Expect More Downside In Axovant Sciences

Shares of Axovant Sciences Ltd AXON plummeted more than 70 percent after the company's late-stage trial involving its therapy for the treatment of Alzheimer's failed to meet its primary objectives in a phase 3 study called MINDSET.

Investors thinking Axovant's stock can't see any additional downside after a 70-percent drop should consider what analysts at Chardan Capital Markets have to say. The firm's Gbola Amusa maintains a Sell rating on Axovant's stock with an unchanged $3 price target.

Axovant said it will no longer develop its intepirdine therapy after the disappointing phase 3 trial results, the analyst commented in a research report. Looking forward there are multiple events ahead including top-line results from the 269-patient HEADWAY Dlb trial of intepirdine in dementia and other studies that are "unlikely to support" the stock's price performance at current levels

"We believe that for HEADWAY DLB to in fact be a registration study, HEADWAY DLB needs to show an intepirdine efficacy signal so strong that the probability of such a signal is extremely remote," Amusa wrote.

The analyst also highlighted a few other concerns, including:

• "HEADWAY DLB has far less power than MINDSET, yet is still testing intepirdine for cognition and function in dementia patients."
• "To us, MINDSET, along with late-stage trials for idalopirdine and PF-05212377, were a test (and a failure) of the acetylcholine hypothesis on 5HT6 antagonist use in dementias to improve cognition and/or function."
• "We note a lack of convincing support that 5HT2A antagonism, on top of 5HT6 antagonism, by intepirdine should affect outcomes in DLB."

At time of publication, shares of Axovant Sciences were up roughly 3 percent at $7.96.

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Axovant Fails To Pull The Sword From The Stone; Alzheimer's Drug Fails