- Evercore ISI's Mark Schoenebaum says there is a 65% probability of success in the upcoming Phase 3 clinical trial evaluating Axovant Sciences' (AXON +0.7%) lead product candidate, RVT-101, in mild-to-moderate Alzheimer's disease (AD) patients. If successful, peak sales could reach $3.5B. If it fails, then AXON shares could lose 90% of their value. Just how Mr. Shoenebaum arrived at his precise prediction is unclear, but this is yet another superb example of the binary event nature of biotech investing. It's feast or famine.
- Axovant's story is interesting. It acquired RVT-101, a 5-HT6 inhibitor, from GlaxoSmithKline (GSK -1%) for a mere $5M. Fast forward to last month's IPO and the value of the company, based entirely on the potential of RVT-101, is almost $2B. This is a dramatic turnaround for a drug that failed four straight mid-stage trials about five years ago.
- The basis for the bullish outlook is the potential for RVT-101 to slow the rate of cognitive decline in AD patients. In an earlier study assessing the combination of RVT-101 and Pfizer's (PFE +0.2%) Aricept (donepezil), the rate of decline was lower than placebo. This is where Axovant will focus on its Phase 3 study, expected to yield results in H2 2017. Stoking the optimism are statements from the FDA that it will be more flexible in how it judges AD drugs in the future, after years of setbacks for drug developers.
- Related tickers: (OTCPK:ESALY) (OTCPK:ESALF)