Axovant Sciences is capitalizing on the attention it has received from welcoming biotech icon David Hung as its new CEO with a $125 million share offering.
The biotech is riding high after Hung—who led Medivation to a $14 billion buyout by Pfizer—took on the challenge of ushering its Alzheimer's disease drug through a phase 3 development program. Investors saw Hung's decision to join the company as a vote of confidence in its bid to bring the first new drug for the disease to market in more than a decade.
According to an SEC filing, Hung is picking up a $550,000 basic salary, with a discretionary bonus of at least 60% of that figure, and has committed to buying "at least $10 million of the company’s securities in or concurrent with [its] next financing event." That should be an easy commitment for a man who netted around $350 million from the Medivation sale.
Hung took over as Axovant CEO from the biotech's founder, ex-hedge fund manager Vivek Ramaswamy, who told the Financial Times that he had been looking for a chief operating officer rather than a replacement for himself, but after a meeting decided "it was a no brainer" to give him the top job.
Axovant is in the midst of a phase 3 trial of intepirdine (RVT-101—called MINDSET) which is scheduled to read out by the end of the year. It's a serotonin 5-HT6 inhibitor, so addresses a different mechanism than the legion of amyloid-targeting drugs that have failed as candidate Alzheimer's treatments. The idea is that it can improve the efficacy of current drugs for the disease, which provide only modest benefits.
That's likely to be an easier ask than trying to alter the underlying course of Alzheimer's, but two other 5-HT6 inhibitors pitched at this form of dementia—Lundbeck's Lu AE58054 and Pfizer's PF-05212377—have already been shelved, and that puts a big question mark over the validity of this proposed mechanism of action.
Axovant and its supporters argue that both Pfizer and Lundbeck botched the design of their trials and their outcomes should not reflect on intepirdine's chances of success. And if successful, MINDSET could unlock a market worth billions of dollars for Axovant and potentially set it up for a Medivation-style sale. Time will tell.
J.P. Morgan, Morgan Stanley and Jefferies are acting as joint book-running managers for the offering, which is due to close on April 17.