Failed Alzheimer's drug wins $117M in vTv's IPO

The megablockbuster potential for any new drug that might one day win a regulatory approval for Alzheimer's continues to boost the chances for small biotechs looking to cash in on the current market boom for IPOs, now in its third bullish year.

Axovant proved that just months ago after taking a drug CEO Vivek Ramaswamy acquired from GlaxoSmithKline ($GSK) for $5 million and flipping it into an IPO initially worth more than $2 billion. And vTv--formerly known as TransTech--followed up today with a more muted response for its own play in the field. 

Highpoint, NC-based vTv ($VTVT) raised $117 million after selling 7.8 million shares at $15 a share--the low end of the range. The company had hoped to raise more than $150 million from the IPO. 

Axovant decided to float its balloon around a drug that had failed several solo midstage studies but demonstrated some success in combination with Aricept, which is what it's taking into Phase III. Like Axovant, vTv is taking a failed drug and heading straight into Phase III as well--and its strategy is raising a few eyebrows.

The biotech's big sell revolves around azeliragon, which Pfizer dumped after a trial using a 20-mg dose was stopped after signs of cognitive worsening developed in patients. But the company, run by Stephen Holcombe with former Pfizer CEO Jeff Kindler acting as executive chairman--says the 5-mg dose demonstrated an improvement for a key ADAS-Cog score on cognition, and that's the window it's shooting for among patients with a mild form of the disease.

"This is a very, very tight window between what could be a good effect and what is certainly a very bad one," noted biotech blogger Derek Lowe, "which is surely why Pfizer dropped the compound like it was giving off gamma rays and has not returned to it."

The drug targets the receptor for advanced glycation endproducts--"RAGE"--and about 800 patients are being enrolled for the Phase III program under a special protocol assessment struck with the FDA. 

Shares for vTv opened at $14, though, showing that investors aren't charging in to back a risky Phase III, which follows a full slate of clinical failures for just about every major player in Alzheimer's.