Financier looks to parlay a $5M Alzheimer's deal into instant $172.5M IPO

Vivek Ramaswamy

Just before Christmas last year, a newly formed Bermuda-based biotech run by former hedge fund partner Vivek Ramaswamy struck a deal to in-license a shelved Alzheimer's drug from GlaxoSmithKline ($GSK) with plans to put it into Phase III. That late-stage study won't start until the fourth quarter, but the newborn biotech isn't waiting around at the starting line. The biotech, now operating as Axovant Sciences, has filed for a $172.5 million IPO, looking to cash in fast on the still-sizzling market for biotech stocks.

Ramaswamy is hoping that he can quickly parlay an experimental 5-HT6 receptor antagonist from GlaxoSmithKline initially dubbed SB742457 into an instant pot of gold. The drug has been tested in 1,250 Alzheimer's patients and healthy subjects. And according to clinicaltrials.gov, the drug finished 5 studies that GSK wrapped between 2008 and 2012 before being put on ice.

According to the IPO, the financier landed this drug cheap, paying an upfront of only $5 million. Without any required research work ahead of the Phase III, Axovant will be on the hook for an additional $5 million payment if the FDA tells the company it can use the data from one late-stage study to file for an approval of the drug, now called RVT-101. Actual approvals in the U.S., Europe and Japan would be worth payments of $35 million, $25 million and $10 million, along with an $85 million bonus when the company hits $1.2 billion in blockbuster revenue.

Axovant is a subsidiary of Roivant Sciences, which currently controls 100% of Axovant's shares.

Axovant and Ramaswamy aren't alone in this particular field. Lundbeck and Otsuka have a 5-HT6 receptor antagonist in the clinic, Lu AE58054, which just began a Phase III program in October. And a big group of companies ranging from Eli Lilly ($LLY) to Biogen ($BIIB) have set their sights on Alzheimer's as well, looking to capitalize on a market with no effective therapy now available to delay the memory-stealing illness.

Axovant's IPO sells the notion that it can be the new leader in the field.

- here's the S-1

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