Hung out to dry? Axovant’s terrible JPM week

David Hung, Medivation CEO
David Hung cut a much more subdued figure at his very brief JPM session

SAN FRANCISCO—David Hung is the CEO who sold his company, Medivation, to Pfizer for $14 billion. He got the plaudits, a big payday, and after the deal in 2016, seemingly a free pass to almost any biopharma job he wanted.

Where he chose was a bit of a head-scratcher: Axovant, the neuroscience spinoff from parent company Roivant, run by the young, media-savvy entrepreneur Vivek Ramaswamy.

Axovant’s whole deal was based predominately around two pharma castoffs: An Alzheimer’s drug called intepirdine that had been dumped by GlaxoSmithKline, but picked up for little cash (just $5 million) by Ramaswamy.

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But in September, the drug did what nearly every other Alzheimer’s therapy has done over the past 15 years, and failed miserably in a phase 3 test. At the time, I gave Ramaswamy praise for being upfront and honest about the flop, with its accompanying PR playing it straight that it was a failure—an increasingly rare occurrence in biotech releases these days.

Then this week at the J.P. Morgan Healthcare Conference, it announced more data from the drug, but there was a familiar trend, and negative results in a phase 2b trial in Lewy body dementia (DLB) spelled the end for its lead candidate, as intepirdine was tossed onto the ever-growing pile of discarded Alzheimer’s drugs.

Axovant has another unwanted pharma med in the form of nelotanserin, an old Arena drug that on Monday saw Axovant report a trend toward efficacy and no safety signals in a phase 2 trial in DLB.

Nelotanserin—a 5-HT2a receptor inverse agonist—was being tested for its ability to reduce visual hallucinations and sleep disorders in patients with DLB, as well as for Parkinson’s disease dementia (PDD).

The data from its PR showed that the drug had a trend toward improvement on the Unified Parkinson's Disease Rating Scale (UPDRS) part III in PDD patients, suggesting an effect on hallucinations, as well as a benefit in DLB patients that just achieved statistical significance.

But then, the nightmare became a night terror. A day after these data were announced, Axovant had an about-face, saying in fact, it got its numbers wrong, specifically on one of the p-values from the trial.

“The previously reported data for this population [post-hoc subset analysis of Parkinson’s patients with a baseline SAPS-PD score greater than 8.0] that nelotanserin treatment at 40 mg for two weeks followed by 80 mg for two weeks resulted in a 1.21-point improvement (p=0.011, unadjusted) were incorrect,” it said in an embarrassing admission of error.

“While nelotanserin treatment at 40 mg for two weeks followed by 80 mg for two weeks did result in a 1.21-point improvement, the p-value was actually 0.531, unadjusted.” In the world of stats, that’s a fail. It will now rejig its plans, and said it would talk to the FDA about a larger confirmatory trial in a DLB motor study.

Yesterday, during Axovant’s very brief JPM session, a subdued Hung gave a postmortem of intepirdine’s failure in clear-cut, although rather monotone, terms. He said next steps: “Include working with Roivant to expand our pipeline and find attractive candidates, while also conducting a portfolio review over our assets, and prioritizing our candidates.” He said he would provide an update of that review to the Street by the end of the quarter.

What's left in the pipeline? RVT-104, an "early-stage asset in development," according to it's website, but when you click through, you get: "The page you are looking for might have been removed, had its name changed, or is temporarily unavailable." More bad optics. 

Hung left after just 11 minutes of the formal presentation. In the breakout session, he was a little more human, calling the original nelotanserin press release a “ridiculous error” that the company takes responsibility for. He added he would “do what we can” on a deal(s).

Axovant got off an eye-watering $315 million IPO based on what now appears to be hype and hope. It was once seen as having a market valuation of more than $2 billion—this week its share price was halved on these data, from around $5.30 a share at the end of last week, to $2.38 as of yesterday, one of the biggest losers at JPM.

RELATED: Why Axovant's $315M IPO bonanza should scare the hell out of you

Hung’s decision to go to Axovant caused a small spike in its shares after the announcement, with some believing perhaps he had seen data, or had reassurance that this company had something big on its hands. Now, his decision looks like even more of a gamble, and one that isn’t paying off.

Interestingly, it was a tale of two cities for another company and CEO with a similar setup this week, namely Impact Biomedicines and its leader John Hood, Ph.D.

RELATED: J.P. Morgan kicks off with a deal as Celgene pays $1.1B for Impact Biomedicines

Hood also has a pharma castoff in fedratinib, once the property of Sanofi, but the French Big Pharma gave it over to the biotech after what looked like some serious safety signals scuppered its development.

The drug, in development for myelofibrosis, as well as AML and colorectal cancer, became something of a phoenix from the flames for Hood and Impact, and with the safety concerns now largely dealt with, it has a potential blockbuster on its hands.

And this week, in swoops Celgene, with more than $1 billion upfront, and $7 billion in total (in biobucks) to buy the company, and its med. Bad day for Sanofi, great for the tiny biotech.

Hung and Ramaswamy had clearly been hoping for the same fairy tale.