IPO year: 2015
Raised: $315 million
Share price: $15
Valuation: $1.5 billion
Close Aug. 30, 2019: $7.03
Change: Down 53%
In 2015, Vivek Ramaswamy, then 29 years old, did something remarkable. Having built a company around a Big Pharma castoff he picked up for $5 million, he took it to Wall Street for the biggest biotech IPO yet.
The $315 million sum was all the more eye-watering because Axovant had a one-asset pipeline—and after putting that asset through phase 2, its developer, GlaxoSmithKline, shelved it. In June 2015, Axovant sold 21 million shares at $15 a pop and before the day was out, the price had nearly doubled. When trading closed, the share price was $29.90, giving the company a market cap of nearly $3 billion.
Axovant’s IPO raised questions of a bubble: Either Glaxo had made a grave error in evaluating the drug and Ramaswamy was an investing genius, or Axovant was seriously overvalued.
The drug, intepirdine, had shown some effect on Alzheimer’s symptoms in a phase 2 study, but ultimately, it did not slow or stop the disease from worsening. But Axovant thought it could make it work, as the serotonin 5-HT6 inhibitor worked differently than the legion of amyloid-targeting Alzheimer’s drugs that had crashed and burned in the clinic.
Th failure of a Lundbeck drug of the same class as intepirdine didn’t dissuade Axovant. After showing promise in phase 2, Lundbeck’s idalopirdine failed two phase 3 studies in 2016 and 2017. But the flop could be blamed on a misstep by the Danish company as it moved from phase 2 to phase 3. In a bid to lower the dropout rate seen in phase 2, Lundbeck switched up the dosing schedule for idalopirdine from 30 mg three times a day to 30 mg or 60 mg just once a day.
Along the way, Axovant picked up a new drug—an Arena castoff called nelotanserin—and a new chief. David Hung, the founder and CEO of Medivation, who sold it for $14 billion after 13 years at the helm, could have had his pick of the biotech litter, so going with Axovant signaled confidence in its work. He joined in April 2017, bringing along his Medivation COO, Marion McCourt.
Less than a year later, it all came crashing down.
In September, intepirdine failed a phase 3 test in Alzheimer’s. At the next year’s J.P. Morgan Healthcare Conference, negative phase 2 data in a study of Lewy body dementia spelled the end for intepirdine. And Axovant stumbled in its delivery of nelotanserin data in Parkinson’s disease dementia. In an embarrassing about-face, the company had to admit it had gotten the numbers wrong and that the drug’s effects were not, in fact, statistically significant. Hung, McCourt and three board members jumped ship soon after, with Pavan Cheruvu, M.D., formerly Roivant’s chief people officer, taking over.
Axovant cut nelotanserin loose at the end of 2018 after it failed in Lewy body dementia. That could have been the end for Axovant, but Cheruvu had a plan. Under his leadership, the company gradually transformed itself into a gene therapy biotech, licensing programs from the likes of Oxford Biomedica and Benitec. It built up its team, picking up gene therapy vets from Spark Therapeutics, Novartis and Sarepta.
“When I joined, at the outset, I had a vision of building a gene therapy company that would be an entirely new company than what Axovant had been before. … The small molecule past is now squarely behind us,” Cheruvu told FierceBiotech at this year’s J.P. Morgan Healthcare Conference.
The company officially rebranded as Axovant Gene Therapies in February, and analysts are optimistic about its new direction. Analysts at Jefferies think the company’s stock is “poised to bounce in 2019” thanks in part to three gene therapy trial readouts due before the end of the year. These include data for a Parkinson’s treatment and a pair of therapies for two forms of the pediatric disease gangliosidosis.
If not for this pivot, we would have written off Axovant’s IPO as one of the losers. Time will tell if it’s enough to push the company into “winning” territory and give Axovant the phoenix-from-the-flames story it’s looking for.