Axovant Sciences (NYSE:AXON) just published its latest financials, and alongside the numbers, gave markets and update as to the progress of its development pipeline. The star of said pipeline is a drug called Intepirdine, which the company is attempting to bring to market as a potential treatment for Alzheimer's disease. As part of the latest release, management reiterated a previously stated target timeframe for the release of data from a phase 3 study of Intepirdine, when used in combination with an already approved (and well established) drug called donepezil.
This is a bit of a controversial asset, with the asset class to which it belongs having had a rocky development history to date. However, there is some suggestion that Axovant can buck this trend and successfully prove efficacy where others have failed to do so. If this proves to be the case, there is a high probability of an immediate upside revaluation for the company.
Right now, the company trades for just shy of $22 a share at a market capitalization of $2.4 billion. If the data in question comes out as indicative of clinical benefit, and just as importantly (as we will get to shortly) does so with a clean safety profile, we are probably looking at $1 billion added to its market capitalization overnight.
Of course, the same can be said for failure, but in the other direction.
With this in mind, here is a look at the drug, and what we are looking out for from the data as underlying a bullish thesis.
So, as mentioned, it's called Intepirdine, and it's a selective 5-HT6 receptor antagonist. The 5-HT6 receptor is a subtype of the 5-HT receptor that plays a key role in the transmission of things like serotonin and other neurotransmitters in the brain. On its own, it's generally regarded as what's called an excitatory receptor; that is, it stimulates and promotes activity. However, a large portion of these receptors are co-localized (or in other words, located near to) what are called GABA neurotransmitters. These basically block neuroactivity, so the co-localization leads to the 5-HT6 receptor stimulating the blocking of neuroactivity.
The idea behind a 5-HT6 receptor antagonist like this, then, is that it stops the 5-HT6 receptor from stimulating this blocking of activity and – in turn – should promote brain function.
It is a pretty roundabout way of going about things, but studies to date have shown that – in concept, at least – it works. In a phase II trial conducted by GlaxoSmithKline plc (ADR) (NYSE:GSK), the addition of Intepirdine to donepezil resulted in a statistically significant improvement in two of the gold standard test scales in Alzheimer's – the ADAS-cog scale and ADCS-ADL scale – when compared to patients that just took donepezil alone.
The phase III that Axovant is conducting is attempting to build on this study in a larger population (the FDA generally requires at least 1000 patients in an Alzheimer's study to underpin a New Drug Application, or NDA) and replicate the results.
There are some doubts, however.
Other companies have tried to prove efficacy and safety in these sorts of drugs, and have had a tough time doing it. Most notably, Lundbeck (OTC:HLUYY) tried to combine a 5-HT6 receptor antagonist with Pfizer's (NYSE:PFE) PF-05212377, and midway through a phase II trial, found that patients were reporting elevated liver enzymes. In a trial environment, this isn’t too much of a problem, as it can be treated relatively easily. If the drug was approved, however, and was taken as a general population therapeutic, there is good chance that this elevated liver enzyme level would not be spotted early enough and could lead to permanent liver damage or, worse, failure altogether. Lundbeck played about with the dosing to try and address the issue, but the trial eventually ended up failing.
What this one comes down to, then, is whether investors feel that it was the altered protocol (as necessitated by the tolerability problems) that caused the failure of the Lundbeck and Pfizer trial, as opposed to any inherent problems with the drug from a clinical benefit perspective (i.e. the drug works, but not in this trial due to various protocol errors).
If that's the case, an Axovant position ahead of the company's releasing of its phase III data could well be justified.
So what are we looking for from the data when it hits?
The primary endpoint is set up to mimic that which determines the outcome of the above-described phase 2 trial (the one that GSK carried out) – improvement from baseline (statistically significant when compared to placebo) in the ADAS-cog scale and ADCS-ADL scale. There are also a few key secondary endpoints that, if hit, would shore up the success of the primary.
Of course, and just as importantly, we need to see a clean safety profile. Specifically, we don't want the drug to go down the same pathway as did Lundbeck's asset and induce elevated liver enzyme levels in patients.
September 2017 is the month to watch.