After the company announced that former Medivation CEO David Hung will be its new CEO, shares in Axovant Sciences (NASDAQ:AXON) were 24.5% higher at 1:20 pm EST today.
Axovant's team includes Lawrence Friedhoff, the person behind the development of the multibillion-dollar Alzheimer's disease drug Aricept; now, the company has even more been-there-done-that experience, thanks to hiring Hung.
At Medivation, Hung led the development and commercialization of the multibillion-dollar prostate cancer drug Xtandi. He also orchestrated Pfizer's massive $14 billion acquisition of Medivation last year.
Hung will try to use his experience to usher Axovant's lead drug, intepirdine, to market. Intepirdine is a& 5-HT6-receptor antagonist that boosts the production of acetylcholine, a neurotransmitter important for cognition and brain function. It's currently in phase 3 studies for use alongside Friedhoff's Aricept, a drug that prevents the body from breaking down acetylcholine in patients with mild to moderate Alzheimer's disease.
Unfortunately, 99% of Alzheimer's disease drugs in trials have failed, and that suggests that Hung faces some steep odds at Axovant. Those odds aren't helped by the fact that other drugmakers, including Pfizer, have attempted to target the 5-HT6 receptor without success.
Fortunately, investors won't have to wait too long to find out if intepirdine's trial pans out; results are expected later this year. If the trial shows that intepirdine can help delay disease progression, there's a very good chance that it will become a blockbuster. Increasingly more people are being diagnosed with Alzheimer's disease, and sadly, there are limited treatment options available.
Undeniably, adding a proven leader in the C-suite is good news for investors. But the failure rate associated with Alzheimer's disease trials makes this stock a risky bet. If intepirdine succeeds where others have failed, there's a big opportunity for profit, but a disappointment could cause this company's shares to crater.