Alzheimer's disease is incredibly tough to treat, and 99% of Alzheimer's disease drugs to enter clinical trials have failed. But Axovant Sciences (NASDAQ:AXON) thinks it's designed a trial that can pan out, and given that its management includes been-there and done-that leaders, it may not be smart to bet against it.

Two is better than one

Axovant Sciences' lead drug candidate is RVT-101, or intepirdine, a 5HT6 receptor antagonist the company bought out of GlaxoSmithKline's discard bin in 2014 for $5 million upfront, plus another $5 million last year.

Gold and silver pills spill out onto a pile of money.

IMAGE SOURCE: GETTY IMAGES.

Intepirdine stimulates the production of acetycholine, a neurotransmitter that sends signals between nerve cells. Because acetycholine is important to cognitive function, Axovant Sciences thinks using intepirdine alongside the top-selling Alzheimer's disease drug Aricept, which slows the breakdown of acetycholine, can improve patient performance on two tests used to measure cognitive function in Alzheimer's disease patients.

In phase 2 trials, these two drugs did statistically and significantly improve performance on the ADAS-COG and ADCS-ADL tests at 24-weeks versus Aricept alone. The p-values associated with the improvement were 0.013 and 0.024, respectively.

Delivering a win

Management is using efficacy at the 24-week mark as the primary endpoint to determine whether or not its phase 3 trial is a success. It's also strictly enrolling patients so that the trial's make-up is similar to the phase 2 trial. And it's enrolling more than 1,000 patients to make sure the trial is powered enough to achieve statistical significance even if it delivers a small benefit.

In short, management used lessons learned from prior studies to design a trial with the best shot at winning. We won't know if its efforts were worth it until data is reported, but investors won't have to wait too long because top-line results should be available in September.

if the data is good, then management has the experience necessary to win FDA approval and turn this drug into a top seller. The company's chief medical officer is Lawrence Friedhoff, who was responsible for heading up Aricept's development, and its CEO is David Hung, the former CEO of Medivation. At Medivation, Hung spearheaded development and commercialization of the multibillion-dollar prostate cancer drug Xtandi before selling the company to Pfizer for $14 billion last year.

A big market opportunity

If intepirdine succeeds where others have failed, then it will launch into a big and growing market. There are 5.5 million people with Alzheimer's disease in the U.S. alone, and estimates are that there could be as many as 16 million people with it by 2050. There's no cure for this disease, so there's a big need for new treatments that can delay disease progression, even if the benefit is small.

This suggests that an approval in Alzheimer's disease alone could turn intepirdine into a blockbuster drug, but that's not the only indication this drug targets. The company also plans to report data later this year from a phase 2b study evaluating it in Lewy body dementia, or LBD. Including Parkinson's disease patients, there are 1.4 million LBD patients in the U.S., and the majority of these patients suffer from cognitive decline and motor impairment that intepirdine may help address. If this trial is a winner, and the Alzheimer's disease trial pans out, then management might be able to file for approval in LBD without conducting another trial in the indication. 

Clearly, there's a big opportunity to target millions of patients, but the high failure rate in this indication makes this a hit-or-miss stock to own. It could end up hitting a home run, or it could strike out, so investors will want to approach shares cautiously. 

Todd Campbell owns shares of Pfizer. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.