Historically, 99% of Alzheimer's disease drugs to enter clinical trials have failed, yet Axovant Sciences (NASDAQ:AXON) believed it could design a phase 3 trial for its Alzheimer's disease drug, intepirdine, that could overcome those stiff odds. Sadly, Axovant Sciences' announced Tuesday morning that intepirdine, its lead product candidate, failed across the board to beat a placebo, delivering yet another setback to progress toward tackling this disease.

Trial design couldn't overcome a bad target

Axovant Sciences' intepirdine targets the 5HT6 receptor to stimulate the production of acetycholine, a neurotransmitter that sends signals between nerve cells. Because acetycholine is important to cognitive function, boosting it via the 5HT6 receptor has long been a goal of Alzheimer's disease researchers.

A shadow of a person giving a thumbs down signal.

Image source: Getty Images.

Yet, 5HT6 receptor antagonists have performed poorly in clinical trials. Pfizer and Lundbeck, for example, both shelved their 5HT6 drugs after trial setbacks, and intepirdine came to Axovant Sciences courtesy of GlaxoSmithKline's discard pile.

Nonetheless, Axovant Sciences' believed those failures weren't caused by the 5HT6 target, but by bad trial design decisions. Management thought it could succeed where others failed by closely mirroring intepirdine's phase 2 trial, in which intepirdine statistically and significantly improved performance on the ADAS-COG and ADCS-ADL tests at 24-weeks versus Aricept alone with p-values of 0.013 and 0.024, respectively.

The company brought in Alzheimer's disease veteran Dr. Lawrence Friedhoff, the person behind the multibillion-dollar Alzheimer's disease drug Aricept. After analyzing intepirdine's mid-stage trial results, it designed a phase 3 trial that evaluated efficacy at the 24-week mark, strictly enrolled patients in order to match the phase 2 trial population, and enrolled enough people to show statistical significance even if intepirdine's benefit was small.

Axovant Sciences didn't share all the data from its phase 3 trial with industry watchers on Tuesday, but the top-line results were enough to show that despite all of its efforts to design its trial for success, intepirdine is a bust.

Scientists working together in a lab.

Image source: Getty Images.

What now?

Earlier this year, Axovant Sciences' signed on former Medivation CEO David Hung to run the company, a move that encouraged many industry watchers, including me. Hung's experience at Medivation included successfully developing one of the globe's top-selling prostate cancer drugs and orchestrating Medivation's $14 billion buyout last year.

Hung was hired to navigate intepirdine through the regulatory maze to commercialization, but now the industry veteran is tasked with redirecting Axovant Sciences' efforts following its disappointing Alzheimer's disease failure to its other ongoing studies.

Those trials include a phase 2b study of intepirdine and a phase 2 study of nelotanserin, an inverse agonist of the 5-HT2A receptor, in dementia patients with Lewy bodies. Results from intepirdine's phase 2b study are expected by year-end and the wild card in that study is the inclusion of a 70 mg arm that's twice the dose studied in its Alzheimer's disease trial.

If intepirdine (or nelotanserin) is effective in patients with Lewy bodies, then Axovant Sciences may still have a path forward despite the Alzheimer's disease failure. An estimated 1.3 million Americans suffer from dementia with Lewy bodies, making it the second most prevalent cause of neurodegenerative dementia in elderly patients. So far, there aren't any drugs approved to treat it, so a win could be a big advance in the indication. Nevertheless, Axovant Sciences is far riskier today following its disappointing Alzheimer's disease data and that suggests it may be wise to focus on other stocks, at least until the Lewy bodies data is reported. 

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.