Development-stage biopharma Axovant Sciences (NASDAQ:AXON) opened 2018 by dropping devastating news on shareholders, essentially hinting that its neuro-drug pipeline was next to worthless. Shares responded as one might expect -- falling from over $20 apiece in late 2017 to just over $1 each in recent months.
Turns out, that just set the stage for the stock's incredible run this month. Shares rose over 44% today -- and have gained 278% in June 2018 alone -- after Axovant Sciences announced that it will license the rights to a gene therapy drug candidate being evaluated as a potential treatment for Parkinson's disease. It also hired Dr. Fraser Wright, co-founder and former CTO of gene therapy pioneer Spark Therapeutics, to serve as the CTO of the company's own gene therapy programs.
As of 11:39 a.m. EDT, the stock had settled to a 37.4% gain.
One year ago, Axovant Sciences boasted a pipeline with three drug candidates: intepirdine, nelotanserin, and RVT-104. The company decided to discontinue development of intepirdine after it failed multiple phase 2 trials. That left two unproven investigational therapies and a lot of doubt over the future of the platform.
That's the backdrop against which today's news is set. Investors are running back into the stock following swift progress on the "pipeline expansion" strategy. What's there to be excited about?
The drug candidate licensed today, now called AXO-Lenti-PD, is a "gene therapy for Parkinson's disease that delivers three genes encoding a critical set of enzymes required for dopamine synthesis in the brain," according to the press release. It was licensed from Oxford BioMedica for $30 million up front. Axovant Sciences has also agreed to provide up to $812 million in milestone payments and royalties on sales to the gene therapy supplier, should the product receive marketing approval.
The biopharma expects to initiate a dose-escalating phase 1/2 trial for the new drug candidate by the end of 2018. To support those efforts, Axovant Sciences received a $25 million equity investment from Roivant Sciences.
It was a pretty busy day for the development-stage biopharma. An exciting new drug was licensed, a leading expert in commercializing gene therapies was hired as the new program-specific CTO, and a cool $25 million was injected into the mix to get things started on the right foot. The company's prospects are now much brighter than just a few months ago, although the bar was pretty low.
That said, investors shouldn't forget that dementia conditions are extraordinarily difficult to treat. Additionally, the new multigene therapy might be on the cutting edge, but it might also be pushing the boundaries of what's realistically possible with our current understanding of biology. So although Axovant Sciences has a new outlook, don't forget there's a long way to go before the company even has a shot at being a commercial success.