When is a competing drug’s failure not a good thing? When your drug has the same mechanism of action.
Axovant Sciences (AXON) dropped 25% in early Tuesday trading on news that Pfizer (PFE) has discontinued phase 2 testing of PF-05212377, a 5-HT6 receptor antagonist being developed for Alzheimer’s Disease.
Axovant’s lead drug RVT-101 works by the same mechanism. Making matters worse, both the Pfizer and Axovant drugs were/are being tested in combination with the long-used and generic donepezil, and in more mild Alzheimer’s patients. Investors can’t ignore the similarities.
Axovant has courted controversy for RVT-101’s provenance, acquiring the asset for just $5 million from GlaxoSmithKline (GSK) after multiple mid-stage trial failures, then parlaying that into one of the largest biotech IPOs of the last three years. Still, AXON was a veritable hedge fund hotel when it went public in mid-2015. The stock doubled from its $15 IPO price in the first day of trading and hasn’t seen those levels since.
Pfizer discontinued the PF-05212377 (also known as SAM-760) trial in October of 2015 but only updated the NIH’s ClinicalTrials.gov listing Tuesday, making the futility discontinuation public knowledge. According to the listing, the 12-week study was stopped when “pre-specified, interim analysis futility criteria were met. The termination was not due to safety concerns.”
Axovant’s own phase 3 study, called MINDSET, won’t be complete until next year. The study pits a combination of RVT-101 and donepezil against donepezil alone in 1,150 patients with mild-to-moderate Alzheimer’s.
Somewhat comically, Axovant began their phase 3 study just two weeks before Pfizer’s discontinuation — though Pfizer’s 3-month-delayed disclosure wasn’t exactly timely.
