Axovant Sciences (AXON): Oppenheimer Dives into the Licensing Move That Has Wall Street Buzzing

Oppenheimer's Jay Olson finds it encouraging to see AXON evolving its pipeline to gene therapy.


Axovant Sciences Ltd (NASDAQ:AXON) shot up like a rocket yesterday through the market roof, a monster 160%, and continues to vault another just under 29% this morning. Here’s the buzz: the biotech player has granted exclusive global rights to develop and commercialize its investigational gene therapy for Parkinson’s disease from Oxford BioMedica.

Notably, the gene therapy AXO-Lenti-PD offers three genes encoding a crucial enzyme set needed for dopamine synthesis in the brain. This marks the first transaction of the company’s 2018 pipeline expansion. Additionally, the company has welcomed Dr. Fraser Wright as new Chief Technology Officer to look after AXON’s gene therapy initiatives.

Oppenheimer analyst Jay Olson is reassured to see that this “gene therapy deal drives pipeline transformation,” a step “from small molecule therapeutics to gene therapy.” Though the analyst is sticking to the sidelines for the time being, he eagerly anticipates further business development by the close of the year.

“AXO-LentiPD is an experimental gene therapy that builds on the earlier success of ProSavin which demonstrated nominal efficacy with long-term safety in an ongoing 15-patient Ph2 study. AXO-Lenti-PD is a next-generation lentiviral vector that improves upon the efficacy of ProSavin while overcoming some of the barriers including dosing constraints imposed by the volume of administration. We are encouraged by the rapid progress of new CEO Pavan Cheruvu as he quickly implements his vision for a new AXON that is focused on transformational science,” cheers Olson, who believes that gene theory theoretically may offer a long-term treatment for Parkinson’s disease with a single injection by merging into the host cell’s genome for dopamine production restoration.

For context, Axo-Lenti-PD serves up the same three genes seen in ProSavin that produce enzymes, but with one improvement: “they are reordered to optimize dopamine production.” Axo-Lenti-PD dials up the brain’s dopamine production as much as 10 times greater than that seen in animal models of Parkinson’s disease on ProSavin.

In the future, Axovant Sciences is planning to kickstart a dose-escalation trial designed for a quick shift over to a sham-controlled trial as soon as the optimal dose gets identified. Opening study sites will stand as already existing ProSavin sites in both the UK as well as France with the intend to down the line expand over to the U.S.

The drug maker is primed to gain $25 million of equity financing from the parent company to fuel the development of its experimental gene therapy and take steps toward further business development. Olson looks for Cheruvu to keep up his “aggressive” strides in transforming the pipeline and commends the priority on “innovation” under AXON’s new leadership. Ultimately, “We believe today’s deal leverages AXON’s expertise in early and late-stage clinical development along with pre-launch commercial capabilities,” concludes Jay Olson.

For now, the analyst reiterates a Perform rating on AXON stock without listing a price target. (To watch Olson’s track record, click here)

TipRanks reveals analysts are mostly playing it safe in their recommendations on AXON, but they have optimistic target expectations. Out of 3 analysts polled in the last 3 months, 1 is bullish on AXON stock while 2 remain sidelined. With a return potential of nearly 65%, the stock’s consensus target price stands at $7.50.

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