Chardan Reiterates Sell On Axovant

In a report published Thursday, Chardan Capital Markets analyst Gbola Amusa commented on

following the company's completer analysis from a previously-published phase IIb which were "less robust scientifically" and "less relevant to the regulator." Amusa continued that a valuation above the $20 level assumes two "unlikely" characteristics that need to be true. First, RVT-101 is approved by the FDA, even though no NME (new molecular entities) has been approved in Alzherimer's since 2003. Second, RVT-101 is the only Alzherimer's drug approved, or sees very limited competition even if others are approved. The analyst further argued that Axon's current valuation ignores 101 "failures" or "unsuccessful attempts" to develop drugs to treat Alzheimer's since 2003. This implies that for each one success, there were 34 failures. "We understand that a probability of success of over 60% for RVT-101 is needed to justify valuation over $20," Amusa wrote. "If so, we believe such probabilities are too optimistic given the history of Alzheimer's disease failures and the history of RVT-101 specifically; and, we question whether our assumed 55% probability of success (with lower non-risk-adjusted estimates) is too high as we continue our diligence in the space." Finally, Amusa argued that Axon's current valuation also ignores the fact that there are 24 other drugs (if not more) in late-stage clinical development in Alzheimer's disease. Bottom line, Axovant's IPO "overpriced" RVT-101 given "mixed" phase II data in dementia. As such, shares are expected to under-perform and are Sell rated with a price target lowered to $9.50 from a previous $10.