UPDATE: Baird Starts Axovant Sciences (AXON) at Outperform

(Updated - July 13, 2015 7:46 AM EDT)

Baird initiated coverage on Axovant Sciences (NYSE: AXON) with an Outperform rating and a price target of $29. Analyst Brian P. Skorney thinks RVT-101 would be an "automatic blockbuster" if a approved.

"Given the consistency of evidence of an effect in Alzheimer's for this class, in combination with the standard of care, we believe RVT-101 is poised for success in Phase 3. Confirmation of such an effect in Phase 3 would result in a multi-billion opportunity in Alzheimer's and other dementias," said Skorney.

"Axovant plans on initiating a Phase 3 study later this year in combination with the standard of care, donepezil. We expect this study’s readout to occur in 2017 and to be the primary catalyst for the stock. In the interim, we expect data from a Phase 2 study in Lewy Body Dementia and competitive Phase 3 data from Lundbeck in 2016 to be key data points for assessing the probability of Phase 3 success and therefore meaningful stock catalysts in their own right," Skorney continued.

"Both RVT-101 and idalopirdine have demonstrated a remarkably consistent effect when added to the standard of care in randomized Alzheimer’s studies. The effect of 5-HT6 receptor antagonism is supported mechanistically and both the preclinical and clinical data provide additional evidence supporting the hypothesis. Given this consistency, we believe the probability of Phase 3 success is substantially higher than the market is currently crediting," added the analyst. "Aricept peaked at $4.2B in annual sales before going generic in 2009. Namenda sales have exceeded $2.3B. If approved, we think RVT-101 would exceed Aricept peak sales, given the expected increase in AD patients and price growth. We model 2026 sales, before risk-adjusting, to be $4.5B WW but, given the market dynamics, could see something substantially higher."

For an analyst ratings summary and ratings history on Axovant Sciences click here. For more ratings news on Axovant Sciences click here.

Shares of Axovant Sciences closed at $17.56 yesterday.

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