Axovant Sciences (AXON) Misses Q1 EPS by 2c; Enters Licensing Agreement with Qaam Pharma

Axovant Sciences (NYSE: AXON) reported Q1 EPS of ($0.38), $0.02 worse than the analyst estimate of ($0.36).

sAxovant and Qaam Pharmaceuticals (Qaam) have entered into an exclusive license agreement under which Axovant expects to develop and, if successful, commercialize products that combine cholinesterase inhibitors with peripheral muscarinic receptor antagonists including glycopyrrolate, which could mitigate the peripheral side effects of cholinesterase inhibitors. Axovant will initially develop RVT-103, a combination of glycopyrrolate and donepezil. In addition, Axovant expects to develop RVT-104, a combination of glycopyrrolate and high-dose rivastigmine. Axovant believes that the intellectual property portfolio licensed from Qaam as part of this transaction provides a strong exclusivity position in this area.

"This program continues to build on our efforts to deliver comprehensive solutions to patients diagnosed with dementia," said Axovant Chief Development Officer Dr. Lawrence Friedhoff, who led the development of Aricept (donepezil) for the treatment of Alzheimer's disease through its approval in 1996. "We believe this product candidate can limit the peripheral side effects of cholinesterase inhibitors which frequently represent an obstacle for patients to adopt or remain on therapy."

"We believe our lead product candidate intepirdine could deliver sustained cognitive and functional benefits when combined with cholinesterase inhibitors, the current standard of care in Alzheimer's disease, while RVT-103 has the potential to mitigate known side effects associated with that standard of care," said Mark Altmeyer, President and Chief Commercial Officer of Axovant Sciences. "These complementary approaches– of delivering additional cognitive and functional benefits with intepirdine, while also mitigating the side effects of cholinesterase inhibitors with RVT-103– could transform the future standard of care for millions of patients currently diagnosed with Alzheimer's disease."

Axovant plans to initiate clinical studies for RVT-103 shortly, with initial results expected in 2017. Depending on results, Axovant may pursue registration programs in the United States. In addition, Axovant intends to evaluate opportunities for higher doses of cholinesterase inhibitors to deliver additional efficacy, potentially in combination with intepirdine.

Axovant believes Qaam's technology may be superior to other competitive approaches combining an anticholinergic agent with a cholinesterase inhibitor in an attempt to reduce the peripheral side effects associated with cholinesterase inhibitors. Glycopyrrolate is believed to have minimal-to-no penetration into the central nervous system (CNS), and therefore may avoid CNS side effects associated with other anticholinergic agents, including worsening of cognition and an increase in the incidence of falls.

Financial terms of the transaction were not disclosed. Axovant does not expect the program to have a material effect on its use of cash in the fiscal year ending March 31, 2017.

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