Good salary, nice bonus — but why did biotech mogul David Hung gam­ble on Ax­o­vant?

David Hung

One day in­to his new job as CEO of Ax­o­vant $AX­ON, you might say that David Hung is earn­ing his pay.

The biotech’s stock end­ed up 23% as in­vestors cheered the re­turn of the leg­endary biotech deal­mak­er, not so long af­ter his crown­ing achieve­ment: A $14 bil­lion buy­out for Medi­va­tion.

That boost added $340 mil­lion to the mar­ket cap, which Ax­o­vant’s Vivek Ra­maswamy — one of the savvi­est play­ers to ever make the leap from hedge fund to biotech — im­me­di­ate­ly sought to cash in on with a $100 mil­lion shelf of­fer­ing.

In re­turn, Hung is in line for a pay pack­age not much out of line with the in­dus­try stan­dard. He’s get­ting a $550,000 salary plus a bonus equiv­a­lent to 60% of that to run a com­pa­ny with a near-term read out from a Phase III Alzheimer’s study. So up to $880,000, pret­ty good for an in-de­vel­op­ment biotech with a cou­ple of as­sets in the clin­ic, but not grandiose ei­ther.

There’s al­so $115,000 to cov­er his re­lo­ca­tion ex­pens­es thrown in, ac­cord­ing to the 8-K. And Hung, who came out of the Medi­va­tion sale with about $354 mil­lion, is buy­ing $10 mil­lion in se­cu­ri­ties.

So where’s the up­side? Look to the op­tions.

There are two op­tions to buy 4 mil­lion shares at $15.13, with each op­tion vest­ing over five years. There’s al­so a third op­tion for 2 mil­lion more shares.

Now, if there’s a change in con­trol, some­one comes in and buys Ax­o­vant or Hung arranges a sale for a big pre­mi­um, then all the op­tions vest im­me­di­ate­ly up­on change of con­trol.

Ax­o­vant is en­gaged in the ul­ti­mate high-wire act in drug R&D. It’s walk­ing the tightrope in a piv­otal stage Alzheimer’s tri­al which looms over bil­lions of dol­lars in wreck­age from the past 14 years of fail­ure. And they’ll know by the end of this year if their shot at 5HT6 worked or not.

If it works, the pay­off will like­ly be in the bil­lions. They don’t call ex­per­i­men­tal Alzheimer’s drugs a gold­en tick­et — a long shot at a for­tune — for noth­ing. The com­pa­ny’s stock would gy­rate up. Hung al­ready knows every big play­er in the field which would look to buy the com­pa­ny. And maybe that’s one good rea­son not to wait un­til af­ter the read­out to take the job, as Ra­maswamy had of­fered to do.

Bri­an Sko­r­ney, Baird an­a­lyst

The im­pli­ca­tions weren’t lost on Baird’s Bri­an Sko­r­ney:

The take­out of Medi­va­tion was the most hot­ly con­test­ed biotech deal last year, pri­mar­i­ly due to Hung’s clear cam­paign­ing to get the high­est price pos­si­ble. We wouldn’t be sur­prised to see the stock run up strong­ly in­to the MIND­SET da­ta to­ward the end of Sep­tem­ber as a suc­cess­ful tri­al, which would be one of the on­ly suc­cess­ful piv­otal tri­als in Alzheimer’s in re­cent mem­o­ry and pos­si­bly the biggest bi­na­ry event of the year, could start a sim­i­lar bid­ding war.

Hung cer­tain­ly isn’t won­der­ing where his next meal will come from. And it’s in­ter­est­ing to see him roll the dice once again on Alzheimer’s, af­ter see­ing Dime­bon go up in smoke at Medi­va­tion.

This is one gam­ble, though, that may not take years to pay off. And the struc­ture of the deal begs a sim­ple ques­tion.

Just how long does Hung plan to stay?

Ax­o­vant shares are up an­oth­er 4% in pre-mar­ket trad­ing this morn­ing.

Here comes the oral GLP-1 drug for di­a­betes — but No­vo Nordisk is­n't dis­clos­ing Ry­bel­sus price just yet

Novo Nordisk’s priority review voucher on oral semaglutide has paid off. The FDA approval for the GLP-1 drug hit late Friday morning, around six months after the NDA filing.

Rybelsus will be the first GLP-1 pill to enter the type 2 diabetes market — a compelling offering that analysts have pegged as a blockbuster drug with sales estimates ranging from $2 billion to $5 billion.

Ozempic, the once-weekly injectable formulation of semaglutide, brought in around $552 million (DKK 3.75 billion) in the first half of 2019.

As Nas­daq en­rolls the fi­nal batch of 2019 IPOs, how have the num­bers com­pared to past years?

IGM Biosciences’ upsized IPO haul, coming after SpringWorks’ sizable public debut, has revved up some momentum for the last rush of biotech IPOs in 2019.

With 39 new listings on the books and roughly two more months to go before winding down, Nasdaq’s head of healthcare listings Jordan Saxe sees the exchange marking 50 to 60 biopharma IPOs for the year.

“December 15 is usually the last possible day that companies will price,” he said, as companies get ready for business talks at the annual JP Morgan Healthcare Conference in January.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 60,200+ biopharma pros reading Endpoints daily — and it's free.

A fa­vorite in Alex­ion’s C-suite is leav­ing, and some mighty sur­prised an­a­lysts aren’t the least bit hap­py about it

Analysts hate to lose a biotech CFO they’ve come to trust and admire — especially if they’re being blindsided by a surprise exit.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 60,200+ biopharma pros reading Endpoints daily — and it's free.

Oxitec biologist releases genetically modified mosquitoes in Piracicaba, Brazil in 2016 [credit: Getty Images]

In­trex­on unit push­es back against claims its GM mos­qui­toes are mak­ing dis­ease-friend­ly mu­tants

When the hysteria of Zika transmission sprang into the American zeitgeist a few years ago, UK-based Oxitec was already field-testing its male Aedes aegypti mosquito, crafted to possess a gene engineered to obliterate its progeny long before maturation.

But when a group of independent scientists evaluated the impact of the release of these genetically-modified mosquitoes in a trial conducted by Oxitec in Brazil between 2013 and 2015, they found that some of the offspring had managed to survive — prompting them to speculate what impact the survivors could have on disease transmission and/or insecticide resistance.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 60,200+ biopharma pros reading Endpoints daily — and it's free.

[via AP Images]

Pur­due threat­ens to walk away from set­tle­ment, asks to pay em­ploy­ees mil­lions in bonus­es

There are two updates on the lawsuit against Purdue Pharma over its role in fueling the opioid epidemic, as the Sackler family threatens to walk away from their pledge to pay out $3 billion if a bankruptcy judge does not stop outstanding state lawsuits against them. At the same time, the company has asked permission to pay millions in bonuses to select employees.

Purdue filed for chapter 11 bankruptcy this week as part of its signed resolution to over 2,000 lawsuits. The deal would see the Sackler family that owns Purdue give $3 billion from their personal wealth and the company turned into a trust committed to curbing and reversing overdoses.

Aerial view of Genentech's campus in South San Francisco [Credit: Getty]

Genen­tech sub­mits a big plan to ex­pand its South San Fran­cis­co foot­print

The sign is still there, a quaint reminder of whitewashed concrete not 5 miles from Genentech’s sprawling, chrome-and-glass campus: South Francisco The Industrial City. 

The city keeps the old sign, first erected in 1923, as a tourist site and a kind of civic memento to the days it packed meat, milled lumber and burned enough steel to earn the moniker “Smokestack of the Peninsula.” But the real indication of where you are and how much has changed both in San Francisco and in the global economy since a couple researchers and investors rented out an empty warehouse 40 years ago comes in a far smaller blue sign, resembling a Rotary Club post, off the highway: South San Francisco, The Birthplace of Biotech.

While No­var­tis ban­ish­es Zol­gens­ma scan­dal scars — Bio­gen goes on a Spin­raza 'of­fen­sive'

While Novartis painstakingly works to mop up the stench of the data manipulation scandal associated with its expensive gene therapy for spinal muscular atrophy (SMA) Zolgensma— rival Biogen is attempting to expand the use of its SMA therapy, Spinraza. 

The US drugmaker $BIIB secured US approval for Spinraza for use in the often fatal genetic disease in 2016. The approval covered a broad range of patients with infantile-onset (most likely to develop Type 1) SMA. 

Jason Kelly. Mike Blake/Reuters via Adobe

Eye­ing big ther­a­peu­tic push, Gink­go bags $290M to build a cell pro­gram­ming em­pire

Ginkgo Bioworks is on a roll. Days after publicizing a plan to nurture new startups via partnerships with accelerators Y Combinator and Petri, the Boston biotech says it has raised another $290 million for its cell programming platform to reach further and wider.

Endpoints News

Keep reading Endpoints with a free subscription

Unlock this story instantly and join 60,200+ biopharma pros reading Endpoints daily — and it's free.

UP­DAT­ED: Speak­er Nan­cy Pelosi to un­veil bill for fed­er­al­ly ne­go­ti­at­ed drug prices

After months of buzz from both sides of the aisle, Speaker Nancy Pelosi will today introduce her plan to allow the federal government to negotiate prices for 250 prescription drugs, setting up a showdown with a pharmaceutical industry working overtime to prevent it.

The need to limit drug prices is a rare point of agreement between President Trump and Democrats, although the president has yet to comment on the proposal and will likely face pressure to back a more conservative option or no bill at all. Republican Senator Chuck Grassley is reportedly lobbying his fellow party members on a more modest proposal he negotiated with Democratic Senator Ron Wyden in July.