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.

At the In­flec­tion Point for the Next Gen­er­a­tion of Can­cer Im­munother­a­py

While oncology researchers have long pursued the potential of cellular immunotherapies for the treatment of cancer, it was unclear whether these therapies would ever reach patients due to the complexity of manufacturing and costs of development. Fortunately, the recent successful development and regulatory approval of chimeric antigen receptor-engineered T (CAR-T) cells have demonstrated the significant benefit of these therapies to patients.

Tillman Gerngross (Adagio)

Till­man Gern­gross on Omi­cron: 'It is a grim sit­u­a­tion...we’re go­ing to see a sig­nif­i­cant drop in vac­cine ef­fi­ca­cy'

Tillman Gerngross, the rarely shy Dartmouth professor, biotech entrepreneur and antibody expert, has been warning for over a year that the virus behind Covid-19 would likely continue to mutate, potentially in ways that avoid immunity from infection and the best defenses scientists developed. He spun out a company, Adagio, to build a universal antibody, one that could snuff out any potential mutation.

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In­cor­po­rat­ing Ex­ter­nal Da­ta in­to Clin­i­cal Tri­als: Com­par­ing Dig­i­tal Twins to Ex­ter­nal Con­trol Arms

Most drug development professionals are familiar with the nerve-racking wait for the read-out of a large trial. If it’s negative, is the investigational therapy ineffective? Or could the failure result from an unforeseen flaw in the design or execution of the protocol, rather than a lack of efficacy? The team could spend weeks analyzing data, but a definitive answer may be elusive due to insufficient power for such analyses in the already completed trial. These problems are only made worse if the trial had lower enrollment, or higher dropout than expected due to an unanticipated event like COVID-19. And if a trial is negative, the next one is likely to be larger and more costly — if it happens at all.

Like the flu vac­cine every year, the FDA could move quick­ly on a vari­ant-tar­get­ed Covid vac­cine

In the same way that the FDA signs off on flu vaccines every year without requiring large clinical trials to measure their efficacy, the FDA may employ a similar strategy in authorizing variant-focused versions of the mRNA vaccines.

As the world braces for more data on the latest variant Omicron, which may reduce vaccine efficacy, top vaccine developers like Moderna and Pfizer-BioNTech have promised they can pull together a new vaccine targeted against a specific Covid variant in about 100 days. Since Omicron emerged last week, Pfizer-BioNTech, Moderna and J&J have all said they’ve begun work on Omicron-specific vaccines, if needed.

Thanks­giv­ing edi­tion: Top 15 End­points sto­ries of 2021; Can you name that vac­cine?; Mer­ck­'s Covid an­tivi­ral dis­ap­points; FDA nom­i­nee's in­dus­try ties; and more

Welcome back to Endpoints Weekly, your review of the week’s top biopharma headlines. Want this in your inbox every Saturday morning? Current Endpoints readers can visit their reader profile to add Endpoints Weekly. New to Endpoints? Sign up here.

Happy Thanksgiving to all those who are celebrating it — although, if we are being honest, this week’s abbreviated edition is really for those who are not. Wherever you’re tuning in from, we appreciate your support, hope you find this recap helpful and we wish you a wonderful weekend.

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What were End­points read­ers tun­ing in­to this year? Here’s a look at our 15 most pop­u­lar re­ports of the year (so far)

At the beginning of this year, I laid out a basic objective for Endpoints News as we headed to our 5th anniversary. We’ve long been doing a fine job covering the breaking news in R&D — if I do say so myself — but we needed to expand our horizons on industry coverage, increase the staff and go much, much deeper when the stories demanded it.

In a phrase: broader and deeper.

It’s safe to say, based on our daily web traffic, that you all seemed to like this idea. We’ve doubled the staff — thanks to a growing group of paid subscribers — ramped up the daily report and now publish a regular slate of in-depth articles. And traffic — those clicks you always read about — have gone up in volume too. Monthly sessions are up 43%, to close to 1.5 million. Unique readers are up 63%, to 874,480 in October, after setting a record of close to a million the month before. Page views are running at 3 million-plus a month. And the overall number of subscribers has surged to 124,000.

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Ursula von der Leyen, President of the European Commission

Omi­cron: Re­searchers scram­ble as new coro­n­avirus mu­ta­tion takes flight around the globe — Pfiz­er/BioN­Tech, Mod­er­na vow swift re­sponse

As Americans were waking up for their Black Friday rituals, they were greeted with the news that a new mutation of the Covid-19 virus has appeared and been sequenced — after it caught an international flight to Hong Kong. And two of the leading Covid-19 vaccine developers promised delivery of a new vaccine “within 100 days” if necessary while a third spelled out its 3-prong strategy hours later.

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Nev­er too late: For­bion pitch­es $100M SPAC; Kro­nos Bio re­leas­es ear­ly in­ter­im da­ta on CDK9 in­hibitor

Dutch VC Forbion is hopping on the ever-lengthening SPAC train.

To be led by Jasper Bos, who joined Forbion Growth as a general partner back in May just after the fund closed at $428 million, Forbion European Acquisition will target late-stage opportunities in the life sciences industry in Europe to merge with and bring onto Nasdaq.

Cyril Lesser, senior controller at Forbion, will be the CFO while Bos serves as CEO.

Jeff Albers, Blueprint Medicines CEO

Look­ing past Big Phar­ma ri­vals, Blue­print buys a pre­clin­i­cal biotech for $250M+

J&J’s Rybrevant scored the first approval back in May for a small group of lung cancer patients with a rare EGFR mutation. Despite a swarm of other biopharma companies angling for a piece of that market, Blueprint Medicines is betting nearly $500 million on a candidate it thinks will stand out.

Blueprint is putting down $250 million in cash and another $215 million in biobucks for Lengo Therapeutics and its preclinical non-small cell lung cancer program LNG-451. Though it hasn’t been tested in humans, Blueprint says the candidate was “highly brain-penetrant” in preclinical trials, and has the potential to inhibit all common EGFR exon 20 insertion variants — which are found in just 2% to 3% of NSCLC patients.

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