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.

The Big Phar­ma dis­card pile; Lay­offs all around while some biotechs bid farewell; New Roche CEO as­sem­bles top team; and more

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With earnings seasons in full swing, we’ve listened in on all the calls so you don’t have to. But news is popping up from all corners, so make sure you check out our other updates, too.

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Sen. Ron Wyden (D-OR) (Francis Chung/E&E News/Politico via AP Images)

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Senate Finance Chair Ron Wyden (D-OR) this week sent a letter to the head of the Centers for Medicare & Medicaid Services seeking an update on how and when new inflation-linked rebates will take effect for drugs that see major price spikes.

The newly signed Inflation Reduction Act requires manufacturers to pay a rebate to Medicare when they increase drug prices faster than the rate of inflation.

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Trodelvy notch­es a win in most com­mon form of breast can­cer

Following a promise last year to go “big and fast in breast cancer,” Gilead has secured a win for Trodelvy in the most common form.

The drug was approved to treat HR-positive, HER2-negative breast cancer patients who’ve already received endocrine-based therapy and at least two other systemic therapies for metastatic cancer, Gilead announced on Friday.

Trodelvy won its first indication in metastatic triple-negative breast cancer back in 2020, and has since added urothelial cancer to the list. HR-positive HER2-negative breast cancer accounts for roughly 70% of new breast cancer cases worldwide per year, according to senior VP of oncology clinical development Bill Grossman, and many patients develop resistance to endocrine-based therapies or worsen on chemotherapy.

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Neu­rode­gen­er­a­tive biotech Vyant warns of po­ten­tial wind-down

The CEO and chief scientific officer of Vyant Bio are out the door as the little-known but publicly-listed neurodegenerative biotech searches for an exit or, if all else fails, a wind-down.

The soul-searching bookends a winding journey for the biotech, which rebranded and transitioned from diagnostics company Cancer Genetics in 2021 after a merger with StemoniX. That came after a failed merger attempt with NovellusDx (now Fore Biotherapeutics) in 2018. In the last few years, units have been sold off and the stock price $VYNT has plummeted from the $30 range to penny stock territory.

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Raymond Stevens, Structure Therapeutics CEO

Be­hind Fri­day's $161M IPO: A star sci­en­tist, GPCR drug dis­cov­ery and a plan to chal­lenge phar­ma in di­a­betes

What does it take to pull off a $161 million biotech IPO these days?

In Structure Therapeutics’ case, it means having a star scientist co-founder paired with the computational drug discovery company Schrödinger, $198 million in private funding from blue-chip investors, almost six years of research work on G protein-coupled receptors and a slate of oral, small-molecule drugs, with an eye on the huge and growing diabetes and weight-loss market.

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Medicago's vaccine greenhouse (Medicago via YouTube)

Cana­di­an plant-based vac­cine de­vel­op­er Med­ica­go shut­ters months af­ter lay­offs

Plant-based Covid-19 vaccine developer Medicago shut down this week with little fanfare. And its two subsidiaries, Medicago R&D and Medicago USA, are also closing their doors, according to a company news release.

The lone shareholder left standing, Japan-based Mitsubishi Chemical Group, “has determined not to make further investments in Medicago and to proceed with an orderly wind-up of its business and operations in Canada and in the United States.”

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After 13 years as president and COO at Optinose, Ramy Mahmoud has stepped into a new role as its CEO. He is taking the place of Peter Miller, who stepped down earlier this week, though Miller is still staying with the company as a consultant.

In 2010, the two business partners joined Optinose to take it in a new direction, transforming it from a delivery platform to product company. They previously worked together at Johnson & Johnson, when Miller was president at Janssen and Mahmoud headed medical affairs. Miller said after he learned about Optinose, “I did what I always do, which is find people smarter than me to talk with about the idea. And the first person I called was Ramy … and I said, ‘Hey, Ramy, what do you think of this technology?’”

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Simba Gill, Evelo Biosciences CEO

Sim­ba Gill stay­ing on at Evelo to weath­er lay­offs and a PhII fail

Simba Gill will be staying put as CEO of Evelo Biosciences for now.

Gill announced last year that he would be leaving the head position at Evelo to take on the role of executive partner at Flagship Pioneering. He was aiming to stay on until a successor was selected, but there’s a new course of action in the wake of a Phase II miss and a reduced headcount.

“I want to emphasize that I remain personally committed to Evelo and staying on to lead the organization. I continue to believe that Evelo is a remarkable opportunity in terms of the science, the platform, the type of products that we’re able to produce, and most importantly, the potential of millions of patients suffering from all stages of inflammatory disease,” Gill said on a conference call.

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Te­va drops out of in­dus­try trade group PhRMA

Following in AbbVie’s footsteps, Teva confirmed on Friday that it’s dropping out of the industry trade group Pharmaceutical Research and Manufacturers of America (PhRMA).

Teva didn’t give a reason for its decision to leave, saying only in a statement to Endpoints News that it annually reviews “effectiveness and value of engagements, consultants and memberships to ensure our investments are properly seated.”

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