Editor's Note: Since the writing of this article, Axovant Sciences announced that its Phase 3 MINDSET clinical trial of its investigational drug intepirdine in patients with mild to moderate Alzheimer's disease (AD) who were receiving background donepezil therapy did not meet its co-primary efficacy endpoints. "While we are deeply disappointed by these trial results, we also are saddened for the millions of patients and families impacted by Alzheimer's disease. However, we believe that the fight against Alzheimer's and other important areas of unmet need in neurology is too important to be derailed by this setback," said David Hung, M.D., CEO of Axovant. Though disappointed, Hung says the company remains committed to advancing its pipeline, which includes a Phase 2b HEADWAY study of intepirdine, and nelotanserin, Axovant’s highly selective inverse agonist of the 5-HT2A receptor currently in Phase 2 development.
“I couldn’t get a job in biotech,” says David Hung, M.D.
Having completed medical school, a residency, two basic science research fellowships, and three clinical fellowships, Hung had spent his entire career in academia. So why was he even looking to leave? “I was in the third year of a fellowship when a patient of mine, a 28-year-old woman, died of metastatic breast cancer,” he explains. “This had a profound impact on me, and I decided right then and there I wasn’t going to spend the rest of my life practicing as a clinical oncologist armed with only the currently available technologies that couldn’t prevent the death of someone so young.”
But Hung had a problem. Despite being highly trained, because he lacked previous biopharmaceutical industry experience, no one seemed willing to give him an opportunity. “I applied to 35 biotech companies before someone finally took a chance on me.” That company was Chiron, an American multinational biotechnology firm based in Emeryville, CA. Then, just when he was getting his start, Hung encountered an additional piece of adversity. “It was 1996, and I was in my first week at Chiron when I got appendicitis and couldn’t go to work.” Being laid up, his boss suggested he put some thought into preparing for an upcoming Chiron scientific retreat, and the rest is, as they say, history.
He would go on to start Medivation, a company he eventually sold to Pfizer for $14.3 billion. But his career path, and its inherent challenges, wouldn’t stop there. In April of this year, he became CEO of Axovant Sciences, a clinical-stage biopharmaceutical company focused on treatments for dementia and related neurological disorders. Among those disorders is Alzheimer’s disease, a therapeutic area synonymous with drug failure. In fact, Hung had experienced failure in this area before. So why, this late in his career, would he join such a company? And why would he agree to invest $10 million of his own money into the business?
Those are exactly the kinds of questions I asked him when we sat down to talk at the 2017 BIO International Convention in San Diego. But first, we started at the beginning.
WADING IN AT CHIRON
When Hung was recuperating from appendicitis during his first week at Chiron, he had a big idea. He had been assigned to work on a tissue factor pathway inhibitor (TFPI), an anticoagulant Chiron was developing for sepsis. While on this project, he pondered why hemophiliacs bleed. That line of thinking eventually led him to raise the following question at the Chiron retreat: Instead of treating hemophilia with recombinant factor 8, or fresh frozen plasma (which has infectious risk), what if Chiron attempted to develop a small molecule treatment for hemophilia by inhibiting the inhibitor (i.e., TFPI)?
Bill Rutter, Ph.D., the founder of Chiron, happened to be in the audience and, afterward, asked Hung to come to his office. Rutter asked Hung what he would do if he were running Chiron. “I told him I would run it as a smaller, virtual organization and proposed setting up a side, virtual drug development organization with a goal of developing compounds faster, cheaper, and better than I believed could be done within Chiron.” Rutter, along with Lewis T. “Rusty” Williams, M.D., Ph.D., who was then the head of Chiron Technologies, decided to give Hung his shot, tapping him as the head of new projects and setting him up to operate virtually. “This was probably a little presumptuous, given the fact that I had no previous industry experience, but they believed in me, and I was given the freedom to pretty much do whatever I wanted,” he grins. “Every one of the programs we started in the new projects division hit their milestones, and a number went on to show significant signals in the clinic.” According to Hung, every year Chiron conducted a net present value (NPV) analysis of the programs in development. Three years after he started, more than 50 percent of the NPV of Chiron’s therapeutic programs came from the new projects division. Hung eventually proposed that Chiron spin him off as his own company, along with some seed capital. “I was all set to go, but then the company had a change in senior management.” The new CEO didn’t want to spin off the division, so Hung ended up leaving.
A STINT IN THE WORLD OF MEDICAL DEVICES
Hung’s next stop was at medical device company Windy Hill Technologies (later named Pro-Duct Health), which focused on early detection and diagnosis of breast cancer. “Considering a young patient dying from breast cancer is what prompted me to leave academia for industry, it almost seemed prophetic to return to this therapeutic area,” he states. Still, just as he had no previous experience in biopharma prior to Chiron, here he was again facing a new industry — medical devices. When asked about such a leap, he explains a philosophy he’s adhered to throughout his career. “When I think about how to create the best options for patients, I’m not wedded to any particular therapeutic approach or medical discipline,” he explains. “I just look at what it takes to develop something from which patients will really benefit.”
One of the most widely used early breast cancer detection tools is a mammogram, which can detect a tumor about one centimeter in diameter. According to Hung, the process of a tumor going from one cell to about a billion cells (the approximate number of cells it takes to make up a one centimeter- sized tumor) takes about 10 years. In other words, early detection by mammography is actually not very early. So Hung set out to come up with an earlier-detection tool.
“When a woman nurses a baby, the little holes in her nipple that milk comes out lead to a series of tubes,” he explains. “One hundred percent of all ductal breast cancers begin in the cell layer that lines those tubes.” Hung invented a microcatheter (about the thickness of three human hairs) that could be put into the nipple through the same holes that milk comes out of. Cells are washed out of the milk ducts (i.e., ductal lavage), and a slide is prepared and analyzed in a manner similar to a pap smear. In a clinical trial of 507 high-risk women, Hung and colleagues demonstrated that not only could they identify cancerous cells that could not be seen on a mammogram, but they could successfully identify precancerous cells. “We got very lucky, because the landmark breast cancer study, NSABP P1 [The National Surgical Adjuvant Breast and Bowel Project, Prevention-1], came out within a few years of our ductal-device study,” he says. “If you could identify precancerous lesions in women considered high risk for breast cancer, defined as women having a GAIL index of 1.7 percent or higher, and give them Tamoxifen, their chance of getting breast cancer was reduced by 86 percent.” At the time, Pro-Duct Heath had the only FDAapproved noninvasive way of finding those precancerous lesions in the breast, and in 2001, the company was acquired by Cytyc Corporation (today known as Hologic) for $167.5 million. “That was my first experience with an acquisition,” Hung shares. It wouldn’t be his last.
SURVIVING A HARD LESSON LEARNED
Following the acquisition of Pro-Duct, Hung took a year off to think about what he wanted to do next. “Even though I’m an oncologist, I decided Alzheimer’s disease was the most important affliction facing patients in society,” he shares. “The total cost of Alzheimer’srelated healthcare is more than double all of cancer, and by 2050 there are going to be more than 100 million people with Alzheimer’s disease.” In preparing to tackle Alzheimer’s, Hung spent the next two years reading as much as he could on the basic science and clinical literature of the disease. “The last thing I wanted to do was develop a company that would develop me-too drugs,” he explains. “So, I started Medivation in 2003, which was named because I wanted to focus on products that represented true medi-cal inno-vation, because the world doesn’t need more drugs, it needs better drugs.”
Based on his literature review, Hung concluded that Alzheimer’s and neurodegeneration might best be addressed with drugs targeting various aspects of mitochondrial pathology in neurons. “I looked at about 300 different technologies worldwide and stumbled across this drug from the Russian National Academy of Science [RNAS], Dimebon [pronounced dim-eh-bon],” he says. “I was intrigued by the molecule because the Russians had been testing it in rodents, and those that had been given Dimebon shortly after birth exhibited far less signs of aging when compared to the rodent control group of similar age [i.e., fewer cataracts, less balding, less greying, and less cachexia].” Seeing the Russian results, Hung theorized that perhaps Dimebon affected mitochondria and thus, in-licensed Dimebon to be Medivation’s first drug. “It had already been approved in Russia for use as an antihistamine, so we initially spent a lot of time characterizing its effects in neurons and put the drug into several clinical trials for Alzheimer’s patients.”
One of the first trials the company conducted was a sixmonth randomized, double-blinded, placebo-controlled Phase 2 clinical study of 183 patients with mild to moderate Alzheimer’s disease at 11 sites in Russia. It remains one of the most robustly positive trials ever conducted in Alzheimer’s. “Dimebon-treated patients showed statistically significant improvement over baseline on all five efficacy endpoints in this study (p < 0.05), so we were highly encouraged,” Hung shares. “The results were compelling enough that the FDA said they would accept this Phase 2 trial as the first of two pivotal studies for Alzheimer’s, and if we hit a second trial, we would get approval.” Unfortunately, the company was not able to reproduce the same results in its Phase 3 study. “We were crushed, as were all of our patients and families when the trial failed,” Hung admits. “We were reviled by the press, our investors weren’t happy, and in the first hour of trading after the announced failure we lost more than $1 billion in market cap.” And though Medivation ended up laying off about one quarter of the company, there was a silver lining. “The experience taught us a lot about what it means to fail as a team and the importance of continuing to work and remain galvanized toward a common mission,” he states. That perseverance was put to the test about a year and a half later when another product in Medivation’s pipeline, Xtandi (enzalutamide) for late-stage castration-resistant prostate cancer, received very positive results.
Xtandi went on to gain FDA approval in 2012, and Medivation eventually ended up being acquired by Pfizer in 2016 for $14.3 billion — one of the largest all-cash deals in biopharma history involving a founding CEO. Though Hung walked away from the deal with around $350 million, he decided not walk away from biopharma — or his desire to tackle Alzheimer’s disease.
ALZHEIMER’S DRUG DEVELOPMENT — AN ITCH IN NEED OF SCRATCHING
Last summer while Hung was at the 2016 U.S. Open men’s tennis final, he ran into Vivek Ramaswamy, the founder of Roivant Sciences (i.e., Axovant Sciences’ parent company). (See “What’s The Backbone Of Vivek Ramaswamy’s Success?” in our April issue.) The two men had known each other for at least 10 years, as Ramaswamy had been a junior analyst at QVT, one of Medivation’s biggest shareholders. Soon thereafter, Ramaswamy asked Hung to come run Axovant. “I had been so swamped with executing the Medivation acquisition that I really didn’t know a whole lot about the company,” Hung explains. But as he began to take a deeper look, he became intrigued. Remember, when he founded Medivation, its original goal was to develop a treatment for Alzheimer’s disease. Although he had success with Xtandi, his failure with Dimebon created an Alzheimer’s drug-development itch that had remained unscratched. “As I did my due diligence, I saw an interesting opportunity to try to get approval for a new Alzheimer’s drug,” he shares. “So I decided to sign on.”
Pursuit of a successful Alzheimer’s therapy is not for the faint of heart. Thus far, drug candidates for the disease have a 99.6 percent failure rate, and poor early-detection methods make clinical trials costly and difficult. Hung did not let such dismal statistics and previous failures discourage him from taking on the Axovant opportunity. In fact, when he signed on to become Axovant’s CEO, he even invested $10 million of his own money in the company (see sidebar — “Hung’s Philosophy When It Comes To Investors”). So why such enthusiasm for a company he barely knew? He says one of the key factors was Axovant’s lead candidate, Intepirdine, a cast-off compound (SB742457) 5-HT6 receptor antagonist acquired by Ramaswamy from GSK for a mere $5 million.
“Recent and notable Alzheimer’s drug-development failures, such as Lilly’s Solanezumab and Pfizer and Janssen’s partnership to develop Bapineuzumab, were therapeutic approaches targeting the same target, beta amyloid protein. I don’t put all Alzheimer’s therapeutic strategies in the same category of risk. If you look at the four drugs approved today for Alzheimer’s disease, three — Aricept (donepezil), Exelon (rivastigmine), and Razadyne (galantamine hydrobromide) — target cholinesterase, the enzyme that degrades acetylcholine.” Acetylcholine is an extremely well-validated target with 30 years of research and the approval of four agents. A fourth cholinesterase inhibitor, tacrine, the first drug approved by the FDA (1993) for Alzheimer’s disease, was taken off the market because of adverse events. “When you inhibit cholinesterase, you may reduce the degradation of acetylcholine, but it doesn’t put more acetylcholine in your synapse,” Hung explains. Axovant’s Intepirdine is an antagonist of the 5-HT6 serotonin receptor, a largely CNS-specific member of the serotonin receptor subfamily. “When you inhibit that receptor, you actually put more acetylcholine in your synapse.” Hung analogizes how Intepirdine works in treating Alzheimer’s as “putting more juice in your cup as opposed to making a leak in the cup smaller [which is what cholinesterase inhibitors do].” And while the Intepirdine Phase 2 data is strong, Hung is hopeful that the compound’s Phase 3 “MINDSET” trial (a 24-week, international, multicenter, double-blind, placebo-controlled clinical study, involving 1,315 patients with mild-to-moderate Alzheimer’s disease) will not only validate his belief, but result in the first new Alzheimer’s drug approved in 15 years. “I’m not saying this is not a high risk, as Alzheimer’s disease is extremely complex and multifactorial,” he concludes. “But some risks are worth taking.”
HUNG’S PHILOSOPHY WHEN IT COMES TO INVESTORS
David Hung ran Medivation for 13 years. When the company was acquired by Pfizer, he still owned more than 90 percent of the stock options ever granted. Some might wonder why? “I really believed in what I was doing and firmly believe in always putting my investors first, so they benefitted before I did,” says the company’s former CEO. Case in point: Dr. Hung founded Medivation in October 2003. During the life of the company he raised a total of only $440 million in public offerings. So when the company reached a market cap of more than $14 billion, Hung effectively provided Medivation investors with an ROI of nearly 21,000 percent! (That is not a typo.)
Hung is applying a similar approach in his new role as the CEO at Axovant. As if to punctuate his point, he jams his index finger onto the table making an audible thump, and says, “I put my own money — $10 million — in on the same terms as the last financing, as I want to make sure that I set the bar high enough for my own option-investing schedule. I want to create real value for my investors before I get rewarded.”
In deciding to sign on as Axovant Sciences’ CEO this past April, Hung had significant input into the structure of his compensation package, which is anything but a golden parachute. For example, the executive will get 6 million Axovant options in total. Two million options are tied to the stock price (NYSE: AXON) on December 29 of this year. Further, most of those options only vest if the stock increases by 1.5 times from December 29. Another 2 million options carry an exercise price of $15.13, most of which only vest if the stock hits $100 (nearly a $78/share increase from where it is presently trading) and the company’s lead Alzheimer’s candidate (Intepirdine) trial is successful, or $15 if the trial is a bust. The remaining 2 million options are tied to Axovant’s stock price prior to the announcement of Hung being named CEO (i.e., exercise price of $15.13). In other words, for Hung to reap significant financial rewards at Axovant, he must first deliver significant financial rewards to his investors.