Why Shares in Axovant Sciences Are Soaring 20% Higher Today

Source: Axovant Sciences

What: After reporting that it will host an investor conference to discuss its Alzheimer's disease drug RVT-101, shares in Axovant Sciences are jumping by more than 20% higher.

So what: Axovant Sciences plans to discuss RVT-101's potential with investors after it presents clinical data at a key Alzheimer's disease conference next week.

The company is slated to host its conference call with investors on July 22 beginning at 5:45 pm EST and during that call, investors could gain insight into Axovant's development timeline for RVT-101, as well as the company's updated thoughts regarding the drug's commercial potential.

Because Alzheimer's disease is notoriously tough to treat and few drugmakers have successfully developed new Alzheimer's therapies, investors are hopeful that management will offer up news suggesting that RVT-101 can ease Alzheimer's disease symptoms.

Now what: An estimated 5 million Americans suffer from Alzheimer's disease and aging baby boomers have industry watchers anticipating that as many as 13.8 million people will be diagnosed with the disease by 2050.

The surging prevalence of Alzheimer's disease and an absence of a cure means that there is a large commercial opportunity available to Axovant Sciences and its peers. However, investors may want to approach Axovant Sciences cautiously.

After acquiring RVT-101 from GlaxoSmithKline for $5 million, plus milestones and low double digit royalties last year,Roivant Sciences created Axovant Sciences to usher RVT-101 through clinical trials.

Axovant Sciences short track record and GlaxoSmithKline's willingness to accept an arguably small purchase price for a drug that could conceivably have blockbuster potential may indicate, at least in GlaxoSmithKline's view, that RVT-101's market potential is more muted than investors think. That view appears to be supported by the fact that GlaxoSmithKline sold RVT-101 after the drug had already failed to meet its primary endpoints during mid stage trials.

RVT-101's past struggles could mean that it's better to sit on the sidelines than to chase Axovant Sciences' shares higher; however, there's still a chance that RVT-101 can succeed as an adjunct therapy used to delay Alzheimer's disease progression in mild to moderate cases. To flush that potential out, Axovant Sciences has established a management team that includes the developers responsible for Aricept and Namenda -- two of the most widely used Alzheimer's disease therapies on the market.

Although I think a healthy dose of skepticism is warranted when it comes to Axovant Sciences' shares, the size of the addressable patient population makes Axovant Sciences a company worth following and for that reason I, for one, will be tuning in to listen to their investor webcast next week.

The article Why Shares in Axovant Sciences Are Soaring 20% Higher Today originally appeared on Fool.com.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capitals' clients may have positions in the companies mentioned. The Motley Fool recommends GlaxoSmithKline. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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