AveXis Inc (AVXS) – The Next Biotech Blowup – Citron Research

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AveXis Inc (AVXS) – 12-Month Target: $9.00; 24-month target $5.00 from Citron Research and the stock is already tanking down  7% on the report. Read the full thing below.

Rarely in biotech do we see a situation where an investor can simply perform their own due diligence and be on the right side of the trade without needing to be a scientist. In the case of AveXis (NASDAQ:AVXS), all you need is a healthy dose of skepticism, willingness to do the research, and a bit of empathy to reveal that there’s nothing here beyond a glorified stock promotion. It will soon trade in the single digits.

AveXis Inc (AVXS)

The hopeful story of a cure for terminally ill babies is powerful enough to bring forth the worst of Wall Street’s greed, which has the power to sell this story to investors despite the absence of real clinical data. If it wasn’t for the horrendously warped way the US pharma market prices its drugs, AveXis could not even have completed its IPO.

The background of this story is exposed in an excellent piece published a month ago. Citron unhesitatingly recognizes good quality research and therefore credits Mako Research with a carefully done profile on why AveXis is nothing more but a stock promotion being orchestrated by highly questionable management.

We won’t bother repeating all their points, but for the foundation of the story we suggest readers start here:


Citron presents the bullet point summary of the Mako Story:

  • CEO and company founder both have deeply troubling backgrounds reflecting corporate misdeeds, DOJ indictments, fraud suits, bankruptcy and kickbacks
  • Drug’s principal investigator’s prior company imploded under fraud investigations and SEC-revoked registration, and forced by SEC to retract a recent study for another company, all omitted from his current bio
  • Ownership of IP rights to current drug is subject of a lawsuit, with potentially devastating consequences for AveXis; yet, undisclosed in IPO registration docs
  • Only efficacy data for its only drug is a highly flawed, non-blinded, subjectively-scored study — not executed to any reasonable scientific standard of proof
  • The single medical institution performing the study has a vested interest in AVXS stock
  • AveXis has no other drugs or gene-therapies in pipeline — if they acquire something else in the marketplace, they have to bid against everyone else
  • Tiny addressable market (estimated < 240 births per year) for SMA Type 1 babies
  • Superior drug from blue-chip-credentialed competitor is on track for imminent FDA approval and establishing EAP for eligible patients
  • Soon-to-be-approved competitor’s drug plus existing lawsuit over IP ownership with self-help group insures tremendously narrowed window of opportunity for future trials and ultimately obstructed market penetration for AveXis.

Citron will now add to that story by explaining how this stock will end. Investors won’t have long to wait either … the end comes sooner than later.

AveXis went public in February 2016 at $20. It immediately broke syndicate price as investors reflected obvious concerns about competition in the marketplace for drugs treating Spinal Muscular Atrophy (SMA) and the questionable practices of their study.


Yet the stock ran to $36 in May, a price point at which the company was thrilled to execute a fat follow-on offering.

The price run was fueled when AVXS was granted the FDA drug designation of “Breakthrough Therapy”, because SMA Type 1 is truly a life-and-death condition. However, this designation does not grant automatic validation of a drug candidate (see below). Then, with the market in a frenzy to find Sarepta “me-too” stories, the stock ran over $65, and now hovers around $50…

“How?”, You ask? Simple! The market went nuts on the run-up of false-comp Sarepta (SRPT), which is up 500% since January on a surprise, controversial and emotionally-driven FDA approval for a similarly rare indication (Duchenne Muscular Dystrophy), despite questionable efficacy data for Sarepta’s drug. So the market went looking for “me-too” phenomena stocks, and found this one.

Dare we Apply some Logic in an Illogical World?

Since the date of AveXis’s IPO at $20 a share in February 2016, they have not enrolled any new patients and have not delivered any clinical data that would compel the FDA to approve this experimental therapy. They continue to analyze data from the same subset of patients. This might be a different landscape if there were no alternative treatments available, but … in the intervening months:

Their main competitor (Nusinersen from Biogen and Ionis) is dominating the science behind a real treatment of treating Spinal Muscular Atrophy.

  • In April, Ionis and Biogen’s Nusinersen met all primary endpoints in a Phase 2 study, with no safety or tolerability concerns identified. http://ir.ionispharma.com/phoenix.zhtml?c=222170&p=irol-newsArticle&ID=2158750
  • Then just months later, in August, Ionis and Biogen’s study met its primary endpoint in an interim analysis of its Phase 3 trial for both survival and motor milestone responses:

Ionis and Biogen have plans to obtain FDA approval for Nusinersen in Q1 2017.

“The companies now plan to file for marketing approval with regulatory authorities in the next few months and are working to open an expanded access program (EAP) this Autumn, to patients with infantile onset SMA (consistent with Type 1) prior to potential regulatory approval. ”


Meanwhile, AveXis stock is over twice the price of its initial offering despite shareholders biggest risk having become a reality: Nusinersen works, safely and effectively. And will most likely earn FDA and European approval.

Article by Citron Research

See the full report below.

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