Axsome Therapeutics (AXSM) develops novel therapies for central nervous system (CNS) related disorders for which limited treatment options are available. The company’s portfolio of five CNS pipeline candidates —AXS-05, AXS-07, AXS-09, AXS-12, and AXS-14—are being developed for various CNS indications.
Outstanding results in treating clinical depression with minor side effects by AXS-05, effectiveness in relieving migraine headaches by AXS-07, and the success of AXS-12 in reducing the number of cataplexy attacks in most of the narcolepsy patients under review, are encouraging. This momentum demonstrates that the biopharma underdog is still running the race, and keeps me bullish on its prospects.
AXS-05 on Track to Bring in First Revenues for Axsome
Notably, Axsome does not have any approved product in its portfolio currently that generates revenues for the company. However, several studies are currently underway on the AXS-05. In March this year, the company filed for an FDA approval for AXS-05 to treat major depressive disorder (MDD). (See Axsome stock chart on TipRanks)
Meanwhile, AXS-05 has successfully concluded its Phase III ADVANCE (Addressing Dementia Via Agitation-Centered Evaluation) study for treating Alzheimer’s-related agitation. Moreover, in December of last year, Axsome initiated a second pivotal Phase III study on AXS-05, ACCORD (Assessing Clinical Outcomes in Alzheimer’s Disease Agitation), which is expected to support the NDA (New Drug Application) filing to the FDA. Top-line data from the ACCORD study is likely to be released in the second half of 2022.
Additionally, AXS-05 is under evaluation in the Phase II MERIT study to treat patients with treatment-resistant depression (TRD). It recently announced that the study is showing substantial preventive capabilities for the relapse of depressive symptoms in TRD patients.
An approval for AXS-05 will lend an impetus to the company’s growth, as it will enable Axsome to have its first marketed product and start generating revenues. This indicates a possible upward movement in share price in the near term.
Recent Update & Wall Street’s Take
On Monday, August 23, Axsome announced that the FDA has not been able to complete the review of AXS-05, and is still under investigation. The FDA was expected to submit a formal Complete Response Letter (CRL) on August 22. However, it revealed that the review is still ongoing and will take more time to complete.
This may be good news, given that earlier this month the FDA notified the company of certain “deficiencies” that were identified in their application for AXS-05. This suggests that the agency has just run out of time, given the Priority Review status of the application.
However, we cannot rule out the possibility that the FDA is still concerned about the deficiencies in the application. Nonetheless, this doesn’t seem to concern Mizuho analyst Vamil Divan, who reiterated a Buy rating on the stock, with a price target of $55.
He explained that Mizuho analysts “overall still see value in AXSM shares, even if the uncertainty around AXS-05 in MDD may lead to continued near-term volatility.”
The rest of Wall Street is, however, cautiously optimistic about Axsome, with a Moderate Buy based on 9 Buys, 1 Hold, and 1 Sell. The average Axsome price target of $96.67 implies 290% upside potential from current levels over the next 12 months.
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