Axsome Therapeutics (AXSM.Q) announced today that its AXS-05 has met primary and key secondary endpoints in the MERIT (Mechanistic Evaluation of Response in TDR) Phase 2 trial. Additionally, the Company has released its Q2 2021 Financial Results and provided a business update.
“As part of the ongoing review of our NDA for AXS-05, the FDA recently notified us that they have identified deficiencies that preclude labeling discussions at this time. We are attempting to learn the nature of these deficiencies with the goal of addressing them, however, this development may lead to a delay in the potential approval of AXS-05. We will keep you informed as we learn more,” said Herriot Tabuteau, MD, Chief Executive Officer of Axsome.
When it comes to back-to-back press releases, its easy to miss the finer details. In the case of Axsome, many investors were left wondering why the Company’s share price tanked 40% today after receiving “positive” news. Although Axsome’s headlines painted a pretty picture, the Company briefly explained in its press release that the FDA had identified deficiencies in its AXS-05, thereby preventing the FDA from approving Axsome’s NDA. With this in mind, its clear to see why some investors may have overlooked this point. However, just because Axsome’s share price dropped significantly today does not mean the Company is a lost cause. Let’s talk about the good news.
Axsome Therapeutics is a biopharmaceutical company developing novel therapies for central nervous system (CNS) diseases that have limited treatment options. With that being said, AXS-05 represents the Company’s novel, oral, patent-protected, investigational NMDA receptor antagonist with multimodal activity under development for the treatment of major depressive disorder (MDD) and other CNS disorders. For context, MDD is a debilitating, chronic, biologically-based disorder characterized by poor mood, inability to feel pleasure, feelings of guilt and worthlessness, low energy, among other emotional and physical symptoms. In severe cases, this can result in suicide. According to the World Health Organization, an estimated 7% of U.S. adults experience MDD each year.
Getting to the point, the MERIT study was intended to evaluate AXS-05 compared to placebo in preventing the relapse of depressive symptoms in 44 patients with treatment resistant depression (TDR). Treatment resistant patients were defined as those experiencing ongoing symptoms of depression despite receiving treatment with two or more prior antidepressants during a major depressive episode. In summary, AXS-05 met the primary endpoint by substantially and statistically significantly delaying the time to relapse of depressive symptoms compared to placebo.
Looking forward, Axsome’s new drug application (NDA) for AXS-05 is under Priority Review by the FDA, with a Prescription Drug User Fee Act (PDUFA) target action date of August 22, 2021. Although Axsome’s NDA for AXS-05 has yet to be approved, it is worth noting that the FDA has granted AXS-05 Breakthrough Therapy designations for MDD and for Alzheimer’s disease (AD) agitation. Keep in mind, Breakthrough Therapy designation is only given to drugs that are intended to treat a serious condition and have provided preliminary clinical evidence demonstrating substantial improvement over available therapy.
Axsome’s Q2 2021 Financial Results
“…We successfully filed our NDA for AXS-07 for the acute treatment of migraine in the second quarter, and we remain on track to initiate the planned Phase 3 trial of AXS-12 for the treatment of narcolepsy this quarter. The buildout of our team and infrastructure is also continuing as we work towards our goal of delivering potentially life-changing medicines to people living with serious CNS conditions,” continued Herriot Tabuteau.
Axsome’s next press release is a long one, so bear with me as I try and condense it. According to Axsome’s Q2 2021 Financial Results, the Company had $141.2 of cash on June 30, 2021 compared to $183.9 million on December 31, 2021. This can largely be attributed to increased research and development (R&D) expenses associated with NDA filing costs and personnel expenses. In particular, R&D expenses grew to $14.5 million as of June 30, 2021 compared to $10.5 million year-over-year. However, Axsome believes the remaining committed capital from its $225 million term loan facility, will be sufficient to fund the Company’s upcoming operations.
So what are these upcoming operations? As previously mentioned, AXS-05 received a PDUFA target action date of August 22, 2021. Put simply, a PDUFA action date is essentially the date by which the FDA must respond to a NDA or Biologics License Application (BLA). For more details about PDUFA, check out this informative article. In addition to a PDUFA action date, Axsome expects to have a meeting with the FDA in Q3 2021 to discuss AXS-05 for the treatment of smoking cessation. Regarding the commercialization of AXS-05 for the treatment of MDD, Axsome hopes to receive approval from the FDA in Q4 2021.
It is also worth noting that Axsome has an extensive pipeline of products including AXS-07 and AXS-12, which are intended for the treatment of migraines and narcolepsy, respectively. In Q3 2021, Axsome expects to receive an NDA acceptance decision from the FDA for its AXS-07. During the same quarter, the Company plans to launch a Phase 3 trial of AXS-12.
With this in mind, there is plenty to look forward to in the future. Sure, Axsome may have taken a hit in the short term, but the Company’s long term potential looks quite promising. NDA approvals are hard to come by nowadays, however, AXS-05 has already received Breakthrough Therapy designation and Priority Review from the FDA. Moreover, a PDUFA action date for AXS-05 is right around the corner. Axsome also announced today that it has completed its Digital Centric Commercialization™ (DCC) platform and testing is currently underway. If successful, DCC will be able to optimize physician and patient engagements, enhance engagement quality, and increase the effectiveness of promotional efforts compared to traditional approaches. In other words, DCC will provide an optimized platform for the improved commercialization of Axsome’s medicines, including AXS-05 and AXS-07.
Axsome’s share price opened at $33.00, down from a previous close of $51.16. The Company’s shares are down -43.76% and are currently trading at $28.80 as of 12:56PM ET.