Axsome shares rocket up on a surprise win for late-stage Alzheimer’s agitation study — but this is no easy layup
Shares of Axsome Therapeutics $AXSM shot up Monday morning on the surprise news that its lead drug scored statistically significant results for Alzheimer’s agitation, a relatively green field in drug R&D, in what’s billed as a pivotal Phase II/III trial. But the company will have plenty of high-risk work to do before it can expect an FDA approval.
Coming off the ropes of a late-stage fail for AXS-05 in treatment-resistant depression, the biotech reports that their drug scored well against a placebo based on a caregiver-rated scale of Alzheimer’s patients’ behavior, which includes tracking episodes of screaming or hitting. At week 5 researchers tracked mean reductions from baseline of 15.4 points for AXS-05 and 11.5 points for placebo, giving them a p value of 0.010.
The drug, a combination of 2 therapies — dextromethorphan and bupropion — also beat out bupropion alone. And the drug achieved superiority at week 3, according to the company.
Analysts, meanwhile, have been primarily tracking this drug’s potential in major depressive disorder, where the company is lining up a near-term application with the FDA after reporting upbeat data in one of the toughest fields in R&D. That left expectations low as the biotech accelerated the study readout due to Covid-19 into Q2 from Q3.
Marc Goodman at SVB Leerink recently noted:
In fact, we don’t believe investors include anything for this indication, and with good data, we would assume the stock could be up $18 if investors assume $650M of added peak sales at 50% POS, which we think is very reasonable.
Actually, the initial response was much better than that, as Axsome stock gyrated up more than 40% on the news. This is an uncertain arena, though, with researchers often forced to stick with difficult endpoints and tough placebo responses as caregivers track responses.
Goodman and others like to point out that no other drug has been specifically approved for Alzheimer’s agitation, leaving this a big opportunity. But others have tried and failed to make the data stick, and this is an area where regulators will likely demand plenty of positive data.
Otsuka’s Avanir underscored just how difficult this could be with their program for AVP-786 — deudextromethorphan hydrobromide [d6-DM]/quinidine sulfate) — which first scored a win in the first Phase III and then flopped in the second last fall.