Axsome's long delayed depression drug is back up for label discussions at the FDA, triggering a big spike in the share price
Axsome’s on-and-off quest to obtain an FDA approval for their depression drug AXS-05 is back on again.
After the markets closed on Monday, the biotech issued a short, simple alert in an SEC filing saying the team had “received from the U.S. Food and Drug Administration (the “FDA”) proposed labeling for the Company’s AXS-05 product candidate with respect to its New Drug Application (the “NDA”) for AXS-05 for the treatment of major depressive disorder. The Company is reviewing the proposed labeling and will reply to the FDA to secure final labeling agreement.”
The filing triggered a frenzy among investors — most of whom have had a steady diet of bad biotech news to digest this year — sending Axsome’s stock $AXSM up 51% after the bell and pushing its market cap to the $1.44 billion mark.
That’s a polar shift from last summer when Axsome announced that the labeling process for their prospective blockbuster for major depressive disorder had been sidelined after regulators had identified “deficiencies” that had halted discussions about the label.
There’s no guarantee of success, of course, but regulators and developers generally hash out a drug label in the weeks before an approval. So the long-delayed drug now has a shot at a near-term success.
Axsome got the party for AXS-05 started again back in April when an earlier SEC filing noted that they had reached an agreement with the FDA on post-marketing conditions.
Axsome’s drug offers a combination of dextromethorphan and bupropion, something some analysts excitedly believe can earn over $1 billion a year. And the biotech has earned breakthrough titles at the FDA for major depression as well as Alzheimer’s agitation, where Lundbeck has now been making progress.
Marc Goodman at SVB Securities picked up on the filing in a note, saying:
The usual process is that the FDA and a company would start labeling negotiations about one month before the PDUFA date, but given there is no action date, it’s difficult to know the timing in this situation, but we will assume approval in about 1 month. Given the saga with this drug approval process, we believe that many investors are still somewhat hesitant on full approval, and thus we wouldn’t be surprised to see another significant jump in the stock on full approval.
Axsome has also been grappling with snags around its migraine drug AXS-07, which was rejected a few weeks ago on CMC issues.