Axsome moves 'closer to judgement day' for stalled depression therapy

Axsome Therapeutics has agreed to a set of postmarketing conditions that the FDA proposed, which will help get its depression drug back on track after the agency identified deficiencies in the application last year.

The short and sweet update issued in a regulatory filing (PDF) Tuesday simply said that the company expects the FDA to act on the application for AXS-05 in the second quarter of 2022.

Axsome's shares rose sharply, opening the market up about 21% to $39.50, compared to a prior close of $36.86.

No details of the conditions were made public, leaving analysts and investors—who had been eagerly awaiting an update on the major depressive disorder application—wondering what Axsome agreed to. Even without the details, analysts from Mizuho Securities called the update an “incremental positive on the path towards the FDA finally getting comfortable approving AXS-05.” The therapy appears to be moving “closer to judgement day.”

The firm is optimistic that the FDA will approve the therapy, which was linked with improvements in depressive symptoms during phase 2 and 3 trials. The med is a combination of the active ingredient of GlaxoSmithKline’s Wellbutrin and a cough medicine.

Axsome could have a busy quarter ahead. In addition to potential action on AXS-05, the company is also awaiting an FDA decision on the migraine treatment AXS-07, which is due around April 30.

AXS-07 was delayed in December 2021 when the FDA halted domestic manufacturing facility inspections due to a wave of COVID-19 infections. Axsome was one of many companies notified that inspectors would not be able to examine facilities in time for a decision date.

And then there's the deal to buy the approved med Sunosi from Jazz Pharmaceuticals, which is expected to close at the end of this month, Mizuho noted. Axsome paid $53 million upfront and will pay royalties on the therapy, approved for improving wakefulness in adults with narcolepsy or obstructive sleep apnea.