Axsome Therapeutics (AXSM) expects the Food and Drug Administration to reject its migraine treatment, causing AXSM stock to collapse on Monday.
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In a filing with the Securities and Exchange Commission, the biotech company said it still hasn’t resolved any chemistry, manufacturing and control issues that the FDA identified in a review of its AXS-07 migraine treatment. Now Axsome expects the FDA to reject the drug.
SVB Leerink analyst Marc Goodman expressed surprise at the plunge in the biotech stock in a note to clients. Investors are much more interested in Axsome’s efforts in depression and Alzheimer’s disease with its drug AXS-05, he said. Shares rose 25% last Tuesday after Axsome said it had completed FDA negotiations before approving the treatment.
“The focus has consistently been on AXS-05 for depression and management’s news on this compound has been increasingly positive given discussions of post-launch requirements and approval now appears much more likely in the second quarter,” he said. “We see this sell-off as a good buying opportunity.”
In today’s stock market, AXSM stock fell 22% to 30.50.
AXSM stock: A potential rival of Biohaven, AbbVie
Axsome said it believed it had resolved these issues during its back-and-forth with the FDA, Goodman said.
The company “is obviously disappointed that it’s likely to receive a[cancellation],” he added.
Nonetheless, Goodman kept an outperform rating on AXSM stock.
The drug would have been competitive Biohaven Pharma‘s (BHVN) Nurtec and AbbVie‘s (ABBV) Ubrelvy, which are acute migraine treatments. Sales estimates for AXS-07 this year are $11 million, said Vamil Divan, an analyst at Mizuho Securities. He reckons they may reach $375 million in 2030. In comparison, The Street expects Biohaven to bring in $930.9 million in Nurtec sales this year.
However, Divan notes that AXSM stock investors are more focused on Axsome’s depression efforts.
“While the news is obviously negative, we believe that overall commercial expectations for AXS-07 are much lower than for the company’s flagship candidate, AXS-05, which is in development for major depressive disorder and Alzheimer’s excitation,” he said in his note to clients.
Divan also has a Buy rating on AXSM stocks.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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