Axsome: A Biotech With Potential Approval Of Several Drugs In Coming Years – Seeking Alpha
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Axsome Therapeutics (NASDAQ:AXSM) is a great speculative biotech to look into. Despite a major issue with the FDA for its New Drug Application (NDA) of AXS-05 for the treatment of patients with major depressive disorder (MDD), I think that there is potential for a recovery. What it boils down to really is the ability to correct the Complete Response Letter (CRL) that the company had received back in August of 2021. I think it can be done, because since the CRL was issued, the main problem that the FDA had with not approving the drug is the Chemistry, Controls, and Manufacturing (CMC) issue that was noted. Having said that, such an issue can typically be fixed quite easily. If it was the need to run another trial or other issue noted by the FDA, then I would say it would not be possible for a recovery so quickly. One item to note is that the FDA didn’t state any other deficiency in the CRL, but that doesn’t mean that it can’t raise another issue after the fact. Setting this aside, Axsome is already pushing forward with filing an NDA for AXS-14 for the treatment of patients with Fibromyalgia. The NDA is not expected to be filed until 2023, but it has already achieved the primary endpoint and secondary endpoints for a phase 2 and a phase 3 study. Lastly, there is another catalyst that is rapidly approaching as well, which is AXS-07 for the treatment of patients with migraine. A PDUFA date for the possible FDA approval of AXS-07 for the treatment of this patient population has been set for April 30, 2022. With several shots on goal for potential approval, plus a pipeline to spread out risk, these reasons are why I believe it is a great speculative biotech to look into.
The first and most important drug in Axsome’s pipeline would be AXS-05, which is being developed for the treatment of patients with major depressive disorder. Major Depressive Disorder (MDD) occurs when there is a persistence of intense feelings of sadness for a long period of time. This might be indicative of a mood disorder such as MDD. Believe it or not, but it occurs in many people in the United States alone. Consider that about 7.8% of adults In the United States have experienced a major depressive episode in 2019. It is estimated that the major depressive disorder (MDD) market is expected to grow to $7.87 billion by 2029 across 8 major markets. Patients with MDD can experience several symptoms as well and the are:
The thing is that Axsome Therapeutics fell into a major problem with its NDA for AXS-05 in MDD. That’s because as I noted at the beginning, the FDA ultimately gave it a complete response letter (CRL) for AXS-05 for the treatment of this patient population. It was inevitable anyways, because the company had gotten notice that its review would be not be completed by the August 22, 2021 date. If this is the case, then why am I optimistic for a possible recovery for this indication? It is because the FDA stated in the CRL the major issues dealt with chemistry, manufacturing, controls (CMC) and that was it. Only if the CRL had stated that there were issues with respect to one of the two studies done, then I would be concerned. However, based on the notion that the only current standing issue for the time being is CMC issues noted in the CRL, I believe that they are easily addressable. AXS-05 is currently under review by the FDA. Axsome has already submitted a response to the FDA about two disclosed deficiencies relating to analytic methods in the Chemistry, Manufacturing, and Controls (CMC) section of the NDA. So far, the FDA has acknowledged the response was received. The good news here is that the FDA has not brought up any new issues relating to AXS-05 in MDD. Again, there is still a small risk that while the FDA is conducting its review it may find another problem. Therefore, I wouldn’t say this is a slam dunk recovery, but if the CMC issues were actually addressed, then I see the biotech obtaining FDA approval for AXS-05 in MDD. If the drug is approved, then a commercial launch would be coming thereafter.
The next program to go over involves the use of AXS-07, which is being developed for the treatment of patients with migraine. Matter of fact, there is a specific catalyst opportunity that investors have to look forward to. This involves the PDUFA date set for April 30, 2022 for AXS-07. If Axsome achieves a successful review of this drug for this indication, then that would be huge for the company as well. In my opinion, even if AXS-05 falters, I would still claim that this company is a good speculative biotech to buy. Why is that? That’s because of the upcoming PDUFA of AXS-07 for migraine. Consider that over 37 million Americans suffer from migraine. A migraine is a recurring headache. It can range from being light or severe. The main issue associated with it is that you have severe pain on one side of your head. In addition, it can also be associated with many symptoms as well, which are:
It is estimated that the global migraine drugs market could reach 5.63 billion by 2027. This is also a huge market opportunity for the company to go after as well.
The reason why the filing of the NDA for AXS-07 for the treatment of patients with acute migraine occurred was because of positive results from the phase 3 INTERCEPT study. This study recruited a total of 302 patients who were randomized 1:1 to receive either AXS-07 or placebo. There were two specific endpoints that were set out for this particular study. The two endpoints of the study are as follows:
It was shown that AXS-07 had achieved statistical significance compared to placebo on both of these co-primary endpoints. When it came to freedom from pain it was noted that patients taking drug achieved an improvement of 16.3% which was statistically significant with a p-value of p=0.002. When it came to the other co-primary endpoint of freedom from most bothersome symptom, those who took AXS-07 achieved an improvement of 43.9% versus only 26.7% of those who only took placebo. This was achieved with a statistically significant p-value of p=0.003. The thing is that positive results weren’t only obtained in this phase 3 INTERCEPT study, it was also achieved in the late-stage MOMENTUM study as well.
AXS-14 is another drug in Axsome’s pipeline which I believe can establish value for shareholders. That’s because there is a goal of submitting a New Drug Application (NDA) to the FDA of AXS-14 for the treatment of patients with Fibromyalgia in 2023. If all goes well, that would put possible FDA approval of this drug for this patient population. Fibromyalgia is a type of disorder where a patient experiences fatigue and has altered sleep patterns. It is also a large market opportunity for Axsome to go after as well. That’s because the global Fibromyalgia treatment market is estimated to surpass $3.60 billion by 2026. There are other issues that they can experience as well such as memory loss and a mood change. These are a lot of issues for this one particular disorder. Abnormal pain perception is another problem that these patients experience as well. The NDA filing of AXS-14 in Q4 of 2022 will be possible because of one phase 3 study and another phase 2 study. The bottom-line is that both of the studies ended up being successful, in that all endpoints were met. That’s the key here is that Fibromyalgia patients taking AXS-14 were able to see statistically significant improvements in several measures. This is proven by both studies, but the late-stage study had recruited much more patients compared to the phase 2 study. The phase 3 stud recruited a total of 1,122 patients with Fibromyalgia were given either AXS-14 or placebo for a total of 14 weeks. The study met on both co-primary endpoints, which were weekly mean pain score and Fibromyalgia Impact Questionnaire (FIQ) total score. For example, on one of the co-primary endpoints of weekly pain score, statistical significance was achieved in favor of AXS-14 in all doses as follows:
This is on just one of the endpoints of the study. Statistical significance was achieved in several of the other endpoints such as: FIQ, Patient’s Global Impression of Change (PGI-C) scale and Global Fatigue Index. Based on this data, the company is in great shape to file an NDA for AXS-14 in 2023.
According to the 10-K SEC Filing, Axsome Therapeutics had $86.5 million of cash as of December 31, 2021. The thing is that in February of 2022 it accessed its at-the-market (ATM) equity facility and raised about $20 million in gross proceeds. This brought the total year-end 2021 cash of $105.9 million. It should be good for now and that’s especially true because of a Loan Agreement it had entered with Hercules in 2020. At that time, it enacted the term loan for an aggregate amount of $225 million. In October 2021, it chose to amend the loan agreement for up to $300 million and now has a maturity date of $300 million. Based on the current cash on hand, plus the Hercules term loan agreement, it believes that it has enough cash on hand to fund its operations into 2024. It has already taken into account on whether or not it receives FDA approval for either AXS-07 and/or AXS-14.
There are many risks that are associated with Axsome Therapeutics that many investors should be aware of. The first risk involves the ongoing NDA of AXS-05, which is being developed for the treatment of patients with major depressive disorder (MDD). There is no guarantee that the FDA will ultimately approve AXS-05 for this indication. I don’t believe it will be rejected again, but that highly depends on whether or not the CMC responses to the FDA were adequate enough to satisfy it. The second risk involves the ongoing review of AXS-07 for the treatment of patients with migraines. The FDA is expected to make its decision by April 30, 2022. There is no assurance that the agency will approve this drug either. Lastly, as it relates to AXS-14 for the treatment of patients with Fibromyalgia, that NDA is not expected for quite some time. Matter of fact, Axsome doesn’t expect to file the NDA for AXS-14 until 2023. FDA approvals are never guaranteed, so that in the off chance the stock trades lower on further delay for AXS-05 for example, I believe it should eventually recover with the many other programs it has in the pipeline.
The final conclusion is that Axsome Therapeutics is a great speculative biotech to buy. The reason why I make this claim is because it has several shots on goal for possible FDA approval. It has the ongoing review of AXS-07 for the treatment of patients with migraine with a PDUFA date of April 30, 2022 , the ongoing review of AXS-05 for MDD and the expected filing of AXS-14 for the treatment of patients with Fibromyalgia. Not only that, but there are several other catalysts that investors may have to look forward to as well. There is going to be the release of results from the phase 3 SYMPHONY study using AXS-12 for the treatment of patients with narcolepsy. This data is expected to be released in the 1st half of 2023. Then, you also have the release of results from the phase 3 ACCORD study, which is using AXS-05 for the treatment of patients with Alzheimer’s disease agitation. Top-line results from this study are expected in the 1st half of 2023. With the potential for so many possible FDA approvals in the coming years, plus several other data readouts expected as well, these are the reasons why I believe that Axsome is a great speculative biotech to look at.
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