AXSM - Axsome: NDA Resubmission AXS-07 And Other Catalysts Make This A Must Watch

2023-06-14 16:21:43 ET

Summary

• Axsome Therapeutics, Inc. NDA resubmission of AXS-07 for treatment of patients with migraine expected 2nd half 2023 after FDA meeting determined that CMC issues are the only things that need to be addressed.
• It is expected that the global migraine drugs market will reach $10.86 billion by 2030.
• NDA submission of AXS-14 for the treatment of patients with fibromyalgia expected Q4 of 2023.
• It is expected that the global Fibromyalgia treatment market will surpass $4.07 million by 2030.

Axsome Therapeutics, Inc. (AXSM) is a good speculative biotech play to look into. The reason why I say that is because it has a large pipeline full of candidates. While most will highlight the potential with respect to the FDA approved Auvelity drug for the treatment of patients with major depressive disorder [MDD], this company is keen on long-term success.

Why do I say that? That's because Axsome has several other late-stage candidates in its pipeline. Not just speaking about several phase 3 studies in place, which it does have, but the fact that it is gearing up to submit/resubmit two regulatory applications in 2023. One regulatory application is an NDA resubmission of AXS-07 which is being developed for the treatment of patients with migraine. This regulatory resubmission is expected in the 2nd half of 2023.

Then, there is an NDA resubmission of AXS-14, which is being moved forward for the treatment of patients with fibromyalgia. This NDA submission is expected to take place in Q4 of 2023. I can take it even one step further than that, which is that there are many other catalysts for traders/investors to look forward to during this year in particular. There is a data readout from a phase 3 study using AXS-12 for the treatment of patients with narcolepsy, which is expected in Q2 of 2023. Secondly, you have data readout from a phase 3 trial using solriamfetol for the treatment of patients with ADHD expected in Q2 of 2023. Finally, you have the release of results from the phase 2/3 study using AXS-05 for smoking cessation, which are expected Q4 of 2023. With an NDA resubmission of AXS-07 for migraines expected in the 2nd half of 2023, plus several other catalysts on the way this year, these are the reasons why I believe that Axsome Therapeutics is a good speculative biotech to look into.

Second Chance For Approval Of Large Migraine Market

As I stated in the beginning above, there is a regulatory NDA resubmission of AXS-07 for the treatment of patients with migraine, which is expected in the 2nd half of 2023. The migraine market is a large one and this NDA resubmission is going to be huge for this biotech. How large of a market is it? Well, there are two reasons why I consider this to be the case. The first reason is that there are about over 37 million Americans who suffer from migraine according to the Centers for Disease Control. The second reason is because of the potential that exists to tap into this market. It is expected that the global migraine drugs market will reach $10.86 billion by 2030 . If Axsome can somehow get a foothold into this market, then I believe its value could rise considerably. It is never easy to obtain FDA approval, but my belief for the company to get AXS-07 over the finish line is because of what was the reason for receiving a complete response letter [CRL] . The FDA didn't have any issues with the safety or efficacy of the drug.

The reason cited in the CRL was because of chemistry, manufacturing and controls [CMC] issue. Why do I believe that this can be addressed? Typically, CMC issues are pretty easy to address. That is, the biotech meets with the FDA and then learns exactly what the FDA wants to see to approve the drug. The company had a Type A meeting with the FDA and after said meeting that it will resubmit its NDA of AXS-07 to the agency following the feedback it had received. All the FDA requested was to see new CMC information, along with stability data for the batches of AXS-07. In addition, there was also a request for additional clinical pharmacology data.

My feeling is that with these issues being addressed, it increases the odds of Axsome receiving FDA approval of AXS-07 for acute migraine. What's even better is that traders/investors won't have to wait log either. That's because the FDA says that an NDA resubmission of AXS-07 would be designated as a Class 2 resubmission. In essence, the review time this time around would only be 6 months instead of 12 months. My takeaway is that there is a good chance for this company to receive approval of this drug for this specific indication. It is simply because the FDA did not ask for any new safety/efficacy data.

Another NDA In 2023 Brings Added Value For Shareholders

Besides the NDA resubmission of AXS-07 for migraine in 2023 as noted directly above, there is additional shareholder value that could be expected during this year. That is, Axsome expects to submit an NDA of AXS-14 for the treatment of patients with fibromyalgia in Q4 of 2023. While still a ways off, this is another major catalyst that I believe could cause the stock to trade higher. Fibromyalgia is a chronic disorder where by pain and tenderness along with fatigue plagues the body. It is also said that those who have this disorder have trouble sleeping as well. There are several symptoms, which these patients experience which are as follows:

• Digestive issues
• Problems concentrating Numbness in arms
• Muscle and joints being stiff
• Pain throughout multiple parts of the body
• Fatigue.

This is another large market opportunity for Axsome Therapeutics should it get this AXS-14 to market for this specific indication. It is expected that the global Fibromyalgia treatment market will surpass $4.07 million by 2030 .

There is one downside to consider, which is that the company entered into a license agreement with Pfizer ( PFE ) back in January of 2020 to obtain AXS-14 and AXS-12 (being developed for narcolepsy). Under the terms of this agreement, Pfizer received 82,019 shares of Axsome's common stock valued at $8 million. In addition, Pfizer will be eligible for up to $323 million once certain regulatory and sales milestone are reached, along with tiered mid-single to low double-digit royalties on future sales for any approved products. Lastly, it would also have rights of first negotiation on any potential future strategic transactions involving AXS-12 and AXS-14.

Financials

According to the 10-Q SEC Filing , Axsome Therapeutics had cash and cash equivalents of $246.5 million as of March 31, 2023. The thing is that it will need to raise cash at least towards the end of 2023. Why do I make that claim? It is because in the 10-Q SEC Filing it believes that the cash on hand should be enough to fund its operations for at least the next 12 months. The reasoning behind this is that it expects commercialization costs of Sunosi and Auvelity to increase in the coming quarters, along with the need to fund the rest of its pipeline.

Speaking of commercialization, Axsome is in better shape than most other biotechs because it has already received regulatory approvals of Auvelity for the treatment of major depressive disorder in adults and Sunosi for the treatment of excessive daytime sleepiness in patients with narcolepsy or obstructive sleep apnea. Axsome generated net product sales of Auvelity of $15.7 million in Q1 of 2023. It generated net products sales of Sunosi of $12.9 million in Q1 of 2023.

My reasoning on why it may not need to raise cash right away is because in January of 2023 it amended its term loan facility agreement with Hercules Capital. In essence, it increased the size of the facility to $350 million reducing the interest rate and extending the maturity and interest-only period, while also accessing a new $55 million tranche. There is currently $200 million available for use under this term loan facility it can tap into.

Risks To Business

There are several risks that traders and investors should be aware of before investing in this biotech. The first risk to consider would be with respect to the AXS-07 clinical candidate which is being advanced for the treatment of patients with migraines. That's because even though the FDA agreed for an NDA resubmission of AXS-07 for migraines, there is no guarantee that this drug will be approved for this indication. Even though this remains a risk, I believe that there is a good chance for Axsome to turn things around here.

The reason why I state that is because the only issue that the agency had with the first NDA submission package of AXS-07 was the CMC portion of the application. No new safety or efficacy studies were required by the FDA, thus why I believe there is a good chance that Axsome will receive FDA approval of AXS-07 this second time around. The second risk to consider would be with respect to the NDA submission of AXS-14 for the treatment of patients with fibromyalgia, which is expected to happen in Q4 of 2023. First, there is no guarantee that this NDA submission will be accepted. Secondly, even if it accepted there is no guarantee that FDA approval will be given thereafter.

A third risk to consider would be with respect to several data readouts expected from several studies in 2023. In the coming weeks and months, it is expected that Axsome Therapeutics will release results from several studies and they are as follows:

• Results from Phase 3 study using AXS-12 for the treatment of patients with narcolepsy expected to be released Q2 of 2023
• Results from Phase 3 study using solriamfetol for the treatment of patients with ADHD expected in Q2 of 2023
• Results from phase 2/3 study using AXS-05 for smoking cessation expected in Q4 of 2023

While these are multiple catalysts which could boost the stock price, should the results turn out to be positive, they still remain a risk. That's because it is quite possible that one or more of these studies may fail to achieve the desired efficacy for further advancement.

A fourth and final risk to consider would be with respect to the financial position that Axsome is in. As I noted above, it believes that it would only have enough cash on hand to fund itself for at least the next 12 months. That means, it is quite possible that it could elect to raise cash on the back of a positive data readout from one of the studies noted directly above. In addition, it could also choose to raise cash if it does eventually receive FDA approval of AXS-07 for the treatment of patients with migraine.

Conclusion

The final conclusion is that Axsome Therapeutics, Inc. is a good speculative biotech to look into. That's because it already is commercializing two products, which are Sunosi for excessive daytime sleepiness due to narcolepsy or sleep apnea and Auvelity for the treatment of patients with major depressive disorder.

Not only that, but as I described above, it has several data readouts which are expected to be released in the coming weeks and months. Such data would come from AXS-12 for narcolepsy, solriamfetol for ADHD and AXS-05 for smoking cessation. Then, there is another chance at being able to possibly obtain FDA approval of AX7-07 for migraines as well. An NDA resubmission for this drug for the treatment of this patient population is expected in 2023 and from there the review period will only be 6 months.

Then, there is possibly an additional NDA in which traders and investors could benefit from. This would be an NDS submission of AXS-14 for the treatment of patients with fibromyalgia, which is expected to take place in Q4 of 2023. It is expected that the global Fibromyalgia treatment market will surpass $4.07 million by 2030. With an NDA resubmission of AXS-07 for migraines expected in the 2nd half of 2023, plus several other catalysts on the way this year, these are the reasons why I believe that Axsome Therapeutics, Inc. is a good speculative biotech to look into.

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