Axsome Therapeutics Shakes Off Post-Earnings Tumble, With Data Barrage on the Way

Investors initially reacted harshly to news earlier this month that Axsome Therapeutics (AXSM -5.71%) had to delay the data readout for a late-stage study involving its lead drug candidate. It apparently took longer than expected to enroll a sufficient number of patients into a long-term safety database, which pushed the study's expected completion date from the end of 2019 to early 2020. But following their initial shock, investors quickly saw the opportunity in the plunging pharma stock, which ushered in a hasty recovery in the share price.

Even after taking the delay into account, Axsome Therapeutics expects to report data from two phase 3 trials and one phase 2 trial before the end of the year. Results from two additional phase 3 studies and one phase 2/3 trial are expected in the first half of next year. 

In total, the company should have results from three unique pipeline assets and six studies within the next seven months. Here's what investors need to know about the updated development timeline.

Image source: Getty Images.

Can the pipeline deliver success?

There wasn't much financial information for investors to pore over in the third-quarter 2019 report. The clinical-stage company didn't generate revenue, and burned through $28.8 million in cash from operations in the first nine months of 2019. It exited September with $43.6 million in cash, which means a future fundraising round is inevitable regardless of study outcomes.

Of course, Axsome Therapeutics hopes it can take advantage of positive results from ongoing clinical trials -- and the potential for a soaring stock price -- to raise cash in a more shareholder-friendly manner. That's not a bad plan given all of its upcoming shots on goal. Here's where the pipeline stands as of early November:

Data source: Press release.

Investors will find it a bit easier to organize all of the activity in the pipeline if they adopt the right mental framework. Here's how the opportunities break down by drug candidate and indication:

AXS-05 (depressive disorders): The lead drug candidate of Axsome Therapeutics could generate peak annual sales of at least $1 billion if it lives up to early results, which suggest it could be a safe, effective, and fast-acting oral treatment for depressive disorders. It received the U.S. Food and Drug Administration's (FDA) coveted Breakthrough Therapy designation in MDD. Pending successful results in the GEMINI study, the company expects to submit a new drug application (NDA) for the drug candidate in the second half of 2020. That would create a path to approval in TRD through a supplemental NDA (sNDA) once the STRIDE-1 study wraps up.

AXS-07: Axsome Therapeutics completed a vast survey of physicians in October to drum up awareness of the asset. The poll found that 85% of doctors identified efficacy as the most important metric for a new migraine treatment, noting that 62% of patients switch treatments due to ineffectiveness. An estimated 37% of doctors would prescribe AXS-07 if it proves superior to the placebo in the ongoing MOMENTUM trial, and 90% would recommend the asset if it proves superior to rizatriptan, a common migraine drug.

The company will host a conference call with key migraine experts on November 25 to position the drug candidate as its second-most important asset. Investors can expect discussion of the importance of the INTERCEPT study, which is designed to collect data on AXS-07 in real-world settings by making the drug candidate available to individuals so it can be administered at the first signs of a migraine. The company expects to file an NDA in the second half of 2020.

AXS-05 (Alzheimer's disease agitation): As of early November, approximately 70% of patients in the ADVANCE-1 study have been randomized into their respective cohorts. That puts the trial on pace for a data readout before the end of June 2020. 

AXS-12: Axsome Therapeutics recently completed enrollment for its phase 2 trial in narcolepsy, for which the drug candidate has been granted orphan drug status (intended to incentivize the development of treatments for rare diseases). The study is on pace to conclude by the end of 2019.

Image source: Getty Images.

An intriguing stock to watch

While the unexpected delay in the STRIDE-1 study in TRD involving AXS-05 isn't ideal, it isn't expected to affect the timing of regulatory filings. That's because the drug candidate earned Breakthrough Therapy designation in MDD, which means the NDA will be filed using mid- and late-stage data in that indication. When the results for TRD are available, they can be submitted as a supplemental filing for the drug candidate (companies only need to file an NDA once for each asset). That's different from what my understanding of the process was when I originally reported on the timing of these filings earlier.

As investors can clearly see, the delay isn't enough to derail the potential of a pipeline that's buzzing with activity. Investors can't get too carried away until positive results are in-hand, but the potential to treat depressive disorders and migraines with fast-acting oral drugs such as AXS-05 and AXS-07, respectively, is surely enough to keep Axsome Therapeutics at the top of your watchlist or in your portfolio leading into the data barrage expected before the end of 2019.