What happened

Shares of Axsome Therapeutics (AXSM -2.62%) fell nearly 15% today after the company reported results for the STRIDE-1 phase 3 study. The company's lead drug candidate, AXS-05, was pitted against an active comparator in treatment-resistant depression (TRD). It met key secondary endpoints, but did not achieve statistical significance on the primary endpoint. 

Despite the mixed results, Axsome Therapeutics is forging ahead with development in TRD. A second phase 3 trial is scheduled to begin in the third quarter of 2020. Meanwhile, the company is on track to submit a new drug application (NDA) for AXS-05 in major depressive disorder (MDD) before the end of this year.

As of 11:26 a.m. EDT, the pharma stock had settled to a 11.5% loss.

A pink arrow crashing through the bottom of a chart.

Image source: Getty Images.

So what

In the STRIDE-1 study, researchers compared AXS-05 to bupropion in individuals with TRD. The drug candidate is a combination of bupropion (105 mg) and dextromethorphan (45 mg), which researchers believe work synergistically with one another to treat depression; the head-to-head matchup to bupropion (150 mg) was designed to test that hypothesis. 

Axsome Therapeutics says AXS-05 met the key secondary endpoints of rapidly improving depressive symptoms at week one, week two, and overall compared to bupropion when measured using the Montgomery-Asberg Depression Rating Scale (MADRS). The drug candidate also achieved statistically significant improvements in cognitive function and anxiety compared to bupropion. 

However, AXS-05 did not meet the primary endpoint of achieving a statistically significant improvement in depressive symptoms at week six (the end of the study) compared to bupropion. The drug candidate did achieve an improvement at week six, but it was small and not statistically significant. 

Now what

Investors might be tempted to parse the results from the STRIDE-1 study and pick out only the indications that AXS-05 can treat TRD, but statistical significance is the gold standard for a reason. Now investors just have to wait for the next study in TRD, which won't produce results until 2021. Despite the setback in this study, Axsome Therapeutics appears well positioned to earn regulatory approval for AXS-05 in MDD and AXS-07 in migraine in 2021. That pipeline diversity should help to insulate the stock from today's sour news.