What happened

Shares of Axsome Therapeutics (NASDAQ:AXSM) were skyrocketing 24.6% higher as of 10:08 a.m. EDT on Monday. The huge jump came after the biotech announced positive results from a late-stage clinical study evaluating AXS-05 in treating agitation in patients with Alzheimer's disease.

Axsome reported that AXS-05 met the study's primary endpoint of a statistically significant mean reduction in the Cohen Mansfield Agitation Inventory (CMAI) total score compared to placebo after five weeks. CMAI is a scale on which caregivers rate the frequency of agitation in patients with dementia. AXS-05 achieved a mean percentage reduction from baseline of 48% compared to a 38% reduction for placebo. Also, 73% of patients receiving AXS-05 achieved 30% or greater improvement from baseline versus 57% of patients on placebo to do so.

Hand holding blue cutout of a human head with a jigsaw puzzle-shaped hole and another hand holding a red jigsaw puzzle piece that fits the hole.

Image source: Getty Images.

So what

The bottom line of Axsome's clinical study update is that the chances for AXS-05 to win approval from the U.S. Food and Drug Administration (FDA) in treating Alzheimer's disease agitation now appear to be pretty good. Alzheimer's disease impacts around 6 million people in the U.S., with agitation reported in up to 70% of those patients. Currently, no drugs are approved by the FDA for the treatment of Alzheimer's disease agitation.

Axsome's latest results were welcome after the company announced disappointing news last month from another clinical study of AXS-05. The drug failed to meet the primary endpoint in a late-stage study targeting the treatment of treatment-resistant depression (TRD).

Now what

Detailed results from the clinical study of AXS-05 in treating Alzheimer's disease agitation will be presented at upcoming medical meetings and will be submitted for publication. Axsome plans to discuss the data with the FDA to pave the way for a likely regulatory filing.

In the meantime, the biotech company could have other positive catalysts on the way soon. Axsome expects to file for FDA approval of AXS-05 in treating major depressive disorder and for AXS-07 in treating migraine in the fourth quarter of 2020.