What happened

Shares of Axsome Therapeutics (NASDAQ:AXSM) were jumping 13.8% as of 11:15 a.m. EDT on Friday. The big gain came after the drugmaker announced that the Food and Drug Administration granted a Breakthrough Therapy designation for its AXS-05 in treating Alzheimer's disease agitation.

So what

The FDA only gives Breakthrough Therapy designation when an experimental drug shows promise for significant improvement over already-approved therapies for a serious or life-threatening condition. Since there are no FDA-approved treatments for Alzheimer's disease agitation, this threshold was relatively easy for AXS-05 to meet after Axsome reported positive results from its phase 2/3 Advance-1 study.

Businessman holding blocks spelling FDA in his palm

Image source: Getty Images.

Receiving the designation is a big deal for Axsome. It could speed up the FDA's review process for AXS-05 in the Alzheimer's disease agitation indication.

This wasn't the first Breakthrough Therapy designation for the drug, though. Axsome previously announced that AXS-05 was awarded the designation for treating major depressive disorder (MDD).

Now what

There are several potential catalysts ahead for the biotech stock. Axsome plans to file for FDA approval of AXS-05 in treating MDD in the fourth quarter of 2020. It also expects to file for FDA approval of AXS-007 in treating migraine around the same time. In addition, the company plans to begin late-stage testing of AXS-12 in treating narcolepsy in the second half of this year.