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Why Shares of Axsome Therapeutics Are Falling Today

By Jason Hawthorne - Jul 14, 2021 at 4:32PM

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The FDA took back a beneficial designation but management isn't changing its plans.

What happened

Shares of Axsome Therapeutics (AXSM 8.57%) are down more than 10% in late-afternoon trading after the Food and Drug Administration (FDA) pulled the breakthrough therapy designation of its AXS-12 drug.

So what

The drug -- designed to treat cataplexy, the sudden loss of muscle control in narcolepsy patients -- was originally granted the designation in August of last year. The label allows for the expedited review of a promising new medicine. The decision to rescind it was due to the approval of another drug from Harmony Biosciences (HRMY 0.27%) for the same condition.

A person sitting at a table in front of a laptop computer with their head down sleeping.

Image source: Getty Images.

Now what

Management said the action doesn't change any timelines associated with the drug. The breakthrough designation was specifically for cataplexy as a condition. AXS-12 already has orphan drug designation for the treatment of narcolepsy. The company plans to initiate a randomized, double-blind, placebo-controlled, parallel-group phase 3 study in the third quarter.

Shareholders will now look to August 22, the action date set by the FDA for a decision on AXS-05. That ruling will determine if the drug can be used to treat major depressive disorder. The company is also enrolling patients to determine its effectiveness in treating Alzheimer's-related agitation and for smoking cessation.

Jason Hawthorne has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Axsome Therapeutics, Inc. Stock Quote
Axsome Therapeutics, Inc.
AXSM
$43.44 (8.57%) $3.43
Harmony Biosciences Holdings, Inc. Stock Quote
Harmony Biosciences Holdings, Inc.
HRMY
$52.50 (0.27%) $0.14

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