What happened

Shares of the commercial-stage biotech Axsome Therapeutics (AXSM -2.56%) rose by a stately 17.2% through the first four days of trading this week, according to data from S&P Global Market Intelligence. The biotech's shares have been racing higher of late in response to the Food and Drug Administration's (FDA) approval for the major depressive disorder (MDD) drug Auvelity (formerly AXS-05) late last week.  

So what

Auvelity's regulatory process took well over a year to complete. As a direct result of the prolonged regulatory review, the stock was trading at a mere fraction of the drug's commercial potential at the time of its official approval last Friday. Investors were clearly taking the FDA's lengthy review as a sign that a Complete Response Letter (a rejection) was on the way. But with an approval now in hand, Wall Street appears to be making up for lost time, evinced by Axsome's sizable uptick this week.  

What's all the fuss about? Auvelity is widely expected to be a big seller as a rapid-onset option for patients with MDD. For instance, the pharma data analytics firm Globaldata came out with a note earlier this week saying that the drug ought to hit a whopping $1.3 billion in annual sales by 2029. To put this figure into the proper context, Axsome was being valued at well under $2 billion prior to Auvelity's approval.

Now what

Despite Axsome's surging share price this week, this mid-cap biotech stock could have a lot more room to run. The FDA approval still isn't priced in to the stock based on the large unmet need in MDD. Investors, in turn, might want to consider buying this growth stock soon.