Axsome Therapeutics (AXSM) snagged a speedy review for its depression treatment on Monday, leading Axsome stock to gap higher.
Instead of the standard 10-month review period, the Food and Drug Administration will review Axsome’s drug, dubbed AXS-05, over the course of six months. That could put the drug on the market soon after the review date of Aug. 22.
“The news is in line with our expectations, but should still lead to significant relief rally in the shares as investors have been increasingly concerned about whether the application would get accepted, especially given some surprises we have seen from the FDA in recent weeks,” Mizuho Securities analyst Vamil Divan said in a report to clients.
In morning action on the stock market today, Axsome stock surged 13.8% near 60.20. That put shares at a one-month high.
Axsome Stock Jumps On Priority Review
Axsome’s med is a combination of two older drugs, dextromethorphan and bupropion, Divan said. It belongs to a class of drugs known as NMDA receptor antagonists.
“However, the company has combined the two products in a unique way into a fixed-dose combination that allows for the mechanism of the two components to work complementarily,” he said.
Divan sees peak sales approaching $2 billion, “given the size of the depression market and the need for new therapies, especially those with a rapid onset of action.”
Another Opportunity In Alzheimer’s
Also bullish for Axsome stock, the FDA granted the same drug a breakthrough therapy designation as a treatment for agitation associated with Alzheimer’s disease.
This is “another large market, but one where there are limited effective treatment options,” he said. “Success in Alzheimer’s disease agitation could add another $1 billion plus peak sales potential for AXS-05.”
Divan kept his buy rating and 118 price target on Axsome stock.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
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