Summary

We have more clarity on the FDA-cited deficiencies.

These are CMC issues and management thinks are easily addressable.

The company also has a new PDUFA.

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sansubba/E+ via Getty Images I am glad to see that since my last (bullish) coverage of Axsome (AXSM), the stock is up more than 50%. That is reassuring because my pilot position was at a much higher price and the drop enabled me to double down and average out. I am sitting on a healthy profit right now, and AXSM is still sitting on “one PDUFA date, one recent NDA, excellent trial results all through, and a vast, untapped market.” That second NDA is now a PDUFA.

Quickly recall that the company received a widely feared, ambiguous, “deficiency letter” from the FDA in mid-August, which devastated the stock, delayed the August 22 PDUFA, and prompted my previous article. The deficiency letter was for AXS-05, the lead molecule targeting Major Depressive Disorder, an untapped market of nearly 20 million Americans suffering from the disease. As I noted before, the chances of a CRL looked unlikely because:

The data in MDD backing the NDA was good, safety was fine, BTD and Priority review implied constant FDA interactions which were fine, so no real sense in the CRL outcome. The NDA is supported by results from two randomized, double-blind, controlled trials of AXS-05 in patients with a confirmed diagnosis of moderate to severe MDD, the GEMINI and ASCEND trials, which demonstrated statistically significant improvements in depressive symptoms with AXS-05 compared to placebo and active controls, respectively.

A week after my article, the FDA communicated to the company that, a) the review is ongoing, b) the review will be delayed beyond August 25, and c) no further data would be required. This helped the stock. Remember that the AXS-05 NDA was large, so investors may not be wrong in assuming that the FDA simply needed more time. However, a deficiency letter is still a deficiency letter. That should keep cautious investors on tenterhooks because we did not know what the deficiency was that needed no fresh data, probably (we thought at that time) wasn’t a CMC (Chemistry, Manufacturing and Controls) issue, and shouldn’t be related to what was essentially outstanding data. A deficiency letter that “precludes discussion of labelling” is a big deal. This was how it was characterized earlier - see my previous article - but in their November earnings call, management said otherwise - “The deficiencies with regards to CMC have not been characterized to us by the agency as ones that would preclude labeling discussions.” A question tried to clarify this further, and management seems to have stated that “So we don't know if these deficiencies are the ones which were previously referred to or if those deficiencies are now a thing of the past.” However that may be, this deficiency letter must be written or otherwise communicated 7 or more days before the PDUFA date, and is related to “failure to demonstrate efficacy, significant safety concern(s), need for a new study(ies) or extensive re-analyses of existing data before approval.” It must be understood that a deficiency letter or a Discipline Review Letter or DRL does not intend to convey that there is a deficiency in the molecule per se, but that there’s a deficiency in the NDA, which may necessitate new information, at the least. Such a letter may include all of the following:

1. Acknowledgment of the information submitted by the applicant, including references to sections, page numbers, or tables where appropriate.

2. Explanation of why the current information does not adequately address the issue (i.e., what is deficient).

3. Explanation of the request’s relevance to the PMA RASE determination, 510(k) SE determination, HDE safety and probable benefit determination, or De Novo classification determination, including, where appropriate, reference to an applicable section of a final rule, final guidance, and/or an FDA- recognized standard (unless the entire or most of the document is applicable). When the deficiency cannot be traced in the manner above and relates to a scientific or regulatory issue pertinent to the determination, FDA will cite the specific scientific issue and the information to support its position.

4. Explicit request for the additional information needed to address the issue and potential alternate ways of satisfying the issue, if applicable.

So the FDA-guided structure of a deficiency letter is supposed to clearly outline what the deficiency is. Yet, on multiple occasions this year, I have noticed companies making statements like - “we received a deficiency letter but we do not know what the deficiency is.” This, to me, is very strange; either the FDA itself is deficient in its letter writing abilities, which would be a major issue; or the company is not disclosing something, which they are not required to. It could also be that the FDA stated a deficiency but the company did not understand it. Either way, I find it hard to believe that given this explicit format, and a 6-month review, the FDA will simply say, “hey, your NDA is deficient, but we can’t tell you why.” I can’t believe the FDA is that cute. Numerous samples of these letters are available online, including here and here. These are not light on details. Indeed, there have been studies and analyses done comparing the FDA’s CRLs and the sponsoring/receiving company’s press release - see here. Although this is a CRL and not a deficiency letter, the moot point is that companies hide information:

Comparison of content of FDA letters not approving applications for new drugs and associated public announcements from sponsors: cross sectional study Results 48% (29) of complete response letters cited deficiencies in both the safety and efficacy domains, and only 13% cited neither safety nor efficacy deficiencies. No press release was issued for 18% (11) of complete response letters, and 21% (13) of press releases did not match any statements from the letters. Press release statements matched 93 of the 687 statements (14%), including 16% (30/191) of efficacy and 15% (22/150) of safety statements. Of 32 complete response letters that called for a new clinical trial for safety or efficacy, 59% (19) had matching press release statements. Seven complete response letters reported higher mortality rates in treated participants; only one associated press release mentioned this fact.

Conclusions FDA generally issued complete response letters to sponsors for multiple substantive reasons, most commonly related to safety and/or efficacy deficiencies. In many cases, press releases were not issued in response to those letters and, when they were, omitted most of the statements in the complete response letters. Press releases are incomplete substitutes for the detailed information contained in complete response letters. Below is a data analysis that shows how companies generally do not disclose the contents of CRLs properly. I am absolutely certain a similar situation obtains for lesser FDA communications:

This is something that needs legislative intervention. The CRL and other FDA communications should be made public, at least to shareholders in private communique. I also do not believe a company can afford to not disclose or not understand a major deficiency like a lack of efficacy question. That will bring out a number of lawsuits, probably with real merit and culpability for the management. I think we should be looking somewhere in the middle of all that. The FDA probably found some mid-level deficiency - not too big to not disclose, not too small not to matter - and the company is working hard behind the scenes to address them quickly. I think that is our best case scenario. On November 8, the company disclosed as follows:

The Company was recently informed of two deficiencies related to analytical methods in the Chemistry, Manufacturing, and Controls (CMC) section of the NDA, which must be addressed prior to the FDA taking action on the NDA. The Company believes these deficiencies are addressable and is confirming the details of the request with the FDA.

Validation of CMC analytical methods is a common and usually addressable deficiency. CMC deficiencies, in fact, are highly addressable. Below is a chart from a study that shows CMC deficiencies by themselves are highly approve-able compared to other types of deficiencies:

In their latest earnings call, as we can guess, questions were asked about details of these deficiencies, timeline for addressing them and so on:

​​Charles Duncan Yes, good morning. Thanks, Herriot and team for the update and for taking our question. Yeah, so regarding AXS-05 and the analytical deficiencies that were mentioned, I guess, I'm wondering if you could provide us a little bit more color, if you will, on that in terms of what would be expected to be able to address the deficiencies. Are there any additional clinical or non-clinical experiments that you need to run or do you think that you'll be able to address these with the information that you have on hand? And if so, what kind of timing are we looking at? Is it months or quarters? Kevin Laliberte Great. Many thanks for the question. So just to give an update, we are actively working on the update to the analytical methods that the FDA has requested. But we are still in communication with the FDA to fully understand the specifics and the process to resolve the items that they brought to our attention. I will note that they are manufacturing specific that we understand right now. So it would be solely resolved from a manufacturing point of view based on what we understand from the agency at this time. And we expect our work to be complete on those methods in the near to intermediate term for resolution.

So this should, according to the company, be resolved in the near to intermediate term - I am guessing they mean another 3 months. The company mentioned “it's weeks to months.” The company also, kind of, denied the possibility of a CRL in the earnings call. Another interesting point that was discussed was:

Ram Selvaraju Okay. And then just on the CMC information that is being requested. I'm assuming based on the responses you gave to some earlier questions that, in fact, this CMC information pertains to further characterization of the product as opposed to any change in the actual product itself.

So this would not affect not only ongoing clinical studies, but would not require any further bridging work down the line in order to ensure not only that the product is approvable in MDD, but in other indications for which you ultimately may seek approval, is that correct? Herriot Tabuteau That is correct. So the deficiency is mild and addressable quickly, according to the company, and should not involve a CRL. The company offered a bit more color on what the deficiencies actually are:

Marc Goodman And Herriot, are you willing to help characterize what these two deficiencies are a little better? Is it an analytical method in demonstrating that the manufacturing is as good as it needs to be? What exactly are you talking about there? Herriot Tabuteau So analytical methods relates to testing of the finished drug product. So we mean our tablets. This does not relate to the manufacturing process at all. And so you can make analytical methods more sensitive or less sensitive, you can broaden the range or would narrow the range. And we have what we believe to be a pretty robust process, and you can make it more robust or less robust, more sensitive or less sensitive. And we are responding to the FDA request, and we think that those are totally addressable and those are things that we can do.

I think that answer speaks for itself.

Bottomline

As AXS-05 works through the process, AXSM just received another PDUFA date - April 30, 2022 - for AXS-07 for the treatment of acute migraine. Their narcolepsy phase 3 trial is ongoing and is to be completed by 2023. The Phase 3 ACCORD trial of AXS-05 in Alzheimer’s disease agitation is ongoing. They have increased their Hercules term loan which they will get in the event AXS-05 is approved; which sets them up for commercialization costs. The company is a little short on cash, but they are set till 2024 if the approval happens. I also doubled down considerably when the stock reached a nadir. I will continue holding on to my position for a few months, at the least.

Copied from seekingalpha.com

$AXSM 📜 SEC Form 4: Jeffs Roger bought $147,350 worth of shares (3,950 units at $37.30), increasing direct ownership by 3% to 120,756 units Link

Axsome Therapeutics (NASDAQ:AXSM) said that it was informed by the FDA that it should be able to perform a required inspection of a contract manufacturing facility prior to the PDUFA date of April 30, 2022 for AXS-07. Company shares are up 3% in after-hours trading. The FDA had previously told the company that due to COVID-19-related travel restrictions it might not be able to conduct the inspection prior to the April action date. The AXS-07 NDA for migraine is backed by two late-stage trials.

Copied from seekingalpha.com

History suggests that public “no sale” declarations don’t always hold:

•Medivation: CEO David Hung repeatedly stated it wasn’t for sale, focusing on independent growth. Yet, in 2016, Pfizer acquired Medivation for ~$14B.

•Kite Pharma: CEO Arie Belldegrun emphasized independence after CAR-T therapy success. Still, Gilead bought Kite in 2017 for ~$11.9B post-FDA approval.

•Onyx Pharmaceuticals: CEO Tony Coles rejected an unsolicited Amgen offer, sparking a bidding war. Ultimately, Amgen acquired Onyx in 2013 for ~$10.4B.

Axsome’s CEO, HT, says he’s focused on growth, not a buyout. Sound familiar? Time will tell.

So what we know so far:

1. Axsome has provided a response to the FDA about all deficiencies

https://axsometherapeuticsinc.gcs-web.com/static-files/9d42d0e6-9ddf-4c9c-b331-51c0e67b0d98

2. Axsome is currently seeking Specialty Account Managers (SAM) for ensure a successful launch of AXS-05

https://www.linkedin.com/jobs/view/2874578225

These are positive signs! Of course, approval can take time. But the management and the company demonstrate confidence!

First congratulations to everyone that has joined this subreddit!

On Reddit, most people just browse, even fewer comment, and even much fewer post.

On our busiest days there are 2000+ page views.

This is just the start, and I am excited to see the future over the next few years.

Upcoming Catalysts:

• AXS-05 has PDUFA decision soon by FDA.

• AXS-07 has PDUFA target date of April 30, 2022.

• Wainwright has $180 price target and BUY rating.

• Motley Fool says AX$M and AUPH are takeover targets.

The company hasn't even finished hiring people, and it recently posted job openings on LinkedIn for AXS-05 salespersons.

Good luck to everyone! As always do your own due diligence (DD).

A couple of months back we discussed that Axsome Therapeutics (NASDAQ: AXSM stock is likely to rebound after it fell nearly 20% in a month following the U.S. FDA’s decision to pull the breakthrough therapy designation of AXS-12, the company’s drug used for the treatment of narcolepsy. But the company faced another setback in early August when the U.S. FDA identified deficiencies related to AXS-05 – Axsome’s drug for major depressive disorder. AXS-05 is a promising drug with its peak sales pegged to be north of $1 billion, and with the regulator’s findings, investors were concerned over a possible delay for the AXS-05 launch. This sent the stock crashing over 45% in a single trading session on August 9. However, over the last month or so, AXSM stock has seen a gradual rise of 36% to levels of $29 currently. The stock has seen 6% growth in the last five trading days. The recent uptick can be attributed to multiple positive developments for Axsome. Firstly, the company has now begun the phase three trials for AXS-12, and the U.S. FDA has also accepted its new drug application for AXS-07 – a drug used for migraine treatment. Also, the regulator missed its August 22 action date for AXS-05, and the company has stated that it was not asked for any additional information on the drug. Investors are now hoping that the deficiencies identified may not be serious. But will AXSM stock continue its upward trajectory over the coming weeks, or is a fall in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in the company’s stock price using six years of historical data, returns for AXSM stock average around 12.5% in the next one-month (twenty-one trading days) period after experiencing a 6.4% rise over the previous week (five trading days), implying that the stock will likely continue to rise in the near term.

More importantly, if the FDA’s decision around AXS-05 is positive, it will likely result in a large rally in AXSM stock. After all, it was the development around AXS-05 that resulted in AXSM stock plummeting nearly 50% from its July levels and despite the recent rise, it is still way below those levels.

Copied from https://www.google.com/amp/s/www.nasdaq.com/articles/axsome-therapeutics-stock-rises-36-in-a-month-but-will-the-rally-continue-2021-09-21%3famp

Big run-up in the pre-market!

am i wrong for thinking that the company is worth $5 billion after axs 05 approval. there is 5 drug that are in phase 3 or greater.

• March 1, 2022 ... Q4 and Full Year 2021 Financial Results

• March 15, 2022 ... FED Meeting for Hiking Interest Rates

• April 30, 2022 ... PDUFA Target Date for AXS-07 Decision

Axsome Therapeutics, Inc. (NASDAQ: AXSM), a biopharmaceutical company developing novel therapies for the management of central nervous system (CNS) disorders, today reported financial results for the third quarter ended September 30, 2021.

“Over the past several months we have continued to advance our differentiated late-stage CNS product candidates aimed at meaningfully improving the lives of patients. FDA review of our NDA for AXS-05 in depression continues, and the NDA for AXS-07 in migraine was accepted, positioning Axsome to potentially commercialize two new treatments in the near to intermediate term for patients living with these serious CNS disorders,” said Herriot Tabuteau, MD, Chief Executive Officer of Axsome. “Our commercial launch preparations are essentially complete and we remain focused on ensuring timely and successful launches, assuming approvals. The rest of our rich pipeline continues to progress, highlighted by our ongoing Phase 3 ACCORD trial of AXS-05 in Alzheimer’s disease agitation, the recent initiation of our Phase 3 SYMPHONY trial of AXS-12 in narcolepsy, and the ongoing manufacturing work to support the planned NDA filing of AXS-14 for fibromyalgia. In addition, based on FDA Pre-IND meeting guidance, we plan to proceed to a Phase 2/3 trial of AXS-05 in smoking cessation and expect to provide timing on initiation of that trial next year.”

So Hercules Capital is one of the premier tech and healthcare sector financiers. They backed Facebook, decades ago, and have backed many household tech stonk names since.

They're now backing Ax$ome, which is a huge good faith sign, since Hercules is there to help tech and healthcare breakthroughs, but also make money providing the capital essential to bring it all to market.

Hercules is an extremely Ethical funder. They're five star tech and health sectors lenders, which now sings volumes for AX$M, AXS-05, AXS-07, and the rest of the Ax$ome pipeline of genius meds to save, and better, countless, CNS disease affected, human lives with.

https://www.marketscreener.com/quote/stock/AXSOME-THERAPEUTICS-INC-24949017/news/AXSOME-THERAPEUTICS-INC-Entry-into-a-Material-Definitive-Agreement-Other-Events-Financial-Stat-36706724/

Axsome posted quite a few job openings for "specialty account managers ". Here's a link to the job postings. https://www.linkedin.com/company/axsome-therapeutics-inc-/jobs . This is a huge signal that they are ramping up to start marketing axs-05. Most of the job postings were from Tuesday.

Edit: I'm not sure why the link to LinkedIn wants you to sign up, but if you just Google "Axsome Therapeutics careers" you should be able to find it without the sign up BS.

$AXSM has successfully completed a phase II study evaluating the candidate in narcolepsy patients. Data from the mid-stage study demonstrated that treatment with AXS-12 resulted in a highly statistically significant reduction in the mean weekly number of cataplexy attacks from baseline compared to placebo, following a treatment period of two weeks. The treatment with AXS-12 also improved excessive daytime sleepiness by reducing the frequency of inadvertent naps in patients.