Surprise Setback for AXS-07 in Migraine Presents Additional Pipeline Uncertainty
Surprise Setback for AXS-07 in Migraine Presents Additional Pipeline Uncertainty
Morgan Stanley / April 25, 2022
Axsome provided an update regarding the NDA for AXS-07 in migraine, for which the PDUFA date is 4/30/22. See the recent 8-K here, in which the company notes that a Complete Response Letter (CRL) is expected for AXS-07 due to CMC issues found by the FDA. While we believe that AXS-07 has consistently been a secondary focus to AXS-05 for most investors, the surprise setback for AXS-07 is likely to increase investor uncertainty regarding prospects for the AXS-05 NDA - particularly given the hurdle faced by both applications are CMC related. We expect the recent regulatory challenges to present the area of focus for Axsome's upcoming 1Q22 earnings call on 5/2/22, and expect updates regarding AXS-05 to now be the primary driver of shares in the near-term. Given the increased caution the AXS-07 update is likely to give the market regarding Axsome's pipeline, we believe that clear positive updates for AXS-05 (such as a near-term approval and/or an announcement that the company has entered labeling discussions with the FDA) would be needed to meaningfully inflect the stock.
We would expect significant pressure on AXSM following the update on AXS-07. We continue to remain on the sidelines with an EW rating, and note that our PT for AXSM is currently under review.