AXSM Stock Clocks Best Day In About 4 Months On FDA Greenlight For Alzheimer’s Drug

• Auvelity is already approved for the treatment of major depressive disorder in adults.
• TD Cowen estimates a peak opportunity of $1 billion in ADA, though it adds, "this may be conservative given surveys."
• Morgan Stanley raised the firm's price target to $217 from $207 and kept an ‘Equal Weight’ rating on the shares.

Shares of Axsome Therapeutics, Inc. (AXSM) closed 13% higher on Thursday, marking its best day in about four months, after the company announced that the U.S. Food and Drug Administration approved its drug Auvelity for the treatment of agitation associated with dementia due to Alzheimer’s disease.

Auvelity was previously awarded the FDA Breakthrough Therapy designation for Alzheimer’s disease agitation and also priority review.

Alzheimer’s disease is the most common form of dementia, affecting more than 7 million Americans. According to Axsome estimates, agitation is reported in 74% of Alzheimer’s patients with symptoms ranging from pacing or restlessness to verbal and physical aggression.

Clinical Data For Auvelity

The FDA approval is based on data from two late-stage studies. In one of the late-stage studies, Auvelity was statistically superior to placebo in improving agitation symptoms, Axsome said. In the other trial, the patients who continued treatment with Auvelity experienced a statistically significantly longer time to relapse of agitation symptoms.

Auvelity is already approved for the treatment of major depressive disorder in adults. The drug has already been administered to more than 300,000 patients in clinical and real-world settings, Axsome said. The company is also studying the drug for smoking cessation.

Analysts Weigh In On AXSM

Morgan Stanley raised the firm's price target on Axsome Therapeutics to $217 from $207 and kept an ‘Equal Weight’ rating on the shares following Axsome announcing the on-time approval of Auvelity for the treatment of Alzheimer's Disease Agitation.

TD Cowen, meanwhile, noted that the label is "clean" with no black box warning for increased risk of death in elderly patients with dementia, differentiating it from the only other approved therapy for ADA, Otsuka’s Rexulti. The firm estimates a peak opportunity of $1 billion in ADA, though it adds "this may be conservative given surveys." TD has a ‘Buy’ rating and $215 price target on Axsome shares.

How Did AXSM Retail Traders React?

On Stocktwits, retail sentiment around AXSM stock stayed within the ‘extremely bullish’ territory over the past 24 hours, while message volume rose from ‘high’ to ‘extremely high’ levels.

A Stocktwits user expressed hopes for Axsome joining the ranks of big pharma companies like Merck.

Another user, however, dismissed the drug’s potential.

AXSM stock has gained 85% over the past 12 months. 

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