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On Tuesday, Axsome Therapeutics (NASDAQ:AXSM), a $5.4 billion market cap pharmaceutical company with impressive 91% gross profit margins, received a Refusal to File (RTF) letter from the U.S. Food and Drug Administration (FDA) regarding its New Drug Application for AXS-14, intended for fibromyalgia management. According to InvestingPro data, the company has demonstrated strong revenue growth of 72% over the last twelve months, despite operating at a loss. The FDA determined the application incomplete for a substantive review, pointing out that one of the two placebo-controlled trials included in the submission did not meet the agency’s standards due to its primary endpoint being set at eight weeks and the use of a flexible-dose paradigm.
Despite this setback, the FDA acknowledged the adequacy of the first trial, which had a 12-week endpoint and a fixed-dose approach. Both trials met their primary endpoints, and importantly, the FDA did not express concerns about the trial results themselves. In response to the FDA’s feedback, Axsome plans to initiate an additional controlled trial in the fourth quarter of 2025, which will align with the FDA’s requirements, featuring a fixed-dose paradigm and a 12-week primary endpoint.
Analysts at H.C. Wainwright, led by Raghuram Selvaraju, view the FDA’s feedback as constructive, providing Axsome with a clear path towards U.S. registration of AXS-14. The firm has reiterated its Buy rating and a price target of $180.00 for Axsome stock, emphasizing that the delay in AXS-14’s market entry timeline does not affect their valuation, as contributions from this asset were not factored into their forecasts. InvestingPro analysis indicates the stock is currently slightly undervalued, with analyst targets ranging from $146 to $210, reflecting strong confidence in the company’s potential. Want deeper insights? InvestingPro offers exclusive access to detailed financial health scores and 8 additional ProTips for AXSM.
The RTF letter is a formal step in the FDA’s review process, indicating that the agency requires additional information or adjustments before it can fully evaluate a new drug application. Axsome’s commitment to conducting another trial demonstrates its dedication to meeting the FDA’s standards and advancing AXS-14 towards potential approval. The company’s stock has shown resilience with a 29.85% year-to-date return, and maintains a healthy current ratio of 2.03, suggesting strong short-term liquidity to fund its development programs.
In other recent news, Axsome Therapeutics has encountered a significant development as the U.S. Food and Drug Administration (FDA) issued a Refusal to File (RTF) letter for their New Drug Application (NDA) for AXS-14, intended for fibromyalgia management. The FDA’s decision was based on the NDA’s lack of completeness, particularly concerning the design of one of the pivotal trials. In response, Axsome plans to initiate an additional trial in the fourth quarter of 2025, aligning with the FDA’s recommendations for a 12-week primary endpoint and a fixed-dose paradigm. Despite this setback, Oppenheimer maintained an Outperform rating on Axsome’s stock, slightly adjusting the price target to $183, reflecting a lower probability of success for AXS-14.
Additionally, Axsome has reached a settlement agreement with Hetero Labs Ltd. regarding patent litigation over the branded product SUNOSI. This settlement allows Hetero to sell a generic version of SUNOSI starting in 2040, pending FDA approval and other conditions. H.C. Wainwright analysts reiterated a Buy rating on Axsome’s stock, maintaining a price target of $180, expressing confidence that no generic version will enter the U.S. market until at least 2040. Meanwhile, Oppenheimer analysts have also initiated coverage on Axsome with an Outperform rating, highlighting the company’s accelerating revenue growth and strategic positioning in the biopharmaceutical industry. Axsome’s CEO, Herriot Tabuteau, expressed the company’s commitment to addressing the FDA’s concerns and advancing the development of AXS-14.
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