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On Wednesday, Mizuho (NYSE:MFG) Securities demonstrated confidence in Axsome Therapeutics (NASDAQ:AXSM), a $5.87 billion market cap biotech company, by increasing the company’s price target from $212.00 to $216.00, while maintaining an Outperform rating on the stock. According to InvestingPro data, the stock appears undervalued based on its Fair Value model. The decision came after Axsome announced positive top-line results from their Phase 3 FOCUS study for solriamfetol in treating Attention Deficit Hyperactivity Disorder (ADHD).
Despite the encouraging study outcomes, Axsome shares experienced a 7% decline on Tuesday, which was a steeper drop compared to the 2% fall observed in the XBI, the SPDR S&P Biotech ETF. Mizuho analysts expressed that the market’s reaction seemed misplaced given the positive data.
The research firm’s optimism is partly due to Axsome’s upcoming standard pediatric study, which is a necessary step for gaining FDA approval. Analysts at Mizuho are bullish on the potential of solriamfetol as a novel non-stimulant-based treatment option for ADHD, a market with a significant need for new therapies.
Mizuho’s increased price target reflects an adjustment in their probability of success assumption for solriamfetol, raising it to 75% from the previous 50%. The new target of $216.00 is now the highest on Wall Street for Axsome shares. The firm reiterated its Outperform rating, citing Axsome as one of the top growth narratives within their coverage universe.
In other recent news, Axsome Therapeutics announced that its Phase III FOCUS trial for solriamfetol in adults with ADHD met its primary and key secondary endpoints. The trial demonstrated a statistically significant improvement in ADHD symptoms with the 150 mg dose, achieving a 45% mean reduction from baseline, while the 300 mg dose did not show statistical significance. The study involved 516 adults and reported that the treatment was well tolerated with no serious adverse events. Guggenheim analysts maintained a Buy rating on Axsome shares with a $195 price target, expressing confidence in the drug’s potential despite mixed results. They emphasized that improvements were seen as early as the first week of treatment. Meanwhile, TD Cowen analyst Joseph Thome noted the lack of dose response but found the 150 mg dose’s benefit encouraging. Axsome’s CEO expressed optimism about solriamfetol’s potential and plans to initiate a pediatric trial later this year. Additionally, Cantor Fitzgerald’s report on the biotech sector highlights potential opportunities for revenue-generating companies, despite recent market challenges.
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