Axsome Therapeutics said Tuesday it agreed to the Food and Drug Administration's requirements for approving its depression drug, and AXSM stock rocketed.
With FDA negotiations behind it, Axsome is now another step closer to gaining approval for its major depressive disorder treatment, Mizuho Securities analyst Vamil Divan said. The company expects the FDA to make its decision on the drug, dubbed AXS-05, this quarter.
"While we wonder what the requirements/commitments will actually entail, we view today's update to be an increment positive on the path towards the FDA finally getting comfortable approving AXS-05," Divan said in a report to clients,
On today's stock market, AXSM stock soared 25.1% to close at 40.92.
AXSM Stock: Trio Of Updates
Axsome's treatment works by blocking a specific receptor in the brain. The company is also studying the impact of AXS-05 in patients with Alzheimer's disease and those who want to stop smoking.
The company has also made headlines recently for buying Sunosi, a narcolepsy treatment from Jazz Pharmaceuticals. Further, Mizuho's Divan notes the FDA is also likely to make a decision on approving Axsome's migraine treatment, AXS-07, before the end of the month.
"The trio of potential positive upcoming updates keeps us bullish on Axsome shares," he said.
Divan has a buy rating and 51 price target on AXSM stock.
Shares Under Recent Pressure
Shares of Axsome have been on a losing streak for most of April. After bounding to their highest point since August on April 5, AXSM stock has since closed in the red eight times.
On Monday, the stock fell below its 50-day moving average, according to MarketSmith.com. The move Tuesday helped shares retake both that line and their 200-day line.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
