Benzinga’s weekly Stock Wars matches up two leaders in a major industry sector with the goal of determining which company is the better investment.
This week, in tribute to Black History Month, the duel is between a pair of Black-owned companies in the biopharmaceutical sector: Axsome Therapeutics Inc. (NASDAQ:AXSM) and Global Blood Therapeutics Inc. (NASDAQ:GBT).
The Case For Axsome Therapeutics: This New York City-based company was founded in 2012 by the Haitian-born Dr. Herriot Tabuteau, who has served as its chairman and CEO since the company began. Tabuteau has a Bachelor of Arts in molecular biology and biochemistry from Wesleyan University and an M.D. from Yale University School of Medicine. He previously worked as an analyst for Goldman Sachs (NYSE:GS), where he specialized in healthcare analysis, and for HealthCor, a fund focused on healthcare and life sciences.
Axsome Therapeutics, which has been publicly-traded since 2015, focuses on treating disorders impacting the central nervous system including depression, chronic pain, narcolepsy, fibromyalgia and Alzheimer's disease. It has a pipeline of four differentiated clinical-stage therapies.
In its most recent development, Axsome Therapeutics reported in September it enrolled the first patient in a Phase 3, randomized, double-blind, placebo-controlled trial of its AXS-12 treatment for narcolepsy with topline results anticipated in the first half of 2023.
In October, it announced that its existing term loan facility agreement with Hercules Capital Inc. (NYSE:HTGC) was increased to $300 million with $100 million to be immediately available upon U.S. Food and Drug Administration (FDA) approval of its AXS-05 treatment therapy for major depressive disorder.
In its most recent earnings report, the third-quarter data published Nov. 8, Axsome Therapeutics reported a net loss of $34.9 million, or -93 cents per share, compared to a net loss of $22.9 million, or -61 cents per share, one year earlier. The company’s third-quarter R&D expenses of $13.2 million were lower than the $14.8 million from the comparable period in 2020 — this decline was attributed by the completion of several clinical trials. But its $20.2 million in general and administrative expenses was up from the $6.3 million in the previous year. That increase was credited to pre-commercial activities and personnel expense plus an increase in non-cash stock compensation expense.
Citing $114.6 million cash on hand plus the Hercules Capital loan facility commitment, the company stated it has sufficient funds to operate on the potential commercial launch into at least 2024 of two treatments: AXS-05 for major depressive disorder and AXS-07 for migraine.
“Our commercial launch preparations are essentially complete and we remain focused on ensuring timely and successful launches, assuming approvals,” said Tabuteau. “The rest of our rich pipeline continues to progress, highlighted by our ongoing Phase 3 ACCORD trial of AXS-05 in Alzheimer’s disease agitation, the recent initiation of our Phase 3 SYMPHONY trial of AXS-12 in narcolepsy, and the ongoing manufacturing work to support the planned NDA filing of AXS-14 for fibromyalgia. In addition, based on FDA Pre-IND meeting guidance, we plan to proceed to a Phase 2/3 trial of AXS-05 in smoking cessation and expect to provide timing on initiation of that trial next year.”
Axsome Therapeutics opened for trading on Wednesday at $28.78, closer to its 52-week low of $19.38 than to its 52-week high of $78.
Related Link: The complete Stock Wars series
The Case For Global Blood Therapeutics: This South San Francisco-based company was founded in 2011 with the focus of developing therapeutics for patients with sickle cell anemia. Dr. Ted W. Love joined GBT in 2014 as president and CEO, having formerly served as executive vice president for research and development and technical operations at Onyx Pharmaceuticals Inc. and president, CEO and chairman of Nuvelo Inc.
GBT, which became publicly-traded in 2015, announced last month that its Oxbryta (voxelotor) tablets for the treatment of sickle cell disease in children ages 4 to 11 were available through its specialty pharmacy partner network. The FDA approved the drug in December, having previously approved its use in patients ages 12 and older. In November, the company’s Oxbryta won the 2021 Prix Galien USA Award for Best Biotechnology Product. The 12-member award committee making the selection included five Nobel Laureates.
Dr. Ted W. Love
Last June, another GBT drug, Voxelotor, became the first sickle cell disease treatment to receive Receive Promising Innovative Medicine (PIM) Designation from the U.K. government. And last March, it entered into an agreement with Sanofi SA (NASDAQ:SNY) to exclusively in-license worldwide rights to two early-stage research programs in sickle cell disease.
In its most recent earnings report, the third-quarter data published on Nov. 4, GBT recorded $52 million in revenue, up from $36.8 million one year earlier, and a net loss of $70.9 million versus a net loss of $59.8 million in the previous year’s third quarter. Its basic and diluted net loss per common share was -$1.13, compared to -97 cents in the third quarter of 2020.
The company’s R&D total for the quarter was $50.5 million compared to $40.1 million one year before and its general and administrative costs of $67.9 million were up from $54.4 million 12 months earlier.
“Our third-quarter results reflect progress with our ongoing initiatives to drive Oxbryta awareness, adoption and access, and like others in our industry, this was partially offset by the impact of the Delta variant causing a surge in COVID-19 cases in key states,” said Love. “Importantly, we continued to grow the net number of patients on Oxbryta, and the fundamentals of our launch remain strong.”
GBT opened for trading on Wednesday at $29.22, closer to its 52-week low of $24.61 than its 52-week high of $52.
The Verdict: This duel might be something of a bit of a chalk-and-cheese comparison because GBT has a revenue stream and Axsome Therapeutics has yet to produce one cent of revenue. Also, GBT is primarily focused on a single disease whereas Axsome Therapeutics is casting its net wider with potential treatments for a number of conditions.
But with Axsome, the keyword is “potential.” Last August, the FDA was supposed to finish its review of the company’s AXS-05 as a treatment for depression. That didn’t happen and the agency has yet to offer a clue on when that will be concluded. The same month, Cowen analyst Joseph Thome reaffirmed his Outperform rating and $125 price target on the company’s stock, explaining the “additional time required by the FDA appears to be an incremental positive and we continue to be optimistic regarding a potential path toward approval for AXS-05 in depression based on the compelling clinical data and safety profile generated to date."
GBT has not been without hiccups. Its stock has been heading south since its third-quarter earnings report and claims it would use some of the net proceeds from a planned $300 million issue of convertible senior notes for “potential acquisitions, investments and strategic transactions” seems a tad fanciful. Its smallish revenue stream makes it a more likely candidate for corporate prey rather than predator.
At the moment, both companies are trading just slightly above their respective 52-week lows. For investors who can’t resist buying on the dip, both companies are at attractive prices. And, to be frank, it is difficult to go wrong with the biopharmaceutical sector. In that sense, this Stock Wars duel is an even match.
Photo: Arek Socha / Pixabay
