Axsome faces delay for depression drug, hitting shares hard

The FDA was supposed to be delivering its verdict on Axsome Therapeutics' depression therapy AXS-05 in less than a fortnight – but instead has delivered the company a letter outlining deficiencies in its marketing application.

The problem for the company is that it doesn't yet know what those deficiencies are, and that uncertainty weighed heavily on its shares, which dropped by around 50% in the wake of the announcement.

AXS-05 – a fixed-dose combination of established drugs dextromethorphan and bupropion – is under a priority review by the FDA for major depressive disorder (MDD), based on the results of two clinical trials which revealed statistically significant improvements in symptoms compared to placebo or bupropion alone.

Dextromethorphan is an ingredient found in cough syrups, while bupropion is an established antidepressant that was originally developed by GlaxoSmithKline, which sold its as Wellbutrin.

On Axsome's second-quarter results call, chief executive Herriot Tabuteau said that the FDA letter received on 30 July indicated that the problems with the filing "preclude discussion of labelling and post-marketing requirements," adding that the company has been in communication with the regulator to try to learn more.

"The FDA has informed us that their review is ongoing, and they have no specific questions for the company at this time," he added, while acknowledging that it may well result in a delay to the review.

Tabuteau told investors that up until now the review appeared to be progressing as expected, and the company had responded to questions raised by the FDA during the review period as requested, receiving no indication before the letter of any problems with the file.

There has been a facility inspection carried out by the FDA at the contract manufacturer for the drug, but Axsome said it was unaware of any 'Form 483' issues – when inspectors see conditions they deem to be objectionable.

The scale of the share selloff reflects the reality that deficiency letters are often followed by a complete response letter turning down an application, which if received could lead to a lengthy delay for the programme.

Analysts at William Blair said approval is now unlikely, with the other possible outcomes a CRL or an extension to the action data, which they say is possible given the six-month review and large filing dossier.

They have pushed back their prediction for a launch date to the second quarter of 2023 from the fourth quarter of this year, and mow give the drug a 70% chance of approval in MDD.

On the plus side, the drug also just chalked up a positive phase 2 study in 44 patients with treatment-resistant depression (TRD), a follow-up indication, delaying the time to relapse of depressive symptoms compared to placebo.

GlobalData analyst Alessio Brunello said that AXS-05 is one of only a handful of drugs that offer rapid onset of action in TRD, and has the potential for blockbuster sales if approved for this type of depression.

At the moment the only approved therapy for TRD is Janssen's Spravato (esketamine), which is used only in a limited patient population, he added.

AXS-05 is also being developed for agitation associated with Alzheimer's disease, with enrolment in the phase 3 ACCORD trial ongoing and results due before the end of next year, as well as smoking cessation.