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Axsome (AXSM) - >>> Why This IBD 50 Stock Stumbled After Its Rival Posted A 15% Gain


Investor's Business Daily

ALLISON GATLIN0

12/03/2019


https://www.investors.com/news/technology/narcolepsy-treatment-why-jazz-stock-toppled-axome-test-results/?src=A00444A&refcode=aflGoogleNews


Jazz stock dipped Tuesday after Axsome Therapeutics (AXSM) unveiled promising test results for a rival narcolepsy treatment.

On the stock market today, shares of Jazz Pharmaceuticals (JAZZ) dropped 2.6%, to 146.45, as Axsome stock surged 15.1%, to 45.61. Jazz stock has a Composite Rating of 98 out of a best-possible 99, putting its growth metrics in the top 2% of all stocks. Jazz stock is also No. 35 on the IBD 50.

Axsome tested its narcolepsy treatment, called AXS-12, in patients with cataplexy. The latter is an uncontrollable muscle weakness of paralysis bought on by a strong emotion. The therapy lowered cataplexy attacks and reduced symptoms of narcolepsy.

SVB Leerink analyst Ami Fadia says Axsome could rival Jazz. Jazz makes narcolepsy treatments called Xyrem and Sunosi. In the third quarter, Xyrem accounted for roughly 79% of Jazz's total revenue. Sunosi, which gained approval this year, generated just a fraction of its sales.

"If similar results are replicated during longer treatment in the planned Phase 3 studies (expected in 2020), we believe AXS-12 could become a potential threat to Jazz's sleep franchise, given its competitive clinical profile and more convenient dosing regimen," she said in a report to clients.

Comparing The Narcolepsy Treatments

Axsome tested its narcolepsy treatment in 21 patients who also experience cataplexy. Following two weeks of treatment, the drug lowered cataplexy attacks by 48.8% vs. an 8.6% dip for the placebo.

More than three-quarters of patients who took the narcolepsy treatment, 76.2%, saw their cataplexy attacks cut by half. In comparison, 30% of those who received the placebo experienced a similar weekly decline.

"These results appear competitive to what (Jazz's drug) Xyrem has shown (about a 55% reduction at week two)," Fadia said. "However, Xyrem's (effectiveness) continued to improve over time, with 68% reduction in weekly cataplexy attacks at week four and 85% reduction at week eight."

Axsome used a metric called the Epworth Sleepiness Scale to measure improvements in symptoms of narcolepsy. At week two, the narcolepsy treatment cut down on symptoms at twice the rate of the placebo. AXS-12 resulted in a 6-point reduction on that scale vs. 3.1 points for the placebo.

Similarly, Jazz's narcolepsy treatment Xyrem showed a 5-point decrease on that scale at week eight. Sunosi showed a 5.5-point decrease at week two, Fadia said.

"Importantly, AXS-12 also showed sleep quality improvement in 45% of patients (vs. 5.3% for the placebo), which is one of the highly appreciated benefits of Xyrem vs. the other competitors," she said.

Jazz Stock Dips On Emerging Competition

Fadia says Axsome's drug could chip away at Jazz's narcolepsy treatments. Xyrem is given twice at night. This means a patient takes one pill at bedtime, and another several hours later. To compare, AXS-12 is a twice-daily pill for narcolepsy treatment.

Axsome's "dosing schedule is clearly superior," she said. "Should (effectiveness) in both cataplexy and excessive daytime sleepiness remain competitive in Phase 3, AXS-12 has the potential to become a treatment to Xyrem."

Fadia kept her outperform rating on Jazz stock.

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