Axsome Therapeutics Inc (AXSM)

[Max77]

Mizuho

Bullish $axsm on yesterday’s news

Our take: While the news in itself (that a P-IV for Auvelity was filed) is not a surprise, the timing of the news does, as it comes a bit sooner than we have been expecting (note: given that Auvelity was initially filed for approval under the 505() (2) pathway, we had expected that a P4 could come at any point in time.
That said, we had an opportunity to speak with AXSM management this morning, who noted: (1) the P-IV has been expected by the company, and it was only a matter of time; (2) that TEVA filed a P-IV for Auvelity implies to them that TEVA thinks Auvelity will be a significant commercial product, (3) the earliest that a generic could be approved is in 2034, at least 11 years from now, giving Auvelity a sufficient commercial runway; (4) with >100 patents listed in the FDA's Orange Book, we should expect that AXSM will continue to strengthen its Auvelity IP estate; and (5) the company is still evaluating its patent term extension (PTE) strategy for Auvelity, which could potentially add additional patent protection.
Also this morning, we also had an opportunity to speak with an IP expert, a person we frequently use on IP diligence. In his view (and ours), that TEVA is only challenging four method of use patents expiring in 2040 (and not the base '328 and '234 patents which expire in 2033 and '34, respectively) represents a very favorable development for AXSM. That said, we'll be interested in learning more about TEVA's IP strategy (as well as AXSM's strategy in response) once AXSM's patent lawsuit against TEVA becomes available.
Bottom line: TEVA is not challenging the earlier expiring patents for Auvelity, and seeing this as a potential best case scenario for AXSM with respect to a potential loss of exclusivity/LOE for Auvelity (where recall, we currently model LOE in 2034), we're not terribly concerned about the news
Hence, on any_potential weakness, we recommend being opportunistic on AXSM shares today.
Graig Suvannavejh, Ph.D.
Managing Director
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