Shares of IBD 50 stock Axsome Therapeutics tumbled Tuesday after the biotech reported mixed results for its drug, Sunosi, in adults with attention deficit hyperactivity disorder.
The company tested two doses of its pill in patients for six weeks. Patients who received the lower, 150-milligram dose showed an average improvement of 17.7 points on a 54-point scale measuring ADHD symptoms. That was 3.4 points better than the placebo group's improvement. The results were statistically significant, Axsome said.
But a higher 300-milligram dose missed its mark. Axsome Therapeutics noted that the 300-milligram dose is only exploratory. The company already sells the lower dose as a narcolepsy treatment.
Axsome stock toppled more than 5% to 122.47 in afternoon trades. Shares broke out of a consolidation, topping a buy point at 105 in late January, according to MarketSurge. Shares were trading in a profit-taking zone on Monday, but fell below that range on Tuesday. Savvy investors are encouraged to take some profits when a stock rises 20% to 25% above its buy point.
Axsome Therapeutics Eyes Non-Stimulant Market
Analysts compared the results to other non-stimulant treatments for ADHD, including Supernus Pharmaceuticals' Qelbree. After six weeks of treatment, Qelbree led to a slightly higher four-point improvement in symptoms over the placebo, Leerink Partners analyst Marc Goodman said in a client note.
Goodman said it's "disappointing to some investors" that the amount of placebo-adjusted improvement was lower in Axome's Sunosi study than standard non-stimulant approaches to ADHD.
"However, the stock move today seems overdone given the minimal expectations going into this readout," he said. "But we think the difficult biotech tape is playing a factor, as well as the significant move upward in the stock (year to date)."
He reiterated his outperform rating on Axsome stock.
Axsome Stock Is Highly Rated
Axsome Therapeutics stock has climbed nearly 45% this year, including Tuesday's big drop. Shares rank sixth on the IBD 50 list of elite growth stocks and have a strong IBD Digital Relative Strength Rating of 96. This means Axsome stock ranks in the top 4% of all stocks when it comes to 12-month performance.
William Blair analyst Myles Minter noted Axsome is also planning to run a study of Sunosi in children with ADHD. The company is also testing Sunosi as a treatment for major depressive disorder, with results expected before the end of this month. Axsome Therapeutics already sells a drug called Auvelity to treat depression.
But Axsome could avoid cannibalizing Auvelity's market by selling Sunosi to patients with depression and excessive daytime sleepiness which is "commonly coincident in MDD patients," he said in a report.
Minter has an outperform rating on Axsome stock.
"Investor expectations were low here and we attribute trading weakness today to broader macro pressures, which in our view continues to create a buying opportunity for shares of Axsome," he said.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
