What happened
In a somewhat counterintuitive development, shares of Axsome Therapeutics (AXSM -2.61%) rose on Thursday even though the company pointed out several issues in the development of one of its drugs. Following the company's latest update on the affected program, one analyst reiterated his bullish outlook on the shares, and they rose by 5.5%.
So what
In a regulatory filing, Axsome said it provided an official response to the Food and Drug Administration (FDA) regarding the pending New Drug Application (NDA) its AXS-05 drug candidate. Axsome said its communication addressed two previously disclosed problems related to the analytical methods in one section of the NDA.
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Axsome, a clinical-stage biotech that focuses on central nervous system (CNS) afflictions, seeks approval for AXS-05 as a treatment for major depressive disorder.
While it isn't necessarily encouraging that the company's submittal contains such errors, some are heartened by the fact that it's being transparent about them. One of these individuals is Cowen analyst Joseph Thome, who in the wake of the news reiterated his positive view on the stock.
Now what
Taking a longer-term view of the AXS-05 program and the NDA currently being evaluated, Thome wrote, "We are encouraged the process is moving forward and remain Outperform."
In other words, he still considers the company to be a screaming buy. After all, he's also reiterating his $125 per share price target on the shares, which is nearly four times the level of Thursday's close.
Some investors have become discouraged with Axsome, not least because the FDA was slated to wrap up its review of AXS-05 last August. But the FDA's process is not always smooth or timely, particularly if there are problems with the submittal, and AXS-05 is quite a high-potential treatment that has performed well in clinical testing.
