Axsome Therapeutics: Teaching Old Drugs New Tricks

Brean Capital assumed coverage of Axsome Therapeutics Inc AXSM with a Buy rating and $20 target price, implying a potential upside of 154 percent.

The company's leading product candidate is AXS-02, a non-opioid therapeutic in development for chronic pain. AXS-02 is being studied for complex regional pain syndrome (CRPS), knee osteoarthritis (OA) with bone marrow lesions (BMLs), and chronic lower back pain (CLBP) with modic changes (MC).

Meanwhile, Axsome's other product candidate, AXS-05, is in trials indicated for treatment resistant depression (TRD) and agitation in Alzheimer's disease (AD). AXS-05 is a fixed-dose combination of dextromethorphan and bupropion, which have been shown to be effective in activating central nervous system receptors.

"We believe the synergistic effects provided by the combination will be superior to either single agent in TRD and AD, as they have differing mechanisms of action," analyst Difei Yang wrote in a note.

Yang says the company has the following upcoming catalysts:

• "AXS-02 vs. CRPS Phase III trial (CREATE-1) interim analysis in 4Q16";
• "IND filing for AXS-05 vs. AD Phase II/III in 4Q16"; and
• "CREATE-1 trial completion by YE2017."

"We see the value drivers, CPRS, TRD, and AD, possessing lower-than-average R&D risks and a proven business model that lends itself to a shorter line to commercialization," Yang added.