IPO Report: Axsome Therapeutics (AXSM)

Francis Gaskins |

Axsome Therapeutics (AXSM) is a clinical stage biopharmaceutical company developing novel therapies for the management of pain and other central nervous system, or CNS, disorders. The company is based in New York, NY.

Seven other companies are scheduled for the week of Nov 16. The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: Ladenburg Thalmann, Cantor Fitzgerald & Co.
Co-managers: Brean Capital

End of lockup (180 days):
End of 25-day quiet period:

AXSM scheduled a $51 million IPO with a market capitalization of $213 million at a price range midpoint of $12 for the week of November 16, 2015 on Nasdaq.

Summary

AXSM is a clinical stage biopharmaceutical company developing novel therapies for the management of pain and other central nervous system, or CNS, disorders.

By focusing on this therapeutic area, AXSM is addressing significant and growing markets where current treatment options are limited or inadequate.

Valuation

Glossary

Accumulated deficit (mm)

.

.

-$15

     

Per share dilution

.

.

-$9.22

     
             

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Axsome Therapeutics (ASXM)

$212

n/a

-18.1

4.3

4.3

24%

             
             
             
             

Conclusion

Neutral

2 products in or soon to be in Phase 3 trials

Fast Track plus Orphan Drug designation

Shareholders not buying

No collaborators, yet

4.3 times bk

P/E of -18 indicating moderate cash burn

Business

AXSM is a clinical stage biopharmaceutical company developing novel therapies for the management of pain and other central nervous system, or CNS, disorders.

By focusing on this therapeutic area, AXSM is addressing significant and growing markets where current treatment options are limited or inadequate.

AZXM have one active program, AXS-06, in preclinical development. AZXM is developing AXS-06 for the treatment of chronic pain disorders.

2 Late Stage Product Candidates

AXSM’s product candidate portfolio includes two late-stage candidates, AXS-02 and AXS-05, which AXSM are developing for multiple indications.

AXSM recently initiated a Phase 3 trial with AXS-02 in complex regional pain syndrome and plan to initiate a Phase 3 trial in knee osteoarthritis associated with bone marrow lesions in or before the first quarter of 2016 pursuant to a Special Protocol Assessment, or SPA.

AXS-02 has been granted FDA Fast Track designation for the treatment of pain associated with CRPS. 
AXS-02 has also been granted Orphan Drug Designation by the FDA and Orphan Medicinal Product Designation by the EMA for the treatment of CRPS

 AXSM also plans to initiate a Phase 3 trial with AXS-05 in treatment resistant depression in or before the first quarter of 2016.

AXSM aims to become a fully integrated biopharmaceutical company that develops and commercializes differentiated therapies that expand the treatment options available to caregivers and improve the lives of patients living with pain and other CNS disorders.

First Product Candidate

AXSM’s first product candidate, AXS-02 (disodium zoledronate tetrahydrate), is a potentially first-in-class, oral, targeted, non-opioid therapeutic for chronic pain.

AXS-02 is a potent inhibitor of osteoclasts, which are bone remodeling cells that break down bone tissue. AXSM is initially developing AXS-02 for the treatment of pain in the following three conditions: complex regional pain syndrome, or CRPS; knee osteoarthritis, or OA, associated with bone marrow lesions, or BMLs; and chronic low back pain, or CLBP, associated with Modic changes, or MCs.

These conditions exhibit target lesions or specific pathology that AXSM believes may be addressed by the mechanisms of action of AXS-02, such as inhibition of osteoclast activity.

These mechanisms may result in a reduction of pain in these conditions. AXSM has successfully completed a Phase 1 trial of AXS-02.

In this trial, oral administration of AXS-02 tablets resulted in rapid absorption of zoledronic acid, which is the active molecule in AXS-02 and the free acid form of disodium zoledronate tetrahydrate, and substantial suppression of bone resorption markers, which are proteins indicative of bone tissue breakdown.

AXSM selected the dose for its ongoing and planned Phase 3 trials based on the pharmacokinetic and pharmacodynamic results of its Phase 1 trial.

AXSM intends to seek U.S. Food and Drug Administration, or FDA, approval for AXS-02 utilizing the 505(b)(2) regulatory development pathway. Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act, or FDCA, enables a potentially shorter development timeline for AXSM’s product candidates by allowing AXSM to rely, in part, upon published literature or the FDA's previous findings of safety and efficacy for an approved product with the active molecules in AXSM’s product candidates and potentially forego conducting certain clinical trials and certain lengthy and costly preclinical studies.

Second Product Candidate

AXSM’s second product candidate, AXS-05, is an innovative fixed-dose combination of dextromethorphan, or DM, and bupropion.

AXSM is developing AXS-05 initially for the treatment of the following two conditions: treatment resistant depression, or TRD; and agitation in patients with Alzheimer's disease, or AD.

DM is active at multiple CNS receptors but is rapidly and extensively metabolized in humans.

As a result, it is difficult to attain potential therapeutic plasma levels of DM when it is dosed as a single agent. AXS-05 uses bupropion, which is itself active at distinct CNS receptors, as a novel drug delivery method to inhibit DM metabolism and increase its bioavailability.

AXSM has demonstrated in two Phase 1 trials that DM plasma levels are substantially increased into a potentially therapeutic range with the co-administration of bupropion. AXSM intends to seek FDA approval for AXS-05 utilizing the 505(b)(2) regulatory development pathway.

Intellectual Property

 

AXSM’s intellectual property portfolio contains 14 issued patents and 5 allowed and more than 50 pending applications in the United States and worldwide.

Twelve issued patents and 3 allowed and more than 35 pending patent applications covering AXSM’s AXS-02 product candidate have claims covering method of delivery, pharmacokinetics, composition of matter, and methods of use with protection extending through 2034 for both AXSM’s issued patents and pending applications.

In addition to patent protections, AXSM’s AXS-02 program, if approved, may also be afforded potential exclusivity by the FDA's and EMA's orphan drug designation programs for CRPS, which provide 7 years and 10 to 12 years of exclusivity, respectively.

Two issued patents and 2 allowed and several pending patent applications covering AXSM’s AXS-05 product candidate have claims covering pharmaceutical composition, drug delivery, and pharmacokinetics with protection extending through 2034 for its issued and allowed patents, as well as its pending applications.

An "allowed" patent application is one which, having been examined by the USPTO, is approved to issue as a patent, subject to payment of the issue fee by the applicant. Its status as an "allowed" patent application continues from the date of the notice of allowance until it is withdrawn from issue, it issues as a patent, or it becomes abandoned. AXSM has pending PCT applications, as well as pending applications in Australia, Canada, China, Europe, Hong Kong, Japan, South Korea, and New Zealand.

AXSM has other patent applications with claims covering the other programs in its pipeline, including those that are not relevant to its current programs in development.

AXSM has licensed the patents and pending applications which cover AXS-02, AXS-04, and AXS-05 from Antecip. All of the other components of AXSM’s intellectual property portfolio are owned by Axsome.

Competition

AXS-02 Competition

There are no drugs approved by the FDA or the EMA for the treatment of pain associated with CRPS, although various classes of pain medications, such as NSAIDs and opioids, are used off-label.

AXSM is aware of other companies working to develop therapeutics for the treatment of pain associated with CRPS, including Grunenthal GmbH and Thar Pharmaceuticals, Inc.

Companies working to develop therapeutics for the treatment of pain associated with knee OA include Carbylan Therapeutics, Inc.; Flexion Therapeutics, Inc.; and Levolta Pharmaceuticals, Inc., which is developing an IV zoledronic acid product for the treatment of knee OA. AXSM is aware of two companies attempting to develop oral dosage forms of zoledronic acid for various indications, Merrion Pharmaceuticals plc and Thar Pharmaceuticals, Inc.

AXS-05 Competition

There is one product approved for the treatment of TRD, Symbyax, which is marketed by Eli Lilly and Company.

In addition, Otsuka Pharmaceutical Co. Ltd. is working to develop a combination of DM and quinidine for the treatment of TRD. AXSM is aware of several other companies developing compounds for the treatment of TRD including Alkermes plc; Allergan plc; and Janssen Research & Development, LLC. AXSM is aware of other companies working to develop therapeutics for the treatment of agitation in patients with AD, including Otsuka Pharmaceutical Co. Ltd., which is working to develop a combination of DM and quinidine in this indication, and Transition Therapeutics Inc.

5% Shareholders Pre-IPO

Antecip Capital LLC       54.5%

Herriot Tabuteau, M.D.  54.6%

Mark Coleman, M.D.      5.2%    

Dividends

No dividends are planned.

Use of Proceeds

AXSM expects to receive $45 million from its IPO and use it for the following:

$19 to $22 million to fund its clinical trials for AXS-02, including the completion of its ongoing Phase 3 trial in pain associated with CRPS and AXSM’s planned Phase 3 trial in the pain of knee OA associated with BMLs, and the launch of its planned Phase 3 trial in CLBP associated with MCs;

$14 to $17 million to fund its ongoing development of AXS-05, including the launch and completion of its planned Phase 3 trial of AXS-05 in TRD; and

the remainder for working capital and general corporate purposes.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Comments

Emerging Growth

GSV Capital Corp

GSV Capital Corp is an externally managed, non-diversified closed-end management investment company. The Company has elected to be treated as a business development company.

Private Markets

Snapchat

Snapchat is the fastest way to share a moment with friends. The mobile app, allows users to not only share photos with friends but also control how long they can…

BioSculpture Technology, Inc.

BioSculpture Technology, Inc. (“BST”) is a commercial-stage medical device manufacturer of liposuction surgical instruments for surgeons. It offers the FDA-cleared Twin Cannula Assisted Liposuction ("TCAL") Airbrush Liposculptor II® controllers, Airbrush®…