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Axsome Therapeutics, Inc.

Case Details

Class Period: December 30, 2019 - April 22, 2022
Date Filed: May 13, 2022
Case Number: 1:22cv03295
Jurisdiction: New York Southern District Court
icon-casetype Case Type: Securities Case
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Case Summary

Axsome is a biopharmaceutical company that engages in the development of novel therapies for central nervous system disorders in the United States. The Company is developing, among other product candidates, AXS-07, a novel, oral, rapidly absorbed, multi-mechanistic, and investigational medicine for the acute treatment of migraine. Axsome consistently touted AXS-07’s regulatory and commercial prospects in anticipation of the Company’s submission a New Drug Application (“NDA”) to the U.S. Food and Drug Administration (“FDA”) for AXS-07 for the acute treatment of migraine (the “AXS-07 NDA”) based on the drug’s positive results in two Phase 3 trials. However, unbeknownst to investors, the Company’s preparation and eventual submission of the AXS-07 NDA was plagued with chemistry, manufacturing, and control (“CMC”) issues. The complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and prospects. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Axsome’s CMC practices were deficient with respect to AXS-07 and its manufacturing process; (ii) as a result, Axsome was unlikely to submit the AXS-07 NDA on its initially represented timeline; (iii) the foregoing CMC issues remained unresolved at the time that the FDA reviewed the AXS-07 NDA; (iv) accordingly, the FDA was unlikely to approve the AXS-07 NDA; (v) as a result of all the foregoing, Axsome had overstated AXS-07’s regulatory and commercial prospects; and (vi) as a result, the Company’s public statements were materially false and misleading at all relevant times. On November 5, 2020, Axsome issued a press release reporting the Company’s third quarter 2020 results. That press release disclosed that the Company “plans to submit the [AXS-07] NDA to the FDA in the first quarter of 2021, versus previous guidance of the fourth quarter of 2020, to allow for inclusion of supplemental manufacturing information to ensure a robust submission package.” On this news, Axsome’s stock price fell $5.22 per share, or 6.99%, to close at $69.51 per share on November 5, 2020. Then, on April 25, 2022, Axsome disclosed in a filing with the U.S. Securities and Exchange Commission that, “[o]n April 22, 2022, Axsome . . . was informed by the [FDA] that [CMC] issues identified during the FDA’s review of the Company’s [NDA] for its AXS-07 product candidate for the acute treatment of migraine are unresolved.” That filing also disclosed that “[b]ased upon the time remaining in the NDA review cycle, the Company expects to receive a Complete Response Letter [(‘CR’)] with respect to this NDA on or about the Prescription Drug User Fee Act target action date of April 30, 2022.” On this news, Axsome’s stock price fell $8.60 per share, or 21.99%, to close at $30.50 per share on April 25, 2022. Finally, on May 2, 2022, Axsome announced that it received a CRL from the FDA regarding the AXS-07 NDA for the acute treatment of migraine. According to the Company, “[t]he principal reasons given in the CRL relate to [CMC] considerations” including “the need for additional CMC data pertaining to the drug product and manufacturing process.”

Documents
Complaint