A second trip-up makes Axsome look careless

Data might generate most of biotech’s headlines, but it is worth remembering that the less racy area of manufacturing is just as crucial when it comes to getting a drug over the finish line. Axsome demonstrated this point neatly today, admitting in a brief SEC filing that chemistry, manufacturing and control issues are likely to lead to a CRL for AXS-07, its project for acute migraine pain. Axsome’s depression asset AXS-05 was also delayed by CMC deficiencies last year; the company’s stock, which had just about recovered from the 47% plunge on news of the first setback, sank 20% in early trade today. Investors are right to be alarmed. Perhaps the specific issues are not related, as Mizuho analysts have supportively suggested, but it is undeniable that Axsome itself is the common denominator here. And coming on a terrible day for biotech news flow, with several other disappointments, this sort of snafu provides investors with yet another reason to be pessimistic about the smaller end of the sector. The FDA’s final decision on AXS-05, which is considered Axsome's most valuable asset, is due before mid-year. Expect zero tolerance of any further delays.