Axsome Strikes Deal for Narcolepsy Drug with High Growth Potential
Shares of Axsome Therapeutics are climbing in premarket trading after the company announced it is acquiring a commercially-available drug for excessive daytime sleepiness from Jazz Pharmaceuticals. Axsome struck an agreement to buy Sunosi for $53 million in upfront payments plus royalties.
New York-based Axsome said the acquisition of Sunosi transforms the company into a global commercial business that will support its operations as it moves closer to launching its treatments for depression and migraine. Sunosi, a dual-acting dopamine and norepinephrine reuptake inhibitor, was approved by the U.S. Food and Drug Administration in 2019 to improve wakefulness in adults living with excessive daytime sleepiness associated with narcolepsy or obstructive sleep apnea.
In 2021, Sunosi generated $57.9 million in revenue for Ireland’s Jazz Pharmaceuticals. Axsome believes the revenue-generating power of Sunosi will continue for years to come, particularly if it gains approvals for other indications in psychiatry and neurology.
Axsome Chief Executive Officer Herriot Tabuteau said the drug acquisition bolsters the company’s goal of providing life-changing medications to patients with serious central nervous system-related conditions. In clinical studies and as a commercial product, Sunosi has demonstrated its ability to transform the lives of patients and has generated positive patient and physician feedback.
“We are excited by its significant growth potential and excellent strategic fit with the Axsome portfolio. Furthermore, the addition of Sunosi augments and accelerates our commercial preparedness ahead of the potential near-term launches of our two existing lead assets, AXS-05 and AXS-07, and allows us to fully leverage our first-in-class Digital Centric Commercialization platform with three complementary assets,” Tabuteau said in a statement.
Jazz Pharmaceutical CEO Bruce Cozadd said his company decided to sell Sunosi to Axsome after they determined that the company is well-positioned to maximize its value.
“Axsome is well placed to leverage its complementary commercial business to ensure Sunosi can effectively reach those who can benefit from this important medicine. Further, we believe Axsome’s track record of clinical development provides a promising foundation for the exploration of Sunosi in additional indications,” Cozadd said in a statement.
In its own announcement, Jazz said the divestiture of Sunosi will enable the Dublin-based company to “sharpen its focus on its highest strategic priorities.”
Earlier this year, Cozadd outlined his vision for the company over the next several years following the acquisition of GW Pharmaceuticals. Cozadd’s vision predicts annual revenue of $5 billion by 2025 and the approval of at least five novel products by the end of the decade.
Axsome’s owns assets, AXS-05 for major depressive disorder and AXS-07 for migraine, are both undergoing review by the FDA. The company anticipates the regulatory agency will approve the medications later this year. Axsome anticipated potential approval of AXS-05 last year but that was delayed. In its year-end financial report earlier this month, Axsome said it has answered all CMC questions raised by the regulatory agency related to that delay. AXS-05 is under Priority Review. A PDUFA date of April 30 was set for Axsome’s migraine drug. The New Drug Application for that treatment was supported by positive data from two Phase III studies, MOMENTUM and INTERCEPT.
The transaction, which is being funded from Axsome’s $300 million term loan from Hercules Capital, Inc., is expected to close in the second quarter of this year. With Sunosi and the two drugs, should they be approved, Axsome will have a transformational 2022 for CNS patients. As Axsome takes over the Sunosi franchise from Jazz, Tabuteau said the company is committed to ensuring uninterrupted patient access to the medication.