Teva Pharmaceutical said Monday it plans a competing knockoff of Axsome Therapeutics' new depression treatment, leading AXSM stock to tumble.
Axsome only just gained Food and Drug Administration approval for Auvelity in August. Experts believe a neurotransmitter called NMDA plays a role in depression and Auvelity is the first pill to block it. AXSM stock surged 40% the day Auvelity gained approval.
But Teva says four patents covering Auvelity "are invalid, unenforceable and will not be infringed" by a generic. Those patents protect Auvelity from generic competition until 2040. Auvelity also has patents expiring in 2034, but Teva isn't challenging any of those.
On today's stock market, AXSM stock skidded 1% to close at 62.18. Teva stock rose 0.4% to finish at 10.30.
A representative of Axsome didn't immediately return a request for comment from Investor's Business Daily.
AXSM Stock Bounds On Auvelity Approval
AXSM stock has been closely tied to its efforts with Auvelity, its second approved drug behind Sunosi. Sunosi is a treatment for excessive daytime sleepiness tied to narcolepsy or obstructive sleep apnea. The company acquired Sunosi from Jazz Pharmaceuticals last May.
Shares hit a fresh high at 82 in December, but have since pulled back. Now, if AXSM stock can surpass that mark again, it would be actionable. The biotech stock is consolidating with a buy point at 82.10, according to MarketSmith.com.
The news Monday sent AXSM stock to the low point of its base. Promisingly, shares have a Relative Strength Rating of 97, which puts them in the top 3% of all stocks in terms of 12-month performance, IBD Digital shows.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.