AXSM stock plummets as Teva plans its knock-off from depression drugs

Teva Pharma (TEWA) said on Monday it is planning a competing copy of Axsome Therapeutics‘ (AXSM) new depression treatment that crashed AXSM stock.

X

Axsome just received 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 soared 40% on the day Auvelity received approval.

But Teva says four patents covering Auvelity are “invalid, unenforceable and not infringed by a generic drug.” These patents protect Auvelity from generic competition until 2040. Auvelity also has patents that expire in 2034, but Teva isn’t challenging any of them.

In today’s stock market, AXSM stock slipped 1% to close at 62.18. Teva shares rose 0.4% to end at 10.30.

An Axsome representative did not immediately respond to a request for comment from Investor’s Business Daily.

AXSM stock limits upon Auvelity approval

AXSM’s stock has been closely linked to efforts for Auvelity, its second approved drug after Sunosi. Sunosi is a treatment for excessive daytime sleepiness associated with narcolepsy, or obstructive sleep apnea. The company acquired Sunosi from Jazz Pharma (JAZZ) last May.

Shares hit a new high of 82 in December but have since retreated. If AXSM stock can surpass that mark again, it would be actionable. According to MarketSmith.com, the biotech stock is consolidating with a buy point at 82.10.

Monday’s news sent AXSM stock to the bottom of its basis. Promisingly, the stocks have a Relative Strength Rating of 97, which puts them in the top 3% of all stocks in terms of 12-month performance, according to IBD Digital.

Follow Allison Gatlin on Twitter at @IBD_AGatlin.

YOU MAY ALSO LIKE:

IBD Stock Of The Day Dexcom delineates a new entry after outperforming bullish calls

AbbVie’s Humira: The Downfall won’t be as “draconian” as originally anticipated

How to research growth stocks: Why this IBD tool makes finding top stocks easy

Learn how to time the market with IBD’s ETF market strategy

Get timely buy and sell alerts with the IBD Leaderboard