Axsome (AXSM) to Acquire Jazz’s Sleep Disorder Drug, Sunosi – March 29, 2022

Axsome Therapeutics, Inc. (AXSM Quick QuoteAXSM Free Report) announced that it has entered into a definitive agreement with Jazz Pharmaceuticals (JAZZ Quick QuoteJAZZ Free Report) to acquire the latter’s new sleep drug, Sunosi (solriamfetol).

The drug is approved as a treatment to improve wakefulness and reduce excessive daytime sleepiness in adults with narcolepsy or obstructive sleep apnea. Sunosi is currently marketed in the United States, Europe and several other countries.

Shares of Axsome have lost 7.1% so far this year compared with the industry’s decline of 13.8%.

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Axsome will make an upfront payment of $53 million to Jazz to acquire worldwide commercial, /manufacturing and intellectual property rights to Sunosi, except for certain Asian markets, from the latter. Jazz is entitled to receive high single-digit on US net sales of Sunosi in the current indication and mid-single-digit royalty on Sunosi net sales in future indications.

In 2014, Jazz had acquired worldwide rights to Sunosi from Aerial Biopharma, excluding certain Asian markets. The commitments of Jazz toward Aerial as well as SK Biopharmaceuticals, which retains Sunosi’s rights in 12 Asian markets, will also be taken care of by Axsome.

The above transaction is expected to close in the second quarter of 2022, subject to customary closing conditions in the United States. Axsome plans to finance the transaction through its existing $300-million term loan facility with Hercules Capital, Inc.

Shares of Jazz have rallied 24.1% so far this year against the industry’s decline of 14%.

Axsome (AXSM) To Acquire Jazz's Sleep Disorder Drug, Sunosi - March 29, 2022
Image Source: Zacks Investment Research

Axsome currently does not have any approved product in its portfolio. Hence, as soon as the acquisition of Sunosi closes, it will immediately transform the company into a revenue generating entity.

One of Axsome’s lead candidates, AXS-05, has been developed for treating major depressive disorder (“MDD”), treatment-resistant , smoking cessation and agitation associated with Alzheimer’s disease. An NDA for AXS-05 to treat MDD is under review with the FDA.

Axsome’s another lead candidate, AXS-07, has been developed for the acute treatment of migraine. An NDA for AXS-07 for the acute treatment of migraine is under review. A decision from the FDA is expected by April-end in 2022.

Given Axsome’s expertise in developing treatments for central nervous system disorders, the acquisition of Sunosi looks highly synergistic with the company’s potential commercialization of AXS-05 for and AXS-07 for migraine.

The deal with Jazz for Sunosi will surely strengthen Axsome’s industry-leading neuroscience portfolio. Sunosi generated sales worth $57.9 million in 2021, reflecting a significant year over year. A potential label expansion into other indications, such as psychiatry and neurology, will boost the drug’s sales further and drive growth for Axsome in 2022 and beyond.

Zack’s Rank & Stocks to Consider

Both Axsome and Jazz currently carries a Zacks Rank #3 ().

Better-ranked stocks in the drug/biotech sector are Assertion Holdings, Inc. (ASRT Quick QuoteASRT free report) and Vertex Pharmaceuticals Incorporated (VRTX Quick QuoteVRTX Free Report) , both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Assertio’s earnings estimates have been revised 75% upward for 2022 over the past 60 days. The ASRT stock has increased 25.6% year to date.

Earnings of Assertio surpassed estimates in two of the trailing four quarters and missed the same on the other two occasions.

Vertex’s earnings estimates have been revised 8.7% upward for 2022 over the past 60 days. The VRTX stock has increased 16.4% year to date.

Earnings of Vertex surpassed estimates in each of the trailing four quarters.

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