Axsome Rises 2.1% on Acquisition of Sunosi from Jazz Pharmaceuticals

Axsome Therapeutics, Inc. (NASDAQ: AXSM) has entered into a deal with Jazz Pharmaceuticals (NASDAQ: JAZZ) to acquire Sunosi, a drug designed to improve wakefulness in adult patients with excessive daytime sleepiness due to narcolepsy or obstructive sleep apnea (OSA).

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Axsome is a clinical-stage biopharmaceutical company, which engages in the development of novel therapies for the management of central nervous system disorders. Shares of AXSM rose 2.1% in Monday’s early trading session.

Deal Details

As per the agreed terms, Axsome will acquire worldwide commercial, development, manufacturing, and intellectual property rights of Sunosi from Jazz, except for certain Asian markets. In exchange, Axsome will have to pay an upfront payment of $53 million

In addition, Jazz will receive a high-single-digit royalty on Axsome’s U.S. net sales of Sunosi in the current indication, and a mid-single-digit royalty on Axsome’s U.S. net sales of Sunosi in future indications.

Given that SK Biopharmaceuticals is the originator of Sunosi and retains rights in 12 Asian markets and Jazz acquired worldwide rights to Sunosi from Aerial Biopharma in 2014, Axsome will be liable to pay both SK Biopharmaceuticals and Aerial Biopharma. The assumed commitments to SK and Aerial include single-digit tiered royalties based on Axsome sales of Sunosi, and up to $165 million in revenue milestones and $1 million in development milestones.

The deal is expected to be financed via Axsome’s existing $300 million term loan facility with Hercules Capital, Inc. The companies expect the U.S. transaction to close in the second quarter of 2022, and the ex-U.S. transaction to close within 60 days after the U.S. transaction is concluded.

“This acquisition immediately transforms Axsome into a global commercial entity, upon closing, and accelerates our growth as a premier biopharmaceutical company focused on delivering potentially life-changing medicines to people living with serious CNS conditions,” said Herriot Tabuteau, MD, CEO of Axsome.

Stock Rating

Recently, H.C. Wainwright analyst Ram Selvaraju maintained a Buy rating on Axsome with a price target of $180 (409.1% upside potential from current levels).

Overall, the Street is bullish on the stock and has a Strong Buy consensus rating based on six Buys and one Hold. Axsome’s average price target of $84.80 implies upside potential of about 139.8% from current levels.

Blogger Opinion

TipRanks data shows that financial blogger opinions are 100% Bullish on AXSM, compared to a sector average of 71%.

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