by DrKSSMDPhD | December 20, 2016 6:49 pm
[Ed. Note: Dr. KSS writes about medicine and biotech stocks for the Irregulars. He has agreed to our trading restrictions, chooses his own topics, and his words and opinions are his own. All of his past articles and most recent comments are on his Stock Gumshoe page.]
Let’s turn our attention today, in a mild respite mode, to a company we’ve mentioned before but never covered. It’s a member of the Manhattan biotech scene, and I admit that’s an establishment of which I have sometimes been mildly upbraiding. Manhattan, of course, is a wonderful place, teeming, thrumming, exuding energy and perfection. Manhattan is a place of such excellence that manifest excellence is needed to survive. The merest meal at a Manhattan restaurant generally startles me: some touch, some ingredient, some gustatory way of reaching out of the Proscenium arch to grab you and ping your senses with what good food is at hand. The mercilessness of Cafe 28 on Fifth Avenue: where else but in a three-alpha city would you expect a busy 24-hour bodega with a buffet of stunning ethnic food of all persuasions, executed to near perfection? (It’s definitely not Denny’s.) Imbibing on a Saturday with an author friend at No Mad, Manhattan’s hottest bar, in its SRO furtiveness only served to make me recall a thought that vexed F. Scott Fitzgerald decades ago when he found himself in a rigorously analogous situation in Manhattan: that my life was at a high-water mark, never to be bested. Though I know it will be.
Which is why the derivativity of Manhattan biotech chafes at me. When a biotech firm settles in New York City, it may prosper and reward shareholders, but it’s seldom trafficking in the kind of bioscience that we like to cover for you here. Manhattan biotech firms tend to take warmed-over ideas and repackage them: drug repurposings, needless reformattings and delivery systems, old wine in new skins. A NYC firm will take a minor indication for a drug, Madison Avenue that into a pressing need, and then reinvent the pills it usually comes in as nasal spray and call it miraculous. Or pinstripe a familiar medication and prove superiority in slightly spring-loaded trials. On good days this is mildly disingenuous, but never a high calling. And on bad days? Well, I saw a condo tower going up recently in Manhattan with a sign: “Architecture and Amenities Soaring to New Heights.” Bad NYC biotech, like Tonix Pharmaceuticals, is egregiousness sinking to new lows.
The firm we’ll address today is Axsome Therapeutics, ticker $AXSM. I mentioned to some readers of the threads that I like this company and had taken a position (I am long, but won’t trade in shares for 72 hours after this column appears). That position is considerably in the red, which is why I’ve not covered Axsome yet in a full column: the share price is adrift and may not have found a true bottom yet. At some point in 2017, however, market forces will prevail, screens will reveal this equity to be functionally underpriced, and gains will be made. Here’s why.
Axsome’s lead projects are derivative and applied, I admit. They take existing agents, rework those, find new indications. But on deep scouring review of the work and its premises, I’ve gotta tell you: I like it. I began liking it more and more as I dug. In fact, I feel that this company has taken a platter of limited resources and set out to wring the max out of those for shareholders. And that shareholders are likely to see major price action in 2017.
I’ll not cover Axsome in detail here: a full column is coming (I can’t promise a deadline). In broad strokes, it has two pursuits. The first are back pain syndrome indications. At the risk of oversharing, for most clinicians, the diagnosis of back pain is a bête noire. Our waiting rooms teem with patients with it, many of whom claim nothing controls it but narcotics. It bothers us because of its unfalsifiability: with routinely available diagnostic methods, we cannot DISprove that someone has back pain. (Neuro-imaging methods do exist to confirm authenticity of pain claims, but are too costly for routine use. Ah, if only the Ontological Lapsometer of which novelist and physician Walker Percy wrote in Love in the Ruins was real!). Some patients lie, though we tend to presume most do not.
Back pain therapeutics consist of muscle relaxants, gabapentin, Lyrica, Cymbalta and, when those don’t work, opioids. We frown on writing for opioids for chronic pain not arising from cancer. “Cocktail” injections of medium-potency steroids sometimes combined with local anesthetics are sometimes placed into the back to temporize pain, but the true efficacy and worth of these and validity of their use is questioned.
I am going to claim at least a small island of credit here for being diligent. I’ve always examined these patients even if I know the exam will yield nada. And in many cases, instead of gently touching the back feeling for spasm, have pressed directly and stoutly on vertebrae in the affected areas and evoked cries of pain. I was told I was stupid in residency for doing this because “everybody knows the pain is in the muscles and nerves, not the bone.” But stupid is as stupid does and I kept stupidly pressing in private practice, often convinced that bone was the true source of the pain. Now, the premise of Axsome tells me I wasn’t so stupid. Extensive revisionary thinking and imaging now concurs that for many cases of chronic low back pain, the pain is indeed arising in vertebrae themselves. Why? Because under strain and torque, the back being a beast of burden, those vertebrae have bone that is preternaturally churning and remodelling itself, recapitulating the molecular events of inflammation.
Bisphosphonates are oral and iv drugs that chill active bone remodeling by poisoning osteoclasts, cells that break down the lattice of already-established bone. And Axsome has strong early data that bisphosphonate therapy can make a sea change of difference in chronic low back pain scores, allowing patients to decrease or come off medications. It has its own reworked bisphosphonate preparation for which it intends to pursue a supplemental NDA for syndromic back pain. Other bisphosphonates won’t have this indication on their labels.
This may strike you as too trivial to invest in. It is not. Back pain is legion in clinical medicine, and complaints of it drive opioid epidemics. Back pain utterly hobbles this nation in lost work time, insurance costs, disability, drug costs. It may not be high-tech, but this is a very big deal indeed. Axsome has built a compelling dossier of evidence that its approach works, and at least one of its back pain trials has been granted SPA by the FDA, which clearly thinks this company’s work is vital for weaning our nation off opiates (a noble pursuit). Back pain should not make you yawn as an investor; propitious data in 2017 could cause shares here to triple. We can see insurers, doctors, pharmacy benefits managers very much getting behind Axsome’s approach and essentially mandating that care proceed along lines of how Axsome proposes, with Axsome’s bisphosphonate therapy. Why? The system stands to save utter billions of dollars by doing so. I like to think of the Axsome approach, moreover, as not molling and covering over the pain, but “fixing” it, knackering the physiologic basis of it. I admit this is out of specialty for me and both welcome and solicit the input of our very own Dr. Bonz, the world’s coolest orthopedist, when he has time.
I don’t generally stroll in the darker corners of the internet, but I did recently, and found what I was looking for, which is this document. I encourage you to look it over. And be sure your children never see it. The pages outline how to take a walk on the wild side with dextromethorphan (under whose mild influence I am writing this, as coughing slows me down when I’m trying to explain to you how to make money).
Dextromethorphan is an interesting molecule, as we learned in these pages when pharmaceutical firm Avanir developed Nuedexta for pseudobulbar affect. Axsome hypothesizes that dextromethorphan in combination with bupropion (WellButrin or Zyban), the antidepressant now in widespread use, may jumpstart the CNS and resolve refractory cases of depression. They make a plausible case for the mechanism of action and have clinical studies underway.
As we’ll discuss when we go long-form into Axsome, the mechanism by which dextromethorphan acts on the brain may, in end result, be strikingly similar, to the cumulative effects of ketamine use, which are highly antidepressant. A clinically therapeutic dose of dextromethorphan for psychiatric indications is not much different from the dose needed to suppress a cough, and the quantities in question are well away from the dose range needed for abusing the drug to euphoria.
Far from being a cynical idea by them to commandeer money from cheap drugs by reinventing them, I suspect dextromethorphan and bupropion in combination will treat depression well. I’ll explain later why the combo may have special properties. This may help depression in an approach far safer than what Johnson and Johnson proposes by having patients take esketamine (an enantiomer of ketamine, and very easily abused). I have a deep sense of conviction that SSRI’s are mere placebos for depression and that they promote suffering by actually keeping patients from getting well. In the depression wars, I say bring on the Axsome approach. If your prescriber has you on an SSRI (Prozac, Celexa, etc), please don’t stop taking it without working that out in advance with the prescriber.
I’m not advising you to buy shares of Axsome, but I’ll be watching this space closely, and likely adding in 2017. Axsome are clever people.
Please feel free to comment in the thread after our first “12 Biotechs of Christmas” entry; you can check the guidelines for posting rules and etiquette.
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