Axsome Therapeutics Inc. (AXSM) recently got some green lights from regulators

At a first look, AXSM doesn't appear to be a good contender as a safe stock to purchase right now. The biotech company currently has no authorized medications or income. It also doesn't have much cash or even a key partner to keep it going.
WAN CHAI, Hong Kong - June 8, 2022 - PRLog -- So how can it be considered safe? The quick answer is that all of the above will most likely improve. It all comes down to one small indication that was just revealed.

AXSM is working on a number of different medications to treat neuropsychiatric disorders like narcolepsy and migraines. Its main initiative is the medicine AXS-05, which is being studied in a late-stage clinical study for its efficacy in treating agitation in Alzheimer's disease, as well as another trial for smoking cessation.

The business agreed to a set of post-market procedures recommended by the US Securities and Exchange Commission (SEC) in an SEC filing on April 19. The Food and Drug Administration (FDA) has approved AXS-05 as a treatment for major depressive disorder (MDD). The FDA's request for specific actions to be taken once the medication is out on the market indicates that authorities are quite likely to approve the drug. It may also cause investors to question if AXSM is a safe investment, let alone a high-potential growth stock.

After all, with the possibility of regulatory clearance on the horizon, most of the clinical development risk that often accompanies pre-product biotech equities is reduced. In other words, if everything goes according to plan from here on out, investors will be able to profit handsomely from the company's commercialization of AXS-05, with less risk of things going wrong. While AXS-05 might be available for purchase as early as this quarter.

Despite the favourable preliminary news about AXS-05, there is still a potential that the business may have trouble meeting the FDA's approval standards, which has been an issue in the past. The FDA recently denied AXS-07, a migraine treatment medicine, due to concerns with the manufacturing data given by the business. However, the problems with AXS-07 are unlikely to be serious enough to put the project on hold. At this juncture, it's difficult to envisage an issue with the AXS-05 program that would completely ruin its stock price, while a comparable misstep would almost certainly do some damage.

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