Today may be less than stellar for Relmada Therapeutics (NASDAQ:RLMD), but it’s certainly a great day for Axsome Therapeutics (NASDAQ:AXSM). Apparently, Relmada’s depressive disorder drug candidate failed to achieve its primary clinical trial endpoint. Now, even on a day when Axsome doesn’t have much news to report, traders are pushing up AXSM stock.
Relmada and Axsome are very similar companies. They’re both small biotechnology businesses focused on central nervous system disorders. Further, Relmada and Axsome have competing proposed treatments for depressive disorders.
Axsome’s drug candidate for major depressive disorder is called AXS-05. Meanwhile, Relmada’s is called REL-1017. As a result, Wall Street investors in one company may secretly — or not so secretly — hope the other encounters problems in its clinical trials.
As it turns out, that’s exactly what’s happening with RLMD stock today — apparently good news for AXSM stock. Specifically, REL-1017 failed to achieve its primary endpoint of a “statistically significant improvement in depression symptoms compared to placebo” after 28 days in its clinical trial.
What’s Happening With AXSM Stock?
The resulting price action from this news is like a seesaw, though you might not believe it even after seeing the numbers. As of this writing, RLMD stock is down more than 75%. Meanwhile, AXSM stock is gaining more than 9% on Relmada’s downfall.
This is what can happen when a company like Relmada Therapeutics relies so heavily on a single drug candidate. If something goes wrong with the product, the share price can absolutely plummet.
Make no mistake — REL-1017 isn’t a complete dud. Reportedly, the treatment did show a depression-symptom-test reduction of 14.8 points at day 28, compared to 13.9 points with a placebo. Still, this apparently isn’t good enough for investors, who don’t appear to be in a forgiving mood.
In contrast, traders clearly think the opposite of Axsome, at least when comparing it to the competition. As we can see, the seesaw of the market can be both cruel and kind. Fortune is favoring Axsome at the expense of Relmada today.
On the date of publication, David Moadel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.