Axsome Therapeutics AXSM announced that it has entered into a settlement agreement with Hikma Pharmaceuticals related to patents for its narcolepsy drug, Sunosi (solriamfetol).

The settlement agreement resolves the patent litigation brought by Axsome on Hikma for submitting an abbreviated new drug application to the FDA, seeking marketing approval for a generic version of Sunosi in the United States. The patent litigation is pending in the United States District Court for the District of New Jersey.

Axsome acquired U.S. rights to Sunosi from Jazz Pharmaceuticals JAZZ in May 2022. It began selling Sunosi in the U.S. market in May 2022 and in certain international markets in November 2022.

Jazz had received approval for Sunosi as a treatment for narcolepsy in 2019.

JAZZ is entitled to receive a high single-digit royalty from Axsome on net sales of Sunosi in the United States. AXSM out-licensed its ex-U.S. marketing rights of Sunosi to Pharmanovia in February 2023.

In the past year, shares of Axsome have rallied 73.6% against the industry’s decline of 9.1%.

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More on AXSM's Litigation Settlement Terms With Hikma

Per the settlement terms, Axsome will grant Hikma a license to sell a generic version of Sunosi in the United States, subject to approval from the FDA and other customary conditions, on or after March 1, 2040. However, if pediatric exclusivity is granted to Sunosi, Hikma can launch the generic version on or after Sept. 1, 2040.

Axsome and Hikma are required to submit the settlement agreement for review by the U.S. Federal Trade Commission and the U.S. Department of Justice, as required by law. Similar patent litigation related to Sunosi brought by Axsome against other parties remains pending in the U.S. District Court for the District of New Jersey.

Sunosi — A Key Top-line Driver for AXSM

Sunosi has become an important revenue driver for Axsome since its acquisition from Jazz. The drug generated sales worth $94.3 million in 2024, reflecting an increase of 26% on a year-over-year basis.

The latest patent litigation settlement helps Axsome to protect Sunosi sales from generic erosion in the United States.

Axsome is evaluating Sunosi in separate phase III studies for treating attention deficit hyperactivity disorder (ADHD), major depressive disorder (MDD), binge eating disorder and excessive sleepiness associated with shift work disorder.

Top-line data from the FOCUS study and the PARADIGM study, evaluating Sunosi for treating ADHD and MDD, respectively, are expected to be released in the first quarter of 2025.

AXSM's Zacks Rank & Stocks to Consider

Axsome currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the drug/biotech sector are Rigel Pharmaceuticals, Inc. RIGL and ANI Pharmaceuticals, Inc. ANIP, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, estimates for Rigel Pharmaceuticals’ earnings per share have increased from 92 cents to $1.28 for 2025. In the past year, shares of RIGL have risen 33%.

RIGL’s earnings beat estimates in three of the trailing four quarters while missing the same on the remaining occasion, the average surprise being 1,740.64%.

In the past 60 days, estimates for ANI Pharmaceuticals’ earnings per share have increased from $5.53 to $5.54 for 2025. In the past year, shares of ANIP have lost 10.5%.

ANIP’s earnings beat estimates in each of the trailing four quarters, the average surprise being 17.32%.

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Jazz Pharmaceuticals PLC (JAZZ) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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