UPDATE 3-Axsome to seek approval for Alzheimer's-related agitation drug despite mixed data

Adds details from conference call in paragraphs 10-11, updates shares in paragraph 2

By Sneha S K

Dec 30 (Reuters) - Axsome Therapeutics AXSM.O said on Monday it would seek marketing approval next year for its oral drug to treat agitation in patients with Alzheimer's disease, after it succeeded in three out of four late-stage studies.

But shares of the New York-based drug developer fell more than 10%, as the treatment did not show statistically significant results in one of the studies.

Axsome tested the drug, AXS-05, in more than 1,000 participants with Alzheimer's-related agitation — a symptom that causes emotional distress as well as verbal and physical aggressiveness, and is reported by up to 70% of patients.

The treatment significantly delayed relapse time of agitation as measured on a disease severity scale in a 295-patient study and reduced worsening of other symptoms compared to placebo, Axsome said.

The drug did not show statistical significance in extending relapse time in another trial, but the company said results "numerically favored" AXS-05 over placebo.

At least three analysts said they still expect the drug to be ultimately approved. But investors will view the miss as "falling short of a very solid efficacy package", said Needham analyst Ami Fadia.

AXS-05 modulates the function of certain neurotransmitters that regulate cognitive and behavioral symptoms such as agitation and aggression.

Last year, the U.S. Food and Drug Administration approved Otsuka Pharma's 4578.T oral tablets Rexulti or brexpiprazole, making it the first drug to treat agitation symptoms.

Rexulti contains the FDA's harshest "black-box" warning for increased risk of death in elderly people with dementia-related psychosis.

AXS-05 will be well positioned to compete with brexpiprazole after approval, Jeffrey Cummings, vice chair of research, UNLV Department of Brain Health, said on a conference call.

"The black box will weigh heavily on the thinking of the prescriber," Cummings said.

Some prior attempts — such as by Otsuka and BioXcel Therapeutics BTAI.O — to develop an Alzheimer's-related agitation treatment have been unsuccessful or faced issues.

(Reporting by Sneha S K; Editing by Shilpi Majumdar)

((Sneha.SK@thomsonreuters.com))