The U.S. Food and Drug Administration has approved Axsome Therapeutics Inc's oral depression pill, the company said on Friday, sending its shares soaring 38% in premarket trading.

The approval clears the way for the drugmaker to make its treatment available for more than 20 million Americans in a highly competitive market. Axsome said the treatment, Auvelity, will be commercially available in the fourth quarter.

The drug is designed to reduce symptoms of depression as early as one week and will compete with existing antidepressants, which take longer to show any effect.

Truist Securities analyst Joon Lee said the approval "represents a turning point for the company" and the drug could be a commercial success given its rapid mechanism of action.

New depression treatments have been rare, and the field of anti-depressants has been littered with trial failures. Johnson & Johnson's nasal spray Spravato was approved in 2019, making it the first new type of antidepressant in more than 30 years.

The long-awaited approval for Axsome's pill comes after the agency found deficiencies in the company's marketing application last year. Axsome had since then been working with the FDA to resolve the agency's concerns. Auvelity, which targets several neurotransmitters including serotonin, had succeeded in reducing symptoms of major depressive disorder (MDD) in a late-stage trial in 2019.