By mid-February, Axsome Therapeutics, a biotech company, experienced a 55% increase in its stock year to date. While substantial gains over short periods are common in the industry, potential investors are considering whether the company can sustain its performance in the long term. If so, it could still be an attractive investment even after the recent surge in its stock price.
Axsome recently resolved a significant risk contributing to a 25% surge in its stock in one day. The company settled a patent lawsuit with generic drugmaker Teva Pharmaceutical Industries regarding Auvelity, a medicine approved in 2022 for major depressive disorder (MDD). Auvelity is one of the three medicines Axsome currently has on the market. If Teva had released a generic version, it would have posed a significant challenge to Axsome’s prospects. However, the settlement prevents Teva from launching a generic version until at least 2038, allowing Axsome to sustain its market position and providing promising news for the company and its shareholders.
Besides Auvelity, Axsome’s product lineup includes treatments like Sunosi for narcolepsy and Symbravo for migraines. Sunosi and Auvelity are contributing to significant revenue growth. While the full financial results for the fourth quarter and full year of 2024 are not yet available, Axsome anticipates product revenue to reach $385.2 million, a notable increase from $270.6 million the previous year. This suggests a growth of at least 42% for Axsome’s top line in 2024, with Symbravo expected to impact financial results positively. The company also plans to make clinical and regulatory advancements. In particular, it aims to submit Auvelity to the U.S. Food and Drug Administration (FDA) as a treatment for Alzheimer’s disease agitation in the year’s second half. Although Auvelity achieved its primary endpoint in one of two phase 3 clinical trials, there remains a strong chance for FDA approval due to the high unmet need and limited treatment options for Alzheimer’s disease.
Additionally, Axsome reported in December that AXS-12 performed successfully in a phase 3 study for treating narcolepsy and received orphan drug designation from the FDA, which expedites the development of drugs for life-threatening rare conditions. The company plans to advance AXS-12 further. Axsome also anticipates receiving late-stage clinical trial results for Sunosi in MDD and ADHD in the first quarter of 2025. It is working on a regulatory application for AXS-14 to treat fibromyalgia.
Axsome could potentially launch a new product and secure a key indication for Auvelity within the next 18 months. Over the next three years, the company might introduce two more brand-new medications to its portfolio, contributing to substantial top-line growth into the 2030s.
Many analysts believe Axsome Therapeutics has not yet reached its peak potential. The biotech company may continue delivering strong returns over the next five years and beyond, indicating that investing in its stock might still be timely.
