As of mid-February, Axsome Therapeutics (AXSM -0.40%) is making headlines with an impressive 55% increase in its stock price year-to-date. Although rapid gains in the biotech sector aren’t rare, those who missed this surge may be wondering if there’s still an opportunity for long-term growth. If the outlook remains positive, Axsome might still be a worthwhile investment despite the recent jump.
Let’s explore if there’s more potential for Axsome Therapeutics.
### Axsome Mitigates a Major Risk
A pivotal development recently pushed Axsome’s stock up by about 25% in a single day. The company resolved a patent lawsuit concerning Auvelity, a treatment for major depressive disorder, with Teva Pharmaceutical Industries, a generic drug manufacturer. Auvelity, one of only three medications Axsome currently markets, was launched in 2022. Had Teva introduced a generic version, it would have posed a major challenge for Axsome, possibly reshaping its future.
Fortunately, the settlement means Teva cannot release a generic Auvelity until at least 2038, giving Axsome a significant advantage. This is fantastic news for Axsome and its investors.
### Expanding Product Lineup and Robust Pipeline
In addition to Auvelity, Axsome’s portfolio includes Sunosi, a narcolepsy treatment, and Symbravo, a newly approved migraine therapy. Both Sunosi and Auvelity are contributing to Axsome’s robust revenue growth. While Axsome has yet to disclose its final fourth-quarter and full-year 2024 results, it has projected $385.2 million in product revenue for 2024, a notable increase from the previous year’s $270.6 million.
This indicates at least a 42% rise in revenue for 2024 compared to 2023. With Symbravo’s introduction, the company’s financials should be positively impacted this year, alongside expected clinical and regulatory advancements.
Later this year, Axsome plans to submit Auvelity to the FDA for potential use in treating agitation associated with Alzheimer’s disease. In December, the company released results from two phase 3 trials for this condition; Auvelity achieved its primary goal in one study but fell short in the other.
However, considering the unmet need in Alzheimer’s – with few treatments approved in recent decades – there’s a strong possibility that the FDA might approve it.
Also in December, Axsome announced that AXS-12, an investigational treatment for narcolepsy, excelled in a phase 3 trial. The FDA granted it orphan drug status, expediting the development process for important medications targeting rare diseases affecting fewer than 200,000 people in the U.S. This bodes well for the drug’s advancement.
Additionally, Axsome is anticipating late-stage trial results for Sunosi in major depressive disorder and ADHD in early 2025, and it’s preparing a regulatory application for AXS-14 for fibromyalgia.
In the next year and a half, Axsome could see the launch of at least one new product and potentially gain a major new indication for Auvelity. Within three years, it could also add two more innovative drugs to its portfolio, sustaining its revenue growth well into the next decade.
Overall, I believe Axsome Therapeutics has significant growth potential ahead. With the possibility of delivering strong returns over the next five years, it might be just the right time to consider investing.
