R&D Pipeline And NDAs Will Unlock New Approvals

Key Takeaways

• Ongoing R&D and product launch efforts, including key NDA submissions, may significantly enhance future revenues through new product approvals.
  
• Strategic commercial expansion and a digital-centric approach could bolster revenues and earnings growth, with operational efficiencies improving net margins.
  
• Rising R&D and commercialization expenses, coupled with increasing net losses, could strain Axsome Therapeutics' financial position and impact future revenue growth.

Catalysts

A biopharmaceutical company, develops and delivers novel therapies for the management of central nervous system (CNS) disorders in the United States.

• Axsome Therapeutics' ongoing R&D execution with multiple Phase III trials and NDA submissions planned, including AXS-05 for Alzheimer's disease agitation and AXS-12 for narcolepsy, could significantly boost future revenue through new product approvals.
  
• Expansion and enhancement of the sales force for existing products like Auvelity and Sunosi are expected to drive increased market penetration and revenue, suggesting potential for higher earnings growth.
  
• The commercial launch of Symbravo for migraine treatment could lead to increased revenues and net margins, particularly if it successfully competes against existing treatments in the robust migraine market.
  
• Axsome's dynamic digital-centric commercialization platform enables cost-effective market reach and supporting launches like Symbravo, potentially improving net margins due to operational efficiencies.
  
• Broad portfolio expansion with plans to commercialize seven products by 2027 presents a compelling pipeline for sustained growth, potentially increasing long-term revenues and earnings significantly.

Axsome Therapeutics Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Axsome Therapeutics's revenue will grow by 57.9% annually over the next 3 years.
• Analysts assume that profit margins will increase from -74.5% today to 28.9% in 3 years time.
• Analysts expect earnings to reach $439.5 million (and earnings per share of $8.46) by about April 2028, up from $-287.2 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $948.5 million in earnings, and the most bearish expecting $-69.4 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 25.1x on those 2028 earnings, up from -18.0x today. This future PE is greater than the current PE for the US Pharmaceuticals industry at 16.2x.
• Analysts expect the number of shares outstanding to grow by 2.67% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.21%, as per the Simply Wall St company report.

Axsome Therapeutics Future Earnings Per Share Growth

Risks

• There are significant R&D expenses, with research and development costing $187.1 million for the year, doubling from the previous year, which impacts net margins and earnings.
  
• The net loss for 2024 was $287.2 million, an increase from the prior year, highlighting ongoing challenges in achieving profitability, affecting earnings and net margins.
  
• Commercialization activities for new product launches involve significant costs, with selling, general, and administrative expenses rising to $411.4 million, which reduces net margins.
  
• The company's cash position decreased to $315.4 million from $386.2 million at year-end 2023, indicating increased cash burn and potential future financial strain on liquidity.
  
• Regulatory and clinical risks exist with multiple NDAs planned for submission in the future, which, if delayed or unsuccessful, could hinder expected revenue growth from pipeline products.

Valuation

• The analysts have a consensus price target of $177.353 for Axsome Therapeutics based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $216.0, and the most bearish reporting a price target of just $148.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.5 billion, earnings will come to $439.5 million, and it would be trading on a PE ratio of 25.1x, assuming you use a discount rate of 6.2%.
  
• Given the current share price of $106.27, the analyst price target of $177.35 is 40.1% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.