Axsome Therapeutics, Inc.'s (NASDAQ:AXSM) Shift From Loss To Profit

We feel now is a pretty good time to analyse Axsome Therapeutics, Inc.'s (NASDAQ:AXSM) business as it appears the company may be on the cusp of a considerable accomplishment. Axsome Therapeutics, Inc., a biopharmaceutical company, engages in the development of novel therapies for central nervous system (CNS) disorders in the United States. The company’s loss has recently broadened since it announced a US$239m loss in the full financial year, compared to the latest trailing-twelve-month loss of US$309m, moving it further away from breakeven. The most pressing concern for investors is Axsome Therapeutics' path to profitability – when will it breakeven? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

Check out our latest analysis for Axsome Therapeutics

Axsome Therapeutics is bordering on breakeven, according to the 17 American Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$171m in 2026. Therefore, the company is expected to breakeven roughly 2 years from today. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 69% is expected, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Underlying developments driving Axsome Therapeutics' growth isn’t the focus of this broad overview, though, keep in mind that by and large pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. So, a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Axsome Therapeutics currently has a debt-to-equity ratio of 174%. Typically, debt shouldn’t exceed 40% of your equity, and the company has considerably exceeded this. Note that a higher debt obligation increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Axsome Therapeutics, so if you are interested in understanding the company at a deeper level, take a look at Axsome Therapeutics' company page on Simply Wall St. We've also compiled a list of key factors you should further research:

1. Valuation: What is Axsome Therapeutics worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Axsome Therapeutics is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Axsome Therapeutics’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.