Loss-Making Axsome Therapeutics, Inc. (NASDAQ:AXSM) Expected To Breakeven In The Medium-Term

With the business potentially at an important milestone, we thought we'd take a closer look at Axsome Therapeutics, Inc.'s (NASDAQ:AXSM) future prospects. Axsome Therapeutics, Inc., a biopharmaceutical company, engages in the development of novel therapies for central nervous system (CNS) disorders in the United States. With the latest financial year loss of US$187m and a trailing-twelve-month loss of US$184m, the US$3.2b market-cap company alleviated its loss by moving closer towards its target of breakeven. Many investors are wondering about the rate at which Axsome Therapeutics will turn a profit, with the big question being “when will the company breakeven?” We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

View our latest analysis for Axsome Therapeutics

Consensus from 12 of the American Pharmaceuticals analysts is that Axsome Therapeutics is on the verge of breakeven. They anticipate the company to incur a final loss in 2024, before generating positive profits of US$169m in 2025. The company is therefore projected to breakeven around 2 years from now. 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 66% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Axsome Therapeutics' upcoming projects, but, take into account that by and large a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. 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 relatively high level of debt. Typically, debt shouldn’t exceed 40% of your equity, which in Axsome Therapeutics' case is 63%. A higher level of debt requires more stringent capital management which 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 important factors you should look at:

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.