Biopharmaceutical company Axsome Therapeutics (AXSM -1.44%) reported financial results for the third quarter on Tuesday, Nov. 12, that topped analysts' consensus estimates. Revenue for the quarter of $104.8 million was up 81% year over year. However, the company reported a net loss of $64.6 million, or $1.34 per share, indicating ongoing challenges with rising R&D and SG&A expenses. Overall, Axsome showed notable improvements in sales but is still navigating financial pressures.
| Metric | Q3 2024 | Analysts Estimate | Q3 2023 | Change (YOY) |
|---|---|---|---|---|
| Revenue | $104.8 million | $98.3 million | $57.8 million | 81.3% |
| Net loss | ($64.6 million) | N/A | ($62.2 million) | N/A |
| Net loss per share | ($1.34) | $(1.38) | ($1.32) | N/A |
| SG&A expenses | $95.6 million | N/A | $83.2 million | 14.9% |
Source: Axsome Therapeutics. Note: Analyst estimates for the quarter provided by FactSet. YOY = Year over year. SG&A = Selling, general, and administrative.
Business Overview and Focus
Axsome Therapeutics is a pharmaceutical company that develops therapeutics for central nervous system (CNS) conditions. It focuses on addressing high unmet medical needs through innovative solutions. The company’s current commercial portfolio includes the antidepressant Auvelity, which combats major depressive disorder, and the wakefulness-promoting agent Sunosi, used for excessive daytime sleepiness. Both drugs are pivotal to Axsome’s commercial strategy, providing substantial revenue growth opportunities.
Recent company pursuits highlight expansion in prescription coverage and international market exposure. Axsome aims to build on product success by expanding its sales force and focusing on clinical trials and regulatory submissions. Effective commercial strategies and regulatory alignment remain key success factors for the business.
Quarterly Performance Highlights
Axsome reported considerable year-over-year revenue growth in Q3, driven by its mainstay medications, Auvelity and Sunosi. Auvelity generated $80.4 million in net sales, an impressive 113% increase from the previous year, with a notable 108% rise in prescriptions written. This demand fortifies Axsome's plan to double its sales force by early 2025. Auvelity’s payer coverage remained robust at 78% across various channels.
Sunosi contributed $24.4 million in revenue, seeing a 21% rise year over year, with U.S. prescriptions up by 15%. The drug’s market reach includes extensive coverage for commercial and some government segments. In total, Sunosi’s payer coverage is strong at 83%. These sales figures underscore Axsome's strategic focus on enhancing market penetration and prescription adoption.
Axsome has also made strides in pipeline development, advancing several candidates through critical trials. Crucial Phase 3 trial results for AXS-05, focusing on Alzheimer's-related agitation, are anticipated by the end of the fourth quarter. Moreover, the AXS-07 resubmission could see an FDA decision by early 2025 for its migraine treatment indication. AXS-12 and AXS-14 development efforts continue towards addressing narcolepsy and fibromyalgia, respectively. Success here could significantly bolster Axsome’s product pipeline and future revenue streams.
The company’s financial picture reveals a deepening net loss attributed to increased R&D and SG&A expenses. R&D costs rose to $45.4 million, reflecting continued investment in pipeline growth and trial activities. SG&A expenses increased to $95.6 million, linked to commercial strategies and sales force expansions. Axsome manages $327 million in cash reserves, which it asserts will suffice to reach future cash flow positivity.
Looking Ahead
Other than its discussion of cash reserves, Axsome offered no specific guidance in this latest report. Axsome's management has said elsewhere that it remains optimistic about future prospects, with expectations hinging on successful product development and regulatory approvals. Strengthening the sales force and achieving positive trial outcomes are seen as cornerstones for future growth. The potential launch of AXS-07 and the continued expansion of both Auvelity and Sunosi are pivotal to management's outlook. The CEO, Herriot Tabuteau, indicated readiness for new launches pending successful regulatory outcomes, hinting at a proactive corporate strategy.
Investors will likely focus on Axsome’s ability to navigate high operating costs and its efforts to secure trial and regulatory success. As the company pushes forward with its pipeline and market strategies, investors will monitor trial results and regulatory developments closely.
