There's a possibility that Axsome Therapeutics (AXSM -3.64%) will transition into commercial operations in the same manner it arrived on investors' radars: overnight. 

After beginning the year with a market valuation of just $79 million, the now-$1 billion pharmaceutical company expects to announce topline results from three phase 3 clinical trials and one phase 2 clinical trial before the end of 2019. The four research studies include three different pipeline assets aimed at treating four different disorders.

Successful results aren't guaranteed, of course, but Axsome Therapeutics is poised to have one heck of an end to the year, for better or for worse. Given the simplicity of the drug candidate formulations and the specific disorders being targeted, investors with a long-term mindset shouldn't necessarily think the stock can't go higher just because of its epic year-to-date performance.

Two drawings of human heads with one brain represented by organized blocks and the other represented by chaotic blocks.

Image source: Getty Images.

Can Axsome Therapeutics splash into commercial operations?

Few investors dared to own shares of Axsome Therapeutics before 2019. The company wasn't very well funded, and its lead drug candidate, AXS-05, took an unusual approach to treating depression disorders. The asset is a simple combination of bupropion (a compound that helps individuals quit smoking) and dextromethorphan (an active ingredient in common cough suppressants). How well could that possibly work for depression? 

Pretty darn well, apparently. The U.S. Food and Drug Administration (FDA) handed AXS-05 its coveted Breakthrough Therapy designation in major depressive disorder (MDD) following impressive phase 2 results. That should significantly reduce the cost and time of development for the asset. 

Axsome Therapeutics can now submit mid-stage results as if they were collected in a phase 3 study in its eventual marketing application (the company is running a phase 3 trial in MDD anyway). The FDA will also allow the business to submit new drug applications (NDA) for AXS-05 in MDD and treatment resistant depression (TRD) simultaneously. Separate ongoing phase 3 trials evaluating the lead drug candidate in MDD and TRD are expected to have initial results before the end of 2019.

That represents just half of the major events investors can expect before the end of the year, or one-third of major events when the time horizon is expanded to the first half of 2020. Here's how it all shakes out:

Drug Candidate



Next Event


Major depressive disorder (MDD)

GEMINI phase 3 trial

Topline results 2H 2019


Treatment resistant depression (TRD)

STRIDE-1 phase 3 trial

Topline results 2H 2019



MOMENTUM phase 3 trial

Topline results 2H 2019



CONCERT phase 2 trial

Topline results 2H 2019


Agitation in Alzheimer's disease

ADVANCE-1 phase 3 trial

Topline results 1H 2020


Smoking cessation

Successful phase 2 trial results announced in April 2019

Meeting with FDA to discuss transition to phase 3 trial

Data source: Press release.

If the three most advanced phase 3 trials deliver successful results before the end of 2019, then Axsome Therapeutics anticipates submitting two NDAs in the second half of 2020. Those two applications would cover three indications: AXS-05 in MDD, AXS-05 in TRD, and AXS-07 in migraine. 

Considering some Wall Street analysts are penciling in $1 billion or more in peak annual sales for AXS-05, the significance of the upcoming events is clear. What's less clear is what happens in the time between topline results being announced and the potential NDA filings. 

Axsome Therapeutics exited June with $53.7 million in cash and another $4 million available under an existing loan. On the second-quarter 2019 earnings conference call, management said that will be sufficient to fund operations into the fourth quarter of 2021, but investors should expect the company to raise a significant sum of money through a share offering in the event shares pop from successful clinical results. Simply put, it will take considerably more than $60 million to commercialize even a single drug candidate and wrap up ongoing mid- and late-stage studies.

A promising stock to watch

Amid all of the optimism surrounding Axsome Therapeutics, investors have to reserve some room for caution, too. There's no guarantee that the company will deliver successful results in late-stage trials of AXS-05 or AXS-07, but simple formulations and solid mid-stage results do offer a glimpse of a promising outcome. Even in the event of successful results, many inexperienced pharmaceutical companies have made regrettable mistakes and missteps during commercialization efforts of new drug products -- and investors have paid the price for it.

All that said, Axsome Therapeutics is a promising pharmaceutical stock to watch heading into the end of 2019. If AXS-05 achieves success in its phase 3 trials for MDD and TRD, then the company should earn a market valuation above its current $1 billion level.