Last year was a big one for Axsome Therapeutics (AXSM 0.27%). The biotech company specialized in central nervous system conditions launched its first two products and saw its share price increase by 100%. But a lot more could be on the horizon.
Axsome is starting to grow revenue thanks to those first two products. And its pipeline, with all late-stage candidates, could make it a multiproduct company sooner rather than later. In fact, Axsome may undergo a significant transformation in just three years. Let's take a closer look at what we might expect from this up-and-coming company.
The first two products
First, a look at Axsome's situation today. The company sells sleep disorder drug Sunosi and antidepressant Auvelity. Axsome acquired the former from Jazz Pharmaceuticals and developed the latter in house. Both of these products have enormous potential. Axsome predicts U.S. peak sales for Sunosi could reach $500 million and sales of Auvelity may reach $3 billion.
Meanwhile, Sunosi says it has the cash and borrowings necessary to keep things running until it becomes cash-flow-positive. The company has $247 million in cash, and it has capital from a $350 million term loan facility.
Now let's look to the future. The fact that all of Axsome's candidates are phase 2 or more advanced suggests the company is close to bringing additional products to market. And, recently, Axsome offered investors a timeline. The company said it expects to have six commercialized products by 2025. This includes Sunosi and Auvelity, as well as candidates for migraine, narcolepsy, fibromyalgia, and Alzheimer's disease agitation.
Axsome plans on submitting the migraine candidate for approval later this year. The company already reported positive data from a phase 3 trial of the Alzheimer's candidate. Another phase 3 trial is ongoing for that investigational product, and the company expects data from the trial in the first half of next year.
Together, these six candidates could generate $9.5 billion in total peak revenue. Of course, this doesn't mean they will bring in this revenue right away. It generally takes a drug some time to launch, gain a following among doctors and patients, and truly take off. But, by 2025, the company could see revenue growth from Sunosi and Auvelity -- and the beginnings of growth in the four newer products.
Positive prescription trends
Today, Sunosi and Auvelity are already showing positive prescription trends. In the most recent quarter, Auvelity prescriptions climbed by almost 300% to 31,000 from the previous quarter. And Sunosi prescriptions climbed 13% year over year.
All of this means that three years from now, Axsome's revenue could be significantly higher than it is today. In the most recent quarter, the company reported product revenue of more than $28 million. Axsome began selling Sunosi about a year ago and Auvelity late last year.
Axsome also aims to launch two additional products that could add another $2 billion to total U.S. product sales in the coming years. The company is working on a smoking cessation candidate and an attention deficit hyperactivity disorder candidate but hasn't determined a specific launch date for them yet.
So, what does all of this mean for investors? Today, Axsome's shares trade for 24 times sales. That may seem like a lot. But the sales picture could look very different in a few years compared to right now. If all goes smoothly in the final stages of development and Axsome wins regulatory approvals, as mentioned, sales could soar from today's levels. And that means, if you're a long-term investor, buying the stock at today's price looks like a bargain.
