Biopharmaceutical company Axsome Therapeutic (AXSM 7.58%) released financial results for the third quarter on Tuesday, November 12, which exceeded analysts’ consensus estimates. Revenue for the quarter of $104.8 million increased 81% year over year. However, the company reported a net loss of $64.6 million, or $1.34 per share, indicating continued challenges related to increased R&D and SG&A spending. Overall, Axsome has seen notable improvements in sales but still faces financial pressures.

Source: Axsome Therapeutics. Note: Analyst estimates for the quarter provided by FactSet. YOY = Year after year. SG&A = Sales, General and Administrative.

Business overview and direction

Axsome Therapeutics is a pharmaceutical company which develops therapeutic products for central nervous system (CNS) conditions. It focuses on addressing significant 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 key to Axsome’s commercial strategy, providing significant revenue growth opportunities.

The company’s recent activities highlight the expansion of prescription coverage and exposure to the international market. Axsome aims to build on the success of its products by expanding its sales force and focusing on clinical trials and regulatory submissions. Effective business strategies and regulatory alignment remain key success factors for the company.

Quarterly Performance Highlights

Axsome reported considerable year-over-year revenue growth in the third quarter, driven by its lead drugs, Auvelity and Sunosi. Auvelity generated net revenue of $80.4 million, an impressive 113% increase over the previous year, with a notable 108% increase in prescriptions written. This demand reinforces Axsome’s plan to double its sales force by early 2025. Auvelity’s payer coverage remained strong at 78% across various channels.

Sunosi generated $24.4 million in revenue, a 21% year-over-year increase, with U.S. prescriptions up 15%. The commercial scope of the drug includes extensive coverage for commercial and certain government segments. Overall, Sunosi’s payer coverage is strong at 83%. These sales figures underscore Axsome’s strategic focus on improving market penetration and prescription adoption.

Axsome has also made progress in pipeline development, advancing several candidates through critical trials. Crucial results from the Phase 3 trial for AXS-05, focused on Alzheimer’s disease-related agitation, are expected by the end of the fourth quarter. In addition, the resubmission of AXS-07 could result in a decision by the FDA by early 2025 for its indication in the treatment of migraine. Development efforts for AXS-12 and AXS-14 continue to combat narcolepsy and fibromyalgia, respectively. Success in this area could significantly strengthen Axsome’s product portfolio and future revenue streams.

The company’s financial position reveals a growing net loss attributed to increased R&D and SG&A expenses. R&D costs increased to $45.4 million, reflecting continued investment in pipeline growth and testing activities. SG&A expenses increased to $95.6 million, related to business strategies and sales force expansion. Axsome manages $327 million in cash reserves, which it believes will be enough to achieve future positive cash flow.

Looking to the future

Aside from its discussion of cash reserves, Axsome did not provide any specific guidance in this latest report. from Axsome Management said elsewhere that it remains optimistic about future prospects, with expectations dependent on successful product development and regulatory approvals. Strengthening the sales force and achieving positive trial results are considered cornerstones for future growth. The potential launch of AXS-07 and the continued expansion of Auvelity and Sunosi are key to management’s outlook. CEO Herriot Tabuteau indicated that it was ready to launch new launches pending positive regulatory results, hinting at a proactive corporate strategy.

Investors will likely focus on Axsome’s ability to manage high operating costs and its efforts to ensure testing and regulatory success. As the company pursues its pipeline and market strategies, investors will closely monitor trial results and regulatory developments.