Axsome Shares Up 20% in a Month: How Should You Play the Stock?

Core Viewpoint - Axsome Therapeutics has shown strong stock performance, with a 20.2% increase over the past month, significantly outperforming the industry and the S&P 500 [1][7]. Sales Performance - The lead drug, Auvelity, has generated $215.9 million in sales during the first half of 2025, marking an 82.3% year-over-year increase, primarily due to higher unit sales volume [3][7]. - Auvelity is expected to maintain a compound annual growth rate (CAGR) of approximately 42.7% over the next three years [3]. Drug Development and Pipeline - Axsome is expanding Auvelity's indications for other CNS disorders, including Alzheimer's disease agitation and smoking cessation, with plans to submit a supplemental new drug application (sNDA) later in Q3 2025 [4]. - The company is also advancing its other drugs, such as Sunosi, which generated $53 million in sales in H1 2025, reflecting a 25.6% year-over-year increase [8]. - New migraine drug Symbravo was approved in January 2025 and launched in June, enhancing Axsome's market presence [9]. Competitive Landscape - Competition exists in the CNS market, with companies like Acadia Pharmaceuticals developing similar treatments [11]. - Sunosi may face competition from Jazz Pharmaceuticals' sleep disorder drugs, which have a strong market share [12]. Regulatory Challenges - Axsome received a Refusal to File letter from the FDA regarding its NDA for AXS-14, which could delay potential approval and market entry [13]. Valuation Metrics - Axsome's shares are trading at a price-to-sales (P/S) ratio of 12.16, significantly higher than the industry average of 2.12, although below its five-year mean of 14.93 [14]. Earnings Estimates - The Zacks Consensus Estimate for 2025 loss per share has widened from $3.26 to $3.41, while 2026 earnings per share estimates have decreased from $1.36 to $0.92 [16]. Conclusion - The strong sales performance of Auvelity and the progress of other drugs are positive indicators for Axsome's stock [17]. - However, competition and potential regulatory setbacks pose risks to growth prospects [17].