It has been about a month since the last earnings report for Axsome Therapeutics (AXSM). Shares have lost about 0.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Axsome due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Axsome's Q3 Earnings Beat, Auvelity Drives Sales Growth
Axsome incurred an adjusted loss of $1.34 per share in the third quarter of 2024, narrower than the Zacks Consensus Estimate of a loss of $1.38. The company had incurred a loss of $1.32 per share in the year-ago quarter.
Total revenues surged 81% year over year to $104.8 million in the third quarter, beating the Zacks Consensus Estimate of $99 million. The increase in revenues can be attributed to strong sales of Auvelity.
Quarter in Detail
Total revenues in the third quarter consisted of product revenues from Auvelity and Sunosi and royalty revenues.
Net product revenues were $103.7 million in the quarter compared with $57.1 million reported in the year-ago period. The figure beat our model estimate of $94 million.
This marked the first time that Axsome generated product revenues of more than $100 million in a particular quarter, owing to the strong sales uptake of Auvelity and Sunosi.
Auvelity recorded sales of $80.4 million, up 113% year over year, owing to strong underlying demand. Sales of the drug beat our model estimate of $71.1 million.
Per Axsome, around 144,000 prescriptions were recorded for Auvelity in the reported quarter, reflecting a sequential increase of 17% and a year-over-year increase of 108%.
Sunosi’s net product sales were $24.4 million, up 21% from the year-ago quarter’s level. Total prescriptions for Sunosi in the United States grew 5% sequentially to 47,000.
Royalty revenues totaled $1 million in the quarter, reflecting royalties on Sunosi sales in out-licensed territories.
Research and development expenses (including stock-based compensation) increased to $45.4 million, up 57.6% from the year-ago quarter’s level. The increase was due to higher costs associated with clinical studies, especially the label expansion study of Sunosi, as well as other pipeline candidates like AXS-05, AXS-12, AXS-07 and AXS-14.
Selling, general and administrative expenses (including stock-based compensation) totaled $95.6 million, up 14.9% year over year. The increase was due to higher commercial activities for Sunosi and Auvelity and other costs.
As of Sept. 30, 2024, Axsome had cash and cash equivalents worth $327.3 million compared with $315.7 million as of June 30, 2024.
Guidance
Management believes that its cash balance of $327.3 million (as of September) is enough to fund future operations into cash flow positivity.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 17.84% due to these changes.
VGM Scores
Currently, Axsome has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Axsome has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Axsome is part of the Zacks Medical - Biomedical and Genetics industry. Over the past month, Pacira (PCRX), a stock from the same industry, has gained 23.6%. The company reported its results for the quarter ended September 2024 more than a month ago.
Pacira reported revenues of $167.72 million in the last reported quarter, representing a year-over-year change of +2.3%. EPS of $0.79 for the same period compares with $0.72 a year ago.
Pacira is expected to post earnings of $0.82 per share for the current quarter, representing a year-over-year change of -7.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -1%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Pacira. Also, the stock has a VGM Score of A.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
