A month has gone by since the last earnings report for Axsome Therapeutics (AXSM). Shares have lost about 9.8% 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 its most recent earnings report in order to get a better handle on the important drivers.
Axsome’s Earnings Miss Estimates, Auvelity Records First Sales
AxsomeTherapeutics incurred an adjusted loss of $1.28 per share in the fourth quarter of 2022, wider than the Zacks Consensus Estimate of a loss of $1.18. The company reported a loss of 90 cents per share in the year-ago period.
Revenues of $24.4 million beat the Zacks Consensus Estimate of $21.5 million. It comprised sales of the sleep drug, Sunosi (solriamfetol), and the major depressive disorder drug, Auvelity. Axsome did not generate any revenue in the year-ago quarter due to the absence of a marketed product.
Quarter in Detail
Auvelity sales in the fourth quarter were $5.2 million.
Sunosi generated net sales of $19.2 million in the fourth quarter, including U.S. net sales of $18.3 million and international net sales of $0.9 million.
Research and development expenses were $14.7 million, up 6.5% from the year-ago period’s level. This increase was due to higher costs associated with clinical studies and post-marketing commitments for Sunosi and Auvelity.
Selling, general and administrative expenses were $61.5 million, up 227% year over year. The significant increase was due to higher commercial activities for Sunosi and Auvelity, which included sales force onboarding and marketing spending.
As of Dec 31, 2022, Axsome had cash and cash equivalents worth $200.8 million compared with $227.5 million as on Sep 30, 2022.
Axsome generated revenues of $50 million in 2022 compared with zero revenues in 2021. The revenues reflect contributions from Axsome’s marketed drugs, Sunosi and Auvelity.
The company reported an adjusted loss of $4.42 per share for full-year 2022.
Management believes that its cash balance of 200.8 million (as of December 2022 end) and term-loan facility of $350 million will be enough to fund future operations into cash flow positivity.
The company also expects an increase in 2023 operating expenses on account of the commercialization activities of Sunosi and Auvelity and other pipeline development.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
Currently, Axsome has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward 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, Seattle Genetics (SGEN), a stock from the same industry, has gained 13%. The company reported its results for the quarter ended December 2022 more than a month ago.
Seattle Genetics reported revenues of $528.15 million in the last reported quarter, representing a year-over-year change of +22.9%. EPS of -$0.80 for the same period compares with -$0.95 a year ago.
Seattle Genetics is expected to post a loss of $0.83 per share for the current quarter, representing a year-over-year change of -12.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Seattle Genetics. Also, the stock has a VGM Score of F.
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