It has been about a month since the last earnings report for Axsome Therapeutics (AXSM). Shares have lost about 2.5% 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 Q1 Earnings Beat Estimates, Auvelity Volume Rises
Axsome incurred an adjusted loss per share of 22 cents in the first quarter of 2023, narrower than the Zacks Consensus Estimate and our model estimates of a loss of $1.13 and $1.15, respectively. It reported a loss of $1.03 per share in the year-ago period.
The company’s revenues of $94.6 million beat the Zacks Consensus Estimate and our model estimates of $27 million and $25.2 million, respectively. Axsome did not generate any revenue in the year-ago quarter due to the absence of a marketed product.
Revenues mainly benefited from Sunosi ex-U.S. license agreement upfront payment received in the quarter.
Quarter in Detail
Net product revenues totaled $28.6 million in the quarter. The amount comprised of product revenues from Sunosi (sleep drug), Auvelity (major depressive disorder drug), and licensing and royalty revenues.
Auvelity recorded its first full-quarter sales of $15.7 million, up 302% sequentially. There were no net sales in the comparable period of 2022.
Sunosi net product sales amounted to $12.9 million for the reported quarter. There were no net sales in the corresponding period of 2022 for Sunosi. Total prescriptions for Sunosi increased 4% from that recorded in the previous quarter.
Licensing revenues totaled $65.7 million, representing an upfront payment from Pharmanovia for Sunosi commercialization rights in Europe, and other Middle East and North African countries.
Royalty revenues stood at $0.3 million for the quarter, reflecting Sunosi sales in the out-licensed territories.
Research and development expenses amounted to $17.8 million, up 41% from that registered the year-ago period. The increase was due to higher costs associated with clinical studies, and post-marketing commitments for Sunosi and Auvelity.
Selling, general and administrative expenses totaled $74.2 million, up 289% year over year. The significant surge was due to higher commercial activities for Sunosi and Auvelity, which included sales force onboarding and marketing spending.
Management believes that its cash balance of 246.5 million (as of March 2023-end) and its $350-million term-loan facility will be enough to fund future operations into cash flow positivity.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
The consensus estimate has shifted -5.98% due to these changes.
Currently, Axsome has a great Growth Score of A, though it is lagging a lot 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 C. 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 indicates a downward shift. 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 belongs to the Zacks Medical - Biomedical and Genetics industry. Another stock from the same industry, Fate Therapeutics (FATE), has gained 2.4% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
Fate Therapeutics reported revenues of $58.98 million in the last reported quarter, representing a year-over-year change of +220.4%. EPS of -$0.19 for the same period compares with -$0.68 a year ago.
For the current quarter, Fate Therapeutics is expected to post a loss of $0.59 per share, indicating a change of +25.3% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Fate Therapeutics. Also, the stock has a VGM Score of F.
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