UBS Bullish On This Depression Drug Maker, Says Alzheimer's Agitation Data Is Attractive Catalyst

UBS initiated coverage on Axsome Therapeutics Inc AXSM, a biotech firm focused on developing and marketing therapies for central nervous disorders. 

UBS analyst is bullish on Axsom’s depression drug Auvelity’s launch and pipeline opportunities with upcoming late-stage clinical read-outs. 

Related Content: Axsome Depression Drug’s Commercial Success, Pipeline Potential Undervalued, Analyst Says.

The analyst anticipates that Auvelity could become a leading brand in depression treatment, generating $1 billion in sales by 2030; UBS’s bottom-up analysis shows that Auvelity can achieve near-term consensus estimates. 

UBS initiates coverage with a Buy rating and a price target of $111.

Positive data in Phase 3 trials for Alzheimer’s Agitation and Narcolepsy is expected to boost the performance of Axsome Therapeutics’ stock. 

The stock is currently benefiting from increased investor interest in the central nervous system therapy sector, particularly after the strategic exit of some players, including:

• Bristol Myers Squibb & Co BMY, which agreed to acquire Karuna Therapeutics Inc KRTX for $330.00 per share in cash, for a total equity value of $14.0 billion, or $12.7 billion net of estimated cash acquired. 
•  AbbVie Inc ABBV agreed to acquire Cerevel Therapeutics Holdings Inc CERE for a total equity value of approximately $8.7 billion, or $45 per share in cash.

Despite the current optimism, UBS analyst notes that the stock may be undervalued, with the market pricing in $2.0 billion in 2029 sales compared to the base case estimate of $2.4 billion.

In January, Axsome Therapeutics released preliminary fourth quarter 2023 product revenue of approximately $71 million and $204 million for the full year of 2023.

The company sees Auvelity’s net product sales to be approximately $49 million and $130 million for the fourth quarter and full year of 2023, respectively.

Sunosi’s revenue is expected to be $22 million and $74 million for the fourth quarter and full year of 2023, respectively. 

The company will report fourth-quarter financial results on February 20.

Price Action: AXSM shares are up 2.39% at $93.69 on the last check Tuesday.