Axsome Therapeutics, Inc. (NASDAQ:AXSM) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Axsome Therapeutics, Inc., a biopharmaceutical company, engages in the development of novel therapies for central nervous system (CNS) disorders in the United States. The US$4.6b market-cap company posted a loss in its most recent financial year of US$239m and a latest trailing-twelve-month loss of US$309m leading to an even wider gap between loss and breakeven. The most pressing concern for investors is Axsome Therapeutics' path to profitability – when will it breakeven? We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.

Axsome Therapeutics is bordering on breakeven, according to the 17 American Pharmaceuticals analysts. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$171m in 2026. The company is therefore projected to breakeven around 2 years from today. What rate will the company have to grow year-on-year in order to breakeven on this date? Using a line of best fit, we calculated an average annual growth rate of 69%, which is extremely buoyant. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

Underlying developments driving Axsome Therapeutics' growth isn't the focus of this broad overview, however, take into account that generally a pharma company has lumpy cash flows which are contingent on the drug and stage of product development the business is in. This means, large upcoming growth rates are not abnormal as the company is beginning to reap the benefits of earlier investments.

Before we wrap up, there's one issue worth mentioning. Axsome Therapeutics currently has a debt-to-equity ratio of 174%. Typically, debt shouldn't exceed 40% of your equity, which in this case, the company has significantly overshot. A higher level of debt requires more stringent capital management which increases the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Axsome Therapeutics to cover in one brief article, but the key fundamentals for the company can all be found in one place – Axsome Therapeutics' company page on Simply Wall St. We've also compiled a list of relevant factors you should further examine:

1. Valuation: What is Axsome Therapeutics worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Axsome Therapeutics is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Axsome Therapeutics's board and the CEO's background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.