We feel now is a pretty good time to analyse Axsome Therapeutics, Inc.'s (NASDAQ:AXSM) business as it appears the company may be on the cusp of a considerable accomplishment. 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$4.4b market-cap company posted a loss in its most recent financial year of US$239m and a latest trailing-twelve-month loss of US$311m 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? In this article, we will touch on the expectations for the company's growth and when analysts expect it to become profitable.

According to the 17 industry analysts covering Axsome Therapeutics, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2025, before generating positive profits of US$146m in 2026. The company is therefore projected to breakeven around 2 years from now. How fast will the company have to grow each year in order to reach the breakeven point by 2026? Working backwards from analyst estimates, it turns out that they expect the company to grow 72% year-on-year, on average, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won't go into details of Axsome Therapeutics' upcoming projects, but, bear in mind that generally pharmaceuticals, depending on the stage of product development, have irregular periods of cash flow. This means that a high growth rate is not unusual, especially if the company is currently in an investment period.

Before we wrap up, there's one issue worth mentioning. Axsome Therapeutics currently has a debt-to-equity ratio of 194%. Typically, debt shouldn't exceed 40% of your equity, and the company has considerably exceeded this. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Axsome Therapeutics, so if you are interested in understanding the company at a deeper level, take a look at Axsome Therapeutics' company page on Simply Wall St. We've also put together a list of essential factors you should further research:

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.