On Wednesday, Citi reaffirmed its Buy rating on Axsome Therapeutics (NASDAQ:AXSM) with a consistent price target of $125.00. The endorsement comes after discussions with the company's management following a recent critical short report. Axsome's management provided detailed clarifications, challenging the claims in the report and asserting their accounting practices are standard for the pharmaceutical industry.
Management at Axsome Therapeutics addressed each point raised by the short report, emphasizing that the allegations were entirely false. They explained their revenue recognition and accounts receivable methodologies, assuring they are in accordance with common practices among biotech companies at a comparable level of commercial development. Citi's analysis supports the company's position, noting that Axsome's practices align with industry standards.
According to Citi's assessment, Axsome Therapeutics has maintained its operational course despite the short report, successfully advancing the launch of Auvelity and setting realistic expectations for the market. The analyst from Citi highlighted that, despite the claims made in the short report, the market seems to have largely disregarded its allegations.
Axsome Therapeutics has been proactive in communicating with its investors and the public, aiming to mitigate any concerns raised by the short report. The company's management has been transparent in their responses, providing detailed explanations to uphold investor confidence.
Citi believes that the current share price of Axsome Therapeutics presents an investment opportunity, especially with anticipated second-half 2024 catalysts on the horizon. The firm's stance remains unchanged, suggesting confidence in the company's ongoing business activities and future prospects.
In other recent news, Axsome Therapeutics has reported significant financial growth, with a year-over-year revenue increase of about 160% in Q1 2024, reaching $75 million in total net product revenue. This growth came despite an impactful cyberattack on Auvelity's weekly prescriptions, showcasing the company's resilience. Additionally, the company has settled a patent lawsuit with Unichem Laboratories over its narcolepsy drug, Sunosi, allowing Unichem to launch a generic version of the drug in the U.S. in 2042, subject to certain conditions.
In the company's recent Annual Meeting of Stockholders, three key proposals were passed. These included the election of two Class III directors, the ratification of Deloitte & Touche LLP as Axsome's independent registered public accounting firm for the fiscal year ending December 31, 2024, and the approval of the compensation of the company's named executive officers on a non-binding advisory basis.
Analyst firms RBC (TSX:RY) Capital and Piper Sandler have maintained their positive ratings on Axsome. RBC Capital increased the price target to $130.00, reflecting a positive outlook for the company's intellectual property surrounding Auvelity. Piper Sandler reaffirmed its Overweight rating, following a survey of neurologists indicating that AXS-05, also known as Auvelity, is viewed as an effective treatment option for Alzheimer's disease agitation. These recent developments underscore Axsome's strategic efforts and continued momentum in its commercial and pipeline activities.
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