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What's in Store for Axsome (AXSM) This Earnings Season?

Zacks Equity Research

Axsome Therapeutics, Inc. AXSM is scheduled to report first-quarter 2019 earnings results on May 9, 2019, before the market opens.

The company’s performance over the trailing four quarters has been encouraging with its earnings having surpassed expectations twice while meeting the same just once. The average trailing four-quarter beat is 3.03%. In the last reported quarter, Axsome delivered a positive surprise of 3.03%.

Shares of Axsome have skyrocketed 579.1% so far this year, outperforming the industry’s 5.2% increase.

Let’s see, how things are shaping up for this quarter to be reported.

Factors in Play

Axsome’s portfolio is currently devoid of any approved product. As a result, the company is yet to generate any revenues from the same.

The company is developing novel therapies for the management of the central nervous system (CNS) disorders. Its core CNS pipeline candidates include AXS-05, AXS-07, AXS-09 and AXS-12, which are being developed for multiple indications.

Last month, Axsome’s phase II study, evaluating AXS-05 for the smoking cessation treatment, met its prespecified primary endpoint of significantly curbing the habit of daily smoking as compared to GlaxoSmithKline’s GSK active comparator, Wellbutrin (bupropion). Shares of the company rose significantly back then.

This apart, Axsome is examining AXS-05 in a phase III program for treatment resistant depression (TRD) and in a phase II/III investigation for addressing agitation associated with Alzheimer’s disease. The candidate is also developed for major depressive disorder (MDD).

In late March 2019, the FDA granted a Breakthrough Therapy designation to AXS-05 for treating MDD. The candidate is a novel, oral, investigational NMDA receptor antagonist with multimodal activity. Axsome plans to initiate a phase III study on MDD during the second quarter of 2019.

The company also expects to report top-line data from the phase III study on TRD and the above mentioned MDD study in the second half of 2019 with an NDA filing anticipated in 2020.

We expect management to provide an update on the same during the upcoming investors call.

Axsome is also developing AXS-07 for the acute treatment of migraine. This March, the company enrolled the first patient in the phase III MOMENTUM study on the candidate. Recently, the company announced acceleration of the timeline for reporting top-line results from this study. Now the study outcomes will be presented in the second half of 2019, ahead of the previous deadline of first-quarter 2020.

Axsome is evaluating AXS-12 in phase II study for the treatment of narcolepsy symptoms. The company plans to release top-line findings from this study in second-quarter 2019.

We expect a through update on these pipeline candidates during the upcoming investors’ call.

Earnings Whispers

The proven Zacks model does not conclusively show that Axsome is likely to beat on earnings this reporting cycle. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: Axsome has an Earnings ESP of +12.90% as the Most Accurate Estimate stands at a loss of 27 cents while the Zacks Consensus Estimate is pegged at a loss of 31. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Axsome has Zacks Rank #4 (Sell), which lowers the predictive power of ESP. Therefore, surprise prediction is left inconclusive for the stock this earnings season. We caution against the Sell-rated stocks (# 4 or 5) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Axsome Therapeutics, Inc. Price and EPS Surprise

Axsome Therapeutics, Inc. Price and EPS Surprise | Axsome Therapeutics, Inc. Quote

Stocks That Warrant a Look

Here are a few health care stocks worth considering as our model shows that these have the right mix of elements to beat estimates this time around.

Aduro Biotech, Inc. ADRO has a Zacks Rank #2 and an Earnings ESP of +82.00%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Horizon Pharma Public Limited Company HZNP has a Zacks Rank #3 and an Earnings ESP of +25.00%. The company is scheduled to report first-quarter 2019 results on May 8.

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