This Stock Is Already Up by 55% in 2025: Is It Too Late to Buy?

It's only mid-February, but as of this writing biotech company Axsome Therapeutics (NASDAQ: AXSM) is up by 55% year to date. Substantial stock-market gains over short periods aren't that rare in the industry. For those who missed Axsome's rally this year, the question is whether the company can perform well over the long run. If that's the case, its shares might still be worth investing in even after their rise.

Let's find out whether there's more upside ahead for Axsome Therapeutics.

Let's start with a development that recently sent Axsome's stock soaring by about 25% in one day. The company settled a patent lawsuit related to Auvelity, a medicine for major depressive disorder (MDD), with generic drugmaker Teva Pharmaceutical Industries. Auvelity was first approved in 2022; it's one of only three medicines Axsome has on the market. If Teva had launched a generic version of Auvelity, that would have been a significant headwind for Axsome and completely altered its prospects.

Fortunately, Teva's settlement with Axsome now means the former won't be able to launch a generic version of Auvelity until 2038 at the earliest. Axsome will grant Teva a license to launch an Auvelity generic at that point, but it's still 13 or more years away. That's excellent news for Axsome Therapeutics and its shareholders.

Besides Auvelity, Axsome's lineup features a treatment for narcolepsy, Sunosi, and the newly approved therapy for migraine, Symbravo. Sunosi and Auvelity are driving strong revenue growth. While Axsome has yet to release its fourth-quarter and full-year 2024 financial results, it gave investors a sneak peek. It expects product revenue of $385.2 million for 2024, compared to total revenue of $270.6 million reported last year.

So Axsome's 2024 top line should grow by at least 42% compared to 2023. The addition of Symbravo will make an impact on financial results this year. Moreover, the company should make clinical and regulatory progress.

It plans to submit Auvelity to the U.S. Food and Drug Administration (FDA) as a potential treatment for Alzheimer's disease (AD) agitation in the second half of the year. In December, Axsome released data from two phase 3 clinical trials from its lead medicine in this indication; Auvelity hit its primary endpoint in the first study but missed it in the second.

However, considering there's a high unmet need in AD -- and very few treatments for the disease have been approved in the past two decades -- there's still an excellent chance the FDA will give the go-ahead.