Bitcoin and different cryptocurrencies are all the fad nowadays, and plenty of traders are pondering of leaping on the bandwagon. Some Bitcoin optimists consider that it’s going to exchange fiat foreign money, that’s, government-issued (or government-backed) foreign money whose worth is not linked to any commodity corresponding to gold or silver.
The worth of fiat foreign money is, roughly talking, decided by the federal government. If Bitcoin finally ends up changing this sort of cash sooner or later, those that bought on early could be sitting fairly. However Bitcoin itself is not presently backed by any authorities or commodity. It’s also very unstable, main some traders to assume it’s best to remain as distant as doable.
The latter argument appears extra convincing to me, and even for traders with a penchant for danger, I feel there are a lot better choices than Bitcoin (and different cryptos) on the inventory market. One instance is Axsome Therapeutics (NASDAQ:AXSM). This clinical-stage biotech has a number of thrilling pipeline candidates that might assist it ship glorious monetary outcomes and stable returns sooner or later.
Listed below are among the dangers Axsome Therapeutics carries
Axsome Therapeutics, which focuses on creating therapies for problems that have an effect on the central nervous system, is topic to most of the identical dangers as different biotechs. The corporate may run into regulatory roadblocks or unfavourable outcomes from scientific trials.
These potential headwinds are much more extreme for this firm because it presently has no merchandise in the marketplace. Axsome Therapeutics’ inventory may fall off a cliff if it does not meet traders’ expectations to a T with its regulatory updates. It’s also important to have a look at Axsome Therapeutics’ monetary place, as the corporate wants sufficient capital to fund its scientific trials and different day-to-day operations.
As of Sept. 30, 2020, the corporate had $202.4 million in money and money equivalents. Axsome Therapeutics didn’t earn a single greenback in income throughout the first three-quarters of 2020. Nonetheless, Axsome Therapeutics did safe a $225 million time period mortgage facility with Hercules Capital again in September. The corporate thinks that the money it presently has readily available, together with the funding it has secured by means of its settlement with Hercules Capital, will probably be sufficient to help its operations no less than into 2024.
Even so, clinical-stage biotechs typically resort to dilutive types of financing, notably when they’re gearing as much as launch new merchandise in the marketplace. The drugmaker raised capital by issuing new shares again in December 2019, and if it chooses to take action once more, its inventory will most likely sink. With these dangers in thoughts, although, let’s take a look at the potential upside for Axsome Therapeutics.
The bullish case for Axsome Therapeutics
Axsome Therapeutics is creating a number of thrilling medicines. Probably the most promising of the bunch is AXS-05, a possible therapy for Main Depressive Dysfunction (MDD) and Alzheimer’s Illness (AD) Agitation. AD Agitation refers to a set of behaviors, together with aggressive behaviors and irritability, that come up on account of Alzheimer’s Illness. In a part 3 scientific trial, AXS-05 considerably improved signs of melancholy in comparison with a placebo.
The medication was additionally well-tolerated throughout the trial; the one severe opposed occasion reported was not associated to the drug. Axsome Therapeutics is gearing as much as file a New Drug Utility (NDA) for AXS-05 as a therapy for MDD. The corporate had stated it might full the submitting course of in January, nevertheless it has but to take action.
The U.S. Meals and Drug Administration (FDA) granted AXS-05 breakthrough remedy designation, which means the overview course of will probably be quicker. And given the superb outcomes it scored in scientific trials, AXS-05 may be very prone to earn regulatory approval as a therapy for MDD. Axsome Therapeutics is presently testing this drugs in a part 3 scientific trial in treating AD agitation. However in a earlier part 2/3 examine, AXS-05 considerably improved agitation in AD sufferers in comparison with a placebo.
What’s the potential business alternative of AXS-05? Axsome Therapeutics estimates that roughly 17 million MDD sufferers and 4 million AD sufferers will probably be eligible to take this drug. The corporate is eyeing peak U.S. gross sales between $1 billion and $3 billion for every indication, which means AXS-05 has likelihood of reaching blockbuster status. However there may be one other one of many firm’s pipeline candidates traders ought to be enthusiastic about, which is named AXS-07.
This potential therapy for acute migraine additionally achieved its main endpoints in a part 3 scientific trial. The corporate stated it might submit an NDA for AXS-07 throughout the first quarter of this 12 months. It sees peak gross sales within the U.S. between half a billion and $1 billion for AXS-07 on this indication. The corporate has different promising merchandise in its pipeline, however its late-stage packages alone have a really excessive ceiling.
A greater wager than Bitcoin
Axsome Therapeutics may nonetheless run into some main headwinds. However the firm appears nicely on its method to launch two medication that might prime $1 billion in gross sales inside the subsequent two to a few years. This might push the corporate’s inventory to new heights. And after dropping by 16.3% over the previous 12 months, the corporate’s market cap stands at $2.8 billion, an affordable degree for a clinical-stage biotech, notably one with such a high-growth potential.
In the meantime, the value of Bitcoin is beholden to produce and demand — and investor sentiment. If traders’ attitudes concerning the cryptocurrency stay optimistic, it’s prone to rise considerably within the subsequent few years. In any other case, Bitcoin may fall precipitously. Whether or not it goes up or down is kind of anybody’s guess. Of those two funding choices, I feel the biotech stock is a a lot better one for the buy-and-hold investor.