Got $10,000? Axsome Therapeutics Could Be a Mental‑Health Moonshot by 2036

Axsome Therapeutics (NASDAQ: AXSM) isn't one of the more famous or prominent biotech companies, but investors interested in the industry had better get to know this drugmaker. Not only has Axsome crushed broader equities over the past five years, but the company could perform similarly well over the next decade.

If you have $10,000 to spare -- money that isn't put away for emergencies -- and a healthy tolerance for risk, let's find out why investing that money into Axsome Therapeutics could lead to amazing returns through 2036.

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Significant progress ahead

Axsome Therapeutics focuses on developing medicines for central nervous system conditions. One of its approved medicines, Auvelity, treats depression and is generating growing revenue. Another one, Symbravo, earned the green light early last year for the treatment of migraine. Axsome has plenty more opportunities on the horizon as it earns new approvals and label expansions. Auvelity is racing toward adding Alzheimer's disease (AD) agitation as one of its additional indications.

What could be the commercial opportunity in this niche? There's only one approved medicine in this market -- yet AD agitation affects more than 5 million patients in the U.S. And that number might grow considerably over the next decade, as the country's population (and that of the rest of the world) ages. People 65 and older -- who tend to be most at risk for AD and its complications -- will outnumber children in the U.S. by 2035. In other words, Auvelity will be entering a growing market with a high unmet need and little competition.

Axsome is also developing a medicine called AXS-12 for narcolepsy, which has already passed phase 3 clinical trials. The company said it would complete regulatory submissions for AXS-12 in the fourth quarter.

Hedge your bets

Axsome Therapeutics' other brand-new products and label expansions could transform its lineup in the next few years. The company estimates peak sales potential of more than $16 billion for its late-stage pipeline, including potential new indications (the market cap is currently only $9.3 billion). Furthermore, Axsome will benefit from patent protection for its products until the 2040s, so it won't run into patent cliffs in the next decade. That's why the company's shares could soar over the next decade, delivering better-than-average returns.

However, there are risks. Biotech stocks, especially smaller ones, often sink following clinical or regulatory setbacks. Axsome Therapeutics has encountered some issues in the past: The approvals of Auvelity and Symbravo were delayed, though the biotech was able to overcome those hurdles.

Keep in mind that Axsome's peak sales could fall well short of its goals due to these or other factors, including competition. But if you're comfortable with the risk, it's a stock worth serious consideration.

Prosper Junior Bakiny has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Axsome Therapeutics. The Motley Fool has a disclosure policy.