Axsome Therapeutics has three drugs on the market and five in the pipeline, with the potential to help some 150 million Americans suffering from brain disorders.<\/p>\n
When Herriot Tabuteau started a drug development company in 2012, he decided to do so differently. First, he\u2019d focus on brain disorders, treatments for which are notoriously difficult to develop and whose efficacy can be hard to prove. And he\u2019d be both CEO and the scientific founder, bringing to bear his dec\u00adades of experience investing in biotech startups and his medical training. But he\u2019d take no venture capital, self-funding with help from friends and family.<\/p>\n
\u201cIf you do things exactly the same way as everybody else, you\u2019re going to have the same outcomes as everybody else. And we wanted to have outcomes that stand apart,\u201d Tabuteau, 57, says, during his first-ever interview with a reporter about his company, Axsome Therapeutics.<\/p>\n
Named for two parts of a nerve cell, the \u201caxon\u201d and the \u201csoma,\u201d Axsome has come a long way from its beginnings in a windowless three-desk office in New York\u2019s Rockefeller Center, affectionately remembered as \u201cthe broom closet.\u201d Today, it has three drugs on the market and five in the pipeline, with the potential to help the estimated 150 million Americans suffering from conditions like depression, ADHD or Alzheimer\u2019s disease. Revenue for the 12 months ended in June reached $495 million, up 70% from the same period in 2024. Axsome is not yet profitable, booking a net loss of $247 million in that time.<\/p>\n
The company trades on the Nasdaq with a market cap of $6.1 billion; Tabuteau is a billionaire thanks to his 15% stake in it, plus options. He figures Axsome could hit $16.5 billion in peak sales from its current drug portfolio, which would put it among the top 25 drug companies by revenue today. That\u2019s assuming all goes to plan, most particularly getting five new drugs through the FDA between now and 2028. It\u2019s a big ask: Only about 25% of drugs do well enough in Phase III trials to move forward in the FDA process.<\/p>\n
Tabuteau was born in Haiti, where his birth mother struggled to raise him and his sister. He recalls experiencing neglect of all kinds\u2014\u201cphysical, nutritional, emotional\u201d\u2014but \u201cit taught me resili\u00adence,\u201d he says now. At age 9, he moved with his dad and adoptive mom to Manhattan\u2019s Upper East Side. Degrees in molecular biology and biochemistry from Wesleyan led him to Yale\u2019s School of Medicine, where he planned to become a neurosurgeon. But he was so unsettled by the transparent unhappiness of his physician professors that he opted against a neurosurgery residency in favor of a job at Goldman Sachs\u2019 health care investment banking group. That was the start of a nearly two-decade career in finance that included stints at Bank of America Securities and hedge fund Healthco\/S.A.C. Capital, as well as managing his own funds.<\/p>\n
A World Apart: After leaving Haiti at age 9, Tabuteau grew up blocks from some of New York City\u2019s preeiminent medical institutions, including Sloan Kettering, Rockefeller University and Weill Cornell. \u201cI was just surrounded by science,\u201d he says.<\/p>\n
Jamel Toppin for Forbes<\/p>\n
From his perch on Wall Street, he watched thousands of early-stage biotechs succeed and fail, and began to develop his own theories about what worked and why. While most biotechs focus on just one drug, he realized that building a portfolio would cut the risk of a flop. To keep costs low, he shunned the industry\u2019s practice of outsourcing clinical trials, betting he could do it cheaper and with greater chance of success in-house. A Phase III trial could easily cost $50 million; Tabuteau could do it for 30% to 50% less. \u201cWe got a lot of pushback,\u201d he says, as investors didn\u2019t believe he could run so many trials on such a low budget. Working on multiple drugs helped: When one trial ended his researchers would immediately begin work on the next. <\/p>\n
Hedging his bets was wise. After going public in 2015, Axsome struggled\u2014not unusual for an early-stage biotech, as drugs can take ten years to get from idea to market, and while Axsome\u2019s trials were cheaper, they were not cheap. The company\u2019s stock puttered along under $10 for years, its market cap dipping below $100 million after an early drug for pain flunked its clinical trial. \u201cNobody believed in Axsome years ago, and I think there\u2019s still a lot of unbelievers,\u201d says Axsome chief financial officer Nick Pizzie. \u201cIt\u2019s a show-me story.\u201d<\/p>\n
Axsome\u2019s prospects skyrocketed with its first big drug, Auvelity. When the treatment for major depressive disorder gained FDA approval in August 2022, shares popped 65% in a week, valuing the company at $3 billion. The drug combines two existing medications for a treatment that can begin to work in just one week, compared to six or eight weeks for serotonin-based anti\u00addepressants, a huge advantage.<\/p>\n
To launch it, Axsome started with 165 sales reps, less than half of what is typical. But it paired those reps with software that could identify which docs were likely to be receptive to its products and to determine whether they\u2019d prefer email, a phone call or a face-to-face meeting. Auvelity is now on track to do $500 million in sales this year, and analysts figure the drug should become a blockbuster, industry parlance for a medication with more than $1 billion in revenue. Earlier this year, the company resolved patent litigation that will keep copycats off the market until at least 2038, a big win.<\/p>\n
Tabuteau\u2019s finance expertise also paid off. In 2022, Axsome acquired a drug called Sunosi, which treats excessive daytime sleepiness in people with narcolepsy or sleep apnea. After pulling together a deal to buy it for $53 million (plus single-digit royalties) in just two weeks over Christmas in 2021, Axsome was able to more than recoup its money when Tabuteau sold the European, Middle Eastern and North African rights to the drug for $66 million (plus milestones and royalties) less than a year later. Sunosi\u2019s revenue is now over $100 million annually. \u201cIt was a very shrewd financial transaction,\u201d says Mizuho analyst Graig Suvannavejh.<\/p>\n
Shares have kept climbing, shooting up 35% over the past year to a recent $122, outperforming the Nasdaq Biotech Index, which is up just 1% over the same period. The next treatment to watch: a drug to treat the agitation that often accompanies Alzheimer\u2019s disease. Antipsychotic medications, currently the only treatment available, have serious risks, including death. Axsome\u2019s drug avoids these side effects but has reported mixed results in Phase III clinical trials. Axsome plans to file for approval before the end of September.<\/p>\n
It\u2019s possible the FDA may not greenlight it, but analysts expect the need for an alternative to antipsychotics makes approval likely. It\u2019s core to Tabuteau\u2019s plans to get to $16.5 billion: He projects $1 billion to $3 billion in sales for Auvelity and $1.5 billion to $3 billion from the Alzheimer\u2019s agitation drug annually at their peak. \u201cThere is so much ahead of us right now in terms of the pipeline and the number of patients we\u2019re able to address,\u201d he says. \u201cWe might be a small company in terms of size, but we\u2019re not a small company in terms of fundamentals or in terms of ambition.\u201d<\/p>\n
How To Play It
\nBy Jon D. Markman<\/p>\n
Illustration by Patrick Welsh for Forbes <\/p>\n
With medicine entering a brave new world, aggressive biotech firms are exploi\u00adting untapped markets through innovation. Vertex Pharmaceuticals is leading the charge. Best known for its cystic fibrosis drugs that can treat 95% of all people living with the illness, Vertex is working on cutting-edge therapies, including mRNA treatments developed with Moderna. Second-quarter 2025 sales reached $2.96 billion, up 12% year-over-year, with full-year guidance raised to a high end of $12 billion. Building on its profitable core and breakthrough partnerships, Vertex is positioned to capture future demand. Shares could climb to $520 within 18 months, a gain of more than 30% gain from current levels.
\nJon D. Markman is president of Markman Capital Insight and editor of Digital Creators & Consumers.
\n<\/p>\n
The Vault<\/p>\n
Individual Innovation
\nAxsome Therapeutics founder Herriot Tabuteau has more than 400 patents, including for Auvelity, a depression drug that his own company licensed from him (for about $9 million last year). But inventive businessmen are not a new thing. Back in 1979, Forbes visited the chaotic Midtown Manhattan office of Robert Lester, an \u201cindependent inventor\u201d who had big ideas for everything from hidden windshield wipers to an imaging typewriter to an \u201cultrasonic locating system,\u201d something like an early Apple AirTag. Lester did quite well for himself but, unlike Tabuteau, never really struck it big.
\nIt\u2019s not easy being a full-time independent inventor in this age of technology. The days of lucrative tinkering in the garage Henry Ford\u2013style are all but over. Lester figures there can\u2019t be more than 100 men like him left in the country. But Lester, who holds \u201caround 50\u201d U.S. patents and has a few more pending, isn\u2019t complaining. He makes a comfortable living. \u201cI have my bad years and my good years, but I live out with all the millionaires in Manhasset. I manage never to earn less than $50,000 a year [$210,000 today].\u201d . . .
\n\u201cTo be very honest with you, manufacturing never really interested me. When I finish an invention, even before I finish writing the patent application, I\u2019m not interested in it anymore. I\u2019m interested in new things.\u201d
\n\u2014Forbes, December 10, 1979
\n
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