Companies with exciting prospects aren't always of the popular, headline-grabbing variety. Some little-known stocks are worth serious consideration, too.

Take Axsome Therapeutics (NASDAQ: AXSM), a mid-cap biotech company not involved in the rapidly growing area of GLP-1 weight loss drugs. Though it's doing so quietly, this drugmaker has performed more or less in line with the broader market this year, and there are good reasons to believe it could produce strong returns over the long run. Let's dig in.

Revenue is ramping up

Axsome Therapeutics focuses on developing diseases that affect the central nervous system. The company currently has two products on the market. One is Auvelity, a therapy for depression that earned approval in the U.S. in 2022. The other is Sunosi, which treats excessive sleepiness linked to narcolepsy. Axsome acquired Sunosi from Jazz Pharmaceuticals, also in 2022.

Though Axsome's top line isn't too impressive yet, it's growing rapidly. In the second quarter, revenue increased by 87% year over year to $87.2 million. Auvelity's sales of $65 million soared 135% year over year, while Sunosi's $22.1 million in sales were up 16% compared to the year-ago period.

True, Axsome remains unprofitable. Its net loss per share of $1.67 was worse than the loss per share of $1.54 reported in the prior-year quarter. Why is the company's bottom line getting worse? Likely because of commercialization efforts related to its two medicines, coupled with the late-stage clinical trials it's running.

Phase 3 studies can cost a lot of money. But Axsome's pipeline is one of the best reasons to invest in the stock.

An exciting late-stage pipeline

Axsome Therapeutics has a market cap of just $4.3 billion. It's not unusual for a biotech of this size, even one with a couple of commercialized products, to be unprofitable. The company looks attractive, though, because it's in the process of transforming its lineup. Some of its products could be approved or receive important label expansions within three to five years.

First, there's AXS-07, a potential medicine for migraines. Axsome had already submitted an application to the U.S. Food and Drug Administration (FDA) for AXS-07, but the agency declined to give it the nod because of manufacturing issues. That was in 2022. The company recently resubmitted its application for this therapy, and an approval almost seems guaranteed this time considering there were no issues with safety or efficacy.

Next, Auvelity is being studied in a phase 3 trial in treating agitation (aggressive and restless symptoms) associated with Alzheimer's disease, with the data expected before the end of the year. Auvelity has already completed one late-stage clinical trial along those lines. If all goes well, Axsome could go after this indication soon.