Axsome Therapeutics Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 7, 2023

There are 16 speakers on the call.

Operator

Hello, and welcome to the Axsome Therapeutics Second Quarter Results Conference Call and Webcast. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Mark Jacobson, Chief Operating Officer at Axlant Therapeutics. Please go ahead, Mark.

Speaker 1

Thank you, operator. Good morning, and thank you all for joining us on today's conference call. This morning, we issued our earnings press release providing corporate updates and details of the company's financial results for the Q2 of 2023. The release crossed the wire a short time ago and is available on our website at axel.com. During today's call, we will be making certain forward looking statements.

Speaker 1

These statements may include statements regarding, among other things, The efficacy, safety and intended utilization of our investigation of agents, our clinical and non clinical plans, our plans to present future research and development plans, our commercial plans regarding Sanofi, Ovelity and our other pipeline products, Revenue projections and possible intended use of cash and investments. These forward looking statements are based on current information, assumptions and expectations that are subject to change can involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward looking statements. These and other risks are described in our periodic filings made with the Securities and Exchange Commission, including our quarterly and annual reports. You are cautioned not to place undue reliance on these forward looking statements, which are made only as of today's date and the company disclaims any obligation to update such statements. Joining me on the call today are Doctor.

Speaker 1

Herriot Tabuteau, Chief Executive Officer Nick Pizzi, Chief Financial Officer and Lori Engelbert, Executive Vice President of Commercial and Business Development. Ariel will provide an overview of the company and progress made in the Q2 of 2023, As well as key upcoming milestones. Following Ariel, Nick will review our financial results, then Laurie will provide a commercial update. We will then open the line for questions. Questions will be taken in the order they are received.

Speaker 1

And with that, I will turn the call over to Herriot.

Speaker 2

Thank you, Mark. Good morning, everyone, and thank you for joining Axsome Therapeutics' 2nd quarter 2023 Financial results and business update conference call. In the Q2, we continued to execute across all areas of our business. We drove continued success in the commercialization of Avelity and Sunosi, advanced our late stage product pipeline and further solidified our financial foundation through a public equity offering that provided us significant operational flexibility and strength. Total net product sales in the quarter were $46,700,000 driven by strong performances from both Avelity and Sunosi.

Speaker 2

Based on the growing Avelity prescription trends to date and positive feedback from clinicians, we are increasing the Avelity By nearly 100 representatives. In conjunction with our digital centric commercialization or DCC platform, The expansion should nearly double the number of prescribers we are able to reach. Later in the call, Laurie will comment further on our commercial performance, and Nick will provide additional details on our financials. In conjunction with the commercial performance, our 1st in class development pipeline continues to expand and advance. With respect to solriamfetol, our dopamine and norepinephrine reuptake inhibitor and tar-one agonist, We recently initiated the FOCUS Phase III trial in ADHD.

Speaker 2

Today, we are pleased to announce the launch of Two new high value potential indications for solriamfetol, binge eating disorder and excessive sleepiness associated with shift work disorder. Binge eating disorder is the most common eating disorder affecting approximately 2.8% of U. S. Adults. There is currently only one FDA approved product for this indication.

Speaker 2

We recently received positive Pre IND needing feedback from the FDA for this program and are preparing to initiate a Phase III trial in patients with binge eating disorder before the end of this year. Turning to shift work disorder. An estimated nearly 1 third of Americans perform shift work, of whom 10% to 43% are diagnosed with shift work disorder. There are currently only 2 FDA approved products for the treatment of excessive sleepiness associated with a shift work disorder. We also recently received positive Pre IND needing feedback from the FDA for this program and are preparing to initiate a Phase 3 trial in shift work disorder in the Q1 of 2024.

Speaker 2

The target indications of ADHD, binge eating disorder And shift work disorder have the potential to dramatically increase the number of patients solriamfetol could help, if successful in clinical testing, Further growing our already 1st in class CNS pipeline. Stay tuned for more updates on these programs and the rest of our leading late stage CNS pipeline. We are excited by the number of value creating opportunities that lie ahead of us. We anticipate completion of the Phase III SINFONI trial of AXS-twelve for the treatment of narcolepsy in the Q4 of this year. We continue to see steady enrollment in the Phase 3 ADVANCE-two trial of AXS-five for the treatment of Alzheimer's disease agitation, And we remain on track to complete ADVANCE-two in the first half of twenty twenty four.

Speaker 2

We are making progress initiating a planned Phase twothree trial of AXS-five in smoking cessation, which is scheduled to start in the Q4 of this year or the Q1 of 2020 Additionally, the team is nearing finalization of the work for the resubmission of the NDA for AXS-seven in migraine. This work has moved at a slower pace than anticipated, and as a result, we now expect to resubmit the NDA in the first half of twenty twenty four. With respect to the planned NDA submission for AXS-fourteen for the management of fibromyalgia, we are making good progress and are working to finalize the content and data that will complete the submission. We are tracking to an NDA submission in the Q4 of this year to the Q1 of next year. Each of these potential milestones builds value for our stakeholders, and we continue to make strategic decisions to maximize the potential for future growth.

Speaker 2

Lastly, we recently closed an underwritten public offering of common stock that resulted in $258,800,000 in gross proceeds, fortifying our financial foundation and providing additional flexibility to execute on multiple fronts, Not only expanding commercial activities by strategically expanding our field force, but also by adding the aforementioned new indications for solriamfetol amplifies our ability to read value across our portfolio. All in all, we expect a productive second half of twenty twenty three that sets us up for multiple milestones over the next 12 months. I will now turn the call to Nick, who will provide details of our financial performance.

Speaker 3

Thank you, Herriot, and good morning. Today, I will discuss our 2nd quarter results and provide some financial guidance. Total revenue in the Q2 of 20 23 was $46,700,000 consisting of net sales of our 2 commercialized products, Avelity and Sunosi, And royalty revenue from Sunosi sales in out licensed territories. Revenue for the comparable period was $8,800,000 comprised of U. S.

Speaker 3

Sunosi sales beginning May 9, of 2022. Avelty net sales in the quarter were $27,600,000 representing 70 percent sequential growth. There were no net sales in comparable 2022 period due to the timing of the launch. Sunosi revenue for the quarter was $19,100,000 U. S.

Speaker 3

Sunosi sales were $17,800,000 International Sunosi revenue was $1,300,000 including approximately $700,000 in royalty revenue from Sunosi sales in the out licensed territories. Sunosi's net sales for the comparable period were $8,800,000 consisting of U. S. Sales beginning May 9, 2022. Cost of revenue was $4,600,000 in the 2nd quarter compared to $1,000,000 in the prior year period.

Speaker 3

The increase reflects the higher product volumes for both Fidelity and Sunosi in the current year. Research and development expenses were $20,600,000 in the 2nd quarter versus $15,800,000 for the comparable period in 2022. The increase was primarily related to higher personnel costs associated with supporting ongoing clinical trials, post marketing commitments for and non cash stock compensation expense. Selling, general and administrative expenses were $78,900,000 For the Q2 versus $31,200,000 for the comparable period in 2022. The increase was primarily related commercial activities for Avelity and Sunosi and higher non cash stock compensation expense due to the build out of both commercial teams.

Speaker 3

Net loss for the Q2 was $67,200,000 or $1.54 per share versus a net loss of $41,400,000 or $1.06 per share for the comparable period in 2022. We ended the quarter with $437,100,000 in cash and cash equivalents compared to $200,800,000 as of the previous year end. Our 2nd quarter cash balance reflects the net proceeds received from our common stock public offering completed in June. In connection with this public offering, in July of 2023, The underwriters fully exercised their option to purchase an additional 15% of the offering, resulting in additional gross proceeds to Axsome of $33,800,000 inclusive of this event, the pro form a June 30, 2023 Cash balance was $469,000,000 I will now turn the call over to Lori, who will provide a commercial update.

Speaker 4

Thank you, Nick, and good morning, everyone. In the Q2, both Avelity and Sunosi delivered strong growth results. For Avelity, we are still early in the launch phase and focused on executing our commercial strategy. With that said, early adoption by drivers is robust and a promising indicator of future success. For Sunosi, the Q2 of 2023 Marked one full year of Sunosi being commercialized by Axsome.

Speaker 4

We have begun to see the results from the relaunch of Sunosi, which is resulting in healthy growth quarter over quarter. We expect the strong performance for both brands to continue in the second half of twenty twenty three. The Q2 represents only the 2nd full quarter for Avelity, and we are pleased with the progress we are making with the launch. Important key indicators of the success of a launch are script growth, new patient starts and HCP adoption. In Q2, approximately 53,000 prescriptions were reported for Avelity, representing a growth of 72% quarter over quarter.

Speaker 4

In the Q2, ACPs wrote prescriptions for 17,000 new patients, Bringing the total number of unique patients on Avelity to over 38,000 at the end of Q2. This prescription growth came from both an increased depth of prescribing with our early HCP adopters as well as an increased breadth of new prescribers. In the Q2, we added approximately 3,700 new first time prescribers of Avelity, increasing the cumulative total number of prescribers since launch to over 9,700. About 40% of our initial target universe has written Avelity after only 2 full quarters. In response to this early success, We are expanding the Avelity sales force from 162 to 260 specialty account managers.

Speaker 4

The expansion is expected to significantly increase our reach from 26,000 prescribers to approximately 44,000 prescribers, We currently write more than 80% of branded antidepressant prescriptions. We believe that the expansion will help build on early success And accelerate launch uptake. With regard to payer coverage, we currently have Coverage established for 68% of all covered lives. In the commercial channel, which is expected to be the primary channel for Avelity, Coverage is now at 46% of covered lives, and we look forward to additional formulary decisions in the coming months. In the Medicaid and Medicare channels, approximately 100% of lives are covered.

Speaker 4

Major depressive disorder or MDD is highly prevalent in a major public health concern with the mental health crisis that the U. S. Is currently facing. We are proud that Avelity is providing an important and clinically differentiated therapeutic option for patients living with this chronic and devastating condition. Turning to Sunosi.

Speaker 4

As mentioned previously, the Q2 of 2023 marked 1 full year of Sunosi being commercialized by In the Q2, we launched our Pullin' All Day or campaign for Sunosi, which was a complete redesign and updated promotional We significantly invested in HCP and DTC Directed Media with the updated campaign and are seeing immediate results from these promotional efforts. Total prescriptions for Sunosi in the U. S. Grew 15% year over year And 8% quarter over quarter with net revenues that exceeded expectations. Since Q2 of last year, we have added Greater than 13,000 unique new patients, which represents an increase of approximately 30% in cumulative unique patients over the past year.

Speaker 4

The field team is working to drive both depth within the current prescriber base and breadth by adding new prescribers. Since Q2 of last year, we have increased unique new riders of Sunosi by 24%. Payer coverage for Sunosi remains broad With 95% of commercial lives and 83% of total lives covered. The growth potential for Sunosi in the currently approved indications remains substantial as well as its growth in potential new target indications such as ADHD, binge eating disorder and shift work disorder. As a reminder, Sunosi is the 1st and only DNRI for excessive daytime sleepiness and obstructive sleep apnea and narcolepsy, And the 1st and only weight promoting agent proven to improve weightfulness through 9 hours.

Speaker 4

Sunosi is the only branded therapy available for patients Who suffer from EDS and OSA and we expect our increased and enhanced promotional and disease education efforts to drive continued growth for the products in 2023. Q2 of 2023 saw the continuation of a strong launch of Avelity and the continued execution of the relaunch efforts of Sunosi. Both products are clinically differentiated and address patient populations with high unmet need. We remain focused on commercial execution and expect continued commercial success for both products in the second half of the year. I will now turn the call back to Mark to lead the Q and A discussion.

Speaker 1

Thank you, Laurie. Operator, may we please have our first questions?

Operator

Thank you. Our first question is coming from Charles Duncan from Cantor Fitzgerald. Your line is now live.

Speaker 5

Yes. Hey, good morning, Herriot and team. Thanks for taking our Performance as well as the broadening of pipeline progress. So nice quarter. Couple of quick questions.

Speaker 5

First of all, with regard to an approval of a product candidate In postpartum depression, but not major depression disorder, I guess I'm wondering if That changes your views on the competitive environment for Avelity. And if you can give us a sense of what Most interest prescribers in its clinical profile Avelity's clinical profile and why they're Really prescribing the drug.

Speaker 2

Thanks, Charles, for the question. In terms of what it changes for our business and for what we're doing, it does not change our plans at all. As a reminder, major depressive disorder is highly prevalent. There are 22,000,000 patients out there. What we've seen with the launch thus far of Melody is that the clinical need is really great.

Speaker 2

And we've always anticipated that there would be space for multiple players. And as we've said in the past, we also think that it's good that a lot of different drugs Because we want to make sure that patients get served and the clinicians have options. So that's our passion. And I know why you're asking the question and I know that the sell side Likes to pick companies against each other. Like leaders say that We hear that Axon, we view both that other companies and D and S colleagues.

Speaker 2

We commend the safety team For their work to provide a new treatment to patients with postpartum depression. We know from experience of Axsome that Developing a new drug and getting approved is really difficult, especially in CNS. It takes the hard work And dedication and passion, a lot of talented individuals. That's what brings us in every day to work. And to that end, We are going to continue our work to make sure that we provide new treatments to patients, not just with depression, but also with other CNS indications.

Speaker 2

So if you look at the expanded general pipeline thus far as we announced today, it brings the total number of patients that we can

Speaker 5

That's helpful. And if I could ask Just one follow-up regarding Axsome 7 or AXS007 in migraine. I'm just wondering if you could provide any more color on the work streams required to enable the NDA filing. And also just remind us on the target product profile that you envision for the candidate That will serve an unmet need in migraine. Thank you.

Speaker 1

Hey, Charles. This is Mark. I'll answer. Hey, Charles, this is Mark. I'll answer the first question about the work streams for the NDA resubmission.

Speaker 1

So just to be clear, this is just taking us longer than expected, and it's not as though there were some setbacks Since the last call, that's going on behind the scenes. So we're taking our time to get this right. And what it is that we need to get right are finishing additional batches that were requested of us by the FDA. As a reminder, The drug substance and drug product are new. The manufacturing, it is A cyclonextrin ring stabilized with a buffering system is an Acrom innovation.

Speaker 1

It is the Mosaic technology. So FDA asked For additional data to support the package. So that work is underway. It's just taking longer than expected and we remain confident that we'll be able to get it done.

Speaker 2

And then I'll pass on for the product profile. Right. Yes. So just with regards to the product profile question that you asked, Charles, in the second part of your first question. Laurie?

Speaker 4

Yes. So Charles, I'll switch back to Avelity And answer the question on the most for most interest positions. But then I'll also answer the competitive piece on Osaba is helpful. So Sorry about that. What most interesting what we're seeing out in the real world is, I would say, Three things.

Speaker 4

One, obviously, the rapid onset of action is really impressive to HCPs and we are seeing Results very similar to what we saw in the clinical trials. The second piece is, we are Getting to a point now where we have enough patients on therapy where the durability is really starting to come through, the sustained effect Of the product. And so that's really encouraging also to physicians. We are able to have A very large number of patients achieve remission and that is something that physicians are commenting on quite a bit on how fast Not only do symptoms improve, but we are able to achieve remission. Again, everything is very similar to what we are seeing in the clinical trials What we saw in the clinical trials was remission as early as 2 weeks.

Speaker 4

But then the last thing is the side effect profile. So the side effect profile is obviously Favorable versus some of the competitors out there and physicians and patients are both commenting on them. In terms of AXS-seven, as Mark was mentioning, the Mosaic technology really does allow for that very early onset of action for patients to reduce pain. Despite the fact that there are multiple entrants in the category right now And a lot of activity and a lot of promotional dollars. Even now, more than 70% of patients still are dissatisfied with their current therapy.

Speaker 4

We know they cycle through therapies looking for something that's efficacious. And so we hope to bring this up into market as an option for them.

Speaker 5

Regarding Avelity, you point out 3 key differentiations from XERZURVEY. So thank you for the added color and congrats on the quarter.

Speaker 4

Thank you.

Operator

Next question is coming from Ram Selvaraju from H. C. Wainwright. Your line is now live.

Speaker 6

Thanks so much for taking my questions and congrats again on the quarter. I just wanted to ask a little bit about the kinetics of the sales Force expansion for Avelity, within what timeframe you expect that to be concluded, if you expect that new expanded size To effectively be the steady state for the sales force for the foreseeable future or if any further expansion might be on the cards? And also if You could perhaps comment on the sales force composition and what you see as the facility with which you're going to be able to execute those new hires from pool of candidates who have prior CNS or antidepressant sales experience? Thank you.

Speaker 4

Thanks. Sorry, if I don't get all of them. I just try to write down every question that you ask. So if I missed something, Please remind me. So we are intending to have the expansion rolled out and completed And ready to perform in Q4.

Speaker 4

We are very much underway in building that expansion right now and have been for a little bit. Part of the reason why we think and believe so strongly that the expansion is needed right now is we are seeing such early success. We have 10,000 HCP riders, 40,000 new patients or patients on therapy right now. We're adding about 1,000 HCPs or more than 1,000 HCPs every month. And what we're seeing and why we're so encouraged is, Obviously, field forces at this stage of launch typically struggle between depth and breadth.

Speaker 4

We are trying to achieve both. And right now, greater than 40% of our target list has already written. And remember, our target list is a very substantial target list with a very small sales force. But also of those 40% that have already written, 60% of those writers have found more than 2 patients already to write. And so that's really encouraged from both a depth and a breadth standpoint, and And we think that expanding the field force will further accelerate the launch uptake.

Speaker 4

In terms of composition and pull up candidates, Our first recruit, I think we had greater than 90% with CNS experience, more than that with psych experience. We are obviously going to that is our goal for this expansion team as well.

Speaker 7

Thank you.

Operator

Thank you. Next question today is coming from Joon Lee from Choo Securities. Your line is now live.

Speaker 8

Hey, congrats on the strong quarter and thanks for taking our questions. Any particular reason why the SYMPA trial in narcolepsy got pushed out And if by trial completion, you're also referring to completion And data readout or just trial completion stuff. And also similar to Alzheimer's agitation, if by Completion of trial in first half of next year. We can also expect data in first half of next year. Thank you.

Speaker 8

And I have a quick follow-up.

Speaker 2

Hi, Jim. Thanks for the questions. So with regards to TASEMPT, we're on track to complete the study and Results out in the Q4. And this is not a change from our last update. And The reason for the more granularity around the timing of The AXIS-twelve trial is that this is an orphan indication and orphan indications there might be.

Speaker 2

So we try and provide granularity as we get closer. And so we're on track there. With regards to

Speaker 1

I think the nuance is that it's the prior guidance was completion of enrollment. This is completion of the study.

Speaker 8

Got it. That's really helpful. And similarly with Alzheimer's agitation, we can also expect top line data for Stefan with share.

Speaker 2

Yes. And then, so when and similarly with the oral number of disease agitation, so the guidance of trial completion also incorporates

Speaker 8

Perfect. And based on your experience with digital centric commercial strategy in partnership with Veeva, is this Something that you may also consider down the road for migraine, narcolepsy or ADHD or even Alzheimer's? Thank you.

Speaker 2

The rationale behind putting together the platform is that we could leverage it for our entire pipeline. So we're very glad that we made that investment and we're looking forward to leveraging it for the really vast pipeline that we have at least big product candidates.

Speaker 4

Yes. Gene, I can just add one piece of commentary there. We are leveraging it for Sunosi now as well. So it is across both products that we are leveraging.

Speaker 7

Thank you.

Operator

Thank you. Next question today is coming from Jason Gerberry from Bank of America. Your line is now live.

Speaker 7

Hey, guys. Thanks for taking my question. Just wanted to come back to the sales force announcement. So I guess, will these new reps just be covering physicians or providers that were not being called on prior? I'm just trying to get a sense of, and I think in the past, the digital strategy was sort of like I thought meant to improve breadth and productivity of

Speaker 2

each prescriber, but there's also maybe a rep that's calling on

Speaker 7

that provider. Of each prescriber, but there's also maybe a rep that's calling on that provider. So just kind of wondering like what's changed in terms of how you'll leverage kind of The digital component and where the new rep will specifically be adding value.

Speaker 4

Yes. Thanks, Jason. So I'll answer that question kind of in reverse. So our DTC platform was part of our DTC platform is how our field is sized, as well as structured. It was intentionally structured so that we could maintain share voice reach through omnichannel measures As well as face to face and or remote engagement with HEP by reps At the same rate, it still forces 2 times our size.

Speaker 4

So that's why we the DTC platform is so instrumental in how we reach HCP. In terms of the expansion of targets, we originally were calling on about 26,000 HCPs or And we are now taking that up to 44,000 prescribers. And I want to make the reason that magnitude is so going up to 44,000 is they cover 90% of the branded therapies. But not only do they cover 90% of prescribing of antidepressants, They cover almost 90% of new branded therapies. So they are the ones that are writing.

Speaker 4

These are the HCPs, the 44,000 are the HCPs And finding new patients to put brand of Therakuz on. This is a very large expansion of the target list. So it will be current targets and then in addition to going up to 44,000.

Speaker 9

And if I could just ask

Speaker 7

a follow-up. So under the order, I guess, approach with fewer reps, you would have just those added 20,000 providers, you would have just not caught on those physicians or just sort of You try to utilize digital means to get to those providers?

Speaker 4

That's right. It doesn't mean they weren't being touched or engaged with. They were just going to get touched or engaged with Through digital or media efforts or non personal promotion efforts, now we are having reps individually calling them to detail the product.

Speaker 7

Got it. Got it. Thank you.

Operator

Thank you. Next question today is coming from David Amsellem from Piper Sandler. Your line is now live.

Speaker 9

Hey, thanks. So just a couple. So first, on Sunosi, So you have a P4 filing, no surprise there. But I guess the question here is, with all the label expansion opportunities that you're pursuing. How are you thinking about exclusivity runway for the product?

Speaker 9

I know that there's a lot of patents in the orange book, but What have you been assuming, I guess, internally on what kind of exclusivity runway you think you'll have for the underlying molecule? So that's number 1. And And then just going back to the sales force, as you're thinking about solriamfetol and ADHD, in particular, What's the extent to which you're going to need further headcount, say, in the ped and adolescent psychiatry setting, In the pediatrician settings and I guess the broader question is how do you think about leveraging The headcount you're going to have in place with respect to solar amphitol? Thanks.

Speaker 2

So just a lot of questions there. So with regards to the label expansion and how we think about the exclusivity runway. So even with the current issues, Pat, is we have exclusivity running out to at least 2040. 2040. And then in addition to that, we also have The recently allowed claims which go out to December 2022 and those cover All of the new indications.

Speaker 2

That'd be December 2042. I'm sorry, December 2042. December 2022, so that's even longer exclusivity runway. And so that covers all of the additional indications. And then with regards to the additional headcount, one of the things that we like and I'll turn it over to Lori to We'll be providing a little bit more color, but one of the things that we do like is the overlap and the operational leverage with regards to our current neuropsychiatry sales force.

Speaker 2

ADHD is treated primarily by psychiatrists, so that fits in very nicely with Our current sales force and sales force expansion.

Speaker 4

Yes, perfect. I don't know if I can add much more other than it's a bit early to talk about And what that looks like, because a lot of factors obviously come into play when you're thinking about what that overlap looks like at the time. And that is How entrenched we are with Avelity, what that current sales force efficiency looks like and whatnot. So We definitely like the overlap. Obviously, it's a very strategic thought from our standpoint in terms of how we structure the field force.

Speaker 4

We always seek to be efficient and effective. So it will be a consideration when it comes time to size that bill for us.

Speaker 10

Okay. Thank you.

Operator

Thank you. Next question today is coming from Vikram Prahant from Morgan Stanley. Your line is now live.

Speaker 11

Good morning. Thanks for taking our questions. So just 2 for us on Avelity. First, could you provide some color on the profile of patients receiving the drug in terms of prior treatment status and prior line of therapy and how this has been evolving over the past couple of months? And then secondly, Could you remind us your latest thinking on ex U.

Speaker 11

S. Plans for commercialization? I believe in the past you might have mentioned This is something you could evaluate a partnership for. So I just wanted to see if that's still your current thinking. And if so, how those internal discussions are going?

Speaker 2

Thanks for the questions. So I'll answer the last question the second question and then I'll turn it over to Laurie to answer the Question on the treatment profile. So ex U. S. Plans, so we've always said that we would look to out license the product ex U.

Speaker 2

S. And so that those plans and that strategic direction has not changed.

Speaker 4

Yes. Thanks, Vikram. So in the very early days of launch, we were of course getting that later line patient just based on mostly due to the unmet need and New therapy coming to market, especially one of the novel methods of action. But as subscribers have gained experience with the product and seen early success And in that patient population, they are starting to move, the use up into earlier line. Right now, there is about 10% to 12% Usage in first line therapy, which is really encouraging because that typically means that physicians have seen success in patients that they feel warrants Using the product profile benefits patients as early as first line.

Speaker 4

But the majority that we're seeing right now is and that's it's roughly around 60 patients that we're getting have failed either 1 or 2 prior therapies. As clinicians get more experience with ABILITY, and again, We are only 2 full quarters into launch, but as clinicians get more experience with ABILITY and our access to VOS, we do expect it to be prescribed

Operator

Your next question today is coming from Yatin Suneja from Guggenheim Partners. Your line is now live.

Speaker 12

Hey, guys. Thank you for taking my question. Just Real quick ones. With regard to the NARCOLAPSE, can you maybe just talk about hitting on the cognition endpoint there? Like what do you need to show?

Speaker 12

Is that Important, maybe the benefit of showing cataplexy in the year. Just trying to understand what the exact You said it, what the gross to net was and maybe what the inventory is in the channel for Avedity? Thanks.

Speaker 2

Thanks for the questions. With regards to AXS-twelve, TAVEXTA is the primary endpoint of the trial. And we are also looking at other endpoints, The endpoints that we look at in the Phase 2 CONCERT study, one of those was cognition, as you mentioned. Demonstrate a reduction or an improvement in the ability to concentrate in that trial. So that's Exploratory, obviously, but it's something that we're definitely looking at, because Cognition, cognitive difficulties, it is one of the key systems or one of the systems that is experienced by the majority of patients with narcolepsy.

Speaker 3

Hi, Gavin. This is Nick. As it relates to the gross to net for Avelity, the quarter was in the low to mid-50s. This was an improvement from the high upper 50s in Q1, mostly due to higher proportion of refills of the scripts, which had a more favorable VPN Versus new scripts. And I think your second question related to inventory, I want to Be clear that the performance for Avelity was not impacted by changes in the inventory level.

Speaker 3

As we stated previously, normal inventory levels We'll be and remain around 2 weeks. So no impact specifically as it relates to inventory levels.

Speaker 12

Just one quick one on gross to net. Do you expect that to I mean, just curious how do you expect it to change over time? And once you have sort of full reimbursement, just trying to understand where it should sort of shake out. Thanks.

Speaker 3

Thank you. Thanks, Yatin. We expect The GTN for Avelvie to remain in that mid-fifty range for the foreseeable future. It's obviously volatile depending on when payer access comes in and then that offsets the co pay reimbursement. So, for the foreseeable future, we expect in that mid-fifty range for GTM.

Speaker 3

Thank you.

Operator

Thank you. Next question is coming from Mark Goodman from Leerink Partners. Your line is now live.

Speaker 10

Thanks for taking my question. This is Rudi on the line for Mark. Can you provide more color And the duration of feedback and persistency for Orbality, I know you're still in the early stage of launch, but any color would be helpful. And also can you provide like The gross margin for Sunosi and even trade changes in the quarter? Thanks.

Speaker 2

Yes. Thanks Can you repeat the second part of the question? We had a little trouble hearing.

Speaker 10

The second part is Just wondering that gross denied our inventory changes for Sunosi in the quarter.

Speaker 2

Thanks. So with regards to the duration of the fact For VELITY, what we saw in the clinical trials, as you know, our clinical trials were 6 weeks and the primary endpoint was at 6 weeks. And so we showed Early onset of action at 1 week, at 2 weeks, in basically at every time point and including at 6 weeks. And then subsequently, in very large follow on studies, we looked at the duration of effect. Patients were treated out to at least 1 year.

Speaker 2

And what we saw was that these improvement either increased or was Maintained out to at least 1 year. What we're seeing from the actual

Speaker 1

Use

Speaker 2

of the product in the field, which is now we have what, how many patients are on Guard? 40,000. Yes, 40,000 patients who've been treated with the product. It's still early, but the experience and the prescription trends support this. We're seeing that the patients are remaining on therapy At the rate that we would have expected.

Speaker 3

Yes. And as it relates to Synosi GTN, it did improve slightly from Q1 Typically due to the seasonality impacts for Q2, we were in the low 50s for GTN. And I believe you asked Also on inventory, as I stated on the previous question, inventory remains for Sunosi around that 2 week level in channel.

Speaker 10

Got it. That's very helpful. Thank you.

Operator

Thank you. Next question is coming from Joseph Tommi from TD

Speaker 13

Maybe the first one, I think you mentioned a little over 40% of the target Writers were have already written a prescription for Avelity. Maybe great to see the progress, but the remaining that have not written, Maybe why are they waiting? Is it really just the lack of kind of in person touch points or is there something else that maybe this new sales force can emphasize with the product profile? And then maybe second is essentially everyone that wants the drug getting the drug, where do we stand with kind of prior authorizations and should that ease over the next Thank you.

Speaker 4

Yes. Hey, Joseph, thanks for the question. So, I'll comment, When a launch happens, what you typically see is that you have some very early adopters. And those early adopters will write Coming straight out of the gate are usually your most informed physicians. Given that Avelity has a novel mechanism of action, those writers who haven't written, it Certainly isn't due to lack of touch.

Speaker 4

It is what it is, is you're now moving into a different physician type. They're typically called fast followers or they wait and see how the early adopters use the product and then they start to adopt. That can be achieved through a lot of different means that's either field force, that's peer to peer speaker programs, which we are investing pretty heavily in So they are being touched. Now we're just we're working through and into that natural phase of a launch where you have to educate The fast followers are the followers that come after your very early adopters. And obviously, as we continue to add HCPs more than 1,000 new riders per month, we are seeing that adoption happen in that group as well.

Speaker 4

In terms of patients that want the product, we do have a very robust patient support services program, including savings card samples And PA support for physicians' offices. So we feel very confident that patients who want the product can get the product.

Speaker 13

And maybe one quick follow-up. I guess, what are you seeing in terms of response rate based on prior line of therapy? Obviously, we saw the open label data in antidepressant unresponsive patients and TRD patients, but you did have that Phase 3 that didn't Meet the mark in the TRD patient population. Are you seeing strong responses in TRD patients? Or is there an ideal place to spot this?

Speaker 13

Thank you.

Speaker 2

Yes. So we look at this pretty closely. In other words, we studied the product in patients with various lines of treatment. So across the entire spectrum from treatment naive patients to inpatients with who meet the criteria for TRD. And what What we saw and we've announced this in the past is that the product performs equally well.

Speaker 2

So we're seeing just as strong responses in patients with who are naive who received one line of treatment and then who received multiple lines of treatment. So that's really encouraging. And as a reminder, in open label data, what we saw The response rate was into the 80% plus range in terms of patients who were responding.

Speaker 8

Great. Thank you.

Operator

Thank you. Next question is coming from Matt Kaplan from Ladenburg Thalmann. Your line is now live.

Speaker 14

Hi, good morning guys and congrats on the strong quarter. Just wanted to focus a little bit more on the Sanofi South from Montreal expansion into additional indications. Can you give us some more detail in terms of the positive Feedback that you received from the FDA with respect to binge eating disorder and shift work disorder. Specifically, How many studies will you need to complete to file for these indications, NDAs, that's something to cause?

Speaker 2

Thanks a lot for the questions, Matt. So with regards to the FDA feedback that we received, so we received feedback on the Higher clinical development plan. In other words, our plan studies to get the products approved. So for changing this order, we We will need 2 studies and for shift work, we'll need one study.

Speaker 14

And in terms of endpoints and For these studies, what will you be can you give

Speaker 12

us more detail on that?

Speaker 2

Yes. So typically, we provide the details on the trial design And the endpoint of the trial once we started the trial. So we intend to so stay tuned and we'll be providing you more on both of those studies because we do intend to launch from very short order. So thinking this order in the 4th quarter and shift work this quarter in the Q1.

Speaker 14

Great. And then with respect to the initiation that you For the Phase 3 study in ADHD, can you give us a little bit more detail in terms of the opportunity The EC, Sanofi or Sacramento filling in that indication.

Speaker 2

So it's a very large patient population as you know, close to or maybe Even rivaling MDD. So just you're sending your own patients who have ADHD. And right now, if you think about the therapies that are available, they fall into roughly 2 categories. You have the stimulus Work, which has been a very large effect sizes, but which have the issues with tolerability and scheduling. And then you have the non stimulants, which have lower effect sizes.

Speaker 2

So it remains to be seen obviously what we'll see with solunefetol. That's why we're conducting the trial. But the indications from What we see with regards to the currently approved medication, so excessive anti Semphemus is that There's a very large effect size that the drug does and that translates to We would say that it would provide significant benefit to patients and fulfill a need right now, which is not

Operator

Thank you. In the interest of time, we have time for 2 more questions. Our next question is coming from Greg Suvaenashe From Mizuho Securities, your line is now live.

Speaker 15

Okay. Thanks for taking my questions. Congrats on the quarter. Just my first one, on the sales force expansion, I was curious, We've seen a flattening of NRX growth on a 4 week rolling basis. So I'm just wondering if the sales force expansion was Somewhat related to seeing that and or does that sales force expansion, is there a contemplation of perhaps down the line additional sales force adds?

Speaker 15

And then just my second question just on the pipeline updates. There were a number of shifts in the timing, and I'm just trying to get a sense of what's your current Confidence in the new timelines that were laid out or are there potential uncertainties or swing factors that still exist that

Speaker 2

So I'll take the second question and then And Laurie will take the first. With regards to pipeline update, what we're trying to do is make decisions that will Generate the most long term value. So we're fortunate to have so many different potential clinical programs, which are high value And which are late stage. So a lot of this has to do with 1, prioritization and 2, The natural uncertainties that occur with enrolling trials. And So that's what you're seeing.

Speaker 2

So we're very happy with where we are with the pipeline expansion. We think that's the right thing to do. And also we're very well resourced to execute and create value. So that's where we are. And I think in the brand scheme of things, The only one of these shifts is within the standard of the equation that you might expect with regards to running any kind of business that involves

Speaker 4

So the very short answer is no. What we're seeing in terms of The trend has nothing to do with the need to expand the sales force. The sales force is purely driven by the fact that we're seeing great adoption And fast update by physicians. What we're seeing and what we believe we're seeing in terms of the flatness is the trend That's pretty we've seen basically since launch is where we'll go through about 4 weeks and then they pop. And right now, I think what we're feeling a little bit Is the seasonality effect.

Speaker 4

Antidepressants typically go through a seasonality effect in the summer, particularly in Q3. They can sometimes drop As much as 10% Q3 versus Q2. So that is likely what we're seeing right now, and We're very confident in the fact that the field force will add to that. But again, the field force should be up and running in Q4.

Speaker 15

Thanks, Laurie.

Operator

Thank you. Our final question today is coming from Myles Mentor from William Blair. Your line is now live.

Speaker 12

Thanks. I'll just keep it

Speaker 15

to 1. I think you added 6% of commercial covered lives in the Q2 here, but you're mentioning that P and T meetings are ongoing or will occur in the next few months. Do you have line of sight as to what proportion of covered lives in the commercial channel that those meetings would from plans that represents, and is your ultimate goal still that 90% of copper parts in the commercial channel that are similarly appears?

Speaker 4

Myles, could you maybe repeat the last part of that question? We had a you faded out a little bit. Yes. So I'll chime in and start. Nick might want to add some Color around how we're thinking about it from a gross to net standpoint.

Speaker 4

But from our standpoint, our goal As always been in discussions with payers to make sure that we are capturing the value of the novelness, the Innovation that we bring to the market as well as the clinical benefit of Avelity. But also we want to make sure that we ensure a path to access for patients. There are 6,800,000 patients who fell prior therapy and all of those patients are typically Taking 6 to 8 weeks to see any kind of response with another therapy. So the delayed onset of action with current therapies, low remission rates, We believe Avelity's clinical profile can really bring value to both payers and to So we want to make sure that we're very careful to capture that value. Nick, do you want to add anything?

Speaker 3

Yes, I think you pretty much said it, Laurie. Avelty is, I mean, it's a truly differentiated product, and

Speaker 2

we just really want to

Speaker 3

secure meaningful access, while maintaining long term value. That's pretty much you said everything.

Speaker 2

Yes.

Speaker 4

The only thing I'll add, Miles, is that the access that we have contracts with and the coverage that we have is very favorable. So payers are seeing the value of the products, and we want to just make sure we're being very cognizant of protecting that long term value of the product.

Speaker 2

Yes. And then just a last thing that I would add, we're reporting the percentage of covered lives, which is 68%, which is great. It's a great place to be right now. But also, while we can report real time What the percentage of covered lives is, that does not reflect ongoing progress. So stay tuned.

Operator

Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to management

Speaker 2

Well, thank you again for taking the time out of your busy schedule to join us for today's update. We are excited to continue building our industry leading CNS franchise in the back half of twenty twenty three. We anticipate a Milestone filled next few months with potential clinical trial readouts, new trial initiations and new submissions. We are committed to ensuring continued success for the launch of Avelity and commercial growth for Sunosi and are fast on our way to achieving our goal potentially having at least 5 marketed products by 2025. We look forward to updating you on our progress and milestones throughout the rest of the year.

Speaker 2

Have a great rest of your day.

Operator

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day.

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Earnings Conference Call
Axsome Therapeutics Q2 2023
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