Axsome Therapeutics Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
November 12, 2024

There are 18 speakers on the call.

Operator

Good morning and welcome to the Axsome Therapeutics Third Quarter 2024 Financial Results Conference Call. At this time, all participants are in a listen only mode. Later, there will be a question and answer session and instructions will be given at that time. Please note that today's call is being recorded. I'll now turn the call over to Darren Opland, Director of Corporate Communications.

Operator

Please go ahead, sir.

Speaker 1

Thank you. Good morning, everyone, and thank you for joining our Q3 2024 financial results conference call. I'm joined today by Doctor. Herriot Tabito, Chief Executive Officer Nick Pizzi, Chief Financial Officer Mark Jacobson, Chief Operating Officer and Ari Mazel, Chief Commercial Officer. Earlier this morning, we posted a new corporate presentation complementing today's call to the Investors section of our website.

Speaker 1

Those joining by webcast may also advance through the slides at any time during the discussion. As a reminder, we will be making certain forward looking statements regarding, among other things, the efficacy, safety and the intended utilization of our investigational agents our clinical and non clinical plans our plans to present or report additional data, the anticipated conduct and the source of future clinical trials, regulatory plans, future research and development plans, our commercial plans regarding Sunosi, Avelity and our pipeline products, revenue projections and other financial forecasts, if any, and the possible intended use of cash and investments. These forward looking statements are based on current information, assumptions and expectations of future events and are subject to certain risks and uncertainties that may cause the company's actual performance and results to differ materially from those projected. Please refer to today's press release, presentation and our SEC filings for additional details on these and important risk factors. You are cautioned not to rely on these forward looking statements, which are made only as of today's date, and the company disclaims any obligation to update or revise these statements.

Speaker 1

With that, I'll hand it over to Arielle. Thank you, Darren, and good morning, everyone. Thank you for joining us on today's financial results and business update conference call. At Axsome, we are focused on developing and delivering novel, innovative medicines that can transform the lives of patients living with serious central nervous system conditions. We are pleased to report on the progress we've made in advancing this important mission in the quarter, articulate our long term vision and review potentially value driving year and intermediate term milestones.

Speaker 1

The Q3 was another strong quarter and represented a notable milestone as we delivered quarterly product revenue in excess of $100,000,000 for the first time. This quarterly performance translates to an annual revenue run rate of approximately $420,000,000 just three quarters into our 2nd full year as a commercial company. While this progress is tremendous, even more significant potential growth lies ahead based on our current portfolio of innovative, marketed and late stage pipeline candidates. In addition to Avelity and Sunosi, our 2 FDA approved treatments for major depressive disorder and excessive daytime sleepiness and narcolepsy and obstructive sleep apnea, respectively. Our pipeline features 5 innovative late stage product candidates currently in development for 9 indications across psychiatry and neurology.

Speaker 1

Our late stage pipeline positions us to continue to deliver important new medicines in therapeutic areas that impact more than 150,000,000 patients in the U. S. If successfully developed, this portfolio has the potential to provide over $16,000,000,000 in peak sales. The diversity and depth of our pipeline also reflects Axsome's differentiated approach to scientific innovation, which we believe aligns with our patient centric mission and expands the therapeutic possibilities for CNS conditions. Now before turning it over to Nick and Ari, who will provide greater detail on the strong performance in the quarter for Avelity and Sunosi.

Speaker 1

I will provide an update on the pipeline and upcoming milestones. A key development in the quarter was the resubmission of our new drug application for AXS-seven, our novel multi mechanistic product candidate for the acute treatment of migraine. The resubmission was acknowledged by the FDA and designated as a Class 2 resubmission with a PDUFA action goal date of January 31, 2025. Launch preparations are underway to ensure timely commercialization if approved. Our ongoing EMERGE Phase III trial evaluating AXS-seven in patients with a prior inadequate response for oral CGRP antagonists is on track to read out in the Q4 of this year.

Speaker 1

Results from this trial will help inform the potential utility of AXS-seven in different patient subgroups. With respect to AXS-fourteen for the management of fibromyalgia, we are completing preparations for the NDA submission and expect to submit the NDA to the FDA this month. I'd now like to comment on our other late stage pipeline products, starting with AXS-five. Our comprehensive development program for AXS-five in Alzheimer's disease education consists of 4 pivotal Phase III placebo controlled efficacy trials: the completed positive ADVANCE-one and aquart-one trials and the ongoing ADVANCE-two and aquart-two trials. ADVANCE II is a parallel group trial and ACOR II uses a randomized withdrawal design.

Speaker 1

Given that target enrollment in both trials have been reached, we are on track to report top line results from both ADVANCE-two and ACORE-two simultaneously this quarter. We look forward to these readouts as we believe that a favorable outcome from 1 or both of these ongoing pivotal studies in addition to the positive results from the 2 completed trials would provide strong support for an ADA filing for AXS-five for Alzheimer's disease agitation. Turning now to AXS-twelve. We are currently conducting a 2 period Phase III trial evaluating the long term efficacy and safety of AXS-twelve in narcolepsy called the ENCORE for evaluating continued treatment with reboxetine study. The trial consists of a 24 week open label period followed by a 3 week double blind randomized withdrawal period.

Speaker 1

Enrollment in the trial is complete and we are on track to report top line results this quarter. The ENCORE trial was conducted as a registration study to provide additional support for our planned NDA for AXS-twelve. Following completion of the trial, we plan to request a pre NDA meeting with the FDA to discuss our planned submission. Rounding out our development pipeline, we continue to advance our 4 ongoing Phase III trials of solriamfetol in ADHD, major depressive disorder or MDD, bandaging disorder and shift work disorder, which we believe represents significant expansion opportunities for solriamfetol. Enrollment in the FOCUS study, our Phase 3 double blind, placebo controlled trial evaluating the efficacy and safety of solriamfetol in ADHD in adults is expected to complete in December.

Speaker 1

And as a result, we now anticipate top line results in the Q1 of 2025. Additionally, the PARADIGM Phase III trial in major depressive disorder is progressing nicely, with enrollment also expected to complete this quarter. PARADIGNE will examine the effect of solriamfetol in MDD patients with and without excessive daytime sleepiness. We now anticipate top line results from the trial in the Q1 of 2025. Lastly, the ENGAGE Phase III trial in binge eating disorder and the SUSTAIN Phase III trial in chipboard disorder continue to enroll with top line results anticipated in 2025 and 2026 respectively.

Speaker 1

As we highlighted in previous calls, solriamfetol's unique pharmacology as a dopamine and norepinephrine reuptake inhibitor in a TAL1 in 5 HT1A agonist along with preclinical and clinical evidence support its potential to treat a broad range of CNS conditions impacting over 80,000,000 people in the U. S. With the potential new indications for solvency, we have the potential to deliver multiple value creating catalysts and drive long term growth for solvaryamfetol alone. In closing, the path ahead for Axsome includes a robust series of clinical, regulatory and commercial milestones. With strategic focus, operational excellence and a strong balance sheet, we are confident in our ability to deliver significant near and long term value for patients and shareholders.

Speaker 1

With that, I'll hand it over to Nick.

Speaker 2

Thank you, Herriot. Today, I'll share our Q3 financial results and provide some financial guidance. We delivered yet another robust quarter and recorded total net product revenue of $104,800,000

Speaker 3

compared to $57,800,000

Speaker 2

for the same period in 2023, representing an 81% year over year increase. Avelity's strong sales momentum continued with net product sales increasing to $80,400,000 in the 3rd quarter, representing 113% growth compared to the prior year period and 24% sequential growth versus Q2 2024. We're also pleased with the continued performance of Sunosi, which delivered net product revenue of $24,400,000 in the quarter or a 21% increase compared to the same period in 2023. Gross to net was approximately 50% for Velvety and in the low 50s for Sunosi. Our R and D expenses for Q3 were $45,400,000 compared to $28,800,000 for the same period in 2023.

Speaker 2

The increase was primarily driven by our ongoing clinical programs for AXS-five and selriamfetol as well as increased chemistry, manufacturing and controls costs associated with our pipeline products and higher personnel costs, including non cash stock based compensation associated with organizational growth. SG and A expenses for the Q3 were 95,600,000 dollars compared to $83,200,000 for the same period in 2023. The increase was mainly a result of continued investments for the commercialization of Avelity and Sunosi along with higher personnel costs, including non cash stock based compensation associated with organizational growth. Net loss for the Q3 was $64,600,000 or $1.34 per share compared to $62,200,000 or $1.32 per share for the comparable period in 2023. The $64,600,000 loss includes $40,900,000 in non cash charges, which reflects a fair market value adjustment for contingent consideration this quarter of 16 $400,000 Cash and cash equivalents totaled $327,300,000 as of September 30, 2024.

Speaker 2

As we approach the potential launches of AXS-seven in migraine and other late stage assets in the coming years, we remain committed to our principal efficient approach to capital allocation that has yielded substantial returns to date. As such, we believe that our current cash balance is sufficient to fund anticipated operations into cash flow positivity based on the current operating plan. And with that, I'll turn the call over to Ari, Axsome's Chief Commercial Officer to provide details on our commercial performance.

Speaker 4

Thank you, Mick. Axsome delivered robust commercial performance in the Q3 of 2024. In addition to strong sales performance for Avelity and Sunosi, Q3 saw continued improvements in market access dynamics for both brands, including an increase in covered lives for Avelity for the 2nd consecutive quarter, reinforcing the strength and quality of our commercial execution. Avelity once again outperformed the market and branded competitors with approximately 144,000 prescriptions in the 3rd quarter, representing 108% growth year over year and 17% growth sequentially compared to the 2nd quarter. By comparison, the antidepressant market grew 1% year over year and sequentially.

Speaker 4

Nearly 26,000 new patients were prescribed Ovelity in this quarter, bringing the total number of new patients started on Ovelity since launch to nearly 140,000. Our sales team successfully activated more than 4,100 new prescribers in the 3rd quarter and continued to penetrate both the psychiatry and primary care markets among MDs, MPs and PAs who care for the majority of depression patients across the U. S. On the market access front, our previously announced expansion of covered lives for Avelity resulted in meaningful increases in new patient starts and covered claims. Coverage continues to evolve and expand and Avelity now has 63% of commercial lives covered and 78% of total lives from across payer channels.

Speaker 4

Negotiations with payers and PBMs are advancing across the access landscape. To build on the success of the Avelity launch, we are planning a second expansion of our Avelity psychiatry sales force to approximately 300 sales representatives, which is expected to complete in the Q1 of 2025. The increase in share of voice combined with strength in market access, outstanding product attributes and positive provider and patient experiences with Elvelity will position the brand for further growth as we enter another pivotal year for Axsome. Turning to Sunosi. Total prescriptions were approximately 47,000 in the quarter, representing 15% year over year growth and 5% sequential growth.

Speaker 4

By comparison, the weight promoting agent market grew 3% year over year and 4% sequentially. Sanofi had strong performance with new patient prescriptions once again in Q3 with more than 4,100 new patients initiating Sanofi treatment during the quarter as the Sanofi team continues to drive depth with existing prescribers, while also activating approximately 400 new writers in the quarter. Turning now to AXS-seven. As Herriot mentioned in his open, we are eagerly anticipating the January 31 PDUFA date for this innovative treatment. Migraine is the leading cause of disability among neurological disorders and affects approximately 39,000,000 Americans, 70% of whom report not being fully satisfied with their current treatment due to suboptimal efficacy.

Speaker 4

If approved, AXS-seven's distinct multi mechanistic pharmacology has the potential to address this unmet need. Launch preparations are well underway, including the build out of the AXS-seven sales team. We anticipate a commercial launch in the first half of twenty twenty five. In closing, we have made significant progress in 2024, our 2nd full year as a commercial company, and have firmly established Axsome as a trusted partner for providers, patients and payers, providing a solid foundation for continued commercial performance for Avelity and Sunosi as well as future product launches. I will now turn the call back to Darren for Q and A.

Speaker 1

Thanks, Ari. I'll now turn it over to the operator to begin Q and A.

Operator

Thank you. At this time, we will be conducting a question and answer you. Our first question comes from Vikram Purahit with Morgan Stanley. Please proceed with your question.

Speaker 5

Hi, everyone. This is Morgan on for Vikram. Thank you for taking our question. So on the Avelity sales force expansion, how long would you expect this full expansion to take? And how much of a sales lift would you expect from the expansion?

Speaker 5

And then I have a follow-up after that. Thank you.

Speaker 4

Hey, Morgan, this is Ari. Thanks for the question. As we mentioned, we expect the expansion to be completed in the Q1 of next year. In terms of lift, I would suggest that our last expansion, the guidance we gave was that the ramp would build over the course of the year. I think you saw as we completed that expansion in January of this year, we started to see the impact straight away, and it's been part of the reason why the brand has performed so well over the course of this year.

Speaker 4

We would expect a similar impact for the 2nd expansion.

Speaker 5

Okay. That's helpful. Thank you. And then would you say how much of this move would be driven by the desire to expand in MDD versus preparation for potential ADA launch as well?

Speaker 4

This is really about MDD and the rationale for it. Recent market access wins have expanded the potential for Avelity as first or second line treatment. We've also seen promising growth in the primary care market. We expect further improvements in market access moving forward and continued growth in primary care. So this makes sense to capitalize on those dynamics.

Speaker 4

But to your point, we do see potential synergy for the future if ABA is approved. And so we'll share more updates on that at appropriate times.

Speaker 5

Thank you.

Operator

Our next question comes from Jason Gerberry with Bank of America. Please proceed with your question.

Speaker 6

Hey, guys. Thanks for taking my questions. First, just on Avelity, curious your thoughts on new atypical antipsychotics that are likely to be approved next year as adjunctive. I get that these are technically considered different segments of the market, but is it fair to think that the target patient that might be an option for a new monotherapy with a different mechanism versus considering going on to adjunctive, there's sort of a competitive tension there. So I'm just wondering if these new and new atypical like CAPLYTA a better tolerability profile might be somewhat of a competitor to Avelity?

Speaker 6

That's my first question. And then just as a follow-up, on the ADA marketplace, I know in the past you guys have said you feel like you have a differentiated profile. So whatever we're seeing with Rexalte may not be applicable to an eventual Avelity launch. But I guess the one thing we've heard is a big issue has been high out of pocket costs for patients and because of the high Medicare SKU, sponsors aren't really able to defray those costs through co pay assistance programs. So how do you overcome that hurdle, which seems more intrinsic to the ADA marketplace?

Speaker 6

That's my follow-up. Thanks.

Speaker 4

Great. Yes. Thanks, Jason, for the questions. Starting

Speaker 1

with

Speaker 4

the atypical question, yes, obviously, adjunctive MBB is slightly different than monotherapy MBB. And although there is use of atypicals, in addition to monotherapies, we do see these as distinct marketplaces. As we've stated previously, we firmly believe that Avelity is a first or second line treatment. Typically atypicals will come into play in later lines, 3rd or 4th, when the patient has had inadequate response to monotherapy treatments. Your comment about capillated tolerability profile, I believe is related to other atypicals, because our safety tolerability profile, I would say, is very strong in this marketplace.

Speaker 4

So while we expect there to be some level of noise, ultimately, we believe our key competitive set is with monotherapy SSRI SNRIs and that's how we're commercializing the product. As it relates to ADA, we have been following the Rexulti launch very carefully. And I think for any branded agent on the marketplace, out of pocket expense is always a top concern for providers and patients. Part of our strategy is to continue to develop strong working relationships with payers and PBMs across the landscape. As we develop those relationships and expand coverage for Avelity and Sunosi, we expect there to be benefit for the ADA launch, which should set us up to help mitigate out of pocket expenses

Speaker 2

for those patients over time.

Speaker 6

Thanks. So you guys wouldn't expect to have $200 out of pocket kind of co pay costs borne on these patients?

Speaker 4

Jason, it really depends on the coverage and the rebate agreements that we have with the plan. So it's a little premature to comment exactly on the out of pocket expense. But our goal is to ensure that there's access for every patient and that out of pocket expenses is managed appropriately.

Speaker 6

Got it. Thank you, guys.

Operator

Our next question comes from Leonard Timmoussen with RBC Capital Markets. Please proceed with your question.

Speaker 7

Hi, guys. It's Leo. Thanks for taking my question. Congratulations on the quarter. Just a simple one from me, I guess.

Speaker 7

On ADA, I guess, now that you're reached target enrollment in both ADVANCE II and ACORD II, can you talk about both how the patients you've enrolled in ADVANCE 2 compared to ADVANCE 1 and what your expectations would have been? And then also the event rate for ACORD 2 compared to your expectations?

Speaker 1

Thank you for the question. So as you mentioned, we have reached target enrollment. As it relates to the patient populations, they're very similar. So if we do an exclusion criteria for the ADVANCE 1 and AVANCE 2 studies are very similar. And I would say the same thing with regards to ACORD 1 and ACORD 2.

Speaker 1

The goal was to make AVANCE II as well as ACORD II replicative studies. As it relates to the event rates, the event rates are what we're expecting them to be. And that is why we're confident that we will be able to have a readout this quarter for both the ACORD II study as well as the AVANCE II study simultaneously.

Operator

Our next question comes from Charles Duncan with Cantor Fitzgerald. Please proceed with your question.

Speaker 7

Hey, morning, Herriot and team. Congrats on a nice quarter and appreciate all the color on the pipeline. What's going on? I had a couple of questions. One is kind of commercial on AXS-five and then a follow-up in terms of the pipeline and its upcoming readouts.

Speaker 7

With regard to Avelity, are you getting more traction with SYKES or PCPs? And is the rapidity of response a driver to that? And do you think that that profile could read on potential differentiation relative to say, Rexelpi if the drug shows effects and is approved for ADA? Thanks.

Speaker 4

Hey, Charles, Zari. Thanks so much for the question. To answer your question, we're doing quite well in both the psychiatry and primary care markets. That said, in Q3, primary care clinicians were the fastest growing segment, which is a really great signal, something we talked about historically that we expect that segment of the market to continue to grow. So we're really pleased with the progress that we're making in the primary care segment.

Speaker 4

Your comment about rapid acting is spot on. It is one of the top drivers of utilization in the depression market. And yes, based on our early conversations with KOLs in the Alzheimer's agitation market, that rapidity of response is a very compelling attribute that we think will be a core part of our brand story at launch.

Speaker 7

Helpful. Thanks, Ari. Relative to the upcoming AXS-five readout, looks like ADVANCE-two is slightly smaller sample size than ADVANCE-one. So does that make you at all concerned about what you might observe there in terms of effect size? And then can you provide us any color on the ongoing open label extension study in terms of enrollment or rollover into that and then persistence?

Speaker 1

Great. So with regards to the sample size for ADVANCE-two, Charles, so the sample sizes that you see in our slide presentation, these are target enrollment numbers. And the numbers always differ slightly once you actually complete enrollment, never reach the exact numbers. You might usually it's plus or minus. So I wouldn't read too much into that, except to look at that number and use it as a guide to how the study is powered.

Speaker 1

In terms of the open label extension, we've seen a very nice or very high percentage of patients rolling over from the CONTROL studies into the open label extension studies, or the open label extension study. And usually, that's a positive sign in terms of how patients and caregivers perceive a product. So we're very happy to see that. Another benefit of a high enrollment rate in the open label safety extension study is that it does allow us to move towards our target exposure numbers, which are needed from an ICH perspective to enable an NDA filing. And on that front, we're very well positioned.

Operator

Our next question comes from Serena Chen with Wells Fargo. Please proceed with your question.

Speaker 8

Hi, thanks so much for taking my question and congrats on the strong quarter. I wanted to ask about thoriumthritol in ADHD. With the FOCUS study now pushed out to 1Q 'twenty five, I was just wondering if there was any kind of slowdown or competition in enrollment? And then what is your thinking on running the pediatric study? Are you still planning to start that prior to or potentially after the adult data readout?

Speaker 8

Thank you.

Speaker 3

Hey, Dorena, good morning. This is Mark. So with respect to timing, that's simply the final screening funnel and kind of what we're seeing. So the study is already over 95% enrolled. It is just our final estimate of how long final patient enrollment is going to take.

Speaker 3

So stay tuned and that's all moving along. And then with respect to the pediatric study, those plans are in the works and we're going to launch that as basically as soon as we're able to. And so also stay tuned for that. But it's not predicated on

Speaker 1

the focus study per se.

Operator

Our next question comes from David Amsellem with Piper Sandler. Please proceed with your question.

Speaker 9

Hey, thanks. So wanted to ask about the cost structure, broadly speaking. And I know I'm not asking for any sort of guidance question about 2025, but I did want to drill down on how you're thinking about R and D spend, not just for next year, but as you think beyond that, particularly with a lot of programs, a lot of studies wrapping up next year, how should we think about that? And then secondly, regarding promotional spend, I mean, I know you have the expansion of the sales force in support of Avelity. But how are you thinking about, say, migraine and then Alzheimer's and the extent to which you're going to be adding headcount to support these additional opportunities?

Speaker 9

Help us understand how SG and A is going to expand next year and beyond? Thank you.

Speaker 1

Maybe I'll just give just some overarching comments and then we'll let the other members of the team provide more details. But for commercialization is to approach it in a very rational way. So there is an intense focus in the company culturally on return on invested capital. So everything that we do will be very well thought out and will be done in a rational way. Now that may differ from what maybe you're used to seeing with other companies.

Speaker 1

However, we think that that's the right way to run the business.

Speaker 4

Sure. Yes. And maybe just hey, David, this

Speaker 2

is Nick. And just to add on to Eric, I think you made the key points. But we as Axsome right now at the end of Q3 are in the strongest capital position that I'd say we've ever been since inception. As a reminder, with our current cash on end, we have the ability to get to cash flow positivity and execute on all of our priorities that are better in our operating plan, including further investing in Avelity, Sunosi, the launch of AXS-seven and just furthering our pipeline. And then just maybe specifically on this quarter in Q4 and how we should think about OpEx in Q4.

Speaker 2

We saw Q3, we had a decrease in R and D and SG and A from the previous quarter. We would expect a slight increase in Q4 as it relates to R and D spend. That's mainly due to the PDUFA for AXS-fourteen. So we'll be filing that shortly. And then SG and A, again, potentially slightly increasing just as we prepare for the migraine launch.

Speaker 9

Okay. Thanks for that.

Operator

Our next question comes from Marc Goodman with Leerink. Please proceed with your question.

Speaker 10

Yes, good morning. First of all, on Avelity, can you just give us a sense of how the product is being used and how that's evolving? Second question is, the expansion in the sales force, that's just for Avelity, but how are the reps going to be used for the migraine launch? I know the question has been asked a few times, but just I'll ask it again like are we going to have another expansion for the migraine when it's approved or are we going to leverage these reps that you're about to add? And then just lastly on reboxetine,

Speaker 1

can you just

Speaker 10

give us an update on what you need to file this product? You're running another study, you have the positive study. So do you need this study to be positive to file? Are we looking for more patients for long term safety? Just curious what the gating issue there is.

Speaker 10

Thanks.

Speaker 4

Hey, Mark, it's Ari. I'll start with the Avelity utilization. So we again saw an incremental increase in first and second line use. It remains around 50% first or second line use in Q3. So pleased with sort of the incremental growth and we can we expect that to continue to build particularly as we bring more market access online for the product.

Speaker 4

In addition, when you think about monotherapy or adjunct use, again, we saw an increase in monotherapy use, but it remains around 50% monotherapy adjunct. So overall, the trends in line with our expectations and we expect that to continue to improve over time. As it relates to the expansion, this expansion is for Avelity MDD. When you think about the migraine launch, we do intend to enter the migraine market in a targeted differentiated way that leverages our experience with Avelity. So there will be an additional expansion, if you will, of sales representatives.

Speaker 4

I'll say that we've made significant progress over the past year with our digital centric commercialization model. We expect 7 to benefit from this experience at launch, but we will be engaging with top migraine treaters and headache centers, large neurology clinics, etcetera. So we'll share additional details as we get a little bit closer.

Speaker 1

Okay, great. As it relates to the rivoxetine question, so Mark, I think what you're referring to is our ENCORE trial. This is the Phase 3 trial in patients with narcolepsy. So we do not need this study to be positive in order to be able to file an NDA. So we already have our 2 studies, which will support the efficacy claims that we want to make with regards to reboxetine or AXS-twelve.

Speaker 1

However, the Phase 3 trial, the long term safety extension trial, it does incorporate a 3 week randomized withdrawal period. So that's always been design of the study from the very beginning. And it's just that there has not been much focus on it. So as we near the readout for that study, we did want to point out that this is in fact a control study and it should provide additional efficacy data. And if it's positive, that's fantastic.

Speaker 1

It will make for a stronger package.

Speaker 10

But you're filing anyway with or without a positive study?

Speaker 1

Correct. And the ENCORE study, it has two periods. 1 is the open label period. That's a 6 month open label safety extension trial. So that was the original reason for running the study.

Speaker 1

So we do need that part of the study in order to file. And then using our strategy that we've used in the past, which is to make sure that we're efficient in everything that we do. When we designed the study, we did include a double blind phase, which is AXS-twelve versus placebo.

Speaker 10

Thanks.

Operator

Our next question comes from Joseph Thorm with TD Cowen and Company. Please proceed with your question.

Speaker 1

Hi there. Good morning. Congrats on

Speaker 2

the progress and thank you

Speaker 11

for taking my questions. Maybe first one on solriamfetol in MDD, I guess given sort of the high bar that Avelia set in the indication, what sort of the area for differentiation that you're looking for here to consider additional investment on that program? And then second, when you're thinking about the enrollment of AXS-five into Alzheimer's agitation, where are you finding these patients? What's sort of the last touch point before being referred into the studies? Is it a neuropsychiatrist?

Speaker 11

Is it an Alzheimer's physician? Is it a primary care doc? Kind of where can we find these patients? And is it different in

Speaker 2

the commercial setting? Thank you.

Speaker 1

So thank you for the question. As it relates to solriamfetol in major depressive disorders, we are studying solriamfetol in patients with MDD, both with and without excessive daytime sleepiness. So if you look at the drug from a pharmacology perspective, it has a novel mechanism of action, which is a which is 18 to all one receptor agonist. That will provide the marketplace and clinicians and patients a brand new mechanism of action in MDD. And given that MDD is a very heterogeneous patient population to have different mechanisms of action is very useful.

Speaker 1

We've seen that firsthand with Avelity, with its novel mechanism of action and how that has been received by the marketplace. As it relates to other points of differentiation, one of the aspects, one of the clinical aspects of major depressive disorder is its association and comorbidity with excessive daytime sleepiness. So that is one of the areas that we will look to explore in the PARADIGM study. So stay tuned and we're looking forward very much to learnings from that study about the potential profile of solriamfetol and MDD. And the other question, which you asked related to Alzheimer's disease agitation and where those patients are coming from.

Speaker 1

The way that clinical studies are run is we and other companies partner with clinical trial centers that specialize in psychiatry. So the way that clinical trial enrollment works is not to go specifically to the general population, although there is advertising. It is to go to centers that have experience and relationships and taking care of these patients and enrolling them. So that's where the patients are coming from. And as it relates to how that might translate into commercialization, I think one point of differentiation with our program is that it is focused on community dwelling patients.

Speaker 1

So these are not nursing home patients. And one of the potential benefits of AXS-five and Alzheimer's disease agitation should be successfully developed is in fact to keep patients out of the nursing home.

Speaker 12

Great. Thank you.

Operator

Our next question comes from Joon Lee with Truist Securities. Please proceed with your question.

Speaker 13

Good morning. This is Asim on for Joon. Congrats on the quarter and thanks for taking the questions. The first question for me is, can you remind us what the powering effect size of the ADVANCE-two study is? And then as a follow-up on Avelity, have you seen some sort of inflection from the increased coverage of 22,000,000 additional new lives on August 1?

Speaker 13

Or would you say you're seeing more of an inflection due to the sales expansion from earlier this year? Thank you.

Speaker 1

So ADVANCE-two is powered very similarly to ADVANCE-one. So it's 90% powered to detect the treatment difference. We have not talked about exactly what the effect size is, but the effect size that it's powered to detect is similar to the effect size in Advance 1.

Speaker 4

And thanks for the question on Audality inflection. We are very pleased with the demand that we've driven post the market access expansion. We have seen meaningful growth in both new patient starts and covered claims. In addition, we've seen a reduction in rejection rates for those covered lives. So overall, we're very pleased with the performance.

Speaker 4

I think keep in mind that that win occurred during the summer seasonality month. So we expect that to continue to build over time. And so I don't think it's a fair comparison to say which created more inflection, but given the fact that the expansion the sales force expansion was earlier in the year, it obviously had more time to make impact and we've been very pleased with the impact we've seen over the course of the year.

Speaker 1

Thank

Operator

you. Our next question comes from Myles Minter with William Blair. Please proceed with your question.

Speaker 14

Hey, just back on the sales force expansion. I know you've still got one one large GPO contract that you could potentially execute here. Is that 300 sales force expansion next year incorporating that you get that? Or is it more from the level of access that you have now you think that, that expansion is required? And if you bring on another GPO contract, we could get a further expansion?

Speaker 14

And then just secondly on AXS-fourteen, have you started to engage payers? And is that sort of unique benefit on fatigue that you might see with that agent something that jives with them potentially having to cover a branded therapy price? Thanks very much.

Speaker 4

Hey, Myles. So regarding the Salesforce expansion, it's not specifically tied to a future market access win. It's really to capitalize on the market access we have today and sort of the increase in first and second line access that we've experienced this year, but also the growth we've seen in primary care in 2024 are 2 of the primary reasons why we believe it was the right time to add additional selling effort. So any additional market access wins would be additive to this expansion and further accelerate performance.

Speaker 1

Yes. And you asked the question about whether or not you're starting to engage payers as it relates to IFRS 14?

Speaker 4

Yes. So, we do talk to payers regarding our pipeline, generally speaking. And obviously, the things that are more near term to launch are of more interest as it relates to sort of payer or rebate negotiations. That said, I think it's fair to say that payers are very impressed with the breadth of our portfolio. They recognize that these are areas of significant unmet need.

Speaker 4

And although there are existing treatment options, there's still plenty of room to improve on not only symptom improvement, quality of life, but also health resource utilization. And so we feel very good about the strength of the profiles of 14 and others and believe we'll have constructive negotiations once we get closer to launch.

Speaker 3

And Miles, hey, this is Mark. Just to your observation on fatigue in particular, we do think that is an important element of the product profile.

Speaker 14

Makes sense. Thanks for the questions.

Operator

Our next question is from Yatin Sanjay with Guggenheim Partners. Please proceed with your question.

Speaker 12

Hey, good morning. This is Eddie on for Yatin. Thanks for taking our questions and congrats on the quarter.

Speaker 4

For Ovelity, what sense are

Speaker 12

you getting from the real world rate of discontinuation, especially as it relates to the pivotal studies and other sort of branded antidepressants on the market? And then in terms of the coverage, it looks like you're creeping up in terms of the commercial coverage, but what are the major hurdles you're seeing to getting broader coverage access on that commercial channel beyond that sort of 60% to 65% range? Thanks.

Speaker 4

Yes, thanks for the question. Regarding discontinuation, we haven't seen anything significant over the course of this year. And in fact, the persistency that we've observed has been very positive. In fact, one of our internal analyses suggests that Avelity persistence outpaces that of SSRIs and SNRIs. So we're really pleased with that.

Speaker 4

There's been no impact from any of the ongoing clinical trials in the marketplace. In terms of hurdles, it's really about aligning on final rebates and utilization management criteria with the outstanding plans. And we're very confident in the negotiations that we've had and expect to see Access expand and evolve in the near term.

Speaker 6

Thanks.

Operator

Our next question comes from Ami Fadia with Needham and Co. Please proceed with your question.

Speaker 15

Hi, this is Poona on for Ami. Thank you for taking our question. My first question is how do you anticipate the prescription trends are relative to differ in Q4 with the number of holidays? And could you provide us some additional color around the timing of the data readouts expected in Q4 for Alzheimer's disease agitation and migraine? And lastly, does the EMERGE study in any way impact the regulatory decision on Jan 31?

Speaker 15

Thank you.

Speaker 4

Hey, Ami. This is Ari. I'll start with the demand question. So we do expect there will be some impact from seasonality in Q4. Quantifying that is a little difficult at this time.

Speaker 4

I would point to Q3, which also there's a seasonality effect and ABILITY outpaced the market, both the generic and branded market, which both in both cases. And so we feel optimistic that we'll be able to continue to grow the brand, but we do expect some seasonality impact in Q4.

Speaker 3

Good morning, Ami. With respect to the cadence of the readouts, excuse me, between now and the end of the year, that's right around the corner. So I think you can stay tuned for that. And we haven't we're not this morning, we didn't provide guidance on the exact choreography. But again, it's right around the corner, and we're looking forward to providing updates there.

Speaker 3

And then with respect to IMerge, I think I heard the question is, is that needed for the NDA submission or resubmission or from a regulatory perspective? And so just as a reminder, that's the ASC six zero seven trial that will read out and that is not needed from a regulatory perspective. Instead, we expect that to whatever we learn from that will inform potential approaching the marketplace and medical and potential commercial communications.

Speaker 15

Got it. Thank you.

Operator

Our next question comes from Joel Beatty with Baird. Please proceed with your question.

Speaker 1

Thanks. First question is for

Speaker 4

the sales force expansion. How much more reach does that give you? Like for example, how many more docs does that allow you to cover? And then the second question is for ADA, when would you expect to be able to file? Yes.

Speaker 4

Thanks, Joel, for the question. There will be some increase in reach, but I think importantly, there's also a frequency play here for high decile providers. And so we feel really good about the markets in which we're expanding, capitalizing on the strong market access in those markets and ultimately think that it will be a dual benefit in getting in front of more doctors. I don't have the specific number for you at the moment, but also frequenting those doctors more regularly.

Speaker 1

Great. And as it relates to timing of filing the walls on the disease agitation, The choreography is that once we have the readouts from the ongoing studies, we will then see an FDA pre NDA meeting. And then but in general, the way that we think about it is it takes roughly 6 to 9 months after completing the studies in order to get a package ready for filing.

Speaker 4

Thank you.

Operator

Our next question comes from Greg Suvanget with Mizuho Securities. Please proceed with your question.

Speaker 16

Good morning. Congrats on the progress in the quarter and thanks for taking my question. My question is primarily on AXS-five and AD agitation. Could you please provide your, I guess, take on the various potential Phase III80 agitation trial outcomes? In other words, I think you said earlier that you feel like hitting on either one of the 2 would be sufficient to support a filing.

Speaker 16

But of the two trials, if you're going to only hit on 1, how should we think about a positive ADVANCE-two enabled filing versus an ACORD-two enabled SND filing? And then I've got

Speaker 1

a follow-up, please. Thank you. Thanks for the question. So just as a reminder, the program consists of 4 pivotal studies. And we've already read out 2 of those studies, which are positive.

Speaker 1

So going into these two readouts, there are 2 possibilities and well, there are several possibilities. But one possibility is that both studies are positive. In other words, ACORD 2 in ADVANCE 2 or that one of those studies is positive. In either of those situations that would leave us with 3 or more positive efficacy trials to support NDA filing. And that is more than is needed from a regulatory statutory perspective.

Speaker 1

So if you're really going to these data readouts, What we like about the program and the fact that we have 4 studies is that it will provide a lot of information in terms of the product profile and also in terms of the safety profile of the product within this population.

Speaker 16

Okay. Thank you for that. And then maybe if I could just ask about the gross net, I think it was 50% for Avelity in the Q3. I might have missed comments around the expectation for the Q4, but any comments just on Q4 and perhaps looking into 2025, specifically on the Ovelte gross to net?

Speaker 4

Sure, Greg. Hey, Nate, it's Nick. Yes, you're correct. Ovelte GTN

Speaker 2

in the quarter was approximately 50%. That was a slight improvement from the low to mid-50s in the previous quarters. We would expect it to remain in that approximately 50% range to slightly worsening for the Q4, similar to prior year. And then for 2025, we would anticipate that similar negative seasonality impact in Q1 that we've seen in previous years and the rest of the pharma industry fees typically and that's due to the reset of the deductibles and we would expect that to improve throughout the year similar again to previous years.

Speaker 16

Okay. Thank you for taking my questions.

Operator

It appears we have time for 2 more questions. Our first question comes from Ram Selvaraju with H. C. Wainwright. Please proceed with your question.

Speaker 2

Hi, this is Eduardo on for Ram. Thanks for taking the question. I had a question regarding the fibromyalgia asset and specifically if you were expecting to hire discrete sales force to promote sales of that if it were approved. And also if you could give a little color to the binge eating disorder market and the nature of the competitive landscape in that indication?

Speaker 4

Yes. So I'll start with the ARX-fourteen question. The fibromyalgia market is represented by a broad group of prescribers across primary care, rheumatology and pain specialists. And similar to my comments about 7, we intend to market enter the market in a targeted differentiated way that really leverages the experience we've seen with Avelity. Right now, I think it's fair to say that there will likely be some distinct selling, particularly in those specialties where we don't currently call on.

Speaker 4

But in primary care, which is a large segment of the provider group, there is potential for synergy with our existing sales force. And so we'll share additional details as we get a little bit closer to launch.

Speaker 1

Yes. As it relates to binge eating disorder and the market for that, this is a very large patient population. There are 7,000,000 patients in the U. S. Who have binge eating disorder.

Speaker 1

And there's only one product that is currently approved. And so that's Vyvanse. So we think that there's a lot of clinical need and a lot of opportunity to respond to that clinical need with solriamfetol should it be successfully developed.

Speaker 2

Great. And if I could add just one last one, if you had any data or background on how Sunosi is doing outside of the U. S? Sure. Yes.

Speaker 2

Sunosi continues to perform well outside the U. S. We do outline the royalty revenue that we received from Pharmanovia, and you'll be able to see that that's been increasing over the last couple of quarters as it's been a further prioritize at PharmaNova in the European countries.

Operator

Our last question today comes from Matt Kaplan with Ladenburg Thalmann. Please proceed with your question.

Speaker 17

Hey, good morning, guys. Thanks for taking the question. Just with the ADA data readout in the near term, what are your current what's your current thinking in terms of the launch plans with respect to filing AXS-five as Avelity or as a new brand in the ADA market?

Speaker 1

Thanks, Matt, for the question. So the nice thing about the ANSYSO-five mobile disease agitation is we do have the ability to file it as an NDA under various forms, either an SNDA or its own freestanding NDA. And there are benefits to each approach. We are still exploring the approach that we will take. Stay tuned for that.

Speaker 1

However, what we can tell you is that it will be a very well thought out decision.

Speaker 4

Thanks, Ariane.

Operator

We have reached the end of our question and answer session. And I would now like to turn the floor back over to Ariel Tabutu for closing comments.

Speaker 1

Well, thank you again for joining us on the conference call today. Axsome has built a singular innovative late stage neuroscience portfolio spanning multiple indications in both psychiatry and neurology, which has the potential to deliver differentiated outcomes for millions of patients and compelling returns to shareholders. We look forward to keeping you posted on our progress.

Operator

This concludes today's teleconference. Thank you for your participation at this time.

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Earnings Conference Call
Axsome Therapeutics Q3 2024
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