TC Energy Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
February 20, 2024

There are 18 speakers on the call.

Operator

Hello, and welcome to the Axsome Therapeutics 4th Quarter and Full Year 2023 Conference Call and Webcast. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Chief Operating Officer, Mark Jacobson. Please go ahead, sir.

Speaker 1

Good morning and thank you all for joining us on today's conference call. This morning, we issued our earnings press release providing a corporate update and details of the company's financial results for the Q4 and full year of 2023. The release crossed the wire a short time ago and is available on our website at axon.com. During today's call, we will be making certain forward looking statements. These statements may include statements regarding, among other things, the efficacy, safety and 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 Cynezi, Velvety and our pipeline products, revenue projections and possible intended use of cash and investments.

Speaker 1

These forward looking statements are based on current information, assumptions and expectations that are subject to change and 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 only made as of today's date, and the company disclaims any obligation to update such statements. Joining me on the call today are Doctor. Herriot Tabuteau, Chief Executive Officer Nick Pizzi, Chief Financial Officer and Ari Mazel, Executive Vice President and Head of Commercial.

Speaker 1

Ariel will provide an overview of the company and progress made in the Q4 of 2023, as well as key upcoming milestones. Following Herriot, Nick will review our financial results, then Ari will provide a commercial update. We will then open the line for questions. And questions will be taken in the order they are received. 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' 4th quarter year end 2023 financial results and business update conference call. 2023 was another strong year for Axsome built on focused commercial execution for our 1st in class marketing products and continued advancement and expansion of our industry leading neuroscience pipeline. During our 1st full year as a commercial company, Mobeli, our 1st in class oral NMDA receptor antagonist and signal 1 receptor agonist for depression and Sunosi with DNRI and Po-one agonist for excessive daytime steepness generated combined net product revenue of approximately $205,000,000 We expect continued revenue growth in 2024 aided by our completed sales force expansion, Morbility, and increasing awareness of our differentiated products. Later in the call, Nick will provide details on our quarterly financials and Ari will provide additional information on our commercial performance.

Speaker 2

During 2023, our innovative development pipeline also progressed and expanded. We made solid progress in the preparation of our NDAs for AXS-seven in migraine and AXS-fourteen in fibromyalgia. We advanced our Phase 3 trials of AXS-twelve in narcolepsy and AXS-five in Alzheimer's disease agitation. We initiated a Phase 3 trial program for solriamfetol in ADHD and announced 3 additional new indications for solriamfetol. This progress positions us to deliver on multiple potentially value driving milestones throughout 2024.

Speaker 2

I will provide a brief update on our industry leading neuroscience pipeline and expected milestones. Starting with our 2 NDA stage products, AXS-seven for the acute treatment of migraine is on track for an NDA resubmission in the first half of twenty twenty four. The NDA submission for AXS-fourteen for the management of fibromyalgia is also tracking for submission in the Q2 of 2024. Now moving on to our late stage clinical programs. We have completed enrollment in the Phase III SINFONI trial of AXS-twelve for the treatment of narcolepsy and we are on track to report top line results to Symphony during the Q1.

Speaker 2

For AXS-five, the Phase 3 ADVANCE-two trial in the treatment of Alzheimer's disease agitation is tracking for completion in the second half of twenty twenty four based on anticipated enrollment trends in recent treatment market dynamics. Turning to solriamfetol, the active molecule in Sunosi. In December, we held an Investor Day event where physician experts provided the scientific and clinical rationale underlying the exploration of solriamfetol in new target indications including major depressive disorder, binge eating disorder and shift work disorder. We expect to initiate Phase 3 trials in each of these indications in the Q1. These new trials complement the ongoing Phase III FOCUS trial of solriamfetol in adults with ADHD.

Speaker 2

Focus is tracking for top line results in the second half of twenty twenty four. Overall, our development portfolio encompasses 5 innovative late stage patent protected product candidates for 10 serious psychiatric and neurologic conditions. If successfully developed, these investigational medicines have the potential to transform the treatment landscape for serious and difficult to treat CNS disorders, which affect more than 150,000,000 people in the U. S. Alone.

Speaker 2

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, we'll discuss our Q4 and full year results and provide some financial guidance. Total product revenues were 71 $500,000 $204,900,000 for the Q4 and full year of 2023, representing year over year growth of 193% and 309%, respectively. This consisted of net product sales of $70,700,000 $202,500,000 for the Q4 full year of 2023 and royalty revenue of $800,000 $2,400,000 respectively. Total product revenues for the comparable periods in 2022 were $24,400,000 $50,000,000 Total revenue for the full year of 2023 was $270,600,000 which includes license revenue of $65,700,000 from out licensing Sunosi in certain ex U.

Speaker 3

S. Territories. Avelity net product sales were $49,000,000 $130,100,000 for the Q4 and full year of 2023 respectively, representing the 1st full year of commercialization for Avelity. Avelity was launched on October 19, 2022 and had U. S.

Speaker 3

Net sales of $5,200,000 for the Q4 of 2022. Sunosi net product revenues were $22,500,000 $74,800,000 for the Q4 and full year of 2023, representing 17% and 67% year over year growth respectively, and consisting of $21,700,000 $72,400,000 in net product sales $800,000 $2,400,000 in royalty revenue associated with Sunosi sales in out licensed territories respectively. Sunosi net sales for the comparable periods in 2022 were $19,200,000 $44,900,000 Total Sunosi revenue for the full year of 2023 was $140,500,000 which includes license revenue of $65,700,000 from out licensing Sunosi in certain ex U. S. Territories.

Speaker 3

Total cost of revenues were $7,400,000 26 $100,000 for the Q4 and full year of 2023. Total cost of revenue for the comparable periods in 2022 were $2,300,000 $5,200,000 Total cost of revenue for the full year of 2023 included a one time cost of $5,000,000 associated with the revenue received on out licensing Sunosi in certain ex U. S. Territories. Research and development US territories.

Speaker 3

Research and development expenses were $30,800,000 $97,900,000 for the Q4 and full year of 2023 respectively, compared to $14,700,000 50 $7,900,000 for the comparable periods in 2022. The increase was primarily related to the focused trial of solriamfetol in ADHD, the advancement of ongoing trials of AXS-five and AXS-twelve, manufacturing costs associated with the anticipated NDAs for AXS-seven and AXS-fourteen, post marketing commitments for both Avelity and Sunosi and higher personnel costs, including non cash stock based compensation. Selling, general and administrative expenses were $86,800,000 $323,100,000 for the Q4 and full year of 2023 respectively, compared to $61,500,000 $159,300,000 for the comparable periods in 2022. The increase was primarily related to commercialization activities for Avelity and Sunosi, including sales force and marketing expenses and higher personnel costs related to organizational growth, including non cash stock based compensation. Net loss for the Q4 of 2023 was $98,700,000 or $2.08 per share, compared to a net loss of $61,200,000 or $1.41 per share in the comparable period in 2022.

Speaker 3

The net loss in the Q4 of 2023 includes $63,700,000 in non cash charges comprised of $43,200,000 in acquisition related contingent consideration expense, reflecting our updated sales projections or recently announced new indications for solriamfetol, dollars 18,900,000 for non cash stock based compensation expense and $1,600,000 of non cash intangible asset amortization. Net loss was 239 point $2,000,000 or $5.27 per share for the full year of 2023 compared to a net loss of $187,100,000 or $4.60 per share for the full year of 2022. The net loss for the full year includes total non cash charges of $117,900,000 which includes $62,600,000 of stock compensation expense, dollars 48,900,000 in fair value of contingent consideration expense and $6,400,000 in intangible amortization compared to $37,700,000 $3,300,000 and $4,100,000 respectively for the full year of 2022. Avelity and Sunosi GTN discount in Q4 of 2023 were both approximately 50%. Q1 typically has a negative seasonality effect on GTN.

Speaker 3

As a reminder, the GTN discount for Avelte in Q1 of 2023 was in the high to upper 50s and in the mid 50s for Sunosi due to the seasonal Q1 GTN dynamics. We would therefore expect a similar GTN in Q1 of 2024 for both products. We ended 2023 with $386,200,000 in cash and cash equivalents compared to $200,800,000 at December 31, 2022. We believe that our current cash balance is sufficient to fund anticipated operations into cash flow positivity based on the current operating plan. I would now like to turn the call over to Ari, who will provide a commercial update.

Speaker 4

Thank you, Nick. Axsome completed our first full year as a commercial company by delivering strong performance for both of our on market products. Starting with Avelity, In the Q4, approximately 84,000 prescriptions were written for Avelity, representing 23% quarter over quarter growth. This performance contrasts with a decline of 1% for the overall antidepressant market during the same period. Additionally, nearly 17,000 new patients started Avelity in the quarter, bringing the total number of unique patients treated with Avelity since launch to approximately 71,000.

Speaker 4

In the Q4, more than 3,500 first time Ovelity prescribers were activated by our sales team, increasing the cumulative total number of prescribers since launch to nearly 17,000. Payer coverage was stable in Q4 as Avelity remained accessible to patients, representing approximately 70% of covered lives. We continue to progress in conversations with major plans and PBMs across all channels as we pursue access improvements for patients. Avelity performance in the quarter was primarily driven by specialists in psychiatry practices with both psychiatry MDs and nurse practitioners and physicians assistants or NPPAs contributing to robust growth in the quarter and over the course of 2023. In addition, we observed meaningful traction within the primary care segment among both MDs and NPPAs as the early impact from our recent sales force expansion began to take hold with increased call activity in primary care offices.

Speaker 4

In a recent survey of providers in psychiatry and primary care who treat a significant proportion of depression patients, key drivers of Avelity prescribing cited by respondents include rapid onset of action and low impact on weight gain and sexual dysfunction. In addition, adopters note the positive impact of Avelity has demonstrated on day to day patient functioning and its improvements in patient perceptions of quality of life. Axsome has established a strong commercial foundation to support continued Avelity growth in 2024, With approximately 260 sales representatives calling on 44,000 healthcare providers and continued investment in our industry leading digital centric commercialization platform, we are well positioned to accelerate our education and awareness objectives across the predominant depression treaters in the U. S. An enhanced brand story for 2024 has been created to provider perceptions of Avelity and is anchored on Avelity's key attributes.

Speaker 4

Avelity is a rapid acting antidepressant that works fast and lasts, with rapid symptom improvement observed at week 1, substantial symptom improvement observed at week 2, and both sustained and substantial symptom improvement observed at week 6. Avelity has a well established safety and tolerability profile that includes low impact on weight and sexual dysfunction and no risk of movement disorders or extrapyramidal symptoms. Further, Avelity is the only oral antidepressant that modulates both glutamatergic and monoaminergic pathways. A key point of consideration as the role of glutamate in depression is increasingly understood and accepted across the clinician landscape. We are very optimistic about Avelity's growth prospects in 2024 and its long term blockbuster potential.

Speaker 4

Transitioning now to Sunosi. Total prescriptions were just over 42,000 representing 2% sequential quarterly growth and 18% growth versus Q4 2022. Approximately 3,600 new patients started Sunosi treatment during the quarter, bringing the total number of unique patients treated with Sunosi to 65,000 since launch. Although excessive daytime sleepiness is a smaller market with a more limited prescriber base, we continue to activate new prescribers, including more than 400 during the Q4 alone for a total cumulative prescriber base of more than 12,000 since launch. The field team is focused on communicating the needed urgency to treat excessive daytime sleepiness symptoms in obstructive sleep apnea and narcolepsy with disproportionate focus on the nearly 2,000 active weekly prescribers in the space.

Speaker 4

Payer coverage for Sunosi was consistent in Q4 with a total of 83% of lives covered across all channels. In a recent survey of Sinozia adopters, key attributes driving demand for the product cited by respondents include significant and sustained impact on the Epworth Sleepiness Scale, a market leading 9 plus hours of wakefulness observed in Phase 3 clinical trials and significant improvement in patient reported outcomes at week 12. We are very proud of our commercial effort for Sunosi and expect continued growth in 2024. In closing, Axsome delivered compelling commercial performance in Q4 2023 as the optimization of our commercial infrastructure took shape and we completed our 1st full year as a commercial company. Anecdotal feedback from providers and patients continues to reinforce our belief that Avelity and Sunosi are unique and differentiated treatment options in their respective indications and supports our growing confidence that Axsome is reshaping the treatment landscape for CNS conditions.

Speaker 4

I will now turn the call back to Mark for Q and A.

Speaker 1

Thank you, Ari. Operator, may we please have our first question?

Operator

Thank you. We'll now be conducting a question and answer session. Our first question today is coming from Leonid Timshave from RBC Capital Markets. Your line is now live.

Speaker 5

Thanks for taking my question. Maybe I'll start off with a question on the ADVANCE 2 readout. I guess, can you maybe provide a little bit more color on what drove the slip in timelines? I guess what's driving the slower recruitment? Is there any reflection on the potential market opportunity from that?

Speaker 5

And any risks to trial integrity, especially as standard of care evolve? Thanks.

Speaker 2

Well, thank you for that question. I think the second part of your question, which is the evolving nature of the standard of care, that's really what is driving this. This is an indication that we're really excited about. And we did want to take into account the recent launch of brexpiprazole and any potential impact that that could have an enrollment. As a reminder, brexpiprazole is the first drug that is approved in this indication.

Speaker 2

So our internal analytics team has been monitoring very closely the prescription trends. And what we've seen is a clear inflection in prescribing, which we attribute to that new indication. So our revised guidance incorporates this new information. Having said that, we're confident that we should be able to deliver data this year. Are any further comments about the evolving treatment landscape and Brex?

Speaker 4

Yes, I would just say related to the brexeprazole increase, we're seeing a substantial increase across the Medicare channel, which we tie directly to the ADA indication. But I think this is also really positive news for AFX-five. Clearly, there's significant unmet treatment need, and that gives us great confidence for the future with AXS-five.

Speaker 6

Got it. Thank you.

Operator

Thank you. Next question today is coming from Charles Duncan from Cantor Fitzgerald. Your line is now live.

Speaker 7

Hey, yes. Good morning, Herriot and team congrats on a great year of commercialization. I did want to follow-up on a question on AXS-five. But first, with regard to commercial performance for Avelity, I'm wondering if you can provide any sense of persistence. I know it may be a little bit too long, but you mentioned for the branding, fast and last in terms of activity.

Speaker 7

I'm wondering what you can see in terms of refills and patients staying on drug.

Speaker 4

Thanks for the question, Charles. It's still a little too early to share any information on persistency and adherence. What I will say is the feedback we're receiving from patients and clinicians suggest that the clinical profile from Phase 3 is holding up in the real world. So we expect to generate additional data in the future. But for now, I'd like to say that what we're seeing in the real world is reflective of the Phase 3 clinical trial results.

Speaker 7

Okay. That's helpful. And if I could follow on to the last question regarding AXS-five and ADVANCE-two. I'm wondering if you have any changed perspective on the probability of success given Otsuka's 786 data recently? And then also in terms of the open label extension, are patients enrolling into that?

Speaker 7

And how does that appear to be going? Maybe, yes, just kind of broadly.

Speaker 2

Yes. Thanks for the questions, Charles. With regards to the Otsuka readout, we don't think that that has any meaningful read through to our product. Now we watch any data readout or any developments in the space for any potential learnings to our clinical development. However, we think that the best data to look at when you're thinking about the potential of AXS-five and Alzheimer's disease agitation is the data that we've generated with our own product.

Speaker 2

And as a reminder, we have now completed 2 Phase 3 trials, which were placebo controlled, both of which had positive results. So we think that that is information which is more relevant than information with other molecules. And if you then take it one step down and actually look at the products themselves, they are different molecules entirely. So ABP76, as a reminder, is deuterium modified dextromethorphan, whereas AXS-five operates non deuterium modified dextromethorphan. And the inhibitors also are different.

Speaker 2

So we use an amino ketone and then they use quinidine. So very different. And then as it relates to the open label safety extension trial that is going well. And the vast majority of patients who are rolling out of our ADVANCE II trial are opting to go into the open label safety extension. We think that that is a good indicator of how the caregivers are thinking about the product.

Operator

Thank you. Next question is coming from Ash Verma from UBS. Your line is now live.

Speaker 8

Hi, thanks for taking our questions. I had 2 both on AD agitation. So maybe just on the ADVANCE 2 study, are you trying to recruit naive patient to treatment and that's why you want to kind of exclude anyone who has started therapy on Rixote? That's the first one. And then second, like just fast forwarding to when you assume that this would come to the market, would you need to primarily focus on the long term care facilities where a lot of these patients broadly reside?

Speaker 8

And just curious what type of sales footprint that might require versus I think your BCC platform is kind of more like footprint? Thanks.

Speaker 2

So thank you for the question. The answer is yes. We are recruiting primarily naive patients And we would want to exclude folks who are on RExulti for obvious reasons. And then our revised guidance does take into account any potential impact on losing patients because now patients do have a treatment option which is approved. And in terms of long term care facilities, our studies thus far have been conducted in the community setting.

Speaker 2

We think that that's where the majority of patients reside who have this indication. And one of the things that we're excited about as it relates to the profile of SSO-five in Alzheimer's disease agitation is that it could potentially keep patients out of long term care facilities. In other words, keep them at home with their loved ones.

Operator

Next question is coming from June Lee from Truist Securities.

Speaker 9

This is Asim on for June. I was wondering if you could comment on what the breakdown of patients on Avelity currently is around what percent are first line? And then also just want to clarify, is the expanded sales force fully online now? And can you comment on if you think current PRX trends are reflective of the full 2 50% sales force? Thank you.

Speaker 2

Thanks. I'll turn that over to Ari.

Speaker 4

Thanks for the question. So we are seeing a meaningful improvement in terms of earlier line treatment. Over the course of 2023, we saw meaningful increases in first and second line treatment every quarter. So today, there is roughly 40% to 50% of patients receiving Avelity in the 1st or second line setting. We expect that trend to continue over time.

Speaker 4

Regarding your sales force expansion question, we are fully complete with the expansion. We hired the additional representatives at the end of last year, completed training in January of this year. We're starting to see meaningful impact in terms of call activity. In particular, we're seeing an increase proportionally of calls to the primary care segment. We would expect the TRx and NBRx trends to continue to increase over the course of the year and there will be a ramp beginning in Q1.

Speaker 4

And so more details to come, but we are very pleased with the increased field force effort post expansion.

Speaker 2

Thank you.

Operator

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

Speaker 10

Hey guys, good morning. Thanks for taking my questions. I just wanted to follow-up on the ADA enrollment dynamic with Rixolte. I guess when we look at growth of this brand on a TRx basis, that inflection doesn't seem obvious. So I'm wondering if we should be looking at a different metric to gauge that inflection.

Speaker 10

I don't know if it's patient enrollment forms or claims, but given this is a massive market, I'm a little surprised that given the TRx move that we've seen that it's being characterized as an inflection. And then is the expectation still that you get both long term safety and efficacy data in second half and then you'd be able to file in second half? Just wondering if the filing timeline is still on track. Thanks.

Speaker 2

Thanks for the question. We have not given guidance on filing. So that's going to be determined by the completion of our long term 60 extension trial. That's the gaining factor there. And with regards to what we're seeing from our internal analytics team on RYXALTI, I'll turn it over to Ari.

Speaker 4

Yes. Thanks, Jason. My suggestion and what we've been looking at claims based data by payer channel and our observation is that brifiprazole is increasing significantly within the Medicare channel. So that is what we attribute the growth to the ADA indication to.

Speaker 3

Okay. Thank you.

Operator

Thank you. Our next question is coming from David Amsellem from Piper Sandler. Your line is now live.

Speaker 6

Hey, thanks. So just a couple. First, on AD agitation, can you talk about the potential for branding it differently from Avelity and pricing it differently, just given that it's a Medicare Part D market and obviously different from the depression landscape. So that's number 1. Then number 2, couple just on reboxetine.

Speaker 6

1, can you talk about the timeline to an NDA and gating factors beyond the study to an NDA filing in narcolepsycataplexy? And then how are you thinking about pricing in that market? You've got on one end of the spectrum, ptolecen, and on the other end of the spectrum, solriamfetol in narcolepsy. So how are you thinking about that? Thank you.

Speaker 2

Sure. So a couple of questions there around branding and pricing for both products. And I'll let Ari provide some color on how we're thinking about those two things. I will preview it by saying that obviously we're thinking about what we will do there and what our options are. And we would not be able to comment too much until we make a final determination.

Speaker 2

And as it relates to AXS-twelve in Norco Fc and the NDA timing, The gating factor there will be our long term safety extension trial. So we're monitoring that, that is enrolling. And so we need to complete that and have that readout in order to complete our package for the NDA.

Speaker 4

Yes. Thanks for the question. Regarding the branding and pricing dynamics for AXS-five, we're currently performing an analysis to better understand the potential impact of having the same brand or different brands. And there are a lot of considerations that will go into it, including ensuring clarity around patient dosing administration, potential halo effect associated with multiple indications, the fact that there is comorbid depression in roughly 40% of Alzheimer's patients. So there are a lot of considerations and we'll share more details in the future.

Speaker 4

And regarding the reboxetine pricing, that's another area of analysis that we're currently exploring and we'll share additional details in the future.

Speaker 6

Thank you.

Operator

Thank you. Our next question today is coming from Joseph Tommi from TD Cowen. Your line is now live.

Speaker 11

Hi there. Good morning and thank you for taking my questions. Maybe the first one on AXS-twelve. I know the AXS-twelve study is really only empowered for cataplexy and it's a little unclear if we're going to actually get the sleepiness scores. But can you talk a little bit from a clinician perspective, sleepiness component?

Speaker 11

And then second, on Sunosi in MDD, how should we be thinking about timelines to data on that? If I remember, Gemini took about 6 months from 1st patient dose to actually seeing data. So is it possible that we could see Sunosi MDD data this year? Or what are kind of the main differences between GEMINI and this study that would make that potentially not the case? Thank you.

Speaker 2

Thanks for the questions. With regards to AXS-twelve, we're very close to a data readout. So we'll refrain from making any comments around that. Look, we're so close and we'll know very soon what the profile is in the Phase III trials. Now, we do think that the product should have a favorable placement in the treatment paradigm that complements solriamfetol and other treatment options.

Speaker 2

And we're looking forward to the data readout because that will provide us with the 1st Phase 3 data to complement the Phase 2 data that we've generated thus far. And in terms of Sunosi with regards to MDD, we'll have more to say about that hopefully once we announce enrollment of the first patient in that study, that remains on track to start this quarter.

Operator

Our next question is coming from Marc Goodman from Leerink Partners. Your line is now live.

Speaker 2

Yes, good morning. Nick, can you talk about how we're thinking about spending this year? And then secondly, you talk about how you have enough cash to get to cash flow positivity. Can you give us a sense of when that is? And then secondly, Areo, are you willing to give us a sense of what percent of the AD agitation study is enrolled?

Speaker 2

Are you 50%, 60%, 70%? Maybe you can give us a sense of that. Thanks.

Speaker 3

Sure. Yes. Thanks, Mark. So as for R and D, our expense for the quarter was $31,000,000 just under $31,000,000 for Q4. That ticked up slightly from the previous quarter.

Speaker 3

We expect R and D spend to increase gradually as solriamfetol Phase 3 trials commence during the year. This increase will also be offset though by lower clinical costs as the SYMPHONY ADVANCE II and FOCUS trials complete in 2024 and also once AXS-fourteen and AXS-seven NDAs are filed. As for the SG and A line, total expense for the quarter was just under $87,000,000 That was also a slight increase in the previous quarter. As you know, as we mentioned, the biggest increase in SG and A was due to the sales force expansion, which took place throughout Q4. As that expansion occurred throughout the quarter, roughly half of the quarter's expense for that expansion was realized in Q4.

Speaker 3

So we would expect a slight increase in Q1 as we realize the full burden of that expansion. So and then from a cash flow positivity or profitability, we are still at the early stages of the Avelity launch and a bit more than a year removed from the acquisition of Sunosi. We've modeled various scenarios and based on the success that we've had thus far, we feel very confident of our ability to be cash flow positive. As you're aware, the launches by nature are very volatile. And as such, we haven't provided any guidance on specific timeline for cash flow positivity.

Speaker 3

Herriot, do you want to take the next question?

Speaker 2

Yes. No, thanks, Mark, for the other question. We haven't provided the specific percentage enrollment in our trials lately. However, weighty agitation, we're confident that we should be able to have results this year. Thank you.

Speaker 2

Operator, next question? Yes.

Operator

Our next question is coming from Greg Siverneks from Mizuho Securities. Your line is now live. Go ahead, Greg.

Speaker 12

Can you

Speaker 1

hear me?

Speaker 12

Yes, please go ahead. Thank you. Okay, great. Thanks. So sorry about that.

Speaker 12

Congrats on the quarter. Just two questions. 1, just can you comment on the, Ovelity DTC efforts? And any thoughts around how that effort might evolve in 2024 and your level of satisfaction with what you've done so far and what's needed on a go forward basis? And then secondly, just in the as we think about the potential of cirriamfetol and MDD, could you just remind us on how we should think about the differential positioning of that product with Ovelity?

Speaker 12

Thanks.

Speaker 4

Hey, Greg, thanks so much. This is Ari. I appreciate the question. As you know, we do have a DTC effort today largely on digital engagement. We've been very pleased with that investment so far.

Speaker 4

What we observed through market research is nearly 8 in 10 patients who ask for Avelity receive it. And so we're very optimistic about continued investment in consumer advertising. And we are assessing additional investments at the moment. And so we would expect to share some updates later in the year based on whether we intend to increase solranthitol and MDD, as you know, MDD is a highly heterogeneous condition. Not all patients respond to the same types of treatments.

Speaker 4

And because there are overlapping symptoms with other illnesses, in particular symptoms that may be more difficult for some patients than others, there's usually room for multiple treatment options to help these patients. And so until we have more data around solriamfetol and MDD, it's a little premature to talk about co positioning with Avelity. But based on our experience in this space, we do believe that there will be opportunities for both products to help patients achieve meaningful symptom relief.

Speaker 12

Thank you.

Operator

Thank you. Next question is coming from David Hoang from Citigroup. Your line is now live.

Speaker 13

Thanks. Good morning and thanks for taking the questions and congrats on the quarter. So maybe just 2 for me. First on Avelity, could you provide any color around your ongoing payer discussions in the commercial channel and expectations to improve the coverage there above the current, I think 48% or so covered lives? And then regarding solriamfetol in ADHD, once the results of the FOCUS study are in hand, what else would be needed to proceed to an sNDA filing there if those results are positive?

Speaker 13

Thanks so much.

Speaker 2

Sure. So we'll take the questions in reverse order. For solriamfetol, the focus study is in adults and we will be launching a Phase 3 trial in the pediatric population. So both of those studies, both of those patient populations are needed for an NDA filing.

Speaker 4

Yes. And related to the payer discussions, as you mentioned, we have roughly 48% coverage in commercial channels, 70% overall across channels. The way we think about the payer dynamics is we are a very disciplined approach to contracting to preserve long term profitability for our products. However, we do anticipate expanding coverage over time and remain actively engaged with health insurers to improve access for insured patients. I will mention that our current investments in both patient savings programs as well as reimbursement services will support continued prescription growth at current levels of coverage, which as I mentioned before remains 70% lives for Avelity.

Operator

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

Speaker 14

Hey, thanks for taking the questions. Just on the TevaRanda filings that are now active, I noticed that you've recently got some new IP listed in the FDA orange book with the patent expires at 2,043. Have you got Chapter 4 filings against those patents that we might not be aware of? And then secondly, just back on the 48% coverage in the commercial channel, that's flat quarter over quarter, yet your conversations are progressing. What is the sticking point with some of these major payers that have yet to get online with Adelody at the moment?

Speaker 14

Is it more about formulary positioning, risk benefit or is it simply just coming down to price? Thanks.

Speaker 4

Yes. Thank you for the question. This is Hunter Murdock. So yes, we do have patents going out to 2,043 and we do have Paragraph IV filings against them, which we filed suit against. So it is public information that we do have those 3 Paragraph IV certification relating to 2,043 patent.

Speaker 4

So that's what the type of litigation. And this is Ari. Regarding your comment on the 48%, yes, it is stable quarter over quarter. Every payer discussion is different. In some cases, it's related to ultimate price.

Speaker 4

In some cases, it's related to utilization management parameters. And so we're we are progressing those conversations. We're having meaningful discussions, but it takes time. And there are ongoing negotiations and hopefully we'll be able to share some updates next quarter.

Speaker 14

Okay. Thanks for the questions. Congrats on the year.

Operator

Thank you. Our next question today is coming from Yatin Suneja from Guggenheim Securities. Your line is now live. Hey, guys. Thanks for taking

Speaker 15

my question. This is Eddie on for Yatin this morning. Regarding that bexeprazole increase in the long term care channel since their ADA approval, is that a good comp for how the Avelity launch could inflect on upon approval? Or does this different safety profile or black spot hornings make Avelity a more attractive option for this population? And then what additional commercial infrastructure would you need to see that kind of inflection like brexeprazole if approved?

Speaker 15

Thanks.

Speaker 4

Yes. Thanks for the question. Just one clarification. We don't have data to suggest increase in brexpetrazole in long term care. It's in the Medicare channel.

Speaker 4

And so, I think additional data would be needed to understand whether it's in the long term care setting or in outpatient. But and I do think it's a little premature to suggest that it's a good analog for AXS-five. These products do have different clinical profiles. AXS-five is a non atypical antipsychotic. It has a slightly different profile overall.

Speaker 4

And we expect there to be meaningful growth within that indication if approved in both the outpatient settings as well as long term care. As Herriot suggested earlier in our trials, we are focused in outpatient settings with a hope to delay patients going to long term care facilities. In terms of commercial infrastructure, we're obviously evaluating our sales force size and structure relative to the overall pipeline. And we do expect to have a meaningful presence in long term care facilities. However, our existing sales force is primarily focused on outpatient care practices, which we expect will continue even for ABA.

Speaker 4

So more details to come, but we feel very confident that we'll be able to have an efficient selling effort based on the shared call points for most of the indications that exist in our pipeline as well as our on market products.

Speaker 15

Great. Thanks and congrats again.

Operator

Thank you. We have time for questions from 2 more analysts. Our next question is coming from Matt Kaplan from Ladenburg Thalmann. Your line is now live.

Speaker 16

Hi, thanks for taking the question and good morning guys. Just maybe a question for Ari in terms of now that you've completed the sales force expansion, when should we start to see an impact of that new sales force? And I guess over the course of the year, is it really first half or second half when we start to see them gaining traction?

Speaker 4

Yes. Thank you for the question. We expect to see a ramp in terms of impact over the course of the year. Obviously, the majority of the expansion representatives were hired late last year. We completed training in January of this year.

Speaker 4

It takes time to go through call cycles and to build confidence with the brand stories and messaging and also to expand our reach into the primary care setting. And so we expect the bill to occur over the course of the year. We're starting to see some meaningful impact in terms of call activity and we would expect demand trends to have corresponding increases over the course of the year.

Speaker 16

Okay, that's helpful. And then maybe a question for Ariel. You gave some added detail in terms of what is necessary for filing sNDA and ADHD. In terms of the other indications you're pursuing in Phase 3 for solvianpetal, MDD, binge eating disorder and shift What would be necessary there? Is it they both they all include 2 Phase III trials or could some be with 1?

Speaker 2

Sure. With regards to solriamfetol in MDD, So there we anticipate that we would need 2 Phase 3 trials. So we're launching our 1st Phase 3 trial. As you know, this quarter, binge eating disorders similarly, we anticipate that we need 2 Phase III trials and we're also on track to launch on the 1st Phase 3 trial this quarter. For shift work disorder, we only need 1 Phase 3 trial for to file an SNDA.

Speaker 16

All right. Well, thanks for taking questions guys.

Operator

Thank you. Our final question today is coming from Vikram Parikh from Morgan Stanley. Your line is now live. Vikram, perhaps your phone is on mute.

Speaker 17

Hi, good morning. Can you hear me?

Operator

Please proceed. Yes.

Speaker 17

Thank you. Good morning. Thanks for taking our questions. So we had 2 commercial questions, 1 on ADA, 1 on MDD. So for ADA, assuming ADVANCE-two is positive and AXS-five is approved for the indication, what would you expect annual duration of therapy to be in the setting given the potential differences in the number and duration of agitation episodes that patients with AD can experience?

Speaker 17

And then secondly, in MDD, do you think Avelity sales guidance is a possibility this year? And if so, what are some of the metrics and aspects of the launch that you're monitoring to gauge whether guidance is reasonable to provide? Thanks.

Speaker 2

Thanks for the questions. With regards to duration of treatment in Alzheimer's disease agitation, so Alzheimer's disease agitation is viewed as a chronic condition and that's how we've been studying it and that is also reflective of how the FDA thinks about it from feedback that we've gotten from them. So we do have as you know a long term open label safety extension trial, which is ongoing. So patients have been on drug now for a fairly long time. So the study, it's a 1 year trial.

Speaker 3

Yes, sure. Vikram, this is Nick. As it relates to the sales guidance, given the relatively short period of time since launch and evolving dynamics including the increase in sales force effort as well as variability with market access, we're not ready to provide forward looking guidance on sales, which is likely the case for the entire year of 2024 at this point.

Speaker 17

Got it. Thank you.

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 for any further or closing comments.

Speaker 2

Well, thank you for taking the time to join us for today's quarterly update. 2023 was a strong year for Axsome. We entered 2024 with a growing commercial business and a late stage neuroscience pipeline that encompasses 5 innovative product candidates in development, the 10 serious neuropsychiatry indications. We look forward to providing multiple updates throughout the year on our progress. Thank you and have a great rest of your day.

Operator

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

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