Axsome Therapeutics Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 6, 2024

There are 8 speakers on the call.

Operator

Good morning, and welcome to the Axsome Therapeutics Conference Call. Currently, all participants are in a listen only mode. Later, there will be a question and answer session and instructions will follow at that time. As a reminder, today's conference call is being recorded. I would now like to turn the conference over to your host, Darren O'Connell, Director of Corporate Communications at Axsome Therapeutics.

Operator

Please go ahead.

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 the corporate update and details of the company's financial results for the Q1 of 2024. 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, amongst 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 Symbosi, Avelity and our other 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 Rick Kiezi, Chief Financial Officer Mark Jacobsen, Chief Operating Officer and Ari Nazell, Executive Vice President and Head of Commercial.

Speaker 1

Herriot will provide an overview of the company and progress made in the Q1 of 2024 as well as key upcoming milestones. Following Herriot, Nick will review our financial results and Ari will provide a commercial update. We will then open the line for questions. Questions will be taken in the order they are received. And with that, I will turn the call over to Ariel.

Speaker 1

Thank you, Gary. Good morning, everyone, and thank you for joining Axon Therapeutics' Q1 2024 Financial Results and Business Update Conference Call. The Q1 of 2024 was marked by strong financial performance for our on market products, which are delivering important and differentiated treatment options for patients living with depression, malcolexic and obstructive skin value. Total net product revenue in the quarter was $75,000,000 representing year over year growth of approximately 160%. We will share additional details on our financial and commercial performance later on the call.

Speaker 1

We also significantly advanced our innovative neuroscience pipeline in quarter, including announcing positive top line results for AXS-twelve and narcolepsy, advancing AXS-seven and AXS-fourteen with IND submissions, initiating pivotal trials and new indications with solriamfetol and advancing and expanding our Alzheimer's disease education program for AXS-five. We expect to continue the commercial and pipeline momentum in the balance of 2024. I will now provide a brief update on our industry leading neuroscience pipeline and effective milestones. Starting with our 2 way exchange products, AFFO-seven for the Q2 data migraine is on track for an immediate remission this quarter. Additionally, we are conducting the Umerge study, a multicenter Phase 1 single route trial evaluating the efficacy and safety of AFX-seven in adults with a prior inadequate response to an oral CGRP inhibitor.

Speaker 1

We anticipate top line results from this trial in the second half of twenty twenty four. For AFX-fourteen, which we are developing for the treatment of fibromyalgia, pre submission activities for the ABA for this product by year completion. We continue to target submission later this quarter. In March, we announced that the Phase 3, Phase 3 trial of AFX12 in narcolepsy achieved its primary endpoint and significantly reduced the frequency of cataplexy attacks that occur at the placebo. AFM12 also reduced excessive daytime sleepiness severity, improved cognition and reduced overall malphaleptic severity.

Speaker 1

An open label safety expansion trial for AFSA12 in 9 with results expected in the Q4 of 2024. We are excited about the potential of AFX12 to provide a differentiated treatment option to patients and HCPs for the debilitating condition. Moving on to ASF-five, we continue to anticipate completion of the Phase 3 ADVANC-two trial in the treatment of Alzheimer's disease education in the second half of twenty twenty four. Today, we announced that we launch the ACORE-two study, a double blind, placebo controlled, randomized, broad trial to evaluate the efficacy and safety of AFX-five in the treatment of oral language disease agitation. This study is similarly designed to the completed positive AQUAR-one trial.

Speaker 1

In the quarter 2, the clinical development program will now include full control efficacy trials. Importantly, a 42 further increases the robustness of our clinical program in our landscape education without impacting our overall development time line. And normal in the Q2 is very far along, and we'll be expecting normal completion around the year. With respect to Solvianetol, our dopamine and more benign lymphadenylating inhibitor and trial alignment, in addition to continued clinical performance, we launched the Phase III paradigm trial in major depressive disorder in the Phase III of each trial in Phase III disorder in the Q1. Results from both trials are expected in 2025.

Speaker 1

We are on track to initiate a Phase 3 clinical program in shape or disorder this quarter. Solriamfetol is also being evaluated in the focused Phase 3 trial of HD, for which we continue to anticipate top line results in the second half of this year. Overall, our innovative neuroscience portfolio encompasses 5 late stage patent protected product candidates targeting 10 serious psychiatric and neurology conditions with substantial motor opportunities. Each bi candidate type of attempted to transform the treatment landscape of serious and difficult to treat serious disorders, which affect more than 150,000,000 people in the U. S.

Speaker 1

I will now turn the call to Nick, who will provide details about our financial performance. Nick?

Speaker 2

Thank you, Ariel, and good morning. Today, I'll discuss our Q1 results and provide some financial guidance. Total product revenues were $75,000,000 for the Q1 of 2024. This consisted of net product sales of $74,100,000 and royalty revenue of $900,000 Total product revenues for the comparable period in 2023 were $94,600,000 which consisted of net product sales of $28,600,000 royalty revenue of $300,000 $65,700,000 in one time license revenue received from the out licensing of Sunosi in certain ex U. S.

Speaker 2

Territories. Avelity net product sales were $53,400,000 for the Q1 of 2024, representing year over year growth of 240 percent. Avelity net product sales for the comparable period were $15,700,000 Sunosi net product revenue was $21,600,000 for the Q1 of 2024 and consisted of $20,700,000 in product sales and $900,000 in royalty revenue associated with Sunosi sales in out licensed territories. Sunosi net product revenue for the comparable period in 2023 was $13,200,000 consisting of $12,900,000 in product sales and $300,000 in royalty revenue. Total cost of revenue was $6,300,000 for the Q1 of 2024.

Speaker 2

Total cost of revenue for the comparable period in 2023 was $7,600,000 which included $5,000,000 in Sunosi's licensing transaction fee sharing expense. Research and development expenses were $36,800,000 for the Q1 of 2024 compared to $17,800,000 for the comparable period in 2023. The increase was primarily related to the initiation of the solriamfetol PARADIGM trial for major depressive disorder, the solriamfetol ENGAGE trial for the binge eating disorder, the advancement of the solriamfetol FOCUS trial for ADHD, the ongoing trials of AXS-five and AXS-twelve, manufacturing costs associated with the anticipated NDAs for AXS-seven and AXS-fourteen, plus marketing commitments for both Avelity and Sunosi and higher personnel costs, including non cash stock based compensation. Selling, general and administrative expenses were $99,000,000 for the Q1 of 2024 compared to $74,200,000 for the comparable period in 2023. The increase is 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.

Speaker 2

Net loss for the Q1 of 2024 was $68,400,000 or $1.44 per share compared to a net loss of $11,200,000 or $0.26 per share for the comparable period in 2023. The net loss in the Q1 of 2024 includes $21,000,000 in non cash charges, of which the majority is comprised of non cash stock based compensation expense. The 2023 comparable period included approximately $62,000,000 in net gain from the Sunosi out licensing. Q1 typically has a negative seasonality effect on GTN, which we saw on both Avelity and Sunosi versus the prior quarter. Avelte GTN discount for Q1 was in the low to mid-50s and Sunosi GTN discount was in the mid-50s.

Speaker 2

We ended the Q1 of 2024 with $331,400,000 in cash and cash equivalents compared to $386,200,000 as of year end. We believe that our current cash balance is sufficient to fund anticipated operations into cash flow positivity based on the current operating plan.

Speaker 1

I would now like to turn

Speaker 2

the call over to Ari, who will provide a commercial update.

Speaker 1

Thank you, Nick. AXA delivered solid brand performance in the Q1 of 2024. Avelty demand trend in Q1 once again outpaced growth rates for the market and branded competitors with approximately 95,000 prescriptions, representing 12% quarter over quarter growth and 2 0 6% growth compared to the Q1 of 2023. Nearly 18,000 new patients started Avelity in the quarter, bringing the total number of unique patients treated with Avelity since launch to more than 89,000. Our sales team continues to activate new prescribers a consistent rate with more than 3,600 first time Avelity prescribers in Q1, illustrating strong underlying demand for the product and expanded use among depression treaters in both psychiatry and primary care offices.

Speaker 1

We're especially proud of this performance in light of seasonal dynamics, which were compounded by the industry wide change healthcare cyber attack. Payer coverage was stable in Q1 as Avelity remains accessible to patients representing approximately 70% of covered lives. As noted in our press release this morning, we just contracted with a large group purchasing organization for a potential formulary coverage of Avelity, laying the groundwork for future increases in covered lives. Pharmacy benefit managers and health plans under this GEO are now able to make coverage decisions for Avelty based on the contracted terms. With this agreement, Axsome is now contracted with 2 of the 3 largest GPOs for potential coverage of Avelity.

Speaker 1

We are very pleased with the strong commercial foundation we have created to support Avelity performance, including our expanded psychiatry sales team, a recently enhanced sales and marketing campaign and expansion of digital capabilities to maximize reach to targeted HCPs. Of note, we observed an inflection in weekly new patient starts or NBRx in March, a positive signal of both the impact of our optimized commercial footprint and continued adoption of Vovality as a go to treatment option for adults with major depressive disorder. Transitioning now to Sunosi. Total prescriptions were just over 41,000, representing a 1.6% decline versus Q4 2023 and 14% growth versus Q1 2023. Demand in the Q1 was impacted by typical seasonality in the EBS market as evidenced by the 3% decline observed in the weight promoting agent market this quarter.

Speaker 1

Approximately 3,700 new patients started Sunosi treatment during the quarter, bringing the total number of unique patients treated with Sunosi to approximately 68,000 since launch. More than 400 new writers were activated in Q1, resulting in a total cumulative prescriber base of more than 12,600 since launch. Payer coverage for Sunosi in Q1 remained 83% of lives covered across channels. In closing, Q1 was a very positive start to 2024 for both Avelity and Sunosi, with leading indicators such as trends with new patient starts and newly activated prescribers, reinforcing our confidence that Axsome will deliver strong commercial performance in our 2nd year as a commercial company. We continue to receive compelling feedback from healthcare professionals and patients about the positive impact our products are having in real world settings.

Speaker 1

And we are proud of Axsome's growing reputation as a leader in the CNS space that delivers differentiated and impactful products for serious psychiatric and neurological conditions. I will now turn the call back to Bering for Q and A. Thank you, Ari. Operator, may we please have our first question?

Operator

Thank you. We will now be conducting a question and answer session. Our first question comes from Charles Duncan with Cantor Fitzgerald. Please proceed with your question.

Speaker 3

Hey, good morning, Herriot and team. Congrats on a great quarter and appreciate you taking our questions. I had a commercial question and then one on the pipeline. Regarding the commercial question, I'm not sure if I heard it. Ari was speaking fast.

Speaker 3

Can you give us a sense of new to brand versus refill rates for Avelity?

Speaker 4

Yes. Thanks,

Speaker 1

Charles. NUDA brand at the moment accounts for roughly 25% to 30% of weekly prescription. That's a healthy number at the moment. We expect these brands continue to grow, but TRx obviously should outpace just based on the existing patient base and the refill rates, which at this point we feel very comfortable with. We're seeing good attendance and persistency generally.

Speaker 1

So hopefully that answered your question. Let me know if there are any specific follow ups.

Speaker 3

Just a little more color on persistency. I know it's probably too early, but how do you feel about that so far with Obelani?

Speaker 1

Yes, I feel really good. In fact, we recently were engaged with a group of KOLs to receive feedback. And this is anecdotal. We don't have specific claims data to prove this out, but they're seeing adherence that's roughly twice what they have seen historically with SSRIs, which bodes very well for the brands, just showing that the impact of the clinical profile is meaningful for patients and they're sticking with it longer than other antidepressants from the past.

Speaker 3

Okay. And then in terms of development perhaps for you, Herriot, can you provide us any information on the percent responder rate that you anticipate out of the first part of the ACORD II study? And then a sense of how you feel brexpiprazole has changed that unmet need? Would you anticipate AXS-five to become frontline or would it, I guess, would it sequence after brexpitrazole use in those patients?

Speaker 1

Thanks for the question. With regard to the responder rate in Q2, I don't want to mislead you because of the exact responder rate, but it is exactly what we modeled or would be included in the criteria in the quarter 1. So the studies are very similarly designed and as a reminder, the cohort trial was able to very effectively detect the signal. In terms of Brex Peripherable and unmet need, we don't view that brexiprazole has changed the need for a safe and effective long term treatment for a line of disease agitation. So the reminder patients will be treated off label necessarily with these type of antipsychotics, which will be that fall into that class.

Speaker 1

And then so you don't view the opportunity for AXA-five is changing materially based upon that approval. And then in terms of the frontline usage, assuming that we continue to generate data that leptocase that we saw in ADVANCE-one and also in the quarter 1, we would fully expect that AFX-five could be a frontline treatment and will be a frontline treatment for Adonis disease indications.

Speaker 3

Makes sense. Thanks for taking my questions.

Operator

Our next question comes from Leonid Khmershev with RBC Capital Markets. Please proceed with your question.

Speaker 5

Hey, guys. Congrats on a quarter, good quarter and thanks for taking my question. Can you guys talk about the price volume impact you expect from this latest GPO add? And should

Speaker 3

we expect some acceleration in scripts with an impact to

Speaker 5

gross to net in the near term? Or would it be more incremental gradual change? And then maybe just related to that, with 2 out of the 3 major GPOs in hand, can you talk about maybe the progress with the 3rd that you've made?

Speaker 1

Yes. Thanks, Wayne. This is Ari. So regarding the price volume trade off, it's a little premature to talk about impact on gross to net after this particular agreement. And obviously, part of the effort right now is to ensure that we're effectively pulling through the contract terms with the PBMs that are underneath the GPL umbrella.

Speaker 1

But we do expect there to be volume growth once we are able to expand coverage and we'll provide updates on the impact of the growth to net when appropriate. Regarding your question around the 3rd GPO, what I'd say is we're having very fruitful discussions with all of the major payers and NPVMs, including the GPOs. And these are complicated negotiations. Obviously, it's important for us not only to expand coverage, but also be mindful of profitability over the long term, because we have a growing portfolio that we need to plan for. So no specifics on the details of the negotiation, but we feel very good about the nature of the dialogue and look forward to future updates.

Operator

Thanks. Our next question comes from Ash Vermauth, UBS. Please proceed with your question.

Speaker 6

Hi, thanks for taking the questions. Congrats on the progress. So I have 2. What was it just on this last comment you had about the GPU win. Can you maybe elaborate like what percentage commercial lives are covered through this GPU?

Speaker 6

You have 48% coverage prior to this, I believe. And then second, regarding this new study for AD agitation, can you remind us like is that something that you need for a regulatory package? Or do you think that the ADVANCE 2 study would be sufficient? Like why do this study now versus you already have another study going on and you had a successful randomized withdrawal study earlier. So just wanted to get your thoughts on that.

Speaker 6

Thanks.

Speaker 1

Sure. Thanks for the question. So I'll open two questions there. I'll take the last one, and then I'll turn it over to Art to answer the first question. So with regards to two trial, no, we do not need it for a reticoid submission.

Speaker 1

This is an opportunity for us to increase the robustness of the program, while also not affecting at all the timing of an AB submission. So it just makes sense. Facts. We want to have the most robust package, the strongest package going into an overview. And it's such an important indication.

Speaker 1

It's always helpful to generate additional data, which may also it may also not just because of regulatory submission, but also in terms of future publication, we saw it from a commercial perspective. So we think it's the right thing to do. It's very efficient. It allows us to leverage the large number of patients who are experiencing stable responses in the current clinical Phase III clinical trial. Yes.

Speaker 1

And Ash, this is Ari. Your question around percent of lives with new GPO. Obviously, as you know, the GPOs represent a pool of PBMs. And so because we each of the PBMs has a different number of lives covered and has the ability to make their own coverage decisions. I can't give you a specific number of the incremental percentage of lives covered, but it is meaningfully above the 48% that we have publicly stated today.

Speaker 1

And so part of our focus moving forward is to ensure that the majority of the PDMs underneath those GPOs are accessing the rates that we've agreed to. So it is a meaningful percentage increase if we were successful with all of the BBMs and the umbrella.

Operator

Our next question comes from Ram Selvigero with H. C. Wainwright. Please proceed with your question.

Speaker 2

Thanks so much for taking my questions. Just very quickly on the commercial front, I was wondering if there are specific factors that you expect to impact discussions with the 3rd of the 3 largest GPOs that you are currently looking to secure contracting for Avelity with? And if so, what those factors might be? And then on the development side, I was wondering, Herriot, maybe if you could comment on the profile of AXS-twelve relative to the existing approved marketed agents and whether you believe the impact on cataplexy is likely to be the most significant selling point and if you anticipate that the impact on sleepiness is going to be sufficient for AXS-twelve to be positioned commercially in a competitive way in this indication? Thanks.

Speaker 1

Sure. I'll start with the first question. So factors that impact negotiations, generally speaking, are the demand growth that we're driving in the marketplace. And in fact, all of the leasing access discussions we've had really focus on how quickly the brand is growing. And so the best way to secure access is to show volume growth in the absence of formal coverage.

Speaker 1

I think it's important to note that as a rule, while we negotiate for coverage with major plans and PBMs, one of the areas of focus has been to optimize our patient savings and reimbursement support services to support continued demand growth within the existing access paradigm. And our ability to drive growth is the primary factor in driving interest with GPOs and major plants and PBMs. And so we're really proud of the growth that we've seen to start off the year. I mentioned on my opening comments that we've seen about a 30% increase in weekly new patient starts March compared to December, and that's with the existing access we have. So that only strengthens our ability to negotiate and ultimately have meaningful discussions with the insurance companies.

Speaker 2

Have you started doing DTC promotion of Avelity? And if so, to what extent?

Speaker 1

Well, we have DTC largely in the digital space at the moment. We do not currently have a TV or video ad that's running, but that is something that is under consideration at the moment, and we'll share updates when appropriate. Great. Thanks. So, Ram, with regards to the question on ANACYFT-twenty and the profile, So what we saw in the 15 trials, it was a replication of what we saw in the CONCERT study that is a pretty important to anticipate the impact on cataplexy.

Speaker 1

So not only is there a large percent reduction in cataplexy, but you looked at remission of capexy, which is total elimination, and those are very stark. So a third of the patients had 100% reduction in cataractin attack versus less than 10% of patient enrollment fever. And we also did see an effect on accepted in chronic kidney severity as well as cognition. So we like the profile and the profile as it relates to agents that are currently on the market is incredibly favorable. We know that of leases that are in the market, not all patients, in fact, the main only patients that we tolerate them.

Speaker 1

So there is a significant unmet need to conduct also very large patient survey as a team of patients in conjunction with non currency network. And what that shows is that even on current treatments, 77% of patients continue to experience cataplexy. As it relates to your question around whether around the EDS data that you generated, if that would be enough for clinicians and patients to think about without paying the product. What we saw in the study was a clear impact on some of the differences. And we also saw a clear impact on overall narcolepsy severity.

Speaker 1

So ANXIP-twelve reduced that type of difference in severity, also improved overall narcolepsy severity as well as quality of life. So the way that we've taken out is that should this product be available to clinicians and to patients, that profile will be very apparent to the patient and the clinicians, and it's treated based on the patient reported outcomes as well as the clinician and the patient impression outcomes. So we really like the profile and we think it's really important treatment for patients.

Speaker 2

Thank you very much.

Operator

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

Speaker 2

Good morning. Nick, can you talk about was there any inventory for Avelity in the quarter, anything unusual that may have helped sales? And second, can you talk about gross to net, how you're thinking about the rest of the year? And with these contracts that are now being put in place, how should we be thinking about over the next couple of years? And then, Ariel, could you just talk about AD Education for one second?

Speaker 2

Obviously, last quarter, you delay by we're not exactly sure, but is it the second half, the completion of the Board's 2? Maybe you can just give us a little more color there, like are we now back on track? Is this going to be something that's going to happen early in the second half of the year? Is this late in the second half of the year? And just to confirm that this new study that you're talking about here, this is just patients who've already gone through that open label.

Speaker 2

So it's not really competing against it at all, right? Thanks.

Speaker 1

Mark, it's Nick. So for inventory, inventory remains

Speaker 2

in channel at 2 weeks. So nothing has changed specifically around inventory for velvety, doors, and those are the main continuing at 2 weeks. And then the Uvalde GPN discount for Q1 was in the low to mid-50s. The Sunosi GPN discount was in the mid-50s for the quarter. As you know, Q1 typically does have a seasonality, a negative seasonality effect on GTN, which we both saw in Avelity and Sanofi versus the prior quarter.

Speaker 2

For Avelity, GTN did fluctuate in Q1

Speaker 1

and ended the quarter with March being in

Speaker 2

the mid-50s. And right now, we have never even expected a very significant amount

Speaker 1

of level moving forward. Great. And Mark, in relation to the questions around all diabetes education, so starting with AVANCE II, the guidance is second half of this year. We're very comfortable. We're very comfortable with that guidance based on enrollment trends.

Speaker 1

So what we're seeing is very positive with regards to how that study is proceeding. And then as it relates to the quarter 2, it is not competing with the VASTA. So you are correct. So we have a large number of patients who are favorable in the portion who are experiencing stable responses. So that allowed us very efficiently to enroll in quarter 2.

Speaker 1

So we expect more enrollment in the quarter 2 to complete midyear. And the reason for the confidence around that is that the study is very far along in terms of enrollment.

Speaker 2

And so just to understand for ADVANCE, too, enrollment really picked up over the past 3 months and that's why you're confident?

Speaker 1

So we're confident based on where enrollment values and has been. Enrollment and Advanced Pivotal is very follow on and it continues to grow at a predictable pace. Okay. Thanks.

Operator

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

Speaker 4

have a couple of questions on the pipeline. First, for reboxetine in narcolepsy, can you just remind us of the path forward? In other words, are you expecting to file after you completed the extension or are there any other gating items to an NDA filing? So can you talk about that and your time line to filing on reboxetine in narcolepsygathepilepsy? Then so rianpetol, can you talk to your pediatric ADHD study plan?

Speaker 4

I believe that's the ADN-nine zero two filing in ADHD. So it would be helpful to talk to that. And then lastly, escriboxetine and fibromyalgia, how big of a commercial priority is that? And what's the extent to which you're going to need to expand the commercial organization to support that product commercially?

Speaker 1

Thank you for those questions. So I think the first 2 are answered 12 and 12, and then I'll let Ori comment on etfemoxetine. So in terms of the filing for aging filing for us at 12, so the gating factor in this completion is looking at the 15% trial, which we expect to complete in the second half of this year. And then it will take us then some time to put together the new filing, but that is the new factor. So once that study is completed, we will then be able to file the NDA.

Speaker 1

As it relates to solanipital and the pediatric AUC study plan, You are correct that that is in trial, which will be part of the initial OV package. And the most known that, as you can imagine, in terms of the front, speaking at the FDA to get that in place. And we've not yet provided the precise guidance that we've been targeting to start this year. And I would like to ask you. Yes.

Speaker 1

Thanks for the question. I think for excess 14a fibromyalgia, we do view this as a meaningful commercial opportunity. There are 3 approved agents, but there's a lot of room for improvement in terms of overall clinical profile for patients, and we feel very optimistic about the profile accessible team offers for patients. As it relates to how it will impact the sort of commercial footprint, part of what we're analyzing this year is how to effectively size and structure our sales force to accommodate a growing portfolio of products. Although fibromyalgia is not a psychiatric product, there is a lot of overlapping comorbidity with major depressive disorder that will influence some of our thinking.

Speaker 1

And so it's a little too early to say how many additional reps we would want to build into the plan or how we would structure it. But we do think that there is a way to promote AXS-fourteen efficiently, while also putting plenty of attention on the other approved products on the market.

Speaker 4

That's helpful. Thank you.

Operator

Our next question comes from Yatin Sunja with Guggenheim Partners. Please proceed with your question.

Speaker 1

Hey guys, thank you for taking my question. I have 2 quick ones. One is a clarification one. With regard to the ACORE-two study, so that's a new study and this is a 4th study within the ADA umbrella. Is that a requirement from the FDA that you have to do to randomized withdrawal study?

Speaker 1

And then will the NDA package be contingent upon completion of that study or the outcome of that study? So that's one. And then with regard to OveloCube, I mean very nice quarter, so congrats on that. Any thoughts on thinking about providing guidance for the product maybe on a quarterly or on an annual basis? Thank you.

Speaker 1

Yes. Yes. Sure. Hey, Yatin, thanks for the question. It's Nik.

Speaker 2

It's just too early an accident of LED voice over the right sales guidance given the fluid nature of some of the market dynamics and the unpredictability of external factors that could have different impacts. We have shared that we believe peak sales for Avelity and MDD alone are in the $1,000,000,000 to $3,000,000,000 range and Sunosi, dollars 3,000,000 to $500,000,000 for its current indications.

Speaker 1

Okay. So yes, I mean, with regards to Cohort 2, this is not an FDA requirement. However, it does increase the robustness of the package, and it is a pivotal trial. So we like that. We like having 4 different studies.

Speaker 1

So basically, if you think about it, ADVANCE I and ADVANCE II or 2 parallel group studies in the cohort I and cohort II are 2 randomized withdrawal studies. So a very nice source of evidence generation of those 4 states. And then with regards to the filing, we continue to complete that study, it's not required. It's not really contingent. However, we do think that based upon where we are in the enrollment of that study, we expect the study to be trained to be enrolled mid year and also timing of the relapses in the ACORD one trial, which was positive, but there is a potential for the next study to be around year end.

Speaker 1

That's not clear on guidance and and some of that is based upon the number of new assets and time of new assets, but just to give you a sense of how one might think about it. So we're really happy with the way that we think it's efficient and increased the removance of the program for this very important product.

Operator

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

Speaker 7

Hey, guys. Thanks for taking my question. So just on ACORD II, so it sounds like the motivation with the study is that kind of think about it as a marketing study. And along those lines, is there an opportunity for you to pool ACORD-one and 2, such that don't know if the data has a better chance of getting into the label given that ACORD-one was a really small trial? And then you guys did mention the cyber attack in 1Q.

Speaker 7

So I know some of your peers had kind of indicated it wasn't really a material impact to the numbers. So can you quantify to what extent the cyber attack did affect Avelity revenues in 1Q?

Speaker 1

So with regards to ACORD II, just to be clear, this is it can be used for marketing, obviously, but it is a registration trial. So we're so we like that. So it does provide a very objective source of evidence. And it relates to the approval of the Form 1. The 2 studies, either some of the design could definitely be combined and that's typically something that's done in new packages.

Speaker 1

Yes. And regarding the Change Healthcare cyber attack, the impact for Avelity was really focused on 2 weeks at the end of February, beginning of March. Basically, what we saw was roughly 30% to 40% impact on weekly prescriptions for those couple of weeks. During that time, we put in a number of technology optimizations and patient savings optimizations. We saw a very quick bounce back in early to mid March for our demand trend.

Speaker 1

And it's been stable since then, stable to growing since then. So it's largely behind us at this point. We don't expect any continued disruption. And for some brands, it was more impactful just related to time and market, whether patient savings cards were tied to the Change Healthcare switch into that nature. And so that's why it impacted us, but it was transient nature.

Speaker 1

We feel really good about the solutions we put into place and we've seen really nice growth out of Sendis.

Speaker 7

Thank you.

Operator

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

Speaker 1

Thanks for taking my questions. Regarding our Part 2, what was the rationale? Like, do you withdrawal, I get those 2 standard parallel concurrency trial, which I think you have to have that it's assessing. And are the endpoints in a Core 2 identical to that use in a Core 1? So thank you.

Speaker 1

You were somewhat muffled. So I'll try

Speaker 2

and answer the question,

Speaker 1

the way that I interpreted it. It's not a coincidence that you said. But I think the question was around a 42 and what was the rationale for the design versus other design. So the rationale was we wanted to take advantage already of the fact that we had a study, which was treated patients in a regulated fashion and therefore, we allowed assessment of stable response. So it made a lot of sense.

Speaker 1

So it presents that our overall safety extension trial is essentially the same way that all in the mind control study we did. So that was the rationale there. And in terms of the endpoint, as compared to the core of 1, the endpoint is identical. So this is a way for us to be able to take the learnings from a quarter 1 and apply them to a Quote 2 to generate additional video.

Speaker 2

Thank you.

Operator

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

Speaker 4

Hi. Thanks for taking the questions. First one is on Avelity. Could you provide the breakdown between usage in earlier line and later line therapy? And with the 2nd large purchasing contract, could the usage of early line therapy be impacted at all?

Speaker 1

Yes. Hey, this is Ari. Thanks for the question. We have seen a really nice increase since last quarter in line of therapy. The increase is we saw roughly 5% increase in first or second line use.

Speaker 1

So at this point, we're around 50 percent of all the prescriptions are first or second line, which is a very healthy trend and we expect that to continue. Your question around the GPO contract and the impact on the therapy, generally speaking, when we negotiate with clients and PBM, we are negotiating for 1st or second line access for patients. And so we would expect, if we're successful in pulling through those contract terms, that they would further increase the earlier usage of Avelity in patients.

Speaker 4

Thanks. And last question is, can you provide any context on how this funding trajectory is looking going forward?

Speaker 1

I'm sorry, you were hard to hear. Do you mind repeating the question?

Speaker 4

Sure. How does this spending trajectory look going forward, just spending overall for R and D and SG and A and so on?

Speaker 1

Got it. Thanks for your question. So as R and D, our spend for the quarter was

Speaker 2

$37,000,000 which ticked out slightly from the previous quarter. We expect R and D spend to continue to increase gradually as we as the 2 celriemcel Phase III trials commenced during the quarter with the 3rd starting in Q2

Speaker 1

in Chipflake. These will be partially offset by the completion

Speaker 2

of the SYNCHEMI trial for ASH12. And as a reminder, in Q2, we do plan to submit the NDA for fibromyalgia, so we will have a one time charge for the NDA filing phase. As per SG and A, total expense for the quarter was $99,000,000 as I mentioned in the opening remarks. That was higher than the previous quarter than anticipated as it relates to the sales force expansion. We would anticipate SG and A expense future quarters.

Operator

Our next question comes from David Wong with Citi. Please proceed with your question.

Speaker 5

Hi, good morning and thanks for taking my question. Congrats on the quarter. I want to ask about the impact of the GTO negotiations in terms of timing on on any increases in the number of commercial covered lives. Just I guess what could the cadence in covered lives that you pick up look like? And can we look towards next quarter as potentially seeing a meaningful step up in the number of covered lives?

Speaker 4

Thanks for

Speaker 1

the question, David. So we expect coverage to increase, but it is difficult to predict the exact timing. The way to think about GPOs are effectively gatekeepers for PBMs, which is why the first step towards securing access is agreeing on contract terms, which include the rebates and utilization management parameters. So the agreement we announced today enables the PBMs under that umbrella to now access the contracted rates for their members. I can't provide a specific percentage increase in covered lives from the 48% we have today, but I will say that depending on how many of the PBMs that are underneath that umbrella access the rate, it is a meaningful increase over and above the 48%.

Speaker 1

The timing is just it's too difficult to provide. And your question about next quarter, obviously, our intent is to try to improve it as quickly as possible, and we'll provide updates at the appropriate time.

Operator

Our next question comes from Greg Sibanyeja with Mizuho. Please proceed with your question. Hi, this is Ivanta on for Greg. I just had a question about AXS-five. Have you thought more about the branding for AXS-five in AD agitation?

Operator

And if you keep it under the Avelity brand?

Speaker 1

Thanks for the question. So whenever you have a new indication and especially one which is different as it is in the case of antibody, the antibodies in the CIGI versus major depressive disorder. That is always a consideration, and it's one that requires a lot of good thought. And it's not just something that we just need to answer on the fly. So it should require us to really think about it and do some quantitative work.

Speaker 1

So stay tuned and that's something that we would not obviously communicate or announce ahead of time, but it's something that we're working on. Are you thinking about that? No, I think you're spot on. And I think the reality is that there are advantages and disadvantages to either maintaining the same name or having an alternative brand name. And we're going to do the work right now in anticipation of filing down the road.

Operator

Great. Thank you. Our next question comes from Vikram Proust with Morgan Stanley. Please proceed with your question.

Speaker 2

Hi, good morning. Thanks for taking my questions. We have 2, 1 on Avelity, 1 on the pipeline. So for Avelity, could you talk a

Speaker 1

bit more about how you expect the sales force expansion that

Speaker 2

you completed recently to help inflect scripts and inflect sales throughout the rest of the year and whether you'd expect there to be kind of a visible kind of acute lift in either of those metrics over the next couple of quarters? And then secondly, for solriamfetol in ADHD, can you confirm, is this Phase 3 readout expected in the second half of the year? Is this going

Speaker 1

to be the study based

Speaker 2

on which you can submit potentially a filing for the indication? And then also if you could just kind of frame out for us what you'll be reporting and what you would think constitutes a successful readout here? That would be helpful. Thank you.

Speaker 4

Sure. Yes, I'll start with

Speaker 1

the Avelte question. So sales force expansion, we are seeing an impact, certainly on activity levels and effort with customers. We're seeing a roughly 40 percent increase in weekly calls to customers. We are engaging with a broader group of providers that includes a primary care audience. And we are seeing that a meaningful increase in new prescriptions and total prescriptions from primary care, which is sort of commensurate with the additional focus we've been able to provide with the expanded sales team.

Speaker 1

I would say that we're in the early phases of seeing the impact from a demand perspective. Referenced on the opening comments that we've seen a 30% increase in weekly new patient starts that is typically the first indicator that demand growth is reaching an inflection. But it's still early days in many ways, and we expect that net growth to continue over time. So we feel really optimistic about the impact the sales force expansion we've had thus far and expect that to continue to build over the course of the year. Great.

Speaker 1

And with regards to selriamfetol and the current study, That's a pre trial and registration trial. So this is the study that would enable an immune filing along with a study in pediatric patients. So the year we do include that data and efficacy data from pediatric patients that's required for early time ADHD and new filings. So we're looking forward to the results of the Phase III trial in the second half of this year. So we're on track for that.

Speaker 1

As it relates to what we're looking for, I think the first thing that we're looking for is to demonstrate efficacy in the first more multicenter randomized parallel group studies. So that's what we're looking for. The result of that will inform the profile of the product. There has been one prior study with sebriancetrol in a VHD, which showed the sponsor that is an investigator in each of the trial. That was the same effect.

Speaker 1

So this will be the focus that we need for the submultiplayer trial.

Operator

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

Speaker 1

Hey, good morning, guys, and congrats on the quarterly results. Just a quick follow-up on the ADHD program for Solenadkatol. Will you, I guess, wait for the readout of the adult study prior to starting the pediatric study in ADHD? No, we would not. Our goal to start the pediatric study is impractable.

Speaker 1

Great. Thanks.

Operator

We have time for questions from 2 more analysts. Our next question comes from Myles Minter with William Blair.

Speaker 2

Hey guys, thanks for taking the questions. Just on the alfalfa therapeutic program, you're enrolling from the open label extension of ADVANCE-two into this new Cohort-two study. So does that really imply that you've already got all of the long term safety data that is required for a potential ASF-two zero five filing for that indication? And then the second one is about the messaging that ACORD II could be a pivotal study if it is required. Why is that the case when I believe a Court 1 went through some protocol amendments and was obviously concluded early?

Speaker 2

And I think the messaging was that, that may have been pivotal when it first started, and it turns out it wasn't. So I guess what has changed there to say that a Court 2 would be pivotal and a Court 1 wasn't?

Speaker 1

Thanks for the questions. With regards to the open label extension study, so we continue to enroll the open label safety pension trial. As a reminder, that requires and that we're trying to do the 19th guidelines, which are 300 patients treated for 6 months and 100 patients treated for 1 year. And we're well on track to accomplish those goals. So, of course, he does not affect that.

Speaker 1

And then also the patients who are completing the quarter also able to then go on and continue to be dosed. So we're very comfortable with regards to the necessary number of patients. As it relates to a cohort to the pivotal study, and it also comparing that to a core 1. So what's nice about a core 2 is we completed a quarter 1. And so all of these noise in terms of our content around these endpoints, it could be a certain thing like this, we have.

Speaker 1

And so we were able to design the core 2 very prospectively. And we have also received feedback from the FDA that this could be a registration trial based on the design. So I think that is the fact that according to more design and we have designed it with the benefit of the knowledge from the quarter 1, which is a benefit in

Speaker 2

this case. Thanks for the questions.

Operator

Our next question comes from Troy Langford with TD Cowen. Please proceed with your question.

Speaker 4

Hi, congrats on all

Speaker 7

the progress this quarter and thanks for taking our question. On ANXYS-fourteen, how confident do you feel the FDA has all it would need from a clinical efficacy perspective to approve the application? And then on Sunosi, can you just provide any additional color on the powering assumption to the Phase III trial in MDD?

Speaker 4

Sure. Hey, I'll take 4th in this, Mark. So we're starting this quarter here. And

Speaker 1

in terms of content, that's essentially complete. So those things are being finalized and really just building out the emissions. We don't do that. We're going

Speaker 4

to take a time to get that as robust as possible, but the work is substantially complete.

Speaker 1

As it relates to the powering, we saw an antipsychol and MDD. We powered that study similar to similarly to the way that we empower our other studies in non medicated disorder. So as you know, we have quite a bit of experience there with the development program. So think about the powering as being similar. And I think in general, one of these studies, the effect sizes, which one you expect with these drugs is very well laid out and there's a lot of precedent.

Speaker 1

So that's how we empower the site. So to summarize, it's 90% power to the effect size, which is similar to the effect size, which we detected in the program.

Speaker 2

Great. Thanks for the color.

Operator

Since there are no more questions, I will now turn the call back over to Axsome's CEO for concluding remarks.

Speaker 1

Well, thank you for taking the time to join us for today's quarterly update. The Q1 of 2024 marked strong progress to Agfa. We hope to continue our focus on commercial and pipeline execution throughout the balance of the year with the goal of delivering innovation and value of patients, healthcare professionals and investors alike. Thank you. Have a great rest of your day.

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Earnings Conference Call
Axsome Therapeutics Q1 2024
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