Axsome Therapeutics, Inc. (AXSM) Earnings Call Transcript & Summary

Great. Welcome, everyone. Let's go ahead and get started. So this is the fireside chat with Axsome Therapeutics. My name is Vikram Purohit. I'm one of the biotech analysts at Morgan Stanley. Before we get into our Q&A, I need to read a brief disclosure statement. Please note that this webcast is for Morgan Stanley's clients and appropriate Morgan Stanley employees only. This webcast is not for members of the press. If you are a member of the press, please disconnect and reach out separately. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. With that, let's kick it off. Happy to have with me Herriot Tabuteau, CEO of Axsome. Herriot, welcome.

Thank you, and thanks for having us, Vikram.

No problem. Thank you for joining. Perhaps, Herriot, the best place to start, just to level set for everyone is if you could just start off with a brief overview of the company's platform and quickly touch on some of the key highlights from the late-stage data that's been generated by your pipelines recently. And then we'll get into product-specific Q&A.

Sure. So if you look at Axsome's pipeline, I think it's focused on CNS disorders. The reason why the company was founded was to try and address the unmet medical needs around CNS diseases. The industry, as a whole, larger pharma had started to move and maybe -- even now currently continues to move away from developing drugs for CNS disorders, psychiatry, in particular. And one of the reasons for that is there are challenges in developing drugs in CNS. And -- but unfortunately, that's where the clinical need is. So there are a lot of diseases currently for which there are no approved treatment, even though they're common. And even for those conditions where there are approved treatments, you do have a lot of treatment failures. And so there's this unmet medical need there. Now that was the rationale behind the founding of the company and behind the therapeutic area that we chose to pursue. Now what we're interested in at Axsome is developing drugs for these disorders and making sure that the therapies are differentiated. One of the things that we're interested in are mechanisms of action. So novel mechanisms of action, hopefully, will yield novel clinical responses and clinical benefit. So for example, with our AXS-05 product candidate, it is an oral NMDA receptor antagonist, which is a different mechanism of actions with the drugs that are currently approved for depression, which were primarily via the monoamine pathway. So we wanted to make -- we wanted to -- our hypothesis was that if you could target the glutamatergic system, then maybe you'd have better responses in patients who currently are not responding to the monoamine drugs. And right now, about 2/3 of patients don't respond to those therapies. Similarly with our AXS-07 product candidate, the clinical need there is for drugs that are more efficacious in migraine. And the way that we sought to go about that was to develop a multi-mechanistic treatment for migraine. And so one of the mechanisms of actions, for example, of AXS-07 has been shown to work in patients who have central sensitization, which is manifested clinically as allodynia in these patients, which makes migraine pain harder to treat. And so that's the idea behind the platforms and the ways that we've chosen to approach these disorders. On just our -- one of our other product candidates is AXS-12 for narcolepsy. And what it is? It is reboxetine. It's a highly selective and potent norepinephrine reuptake inhibitor. And what we observed in animal studies was that, that specificity provided a very strong signal in cataplexy. And so then -- we, of course, then tested that hypothesis and can go into the clinical data. So that's really what we're interested in. We're interested in the diseases themselves, novel mechanisms of action and ways to develop differentiated therapies that will address the needs of patients and clinicians.

Great. Thank you for the overview. Let's go back to your 2 lead programs. AXS-05 for MDD, AXS-07 for migraine, you are expected to be submitting NDAs for both of those programs in the fourth quarter. Could you just kind of walk us through where those programs currently stand? And what are the boxes left to check before those submissions can successfully take place?

So for AXS-05, one of the -- and actually for both product candidates, one of the boxes that remains to be checked, and we were on track to check, has to do with the patient safety database that is required. Now the FDA is viewing both of these product candidates as new drugs. And so therefore, they're requiring that we fulfill the ICH guidelines for patient exposure. So -- and those guidelines for those who don't know, it's at least 1,500 patients that we treated overall in the product candidate, 300 patients have to be treated for at least 6 months and 100 patients -- at least 100 patients had to be treated or exposed to the drug for at least 1 year. And so clearly, the -- those numbers mean that we need to reach them, and so there is a rate determining, but we're on track. We're on track to complete our long-term safety studies for both AXS-05 and AXS-07 leading to the NDA filings. The other boxes that are left to check have to do with clinical pharmacology. And simply put, clinical pharmacology studies are typically or mostly pharmacokinetic trials in special populations, for example, which need to be completed because they need to be included as part of the package. So I'd say that those are the major boxes that need to be checked on the CMC side of things. Then you also need to produce stability data on registration batches of drug. And so all those -- all of that is underway and puts us on track to us to file our NDA around year-end.

Understood. And for your MDD long-term safety study, you mentioned recently that you're going to be conducting 3 efficacy-focused sub-studies from within that long-term safety trial. Could you walk us through the rationale for conducting those sub-studies? What the populations are you'll be looking at there? And whether these data are going to be included in the NDA submission in the fourth quarter for the broader MDD profile?

So the rationale behind conducting those sub-studies is to generate data that can be shared with clinicians, and that will be important to patients across the spectrum of major depressive disorder. And so that's the rationale. This is the new mechanism of action and so -- and a new therapy. So physicians, we think, will find it useful to have data generated in patients that they are likely to see. So who are those patients? So you have -- so a patient who has a major depressive disorder, who goes to see a physician, that patient may have been on another antidepressant, only currently on an antidepressant. And that would be a common situation because we do know that around 2/3 of patients fail frontline treatment. So -- and that patient population, we term antidepressant unresponsive, or AU. So they failed or they currently have symptoms with -- while on one current antidepressant. A patient may have, for example, then been on 2 antidepressants -- 2 different antidepressants during the current major depressive episode. So that's another segment of patients. And we loosely call that TRD in the COMET studies. And then you may have patients who are totally naive, so incident patients. And then you may have patients who have suicidal ideations with active suicidal ideation. Now that segment of patients are typically not included in clinical trials. They're excluded. But in the common study, we do have some of those patients. So what we did was we prospectively defined those subgroups so -- and designated sub-studies to prospectively measure efficacy with AXS-05 in those patient populations. So those are the common AU trial or antidepressant unresponsive group, the COMET-TRD trial and the COMET-SI for suicidal ideation study -- sub-studies.

Understood. And going back to TRD then, you also mentioned recently that you're going to be conducting a Phase II study, solely focused on TRD. Could you walk us through the basic design of that study, again, the rationale for evaluating AXS-05 in that population? And assuming that data is positive, what you think the path forward is going to be for approval with a label focused on TRD?

So the COMET-TRD study is a randomized withdrawal design, okay? And what that means is we're taking patients who have been given AXS-05 and who failed or have been on 2 prior antidepressant treatments. And we're taking those patients who want to experience a remission and for whom that remission is stable. So stable remission. And then we're randomly assigning them to continue on AXS-05 or to be switched to a placebo. This will be a small study, admittedly, and it's not powered for statistical significance. However, we think that it would provide very useful information to patients. I'm sorry to -- well, to patients, of course, but to clinicians. The rationale behind the MERIT study in TRD, which is the study that we just discussed as well as the COMET sub-studies, including the COMET-TRD trial, is to generate data and information for clinicians ahead of our expected launch. Should we be successful in filing our NDA more times and also in receiving priority review, a 6-month review, from the FDA, and should the product be approved, we could be in a position to be launching this therapy around midyear next year. And so between that time, our goal is to generate as much information as possible that will be useful to clinicians. So that the MERIT trial in TRD is not designed as a registration trial. Now, of course, everything is up for negotiation, should the study work. But it is not being designed as a registration trial, and it will be a small study. With regards to our approach in TRD, we generated some interesting data from our STRIDE-1 trial showing that the product does, in fact, have an effect in TRD, specifically at the early time points, so in week 1 and week 2. Those were key secondary endpoints, were separated statistically significantly. And even at week 6, although it didn't hit fiscal significance there, there was a pretty significant treatment effect. So the -- and then in addition to that, we'll be generating the data from the COMET-TRD study as well as on the MERIT trial. And so that will provide -- the goal is to provide clinicians with information on how AXS-05 works in that subsegment of MDD, because remember that the indication that we are filing the NDA for is MDD, which is very broad. It subsumes all of these different subsegments of MDD. So whether it be patients who are on one current antidepressant or in the current major depressive episode 2 antidepressants, some of whom may then be labeled TRD or with suicidal ideation.

Okay. That's helpful. Maybe with that, let's pivot over to AXS-07 for migraine. Just to start off with, what has the performance of the oral CGRP so far told you about the commercial potential of the migraine market and where potentially AXS-07 could fit in as competition in the market starts to build?