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

Good morning, ladies and gentlemen, and welcome to Axsome Therapeutics conference call. [Operator Instructions] This call is being webcast live on the webcast and presentation page of Axsome's website at axsome.com. [Operator Instructions] Please note that today's conference is being recorded. I would now like to turn the conference over to your host, Mark Jacobson, Chief Operating Officer at Axsome Therapeutics. Please go ahead.

Thank you, operator. Good morning, and thank you all for joining us on today's conference call. This call is to provide an update on our AXS-12 product candidate. A short time ago, this morning, a press release crossed the wire announcing the expedited development plan for AXS-12 in the treatment of narcolepsy based on the outcome of our recent breakthrough therapy meeting with the U.S. Food and Drug Administration, or FDA. We will begin this call with prepared remarks by Dr. Herriot Tabuteau, Chief Executive Officer, and then open the line for questions. Questions will be taken in the order that they are received. 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 nonclinical plans; our plans to present or report additional data; the anticipated conduct in the source of future clinical trials, regulatory plans, future research and development and possible intended use of cash and investments. These forward-looking statements are based on current information, assumptions and expectations that are subject to change 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 weight on these forward-looking statements, and the company disclaims any obligation to update such statements. I shall now turn over the call to Herriot.

Thank you, Mark. Good morning, everyone, and thank you all for joining Axsome Therapeutics' clinical update conference call. This morning, we announced an acceleration in clinical development for AXS-12 for the treatment of narcolepsy. As a reminder, AXS-12 is Axsome's novel, oral, highly selective and potent norepinephrine reuptake inhibitor under development for the treatment of narcolepsy. AXS-12 has been granted FDA Breakthrough Therapy designation and Orphan Drug designation for the treatment of narcolepsy, and Axsome has pending patent applications covering AXS-12. Narcolepsy is a chronic, debilitating neurologic condition characterized by excessive daytime sleepiness and cataplexy. Cataplexy is a sudden reduction or loss of muscle tone while the patient is awake, triggered by strong emotions, and it is seen in about 70% of narcoleptics. Other symptoms of narcolepsy include cognitive difficulties, disruptive nighttime sleep, sleep paralysis and hypnagogic hallucinations. Narcolepsy is an orphan condition that affects nearly 200,000 patients in the U.S. This serious condition interferes with cognitive, psychological and social functioning; increases the risk of work and driving-related accidents; and is associated with a 1.5-fold higher mortality rate. Existing treatment options remain limited, do not address all symptoms, provide variable efficacy, have significant side effects and are mostly controlled substances. Only one agent is currently approved to treat both cataplexy and excessive daytime sleepiness. There is, therefore, an urgent need for new treatments, which address the unmet needs of patients and the limitations of current agents. In August, the FDA granted Breakthrough Therapy designation for AXS-12 for the treatment of cataplexy in narcolepsy based on positive results from our previously completed Phase II CONCERT trial, which was a randomized, double-blind, placebo-controlled, crossover, multicenter U.S. study. In this trial, AXS-12 demonstrated rapid, substantial and statistically significant improvement in cataplexy, excessive daytime sleepiness and the ability to concentrate for AXS-12 as compared to placebo. Pursuant to AXS-12 being granted Breakthrough Therapy designation, we recently had a Breakthrough Therapy meet with the FDA to discuss the development program and regulatory path forward for AXS-12 for the treatment of narcolepsy. Based on the outcome of this meeting with the FDA, we are pleased to announce that the development plan for AXS-12 in the treatment of narcolepsy has been expedited. The expedited development plan includes the single Phase III efficacy trial, which, along with the previously completed Phase II CONCERT trial, will be used to support the filing of an NDA for approval of AXS-12 for the treatment of cataplexy in narcolepsy. The planned Phase III trial will be a randomized, double-blind, placebo-controlled, parallel-group study. We intend to initiate this trial in or before the first quarter of 2021 and look forward to providing greater details about the study at that time. Patients completing the Phase III trial will be eligible to enroll in an open-label safety extension study. Also, as part of the expedited development plan, clinical and nonclinical data with reboxetine, which we previously obtained through our exclusive license agreement with Pfizer, can be used to support the NDA filing for this new molecular entity. Specifically, the existing short-term and long-term safety database of more than 2,500 patients treated with reboxetine, along with the safety data from the completed and planned studies of AXS-12 in patients with narcolepsy would be sufficient to support an NDA filing for AXS-12. Certain existing, completed clinical pharmacology studies with reboxetine are considered sufficient to support an NDA filing for AXS-12. And the extensive package of completed nonclinical studies for reboxetine are considered sufficient to support the NDA filing for AXS-12. Our expedited approach for the development of AXS-12 for narcolepsy reflects our commitment to accelerating the innovation of potentially life-changing medicines for the many patients living with serious CNS disorders. We are very pleased with the FDA's feedback from the Breakthrough Therapy meeting and look forward to frequent and collaborative interactions with the agency as we execute on this expedited development plan. Based on its clinical profile to date, we believe that AXS-12, if successfully developed, could be a candidate as foundational therapy to meaningfully improve the lives of the many patients living with narcolepsy. With that, I would like to open the call to Q&A. Operator, can we please have our first question.

[Operator Instructions] Your first question comes from Marc Goodman from SVB Leerink.

This is Rudy on the line for Marc. Congrats on the news. I'll just have a quick question, follow-up on the filing for AXS-12. So what would be the gating factor for the NDA? I guess you talked about that, you have the data -- preclinical data and safety data from Pfizer. Just wondering if you need additional data on top of that. And would you include the open-label safety extension study data for the NDA filing?

Thanks for the questions. With regards to just the gating factor, what is nice about this expedited path is now really, the gating factors are minimal. It's essentially completing our Phase III trial. Now we will need some additional patients, obviously, in the safety database who have narcolepsy. Those patients will come from our completed CONCERT trial as well as the planned Phase III trial. And then the -- those patients coming out of the Phase III trial will go into the open-label safety extension study. So we think that it significantly reduces the number of patients and the things that we need to do in order to file the NDA once we complete the Phase III trial. So obviously, once we launch the Phase III trial, we'll have more to say in terms of all of the various things that go into an NDA filing, which is -- which are extensive. But this -- these absolutely are true facts, if you will, the items that we need to check off. So this is a new chemical entity, and then one of the things that would need to be done typically would be a 2-year carcinogenicity study. And so as a result of the Pfizer collaboration, we actually don't have to run that. So we have that information. So that's not going to be a gating factor. Other items such as clinical pharmacology studies, which are typically needed, those are also largely done and completed with regards to the package. So that's -- no, I think this is a question which would be better answered as we get closer to completing the Phase III trial. But overall, we're very pleased with the acceleration of the time lines.

And your next question will come from Ram Selvaraju from H.C. Wainwright.

I was wondering if you could comment on the length of the evaluation window in the planned Phase III trial? And also, if you could comment on whether the adjudication by the FDA that the preclinical and clinical safety data package from Pfizer has any potential readthrough to the possible path forward for AXS-14 in fibromyalgia?

Thanks for the question, Ram. With regards to the length of the Phase III efficacy trial, this will be a short-term trial. We have not given the exact length of the study. But if you look at past trials that have looked at cataplexy or that have looked at excessive daytime sleepiness in this indication, they've ranged anywhere from 2 weeks in the [indiscernible] CONCERT trial to 12 weeks. So we will provide the exact length of treatment once we launch the study. But I think those 2 brackets should provide you with a good approximation of what the length of the trial will be. With regards to your question around the outcome of the FDA's assessment on the preclinical and clinical package with racemic reboxetine for AXS-12 and its implications for AXS-14, which is esreboxetine, the SS-enantiomer, which is being developed for fibromyalgia, it's too early to tell. But I think, certainly, it bodes well. There is some overlap in terms of the preclinical work that was done for AXS-14, i.e., reboxetine; and AXS -- I'm sorry, for AXS-12, i.e., racemic reboxetine; and AXS-14, i.e., esreboxetine.

And your next question will come from the line of Charles Duncan from Cantor Fitzgerald.

Congrats on the progress. Herriot, kind of I wanted to just ask you for any additional color with regard to trial design in terms of dosing or the sample size? I know you'll talk about that more in the future. And then if you have a sense of the time to enroll the trial at this point, can you gauge that at all?

So thanks, Charles, for the questions. I mean those questions are related to the trial design in terms of the numbers of patients and the time that it will take to enroll the study. So the study design, as we stated in our announcement this morning, will be a parallel group design. And in terms of the number of subjects, we'll provide that once we launch the study. But just to give you some framework through which to think about this, if you look at our CONCERT trial, so that was a 21-patient trial, used a crossover design. So translating that to a parallel-group design would be roughly 21-or-so patients per treatment arm. And I'm not saying that that's going to be the number of subjects in our Phase III trial. But it is good to look at that because we certainly are looking at that from a powering perspective. And in the CONCERT trial, the results on cataplexy were highly specifically significant using that patient number. So we'll be north of that in terms of the numbers of patients per treatment arm, and we'll provide more granularity and more precision around the size of the trial once we actually launch it. With regards to the length of time that we'll take to enroll the trial, that all -- that depends, obviously, on the size of the trial. And to give you just, again, a sense of what we know from our experience of the CONCERT study, which was 21 patients, we did enroll that in less than 6 months or about 6 months across roughly 12 clinical trial sites. Again, I'm not saying that this is necessarily predictive. Of course, it's not predictive because it's not -- the size of the Phase III trial will be different. What I'm saying is the metrics that you can extract from that experience, I'm not saying that they're necessarily predictive, but it's data that we do have and that we'll be looking at and that you should look at.

Yes. No, that makes sense. It's all very helpful. I guess the other thing to think about is the effect size that you're thinking about and the types of patients that you'll be enrolling, maybe if you could help -- if you think about the sample that was enrolled in the CONCERT trial, how would that compare roughly to the sample, the enrollment criteria that you'll be using for this trial?

Our goal would be to enroll similar patients in the Phase III trial to the Phase II trial.

Okay. That's helpful. And then the last question that I had, probably the only guy on the call that knows both Orphan Medical which became Jazz and then also covered Cephalon. But I'm wondering if you think about the residual unmet need here in treating cataplexy, would your intent to be able to treat both cataplexy and excessive daytime sleepiness, would that be part of the label? And then how would this -- would an approval of AXS-12 leverage the planned sales force that you haven't -- that you're planning for psych and neurology?

So -- well in the CONCERT trial, we show a profound effect not only on cataplexy but also on excessive daytime sleepiness. And so that was an endpoint in the CONCERT trial. That will be an endpoint also in our Phase III trial. And in the CONCERT trial, it was a secondary endpoint. And in the Phase III trial, excessive daytime sleepiness would be at least a key secondary endpoint. And then with regards to the sales force, the way that we think about our sales effort right now is that our CNS franchise is divided between psychiatry, on the one hand, and neurology. So if you look at our product candidates which we plan to file NDAs shortly on the psychiatry side, the AXS-05 for depression; and on the neurology side, you have AXS-07 for migraine. And AXS-12 would fall under the neurology bucket. So the answer is -- the short answer is, yes. Our business model is to focus on CNS and to leverage operationally everything that we're doing.

Your next question will come from Joseph Thome from Cowen.

Just first, maybe a little bit of a broader question on kind of, if you're able to provide any additional information on what the FDA saw in the available data package, I guess, first, to award the Breakthrough Therapy designation? And then second, kind of to go ahead with the single Phase III, is there a certain aspect of the data that stood out to them? And then second, do you anticipate that drug would have any scheduling? Or based on the Phase II and the existing data package, do you have enough information to show that there's no withdrawal symptoms?

Okay. So when we ran the Phase II CONCERT trial, the point of that study was to see if there was a signal. It was a butanol test that was -- of our hypothesis that selectively targeting norepinephrine in the way that AXS-12 does would result in anti-cataplectic effects as well as effects against excessive daytime sleepiness. And so we were very pleased with the results, which showed some very strong outcomes on those 2 measures. And we applied to -- for Breakthrough Therapy designation based upon those results. As a reminder, cataplexy is still -- narcolepsy is still a very much underserved therapeutic area. There's only one agent which is currently approved to treat cataplexy. And the agents that are available to treat excessive daytime sleepiness, most of those agents are controlled substances. So we're very pleased that the FDA found the results of the CONCERT trial compelling in order to award us Breakthrough Therapy designation. And also, we're very pleased that they are strong enough that they can be used to support the filing of NDA along with a single Phase III trial. With regards to our scheduling, we do not expect AXS-12 to be scheduled. And that is based upon the extensive clinical experience with the product. And there is -- we do have access to a lot of data. As a reminder, the number of patients in the safety database is more than 2,500, the safety data which we obtained through the Pfizer license. And those data did not show signs of abuse potential or withdrawal. And that is in addition to the extensive amount of post-marketing experience in Europe with the product.

Your next question comes from Yatin Suneja from Guggenheim Partners.

Just a couple of questions for me as well. Can you maybe just talk about some of the benchmarks that you are looking at as you are thinking about the problem concerning both cataplexy and EDS? What you are thinking about -- and I think data has shown somewhere around 12 to 14 attacks per week improvement over placebo. Is that how you are thinking of powering? So that's one part of the question. The second is, you mentioned the foundational therapy. What are you hearing from KOLs that what level of improvement you need to show for you to become a foundational therapy?

Yes. Well thanks for the questions, and please do let us know if we don't answer them all. With regards to powering for the Phase III trial, one of the things that we're looking at very clearly are the effects that we saw in the CONCERT trial. And so in that study, with regards to -- except the -- with regards to cataplexy, we were able to show an effect that was highly statistically significant. At week 1, P value was less than 0.001; and at week 2, the P value was 0.002. And that was with 21 patients using a crossover design. So that would translate to roughly 21 patients per treatment arm. It's a more powerful group design. So now that's not necessarily precisely predictive, but certainly, it gives us a comfort that there is a large treatment effect here. And we will certainly be looking at that data very closely as we power our Phase III trial. And with regards to your question around foundational therapy and what level of effect we would be looking for to support that, the reason why we say that this could be foundational therapy is, if you look at the symptoms that AXS-12 improved, CONCERT trial, these are the key -- some of the key symptoms in narcolepsy. So there was a profound effect on cataplexy, that's one. There was also a profound effect on excessive daytime sleepiness. And we measured that using more than one measure. So we had Epworth Sleepiness Scale well as the number of inadvertent naps, and then something which is not usually measured or assessed but which affects patients with narcolepsy profoundly is the ability to concentrate. So this is a symptom which patients feel all the time as a result of their narcolepsy. And AXS-12 did show a very significant effect on the ability to concentrate, that is, improving the ability to concentrate. And lastly, if you look at the several measures -- several sleep-related measures such as quality of sleep, nighttime awakenings, sleep paralysis episodes and hypnagogic hallucinations, those were also positively all affected by AXS-12. The magnitude of the effect on cataplexy and on excessive daytime sleepiness are similar to what has been seen with the only currently approved agent for both of those indications. You can't do cross-trial comparisons, of course, but it is instructed to look at the historically reported magnitudes of effect. So those are the [ actions ] of the data which support that AXS-12 could be foundational therapy, should we replicate these results in the Phase III trial.

Got it. Just one more question for me. Can you remind the IP? And anything you're doing on the European front for narcolepsy?