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

Hi, everyone, and thank you for joining us at our Cowen health care conference this year. It is my pleasure to have with me today Dr. Herriot Tabuteau, CEO of Axsome Therapeutics. Thank you very much for taking the time to join us today. Maybe first, congratulations on all the progress that's happened over 2020. If you want to just outline maybe some of the key takeaways over the past 6 to 12 months and what we should be looking for over the course of 2021.

Well, first of all, Joe, thanks for having us at the Cowen health care conference. So I'd say, if you look back to last year, it was a year when we focused on executing to make sure that we got to a point whereby we could file our NDA. So we had a lot of regulatory interactions. We had successful pre-NDA meetings with the FDA for AXS-05 in major depressive disorder, AXS-07 in the treatment of acute migraine -- or in the acute treatment of migraine. And so those are really important milestones leading into the readout of our open-label safety extension trials at the end of the year, all of those things. All those milestones were really important to allowing us to file our NDAs. Now at the same time, we did have an important data readout which was on Alzheimer's disease agitation with AXS-05. That was a pivotal trial in this indication, which currently there are no approved treatments. In addition, we did receive 2 breakthrough therapy designations, one was for AXS-05 in Alzheimer's disease agitation, and the other one was for AXS-12 in narcolepsy; and had successful FDA breakthrough meetings. So that's set us on track to continue developing those programs. And just to go back to the Alzheimer's disease agitation program: We announced positive results from one pivotal trial. We secured breakthrough therapy designation for that indication, and then we initiated our second pivotal trial at the end of last year. So that was -- that led us into this year. And this year, [ what are we focusing on ]? This year, we're focused on making sure that we get through our NDA reviews successfully. So to kick off the year, we filed our NDA for AXS-05 in major depressive disorder. Soon we'll be filing our NDA for AXS-07 in the acute treatment of migraine. And then while that's happening, the team has been working incredibly hard to continue to build out our commercial infrastructure, so our proprietary Digital-Centric Commercialization platform or DCC platform, to make sure that we successfully transition to commercialization, assuming that we get positive outcomes from our NDA submissions. So that's really the focus. There are some other items too which the team is working on which are important and notable this year, including the launch of our Phase III trial for AXS-12 in narcolepsy; and so important, additional regulatory interactions, including our planned FDA meeting for our AXS-14 product candidate in fibromyalgia, which is scheduled for the second quarter.

Perfect. Definitely have been busy. We did see the COMET data, at the end of last year, for AXS-05 in the treatment of depression, specifically certain subgroups of patients. Can you maybe outline some of the key takeaways there? Were there any patient subgroups that you find maybe most impactful or that will be most impactful upon a potential initial launch?

What was gratifying to see in the data is -- in a very large data set, the largest actually treatment group ever for AXS-05, close to 900 patients, what we saw is that in every patient segment you had consistent response on the MADRS as well as functional improvement. So not only is the drug working well on depressive symptoms, but it's translating to functional benefit. And this was rapid. Not only that. Is -- something which you can only tell from looking at the data over a long-term treatment period is that the effect was maintained or increased with long-term treatment out to 12 months. And then when you look at [indiscernible] segments: We selected 3 groups of patients, patients who -- to focus on. So patients who had failed 1 antidepressant treatment; patients who had failed 2 antidepressant treatments, traditionally referred to as treatment-resistant depression; and also patients with suicidal ideation. And there's a reason for focusing on each of those segments. For suicide ideation, one of the features of AXS-05 is its rapid onset of action, which clearly is important in patients who might have suicidal ideation. So it was nice to see that in that study, within 1 week of treatment, 60% of the patients actually had resolution of suicidal ideation. And then with regards -- and then the other interesting segment is the segment of patients with treatment-resistant depression, patients who had fail 2 prior treatments. And the response in those patients was similar to that for the overall group, showing a robust, rapid onset of action on the MADRS, which was sustained for 12 months; and then also significant functional improvement which we've seen in the vast majority of patients, more than 80%.

Perfect. And then looking into potentially launching in the backdrop of a COVID environment, I guess, first, are there any takeaways that your team has found sort of over the course of the COVID pandemic related to the onset of sort of depressive symptoms broadly and maybe how that market has changed? And then second, you have outlined sort of a digital-centric approach to commercialization that you have integrated here. If you could go into a little bit of that and how you're seeing an initial launch potentially during COVID.

So one of the features of COVID apart from it being a pandemic is that it did contribute to a mental health crisis. And now in retrospect, that makes sense given that, this historic pandemic; and the response to it, which has required patients to -- or individuals to socially isolate for very long periods of time; the economic toll; loss of jobs, all those factors, a lot of different factors, we know, are risk factors for depression. And as a result, the prevalence of depressive symptoms has been recorded to have tripled since before the pandemic. So now -- so that's depressive symptoms. And what we've -- what our commercial team has started to see is that, that has now filtered into actual prescribing patterns. So the -- so there definitely is an impact on the market. The need is now greater than it's ever been for not [ only ] antidepressant treatments that work and work quickly -- because we know that currently patients are highly underserved. 2/3 of them do not respond to frontline treatment. 1/2 of them are treated with adjunctive therapy, which means that there has to be a fine line walked between efficacy and increased side effects, so we think that this is an important time to be launching a new treatment. Now with regards to the digital-centric approach, this is an approach which we have for a very long time, this is pre-pandemic, talked about. And reason for that was it aligned with the observations about how patients as well as clinicians consume information. It just makes sense. The pandemic, of course, accelerated that and forced all companies and the industry to deal with how do you talk to physicians. So there had to be a lot of retrofitting of sales forces and sales approaches. We have not had to do that, so -- and that's the benefit of our approach is that it was prospective, to use a clinical trial term. This is something that we had planned to do. And since we're not retrofitting, [indiscernible] is going to be a lot more rational in terms of our approach. We have invested quite a bit into our DCC platform. And from a commercialization perspective, we have the infrastructure in place. And from a human capital and resources talent perspective, we have all of our functional heads in place. And from a -- an actual planning in terms of sales force as it integrates into our DCC platform, that has been -- that planning has been finalized. And we're on track to start actually hiring our field sales force over the next couple of months.

And then you do have breakthrough here, so we could have a launch potentially this year, kind of in the Q3 time frame potentially. In terms of where you see AXS-05 seeing the most uptake along the treatment paradigm, obviously the indication is going to be broadly for MDD, but you do have all of these supportive data sets that you have, so maybe how are those going to factor in, do you think, the physician decision? And how are you maybe targeting your MSL sales force and where we can see most uptake here?

What's nice about the data that we've generated thus far is it shows that there is not -- that there is excellent response across the spectrum of patients. So it's important for physicians to have that information. And we're going to make sure that those data are disseminated in the right form, so scientific conferences. And what's nice about that is it leaves the decision in the hands of the physicians based upon the response that they're seeing from their patients with current treatments. And we do know that 2/3 of patients do not respond to current treatments. So you pointed out that we will have a broad label, assuming successful prosecution of the NDA that we've submitted. And so it's a broad label, which means that it encompasses all flavors of MDD. And then we will have the data that's out there. We've generated data to show clinicians how the product will perform in all of these different segments. And then what we would expect in the marketplace is that patients might be required to try other treatments prior to being prescribed a branded therapy, which is very standard with any kind of new product launch. And because we know that the vast majority of patients have already been on one prior antidepressant, that theoretical hurdle might be just that, a theoretical one.

And we are going to see some data from the MERIT trial in TRD patients this year. Maybe if you can talk about how you designed this study based on prior learnings of AXS-05 in treatment-resistant patients and maybe how you're going to be building off of the prior data from last year. Is there any sort of read-through that's changed your positivity on this upcoming data readout?

So we're positive on the profile of AXS-05 because it's not been replicated in [ forward replacement ] trials. So the -- so AXS-05, the efficacy has been consistent, so which is great, across a broad range of patients. And we think that, that may have to do with the novel mechanism of action of the drug. Is -- so AXS-05 is an NMDA receptor antagonist, which means -- an NMDA receptor is the primary receptor for glutamate which is the main excitatory neurotransmitter in the brain. There's been a lot of focus over the years on the monoaminergic side of neural transmission as it relates to depression, but we do know that there's been a lot of recent evidence showing that glutamatergic neural transmission is really important. And currently there is only -- there is no oral MOA that is NMDA. So we think that, that mechanism of action may be important to the clinical benefits that's seen with AXS-05. As it relates to the MERIT study in TRD, just as a reminder: The rationale behind that study was to take advantage of the large number of patients that -- who were in the open-label COMET trial, many of whom -- some of whom had had TRD, and to find a way to really use that information on those patients efficiently. So we then launched the MERIT trial. It is a small study. It is not a registration trial, but it does allow us to view how patients will perform and how the drug will perform in this randomized withdrawal setting. So we're looking forward to those data. We've never done a study like that with AXS-05, so it's really hard to predict what we'll see. And the study is primarily event-driven. And so we're looking forward to see what it shows in that small study.

Perfect. And then maybe we'll switch over to -- stay on AXS-05, but let's switch over to Alzheimer's disease agitation. We saw the positive data last year. You're now in a Phase III randomized withdrawal trial. Maybe what has been the reception to the data that have been generated thus far? Maybe the rationale behind the slight change in trial design for the Phase III.

So the reception has been positive. As you know, there currently is no product that's approved to treat Alzheimer's disease agitation. And so -- and it's physicians who treat these patients are on a quandary because they need to treat them, but there are no approved treatments, and the off-label treatments are problematic. In fact, not only do they carry black box warnings against their use specifically in that [ very population ] with Alzheimer's disease, but there are also public health efforts to reduce the use of antipsychotics in nursing homes, in patients because they are associated with increased mortality risks, sedation, which can lead to other very serious side effects, potentially fatal. So the -- so there is a need out there not just for a therapy that works but a therapy that is safe and that is approved. As you know, this has been a very difficult area, to develop drugs for Alzheimer's disease. And so it was very -- we're very satisfied to see that AXS-05 in our first pivotal trial was able to deliver rapid and substantial reductions in agitation in patients with Alzheimer's disease. And then that was accompanied by a very well-tolerated drug. So the reception, as you can imagine, was positive from the clinical and scientific community. Now the reason -- so now bringing to the ACCORD study. So we launched the ACCORD Phase III trial. This is our second pivotal trial. And we believe that we will need only those 2 studies, the ADVANCE trial as well as the ACCORD study, in order to file an NDA. And one thing that we wanted to take into account is how do we design a study that will maximize signal deduction, and randomized withdrawal study designs in the past have been associated with greater signal detection. The challenge with having a -- one successful trial is the next study then suffers from increased expectation bias, and expectation bias meaning that you expect that the drug will work because it worked before. Nowadays, patients have access to the Internet. Caregivers have access to the Internet. And so if you have a positive trial, then the first thing that patients do is to want to learn, understandably, about the drug, so then -- so you do have this issue of expectation bias, which we know is linked directly to the placebo response. So how do you control for that? So we're not certain, but we think that this study design will help to mitigate some of these consumers around the placebo response and will help to, hopefully, increase signal detection in this next study.

I think those are really important points. And then in terms of the overall market for patients with agitation, I guess, what proportion of Alzheimer's patients do you think would benefit from a chronic treatment? We have seen some other therapies that focus more on sort of episodic treatment of agitation Alzheimer's. If a patient is on a chronic therapy, will there not necessarily be the need for some of these episodic treatments? Or how are you seeing those kind of playing together in the treatment paradigm, if possible?

Well, what we can speak to is just our drug and our approach. So what we do know is that, of the 5 million patients in the U.S. who are diagnosed with Alzheimer's disease, a vast majority of them, so up to 70%, have symptoms of agitation; and also that, those symptoms, when they occur, they don't tend to go away. So it tends to be chronic. So patients who have agitation, that agitation tends to remain or recur over long periods of time. In our clinical trials, when we studied these patients, these are patients who have clinically significant agitation. And also it had to have been present obviously for a particular period of time. So the -- so in terms of the addressable market, we think it's about 3.5 million patients, which is 70% of the 5 million patients. Now not all drugs work in all patients. And you will have situations whereby patients who for whatever reason have exacerbations of their agitation may be hospitalized. And so in those situations, those are very serious situations which are acute, then obviously they're taken to the hospital. What we would like to do with our therapy if we're successful is actually prevent those episodes from happening or reducing them. So if we're successful, we think that we'll be able [ to treat ] patients at home with their loved ones because we know that agitation is the primary -- is one of the primary reasons for early nursing home placement.

Perfect. And then maybe switching over to AXS-07: You indicated on the call this morning that, that application is also moving forward, potentially an early Q2 submission there. Maybe just any updates on the regulatory progress that you wanted to outline. And second, I guess, where do you see the sweet spot for AXS-07 fitting in the treatment paradigm? We did see, based on the data, that it also has a very rapid onset of action. How do you see it kind of integrating?

The way that we see it integrating -- so there are 2 questions there. On the regulatory side -- so we're on track to complete our submission internally by the end of the quarter, and we would expect it to go in early second quarter upon receipt of [ a final vendor report ]. The way that it fits in into the treatment paradigm is to provide greater efficacy, all right? So people think of migraine. And now I think the awareness [ when it comes to ] severity of migraine and its impact on patient lives is greater than it's ever been, but I think that it's still worth mentioning that the disability from severe migraine -- it's not just a headache. It has been ranked by the World Health Organization in the same category as the disability from active psychosis from -- and from quadriplegia, okay? So this is a very disabling disease. So anybody who's had severe migraines knows that. They are not surprised by that. It -- and so that's where the meat is. The meat is to do more efficacious treatment. 70% of patients are not satisfied with the current acute migraine treatments. And the primary reason for dissatisfaction relates to efficacy, not safety. So that's the way that AXS-07 was designed, to provide greater efficacy. So fast pain relief, but not just fast pain relief but greater pain relief and also more sustained pay relief. So patients who do respond, they do not want the pain to come back. And so -- and we've shown with AXS-07, in trial against an active comparator, that not only is there greater pain relief, but there's also significantly reduced relapse of symptoms and significantly reduced use of rescue medication. So that speaks to the efficacy side of things, which also interestingly enough dovetails and translates into positive pharmacoeconomic benefits. So that's where we see it fitting in. And the need is tremendous, roughly 40 million patients with migraine. And the new treatments that have recently been launched in this space and -- those treatments have been doing well but, as a reminder, captured only about 10% of the scripts. So that just speaks to the clinical need. And then they have not shown benefit on the efficacy side, and none of them have been studied versus active comparators.

Perfect. And then maybe touching on AXS-12 for narcolepsy. A Phase III study is anticipated in the near term here. How do you see AXS-12 as being differentiated from currently available therapies, maybe specifically on cataplexy itself? And kind of where is it going to fit in here?

So AXS-12 is differentiated by the breadth of symptoms of narcolepsy that it addresses. So some drugs don't work well on cataplexy. Some work well on excessive daytime sleepiness. In our Phase II trial, we showed efficacy with regards to cataplexy which was significant and rapid with regard to excessive daytime sleepiness. Also we showed an improvement in cognitive function, which is another key symptom of narcolepsy which is not talked about and not studied, but when you speak to patients who have narcolepsy, that is one of the most bothersome symptoms is the -- is what they call the [ narco fog ], which comes from the disease, from the condition. And we're able to show a rapid onset of action with regards to that. We also looked at a number of other symptoms, hypnagogic hallucinations, nighttime awakenings and sleep paralysis episodes. And for all those measures, AXS-12 showed a benefit. So when we -- so that's how -- when we think about a profile of the products, it's really the clinical profile which we think is very attractive. And I should also mention that the drug was incredibly well tolerated. 100% of patients stayed on therapy during the study. And this is a drug which is dosed during the day, not in the middle of the night. So we think that there are a lot of benefits there to the therapy and including its rapid onset of action within less than a week.

Perfect. And then finally, on the pipeline, AXS-14 for fibromyalgia. You have an FDA meeting upcoming, with a positive Phase II and positive Phase III in hand. What are sort of the key end points that you think regulators will be focusing on for fibromyalgia or that patients focus on? And sort of what are your base case expectations for potential additional development here?

So the key end points typically are pain. So one of the symptoms of fibromyalgia is this widespread pain. And then the other one is function. So those are traditionally the 2 end points; and other patients -- other symptoms that patients have, which is -- the other very common symptom is fatigue, but that's very difficult to treat. And there are only 3 approved treatments currently for fibromyalgia. One of the observations from the positive Phase II and the positive Phase III trials with AXS-14 was an improvement in fatigue which was statistically significant. So these were prespecified end points. So we think, for that reason alone, that is a differentiating factor. And with regards to our upcoming FDA meeting, we're looking forward to that being -- will be our first meeting with the FDA to discuss these data. And it's hard to speculate in terms of what will come out of that meeting, except to say that we'll [indiscernible] that meeting with a greater understanding of what needs to be done to bring this therapy potentially to patients.

Perfect. Definitely a lot going on in the pipeline. And I think it's going to be an exciting 2021 as you make the transition into a potentially commercial company here. So thank you very much for taking the time with us. We really appreciate it.

Well, thank you. And have a great day.

You too.