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

Great. Good day, everyone. Welcome to Bank of America 2021 virtual health care conference. My name is Ashwani Verma. I cover biotech companies here at Bank of America. Next company on our virtual stage is Axsome Therapeutics. And joining me today from Axsome is CEO and Chairman, Dr. Herriot Tabuteau. So Herriot, thanks for joining us today. I just want to go over some of the programs and hear more updates from you, but before we do that, it will be helpful if you can just give a -- like a quick intro to the company for some investors who might not be as familiar.

Sure. Thanks, Ash. And thanks. Thank you for having us at your conference. I think this is the first time that we present at a Bank of America conference. So Axsome is a CNS-focused company. We're pre commercial. We have filed an NDA for our lead product candidate, which is AXS-05 for the treatment of major depressive disorder. And we did announce recently that the filing had been accepted by the FDA. We've been granted priority review with a PDUFA date of August 22, 2021. So that's less than 4 months away. So the team has worked really hard to get us to a point whereby very soon, assuming a positive FDA decision, we could transition from being an R&D organization to a commercial organization. In addition to that NDA filing, we have also said that we're getting ready to file a second NDA for our product candidate AXS-07 for the treatment of migraine; and we expect to do that this quarter, the second quarter. And now while the company is getting ready to transition to being a commercial entity potentially, we are also advancing the rest of our differentiated CNS pipeline. We have -- right after AXS-05 and AXS-07, we do have a product candidate for the treatment of narcolepsy. This is AXS-12, which is reboxetine. And that is a breakthrough therapy designated product candidate which is getting ready to enter a Phase III trial very soon. [ We've set ] early in the third quarter. And then in addition to that, we have a fourth product candidate, AXS-14, for the treatment of fibromyalgia. This is a product candidate which we got through our collaboration with Pfizer. It comes with positive Phase III data and also positive Phase II data. We did meet the FDA recently to discuss the development plan for AXS-14. We are awaiting meeting minutes from the FDA. And that will then allow us to give the Street a sense of what the plans are going forward for AXS-14. So a very rich pipeline of differentiated product candidates for large markets; and a company which is about to transition to commercialization, assuming successful NDA reviews.

Great. Thanks for that intro.

So I had a few questions just on your deep product opportunity here for AXS-07 and MDD. I mean, as you look at the upcoming PDUFA, clearly there is a lot of just investor discussion around whether you would need an AdCom or not. Or I mean the FDA kind of is free to do what they want to, but the -- have you seen like AdComs in 505(b)(2) applications? I -- at least the feedback that I've got from KOLs is it's pretty rare, so just curious like where your -- what your thoughts are on that, if it might necessitate an AdCom or not.

It's we have not seen any specific patterns in terms of AdComs being granted or being needed, apart from typically AdComs seem to be called when there is some kind of controversy. So if you -- with regards to depression in particular, esketamine, which was a type of 505(b)(2) application, that did have an AdCom, whereas if you look at other drugs from the psychiatry products division, which were new chemical entities, they did not have AdComs. So it's really all over the place. Now as it relates to us, I mean, there's nothing [ a priority ] in our application which we as a company think would necessarily indicate an AdCom. We have not gotten any communications yet from the FDA that would indicate that we would need an AdCom, but the FDA can let us know about an AdCom at any point in time.

Got it. And so just thinking about a potential label for AXS-05 in MDD, some of these additional studies that you completed late last year, some that were studying depression in different kind of settings, some of these open label. Is that something that you could potentially get listed on the AXS-05 label, do you think?

Well, the label -- the indication that we have filed the NDA for is major depressive disorder, so MDD, which is pretty broad. So MDD encompass all flavors of MDD, so across the spectrum. So patients who have -- who are totally de novo who are naive to treatment, patients who have failed one or more antidepression treatments, patients who may be classified as treatment-resistant patients, but the indication itself is MDD. Now you did mention studies that we've conducted like our COMET trial, in which we've studied patients along the spectrum of MDD. So we reported positive results out of the COMET-AU trial. Those were patients who failed one prior treatment. The COMET-TRD trial, patients who have been treated with 2 prior treatments; and the COMET-SI trial, patients with suicidal ideation. And those studies, what they showed was that, not just acutely but also over the long term, patients in a variety of settings had very similar responses; in other words, rapid reductions in depressive symptoms, achievement of functional remission and of clinical response, which lasted and sometimes increased over time. We think that, that information is important for physicians. It will be useful to them in deciding how to use this novel mechanism of action to treat their patients. So while those data for those individual patient populations may not specifically make it onto the label, those data will be available at scientific conferences and in publications for clinicians, to be provided under the right circumstances.

Got it. And so just from a safety standpoint, I mean, [ as is ] 505(b)(2), I mean, typically you inherit the safety language from whatever generic components. That has been a trend now. That is not applicable in all cases. I mean we know that in this particular case bupropion carries a black box versus [indiscernible], and dextromethorphan has some dissociative side effects. Now depression drugs, I mean, pretty much all of them carry these [ onerous ] safety risk. So it is a classic, but this is something -- the component side effects is something that you have not seen in the safety extension studies that you did, so does that give you any kind of confidence that AXS-05 for MDD might not have some of this [ onerous ] safety language?

So if you look at our open-label safety extension trial, I think the first thing that [indiscernible] is the size, right? So overall, our package included exposure of at least 1,500 patients. Now why is that? The reason for that is, while this is a 505(b)(2) application, as you point out, the FDA does view AXS-05 like a new drug. The -- while the chemical entity in AXS-05, the main active ingredient, dextromethorphan, is a known chemical entity, the way that the drug works and the rationale for it is to make dextromethorphan's pharmacology available. In more than 90% of individuals, it is so rapidly metabolized that you actually don't get the pharmacology which hits NMDA, which is a novel mechanism of action. And so because of that, because of the novelty, the FDA has required us to study it in the same number of patients that under ICH guidelines will be required for a new chemical entity. And we're glad we did that because it's provided us a wealth of information on the product that allows us to have confidence not just in the efficacy profile but also in the safety profile. What we have not seen is we have not seen psychotomimetic effects, which has been seen with other NMDA receptor antagonists, which is great, but at the same time, the rapid onset of action which one might expect from hitting the glutamatergic system, we have seen that. We've seen statistically significant reductions in depressive symptoms after only 1 week of treatment and after 2 weeks of treatment. And importantly, that has been maintained now out to 1 year in our long-term safety extension trials. You did mention suicidal ideation as a black box warning in the label for bupropion. Well, that is a warning which is -- which appears in the label to every antidepressant drug, which is of course intuitive when you first think about it since it's supposed to treat depression. And so that is required labeling which -- for any antidepressive drug because there is a phenomenon whereby, as patients do get better, then they do get the energy to potentially act on certain thoughts that they might have with regards to suicide.

Yes, great, excellent. And as you talk in the field right now with different physicians in different settings, like what's the level of excitement, adoption, motivation for AXS-05 as you look forward to launch this drug in the next few months?

I think there's been a lot of interest from clinicians in general around AXS-05 but especially now. We do have a situation whereby there is a mental health crisis, unfortunately, which has been exacerbated by the pandemic. So the latest CDC numbers have shown a more-than-fourfold increase in the prevalence of depressive symptoms in patients in the U.S. and not just with regards to depression, but also, frankly, with regards to all forms of mental illness. Now when you speak to clinicians about AXS-05, what excites them is the fact that most patients currently fail antidepression treatments. And most of antidepressants work by the mono immune system. And to have a novel mechanism of action, one that works with the glutamatergic system, that seems very attractive to them. And it's fine to have a novel mechanism of action, but does that translate into clinical benefit? And with AXS-05, it does in terms of rapidity of onset, but not only it's patient friendly because it's oral -- and it is also very well tolerated. So in our long-term open-label safety extension trial, for example, over a 1-year period, the dropout rate was 8%. It was very low. So a lot of excitement based on the efficacy profile as well as the tolerability and side effect [ book ].

Yes, all right. So I want to go back to something that you mentioned, I mean, this spike in mental health during COVID, that certainly there are a lot of stats out there for this. And I think you mentioned on the conference call yesterday for your earnings that the overall antidepressant market grew by 6% to 7% in 2020, if I understood that correctly. So I just want to make sure that I understand this trend because this can have like a clear repercussion for AXS-05 launch. So just in terms of overall antidepressant market, like it recording like a 6% to 7% growth, what's -- how does that compare to like a historical run rate? I mean, is it significantly up compared to what it has been historically?

So I think what Lori Englebert, our Senior Vice President of Commercial, was pointing out is that, the increase that has been seen or that's been recorded in the [ prevalence ] of depressive symptoms, that seems to have started to impact script growth. And certainly a 6% to 10% growth in antidepressant scripts is outside of the normal trend. So that's what that was meant to provide insight into. And we would expect that, that would continue. Now it's not just the CDC data, but clinicians have written in publications like JAMA that they expect that these trends -- they expect these trends to continue even after the pandemic because it's not -- it's obviously not COVID itself that has caused this. It's the increase in the risk factors for depression that have come from COVID which will not go away with vaccination right away.

So I -- yes. I mean there are a lot of theories out there, right, about this. I mean I want to understand like from your perspective. How do you consider this to be like a durable long-term effect? I mean we are now in kind of like a reopening phase where everyone is looking back -- to get back to normal. And hopefully, that takes care of some of these problems, but do you think that this can be like a persistent tailwind for the antidepressant market like for the foreseeable future?

Yes. It's hard to speculate on that, but some of the aspects, some of the risk factors for depression which have accompanied the COVID pandemic include things like job dislocations and economic factors. And so those can persist, as we know from past recessions, for a very long time in certain patient groups.

I see, okay. And that 6% to 7% growth that you referred, is that just broadly for the market? Do you have a sense of like [ did the brands seen ] kind of uplifts versus the generics during this time?

So Ash, I'd love to get Lori on with you, and I wish he was here with me [indiscernible] greater insight into those numbers. I believe that, that increase was the overall prescriptions for antidepressants.

Got it. Okay, let's move on. So I mean I think you have articulated your launch approach as digital centric. And wanted to understand like what's kind of the genesis of that. How did you decide to pursue it? And as you look at this approach, I mean, do you think this would be equally suited to depression or migraine or some of the other follow-on indications that you have in the pipeline?

It definitely is applicable to the other product candidates that we have and other indications. What we're building is a platform from which we can launch not just AXS-05 in MDD but the rest of [ the pipeline ]. The genesis of it was based on data. We -- so what do we want to do as a commercial organization? We want to be able to reach our customers. We want to be able to reach patients. [ So ] HCPs and patients. And so we started by figuring out how do -- clinicians and patients, how do they access information? How do they access health care data? And how do they prefer to be reached? So that was the genesis of it. So if you look at the adoption, let's say, of digital technologies: By specialty, it's highest among psychiatrists. And it's not just in terms of virtual detailing which is highest amongst psychiatrists and neurologists, incidentally, but it's also the use of telehealth services. So psychiatrists are the highest adopters of telehealth for diagnosing with patients and for prescribing. And then look at it from the patient side. We know that, since 2018, the -- the switch from hours spent, let's say, consuming media, it has been so that, for the first time in a very long time, it's greatest through digital means versus through traditional means since 2018. And that trend has been increasing. And it's been [ especially so ] for health care information. So the data clearly point to using this platform primarily to provide information to nations as well as patients. And so that was the start of it. Now our platform is not meant to be solely to reach clinicians through digital means. One of the things that we're doing is making sure that we understand on an individual physician level how they prefer to access information and to be reached. And if it is via traditional means, then guess what, we'll be ready to do that too. So there is flexibility there. We're very excited about the platform. The foundational infrastructure is in place. We have a very talented team and they've been working towards this PDUFA date, with that PDUFA date in mind, even though we didn't know that we would get priority review. But we wanted to make sure that -- in case we had gotten priority review, that we were ready. And we'll be ready to launch in the fourth quarter, assuming a successful outcome.

Great, great, excellent. And I know that you have started to do some preliminary discussions with the payers for AXS-05 here. And to the extent that you can comment on how those discussions are going -- I mean one of the things that we realize is that depression brands are typically positioned in the highest tier and have a little bit of a challenging access, some of these drugs like Rexulti, Viibryd. So how do you think AXS-05 can break the mold? And what are you learning from your discussions with the payers right now?

So, so far, there's been great receptivity from payers. So we are engaging in permitted discussions. Now the final payer negotiations cannot occur until the product is approved, but the discussions that we've been having have been to inform payers about the profile of AXS-05 to make sure that they recognize the value that the product brings. And based on our discussions thus far and the receptivity, we're very confident that we will be able to maximize access while also being able to price for the value -- for the clinical value that the product provides.

Yes, yes. No, that's great. So just moving on: I mean AXS-07. I just wanted to understand. I think the filing -- I think you are expecting to put that in, in the second quarter, so next few months, I'm assuming. I think the initial plan was to file it in the fourth quarter last year, so there's a little bit of a delay. So can you like catch us up on what's -- kind of where we stand right now? Do you feel confident that you can put in the application in this quarter?

At the beginning of the year, we said that we would file the application in the second quarter. We're still in the second quarter and we're on track, so we expect that to go in.

Yes, okay, great. And just in terms of like acute migraine, I know that some of these drugs, Ubrelvy and NURTEC, have made some big strides against the generic triptans. So as you bring your product to the market, like what is kind of your approach here? How do you expect to compete with these brands? And what -- kind of what do you plan to do to achieve that success?

So our market research indicates that clinicians view our product as serving a different patient population than the oral gepants. And if you step back and you think about the way that we designed AXS-07: We designed AXS-07 so that it would maximize efficacy. And we did that because in every survey, in every patient survey, in every clinician survey, with regards to unmet medical needs in migraine, the unmet medical need is around more efficacious treatments. So patients want drugs that work faster, that work better and with less symptom recurrence. So that's how we designed AXS-07. We generated the clinical data which were positive, which included head-to-head data, against the fastest-acting triptan, and clinicians seem to have responded to that. So when they look at AXS-07, the market segment that they see that it fills are in those patients with difficult-to-treat migraine, which is very different from the other new entrants in the marketplace which have not -- which are not differentiated with regards to efficacy. I think they're differentiated in terms of mechanism of action and so clinicians view them very differently. There are roughly 15 million prescriptions that are written every year for [indiscernible] so that's a very large market. And they're close to 40 million patients every year with migraine. So a very large market, different segmentations, different patient populations. And we're very excited that we've generated data that shows that the product [ builds ] the highest unmet medical need, which is around efficacy.

Yes, yes. So as you look to just launch these products, are you going to provide sales guidance for the first few years? I know that you have just shared like the potential peak sales opportunity for these different indications. Do you expect to lay down what are your expectations for AXS-05, let's say, in MDD in the first 1 or 2 years?

I think right now it's a little premature to provide that guidance. So first of all, let's wait just in [indiscernible] 4 months what the decision is with regards to approval. That's one. And at that point, we would also be able to provide specifics around pricing, which would then allow you and others to test our assumptions around any kind of launch guidance that we will provide.

I see, all right. And just switching over to fibromyalgia. I mean here I think you're waiting for just a written feedback from the meeting. How long does that typically take? Like is that something that we can expect to hear just in the next month or so?

It's variable. And so we're waiting to get the written feedback and to make sure that we understand it. I mean that will allow us to provide an update to the Street at an appropriate time about what the path forward is for AXS-14. And we're really excited about AXS-14 for fibromyalgia, and the reason being this is another area of high unmet medical need. There are roughly 5 million patients in the U.S. who have fibromyalgia, who suffer from fibromyalgia. There are only [ 3 drugs that are currently approved ] to treat it. There are a variety of symptoms in fibromyalgia, some of which are very difficult to treat. And the clinical data generated with AXS-14 thus far does show that it is able to address many of these symptoms potentially more broadly than the currently available treatments.

Yes, great. And just on AXS-12 then for narcolepsy. I mean you have a lot of just competition emerging. I think we saw some data from Takeda recently. You have Harmony and some of these other companies accessing the space as well. How is that -- either their success or failure or like the dynamic of the market, how is that just changing your views of the product opportunity that you have in front of you, if that did change anything for you?

I think what it does is it highlights the unmet need in this market, which is very [indiscernible]. And it is an orphan market, but it's [indiscernible] orphan market with roughly 200,000 patients. And there is a need here. There is a need for drugs that work better and that address a lot of the symptoms of narcolepsy. So obviously there's cataplexy, which is a key septum. You've got excessive daytime sleepiness, but patients who suffer from narcolepsy also have cognitive dysfunction. So they've got cognitive dysfunction, hypnagogic hallucinations, sleep paralysis, a number of symptoms. And what we've shown with the data that we've generated with the AXS-12 is it can address many of these symptoms. Not only that, it works very quickly. So we had onset of action after 1 week of treatment. And we also demonstrated not just a reduction in inadvertent naps, so in other words excessive daytime sleepiness, but also a significant improvement in the ability to concentrate.

Great, excellent. So with that, we are almost out of time. So thank you so much for all your time today. And good luck with the -- with your pipeline.

Well, thank you, Ash. And thanks for having us at your conference.

[ Yes ]. Take care...

Goodbye.