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

Good morning, and welcome to the Axsome Therapeutics Conference Call. I would now like to turn the call over to your host, Mark Jacobson, Chief Operating Officer at Axsome Therapeutics. Mark, please go ahead.

Thank you, operator. Good morning, and thank you all for joining us on today's conference call. During today's call, we'll 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 and the source of future clinical trials, regulatory plans, future research and development plans, commercial plans 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 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 Dr. Herriot Tabuteau, Chief Executive Officer; Nick Pizzie, Chief Financial Officer; Lori Englebert, Executive Vice President of Commercial and Business Development; and Dr. Amanda Jones, Senior Vice President of Clinical Development; as well as our distinguished guests who will be introduced by Dr. Tabuteau. After the presentation, we will open the line for questions, and questions will be taken in the order they are received. And with that, I will turn the call over to Herriot.

Thank you, Mark. Good morning, everyone, and welcome to Sunosi Investor Update. We signed the agreement to acquire Sunosi on March 28. Since the closing of the U.S. portion of the acquisition on May 9, Sunosi has been rapidly integrated into Axsome's industry-leading neuroscience portfolio, and our excitement for the product has only grown. Sunosi is the first and only dual-acting dopamine and norepinephrine reuptake inhibitor, or DNRI, approved for excessive daytime sleepiness, or EDS, due to narcolepsy or obstructive sleep apnea, or OSA. Sunosi has a differentiated clinical profile based on strong efficacy in the improved indication as well as a well-established safety profile. We are excited about Sunosi not only because of its potential for significant growth in EDS, narcolepsy and OSA, but also for potential in new neuroscience indications. Today, we are announcing our plan to develop Sunosi for the treatment of attention deficit hyperactivity disorder, or ADHD. The pharmacology of solriamfetol may be particularly suited to treat this distressing condition, which affects approximately 12 million Americans. We intend to rapidly develop Sunosi for ADHD and plans are underway to initiate a Phase III trial in this indication this year. We are honored to have with us today 3 distinguished physicians, scientists and key opinion leaders who will provide clinical overviews of EDS in narcolepsy, of EDS and OSA and of ADHD. Joining us today are Dr. Richard Bogan, Dr. Andrew Krystal and Dr. Stephen Faraone. Dr. Bogan is Principal of Bogan's Sleep Consultants, Associate Clinical Professor at the University of South Carolina School of Medicine and Associate Clinical Professor at Medical University of South Carolina. Dr. Bogan will provide an overview of EDS associated with narcolepsy. Dr. Krystal is the Ray and Dagmar Dolby Distinguished Professor of Psychiatry and Neurology at UCSF Weill Institute for Neurosciences and Vice-Chair for Research in their Corporate of Psychiatry. Dr. Krystal will provide an overview of EDS in obstructive sleep apnea. Dr. Faraone is the distinguished professor in the Department of Psychiatry and Neuroscience & Physiology at SUNY Upstate Medical University and Vice-Chair for Research in the Department of Psychiatry. Dr. Faraone will provide an overview of ADHD. Following the KOL presentation, Amanda Jones, Axsome's Senior Vice President of Clinical Development, will discuss the ongoing and planned clinical development of Sunosi. We will then open it up for questions to our physicians and scientific experts. Following the Q&A, Lori Englebert, Axsome's Executive Vice President of Commercial and Business Development and Nick Pizzie, Axsome's Chief Financial Officer, will provide the Sunosi commercial overview and financial update. We will then open it up to questions for the Axsome presenters. A key part of the rationale for the acquisition of Sunosi is the excellent strategic fit with our AXS-05 product candidate for the treatment of major depressive disorder, and our AXS-07 product candidate for the acute treatment of migraine. This strategic fit is based on the overlap of prescriber base and disease comorbidities. I will provide a brief regulatory update on AXS-05 and AXS-07 before turning it over to our first KOL presenter. The NDA for AXS-05 for the treatment of MDD is currently under review. On Friday, we received from the FDA proposed product labeling for AXS-05. We are reviewing proposed labeling and we will reply to the FDA to secure final labeling agreement. As a reminder, we also received from FDA the post-marketing requirements and commitments for this NDA, and we have started to honor those. With regards to AXS-07, our NDA for this product candidate in migraine, we previously announced the receipt of a complete response letter for this NDA. We have been actively working to prepare for a Type A meeting to discuss our plan for resubmission and expect that meeting to occur in the next couple of months. That completes the regulatory update. It is now my pleasure to turn the floor over to Dr. Richard Bogan to discuss excessive daytime sleepiness and narcolepsy. Dr. Bogan, thank you for joining us today, and please go ahead.

Hi. I'm Dr. Richard Bogan. I am a pulmonary critical care physician who practices sleep medicine in South Carolina, have clinical employment and also see patients and we do clinical research here in our laboratory. I'm here today to talk to you about narcolepsy. Narcolepsy is a disorder that is characterized by excessive daytime sleepiness. It tends to occur in, the peak incidence actually is in the teenage years. We make the diagnosis in young adults, but it can occur at any time. For these individuals who have profound daytime sleepiness despite an adequate opportunity to sleep, we believe that this disorder is associated with orexin signaling abnormality, certainly Type 1 narcolepsy. We have Type 1 and Type 2, which I will explain. But these individuals have abnormality of orexin signaling presumptively due to an autoimmune abnormality. They got the flu and it injured the orexin cells. And orexin is an important neuropeptide that downstream stimulates other regions in the brain. In this diagram, you'll see the norepinephrine but also dopamine and histamine, acetylcholine, serotonin. These neurotransmitters are very important for regional activation of the brain and stabilization of wakefulness. In the absence of orexin, state instability occurs. These individuals have trouble staying awake despite the fact that they had adequate quantity of sleep. In addition, the sleep centers, which are normally inhibited during the day and the dreaming centers, are disinhibited. So these individuals have episodes of getting sleepy if they're relatively inactive, and they also tend to have what we call REM-dissociative symptoms. So they tend to have very vivid dreams. They tend to have episodes of sleep paralysis. And the reason for that is when we are dreaming, we're paralyzed. And so these individuals may be falling asleep or waking up and feel briefly paralyzed. And as I said, vivid dreams -- or they may actually see or hear the dream. We call those hypnopompic or hypnogogic hallucinations, so obviously can be unsettling. Many of the patients have unsettled or irregular sleep patterns, multiple awakenings in the night. And sometimes that can be confusing because they interpret their sleepiness in the daytime due to the disruptive nocturnal sleep. And of course, cataplexy is the ultimate REM dissociative symptom. If you think about being awake, something triggers the dreaming generator while you're awake, the brain is already awake, but there's downward inhibition of motor activity, ala paralysis. So these individuals with strong emotion can have episodes of muscle weakness, so they can just melt into the floor or knees buckling or the head gets heavier or they consider themselves clumsy. This is certainly Type 1 narcolepsy. We're not really quite sure in Type 2. Some individuals think there is maybe a deficiency or a mild efficiency or there may be some orexin signaling abnormality, but we're not really sure, but they have very similar symptoms as to Type 1 narcolepsy in that they are tired and sleepy and have these REM dissociative symptoms of vivid dreams, paralysis, hallucinations commonly occur in these individuals, but they don't have cataplexy. So that's Type 2. The prevalence of narcolepsy, we think, is about 1 in 2,000. And as I said, the peak incidence is around age 15, 16, but they oftentimes go 10 years before we make the diagnosis because they don't know how sleepy they are, and they don't know that these REM dissociative symptoms are abnormal, they say it's just me. So it's a very prevalent disorder. And unfortunately, most of the patients have not been diagnosed, we probably only diagnosed about 50% of them. But these patients do present to us. And when you begin to explore the prevalence of these symptoms, you see excessive sleepiness is 100%, cataplexy in about 70% of patients, disrupted nocturnal sleep is very prevalent. And not all patients have the REM dissociative symptoms of hallucinations or paralysis that occurs. The paralysis is interesting because sometimes it can be mistaken for panic attacks or even sleep apnea because these individuals wake up and they can't move. So they panic and they feel as if they can't catch their breath. So let's move on to treatments. What do we do to treat these individuals? And they come to us and they say "Doc, I'm tired, I'm sleepy, I can't think, I can't remember. I sometimes do things, I don't remember doing, we call it automatic activity. I constantly need to nap or a desire to nap or in certain situations where I'm trying to stay awake, I have trouble staying awake." And that can obviously affect workplace performance, even driving and social interaction. So it has a huge impact on quality of life. The excessive sleepiness, as I said, is 100%, and the medications that we use traditionally are solriamfetol is our newest addition to the FDA-approved meds. And solriamfetol actually works on those dopamine and norepinephrine receptors, so it is a reuptake inhibitor. So it's increasing exposure of the neurons to dopamine and norepinephrine, which helps people stay awake. Old drugs, modafinil and armodafinil, armodafinil has just 1 isomer that modafinil has in it. And that's primarily, we believe, through dopamine reuptake. Of course, we use the classic stimulus, the drugs that are used in attention deficit disorder, methylphenidate and amphetamine. There is a histamine mediated drug pitolisant, which is also commercially known as Wakix and pitolisant has been beneficial in both the sleepiness as well as the cataplexy and of course, oxybate. And oxybate now is in 2 flavors, sodium oxybate and then the lower sodium oxybate Xywav, which has 92% less sodium. What about the cataplexy? Well, what I said earlier is that orexin and of course, downstream norepinephrine and serotonin, those inhibit the REM generator. So we've actually used drugs that will sort of augment the signaling to try to prevent the REM generator from causing muscle paralysis in the daytime. And we've used off-label antidepressants, anticholinergics, serotonin reuptake inhibitors or selective norepinephrine reuptake inhibitors have also been used. But the drugs that have been approved are oxybate, sodium oxybate and the lower sodium oxybate has shown usefulness, both in the excessive sleepiness, but also the cataplexy. Pitolisant, again, working through histamine can improve excessive sleepiness, but also has been shown to help with the cataplexy. And of course pitolisant was primarily studied in Europe. So now let's think about the guidelines. And the American Academy of Sleep Medicine has actually published, reviewed the scientific information that's out there on these medications, looked at the randomized controlled trials, looked at the study design and examine the efficacy and side effect profile, quite frankly, of these various medications. And we're talking about solriamfetol, and solriamfetol is listed as a strong recommendation for treating patients with narcolepsy. So it has demonstrated both efficacy and safety in narcolepsy patients so much so that the American Academy strongly recommended this as an option for therapy in our patients. So let's move on and look at the actual data, the science behind Sunosi, solriamfetol in treating excessive daytime sleepiness in narcolepsy patients. One of the parameters that we use when we do research is the maintenance of wakefulness test. So if you think about state stability, the normal human is awake in the day and asleep at night, their orexin works, their dopamine, norepinephrine and all of those work in the daytime, they can stay awake. And then at night, those turn off and the person sleeps, and they cycle in an ultradian rhythm every 90 minutes, they have these periods of non-REM and REM sleep as they cycle through the night. And of course, narcolepsy patients, those are disrupted because of the REM dissociative symptoms. One of the measures that we use is the maintenance of wakefulness test. So here, we're isolating a patient or a research subject, dark room, lights out and have them sit up and try to stay awake. Now these are sleepy people. And so we measure them at times across the day. So how well can their brain stay awake when they're trying to stay awake? And we do this at 2-hour intervals, so 2, 4, 6 or we could do them at 1-hour and 3 hours, 5 hours. But we do it across the day as an objective measure of the ability to remain awake. And typically, if I were to do that to you, you would probably -- we do a 40 -- you're in the dark room 40 minutes, you would probably be north of 20 minutes, and we take the average across the whole day, siesta time you might fall sleep. But I would expect if you're normal to be well over 20 minutes, these folks were typically right around 12 minutes or so, actually shorter than that, less than 10 minutes for narcolepsy, that was really more the sleep apnea, sleepy people. And then we gave them placebo, we gave them solriamfetol 75 milligrams and we gave them solriamfetol 150 milligrams, double-blind, placebo-controlled, randomized. So the patients didn't know, the investigators didn't know. And then when we did the NAP studies, across the day, you can see the MWT improved. It improved 4.7 minutes, which is a big signal, quite frankly, 4.7 minutes with 75 milligrams, 9.8 minutes with 150 milligram. And we call this effect size. This is one of the biggest effect sizes we've seen in any research group. Now we can't compare different studies in different cohorts at different times, but these were pretty big signals to these individuals who are better able to remain awake. The other question we ask is, does it work for a long period of time? Do we see tolerance? So you can see the data in the graph, which looks at the sleep latency over time, and you can see 1 week all the way out to 12 weeks. And if you look at the MWT across that entire time, you can see it separates from the placebo group. So the 75-milligram showed a signal, the 150-milligram showed a bigger signal in terms of the individual's ability to remain awake. So what about across the day, let's look at MWT across the day. So the other question is, okay, how quickly does it work? Can we see a signal within an hour? And does the signal last across the entire day? Because we all know siesta time, we all tend to get drowsy in the middle of the afternoon, what does this drug do, does it tail off or not? And when you look at the placebo group, it's really interesting to look at the placebo individuals in terms of their baseline and the change in the placebo group. And you can see that little dip at trial #4, 7 hours that siesta time, we can't get a placebo effect. But importantly, at 75 milligrams and at 150 milligrams, you can see at 1 hour and out to 9 hours, a statistically significant change in individuals compared to the placebo group and compared to their baseline in terms of efficacy and the ability to remain awake. So this is objective evidence of duration of therapy, we didn't see tolerance and also improvement across the day for the entire 9-hour period of time. Now let's look at the Epworth sleepiness scale score. The Epworth sleepiness scale score is a standard way for us to talk about sleepiness. It's 8 items, 0 to 3, how likely are you to dose off under these circumstances while sitting and reading, watching TV, while you're driving, stopped at a traffic light, et cetera. Typically, you're going to be less than 10 -- 10 or less. I'm a 6 on my Epworth score. Patients with narcolepsy, particularly untreated, their Epworth score is up around 18, 17, 16. I mean they are very sleepy individuals. They will tell you, any time they're quiet or inactive, they tend to dose off. So, what did we see in the Epworth score, subjective measure. This is a validated clinical tool that we use in research a lot. So how sleepy are you narcolepsy patient when I give you placebo compared to baseline, solriamfetol 75 and 150 milligrams and you see a signal. At 75 milligrams on the left-hand side in the gold, you see a 3.8 signal. And in the lavender color, 150 milligram, we saw a 5-point signal. We think clinically meaningful change in the Epworth score is right around 2.5 to 3. So you can see these are meaningful to the patient in terms of a biological signal that says that they are less sleepy. So did we see duration over the 12-week period of time? Did we see tolerance? And when you look at that graph on the right, at week 1, all the way out to week 12, you can see the signal separates from the placebo group. So this is a change from baseline at week 1 all the way out to week 12. So we saw a signal. Remember at 1 hour, for the MWT and we saw a signal as far as the Epworth at 1 week, all the way out to 12 weeks, again demonstrating efficacy. And of course, the American Academy of Sleep Medicine and the FDA used this data to try to determine efficacy and safety. And speaking of safety, on this slide, you can see the adverse events. Obviously, when we do a clinical trial, we capture every adverse event that occurs, whether it's related to the drug or not. But one of the ways that we look at this is side effects that occurred in over 5% of people, and it was greater than the placebo group. And this is pretty much what we expect when we use medications that activate the neurons in the brain and excite them to keep an individual awake, we may actually see some other CNS side effects. So we could see headache or nausea. We could see a change in appetite. We could see insomnia, obviously, if the drug keeps them awake too long and anxiety. But you can see that the prevalence of these disorders is fairly low. I mean it's typically less than 10%, so there was a dose response relationship you saw, some headache in the solriamfetol group at 14%. And then again, you can see that drop off. But this is a listing of all the side effects that occurred both in the placebo group as well as the solriamfetol 75 and 150 milligrams. I usually tell my patients, headache dizzy, nausea, could cause some anxiety. I rarely see insomnia in my narcolepsy patients. But it's possible that we could see that in someone and maybe have to make dose adjustments or something to that effect. I'm going to show you another study. Now this study actually was a long-term study looking again at efficacy going out 40 weeks. So this gives us some idea. The study design is in such a way that it allows us to look at tolerance and rebound and withdrawal symptoms in these individuals. And as you can see, this actually was a group of individuals with obstructive sleep apnea, which I'm not going to talk about, but there are patients with obstructive apnea who are still sleepy and also narcolepsy patients, but look at their Epworth scores. You can see 17, 15. These individuals are sleepy enough. And again, with sleepiness, you have problems with executive function, speed of processing, motivation, mood, all of those are affected. So these individuals don't feel good. But when you look at them on drug over a period of time, you can see that there is a reduction in the export score at 2 weeks, 14, 27, 40 weeks, that does show clinical relevance over a long period of time. And again, we interpret this as not much evidence of tolerance. As you know, in the Schedule II drugs, tolerance is an issue. So people on methylphenidate and amphetamine can develop tolerance and ask for dose escalation, and we can begin to get more into safety issues in terms of the effect on sympathetic tone in those individuals. So this is a nice piece of data looking at the Epworth score over a long period of time. Now how does this translate into what we do. And this is a nice little study from Germany, actually the Europeans have a registry in Germany, France, Italy, they track patients. And this is a retrospective observational study. So we always have to be careful with these kinds of studies. But it's asking what are we doing in the clinic? And this actually relates to the German study. So they took a group of individuals and said, okay, I'm treating your narcolepsy, you're still sleepy, this is what I did. And in these individuals, they had to take the solriamfetol for at least weeks. And you can see the strategies behind this -- some of the patients changed over from a current wakefulness promoting medication, most likely modafinil or methylphenidate. And you can see they were changed over to solriamfetol, there's a signal. There's again about that 4-point change and the changeover, some of them actually was an add-on. And we don't have data obviously from the randomized controlled trial of adding on. But this is what they did in the clinic, 19 patients, they added on. Again, a 3.7 improvement in the Epworth score. So the patients told them I'm less sleepy. And then you had naive patients. They came in -- newly diagnosed, not only [indiscernible], but what you see is a 6.1 improvement. And when you put them all together, there is about a 4.3 improvement, again clinically relevant. We think 2.5, maybe 3 is what is clinically meaningful to the patient in terms of the effect on -- of sleepiness in terms of quality of life. So this is a nice real-world study against what do we do with this drug in our clinics, obviously, coming from Germany. So with that, I will close and look forward to any questions. But I think the important message here is narcolepsy patients have pretty profound daytime sleepiness and the sleepiness impacts quality of life and their ability to remain vigilant, and now we have multiple options for therapy in terms of wakefulness promoting medications. You saw the American Academy of Sleep Medicine in terms of their recommendations, and you had a chance to look at both efficacy and safety data. Thank you for your attention.

Thank you, Dr. Bogan. I will now turn it over to Dr. Andrew Krystal to discuss excessive daytime sleepiness in obstructive sleep apnea. Dr. Krystal is the Ray and Dagmar Dolby Distinguished Professor in the Department of Psychiatry and Neurology and Vice-Chair for Research in the Department of Psychiatry at UCSF Weill Institute for Neurosciences. Dr. Krystal, thank you for joining us today, and please go ahead.

I'm Andrew Krystal. I'm Professor of Psychiatry the University of California, San Francisco. I'm going to give a brief overview of excessive daytime sleepiness in obstructive sleep apnea. Obstructive sleep apnea is a common disorder that affects people, occurs in the form of repeated collapses of the upper airway during sleep that are often associated with drops in oxygen level. But they also -- it also is associated with disturbed sleep in terms of fragmentation and people not feeling restored. The typical symptoms include being sleepy during the day, snoring noted, apnea events and people having the experience of waking with difficulty breathing and gasping for air. This is a condition associated with a very high rate of morbidity and mortality. Among the adverse health consequences are hypertension, diabetes, associated coronary artery disease, depression and daytime accidents. The standard therapy for this condition is to use a device that blows air through the upper airway during sleep to keep it open basically as a splint to prevent the collapses. This is called CPAP, or continuous positive airway pressure. And it comes in some forms that are often commonly used in the BiPap, which is where the pressure is varied during inhalation and exhalation and then APAP, which is auto-titrating CPAP. Unfortunately, for many people, the sleepiness that's associated with obstructive sleep apnea continues to be present despite the use of this standard therapy for the condition. And one of the challenges is that many people have difficulty tolerating the CPAP. They have really challenges in using it every night or throughout the entire night. And many people stop using it over time or they use it for only a part of the night or some nights. And there are several wake-promoting agents that are FDA approved for treating the excessive daytime sleepiness that occurs in adequately treated patients for obstructive sleep apnea, this includes solriamfetol, modafinil and armodafinil. There are also some medications like Dexedrine. These are types of stimulants that are used off label for treatment of the residual sleepiness and obstructive sleep apnea. The excessive daytime sleepiness occurring in people with obstructive sleep apnea is extremely common. It's seen in roughly 87% of people, as measured by the standard test we use -- or one of the standard tests we use for assessing daytime sleepiness objectively in the laboratory, and multiple sleep latency tests and multiple lab test. Among those people, many of them suffer from residual excessive daytime sleepiness despite using the standard of care CPAP, and across studies that's reported to be 34% to 65% of the general population and 9% to 22%. It's really unclear why this excessive daytime sleepiness persists despite use of continuous positive along pressure in those who use it 100% of nights all night long. One reason that we do see this is that many people don't use it 100% of nights, all night long, because it's difficult to do and some people just take it off without even being aware of it in the middle of the night. So, that's one of the contributors. This obstructive seat associated daytime sleepiness has significant impacts on people's lives and on the public. There's a 2 to 3x increased risk for motor vehicle accidents, 80% inclusive risk for work-related accidents and decreased work productivity, high prevalence of depression and anxiety. And in general, people suffer from impairments in many key functions; attention, memory and executive functions that are critical to many of the functions people engage in during the day. In terms of numbers, it's estimated that about 12 million people have excessive daytime sleepiness and obstructive sleep apnea, about 5 million use CPAP of these, those who continue to have significant sleepiness are estimated to be about 2.7 million despite using CPAP, and there's estimated nearly 1 million people who use wake-promoting agents or stimulants in this context. Important point from my point of view as a psychiatrist and sleep medicine experts that these people who have big residual daytime sleepiness and OSA are prone to having significant depression. Just in general, people who have excessive daytime sleepiness that have obstructive sleep apnea have a rate of depression of 62%. That's 6x the general population prevalence of your fresh. And if you look at meta-analysis that have tried to evaluate how common the depression patients have, how commonly the depression patients have obstructive sleep apnea, it's like 36% ballpark. And that's around double to triple the general population prevalence of apnea -- excuse me, of apnea in those without depression. One of the reasons that is believed that depression is so common in people who have obstructive sleep apnea is that there are overlap in their symptoms. There are common factors in the 2 disorders. For example, the fatigue, loss of energy, poor concentration, being slowed down, having weight gain are all symptoms of both of these conditions. And so it's not surprising that the elevated rates of cooccurrence of these 2 things. I think while the American Psychiatric Association has recommended assessing people with all psychiatric disorders for obstructive sleep apnea because it's elevated in a number, not just depression. They've also specifically made recommendations in evaluating and treating people with depression. As I say, by and large, these guidelines are not followed super closely because of the under diagnosis of lack of training of many psychiatrists, but this is increasing. There's a lot of these efforts for educating psychiatrists and new data coming out showing that the presence of obstructive sleep apnea is limiting to antidepressant response are increasingly having impacts on psychiatric care. Now, I'll quickly review some data from the solriamfetol clinical trials that are relevant to this key question that we're focusing on of the relationship of obstructive sleep apnea and depression. First, there's strong evidence that solriamfetol improves excessive daytime sleepiness in people who have obstructive sleep apnea, as it does in people with narcolepsy, the clinical trial data show that very clearly. And there's an increase in the therapeutic effect with the increasing dose and statistically significant effects are found on the 2 major outcomes that were used in the clinical trials compared with placebo. And this is the Epworth Sleepiness Scale and the Maintenance of Wakefulness Test where people are given an opportunity to sleep during the day multiple times, and they're asked to try to stay awake in a dark room in bed while it's quiet. But the more specific result that is relevant to what we're talking about is that we did an analysis comparing whether there was an effect of solriamfetol compared with placebo on these parameters in people who had a history of depression versus those who didn't, given that there are so many people who have depression and who have obstructive sleep apnea associated with sleepiness. It's likely that the navigation will be used in those with depression. And there's a number of reasons that it could not be the case. For example, brain circuitry is different in those with depression than those who are not, the people are taking medications that might interact with the effects of solriamfetol might interfere with them. So we're very interested in sort of assessing whether or not the therapeutic effect was present in people with depression as well as those without. So the data sets that were available had allowed us to do an analysis of those who had a history of depression, some of whom have current depression, but also some of who have had only just had it in the past as a proxy for trying to look at this question. And we found that the therapeutic effects of the drug were present whether or not people had a history of depression, both on the apnea sleepiness scale and the Maintenance of Wakefulness test. And similarly, people who are currently using antidepressants, while they were in the trials also had just as strong a therapeutic effect on the Epworth Sleepiness Scale and on the Maintenance of Wakefulness test, compared to those who didn't. And again, that's a clinical issue for knowing whether there's likely to be therapeutic effects in people who have depression to essentially all of which or nearly all of which will be taking the antidepressants. It's clear that this didn't repeat the therapeutic effect. And then we also looked does this increase the risks of side effects and looking at the data for solriamfetol in those who have a history of depression and no history of depression suggests that this is not the case. We looked not only at those who have obstructive sleep apnea who were treated with solriamfetol, but also people with narcolepsy, just because the numbers of people in the history of depression group and it gets relatively small when you have to pie up into more pieces by looking at that. And it's consistent across the OSA and narcolepsy data that there isn't any clear or consistent increase in adverse effects compared with placebo when we look across those conditions. So overall, I just wanted to summarize that structural set apnea is a very common condition, and it's treated with therapy as a standard first-line intervention called continuous positive area pressure. Despite using that, many people with obstructive sleep apnea continue to experience excessive daytime sleepiness. And solriamfetol is agent that shows clear therapeutic effects for the excessive daytime sleepiness. But depression is very common in people who have obstructive sleep apnea and particularly those who have residual excessive daytime sleepiness. And it turns out that solriamfetol has potent therapeutic effects in that sleepiness, whether or not you have a history of depression and whether or not you're taking antidepressive medications and without increasing side effects, suggesting that would be a very effective treatment for the many people with excessive daytime sleepiness, especially with apnea who have major depression.

Thank you, Dr. Krystal. I will now turn it over to Dr. Stephen Faraone, who will provide an overview of attention deficit hyperactivity disorder. Dr. Faraone is the distinguished professor in the Departments of Psychiatry and Neuroscience & Physiology at SUNY Upstate Medical University and Vice-Chair for Research in the Department of Psychiatry. Dr. Faraone, thank you for joining us today, and please go ahead.

Hi. I'm Stephen Faraone. Today, I'm talking to you about an overview of attention deficit hyperactivity disorder, or ADHD. I've been studying ADHD for over 30 years now, and I first want to tell you that the evidence base for ADHD is huge. In 2021, with a group of international colleagues, I published international consensus statement on ADHD. You can take a look at that adhdevidence.org to find more backup for the information I present to you today and lots more information about disorder. Let's start with the question, well, what is ADHD? To be diagnosed with ADHD, according to the American Psychiatric Association, the patient must exhibit developmental inappropriate levels of hyperactive impulsive and inattentive symptoms for at least 6 months. The symptoms, there must be 6 or more symptoms for children, 5 or more symptoms for adults. Importantly, the symptoms must occur in different settings. ADHD is a pervasive condition. It doesn't only occur in the home or in school or in the workplace. Some symptoms and impairments must be present prior to age 12 -- and these symptoms must cause impairments in living. Importantly, it must be the case that no other condition or disorder better explains the symptoms than the diagnosis of ADHD. The symptoms of ADHD change across the lifespan. In this slide, you can see how symptoms from child through the adolescence and adulthood tend to change from young kids being very hyperactive and impulsive. I mean they're running around climbing on furniture, blurting out answers in school. And through adolescents and adults, the symptoms of hyperactivity and impulsivity attenuate, we don't find adults, for example, climbing on furniture, and they replaced by inner sense of restlessness, misjudging time, making impulsive decisions and importantly emotional dysregulation. Because the symptoms change over time, sometimes ADHD in adults is not recognized and that's a problem that many of us are trying to change, to improve the care of adults with ADHD. ADHD is sometimes considered to be a mild condition, and that is wrong. There is a serious real-world impact of ADHD in patients that have now been shown through multiple, multiple studies from around the world. All of these outcomes here, accidental injuries, bone fractures, traumatic brain injury, criminality, drug and alcohol abuse, cigarette smoking, educational underachievement, sexually transmitted infections, depression, suicide, teenage pregnancy, all these outcomes we see in ADHD children as they move into adolescents and into adulthood, especially if they are not treated for the disorder. One of the more important findings that occurred in the 1990s and beyond was that ADHD tended not to occur by itself, it tended to be associated with other conditions. It is an early signal that the child is at risk for other problems. All the ones listed here on this slide have now been replicated by numerous laboratories and clinics around the world, mood disorders, anxiety disorders, autism spectrum disorders, antisocial disorders, eating disorders and most worrisome to parents substance use disorders. But importantly, the presence does not rule out the diagnosis of ADHD. Another important feature of ADHD is that it is a common disorder. We know now from many, many studies that the prevalence of ADHD is about 6% in kids, they are 3% in adults. If you plug those figures to the population in the United States, we're talking about 4.3 million youth with the disorder and 7.2 million adults. Contrary to some media reports, the prevalence of ADHD has not changed over the past 3 decades. Moreover, there are no significant differences in prevalence between North America and Europe, Asia, Africa, South America and Oceania. We now have a very huge evidence base for epidemiologic study of the disorder. We've learned a lot about the causes and pathophysiology of ADHD. In a cost perspective, we now know that ADHD is caused by the confluence of many, many genetic risks in many, many environmental risk factors. And most of these environmental risk factors occur very early in life and affect the fetus, such as pregnancy and delivery complications. This confluence of teams and environment impairs brain systems that involve in the executive control of attention and behavior. We refer to these as the fronto-striatal and fronto-parietal networks. These are involved in what we call goal-directed executive processes that help the individual regulate their attention and regulate their behavior and regulate their motions. In particular, under activation of these systems, leads to impaired control of limbic system, which controls the emotional symptoms that we see in ADHD. There are parts of the frontal cortex of the brain, we call orbital frontal cortex. They're connected to an area called ventral stratum, which is involved in the control of reward. Because of this, people with ADHD, they have poor control over rewards. What that means is they don't respond to reward and punishment the same as the average person. This is one reason we believe they are at higher risk for substance use disorders because that area of the brain also regulates the use of substances. And under activation of that part of the brain leads to the poor control of attention to stimulate that should be important in the environment. And that means that the child sitting in the classroom, instead of paying attention to the relevant stimulus, which is the teacher, they're paying attention to something they see outside the window. It also has been documented now over the years that the medications that are therapeutic for ADHD work in the brain networks that are implicated in ADHD. These are primarily noradrenergic networks and dopaminergic networks. Let's talk a bit about current treatments for ADHD. You can see here on the right, this is a treatment algorithm for ADHD. Essentially, clinician starts out thinking or asking the question, does the patient have a comorbid condition? Is it more severe than the ADHD? If it is, they treat the comorbid condition. If the patient is suicidal, you treat their depression not their ADHD. Otherwise, you treat their ADHD. And you go down the right hand of the algorithm, and then you ask other contraindications for the use of stimulants or personal preference against stimulants. If there are not, you go down the stimulant side of this tree to the right. If there are, you go down the non-stimulant right side of the tree. And this is -- the algorithm is based on treatment guidelines from the American Academy of Pediatricians and other guideline organizations. And then as you can see, the stimulants or amphetamine and methylphenidate, there are 3 types: short-acting, immediate acting and long-acting. The non-stimulants we have now, alpha-adrenergic medications, clonidine and guanfacine, atomoxetine and actually, a new one after this algorithm was written in 2015, which is extended-release Viloxazine just came out last year. Essentially, any medications is used, you monitor progress. You either get full response, partial response or no response at all. And depending upon the outcome, the prescriber may switch to another medication, may add a non-pharmacologic treatment. Importantly, there is a 50% discontinuation rate after 6 months for most medications of ADHD, which leads to low response rates. Here, you see the medications approved by the FDA for ADHD. Importantly, there are 2 types of stimulants we mentioned, the immediate release formulations and the extended release formulations can be found for both methylphenidate and amphetamine. And this gives prescribers a range of duration between 4 hours and 16 hours. Liquid and chewable forms are available. The stimulants are all reuptake inhibitors of the dopamine transporter -- they are dopamine transporter reuptake inhibitors, and they also typically release monoamines as well. In contrast to the stimulants, the non-stimulants work primarily in noradrenergic systems, although there's a new nonstimulant extended release Viloxazine, which also is a dopamine transporter. Reuptake inhibitor possibly works in the serotonergic system as well. And we mentioned 2 alpha-2 agonists, guanfacine and clonidine, which work in that noradrenergic system I showed you on the slide earlier. We know from many, many randomized controlled trials that the stimulant medications are somewhat more efficacious than the non-stimulant medications. You can see that here in this figure from a book chapter I wrote 2014, essentially, we're measuring efficacy by the effect size or the standardized mean difference where larger is better. There's only 1 at this point, 1 non-pharmacologic treatment that's shown any evidence for being useful in ADHD, and that happens to be the use of omega-3 fatty acids. But as you can see, the effect size is about 0.2 or less, which means it's not very effective at all. All these other nonpharmacologic treatments that have been tried for ADHD, unfortunately don't work on their own. So this is why medications are considered to be the first-line treatment for ADHD by most professional organizations. So what are the unmet needs in the psychopharmacology of ADHD? Well, let's start with the stimulants. The stimulants are very effective. But unfortunately, they are Schedule II controlled substances. That leads to headaches with prescribing having patients have to come in more frequently than they would otherwise to renew prescriptions, so it's really headaches all around. Some practitioners don't want to get involved with a controlled substance because they're worried about getting in trouble with some point with the Drug Enforcement Agency. Because the stimulants, although when used therapeutically, they are not addictive and in fact, will prevent substance disorders, they are at risk for being misused, abused and diverted. This is a fairly large problem when the adolescents and young adults, especially in the college population. There are also some irritability and rebound phenomena that makes stimulants difficult to use and adhere to, and what my pediatrician once called loss of sparkle, which is the, many patients tend to lose a sense of spontaneity and joie de vivre that they had in their life. And that's a main cause for not adherence or moving to another medication. On the other hand, the non-stimulants don't have these problems, but they tend to have lower effect sizes and the difference is even bigger for adults than it is for children. The clonidine and guanfacine has sedation, especially at higher doses and lack of data or much data in adults with ADHD. And in Tamoxifen, which has been here for quite a long time, now has the black box for suicidality by the FDA, and it does cause nausea in many patients when titrated -- especially when titrated ineffectively, and that leads to a lot of noncompliance and failure to tolerate the medication. Medication for ADHD have this non-adherence problem I mentioned. And none of them are very good at treating emotional dysregulation or executive dysfunction. For example, the effective stimulants on the scale of 0 to 1 is about 9, the effect that emotional dysregulation and executive dysfunction is about a 3. For nonstimulants, it's about 1.5. So more work is needed to come up with medication that do a better job treating those areas. Let me summarize what I've said to you today. Number one, ADHD is a common impairing disorder in both children and adults. ADHD is caused by the confluence of many genetic and environmental risk factors. There's no one single cause of ADHD. Pathophysiologic studies of ADHD implicate dopaminergic and noradrenergic circuits in the brain. Many treatments are available, but many unmet needs exist. If you would like to see more curated information about ADHD, go to www.adhdevidence.org, which is my website. Thank you very much.

Thank you, Dr. Faraone. We will now turn it over to Amanda Jones, Axsome's Senior Vice President of Clinical Development and Medical Affairs, who will discuss our ongoing and planned clinical development programs for solriamfetol. Amanda? .

Good morning. I'm Amanda Jones, Senior Vice President of Clinical Development, and I'm excited to discuss the ongoing and planned clinical development programs for solriamfetol. Today, I will review the planned clinical development for solriamfetol in ADHD and discuss the ongoing SHARP study, which is evaluating the effects of solriamfetol on cognitive impairment. Lastly, I will quickly highlight some of the ongoing investigator initiated trials with solriamfetol. One of the main reasons we were excited about the opportunity to acquire solriamfetol was for the potential to develop it for additional CNS indications specifically ADHD. As reviewed by Dr. Faraone, dopaminergic and noradrenergic pathways are implicated in the pathophysiology of ADHD. The pharmacology of solriamfetol, a selective dopamine and norepinephrine reuptake inhibitor, therefore, align nicely with the brain networks implicated in ADHD. Solriamfetol is a nonstimulant with a low abuse potential. It's dosed once daily and has a well-established safety and tolerability profile. These are key features which make solriamfetol have an attractive product profile for ADHD. We are making preparations to submit an IND, enabling us to initiate a Phase III study in adult patients with ADHD later this year. Our current time lines project potential top line data in the second half of 2023. we will provide a more definitive time line once we announced the study initiation. Following completion of the adult ADHD study, we would intend to initiate pediatric ADHD study to support an FDA filing. The planned clinical trial for adult patients with ADHD will be a randomized double-blind, placebo-controlled 4-week study evaluating the effects of solriamfetol on ADHD. The primary endpoint will be the change in the AISRS or adult ADHD Investigator Symptom report scale at week 4. Eligible patients will be adults aged 18 to 55 with a primary diagnosis of ADHD using the DSM-5 criteria, and confirmed via the clinician-administered adult ADHD clinical diagnostic scale. We look forward to sharing additional details of this study when we announced the trial initiation. Transitioning to evaluation of Sunosi's potential effect on cognition in patients with EDS and OSA. OSA and EDS and OSA are associated with impairments in attention, memory, and executive functions. About 40% of OSA patients complain of cognitive difficulties. These cognitive difficulties are one of the top symptoms that have an impact on patients' daily activities. The decrease in cognitive function in patients with OSA impacts work performance and social functioning and increases the risk for occupational and motor vehicle accidents. In the SHARP study, we are evaluating the impact of solriamfetol on cognitive outcome measures in patients with EDS associated with OSA and impaired cognitive function. The SHARP study is a randomized, double-blind, placebo-controlled multicenter 2-week crossover study evaluating the effects of solriamfetol on cognition in patients with EDS and OSA. Eligible patients are randomized in a 1:1 fashion to 1 of 2 sequences, either solriamfetol followed by placebo or placebo followed by solriamfetol. During each period, the dose is titrated over 3 days from 75 milligrams to 150 milligrams per day. The 2 periods are separated by a 1-week washout. The primary endpoint is the change from baseline to week 2 in the DSST or digit symbol substitution type. Key eligibility criteria include adults aged 18 to 55 years who have OSA and EDS with impaired cognitive function. The study is currently ongoing with top line data anticipated in the third quarter of 2022. The pharmacology of solriamfetol is potentially relevant to multiple CNS conditions. Currently, 12 investigator-sponsored studies are ongoing. Seven of these are interventional clinical trials evaluating solriamfetol in a variety of indications, including binge eating disorder, ADHD, shift work disorder, chronic fatigue syndrome, post-stroke wakefulness, insomnia and fatigue associated with MS. We look forward to the investigators completion of these trials and the subsequent data presentations. In summary, the pharmacology of solriamfetol is relevant to multiple new potential indications. Upcoming clinical development milestones for solriamfetol include top line data from the SHARP study expected in the third quarter and initiation of a Phase 3 adult ADHD study in the fourth quarter of this year.

Thank you, Amanda. So with that, we will now start the Q&A session, whereby we will have our physician and scientific experts, who will be available for questions with regards to their presentations. And I'll turn it over to Mark, who will lead the session.

Great. Given the webcast format, if you do have questions, feel free to submit those online. And then what we will do is read those back. We'll read who the question is from and then turn it over to our guests on the call. And then subsequent to the next phase of the presentation, we'll open the line for further Q&A. Okay. So the first question we have is from Joe Thome at Cowen. And it is, how are you incorporating Sunosi and narcolepsy the most, first-line [ versus additive ] versus switch? And is this the first branded agent that you reach for following any associated step through that is applicable?

Yes. This is Rick Bogan here. I would say that Sunosi to me, has an advantage. One, the effect size was impressive, though again we don't have comparative studies, I have to caution that. But it is renally excreted, which means that we don't deal with the hepatic enzyme difficulty. Modafinil, armodafinil activates the cytochrome system in the liver, which affects birth control. So females who are on steroidal birth control, we don't use modafinil, armodafinil or pitolisant in narcolepsy patients posed of that decreases the effectiveness. The advantage of solriamfetol (Sunosi) is that it's renally excreted, so we don't really worry about that. So it is a first-line drug. It's right up there with Modafinil, armodafinil. So in select patients, those are the ones that we consider as first-line therapy.

Great. Next question coming from Charles Duncan at Cantor. And what line of therapy do you prescribe Sunosi for N1 versus N2 and why? So narcolepsy 1 and 2 for the folks on the phone.

It's indicated for both patients because both of them have excessive sleepiness and solriamfetol (Sunosi) is effective in both Type 1 and Type 2 narcolepsy. So I'm pretty much equivalent. Type 1 narcolepsy basis, we think, tend to be a little bit sleepier. And as you saw from the German study, oftentimes, we need polypharmacy in those individuals. And it's not unusual to have patients on oxybate and solriamfetol. They're not mutually exclusive. So yes, the answer to the question is we use it for both Type 1 and Type 2.

And a follow-up question from Charles at Cantor is specifically for Dr. Krystal. Does the use of antidepressants reduce OSA EDS symptom burden? And more importantly, would you have any concerns with prescribing Sunosi to a patient that is on stable antidepressant medications?

Thanks for the question. I don't have any concerns about using Sunosi on people who are on stable antidepressant medication. It is -- I think the data we have show that it is clearly safe and can work in people on taking antidepressant medications. Of course, the size of the groups on any specific antidepressant aren't big enough to be able to determine effect sizes or side effects for each drug. But in general, that's true in my clinical experience, I use it in people who are taking antidepressants and have not had any problems. And it's actually kind of a nice strategy in some ways because the pharmacology of it is kind of a reasonable augmentation strategy for antidepressants for people who don't respond well to them. The norepinephrine and dopamine reuptake inhibition is one of the established sort of path we tend to tap into for treatment of depression in general. So it's a very good strategy, and I use it clinically relatively frequently.

And a question from Sarah Schram at William Blair. Do patients using SSRIs for depression have a differential response to Sunosi for OSA in your experience?

They don't. They seem to do about as well. And again, there is overlap in the mechanism of some of the establishing in presence like bupropion as norepinephrine and dopamine reuptake inhibition properties. And it is not as potent a wake-promoting agent as Sunosi. But there again, it's a reasonably good strategy, and I use it frequently without any difficulty and the data support there.

Great. And follow-up from Sarah. And so any concerns over increased heart rate or blood pressure signal with Sunosi? Are there a significant amount of narcolepsy or OSA patients that have cardiovascular comorbidities that an alternative agent would be better suited for?

Yes, Rick Bogan here. Yes, we're -- anything that wakes you up can have the potential increase in sympathetic tone and heart rate and blood pressure, so we monitor our patients. And as a rule, the majority of patients do fine. We don't see a heart rate, blood pressure signal. It is dose response related and individual related and comorbidity-related. Narcolepsy patients observationally do have a higher prevalence of cardiovascular disease and hypertension. Their own stimulants, and those also increase high rate and blood pressure. So we monitor our patients. But as a rule, that's -- it's not a big impediment, at least in our narcolepsy patients. I'll leave it to Andy to talk about the sleep apnea.

Yes. I mean cardiovascular disease is very common in people with obstructive sleep apnea. And I think that the data from the clinical trials with obstructive sleep apnea speaks for itself, the rate of problems with hypertension and elevated heart rate is not notable. It's not significant in that group. Now, people tolerate it quite well. But as Dr. Bogan mentioned, it's something you always want to monitor in anybody you're treating with an agent that has the potential to enhance heart rate or blood pressure, which this drug does by mechanism. But it just doesn't arise hardly at all in clinical use or again it wasn't evident in the trials.

Question from Bert Hazlett at BTIG. Are there any differences in prescribing practices between adolescent or adult patients with ADHD? And so, I'm not sure if there's any commentary there for Dr. Faraone.

No, there really aren't any differences. The one -- well, the one main difference might be the adolescents are, of course, at higher risk for substance use disorders. In that case, stimulant medications are frequently avoided. But otherwise, it would mainly be a dosing issue. Adolescent sometimes need higher doses because of body weight.

Thank you. I'm going over to Joon Lee at Truist. What differentiates Sunosi from modafinil or armodafinil, is it the efficacy or safety? And how would you go about choosing among myriad available drugs for EDS?

Yes, I'll start. Modafinil, armodafinil mechanism of action, we believe, is dopamine reuptake. They are effective and clinical studies have shown effectiveness for excessive sleepiness, the Epworth score compared to baseline with about a 3. And again, we can't compare cohorts, different studies. So remember the effect size of solriamfetol in narcolepsy patients was a large effect size. And so we consider modafinil, armodafinil and Sunosi sort of equivalent in terms of top line, first-line therapy based on efficacy and safety. The big differential is modafinil, armodafinil as I said earlier, is metabolized through the liver and it activates some of the CYP enzymes which affect birth control, but Sunosi does not, being renally excreted. So it's a little bit easier to use in terms of drug-drug interaction. I hope I answered the question. But yes, they're effective drugs and patients have individual response. We may have a patient respond to one, not the other one for some reason. But remembering Sunosi is dopamine and norepinephrine reuptake inhibition.

Follow-up from Joon. How prevalent is depression among patients with EDS? Would you treat MDD comorbidities with EDS with both antidepressant and Sunosi or just treat EDS and hope for resolution of MDD?

I can -- Andrew Krystal, I can address that. I think the standard of care would be to use an antidepressant and a wake-promoting drug like Sunosi. And -- but I would be cognizant of mechanism. I would generally not add it to bupropion as a -- first, I would look -- I would treat a person with bupropion, and then I would do Sunosi afterwards with that, if it was inadequate wake-promoting effective would be bupropion or other norepinephrine uptake inhibiting antidepressants. And then cautiously add on Sunosi afterwards. The rate of sleepiness in depression is actually reasonably high. It's particularly common in people with bipolar depression and seasonal affective disorders that have seasonal changes in their mood, which is probably about 10% to 20% of people with depression. So it's extremely common. And there's debate in the Sleep Medicine role about how should we think about this. Is this a form of what we should call idiopathic hypersomnia. I think the reality is, functionally, it's treated by generally adding antidepressive therapy and adding a similar medication, but it doesn't have sort of a separate designation as a disorder of excessive sleepiness unless it occurs in the setting of something like narcolepsy or acne or some problem with that. I hope that answers the question.

Two questions from Jason Gerberry at Bank of America. The first one for Dr. Faraone. Based on what you know about Sunosi, can you offer any hypothesis as to why you'd expect the drug to clinically differentiate versus existing stimulant treatment options? And whether those theoretical improvements address an unmet need?

Okay. Tough question, but I'll do my best. So in the current landscape, you've got stimulants on the one hand and the non-stimulants on the other hand. Sunosi, I'm hoping will fall kind of in between. Because we know that the drugs that are most effective have strong dopaminergic activity, which is why the stimulants are Schedule 2 because there they can be addictive. Sunosi is, I think believe Schedule IV is a non-stimulant -- non-stimulants or not scheduled drugs. I'm hoping that Sunosi has a strong dopaminergic effect enough to do well in ADHD symptoms also fairly quickly. Because remember, I shouldn't say remember, you don't know this, the nonstimulants typically take around 6 to 8 weeks to work. Whereas stimulants you can see an effect in 2 weeks, we think at 4 weeks to have a full effect. So Sunosi might also work more quickly. So I do -- that's my hope for it, but we'll have to see where the trials show.

And a follow-up here is a general question. Can you speak to the impact COVID-19 might have had on Sunosi's adoption?

I'm sorry, that -- can you repeat that question?

Sure. And I think this is open to anyone that would like to address it. So a complementary question. Can you speak to the impact COVID-19 might have had on Sunosi adoption?

Yes, I don't think it's had any effect on the on the adoption of Sunosi. And obviously, there's interest in long COVID and chronic fatigue, but I don't really know of -- where we stand on that at the moment. We do think of narcolepsy patients having an autoimmune response to infection influenza and common cold, mono and the body's immune system mobilizes and endangers the orexin cells. And of course, in the pandemic Von Economo Encephalitis told us a lot about sleepiness because those people in the early 1900s, some of them developing insomnia, some of them developed hypersomnia narcolepsy from encephalitis from the pandemic. So I think the story is not fully in yet in terms of what COVID might do in terms of brain function. There are others probably have better expertise than I. But from a Sunosi perspective, other than access to care and volume, I don't see any story there.

I will say -- this is Andrew Krystal. I'll say that there's a fair number of people who experience -- who have suffered from COVID who are described as long haulers. We have chronic symptoms and a number of those people suffer from significant fatigue, and there can be a sleepiness component to it. And there's really no great consensus on how to best address it, but wake-promoting medications are being considered and sometimes being used functionally on a practical basis to try to help these people. So I think some wake-promoting agent uses increased in that setting, but by and large, my sense is it hasn't affected the process.

That reminds me, Dr. Krystal, the modafinil and armodafinil actually was studied for fatigue back in the day. I mean shortly after they were released in fatigue of cancer therapy. And I think you saw the investigator-initiated trials is MS fatigue is modafinil, armodafinil has been recommended for MS fatigue as well and obviously, shift work and -- so there are a lot of potential options here. Again, the story is not in, and it will be interesting to see how those investigator-initiated trials will help in terms of approaching fatigue itself as well as sleepiness.

Agreed.

A second question from Joe at Cowen. For OSA, do you need to have demonstrated failure of CPAP in order to progress to pharmaceutical intervention?

Yes. It's a great question. So the way that the studies are done, so as to prevent failure to adequately treat obstructive sleep apnea is that we identify people who are using CPAP at the rate required by Medicare to meet adherence criteria. So it's at least 4 hours a night for 70% of nights or more. And this is -- those people then are the sort of standard cohort included in the study if they have a big time sleepiness. Some of those people are using CPAP 100% of the time, as I mentioned, and yet they have sleepiness and there are complex reasons why that may be, which we don't fully understand. And then there are some people for whom that use is maybe not fully addressing the problem because they're sleeping 7 hours, and they're using it for, let's say, 4.5, and so some of their night is being spent unaddressed with unaddressed sleep apnea. But that's a standard of care and the model that's been used. I'd say in clinical practice, it's a much more practical set of things that go into this decision. If a person has significantly sleepy, and you've made your best effort to have them wear CPAP, they don't quite meet that criteria, and they're able to keep their device because often patients will take their CPAP devices if they aren't remaining there. But by and large, any residual sleepiness in a person who is using CPAP to their best ability and with the best help you can give them is considered for wake-promoting therapy.

Dr. Krystal, I might add, obviously, solriamfetol (Sunosi) does not treat obstructive sleep apnea, it helps with the sleepiness. But in the trial, the FDA and the sponsor actually included patients who weren't wearing CPAP. And the main reason for doing that was to look at efficacy and safety in that subgroup to see if there was a signal. And Interestingly, there was a signal in that the sleepiness did improve, and the safety profile was the same in people who weren't using their CPAP as much as they should. Now you don't translate that into, okay, it's okay to just to use solriamfetol in patients with obstructive sleep apnea, and we know they're at medical risk, and we should. But as Dr. Krystal said, in the clinical practice, we look at patients, both from a morbidity mortality perspective, but also there are symptoms and what can we do to alleviate those particular problems. But I thought that safety and efficacy data was kind of interesting include that cohort.

Yes. It's very interesting. Thank you for adding in it.

And there are a significant number of questions this morning. We will try and get through a few more for our guests this morning, and then we'll continue with the remainder of the presentation, which is a commercial and financial update. So a few more questions here for the physician and scientific experts from -- first one from Matt Kaplan at Ladenburg Thalmann for Dr. Faraone. How would you potentially incorporate Sunosi in the treatment paradigm for ADHD?

Well, it will be ideal if Sunosi comes close to having an effect size as good as the stimulant medications. It could be a first-line treatment for ADHD. And currently, the first-line treatments are the stimulant medications, non-stimulants are second line. As I said before, Sunosi may kind of fall in between. The closer it creeps up to having similar effect size, even if a little bit less with similar tolerability, then it would do very well. I mean modafinil is never used for ADHD and never approved by the FDA for ADHD. But in studies in children, it's nearly as effective as methylphenidate and has essentially the same tolerability as methylphenidate. So I do think it's hopeful that Sunosi will kind of reach that point of good effect size, good tolerability and could be a first-line agent.

And probably going to David Hoang at SMBC. What proportion of ADHD patients are generally treated with stimulants versus nonstimulants? And do most ADHD patients on non-stimulants usually end up switching to stimulants over time?

So typical response rate to stimulants is -- first stimulus is around 80% or so. Same thing for the second stimulus. So most of the people with ADHD are going to be on stimulant medication. I don't have the actual figures for you, but it's at least going to be 70/30, if not 80/20, stimulant and non-stimulant. Some patients on nonstimulants will -- if they start on nonstimulants, current nonstimulants, many of them will switch to a stimulant medication because the nonstimulants are just less effective.

And from a final question here before we switch back to the -- or continue with the remainder of the presentation. Do the majority of treatment-emergent adverse events subside with repeat dosing over time? Or do they randomly occur with each dose. Do you become tolerized to therapy over time?

Yes. Narcolepsy, I think tend to occur early. So we'll know right away if the patient is tolerant of the medication. And again, sort of headache and nausea, and some anxiety are the most common. And -- but if we start at a lower dose and kind of work our way up, sometimes the side effects are mild. If they're mild, they do adapt. We rarely see -- once the patient is on stable dosing, it's unusual to see the emergence of new side effects, unless some comorbidity develops or you add concomitant meds that for some reason, might augment it, but it's uncommon. Once we get through that initial titration, the patients rarely develops kind of random side effects.

Well, that was the last question that we'll take in the interest of time for this session. We'd like to thank doctors Bogan, Krystal and Faraone for the discussion. We will now turn it over to Lori Englebert, Axsome's EVP of Commercial and Business Development, who will provide a Sunosi commercial update. Lori?

Thank you, Herriot. Good morning, everyone. The U.S. portion of the Sunosi acquisition from Jazz Pharmaceuticals was completed on May 9, and I am happy to report that the transition was seamless with no disruption to patients. We are extremely proud of the efforts made by the team in such a short amount of time to achieve this significant milestone for Axsome. At the time of completing the acquisition, Axsome conveyed approximately 75 employees from Jazz, of which the majority were sales reps. Immediately upon closing the acquisition, sales reps were trained and back in the field promoting within just 2 days. Axsome's digital-centric commercialization platform is key to our commercial strategy for Sunosi and will allow our sales reps to engage more efficiently and effectively with HCP targets. As a note, the EU portion of the close is scheduled to be later in the second half of the year. The opportunity for growth remains substantial for the current indication in both indicated patient populations. As a reminder, Sunosi is indicated for excessive daytime sleepiness, or EDS, in individuals with narcolepsy or with obstructive sleep apnea or OSA. Narcolepsy is an orphan condition that affects approximately 185,000 people in the U.S., all of whom experienced EDS. Narcolepsy is largely undiagnosed but once diagnosed, has extremely high treatment rates with more than 95% of diagnosed patients being drug treated. OSA, on the other hand, is a highly prevalent condition that affects an estimated 22 million U.S. adults. It is estimated that up to 87% of OSA patients experience EDS and even after continuous positive airway pressure or CPAP use, EDS can persist in up to 65% of patients. OSA is a severely undertreated condition with only 6% of diagnosed patients being drug treated. Sunosi is the first and only DNRI approved for EDS and narcolepsy and OSA. Sunosi offers a differentiated profile with strong efficacy, a well-established safety and tolerability profile, high patient-reported improvement and extremely high prescriber satisfaction. When polled, 99% of HCPs who have used Sunosi stated that they would recommend a product to a colleague. Currently, Sunosi has broad access with over 96% of commercial lives covered and a robust patient support program that includes prior authorization support and co-pay assistance. During the transition period, weekly prescriptions were maintained at preacquisition levels, and I am excited to announce that in the last reportable week, the product reached an all-time high for TRx. As a reminder, Sunosi launched in the U.S. in July of 2019. The initial growth trajectory was negatively impacted by pandemic restrictions, which were enforced within 6 months of launch. Despite this headwind, script growth continues to trend upwards. The growth potential for Sunosi is significant. Currently, Sunosi has only a 2% patient share for drug-treated OSA patients, and a 7% patient share for drug-treated narcolepsy patients. With the current very low penetration rates, strong product profile and broad payer coverage, there is substantial room to significantly grow Sunosi adoption and revenue. As discussed by Dr. Krystal, a majority of patients with EDS and OSA also experienced major depression. Consistent with this comorbidity, a substantial portion of treated OSA patients are seen by psychiatrists. Among specialists, psychiatrists overwhelmingly treat the most patients, prescribing pharmacotherapy to 66% of patients who are treated by specialists. Psychiatrists are also familiar with identifying and treating excessive daytime sleepiness as over 40% of OSA patients who are seen by psychiatrists are drug treated for EDS compared to just 3% for PCPs. Psychiatrists are a key prescribing group for Sunosi and the potential overlap with our AXS-05 targets will allow for a highly complementary sales targeting efforts once AXS-05 launches. We are excited about the significant potential growth opportunities with Sunosi and have taken a very strategic approach to commercialization. Since deal close, we have focused the field force on high-potential prescribers. High potential prescribers are HCPs with a large pool of diagnosed patients, have high script volume and are familiar with wake-promoting agents. To successfully drive market share with these high potential prescribers, we have aligned our territories, focused our sales force and will utilize DCC to optimize HCP engagement. The potential near-term launch of AXS-05 for major depressive disorder, if approved, will enable us to leverage synergies with our psychiatry sales efforts. We also see a real need and opportunity to educate HCPs and patients on identifying and treating EDS in OSA or narcolepsy. We remain excited about this high-potential product and look forward to sharing our progress with you in the future. I will now turn it over to Nick who will go over financial performance, growth opportunities and provide a financial update.

Thank you, Lori. I'll now give a brief overview of Sunosi historical and potential revenue along with some additional financial guidance as it relates specifically to Sunosi. Sales for Sunosi continued to grow year-over-year. 2021 net sales grew 105% versus 2020. For the most recent full quarter, Q1 net sales for Sunosi were approximately $16 million, an increase of 37% from the same quarter in 2021. Peak sales for Sunosi for EDS in narcolepsy and OSA have the potential to be in the $300 million to $500 million range. We hope to grow Sunosi in these indications by increasing our market share in OSA and narcolepsy. Additionally, we intend to focus on disease awareness with the HCPs and patients with the goal of increasing OSA treatment rates over time. As stated earlier, the ADHD market is very large and continues to grow. With approximately 100 million annual ADHD scripts dispensed in the U.S. alone, each 1% share would be equivalent to roughly $900 million in gross sales. We are very excited about the potential of Sunosi in the ADHD market and plan to start our first pivotal trial later this year. Sunosi has high clinical and commercial potential based on the following: One, it's well-established and clinically meaningful efficacy in EDS associated with narcolepsy and OSA; two, it's consistent positive feedback from HCPs, patients and providers; three, patents extending out to 2040 and four its potential in other neuroscience indications such as ADHD. Based on current and potential future indications, we believe that potential peak net sales for Sunosi could be $1 billion or greater. As a reminder, the WACC for a 30-day supply of Sunosi is $755 for either the 75- or 150-milligram tablets. With the U.S. portion of the transaction closing on May 9, Axsome began recording sales immediately thereafter. Based on our current assumptions, we expect gross to net for Sunosi to be approximately 50%. Upon closing of the U.S. portion of the transaction, titled to Sunosi-related inventory transferred to Axsome, we estimate that gross margin on Sunosi net sales is expected to be in the mid- to upper 70s percentile, along with the cost of the product, royalties to Jazz, SK Biopharma and Aerial Biopharma are also included in the cost of goods sold. We expect a small loss for the U.S. Sunosi operations for the remainder of 2022 as we transition and implement Sunosi into Axsome's infrastructure. This loss includes the further development of Sunosi for the ADHD indication along with supporting the post-marketing requirements while investing in all aspects of commercialization. The intellectual property for Sunosi acquired from Jazz was domiciled outside the U.S. and remains outside of the U.S., resulting in a favorable tax jurisdiction. Additionally, NOLs that Axsome has accumulated may be used to further enhance profitability. I will now turn the call back over to Mark to lead the Q&A discussion.

Great. So we'll pause a minute here just to collate some questions, and then we will take the same approach and read back the questions that have been received and respond. So there are a few that would go to Lori with respect to the commercial activities and approach, and I'll group them together, they are iterations of the same fundamental question. What can the company do to drive further identification of patients with ESS -- I'm sorry, EDS associated with OSA and greater rates of treatment in this population? A similar question is what is Axsome doing to adjust the dynamic with targeting and prescriptions?

Yes. Great. So I'll take that in 2 separate questions. So one for consumers and patients. As mentioned before, we do have in place the exact same patient support programs that Jazz had in place. Extremely robust patient support efforts to make sure that patients who get on products are able to stay on products without being financially implicated. We -- in terms of driving the market growth with patients, that is a marketing tactics that we are constantly exploring and pressure testing, we will deploy very targeted media to patients to help drive them. We are also exploring additional educational opportunities that we can deploy into the marketplace to help patients understand more about their disease. I think I'll answer the second one, Mark, which is around adjusting to the targeting. So targeting for us was heavily influenced by our DCC technology, right? So our DCC technology allowed us to apply very sophisticated analytics to help us understand the dynamics in the marketplace and who would be the most prone to prescribe Sunosi. We then took those analytics and aligned to our number of target list. So we are, again, focusing on the high potential prescribers, which is a culmination of many factors, but most prominently a very large patient pool, those who are very active and have high script volume, but also those who are active in NWPAs, those target list, we're actively approaching about 12,000 HCPs across all specialties.

And one follow-up, Lori, how -- can you comment further on how you are incorporating the DCC platform and the commercialization of Sunosi? And is this representative of how you will deploy the platform for AXS-05 and AXS-07?

It is. So remember, our DCC platform is really a connected platform of technology-enabled tools and systems. And what that means is that you have a fundamental base of tools that are available to the internal team who is analyzing data. We also have tools available to deploy to reps to make sure that their engagements with physicians are meaningful and highly effective. And that is providing them data that they may not have had otherwise.

Question about the SHARP study. What are the next steps if the SHARP study on cognition reports other results? And related to that, how we're having a label claim for cognitive improvement potentially impact prescribing of Sunosi?

Sure. So we're really excited to unblind the study in the coming months to see what impact Sunosi could have on cognition. The study was initially launched by Jazz in response to feedback from physicians as well as patients. Overwhelmingly, patients do report cognitive dysfunction which makes sense given that the patients do have fragmented sleep with excessive sleepiness. If you look at the literature, it's been very inconsistent with regards to the impact of wake-promoting agents on cognition. So most of these agents have not shown any type of consistent effect. So we are conducting a study. This is very much research. Now there is a potential for label enhancement should the SHARP study be positive. That is something that we would absolutely seek to do to enhance the label. But first things first, let's see what the data show.

Great. Historically, there was some DTC advertising in particular on TV and what we -- do we have plans to do DTC advertising?

Yes. So DTC TV advertising is not in consideration right now, but we are constantly exploring ways to effectively deploy media. And by right now, I mean, in the immediate near term. So we -- as we continue to get our targeting approach correct, we will then switch gears and start thinking about how to continue to drive patients into the funnel.

Would you expect any changes to the sales force footprint for Axsome assuming AXS-05 approval?

Yes. So no. So not immediately. So the 2 sales forces will stay completely separate and focused. I think, especially if AXS-05 is approved, focusing a sales force on that launch is very, very critical. But obviously, we cannot ignore the high overlap and potential for synergies. So we will continuously evaluate that. And when the time is right, we will start leveraging those call points across sales forces.

Great. Question from Joe at Cowen. How are you thinking about the ex U.S. opportunity for Sunosi, in particular, marketing therapy in the region yourself or partnering, et cetera?

Yes, great question. Given that we have not closed the ex U.S. portion of the deal, once that happens, we will be prepared to comment more on what our strategy is.

Great. And so we do have a few other questions pertaining to some of our other programs. So we'll take the first one from Sarah at William Blair. Is our focus on use of reboxetine, so AXS-12, for OSA, if there is such a high degree of comorbid depression?

We are developing AXS-12, which is reboxetine for the treatment of narcolepsy, specifically the treatment of cataplexy symptoms of narcolepsy as well as excessive daytime sleepiness. As a reminder, the results of our CONCERT trial did show a pretty profound and rapid effect on the reduction of cataplexy attacks. So the study is ongoing, and that is the focus on development of AXS-12.

Now with respect to AXS-05. Joe from Cowen. If you are able to provide context for how long the labeling discussions may take, that would be helpful?

Great question. We will speculate as to how long this process will take. But as you can imagine, it is a top priority for the company, and our team is working expeditiously to bring this to a close as quickly as possible.

Great. And 2 final questions here before we round up the hour. Any -- for AXS-05, any color on timing for post-approval requirements, so post-marketing commitments and requirements? And apologies, that's from Charles from Cantor.

So I'm not sure that I fully understand the question in terms of the timing. But with regards to post-marketing requirements and commitments, the way that it works is those come with specific time lines from the FDA. So they agreed to, but then there's also a time line that has to be met with regards to accomplishing those marketing requirements and commitments. And as I mentioned in the prepared remarks, we have started to honor some of those PMRs and PMCs already. So I hope that, that gives you a sense of when the timing started or was required for some of those commitments and requirements.

Great. And last question, Jason from Bank of America for AXS-05. Can you speak to whether the proposed product label is generally in line with the package insert that Axsome has sought to market?

So at this time, we are in labeling discussions with the FDA. So we will refrain from commenting on anything that could influence those negotiations. I hope that you can appreciate that. In the meantime, what we can do is refer you to the recent publications of our efficacy trials, which have been published in high-profile peer review journals.

Great. And that was the final question for the session.

Well, thank you all for joining us today on the Sunosi webcast. I would like to especially thank our physician experts, doctors Bogan, Krystal and Faraone for their participation. As you can tell, we are excited by the profit Sunosi and its potential to deliver significant patient benefit and shareholder value. We are also very excited by the rest of our industry-leading late-stage CNS pipeline. We are looking forward to FDA action on our NDA for AXS-05 in major depressive disorder and to FDA interactions for our AXS-07 product candidate for migraine with the goal of a resubmission of that NDA. Our other product candidates are also progressing, including the ongoing clinical development of AXS-05 in Alzheimer's disease agitation, the Phase 3 trial of AXS-12 in narcolepsy and activities leading to a planned NDA filing for AXS-14 in fibromyalgia. All in all, we have 4 pipeline candidates being developed in 6 indications, which are either under FDA review or in late-stage development. We are committed to bring these potential and life-changing medicines to people living with serious CNS conditions. We look forward to keeping you updated on our continued progress. Have a great day.

Thank you. That does conclude today's teleconference. We appreciate your participation. You may disconnect at this time.