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

All right, everybody. We're going to get going with our next company presenter. Thank you for joining us at the BofA Annual Healthcare Conference. My name is Jason Gerber. I'm one of the biotech analysts, and I'm pleased to be introducing Axsome Therapeutics and Herriot Tabuteau, CEO. So first, Herriot, thanks so much for joining us.

Thanks, Jason, for having us. I think this is the first time that we're presenting at the BofA conference. So...

Maybe virtually in the past. But yes, it's good to have you in person. So a lot going on at the company. You've got some pipeline readouts, some regulatory advancements in the launch that's going on. And maybe just coming out of the quarter, any high-level thoughts or takeaways just in terms of the progress the company is making. Or do you want to just jump right into the Auvelity launch?

Yes. Well, I think coming out of this first quarter, it's a very important time for us. It's the first full quarter of sales for Auvelity. And it's about the 1-year anniversary since we acquired Sunosi. So we have our 2 lead commercial products. And then at the same time, we're making progress on the rest of the pipeline. So which is very rich right now. So you have follow-on indications for both Auvelity as well as Sunosi as well as our additional pipeline assets. So we have 3 other pipeline candidates. So overall, we have 6 different indications that we are progressing in addition to our 2 commercialized products. So a very exciting time at the company. It's the time of building and a time of growth. And so we're -- we've got a lot to look forward to over the balance of the year but also over the next 18 months, including clinical trial readouts, clinical trial initiations and of course, continued progress with the commercialization of Sunosi and Auvelity.

One interesting thing I heard from an investor yesterday is that a lot of CNS launches in categories that have lots of generic options that are perceived as heavily managed by payers are doing better than expected. I mean if you think about migraine or mood disorders more broadly, right? Do you -- is there any theme that you can kind of pinpoint that -- what might be driving that dynamic versus -- we saw maybe 10 years ago, some more challenging launches, but arguably, maybe that was just due to a lack of innovation. So maybe curious if you have some perspective on that.

Well, one perspective that we have that we hear every day is the clinical need. So the number of patients who have these diseases. And while there are a lot of drugs available for some conditions, most of the time they don't work. So we know, for example, in depression that first-line treatment fails based on a lot of clinical studies. 60% to 70% of the time. So there's a lot of clinical need even though they are arguably options that are available. So assuming that you do have a product that has a novel mechanism of action that's attractive to clinicians because it provides them another option. And if you have a novel mechanism of action, which actually yields the clinical benefit, then that's even better.

Do you have a sense so far with Auvelity?What facet of the profile is really resonating most with clinicians, be it either the NMDA mode of action, the faster onset of action versus a traditional treatment options that are out there or maybe something else?

I think we hear a couple of things initially. So the first thing that we heard initially was that clinicians liked the fact that this was a differentiated mechanism of action. They liked the fact that it had the possibility of working early. Now once it got it in the hands of clinicians, then the clinicians they had their own experience. And that experience was paradoxically the drug being tried in patients would fail multiple lines of treatment. So no company wants that, right, because that kind of biases the experience of the clinician against your drug because it's being tried in the hardest to treat patients. And what ended up happening was clinicians actually saw that Auvelity was working actually very well in those patients, even in patients who had failed drugs such as ketamine, which normally are concerned to be very last lines of treatment. That has given clinicians good experience and greater willingness to try it in earlier lines of treatment. So those are the things that we're hearing in the field. As you might expect, the drug is being used in patients who have failed typically 2 or more lines of treatment. So that's about 90% of the mix. But then you have another 10% of the mix, which represents patients were being treated frontline.

Okay. Maybe just help us think through how we track the launch over the course of the year. I would think that NRXs that's really going to be what was, I assume, the best forward-looking indicator. There is, in year 1, effectively of a launch, they're bridging programs, gross to nets, all sorts of things that you kind of have to sort out ultimately. And that could be noise ultimately. But is the -- can you talk a little bit about the sort of the script trend, how you see that evolving? And is that ultimately what you focus on?

We absolutely focused on prescription trends because that's the way that we gauge uptake of the product. It also gives us insights into a clinical experience. So what we've seen thus far is that right now, about 50% of the prescriptions are coming from new prescriptions, so new patients who are being started and about 50% are coming from refills. That's what you want to see. So you want to see new prescriptions being written because as you mentioned, that's a forward indicator. And then you also want to see repeat prescriptions because that is an indication that the drug is working, that clinicians feel comfortable prescribing it again and that the patients who are on it see benefit. So that's what we're seeing, and we do watch that, just like the rest of the world does. It's a very important metric. Other things that we watch and that we focus on, which are not reflected in the prescription trends and which are leading indicators or things like making sure that we adequately educate clinicians. Whether that be at scientific conferences. Obviously, our field force educating the clinicians or whether that be speaker program. So a lot of activity going on behind the scenes, and we're going to be watching to make sure that both components of prescriptions, both new prescriptions as well as repeat scripts continue to track upward.

Okay. And I think you guys have indicated you have a field force that's 2/3 the size of what conventional MDD launches, how those are resourced. So talk a little bit about how you're able to win with less and how the DTC kind of marketing digital strategies sort of help maybe augment or do things smarter with less spend.

Well, I think one of the things that our digital central commercialization platform or DCC platform has done is to allow us to better target the clinicians. So targeting is really important. That's one. Secondly, also figuring out how the clinicians like to be detailed. So what is their preferred mode or route. And the other aspect of it, which kind of rolls into also the first two is increased efficiency. So our sales effort is able to be more efficient. At least that was the plan. So far, it's playing out. And I do -- do you want to make one correction in your statement, you said that our field force is about 2/3. It's about half the size of traditional sales forces. So it really speaks to the efficiency of the approach, and it's an approach which we have now shown can be affected with 2 different products, so Sunosi as well as Auvelity.

Okay. Maybe just briefly, the -- we oftentimes think about in-play market, right? So these are patients presumably who've come off of 1 or 2 options, and this is common in an indication like MDD, where there's a lot of cycling. There will be a number of new options out there for -- there's a new adjunctive ads, there's like a Vraylar, you've got Zuranolone potentially coming into the space. How do you think that ultimately impacts sort of the medium term for Auvelity? Or do you think that you don't really see those as being impactful?

Well, anytime that you have new entrants into the marketplace, then you do have to battle for share of voice. So that's natural that occurs. It's also really good for the category because you have this situation whereby in MDD for 60 years, there were no new mechanisms of action. And against the backdrop -- so against that backdrop, you also have an increase in prevalence, which has been occurring over the past several years. So there is high clinical need. And it's nice to see that the marketplace is now realizing and giving credence to the fact that the drugs that are currently available actually don't work that well. So there's a lot of clinical need. So it's good to see new market entrants. And I think that clinicians and patients will welcome anything that's new because there's also a lot of heterogeneity. Now what impact does it have on us? The market is very large. There are about 400 million prescriptions that are written every single year. Where we see the growth currently, although it's early stages for Auvelity coming from is -- it's coming from a lot of the non-branded part of the market, which makes up actually 90% of the market. So there's a lot of room, and we're very confident in the profile of our product, and we expect to see continued growth.

Yes. Okay. Maybe pivoting to Alzheimer's in the aftermath of the ACCORD update. And now as you wait -- as we wait until next year to get the safety exposures and then ultimately, presumably the sNDA for this opportunity. How do you see this as transforming Auvelity moving into different channels, different potentially prescribers and the opportunity that presents?

So Alzheimer's disease agitation is an area of high unmet medical need. And when people think about Alzheimer's disease, the thought is that it's the cognitive decline, which is bothersome. But actually, one of the most bothersome symptoms is agitation, the neurobehavioral symptoms that land patients in nursing homes because the caregivers, the loved ones can no longer take care of those patients at home. So area of high unmet medical need and until last night, there was no drug that was approved, specifically for Alzheimer's disease agitation. So we really like the potential for AXS-05 to have -- to provide clinicians as well as patients, a drug that works well, works rapidly, has large clinical benefit and is also safe for patients. So right now, clinicians face a quandary, which is they -- until recently, didn't have any drugs that were approved and the drugs that they used off label and also the drug that was recently approved is -- are atypical antipsychotics, which do carry a blackbox warning against their use in the elderly patients with dementia, specifically around mortality risk. So however, that just speaks to the need to treat those symptoms. It's -- the symptoms are so disruptive that clinicians do have to make that very difficult risk benefit analysis. So we're really looking forward to generating more data with AXS-05. And should the clinical development be successful, getting that in the hands of patients and clinicians.

What are some of the practical considerations to building out this market commercially? These are patients I presume that are nursing home, care providers giving them their medicine. And you have a drug that works fast. Is there -- could this be potentially used PRN? Or do you think that this is something that would be a symptom that's managed with chronic dosing approach?

AXS-05 is being developed as a chronic treatment. So not full PRN treatment. So we want to avoid patients landing in the emergency room and needing PRN treatment. So -- and if you have a drug which is safe enough, which works well enough, then that will be of great benefit. The trials that we've conducted have been in the community setting, which is great. So AXS-05 has been dosed to patients living at home, which is great. And obviously, if successful, then the drug would also be useful in nursing homes and institutions.

Okay. So basically, obviously, we're waiting first half to get the accrual of the safety exposures. Any planned updates. I think like we're still waiting for the ACCORD, I think the open-label safety publication. Any additional publications that you plan for the existing data sets?

Well, we have a lot of data sets and a lot of information to share with the scientific community. So you mentioned, obviously, the ACCORD trial. That's one, but then also once ADVANCE 2 reads out. So there will be data from that. Then we also have the open-label safety extension data. So a lot of data, which we are generating and we will be sharing in due course with the clinical community.

Yes. Okay. So you mentioned the Rexulti approval, they'll be out a couple of years in front of you. How do you see the market dynamics between say an Auvelity and Rexulti in that space? And mindful that there's some safety box warnings with Rexulti. Is that in your view, kind of a swing factor competitively? Or when you talk to psychiatrist, they'll often kind of be dismissive of these safety risk with atypical because they're so used to giving them. So I'm just kind of curious how you see that dynamic evolving?

Well, on one hand, the approval doesn't -- probably doesn't change how clinicians currently try to manage these patients, which is with atypical antipsychotics. So they already do that anyway. And the issues around that class of drugs will still persist, right, because it's a feature of those molecules. And we think that with other treatment options, that's only going to benefit clinicians as well as patients, clinicians in terms of now being able to make choices other than having an antipsychotic and patients in terms of having options which may have a different safety and efficacy profile.

Okay. So maybe we'll shift gears to narcolepsy. You've got one on market product and your portfolio and potentially a complementary asset in AXS-12. So how do you see these products coexisting together if you're able to replicate your Phase II results that you showed with AXS-12.

Well, they should be complementary. So narcolepsy is a disorder that is characterized by different symptoms, all of which are bothersome to patients. So you have excessive daytime sleepiness, EDS. And our current product, Sunosi is approved to treat excessive daytime sleepiness in patients with narcolepsy. It is not labeled for cataplexy. And AXS-12 is being developed to treat cataplexy in patients with narcolepsy. So they're complementary. And I think that part of our strategy has always been to focus on CNS and to make decisions about our portfolio where there could be operational leverage. This is a prime example of that. So whereby we -- there's a lot that we're learning about the narcolepsy space because of Sunosi, and that positions us well should we have success in clinical trials with AXS-12 once we launch that product.