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

Next company presenter, Axsome Therapeutics and Mark Jacobson, Chief Operating Officer; and we've got Nick Pizzie, CFO as well. And my name is Jason Gerberry. I'm one of the mid-cap biotech analysts. And so guys, thanks so much for joining us.

Well, thanks very much for having us, Jason. Good to be here. Happy to field any questions you may have, but obviously, a really good start to the year for us so far.

Yes. So I mean, I think in terms of Auvelity and the commercial uptake, that's been solid. The patent settlement, I think, has taken a part of the discussion out that you probably don't want to have to have with investors and you've got like better line of sight in terms of long duration of asset and some clinical developments for other assets not named Auvelity, including the SYMBRAVO approval. So we've got a lot to talk about. Maybe we'll kick it off just with Auvelity and MDD. Solid quarter. Where do you feel like you're at in terms of the launch cycle in terms of added initiatives to try to grow that, how you think you're comping relative to other MDD launches at the similar stage of the life cycle?

Sure. So we're a bit past 2 years from launch, and we're still very much on growth trajectory and continued launch. And like Q1, with that execution, and we're really looking forward to the balance of the year. There are a number of initiatives and activities underway that we think will continue to drive growth and one of which has been implemented, and that is the field force expansion. So we recently increased the field force to about 300 reps. That was completed in the first quarter. And we're just starting to see impact in terms of NBRx and we'd expect that impact in growth to continue through the balance of the year. And typically, what we saw with last year's expansion is that changes really start to manifest 3 to 6 months after expansion. So that's 1 category and 1 potential growth driver. Another is just continued execution with respect to coverage, the number of lives covered and the quality of coverage. So we expect to see drive positive development on that side of the business. And then third, in the second half of this year, we'll be launching a national DTC campaign. So those are kind of classic categories that can catalyze continued growth, and we expect that. Also we would continue to expect trial, HCP trial and patient trial. And when we see that, we see good uptake with HCP. So we expect that kind of underlying dynamic to grow.

So since you've launched, you stepped up, I think, some of the resourcing behind it in terms of sales reps, you've got planned DTC spend coming in. I imagine with like a lot of different brands, you reach a point of like, all right, this is sort of fully resourced and we can get to a point of like incremental growth and starts to become a source of positive operating leverage in the model. So right now, I get the sense that you're kind of investing to drive better area under the curve with a better top line for the longer term, and that's a good trade-off. But do you feel like with some incremental amount of investment for DTC this year and where the sales force is. We're kind of getting to that more fully resourced level and then we start to get some operating -- more operating leverage going forward into 2026 plus.

I think we'll see further efficiency from the field force. As Mark mentioned earlier, we just completed the expansion in Q1 of the 40 reps. So we are seeing the NBRx growth nicely. And then as payer dynamics change or evolve, we would expect to see further growth from those additional covered lives. And then the DTC campaign, as Mark mentioned, we're planning for a national campaign that we would anticipate have a very nice ROI. So seeing that operating leverage in the P&L, I think we're seeing it now. Revenues growth are outpacing our operating expense growth across the board, and we will anticipate to see that in rest of '25 and through '26.

Yes. I don't know if we see on the near horizon where there's diminishing return with respect to driving growth. So I think we still expect to be in growth mode for...

Yes. I mean a lot of peer brands, I look at like AbbVie Vraylar, right, DTC has been a very seemingly important element of that. And most of Vraylar's utilization is in depressive states, the bipolar or bipolar depression. So when you look at sort of the comps and how promotionally sensitive do you think MDD is and how important this could be as a growth accelerant to the franchise?

I think it's promotion sensitive. And so we'll continue we scale to 300, and that gives us flexibility for continued work within MD and if additional potential indications come online, there's leverage there from a targeting perspective or overlap in potential targets and things like that. So that's in-house already, so to speak. But then I think to your point, even within or with potential other future indications, there could be scenarios where we continue to expand kind of the investment in the brand and the commercial infrastructure around the brand.

Okay. And then as in a protected class, good government right out of the gate, commercial coming up, I think it's 68% on the commercial side or so. Where are you at? I think there was some mention on the earnings call about the potential to improve the commercial side of the coverage over the course of the year. And do you feel like you have enough leverage now given how big Auvelity has gotten to where when you go to payers who maybe were trying to maybe force your hand with a tougher deal that you can strike deals and kind of keep that sort of net pricing or gross to net as we think about it, right, within the range of your kind of steady-state guide?

Yes, I think it goes to the efficacy of the product, right? So our strategy out of the gate negotiating with payers was always long term. And as a reminder, our IP takes us through 2039. So we were always being mindful of long-term value for the product, not getting covered lives day 1 or even day 365 to where we anticipate them to be. So to answer your question, Jason, I think we're pleased with how conversations are going with payers. Currently, covered lives in the commercial space is at 63% so just again, with the 300 team field force that we have, if we're able to improve those lives, we think it's benefit to the patients as well as to Paxim. Okay. Were you going to say something, Mark?

Yes. No, I did myself I wasn't going to be redundant. But we haven't guided to steady-state expectation per say, a certain number of covered lives, except to say that. So in the government channel, essentially 100% of lives are covered now. And then our expectation for the commercial channel is that we'll be in line with what steady state is north of 80% of covered lives in the commercial channel. So that's the those are steady-state dynamics for the class, and we don't see any reason why we would be out of line with that.

And just maybe to further that, so 62% commercial covered lives, 78% overall. And importantly, as Jason, as you mentioned, our GTN in Q1 was in the mid-50s. And what we shared to the Street is that we anticipate that GTN to remain constant throughout the year. And the reason being you will see seasonality. However, as potential additional coverage comes online or also as payer access evolves, we would anticipate that would adjust the GTN accordingly. So you may see favorability from seasonality, but you may see an impact from additional covered lives or how utilization in management evolves. So maybe going from 2 steps to 1 step, but GTN would adjust accordingly.

Yes. I think consensus for about MDD is kind of at the midpoint of your $2 billion to $3 billion or so guidance. As we think about sort of the variables that could drive the bull case, right, to the higher end of that, how much of that do you think is in your own mind, as you guys think about the launch, just maybe faster coverage or how responsive the market proved to DTC? And is the proof points in your mind maybe in the next 12 to 18 months as to like where you're at within that sort of growth trajectory?

I think that makes sense. So, what we see over the time frame that you suggested, how the growth curve changes or inflects, and you think that will impact, sort of where we net out from a peak sales potential. But right now, the range we gave is $1 billion to $3 billion in MDD, and that floor, we're very comfortable with right now. So it's really where you are above that. And I think that's right in terms of outlook for the next year, 1.5 years, and how some of the growth drivers come to fruition and when they come online, and the confluence of those synergize. And I think just another important consideration, part of the reason for the field force expansion is that it allows us to have more engagements with primary care clinicians. And we think that's really important, and how utilization or potential prescribing dynamics in that group where that kind of coalesces around. Right now, we're at about north of 50% first and second line use for first line first. And if we see that continue in primary care and things like that, I think that will also be for exactly where we net out from a sales perspective.

Okay. Maybe shifting gears to the Alzheimer's agitation label expansion opportunity. And if you can, maybe just outline that you had data in December. I think you're indicating a second half 2025 filing and just some of the lag factors and where you're at with FDA, not with FDA, but where you're at internally to get that over the goal line?

Yes. So right now, it's building the package. So right, we completed the clinical program in December. And then earlier this year, we announced the shared the FDA feedback we have received for the pre-NDA meeting, feedback, and minutes. So we're good there. We've completed that part of the choreography, so to speak. And now it's building the package, writing the modules, and assembling them, and guided to a third quarter submission for an sNDA. So the data generation in the clinical study is done. So it's bringing it all together in a quality fashion. And as you might imagine, that's a key effort internally and a key corporate priority for the year. So that's very healthy work going on, and we're excited about...

Yes. There's, I guess, some debate out there, like the FDA, people say the FDA doesn't like randomized withdrawal studies. KOLs would say, hey, this is 2 studies with diverse study protocols, and that's more robust evidence of efficacy, and efficacy, and the FDA has approved CNS drugs on the basis of a randomized withdrawal study. So, can you maybe speak to any, like, I imagine there was some alignment with the FDA before you even headed down this pathway, around choosing the types of studies and the study designs that you did?

Yes, definitely. So the very first study we did was ADVANCE-1, which was a parallel group study. And that study was positive. And once that study was completed, we engaged with the FDA, shared the results. That led to the receipt of a breakthrough therapy designation for the program. And then that was the sort of feedback for what the rest of the clinical program would look like. And since then, we've been continuing to engage with the FDA for what a package could and should be and what's acceptable. And we feel very good about that, we have 3 studies to correct those different paradigms. We have 3 positive studies. And so we have looking at longitudinal change over a short-term period of time, like 5 weeks, in the advanced study. And then we also have the maintenance study maintenance effect. So it's a randomized withdrawal design study. So we feel very good about the package we have and also [indiscernible] with the feedback we received from the FDA in terms of supporting a filing for review.

Yes. Okay. And if approved, I mean, can you maybe frame the synergies? I know you're looking at this as a supplemental NDA. We have seen other we call indication stacking situations with other CNS drugs where drugs just step into the coverage, right, of the pre-existing indication. But yet, I think when we look at how the Rexulti launch is going, I think that there are some unique challenges to building out the ADA market. And so maybe what have you learned from the early Rexulti rollout? And are those concerns about a sort of heavy lift on the market build side substantiated in your view?

Yes. So I don't want to speak too much about Rexulti, but if you just take a look at growth in channel in the Medicare Part D channel, if you take a look at growth from '24 versus '23, it's roughly a 50% growth just in the Medicare Part D channel where it's completely outperforming your Medicaid and your commercial channel, I think they're in like single digits. And then even growth Q1'25 versus '24, it's at 41% growth. So there is robust growth, I would say, for Rexulti in Medicare Part D channel. Presumably, that's the ADA indication, even with the black box warning. So from that perspective, we're seeing that growth with Rexulti. From a market access standpoint, with it being under the brand name Auvelity, we would anticipate that we would have access out of the gate in the Medicare Part D channel. So by having an sNDA and using the brand name Auvelity, we would anticipate that we would have coverage out of the gate in Medicare Part D, we would anticipate that to be roughly 70% of the total scripts.

Maybe to layer on to that a bit. We touched on this a little bit with the current commercial infrastructure and account managers, there's an overlap now with some of the targets, and growing that in terms of any type of realignment or retargeting that would need to be done. That work is underway now, and even if one would want to complement the current team with additional apps. So for example, we are not currently targeting in long-term care facilities and things like that. That's something that's being assessed right now, if that's something one would want to do with the potential approval. And yes, there's a dramatic unmet need is now an approved product that's growing, as Nick mentioned, there are certain key differences in the product profile that we think could offer a compelling framework for Auvelity, but we'll see. But we're excited about the opportunity.

In terms of the market and some of the segmentational considerations, I know in the past, you guys have talked about wanting to maybe get the patient before they get to the nursing home, right? When they get to the nursing home, my understanding, at least in talking to some doctors, is perhaps the coverage shifts to Medicaid in the nursing home, and there's some capitated payment models that maybe make it more challenging to absorb the cost of a proprietary brand medicine. So, how meaningful is that as a proportion of the market? Do you have a sense of that? Sometimes we can get a little bit of sample bias in the doctor calls that we do...

Do you have numbers? I mean, I'm sure the team does.

I don't have them handy, but there are considerations with respect to long-term care facilities. There are initiatives in place to monitor and change the incentives for prescriptions of antipsychotic utilization in elderly patients with dementia. So there's a star rating and things like that. And obviously, Auvelity is a distinct mechanism of action. So there are structural considerations that are distinct that I know that's adjacent to your question, but I think it's informative and are potentially interesting, but the basis of the question, I think, is correct is that, right, agitation is really a key symptom that leads to placement in long-term care facilities. And if you are able to interrupt that, that is for patients, for their caregivers, for their loved ones, that's a huge area of unmet need. That's great. But then also individuals in long-term care facilities, additional treatment options for them, that's important, too.

Yes. And maybe just double clicking on what our data is showing is that, like I said, 70%, roughly 70%, maybe a little bit more of that is Medicare, of which 25% of the patients in Medicare are LIS patients, which make up roughly 75% a lot of the scripts. So, as a reminder, LIS patients really pay nothing out of pocket. So we feel that we'll be able to get the product to patients without the issue that came about with MDD with the co-pay and having that obviously can't do co-pay in government channels. So from that perspective, we feel LIS patients will be able to get the product. And the non-LIS patients, you have the cap and smooth provision of $2,000. So that also should be a tailwind or supportive of patients being able to smooth out or budget their spend on an annual basis.

Okay. Maybe shifting gears to SYMBRAVO, the launch for migraine, where you're at in terms of launch readiness? I believe you'll be launching that product pretty soon. Just remind us where are you in terms of peak sales for SYMBRAVO migraine relative to Auvelity MDD? It's $500 million to $1 billion is for SYMBRAVO. And for MDD, we have peak sales of $1 billion to $3 billion, and for ADA, it's $1.5 billion to $3 billion.

Launch for SYMBRAVO, that's targeted for June or slated for June. So that's on track. We're excited for that. The preparations well underway, the field force, they're hired. They're going through training now. They're on board. And so it's basically final steps before product is in channel and the field force is engaging and engaging with HCP. So it's an exciting time for us, and that's obviously the second product that we've developed internally that we've obtained approval for, and we'll be launching. So it's a pretty exciting time. We're looking forward to it, especially because it is based on the clinical data we generated, highly differentiated in terms of efficacy for patients, and which is still remains the overwhelming in the market.

In terms of maybe the more conservative outlook relative to, say, MDD, both big markets, right? Like you feel like the level of genericization or maybe shorter use scripts? What are some of the factors that maybe would drive a more conservative peak number for migraine versus MDD?

Yes, the nature of prescribing product utilization it's much different, right? It's chronic intermittent in migraine. And so with depression, whereas right, that's chronic and for the duration of a major depressive episode. So, migraine, you have that distinction, right? And so what does that translate into that translates into a different type of refill number and frequency. Just the current treatment landscape is much different, right? Well, you have a few recent branded launches. And the dust is kind of settling or maybe it's better to say the framework prior to the SYMBRAVO launch has started to crystallize with respect to that. So there's that WAC prices and rebating dynamics are distinct across the categories. I think that's another element. Anything you'd add to that?

Okay. And so, where do you see SYMBRAVO, kind of like finding its positioning within the space? Is it sort of a post-CGRP drug? Do you think you can compete with CGRP, sort of the post-triptan treatment option for doctors who maybe have explored triptans for the fullest and are now migrating to different therapeutic options?

The feedback that we're receiving from clinicians based on the clinical data and the profile and the label is that the clinical data it's very interesting, very compelling because of the types of patient profiles that the registration trials and other efficacy trials that we've run were done in. And so the feedback from KOLs is that they can actually see it being used in a variety of patient profiles, say, post a triptan or post an oral CGRP earlier this year, we read out the EMERGE Phase III trial, which was inadequate responders to oral CGRP therapy, and compelling data there. So what's great is the product, the efficacy of the product, the responses that we saw clinically it's across patient profiles. And so a key consideration will be access dynamics. But in our mind, the product can offer benefit to patients and HCPs in a number of different niches, is maybe the wrong word, but in a number of different patient profiles. And so it will be the confluence of access, clinician experience, patient outcomes, and we'll start to see that and have those data very soon.

I guess is pretty heavily on the commercial insurance, I believe, right? So when we look at other drugs, I guess, that have that sort of channel mix, there's a lot of, I guess, subsidized free drug in the early days, right, to get physicians using the product. And so as investors think about early days launch ramp and revenue recognition, is that something you'd caution folks that like perhaps there could be a high gross to net as there's sort of a lot of like subsidized drug in the early days?

I think what you saw from NURTEC and Ubrelvy, there were in north of 70%, 80%, somewhere in that vicinity. We don't anticipate that we're going to have as ubiquitous of a free drug program. We are focused on headache centers and major KOLs out of the gate. So I think from that perspective, we're going to be mindful of DTN, but we also want to ensure that product does get to patients and that the KOLs are able to write the product and see the patient utilization and see how efficacious the product is.

Yes. Definitely, the to add on to what Nick said it's a very distinct from, say, depression, right? So depression, that's still heavy in the commercial channel, right? But even so, the categories are different with respect to gross to net and sampling, and helping patients obtain therapy, and a lot of it just has to do with market access dynamics.

Yes. And maybe there is that we feel like we're in a much better spot than in 2022 when we launched Auvelity, with now we have 2 products that the payers are aware of. We have an experienced payer access market access team that has good contacts, good networks with the team. So we've been having, I would say, quality conversations with the payers thus far.

Okay. And then AXS-12 for narcolepsy, just remind us where you're at in terms of gating items for the submission? And have you had your pre-NDA meeting with regulators, and kind of where you stand on the single study being, I guess, the sufficient basis for the filing?

So we've guided to a filing this year, we've said second half. So more to come, more to come with respect to pre-NDA engagements with the FDA prior to a submission. But the efficacy packages, we actually have 3 studies. Now that everything is said done, there was an early Phase II, that's a concert trial. Then, just over a year ago, we had the results from the SYMPHONY Phase III. And then, towards the end of last year, we had results from ENCORE, which was another Phase III trial we conducted. So we're really pleased with the package. that we have and that will be submitting, and that work is underway. But I think maybe a couple more it wouldn't surprise me if we have additional updates in terms of, say, tightening of potential submission expectations, as I mentioned, things like that.

Is it fair to think about this as like going after the installed base of generic venlafaxine? Do you see a broader role? And how do you envision launching basically, I guess, in parallel with Takeda's orexin receptor 2 agonist, given their Phase III data this summer, it looks like their Phase II, I think they're on a good track to get approved as well.

No. So launch dynamics, commercial infrastructure, that's already in place. We have a sleep field force already, and that's they're detailing Sunosi right now. So it's there, and that would be very easy to add a product to that bag and to leverage that infrastructure. So we feel really good about that. Exactly how it might fit with other entrants and other potentially contemporaneous entrants, that's okay. It's difficult to I mean, we're fine if that dynamic is playing out. And we've seen other cases where actually that increases HCP awareness, attention, which is a good thing. And exactly how that would work, though, I think it's a little difficult to comment on without label. But when you step back and say, what's the clinical data we've generated so far, focus and indication would be cataplexy. And then we have additional other consideration of the product profile, daytime dosing, likely distinct scheduling, right from what's currently available. And then we also had other efficacy measures on sleepiness, cognition, et cetera. So again, it's difficult to know how that might manifest on the label and how one might position versus other new entrants, but we feel very good about the totality of data we have and the product profile itself.

We're out of time. So, gentlemen, thanks so much for joining us.