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

Everyone, good morning, and thank you for joining us for our Fifth Annual TD Cowen Novel Mechanisms in Neuropsychiatry and Epilepsy Summit. I'm Joe Thome, one of the senior biotech analysts here on the team at TD Cowen, and it is my pleasure to kick things off this morning with the team from Axsome Therapeutics. And joining me today, we have COO, Mark Jacobson; and CFO, Nick Pizzie. So thanks, guys, for joining us this morning.

Maybe just at a high level, obviously, you had a lot of great progress over the past year, both commercially and in the development pipeline. So maybe if you could just at a high level, let investors know what they should be expecting even at the end of 2025 now and maybe even to the beginning of 2026 as they look ahead.

1 Sure. So good morning. Thanks for having us, Joe. I'm Mark. And I'll actually maybe turn it over to Nick to talk about the commercial side of the business, and then I can speak to some of the R&D efforts if that works.

Yes. Sounds great. So Joe, maybe just taking a step back into Q2, net sales for the quarter were $150 million, right? Obviously, focused heavily on Auvelity $120 million of the $150 million. Sunosi made up $30 million of that. And then we just recently launched SYMBRAVO. We had about 2.5 weeks of launch there, which did roughly around $400,000. So a lot to be excited for -- in the back half of the year. Some of the things that have transpired specifically around Auvelity. We did the expansion in Q1 of 40 reps. And we've seen the return on that investment already. So taking a look at Q4 and Q1 of last year, we were seeing NBRxs in the range of 2,000 per week. Once those 40 reps got their legs under them in Q2 and Q3, we're starting to see NBRx. And we are seeing NBRxs at the 2,500 level per week. So we're seeing the efficiency from those 40 reps and also the original 260 being even that much more effective. So super pleased with that. Secondly, we announced that we added 28 million additional lives covered in a first line or first step. So really great coverage. That was announced July 1. So super excited about that for -- specifically for patients. How that transitions into the back half of the year? One's of the things that we've shared is from a net price perspective, with this additional lives with patients being able to actually get drug much easier without having to go through necessarily a PA process and so forth. We're able to actually maintain net price. And what that means is from a gross to net perspective, we don't expect any degradation in our gross to net. So we've shared that we're in that mid-50s range in Q1, Q2. We haven't changed guidance for the back half of the year. We'll see how claims are adjudicated in Q3, and we'll be able to give an update from that perspective. And then most recently, we launched our national direct-to-consumer campaign. That's a national TV advertising campaign for Auvelity, which was launched last Monday. It premiered on the TODAY Show on Monday morning. And we expect to run that through the back half of the year. So super excited about that. We'll start seeing Internet searches, Google trends hopefully to increase. And then from there, we should start seeing the NBRxs and then finally, return on the investment would be through the [ Ts ] through the refills. So a lot to be excited for specifically around Auvelity. Sunosi continues to do its thing, super healthy business, and we're seeing nice growth year-over-year from that perspective. And then SYMBRAVO, we launched SYMBRAVO at 2 weeks prior to the end of the quarter with 100 reps, so very discrete field force. Very early days, but we've heard anecdotally lots of positive things from HCPs, and we're seeing the NBRxs come through. So really pleased with that. So stay tuned for how that continues to grow. Mark, maybe a little on the clinical side?

Sure. And yes, so just commercially, we'll continue to drive growth and make investments as we see are rational. And so we're really excited for that part of the business. And then turning to the R&D and development side and development pipeline. Obviously, of key focus and key program for us is AXS-05 in Alzheimer's disease agitation. The latest there is sNDA filing we've guided to the third quarter, and that's intact and that guidance remains the same. And likely, the next update you can hear from us is acceptance decision from FDA, and we'll keep everyone posted there and provide updates as there are developments, and we can dig into that, Joe, if that's helpful. We have another NDA submission planned for the fourth quarter, that is AXS-12 in narcolepsy and very excited about that. And then behind those 2 regulatory items, just a ton as per usual going on the clinical side in terms of clinical trials. So we have 4 clinical programs for solriamfetol that are moving along. So we have some upcoming trial initiations in ADHD and major depressive disorder, ongoing studies in binge eating disorder, shift work disorder. There's work for AXS-14 in fibromyalgia. We said we'd launch another trial in that program. And AXS-05 in smoking cessation, we plan to launch a trial in that program as well. So just, again, a ton going on, on all fronts across functions in the company. So we're really, really excited for where things are today and the outlook.

Perfect. Great. Definitely a lot to dive in on. Maybe we'll start with the commercial franchise for Auvelity. But maybe can you talk a little bit about what you're seeing in terms of the type of patients that are using Auvelity now? And if that's changed at all since sort of the initial commercial experience a couple of years ago?

Sure. Right now, we're seeing -- so about 50% of the utilization is in first line or first switch -- which is great, right? And it speaks to we're already at this point of the launch, the product can be used pretty robustly as clinicians think is appropriate across the treatment paradigm. So that's fantastic. And if you look at that, it's about 15%, 16% first line and then obviously, 35%, 34% second line, which is fantastic, and then it kind of goes from there in later lines. And we've seen that increasing over time, steadily increasing over time in terms of earlier utilization. And that corresponds to, I think, just a number of things, our commercial efforts and focus in terms of being able to expand detailing to primary care and things like that. So those tend to be HCPs who are seeing earlier line patients. Nick touched on the improvements in access. And so that also -- the type of access we're targeting is to facilitate clinician prescribing decisions, right? If they think a patient earlier in say, first or second line is appropriate, then we want to make sure access is present to facilitate those prescribing decisions. And that's moving along. But that's -- we've been very steady in terms of making sure we secure access that we think is meaningful, but also sound from a business perspective. So that's there. Another way to look at that is monotherapy use. And we're seeing -- I think now it's a bit over 50% is -- the product is utilized in a monotherapy fashion, which is great, which also speaks to earlier utilization and then also the potential of the product to facilitate reductions in polypharmacy, which is fantastic. And so really like where we are today, and we expect that to just continue to improve in terms of who can use the product earlier in the treatment paradigm and things like that. So we'll keep you posted and our investments from a business perspective correspond to driving additional growth in that realm.

Perfect. And Nick, in your opening remarks, you mentioned kind of 3 main drivers, first being the commercial sales force; second, the new covered lives coming online; and then third, the DTC campaign. So maybe we can kind of break those down. Individually, does this kind of we see all of those different components kind of come online kind of over the next -- they have already, but kind of over the next 6 months. So for the sales force, do you think you've seen sort of the full impact of the sales force at this point? Is it steady state? And kind of when you think about what you're seeing in the field, are you rightsized right now? Or would you continue to maybe look to expand? Obviously, with all [indiscernible] you have that goes in depression?

Sure. We have seen, obviously, that nice increase from 2,000 to 2,500 NBRxs per week from the team. Are we rightsized? I think we're in a good spot as of now. I think the next natural expansion is -- I'm sure what we're going to talk about more is ADA. And what we have been sharing is that we would look to expand the field force team significantly to the point where we can add on to those 300 reps in primary care as well as in psych areas. So something meaningful from that perspective sometime in 2026. And then additionally, I know we're not going to talk more MDD right now without ADA, but speaking on the field force, we would look to have more like a discrete long-term care tactical field force that just solely focused on LTC centers. We're currently -- as a reminder, we're currently not even calling on LTCs. So it's a completely untapped market right now for MDD for us and then obviously, the indication of ADA. So from a field force perspective, I think that would be the next natural expansion. And maybe even take a step back, if you think about where -- what we've done thus far, we started with 160 reps, we went to 260 last year, January of '24, went to 300 in January '25, and we're already annualizing at $0.5 billion only 11 quarters in. So we've been -- I think the way that we've invested, and we've always done this since inception, the way we've invested money. And when we see return, we will invest that accordingly. We're not just going to go and say, hey, we need 800 reps out in the field and then just have them go around. So we try to do a very disciplined approach.

One thing I might add to that, Joe, is when you think about the current Auvelity sales team, there is high overlap from a detailed target perspective. And so the team is going through that analysis right now in anticipation of a potential review and potential approval. So the work on the commercial side is already underway.

Yes. And maybe just one last point on the field force expansion. I think when we first started, it was heavily psych. The call points are heavily psych and scripts were like less than 1/4 of total scripts were in primary care. Now we're already seeing it at roughly 1/3. So that is going to continue to grow as the field force continues to grow, as territories get smaller, they're able to have better breadth and depth. So that would be one of the things to be looking forward to in later this year and into '26. And just with that primary care call point and doing DTC, I know we'll be talking about that, but that's -- it comes together very nicely.

That's great. And yes, maybe for the last 2 components, just maybe on a sort of quarter-by-quarter basis. Obviously, Q3 for neuropsychiatry products can tend to be a little bit seasonally impacted. You are bringing more lives online through the coverage that's starting on July 1. And then obviously, you just started the DTC campaign, which I'm guessing will probably have more of an impact beginning in the fourth quarter. But I guess kind of how are you seeing these things kind of the timing and kinetics of them flow through to your revenues?

Yes. I think you're right on the additional coverage of getting to 83%, the 28 million lives coming on July 1. It's more of a downtime. July, August, people are feeling better. Doctors are taking vacation. Our reps take vacation, patients take vacation. So they're not as compliant with their refills. That being said, we're on the other side now of Labor Day. So we'll see how that continues to grow now that we're kind of back into, I'll say, a new year. Everybody is back to school and resetting. So we feel that with that additional covered lives, we'll see, again, no degradation in price, easier access. So doctors will feel there's the actual piece of it and then there's the perception, too. If doctors perceive that they now can write and that we have these national wins, they feel more comfortable of putting their patients on Auvelity and they know that they'll continue to get Auvelity. Previously, we had a very generous patient service program. So we try to ensure that patients will always receive Auvelity. But when you actually get that payer coverage, there's something more tangible about that from a doctor's perspective. So -- and then maybe just one last thing on covered lives. We do -- we feel optimistic that 83% is not where -- it's not going to be steady state. We feel that there is additional covered lives to be had and hopeful for those additional 17%. So that's for the rest of this year, and we'll be able to give an update as things evolve.

Perfect. Maybe we'll jump over to Alzheimer's agitation. Mark indicated that the filing last update was we'll follow that in Q3. And so when you had your breakthrough therapy designation meeting with the FDA, the agency at that time said you would need 1 additional placebo-controlled study in addition to ADVANCE-1. You now have ACCORD-1 and ACORD-2. I guess, in addition to the support data from ADVNCE-2, but that one didn't quite meet the mark, obviously. I guess, how have your interactions changed, if any, kind of since that time, given that, obviously, shakeups at the FDA have been a huge investor in kind of public focus this year. Have you seen any changes in your dialogue at all that would make you think differently about the application, I guess?

Sure. I think I'll say that in totality for the common -- for the overall program and then recently. So for the overall program, the feedback and dialogue has been consistent for what the FDA is looking for, which is 2 adequate and well-controlled trials, positive. And -- so we'll be coming with 3 positive adequate and well-controlled trials. So that's been very consistent up to and in connection with the pre-NDA meeting feedback that we announced in April. So that's all been very consistent. And say, focusing on 2025. And so consistency there in terms of engagement and feedback on the development program that we ran and the trials we've completed, what studies they're looking for a determination and assessment of efficacy for an assessment and determination of safety and things like that. So we can talk about those, but again, all very consistent. And then looking at 2025, it's status quo in terms of our engagement, dialogue and the division. It's the psychiatry division. This is a division that reviewed Auvelity in major depressive disorder and obviously, that it was approved. And as far as we're aware and yes, changes, both in the staffing or disposition from our vantage point and interactions, again, things are status quo with division director and below reviewers and things like that, project manager interactions. So no -- another way to put that is no updates in terms of our approach or perspective on the program, the package, the filing strategy since we shared the pre-NDA meeting minutes in April. So it's status quo.

Perfect. And I guess, based on your conversations, do you believe that the FDA views parallel placebo design studies differently than randomized withdrawal studies? And secondarily to that, how are the KOLs using this information? Because I do feel like they provide a little bit of a different bout of information for patients on how they would manage patients. So I guess how does the agency think about it in your opinion? And then how have your physician feedback on the 2 different designs been?

Sure. They are different designs. So they generate different data sets. But in terms of demonstration of efficacy, those -- you can get that from both, right? And so -- and that's a substantial evidence of effectiveness question. Then you have other questions, labeling, how does it look from a labeling perspective? And then how does it look from a KOL perspective? So ADVANCE-1 that classic parallel group where you can track longitudinal change, separation from placebo and when that occurs, right? We saw that occur at week 2, stats at week 3. And so whereas the randomized withdrawal studies, those are -- you can assess maintenance of a treatment effect and obviously, signal or separation versus placebo, but a different type. And so -- but you can still demonstrate a treatment effect. And we did that. And so we'll have ACCORD-1 and ACCORD-2, both which were incredibly consistent from the results perspective, also from an activity perspective, consistent with ADVANCE-1. So that's great. And the KOL feedback, obviously, that will -- that can grow over time, right, as more have experience with the product candidate and potential product, we'll call it. But currently, right, that one helps with thinking about onset, which I think is important with respect to the current standard of care and how patients are currently treated, the tolerability profile associated with that and magnitude of treatment effect, right? And so -- and that kind of ties to clinical meaningfulness. So we've received good feedback from KOLs with respect to that, but then also demonstrating prevention of relapse and agitation symptoms and durability of a treatment effect through the randomized withdrawal study. So another key element that we've -- that KOLs have flagged is the safety and tolerability profile, which is very distinct and, of course, very important for this patient population, elderly patient population at risk. And current treatment options have a number of risks associated with those. AXS-05, entirely different mechanism of action and product and molecule, so to speak. So we're pleased with the feedback we've received from KOLs.

Perfect. And maybe what are your latest expectations for how large this market can be? And maybe following on to your last point, Mark, we have heard from our KOLs that the potential lack of a black box warning for mortality for Auvelity versus what we see for Rexulti would be particularly meaningful. I guess, are you hearing that as well? And how much larger do you think, I guess, that could make Auvelity versus kind of what we're seeing in the initial launch trends with Rexulti?

Yes. The -- I mean, the feedback about -- so black box or just more broadly, say, warnings and precautions or the description of adverse events, right, that -- and obviously, it's specific labeling or what the specific label might look like. Obviously, that's getting ahead of ourselves, but it ties to the tolerability profile. And we saw distinct rates of AEs. We did not see a signal with respect to falls. We did not see a mortality signal. So I think that ties to what you're referring to from a black box for the atypical antipsychotics that -- so that's very good. And Nick, do you want to comment on that.

Sure. We estimate the market size, total Alzheimer's patients are around 7 million and upwards of 3/4 of them have agitation. So that's around 5 million patients that are -- that would need -- essentially need therapy. So we -- from a peak sales perspective, we look at this as a significant opportunity even north of where Auvelity and MDD is. We've shared peak sales in the range of $1.5 billion to $3 billion. That's as of today, I think we've typically taken a more conservative approach in how we look at peak sales. So we'll see how the product does assuming approval and once it's launched.

Perfect. Maybe we'll jump to some of the other programs just for a time, but obviously, a lot of focus on that. So best of luck with the FDA. Maybe jumping over to SYMBRAVO. Maybe you can talk just a little bit about the initial commercial experience. What sort of patients are reaching for the drug? And then obviously, through your programs, there is a large paydown component early in the launch. And kind of when will we start to see if that kind of flips over into longer-term prescriptions. Is that a 2025 event? Or is that maybe something more that we should look out for, for the first half of next year?

Sure. Maybe I'll take the second question and then Mark can talk about the patients that are trying the drug currently. So we do have a robust patient service program. And what we've shared is that our co-pay card will allow -- our co-pay card program will allow NBR patients to try the drug, and it's a full buydown for SYMBRAVO. So essentially, patient goes to the doctor, they maybe get a sample to start with and then try it and then come back and then get a script. That scripts, if they use the co-pay card or co-pay card program, they'll be able to have a full buydown. And then ultimately, we're looking for the HCP to then pull through the PA to initiate it, submit it and then approve it and then have the payer get paying for that script. I would say for this year, we launched 2 weeks into -- or 2 weeks prior to the end of the quarter, going into the summer months, as you mentioned, Joe, earlier at the top, it's very seasonal in neuropsych. We've seen growth, and we're pleased with what we're seeing even through those -- through that time period, we do have 100 reps that are out in the field as opposed to some of the other [ GPAs ] to launch with 600 or 650 reps out of the gate. So we are taking a disciplined approach. But I would say for this year, this is the investment year. We're looking to drive scripts, drive adoption, develop payer access, similar playbook to Auvelity. And then at the turn of the year, we'll be able to kind of get a good sense of how the launch is going.

Early use. So it is early. And so there's not a ton of data. But so far, the approach on the commercial side has been to focus on headache centers and headache specialists. And with that, you tend to see later line patients, right? These are individuals who have had acute migraine, have made their way from a prescriber or physician HCP perspective to these specialists and centers. And so they tend to have tried a number of products already. And so they tend to be later line. That also matches the new-to-market block that new brands, new products face from a payer perspective and meaning that payers will drive or force later line utilization. And Nick touched on some of the commercial infrastructure or patient support offerings that are in place that -- to match that prescribing dynamic. And one thing that we like so far is, again, it's early, and so it's highly anecdotal, but the feedback we're getting in that late-line setting, and this is consistent with the clinical data we generated is that the product works well from an efficacy perspective and also it has a tolerability profile that we're receiving positive feedback on and -- which is great. And so we'll continue to work to drive trial of the product, and we'll be looking for feedback from prescribers on how it does, and then that will inform, as Nick mentioned, additional investment in the launch. So early days, but we like how we're kind of coming off the launch pad.

Well, great, we could go on for another half an hour, but maybe just to end, obviously, a lot of development going on with Sunosi. You have several clinical -- late-stage clinical studies wrapping up and some commercial progress here. I guess the company has done -- did well with the Sunosi acquisition. I guess, are you looking at additional BD either commercially or in the pipeline? Or are you happy with what you have? Kind of how are you thinking about that?

Sure. We have -- look, it's something that we'll keep an eye on out there. But what's great is, as you mentioned, Joe, we have such a robust late-stage pipeline right now. So we're always keeping an eye and the market is a bit volatile right now. So we're -- we definitely are seeing what's out there, but there's really no need to. We're very happy with that Sunosi acquisition, as you mentioned, and being able to develop solriamfetol for further indications. And we'll keep an eye else -- what else is out there at this point, but no need to do anything.

Perfect. Great. Well, unfortunately, we are out of time, but thank you both for joining us today, and thank you for the investors for tuning in.

Appreciate for your time, Joe.

See you later.

Bye-bye.

Bye.