Axsome Therapeutics, Inc. ($AXSM)

Good morning, and welcome to the Axsome Therapeutics conference call. [Operator Instructions] As a reminder, today's conference call is being recorded. I would now like to turn the conference over to your host, Mark Jacobson, Chief Operating Officer of Axsome Therapeutics. Please go ahead.

Thank you, operator. Good morning. Thank you all for joining us on today's conference call to discuss the approval of AUVELITY for the treatment of agitation associated with dementia due to Alzheimer's disease. During today's call, we will be making certain forward-looking statements. These statements may include statements regarding, among other things, the efficacy, safety and intended utilization of our agents, our clinical and non-clinical 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 risks and -- these and other risks are described in our periodic filings made with the Securities and Exchange Commission, including our quarterly and annual report. 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 call today from the Axsome team are Dr. Herriot Tabuteau, Chief Executive Officer; Ari Maizel, Chief Commercial Officer; Nick Pizzie, Chief Financial Officer; and Hunter Murdock, General Counsel. Also joining me on the call today is one of the leading experts on agitation in Alzheimer's disease dementia. Dr. Jeffrey Cummings, the Chambers-Grundy Professor of Brain Sciences at the UNLV Kirk Kerkorian School of Medicine. Herriot will start with opening remarks followed by Ari, who will provide an overview of our commercial plans. Dr. Cummings will then provide an overview of Alzheimer's disease agitation, treatment needs, and we'll then discuss the profile of AUVELITY in the indication. We will then open the line for questions. And with that, I am pleased to turn the call over to Herriot.

Thank you, Mark. Good morning, everyone. Since Axsome's founding, we have been on the mission to deliver and develop transformative medicines to improve brain health. And so today, we are very pleased to share that the FDA has a approved AUVELITY for the treatment of agitation associated with dementia due to Alzheimer’s disease. Agitation is one of the most common and challenging aspects of care in Alzheimer's disease. And to date, treatment options have been limited. AUVELITY is a first-in-class medicine with a distinct mechanism of action that provides an important new treating option for this debilitating and critically underserved condition. This approval, therefore, marks an important milestone for the millions of patients living with Alzheimer's disease, their families and their caregivers. Alzheimer’s disease agitation is the second indication for where AUVELITY has received FDA breakthrough therapy designation and has been granted FDA priority review and approval. This underscores Axsome's pioneering work in neuroscience and our dedication to people living with serious brain health conditions. Next slide. In Alzheimer's disease, a cascade of cellular events leads to synaptic loss in neuronal cell death. These events are thought to result in reductions in certain neurocrine systems, which in turn contribute to the cognitive and behavioral symptoms of Alzheimer's disease, including agitation. AUVELITY targets the N-methy and sigma-1 receptors, which are believed to modulate neurotransmission implicated in Alzheimer's disease. The exact mechanism of action of AUVELITY treatment of agitation associated with Dementia is unclear. Next slide. AUVELITY has a differentiated efficacy and safety profile. It is the only approved treatment for agitation associated dementia due to Alzheimer's disease that has demonstrated substantial symptom improvement, which was shown to be sustained in the long-term trial over up to 6 months. In clinical trials with Alzheimer's disease patients, it was well tolerated with a low discontinuation rate that is identical to placebo. Next slide. We are pleased with the labeling AUVELITY in this new indication. Highlighted in yellow on the updates to the AUVELITY label for the new indication of agitation associated with dementia due to Alzheimer's disease. Importantly, with this new indication, there is no new [indiscernible]. Next slide. Turning now to key efficacy data. The efficacy of AUVELITY in the treatment of agitation associated with Alzheimer's disease was demonstrated in the ADVANCE-1 in Core 2 trials. ADVANCE-1 was a 5-week parallel study. In ADVANCE-1, AUVELITY met the primary endpoint by demonstrating statistically significantly greater improvement in agitation symptoms as measured by the [indiscernible] field Agitation Inventory, or CMAI total score compared to placebo at week 5. Patients who received AUVELITY experienced a 14.9 point reduction in the CMAI total score, compared to an 11.6-point reduction for placebo. The improvement with AUVELITY was numerically greater versus placebo starting at week 2, demonstrating early separation. Additionally, a statistically significantly greater proportion of AUVELITY patients were rated by clinicians has improved compared to placebo as assessed using a modified Alzheimer's disease cooperative study clinical global impression of change for agitation, a key secondary [indiscernible] in the study. Next slide. ACCORD-2 was a long-term double-blind, randomized withdrawal trial in which patients were nonresponders to AUVELITY or [indiscernible] in an up to 6-month double-blind phase to either continue treatment with AUVELITY or switch to placebo. In ACCORD-2, the patients who continue treatment AUVELITY experienced a statistically significantly greater time to relapse of agitation symptoms measured by the CMAI than the patients who switched to placebo. In the study, treatment with AUVELITY reduced the risk of relapse by 72% compared to placebo. Overall, the study showed that 20.6% of patients on placebo relapsed compared to 8.4% of patients who received AUVELITY. Taken together, these data demonstrate rapid and durable improvement in actuation symptoms in Alzheimer's disease dementia, supporting AUVELITY's potential a timely and long-term symptom management. With that, I'd like to turn the call over to Ari who will review the commercial opportunity for AUVELITY in Alzheimer’s disease agitation and discuss the launch plans. Next slide.

Thank you, Herriot, and good morning, everyone. Agitation in Alzheimer's disease dementia has represented a significant unmet medical need. Today, more than 5 million people in the U.S. have Alzheimer's disease agitation, a number which is projected to double in the coming decades. Approximately half of these patients are currently treated with pharmacotherapies, reflecting a significant unmet treatment need that has existed for decades with only one previously approved treatment that reached the market in 2023. The treatment landscape is defined by variability in patient disease severity and access to specialists in certain geographic markets, which influences where patients are treated and will provide our specialty is responsible for clinical decision-making. The majority of Alzheimer's disease agitation patients live with loved ones in the community and are generally considered to have more mild to moderate agitation symptoms. Conversely, nearly 4 out of 10 patients reside in long-term care facilities and are nearly considered to have more moderate to severe agitation symptoms. Treatment decisions are overwhelmingly made by primary care providers across the United States with psychiatry, neurology and geriatric specialists playing a important role in managing symptoms for many patients. Next slide. Last year, Axsome conducted survey in partnership with a leading polling and research survey firm receiving critical insight from 751 care partners including spouses, children, grandchildren, family members and friends of Alzheimer's disease agitation payments. The goal of the survey was to learn more about the challenges of living with and managing agitation symptoms. An overwhelming majority of 97% of care partner respondents stated Alzheimer's disease agitation symptoms had a negative impact on their loved one's quality of life. Further, 96% of care partner respondents agree that their loved ones seem more like themselves when agitation is under control. Although non-pharmacologic interventions such as environmental changes are recommended as first-line treatment, their success is highly context dependent. This variability, combined with the burden, risk and quality of life impact associated with agitation symptoms underscores the urgent need for safe and effective treatment options to preserve quality of life for patients and care partners. Next slide. Our comprehensive launch strategy is designed to reflect current prescribing patterns addressing points of care across treatment settings and key prescriber segments. Our expanded sales team of approximately 630 representatives will engage a broad group of clinicians aligned with where these patients are treated today, including primary care providers, psychiatrists, neurologists and geriatric specialists who treat patients in both the community and long-term care sets. Our target list includes approximately 68,000 health care professionals with substantial overlap from our existing AUVELITY prescriber base in major depressive disorder, which we anticipate will further support adoption. We've spent the past year working closely with payers and PBMs to ensure access to ability for Alzheimer's agitation patients. And we've enhanced our comprehensive patient services program, AUVELITY On My Side, to facilitate education and support for patients and the caregiver community. Payer coverage probability is strong at approximately 100% of lives covered in Medicare and Medicaid, which together represent nearly 90% of the expected payer mix in Alzheimer's disease agitation. In addition, approximately 78% of commercially insured lives have coverage for AUVELITY. Overall, our commercial infrastructure positions us well to execute a strong and coordinated launch of AUVELITY in Alzheimer's disease agitation. Next slide. In summary, Axsome is taking a disciplined approach to launch readiness to support AUVELITY's entry into the Alzheimer's disease agitation market. Our expanded sales team is well positioned to effectively educate across key provider segments and patient settings of care. Our strong foundation of insurance coverage and patient support services will facilitate patient access to AUVELITY and support ongoing treatment experience. Finally, we expect our launch preparations to be completed in approximately 1 month, with a full commercial launch planned in June. We're excited to bring this important new treatment option to the Alzheimer's disease dementia community, and we look forward to updating you on our progress in the weeks and months ahead. I'd now like to hand the call over to Dr. Cummings.

Thank you. Thank you very much, Ari. It's great to be on the call today. This is a very rare event, to be participating in the announcement of the successful drug development program in Alzheimer’s disease. So I just couldn't be more pleased than I am today and to share some information about agitation. Next slide. This just is a definition of agitation to make sure that we're all understanding what agitation encompasses -- there are generally 3 areas: excessive motor activity, verbal aggression and physical aggression. These have been used in the IPA, the International Psychogeriatric Association definition of agitation in the cognitive implement. And you can see that excessive motor activity is things like significant rocking, verbal aggression, yelling and shouting and physical aggression, things like resisting and pushing and kicking and scratching. You can imagine family members go through when these are the behaviors of their loved ones exhibits. Agitation is present across the spectrum of Alzheimer's disease severity. So you see in the bottom part of the slide, 56% of mild patients, that would be a mini-mental of above 20%. 75% of moderate to severe patients. So that's -- this is a real target population. 75% of them exhibit variants of agitation and 68% of patients with severe dementia that is [indiscernible] is less than 10% exhibit agitation. So let's go on to the next slide, which is the CMAI. This is the Cohen Mansfield Agitation Inventory. And it is -- the approved regulatory instrument for measurement of agitation in clinical trials. And you see how well it match onto the IPA definition. So there's the physically aggressive domain, you see spitting physical aggression, scratching, physically nonaggressive things. These are like pacing, repetitious mannerisms, verbally aggressive like cursing and screaming and verbally nonaggressive like the complaining and negativism. You can see on the right there that the scale is scored from never 1, to several times per hour. You can imagine what those patients are like who had score of 7, given the range of scores of 29, which is the lowest for one can have because there is no 0 on the scale. There's only a 1 as the lowest or never rating on the 29 items and it can go as high as 203, if one had a maximum score on all of the items. Next slide. So agitation is among the most prevalent and distressing of neuropsychiatric symptoms of Alzheimer's disease or emphasize this as well. It accelerates disease progression and a really great question is going to be AUVELITY slow this accelerated decline, that will be an important research question. Agitation exaggerates functional decline. It leads to an increased earlier institutionalization and increased fall and mortality risks. So there are very many negative consequences of agitation leading to the importance of treating this and controlling it as well as we can. It's certainly a significant burden to caregivers. Next slide. Now this is an unmet need for Alzheimer's disease. Historically, the use is for typical and atypical antipsychotics, antidepressions, benzodiazepines in [indiscernible], most of them have not been rigorously shown to be efficacious. There is one approved atypical antisyntotic prestrip result for the treatment of agitation in dementia due to Alzheimer’s disease. And about half of the treated patients are on more than one class of anti-agitation vacation, suggesting the low rate of response. Limitations to these off-label medications include sedation, external effects, falls, the worsening of cognition cardiovascular and Shebovascular [indiscernible] were mainly associated with the atypical antipsychotics. There's a black spot warning for increased mortality risk among the overly patients with the dementia treated with atypicals and they have modest efficacy with it being rigorous and showing only for brexpiprazole. If I could go on to the next slide. I would just say this is my last slide that this is a huge unmet need highly prevalent, very disabling in terms of the course of Alzheimer's disease and its impact on patients and caregivers. AUVELITY, as a unique mechanism of action. It is not an antipsychotic. It targets the NMDA and sigma-1 receptors, that modulate [indiscernible] pathways that are affected in Alzheimer's disease agitation. The clinical results support the use of AUVELITY in agitation in Alzheimer's disease. There was a significant reduction in agitation. You saw that in the material that Herriot presented was safe and well tolerated. One of the things I like about this data set is the convergence from CAMI and the global scale that was used, the ADCS clinical global impression of change because we have 2 perspectives, and they give you the same information, increasing the validity credibility of that result. The onset of action is rapid and sustained. I'll stop there. Ari [indiscernible] and Mark, turn it back to you.

Great. Thank you, Dr. Cummings. And so what we'd like to do now is open the line for question. Now I'll pass it to the operator who will provide the instructions for how to get in the question queue, if that's of interest.

[Operator Instructions] Our first questions come from the line of Leonid Timashev with RBC Capital Markets.

First, congratulations on the approval here. So I wanted to ask on sort of how patients are actually treated in the real world. I guess is treatment intermittent or as needed or do patients typically select the drug and then stay on a drug for multiple months or years. So I guess, ultimately, how should we think about how many prescriptions each patient is going to be getting per year and what the compliance might be like?

So maybe I can ...

Dr. Cummings, yes, please. Great. Great.

Yes, that's a really good question. And what we're -- this is not a PRN medication, I think that's very important. This is a medication that when patients become educated they tend to remain agitation prong over a period of about 3 years. So patients will not be treated for the entire course of their illness, but they will be treated for relatively long periods during the course of the illness. Compliance is high because these patients are pretty impaired cognitively. The caregiver is administering the medication and the caregiver is experiencing, of course, very great distress from these symptoms. So they're motivated to keep the vacation going. So when the threshold for treatment is passed that then the patients will be treated with the pharmacologic medication, families for agnostic medication. We respect that. But most patients have intolerable levels of agitation. Most patients that we would define as agitation have been [indiscernible] levels. And so they're treated with medications and compliance will be good. It will be for a period of roughly 3 years.

Our next questions come from the line of Ami Fadia with Needham.

Maybe I can sort of ask about just the payer coverage here. MDD, which is the prior indication for AUVELITY, it benefited from being a protected class status which had sort of 100% support in the government channel. Agitation does not enjoy the same protected class designation. So what is your expectation with regards to the prior authorization requirements in AD agitation, particularly given that the high volume of lipsychotics that are used off label and they're obviously lower cost? So maybe kind of just from a clinician standpoint, what is going to be the approach? And maybe from Axsome standpoint, what type of step edits do you anticipate there?

Thank you, Ami, for the question. As you mentioned, for the MDD indication, mobility was considered part of the protected class over the past year, we've been working closely with payers and PBMs to ensure that our access extends to the Alzheimer's disease agitation indication, and we are confident based on those discussions and the terms of our contract that the coverage I referenced in my opening comments, 100% coverage across the [indiscernible] and Medicaid is applicable to both indications. As it relates to utilization management, that's an area we've been very focused on in terms of launch preparation and approximately 75% of agitation patients will not require fire authorization in order to receive ability once prescribed. And that is currently active. So that's not something that's coming down the road that's effective in January 2026. So that's sort of the state of coverage going into the launch.

Our next questions come from the line of Andrew Tsai with Jefferies.

This is John on for Andrew. So in our doctor, it seems like psychiatrists, who treats depression also treat all agitation patients. And so they're very aware of AUVELITY given their experience with MDD. And given that AUVELITY is so penetrated in the PCP community who generally tend to avoid hypsychotics. And then now with the FDA posting about it being non-antipsychotic. With all this awareness already, maybe just speak to why wouldn't this launch be fast and just kind of your expectations on the pace and speed that the launch can grow?

Yes. Thank you so much for the question, John. To your point, there's significant overlap in prescribers as it relates to MDD and Alzheimer's disease agitation, and that is what are the primary focus of our sales team is calling on those clinicians that see a high volume of both sets of patients. So we're very optimistic. I think the awareness of AUVELITY in MDD certainly will support uptake in prescribers who have written over the past couple of years. There will be some clinicians who either don't have experience or more predominantly Alzheimer's agitation treaters for wedge agitation and awareness will be really important in the coming months. So we're excited about the potential here, and we'll keep everyone updated on our progress as we get through the launch.

And then maybe one quick follow-up, if I can. I'm curious on the overall messaging for your sales reps of maybe why AUVELITY should be used over other treatments and how they'll be positioning AUVELITY specifically? Will it be like a first-line drug for agitation? And then maybe remind us if AUVELITY is being used ahead of Rexulti and MDD in the first place?

Sure. And maybe Dr. Cummings, could you offer your perspective on AUVELITY's potential place for potential prescribers or patients?

Absolutely. And I would just say that this will evolve as we come to understand the AUVELITY better. But the way I think it will be positioned is as a first-line therapy for many patients with agitation in Alzheimer's disease because the box warning is a desurging factor for the use of Rexulti. And Rexulti has a strong data set. I think it's an effective medication, but the box warning is important in terms of discouraging prescribers. So I think that AUVELITY is likely to be the first choice for prescribers. There's no medication, which is going to work for every patient. And so there will be room for other drugs in the market. And I think AUVELITY will do very well within the therapeutic landscape of this very large problem.

And John, the only thing I'd add is our insurance coverage and the contracts that we've negotiated will support first-line use for the majority of patients. So I think that is in line with Dr. Cummings' view on potential place of treatment.

Our next questions come from the line of Ash Verma with UBS.

So I know it's early days, but what do you expect the average duration of therapy in Alzheimer's agitation as opposed to what it has been in MDD? Just trying to understand if AUVELITY and Alzheimer's agitation, would more likely be kind of like a first line pass-through treatment before patients ultimately start to go to solve the other off-label D2 blockers like [indiscernible] for that matter? So if you can comment on that, that would be great.

Dr. Cummings, I know you touched on this briefly. Is there anything you would add to your prior comments? And then maybe we can offer something to round it out?

Absolutely. So I appreciate the fact that you broaden the all sigma- prescribing because I think this represents a liability for physicians and represents a liability for health care systems, where most physicians were currently employed. So the presence of NOW 2 on-label treatments, I think, is going to increasingly move doctors and their systems away from the off-label use of risperidone to [indiscernible] that have been the standard for such a long period of time. So I think we will see the market migrating for [indiscernible] medications, but I think it's absolutely an appropriate thing. This is -- these are the drugs that we know about safety and efficacy. And AUVELITY is going to be very well positioned within that migration to online prescribing, as I say, because I think the box warning has been a factor in terms of use of Rexulti.

And Ash, the only thing I would add is, obviously, we're going to have to wait and see as the market develops with AUVELITY in market, but there's never been a product like AUVELITY for this patient population. And as Dr. Cummings suggested compliance generally is very high if the drug is successful at treating these symptoms. So we'll share more updates as it relates to duration of therapy as we get some experience in the marketplace.

Our next question has come from the line of David Amsellem with Piper Sandler.

So this is one for Dr. Cummings. So a number of your peers talk about off-label use of reuptake inhibitors, be it selective serotonin reuptake inhibitors or dual reuptake inhibitors of serotonin and norepinephrine. So we hear a lot about off-label use there. So really 2 questions, do you think they're still going to continue to be off-label use of the reuptake inhibitors, particularly upfront? And then what can you say about the portion of patients who don't respond adequately to reuptake inhibitors just given that it seems to be there's a lot of off-label uses of those in addition to the off-label uses of the atypicals that you cited?

Yes, really great question and an informed question. There is a lot of use of the SSRIs in particular because of the satelipram in AD study. And that showed that there was a statistically significant reduction in agitation associated with the use of citalopram or prescriber ratelecram. And that was a very well conducted and influential study. However, we also used a dose of citalopram, which the FDA believed is too high, and there was a cardiac warning associated with the dose that was used in the citalopram study. So it hasn't enjoyed as the kind of widespread you said it might have if we had greater confidence in the safety of the agent. So again, I think there will be a migration towards drugs that are approved and where the efficacy has been established to the comfort level of the FDS. The other thing I would say about the SSRIs is not surprisingly, they tend to do best in patients who have concomitant mood symptoms. And they also have performed the best in patients with lower levels of agitation as compared to higher levels of agitation as seen in the current trial. So I think people absolutely will continue to use those drugs. And they are comfortable with their use because of their widespread prescribing in depression. But I think we will see the market migrating forward drugs that are showing to be efficacious for this indication and safe and approved, I think the approval is of tremendous importance to docs.

Our next questions come from the line of Ram Selvaraju with H.C. Wain.

So the first one is probably for both Dr. Cummings and Ari. If you look at Rexulti experience in the elderly Alzheimer's population, maybe comment on how long patients who get put on Rexulti for agitation stay on that drug and the principal reasons for discontinuation? And also what you anticipate are likely to be the principal advantages for AUVELITY in prompting a physician decision in favor of that medication versus Rexulti? And then I was just wondering if, Ari, you could provide us with some additional details on something you said in your prepared remarks about the target prescriber base and what percentage of that approximately is currently covered by the sales team effectively promoting AUVELITY on the original MDD label?

Dr. Cummings, would you like to let me start with the Rexulti experience question?

I will, and I have to say that I don't know the answer to that question. I'm not sure how long the patients have remained on the agent and I'm not sure why it was stopped when it was not renewed. I'll just say one thing about the AUVELITY development program that I particularly like is the combination of the parallel double line design and then followed by the withdrawal, the randomized discontinuation design because the randomized discontinuation shows this very high rate of relapse in the patients who are randomized to placebo compared to those who continue treatment with AUVELITY. So I think that's a powerful piece of information and useful both in the question you're asking, what is the persistence and if people see the relapse they're going to redo the prescription if they didn't do it automatically. And then there were some rules that nursing homes have to abide by including periodic efforts to try to get patients off of psychotropic medications. And again, that's a publication that I really don't like because you see in the data that patients will relapse when you do that. So I think this is a more comprehensive data set that allows us to think more about the use of AUVELITY in the market because we both have the acute effect in the parallel design, and we had the enduring effect in the randomized discontinuation design. It's a very useful complementary set of observations.

Yes. I would build on that and just say one of the unique aspects of our messaging is related to that clinical trial plan, our development program -- what's unique is we're able to communicate the impact of AUVELITY in both short- and long-term studies. With strong rapid onset of action, durable efficacy out to 6 months for many patients in a highly safe and tolerable profile no box warning associated with elderly patients. And overall, the feedback we've received is this is a very, very compelling clinical profile that we feel very good about. Ram, your question about target CP. So as I mentioned in my opening remarks, we'll be calling on approximately 68,000 health care providers across the community in long-term settings. Today, we call on roughly 80% of those targets for the MDD indication. So there is a high overlap with the folks that we've been calling on over the past few years. Obviously, that provides some advantage in terms of awareness and relationships. And there is a group of about 20% of that group, 13,000 that are primarily high-volume Alzheimer's disease agitation providers, who will be new for Axsome, but who we expect to engage with early in the launch.

Our next questions come from the line of Ben Burnett with Wells Fargo.

I had 2 questions. Just one, I wanted to go back to the question around sort of the payers. What are your expectations for gross to net as you add AD agitation patients to the mix long term?

Sure. Yes. This is Nick, Ben. We would anticipate that GTN for this year looks similar to 2025, similar to how we shared previously. So looking at the phasing that we had in '25, very similar in 2026. Reminder that we were in the mid-50s for the first half of the year in the high 40s for the back half of the year. So with this approval in ADA, we don't anticipate to see much change in GTN this year. And longer term, what we've shared before and continue to share is that we will likely level out, in the 50s range from a GTN from a longer-term perspective.

Okay. That's helpful. And then I just wanted to ask just regarding the label, there were some description about hyponatremia. And I think there's maybe some guidance about concomitant use of other serotinergic antidepressants. Just wonder if you could maybe offer some color on that.

Sure. That was one addition to the label. It was based on one case of hyponatremia in our entire clinical development program. So we have to mind to make sure that we want to make sure that clinicians are aware of hyponatremia in the elderly patient population because even any kind of clinical setting with on patients so you do tend to see higher rates of [indiscernible].

And I guess with a patient who's on a serotonergic antidepressant have to come off that? And is that -- I guess, how relevant is that to this population?

So our clinical studies that did not include concomitant dosing with other agents.

Our next questions come from the line of Jason Gerberry with Bank of America.

So, my question is for Medicare Part D patients who are not low-income subsidy, what is your expectation for average out-of-pocket costs? And do you see that as a barrier for that group of patients? Do you think there's a differential level of uptake in non-low-income subsidy Part D versus low income subsidy Part D. So given that Part D is such a big part of the ADA population. And I wanted to hone in on this out-of-pocket cost issues because it's come up with Rexulti as a barrier to uptake because the sponsor can't deflect the out-of-pocket costs.

Yes. Thanks for the question. I think it's important to note that the overwhelming majority of Alzheimer's disease agitation patients do qualify for low-income subsidies, in terms of predicting out of pocket if it's not an LIS patient, it's difficult to forecast until we see what the patient mix is during the launch itself. So we'll likely have more to share as we get into the launch. But we have been very we've been very mindful of our contracts with Part D plans to try to minimize out-of-pocket as much as possible. Obviously, it won't be perfect solution. But given the portion of LIS patients in this marketplace, and the contracts that we've been able to secure, we feel optimistic that [indiscernible] will not be a tremendous barrier to use.

And if I could just follow up on that because my understanding was LIS was like 30% of Part D. Is what you're saying in that that's wrong, it's a much bigger proportion of Part D?

Yes. It really depends on setting of care. I would say in the long-term care setting, it's likely a higher -- much higher proportion of lives in the community setting, it may be closer to what you're referring to. However, you also do see commercial coverage being stronger in the community setting, so there's some different dynamics at play. But ultimately, our view is that out-of-pocket expenses will not be a significant barrier to initial trial.

Our next questions come from the line of Joseph Thome, with TD Cowen.

Maybe the first 1 for Dr. Cummings, what proportion of your patients under your care or at your center with Alzheimer's disease associated agitation are actually on pharmacological treatment, to manage their agitation? And do you expect this would expand with the availability of AUVELITY, will patients be switching at all? And then maybe second for the company, how will you be reporting information and how the launch is progressing? Is it going to be clear which scripts are coming from MDD versus Alzheimer's agitation? And just sort of how are you going to relay that information tothe industry?

So I'll jump into the first part of that question in terms of my own practice. I can say earlier patients who have less agitation, so maybe only about 20%, 25% of patients with very early disease have periods of agitation, and only about half of them are actually treated pharmacologically, because in the early part of the disease, the agitation tends not to be prolonged. So families just figure out ways to adjust to it. On the other hand, the consulting in long-term care facilities and the 60% or 70% of patients will have agitation and most of it over 50% would require pharmacologic management because the nonpharmacologic [indiscernible] simply don't work in that population. You can't do music therapy and make that work or aroma therapy and make that work and severely impaired nursing home patients in my own experience. So I would say the prevalence of use is going to depend on the kind of practice that an individual has. But in patients in that moderate to severe stage of the illness of the illness, it is very common. And most of it, 2/3 of it will require pharmatologic management just as a kind of a rule of thumb.

Joe, this is Ari. I'll start with your question about reporting. Yes, as we're evaluating launch performance, clearly, NBRx growth, new patient start growth will be 1 of the most important aspects. We will also be looking at activation of new prescribers, particularly the prescribers that we'll be adding who are specifically treating high volumes of Alzheimer's disease agitation patients. As it relates to looking at the proportion coming from either indication, as you know, with IQV and Symphony, they don't split out by indication, but we will be looking at claims data retro actively to estimate the proportion of lives that are coming from one indication or the other. Last thing I'd mention is just our entry into the long-term care setting, although we expect there to be demand for both Alzheimer's agitation and MDD in long-term care. We suspect that Alzheimer's agitation will be sort of the primary source of initial trial. And so monitoring uptake in a long-term care setting will provide a helpful view on how the launch is progressing.

Yes. And Joe, from a net sales and GTN perspective, we'll obviously just be providing one number for AUVELITY in totality.

Our next questions come from the line of David Hoang with Deutsche Bank.

So just a couple of questions here. Maybe first, could you talk a little bit about the threshold to initiate a patient on AUVELITY, just what would you be looking for? Just would it be cases, number of cases of agitation, particularly severe agitation episode just anything of that nature? And then in terms of other drugs being developed for adjacent indications like Alzheimer's disease psychosis, there are a few there such as Coben, would you view those drugs as competitors? Or are they -- do you view them as operating in a different patient segment that has psychosis?

Well, maybe I'll jump in on that and others can fill in. The threshold is really dependent on the family to such a great extent because some families just -- the last thing they want to use is about [indiscernible] just go way out of their way to accommodate the agitation and other families have very low thresholds. And so the discussion that you have with the family is -- to what extent is this impacting the life of the patient in your life and the life of the family and what are the activities that can still be done? And are there still enjoyable things that [indiscernible] can embrace? And -- so it's a negotiation with every patient. This is truly a personalized care. And most families are going to want treatment most families do not want to have to adjust their own lifestyles to accommodate a very agitated patient. You can just imagine if your wife or your mom or dad had the behaviors on that list of behaviors that we went over. So most patients who have agitation, which is occurring several times per week and reaches a modest level of severity are going to be treated pharmacologically. And that's sort of the threshold that working with is how frequent is it and how severe is it? And there's a relationship between those two. So that the patients who are agitation prone have it more of often and they have it more severely. So it's the kind of discussion that you have. In terms of adjacent medications, I think that's a really interesting question. the [indiscernible] program is proceeding, and I think we'll read out this year. Psychosis does overlap with agitation. There are psychosis patients who become agitated. And I think there will be a very interesting learning period here that we're all coming into as to whether or not the prescriber would say, "Well, I think I should try to treat the psychosis or I should try to treat the agitation. And I would say, at this point, we don't haven't figured that out. It's going to take professional guidelines to give some guidance to clinicians around those kinds of issue if [indiscernible] is approved. And I think it's going to be a really interesting evolution as we get more drugs that are on this kind of issue.

Our next question comes from the line of Rudy Li with Wolfe Research.

Maybe a question for Dr. Cummings. Can you actually talk about the overlap of agitation and psychosis in Alzheimer's your patients. Just wondering how that will impact the treatment sequencing and maybe medication selection while managing behavioral symptoms. And then just a quick question for Ari. You can talk about Rexulti dynamics since it has been on the market for 3 years, also approved for MDD plus ADA. So what are the key learnings that can apply for AUVELITY?

So I'll pick up the psychosis question, we beared on -- we touched on that a little bit. One of the things that we need to do with the current AUVELITY data set is to look at psychosis. And I understand that the -- that it was either excluded or occurred at a very low level at baseline but we can look at whether there was greater evolution of or emergence of psychosis in the treated patients or in the placebo group patients to see whether there are any benefits of the use of AUVELITY in this population in terms of cytotic symptomatology. I think there might be because this [indiscernible] pathway is implicated in psychosis. And then in terms of sequencing, again, I don't think we know that yet. I think the prominence of the symptom complex will be very important. If the patient is very paranoid, very disturbed by the thought that people are stealing from them. That patient is likely to be treated first within antipsychotic. On the other hand, it's a major problem is the list of problems that we saw on the CAMI or in the IPA definition, those patients are going to be treated with anti-agitation agent, the safest one available. And so I think there will continue to be a very important role for AUVELITY regardless of what happened in the [indiscernible] space.

Rudy, regarding your question around Rexulti dynamics and learnings, obviously, we think the Rexulti team has done a nice job in building awareness and trial of Rexulti over the past few years. We've been students of their approach. Obviously, the adopters of Rexulti are likely adopters of AUVELITY and their choices in terms of engagement with health care providers and the caregiver community have been things that we've evaluated to inform our launch strategy. So without getting into too many specifics, I would just say that they've done a nice job and has given us a lot of confidence in the market opportunity for AUVELITY as we enter the space.

Our next question is come from the line of Sean Laaman with Morgan Stanley.

My first question is more macro. So obviously, Alzheimer is a significant economic burden. But I'm wondering if you have a sense of how much this indication contributes, if you have a number around that as we think about the alleviation of that burden, what would be the economic benefit is kind of where I'm going. And then maybe a question for Dr. Cummings and just in terms of looking at the clinical practice, I mean how much does this move the debate along? How much does 5 adoption of 05 move the debate along? Are these patients really going to be significantly more manageable in a practical sense?

Thank you Yes. Sean, thanks so much for the question. Obviously, the economic burden of all-time reeves is significant when you take into consideration the amount of health care required to support these patents the institutionalization our estimates and there are a variety of estimates based on existing literature, but you're talking in the hundreds of billions of dollars annually within the U.S. alone. So the AUVELITY to treat these symptoms effectively to potentially prevent or delay institutionalization for patients can have massive benefits from an economic perspective on the health care system.

Maybe I could just add to that. I think if you look at just the main differences between the placebo and the treatment group and take the most conservative view, there was at least a 25% reduction in the mean levels of agitation. And that's seen as an important threshold in terms of meaningfulness of the response. So and importantly, one of the trials used patient or really, in this case, caregiver impression of change, which means that the caregiver was able to see the same change that the clinicians saw on CAMI. So I think these are changes that are appreciable to the caregiver. They're not minor. They're at least 25% in the mean, which means some patients do very well. Some patients probably continue to have substantial agitation. We're going to have to work that out. I think we need responder analysis. We're going to need more studies. We're going to have to understand this in much more detail than we currently do. But on average, the change was -- so it would be the most conservative view, and it was still accepted as -- or will be accepted as within the range of meaningful.

Our next questions come from the line of Graig Suvannavejh with Mizuho.

I just wanted to get another perspective on how to think about launch trajectory given the knowledge that you've got basically 2 prescriber segments, whether it's PCP oriented or long-term channel-based segment. How should we think about the launch trajectory in each of those segments? And can you remind us weather prescriptions in long-term care get incorporated into the prescription data services. And then a question for Dr. Cummings just given your experience with treating Alzheimer's patients, how -- what's your estimation of the awareness of AUVELITY as a potential treatment for agitation amongst the broader Alzheimer's prescriber community?

Yes. Thanks for the question. So in terms of launch trajectory, as you mentioned, primary care is a large segment of this treatment population followed by specialists in psychiatry, neurology and geriatrics. We expect there to be adoption across specialties I think it really comes down to the volume of patients that exist in any one practice. And so not necessarily specialty specific, but a practice-specific. And so our expectations just from a national perspective is we anticipate growth acceleration to begin in Q3 and build throughout the second half of 2026. And, as it relates to the data sources, as you mentioned, long-term care, which is sort of a new wrinkle for AUVELITY sales IQVIA-Symphony do capture portions of later, but there are some unique dynamics in certain facilities that may not report directly through IQVA Symphony. So we're working on ensuring that we have a transparent view of data across both community and long-term care settings.

And I can take part of that question also in terms of the prescribing and the long-term care question, which is part of this discussion. It's important to remember that the medical directors of long-term chair or docs that have other jobs in their PCPs or their journey attritions that are familiar in general with caring for older patients and patients with Alzheimer’s disease. In terms of how aware is the medical community of this program. Of course, it's been called AXS-05 in the development program into the clinical trials. And I think it is not well known by the medical community. However, I think it's going to be very interesting because as soon as they realize that AXS-05 is AUVELITY, I think they'll say, "Oh, I know that drug and they'll be comfortable with it. So I think once that educational gap about those -- these 2 names being the same drug is bridged. I think it will be a relatively easy transition for prescribers.

Our next questions come from the line of Myles Minter with William Blair.

This is John on for Myles. So, maybe a follow-up to the question on psychosis for Dr. Cummings. Wondering if you can give us an idea of the proportion of patents that have overlapping agitation in psychosis, which would conflict with [indiscernible] facilities prescribing given the black box warning there? And then for the company, are these patients overlapping agitation in psychosis readily identifiable? And could they be leveraged as an initial pool to drive early uptake?

So I'll jump into the first question. Psychosis in a person about 25% of Alzheimer's patients and agitation as you've seen, about 75%. So you would say that roughly 1/3 of agitation patients have symptoms of psychosis. Some of that psychosis is relatively minor and some of that agitation is relatively minor. So I would just say that it's certainly far from all patients with agitation psychotic, but it's a nontrivial which also have psychotic symptoms. And it's one of the things we're going to have to look at more closely in the resulting studies, they limited the amount of psychosis to 30% of the population. But it did represent roughly, again, about 1/3 of the patients with agitation.

And John, your question about could this be a specific segment of patients that we target. I would say our focus is on all agitation patients not just specifically patients that might have overlapping psychosis symptoms. And the reason for that is based on the label, the totality of data, this is a first-line option for any patient suffering from agitation associated with Alzheimer's disease. So that's our orientation as we enter the launch.

Our next questions come from the line of Brian Skorney with Baird.

So we've all watched the results you launch in Alzheimer's agitation, and we spent a lot of kind of talking about some of the nuances and differences between AUVELITY and Rexulti. So maybe, Ari, if you could kind of just give us a synopsis in terms of compare and contrast where you think AUVELITY is positioned in terms of coverage, physician enthusiasm, just the operational aspects of the launch versus Rexulti? And do you think that the Rexulti Rx curve is better reasonable hurdle to hold you to? And what do you see as the primary reasons why this launch could outperform or underperform Rexulti initial launch in Alzheimer's agitation?

Yes. Thanks for the question, Brian. Obviously, we're very enthusiastic about this launch and the enthusiasm we're receiving from health care professionals caregivers, advocacy organization is equally as high. I think you saw some of that in just the press release announcements coming from the Alzheimer's Association yesterday. Our expectation relative to Rexulti is not necessarily to compare ourselves to AUVELITY. Obviously, it's the only analog in this space because it's the only other approved agents. And so I do think it's helpful from a directional standpoint. But our expectation is that based on the totality of evidence and the strong clinical profile that there's a really good chance AUVELITY will be considered a first-line treatment for these patients. And that's how we plan to approach the market. We think our insurance coverage will support that in the early days, and we're optimistic about the potential for impact. So we'll have more to share as we get into the marketplace.

Our next questions come from the line of Madison Wynne El-Saadi, with B. Riley.

AUVELITY in MDD, it took a few quarters to really inflect. -- of course, you were building access from 0. This is a very different story now. So just wondering how we should think about the shape of the ADA ramp relative to say, MDD, for example. What's the right analog is here? And relatedly, what are the key drivers that would support AUVELITY and agitation becoming the larger overall contributor?

Yes. Thanks, Madison. I do think your comment around AUVELITY and NBV, the uptake from our perspective, the best analog to look at for the launch or either Rexulti or AUVELITY MDD. Obviously, there are differences that are noteworthy, which you shared a little bit of -- you obviously have more -- a larger base of insurance coverage than we did at the NBV launch. Our sales team is larger. There's awareness in the marketplace. There are reasons for optimism. The all-time agitation market is a little smaller than the MDP market. So in terms of overall patient opportunity. It is more limited from a brand perspective, but there's one other approved treatment. And so from a competitive standpoint, there's less competitors to to think about. So there are lots of factors that go into it. Our expectation is that we're focused on execution with the [indiscernible] and HCPs we're calling on to maximize uptake in the early days. And we'll -- in terms of reasons drivers of use. I think the fact that there's rapid onset of action, durable response and our short- and long-term trials as well as the non-antipsychotic option, no box warning for elderly patients. I think one factor that we haven't spoken about today, but in long-term care facilities, in particular, Star ratings are of importance, meaning delivering quality care to maximize reimbursement from CMS. And so having a non-antipsychotic for these patients will facilitate those star ratings. So there are lots of reasons for optimism. But ultimately, predicting the exact uptake is very difficult.

Our final question will come from the line of Yatin Suneja with Guggenheim.

This is Eddie on for Yatin. I appreciate all the color so far. You're talking about the differences between the 2 channels. But can you sort of put a pin on it and talk about how the company is thinking about how the earliest adoption -- the patient mix between long-term care and community settings and then what you might think the longer-term revenue split overall would be between these channels?

Yes. Thanks for the question, Eddie. We're -- we expect there largely because we're currently in community-based settings that there may be earlier uptake in the community setting, just by nature of experience with MDD than the existing relationships of our sales colleagues with those practices. But with long-term care, we expect there, as I mentioned earlier, growth acceleration to begin in Q3 and build throughout the second half of 2026. I think in terms of proportion of business over the long term, it's hard to predict exactly. I would just say that today, when you look at prescription volume, roughly 60% coming from community settings and from long-term care settings for agitation and specifically.

Thank you. We've reached the end of our question-and-answer session. I would like to turn the call back over to Herriot Tabuteau for closing comments.

Thank you. Thank you, Dr. Cummings for your time this morning and your valuable insights. We also want to thank the patients, health care professionals and our Axsome team for all their contributions that led to this approval. The approval of AUVELITY for the treatment of agitation associated with dementia due to Alzheimer's disease that exemplifies our mission to deliver innovative new treatment options to clinicians and patients living with serious CNS conditions. Axsome today represents a singular CNS platform with now 3 commercial products approved across 4 highly prevalent conditions and a broad pipeline, including 6 novel product candidates that target 10 serious areas of unmet medical need, a psychiatry and neurology. The continued performance of our marketed medicines, driven by the accelerating growth of AUVELITY, a potentially first-in-class and best-in-class treatments in our pipeline promised to deliver substantial long-term value as we further our mission to advance the frontiers of brain health. Have a great day.

Ladies and gentlemen, thank you so much. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.