Axsome Therapeutics, Inc. ($AXSM)

We are introducing Axome, Our next company presenter. We've got Mark Jacobson. Chief Operating Officer; and Nick Pizzie, Chief Financial Officer. So gentlemen, first off, thanks for joining us.

Good morning, everyone, and thanks for having us, Jason. It's good to be here. Obviously, a pretty exciting time for us. So it's nice to be able to chat with you.

So a lot going on at Axsome recently, a high-profile new indication approval for belt and company has been, I guess, emboldened to convey even a more bullish outlook for the franchise in aggregate. Maybe we could start there. Just if you can talk about the approval, what was the biggest positive takeaways in terms of product labeling, how that will confer competitiveness for ability, both in its newly indicated disease state as well as the legacy MDD indication?

Sure. We'd be happy to. And it's coming from a place of just what the current state of the business tells us as opposed to being feeling extra bold or bullish. It's just the state of the business, and we can talk about that, but to your point, starting with the label, this -- the label now for AD agitation, it's incredibly clean and speaks to the underlying product profile, and that gives the team a lot of ability to educate potential prescribers for both indications. So that ties to the need in Alzheimer's disease agitation as a serious unmet medical need. It's dramatic that we can talk about the market size and the potential there, but there's also high synergy in overlap with MDD. And so maybe, Nick, do you want to start there?

Sure. So for MDD [indiscernible] and that's 14 quarters into the launch. And as a reminder, started the launch with 160 reps. So a very small amount of reps compared to our competitors. And that number has grown from 160 to 260, most recently 300, and we just did the expansion from 300 to 630 in anticipation of the ADA approval, but also more importantly, just the trajectory that we've seen with MDD. We're really pleased with where we are. We're outperforming a lot of our competitors, being only 14 quarters in I think the other piece of the puzzle is the payer access. Access for the MDD for Availity is already at 86% of which 56% of that is either first line or first switch -- so really pleased with where we are with -- from a payer access perspective. And then the other thing that goes along with it is just the investment. We haven't invested heavily as of yet into DTC. We started that in Q4 of last year. We like the returns that we had, but we did that with less than 300 reps on board. So we would expect to see a higher multiplier with the additional reps that we are bringing on with the investment that we're doing in DTC. So maybe just kind of summarizing it from a quantitative perspective, we are currently at 0.2% of the total and depressive market, annualizing over $600 million. we're at 0.3% of the NBRx market. So MRs obviously being a leading indicator where we we expect to be from the Ts, and that number is anticipated to grow as we further invest in the field force as we further invest into the commercialization of the product.

And this idea of synergies and the benefit of ADA to MDD and MDD to ADA and just that virtuous cycle of greater utilization, greater comfort, familiarity, et cetera. When we look to analogs in the CNS space that have "domthis indication stacking, right, and seen that benefit, it seems to me like a lot of those analogs were adding another mood disorder, right? But it was largely a psychiatry driven sort of opportunity like CAPLYTA going from bipolar depression to Unipol or depression, for example, here, you're adding a new indication that probably has more complexities to it, bigger primary care component, maybe neurology component to it as well. Can you unpack that? Are there different analogs you look to drive comfort around this idea of synergy given that it could be somewhat different prescriber or lack of prescriber overlap?

For analog, the ones you mentioned are fine. I don't know that we'd point to you to any others as being being our internal justification for where our modeling put points us? It's not that you can actually just do the analysis on the prescribers themselves. And that's part of the team, our commercial team and sales operations of looking at your targets for each and looking at the overlap there? And can you detail or do you want to detail and try and educate those targets. So that is kind of the targeting analysis. So it's not predicated or based on another analog and how it did, but where do the synergies come from? So starting with long-term care, that's pretty straightforward, right? That is you have high rates of comorbid depression in individuals who have Alzheimer's agitation. But also just in long-term care, you have high rates of depression, right, 50% to 80% of individuals in long-term care facilities are depressed, and that's not an area that we've actively educated in the past or detailed in. And so we'll be doing that now, so you could very directly see that just educational efforts would be beneficial and synergistic in that area, right? If it's a call or 1 medical presentation where you can talk about both indications, I think that's straightforward. And it's similar in a community-based setting where Nick talked about our investments in the sales force we're going out further into primary care. And depending on where you are, and you do these analyses, urban centers, rural areas in certain whatever geography you're in, you can do the analysis, hey, who are the targets? Is it primary care? Is it psychiatrists? Is it neurologists? It turns out for both indications, the bulk of prescribers are primary care and then psychiatrists and then for Alzheimer's agitation, you do have some neurologists geriatric neurologists, et cetera, but the bulk is primary care. And what we see -- and what we've seen since launch is when there is trial by an HDP in a certain number of trials in a certain period of time, that leads to adoption. And the expansion that we did last year, it was a small expansion in the sales team that allowed us to go a little bit further into primary care, and we saw those trends. And so now that we're -- we have this large expansion in the sales team and investment there. We expect to -- that's where the bulk of our work will be to go further into primary care, and that's where you actually see high synergy from a potential prescribing perspective.

Just to add to what Mark was saying, we did the expansion last year went from 260 to 300 reps. The idea there was to be more in primary care. And we saw a significant increase in NBRxs call it, 4 to 6 months after we did that expansion at the beginning of the year, just with the 40 reps because we were able to get into primary care, but also as importantly, we were able to have better depth with our individual HCP. So if you think about our target list, when we started, it was really specialty, it was really heavily on psych. And we are now just recently getting more heavily into primary care. And as Mark mentioned as well, we haven't even called on long-term care centers, huge prevalence within long-term care centers in MDD, obviously, with ADA, but also with MDD.

And now the ADA market itself, right? There's certain generic antidepressants, antipsychotics. There is 1 branded antipsychotic approved. What do you think is the critical differentiator for Avelity here? Is it more safety or efficacy? When I look to MDD, psychs always say, drugs got to be super safe in MDD, right? It's just a critical table stakes almost, right? So when we think about ADA, is it different? Do you lead with more of the efficacy benefits or safety? Or is it a mix of both?

It's a mix of both, and it's -- it probably starts with the mechanism, right? Mechanistically, it's highly differentiated, and it's first-in-class. So it targets NMDA and Sigma 1, that's highly differentiated from on- and off-label pharmacotherapies that are used for these patients. And so then what does that lead to UC differentiated for distinct efficacy and tolerability profile? In the label, we have parallel group efficacy data that shows the product works quickly, and separates very early on, so 2 to 3 weeks. And then we have data that relapsed prevention data. So this is duration of effect in treatment effect over longer periods of time. And that's highly differentiated. For on and off label, what's used now? And then the tolerability profile is great in terms of pairing with advocacy like that. So the tolerability profile -- it's very clean. Low rates of AEs. There's not a box warning for this patient population. We didn't see sedation. We don't see a mortality signal. We don't see a fall signal, -- the list goes on, right? If you look at the most common in the label for this patient population, it's dizziness in dyspepsia, that's it. So it's a very tolerable pharmacotherapy for the level of efficacy that you see with it. And so that's great. And then that also, just to further make the point about synergy when you have trial and if the real-world experience matches the clinical data, then that's a very, very different option for patients and caregivers and prescribers than what's been available to date.

Maybe you have 600 sales individuals now that are going to be promoting both the ADA and MDD indication? How are these sales individuals going to be prioritizing? Is it the new indication gets more of the love versus, say, MDD, which is more established now at this point? Or is it going to be very context-driven depending upon the provider and their practice and where the opportunity could be to drive business.

It's the latter. So it's context-driven. It's by target and by region and geography. So every account manager has a mix of targets who are primarily MDD target or an AD agitation target or they're both. And so that will drive their call plan. And so it varies. But every team member will have that mix of of targets.

And it seems important to mention, so you'll launch in June, but you guys did a lot of the heavy lifting on the payer front in advance of this launch as you went through the regulatory review process. So maybe just level set for investors, what that coverage dynamic is going to look like day 1, right, in this largely Medicare Part D population, both in terms of ease of access, quality of access, step-throughs, et cetera.

Sure. Yes. So we would anticipate that every script in for ADA, 80% of those scripts will be in Part D. In Part D, we currently have 100% covered lives in Part A, of which 3/4 of them, so 75% of them will have no PA and first line or first switch. So we feel very good about coming out of the gate with coverage specifically in ADA. And then the other 25% of the lives that are covered would have a PA, but we anticipate the majority of those that do have the PA with just BPA to indication. So it's not a heavily burdensome for the HCP to be able to write the product. And that would be also with first -- basically first switch or potentially something after that. So overall, 100% covered lives. Typically, the next question is going to be related to GTN as it relates to Part D, we would anticipate that from a GTN perspective, that net price would slightly be better. in Part D patients versus our commercial landscape. And that's really only due to there's no co-pay coverage allowed in Part D compared to commercial.

Next question is one, for lack of a better way you're saying, I'll call it plumbing in this market, right, like where got individual, they're Medicare, they're in a nursing home. They're in a long-term care facility. So they have this access. But like the facility that they're in, the ability to write the script and seamlessly ensure that, that access is obtained. And is that an awareness thing does your sales team need to work with practice with these practices to understand how this all works and to have confidence that they can get seamless coverage.

Maybe I'll talk a little bit about our LTC team. So we -- of the 630 reps, there will be a portion of them that will be dedicated to long-term care. And we would -- we look at those specific reps, not as the typical specialty rep or a primary rep. It's more of a key account manager. So to your point, Jason, there's a bit more work in handholding with some of these larger centers. to educate them on what the payer access is to establish relationships with the pharmacies in and outside of the centers as well as with those HCPs that support the centers, they also may be in the community.

Yes. I don't have much more to add to that, except the plumbing, maybe 1 way to say that is just -- that really ties to supply chain, and the team has been preparing or the supply chain is already established through MDD to facilitate if a clinician or an HDP is writing the product, we want to make sure the product can -- that script can be filled and that the product is there waiting if when the script is filled. So that is -- that's been -- that's behind the scenes or "back office" but we've been attending to that and we feel good about the infrastructure in place there.

Got it. And maybe just -- how would you frame the patient out-of-pocket cost dynamic for key subsets of this population, be it those with minimal out-of-pocket versus those that may have -- and if you've got a blended average.

Yes, sure. So a bit early on that, but what we have seen is as it relates to the patient population between non-low-income subsidy and LIS patients. So for those LIS patients that Dirk out-of-pocket out of the gate or for each script would be something less than $13 on average, I think it's around $3 to $5, and I believe it's also voluntary. . So for those patients, there shouldn't be much of a co-pay, if any, at all. For the non-LIS patients, $2,100 is the max out-of-pocket for 2026, and they have the ability to cap and smooth, and that relates to any drug that they are taking. So obviously, if they are on an agitation med, they're likely on probably more expensive. Alzheimer's mid as well as other meds that they are currently taking related to their health. So overall, there -- we obviously can assist them from a co-pay perspective, but you likely will see that seasonality until they actually hit their $2,100 out of pocket and then that would improve as the year goes on.

And then for us in the analyst community, how would you envision tracking the launch? Is that going to be something that will be discernible from the script data or on the quarterly updates, how you plan on educating us on the launch trajectory?

So the weekly scripts will be there, the scripts that are written for patients with Alzheimer's disease agitation, those will manifest or show up in weekly scripts and we will monitor that the same way through weekly scripts and then we'll have additional data that that we can see through our sales infrastructure or, say, retroactive claims data. One thing you can -- or folks can monitor or if you get scripts by channel, say, Medicare Part D or commercial channel. So folks can watch that. We'll see what we can offer for commentary, and we'll look to do what we always do, which is provide some some level of detail or peel back the onion a little bit in terms of the quarterly dynamics we see, it could be potential prescribers. It could be a number of detail or it's hard to know because we'll have to see what data we have, but we'll look to provide the same level of detail that we have been. But in the meantime, from a weekly script perspective, folks will have a sense of of data through a channel that provides kind of a proxy for. But it's, of course, Medicare Part D is not exclusive to Alzheimer's education, right? If we're in long-term care and we're detailing on depression, that will also likely be in, say, that channel. However, the point is what you'll be able to see is the overall performance of the brand. And I think that's probably the most important.

Okay. Shifting to MDD. Curious, you're 4 years now, I think, into the launch. So where you're winning share by line of therapy? And if you had to like deduce the ultimate success, which would be hitting that $4 billion target, like 1 or 2 things, right, that you'd say this has to happen, be it either -- this has to be adopted by primary care high clip or we've got to win the battle in early first second line? Like how would you frame, if you could, at a high level, what has to happen to get to that $4 billion target?

The -- it's based on current trends and uptake. So for -- obviously, for MDD in particular, it's what we're seeing in primary care. It's what we're seeing with adoption is what we're seeing with how patients do and feedback from clinicians. So we're investing further to go into primary care further as we talked about. And if we see adoption there at the rates at the pace, the rates we see, the persistence and compliance, we see -- if that holds up, then those are the numbers we'll see. And it's not predicated on threating some needle of some certain -- some patient profile. It's where the coverage stands today, which is great for just a few years after launch and where -- how we expect it to continue to grow and evolve over time is the investments we'll make in the sales team and then the how productive we've seen that -- those efforts to date and to see that continue. So it's not it's -- those numbers aren't -- it's not a root Goldberg contraction that 1 thing has to 1 precarious event leading to another. That's the product profile. And if you just step back Nick touched on where we are with the overall market. It's not even 0.5%. It's barely 0.5% right? So it's -- the market is so large, the need is so large. And if we do our job educating clinicians and the product profile continues to be what we've seen to date, that's that's the numbers that we'd expect.

Yes. And we're -- yes, we're 14 quarters in right? We have exclusivity through early 2039 with pediatric indications. So 14 quarters in of 66 orders who's counting, but that's less than 20% of our life currently, right? So we feel great about where we are and analyzing a $600 million with a team that, on average was somewhere in the neighborhood of 200 to 250 reps and mediocre market access up until really last year. We've been laying the roots and the foundation now for the 3 years with this approval with the trajectory that we've seen. Now we're when I use when Vegas was to say we're going more all in now because the with the team and with the investment that we did in Q4 in DTC, we'll see -- we'll continue to add that investment. We don't anticipate that it's going to significantly increase from where we were -- but we've laid that foundation now. We feel really great. And we've shared that it's an $8 billion plus number. It's not a max out at $8 billion, but it's a $8 billion plus.

Okay. It seems like DTC is basically table stakes, right? In the MDD setting, if you look at like AbbVie and companies that are operating in the space, they effectively use DTC. So curious your observations on ROI. And can you envision as you evolve to this profile, if there should be step-ups in that investment from what you're seeing in terms of the ROI.

Yes. We did DTC in Q4. We had a lot of learnings from that. And one of the learnings was where to place our ads between linear, which is the traditional over-the-air TV and digital TV. And we've learned where to place them, how to measure it, how to manage those -- that spend. It's easy just to some of our peers that are out there 24/7 and understand why they are doing that. That's not how we spend, and that's not how we've historically invested. We've always gone with a very disciplined approach that made sense. And we will continue to invest in those areas. I think we've gotten smarter. We started the campaign again in March, and we'll have a campaign throughout the rest of this year. But it will always be disciplined and discrete regardless if where we are today versus in 3 years from now. But I would agree, we'll always have a presence out there in 1 way.

Yes. And what Nick is talking about is us that those are -- we're looking to make the the most sound or best ROI decision. So for us, the best ROI, it's the sales team. So that's where we're investing heavily. We'll invest in other elements, which is traditionally described as surround sound. And so we'll have that. But the -- it's being done in the track record for the brand to date. It speaks to that approach that you can drive very high performance with disciplined, say, commercial investments, we'll continue to do that. But you're right, as it grows, we'll change the mix of those investments over time.

Okay. So we've got about 4 minutes. So some quick hitters here. So I'll be -- I'll cut to the chase. The early efforts are on the access build side. When do you think investors should be looking to sort of like when do you think an inflection can occur with SymbaVO from a revenue recognition standpoint, given where we're at and sort of the launch?

Couples with payer access and we announced that we had a nice win in Q1. So as access comes online, we expect to see an inflection with net sales. We had nice script growth quarter-over-quarter, so sequential script growth, I think, was around 36%. And -- it's just -- and anecdotally, we've heard nothing but positive feedback as it relates to SimbraVo. It works really well. Safety profile has been positive. So we're pleased with where we're at. As a reminder, again, this was a similar playbook that we had with Avelity. We started with 160 reps in Nobelity. We have, on average, roughly 100 reps for SYMBRAVA. We did just announce the expansion because we feel great about that win as well as potential other wins that will be coming down the line.

Yes, it's -- I'll just point out, I mean, this probably goes without saying, but it's a much different market from depression. So it's the launch, Nick is talking about our our data-driven approach to investing, but the launch and navigate that market is much, much different from an access perspective and trial and treatment options. So we've always shared that we're starting discreetly so we can understand feedback from clinicians about the product profile, which Nick touched on, but then also the maybe for plumbing or the inner workings of that marketplace. So we're wrapping our head around it and now we're investing further. So we'd expect to see growth moving forward.

Okay. Sunosi ADHD -- can we just talk about the dream there, if you will, right? Like is beating the non-stimulants from an efficacy perspective, critical given the other inherent attributes of Sunosi relative to stimulants, right, in terms of scheduling and the safety profile considerations there. So it seems like you're trying to offer something in between what nonstimulants are and what stimulants are. And so I'm just wondering how high the efficacy bar is. Well, the advocacy that we saw in the adult trial to date is in line with 1 category of the products you mentioned, which is in line on an absolute change with the stimulants. So that's great. And then there's the distinct tolerability profile, which we think bodes really well for that patient population. Of course, we're running the experiments and we're starting the the 2 trials in children and adolescents. So we'll have to wait for the data. But right now, there's a real world experience, obviously, for the on-label indications. There's the clinical data in adults. And so we have a sense of the efficacy and tolerability profile. The scheduling is different. We see -- there are other data that we have in hand, right, that the cognitive benefit that we saw, we shared that through the SHARP study. That was a couple of years ago now. that was in individuals for the current on-label indications. But that, again, speaks to the differentiated product profile. So we've got to finish these 2 studies. And we'll be providing updates on them throughout the year. And then we'll turn the cards over and see what we have. But already, we know the product is differentiated from what's available which is great and then providing different treatment options to clinicians and patients. That's our job. And then if the product is is approved in the indication then our next job will be to educate clinicians appropriately. But already, it's a differentiated product profile. So we're excited about its potential. We just have to finish the clinical program.

All right. Great. Well, we're out of time. So gentlemen, thanks so much for joining -- yes for having us.

Thank you -- good day.

See you guys.