Earnings Call: Q2 2020

Aug 10, 2020

Good morning, and welcome to the Axsome Therapeutics Conference Call. Currently, all participants are in a listen only mode. Later, there will be a question and answer session and instructions will follow at that time. As a reminder, today's conference call is being recorded. Now I'd like to turn the conference over to your host, Mark Jacobsen, Chief Operating Officer at Axsome Therapeutics. Please go ahead. Thank you, operator. Good morning and thank you all for joining us on today's conference call. Our earnings press release providing a corporate update and details of the company's financial results for the Q2 of 2020 crossed the wire a short time ago and is available on our website at axholm.com. 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 investigational 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 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 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 the call today are Doctor. Herriot Tabuteau, Chief Executive Officer Nick Pizzi, Chief Financial Officer Dave Merrick, Chief Commercial Officer and Doctor. Cedric O'Gorman, Senior Vice President of Clinical Development and Medical Affairs. Herriot will first provide an overview of the company and then review recent developments and upcoming milestones. Following Herriot, Nick will review our financial results. We will then open the line for questions. I shall now turn the call over to Herriot. Thank you, Mark. Good morning, everyone, and thank you all for joining Axsome Therapeutics' Q2 2020 financial results and business update conference call. Over the past several months, we continue to advance our AXS-five and AXS-seven product candidates towards NDA submissions in major depressive disorder and migraine, respectively. Across our broad development pipeline, we achieved several important clinical and regulatory milestones, including 2 FDA breakthrough therapy designations. I will provide a pipeline update, highlight the achievements in the quarter and will then review our upcoming milestones. Starting with AXS-five and depression, this morning, in addition to our regular quarterly financial results press release, we issued a separate press release focused solely on the progress in our depression program, including the generation of new clinical data. We remain on track to submit the NDA for AXS-five in the treatment of major depressive disorder or MDD in the Q4. To that end, we have completed a successful pre NDA meeting with the FDA for AXS-five and MDD. In addition, we have completed enrollment in the Phase 3 open label safety trial of AXS-five in MDD, which we call Aconit study to support the planned NDA filing. We are also conducting 3 Phase 2 open label efficacy sub studies of the COMET trial, which will evaluate the efficacy and safety of AXS-five in 3 clinically pertinent MDD patient populations: the COMET TRD trial in treatment resistant major depressive disorder or TRD the COMET AU trial in antidepressant unresponsive MDD, defined as patients who continue to have depressive symptoms despite treatment with 1 standard antidepressant and the COMET SI trial in patients with suicidal ideation. Efficacy results from these studies are expected in the Q4 of this year and will further inform the antidepressant profile of AXS-five. We also initiated a Phase 2 double blind placebo controlled randomized withdrawal study in patients with TRD, which we call the MERIT trial. Results from MERIT trial are expected in the first half of twenty twenty one. The MERIT and COMET TRD trials are being conducted in lieu of the previously planned Phase 3 trial in TRD. This approach will more quickly generate clinically useful information with AXS-five in this treatment resistant MDD population starting as early as the Q4 of 2020. Overall, these new trials will generate additional data on AXS-five across a broad spectrum of MDD patient types by the time of commercialization. We believe that this information will be helpful to prescribers and patients, especially given the new mechanism of action of AXS-five. Moving on to our program in Alzheimer's disease agitation with AXS-five. In June, we received breakthrough therapy designation from the FDA for AXS-five in the treatment of Alzheimer's disease agitation. This designation is supported by the positive results from our ADVANCE-one pivotal trial, which demonstrated a substantial reduction in agitation in Alzheimer's disease patients as compared to placebo. We are on track to initiate the 2nd Phase 3 trial of AXS-five in this important indication in the Q4 of this year. Switching now to our migraine program with AXS-seven. We remain on track to submit the NDA for AXS-seven for the acute treatment of migraine in the Q4. To that end, we have completed enrollment in the Phase 3 open label safety extension trial of AXS-seven in migraine, which we call the ILUMIT study to support the planned NDA filing. As we move towards the filing of our NDAs in the Q4 for AXS-five and for AXS-seven, our commercial team is focused on launch readiness activities to ensure successful commercial execution. Moving next to our narcolepsy program with AXS-twelve. Last week, we received FDA breakthrough therapy designation for AXS-twelve for the treatment of cataplexy in patients with narcolepsy. The designation was supported by the positive results from the Phase II CONCERT study, which demonstrated substantial and rapid improvements in cataplexy and excessive daytime sleepiness with AXS-twelve as compared to placebo. We are on track to initiate Phase III trials of AXS-twelve in the treatment of narcolepsy in the Q4 of 2020. Our industry leading late stage CNS pipeline has now been granted 3 FDA breakthrough therapy designations: OXS-five in MDD, AXS-five in Alzheimer's disease agitation and AXS-twelve in cataplexy in narcolepsy. These designations exemplify our commitment to developing potentially life changing medicines for patients with difficult to treat CNS conditions and highlight our innovative approach to clinical development and the potential for our products to provide significant advances in patient care. With regards to major upcoming milestones, the rest of the year promises to be a busy time. We remain on track to submit our NDAs for AXS-five in major depressive disorder and for AXS-seven in the acute treatment of migraine, both in the Q4. We anticipate efficacy results with AXS-five from COMET TRD trial in treatment resistant depression, the COMET AU trial in antidepressant unresponsive MDD and the COMET SI trial in MDD with suicidal ideation all in the Q4. And we expect to launch our 2nd Phase 3 trial of AXS-five in Alzheimer's disease education and our Phase III trials of AXS-twelve in narcolepsy, all in the 4th quarter. I would now like to turn the call over to Nick, who will provide a financial update. Thank you, Herriot, and good morning, everyone. We remain in a strong financial position as we continue to accelerate our clinical programs and commercial preparedness, while maintaining sound fiscal discipline. We ended the Q2 with approximately $191,000,000 in cash compared to roughly $197,000,000 in cash at the end of the first quarter, a net decrease of approximately $6,500,000 During the quarter, we issued 141,678 shares, yielding gross proceeds of approximately $12,500,000 R and D expenses were $10,500,000 for the quarter ended June 30, 2020 versus $11,000,000 for the comparable period in 2019. The decrease of $500,000 was driven by the completion of a majority of our clinical trials, which were ongoing in the comparable prior period. G and A expenses were $7,200,000 for the quarter ended June 30, 2020 $2,400,000 for the comparable period in 2019. The increase was primarily due to an increase in non cash related stock compensation expense along with the build out of the commercial function. Looking forward, we believe our current cash position is sufficient to fund our anticipated operations based on our current operating plan for at least 2 years. That concludes our Q2 2020 financial review. I will now turn the call back to Mark to lead the Q and A discussion. Thank you, Nick. Operator, may we please have our first question? Certainly. Thank you. Our first question comes from Joon Lee with Truist Securities. Your line is open. Hi. Thanks for taking my questions and congrats on all the progress. A question on the COMET sub studies, are these purely hypothesis generating or is it possible that results can be incorporated into the NDA submission? And I have a follow-up. Thank you. Thanks, Jun, for the question. The COMIT trial will be incorporated into the NDA submission. It is our long term safety study. And then the sub studies of the COMIT trial, which are measuring efficacy in these different patient populations, those data we would also expect to be included in the NDA filing. And regarding the mechanics of how you are going to enroll the patients into the sub studies, will you be enrolling additional patients into the COMET Phase 3 long term safety study to enroll in one of these 3 studies, sub studies? Or will you be selecting from those already enrolled in the long term safety COMET Phase 3 study into these Phase 2 sub studies? And I have one more follow-up after that. Thank you. There will be enough subjects being enrolled in total because as we disclose the number of subjects enrolled in the COMET study is above 800 patients. So there certainly aren't enough subjects in that substudy. So these the substudies are prospectively defined patient groups and also efficacy data is being collected in those patients respectively. And those will be separate fiscal analysis plans. Great. And then regarding your Phase 2 MERIT study, which is a randomized withdrawal study, are you aware it's very interesting that you're taking this approach, which tends to have lower placebo effect. Are you aware of any antidepressants approved on a randomized withdrawal study design? Yes. I mean, if you look at the esketamine data package, so one of the studies that worked was a randomized withdrawal study design. Great. Thank you so much and good luck on all the programs. Thank you. Our next question comes from Marc Goodman with SVB Leerink. Your line is open. Hi, this is Roana on the line for Mark. Thanks for taking the question. I was curious, these sub studies that you have coming out of the COMET trial, did that come from some FDA guidance from your pre NDA meeting? Or is that sort of your own plan of building out more robust data package? So I'll let Cedric speak to that. But yes, just to answer the first part of your question, that did not come from FDA guidance. And this is really us wanting to make sure that there is as much information as possible available to clinicians given the new mechanism of action of the drug and we wanted to study it in a wide spectrum of MD patients. Thanks for the question. The only thing I would add is that given that we have such a rich patient population, a rich MDD patient population in COMET, I mean, it really was a terrific opportunity with the hundreds of patients that are enrolled to look specifically at the important clinical populations of treatment resistant depression, major depressive disorder and then suicidal ideation. And as you'll recall, the long term safety study has been feeded by both our short term treatment resistant depression study and our short term major depressive disorder study. So it really was a very sort of elegant way and important way to look at these patients in order to look at their efficacy outcomes. And as Herriot said, you sort of guide clinical utility and further characterize the antidepressant profile of AXS-five. Got it. Thanks. And then one quick question on could you maybe explain a little bit clinically what the difference is between TRD and unresponsive MDD? Is that something that physicians will easily recognize? And how do we think about that in terms of treatment paradigm? Yes. So they are well recognized clinical populations. So for unresponsive MDD, you're talking about a patient population who like patients who continue to have depressive symptomatology despite treatment with 1 antidepressant. And then for the treatment resistant depression population, that is also widely recognized as patients who have failed to respond or continue to have depressive symptoms despite 2 or more antidepressants. So very distinct groups, well recognized to physicians and prescribers, and that's why we approach the definitions in that way. Great. Thanks. Our next question comes from the line of Charles Duncan with Cantor Fitzgerald. Your line is open. Hi, this is Pete Stavropoulos on for Charles. Congratulations on all the progress and for the initiation of the new studies. One quick question for me. Is there anything you can tell us about the MVMT trial regarding persistence of patients on AXS-seven? So with regards to the MVMT study, we've had great patient retention, I think better than expected. And obviously, when we provide the results of that trial, we'll give you more details. Okay. Thank you. Congratulations again. Thank you. Our next question comes from the line of Matt Kaplan with Ladenburg Thalmann. Your line is open. Hi, guys. Good morning. I wanted to ask a little if you could provide a little more color in terms of what your thoughts current thoughts are in terms of the Phase 3 program in narcolepsy. You mentioned starting two trials. Do you expect to start, I guess, 2 studies simultaneously later this year? Thank you, Matt, for the question. That is the plan. So right now, we're planning to launch our Phase 3 program and we'd like to do that in parallel as much as possible. We do anticipate that 2 Phase 3 studies would be needed. And by launching them in parallel or as close to in parallel as possible, that should accelerate the timing of commercialization. Okay. That's helpful. And then going back to the sub studies, the COMET sub studies and the MERIT study, do you expect the results, the efficacy results from those 4 studies to be included potentially in the label if AXS-five is approved for MDD? So to be clear, these studies are not studies that are being conducted to support specific labeling. However, the data will be included in our FDA package. And what's important too about what we're doing is the indication that we're filing the NDA for is MDD, which is very broad and the data that's being generated in these sub studies can encompass MDD. Okay. That's very helpful. Thanks for taking the questions. Our next question comes from the line of Myles Minter with William Blair. Your line is open. Hey, guys. Thanks for taking the questions. Just firstly on Merit again, just wondering what your definition of treatment response in that trial would be prior to randomization to the withdrawal portion of the study. I'm assuming it's 50% improvement from baseline on the MADJAS, but correct me if I'm wrong there and over what treatment time period would that be? Thanks. So thanks Miles for the question. I'll lead off and see if Cedric has anything else that he'd like to add. So in order to be randomized in the MERIT study, patients have to have not a specific reduction, but they have to be in remission. So these are patients who remit and so which is a very stringent definition and then that is sustained. And then with regards to what a relapse would be defined as, so we have not yet disclosed that, but it would be a return of symptoms. And then maybe just a follow-up on me. You mentioned in parallel the esketamine approval package. This is starting to look a lot like that SPRAVATO-one. So just curious as to whether somewhere future down the track you're going to be running a study in the elderly. I ask it because of a pretty benign safety profile that you saw in the ADVANCE-one study of Alzheimer's disease patients. And just wondering whether you've already sort of overcome that safety concern in an elderly population and why we haven't seen elderly patient trial pop up in these additional trials that you've announced today? Cheers. So certainly one of the benefits of the ADVANCE trial in addition to demonstrating efficacy in Alzheimer's disease agitation is that it did provide us a very clear sense of the safety profile of AXS-five in the elderly. So that's really helpful to us in thinking about additional potential future indications. And while the current sub studies do not include the elderly, in the future, we may certainly look at that patient population in MDD. Okay. And then final one from me. Just in terms of the patient population you're enrolling in Merit, none of those have come from COMET. Yes, these are newly treated patients with MERIT. It's not like you're trying to define remission out of COMET and then use those patients to be randomized into the withdrawal period of merit. These are 2 completely separate trials, yes? So they are 2 completely separate trials. But as you can imagine, in the CONMED study, we have a lot of patients who are de novo, some of whom have TRD and we would look to certainly leverage the recruitment effort as much as possible. So patients from COMET who may have TRD would definitely be included. And that's one of the reasons why we launched the COMET TRD study. It's a very efficient way with our current clinical program to get those patients who have TRD. And so it reduces recruitment effort. It gives us a patient population that's already there and allows us to generate randomized control data in a very efficient and rapid fashion. That's very helpful. I'll leave it there. Thanks guys. Our final question comes from the line of Ram Selvaraju with H. C. Wainwright. Your line is open. Hi, thanks very much for taking my questions. Very quickly on Efroboxetine, I was wondering if you could comment on what some scenarios might be regarding the scope of clinical development, if the FDA might ask you to recapitulate a study or studies that have already been done or if there might be the possibility of you're having to look at a completely different kind of clinical development paradigm with a set of endpoints that haven't yet been evaluated within the context of fibromyalgia, if you could comment on that? So thanks, Ram, for the question. So with regards to AXS-fourteen, as you know and as you pointed out, we do have positive results from 2 controlled trials. 1 of them is the Phase 3 trial and one of them is the Phase 2 trial. And so the simple studies were conducted. We don't believe that the endpoints have changed much, if at all for fibromyalgia. But what we'd like to do is meet with the FDA to actually sit down with them, go through the data and come up with what the next steps are and what the clinical plan is. So before we make any pronouncements and before we speculate, we do want to meet with the FDA. We think we're in a great position given the 2 positive studies to do that. And as soon as we have met with the FDA and we've gotten written confirmation, we'll provide you with all the details. Okay, great. And then on the COMET SI trial, can you comment on whether this trial would, if positive, have any direct implications for the specific utilization of AXS-five in suicidal depression? And if that's potentially a specific indication that we could see included on the label? And if that's the case, would the COMET S5 study be sufficient or what additional development work might potentially be necessary to specifically firm up the evidence and support of the drug in suicidal depression specifically? So thanks, Ram, for the question. So the COMET S I trial is hypothesis generating. And the reason why it's important is one of the features of AXS-five AXS-five that we have seen is its rapid onset of action. So we've seen, statistically significant separation from placebo as early as week 1 and also at week 2. As a reminder, those were key secondary endpoints in our GEMINI trial. And so it makes sense that 4 patients with suicidal ideation that those features would be relevant. So we'll wait the results of the COMIN SI trial and to see whether or not future clinical studies in that specific patient population are merited. But we do think that the results will provide very important information for clinicians as we commercialize the product. Okay. And then just one very quick clarification. So it was my understanding from going through the press release that the COMET TRD and MERIT studies would be effectively the additional basis for supporting a filing in TRD and that COMET AU would not expressly be taken into consideration in terms of the supporting evidence for AXS-five in the TRD indication. Can you just elaborate on whether that is indeed correct or not correct? So the studies these studies are to provide information that we think will be clinically relevant and useful for patients as well as physicians as we launch the product. And these the data from these trials will certainly include it in our MD filing. Just to be clear, the indication that we are filing for is MDD more broadly, which encompasses obviously all of these subsets. And the indication is not specifically for a particular subset, but it's for the broad MDD patient population, which includes all of these subsets. Okay. Thank you very much. Since there are no more questions, I will turn the call back to Axsome's CEO for any concluding remarks. Well, thank you all for attending our conference call today. This is an exciting time for Axsome as we advance our pipeline of potentially life changing medicines. We look forward to a busy rest of the year and to updating you on our progress.