Investor Update

Jan 13, 2020

Good morning, ladies and gentlemen, and welcome to the Axsome Therapeutics Conference Call. Currently, all participants are in listen only mode. We will be facilitating a question and answer session towards the end of today's call. The instructions will follow at that time. As a reminder, today's conference call is being recorded. And I would now like to turn the conference over to your host today, Mr. Mark Jacobson, Senior Vice President of Operations at Axsome Therapeutics. Please go ahead, sir. Thank you, operator. Good morning, everyone, and thank you for joining us on today's conference call. A press release announcing that Axsome has entered into an exclusive license agreement with Pfizer crossed the wire a short time ago and is available on our website at axsome.com. During today's call, we will be making certain forward looking statements, and 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 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 reports. 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 from Axsome's management team are Doctor. Herriot Tabuteau, Chief Executive Officer Doctor. Cedric O'Borman, Senior Vice President of Clinical Development and Medical Affairs Mr. Nick Pizzi, Chief Financial Officer and Mr. Dave Merrick, Chief Commercial Officer. After the presentation, we will open the line for Q and A. And following Q and A, Herriot will provide some concluding remarks. I shall now turn the call over to Herriot. Thank you, Mark. Good morning, everyone, and thank you for joining us on the call. We are very pleased to announce that Axsome has entered into an exclusive license agreement with Pfizer, which has the potential to accelerate the development of an existing Axsome product candidate and which adds a new Phase 3 product candidate to our late stage CNS pipeline. The agreement provides Axsome an exclusive U. S. License to Pfizer's clinical and non clinical data and intellectual property for reboxetine. Reboxetine is the active pharmaceutical ingredient in AXS-twelve, which Axsome is developing for the treatment of narcolepsy. The agreement also provides Axsome exclusive rights from Pfizer to develop and commercialize es reboxetine, a new Phase 3 stage product candidate now referred to as AXS-fourteen in the U. S. For the treatment of fibromyalgia as well as for other additional indications. Esproboxetine is the SSM antrimor of racemic reboxetine. In 2 efficacy clinical trials conducted by Pfizer, 1 Phase 3 and 1 Phase 2, AXS-fourteen met the primary endpoints and statistically significantly improved the symptoms of fibromyalgia. In consideration for the license and rights, Pfizer will receive $11,000,000 in Axsome stock in upfront cash and up to $323,000,000 dollars in regulatory and sales milestones. The valuable clinical and non clinical data under this license will enable us to potentially significantly accelerate the clinical development and commercialization timelines for AXS-twelve in narcolepsy, while reducing development risks and costs. As a reminder, we recently completed and announced positive results for Phase 2 trial of AXS-twelve in the treatment of narcolepsy and are preparing to advance AXS-twelve into Phase 3 development for the treatment of narcolepsy this year. Through this agreement, we have also expanded our CNS pipeline with AXS-fourteen for the treatment of fibromyalgia. With the planned advancement of AXS-twelve into Phase 3 this year And with the addition of AXS-fourteen, our pipeline now contains 4 differentiated Phase 3 stage CNS product candidates. Axsome has 3 pending U. S. Patents covering AXS-fourteen and 2 pending U. S. Patents in orphan drug designation covering AXS-twelve. Both AXS-twelve and AXS-fourteen are new chemical entities. This license agreement with Pfizer demonstrates Axsome's continued growth and commitment to developing new effective medicines that have the potential to significantly improve the lives of the millions of people affected by distressing CNS disorders. I will now provide further details on the agreement, retropam the status of AXS-twelve and provide a brief overview of AXS-fourteen the clinical data generated to date with this new product candidate. Under the terms of the agreement, Axsome will receive from Pfizer an exclusive U. S. License, the Pfizer data for reboxetine and S reboxetine encompassing a full range of non clinical studies and short term and long term clinical trials. The licensed data includes results from a positive Phase 3 and a positive Phase 2 trial of es reboxetine in the treatment of fibromyalgia. Axsome will have the exclusive right and sole responsibility of developing AXS-fourteen or esroboxetine in the U. S. For the treatment of fibromyalgia and for other indications. Outlined here are the financial terms. Pfizer will receive shares of Axsome common stock having a value of $8,000,000 based on the average closing price of Axsome's common stock for the 10 prior trading days. Pfizer will also receive an upfront cash payment of $3,000,000 up to $323,000,000 in regulatory and sales milestones and tiered mid single to low double digit royalties on future sales. Pfizer will also have a right of first negotiation on any potential future strategic transactions involving AXS-twelve and AXS-fourteen. Benefits of the transaction include the acceleration of the development of AXS-twelve for narcolepsy and expansion of Axsome's late stage pipeline with AXS-fourteen With a full array of completed non clinical studies and a large clinical database for araboxetine and esriboxetine encompassing more than 5,000 patients. The agreement reduces or eliminates the need to conduct certain non clinical and clinical studies. Importantly, the agreement expands Axolent CNS pipeline with a new Phase 3 stage product candidate that has already demonstrated efficacy in fibromyalgia in completed late stage trials. This agreement therefore advances our mission to accelerate the development of life changing medicines for the many people living with difficult to treat CNS disorders now including fibromyalgia. As discussed, reboxetine is the active pharmaceutical ingredient in AXS-twelve, which we are developing for the treatment of narcolepsy. Narcolepsy is a chronic, debilitating neurologic condition characterized by excessive daytime sleepiness and cataplexy. Existing treatment options for narcolepsy are limited and only one agent is currently approved to treat both cataplexy and excessive daytime sleepiness. Now our recently completed Phase II trial AXS-twelve demonstrated statistically significant reductions in cataplexy attacks, excessive daytime sleepiness and improvement in cognitive function and sleep quality as compared to placebo in narcolepsy patients. We intend to initiate Phase 3 development of AXS-twelve in narcolepsy this year as previously disclosed. Axsome has orphan drug designation for AXS-twelve in the treatment of narcolepsy and 2 pending U. S. Patents covering AXS-twelve. I will now provide a brief overview of AXS-fourteen, which is under development for the treatment of fibromyalgia. Fibromyalgia is a debilitating chronic CNS disorder characterized by widespread pain, fatigue, disturbed sleep, depression and cognitive impairment. It affects approximately 5,000,000 Americans, approximately 90% of whom are women. Treatment options for fibromyalgia are limited with only 3 pharmacologic treatments currently approved by the FDA. These agents have variable efficacy and do not address all the symptoms of fibromyalgia. AXS-fourteen or S reboxetine has demonstrated positive results in late stage clinical trials in fibromyalgia. Axsome has 3 pending U. S. Patents covering AXS-fourteen. AXS-fourteen has the potential to address a fuller range of fibromyalgia symptoms than currently approved treatments. Notably, AXS-fourteen has shown effectiveness on symptoms of fatigue. This is an important finding because fatigue is one of the most common and disabling symptoms of fibromyalgia. AXS-fourteen is the SS enantiomer of racemic reboxetine, which is a potent and highly selective norepinephrine reuptake inhibitor. AXS-fourteen is the more selective isomer and enhances descending norepinephrine inhibition. It is a different pharmacologic approach than current treatments and is administered once daily. Shown here are results from a randomized double blind 8 week 267 patient Phase 2 trial of esferboxetine or AXS-fourteen in fibromyalgia. AXS-fourteen met the primary endpoint demonstrating a highly statistically significant reduction in pain as compared to placebo and significant improvement in function measured using the fibromyalgia impact questionnaire as compared to placebo. AXS-fourteen also resulted in highly statistically significant improvements in fatigue measured using the multi dimensional assessment of fatigue scale and in the patient global impression of change as compared to placebo. AXS-fourteen was also evaluated in a randomized double blind 14 week 11 22 patient Phase 3 trial in the treatment of fibromyalgia. Patients were treated with AXS-fourteen at doses of 4, 8 or 10 milligrams daily for placebo. The study met the 2 primary endpoints demonstrating highly statistically significant improvements compared to placebo in the weekly mean pain score and in the Fibromyalgia Impact Questionnaire total score. Similar to the results in the previous trial, in this Phase 3 trial, AXS-fourteen also demonstrated a highly statistically significant improvement in fatigue measured using a global fatigue index for the 4 8 milligram doses and in the patient global impression of change for all doses as compared to placebo. Overall, in 2 randomized double blind placebo controlled trials, AXS-fourteen or esroboxetine significantly improved symptoms of fibromyalgia, including fatigue, one of the most disabling symptoms of the disease as compared to placebo. In these two trials, XS-fourteen treatment also significantly reduced the impact of fibromyalgia and provided global and recognizable benefits to patients. I would now like to turn the call over to the operator to begin the Q and A session. Operator? Your first question comes from the line of Mark Goodman from SVB Leerink. Your line is open. Hi, this is Rona on the line for Mark. The really interesting deal, I was curious if you could talk a little bit about what led up to this agreement and if there is a particular reason why Pfizer did not want to pursue this asset? Thank you for the question. In terms of what led up to the agreement, as you know, we have been developing AXS-twelve FC. Now as you know, reboxetine is a new chemical entity in the U. S. And so therefore, continued development in order to enable an NDA filing would require non clinical studies as well as a full array of clinical data, which could be required in a safety database. This deal made sense. Pfizer has a broad array of non frugal studies, which have already been completed as well as a long term CP database encompassing thousands of patients. So it just made sense to partner with Pfizer in order to accelerate the development of AXS-twelve. And then with regards to your question around AXS-fourteen, biggest disclosures from Pfizer public disclosure state that esloboxetine was discontinued from clinical development for fibromyalgia as part of an overall portfolio review. And that portfolio review occurred around the time of the Wyeth acquisition and that it was not discontinued for safety or lack of efficacy. Strong clinical data we just reviewed bears that out. And importantly, that portfolio decision was made before the Phase III results were available. Got it. Great. Thanks. And just one more question, if I may. I was looking at the pain reduction score for ezriboxetine and it looks like if you took placebo adjusted value, it's around like 0.5. I was wondering if you could help us understand is that clinically meaningful or what is the clinically meaningful bar for pain reduction in fibromyalgia? Thanks. That is definitely clinically meaningful and I think another way to look at by patients. So patients reported that they felt better and that their symptoms were improved. If you look at the patient global impression of change, for example, that was highly statistically significant. And in addition to that, there was a significant improvement in function. So, fibromyalgia, as you know, has numerous symptoms. Your next question comes from the line of Raghuram Silvari from H. C. Wernwright. Your line is open. Good morning. This is Edward Marks on for Ram. I appreciate you guys taking the questions. So to start off, I was wondering is estradoxetine applicable in narcolepsy? And does it have a similar effect to the racemic mixture indication or not? And then speaking of the racemic mixture, does it also have similar activity against fibromyalgia versus the S and anti NMR? Well, thank you for the question. So just to be clear, esterboxyme has not been studied in narcolepsy. So the 2 agents have been studied in different indications. So we've been developing AXS-twelve for the treatment of narcolepsy and we've generated data there. And the data that we shared with AXS-fourteen that has been studied in fibromyalgia. So different indications. Okay. And so just to be clear, none of the preclinical data yet has looked at narcolepsy for AXS-fourteen? That is correct. Okay, thanks. And then looking at the deal terms, I was wondering does the right of first negotiation imply right of first offer? And then just assuming yes, what amount of time must elapse before you guys can seek other offers on AXS-twelve or 14? Yes. What we've disclosed is that Pfizer has a right of first negotiation on any potential strategic transaction with AXS-twelve or AXS-fourteen. So we've not disclosed further details than that. But what this shows is that obviously there is interest should we decide to out license the product or enter into other strategic collaborations with regards to these 2 agents. Okay. And then does Pfizer is or are Pfizer is Pfizer retaining the ex U. S. Rights to ezroboxetine? Or do they have any specific co promotion rights within the U. S? There are no specific co promotion rights in the U. S. And this is a U. S. Only license for us. So therefore Pfizer retains all ex U. S. Rights. Excellent. And then just a last quick question. I'm wondering just if extravoxetine has applicability in other areas like restless leg syndrome or any other indications that you guys are looking at? So we so under the license Axsome has the right to develop AXS-fourteen for all indications. And right now, the focus is on fibromyalgia. That's where the data has been generated that is most late stage. And but AXS-fourteen has been studied by Pfizer in other indications. And we'll be exploring the data for those other indications and making a decision. But right now, the focus is on fibromyalgia. Perfect. Well, thank you guys. I appreciate all the detail. Thank you. Your next question comes from the line of Myles Mentor from William Blair. Your line is open. Hi, guys. Good morning and congrats on the license here. I'm just wondering if you can provide any more granularity on exactly how you believe licensing out these non clinical and early stage clinical data set could accelerate that reboxetine development timeline? The first question, I've got a follow-up after that. Yes. Hi, Myles. We had a little bit of trouble hearing you. We've been some technical difficulties since we're out here at JPMorgan. Could you just repeat that question for us, please? Yes. Sorry. Just on the nonclinical and clinical data sets that you've licensed from Pfizer, how do you specifically expect that to accelerate the reboxetine development timeline in narcolepsy? If you can provide more granularity there that would be great. Yes, absolutely. So the with regards to the acceleration in the timeline, it could be significant. As part of the data set that we have licensed, it includes non clinical data. As you know, new chemical entities are required to have 2 year carcinogenicity data. So those studies by definition take at least 2 years to conduct. So those are part of the data set that we have licensed. So when you think about the potential acceleration, we think that it could be as much as 2 years, but at least 1 year. Okay, beautiful. And then just on the Pfizer public release on the discontinuation of esriboxetine, I know you said it's part of their review of their portfolio agents, but there was a quote in there saying that they do think that it did not provide meaningful benefit over currently approved therapies. You said that they didn't have the Phase 3 data set on hand when they made that decision. I'm wondering whether these differences in fatigue and cognition showed up in that Phase 2 dataset. Did they know that making that public announcement and what gives you confidence that you've really got a good drug for fibromyalgia on your hands here? Thanks. That's it for me. Sure. What gives us confidence is the data. The data are very strong, which show efficacy across a broad range of symptoms. And yes, that decision was made prior to the conclusion of the Phase 3 trials. So we refer you to statements that Pfizer has made, so we can't really speak for them and we would not. But what we're really excited about, all the very strong clinical data demonstrated in 2 efficacy trials that were placebo controlled that were highly statistically significant that showed improvements across a broad range of symptoms and showed also differentiating features, for example, the impact on fatigue. There was a patient forum, which was conducted by the FDA, not too long ago on fibromyalgia, because this is an area of high unmet medical need and fatigue was reported as one of the most disabling symptoms of the disease. So we're very gratified to see that AXS-fourteen not only did improve pain and function, but also improved fatigue. Beautiful. Thanks for the questions. Thank you. Your last question comes from the line of Eddie Hickman from Guggenheim. Your line is open. Hey, guys. Yes, this is Eddie on for Yatin. Congrats on the deal. Just two quick ones for me. Regarding the clinical data that you've gotten, of these 5,000 patients that have been on these drugs, can you give us a breakdown of how many have been on 12 versus 14? And does that include the full safety data for both of these drugs, the full safety data set? And then can you give us a reminder of the IP status you have for both 12 and 14 now? Thanks. Great. So we have not disclosed the breakdown of the number of patients between AXS-twelve and AXS-fourteen, 4,000 to 5 What we can say is that both of those data sets include and encompass long term safety exposure for both drugs. So and that's really important because as you know that would be important to enable NNDA filing. And then with regards to the IT status, for AXS-twelve, as you know, we have been granted FDA orphan drug designation in the U. S. For AXS-twelve that provides 7 years of protection. We've also filed patent applications with for AXS-twelve and should those issue then that would give us even greater runway. And then for AXS-fourteen, we do have 3 pending U. S. Patents and if those issue that would give a significant runway. Both AXS-twelve and AXS-fourteen are new chemical entities in the U. S. And that provides automatic exclusivity of 5 years. And then the patents will obviously extend that significantly. Great. Thanks so much guys. Congrats again. Thank you. There are no further questions at this time. I turn the call back over to the presenters. Well, thank you again for joining us on the call this morning. We are now better positioned to continue the development of AXS-twelve in narcolepsy, which is slated to begin Phase 3 development this year. And we are excited to broaden our CNS portfolio with a new Phase 3 stage asset, which is AXS-fourteen, which has demonstrated efficacy in fibromyalgia. 2020 promises to be a year of continued clinical and regulatory progress for us. In addition to initiation of Phase 3 development of AXS-twelve in regulatory interactions regarding AXS-fourteen, we expect this year 2 NDA filings, one for AXS-five in MDD and the other for AXS-seven in migraine. We expect top line results from our ongoing Phase 3 trials of AXS-five in treatment resistant depression and Alzheimer's disease agitation and top line results from our ongoing INTERCEPT trial of AXS-seven in the early treatment of migraine. Our recently completed financing provides us with a strong balance sheet, which allows us to effectively execute on these milestones. We look forward to keeping you updated on our progress throughout the year. Thank you. This concludes today's conference call. You may now disconnect.