Earnings Call: Q2 2019

Aug 8, 2019

Ladies and gentlemen, and welcome to Axsome Therapeutics Second Quarter 2019 Financial Results Conference Call. Currently, all participants are in a listen only mode. Later, there will be a question and answer session. 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, Senior Vice President of Operations 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 2019 crossed the wire a short time ago and is available on our website at www.axone.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 funding of future clinical trials, regulatory plans, future research and development and possible intended use of cash and investment. 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 weight on these forward looking statements, and the company disclaims any obligation to update such statements. Joining me on the call today are Doctor. Herriot Tabuteau, Chief Executive Officer, who will begin the call by highlighting our recent achievements and upcoming clinical milestones Doctor. Cedric O'Gorman, Senior Vice President of Clinical Development and Medical Affairs, who will continue with a clinical update and Nick Pizzi, Chief Financial Officer, who will provide a financial update. I'd now like to hand the call over to Herriot. Thank you, Mark. Good morning, everyone, and thank you all for joining us on the call today. Over the past 4 months, Axsome achieved significant clinical and regulatory milestones, which have accelerated the clinical development of our potentially 1st in class or best in class CNS product candidates. Our investigational medicines are being evaluated in 7 ongoing clinical trials across 6 different indications. And if successfully developed has the potential to improve the lives of millions of patients living with CNS disorders. I will provide an update on key developments in the quarter as well as upcoming clinical milestones. Let us start with AXS-five, Axsome's novel, oral, investigational NMDA receptor antagonist with multimodal activity. Following the receipt of breakthrough therapy designation for AXS-five in major depressive disorder or MDD and a successful breakthrough therapy meeting with the FDA, we have launched 2 new studies with AXS-five. The GEMINI study, which is a Phase 3 randomized double blind placebo controlled trial in MDD, which enrolled the first patient in late June and the Phase 3 open label long term safety study in MDD and treatment resistant depression or TRD, which enrolled the first patient in July. To date, the GEMINI study is approximately 30% enrolled. As a reminder, based on the results of the breakthrough therapy meeting, the previously completed ASCEND trial of AXS-five in MDD is considered pivotal and sufficient with positive results from either the GEMINI trial or our STRIDE-one trial of AXS-five in TRD to support an NDA filing for AXS-five in the treatment of MDD. We remain on track to report top line results from both the STRIDE-one and GEMINI trials in the second half of twenty nineteen with an NDA filing anticipated in the second half of next year. AXS-five is also being evaluated for the treatment of agitation associated with Alzheimer's disease in our ongoing ADVANCE Phase twothree trial. The ADVANCE trial is now just under 60% enrolled and top line data is anticipated in the first half of twenty twenty. Turning to AXS-seven, our novel oral investigational medicine with distinct dual mechanisms of action under development for the acute treatment of migraine. The MOMENTUM Phase 3 trial of AXS-seven in this indication continues to enroll ahead of expectations. To date, more than 70% of the target number of patients have been randomized and we remain on track to report top line results in the second half of twenty nineteen. In the second quarter, we held an end of Phase 2 meeting with the FDA related to AXS-seven. Based on the results of this meeting, the ongoing MOMENTUM trial, if positive, will be the only efficacy trial required to support an NDA filing for AXS-seven for the acute treatment of migraine. Momentum is being conducted pursuant to an FDA special protocol assessment. The study is enrolling only patients with a history of inadequate response to prior acute treatments and uses both a placebo as well as a potent well established active comparator. The study therefore sets a high bar and if successful, we'll demonstrate the unique profile of AXS-seven in this difficult to treat patient population. We recently initiated a Phase 3 open label long term safety extension study of AXS-seven to build the safety database required for potential NDA filing, which we anticipate in the second half of next year. Our 3rd clinical stage product candidate is AXS-twelve, our novel, oral, potent and highly selective norepinephrine reuptake inhibitor being developed for the treatment of narcolepsy. It is being evaluated for the treatment of the symptoms of narcolepsy in the Phase 2 randomized placebo controlled CONCERT trial. To date, enrollment in this trial is approximately 50% of target and we remain on track to report top line results in the second half of this year. So the next several months are expected to be highly active and have the potential to be transformative for Axsome with top line data expected from the following trials before year end. Our Phase 3 STRIDE-one trial of AXS-five in TRD, our Phase 3 GEMINI trial of AXS-five in MDD, our Phase 3 MOMENTUM trial of AXS-seven in the acute treatment of migraine, our Phase 2 CONCERT trial of AXS-twelve in the treatment of narcolepsy. In addition, recent financing activities have enabled us to fully fund all 7 of the disclosed clinical trials and further extend our cash runway into the Q4 of 2021, which is well beyond top line data readouts for all ongoing efficacy trials. Favorable outcomes from these clinical trials would position us to file potentially 2 NDAs in 2020. I would now like to hand the call over to Cedric to provide some additional details on the recently launched GEMINI trial. Thank you, Herriot. In late June, we enrolled the 1st patient in the GEMINI or glutamatergic and monoaminergic modulation in depression study. GEMINI is a Phase 3 randomized double blind multicenterplacebo controlled trial of AXS-five in patients with MDD. Approximately 300 patients with a confirmed diagnosis of moderate to severe MDD will be randomized to treatment with either AXS-five or placebo for 6 weeks. The primary efficacy endpoint is the change in the MADRS total score from baseline. Other assessments include safety parameters, other clinician rated scales, as well as patient reported outcome measures. The GEMINI study largely replicates the design of our positive ASCEND trial with 2 major differences being the use of a placebo control in GEMINI versus an active control in ASCEND and the larger size of GEMINI. We look forward to the readout for this trial in the second half of this year. With that, I would now like to turn the call over to Nick for a financial update. Thank you, Cedric, and good morning, everyone. I will focus on key highlights in the quarter and provide some financial guidance. We ended the 2nd quarter with $53,800,000 in cash, up from $42,600,000 of cash at the end of the first quarter. This increase reflects an equity raise of approximately $20,000,000 conducted in May via our ATM facility. G and A expenses were flat year over year at $2,400,000 R and D expenses in the 2nd quarter were $11,000,000 which was higher than trend reflecting the significantly faster than expected enrollment of our Phase 3 MOMENTUM trial of AXS-seven in migraine and upfront costs associated with the initiation of 3 new clinical trials, the Phase 3 GEMINI study of AXS-five in MDD, the Phase 3 open label safety study of AXS-five and the Phase 3 open label safety study of AXS-seven. R and D expenses are expected to decrease in subsequent quarters as multiple trials conclude later this year. We believe that our current cash position fully funds all disclosed clinical trials and will be sufficient to fund our anticipated operations based on our current operating plan into the Q4 of 2021. We currently do not anticipate any new equity financings prior to the readout from our Phase 3 efficacy trials. That concludes our Q2 2019 financial review. I will now turn the call back to Mark to lead the Q and A discussion. Thank you, Nick. Operator, can we please have our first question? Mark Goodman with SVB Leerink, your line is open. Yes. Good morning. Two things. 1, just on the narcolepsy study, can you talk about what should we be expecting and remind us of the proof of concept of this molecule in this indication? And then second of all, obviously, you're moving much faster than you probably thought you were 6 to 8 months ago. Talk about your thoughts on commercial marketing of the products and how you're thinking about the strategy right now? Thanks. Thank you, Mark, for those questions. So with regards to narcolepsy, as a reminder, this is a randomized double line placebo controlled crossover study. And what we're looking for is to compare AXS 12 to placebo with regards to the key symptoms of narcolepsy. So those would be cataplexy and we will also be looking at excessive daytime sleepiness. So this will be the 1st randomized controlled trial of AXS 12 in this indication. So we're looking forward to those results. Because of the crossover design of the study, we do think that it should increase the ability to detect the signal in this relatively small but well designed study. And in terms of the proof of concept thus far, the proof of concept for AXS-twelve in narcolepsy comes from non clinical data. So in the orexin deficient mouse model of narcolepsy, AXS-twelve or rivositene was shown to potently reduce narcoleptic episodes. And that translated into positive results in a small pilot trial, which was open label. This was a 12 patient study in patients with narcolepsy and that did show a reduction from baseline in cataplexic episodes as well as improvement in excessive daytime sleepiness symptoms. With regards to our commercial plans, outside of the U. S, we've always said that we intend to partner our products. So that is still the plan. But in the U. S, we fully expect to commercialize our products ourselves. And in order to do that, we want to make sure that we have in place the appropriate commercial leadership and we look forward to updating you on our progress on that front. Joon Lee with SunTrust Robinson Humphrey. Can you clarify the extension of the STRIDE study? My understanding is that TRD study STRIDE is ongoing in order to collect additional safety database. And on top of that, you started an open label study. What is the minimal number of patient years you need for the NDA submission for the safety? And how many patient years have you collected so far? And based on that, how long do you need to run the study the STRIDE study beyond the original plan in order to satisfy the NDA requirement? And also the second question is that it might come as a silly question based on the results of the ASCEND study, but what is the powering of GEMINI and also the STRIDE? Thank you. Okay. Thank you for all those questions. So So the first question had to do with the STRIDE-one extension and how that relates to the open label safety study, which we launched. So we did launch in the quarter. Actually in July, we enrolled the 1st patient in a long term open label safety extension study of AXS-five. That study is meant to capture patients who are exiting the STRIDE-one trial in TRD as well as the AGEMINI trial in MDD. And the reason for that is in order to file an NDA, we do need to have a safety database that incorporates both patients with MDD as well as patients with TRD. In terms of the patient years that are needed, the guidance that we've received from the FDA is for the NDA filing. We do need to have 300 patients who've been treated for 6 months with AXS-five and 100 patients who've been treated for 1 year. Now prior to the FDA Breakthrough Therapy meeting, we did not have an open label safety extension study in place. And we very quickly started that study and that study is ongoing and that will of course be a gating factor to us filing an NDA. And that is what is driving our anticipation of filing an NDA in the second half of next year. And in terms of the STRIDE-one trial, in order to capture patients who have TRD, we did, as you know, continue enrolling patients in that study even though we had reached the target number of patients who have been enrolled in that trial. And so that is the purpose of the extension of enrollment in STRIDE and also the purpose of the launch of the open label safety extension trial. With regards to the powering of the GEMINI study, so what is nice about GEMINI is that it builds on the positive results from the ASCEND trial. That study was positive with roughly 40 patients per treatment arm and GEMINI has 150 patients targeted per treatment arm. The way that we're thinking about the powering of not only both Gemini and STRIDE is where we looked at the effect sizes, which we're seeing on average for antidepressants that have been approved. So these are antidepressants that have been shown to be active. That effect size is roughly in the range of 0.3 to 0.35. And we have powered both Gemini as well as Stride at the 90% level to that effect size. So just to clarify on the original question of STRIDE, So when can we expect top line from STRIDE? Is there a limiting factor that you have to actually complete the open label study before you can disclose or unblind the STRIDE study? Or can you just tell us a little bit about what is the gating factor for top line in the STRIDE study? And when can we expect that data? So we anticipate top line results from the STRIDE-one trial before year end, so in the second half of the year. And the way that we're thinking about it is since the study is fully enrolled, in other words, since we've reached the target enrollment and we're actually beyond the target number of enrolled subjects, we're working backwards to make sure that we meet the guidance of year end. And so Cedric, am I is there anything else to add to that? No. Yes, I agree with that. And just one other consideration our team is taking into account is to ensure that an appropriate number of patients with treatment resistant depression are included in the long term depression safety data set. Great. Well, thank you so much and good luck with all the data readouts. Thank you. Ram Selvaraju with H. C. Wainwright. Your line is open. Hi, thanks very much for taking my questions. Very impressive array of clinical trials currently ongoing all simultaneously. So congrats on being able to achieve that from an operational standpoint. I just wanted to get some additional clarity on your thinking regarding the sequence and timing of the release of data from STRIDE and GEMINI. Do you have a sense specifically at this juncture of what the delta is likely to be between release of those two results? And can you comment on the current status of enrollment in Gemini? And furthermore, do you have a definitive sense of which data release is likely to come first? And if so, can you tell us which one would? Thank you, Ram, for the question. With regards to enrollment in GEMINI, the study was launched in late June and we are currently approximately 30% enrolled in that trial. So we very much feel that we remain on track to report results for that study by year end. And with regards to the sequencing of data readouts for STRIDE and GEMINI, a lot will depend on the continued enrollment in GEMINI. So right now, it's hard for us to give greater granularity than that. Now having said that, they remain 5 months in the quarter I'm sorry, in the year. And we have a number of clinical trials, which we expect to read out by year end. So everything will be compressed. And the reality of it is that the possibilities are that Stride and Gemini could report sequentially or they could report simultaneously. Okay. Can you also comment on the nature of the label that could be obtained for AXS-five assuming that both STRIDE and GEMINI hit. So I just wanted to clarify that this would allow you to obtain a label hypothetically in both TRD and MDD. And then if you could also talk a little bit about what additional clinical work might be necessary in order to position AXS-five specifically as maintenance therapy? Thank you. So with regards to the label, to clarify the indication would be for the treatment of major depressive disorder, so for the treatment of MDD. And that indication would be enabled by the previously reported positive results for the ASCEND trial and positive results from either the STRIDE-one trial in TRD or the GEMINI trial in MDD. One nuance is that, if STRIDE is positive and in that case, STRIDE will be part of the data package even though the indication would be for MDD. The STRIDE data would be described in the clinical trial section of the package insert. And in addition with regards to a label specifically for TRD, that would require another study in TRD. But importantly, the guidance that we've received from the FDA with regards to that study is that that study could also be a placebo controlled trial. So this should be an easier study to conduct than the current STRIDE-one trial. And with regards to additional clinical studies or clinical data, which would be required for a maintenance indication. To be clear, we do not need to conduct these long term maintenance studies or a long term maintenance study prior to an NDA filing. And typically, those are post marketing commitments. And those involve long term studies usually with a randomized discontinuation design. Okay. And then just with regard to how you're thinking about the AXS-five commercialization effort and the nature of the difference between the TRD and MDD indications. Could you maybe comment a little bit on the patient profile in TRD versus MDD and what the treatment landscape looks like currently in each of these patient populations? Because one could imagine that TRD patients are a lot more recalcitrant than MDD patients. And therefore, if you were eventually to have a label for AXS-five in TRD, the drug might be more privileged from a competitive standpoint, but I just wanted to make sure that I'm thinking about this in the right way. So we're very much looking forward to the clinical data from both Gemini as well as STRIDE since that will form the basis of how we promote AXS-five. And but with regards to the treatment landscape and how these patients are treated, it's important to remember that currently roughly 70% of patients fail frontline treatment. So there are a lot of patients out there who are not adequately treated currently. And the one of the reasons for one of the reasons we believe for the large percentage of treatment failures is that most drugs, in fact, it's thought that all currently approved antidepressants for MDD target the mononaminergic pathway. So from a commercialization perspective, what we're excited about with regards to AXS-five is its novel mechanism of action, the fact that it hits NMDA. And so therefore, it would represent a novel mechanism of action for the 70% of patients who currently have inadequate response to frontline treatment, as well as for patients who have treatment resistant depression. And those are patients who failed 2 drugs of adequate course and duration. So there's clearly overlap there in terms of clinical need and there's broad clinical need in the entire MDD population including patients with TRD. So if we so assuming that that's right is positive, that would demonstrate that in TRD where there is even greater clinical need that and also where the bar is much higher in terms of getting clinical response that AXS-five is effective in that treatment population. And regardless of what happens with T or D, the current clinical profile of AXS-five based on the ASCEND trial is one where we see a rapid onset of action and apparently potent response since we did show efficacy versus an active comparator as well as this novel mechanism of action. Great. And just as a clarification regarding the points you just made. Is it sort of the baseline scenario that if AXS-five is approved with an MDD label that you would expect it to be deployed only in patients who have previously been tried on and failed an SSRI? Or do you think that it could be elevated to the frontline drug of choice because of aspects like the rapid onset of action? Assuming that the I'll turn it over to Cedric to give his thoughts. But assuming that the clinical profile that we've seen thus far in the ASCEND trial are maintained, there's no reason to not think that AXS-five could be used upfront. And also assuming that we continue to show clinical success in our other trials and specifically in the STRIDE-one trial then obviously that would be a very significant development since it would show the ability of AXS-five to also treat patients who historically have been very difficult to treat, hence the name treatment resistant. Cedric? Yes. Ariel, the only thing I would add is that if there's a real compelling reason to use AXS-five for existing antidepressants such as the reasons you gave faster onset of action and better efficacy as would be suggested from the ASCEND trial. Then I think the question becomes, is the safety profile comparable or better? And so far, the data would suggest that AXS-five is safe and well tolerated. So in that context, I think, yes, there's no reason that one wouldn't see a compelling argument to use AXS-five as a first choice medication if approved in MDD. Great. Thank you very much. Bert Hazlett with BTIG. Your line is open. Yes. Thank you for the all the significant answers here. Just a quick question, maybe you answered it, maybe I missed it. In terms of timing of the open label extension completion, given that that's the rate limiting step to potentially filing for this program? Thank you, Bert, for the question. We launched open label safety extension studies recently. And assuming 1 year of treatment, then that would put us roughly in the second half of next year, hence the guidance for NDA filing. Okay, terrific. Couple of other questions. In terms of GEMINI and the trial design, are you taking any steps to manage the placebo effect in that study? Obviously, you've had material success in the study with the active comparator, but are you doing anything to manage placebo effects? And how many centers is that GEMINI study being conducted in? So I thank you for those questions. I'll answer the second question then I'll turn it over to Cedric who will answer the first. With regards to the number of centers, we're currently in approximately 30 centers. Pedro? Yes. Hi, Burch. Placebo response is definitely a concern in the U. S. And CNS trials have been particularly vulnerable to high placebo response. However, data would suggest that placebo response is on the rise. What we do know is the placebo response is driven by expectation bias, the expectation that subjects are getting an active drug. Now in the ASCEND trial, the chance of getting an active agent was 100%, namely they could get access with LIBOR bupropion. So that set a higher bar for separation. But we still managed to separate from the active comparator bupropion. Because the GEMINI trial is placebo controlled, there's a lower chance of getting an active agent than in the ASCEND trial. So it's 50% versus 100%. Therefore, this might be seen as an advantage for GEMINI. However, the positive ASCEND trial also preceded the GEMINI trial could also theoretically heighten expectation bias for GEMINI. But with all our trials, we do incorporate extensive quality control measures to ensure that the appropriate patients are enrolled and that the trials are well run. And GEMINI has been designed to replicate as closely as possible the ASCEND trial. And of course, GEMINI is a significantly larger trial. So while ASCEND enrolled 80 patients, GEMINI will enroll 300. So this would further increase power to detect a difference. And so far, we've been pleased with the design and the conduct of all our clinical trials to date. Okay. Thank you. And just one more on the financial side. With regard to the ATM, you're committed to not tapping that for the at least in the near term foreseeable future? Yes. I'll turn it over to Nick to answer that. Yes, sure. Thanks for the question, Bert. As you know, we did use the ATM facility in May. We used it very opportunistically. But given our currently our strong financial position, which provides runway well beyond the data readouts of all of our ongoing efficacy trials. As we stated earlier, we currently do not anticipate future equity financings based on our current operating plan prior to the readout from the Phase III trials. Okay, terrific. Thank you. Congrats on the progress. Thank you. Matt Kaplan with Ladenburg Thalmann. Your line is open. Hi, good morning and congrats on the progress. I wanted to dig in a little bit to the AXS-seven program in migraine. Can you describe a little bit more in detail in terms of the momentum Phase 3 design? And I guess what you hope to show with AXS-seven there in terms of potentially a differentiated profile versus other migraine treatments that are currently available with that study? Good morning, Matt, and thank you for the question. So just as a reminder, AXS-seven is enrolling in the LOMENTUM trial, which is a 4 arm study. So the design of that study is that patients importantly with a historical inadequate response to prior acute treatments would be randomized to treatment with either AXS-seven, placebo, risotriptan, which is a very potent and well characterized active comparator, which is known to work in which is approved for migraine and also mosaic meloxicam, which is one of the components of AXS-seven. As I mentioned, one important design element of the study is that patients only patients who have failed or with a history of prior inadequate response to acute migraine treatments. And this is measured using the MTOC 4, which is the migraine treatment optimization questionnaire. So only those patients are allowed to be enrolled into the trial. So that sets a high bar because this is a population which is known to be difficult to treat. The other reason why there's a high bar set in the study is we are using not just the placebo comparator, but the active comparator rizatriptan, which is known to be one of the fastest and most fastest acting and most potent kriptan. So, if we are able to show positive results in the MOMENTUM trial, it would highlight and confirm what we believe to be a potentially differentiated profile for AXS-seven. So that profile as compared to other agents both agents that are approved as well as agents that are in development is based on efficacy. So the point of differentiation with AXS-seven has always been efficacy. If you look at numerous patient surveys, the most common reasons for patient dissatisfaction all boil down to inadequate efficacy. So patients report that drugs don't work bad. Drugs their current migraine treatments either do not work fast enough. They don't work well enough, meaning they don't provide sufficient pain relief or consistent pain relief or that the pain comes back. And with regards to AXS-seven because of the pharmacokinetics of the mosaic meloxicam component of AXS-seven, we would expect at least rapid absorption, which could translate into fast onset of action. It uses a dual mechanism of action. So that should contribute to greater pain relief and more consistent pain relief. And it incorporates Mosaic meloxicam which has a half life of at least 20 hours which should help to reduce symptom recurrence. Thank you. Great. Thanks. And then just a follow-up on that in terms of the momentum and potential NDA filing for AXS-seven. How are you going to achieve the safety database required for the NDA filing? We launched in July a Phase 3 open label safety extension of AXS-seven. So open label safety extension study of AXS-seven. And the reason for that is to enable an NDA filing. So that study is underway and we are capturing patients who are exiting the MOMENTUM trial in that study. Okay, very good. And just one more follow-up on, I guess, June's question. So kind of fully understand the outcome of the breakthrough designation, breakthrough therapy meeting that you had for AXS-five. In terms of what is necessary or the potential path for filing AXS-five and MDD and what and the potential paths for filing AXS-five in TRD. Can you describe those just to be just so we fully understand that the different pathways there? So for MDD, the PACHA filing for MDD incorporate the using the ASCEND trial, which has been deemed to be pivotal as one of 2 adequate and well controlled trials, which are required for an NDA filing. Now the second study and this is for MDD. The second study could come in the form of a positive readout from either the STRIDE-one trial or the GEMINI trial. So there are 2 pathways there to an NDA filing for MDD. And with regards to TRD, assuming that the STRIDE-one trial is positive, we would need one additional positive trial in TRD. Importantly, that second positive trial that second trial in TRD could use a placebo control. There are no further questions at this time. I would now like to turn it back over to Axsome's CEO, Herriot Tabuto for closing remarks. Well, thank you all again for joining us on the call. The Axsome team is committed to advancing our clinical pipeline with the goal of developing new medicines for difficult to treat CNS disorders. We look forward to the rest of the year and to updating you on our continued progress. This concludes the Axsome Therapeutics' 2nd quarter 2019 financial results conference call. We thank you for your participation. You may now disconnect.