Water.
Okay, we'll go ahead and get started with the next one. I'm Ben Burnett, Senior Small & Midcap Biotechnology Analyst at Wells Fargo. Pleased to be here with the Axsome management team. We have Nick Pizzie, CFO, and then to his right, we have Mark Jacobson, COO. Thank you all.
Thanks for having us.
Yes.
Yeah, great to be here.
I think just to kick it off, maybe we could just start by, if you just give us a quick overview of Axsome and just frame any near-term catalysts that we should focus on.
Sure, I'd be happy to. Maybe I'll start and then hand it over to Nick. Axsome, CNS-focused biopharma. We have three products that are commercial products. Those are AUVELITY for major depressive disorder and agitation associated with Alzheimer's disease. There's SYMBRAVO for migraine, and Sunosi for excessive daytime sleepiness and obstructive sleep apnea and narcolepsy. All products are growing robustly. Nick can share some of those numbers. Of course, for AUVELITY, we have recently expanded that team. We are seeing robust growth beginning in major depressive disorder, or I should say, continuing. The launch effort around the newest indication, Alzheimer's disease agitation, is underway. Both of those efforts have started to come online this summer. We can get into the details, but that's the commercial business.
The company is. The foundation and growth is better than it's ever been, and we're very excited about the opportunity moving forward for the on-market products. Behind those, we have a very late-stage and deep pipeline. We can cover those, but very quickly, that covers a number of indications and states of development. We have AXS-12 for narcolepsy. That is under NDA review with the FDA. We have a PDUFA date of May 1, and then multiple phase III trials underway in indications from binge eating disorder, ADHD, smoking cessation. A lot of additional ways to deliver value to patients, with potential label expansion efforts for the products that are on market now and new entrants. We're happy to cover those, but the pipeline is also more robust and late-stage than it's ever been.
The foundation is great, and we're really excited about where we are today, about three-quarters of the way through the year. I'll turn it to Nick in case you want to review some of the financials.
Yeah, sure. As Mark said, it's a unique and exciting time now at Axsome. It's really like the next chapter of Axsome's story, and I say that because we have the approval and the launch in ADA, and secondly, we've more than doubled the sales team for AUVELITY. Super exciting about the back half of the year. We're seeing already impacts from both the expansion, significant impacts on the expansion, which we could talk about a little bit more later on the NBRx, and also as it relates to the indication and taking a look at subpopulations and seeing that dynamic growth that we have. We're really pleased with that.
From a financial perspective, balance sheet, we are in the best situation that we have been really since inception of the company, right around $330 million as of the end of Q2, takes us to cash flow positivity, which we have shared in the past. That being said, we are also seeing in the P&L significant operating leverage in the back half of the year, where we really feel we are setting ourselves up in the first half of the year with the SG&A, with the expansion. The P&L has already been impacted on where we expect to be for the back half of the year. Really plateauing out from an OpEx and seeing a nice growth on the top line. Seeing the operating leverage and eventually getting to profitability.
That is a fantastic overview. I want to start with AUVELITY and agitation. It is obvious it is early days, and you have been on the market only for a few months. What has been the early kind of doc feedback there?
The early feedback is, obviously it is very early, but we are very excited about the feedback we are getting, which is in line and matches the profile that we saw in the clinic, and then the data that are on the label. Robust efficacy. It is working quickly, and the safety and tolerability profile is very compelling, especially in this patient population that is considered a frail or at higher risk patient population. That is great. It is still very early, and we want to. The effort here and a key focus for us is driving trial and ensuring we are educating potential prescribers about the product profile and then ensuring that if they have a potentially appropriate patient that they are interested in trying the product in, that they can do so. That can vary depending on the setting, long-term care or a community setting.
We have a sampling program in place to facilitate that. The majority of patients have Medicare. So that is a different type of. There is no copay assistance program in place for those patients. There are other ways to support potential trial, primarily through sampling efforts.
Yeah. Quantitatively, what we are seeing with the launch is prior to launch, LTC Medicare 65+ was less than 20% of our total NBRx. Most recently, we are now north of 30% of our NBRx is that specific subpopulation. Really seeing the growth there, as it relates specifically for the indication.
Very cool. Actually, I want to ask about the script data. I think maybe this kind of feeds into what you were just kind of mentioning there. I think a lot of us are There is a long history of script data because Abilify has been around for depression, so we have kind of seen that historical reference point. What are some of the considerations that we should have when we look at third-party script data?
With just in general, moving forward with respect to AD agitation, the folks tend to look at IQVIA and Symphony scripts. Both capture Alzheimer's disease agitation scripts. We are not blocking scripts. Scripts are available. Sampling is not captured in scripts, so those are true samples. Sampling is not available in the long-term care setting. One area to look at, and this is both for long-term care and the community setting, is the titration pack. There are sample titration packs. Again, those do not show up in weekly scripts. There is also trade titration packs, where someone can just start a patient with a script on the titration pack. We would expect that to increase in both the community setting once trial is underway through samples, but also as a reflection of long-term care uptake. We are just starting long-term care uptake.
With respect to long-term care, the data providers project long-term care scripts differently. Symphony, I believe, captures both new-to-brand scripts and total scripts, or that it includes long-term care estimates in both of those segments. Whereas I believe IQVIA, it is only capturing new-to-brand scripts, or I am sorry, long-term care scripts in the total scripts, not new to brand. Those are some considerations. Any you would add, Nick?
Yeah, I would just say, if your question was how should the street interpret the scripts, and how you gauge success? One of the things that we looked at and we've always shared is NBRx. NBRx lead to the TRx. When you look at the evolution just this year alone, in Q1 , on average, through Symphony Health data, we are averaging around 2,400 NBRx per week. That number grew to 3,000 NBRx in Q2, so roughly, what? 25%, 26% from Q2 - Q1. In Q3, we're seeing continued growth, and that most recent NBRx week was over 3,700. Last couple of weeks have been on average around 3,700. We are now starting to see that impact from the expansion. As we've shared, it takes typically three - six months from the time when you do an expansion to when you start seeing that impact.
We expanded the community setting team in Q1 and Q2, so now is the time that we should see it, which we are. Even in, I would say, probably a more difficult month in the month of August, where typically things start to simmer down a little bit before September and October, but we're seeing that increase during that. Why is that important? The NBRx will ultimately lead to the TRx. These NBRx are filling essentially the pipeline that we will see in the TRx in the months to come.
Okay. That's very helpful. Maybe just one other question on this front. In agitation, when someone gets a sample titration pack, how long does it take them to kind of go through that to where they may then convert onto a full script?
The titration, according to the label, is a three-week titration. The sample titration pack matches that. When that converts to a script is We're monitoring that now because in a real-world setting, when someone fills a script, that's more than just, hey, are they following the label titration? It can be earlier, it can be later. So we're monitoring to see what it nets out on average. The point is, we've been sampling since this summer, since we launched the product in mid-June. We are seeing, and we expect to continue to see conversion from those samples into scripts for the maintenance dose.
Okay.
Yeah. Just to maybe double back on what Mark shared earlier, the demand that we are seeing for AUVELITY is through the titration pack scripts, as well as the samples that our reps are providing to the doctors. We haven't shared specifically the amount of samples, but those samples are robust. The majority of the demand is coming from samples. They are not reported in the script numbers. The titration pack prescriptions obviously are reported. We would anticipate that there will be eventually a transition from those samples to potentially the maintenance dose. They will likely not go on a titration pack script. It'll go directly to the maintenance dose.
Okay. That's fantastic. I guess, I know, again, it's early days, but do you have a sense for kind of the phenotype of patient that is in agitation that's taking Abilify? Are they often switched patients from Rexulti? Are they-
It's very early and it's-
Okay
very early, so we're watching that. We are seeing, though, frontline utilization, but again, it's very early. So exactly how this evolves, we'll see. But it's very exciting where it's rare these days where companies have the opportunity to really address an unmet need. So now, you have two companies doing that, and there are two products that are now labeled in AD agitation. There was wide, and still is, off-label prescribing for this indication due to the lack of approved medicines. So now what we're seeing is just growth overall, as opposed to, say, one eating another's lunch. We are seeing on-brand growth, which is great, but it's still so early to actually say, hey, the specific type of patient profile that we expect to continue or change. It's hard to say, but right now, we like the starts of the trends that we're seeing.
If doctors want to write it first-line, they have the ability to because we have the coverage.
Yeah.
Every Medicare participant has AUVELITY coverage, and north of 85% of them have coverage with no PA or, and first line or potentially one step edit. So coverage is fully available for Part D patients if the HCP decides to write it.
Excellent. You mentioned earlier about the long-term care facilities and the growth you are seeing in that segment. I would assume that it is a pretty wide net and it is going to take some time to get to all those touchpoints and sort of put that under the commercial umbrella. When do you expect to be there in full force, in selling to the long-term care facilities?
One of the main differences for these facilities, the jargon is that they are activated, or you bring them online, right? So you are engaging with potential prescribers there. So the doctors who are seeing patients, diagnosing them, who may be prescribing, but you have additional stakeholders in long-term care that lead to ultimate prescribing. Oftentimes there are, depending on the type of facility, if it is a part of a network, those stakeholders include a director of nursing, pharmacy, if the pharmacy is on-site or if it is part of a network that may be an umbrella over different facilities. So there are steps and activities that occur in that network of stakeholders to bring a facility online so that way a new product can be written within those facilities.
Now you can see certain kind of PRN or ad hoc writing here and there by certain prescribers in long-term care, but that's different from what you're talking about where you're really bringing long-term care facilities online, so they can write for patients that have symptoms of agitation or now major depressive disorder in those facilities. The reason I mention that, just to pause on that quickly, is we were not engaging with long-term care facilities at all prior to the approval of this new indication, AD agitation. So now we can actually detail on both indications in long-term care. We'd expect to see growth in a long-term care setting from both indications.
The process that I was talking about with different stakeholder engagement, getting the product or the different NDC codes or trade configurations into those systems, it takes about a minimum of one month on any given facility. So we're just now starting to see the impact. We touched on that with looking at the weekly scripts, the trade titration pack, NDC code, that gives you a sense. So it's just starting to come online, but really it's not going to be steady state or fully online for some time, and we're excited about the opportunity there. It's the product profile for sure, but then also how patients have been treated historically, off-label antipsychotics. There are dynamics at play with respect to how these facilities are monitored and then rated according to how many atypical antipsychotics they prescribe.
AUVELITY, of course, is not an atypical antipsychotic, so there are dynamics at play there and considerations from, say, a governance and buffering perspective that AUVELITY fits into nicely.
Great. You've said previously, there's sort of peak sales guidance around this or expectations, $4 billion apiece for MDD and agitation, which is great. I wonder if you could maybe articulate what does that kind of apply in terms of market penetration in those two categories?
I think if you just take a look at where we are today in MDD specifically, right? We are 26 basis points of the total antidepressant market, so that's 0.26 of one percent, and we're annualizing as of the end of Q2, somewhere around three-quarters of a billion dollars. You can kind of do the math where if we just get to one percent of the antidepressant market, we're north of $3 billion already. One of the leading indicators on where we are going right now, I shared 0.26 in TRx. We're 0.42, sorry for all the numbers, but we're 0.42 in NBRx. That's a leading indicator of where the T's are eventually going to go, and that 0.42 is continuing to grow as well. Like I said, we're just starting to see the impact of the field force.
As that continues to grow, we'll see the N's and the T's continue to grow.
That's MDD.
Yeah.
AD agitation, obviously we've There's, at this point in time, since we've just launched the product, there's effectively no penetration. It's a smaller patient population. However, there are fewer treatment options on label, so you would expect potentially at steady state, a higher penetration in the market overall. But it's so early, obviously, we've just barely scratched the surface there.
Okay.
But as a reminder, we have exclusivity into, assuming we get pediatric indication, through the end of Q1 2039. So that is another 12 years from essentially today, 12 and a half years.
Yeah. Fantastic. And you have spoken about this before, but I want to get kind of the current thinking in terms of net pricing and Gross-to-Net discounts on AUVELITY going forward.
Yeah. So we are in a better situation this year than we were last year. We started the year improved in Q1 as well as in Q2 compared to the prior year. What we have shared is that we would anticipate similar trend that we saw last year, which was continued improvement as the year progresses. The Q2, we were approximately 50% and last year we were in the low to mid-50s. In the back half of the year, we did see that improvement, so we would continue to see further improvement in the back half of this year with GTM.
Great. Well, very good. I want to move to the pipeline because you have some interesting readouts, including one coming up with the ENGAGE study in binge eating disorder.
Yep.
I guess, kick this off. What is the commercial opportunity there, and what do you need to show from an effect size to have a commercially competitive product?
The opportunity we think is really compelling, there's one other approved product. That product, I think, was achieving around $500 million in sales in that indication approximately.
You're right. Our program, the ENGAGE trial, that's solriamfetol, and we've guided to top line in the fourth quarter of this year. What we're looking for is a positive study. Given the dearth of approved treatments there, any new entrants, we think that's important. If we see a signal, we'd expect to need to run a second trial, and obviously, if the study's positive, that's something we would do. We have a very good sense of the product profile overall now. Set aside potential impact to binge eating episodes, that's obviously what we're looking for. We have a very good sense of the adverse reactions and the safety and tolerability of the profile of the product which is approved.
Obviously, we need to be looking for if there are any specific distinctions in this patient population, but generally, we have the sense of that. We know the scheduling, Schedule IV for Sunosi, so there are limited barriers to prescribing or considerations given the scheduling. So that's good. We have other data that we've generated and published a few years ago now on Sunosi's impact to cognition. I'm mentioning that to give a sense of the overall product profile. That leads to the feedback we get from clinicians. We're looking at four different indications, so there's binge eating disorder, ADHD, shift work disorder, and then major depressive disorder with symptoms of excessive daytime sleepiness. What led us to launch all of those programs is feedback from prescribers and clinicians that the product has global changes that, positive global impact to patients.
We are conducting a very intentional effort based on mechanism of action and potential applicability to these indications to see if we can detect signal. If we do, then that will lead us to conduct the next study in binge eating and go from there, and we will have an answer soon.
That is great. Actually, you mentioned shift work disorder, another program that is in the works. How big is that commercial opportunity? I think there was a Pfizer drug that maybe I mean, is that a good example of what a branded drug can do in that category?
Yeah, I think we have shared $300 million-$500 million for shift work disorder from a peak sales perspective.
Yeah.
Okay.
That study is underway, and we have guided to top line next year. In this case, binge eating disorder, we have aligned with FDA that they want two studies. But for shift work disorder, it is considered a related indication to the currently approved indications. So this study, depending on what we see, could be NDA enabling or SNDA enabling.
Fantastic. I guess kind of a similar line of questions on ADHD.
You've now started another ADHD study. This is coming off of a prior study. I guess, just based on the data that you've generated to date and your expectations for the ongoing study, like how do you see this fitting within the kind of competitive armamentarium of ADHD drugs?
Sure. Based on the data we have in hand, and of course, we need to complete the studies in pediatrics and so in children and adolescents, which we started just a few months ago now and are underway and enrolling, which we're excited about. I reviewed, it's Sunosi, so it's solriamfetol. I touched on some of just the general product profile attributes that are. There are some specific differences between indications, but are generally indication agnostic. It pertains to the molecule and its mechanism of action. That's relevant and distinct from the stimulants and non-stimulants. We have one positive phase III trial to date in adults, and the absolute change we saw on the rating scale in adults was in line with the stimulants.
You have potentially an efficacy profile in line with the established kind of flagship products, but also a distinct safety and tolerability profile, if the product is ultimately approved. That's a really potentially compelling profile, which would be distinct, again, from the stimulants and non-stimulants if it's ultimately approved, and the market is very large, and there is a high need for new entrants due to tolerability issues. In fact, the market is so large, there are regularly supply constraints at this time. There is a need just in terms of overall volume demand for new entrants.
Absolutely. Actually, if I can go back now to AUVELITY AXS-05 and the development you are doing in smoking cessation.
What does that market look like, and I guess, what is the hypothesis there for testing this in smoking cessation?
It is driven, as all of our clinical experimentation, it is generally driven through mechanistic rationale and then some form of non-clinical or clinical data or KOL or clinician feedback. Here, we know that there are non-clinical and clinical data supporting NMDA receptor antagonism and sigma-1 receptor agonism in this indication. We have been looking at this indication for quite a while, and we have been running air traffic control and the choreography of all of the programs that we have, and there are quite a few of them. We have just started this trial, the phase III trial, and it is a three-arm trial, AXS-05 versus placebo and also versus bupropion. The market is there are a few approved products. So there is Zyban, there is CHANTIX. But other than that, there has been very, very little innovation in the space.
Again, this is an indication we were interested in from very early on for this mechanism. So now there is clinical data that are available that are consistent with running the experiment, and so we will see.
Okay. Is this an indication where maybe one trial could suffice here? Do you have any
Oh, we'd expect to need two studies.
Okay.
Yeah.
I also want to ask about the narcolepsy program, AXS-12. We've seen ORZEYFUL, the first orexin agonist, get approved. We're waiting for scheduling there, so it's not on the market. I guess, how are you thinking about the fit within the marketplace if this is ultimately approved in narcolepsy type 1?
Sure. It's an exciting time for narcolepsy, where there are new entrants and other potential entrants that are close to FDA action, and AXS-12 is one of those. The profile that we saw clinically, and of course, exactly where it fits will depend on if it's ultimately approved and whatever the label looks like. We have a sense of the product profile, and it's distinct from other products approved or product candidates in development from each reference point. Mechanistically, it's distinct from the orexins and the oxybates. As a result, from that mechanism, we see a very specific efficacy and tolerability profile. We focused on cataplexy, and so loss of muscle tone. We also, though, in the clinical studies, looked at excessive daytime sleepiness, so we saw improvements in excessive sleep. We saw improvements in cognition.
What ultimately ends up on a label, if it's approved, that's something we don't comment on while a review is underway. However, that just speaks to the efficacy profile overall and potential differentiation, and from adverse reactions perspective, you can look at it from, say, a scheduling perspective. We have that differentiation there, or just rates of AEs. It's distinct. We saw a distinct tolerability profile, which then allows for specific patient profiling decisions or patient prescribing decisions. We like that.
Yeah, I was just going to share that, the PDUFA date's May 1, 2027, and if approved, we already have a sleep franchise, as a reminder, with Sunosi. The infrastructure's already built, and an approval for AXS-12 is super synergistic to the organization, where we believe with orphan drug pricing, we haven't shared what the specific pricing would be, but it would be accretive very quickly.
Okay. Actually, it's a great point. I wanted to maybe drill into that and understanding that some of this is proprietary and around price and things like that. But when you look at the narcolepsy landscape, there are some branded drugs that command sort of high pricing. Is the goal ultimately to help physicians think about combination therapy, where they can add this too? Because I think you mentioned the mechanism is very different. Or the goal would be to price this in a way that this would be kind of a standalone?
We haven't offered commentary with respect to pricing. That's something we always wait for potential approval on. What I would say is, your observation is correct. It could potentially be used, especially depending on label, and it could potentially be used with other products, but that is not our primary focus, again, given the overall profile. The idea is not to necessarily have a product that's functionally adjunctive. But should there be a use case for that, as determined by a prescriber, I think that could be viable, too. But not necessarily the North Star we're tracking to.
Got you.
For that.
Okay. Maybe just the last minute or so, just capital allocation question. I think, Nick Pizzie, you gave some helpful comments at the beginning. But just as you think about the phase III's that are coming up and the launch, how do you think about investing in the business going forward?
Yeah, our first focus in capital allocation is top line growth. We think we're actually resourced really well for AUVELITY. We invested in the team heavily in the first half of the year. We think, as I shared earlier in my introductory comments, is that we would anticipate the SG&A to essentially be plateau to where we're at, potentially slightly increasing as the back half of the year goes if we see certain ROI areas that we want to further invest in. That's our main focus. From a BD standpoint, we've done BD historically over the last couple of quarters in Q4 and Q1. We brought a couple assets in to add to our pipeline. We'll continue to take a look if something arises that makes sense to Axsome.
If we have additional resources, we can take a look at other things that have additional ROI, potentially stock repurchasing down the road. That would be a fortuitous problem to have.
Yeah. Awesome. Well, just real quickly, any additional questions from the audience? Okay.
Thanks a lot.
Thank you both.
Yeah.
Thank you both.
Thanks for having us.
Yeah.
Appreciate it.