All right, I think we're live now. Good morning, everyone. Welcome to Guggenheim Third Annual Healthcare Innovation Conference. My name is Yatin Suneja, one of the biotech analysts here at the firm. My pleasure to welcome our next presenting company, Axsome. From the company, we have two executives here. We have Mark Jacobson, who is the Chief Operating Officer, and Nick Pizzie, who's the Chief Financial Officer. Gentlemen, why don't you make some opening comments, highlight some of the updates you provided at the quarter, both financial and pipeline, and then I've prepared a little bit of a Q&A that I want to run through.
Sure. Thanks for having us, Yatin. Good to be here, and good morning, everyone.
Thanks, Yatin.
You're right. We, last week, reported Q3, and if you step back, Axsome as a business now, we have three commercial products, four indications, one recent approval, and we'll get into that is of course AUVELITY for Alzheimer's disease agitation. The commercial business is growing robustly, and we're very excited about AUVELITY's performance in particular in both major depressive disorder and AD agitation, and what's to come there. I'm sure that will be a focus of the discussion, so I'll pass the details for now. That is, of course, backed by SUNOSI for excessive daytime sleepiness. That is growing very steadily. We're very pleased with the number of patients that's reaching and the state of affairs for that business. Then there's SYMBRAVO, very pleased with, that's our product for the acute treatment of migraine. Very, very strong clinician and prescriber and patient feedback.
That's growing from a volume perspective, and our work there is to navigate the commercial dynamics that are in play and in place. We can talk about those, but we're very pleased with how that part of the business is growing. Then behind that, we have a very, very deep and robust and broad pipeline of innovative products that are 10 programs, and we can talk about those, but heavily weighted towards NDA stage or phase III stage programs, many of which already have one positive phase III trial behind them. So those are all moving in the background.
Of course, much of the focus outside the company is on the performance of AUVELITY, but that part of the business is advancing very robustly and steadily, and 2027 could be a big year, or we expect it to be a big year in terms of potential milestones and catalysts for a number of programs. We'll touch on those. We have a PDUFA date for AXS-12, that's reboxetine for cataplexy and narcolepsy. That is May 1st, so we're a bit over halfway through that review cycle, and that's moving forward as expected, and we can talk about opportunity there. So it's just an amazing time for the business and our history. So frankly, things have never been better from the perspective of the business, and I don't know if, Nick, you want to share anything?
Sure.
Yeah.
Yeah. Love to talk a little bit about the financials. Revenue for the quarter was $260 million, surpassing on a run rate, annualized run rate of a billion dollars for the first time ever. So exciting time, exciting milestone for Axsome. AUVELITY, our leading product, had $208 million in revenue for the quarter. That was 53% year-over-year growth. That accelerated from 51% year-over-year growth in Q2, sequentially growing 15%. That's led by continued growth in our MDD indication and accelerated growth in our new indication for Alzheimer's disease agitation. So pleased with where that is, and we can talk a little bit about how we're thinking about future growth for that product. Then with our second product, SUNOSI did around $46 million for the quarter, and that was continued growth in that brand. We did have a milestone recognized in the quarter of roughly $8.5 million.
Finally, for SYMBRAVO grew again quarter-over-quarter up to $3.9 million. As Mark said, I have heard very positive things clinically and from a safety profile as it relates to SYMBRAVO. We expect future growth, continued future growth from there. Turning to the balance sheet, $314 million in cash, and this quarter we were actually cash flow positive for the first time. Our net loss was $13 million, but if you take out our employee stock-based compensation expense, which was around $28 million, and take out other one-time things, we were about $5 million-$6 million profit from a cash flow perspective. The balance sheet is looking great. The P&L continues to grow robustly, and as we shared, it is an exciting time right now at Axsome.
Very good. Thank you for that overview. Let us just first focus on the AD agitation launch, because that is where I think investors are really focused on. I think you have said that it is tracking according to your internal plans. You have done right now full one quarter under your belt. How should we think about the growth within AD agitation over the next, let us say, two to four quarters? What is driving it? How much there is? Because we do not have the exact numbers, but just articulate a little bit there.
Sure. I think the best way to look at future growth is based on the NBRXs. That is the leading indicator by far of how we anticipate growth for any indication. We have said that historically as well when we have done field force expansions, and we have seen that robust growth. A couple things to think about, specifically the AD agitation indication, Yatin, you were asking. We did put a few slides to show, to break out the 65 and older cohort and 65 and under cohort.
That is in our slide deck on our website, and you will be able to see that, specifically in NBRXs, they have grown 3.6x within a very short period of time. Maybe just putting some more numbers to that, their NBRXs per month were roughly 1,000 NBRXs from January of 2025 up until every month, up until our approval. So, 1,000 NBRXs per month.
Upon the approval, even prior to starting the detail, you started seeing an increase, and as recently as the end of September, you saw that 1,000 number is now 3,600 NBRXs per month. Taking that into consideration, they will ultimately lead into refills, and that is how you will get your TRX growth. Same goes for, I know this is not specifically your question on AD agitation, but just in totality for AUVELITY, you see the NBRX growth every quarter by month. It is basically 2,400 NBRXs per week. This is for the entire AUVELITY line, 2,400 NBRXs per week in Q1. It went to 3,000 in Q2. It went to 3,550 in Q3, and we are currently tracking at 3,800 NBRXs in October. Seeing that robust growth, that is not included yet in the TRX, right?
The TRX that you have seen, and we have talked about 14% TRX growth sequentially Q3 to Q2, the NBRX increase has not caught up yet into that TRX. That is the future growth that we would anticipate. We are really pleased with how not only the launch has gone, but the expansion has gone. Yes, are there things that we are going to continue to optimize and improve as it relates to the field team? We have more than doubled the team in a very short period of time. That is the work that is going on, that has gone on behind the scenes and continues to do so.
Got it. How long it takes for the TRX to catch up to NBRX? Then also, I think there was another slide in your presentation about 65 plus NBRX. Just maybe talk a little bit about that, like what you are showing.
Yeah, sure. The 65 plus NBRX is what I was sharing, where it was 1,000 NBRXs per month up to 3,600 NBRXs as recently as the end of September. Then, the TRXs, the refills, usually takes a couple quarters for it to start to catch up, but it accumulates. Think of it as a funnel. We were adding into that funnel at 2,400 NBRXs per week beginning of the year. Now it is more than 50%, the speed, the velocity going into that funnel. In the end, you will see the TRXs coming out of that funnel continuing to pile on top of each other and build on top of each other.
Got it.
Yeah.
Are you in the LTC channels right now?
The team is active in long-term care, yeah. We have a dedicated group of the sales team that is active in long-term care, and we expect to see that work start to manifest in terms of prescribing in that channel, and we are starting to see that. That is an area where we expect to see robust growth into the end of this year and next year. It is just getting started, and we can talk about why that is. It tends to be, it is not just visiting a prescriber, doing a detail, some educational touchpoint, and maybe a repeat touchpoint here. There is activation of facilities. That means placement of the brand in their prescribing systems, education for directors of nursing or nursing staff, and then also education of the prescribers. Oftentimes, it is a community-based prescriber who is rotating or visiting a facility.
It is more complicated to get, quote unquote, "facility activated." It is a longer time to prescribing, but then once you are good, then there is an anticipated steadiness to it. We expect that to be one of the contributors to the continued build moving forward here.
Got it. In terms of the indicators or the leading indicators that you track, let us say specifically for AD agitation, what are those outside of NBRX? What about sampling dynamic?
Sure.
I think you touched about that on the call.
Yeah. Oh, sure. The NBRX, that's the best leading indicator, I think for everyone, because you can track it, and there are weekly scripts for us. What do we look at? There are different types of KPIs that you can use, samples, calls, rep-triggered emails. There are a variety of metrics that the team looks at, and what I'll share is, we typically don't provide numbers there, because it's sales force strategy and tactics. But everything, the metrics are all aligned and point to robust growth for AD agitation and also MDD.
Got it.
That's about ADA. I mean, you've also expanded the sales force, so that should also be helping with the MDD.
Yes. Yep.
Talk about that dynamic, how much of the growth you are seeing in all these numbers that are going up on NBRx.
How much of that maybe is MDD-driven of these?
Yeah, sure. I would say, again, not to reiterate on the NBRx, but that is your leading performance indicator. So maybe taking a step back, if you think about what we have added from an expansion, team expansion, we went from somewhere in the neighborhood of 270 reps to north of or right around 650 reps, let us say, in a very short period of time, in roughly a six-month period. And with the majority of those reps, that expansion being complete in Q2. So, let us say the average tenured rep from the expansion is roughly about five months in, five, six months in, somewhere in that vicinity, probably maybe even four to five months. You are starting to see that ROI from those reps, again, specifically in those NBRxs, having it grown by more than 50% within a two-quarter period.
Got it.
With all that, we're continuing, we've added more than double the team. We've also added more than double the first-line leaders. There's been a lot of optimization that has had to occur over that last two quarters, but we feel like that's a transient investment that we've made. Why did we go so big so quickly? The idea was, A, we have this new indication. B, we have payer access for MDD as well as AD agitation that is at a, we'd say, very solid rate, meaning from a total covered lives, 89% total covered lives in MDD, 100% of all Medicare patients are covered with the vast majority, vast majority having no PA, no step edit. Access is there, so we decided, "Hey, let's invest heavily now with the team.
Yeah.
We did two other expansions previously over the last couple years. Every time you do an expansion, there's always inherent, there's going to be disruption. So we decided, "Let's do it all now, bring in the team." We have a very long runway. We have through the end of 2038 into early 2039 with pediatric indication, and we had the ability, the balance sheet to be able to do that investment now. So, that was why we chose to more than double the team in a short period of time.
Got it. What are you seeing in the primary care? I mean, that's where you're seeing penetration. I think the number is maybe 25-ish percent. How much more we can go?
Oh, yeah, we think a lot more. The primary care, it makes sense for both indications, and it lines up with where Axsome is this year, also for both indications. We wanted to be mindful of when we started to really ramp up primary care engagement, because Axsome needed to be a point where if we're seeing material writing in that area, you want the scripts to be filled.
Got it.
We're seeing that. Now, of course, that, quote unquote, we know everyone is really watching how NBRx is translating. That, of course, is a longer translation from an engagement, from a rep productivity perspective to a potential script being written and then a potential script being filled. We can talk about why that is, but it's different from the historical rates we've seen. This is intentional because over the long term, that leads to very robust, durable, and sustained growth. Of course, we want to make sure the product is used and/or available to as many appropriate patients as possible, and you have a lot in a primary care setting.
Got it. How is the gross to net shaping out, and how should we think about pricing in 2027? There was improvement in Q3.
But going forward, what is the expectation?
Yeah, it is a great question. In Q3, we did see improvement in the mid to high 40s. If you think about that, we had the most covered lives in Q3 and the best GTN since launch. So really pleased with that. We have guided, as it relates to GTN into Q4, that there potentially could be a tick up in GTN. Just being cautious that we do have to accrue for the last two weeks of the quarter that would get adjudicated in Q1. The last two weeks of the quarter that would be in channel that would get prescribed or adjudicated in Q1, which would, first two weeks typically has the highest GTN in the entire year. Then for 2027, what we have shared is just take a look at quarter by quarter in 2026 and essentially copy-paste that into 2027 as a starting point right now.
We think that a couple of things that would potentially change that is we will see how mix continues to grow in the Medicare channel. That is key. Then also, we have great amount of covered lives, 89%, but we are always looking to get to the best covered lives, preferred, unrestricted, no PA. So, if we find ways that we can continue to further improve the quality of coverage, I think we have very good quality now, we will always look to continue to further improve that quality. That also could put some pressure on the GTN. So that is why we have shared, at this point, take a look at GTN in 2026 and essentially it would look very similar by quarter in 2027.
Got it. Maybe final question on AUVELITY, then we move to pipeline. I think if you look at the second quarter and third quarter, I think the sequential growth has increased. I do not have the number right now, but it is somewhere between $23 million, $24 million on a sequential basis. I mean, is that sort of trajectory, because now AD agitation is helping you have more sales for, or is that trajectory going to hold? Just curious about the trajectory of launch, of growth.
It was, yeah, $28 million. We haven't given specific guidance around that. We would expect continued momentum in the underlying MDD business and accelerated growth in AD agitation. Probably best qualitatively that I can give you.
I mean, the guidance is up, but yeah, to Nick's point, we haven't shared what this is our methodology, right?
Got it.
We don't give quarterly guidance.
Yeah.
However, the qualitative guidance is continued robust growth.
Yeah. Very good. Okay. With regard to the couple of milestones that are coming up, the binge eating disorder study, I think you've narrowed it
Yes
or to update it to Q1.
Yeah.
What defines a win there? Do you need more studies?
Yes.
What is the path to NDA or sNDA?
Sure. Yeah, the win is if it's a positive study, if we see a statistically significant result on the primary endpoint. If the study is positive, we would need a second study. We've aligned with FDA that they'd like to see two adequate and well-controlled trials. Of course, the product is already approved, but the agency, the division considers binge eating disorder to be sufficiently distinct from the two approvals that we need a standalone efficacy package. We're in the midst of that, so we'll have an answer very soon. The Q1, that is the date because we have enrollment's done, so now it's just the clock is ticking and winding down before we see top line, which we're excited about. Only one product approved, and we have a good sense already, of course, of the product profile, at least from a tolerability perspective.
Then we know other elements of how it performs from an efficacy perspective, and from a global changes perspective and clinician feedback there. We'll see. We're excited for that. We haven't had a clinical readout in some time, which is atypical for us, and we'll get back to that. Then that would be the start of potential clinical and core pipeline milestones in 2027.
Yeah. Maybe two more questions on SUNOSI. One is on the commercial dynamic. How should we think about the growth in the currently approved indication? Like you said, there are going to be a lot of milestones. You have ADHD, MDD, shift work disorder, everything reading out in 2027 for SUNOSI. Are there ones that are higher likelihood from a success standpoint?
Maybe a minute on the current indications.
Yeah.
Continuing to grow nicely quarter-over-quarter. That is with essentially a fixed investment on an OPEX side for the last several years. We have not increased the team. The team has been around 70 since we brought it over. We in-licensed it from Jazz back in 2022, and continue to have the same sales team, continue to have a very similar marketing spend, and the business has grown in low to mid-single digits consecutively, sequentially, for quite some time. So, really pleased to see how that's evolved. Peak sales in the current indications is $300 million-$500 million, and we're tracking very nicely to that.
Yeah. Got it.
From a development perspective, we touched on binge eating, so that'd be one of two. That's Q1. Then we shared with CLARITY, that's the trial in major depressive disorder, with individuals who have excessive daytime sleepiness.
What we've guided to there is, that's a randomized withdrawal trial, so that's event-driven in terms of when top line will occur, but we've guided to completion of enrollment next year. Exactly when we'd see a readout, to be determined. That's moving along. We'll see what we see there, right? In psychiatry, placebo response rates have increased and continue to increase materially, so we'll see, especially in major depressive disorder. We've designed a study that we think if the product is active, we have a chance of seeing a signal. Then behind that, you have ADHD, and there are two studies there in children and adolescents. We have the completed adult trial, which was positive, and we saw a very robust treatment effect with impact in line with stimulants and, say, a distinct tolerability profile. That's what you want to see.
Of course, that's a good setup, but we'll have to see how the product performs in the younger patient population. If we have those, that's what we need to proceed with a marketing application in ADHD. Shift work, that's considered, or FDA considers that a related indication to the already approved indication, so there, we need one study. If that study's positive, then that would allow us to file. SUNOSI, again, it's been growing really well, and we really like the product and really excited about other potential appropriate patient populations that it could be a positive treatment option for.
Got it. Then a few questions on AXS-12.
reboxetine. Maybe a little bit early in the review process, but talk about it, if you can, how the review is going. The key question I have is that, what is your view on the market? Because when we did the diligence, I mean, it's been a while, maybe one or two years ago, there was a decent amount of excitement, but then the orexin came in.
Sure.
What are you hearing from the market? You have an established sales force already.
Yes.
Yes.
Right.
It could be an orphan product.
Yes. Just a bit over halfway through the review, and that is tracking to where you would want to be at this point in time. Nothing out of the ordinary. We will keep everyone posted there. PDUFA date, as we shared, is May 1st. Pre-launch activities are underway. You are right, there is a lot of focus on the orexins now. AXS-12 is distinct mechanistically, and also the efficacy and tolerability profile that we see, it is distinct, and we think that is really important for this patient population where we know there are very discrete patient profiles and especially tied to tolerability of agents that are currently available for those patients and others that are coming online.
We will see how it goes, but as you touched on, we have a sleep team and sleep infrastructure that is already in place and effective and has a very good The business is sound there. We will likely invest in driving any key differentials, say, from marketing, but the investments tend to be relatively They are distinct and proportionally smaller than, say, for a larger team. It is an orphan indication, and the infrastructure scales with that, and obviously, we have a lot to leverage already. It is an exciting time there. Anything you would add from a
No, I just, as Yatin, as you alluded to, we have a sleep team. We could add it to the bag, minimal investment, accrete it to the P&L pretty quickly.
Got it.
Yeah.
A final question. As you turn cash flow positive, let's say, or profitable, over the next 12 months, how should we think about the, obviously, the revenues are growing, how the margins are going to evolve?
Sure
Where the leverage comes from.
I think first and foremost, it is to have sustained cash flow positivity. Even with that, though, is top line growth. Our focus is top line growth for the three brands that we currently have. That is our main priority. As I shared, we were cash flow positive in Q3. We have not shared that we are going to be sustained cash flow positive. We will continue to take a look at additional investments that can further grow top line.
Yeah, of course, that is a great place to be to have the luxury of that decision-making, to how we are driving the business growth in the business. Then that, behind it, everything is very healthy.
Well, very good, gentlemen. Thank you so much.
Thanks, Yatin.
Thank you.
Cool. Appreciate it. Good day.