Axsome Therapeutics Inc

NASDAQ:AXSM

Earnings Call Transcript 2018-Q1

[Operator]

Welcome to Axsome Therapeutics First Quarter 2018 Financial Results Conference Call. [Operator Instructions]. I would now like to turn the conference over to your host, Mark Jacobson, Senior Vice President of Operations at Axsome Therapeutics. Please go ahead.

[Mark Jacobson, SVP, Operations]

Thank you, Operator. Good morning and thank you all for joining us on today's conference call. Our financial results press release providing a corporate update and details of the company's financial results for the first quarter ended March 31st, 2018 crossed the wire a short time ago and is available on our website at www.axsome.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 these 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 weight on these forward looking statements and the company disclaims any obligation to update such statements.

Joining me on the call today are Dr. Herriot Tabuteau, Chief Executive Officer and Dr. Cedric O’Gorman, Senior Vice President of Clinical Development and Medical Affairs. Dr. Tabuteau will first provide a pipeline update and a review of upcoming clinical milestones. Following that Dr. O’Gorman will provide a clinical and scientific update and then Dr. Tabuteau will review our financial results. We will then open the line for questions. I shall now turn over the call to Herriot.

[Herriot Tabuteau, CEO]

Thank you, Marc. Good morning everyone and thank you all for joining Axsome Therapeutics first quarter 2018 results conference call. Axsome is committed to developing new treatment options for patients living with CNS disorders. To that end so for this year we have achieved several key clinical milestones which I will review. In the first quarter we also further expanded our pipeline presented at a scientific conference and recently we held a research and development day with key opinion leaders. I will provide a brief pipeline update and then turn it over to Cedric who will provide further details.

Let us start with AXS-05, our most advanced CNS product candidate AXS-05 is a novel oral investigational medicine which combines glutamatergic, monoaminergic and anti-inflammatory mechanisms of action. AXS-05 is currently in a Phase 3 trial in treatment resistant depression which we refer to as the Stride-1 trial. Last month we announced a positive outcome of the interim futility analysis or the Stride-1 trial, an independent Data Monitoring Committee or IDMC conducted the unblinded pre-specified interim analysis on the first approximately 40% of the target number of subjects. Based on the results of the analysis the IDMC recommended that the trial continue and also the IDMC indicated that AXS-05 appeared safe and well-tolerated. The Stride-1 trial incorporates a second interim analysis which will be performed on the first approximately 60% of the target number of subjects to assess efficacy.

We anticipate this next and final interim analysis in the second half of this year. AXS-05 is also in a Phase 2-3 trial in agitation associated with Alzheimer's disease, we refer to this trial as the Advance-1 trial. Enrolment in Advance-1 is ongoing and we anticipate an interim analysis for that trial in the second half of this year. Last month we announced enrolment of the first patient in a Phase 2 trial of AXS-05 for the treatment of smoking cessation. The trial is being conducted under a research collaboration between Duke University and Axsome. Top line results are anticipated in 2019. With smoking cessation AXS-05 is now being evaluated in clinical trials in three separate indicators. Complementing AXS-05 in the first quarter we announced AXS-09 our next generation CNS product candidate. AXS-09 is a novel oral investigational medicine which consists of SP4 [indiscernible] and dextromethorphan.

Now switching gears the AXS-07, our product candidate for the acute treatment of migraine. AXS-07 is a novel product candidate which consists of MoSEIC Meloxicam [indiscernible], Meloxicam is a new molecular entity for migraine which is enabled by Axsome's MoSEIC technology. The MoSEIC technology result in rapid absorption of Meloxicam while maintaining a long plasma half-life. We are actively making preparations by our planned Phase 3 trial with the AXS-07 in migraine which we anticipate starting in 2018. I will now review some of our upcoming clinical milestones. With a Stride-1 trial of AXS-05 in treatment resistant oppression we anticipate an interim analysis for efficacy in the second half of 2018 and final results are anticipated in the second half of 2018 to the first half of 2019 timeframe. With the Advance-1 of AXS-05 and Alzheimer's disease agitation we anticipate an interim analysis [indiscernible] utility in the second half of 2018 and an interim analysis for efficacy in 2019.

For AXS-07 we anticipate starting a Phase 3 trial in the acute treatment of migraine in 2018. The Axsome team is excited and working hard to achieve these upcoming clinical milestones. Now for more details regarding our ongoing clinical programs I will turn the call over to Cedric for a review.

[Cedric O’Gorman, SVP, Clinical Development and Medical Affairs]

Thank you, Herriot. I will now discuss some of our recent clinical and scientific updates starting with the Stride-1 trial of the AXS-05 in treatment resistant depression, enrollment in this trial is ongoing and to-date just over 45% of the target number of subjects have been randomized. As Herriot mentioned last month an interim futility analysis of the Stride-1 study was conducted by an IDMC, based on the results of the analysis the IDMC recommended that the trial continue. The IDMC also reviewed the available safety information from the study and indicated that based on the interim results in AXS-05 appeared to be safe and well tolerated. The IDMC's recommendation for continuation of the Stride-1 trial and its findings of an overall favorable clinical safety profile for AXS-05 are encouraging. A significant proportion of patients with major depressive disorder are treatment resistant having previously failed to more therapies. There are limited available treatment options for these patients. AXS-05 multiple mechanisms targeting glutamatergic, monoaminergic and anti-inflammatory pathways may offer a unique therapeutic approach for this serious condition. We look forward to the second interim analysis of the Stride-1 trial anticipated in the second half of this year. This second interim analysis will be performed on the first approximately 60% of the target number of subjects to assess efficacy.

Last month we announced that the first patient was enrolled in a Phase 2 trial of a AXS-05 in smoking cessation. More than 40 million Americans smoke and approximately 70% report that they want to quit. Unfortunately success rates are low. Smoking is the largest preventable cause of death and results in a total economic cost in the U.S. of more than $300 billion a year. The Phase 2 smoking cessation trial is a randomized double blind active controlled study being conducted under a collaboration with Duke University. Approximately 60 smokers interested in quitting are to be randomized in a 1:1 ratio to receive either AXS-05 or bupropion for four weeks. The primary outcome measure is the change in smoking intensity, smoking intensity will be measured using the number of cigarettes smoked per day, salivary cotinine and carbon monoxide breath testing. Other outcome measures include smoking abstinence measured using a seven day abstinence test, adherence to treatment, withdrawal symptoms, stress, anxiety and depression. Topline results are expected in 2019.

Turning to scientific presentations, in the first quarter we delivered three presentations, two oral and one poster at the 20th Annual Meeting of the American Society for experimental therapeutics. These presentations reviewed the mechanistic rationale, pharmacokinetic data and functional clinical data which form the scientific basis for the ongoing Phase 3 trial of AXS-05 in treatment resistant depression and for the ongoing Phase 2-3 trial of AXS-05 in agitation associated with Alzheimer's disease. Finally we recently held Axsome's first research and development day with key opinion leaders focused on unmet needs in depression, agitation associated with Alzheimer's disease and nicotine dependence and the potential of AXS-05 to address these conditions. The R&D Day featured presentations by Dr. Stephen Stahl of the University of California, San Diego Dr. Maurizio Fava of Massachusetts General Hospital, Dr. Marc Agronin of Miami Jewish Health and Dr. James Davis of Duke University. We look forward to continuing to drive all of our clinical programs forward and to providing further updates as they progress throughout the year.

I would now like to turn the call back over to Herriot to provide a financial update for the first quarter of 2018.

[Herriot Tabuteau, CEO]

Thank you, Cedric. Starting with our balance sheet. We had $26.6 million in cash at March 31, 2018 as compared with $34 million at December 31, 2017. Research and development expenses were $4.8 million for the quarter ended March 31, 2018 and $6 million for the comparable period in 2017. General and administrative expenses were $2.4 million for the quarter ended March 31, 2018 and $1.7 million for the comparable period in 2017. Overall operating expenses in the first quarter of 2018 decreased approximately $0.5 million to $7.2 million as compared with $7.7 million during the same period in 2017. We anticipate that our current cash position will be sufficient to fund our anticipated operating cash requirements into the third quarter of 2019. Importantly we believe it will take us through the next several major clinical milestones including the next interim analysis and final results of the Stride-1 trial for treatment resistant depression. Both interim analyses with the Advance-1 trial in agitation associated with Alzheimer's disease the results of the Phase 2 trial of AXS-05 in smoking cessation and potentially the results from the planned Phase 3 trial of AXS-07 in migraine.

I'll now turn the call back to Mark to lead the Q&A discussion.

[Mark Jacobson, SVP, Operations]

Thank you, Herriot. Operator, can we please have our first question.

[Operator]

[Operator Instructions]. Our first question comes from the line of Matt Kaplan from Ladenburg Thalmann. Your line is open.

[Matt Kaplan, Ladenburg Thalmann]

I want to focus a little bit on AXS-05 and AXS-09 and help us think about how AXS-09 compliments, AXS-05 and how that in terms of your portfolio?

[Herriot Tabuteau, CEO]

So we do view the two product candidates as complimentary if you think about what the components are of 05 and 09, AXS-05 is receiving [indiscernible]. We're very excited about that product candidate and are looking forward to continuing our progress in the two late stage trials that are ongoing and also in these Phase 2 trials so those are as you know the Stride-1 trial and treatment resistant oppression the Advance-1 trial in Alzheimer's disease agitation and recently announced Phase-2 trial and smoking cessation. So we are very excited about 05 and are now moving aggressively forward, AXS-09 is a little bit different. It does contain [indiscernible] and we did announce positive Phase 1 results what we saw similar increases in plasma concentrations with 09 as with 05. So that coupled with the observation that there are differences between the [indiscernible] which may be beneficial in certain conditions that gives us confidence to plan to develop AXS-09 in other CNS indications.

So the two are complimentary, there are numerous potential indications for both of these product candidates based upon multiple mechanism of action of AXS-05 and AXS-09 and we look forward to exploring those and updating you in the coming months.

[Matt Kaplan, Ladenburg Thalmann]

And then just focusing on the pipeline a little bit more, in terms of AXS-07, can you help us understand the migraine market and it's that potential for AXS-07 in that market?

[Herriot Tabuteau, CEO]

Matt, thank you for that on '07, we are really excited about AXS-07 and the reason to what that is we believe that it has the potential to be the most efficacies migraine product either currently in development or currently marketed and now why is that important? The migraine market is very large. There are an estimated 40 million Americans in the U.S. who have migraine, most of them have acute migraines that's about 90% of them so that's the market that we are targeting and now one of the stark facts about the migraine market is that it is highly dissatisfied so approximately 70% of patients in report that they are dissatisfied with their current therapies and the reason for the primary reasons for dissatisfaction include one small onset [ph]. So in other words the drugs don't work fast enough and that makes sense for an indication. We do have acute and extreme pain and the other reason for dissatisfaction has to do with lack of sustained pain relief in other words there is a high recurrence rate and also patients complain that these drugs don’t work consistently enough, they work some of the time and not at other times. So that's the current landscape, very large and under-served from a perspective of a high patient dissatisfaction. So with AXS-07 the reason why we're excited about it is it doesn’t cooperate MoSEIC Meloxicam which results in rapid absorption of Meloxicam. We do observe IV like pharmacokinetics with MoSEIC Meloxicam as compared to a T-max of about five hours with a standard Meloxicam. So that bodes well in terms of a rapid absorption and onset of action.

In terms of recurrence Meloxicam does have a long half-life and with MoSEIC Meloxicam we were able to maintain that long platform [ph] half-life which should bode well for a reduction in symptom recurrence. Now you combine MoSEIC Meloxicam with the known efficacy of [indiscernible] and that should result we believe in a very potent medication. So overall we think that AXS-07 would address the major reasons for patient dissatisfaction with current migraine treatments and if you address those then those should translate into pharmacoeconomic benefits.

[Matt Kaplan, Ladenburg Thalmann]

And then last question in terms of AXS-05 in the Stride-1 trial, how is enrolment progressing there is it starting to -- are you seeing starting to pick up at this point or has been picking up during the first part of this year.?

[Herriot Tabuteau, CEO]

Well I'll turn it over to a Cedric who will provide you just with a perspective on enrolment but generally we are pleased with the recent acceleration in enrolment trends but I'll turn over Cedric who will give you some details.

[Cedric O’Gorman, SVP, Clinical Development and Medical Affairs]

We are very pleased so far. We believe we have a very good quality robust trial and enrolment in patients has recently been accelerating per site and continuing this meant. We've taken steps to increase the number of sites with the trial so by the end of 2017 we had approximately 40 open sites and today we've almost doubled the number of sites. So we're pleased with the uptake and the continued enrollment right now.

[Operator]

Our next question comes from the line of Bert Hazlett from BTIG. Your line is open.

[Bert Hazlett, BTIG]

Nice progress again guys as well. So we will stick along once of Stride-1, could you describe some of the secondary endpoints that you're considering in the study and what may that may further elucidate in the study and then could you describe any of the inclusion criteria that you might be focused on with this study? I have a couple of other follow-on's as well with 05 and 07.

[Herriot Tabuteau, CEO]

So I'll give you a sense in terms of the inclusion criteria for the trial and then I'll turn over to Cedric who will give you a general sense of some of the secondary endpoints that we might be looking at. So with regards to the entry criteria this is first and foremost the trial in patients with treatment resistant depression, that’s very important so the definition of treatment resistance is a patient having failed at least two prior treatments so that’s I think is a key is the key inclusion criterion in the trial so patients come in having failed either one or two historical treatments and then they were treated in an open label fashion before [indiscernible] to then be randomized so before failing before -- plus one or two prior treatments historically then that would result in two treatment failures and that would qualify them as being treatment resistant. So I think that's one of the key inclusion criteria.

And then there are other standards inclusion criteria inclusion and exclusion criteria so for example similar to other trials with anti-depressants patients are excluded if they have certain risk factors for example such as suicide risk which is pretty standard and other standard inclusion and other standard inclusion and exclusion criteria but really I would say the most important one has to do with the definition of treatment resistant.

[Cedric O’Gorman, SVP, Clinical Development and Medical Affairs]

This is Cedric. Also when you look at a study like this you look at patient population there are quite a few standard approaches in terms of outcomes to consider. So as you know the primary outcome is the change in the mattress, the Montgomery rating scale for depression but in addition to that you also have clinicians perspective and how the patient is doing and you also have the patients perspective of how they are doing. So there's a number of different ways to look at how each of these sort of stakeholders view the improvement in symptomatology and you can also look at very granular when you think of symptom scales like the [indiscernible] or the Hamilton which we will look at but you can also look at it in terms of a global clinical impression of improvement which is important as well, then of course from the time of randomization to the primary endpoint of the six week period and we would be very interested to look at that time course of improvement over those six weeks which can be very important given the mechanism of this drug which is novel compared to existing treatments and also response rate, so what are the percentage of patients who are mildly improving, moderately improving, significantly improving. So the percentage of patients across the two worlds and then you can always use these scales to look at item analysis and dive more deeper into the points of differentiation.

[Bert Hazlett, BTIG]

If you have -- it's a Stride-1 350 patients on clinicaltrials.com they are talking about December 18, estimated primary completion date. If assuming the primary and secondary are positive and again that's projecting forward a bit but is there any chance, you know you've got fast track with this, is there any chance for a single study resonating with the regulatory agencies in this indication given the unmet need?

[Herriot Tabuteau, CEO]

So the way that we think about it is that we are conducting the Stride-1 trial, the Stride-1 trial is a pivotal study and we do believe that in general the FDA does require two adequate and well controlled trials. However having said that from an FDA regulations a stricter FDA regulations perspective it is possible for product for candidates to get approved with only one clinical trial so there is been precedent for that clearly and however you know our plans have always been to conduct two adequate and well-controlled trials. That does not mean of course that depending on the data and also as you've mentioned the clinical need here that we would not of course approach the FDA with our data and suggest that we file with one trial but I want to be clear just about what you know what the company's plans are in the way that we're running the business.

Now with regards to the clinical need here and the potential for possibly filing with one trial I think in one point encouragement, you have to do with the fact that the treatment resistant oppression is recognized as a serious and life threatening condition as a reminder we have fast tracked designation for AXS-05 in treatment resistance depression and then the other the other point to note from a regulatory perspective is that the FDA has given a break from therapy designation for treatments that are geared towards treatment resistant oppression, so that speaks to you know their heightened concern around this indication from a patient in need perspective. So obviously those are all things which we keep in mind as we develop the product and those things will be front and center in terms of our strategic plans as we move towards data.

[Bert Hazlett, BTIG]

Then just shifting gears to AXS-07 for just a second. Could you give us just frame some of the Phase 3 parameters that you're considering with that combination really intriguing molecule but just Phase 3 parameters and are you pursuing 505(b)2 pathway given the experience with the molecules and again just any more color you can provide with what a Phase 3 program for 07 might look like. Thank you.

[Herriot Tabuteau, CEO]

So for AXS-07 we are actively getting ready for a Phase 3 trial which we anticipate starting this year and with regards to the end points for such a study you know there will be standard endpoints, now the FDA did come out very recently with guidelines new guidance for the development of acute treatments in migraine so we'll be following those. But generally speaking the end points have to do with pain relief at two hours so pain free two hours is a standard primary endpoint, the FDA does require generally two core primary end points which is not only pain relief at two hours but also relief from most bothersome symptom. So in other words the patient does select a most bothersome symptom apart from pain and so those are the two end points interestingly enough the FDA does not require any kind of adjustment for multiplicity where facts is hitting a P value of 0.5 for each of those end points and then there are numerous other end points. As you can imagine given the magnitude of action of AXS-07 and the unique pharmacokinetic profile which we hope will be maintained with the product we will be definitely looking at onset of action since we think that that is a key component in terms of patient dissatisfaction which we hope to address and with regards to the regulatory pathway we will be pursuing a 505(b)2 regulatory pathway so that will allow us to certainly to reference the FDA's findings of efficacy on the active ingredients in AXS-07.

[Bert Hazlett, BTIG]

Just one other quick one, how larger study do you expect this to be, do you have that nailed down yet?

[Herriot Tabuteau, CEO]

We intend to provide a fuller details on the Phase 3 trial, once we actually get that up and running. So stay tuned we certainly do have obviously an idea in our mind in terms of the size of the study but we'd like to make sure that those plans are fully baked before we give you any guidance.

[Operator]

[Operator Instructions]. Our next question comes from the line of Ram Selvaraju from H.C. Wainwright. Your line is open.

[Unidentified Analyst]

This is Julian on for Ram Selvaraju. First off my understanding is that there was no statistical penalty for Stride-1 in terms of futility analysis this will also be the case for the upcoming one for the Advance-1 is that correct?

[Herriot Tabuteau, CEO]

The answer is yes, there was no physical penalty for the interim analysis for Stride-1 for futility and that is also the expectation for the upcoming interim analysis for the Advance-1 trial in Alzheimer's disease agitation.

[Unidentified Analyst]

Okay, great. Regarding AXS-09 are any additional safety and PK studies necessary and also have you narrowed down specific indicators to explore any late stage studies or is that still to be determined?

[Herriot Tabuteau, CEO]

The indications for late stage studies with AXS-09 are still to be determined and with regards to any additional PK studies that there are needed we do not believe that any or absolutely necessary but we of course are always continue to explore additional early stage studies as well as pre-clinical studies to further elucidate the molecule especially given that the unique nature, or the unique features that we have seen thus far with the single isomer.

[Unidentified Analyst]

So my last question I was just curious how should we be thinking about AXS-05 in the context of recent data on ketamine for treatment resistant depression.

[Herriot Tabuteau, CEO]

So if look at the mechanism of action of dextromethorphan and ketamine you do compare them, there are several similarities. So both dextromethorphan and ketamine are NMDA receptor agonist and they both are signal one receptor agonist and those two mechanism of action are credited with the fact onset of action, the fast onset of anti-depressant action seen with ketamine. So there is a point of similarity there in terms of the pharmacology and the other point of similarity between the two molecules is that they both inhibit norepinephrine and serotonin reuptake. Now of course ketamine is an intravenous agent which is now been given intranasally but there are still obviously the issues with ketamine administration in terms of therapeutic index for example and concerns around abuse and diversion.

So there are similarities obviously between the mechanisms of action and the glutamatergic mechanisms of action of ketamine have proved to be promising and we are happy and encouraged that AXS-05 shares some of those mechanisms of action and we're looking forward to the efficacy results with the Stride-1 trial to elucidate the product profile.

[Operator]

Thank you. That concludes the Q&A session. I will turn the call back over to Axsome CEO, Herriot Tabuteau for concluding remarks.

[Herriot Tabuteau, CEO]

Thank you. Thank you all for joining the call today. We are committed to finding safe and effective treatments that can make a significant difference for patients suffering from prevalent and disabling CNS disorders. We are pleased with our progress so far in 2018 and we anticipate the second half of the year will be busy and exciting as we focus on continuing to deliver on our objectives. I look forward to informing you of our progress in the months ahead. Thank you again and operator you may now disconnect the call.

[Operator]

Thank you. Ladies and gentlemen that does conclude today's conference call. You may all disconnect and everyone have a great day.