Axsome Therapeutics Inc

NASDAQ:AXSM

Earnings Call Transcript 2024-Q1

[Operator]

Good morning, and welcome to the Axsome Therapeutics conference call. [Operator Instructions] As a reminder, today's conference call is being recorded.

I would now like to turn the conference over to your host, Darren Opland, Director of Corporate Communications at Axsome Therapeutics. Please go ahead.

[Darren Opland, executive]

Good morning, and thank you all for joining us on today's conference call. This morning, we issued our earnings press release providing a corporate update and details of the company's financial results for the first quarter of 2024. The release crossed the wire a short time ago and is available on our website at axsome.com.

During today's call, we will be making certain forward-looking statements. These statements may include statements regarding, amongst other things, the efficacy, safety and intended utilization of our investigational agents, our clinical and nonclinical 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 plans, our commercial plans regarding Sunosi, Auvelity and our other pipeline products, revenue projections and possible intended use of cash and investments. These forward-looking statements are based on current information, assumptions and expectations that are subject to change and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our periodic filings made with the Securities and Exchange Commission, including our quarterly and annual reports. You are cautioned not to place undue reliance on these forward-looking statements, which are only made as of today's date, and the company disclaims any obligation to update such statements.

Joining me on the call today are Dr. Herriot Tabuteau, Chief Executive Officer; Nick Pizzie, Chief Financial Officer; Mark Jacobson, Chief Operating Officer; and Ari Maizel, Executive Vice President and Head of Commercial. Herriot will provide an overview of the company and progress made in the first quarter of 2024 as well as key coming milestones. Following Herriot, Nick will review our financial results, then Ari will provide a commercial update. We will then open the line for questions. Questions will be taken in the order they are received.

And with that, I will turn the call over to Herriot.

[Herriot Tabuteau, executive]

Thank you, Darren. Good morning, everyone, and thank you for joining Axsome Therapeutics First Quarter 2024 Financial Results and Business Update Conference Call.

The first quarter of 2024 was marked by strong financial performance for our own market products, which are delivering important and differentiated treatment option for patients living with depression, narcolepsy and obstructed sleep apnea.

Total net product revenue in the quarter was $75 million, representing year-over-year growth of approximately 160%. We will share additional details on our financial and commercial performance later in the call. We also significantly advanced our innovative neuroscience pipeline in the quarter including announcing positive top line results for AXS-12 in narcolepsy, advancing AXS-07 and AXS-14 [ working ] submissions, initiating pivotal trials in new indications with solriamfetol and advancing and expanding our old [indiscernible] disease [ education ] program for AXS-05. We expect to continue the commercial and pipeline momentum in the balance of 2024.

I will now provide a brief update on our industry-leading neuroscience pipeline and expected milestones. Starting with our 2 huge [ stage ] products, AXS-07 for the acute treatment of migraine on track for year resubmission this quarter. Additionally, we are conducting the EMERGE study, a multicenter Phase II single group trial evaluating the efficacy and safety of AXS-07 in a dose with a prior inadequate response to an oral CGRP inhibitor. We anticipate top line results from this trial in the second half of 2024.

For AXS-14, which we are developing for the treatment of fibromyalgia, pre-submission activities for the [indiscernible] for this product [indiscernible] completion. We continue to target submission later this quarter.

In March, we announced that the Phase III SYMPHONY trial of AXS-12 in narcolepsy achieved its primary endpoint and significantly reduce the frequency of narcolepsy attacks as compared to placebo. AXS-12 also reduced excessive daytime sleepiness [indiscernible], improved cognition and reduced overall [indiscernible] severity. In open-label safety extension trial for AXS-12 [indiscernible] with results expected in the fourth quarter of 2024. We are excited about the potential of AXS-12 to provide a differentiated treatment option to patients and [indiscernible] for this debilitated condition.

[indiscernible] a completion of the Phase III ADVANCE-2 trial in the treatment of Alzheimer's disease education in the second half of 2024. To date, we announced that launched the ACCORD-2 study, a double-blind placebo-controlled randomized [ double-trial ] to evaluate the AXS-05 in the treatment of Alzheimer's disease education. This study is similar in design to the completed positive ACCORD-1 trial. In the ACCORD-2, the clinical development program will now include 4 controlled efficacy trials. Importantly, ACCORD-2 further increases the robustness of our clinical program in Alzheimer's disease education without impacting our overall development time line. And [indiscernible] is very [indiscernible] and we expect a robust competition around the year.

With respect to solriamfetol, our dopamine and norepinephrine [indiscernible] update inhibitor in [indiscernible], in addition to continued commercial performance, we launched the Phase III PARADIGM trial in [indiscernible] disorder in the Phase III lead trial [indiscernible] disorder in the first quarter. Results from both trials are expected in 2025. We are on track to initiate a Phase III clinical program in [indiscernible] disorder this quarter. Solriamfetol is also being evaluated in the FOCUS Phase III trial in ADHD for which we continue to anticipate top line results in the second half of this year.

Overall, our innovative neuroscience portfolio of compasses 5 late-stage [indiscernible] product [indiscernible] for intent serious psychiatric and neurologic conditions with substantial market opportunities. Each product candidates had the potential to transform the treatment landscape for serious and difficult [indiscernible] CNS disorders, which affect more than [ 115 billion ] in the U.S.

I will now turn the call to Nick who will provide details of our financial performance. Nick?

[Nick Pizzie, executive]

Thank you, Herriot, and good morning. Today, I will discuss our first quarter results and provide some financial guidance.

Total product revenues were $75 million for the first quarter of 2024. This consisted of net product sales of $74.1 million and royalty revenue of $900,000. Total product revenues for the comparable period in 2023 were $94.6 million, which consisted of net product sales of $28.6 million, royalty revenue of $300,000 and $65.7 million in onetime license revenue received from the out-licensing of Sunosi in certain ex-U.S. territories. Auvelity net product sales were $53.4 million for the first quarter of 2024, representing year-over-year growth of 240%. Auvelity net product sales for the comparable period were $15.7 million. Sunosi net product revenue was $21.6 million for the first quarter of 2024, and consisted of $20.7 million in product sales and $900,000 in royalty revenue associated with Sunosi sales in our licensed territories. Sunosi net product revenue for the comparable period in 2023 was $13.2 million, consisting of $12.9 million in product sales and $300,000 in royalty revenue.

Total cost of revenue was $6.3 million for the first quarter of 2024. Total cost of revenue for the comparable period in '23 was $7.6 million, which included $5 million in Sunosi licensing transaction fee sharing expense. Merchant development expenses were $36.8 million for the first quarter of 2024 compared to $17.8 million for the comparable period in 2023. The increase was primarily related to the initiation of the solriamfetol PARADIGM trial for major depressive disorder, the solriamfetol ENGAGE trial for the binge-eating disorder, the advancement of the solriamfetol FOCUS trial for ADHD, the ongoing trials of AXS-05 and AXS-12, manufacturing costs associated with the anticipated NDA for AXS-07 and AXS-14, post-marketing commitments for both Auvelity and Sunosi and higher personnel costs, including noncash stock-based compensation.

Selling, general and administrative expenses were $99 million for the first quarter of 2024 compared to $74.2 million comparable to period in 2023. The increase was primarily related to commercialization activities for Auvelity and Sunosi, including sales force and marketing expenses and higher personnel costs related to organizational growth, including noncash sales compensation.

Net loss for the first quarter of 2024 was $68.4 million or $1.40 per share compared to a net loss of $11.2 million or $0.26 per share for the comparable period in 2023. The net loss in the first quarter of 2024 included $21 million in noncash [indiscernible] of which the majority is comprised of noncash stock-based compensation expense. The 2023 comparable period included approximately $62 million in net gain from the Sunosi out-licensing.

Q1 typically has a negative seasonality effect on [ GTN ], which we saw on both Auvelity and Sunosi versus the prior quarter. Auvelity GTN discount for Q1 was in the low to mid-50s, and Sunosi GTN discount was in the mid-50s.

We ended the first quarter of 2024 with $331.4 million in cash and cash equivalents compared to $386.2 million as of year-end. We believe that our current cash balance is sufficient to fund anticipated operations into cash flow positivity based on the current operating plan.

I would now like to turn the call over to Ari, who will provide a commercial update.

[Ari Maizel, executive]

Thank you, Nick. Axsome delivered solid brand performance in the first quarter of 2024, an elevated demand trends in Q1 once again outpaced growth rates for the market [indiscernible] the competitors with approximately 95,000 prescriptions representing 12% quarter-over-quarter growth and 206% growth compared to the first quarter of 2023. Nearly 18,000 new patients started Auvelity in the quarter, bringing the total number of unique patients treated with Auvelity since launch to more than 89,000. Our sales team continues to activate new prescribers at a consistent rate, with more than 3,600 first-time Auvelity prescribers in Q1, illustrating strong underlying demand for the product and expanded use among [indiscernible] treaters in both psychiatry and primary care offices. We're especially proud of this performance in light of seasonal dynamics, which were compounded by the industry-wide change health care cyber attack.

Payer coverage was stable in Q1 as Auvelity remains accessible to patients representing approximately 70% of covered lives. As noted in our press release this morning, we just contracted with a large group purchasing organization for a potential formulary of Auvelity, laying the groundwork for future increases in covered lives. Pharmacy benefit managers and health plans under this EO are now able to make coverage decisions for Auvelity based on the contracted terms. With this agreement, Axsome is now contracted with 2 of the 3 largest GPOs for potential coverage of Auvelity. We are very pleased with the strong commercial foundation we have created to support Auvelity performance, including our expanded psychiatry sales team, a recently enhanced sales and marketing campaign and expansion of digital capabilities to maximize reach to targeted HCPs. Of both, we observed an inflection in weekly new patient starts or [ NBRX ], in March, a positive signal of both the impact of our optimized commercial footprint, and continued adoption of Auvelity as a go-to treatment option for adults with major depressive disorder.

Transitioning now to Sunosi. Total prescriptions were just over 41,000, representing a 1.6% decline versus Q4 2023 and 14% growth versus Q1 2023. Demand in the first quarter was impacted by typical seasonality in the [ EBS ] market as evidenced by the 3% decline observed in the weight-promoting agent market this quarter. Approximately 3,700 new patients started Sunosi treatment during the quarter, bringing the total number of unique patients treated with Sunosi to approximately 68,000 since launch. More than 400 new [indiscernible] were activated in Q1, resulting in a total cumulative prescriber base of more than 12,600 since launch. Payer coverage for Sunosi in Q1 remained 83% of lives covered across channels.

In closing, Q1 was a very positive start to 2024 for both Auvelity and Sunosi, with leading indicators such as trends with new patient starts and newly activated prescribers, reinforcing our confidence that Axsome will deliver strong commercial performance in our second year as a commercial company. We continue to receive compelling feedback from health care professionals and patients about the positive impact our products are having in real-world settings. And we are proud of Axsome's growing reputation as a leader in the CNS space that delivers differentiated and impactful products for serious psychiatric and neurological conditions.

I will now turn the call back to Darren for Q&A.

[Darren Opland, executive]

Thank you, Ari. Operator, may we please have our first question.

[Operator]

[Operator Instructions] Our first question comes from Charles Duncan with Cantor Fitzgerald.

[Charles Duncan, analyst]

Congrats on a great quarter and appreciate you taking our questions. I had a commercial question and then one on the pipeline. Regarding the commercial question, I'm not sure if I heard it, Ari was speaking fast. Can you give us a sense of new-to-brand versus refill rates for Auvelity?

[Ari Maizel, executive]

Yes. Thanks, Charles. Due to brand at the moment, accounts for roughly 25% to 30% of weekly prescriptions, that's a healthy number at the moment. We expect new brands to continue to grow, but TRx, obviously should outpace just based on the existing patient base and the refill rates, which -- at this point, we feel very comfortable with. We're seeing good [indiscernible] and persistency generally. So hopefully, that answers your question. Let me know if there are any specific follow-ups.

[David Marek, executive]

Just a little more color on persistency. I know it's probably too early, but how do you feel about that so far with Auvelity?

[Ari Maizel, executive]

Yes. I feel really good. In fact, we recently were engaged with a group of KOLs to receive feedback. And -- this is anecdotal. We don't have specific [ clean data ] to prove this out, but they're seeing adherence as roughly twice what they have seen historically with SSRIs, which bodes very well for the brand. Just showing that the impact of the clinical profile is meaningful for patients and they're sticking with it longer than other entry depressants from the past.

[Charles Duncan, analyst]

Okay. And then in terms of development, perhaps for you, Herriot. Can you provide us any information on the percent responder rate that you anticipate out of the first part of the ACCORD-2 study? And then a sense of how you feel [ brexpiprazole ] has changed that unmet need. Would you anticipate AXS-05 to become frontline? Or would it -- I guess, would it sequence after brexpiprazole use in those patients?

[Herriot Tabuteau, executive]

With regards to the responder rate in the ACCORD-2, I don't want to misspeak in terms of the exact response rate, but it is exactly what the model or will be included in inclusion criteria in quarter 1. So the studies are very similarly designed and -- and a reminder, the ACCORD-1 trial was able to very effectively detect the [ sale ]. In terms of brexpiprazole and the unmet need, we don't view that brexpiprazole has changed the need for a safe and effective long-term treatment [indiscernible] disease agitation. So as a reminder, patients were treated as [indiscernible] necessarily with [indiscernible], breakthrough result does fall into that class. And so we got [indiscernible] view the opportunity for AXS-05 is changing materially based upon that approval. And in terms of their frontline usage, assuming that we continue to generate data that replicate [indiscernible] in ADVANCE-1 and also in ACCORD-1 [indiscernible] expect that [indiscernible] could be a frontline treatment and will be online treatment for [indiscernible] disease [indiscernible].

[Operator]

Our next question comes from Leonid Timashev with RBC Capital Markets.

[Leonid Timashev, analyst]

Congrats on the quarter. Can you guys talk about the price volume impact you'd expect from this latest GPO [ add ]? And should we expect some acceleration in scripts with an impact to gross to net in the near term? Or would it be more incremental, gradual change? And then maybe just related to that, with 2 out of the 3 major GPOs in hand, can you talk about maybe the progress of the third that you've made?

[Ari Maizel, executive]

Yes. Thanks, Leonid. This is Ari. So regarding price volume trade-off, it's a little premature to talk about impact on gross to net for this particular agreement. And obviously, part of the effort right now is to ensure that we're effectively pulling through the contract terms with the [ PBMs ] that are underneath the GPO umbrella, but we do expect there to be volume growth once we are able to expand its coverage and we'll provide updates on the impact of the gross to net when appropriate.

Regarding your question around the third GPO, what I'd say is we're having very fruitful discussions with all of the major payers and PBMs including the GPOs. And these are complicated negotiations. Obviously, [indiscernible] important for us, not only to expand coverage but also be mindful of profitability over the long term because we have a growing portfolio that we need to plan for. So -- no specifics on the details of the negotiation, but we feel very good about the nature of the dialogue and look forward to future updates.

[Operator]

Our next question comes from Ash Verma, UBS.

[Ashwani Verma, analyst]

Congrats on the progress. So I have 2. One is just on this last comment that you had about the GPO win. Can you maybe elaborate like what percentage commercial lives are covered through this GPU? You have 48% coverage prior to this, I believe. And then second, regarding this new study for AD agitation, can you remind us like is that something that you need for regulatory package? Or do you think that the ADVANCE-2 study would be sufficient? Like why do this study now versus you already have a another study going on, and you had a successful randomized withdrawal study earlier? So just wanted to get your thoughts on that.

[Herriot Tabuteau, executive]

Sure. Thanks for the question. So 2 questions there. I'll take the last one, and then I'll turn it over to Ari to answer the first question.

So with regards to [indiscernible] trial, we do not need it for a regulatory submission. This is an opportunity for us to increase the [indiscernible] of the program while also not affecting at all the timing of [indiscernible] submission. So [indiscernible], we want to have the most robust package, the strongest package going into NDA review. And this is such an important indication. It's always [indiscernible] to generate additional data, which may also -- not just in terms of [indiscernible] submissions, but also in terms of future publications is useful from a commercial perspective. So we think this is the right thing to do. It's very efficient. It allows us to leverage a large number of patients experiencing stable responses in the [indiscernible] trial.

[Ari Maizel, executive]

Yes. Ash, this is Ari. Your question around percent of lives with new GPO. Obviously, as you know, the GPOs represent a pool of PBMs and so because we -- each of the PBMs is a different number of lives covered and has the ability to make their own coverage decisions, I can't give you a specific number of the incremental percentage of lives covered, but it is meaningfully above the 48% that we have publicly stated today. And so part of our focus moving forward is to ensure that the majority of the PBMs are [indiscernible] GPOs are accessing the [indiscernible] that we've agreed to. So it is a meaningful percentage increase if we were successful with all of the PBMs [indiscernible] umbrella.

[Operator]

Our next question comes from Ram Selvaraju with H.C. Wainright.

[Raghuram Selvaraju, analyst]

Just very quickly on the commercial front. I was wondering if there are specific factors that you expect to impact discussions with the third of the 3 largest GPOs that you are currently looking to secure contracting for Auvelity with? And if so, what those factors might be? And then on the development side, I was wondering, Herriot, maybe if you could comment on the profile of AXS-12 relative to the existing approved marketed agents. And whether you believe the impact on cataplexy is likely to be the most significant selling point. And if you anticipate that the impact on sleepiness is going to be sufficient for AXS-12 to be positioned commercially in a competitive way in this indication.

[Ari Maizel, executive]

Sure, I'll start with the first question. So factors that impact negotiations generally beating are the demand growth that we're driving in the marketplace. And in fact, all of the recent access discussions we've had, really focused on how quickly the brand is growing and so the best way to secure access is to show volume growth in the absence of formal coverage. I think it's up to note to know that as a rule, while we negotiate for coverage with major plans and PBMs, one of the areas of focus has been to optimize our patient savings and reimbursement support services to support continued demand growth within the existing access paradigm. And our ability to drive growth is the primary factor in driving interest with GPOs and major brands in PBMs. And so we're really proud of the growth that we've seen to start off the year. I mentioned on my opening comments that we've seen about a 30% increase in weekly new patient starts March compared to December. And that's with the existing access we have. So that only strengthens our ability to negotiate and ultimately have meaningful discussions with the insurance companies.

[Raghuram Selvaraju, analyst]

Have you started doing [ DTC ] promotion of Auvelity? And if so, to what extent?

[Ari Maizel, executive]

Well, we had DTC largely in the digital space at the moment. We do not currently have a TV or video ad that's running, but that is something that is under consideration at the moment, and we'll share updates when appropriate.

[Herriot Tabuteau, executive]

So Ram, with regards to your question on AXS-12 and the profile. So -- what we saw in the trial, it was an application we saw in the [indiscernible] study was a pretty important and significant impact on cataplexy. So not only is there a large percent reduction in cataplexy. But if you looked at our remission cataplexy, which is total elimination, the results were very stark. So a third of the patients had a 100% reduction in cataplexy attack versus less than 10% of patients in the placebo room.

And we also did see an impact on excess of [indiscernible] severity as well as cognition. So we like the profile and the profile as it relates to [indiscernible] tests that are currently on the market is incredibly favorable, we know that is that [indiscernible] are on market, not all patients. In fact, I know the patient actually tolerate them. So there is a significant [indiscernible]. We did conduct also a very large [indiscernible] survey of [indiscernible] in conjunction with narcolepsy network and what that showed was that even on current treatments, 77% of patients continue to experience cataplexy.

As it relates to your question around whether around the [indiscernible] data that we generated, if that will be enough for clinicians [indiscernible] to think about without [indiscernible] a product. The -- what we saw in the study was a clear impact on [indiscernible]. And we also saw a clear impact on overall narcolepsy severity. AXS-12 reduced that because [indiscernible] in severity, also improved overall narcolepsy severity and its quality of life. So the way that we think about it is should this product be available to clinicians and to patients that profile would be very apparent to patients and the clinicians when it's treated based on the patient-reported outcomes and what the clinician global impression outcomes. So we really like the profile and we think this will be an important treatment for patients.

[Operator]

Our next question comes from Marc Goodman with Leerink.

[Marc Goodman, analyst]

Nick, can you talk about was there any inventory for Auvelity in the quarter, anything unusual that may have helped sales? And second, can you talk about gross to net? How you're thinking about the rest of the year and with these contracts that are not being put in place? How should we be thinking about it over the next couple of years? And then Herriot, can you just talk about AD agitation for 1 second? Obviously, last quarter, you delay by -- we're not [indiscernible] but into the second half, the completion of ADVANCE-2. Maybe you can just give us a little more color there? Like are we now back on track? Is this going to be something that's going to happen early in the second half of the year? Or is this late in the second half of the year? And -- and just to confirm that this new study that you're talking about here, this is just patients who've already gone through that open label. So it's not really competing against it at all, right?

[Nick Pizzie, executive]

Mark, it's Nick. So for inventory, inventory remains a channel at 2 weeks. So nothing has changed specifically around inventory for Auvelity or Sunosi, remains continuing at 2 weeks. And then the Auvelity DTN discount for Q1 was in the low to mid-50s. It's an [indiscernible] discount was in the mid-50s for the quarter. As you [indiscernible] typically does have a seasonality [indiscernible] seasonality effect on GTN, which we both saw in Auvelity and Sunosi versus the prior quarter. For Auvelity, GTM did fluctuate in Q1 and ended the quarter with March being in the mid-50s. And right now, we have no reason to expect it to vary significantly from that level moving forward.

[Herriot Tabuteau, executive]

Mark, as it relates to the questions around [indiscernible] agitation. So starting with ADVANCE-2. The guidance is second half of this year. We're very comfortable. We remain very comfortable with that guidance [indiscernible]. So what we're seeing is very positive with regards to how that study is proceeding. And then as it relates to ACCORD-2, it is not competing with the ADVANCE-2. So you are correct. So we do have a large number of [indiscernible] who are in the open label portion, who are experiencing stable responses. So that allows us very efficiently to enroll ACCORD-2. So we expect more enrollment in ACCORD-2 to complete midyear. And the reason for the confidence around that is that the study is very fall along in terms of enrollment.

[Marc Goodman, analyst]

And so just to understand for ADVANCE-2 enrollment really picked up over the past 3 months, and that's why you're confident?

[Herriot Tabuteau, executive]

So we're confident based on where enrollment [indiscernible] and has been. Enrollment in [indiscernible] is also very far along, and it continues to enroll at a predictable pace.

[Operator]

Our next question comes from David Amsellem with Piper Sandler.

[David Amsellem, analyst]

I have a couple of questions on the pipeline. First, for reboxetine in narcolepsy, can you just remind us of the path forward? In other words, are you expecting to file after your -- you completed the extension? Or are there any other gating items to an NDA filing? So can you talk about that and your time line to filing on reboxetine and narcolepsy/cataplexy? Can you talk to your pediatric ADHD study plan? I believe that's a gating item to a filing in ADHD. So it would be helpful to talk to that. And then lastly, esreboxetine and fibromyalgia, how big of the commercial priority is that? And what's the extent to which you're going to need to expand the commercial organization to support that product commercially?

[Herriot Tabuteau, executive]

Thank you for those questions. So I think the first 2 [indiscernible] and then I'll Ari comment on esreboxetine.

So in terms of the timing for filing for AXS-12, so the gating factor is the completion of the legacy [indiscernible] trial, which we expect to complete in the second half of this year. And then it will take us spend some time to put together the NDA filing, but that is to be a new factor. So once that study is completed, we will then be able to file the NDA.

As it relates to solriamfetol, in the pediatric ADHD study plan. You are correct that, that is in trial, which move in part of the [indiscernible] package and we've been working on that, as you can imagine, in terms of speaking to the FDA to get that in place. And we've not yet provided the precise guidance, but is in the study that we will be targeting to start this year. And with regards to exreboxetine.

[Ari Maizel, executive]

Yes. Thanks for the question. I think for AXS-14 fibromyalgia, we do view this as a meaningful commercial opportunity. There are 3 approved agents but there's a lot of room for improvement in terms of overall clinical profile for patients, and we feel very optimistic about the profile of AXS-14 offers for patients. As it relates to how it will impact the sort of commercial footprint, part of what we're analyzing this year is how to effectively size and structure our sales force to accommodate a growing portfolio of products. Although fibromyalgia, it's not a psychiatric product, there is a lot of overlapping comorbidity with major depressive disorder that will influence some of our thinking. And so it's a little too early to say how many additional reps we would want to build into the plan or how we would structure it. Do you think that there is a way to promote AXS-14 efficiently while also putting plenty of attention on the other approved products on the market.

[Operator]

Our next question comes from Yatin Suneja with Guggenheim Partners.

[Yatin Suneja, analyst]

I have 2 quick ones. One is a clarification one. With regard to the ACCORD-2 study. So that's a new study. And this is [indiscernible] study within the [ ADA ] umbrella. Is that a requirement from the FDA that you have to do to randomized withdrawal study and then will the NDA package be contingent upon completion of that study or the outcome of that study? So that's one. And then with regard to Auvelity, I mean, very nice quarter. So [indiscernible] on that. Any thoughts on thinking about providing guidance for the product, maybe not quarterly or on a yearly basis? Thank you.

[Nick Pizzie, executive]

Yatin, thanks for the question, Nick. It's just too early in [indiscernible] provide sales guidance given the fluid nature of some of the market dynamics and the unpredictability of external factors that could have different impacts. We have shared that we believe peak sales for Auvelity and [ MDD ] alone are in the $1 billion to $3 billion range and Sunosi, $300 million to $500 million for its current indications.

[Herriot Tabuteau, executive]

Yatin, with regards to quarter 2, this is not an FDA requirement. However, it does increase the [indiscernible] package, and it is a pivotal trial. So we like that. We like having 4 different studies. So basically, if you think about it, ADVANCE-1 and ADVANCE-2 or 2 [indiscernible] studies in ACCORD-1 and ACCORD-2 are 2 randomized [indiscernible] studies. So a very nice [indiscernible] from about [indiscernible] generation with those 4 states.

And then with regards to the filings. We continue on completion of that study. So it's not required. It's not really contingent. However, we do things that based upon where we are with enrollment of that study. So we expect the study to be fully enrolled midyear and also timing of the relapses in the ACCORD-1 trial, which was positive, but there is a potential for that study to read out around year-end. That's [indiscernible] formal guidance and [indiscernible] will be based upon the number of new assets and the time it relapses, but just to give you a sense of how we might think about it. So we're really happy with the way that we've been able to efficiently increase [indiscernible] of the program for this very important product.

[Operator]

Our next question comes from Jason Gerberry with Bank of America.

[Jason Gerberry, analyst]

So just on ACCORD-2, so it sounds like the motivation with the study is that kind of like think about it as a marketing study. And along those lines, is there an opportunity for you to pool ACCORD-1 and ACCORD-2 such that I don't know if the data has a better chance of getting into the label, given that ACCORD-1 was a really small trial? And then you guys did mention the cyber attack in 1Q. So I know some of your peers had kind of indicated it wasn't really a material impact from numbers. So -- can you quantify to what extent the cyber attack did affect Auvelity revenues in 1Q?

[Herriot Tabuteau, executive]

Sure. So with regards to ACCORD-2, just to be clear. It can be used for marketing, obviously, but it is a registration product. So we're -- we like that. So it does provide a very objective source of [ revenues ] and it relates to [indiscernible]. The 2 studies [indiscernible] design could definitely be combined. And that's typically something that is done in new packages.

[Ari Maizel, executive]

Yes. And regarding the Change Healthcare cyber attack, the impact for Auvelity was really focused on 2 weeks at the end of February, beginning of March. Basically, what we saw was roughly a 30% to 40% impact on weekly prescriptions for those couple of weeks. During that time, we put in a number of technology optimization and patient savings optimizations. We saw a very quick bounce back in early to mid-March for our demand trend. And it's been stable since then, stable to growing since then. So it's largely behind us at this point. We expect [indiscernible] disruption. And for some brands, it was more impactful just related to time and market, whether patient savings cards were tied to the Change Healthcare switching to that nature. And so that's why it impacted us, but it was transient in nature. We feel really good about the [indiscernible] we put into place, and we've seen really nice growth.

[Operator]

Our next question comes from Joon Lee with Truist Securities.

[Joon Lee, analyst]

Regarding on quarter 2, what's the rationale behind [indiscernible] randomized trial? I get those to [indiscernible] trial, which appears to have [indiscernible] success in and are the endpoints in ACCORD-2 [indiscernible] that [indiscernible] in ACCORD-1?

[Herriot Tabuteau, executive]

So thanks, Joon. You were somewhat muffled, so I'll try and answer the question the way that I interpreted but not necessarily what you said.

But I think the question was around ACCORD-2 and what was the rationale for the design versus other designs. So -- so the rationale was like to take advantage already the fact that we had a study which was [indiscernible] patient in an [indiscernible] fashion and therefore, would allow assessment of stable response. So they made a lot of sensors that is our [indiscernible] label [indiscernible] extension trial is essential, the same way that all randomized [indiscernible]. So that was the rationale there.

And in terms of the endpoint as compared to ACCORD-1 is identical. So this is -- this is a way for us to be able to take the learnings from ACCORD-1 and imply them to ACCORD-2 to generate additional data.

[Operator]

Our next question comes from Joel Beatty with Baird.

[Joel Beatty, analyst]

First one is on Auvelity. Can you provide the breakdown between users in earlier line and [indiscernible] therapy? And with the second large [indiscernible] contract, could the use of an earlier line therapy be impacted at all?

[Ari Maizel, executive]

Yes. This is Ari. Thanks for the question. We have seen a really nice increase since last quarter in line of therapy. The increase is we saw roughly 5% increase in first or second line use. So at this point, we're around 50% of Auvelity prescriptions are first or second line, which is a very healthy trends, and we expect that to continue.

Your question around the GPO contract and the impact along of therapy. Generally speaking, when we negotiate with [indiscernible] PBMs, we are negotiating for first or second line access for patients. And so we would expect or if we're successful in pulling through those contract terms that, that would further increase the earlier usage of ability in patients.

[Joel Beatty, analyst]

And last question is, can you provide any kind of context on how this funding trajectory is looking going forward?

[Ari Maizel, executive]

I'm sorry, you were hard to hear. Do you mind repeating the question?

[Joel Beatty, analyst]

How does this spending trajectory look going forward, just spending overall for R&D and SG&A and so on?

[Nick Pizzie, executive]

Got it. Thanks for your question. So as for R&D, our expense for the quarter was $37 million, which ticked up slightly from the previous quarter. We expect R&D spend to continue to increase gradually as we -- as the 2 [indiscernible] Phase III trials commenced during the quarter with the third starting in Q2 and [indiscernible] work. These will be partially offset by the completion of the SYMPHONY trial for AXS-12. And as a reminder, in Q2, we do plan to submit the NDA for fibromyalgia. So we will have a onetime charge for the NDA filing.

As for SG&A, total expense for the quarter was $99 million, as I mentioned in the opening remarks, that was higher than the previous quarter than anticipated as it really related to the sales force expansion. We would anticipate SG&A expense to be in this range in a few quarters.

[Operator]

Our next question comes from David Hoang with Citi.

[David Hoang, analyst]

Congrats on the quarter. I want to ask about the impact of the GPO negotiations in terms of timing on any increases in the number of commercial covered lives. Just I guess, what's the cadence in covered lives that you pick up look like? And can we look towards next quarter as potentially seeing a meaningful step up in the number of covered lives.

[Herriot Tabuteau, executive]

Thanks for the question, David. So we expect [indiscernible] to increase, but it is difficult to predict the exact timing. The way to think about it, GPOs are effectively gatekeepers for PBMs which is why the first step towards securing access is agreeing on contract terms, which includes the rebate and utilization management parameters. So the agreement we announced today enables the PBMs under that umbrella to now access the contracted rates for their numbers. I can't provide a specific percentage increase in covered lives from the 48% we have today. But I will say that depending on how many of the under [indiscernible] umbrella access the [ raise ], it is a full increase over and above the [ 40% ]. The timing is just -- it's too difficult to provide and your question about next quarter. Obviously, our intent is to try to improve it as quickly as possible and will provide updates at the appropriate time.

[Operator]

Our next question comes from Graig Suvannavejh with Mizuho.

[Unknown Analyst]

This is [indiscernible] here for Graig. I just had a question about AXS-05. Have you thought more about the branding for AXS-05 and AD agitation? And if you keep it under the Auvelity brand? Congrats on the quarter.

[Herriot Tabuteau, executive]

Thanks for the question. So whenever you have a new indication and especially one which is different as it is -- in the case of 5 [indiscernible] versus major depressed disorder. That is always a consideration, and it's one that requires a lot of good thought and it's not just something that we just [indiscernible]. So this would require us to really think about it and do some quantitative work. So stay tuned [indiscernible] that we would not obviously communicate or announce ahead of time, but it's something that we're working on.

Ari, anything you add to that?

[Ari Maizel, executive]

No, I think you're spot on. And I think the reality is that there are advantage of the disadvantages to either maintaining [indiscernible] or having an alternative brand name, and we're going through the work right now in anticipation of a filing down the road.

[Operator]

Our next question comes from Vikram Purohit with Morgan Stanley.

[Vikram Purohit, analyst]

We had 2. One on Auvelity, one on the pipeline. So for Auvelity. Could you talk a bit more about how you expect the sales force expansion that you completed recently to help kind of inflect scripts and inflect sales throughout the rest of the year and whether you'd expect there to be kind of a visible kind of acute lift in either of those metrics over the next couple of quarters? And then secondly, for solriam ADHD, can you confirm, is this Phase III readout expected in the second of the year? Is this going to be the study based on which you can submit potentially a filing for the indication? And then if you could just kind of frame out for us, what you'll be reporting and what you would think [indiscernible] successful readout here, that would be helpful.

[Ari Maizel, executive]

Sure. Yes, I'll start with the Auvelity question. So [indiscernible] expansion, we are seeing an impact certainly on activity levels and effort with customers. We're seeing a roughly 40% increase in weekly calls to customers. We are engaging with a broader group of providers that includes a primary care audience. And we are seeing that a meaningful increase in new prescriptions and total prescriptions from primary care, which is sort of commensurate with the additional focus, we've been able to provide with the expanded sales team. I would say that we're in the early phases of seeing the impact from a demand perspective, referenced on the opening comments that we've seen a 30% increase in weekly new patient starts that is typically the first indicator that demand growth is reaching an inflection -- but it's still early days in many ways, and we expect that net growth to continue for time. So we feel really optimistic about the impact the sales force expansion has had thus far and expect that to continue to build over the course of the year.

[Herriot Tabuteau, executive]

Great. And with regards to solriamfetol and the [indiscernible] studies. That's a free trial [indiscernible]. So this is the study that would enable an NDA filing along with a study in AD agitation. So we do need to include the data and efficacy data from pediatric patients that's required for a kind of ADHD in pilot. So we're looking forward to the results of the FOCUS [indiscernible] trial in the second half of the year. So we're on track for that.

As it relates to what we're looking for. I think the first thing that we're looking for is to demonstrate efficacy in the first large multicenter in [indiscernible] studies. So that's what we're looking for. The result of that will inform the profile of the product. There has been one prior site with solriamfetol in ADHD, which sponsored -- that was an [indiscernible] initiated trial. That was a stable center study. So this will be the focus study that will be the first multicenter trial.

[Operator]

Our next question comes from Matt Kaplan with Ladenburg Thalmann.

[Matthew Kaplan, analyst]

Congrats on the quarterly results. Just a quick follow-up on the ADHD program for solriamfetol. Will you, I guess, wait for the readout of the adult study prior to starting the pediatric study in ADHD?

[Herriot Tabuteau, executive]

No, we would not. Our goal is to start the pediatric study as soon as practical.

[Operator]

We have time for questions from 2 more analysts. Our next question comes from Myles Minter with William Blair.

[Myles Minter, analyst]

Just on the Alzheimer's [indiscernible] agitation program. You're enrolling from the open-label expansion of ADVANCE-2 into this new ACCORD-2 study. So does that really imply that you've already got all of the long-term safety data that is required for a potential filing for that indication? And then the second one is about the messaging that ACCORD-2 could be a pivotal study if it is required. Why is that the case when I believe that ACCORD-1 went through some protocol amendments and was obviously concluded early. And I think the messaging was that, that may have been pivotal when it first started, then it turns out it wasn't. So I guess, what has changed there to say that ACCORD-2 would be pivotal and ACCORD-1 wasn't?

[Herriot Tabuteau, executive]

Thanks for the question. With regards to the open-label extension study, so we continue to enroll the open-label safety extension trial. As a reminder that requires or what we're trying to do [indiscernible] guidelines [indiscernible] 300 patients treated for 6 months and 100 patients treated for 1 year and we're well on track to accomplish those goals. So of course, [indiscernible] do not affect that. And then also the patients who are completing ACCORD-2 also [indiscernible] then go on and continue to be dosed. So we're very comfortable with regards to [indiscernible] number of patients.

As it relates to ACCORD-2 pivotal study and is also comparing that to ACCORD-1. So what's nice about ACCORD-2, we completed Cohort 1. And so all of the [indiscernible] in terms of out of content around the endpoint, which could be necessary in a study like this, we have and so we're able to design ACCORD-2 very prospectively. And we have also received feedback from the FDA that this could be a registration trial based on the design. So I think that it's the fact that ACCORD-2 [indiscernible], and we have designed it with the benefit of the knowledge for the ACCORD-1, which is a benefit in this case.

[Operator]

Our next question comes from [ Troy Langford ] with TD Cowen.

[Unknown Analyst]

Congrats this quarter. On AXS-14, how confident do you feel that the FDA has all would it need from a clinical efficacy perspective to approve the application? And then on Sunosi, can you just provide any additional color on the powering assumptions for the Phase III trial in MDD?

[Mark Jacobson, executive]

Sure. I'll take 14. This is Mark. So we're targeting this quarter here. And in terms of content, that's substantially complete. So we're -- those things are being finalized and really just building out the submission. We're going through that. We think we tend to get that as robust as possible, but it's the work is substantially complete.

[Herriot Tabuteau, executive]

As it relates to the power of solriamfetol in MDD, we've had that study similar to -- similarly to the way that we powered our other studies in major progressive [indiscernible]. So -- and as you know, you have quite a bit of superior with the Auvelity program. So think about the powering and similar. And I think in general, on the studies, the effect sizes, which one would expect with these drugs is very well laid out, and there's a lot of precedent. So that's how [indiscernible].

To summarize, 90% power to detect an effect size, which is similar to the effect side, which we detected in [indiscernible] program.

[Operator]

Since there are no more questions, I will now turn the call back over to Axsome's CEO for concluding remarks.

[Herriot Tabuteau, executive]

Well, thank you for taking a time to join us for today's [indiscernible] marks strong progress to Axsome. We look to continue [indiscernible] of commercial and pipeline execution throughout the balance of the year with the goal of delivering innovation and value of patients, health care professionals and investors alike.

Thank you, and have a great rest of your day.

[Operator]

This [indiscernible] today's conference. Thank you for your participation. You may disconnect your lines at this time.