Axsome Therapeutics Inc

NASDAQ:AXSM

Earnings Call Transcript 2020-Q2

[Operator]

Good morning. And welcome to the Axsome Therapeutics Conference Call. Currently, all participants are in a listen-only mode. Later, there will be a question-and-answer session and instructions will follow at that time. As a reminder, today's conference call is being recorded.

Now, I'd like to turn the conference over to your host, Mark Jacobson, Chief Operating Officer at Axsome Therapeutics. Please go ahead.

[Mark Jacobson, Chief Operating Officer]

Thank you, operator. Good morning and thank you all for joining us on today's conference call. Our earnings press release providing a corporate update and details of the company's financial results for the second quarter of 2020 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, among other things, the efficacy, safety and intended utilization of our investigational agents, our clinical and non-clinical plans, our plans to present or report additional data, the anticipated conduct in the source of future clinical trials, regulatory plans, future research and development plans 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; Dave Marek, Chief Commercial Officer; and Dr. Cedric O'Gorman,

Senior Vice President of Clinical Development and Medical Affairs. Herriot will first provide an overview of the company and then review recent developments and upcoming milestones. Following Herriot, Nick will review our financial results. We will then open the line for questions.

I shall now turn over the call to Herriot.

[Herriot Tabuteau, Chief Executive Officer]

Thank you, Mark. Good morning, everyone. And thank you all for joining Axsome Therapeutics second quarter 2020 financial results and business update conference call. Over the past several months, we continued to advance our AXS-05 and AXS-07 product candidates towards NDA submissions in major depressive disorder and migraine respectively. Across our broad development pipeline, we achieved several important clinical and regulatory milestones including two FDA Breakthrough Therapy designations. I will provide a pipeline update, highlight the achievements in the quarter and will then review our upcoming milestones.

Starting with AXS-05 in depression, this morning, in addition to our regular quarterly financial results press release, we issued a separate press release focused solely on the progress in our depression program, including the generation of new clinical data. We remain on track to submit the NDA for AXS-05 in the treatment of major depressive disorder, or MDD in the fourth quarter. To that end, we have completed a successful pre-NDA meeting with the FDA for AXS-05 in MDD. In addition, we've completed enrollment in the Phase 3 open-label safety trial of AXS-05 in MDD, which we call the COMET study to support the planned NDA filing.

We're also conducting three Phase 2 open-label efficacy sub-studies of the COMET trial, which will evaluate the efficacy and safety of AXS-05 in three clinically pertinent MDD patient populations: the COMET-TRD trial in treatment resistant major depressive disorder or TRD; the COMET-AU trial in antidepressant unresponsive MDD, defined as patients who continue to have depressive symptoms, despite treatment with one standard anti-depressant; and the COMET-SI trial in patients with suicidal ideation. Efficacy results from these studies are expected in the fourth quarter of this year. We will further inform the anti-depressant profile of AXS-05. We also initiated a Phase 2 double-blind, placebo-controlled randomized withdrawal study in patients with TRD, which we call the MERIT trial. Results from MERIT trial are expected in the first half of 2021.

The MERIT and COMET-TRD trials are being conducted in lieu of the previously planned Phase 3 trial in TRD. This approach will more quickly generate clinically useful information with AXS-05 in this treatment resistant MDD population starting as early as the fourth quarter of 2020. Overall, these new trials will generate additional data on AXS-05 across a broad spectrum of MDD patient types by the time of commercialization. We believe that this information will be helpful to prescribers and patients, especially given the new mechanism of action of AXS-05.

Moving onto our program in Alzheimer’s disease agitation with AXS-05. In June, we received Breakthrough Therapy designation from the FDA for AXS-05 in the treatment of Alzheimer's disease agitation. This designation is supported by the positive results from our ADVANCE-1 pivotal trial which demonstrated a substantial reduction in agitation in Alzheimer’s disease patients as compared to placebo. We are on track to initiate a second Phase 3 trial of AXS-05 in this important indication in the fourth quarter of this year.

Switching now to our migraine program with AXS-07, we remain on track to submit the NDA for AXS-07 for the acute treatment of migraine in the fourth quarter. To that end, we have completed enrollment in the Phase 3 open-label safety extension trial of AXS-07 in migraine, which we call the MOVEMENT study to support the planned NDA filing. As we move towards the filing of our NDAs in the fourth quarter for AXS-05 and for AXS-07, our commercial team is focused on launch-readiness activities to ensure successful commercial execution.

Moving next to our narcolepsy program with AXS-12.

Last week, we received FDA Breakthrough Therapy designation for AXS-12 for the treatment of cataplexy in patients with narcolepsy. The designation was supported by the positive results from the Phase 2 CONCERT study, which demonstrated substantial and rapid improvements in cataplexy, and excessive daytime sleepiness with AXS-12 as compared to placebo. We are on track to initiate Phase 3 trials of AXS-12 in the treatment of narcolepsy in the fourth quarter of 2020.

Our industry leading late-stage CNS pipeline has now been granted three FDA Breakthrough Therapy designations: AXS-05 in MDD; AXS-05 in Alzheimer’s disease agitation; and AXS-12 in cataplexy, in narcolepsy. These designators exemplify our commitment to developing potentially life changing medicines to patients with difficult-to-treat CNS conditions and highlight our innovative approach to clinical development and the potential for our products to provide significant advances in patient care.

With regards to major upcoming milestones, the rest of the year promises to be a busy time. We remain on track to submit our NDAs for AXS-05 in major depressive disorder and for AXS-07 in the actuate treatment of migraine, both in the fourth quarter. We anticipate efficacy results with AXS-05 from COMET-TRD trial in treatment resistant depression, the COMET-AU trial in antidepressant unresponsive MDD, and the COMET-SI trial in MDD with suicidal ideation, all in the fourth quarter. And we expect to launch our second Phase 3 trial of AXS-05 in Alzheimer's disease agitation, and our Phase 3 trials of AXS-12 in narcolepsy, all in the fourth quarter.

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

[Nick Pizzie, Chief Financial Officer]

Thank you, Herriot. And good morning, everyone. We remain in a strong financial position as we continue to accelerate our clinical programs and commercial preparedness while maintaining sound fiscal discipline. We ended the second quarter with approximately $191 million in cash, compared to roughly $197 million in cash at the end of the first quarter, a net decrease of approximately $6.5 million.

During the quarter, we issued 141,678 shares, yielding gross proceeds of approximately $12.5 million. R&D expenses were $10.5 million for the quarter ended June 30, 2020 versus $11 million for the comparable period in 2019, a decreased of $0.5 million was driven by the completion of a majority of our clinical trials, which were ongoing in the comparable prior period.

G&A expenses were $7.2 million for the quarter ended June 30, 2020 and $2.4 million for the comparable period in 2019. The increase was primarily due to an increase in non-cash related stock compensation expense, along with the build-out of the commercial function. Looking forward, we believe our current cash position is sufficient to fund our anticipated operations based on our current operating plan for at least two years.

That concludes our second quarter 2020 financial review. I will now turn the call back to Mark to lead the Q&A discussion.

[Mark Jacobson, Chief Operating Officer]

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

[Operator]

[Operator Instructions] Our first question comes from Joon Lee with Truist Securities. Your line is open.

[Joon Lee, Truist Securities]

A question on the comments about studies. Are these purely hypothesis generating or is it possible that results can be incorporated into the NDA submission? And I have a follow up. Thank you.

[Herriot Tabuteau, Chief Executive Officer]

Thanks, Joon, for the question. The COMET trial will be incorporated into the FDA submission. It is our long-term safety study. And then the sub-studies of the COMET trial which are measuring efficacy in different patient populations, those data we’d also expect to be included in the NDA filing.

[Joon Lee, Truist Securities]

And regarding the mechanics of how you are going to enrol the patient into the sub-studies. Will you be enrolling additional patients into the COMET Phase 3 long-term safety study to enrol in one of these three studies -- sub-studies or will you be selecting from those already enrolled in the long-term safety COMET Phase 3 study into these Phase 2 sub studies? And I have one more follow up after that. Thank you.

[Herriot Tabuteau, Chief Executive Officer]

There will be enough subjects to be enrolled in total, as we disclose, the number of subjects enrolled in the COMET study is about 800 patients. So, there surely are enough subjects in that sub-study. So, these sub-studies are on prospectively defined patient groups and also what efficacy data is being collected in those patients respectively, and those will be separate fiscal analysis....

[Joon Lee, Truist Securities]

Great. And then regarding your Phase 2 MERIT study, which is a randomized withdrawal study. Are you aware -- it's very interesting that you're taking this approach, which tends to have lower placebo effect? Are you aware of anti-depressant approved on a randomized withdrawal study design?

[Herriot Tabuteau, Chief Executive Officer]

Yes. The -- if you look at the esketamine data package, so one of the studies that worked was a randomized withdrawal study design.

[Operator]

Our next question comes from Mark Goodman with SVB Leerink. Your line is open.

[Roanna Ruiz, SVB Leerink]

Hi, this is Roanna on the line for Mark. Thanks for taking the question. I was curious, these sub-studies that you have coming out of the COMET trial, did that come from some FDA guidance from your pre-NDA meeting or is that sort of your own plan of building out more robust data package?

[Herriot Tabuteau, Chief Executive Officer]

So, I'll let Cedric speak to that. But yes, just to answer the first part of your question, that did not come from FDA guidance. And this is really us wanting to make sure that there is as much information as possible available to clinicians, given the new mechanism of action of the drug and we want to study in a wide spectrum of new patients.

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

Thanks for the question. The only thing I would add is that given that we have such a rich patient population, rich MDD patient population in COMET, it really was a terrific opportunity with the hundreds of patients that are enrolled to look specifically at the important clinical populations of treatment resistant depression, major depressive disorder and then suicidal ideation. And as you’ll recall, the long-term safety studies have been treated by both our short-term treatment-resistant depression study and our short-term major depressive disorder study. So really was a very sort of elegant way and important way to look at these patients in order to look at their efficacy outcomes. And as Herriot said, sort of guide clinical utility and further characterize the antidepressant profile of AXS-05.

[Roanna Ruiz, SVB Leerink]

And then one quick question on -- could you maybe explain a little bit clinically, what the differences between TRD and unresponsive MDD. Is that something that physicians will easily recognize, and how do we think about that in terms of treatment paradigm?

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

Yes. So, they are well-recognized clinical populations. So, for unresponsive MDD, you're talking about a patient population who -- like patients who continue to have depressive symptomatology, despite treatment with one antidepressant. And then for the treatment resistant depression population, that is also widely recognized as patients who have failed to respond or continue to have depressive symptoms, despite two or more antidepressants. So very distinct groups, well-recognized to physicians and prescribers, and that's why we approach the definitions in that way.

[Operator]

Our next question comes from the line of Charles Duncan with Cantor Fitzgerald. Your line is open.

[Pete Stavropoulos, Cantor Fitzgerald]

Hi. This is Pete Stavropoulos on for Charles. Congratulations on all the progress and the initiation of the new studies. One quick question for me is, is there anything you can tell us about the MOVEMENT trial regarding persistence of patients on AXS-07?

[Herriot Tabuteau, Chief Executive Officer]

So, with regards to the MOVEMENT study, we've had great patient retention, I think better-than-expected. And obviously, when we provide the results of that trial, we'll give you more details.

[Operator]

Our next question comes from line of Matt Kaplan with Ladenburg Thalmann. Your line is open.

[Matt Kaplan, Ladenburg Thalmann]

I wanted to ask a little -- if you could provide a little bit more color in terms of what your thoughts -- current thoughts are in terms of the Phase 3 program in narcolepsy. You mentioned starting two trials. Do you expect to start I guess two studies simultaneously later this year?

[Herriot Tabuteau, Chief Executive Officer]

Well. Thank you, Matt, for the question. That is the plan. So, right now, we're planning to launch our Phase 3 program. And we'd like to do that in parallel as much as possible. We do anticipate that two Phase 3 studies would be needed. And by launching them in parallel or as close to in parallel as possible, that should accelerate the timing to commercialization.

[Matt Kaplan, Ladenburg Thalmann]

And then going back to the sub-studies, the COMET sub-studies and the MERIT study, do you expect the results -- the efficacy results from those four studies to be included potentially in the label, if AXS-05 is approved for MDD?

[Herriot Tabuteau, Chief Executive Officer]

So, to be clear, these studies are not studies that are being conducted to support specific labeling. However, the data will be included in our FDA package. And what's important too about what we're doing is, is the indication that we're filing the NDA for is MDD, which is very broad and the data that's being generated in these studies to [accomplish] MDD.

[Operator]

Our next question comes from the line of Myles Minter with William Blair. Your line is open.

[Myles Minter, William Blair]

Just firstly on MERIT again, just wondering what your definition of treatment response in that trial would be part of randomization to the withdrawal portion of the study? I'm assuming that’s 50% improvement from baseline on the MERIT just, but correct me if I'm wrong there. And overall what treatment time period would that be? Thanks.

[Herriot Tabuteau, Chief Executive Officer]

So, thanks Myles for the question. I'll lead off and see if Cedric has anything else that he'd like to add. So, in order to be randomized in the MERIT study, so patients have to have not a specific reduction, but they have to be in remission. So, these are patients who remit. And so which is a very stringent definition, and that is sustained.

And then with regards to what a relapse would be defined as. So, we have not yet disclosed that, but it would be a return symptom.

[Myles Minter, William Blair]

And then maybe just a follow up on the -- you mentioned in parallel the esketamine approval package, this is starting to look a lot like that SPRAVATO one. So, just curious as to whether somewhere future down the track you're going to be running a study in the elderly? I asked it because of a pretty benign safety profile that you saw in the ADVANCE-1 study of Alzheimer's disease patients and just wondering whether you've already sort of overcome that safety concern in an elderly population. And why we haven't seen elderly patient trial pop up in those additional trials that you've announced today? Cheers.

[Herriot Tabuteau, Chief Executive Officer]

So, certainly, one of the benefits of the ADVANCE trial in addition to demonstrating efficacy in Alzheimer’s disease agitation is that it did provide us a very clear sense of the safety profile of AXS-05 in the elderly. So, that's really helpful to us in thinking about additional potential future indications. And while the current sub studies do not include the elderly, in the future we may certainly look at that patient population in MDD.

[Myles Minter, William Blair]

Okay. And then final one from me. Just in terms of the patient population you're enrolling in MERIT, none of those have come from COMET, yes, these are newly treated patients with MERIT, that’s not like you’re trying to define remission out of COMET and then use those patients to be randomized into the withdrawal period of MERIT, these are two completely separate trials. Yes?

[Herriot Tabuteau, Chief Executive Officer]

So, they are not two completely separate trials. But as you can imagine, in the COMET study, we have a lot of patients who are de novo, some of whom have TRD. And we would look to certainly leverage the recruitment efforts as much as possible. So, patients from COMET who may have TRD would definitely be included. And that's one of the reasons why we launched the COMET-TRD study. It's a very efficient way with our current clinical program to get those patients who have TRD. And so it reduces recruitment efforts. It gives us a patient population that's already there and allows us to generate randomized control data in a very efficient and rapid fashion.

[Operator]

Our final question comes from the line of Ram Selvaraju with H.C. Wainwright. Your line is open.

[Ram Selvaraju, H.C. Wainwright]

Very quickly on esreboxetine, I was wondering if you could comment on what some scenarios might be regarding the scope of clinical development if the FDA might ask you to recapitulate a study or studies that have already been done? Or if there might be the possibility of your having to look at completely different kind of clinical development paradigm with a set of endpoints that haven't yet been evaluated within the context of fibromyalgia, if you could comment on that?

[Herriot Tabuteau, Chief Executive Officer]

So, thanks Ram for the question. So, with regards to AXS-14, as you know and as you pointed out, we do have positive results from two controlled trials. One of them is a Phase 3 trial, one of them is a Phase 2 trial. And so, the simple studies were conducted, we don't believe that the endpoints have changed much, if at all, for fibromyalgia. But what we'd like to do is, is meet with the FDA to actually sit down with them, go through the data and come up with what the next steps are and what the clinical plan is.

So, before we make any pronouncements, and before we speculate, we do want to meet with the FDA. We think we're in a great position, given these two positive studies to do that. And as soon as we have met with the FDA, and we've gotten written confirmation, we will provide you with all the details.

[Ram Selvaraju, H.C. Wainwright]

And then on the COMET-SI trial, can you comment on whether this trial, would if positive, have any direct implications for the specific utilization of AXS-05 in suicidal depression? And if that's potentially specific indication that we could see included on the label? And if that's the case would the COMET-SI study be sufficient or what additional development work might potentially be necessary to specifically firm up the evidence in support of the drug in suicidal depression specifically?

[Herriot Tabuteau, Chief Executive Officer]

So, thanks Ram for the question. So, the COMET-SI trial is hypothesis generating and the reason why it's important is one of the features of AXS-05 that we have seen is its rapid onset of action. So, we’ve seen [specifically] significant separation from placebo as early as week one and also at week two. As a reminder, those were key secondary endpoints in our GEMINI trial. And so, it makes sense that four patients with suicidal ideation that those features would be relevant. So, we'll await the results of the COMET-SI trial and to see whether or not future clinical studies in that specific patient population are merited. But we do think that the results will provide very important information for clinicians as we commercialize the product.

[Ram Selvaraju, H.C. Wainwright]

And then just one very quick clarification. So, it was my understanding from going through the press release that the COMET-TRD and MERIT study would be effectively the additional basis for supporting a filing in TRD. And that COMET-AU would not expressly be taken into consideration in terms of the supporting evidence for AXS-05 in the TRD indication. Can you just elaborate on whether that is indeed correct or not correct?

[Herriot Tabuteau, Chief Executive Officer]

So, the studies -- these studies are to provide information that we think will be clinically relevant and useful for patients as well as physicians, as we launch the product. And these -- data from these trials will certainly be included in our NDA filing. Just to be clear, the indication of that, that we are filing for is MDD more broadly, which encompasses obviously all of these subsets. And the indication is not specifically for a particular subset, but it’s for the broad MDD patient population, which includes all these subsets.

[Operator]

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

[Herriot Tabuteau, Chief Executive Officer]

Well. Thank you all for attending our conference call today. This is an exciting time for Axsome as we advance our pipeline of potentially life changing medicines. We look forward to a busy rest of the year and to updating you on our progress.

[Operator]

This concludes today's conference call. We thank you for your participation. You may now disconnect.