Axsome Therapeutics Inc

NASDAQ:AXSM

Earnings Call Analysis

Axsome's Strong Growth and Strategic Advances in Q2 2024

In Q2 2024, Axsome Therapeutics showcased robust financial growth and strategic advancements across its portfolio. Revenues surged to $87.2 million, an 87% year-over-year increase. Auvelity sales skyrocketed by 135%, reaching $65 million, driven by a 29% rise in prescriptions. Sunosi also performed well, with 15% growth in total prescriptions. The company augmented commercial coverage significantly, adding 22 million new covered lives for Auvelity. Despite a net loss of $79.3 million, Axsome remains confident in reaching cash flow positivity. The pipeline saw critical progress, including pivotal trial milestones for AXS-07 and AXS-05, and new Phase III trials for multiple indications of solriamfetol.

Strong Growth Momentum for Auvelity and Sunosi

In the second quarter of 2024, Axsome Therapeutics showcased impressive financial performance, highlighted by a total net product revenue of $87.2 million, reflecting an 87% increase from $46.7 million in the same quarter of 2023. A significant contributor to this success was Auvelity, which recorded net product sales of $65 million, a remarkable 135% growth compared to $27.6 million in Q2 2023. Sunosi also performed well, generating $22.1 million, which corresponds to a 16% year-over-year increase.

Expansion in Commercial Coverage

Axsome's commercial strategy has yielded positive results, particularly in enhancing market access for Auvelity, which recently gained commercial coverage for an additional 22 million lives. This change elevates the coverage of commercial lives from 48% to 60%, and the total covered lives across all payer channels from approximately 70% to 76%. This new coverage is expected to strengthen the uptake of prescriptions, evidencing solid underlying demand for Auvelity.

Rising Prescription Volume and Positive Market Trends

The prescription volume for Auvelity has continued to rise, reaching approximately 123,000 prescriptions in Q2, which is a 131% increase compared to last year. This momentum is indicative of the product's acceptance in the market, with more than 24,000 new patients initiated on Auvelity treatment this quarter, and 4,300 new prescribers activated. In contrast, market growth for the broader antidepressant category is stagnating, highlighting Auvelity's strong market position.

Financial Outlook and R&D Investments

Despite the impressive revenue growth, Axsome reported a net loss of $79.3 million or $1.67 per share, attributable in part to increased R&D expenses totaling $49.9 million, primarily due to ongoing clinical trials and expansion efforts. The company ended the quarter with $315.7 million in cash and equivalents, which is deemed sufficient to fund operations until reaching cash flow positivity. Axsome anticipates continuing investments in R&D, particularly for ongoing Phase III trials for AXS-05 in depression and AXS-14 in fibromyalgia, which are expected to report results in the second half of 2024.

Positive Developments for Upcoming Trials

Looking ahead, Axsome is on track for critical data readouts from pivotal trials in the second half of 2024, including AXS-05 in Alzheimer’s disease agitation and AXS-14 for fibromyalgia. Successful outcomes from these trials could pave the way for new applications and significant revenue streams, particularly given the lack of recent innovations in fibromyalgia treatment.

Market Dynamics and Strategic Planning

Axsome is aware of the competitive landscape in the migraine treatment market as it prepares for the launch of AXS-07. The team emphasizes the need for a robust market access strategy, especially as many patients still report dissatisfaction with current therapies. The company is actively planning its pricing structure and marketing strategy for AXS-07, focusing on unique selling points that differentiate it from existing products.

Conclusion: A Promising Future

Overall, Axsome Therapeutics is well-positioned for future growth, supported by an expanding product portfolio, significant advancements in commercial strategies, and a robust pipeline of clinical trials. The successful execution of these elements could not only solidify the company's standing in the CNS market but also enhance shareholder value moving forward.

Earnings Call Transcript 2024-Q2

[Operator]

Hello, and welcome to the Axsome Therapeutics Second Quarter 2024 Financial Results Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Darren Opland, Director of Corporate Communications at Axsome Therapeutics. Please go ahead, Darren.

[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 second 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, among 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 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 comment on the progress we made in the second quarter of 2024 and review key upcoming milestones.

Following Herriot, Nick will review our financial results, and then Ari will provide a commercial update. We will then open the line for questions. Questions will be taken in the order that 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 Axon Therapeutics' Second Quarter 2024 Financial Results and Business Update Conference Call. We had a very productive second quarter, with all elements of our business advancing across our singular CNS focused portfolio, as we continue to build a leading neuroscience company. We delivered strong commercial performance with continued momentum for the launch of Auvelity. In particular, we secured important improvements in both the quality and quantity of payer coverage, and we are clearly seeing the impact of our expanded sales representative team.

We remained pleased with Sunosi and remain excited by the opportunities we see in the currently improved indications alone. Nick and Ari will provide additional color on both products shortly.

Adjacent to our commercial products, we made important progress on both our NDA stage product candidates. The NDA for AXS-07 for the acute treatment of migraine has been resubmitted to the FDA. And we look forward to providing updates on the FDA review. We believe that AXS-07, if approved, would be an important new treatment option that could provide differentiated outcomes for patients.

With respect to AXS-14 for the management of fibromyalgia, we made important progress on our NDA package, taking a steady approach to ensure a quality submission. And we expect to complete this NDA submission shortly in the third quarter.

Fibromyalgia is a debilitating, chronic CNS disorder characterized by widespread pain, fatigue, disturbed sleep, depression and cognitive impairment. With limited treatment options available, AXS-14 has the potential to deliver much needed innovation to patients and HCVs alike.

Moving on to the rest of our robust late-stage development pipeline. We are making excellent progress on our numerous important clinical programs, a number of which have pivotal trial readout later this year and next.

AXS-05 is Axsome's novel, oral, investigational NMDA receptor antagonist and sigma-1 receptor agonist that we are developing for Alzheimer's disease agitation. We continue to anticipate top line results for the pivotal ADVANCE-2 Phase III trial in the second half of the year. Additionally, the enrollment target in the pivotal ACCORD-2 Phase III trial has been reached. As a result, we now expect top line results for both of these studies in the second half of 2024.

Solriamfetol, our dopamine and norepinephrine reuptake inhibitor and TAAR1 agonist is now in Phase III trials in four new indications. The FOCUS Phase III trial in adults with ADHD remains on track for top line results in the second half of the year. In addition, the PARADIGM Phase III trial in major depressive disorder and the ENGAGE Phase III trial in binge eating disorder are also ongoing, with results from both trials anticipated in 2025.

We also recently launched the sustain Phase III trial in Shift Work Disorder for which we anticipate results in 2026. Each of these programs, if successful, has the potential to represent a significant commercial expansion opportunity for solriamfetol.

Finally, we continue to anticipate results this year for the EMERGE Phase III trial of AXS-07 in patients with an inadequate response to oral CGRP therapy as well as results from the Phase III open-label safety extension trial of AXS-12 in narcolepsy.

In total, we have five product candidates in late stage development for nine important indications. Each of which has key potentially value-driving milestones on the horizon. We are incredibly excited by our work and the potential Axsome has to contribute to differentiated patient outcomes and to the advancement of medical practice in neuropsychiatry.

Stay tuned for updates on our advancements as we continue to work every day to make a difference in the lives of the millions of people in the U.S. affected by central nervous system disorders.

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

[Nick Pizzie, executive]

Thank you, Herriot, and good morning. Today, I will discuss our second quarter results and provide some financial guidance. Total net product revenue for the second quarter of 2024 was $87.2 million, representing 87% year-over-year growth. Total net product revenue for the comparable period in 2023 was $46.7 million.

Auvelity net product sales were $65 million for the second quarter of 2024, representing 135% year-over-year growth. Auvelity net product sales for the comparable period in 2023 were $27.6 million.

Sunosi net product revenue was $22.1 million for the second quarter of 2024, consisting of $21.5 million in net product sales and $600,000 in royalty revenue associated with sales in out-licensed territories, representing 16% year-over-year growth. Sunosi net product revenue for the comparable period in 2023 was $19.1 million, consisting of $18.4 million in net product sales and $700,000 in royalty revenue.

Total cost of revenue was $8.1 million for the second quarter of 2024 versus $4.6 million for the comparable period in 2023. Research and development expenses were $49.9 million for the second quarter of 2024 compared to $20.6 million for the comparable period in 2023.

The increase was primarily related to the initiation and continuation of solriamfetol Phase III trials in major depressive disorder, ADHD and binge eating disorder, ongoing trials of AXS-05 and AXS-12, manufacturing costs associated with AXS-07 and AXS-14, post-marketing commitments for Auvelity and Sunosi and higher personnel costs, including noncash stock-based compensation due to organizational growth.

Selling, general and administrative expenses were $103.6 million for the second quarter of 2024 compared to $78.9 million for the comparable period in 2023. The increase was primarily related to commercialization expenses largely driven by field force expansion and higher personnel costs, including noncash stock-based compensation due to organizational growth.

Net loss for the second quarter of 2024 was $79.3 million or $1.67 per share compared to a net loss of $67.2 million or $1.54 per share for the comparable period in 2023. The net loss in the second quarter of 2024 reflects $26 million in noncash charges.

Gross net discount for Q2 was in the low to mid-50s for both Auvelity and Sunosi. We ended the second quarter of 2024 with $315.7 million in cash and cash equivalents compared to $386.2 million as of December 31, 2023.

We believe that our current cash balance is sufficient to fund anticipated operations into cash flow positivity based on the current operating plan. I will now like to turn the call over to Ari, who will provide a commercial update.

[Ari Maizel, executive]

Thank you, Nick. Axsome drove significant demand growth for Auvelity and Sunosi in the second quarter of 2024, reflecting strong market acceptance of our sales and marketing efforts and positive experiences with our products. Our optimization of commercial execution and operations, powered by our digital-centric commercialization platform, combined with improved market access dynamics beginning in Q3, position Axsome well for the second half of the year.

Starting with Auvelity, the second quarter of 2024 saw Auvelity outperform the market and branded competitors with approximately 123,000 prescriptions, representing 29% quarter-over-quarter growth and 131% growth compared to the second quarter of 2023.

By comparison, the antidepressant market grew 1% sequentially and declined 1% compared to the second quarter of 2023. More than 24,000 new patients were prescribed Auvelity in the quarter, and we successfully activated 4,300 new prescribers in Q2, underscoring strong underlying demand for the product as we continue to expand use among depression treaters in both psychiatry and primary care offices.

Our efforts to improve market access for Auvelity recently resulted in a significant commercial coverage decision, which added more than 22 million new covered lives effective August 1. This increases the percentage of covered commercial lives from 48% to 60% and the percentage of total covered lives across all payer channels from approximately 70% to 76%. We anticipate continued progress on coverage dynamics as we strive to improve access for the millions of patients living with major depressive disorder.

Turning to Sunosi. Total prescriptions were approximately 45,000 in the quarter, representing 8% sequential growth and 15% growth versus Q2 2023. By comparison, the waste promoting agent market grew 4% sequentially and declined 1% compared to the second quarter of 2023. Of note, Sunosi had strong performance with new patient prescriptions in Q2, with more than 4,200 new patients initiating Sunosi treatment during the quarter.

In addition, approximately 400 new writers were activated in Q2 as Sunosi continues to grow adoption across the universe of sleep specialists in the United States.

Payer coverage for Sunosi in Q2 was stable with 83% of lives covered across channels. Efforts to improve patient access for Sunosi are ongoing. In closing, we are very pleased with our commercial performance in Q2 for both Auvelity and Sunosi, evidenced by key metrics, including new patient starts, new writer activation and improved market access dynamics.

In addition, we continue to receive outstanding real-world feedback on the impact our products are having on the lives of millions of adult patients suffering from major depressive disorder and excessive daytime sleepiness associated with obstructive sleep apnea and narcolepsy.

Our success in 2024 provides compelling evidence of the promise and potential of Axsome commercialization capabilities in support of future product launches in the CNS space. 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 is coming from Vikram Purohit from Morgan Stanley.

[Vikram Purohit, analyst]

Our one question is on Auvelity commercialization. You mentioned that the sales force expansion was having a benefit that you saw in the quarter. I would just be curious to get some more context on the specific kinds of prescribers and kind of the -- to any extent you could quantify what sort of benefit you saw from the sales force expansion would be helpful.

[Ari Maizel, executive]

Yes. Thanks, Vikram. This is Ari. Obviously, we're really pleased with how the quarter ended up and the impact of the sales force is being seen in a couple of different areas. One, we saw a clear inflection in weekly new patient starts that began at the end of March and continued through the quarter.

Secondly, we're seeing a nice growth in the primary care segment. So although psychiatrists, MDs and MPPAs are still the lion's share of our volume. We are seeing primary care utilization increase and solidly so over the course of the quarter. So those are two things that I would point to in terms of sales force expansion impact.

[Operator]

Next question is coming from Leonid Timashev from RBC Capital Markets.

[Leonid Timashev, analyst]

Congrats on another quarter. I just want to ask on the progress for ADVANCE-2. I guess, can you talk about what you're seeing with respect to the dynamics, in particular with the fact that there's now an improved agent there? I guess what's driving your confidence that you can complete recruitment in second half of the 2024, and, I guess, read that trial out? So any kind of color on the sort of recruitment for ADVANCE-2 would be appreciated.

[Herriot Tabuteau, executive]

Sure. Thanks for the question. What's driving our confidence is simply the moment progress. The study is progressing in terms of enrollment very steadily, and it's putting us on track to report results in the second half. So we're pretty confident with regards to that. And as it relates to the launch of Auvelity, which is an improved agent in this indication.

The impact that we anticipated was that it could provide patients with an alternative treatment. So patients who are considering to enroll a clinical trial in Alzheimer's disease agitation, they will now be presented with another approved agent. So that could have an impact, and that's an impact that we had anticipated and built into our modeling, and we're very comfortable with the pace of progress of the trial and read out in the second half.

[Operator]

Our next question today is coming from Marc Goodman from Leerink Partners.

[Marc Goodman, analyst]

Is the plan still to do a DTC advertising campaign in the second half [indiscernible] like the spending there? And then also just update us on the marketing like plans, the spend, like just give us a sense of what we will happen next year considering maybe launching multiple products?

[Ari Maizel, executive]

Yes. Thanks, Mark. You broke up a little bit, but I believe the first question was plans on direct-to-consumer. Yes, we obviously have direct-to-consumer in market right now. It's primarily focused on digital media. We continue to evaluate the potential for a broad-based media campaign, and we'll share updates as things progress. Part of the decision criteria just with the anticipated noise level with the election season is one of the factors that we're evaluating.

Secondly, your comments about spend as it relates to ongoing launches. Maybe, Nick, do you want to take that?

[Nick Pizzie, executive]

Sure. Yes. So we're currently evaluating planning for the spend for those launches. And as we get closer to those launches, we'll be able to share more information with you.

[Operator]

Next question is coming from Charles Duncan from Cantor Fitzgerald.

[Charles Duncan, analyst]

Yes. Congratulations on a good quarter. I had a 2-part question on AXS-05 or Auvelity. One is with regard to Auvelity, are you seeing persistence that perhaps exceeds expectations relative to other antidepressant medicines. And for AXS-05, relative to the two readouts, congrats on finishing ACCORD, that enrollment. I guess the question is, what is the rate limiting step to filing an NDA? And when would you anticipate that if those two studies are positive?

[Herriot Tabuteau, executive]

Sure. So I'll take the second question, and then I'll turn it over to Ari to talk about persistence. With regards to AXS-05, the gaining factor, the major gating factor is completion of the ongoing studies, including the long-term open-label portion. So once those studies are completed, then we'll be in a very good position to put together an NDA filing. Typically, that takes about six months. Ari, do you want to comment on persistence?

[Ari Maizel, executive]

Yes. Charles, you may remember in the past, we talked about some of the anecdotal feedback we've received that suggested persistency, Auvelity is greater than that observed with SSRIs. We recently conducted a cohort analysis using claims data that did validate there's a numerical advantage for Auvelity relative to the most widely used SSRIs. So we were really pleased to see that, and it does support what we're hearing from providers in their practices.

[Operator]

Our next question today is coming from Joon Lee from Truist Securities.

[Joon Lee, analyst]

Congrats on the strong quarter. ACCORD-2, can you remind us the duration of open-label run-in period? And what the typical time to relapse was in ACCORD-1 using your ACCORD-2 definition?

[Herriot Tabuteau, executive]

So with regards to the running period, what we've disclosed is that it is long enough to enable patients to respond. So if you think back to the advanced studies, those are five weeks in duration, and we're able to see patients respond fairly quickly. And then you would add on to that a period of time to judge whether or not the response is stable. And as soon as that judgment can be made then patients will be able to randomize.

And then the other -- I'm sorry, I think the other part of your question was how long did it take for patients to relapse. So we definitely have that information based on the result of the ACCORD-1 study. Those [indiscernible] here, we've shown. So we definitely get back to you with regards to some qualitative way of looking at that.

In that study, there was no [indiscernible] median time to relapse because the patients on AXS-05 had such low relapse rates. But obviously, the results were highly specially significantly in ACCORD-1.

[Operator]

Your next question is coming from Raghuram Selvaraju from H.C. Wainright.

[Raghuram Selvaraju, analyst]

Herriot, you mentioned the various indications, potentially commercializable for solriamfetol. And I was wondering if you could provide additional color on which of those you expect to present the most attractive competitive landscape, competitive opportunity for solriamfetol and what the peak market opportunity might look like on an annualized basis for solriamfetol in that indication of those four that are currently the basis of ongoing clinical investigation?

[Herriot Tabuteau, executive]

Thanks for the question. What's nice about all the four indications, which we are studying for new indications, ADHD, MDD, binge eating disorder and shift work disorder is that these are all very large patient populations. And we think that solriamfetol based on mechanism of action and the efficacy that's been seen in the current indications does potentially provide added benefit, which can be superior to what is seen with the current agents in -- certainly in ADHD and also in binge eating disorder.

So it remains to be seen what the full group profile is, which is why we are conducting the current studies. We're looking forward to the results of an [indiscernible] study first. That's in the second half of this year. And then we'll be looking forward towards the results for the other indications thereafter.

Shift work disorder is an interesting indication. So as a reminder, the indication there is excessive daytime steepness in patients with shift work disorder that's very akin to the currently approved indications, which is because of [indiscernible] OSA and narcolepsy. So that will round out that the currently approved indications.

And then ADHD and binge eating disorder, obviously, those are very new indications, and then MDD would be also of a new indication -- entirely new indication for solriamfetol.

[Operator]

Our next question today is coming from Jason Gerberry from Bank of America.

[Jason Gerberry, analyst]

Mine is just I wanted to get your latest thinking on AXS-05 for ADA. Assuming you're able to file your thoughts on like a unique NDA versus supplemental to the Auvelity NDA. Specifically, like given the differences in the payer mix, just what are your kind of thoughts on tactical considerations for approaching like this more highly Medicare, Medicaid indication in lieu of Part D redesign, implications for next year, how like a unique pricing strategy may be important for AXS-05 adoption?

So anything you can do to set a high level to frame some of these tactical considerations would be helpful as we think about monitoring kind of launch comps.

[Herriot Tabuteau, executive]

Yes. So those are great questions that we obviously are giving a lot of thought to. What's nice is we do have optionality. So we want to make sure that we make the right decision, and we're not going to make it hastily. And it does require a lot of work. We like to be very quantitative in our assessments. And as soon as there's something definitive, we will let you know. Typically, that would be closer to the time of the filing and then the approval.

Having said that, maybe Ari could to provide you some guardrails around how we're thinking about things.

[Ari Maizel, executive]

Yes. Thanks for the question, Jason. So there are a bunch of considerations that we're working through right now is obviously marketing elements as it relates to the halo that may be associated with the drug with single or separate brand names. There are patient safety considerations. When you look at other drugs that same molecule, different brand names, generally speaking, there may be a difference in route of administration or dosages.

So there are a number of different factors that we're still in the process of evaluating. And as Herriot mentioned, we'll provide further updates as we get a little bit more certainty around our decision.

[Operator]

Our next question today is coming from Ami Fadia from Needham & Company.

[Ami Fadia, analyst]

Can you talk about the pull-through that you've started to see following the expansion of the commercial coverage? And how you anticipate gross to net to evolve for the remainder of the year?

[Ari Maizel, executive]

Yes. So thanks, Ami, for the question. The 22 million additional lives, which increased our commercial coverage from 48% to 60% and overall coverage from 70% to 76%, just started on August 1. So it is premature to talk about a pull-through at this point. But obviously, we will share additional updates as time goes on. And then in terms of gross net dynamics, I'll hand it to Nick.

[Nick Pizzie, executive]

Hi, Ami. Yes, for the GTN, as I said in my opening remarks, GTN for ability was in the low to mid-50s. We do expect it to remain in this range for the second half of the year as of now.

[Ami Fadia, analyst]

Great. I guess let me just also the question what I meant to ask was how long do you expect that pull-through to come starting August 1.

[Ari Maizel, executive]

We expect it to be dynamic over the coming months. The impact is not felt immediately. It sort of builds over time. So we would expect that to build in the weeks and months ahead.

[Operator]

Our next question is coming from Yatin Suneja from Guggenheim Partners.

[Yatin Suneja, analyst]

Could you maybe help us clarify or maybe set the stage for the ADHD study, what exactly you are looking for on the AISRS endpoint? How should we think about placebo? What would be meaningful here? So that's one.

And the second is on the ADA side. Could you maybe also help us articulate or maybe refamiliarize us with your filing strategy. So you have ADVANCE-1, which was more of a component contribution study. You have the ACCORD-1, which was a randomized withdrawal study, which one is the primary study from an efficacy standpoint, how are you going to utilize the ADVANCE-2 study or the ACCORD-2 study in that package.

[Herriot Tabuteau, executive]

Sure. With regards to the first question around ADHD. This is for solriamfetol, which is being studied in the Phase III trial. The FOCUS trial for ADHD. The study is 90% powered to detect a treatment difference. So we're very comfortable with the powering of the study. And as a reminder, it's enrolling well, and it's on track for a readout in the second half of this year.

With regards to the Alzheimer's disease agitation program, so we now currently have a total of four different Phase III trials. And so we really like the way that positions us. The ADVANCE-1 trial was a parallel group study. It did also have a [indiscernible] brand only arm. So not only did it provide a pivotal evidence of efficacy, but it also did satisfy the component contribution aspect.

The ADVANCE-2 trial is designed exactly like the ADVANCE-1 trial for the most part, and except that it's only the 2-arm study. So it's AXS-05 versus placebo. The ACCORD-1 trial was a randomized withdrawal study, and the ACCORD-2 study is also randomized withdrawal study. So as a reminder, typically four regulatory considerations, on these two positive trials. So we really like the way that the development program has been structured, which provides us -- should provide us a very robust data set for the NDA submission.

[Operator]

Your next question is coming from David Amsellem from Piper Sandler.

[David Amsellem, analyst]

On AXS-07, I appreciate the color earlier in the call, but wondering if you could elaborate more on your go-to-market strategy in acute migraine. Just bearing in mind that there have been some product launches that -- in that space that have failed to gain traction and just given that the payer landscape is not particularly generous. So how do you think about that, how you think about pricing and the payer landscape and just overall thoughts there?

[Ari Maizel, executive]

Yes. Thanks for the question, David. Obviously, we're doing a ton of work on our launch readiness for AXS-07. I think the important thing to remember is that the oral CGRP space is crowded. There are many triptans available. However, there are still 70% of the 6 million or so migraine patients on therapy who are dissatisfied, who are not getting the efficacy or safety results that they're looking for.

And so we do think that there is a meaningful opportunity for AXS-07. Obviously, market access and payer dynamics is top of mind. We're going through the work right now to understand what the pricing strategy should be, but we do feel confident based on the clinical trials that we've designed and the potential impacts on patients with or without prior CGRP utilization is very high.

So we'll provide additional updates as we get a bit closer to launch, but we feel that there is a meaningful opportunity for AXS-07.

[Operator]

Next question today is coming from Joel Beatty from Baird.

[Joel Beatty, analyst]

For Auvelity, the press release mentioned that Axsome expects coverage to continue to expand and evolve. What do you mean by evolve? And then, of course, on AXS-07 for migraine, what will you be looking for in the results of the single group Phase III EMERGE study reading out in the second half of this year? And could those results make it into the NDA that was just recently resubmitted?

[Ari Maizel, executive]

Yes. I'll take the first question, which is around expand and evolve. Obviously, we're very focused on our negotiations with payers. The expand is what you just saw, which was the addition of 22 million lives. So increasing the percent of covered lives is the expand part.

The evolve is, our strategy is to secure access that is first line or first switch in instances where we have existing coverage, where that first line, first switch is not accessible, we work with payers to try to improve the access over time. And so that's sort of a two-pronged approach to our market access engagement.

[Herriot Tabuteau, executive]

Great. And with regards to the question on the migraine study with AXS-07. This is the study in patient EMERGE trial in patients with a history of inadequate response to oral CGRPs. The way that study is designed is it is enrolling patients who are not responding to oral CGRPs. And we monitor their treatment once they've been switched over to AXS-07.

And what we'd be looking for there is what the response rates are with patients who are taking AXS-07 versus what the response rates were prior to when they were on AXS-07. In other words, response rates on all CGRPs versus the response rates on AXS-07.

And in terms of whether or not that would make into the NDA filing, it by definition that will not be the case, right, because that study has not yet read out. However, we do think that it will provide very good information, should it be positive from a marketing perspective and certainly from an [indiscernible] education perspective.

[Operator]

Next question is coming from Joseph Thome from TD Cowen.

[Joseph Thome, analyst]

Maybe on the commercial side for Sunosi. You are seeing growth, obviously, but maybe a little bit slowly. So can you talk a little bit about maybe what you can do or your plans to increase prescribing in the narcolepsy and OSA market? Is there still more room here? Or you getting to a place where you might be a little bit tapped out?

And then second, can you just remind us on the AXS-12 in narcolepsy. What are sort of the next steps there? Do you have to meet with the FDA for pre-NDA meeting? Are you waiting for the safety database? Just sort of some timeline updates would be helpful.

[Ari Maizel, executive]

Yes. So I'll take the first question. Obviously, we're very pleased with how Sunosi has performed. It was a good quarter, and we saw a really nice uptake in terms of new patients started on treatment. And this is overall a smaller market opportunity relative to major depression. That said, we do look at the entire commercial mix of activities and investments, everything from our marketing plans, our sales force effort, market access dynamics as well as our marketing to consumers.

And so all of those things are levers that we're evaluating to try to support the brand growth, but we're really pleased with how it's performed since we acquired the product from Jazz.

[Herriot Tabuteau, executive]

Great. And then related to AXS-12 and the next steps there. So the next steps are completion of the long-term open label safety extension trial. And that's -- and then it is typical to meet with the FDA and have a pre-NDA meeting. So we would look to do that.

[Operator]

Your next question is coming from David Hoang from Citi Group.

[David Hoang, analyst]

So I just wanted to ask about first or second-line usage of AXS-05 in MDD. Have you seen any increased early line usage this quarter? and then I also want to ask about AXS-05 versus solriamfetol in MDD. Obviously, you have a trial for solriamfetol now going on there. How do you think about these two products fitting into the MDD competitive landscape?

[Ari Maizel, executive]

Yes. Thanks, David. So we have seen continued progress in terms of versus second-line use. It's roughly 50% of all utilization for Auvelity now is first or second line. And we've seen that progress over the past year or so. So we're really pleased with the direction that it's heading.

[Herriot Tabuteau, executive]

And as relates to the profile in MDD for AXS-05 for Auvelity and solriamfetol, what we want to do is wait to see what the profile is of solriamfetol for MDD. We're currently conducting that study. So once we see that profile, we'll know more. There are some things, though, that we can't say right now, which is that if you look at patients who have MDD, a very large percentage of them all to have excessive day time sleepiness.

So remember, that is an indication, which is currently approved for solriamfetol. So there is a tremendous amount of overlap in terms of symptomatology between MDD and EDS associated with OSA. So if you can imagine that if solriamfetol were to be positive in major depressive disorder, that might be helpful for clinicians who are trying to treat a patient who is both depressed and who also has excessive daytime sleepiness.

So this is a recurring theme, if you look at our entire portfolio, the overlap in terms of symptomatology and disease states for the various products or the indicators.

[Operator]

Next question today is coming from Graig Suvannavejh from Mizuho Securities.

[Graig Suvannavejh, analyst]

Congrats on the quarter. Just a clarification just around your big Phase III data readouts focus and also your ADVANCE-2 studies. I know the guidance is the second half of this year. Any comment on when or if you plan on providing more refined guidance around those time lines?

And then just a follow-up question, a commercial question just on Auvelity's performance in the second quarter. Congrats there, but any comment on stocking, destocking in the quarter that might have impacted the performance?

[Herriot Tabuteau, executive]

Yes. As it relates to the first question, in terms of providing more granularity as it relates to clinical trial readouts. So we've set the second half for these studies. We're very comfortable with that, and we definitely will consider providing additional guidance. Typically, we do that around the time that we announce our quarterly results. So stay tuned.

[Nick Pizzie, executive]

Craig, it's Nick. As it relates to stocking or destocking. There was no impact specifically around stocking or destocking in channel. We remain at two weeks as we have pretty much since launch for Auvelity and Sunosi.

[Operator]

Next question today is coming from Ash Verma from UBS.

[Ashwani Verma, analyst]

I had questions on AD agitation. So I'm trying to figure out when you can file this. So if you definitely need the OLE to file? What does that mean that you also need advance to the complete first because the OLE is drawing in patients from ACCORD-1 and ADVANCE-2? And then about ADVANCE-2, are there any specific hurdles that you're facing in terms of getting Rexulti naive patients?

[Herriot Tabuteau, executive]

Sure. So with regards to the timing for ADVANCE-2 in the open label safety extension trial. So you are correct that there is a relationship because the open label safety extension trial is enrolling patients who are coming out of the ADVANCE-2 trial. However, the guiding factor for the open label safety extension trial is the number of patients who are exposed.

So we need 300 patients who have been treated with AXS-05 in this patient population for six months, and 100 who have been treated for one year. So we are very much on track to hit those numbers. And so that it put us up on track for potentially completing not only the ADVANCE-2 trial and the ACCORD-2 trial, but also the open label safety extension trial all in the second half of this year. And then that will put us on the glide path towards submitting an NDA or SME filing.

[Operator]

Our next question is coming from Myles Minter from William Blair.

[Myles Minter, analyst]

Just on the ACCORD-2 readout, I know that trial has the opportunity for patients to have up to 26 weeks of treatment post randomization, and you guide into the second half of the year here for top line data. I'm wondering why that guidance is there. Like you saying on a blinded basis, similar to what you saw in ACCORD-1, which was the majority of relapse events are happening by 12 weeks, and that's what's giving you the confidence. You can read it out as early as the second half here rather than pushing year-end if you do require that full 26 weeks of treatment for these patients.

[Herriot Tabuteau, executive]

So the way that the study is designed, so once the patients have been randomized, then they're treated for -- they're treated until two things occur: either, one, they relapse; or two, they have been treated for six months. So given the timing of completion of randomization of target randomization then it just flows that the study should be able to read out in the second half of the year.

[Operator]

Our next question today is coming from Matt Kaplan from Ladenburg Thalmann.

[Matthew Kaplan, analyst]

Congrats on the quarterly results. Just with the near-term filing for AXS-14, can you give us a little bit more sense in terms of the opportunity there in fibromyalgia and how you're thinking about it?

[Herriot Tabuteau, executive]

Yes. Thanks for the question, Matt. I'll just give maybe just from [indiscernible] neurological data, and then I'll turn it over to Ari to talk about the opportunity. The best highest quality of the neurological studies that have been conducted in the U.S. show that the [indiscernible] of fibromyalgia is 6.4% of U.S. adults. So if you do the math that equates to a very large patient population, about 17 million. Ari?

[Ari Maizel, executive]

Yes. We're really excited about AXS-14. As you may know, there are only three treatments that are approved in fibromyalgia and there have been no new treatments in the last 15 years. So we believe that AXS-14 has a real potential to become a new standard of care based on the robust clinical profile, and we're looking forward to bringing it to market sometime in the future.

[Operator]

We've reached the end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.

[Herriot Tabuteau, executive]

Thank you for taking the time to join us for today's quarterly update. We delivered another robust quarter, driven by focused commercial execution and continued pipeline advancement. In the second half of the year, we expect similar progress, including top line results from the Phase III ADVANCE-2 and Phase III ACCORD-2 trials of AXS-05 in AD agitation.

And the Phase III FOCUS trial of excess of solriamfetol in ADHD. All told, we expect to make substantial progress across our unparalleled CNS portfolio this year, and we look forward to continuing to deliver innovation in value to patients, healthcare professionals and investors alike. Thank you, and have a great rest of your day.

[Operator]

Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.