Axsome Therapeutics (NASDAQ:AXSM) Q2 2020 Earnings Call

0:00 Good morning and welcome to the Axiom 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 Axiom Therapeutics. Please go ahead.

0:24 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 across the wire a short time ago and is available on our website at axon.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 and the source of future clinical trials, regulatory plans, future research and development plans, and possible intended use of cash and investments.

1:12 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. We 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 Merrick, Chief Commercial Officer, and Dr. Cedric O'Gorman, Senior Vice President of Clinical Development and Medical Affairs.

2:03 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. He will then open the line for questions. I shall now turn the call over to Herriot.

2:19 Thank you, Mark. Good morning, everyone, and thank you all for joining Axon Therapeutics' second quarter and Tony Horny Financial Results and Business Update Conference Call. Over the past several months, we continue to advance our AXS05 and AXS07 product candidates towards NDE 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 AXS05 and 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.

3:21 We remain on track to submit the NDEA for AXS05 in the treatment of Major Depressive Disorder, or MDD, in the fourth quarter. To that end, we have completed a successful pre-NDEA meeting with the FDA for AXS05 and MDD. In addition, we have completed enrollment in the Phase III Open Label Safety Trial of AXS05 in MDD, which we call a CONIT study, to support the planned NDEA filings. We are also conducting three Phase II open-label efficacy sub-studies of the COMET trial, which will evaluate the efficacy and safety of XSO5 in three clinically pertinent MDD patient populations.

4:08 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 and the Common SI Trial in Patients with Suicidal Aviation. Efficacy results from these studies are expected in the fourth quarter of this year and will further inform the antidepressant profile of AXS05. We also initiated a Phase II double-blind, placebo-controlled, randomized withdrawal study in patients with TRD which we call the MERIT Trial.

4:53 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 III Trial TRD. This approach will more quickly generate clinically useful information with AXS05 in this treatment-resistant NBD population starting as early as the fourth quarter of 2020. Overall, These new trials will generate additional data on AXS05 across a broad spectrum of NDD 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 AXS05.

5:40 Moving on to our program in Alzheimer's disease agitation with AXS05. In June, we received breakthrough therapy designation from the FDA for AXS05 in the treatment of Alzheimer's disease agitation. This designation is supported by the positive results from our advance one pivotal trial, which demonstrated a substantial reduction in agitation in Alzheimer's disease patients as compared to placebo. We are on track to initiate the second phase three trial of AXS05 in this important indication in the fourth quarter of this year. Switching now to our migraine program with AXS07, we remain on track to submit the NDA for AXS07 for the acute treatment of migraine in the fourth quarter. To that end, we have completed enrollment in the phase three open label safety extension trial of AXS07 in migraine, which we call the movement study, to support the planned NDA filing.

6:42 As we move towards the filing of our NDAs in the fourth quarter, for AXS05 and for AXS07, our commercial team is focused on launch readiness activities to ensure successful commercial execution. Moving next to our narcolepsy program with AXS12. Last week, we received FDA breakthrough therapy designation for AXS12 for the treatment of cataplexy in patients with narcolepsy. The designation was supported by the positive results from the Phase II Concert Study, which demonstrated substantial and rapid improvements in cataplexy and excessive daytime sleepiness with AXS-12 as compared to placebo.

7:28 We are on track to initiate Phase III 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 FDU Breakthrough Therapy Designations, AXS05 in MDD, AXS05 in Alzheimer's disease agitation, and AXS12 in cataplexy in narcolepsy. These designations exemplify our commitment to developing potentially life-changing medicines for patients with difficult to treat CNS conditions and highlight our innovative approach to clinical development and the potential for products to provide significant advances in patient care.

8:17 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 AXS05 in major depressive disorder and for AXS07 in the acute treatment of migraine, both in the fourth quarter. We anticipate efficacy results with AXS05 from Comet TRD trial in treatment-resistant depression The Comet AU Trial, an Antidepressant Unresponsive MDD, and the Comet SI Trial, an MDD with Suicidal Ideation, all in the fourth quarter. And we expect to launch our second Phase 3 Trial of AXS05 in Alzheimer's Disease Education, and our Phase 3 Trials of AXS12 in Narcolepsy, all in the fourth quarter.

9:07 I would now like to turn the call over to Nick, who will provide a financial update.

9:12 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.

9:58 The decrease of a half a million dollars 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.

10:43 Thank you, Nick. Operator, may we please have our first question? Certainly. Thank you. At this time, if you'd like to ask a question, please press star 1 on your telephone keypad. Our first question comes from June Lee with Truist Securities. Your line is open.

11:03 Hi. Thanks for taking my questions, and congrats on all the progress. A question on the comet sub-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.

11:22 Thank you for the question. The comet trial will be incorporated into the NDA submission. It is our long-term safety study. and then the sub-studies of the COMET trial, which are measuring efficacy in these different patient populations. You know, those data we would also expect to be included in the NDA file.

11:45 And regarding the mechanics of how you are going to enroll the patients into the sub-studies, will you be enrolling additional patients into the COMET Phase 3 Long-Term Safety Study? to enroll in one of these three studies, sub-studies, or will you be selecting from those already enrolled in the long-term safety comment phase three study into these phase two sub-studies? And I have one more help after that. Thank you.

12:17 There will be enough subjects being enrolled in total because we disclosed the number of subjects enrolled in the comment and others. So, there certainly aren't enough subjects in that sub-study. So, the sub-studies are respectively defined patient groups and also efficacy data is being collected in those patients respectively and those will be separate physical analysis plans.

12:54 and then regarding your Phase II 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 any antidepressants approved on a randomized withdrawal study design?

13:13 Yes. I mean, if you look at the SDS ketamine data package, so one of the studies that worked was a randomized withdrawal study design.

13:25 Great. Thank you so much, and good luck on all the programs.

13:30 Thank you. Our next question comes from Mark Goodman with SVB Lyric. Your line is open. Hi. This is Rowana on the line for Mark. Thanks for taking the question. I was curious, these sub-studies that you have coming out of the comment 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?

14:01 So I'll let Cedric speak to that, but yeah, 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 wanted to study it in a wide spectrum of MDD patients. Thanks for the question. The only thing I would add is that given that we have such a rich patient population, a 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.

14:54 And as you recall, the long-term safety study has been feeded by both our short-term treatment-resistant depression study and our short-term major depressive disorder study. So it 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 AXS05. Got it. Thanks. And then one quick question on could you maybe explain a little bit clinically what the difference is between TRD and Unresponsive MDD, is that something that physicians will easily recognize?

15:44 And how do we think about that in terms of treatment paradigm? Yes, 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.

16:36 Great, thanks. Our next question comes from the line of Charles Duncan with Cantor Fitzgerald. Your line is open.

16:46 Hi, this is Pete Savropoulos for Charles. Congratulations on all the progress and for 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 AXS07?

17:10 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.

17:24 Okay. Thank you. Congratulations again. Thank you. Our next question comes from the line of Matt Kaplan with Lindbergh Thalmann. Your line is open.

17:37 Hi, guys. Good morning. I wanted to ask if you could provide a little more color in terms of what your 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?

17:59 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 three studies would be needed and by launching them in parallel or as close to in parallel as possible that should accelerate the timing of commercialization.

18:23 Okay, that's helpful. 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 AXSL-5 is approved for MDD?

18:45 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 the indication that we're filing the NDA for is MDD. which is very broad and the data that's being generated in these sub-studies to encompass NDD.

19:17 Okay, that's very helpful. Thanks for taking the questions. Our next question comes from the line of Miles Minter with William Blair. Your line is open.

19:29 Hi guys, thanks for taking the questions. Just firstly, I'm Merrick again, just wondering what your definition of treatment response in that child would be prior to randomisation to the withdrawal portion of the study. I'm assuming it's 50% improvement from baseline on the madras, but correct me if I'm wrong there, and over what treatment time period would that be? Thanks.

19:57 So, thanks, Miles, for the question. I'll lead off and see if Frederick 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, which is a very stringent definition, and then 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 of symptoms.

20:41 And then maybe just to follow up on me, you mentioned in parallel the S-ketamine approval package. This is starting to look a lot like that Super 5.01. So just curious as to whether somewhere future down the track you're going to be running a study in the elderly. I ask it because of, you know, a pretty benign safety profile that you saw in the advanced one 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, you know, we haven't seen elderly patient trial pop up in these... and those additional trials that you've announced today. Cheers.

21:24 So certainly one of the benefits of the advanced trial in addition to demonstrating efficacy on Alzheimer's disease agitation is that it did provide us a very clear sense of the safety profile of SSO5 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.

21:57 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, but it'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?

22:21 So they are 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 effort as much as possible. So patients from Comet who may have TRD would definitely be included, and and that's one of the reasons why we launched the common 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 effort. It gives us a patient population that's already there and it allows us to generate randomized control data in a very efficient and rapid fashion.

23:11 That's very helpful. I'll leave it there. Thanks, guys. Our final question comes from Oren Abram Selvaraju with HC Wainwright. Your line is open.

23:23 Hi, thanks very much for taking my questions. Very quickly, on S-robocytin, 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.

23:58 So, thanks for the question. So, with regards to AFS-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 and one of them is a Phase 2 trial. And so since those 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 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 the two positive studies to do that. And as soon as we have met with the FDA and we've gotten written confirmation, we'll provide you with all the details.

24:57 Okay, great. 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 AXSO5 in suicidal depression? And if that's potentially a specific indication that we could see included on the label, and if that's the case, would the common 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?

25:35 So thanks, Ron, for the question. So the COMET-FI trial is hypothesis generating, and the reason why it's important is one of the features of AXS05 that we have seen is its rapid onset of action. So we've seen significantly 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 for patients with suicidal ideation that those features would be relevant. So we'll await the results of the Common SI trial and to see whether or not future clinical studies in that specific patient population are merited.

26:28 But we do think that the results We do think that the results will provide very important information for clinicians as we commercialize the product.

26:42 Okay, and then just one very quick clarification. So it was my understanding from going through the press release that the Comet TRD and merit studies 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 AXS05 in the TRD indication. Can you just elaborate on whether that is indeed correct or not correct?

27:14 So the studies, these studies are to provide information that we think would be clinically relevant and useful for patients as well as physicians, you know, as we launch the product. And these, the data from these trials were certainly included in our MED filing. Just to be clear, the indication that we are filing for is MED 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 MED patient population, which includes all of these subsets.

27:57 Okay. Thank you very much. Since there are no more questions, I will turn the call back to Axum's CEO for any concluding remarks.

28:13 Well, thank you all for attending our conference call today. This is an exciting time for Axum 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. Thank you for your participation. You may now disconnect.