Axsome Therapeutics, Inc.

Hello, and welcome to the Axiom Therapeutics second quarter results conference call and webcast. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may press star one at any time to be placed in the question queue. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Mark Jacobson, Chief Operating Officer at Axiom Therapeutics. Please go ahead, Mark.

Thank you, Operator. 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 2023. The release crossed 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 investigation 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, our commercial plans regarding synovi, ovality, 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 made only as of today's date, and the company disclaims any obligation to update such statements. Joining me on the call today are Dr. Ariel Tibuto, Chief Executive Officer, Nick Pizzi, Chief Financial Officer, and Lori Engelbert, Executive Vice President of Commercial and Business Development. Ariel will provide an overview of the company and progress made in the second quarter of 2023, as well as key upcoming milestones. Following Ariel, Nick will review our financial results, then Lori 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 Ariel.

Thank you, Mark. Good morning, everyone. And thank you for joining Axon Therapeutics second quarter, 2023 financial results in business update conference call. In the second quarter, we continue to execute across all areas of our business. We drove continued success in the commercialization of Avelity and Synosi, advanced our late stage product pipeline, and further solidified our financial foundation through a public equity offering that provided us significant operational flexibility and strength. Total net product sales in the quarter were 46.7 million, driven by strong performances from both Obelity and Synose. Based on the growing Obelity prescription trends to date and positive feedback from clinicians, we are increasing the Obelity field force by nearly 100 representatives. In conjunction, with our digital-centric commercialization or DCC platform, the expansion should nearly double the number of prescribers we are able to reach. Later in the call, Laurie will comment further on our commercial performance and Nick will provide additional details on our financials. In conjunction with the commercial performance, our first-in-class development pipeline continues to expand and advance. With respect to Sol Re-Invital, our dopamine and norepinephrine reuptake inhibitor, and TAR1 agonist, we recently initiated the FOCUS phase three trial in ADHD. Today, we are pleased to announce the launch of two new high-value potential indications for solar re-amphitol, binge eating disorder and excessive sleepiness associated with shift work disorder. Binge eating disorder is the most common eating disorder, affecting approximately 2.8% of U.S. adults. There is currently only one FDA approved product for this indication. We recently received positive pre-IND meeting feedback from the FDA for this program and are preparing to initiate a phase three trial in patients with binge eating disorder before the end of this year. Turning to shift work disorder. An estimated nearly one third of Americans perform shift work of whom 10 to 43% are diagnosed with shift work disorder. There are currently only two FDA approved products for the treatment of excessive sleeviness associated with shift work disorder. We also recently received positive pre-IND meeting feedback from the FDA for this program and are preparing to initiate a phase three trial in shift work disorder in the first quarter of 2024. The target indications of ADHD, binge eating disorder, and shift work disorder have the potential to dramatically increase the number of patients sorianfetol could help if successful in clinical testing, further growing our already first in class CNS pipeline. Stay tuned for more updates on these programs and the rest of our leading late stage CNS pipeline. We are excited by the number of value creating opportunities that lie ahead of us. We anticipate completion of the phase three symphony trial of AXS-12 for the treatment of narcolepsy in the fourth quarter of this year. We continue to see steady enrollment in the phase three, advanced two trial of AXS05 for the treatment of Alzheimer's disease agitation. And we remain on track to complete advanced two in the first half of 2024. We are making progress towards initiating a planned phase two, three trial of AXS05 in smoking cessation. which is scheduled to start in the fourth quarter of this year or the first quarter of 2024. Additionally, the team is nearing finalization of the work for the resubmission of the NDA for AXS07 in migraine. This work has moved at a slower pace than anticipated. And as a result, we now expect to resubmit the NDA in the first half of 2024. With respect to the plan NDA submission for AXS14 for the management of fibromyalgia, We are making good progress and are working to finalize the content and data sets that will complete the submission. We are tracking to an NDA submission in the fourth quarter of this year to the first quarter of next year. Each of these potential milestones builds value for our stakeholders, and we continue to make strategic decisions to maximize the potential for future growth. Lastly, we recently closed an underwritten public offering of common stock that resulted in $258.8 million in gross proceeds, fortifying our financial foundation and providing additional flexibility to execute on multiple fronts. Not only expanding commercial activities by strategically expanding our field force, but also by adding the aforementioned new indications for solar re-amphitol that may serve to maximize the product's potential. Laurie and Nick We'll each discuss in further detail how the financing amplifies our ability to read value across our portfolio. All in all, we expect a productive second half of 2023 that sets us up for multiple milestones over the next 12 months. I will now turn the call to Nick, who will provide details of our financial performance.

Thank you, Ariel, and good morning. Today, I will discuss our second quarter results and provide some financial guidance. Total revenue in the second quarter of 2023 was $46.7 million, consisting of net sales of our two commercialized products, Avelity and Senosi, and royalty revenue from Senosi sales in outlicensed territories. Revenue for the comparable period was $8.8 million, comprised of U.S. Senosi sales beginning May 9th of 2022. Avelity net sales in the quarter were $27.6 million, representing 76% sequential growth. There were no net sales in comparable 2022 period due to the timing of the launch. Senosi revenue for the quarter was $19.1 million. U.S. Senosi sales were $17.8 million. International Senosi revenue was $1.3 million, including approximately $700,000 in royalty revenue from Senosi sales in the out-licensed territories. Senosi's net sales for the comparable period were $8.8 million, consisting of U.S. sales beginning May 9th of 2022. Cost of revenue was $4.6 million in the second quarter compared to $1 million in the prior year period. The increase reflects the higher product volumes for both Avelity and Synosy in the current year. Research and development expenses were $20.6 million in the second quarter versus $15.8 million for the comparable period in 2022. The increase was primarily related to higher personnel costs associated with supporting ongoing clinical trials, post-marketing commitments for Sanosi and Aveliti, and non-cash stock compensation expense. Selling, general, and administrative expenses were $78.9 million for the second quarter versus $31.2 million for the comparable period in 2022. The increase was primarily related to commercial activities for Aveliti and Sanosi, and higher non-cash stock compensation expense due to the build out of both commercial teams. Net loss for the second quarter was $67.2 million or $1.54 per share versus a net loss of $41.4 million or $1.06 per share for the comparable period in 2022. We ended the quarter with $437.1 million in cash and cash equivalents compared to $200.8 million as of the previous year end. Our second quarter cash balance reflects the net proceeds received from our common stock public offering completed in June. In connection with this public offering, in July of 2023, the underwriters fully exercised their option to purchase an additional 15% of the offering, resulting in additional gross proceeds to Axum of $33.8 million. Inclusive of this event, the pro forma June 30th, 2023 cash balance was $469 million. I will now turn the call over to Lori, who will provide a commercial update.

Thank you, Nick. And good morning, everyone. In the second quarter, both Avelity and Synosi delivered strong growth results. For Avelity, we are still early in the launch phase and focused on executing our commercial strategy. With that said, early adoption by prescribers is robust and a promising indicator of future success. For Sanosi, the second quarter of 2023 marked one full year of Sanosi being commercialized by Axum. We have begun to see the results from the relaunch of Sanosi, which is resulting in healthy growth quarter over quarter. We expect a strong performance for both brands to continue in the second half of 2023. The second quarter represents only the second full quarter for availability, and we are pleased with the progress we are making with the launch. Important key indicators of the success of a launch are script growth, new patient starts, and HCP adoption. In Q2, approximately 53,000 prescriptions were reported for availability, representing a growth of 72% quarter over quarter. In the second quarter, HCPs wrote prescriptions for 17,000 new patients, bringing the total number of unique patients on availability to over 38,000 at the end of Q2. This prescription growth came from both an increased depth of prescribing with our early HCP adopters, as well as an increased breadth of new prescribers. In the second quarter, we added approximately 3,700 new first-time prescribers of availability. increasing the cumulative total number of prescribers since launch to over 9,700. About 40% of our initial target universe has written availability after only two full quarters. In response to this early success, we are expanding the availability field force from 162 to 260 specialty account managers. The expansion is expected to significantly increase our reach from 26,000 prescribers to approximately 44,000 prescribers who currently write more than 80% of branded antidepressant prescriptions. We believe that the expansion will help build on early success and accelerate launch uptake. With regard to payer coverage, we currently have coverage established for 68% of all covered lives. In the commercial channel, which is expected to be the primary channel for availability, Coverage is now at 46% of covered lives, and we look forward to additional formulary decisions in the coming months. In the Medicaid and Medicare channels, approximately 100% of lives are covered. Major depressive disorder, or MDD, is highly prevalent and a major public health concern with the mental health crisis that the U.S. is currently facing. We are proud that Abelida is providing an important and clinically differentiated therapeutic option for patients living with this chronic and devastating condition. Turning to Cenosi. As mentioned previously, the second quarter of 2023 marked one full year of Cenosi being commercialized by Axum. In the second quarter, we launched our Pull an All Dayer campaign for Cenosi, which was a complete redesign and updated promotional campaign. We significantly invested in HCP and DTC-directed media with the updated campaign and are seeing immediate results from these promotional efforts. Total prescriptions for Sanosi in the U.S. grew 15% year over year and 8% quarter over quarter, with net revenues that exceeded expectations. Since Q2 of last year, we have added greater than 13,000 unique new patients, which represents an increase of approximately 30% in cumulative unique patients over the past year. The field team is working to drive both depth within the current prescriber base and breadth by adding new prescribers. Since Q2 of last year, we have increased unique new riders of CINOSI by 24%. Payor coverage for CINOSI remains broad with 95% of commercial lives and 83% of total lives covered. The growth potential for synosy in the currently approved indications remains substantial, as well as its growth in potential new target indications such as ADHD, binge eating disorder, and shift work disorder. As a reminder, synosy is the first and only DNRI for excessive daytime sleepiness, inobstructive sleep apnea, and narcolepsy, and the first and only weight-promoting agent proven to improve wakefulness through nine hours. Synose is the only branded therapy available for patients who suffer from EDS and OSA, and we expect our increased and enhanced promotional and disease education efforts to drive continued growth for the product in 2023. Q2 of 2023 saw the continuation of a strong launch of availability and the continued execution of the relaunch efforts of Synose. Both products are clinically differentiated and address patient populations with high unmet need. We remain focused on commercial execution and expect continued commercial success for both products in the second half of the year. I will now turn the call back to Mark to lead the Q&A discussion.

Thank you, Lori. Operator, may we please have our first questions?

Thank you. We'll now be conducting a question and answer session. If you'd like to be placed into question queue, please press star 1 on your telephone keypad. You may press star two if you'd like to remove your question from the queue. One moment, please, while we poll for questions. Our first question is coming from Charles Duncan from Cancer Fitzgerald. Your line is now live.

Yeah, hey, good morning, Ariel and team. Thanks for taking our questions. Wanted to first of all start off with a congratulations on the strong revenue performance as well as the broadening of pipeline progress. So nice, nice quarter. A couple of quick questions. First of all, with regard to an approval of a product candidate in postpartum depression but not major depression disorder, I guess I'm wondering if that changes your views on the competitive environment for Avelity, and if you can give us a sense of what most interests prescribers in its clinical profile, Ovality's clinical profile, and why they're really prescribing the drug.

Thanks, Charles, for the question. In terms of what it changes for our business and for what we're doing, it does not change our plans at all. As a reminder, major depressive disorder, is highly prevalent. There are 22 million patients out there. What we've seen with the launch thus far of Avelity is that the clinical need is really great. And we've always anticipated that there would be space for multiple players. And as we've said in the past, we also think that it's good that a lot of different drugs are being developed for major depressive disorders because we want to make sure that patients get served and that clinicians have options. So that's our passion, and I know why you're asking the question, and I know that the sell side likes to pick companies against each other. Let me just say that we here at Axon, we've used folks at other companies in DNS as colleagues, We commend the SAGE team for their work to provide a new treatment to patients with postpartum depression. We know from the experience at Axone that developing a new drug and getting it approved is really difficult, especially in CNS. It takes the hard work and dedication and passion of a lot of talented individuals. That's what brings us in every day to work. And to that end, we are going to continue our work to make sure that we provide new treatments to patients, not just with depression, but also with other CNS medications. So if you look at the expansion of our pipeline thus far that we announced today, it brings the total number of patients that we can help to 162 million patients in the U.S.

That's helpful, and if I could ask just one follow-up regarding Axome 007 or AXS 007. In migraine, I'm just wondering if you could provide any more color on the work streams required to enable the NDA filing, and also just remind us on the target product profile that you envision for the candidate that will serve an unmet need in migraine. Thank you.

Hey, Charles. This is Mark. I'll answer the first question about the workstreams for the NDA resubmission. So just to be clear, this is just taking us longer than expected, and it's not as though there were some setbacks since the last call that's going on behind the scenes. So we're taking our time to get this right, and what it is that we need to get right are finishing in additional batches that were requested of us by the FDA. As a reminder, the drug substance and drug product are new. The manufacturing, it is a cyclodextrin ring stabilized with a buffering system. This is an actual innovation. It is a mosaic technology. So FDA asked us for additional data to support the package. So that work is underway. It's just taking longer than expected. and we remain confident that we'll be able to get it done. And then I'll pass on for the product profile.

Right, yeah, so just with regard to the product profile question that you asked Charles in the second part of your first question.

Lori? Yeah, so Charles, I'll switch back to availability and answer the question on what most interest physicians, but then I'll also answer the competitive piece on those other ones. It's helpful. Sorry about that. What most interesting, you know, what we're seeing out in the real world is I would say three things. One, obviously, the rapid onset of action is really impressive to HTPs, and we are seeing results very similar to what we saw in the clinical trials. The second piece is we are, you know, getting to a point now where we have enough patients on therapy where the durability is really starting to come through. the sustained effect of the product. And so that's really encouraging also to physicians. We are able to have a very large number of patients achieve remission, and that is something that physicians are commenting on quite a bit, on how fast not only do symptoms improve, but we are able to achieve remission. Again, everything is very similar to what we're seeing in the clinical trials, or what we saw in the clinical trials with remission as early as two weeks. But then the last thing is the side effect profile. So the side effect profile is obviously favorable versus some of the competitors out there, and physicians and patients are both commenting on that. In terms of AXS07, as Mark was mentioning, the mosaic technology really does allow for that very early onset of action for patients to reduce pain. Despite the fact that there are multiple entrants in the category right now and a lot of activity and a lot of promotional dollars, even now, more than 70% of patients still are dissatisfied with their current therapies. We know they cycle through therapies looking for something that's efficacious. And so we hope to bring this up into market as an option for them.

Regarding Ovelity, you point out three key differentiations from ZerZervase. Thank you for the added color and congrats on the quarter. Thank you.

Thank you. Next question is coming from Ram Sivaraju from H.C. Wainwright. Your line is now live.

Thanks so much for taking my questions and congrats again on the quarter. I just wanted to ask a little bit about the kinetics of the Salesforce expansion for Avelity. Within what time frame you expect that to be concluded? If you expect that new expanded size to effectively be the steady state for the Salesforce for the foreseeable future, or if any further extension might be on the cards. And also, if you could perhaps comment on the Salesforce composition and what you see as the facility with which you're going to be able to execute those new hires from a pool of candidates who have prior CNS or antidepressant sales experience. Thank you.

Hey, Ron. Thanks. Sorry if I don't get all of them. I did try to write down every question that you asked, so if I missed something, please remind me. So we are intending to have the expansion rolled out and completed and ready to perform in Q4. We are very much underway in building that expansion right now and have been for a little bit. Part of the reason why we think and believe so strongly that the expansion is needed right now is we are seeing such early success. We have 10,000 HCP writers, 40,000 new patients or patients on therapy right now. We're adding about 1,000 HCPs or more than 1,000 HCPs every month. And what we're seeing and why we're so encouraged is obviously field forces at this stage of launch typically struggle between depth and breadth. We are trying to achieve both. And right now, you know, greater than 40% of our target list has already written. And remember, our target list is a very substantial target list with, you know, a very small sales force. But also of those 40% that have already written, 60% of those writers have found more than two patients already to write. And so that's really encouraged from both a depth and a breadth standpoint, and we think that expanding the field force will further accelerate the launch uptake. In terms of composition and pool of candidates, our first recruit, I think we had greater than 90% with CMS experience. More than that with site experience, we are obviously going to – that is our goal for this expansion piece as well.

Thank you.

Thank you. Next question today is coming from June Lee from Truist Securities. Your line is now live.

Hey, congrats on the strong quarter and thanks for taking our questions. Any particular reason why the symphony trial and narcolepsy got pushed out to fourth quarter? And if by trial completion, you're also referring to completion and data readout or just trial completion itself? And also, similar to Alzheimer's agitation, if by completion of trial in first half of next year, we can also expect data in first half of next year. Thank you. And I have a quick follow-up.

Hi, Jude. Thanks for the questions. So with regards to Symphony, we're on track to complete the study and report results out in the fourth quarter. And this is not a change from our last update. And the reason for granularity around the timing of the AXS-12 trial is that this is an orphan indication, and orphan indications, they're lumpy. So we try and provide granularity as we get closer, and so we're on track there.

With regards to... I think the nuance is that it's The prior guidance is completion of enrollment. This is completion of the study.

Got it. That's really helpful. And similarly, with Alzheimer's agitation, we can also expect top line data. First step, I would share. Or is that just a truck?

Yeah. And similarly, with the Alzheimer's disease agitation, so the guidance of trial completion also incorporates data readout. Perfect.

And, you know, based on your experience with digital centric commercial strategy in partnership with Viva, is this something that you may also consider down the road for migraine, narcolepsy, or ADHD, or even Alzheimer's?

Thank you. The rationale behind putting together the platform is that we could leverage it for our entire pipeline. So, you know, we're very glad that we made that investment, and we're looking forward to leveraging it for the really vast pipeline that we have of late-stage product candidates.

Yeah, Gene, I can just add one piece of commentary there. You know, we are leveraging it for Synosy now as well, so it is across both products that we are leveraging.

Thank you. Thank you. Next question today is coming from Jason Gerberry from Bank of America. Your line is now live.

Oh, hey, guys. Thanks for taking my question. I just want to come back to the Salesforce announcement. So I guess, will these new reps just be covering physicians or providers that were not being called on prior? I'm just trying to get a sense of, and I think in the past, the digital strategy was sort of like I thought meant to improve breadth and productivity of each prescriber, but there's also maybe a rep that's calling on that provider. So just kind of wondering, like, What's changed in terms of how you'll leverage the digital component and where the new rep will specifically be adding value?

Yeah, thanks, Jason. So I'll answer that question kind of in reverse. So our DCC platform, part of our DCC platform is how our field is sized as well as structured. It was intentionally structured so that we could maintain share voice, reach, through omni-channel measures as well as face-to-face and or remote engagement with HGPs by reps at the same rate as field forces two times our size. So that's why the GCC platform is so instrumental in how we reach HGPs. In terms of the expansion of targets, we originally were calling on about 26,000 HGPs And we are now taking that up to 44,000 prescribers. And I want to make, you know, the reason that magnitude is so important in going up to 44,000 is they cover 90% of the branded therapies. But not only do they cover 90% of prescribing of antidepressants, they cover almost 90% of new branded therapies. So they are the ones that are riding. These are the HCPs, the 44,000 are the HCPs that are riding and finding new patients to put branded therapies on. This is a very large expansion of a target list, so it will be current targets and then in addition to going up to 44,000.

If I could just ask a follow-up. So under the older, I guess, approach with fewer reps, those added 20,000 providers, you would have just not caught on those physicians or just sort of tried to utilize digital means to get to those providers?

That's right. It doesn't mean they weren't being touched or engaged with. They were just being touched or engaged with through digital or media efforts or non-personal promotion efforts. Now we are having reps individually calling them to detail the product.

Got it, got it. Thank you.

Thank you. Next question today is coming from David Amselm from Piper Sandler. Your line is now live.

Hey, thanks. So just a couple. So first, on Synosi, so you have a P4 filing, no surprise there. But I guess the question here is, you know, with all the label expansion opportunities that you're pursuing, How are you thinking about exclusivity runway for the product? I know there's a lot of patents in the Orange Book, but what have you been assuming, I guess, internally on what kind of exclusivity runway you think you'll have for the underlying molecule? So that's number one. And then just going back to the sales force, as you're thinking about psori-amphetol and ADHD in particular, what's the extent to which you're going to need further head count, say, in the ped and adolescent psychiatry setting, in the pediatrician setting? And I guess the broader question is, how do you think about leveraging the head count you're going to have in place with respect to solar amphitol? Thanks.

So just a lot of questions there. So with regards to the label expansion and how we think about the exclusivity runway, so even with the current issued patents, we have exclusivity running out to at least 2040. And then in addition to that, we also have recently allowed which go out to December 2022, and those cover all of the new indications. That'd be December 2042. I'm sorry, December 2042. December 2042, so that's an even longer exclusivity runway, and so that covers all of the additional indications. And then with regards to the additional headcount, One of the things that we like, and I'll turn it over to Laurie to maybe provide a little bit more color, but one of the things that we do like is the overlap in the operational leverage with regards to our current neuropsychiatry sales force. ADHD is treated primarily by psychiatrists, so that fits in very nicely with our current sales force and sales force expansion.

Yeah, perfect. I don't know if I can add much more other than it's a bit early to talk about and what that looks like because a lot of factors obviously come into play when you're thinking about what that overlap looks like at the time, and that is how entrenched we are with availability, what that current field force efficiency looks like, and whatnot. So we definitely like the overlap. Obviously, it's a very strategic thought from our standpoint in terms of how we structure the field force. We always seek to be efficient and effective, so it will be a consideration when it comes time to size that field force.

Thank you.

Thank you. Next question today is coming from Vikram Prohit from Morgan Stanley. Your line is now live.

Hi, good morning. Thanks for taking our questions. So just two for us on Ovelity. First, could you provide some additional color on the profile of patients receiving the drug in terms of prior treatment status and prior line of therapy and how this has been evolving over the past couple of months? And then secondly, could you remind us your latest thinking on ex-U.S. plans for commercialization. I believe in the past you might have mentioned this is something you could evaluate a partnership for, so I just wanted to see if that's still your current thinking, and if so, how those internal discussions are going. Thanks.

Thanks for the questions. So I'll answer the last question, the second question, and then I'll turn it over to Laurie to answer the question on the human profile. So ex-U.S. plans, so we've always We've always said that we would look to out-license the product, XUS, and so those plans and that strategic direction has not changed. Maureen?

Yeah, thanks, Edgar. So, you know, in the very early days of launch, we were, of course, getting that later line patient just based on, you know, mostly due to the unmet need and a new therapy coming to market, especially one with a novel method of action. But as prescribers have gained experience with the product and seen early success in that patient population, they are starting to move the use up into earlier line. Right now, there is about 10 to 12% usage in first line therapy, which is really encouraging because that typically means that physicians have seen success in patients that they feel warrants using the product profile benefits patients as early as first line. But the majority that we're seeing right now is roughly around 60% of patients that we're getting have failed either one or two prior therapies. As clinicians get more experience with ability, and again, we are only two full quarters into launch, but as clinicians get more experience with ability and our access evolves, we do expect it to be prescribed to people earlier in the treatment algorithm.

Got it. Thank you. Thank you. Next question today is coming from Yatin Suneja from Guggenheim Partners. Your line is now live.

Hey, guys. Thank you for taking my question. Just real quick ones. With regard to the narcolepsy, can you maybe just talk about hitting on the cognition endpoint there? Like what do you need to show? Is that even important? Maybe the benefit of showing cataplexy in the ear, just trying to understand what the exact expectation would be. And then quickly, if you can just let us know what the gross to net, I missed it if you said it, what the gross to net was and maybe what the inventory is in the channel for the validity. Thanks.

Thanks for the questions. We are with regards to AXS-12 metaplexy as the primary endpoint of the trial. And we are also looking at other endpoints and specifically, you know, the endpoints that we looked at in the Phase II CONSERT study. One of those was cognition, as you mentioned. So we need to demonstrate a reduction or an improvement in the ability to concentrate in that trial. So that's exploratory, obviously, but it's something that we're definitely looking at because cognition, cognitive difficulty is one of the key symptoms or one of the symptoms that's experienced by the majority of patients with narcolepsy.

Hi, Adam. It's Nick. As related to the gross net frivolity, the quarter was in the low to mid-50s. This was an improvement from the upper 50s in Q1, mostly due to higher proportion of refills of the scripts, which had a more favorable GPM, versus new scripts. And I think your second question related to inventory is one, too. Be clear that the performance variability was not impacted by changes in the inventory level. As we stated previously, normal inventory levels will be and remain around two weeks, so no impact specifically as it relates to inventory levels.

Just one quick one on gross net. I'm just curious, how do you expect it to change over time? And, you know, once you have sort of full reimbursement, just trying to understand where it should sort of shake out. Thanks.

Thank you. Thanks, Yadin. We expect the GTN for availability to remain in that. mid-50 range for the foreseeable future. It's obviously volatile depending on when payer access comes in, and then that offsets the copay reimbursement. So for the foreseeable future, we expect in that mid-50 range for GTM.

Thank you. Thank you. Next question is coming from Mark Goodman from Learing Partners. Your line is now live.

Thanks so much for your question. This is really on the line for Mark. Can you provide more color on the duration of HVAC and persistency for availability? I know you're still in the early stage of launch, but any color would be helpful. And also, can you provide like the gross night for Sanosi and even trade changes in the quarter? Thanks.

Yeah, thanks for the question. If you repeat the second part of the question, we have a little trouble here.

The second part, I'm just wondering, the girls tonight, are there any inventory changes for Sanosi in the quarter?

Thanks. So with regards to the duration of effect for ability, what we saw in the clinical trials, as you know, our clinical trials were six weeks, and the primary endpoint was at six weeks. And so we showed early onset of action at one week, at two weeks, and basically at every time point, including at six weeks. And then subsequently, in very large follow-on studies, we looked at the duration of effect. Patients were treated out to at least one year, and what we saw was that the improvement either increased or was maintained out to at least one year. What we're seeing from the actual use of the product in the field that we've got now We have, what, how many patients are on drug now? Yeah, 40,000 patients who've been treated with the product. It's still early, but the experience and the prescription trends support this. We're seeing that the patients are remaining on therapy at the rate that we would have expected.

Yeah, and as it relates to Sanosi GTN, it did improve slightly from Q1, typically due to the seasonality. impact for Q2, we were in the low 50s for GTN. And I believe you asked also on inventory, as I stated on the previous question, inventory remains forced to no-see around that two-week level in general.

Got it. That's very helpful. Thank you.

Thank you. Next question is coming from Joseph Tomey from TD Calendar. Your line is now live.

Hey there, good morning, and thank you for taking my questions. Maybe the first one, I think you mentioned a little over 40% of the target writers have already written a prescription for a melody. Maybe great to see the progress, but the remaining that have not written, maybe why are they waiting? Is it really just the lack of in-person touch points, or is there something else that maybe this new sales force can emphasize with the product profile? And then maybe second, is essentially everyone that wants the drug getting the drug, where do we stand with kind of prior authorizations and should that ease over the next couple quarters? Thank you.

Yeah, hey Joseph, thanks for the question. So I'll comment, when a launch happens, what you typically see is that you have some very early adopters. And those early adopters will write, coming straight out of the gate, they're usually your most informed physician. Given that Avelity has a novel mechanism of action, those writers who haven't written, it certainly isn't due to lack of touch. What it is is you're now moving into a different physician type. They're typically called fast followers, or they wait and see how the early adopters use the product, and then they start to adopt. That can be achieved through a lot of different means. That's either field force, that's peer-to-peer speaker programs, which we are investing pretty heavily in through media. So they are being touched. Now we're working through and into that natural phase of a launch where you have to educate the FAST followers or the followers that come after your very early adopters. And obviously, as we continue to add HCPs at more than 1,000 new riders per month, we are seeing that adoption happen in that group as well. In terms of patients that want the product, we do have a very robust patient support services program, including savings cards, samples, and PA support for physicians' offices. So we feel very confident that patients who want the product can get the product.

Perfect. Then maybe one quick follow-up. I guess, what are you seeing in terms of response rate based on prior line of therapy? Obviously, we saw the open label data in antidepressant unresponsive patients and TRD patients, but you did have that, you know, phase three that didn't meet the mark in the TRD patient population. Are you seeing strong responses in TRD patients, or is there an ideal place to spot this? Thank you.

Yeah, so we look at this pretty closely. In other words, we study the product in patients with various lines of treatment. So across the entire spectrum, from treatment patients to patients with who meet the criteria for TRD. And what we saw, and we've announced this in the past, is that the product performs equally well. So we're seeing just as strong responses. in patients who are naive, who received one line of treatment, and then who received multiple lines of treatment. So that's really encouraging. And as a reminder, in open label data, what we saw, the response rate was into the 80% plus range in terms of patients who were responding.

Great. Thank you.

Thank you. Next question is coming from Matt Kaplan from Lattenburg-Thalman. Your line is now live.

Hi. Good morning, guys, and congrats on the strong quarter. Just wanted to focus a little bit more on the Sanosi-South Remittal expansion into additional indications. Can you give us some more detail in terms of the positive feedback that you received from the FDA with respect to binge eating disorder and shift walk disorder, specifically how many studies will you need to complete to file for these indications, NDAs, submitting to CUSP?

Thank you a lot for the questions, Matt. So with regards to the FDA feedback that we received, we received feedback on the entire clinical development plan. In other words, our plan studies to get the products approved. So for dengue disorder, We will need two studies, and for shift work, we'll need one study.

In terms of endpoints for these studies, can you give us more detail on that?

Typically, we provide the details on the trial design and the endpoint of the trial once we've started the trial. So stay tuned, and we'll be providing you more details on both of those studies, because we do intend to launch them in very short order. So DTD disorder in the fourth quarter, and shift work disorder in the first quarter.

Great. And then with respect to the initiation for the Phase III study in ADHD, Can you give us a little bit more detail in terms of the opportunity that you see, Hennessy, or salchromatol filling in that indication?

Yeah. So it's a very large patient population, as you know, close to or maybe even rivaling MDD. So you're sensing your own patients who have ADHD. And right now, If you think about the therapies that are available, they fall into roughly two categories. You have the stimulants, which have very large effect sizes, but which have the issues with solubility and scheduling. Then you have the non-stimulants, which have lower effect sizes. You know, it remains to be seen, obviously, what we'll see with Solianfetol. That's why we're conducting the trial. But the indications from what we've seen with regards to the currently approved indication, so accepted any time soon, is that there's a very large effect size that the drug does. And that translates to ADHD. And we think that it could provide significant benefit to patients. and fulfill a need right now which is not addressed by the current treatments.

Thanks. Thanks, Ariel.

Thank you. In the interest of time, we have time for two more questions. Our next question is coming from Greg Subanesia from Mizuho Securities. Your line is now live.

Okay. Thanks for taking my questions. Congrats on the quarter. Just my first one, on the Salesforce expansion, I was curious. We've seen a flattening of NRX growth on a four-week rolling basis, so I'm just wondering if the Salesforce expansion was somewhat related to seeing that, or does that Salesforce expansion, is there a contemplation of perhaps down the line additional Salesforce ads? And then just my second question, just on the pipeline updates. You know, there were a number of shifts in the timing, and I'm just trying to get a sense of what your current confidence in the new timelines that were laid out, or are there potential uncertainties or swing factors that still exist that could trigger, you know, additional delays? Thanks.

So I'll take the second question, and then Laurie will take the first. With regards to the pipeline update, What we're trying to do is make decisions that will generate the most long-term value. We're fortunate to have so many different potential clinical programs which are high value and which are late stage. A lot of this has to do with, one, prioritization. And two, the natural uncertainties that occur with enrolling trials. So that's what you're seeing. We're very happy with where we are with the pipeline expansion. We think that that's the right thing to do. And also we're very well resourced to execute and create value. So that's where we are, and I think in the grand scheme of things, you know, any of these shifts is within the standard that you might expect with regards to, you know, running any kind of business that involves human beings. Gord?

Yeah, hey, thanks, Greg. So the very short answer is no. What we're seeing in terms of the trend has nothing to do with the need to expand the sales force. The sales force is purely driven by the fact that we're seeing great adoption and fast uptake by physicians. What we're seeing and what we believe we're seeing in terms of the flatness is the trend that we've seen basically since launch is where we'll go through about four weeks and then they pop. Right now, I think what we're feeling a little bit is the seasonality effect. Antidepressants typically go through a seasonality effect in the summer, particularly in Q3. They can sometimes drop as much as 10% Q3 versus Q2. That is likely what we're seeing right now. And we're very confident in the fact that the field force will add to that. But again, the field force should be up and running in Q4.

Thanks, Lori. Thank you. Our final question today is coming from Miles Minter from William Blair. Your line is now live.

Thanks. I'll just keep it to one. I think you added 6% of commercial covered lives in the second quarter here, but you're mentioning that P&T meetings are ongoing or will occur in the next few months. Do you have line of sight as to what proportion of covered lives in the commercial channel that those meetings would be from plans that represent? And is your ultimate goal still that 90% of covered lives in the commercial channel that a similarity appears?

Miles, could you maybe repeat the last part of that question? You faded out a little bit.

Yeah, it was just that is your goal still to aim to achieve about 90% of covered lives in the commercial channel that would be similar to digital?

Yeah, so I'll chime in and start. Nick might want to add some color around how we're thinking about it from a gross-to-net standpoint. But from our standpoint, our goal has always been in discussions with payers to make sure that we ensure that we are capturing the value of the novelness, the innovation that we bring to the market, as well as the clinical benefit of availability. But also, we want to make sure that we ensure a path to access for patients. There are 6.8 million patients who sell prior therapy, and all of those patients are typically taking six to eight weeks to see any kind of response with another therapy. So, you know, the delayed onset of action with current therapies, low remission rates, we believe Abelity's clinical profile can really bring, you know, value to both payers and to patients. So we want to make sure that we're very careful to capture that value. Nick, you want to add anything?

Yeah, I think you pretty much said it, Lori. Abelity's, I mean, it's a truly differentiated product. And we just really want to secure meaningful access while maintaining long-term value. But pretty much you said everything.

Yeah, and the other thing I'll add, Miles, is that the access that we have contracted with and the coverage that we have, it is very favorable. So, you know, payers are seeing the value of the product, and we want to just make sure we're being very cognizant of protecting that long-term value of the product.

Yeah. And then just the last thing that I would add, you know, we're reporting the percentage of covered lives, which is 68%, which is great. It's a great place to be right now. But also, you know, while we can report, you know, real-time what the percentage of covered lives is, that does not reflect ongoing progress. So stay tuned.

Cool. Thanks.

Thank you. 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 closing comments.

Well, thank you again for taking the time out of your busy schedule to join us for today's update. We are excited to continue building our industry-leading CNS franchise from the back half of 2023. We anticipate a milestone-filled next few months with potential clinical trial details, new trial initiations, and new submissions. We are committed to ensuring continued success for the launch availability and commercial growth for Synology and are fast on our way to achieving our goal of potentially having at least five marketed products by 2025. We look forward to updating you on our progress and milestones throughout the rest of the year. Have a great rest of your day.

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.