Axsome Therapeutics, Inc.

Good morning and welcome to the Axum Therapeutics third quarter 2024 financial results conference call. At this time, all participants are in a listen only mode. Later, there will be a question and answer session and instructions will be given at that time. Please note that today's call is being recorded. I'll now turn the call over to Darren Opplen, Director of Corporate Communications. Please go ahead, sir.

Thank you. Good morning everyone and thank you for joining our third quarter 2024 financial results conference call. I'm joined today by Dr. Ariel Tabito, Chief Executive Officer, Nick Pizzi, Chief Financial Officer, Mark Jacobson, Chief Operating Officer, and Ari Maizel, Chief Commercial Officer. Earlier this morning, we posted a new corporate presentation complimenting today's call to the investor section of our website. Those joining by webcast may also advance through the slides at any time during the discussion. As a reminder, we will be making certain forward-looking 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, our commercial plans regarding synodity, ability, and our pipeline products, revenue projections, and other financial forecasts, if any, and the possible intended use of cash and investments. These forward-looking statements are based on current information, assumptions, and expectations of future events and are subject to certain risks and uncertainties that may cause the company's actual performance and results to differ materially from those projected. Please refer to today's press release, presentation, and our SEC filings for additional details on needs and important risk factors. You are cautioned not to rely on these forward-looking statements, which are made only as of today's date, and the company disclaims any obligation to obtain or revise these statements. With that, I'll hand it over to Ariel.

Thank you,

Darren,

and good morning, everyone. Thank you for joining us on today's financial results and business update conference call. At Axone, we are focused on developing and delivering novel, innovative medicines that can transform the lives of patients living with serious central nervous system conditions. We are pleased to report on the progress we've made in advancing this important mission in the quarter, articulate our long-term vision, and review potentially value-driving year and intermediate-term milestones. The third quarter was another strong quarter and represented a notable milestone as we delivered quarterly product revenue in excess of $100 million for the first time. This quarterly performance translates to an annual revenue run rate of approximately $420 million, just three quarters into our second full year as a commercial company. While this progress is tremendous, even more significant potential growth lies ahead based on our current portfolio of innovative, marketed, and late-stage pipeline candidates. In addition to Ovelity and Tinozi, our two FDA-approved treatments for major depressive disorder and excessive daytime sleepiness and narcolepsy and obstructive sleep apnea, respectively, our pipeline features five innovative, late-stage product candidates currently in development for nine indications across psychiatry and neurology. Our late-stage pipeline positions us to continue to deliver important new medicines in therapeutic areas that impact more than 150 million patients in the US. If successfully developed, this portfolio has the potential to provide over $16 billion in peak sales. The diversity and depth of our pipeline also reflects Axel's differentiated approach to scientific innovation, which we believe aligns with our patient-centered mission and expands the therapeutic possibilities for CMS conditions. Now, before turning it over to Nick and Ari, who will provide greater detail on the strong performance in the quarter for Ovelity and Tinozi, I will provide an update on the pipeline and upcoming milestones. A key development in the quarter was the resubmission of our new drug application for AXS07, our novel multi-mechanistic product candidate for the acute treatment of migraine. The resubmission was acknowledged by the FDA and designated as a class two resubmission with a PDUFA action goal date of January 31st, 2025. Launch preparations are underway to ensure timely commercialization if approved. Our ongoing eMERGE phase three trial evaluating AXS07 in patients with a prior inadequate response to oral CgRP antagonists is on track to read out in the fourth quarter of this year. Results from this trial will help inform the potential utility of AXS07 in different patient subgroups. With respect to AXS14 for the management of fibromyalgia, we are completing preparations for the NDA submission and expect to submit the NDA to the FDA this month. I'd now like to comment on our other late stage pipeline products starting with AXS05. Our comprehensive development program for AXS05 and Alzheimer's disease education consists of four pivotal phase three placebo controlled efficacy trials. The completed positive advance one in a quarter one trials and the ongoing advance two in a quarter two trials. Advance two is a parallel group trial and a quarter two uses a randomized withdrawal design. Given that target enrollment in both trials have been reached, we are on track to report top line results from both advance two and a quarter two simultaneously this quarter. We look forward to these readouts as we believe that a favorable outcome from one or both of these ongoing pivotal studies in addition to the positive results from the two completed trials will provide strong support on NDA filing for AXS05 for Alzheimer's disease education. Turning now to AXS12. We are currently conducting a two period phase three trial evaluating the long term efficacy and safety of AXS12 in narcolepsy called the ONCOR or evaluating continued treatment with revoxitune study. The trial consists of a 24 week open label period followed by a three week double blind randomized withdrawal period. Enrollment in the trial is complete and we are on track to report top line results this quarter. The ONCOR trial was conducted as a registration study to provide additional support for our planned NDA for AXS12. Following completion of the trial, we plan to request a pre-embedding meeting with the FDA to discuss our plan and submission. Rounding out our development pipeline we continue to advance our four ongoing phase three trials of psoriasis call in ADHD, major depressive disorder or NDD, Bay eating disorder and shift work disorder which we believe represents significant expansion opportunities for psoriasis call. Enrollment in the focus study our phase three double blind, the seat control trial evaluating the efficacy and safety of psoriasis call in ADHD in adults is expected to complete in December and as a result, we now anticipate top line results in the first quarter of 2025. Additionally, the paradigm phase three trial in major depressive disorder is progressing nicely with enrollment also expected to complete this quarter. Paradigm will examine the effect of psoriasis call in NDD patients with and without excessive daytime sleepiness. We now anticipate top line results from the trial in the first quarter of 2025. Lastly, the engaged phase three trial in binge eating disorder and the sustained phase three trial in shift work disorder continue to enroll with top line results anticipated in 2025 and 2026 respectively. As we highlighted in previous calls, Saldran's calls unique pharmacology as a dopamine and norepinephrine re-uptake inhibitor in a prolonged in 5-HT1 agonist along with pre-clinical and clinical evidence support its potential to treat a broad range of serious conditions impacting over 80 million people in the US. With the potential new indications for Saldran's call under study, we have the potential to deliver multiple value-creating catalysts and drive long-term growth for Saldran's call alone. In closing, the path ahead for Axel includes a robust series of clinical, regulatory and commercial milestones with strategic focus, operational excellence, a strong balance sheet. We are confident in our ability to deliver significant near and long-term value for patients and shareholders. With that, I'll hand it over to Nick.

Thank you, Ariel. Today I'll share our third quarter financial results and provide some financial guidance. We delivered yet another robust quarter and recorded total net product revenue of $104.8 million compared to $57.8 million for the same period in 2023, representing an 81% -over-year increase. A very strong sales momentum continued with net product sales increasing to $80.4 million in the third quarter, representing 113% growth compared to the prior year period and 24% sequential growth versus Q2 2024. We're also pleased with the continued performance of Synose, which delivered net product revenue of $24.4 million in the quarter or a 21% increase compared to the same period in 2023. Gross to net was approximately 50% for Validly and in the low 50s for Synose. Our R&D expenses for Q3 were $45.4 million compared to $28.8 million for the same period in 2023. The increase was primarily driven by our ongoing clinical programs for AXS05 and Solventol as well as increased chemistry, manufacturing, and controls costs associated with our pipeline products and higher personnel costs, including non-cash stock-based compensation associated with organizational growth. SG&A expenses for the third quarter were $95.6 million compared to $83.2 million for the same period in 2023. The increase was mainly a result of continued investments for the commercialization of Validly and Synose along with higher personnel costs, including non-cash stock-based compensation associated with organizational growth. Net loss for the third quarter was $64.6 million or $1.34 per share compared to $62.2 million or $1.32 per share for the comparable period in 2023. The $64.6 million loss includes $40.9 million in non-cash charges, which reflects a fair market value adjustment for contingent consideration this quarter of $16.4 million. Cash and cash equivalents totaled $327.3 million as of September 30th, 2024. As we approach the potential launches of AXS07 in migraine and other late stage assets in the coming years, we remain committed to our principal efficient approach to capital allocation that has yielded substantial returns to date. As such, we believe that our current cash balance is sufficient to fund anticipated operations into cashflow positivity based on the current operating plan. And with that, I'll turn the call over to Ari, AXSOM's Chief Commercial Officer, to provide details on our commercial performance.

Thank you, Nick. AXSOM delivered robust commercial performance in the third quarter of 2024. In addition to strong sales performance for Auvelyti and Senosi, Q3 saw continued improvements in market access dynamics for both brands, including an increase in covered lives for Auvelyti for the second consecutive quarter, reinforcing the strength and quality of our commercial execution. Auvelyti once again outperformed the market and branded competitors with approximately 144,000 prescriptions of the third quarter, representing 108% growth year over year and 17% growth sequentially compared to the second quarter. By comparison, the antidepressant market grew 1% year over year and sequentially. Nearly 26,000 new patients were prescribed Auvelyti in this quarter, bringing the total number of new patients started on Auvelyti since launch to nearly 140,000. Our sales team successfully activated more than 4,100 new prescribers in the third quarter and continued to penetrate both the psychiatry and primary care markets among MDs, MPs, and PAs who care for the majority of depression patients across the US. On the market access front, our previously announced expansion of covered lives for Auvelyti resulted in meaningful increases in new patient starts and covered claims. Coverage continues to evolve and expand and Auvelyti now has 63% of commercial lives covered and 78% of total lives from across payer channels. Negotiations with payers and PBMs are advancing across the access landscape. To build on the success of the Auvelyti launch, we are planning a second expansion of our Auvelyti psychiatry sales force to approximately 300 sales representatives, which is expected to complete in the first quarter of 2025. The increase in share of voice combined with strengthened market access, outstanding product attributes, and positive provider and patient experiences with Auvelyti will position the brand for further growth as we enter another pivotal year for Axome. Turning to Synose, total prescriptions were approximately 47,000 in the quarter, representing 15% year over year growth and 5% sequential growth. By comparison, the weight promoting agent market grew 3% year over year and 4% sequentially. Synose had strong performance with new patient prescriptions once again in Q3, with more than 4,100 new patients initiating Synose treatment during the quarter, as the Synose team continues to drive depth with existing prescribers while also activating approximately 400 new writers in the quarter. Turning now to AXS07. As Ariel mentioned in his open, we are eagerly anticipating the January 31st Kuduza date for this innovative treatment. Migraine is the leading cause of disability among neurological disorders and affects approximately 39 million Americans, 70% of whom report not being fully satisfied with their current treatment due to suboptimal efficacy. If approved, AXS07's distinct multi-mechanistic pharmacology has the potential to address this unmet need. Launch preparations are well underway, including the buildout of the AXS07 sales team. We anticipate a commercial launch in the first half of 2025. In closing, we have made significant progress in 2024, our second full year as a commercial company, and have firmly established Axome as a trusted partner for providers, patients, and payers, providing a solid foundation for continued commercial performance for Ability and Synose as well as future product launches. I will now turn the call back to Darren for Q&A.

Thanks, Ari. I'll now turn it over to the operator to begin Q&A.

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. We ask that you limit your questions to one and a follow-up so that others may have an opportunity to ask questions. For participants using speaker equipment, it may be necessary to pick your handset before pressing the star keys. One moment, please, while we poll for questions. Our first question comes from Vikram Purahit with Morgan Family. Please proceed with your question.

Hi, everyone. This is Morgan on for Vikram. Thank you for taking our question. So on the Ability Salesforce expansion, how long would you expect this full expansion to take and how much of a sales lift would you expect from the expansion? And then I have a follow-up after that. Thank you.

Hey, Morgan, this is Ari. Thanks for the question. As we mentioned, we expect the expansion to be completed in the first quarter of next year. In terms of lift, I would suggest that our last expansion, the guidance we gave was that the ramp would build over the course of the year. I think you saw as we completed that expansion in January of this year, we started to see the impact straight away. And it's been part of the reason why the brand has performed so well over the course of this year. So we would expect a similar impact for the second expansion.

Okay, that's helpful. Thank you. And then would you say how much of this move would be driven by the desire to expand an MDD versus preparation for a potential ADA launch as well?

And this is really about MDD. And the rationale for it, recent market access wins have expanded the potential for all Bellavie, first or second line treatment. We've also seen promising growth in the primary care market. We expect further improvements in market access moving forward and continued growth in primary care. So this makes sense to capitalize on those dynamics. But to your point, we do see potential synergy for the future if ADA is approved. And so we'll share more updates on that at appropriate times.

Thank you.

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

Hey guys, thanks for taking my questions. First, just on availability, curious your thoughts on new atypical antipsychotics that are likely to be approved next year as adjunctives. I get that these are technically considered different segments of the market, but is it fair to think that the target patients that might be an option for a new monotherapy with a different mechanism versus considering going on to adjunctive, there's sort of a competitive tension there. So I'm just wondering if these new, in a new atypical like CapLyto with a better tolerability profile might be somewhat of a competitor to availability. That's my first question. And then just as a follow-up, on the ADA marketplace, I know in the past you guys have said, you feel like you have a differentiated profile. So whatever we're seeing with Rick Salty may not be applicable to an eventual availability launch, but I guess the one thing we've heard is, a big issue has been high -of-pocket costs for patients and because it's a high Medicare SKU, sponsors are really able to defray those costs through copay assistance programs. So how do you overcome that hurdle, which seems more intrinsic to the ADA marketplace? That's my follow-up, thanks.

Great, yeah, no, thanks Jason for the question. I'll start with the atypical question. Yeah, obviously, ajunctive MVB is slightly different than monotherapy MVB. And although there is use of atypicals, in addition to monotherapies, we do see these as distinct marketplaces. As we've stated previously, we firmly believe that availability is a first or second line treatment. Typically atypicals will come into play in later lines, third or fourth, when the patient has had inadequate response to monotherapy treatments. Your comment about capillarity tolerability profile, I believe is related to other atypicals, because our safety tolerability profile, I would say, is very strong in this marketplace. So while we expect there to be some level of noise, ultimately we believe our key competitive set is with monotherapy SSRI, SNRIs, and that's how we're commercializing the product. As it relates to ADA, we have been following the RecSULTI launch very carefully. And I think for any branded agent on the marketplace, out of pocket expense is always a top concern for providers and patients. Part of our strategy is to continue to develop strong working relationships with payers and TBMs across the landscape. As we develop those relationships and expand coverage for Aubellity and Tinozi, we expect there to be benefit for the ADA launch, which should set us up to help mitigate out of pocket expenses for those patients over time.

Thanks, so you guys wouldn't expect to have $200 out of pocket kind of copay costs borne on these patients?

Jason, it really depends on the coverage and the rebate agreements that we have with the plan. So it's a little premature to comment exactly on the out of pocket expense, but our goal is to ensure that there's access for every patient and that out of pocket expenses is managed appropriately. Thank

you guys.

Our next question comes from Leonard Timisot with RBC Capital Markets. Please proceed with your question.

Hi guys, it's Leo. Thanks for taking my question. Congratulations on the quarter. Just a simple one from me, I guess. On ADA, I guess now that you're reached target enrollment in both Advanced II and Accord II, can you talk about both how the patients you've enrolled in Advanced II compared to Advanced I and what your expectations would have been, and then also the event rate for Accord II compared to your expectations?

Thanks. Thank you for the question. So as you mentioned, we have reached target enrollment and it relates to the patient populations. They're very similar. So you include an exclusion criteria for the Advanced I and Advanced II studies are very similar and I would say the same thing with regards to Accord I and Accord II. The goal was to make Advanced II as well as Accord II replicative studies. And it relates to the event rates. The event rates are what we're expecting them to be. And that is why we're confident that we will be able to have a readout this quarter for both the Accord II study and all of the Advanced II studies simultaneously.

Our next question comes from Charles Duncan with Cantor Fitzgerald. Please proceed with your question.

Hey, morning, Arial and team. Congrats on a nice quarter and appreciate all the color on the pipeline, lots going on. I had a couple of questions. One is kind of commercial on AXS05 and then a follow-up in terms of the pipeline and its upcoming readouts. With regard to ability, are you getting more traction with psychs or PCPs and is the rapidity of response a driver to that? And do you think that that profile could read on potential differentiation relative to say Rexalti if the drug shows effects and is approved for ADA? Thanks.

Hey, Charles, sorry. Thanks so much for the question. To answer your question, we're doing quite well in both the psychiatry and primary care markets. That said, in Q3, primary care clinicians were the fastest growing segment, which is a really great signal. Something we talked about historically that we expect that segment of the market to continue to grow. So we're really pleased with the progress that we're making in the primary care segment. Your comment about rapid acting is spot on. It is one of the top drivers of utilization in the depression market. And yes, based on our early conversations with KOLs in the Alzheimer's agitation market, that rapidity of response is a very compelling attribute that we think will be a core part of our brand story if launched.

Helpful, thanks, Ari. Relative to the upcoming AXS05 readout, looks like Advanced 2 is slightly smaller sample size than Advanced 1. So does that make you at all concerned about what you might observe there in terms of effect size? And then can you provide us any color on the ongoing open label extension study in terms of enrollment or rollover into that and then persistence?

Great. So with regards to the sample size for Advanced 2, Charles, so the sample sizes that you see in our slide presentation, these are target enrollment numbers. And the numbers always differ slightly once you actually complete enrollment. You never reach the exact numbers. You might, usually it's plus or minus. So I wouldn't read too much into that except to look at that number and use it as a guide to how the study is powered. In terms of the open label extension, we've seen a very nice or very high percentage of patients rolling over from the control study into the open label extension studies or the open label extension study. And usually that's a positive sign in terms of how patients and caregivers proceed a product. So we're very happy to see that. Another benefit of a high enrollment rate in the open label safety extension studies is that it does allow us to move towards our target exposure numbers, which are needed from an ICA perspective to enable them to be filing. And on that front, we're very well positioned.

Okay, excellent. Thanks for the added color,

Avery. Our next question comes from Srinich and with Wells Fargo. Please proceed with your question.

Hi, thanks so much for taking my question and congrats on the strong quarter. I wanted to ask about theriancitol and ADHD. With the focus study now pushed out to 1Q25, I was just wondering if there was any kind of slowdown or competition in enrollment. And then what is your thinking on running the pediatric study? Are you still planning to start that prior to or potentially after the adult data readout? Thank you.

Hey, Therian, good morning. This is Mark. So with respect to timing,

that's

simply the

final screen funnel and kind of what

we're seeing. So the study's already over 95% enrolled. It was just our final estimate of how long final patient enrollment's gonna take. So stay tuned and that's all moving along. And then with respect to the pediatric study, those plans are in the works and we're gonna launch that basically as soon as we're able to. And so also stay tuned for that. But it's not predicated on the focus study per se.

Thank you.

Thank you.

Our next question comes from David Amsum with Piper Sandler. Please proceed with your question.

Hey, thanks. So wanted to ask about the cost structure, broadly speaking. And I know, I'm not asking for any sort of guidance question about 2025, but I did want to drill down on how are you thinking about R&D spend, not just for next year, but as you think beyond that, particularly with a lot of programs, a lot of studies wrapping up next year. How should we think about that? And then secondly, regarding promotional spend, I mean, I know you have the expansion of the Salesforce in support of OVELY, but how are you thinking about, say, migraine and then Alzheimer's and the extent to which you're going to be adding headcount to support these additional opportunities? Help us understand how SG&A is going to expand next year and beyond. Thank you.

Maybe I'll just give just some overarching comments and then let the other members of the team provide more details. But just overall, the way that we've thought about spending in terms for, whether it's for R&D or for commercialization is to approach it in a very rational way. So there's an intense focus in the company culturally on return on invested capital. So everything that we do will be very well thought out and will be done in a rational way. Now that may differ from what maybe you're used to seeing with other companies. However, we think that that's the right way to run the business.

Sure, yeah, and maybe just, hey, David, this is Nick. And just to add on to Terry, I think he made the key points, but we as Axel right now at the end of Q3 are in the strongest capital position that I'd say we've ever been since inception. As a reminder, with our current cash on end, we have the ability to get to cashflow positivity and execute on all of our priorities that are in our operating plan, including further investing in ability, so notice the launch of AXS07 and just furthering our pipeline. And then just maybe specifically on this quarter in Q4 and how we should think about OpEx in Q4, we saw Q3, we had a decrease in R&D and SG&A from the previous quarter. We would expect a slight increase in Q4 as relates to R&D spend, and that's mainly due to the paedophilia for AXS14, so we'll be filing that shortly. And then SG&A, again, potentially slightly increasing just as we prepare for the migrant launch.

Okay, thanks for that.

Our next question comes from Mark Goodman with Learing. Please proceed with your question.

Yes, good morning. First of all, on availability, can you just give us a sense of how the product is being used and how that's evolving? Second question is the expansion in the sales force, that's just for availability, but how are the reps gonna be used for the migraine launch? I know the question's been asked a few times, but just, I'll ask it again, like are we gonna have another expansion for the migraine when it's approved, or are we gonna leverage these reps that you're about to add? And then just lastly on Roboxetine, can you just give us an update on what you need to file this product? You're running another study, you have the positive study, so do you need this study to be positive to file? Are we looking for more patients for long-term safety? Just curious what the gating issue there is, thanks.

Hey, Mark, it's Ari. I'll start with the availability utilization. So we, again, saw an incremental increase in first and second line use. It remains around 50% first or second line use in Q3. So pleased with sort of the incremental growth, and we expect that to continue to build, particularly as we bring more market access on the market. So we're in line for the product. In addition, when you think about monotherapy or adjunct use, again, we saw an increase in monotherapy use, but it remains around 50% monotherapy adjunct. So overall, the trends are in line with our expectations, and we expect that to continue to improve over time. As it relates to the expansion, this expansion is for ability MDB. When you think about the migraine launch, we do intend to enter the migraine market in a targeted, differentiated way that leverages our experience with all abilities. So there will be an additional expansion, if you will, of sales representatives. I'll say that we've made significant progress over the past year with our digital-centric commercialization model. We expect O7 to benefit from this experience at launch. But we will be engaging with top migraine treaters and headache centers, large neurology clinics, et cetera. So we'll share additional details as we get a little bit closer.

Great. As it relates to the riboxetine question, so Mark, I think what you're referring to is our Encore trial. This is the phase three trial in patients with narcolepsy. So we do not need this study to be positive in order to be able to file an ABA. So we already have our two studies, which will support the efficacy claims that we want to make with regards to riboxetine or AXS12. However, the phase three trial, the phase three long-term safety extension trial, it does incorporate a three-week randomized withdrawal period. So that's always been the design of the study from the very beginning. And it's just that there has not been much focus on it. So as we near the readout for that study, we did want to point out that this is in fact a controlled study, and it should provide additional efficacy data. And if it's positive, that's fantastic. It will make for an even stronger package.

But you're filing anyway, with or without a positive study.

Correct, and the Encore study, it has two periods. One is the open-label period. That's a six-month open-label safety extension trial. So that was the original reason for running the study. So we do need that part of the study in order to file. And then using our strategy that we've used in the past, which is to make sure that we're efficient in everything that we do, when we design the study, we did include a double-blind phase, which is AXS12 versus placebo.

Thanks.

Our next question comes from Joseph Thorm with TD Cohen & Company. Please proceed with your question.

Hi there, good morning. Congrats on the progress, and thank you for taking my questions. Maybe first one on soli-emphatol in MDD. I guess, given sort of the high bar that ability is set in the indication, what sort of the area for differentiation that you're looking for here to consider additional investment on that program? And then second, when you're thinking about the enrollment of AXS05 into Alzheimer's agitation, where are you finding these patients? What's sort of the last touch point before being referred into the studies? Is it a neuropsychiatrist? Is it an Alzheimer's physician? Is it a primary care doc? Where can we find these patients? And is it different in the commercial setting? Thank you. Okay, great.

So thank you for the question. As it relates to soli-emphatol and major depressive disorders, so we are studying soli-emphatol in patients with MDD, both with and without excessive daytime sleepiness. So if you look at the drug from a pharmacology perspective, it has a novel mechanism of action, which is it being all one receptor agonist. That would provide the marketplace in clinicians and in patients a brand new mechanism of action. In MDD, and given that MDD is a very heterogeneous patient population, to have different mechanisms of action is very useful. We've seen that firsthand with Ovelity, with its novel mechanism of action and how that has been received by the marketplace. As it relates to other points of differentiation, one of the aspects, one of the clinical aspects of major depressive disorder is its association and comorbidity with excessive daytime sleepiness. So that is one of the areas that we will look to explore in the Paradigm Study. So stay tuned and we're looking forward very much to learning from that study about the potential profile of soli-emphatol in MDD. And the other question which you asked related to Alzheimer's disease agitation and where those patients are coming from. The way that clinical studies are run is we and other companies partner with clinical trial centers that specialize in psychiatry. So the way that clinical trial enrollment works is not to go specifically to the general population, although there is advertising, it needs to go to centers that have experience in relationships and taking care of these patients and enrolling them. So that's where the patients are coming from. And as it relates to how that might translate into commercialization, I think one point of differentiation with our program is that it is focused on community dwelling patients. So these are not nursing home patients and one of the potential benefits of XS05 in Alzheimer's disease agitation should it be successfully developed is the fact that patients out of the nursing home.

Great, thank you.

Our next question comes from June Lee with Trues Securities. Please proceed with your question.

Good morning, this is Asimone for June, congrats on the quarter and thanks for taking the questions. The first question for me is, can you remind us what the powering effect size of the advanced two study is? And then as a follow-up on ability, have you seen some sort of inflection from the increased coverage of 22 million additional new lives on August 1st? Or would you say you're seeing more of an inflection due to the sales sort of expansion from earlier this year? Thank you.

Well, advanced two is powered very similarly to advanced one. So it's 90% powered to detect the treatment difference. We have not talked about exactly what the effect size is, but the effect size that it's powered to detect is similar to the effect size in advanced one.

And thanks for the question on our ability inflection. We are very pleased with the demand that we've driven post the market access expansion. We have seen meaningful growth in both new patient starts and covered claims. In addition, we've seen a reduction in rejection rates for those covered lives. So overall, we're very pleased with the performance. I think keep in mind that that win occurred during the summer seasonality month. So we expect that to continue to build over time. And so I don't think it's a fair comparison to say, which created more inflection, but given the fact that the sales for expansion was earlier in the year, it's obviously had more time to make impact. And we've been very pleased with the impact we've seen over the course of the year.

Thank you.

Our next question comes from Miles Minter with William Blair. Please proceed with your question.

Hey, just back on the Salesforce expansion. I know you've still got one large GPO contract that you could potentially execute here. Is that 300 Salesforce expansion next year incorporating that you get that? Or is it more from the level of access that you have now, do you think that that expansion is required? And if you bring on another GPO contract, we could get a further expansion. And then just secondly on AXS14, have you started to engage payers and is that sort of unique benefit on fatigue that you might see with that agent, something that jives with them potentially having a cup or a brand of therapy price? Thanks very much.

Hey, Miles. So regarding the Salesforce expansion, it's not specifically tied to a future market access win. It's really to capitalize on the market access we have today and sort of the increase in first and second line access that we've experienced this year. But also the growth we've seen in primary care in 2024 are two of the primary reasons why we believed it was the right time to add additional selling effort. So any additional market access wins would be additive to this expansion and further accelerate performance.

Yeah, and you asked a question about whether or not you're starting to engage payers as it relates to AXS14.

Yeah, so we do talk to payers regarding our pipeline, generally speaking. And obviously the things that are more near term to launch are of more interest as it relates to sort of payer or rebate negotiations. That said, I think it's fair to say that payers are very impressed with the breadth of our portfolio. They recognize that these are areas of significant unmet need. And although there are existing treatment options, there's still plenty of room to improve on not only symptom improvement, quality of life, but also health resource utilization. And so we feel very good about the strength of the profiles of 14 and others and believe we'll have constructive negotiations once we get closer to launch.

And my okay, Mark, just to

your observation on fatigue in particular, we do think that is an important element of the product profile.

Makes sense, thanks for the questions. Good.

Our next question is from Yaten Sanjaya with Guggenheim Partners. Please proceed with your question.

Hey, good morning, this is Eddie on for Yaten. Thanks for taking our questions and congrats on the quarter. For Ovelity, what sense are you getting from the real world rate of discontinuation, especially as it relates to the pivotal studies and other sort of branded antidepressants on the market? And then in terms of the coverage, it looks like you're creeping up in terms of the commercial coverage, but what are the major hurdles you're seeing to getting broader coverage access on that commercial channel beyond that sort of 60 to 65% range, thanks.

Yeah, thanks for the question. Regarding discontinuation, we haven't seen anything significant over the course of this year and in fact, the persistency that we've observed has been very positive. In fact, one of our internal analyses suggests that Ovelity persistence outpaces that of SSRIs so we're really pleased with that and there's been no impact from any of the ongoing clinical trials in the marketplace. In terms of hurdles, it's really about aligning on final rebates and utilization management criteria with the outstanding plans and we're very confident in the negotiations that we've had and expect to see access expand and evolve in the near term.

Thanks. Our next question comes from Ami Fadia with Needham & Co. Please proceed with your question.

Hi, this is Purnima Anfarmi. Thank you for taking our question. My first question is how do you anticipate the prescription transfer of Ovelity to differ in fourth quarter with the number of holidays and could you provide us some additional color on the timing of the data readouts expected in fourth quarter for Alzheimer's disease agitation and migraine? And lastly, does the MRT study in any way impact the regulatory decision on January 31st? Thank you.

Hey Ami, this is Ari. I'll start with the demand question. So we do expect there will be some impact from seasonality in Q4. Quantifying that is a little difficult at this time. I would point to Q3 which also there's a seasonality effect and Ovelity outpaces the market both the generic and branded market which both in both cases. And so we feel optimistic that we'll be able to continue to grow the brand but we do expect some seasonality impact in Q4.

Morning, Ami. With respect to cadence of the readout, excuse me, between now and the end of the year, that's right around the corner. So I think you can stay tuned for that. And we haven't, we're not this morning we didn't provide guidance on the exact choreography but again, it's right around the corner and we're looking forward to providing updates there. And then with respect to eMERGE, I think I heard the question is, is that needed for the NDA submission or resubmission or from a regulatory perspective? And so just as a

reminder, that's the A607 trial that will lead out. And that is not needed from a regulatory perspective.

Instead, we expect that to whatever we learn from that will inform potential approaching the marketplace and medical and potential commercial communications.

Got

it, thank you. Our next question comes from Joel Beaty with Baird. Please proceed with your question.

Thanks. First question is for the Salesforce expansion, how much more reach does that give you? Like, for example, how many more docs does that allow you to cover? And then the second question is for ADA, when would you expect to be able to file?

Yeah, thanks Joel for the question. There will be some increase in reach but I think importantly, there's also a frequency play here for high decile providers. And so we feel really good about the markets in which we're expanding, capitalizing on the strong market access in those markets and ultimately think that there'll be sort of a dual benefit in getting in front of more doctors. And I have this specific number for you at the moment, but also frequenting those doctors more regularly.

Great, and as it relates to timing of filing, the walls under disease agitation, the choreography is that once we have the readouts from the ongoing studies, we will then seek an FDA pre-NDA meeting. And then, but in general, the way that we think about it is it takes roughly six to nine months after completing the study in order to get a package ready for filing.

Thank you.

Our next question comes from Greg Suvinje with Zuhu Securities. Please proceed with your question.

Good morning, congrats on the progress in the quarter and thanks for taking my question. My question is primarily on AXS05 and AD agitation. Could you please provide your, I guess, take on the various potential phase III AD agitation trial outcomes in other words, I think you said earlier that you feel like hitting on either one of the two would be sufficient to support a filing, but of the two trials, if you're gonna only hit on one, how should we think about a positive advanced two enabled filing versus an accord two enabled SND filing? And then I've got a follow up, please, thank you.

So thanks for a question. So just as a reminder, the program consists of four pivotal studies and we've already read out two of those studies which are positive. So going into these two readouts, there are two possibilities and well, there are several possibilities, but one possibility is that both studies are positive, in other words, accord two and advanced two or that one of those studies is positive. In either of those situations, that would leave us with three or more positive efficacy trials to support an indie filing and that is more than needed from a regulatory statutory perspective. So if you're really going to these data readouts, what we like about the program and the fact that we have four studies is that it can provide a lot of information in terms of the product profile and also in terms of the safety profile of the product in this population.

Okay, thank you for that. And then maybe if I could just ask about the gross to net, I think it was 50% for ability in the third quarter, I might've missed comments around the expectation for the fourth quarter, but any comments just on fourth quarter and perhaps looking into 2025, specifically on the ability gross to net?

Very good, thanks Nick. Yeah, if you're correct, the ability GTN in the quarter was approximately 50%, that was a slight improvement from the low to mid 50s in the previous quarters. We would expect it to remain in that approximately 50% range to slightly worsening for the fourth quarter, similar to prior year. And then for 2025, we would anticipate that similar negative seasonality impact in Q1 that we've seen in previous years and the rest of the farm industry sees typically and that's due to the reset of the deductibles and we would expect that to improve throughout the year similar again

to previous years. Okay, thank you for taking my questions.

It appears we have time for two more questions. Our first question comes from Ram Salvajar with HCWayne. Please proceed with your question.

Hi, this is Eduardo on for Ram, thanks for taking the question. I had a question regarding the fibromyalgia asset and specifically if you were expecting to hire a discrete sale force to promote sales of that, if it were approved and also if you could give a little color to the binge eating disorder market and the nature of the competitive landscape and that indication.

Yeah, so I'll start with the AXS14 question. The fibromyalgia market is represented by a broad group of prescribers across primary care, rheumatology and team specialists. And similar to my comments about 07, we intend to market and enter the market in a targeted differentiated way that really leverages the experience we've seen with all validity. Right now, I think it's fair to say that there will likely be some distinct selling, particularly in those specialties where we don't currently call on. But in primary care, which is a large segment of the provider group, there is potential for synergy with our existing sales force. And so we'll share additional details as we get a little bit closer to launch.

Yeah, as it relates to binge eating disorder and the market for that, this is a very large patient population. There are seven million patients in the US who have binge eating disorder. And there's only one product that is currently approved. And so that's Vyvan. So we think that there's a lot of clinical need and a lot of opportunity to respond to that clinical need with Solary Ampital should it be successfully developed.

Great, and if I could have just one last one, if you had any data or background on how Synosy is doing outside of the US.

Sure, yeah, Synosy continues to perform well outside the US. We do outline the royalty revenue that we received from PharmaNovia and you'll be able to see that that's been increasing over the last couple quarters as it's been a further prioritize at PharmaNovia in the European countries.

Our last question today comes from Matt Kaplan with Lindenburg-Belmont. Please proceed with your question.

Hey, good morning guys. Thanks for taking the question. Just with the ADA data readout in the near term, what's your current thinking in terms of the launch plans with respect to filing AXS05 as a Velity or as a new brand in the ADA market?

Thanks Matt for the question. So the nice thing about the AXS05 and all of our new disease agitation is we do have the ability to file it as an NDA under various forms, either an S-NDA or its own freestanding NDA. And there are benefits to each approach. We are still exploring the approach that we will take. Stay tuned for that. However, what we can tell you is that it will be a very well thought out decision.

Thanks, Ariel.

We have reached the end of our question and answer session and I would now like to turn the floor back over to Ariel Tabutu for closing comments.

Well, thank you again for joining us on the conference call today. Axome has built a singular, innovative, late stage neuroscience portfolio spanning multiple indications in both psychiatry and neurology, which has the potential to deliver differentiated outcomes for millions of patients and compelling returns for shareholders. We look forward to keeping you posted on our progress.

This concludes today's teleconference. Thank you for your participation.