Q1 2024 Earnings Summary
- **Strong commercial performance and growth of Auvelity, with approximately 95,000 prescriptions in Q1 2024, representing a 12% quarter-over-quarter increase and 206% growth compared to the first quarter of 2023. ** The expansion of the sales force has led to a 40% increase in weekly calls to customers and a meaningful increase in new prescriptions, particularly from primary care providers.
- **Enhanced payer coverage for Auvelity, including a recent contract with a large group purchasing organization (GPO), positioning the company for future increases in covered lives beyond the current 48%. ** Negotiations aim for first or second line access for patients, which is expected to further increase earlier usage of Auvelity and drive significant volume growth.
- **Robust and advancing pipeline with multiple near-term catalysts, such as expected NDA submissions for AXS-07 (migraine) and AXS-14 (fibromyalgia) this quarter, and significant progress in pivotal trials including ACCORD-2 for Alzheimer's disease agitation and the FOCUS Phase III trial of solriamfetol in ADHD with results expected in the second half of the year. **
- Increasing Expenses Impacting Profitability: Axsome's R&D and SG&A expenses are rising due to multiple Phase III trials and sales force expansion. R&D expenses increased to $37 million in Q1 2024 and are expected to continue increasing ( ). SG&A expenses were $99 million in Q1 2024, higher than anticipated, and are expected to remain at this level for a few quarters ( ).
- Clinical and Regulatory Uncertainties: Additional studies, such as ACCORD-2 for Alzheimer's disease agitation, are being conducted even though they are not FDA requirements, potentially delaying approvals and increasing costs ( ). The initiation of the pediatric ADHD study, a gating item for solriamfetol's ADHD filing, lacks precise guidance, indicating possible delays ( ).
- Market Access and Reimbursement Challenges: Uncertainty surrounds the expansion of coverage through GPO contracts. The company could not provide specific timing or percentages regarding increased coverage from new agreements ( ). High gross-to-net discounts for Auvelity, in the low to mid-50% range, may impact net revenues ( ).
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GPO Contracts Impact on Coverage
Q: What is the expected impact of the new GPO contract on covered lives?
A: The new GPO agreement should significantly increase our coverage above the current 48%, though we can't provide specific numbers. The timing is uncertain, but we're aiming to improve coverage as quickly as possible. -
Spending Trajectory
Q: How does the spending trajectory look going forward?
A: R&D expenses were $37 million this quarter and are expected to increase gradually due to new Phase III trials, offset partially by trial completions. SG&A expenses were $99 million, higher due to sales force expansion, and we anticipate SG&A to remain in this range for a few quarters. -
Sales Force Expansion Impact
Q: How will the sales force expansion influence Auvelity sales?
A: The expansion has led to a 40% increase in weekly customer calls and a 30% increase in weekly new patient starts since December. We expect continued growth in new prescriptions, especially from primary care providers. -
Timeline for AXS-12 NDA Filing
Q: When do you plan to file the NDA for AXS-12 in narcolepsy?
A: We expect to complete the ongoing trial in the second half of this year and will file the NDA after assembling the data. -
ACCORD-2 Study in AD Agitation
Q: Is the ACCORD-2 study required for regulatory approval in AD agitation?
A: ACCORD-2 is not required but enhances our submission package; it's a pivotal trial that increases robustness without affecting submission timing. -
Gross-to-Net Expectations
Q: How should we think about gross-to-net over the next years?
A: The Auvelity gross-to-net discount was in the low to mid-50% range in Q1 and is expected to remain stable moving forward, with no significant variations anticipated. -
New-to-Brand vs. Refill Rates
Q: Can you provide new-to-brand versus refill rates for Auvelity?
A: New-to-brand prescriptions account for roughly 25% to 30% of weekly prescriptions. Refill rates are strong with good persistency, and we expect new prescriptions to continue growing. -
Impact of Cyber Attack on Sales
Q: Did the cyber attack affect Auvelity revenues in Q1?
A: The cyber attack impacted Auvelity for two weeks, causing a 30% to 40% drop in weekly prescriptions during that period. We implemented optimizations and saw a quick rebound in mid-March. -
Branding for AXS-05 in AD Agitation
Q: Will AXS-05 in AD agitation have the same brand as Auvelity?
A: We are considering whether to keep the same brand or have a new one; this requires careful thought and analysis, and we have not made a decision yet. -
Competitive Positioning vs. Brexpiprazole
Q: How does brexpiprazole approval affect AXS-05's positioning in AD agitation?
A: We don't believe brexpiprazole changes the need for a safe, effective long-term treatment. Assuming positive data, AXS-05 could be a frontline treatment for AD agitation.