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Axsome Therapeutics, Inc. (AXSM)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 revenue accelerated: total net product revenue $87.2M (+87% YoY), led by Auvelity $65.0M (+135% YoY) and Sunosi $22.1M (+16% YoY); operating loss $(78.0)M and EPS $(1.67) reflected heavier R&D and SG&A to support pipeline and commercial scale-up .
  • Access expanded: commercial coverage for Auvelity rose to 60% (from 48% in Q1) effective Aug 1, lifting total covered lives to ~76% across channels; ~123k Auvelity scripts (+29% QoQ) and ~45k Sunosi scripts (+8% QoQ) underscore demand momentum and sales force effectiveness .
  • Pipeline catalysts: AXS‑07 NDA resubmitted (expect Class 2, six‑month review), AXS‑14 NDA expected in Q3; multiple Phase 3 readouts targeted for 2H 2024 (ADVANCE‑2, ACCORD‑2 in AD agitation; FOCUS in ADHD; EMERGE in migraine/CGRP inadequate responders) .
  • Balance sheet: cash and equivalents of $315.7M; management reiterates runway “into cash flow positivity” under current plan—no quantitative revenue/EPS guidance issued .
  • Estimates context: S&P Global consensus was unavailable at time of analysis due to request limits; beat/miss versus Street cannot be assessed here and should be updated when access is restored (see Estimates Context) .

What Went Well and What Went Wrong

What Went Well

  • Commercial outperformance: Auvelity net sales reached $65.0M (+135% YoY) with ~123k scripts in Q2 (+29% QoQ), reflecting strong prescriber activation (4,300 new writers) and rising primary care mix; Sunosi scripts grew to ~45k (+8% QoQ) .
  • Access tailwinds: Commercial coverage for Auvelity increased by >22M lives to 60% as of Aug 1, pushing total covered lives to ~76%; management expects continued access “expand and evolve” .
  • Strategic de‑risking and pipeline progress: Sunosi patent settlement permits generic entry no earlier than June 30, 2042 (potentially extended), reducing near‑term IP overhang; AXS‑07 NDA resubmitted; multiple late‑stage trials on track for 2H readouts .
    • CEO: “We delivered another robust quarter driven by focused commercial execution and continued pipeline advancement” .

What Went Wrong

  • Higher operating spend pressured P&L: R&D rose to $49.9M (from $36.8M in Q1) on multiple Phase 3 programs; SG&A expanded to $103.6M with field force and organizational growth, lifting net loss to $(79.3)M (vs $(68.4)M in Q1) .
  • Gross‑to‑net remained elevated: GTN discounts in “low to mid‑50s” for both brands, expected to remain in that range near‑term, tempering realized pricing as access scales .
  • No quantitative financial guidance: Beyond stating cash runway to cash flow positivity, the company provided no revenue/margin targets, leaving Street to extrapolate trajectory amid spending ramp .

Financial Results

Consolidated P&L and Cash (oldest → newest)

MetricQ4 2023Q1 2024Q2 2024
Total Revenues ($M)$71.5 $75.0 $87.2
Cost of Revenue ($M)$7.4 $6.3 $8.1
R&D Expense ($M)$30.8 $36.8 $49.9
SG&A Expense ($M)$86.8 $99.0 $103.6
Loss from Operations ($M)$(98.3) $(67.3) $(78.0)
Net Loss ($M)$(98.7) $(68.4) $(79.3)
Diluted EPS ($)$(2.08) $(1.44) $(1.67)
Cash & Equivalents ($M, period‑end)$386.2 $331.4 $315.7
Shares Outstanding (period‑end)47,351,363 47,464,575 47,801,578

Notes: Q2 net loss includes $26.0M in non‑cash charges .

Product Net Sales/Revenue (oldest → newest)

MetricQ4 2023Q1 2024Q2 2024
Auvelity Net Product Sales ($M)$49.0 $53.4 $65.0
Sunosi Net Product Revenue ($M)$22.5 $21.6 $22.1

Commercial KPIs (oldest → newest)

KPIQ4 2023Q1 2024Q2 2024
Auvelity Prescriptions (000s)~84 ~95 ~123
Sunosi Prescriptions (000s, U.S.)~42 ~42 ~45
Auvelity Commercial Coverage (%)~48% ~48% 60% (as of Aug 1)
Auvelity Total Coverage (All Channels, %)~70% ~70% ~76% (as of Aug 1)
Sunosi Total Coverage (All Channels, %)83% 83% 83%
Auvelity GTN Discount (%)—Low–mid 50s Low–mid 50s
Sunosi GTN Discount (%)—Mid‑50s Low–mid 50s
New Auvelity Prescribers (#)—~3,600 ~4,300
New Auvelity Patients (#)—~18,000 >24,000

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Cash runwayCompany‑levelCash sufficient to fund anticipated operations into cash flow positivity Maintained: sufficient to fund into cash flow positivity Maintained
Auvelity access outlook2024Coverage expected to “expand and evolve” Coverage expanded to 60% commercial; company expects further expansion/evolution Improved/maintained
AXS‑07 (migraine) NDA2024Resubmission targeted 2Q 2024 NDA resubmitted; expects Class 2 (six‑month review) Achieved/updated
AXS‑14 (fibromyalgia) NDA2024Submission targeted 2Q 2024 Submission expected 3Q 2024 Deferred (timing)
2H Clinical catalysts2H 2024ADVANCE‑2 (AD agitation), FOCUS (ADHD), EMERGE (AXS‑07) planned Adds ACCORD‑2 topline in 2H (target enrollment reached) alongside ADVANCE‑2/FOCUS/EMERGE Expanded

No quantitative revenue, margin, OpEx, OI&E, tax, or dividend guidance was provided .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’23 and Q1’24)Current Period (Q2’24)Trend
Market access (Auvelity)Coverage ~70% total; ~48% commercial; contracting with second large GPO to enable future access gains Commercial coverage increased to 60% (Aug 1), total ~76%; expects continued expansion/evolution Improving
Sales force & demandNeuropsychiatry sales force expansion completed; early PCP penetration; ~95k Auvelity scripts in Q1 ~123k scripts (+29% QoQ); 4,300 new prescribers; primary care utilization rising; DTC mostly digital Accelerating
GTN/pricingQ1 GTN: Auvelity low–mid 50s; Sunosi mid‑50s Q2 GTN low–mid 50s for both; expected to remain in this range in 2H Stable
AXS‑05 (AD agitation)ADVANCE‑2 2H24; ACCORD‑2 initiated to bolster package (not required) ADVANCE‑2 progressing; ACCORD‑2 enrollment target reached; both topline expected 2H24 On track; program robustness increasing
AXS‑07 (migraine)Resubmission targeted 1H/2Q 2024 NDA resubmitted; EMERGE readout 2H24; go‑to‑market being developed for crowded oral space Regulatory de‑risking; commercialization planning
Sunosi (sleep)Steady growth; 83% total coverage ~45k scripts (+8% QoQ); IP settlement limits generics until 2042 Steady growth; IP de‑risked

Management Commentary

  • CEO: “We delivered strong commercial performance with continued momentum for the launch of Auvelity…secured important improvements in both the quality and quantity of payer coverage” .
  • CEO on catalysts: “We anticipate topline results for the pivotal ADVANCE‑2 and ACCORD‑2 Phase III trials [AD agitation] in the second half of 2024” and FOCUS (ADHD) in 2H24; AXS‑07 NDA resubmitted .
  • CFO: “Gross‑to‑net discount for Q2 was in the low to mid‑50s for both Auvelity and Sunosi…current cash balance is sufficient to fund anticipated operations into cash flow positivity” .
  • Commercial lead: “~123,000 Auvelity prescriptions in Q2 (+29% QoQ)…+22M commercial lives added effective Aug 1, lifting commercial coverage from 48% to 60% and total from ~70% to ~76%” .

Q&A Highlights

  • Sales force impact and channel mix: Management cited an “inflection in weekly new patient starts” since late March and increasing primary care utilization supporting Auvelity growth .
  • Access pull‑through cadence: The Aug 1 coverage wins will “build over time…in the weeks and months ahead,” with GTN expected to remain in low‑to‑mid‑50s near‑term .
  • AD agitation development: ADVANCE‑2 enrollment progressing; ACCORD‑2 is a pivotal randomized withdrawal built on ACCORD‑1 learnings; open‑label exposure targets (300 at 6 months/100 at 12 months) on track for NDA readiness .
  • AXS‑07 launch strategy: Acknowledges crowded CGRP/triptan landscape yet sees opportunity given ~70% dissatisfaction among treated migraine patients; pricing/market access under evaluation .
  • Branding and payer strategy for AXS‑05 in AD agitation: Company retains optionality (unique vs supplemental NDA/branding) given different payer mix; decision to be data‑driven closer to filing .

Estimates Context

S&P Global consensus estimates for Q2 2024 revenue and EPS could not be retrieved due to daily request limits on the data service during this session; therefore, we cannot state a beat/miss versus consensus here. We recommend updating this section once access is restored to S&P Global to anchor comparisons and assess potential estimate revisions .

Key Takeaways for Investors

  • Commercial momentum is intact: Auvelity’s $65.0M quarter and +29% QoQ scripts, combined with +22M incremental covered lives to 60% commercial (76% total), set up 2H pull‑through as access changes flow through claims cycles .
  • Near‑term stock catalysts: Multiple 2H24 readouts (ADVANCE‑2/ACCORD‑2, FOCUS, EMERGE) plus AXS‑07 NDA under Class 2 review could drive binary events; program breadth increases probability of at least one positive inflection .
  • P&L trade‑off: Elevated R&D/SG&A supports a robust pipeline and sales expansion but keeps profitability deferred; watch for operating leverage as GTN stabilizes and access improves .
  • Sunosi IP de‑risked: Settlement pushes potential U.S. generic entry to 2042, sustaining cash‑generating durability while new solriamfetol indications are pursued .
  • Access dynamics: The “expand and evolve” access strategy includes targeting first‑line/first‑switch positions; expect gradual coverage pull‑through over coming months rather than an immediate step‑function .
  • Runway sufficient to catalysts: $315.7M cash and reiterated runway “into cash flow positivity” supports execution through multiple Phase 3 readouts and launches under the current plan .

Appendix: Additional Press Releases (Q2 2024)

  • Sunosi patent litigation settlement with Unichem: generic entry permitted June 30, 2042 (earlier under certain conditions; pediatric exclusivity extension possible) .
  • Advocacy/awareness initiatives in Alzheimer’s and migraine communities (June 2024) .