Axsome Therapeutics, Inc. Q4 FY2020 Earnings Call

Good morning. And welcome to the Axsome Therapeutics Conference Call. Currently, all participants are in a listen-only mode. Later there will be a question-and-answer session and instructions will follow at that time. As a reminder, today's conference call is being recorded. I would now like to turn the conference over to your host, Mark Jacobson, Chief Operating Officer at Axsome Therapeutics. Please go ahead.

Thank you, operator. Good morning and thank you all for joining us on today's conference call. Our earnings press release providing a corporate update and details of the company's financial results for the fourth quarter and full year of 2020 crossed the wire a short time ago and is available on our website at axsome.com. During today's call, we will be making certain forward-looking statements. These statements may include statements regarding, among other things, the efficacy, safety, and intended utilization of our investigational agents, our clinical and non-clinical plans, our plans to present or report additional data, the anticipated conduct in the source of future clinical trials, regulatory plans, future research and development plans, commercial plans, 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. Herriot Tabuteau, Chief Executive Officer; Nick Pizzie, Chief Financial Officer; Lori Englebert, Senior Vice President of Commercial and Business Development; and Dr. Amanda Jones, Senior Vice President of Clinical Development; and Dr. Cedric O'Gorman, Senior Vice President of Medical Affairs. Herriot will first provide an overview of the company and then review recent developments and upcoming milestones. Following Herriot, Nick will review our financial results. We will then open the line for questions. And with that I will turn the call over to Herriot.

Thank you, Mark. Good morning, everyone. And thank you all for joining Axsome Therapeutics Fourth Quarter and Full Year 2020 Financial Results and Business Update Conference Call. This past year was one of focused execution for Axsome as we advanced our industry-leading CNS pipeline towards marketing application submissions. Our portfolio comprises four late-stage product candidates under development for six distinct indications representing unmet medical needs that affect over 60 million patients in the U.S. alone. Our focus this year will be on the regulatory activities surrounding our NDA filings for AXS-05 and AXS-07, launch readiness to ensure a successful transition to commercialization assuming product approvals, and continued advancements of the rest of the late-stage CNS pipeline. I will provide a brief update on our pipeline and pre-commercial activities before turning it over to Nick, who will provide a financial update. Starting with our first lead product candidate AXS-05. The new drug application (NDA) for AXS-05 for the treatment of MDD has been submitted. We intend to issue a press release following the FDA’s decision regarding acceptance of the filing. The NDA submission is a major milestone for the company and it brings us closer to potentially making this innovative treatment available to the millions of patients who are living with depression. AXS-05 is a novel, oral NMDA receptor antagonist with multimodal activity. If approved, AXS-05 has the potential to be the first new oral mechanism of action for depression in over 60 years. In the fourth quarter, we announced positive results from the long-term open label phase 3 COMET trial demonstrating rapid, substantial global improvement in depressive symptoms and functional impairment that will sustain over the 12-month treatment period with AXS-05. AXS-05 was well-tolerated with long-term treatment, with the safety profile consistent with that observed in the previously reported controlled trials. We also announced positive results from phase 2 open-label COMET sub-studies in patients failing one prior treatment, failing two prior treatments, and in patients with suicidal ideation. Moving on to our Alzheimer's disease agitation program with AXS-05. Alzheimer's disease agitation is a serious and debilitating condition for which there is currently no approved treatment. Last year we announced positive results from a pivotal ADVANCE-1 trial which demonstrated rapid and substantial improvement of agitation in patients with Alzheimer's disease treated with AXS-05. We subsequently received breakthrough therapy designation for AXS-05 in this indication. In December, we launched our second pivotal trial, the ACCORD study, which is a double-blind, placebo-controlled, randomized-withdrawal study. Turning now to our migraine program with AXS-07. We are completing the compilation of the NDA, which we expect to submit to the FDA early in the second quarter. There is a significant unmet need for more efficacious treatment for migraine. The World Health Organization ranks the disability from severe migraine attacks on par with that from dementia, quadriplegia, or active psychosis. AXS-07's novel oral multi-mechanistic approach may help to address this unmet need. In the fourth quarter, we announced positive results from the long-term open-label MOMENT trial of AXS-07, demonstrating rapid, substantial, and global relief of migraine pain and associated symptoms over the 12 months treatment period. AXS-07 was well-tolerated over long-term treatment, with the safety profile consistent with that observed in the previously reported controlled trials. Moving next to our AXS-12 product candidate for narcolepsy. Narcolepsy is a serious and debilitating condition with limited treatment options. Results from our phase 2 trial demonstrated the potential for AXS-12 to address a broad range of narcolepsy symptoms. We expect to initiate a phase 3 trial of AXS-12 in narcolepsy in the second quarter. For AXS-14, our product candidate for the treatment of fibromyalgia, we are scheduled to meet with the FDA in the second quarter of this year to discuss the development plan for this program. AXS-14 has previously met the primary endpoint in both phase 3 and phase 2 trials for the treatment of fibromyalgia. Our intellectual property portfolio continues to grow with recently issued and allowed patents for AXS-05 and AXS-07. The number of issued U.S. patents for each product candidate now totals 50, with protection extended to 2040 and 2026 respectively. With potentially FDA decisions on two NDA filings over the coming year, preparation for potential commercial launch is well underway. All functional commercial leadership is in place and the team continues to expand. Sales structure and design have been finalized. The hiring of sales managers and representatives will begin shortly. The infrastructure for our proprietary DCC or Digital Centric Commercialization platform is in place, and peer engagement activities have started. We are excited about the differentiated clinical profile of our numerous product candidates, the potential of our investigational medicines to deliver significant benefits to patients, and our planned commercialization approach. I will now turn the call over to Nick, who will provide a financial update.

Thank you, Herriot, and good morning everyone. Today I will discuss our fourth quarter 2020 results and provide some financial guidance. We ended the fourth quarter with approximately $184 million in cash compared to roughly $202 million at the end of the third quarter; a net decrease of approximately $18 million. R&D expenses were $17.4 million for the fourth quarter ended December 31, 2020, versus $19.2 million for the comparable period in 2019. The decrease of $1.8 million was driven by the completion of a majority of our clinical trials which were ongoing in the comparable prior period, offset by costs related to the preparation of AXS-05 and AXS-07 NDA submissions. G&A expenses were $10.4 million for the quarter ended December 31, 2020 and $5.2 million for the comparable period in 2019. The change was primarily due to an increase in non-cash-related stock compensation expense, along with the continued buildout of the commercial function. Net loss was $29.2 million or $0.78 loss per share for the quarter ended December 31, 2020 compared to a net loss of $24.8 million or $0.71 loss per share for the comparable period in 2019. Net loss for the year ended December 31, 2020 was $102.9 million for a loss per share of $2.77 compared to a net loss of $68.3 million or $2.01 loss per share for the comparable period in 2019. As a reminder, in Q3 of 2020, we secured a $225 million term loan facility with Hercules Capital, of which $175 million in funding remains available. This committed, non-diluted capital gives us additional financial flexibility through the anticipated potential commercial launches. We believe our current cash position of $184 million, along with the remaining committed capital from our $225 million term loan facility, is sufficient to fund our anticipated operations based on our current operating plan in at least 2024. That concludes our fourth quarter 2020 financial review. I will now turn the call back to Mark to lead the Q&A discussion.

Thank you, Nick. Operator, may we please have our first question?

Thank you very much. Your first question comes from Charles Duncan from Cantor Fitzgerald. Your line is open.

Hey, good morning Herriot and team. Thanks for taking our questions. Yes, busy time for you, congrats on the forward motion and progress with 05. I had a couple of quick questions. With regards to the label and I imagine you'll be talking about this more in terms of the claims that you were asking for was 05 NDA. I guess I'm wondering would you anticipate the label to perhaps approve label to be explicit regarding the comment outcome or comment results with one and two failures in suicidal ideation or would that just be data included in the label and it would be a generalized MDD approval if it’s granted?

Good morning, Charles, and thanks for the question. So the label that we are targeting and that we have submitted the NDA for is the treatment of major depressive disorder (MDD) and now our clinical trials, our controlled clinical trials as well as our open-label long-term studies do include a broad range of patients who have MDD, and so we would not expect specific indications, for example, suicidal ideation, to be in the label. However, the patients with MDD do have suicidal ideation, and patients with MDD have been treated with more than one prior treatment. So those data from the common trial that have been included in the NDA submissions are data which certainly will be published and which we think will be very useful to the clinicians and will be able to make those data available to clinicians using our medical functions.

Okay. That makes sense. It would be useful for prescribers. Just sticking with 051, last quick question regarding the ACCORD study in Alzheimer's agitation. Can you provide any additional color on how that study is going in terms of enrollment and what you anticipate the call it screen failure rate to be or the number of patients enrolled versus going on to the blinded portion and then being withdrawn?

Those are great questions. It's early days in the study, so we launched the trial at the end of December, as you know. So it's very early days, especially for this title study whereby you have this lead-in where everyone is treated with AXS-05 in an open-label fashion and then they're monitored not just for response but for stable response prior to randomization. We will have more to tell you and we'll be happy to share some of those observations and incorporate them into any kind of timing updates with regards to the trial, but right now it's too early.

Okay. Last question regarding commercial, you mentioned the salesforce sizing had been finalized, and I guess I'm wondering what do you anticipate that sizing to be roughly, not specifically, and then the breakdown of psych versus neuro focus and how do you plan to accomplish that?

Hey Charles, thanks for the question. I think you probably will not be surprised if we tell you we're not going to tell you the exact size of the salesforce, but what I can tell you is that we are highly confident that the size that we have anticipated will cover the amount of physicians that will be high prescribers of AXS-05, and we do believe that our Digital Centric Commercialization approach will be able to provide information to physicians when they need it, how they want it, and at the time that they want it. And I think that's really important to understand because our promotion is not just personal. There will be a large component of non-personal promotion as well, and regarding your question around 07 and that launch, look everything we're doing in preparation for the 05 launch is working under the assumption that 07 will follow very closely after. So all of the structures that we're putting into place, salesforce, digital will all be readily capable of scaling at the time of launch for 07.

Okay. That's helpful. Thanks Lori and Herriot for the added color. Should be effective looking forward to the progress this year.

Thank you.

Your next question will come from Marc Goodman from SVB Leerink. Your line is open.

Yes. Good morning. I understand you're not going to give us the number of reps, but can you give us a sense of the spend that you're going to do this year, maybe some type of spending guidance specifically for SG&A is what I was focused on? Second, can you just give us a sense of the payer discussion so far for depression and how those are going and how they are appreciating the differentiation of the new mechanism? Just curious how that's going. And then third, just curious on the fibromyalgia. You're going to meet with FDA. Can you talk about the different scenarios if they come back and say okay you can file with what you have, are you prepared to file and then move forward and market this product on your own? Are you thinking about potentially partnering it just because it's such a large indication and if they say do another study, prepare to start another study before the end of the year? Thanks.

Thanks for the multi-part questions there. So I'll take the fibromyalgia question first and then I'll turn it over to Nick and then to Lori for the other questions on spend and payer discussions. With regards to fibromyalgia, we're looking forward to our FDA meeting which is scheduled in the second quarter to discuss the development path forward for that product candidate. This will be our first meeting with the FDA since we've gotten the data. So we'll have a lot more to tell you hopefully once we have that meeting. Now as a reminder, there are two studies, two efficacy trials, for quick control trials which have been completed and which were positive. So that puts us in a very good position. In the theoretical, under the theoretical scenario where let's say there's absolutely nothing more that we had to do from a clinical perspective, we would still need to manufacture commercial supplies, and what I can tell you is that work is already underway to make sure that we can manufacture the product. This is a novel chemical entity, and therefore there's been a lot of work that our CFC team has been doing in order to synthesize it. So that work is well underway and is progressing well. I will turn it over to Nick to answer your first question.

Thanks, Herriot. Thanks, Marc, for the question. As you know, we don't give necessarily expense guidance. I can give a little bit of guidance on the cash runway. As a reminder, we had $184 million in cash at year end. We also have the $245 million debt facility, so we feel like we're in a really strong position from our financial resource base. The cash runway, so you're aware, this takes us into at least 2024 based on our current operating plan and includes all launch readiness, all launch expenses including field force for AXS-05 and AXS-07. It also includes funding for the second phase 3 Alzheimer's agitation trial, a continuation of the MERIT trial for TRD, and the soon-to-be-started AXS-12 trial in narcolepsy. So the runway currently just in conclusion takes us through both potential launches upon NDA approval for both MDD as well as the treatment of migraine.

Hey, and I will quickly answer the payer questions. So I think we all know depression is the number one cause of disability worldwide and the prevalence of depression is just continuing to grow, especially with the pandemic; sometimes we've heard to the tune of 3x. So payers are paying attention. Depressed patients cost money and they are acutely aware of the other clinical profiles of products that are already on the market. When we discuss with payers and what we've seen in early discussions, yes, bringing forth a novel mechanism of action that's patient-friendly and reminding them that this will be the first one in 60 years is interesting to them. Very interesting to them, but what really sticks out is our clinical profile. So our data is highly differentiated versus the other products on the market, and what I believe we've heard, and again in early discussions, what attracts them most is the rapid onset of remission and the durability that we show with the product.

And your next question comes from Joon Lee with Truist Securities. Your line is open.

Thank you for your updates and for taking our questions. I wanted to follow up on the discussion about payers and your point regarding the increase in depression prevalence. In one of your presentations, you mentioned that the number of people experiencing depression rose from 22 million before the pandemic to 71 million during the pandemic, which is over a threefold increase. Although you've completed your phase 3 trial, if you were to conduct another phase 3 trial now, would you approach it differently? I'm trying to understand whether the new cases of depression during the pandemic are legitimate major depressive disorder or if they are influenced by various factors, and whether you would have needed to modify the study considering these millions of new cases. Is this situation unique to the U.S. or is it seen in other countries as well? I would appreciate hearing your thoughts on this. Thank you.

Thanks, Joon, for the question. A lot of theoreticals there, but I think you do raise some interesting questions. So from a public health perspective, it's very clear the effect of the pandemic on mental health and also on depressive symptoms. It's been very well documented, I think definitely in some high-profile journals by some well-respected clinicians. So the data are clear. There is a significant increase in depressive symptoms, and Lori can maybe speak to this a little bit, but we started to also see that work its way into prescription trends. Now, so what that means is there's acute need to treat patients, and also there's a great opportunity for companies that can provide novel mechanisms of action that will work quickly and help these patients. So that's on the clinical needs side of things. Now, from a clinical trial conduct perspective, I think that you bring up an interesting point that there is an unknown there and that unknown is what impact would the pandemic and would the mental illness from a pandemic have potentially on being able to test your drug to see if it works. That's a theoretical, so we can't really say too much about that. One of the things that we did was to look at the impact of AXS-05 during the pandemic through our long-term open-label safety extension trial, and we were very interested to see what impact our drug would have on patients regarding their depressive symptoms in the context of the pandemic, and we can only speak to our data. What we showed is as you know, and what we're reported was very profound reductions in depressive symptoms, incredibly high rates of response and remission that were either maintained or increased over the 12-month treatment period.

Fantastic. Thank you.

And your next question comes from Joseph Thome from Cowen & Company. Your line is open.

Hi there, thank you for taking my questions. A little bit on the COMET data. In those types of data was there anything that surprised you in terms of response in any of the individual subsets? And maybe in terms of positioning upon launch, is there anything your MSL team is doing to position the therapy in a certain subset of patients that will be maybe more early adopters? And finally related to that, does the subset data give you any read-through into your expectations for MERIT later this year?

So thanks for the question. In terms of points that were surprising in the data, I think it was good to see that the rapid onset of action and the significant percentages of patients achieving remission and response that we saw in the control trials were replicated in the COMET data. One of the sub studies that we were really interested in was the suicidal ideation sub study; a small number of patients, but as you can imagine rapid onset of action is really important for that symptom in those patients, and what we saw was that there was a resolution of suicidal ideation in that subgroup in 60% of the patients at week one, and that only increased to the vast majority of patients after two weeks. So that was definitely interesting, and I think number two on the list was the fact that the efficacy that we saw in the controlled trials did translate also to patients who had failed two prior treatments. So patients who are traditionally referred to as treatment-resistant depression patients. So it was really good to see that in a real-world setting. As it relates to expectations, as it relates to what implications that would have for the MERIT study, those points, those observations can only be positive in terms of the profile of the product and we've never done a randomized-withdrawal study design before. So it'll be interesting to see what those show and that's the benefit and one of the reasons why you conduct phase 2 trials, so we're looking forward to seeing how the product performs in that setting. And then I'm going to turn it over to Cedric to talk about MSL strategies.

Yes. Thanks, Herriot. I would just say that these data from COMET are very exciting, I mean in terms of response and remission on that data and also the fact that it translates into clinically observable response and remission rates. This was clear across the overall COMET as well as those who have failed to respond to antidepressants in the current episode in suicidal ideation. So the MSL have these data in hand. We've been out talking to key opinion leaders, getting their insights on the data has been a great progressive productivity to it and excitement about the new mechanism of action, and I think that what's important from COMET is not only are you seeing these responses early on but they're being sustained with really impressive compliance and maintenance with treatment up to 12 months. So that's what's really exciting is that the drug appears to be working, but also patients are willing to stay on it over the long term. So the MSLs are out there right now getting insights and talking about these data, and we'll be presenting data at upcoming conferences as well.

Excellent. Thank you so much.

Your next question will come from Myles Minter from William Blair. Your line is open.

Hey everyone. Thanks for taking the questions. I'm just wondering from the payer perspective whether you've sort of engaged in the conversations regarding where 05 might actually sit in the treatment paradigm from their perspective, and whether the DCC platform that you're running on the commercial front, whether that's actually touching base with the appropriate prescribing physicians that are seeing patients, say with like two or more prior failed antidepressants?

Hey Miles, thanks for the question. I think it's a little bit too early for us to know where the payer discussions are going to net out. So answering your first question is difficult at this time. We do, as I mentioned earlier, we are very encouraged by those discussions that we are having right now. They seem to respond very well to our clinical data package that we're putting in front of them. In terms of the DCC approach. I'm not quite sure I understand or understood your question correctly. Could you repeat it? Would you mind repeating it?

Yes. I'm just wondering like with the target prescribing accounts for that platform and also for your salesforce, what the breakdown of patients that have failed two or more prior therapies would be at those target accounts and that are classified as TRD patients versus standard MDD?

Yes. I think I understand your question. So I'll turn it over, I'll turn it back to Lori, but I just wanted to just point out that the data are pretty clear that roughly two-thirds or more of patients already fail or respond inadequately to at least one prior treatment.

Yes. I agree. The majority of our target physicians are high-prescribing physicians, so the likelihood that they're treating patients who have failed one or more is really high.

Okay. Cool. And then maybe on 07, the MOMENT trial data looks really good from my perspective. If you're giving any updates as to the frequency of dosing for patients out to 12 months and also were those patients treated at the earliest signs of a migraine like an interceptor at confirmed migraine like in MOMENTUM?

Hi Myles, thanks for the question. The patients were allowed to treat at any point in time following the onset of migraine pain. So it really reflects more of the real-world data and real-world use of the drug, and also the data that was captured during the MOMENTUM and INTERCEPT trials.

Your next question will come from indiscernible. Your line is open.

Hey guys, thanks for the opportunity to ask a couple of questions. Regarding AXS-07, could you clarify why there has been a delay in the 2Q earnings and filing? Is this something that was previously mentioned, or is there a new development? Additionally, I’m curious about your pricing strategy moving forward, especially in relation to MDD and agitation. How do you see the pricing differing in those areas, and how are you preparing to engage with payers? Thank you.

Great. Thanks for the question. With regard to 07 and the NDA filing, the team remains on track to complete the filing by the end of the quarter. However, we are waiting on one vendor report which will slip into the very beginning of the second quarter, and that's the reason behind your guidance. And Lori?

Hi, that’s an interesting question. Regarding pricing, so whenever you put pricing discussions with payers, typically, companies focus on fair and timely access, how large a portion of that will be associated with price, but the balance of that is we need the price for the value that the product brings. So we are working through that right now to make sure that we understand how we appropriately price to represent the value we are bringing to the market.

Okay. Thanks.

And your next question will come from Matt Kaplan from Ladenburg Thalmann. Your line is open.

Hi, good morning everyone. I want to congratulate you on the progress made during the quarter. Now that you have submitted the AXS-07 NDA, what are your expectations regarding potential priority in relation to the data you have for MDD?

So as you mentioned, we do have great concern for the product, and we do believe that we qualify for priority review which is a six-month review. However, that is the determination made by the FDA. And the way that it works is that priority review is not automatic, and at the time of the NDA filing, you do request priority review, and it is a determination which is made and communicated to the company upon the FDA decision whether or not to file the application. So our plans with regards to launch, etc., are predicated on a six-month review, but again that is really up to the FDA.

Okay. Helpful. And then in terms of AXS-07, I guess we focused a bit on the commercial profit on 05 already. But I guess maybe more for where are you in the preparation in terms of research again at interaction for 07 given I guess it's kind of the near-term NDA filing there.

Yes. Thanks, Matt for the question. Regarding 07, as I mentioned earlier, we have always anticipated that 07 would follow very closely to the high end of 05 in terms of launch. Therefore, we have actually been preparing on all fronts to have a staggered approach but scalable if we were to receive approval for AXS-07. In terms of payer negotiation, exactly, we have performed market research but have not started 07 payer discussion just yet.

Okay, great. For your last question about Herriot, you mentioned that you are set to begin phase 2 for AXS-12 in narcolepsy next quarter. Could you provide some insight into the design of that trial and the expected timeline for its completion?

So with regard to the trial design, it will be a parallel design. It will be similar in some ways to the phase 2 trial which we conducted, expect the phase 2 trial was a crossover design. This will be a parallel design. So we expect, we would expect to randomize subjects to ASX-12 and into placebo. And with regards to expectations around how long it will take to enroll the study once we start the study, we will provide you details with regards to the size of the study, and that of course will determine potentially how fast it could enroll. One of the things we can point to you is metrics around the phase 2 enrollment; as a reminder, that was a 21 patient study which was conducted at roughly 12 sites and that enrolled in approximately six months.

All right. Thanks for the added detail.

Your next question will come from Vikram Purohit from Morgan Stanley. Your line is open.

Great. Thanks for taking my question. Just had one on AXS-05 for smoking cessation. So I have seen your release, but you have an FDA meeting scheduled here for the third quarter. I just wanted to see where you are looking to learn from the meeting with the FDA here and what you think an eventual subsequent pivotal study this indication would look like?

Thank you for your question. We are very excited about smoking cessation, and following the positive phase 2 data from the small study, we plan to meet with the FDA to discuss the design of an efficacy trial. The phase 2 study examined smoking behavior, but that was not a registration endpoint. However, it was valuable for detecting signals. Our goal for the meeting is to gain guidance and agreement on the next study's design, which will be focused on efficacy. We are looking forward to those discussions. Registration trials in smoking cessation usually have specific endpoints, which we expect will be the case for the upcoming study.

Okay. Thank you.

And your next question will come from Chris Howerton from Jefferies. Your line is open.

Hi, good morning. Thank you for taking the time for questions. Congratulations. I understand there have been inquiries about the Alzheimer’s disease agitation market. It seems we may face increased competition in this area over the next few years, as several companies are developing therapies. How do you plan to compete in this environment? Safety is a major concern for this patient population. Thank you.

Thank you for your question. This is a significant and complex disease area. While the term unmet medical need is often used, here it applies well, as there is currently no approved product for this disease. The off-label drugs being used carry black box warnings for this specific patient population, yet doctors need to find treatments due to the seriousness of the condition. At this moment, there is no competition in terms of approved products. The outcome really hinges on the clinical data, and it’s challenging for us to comment on drugs that are still being developed. Drug development in this area has been tough, so we are fortunate to have one pivotal trial that yielded positive results, demonstrating strong efficacy and safety. Our drug has shown to be very well tolerated in the ADVANCE-1 trial, and we are eager to enroll and finish the ACCORD study. Regarding other products in development, it highlights a significant clinical need, and it would be beneficial to have multiple treatments available for these patients due to the seriousness of the condition. However, we cannot speculate on theoretical outcomes without positive data from other companies.

Okay. Alright. Well, thank you Herriot. Appreciate it and I also look forward to that as well. Thanks.

Thank you.

And your next question will come from Yatin Suneja from Guggenheim. Your line is open.

Hey guys, this is Eddie on for Yatin. Thanks for taking my question. So just to follow up on TRD, can you, given what you saw on STRIDE and then recently with the COMET study, can you give us an update on sort of what the development path looks like and the timelines to get to an sNDA and TND and how will the MERIT data come in later this year sort of influence that path? Thanks so much.

The indication that we filed is MDD and so that's the broadest indication, so that encompasses the entire spectrum of major depressive disorder. So we're very happy with that indication should we be successful with the NDA review, and where we do not intend to conduct another phase 3 trial in treatment-resistant depressions. What we have done is to generate data that will help clinicians to understand how the product performs in a wide range of patients with major depressive disorder, including patients who failed prior treatments. So from that perspective, we're very happy that the STRIDE study was conducted, we think that the COMET TRD data does provide very helpful information to clinicians in a real-world perspective, and we think that the MERIT study may also provide data that will be useful to clinicians again in the right setting, as is in a scientific setting.

Great. Thank you so much.

We have time for just a few more questions, and we'll try to get through as many as possible. Your next question is from Raghuram Selvaraju from H.C. Wainwright. Your line is open.

Thank you so much for taking my questions. I wanted to ask about the general allocation of sales and marketing commercialization resources across the different indications for AXS-05 as you look towards the possibility of this drug potentially being a triple or even a quadruple threat in the CNS neuropsych space, and in particular if you could talk through how you anticipate the different sales and marketing strategies to be taken with AXS-05 effectively being deployed and if you can especially describe any particular initiatives that are likely to be aimed at specific types of institutions with the aim of optimizing the commercial value of this product?

Thanks, Rag, for the question. I'll turn it over to Lori, but you do raise some interesting questions which we certainly thought about as a team with regards to the potential different indications for AXS-05.

Yes. Hey Rag, thanks for the question. It's a little bit difficult question to answer at this point in time. Adjunctive treatment, we need to see how the trial finalizes, but we are absolutely always thinking about how we leverage the salesforce, when we leverage the salesforce, and what that overlap of position might look like. Again, as we built our salesforce sizing and design and structure, we did that with the understanding that we would have follow-on indications coming in, particularly different disease areas and also different treating physicians. So we've taken great efforts to ensure there's efficiency there, if that were to happen.

So and specifically with respect to the smoking cessation indication, are you looking at that as being primarily an indication where the principal commercialization thrust would be through advertising as opposed to boots on the ground relative to, for example, MDD or Alzheimer's associated agitation? Or are you thinking about it in terms of a situation where you might need to feel a totally separate salesforce in order to potentially market AXS-05 in that indication as well?

Yes, Rag, it's premature for us to talk about marketing for smoking cessation. So let's first conduct the trials and see what the profile is. But those would be great questions and great problems to have which would certainly solve should we have positive data.

Okay, and then I was just wondering, I know that you haven't had the actual meeting discussion yet on the fibromyalgia candidate, but have you received any indication one way or another as to whether the FDA considers the current efficacy data package to be adequate or if they are looking for you to conduct an entire additional registrational program aimed at adding to the efficacy data package for assembling a potentially billable approvable application in fibromyalgia?

We have not met with the FDA, and we're not going to speculate on what the outcomes of those discussions might be, but we're very much looking forward to sitting down with them and discussing what we view to be unique data in this area, which is still an area of high unmet medical needs. As a reminder, there are only three approved products to treat fibromyalgia. It is a condition that has a variety of symptoms, many of which are not addressed by the small number of currently available treatments.

Okay. And then lastly, just a housekeeping item on stock-based compensation. How are you anticipating stock-based compensation to trend this year relative to last year and looking at your upcoming hiring plans and in particular, sales and marketing infrastructure build-out? Should we expect a significant increase in stock-based comp expense for 2021 relative to 2020?

Hey Rag, this is Nick Pizzie. Yes, I can answer that question. We did see an increase in stock-based compensation compared to last year, which is directly related to our stock price this year. As we build our field force and enhance other functions, you should expect stock-based compensation to continue to rise. This will also depend on our share price based on the calculation we use. Typically, our stock-based compensation is amortized over a four-year period, so the impact from the field force won't be felt all in one year.

Thank you.

And your next question will come from Ashwani Verma from Bank of America. Your line is open.

Hi there. Thanks for taking the question. I just had one, so in terms of the AXS-05 pattern, just trying to figure out how many of these 50-plus patents that you have cited can be listed on the orange book? My understanding is that as a new NDA, you'll have to file the form 3542 and list the patents that put into the specific attributes of the drug for the MDD label in the situation. Just curious how many of the patents would meet that criteria?

Hi Ashwani, thanks for the question. As a reminder, we have approximately 50 or more than 50 patents in the U.S. covering AXS-05, and the vast majority of those patents are orange book listable. And the other point to mention is that most of those patents provided protection out to 2034; the more recent ones provide protection out to 2040. And in addition, the new patents encompass different families of patents. So not only do we have pharmacogenetic patents, but we also have a method of treating disease patents. Furthermore, we would expect that the families would continue to expand.

Got it. And just to follow up, have you filed that formulation patent that you talked about earlier?

I'm not certain of which formulation patent you're referring to. Are you referring to a particular patent? Typically what we would do is talk about patents that have issued. We do have some claims around our formulation specifically, so some of the new patents that have issued specifically speak to our formulation as well as the method of treating a disease. I think what I was referring to is additional patent families which we would expect to file in the future to further expand the patent portfolio.

Got it. Thank you so much.

Yes. Thank you.

Your next question will come from David; your line is open.

Hey, thanks for taking the questions and fitting me in here. So just a quick couple. You talked about the Digital Centric approach to the salesforce and the launch, and I'm just curious as to what gives you confidence that type of approach detailing positions in that way would be successful versus a more traditional in-person effort by the salesforce?

Hey David, thanks for the questions. Yes, we have high confidence mostly based on data. We do know that the psychiatrists and neurologists are two of the highest adopters of remote detailing. In fact, a lot of psychiatrists we know actually prefer it. Psychiatrists actually trend anywhere from 60% to 70% of their details are remote, and that's recent data. That is actually higher than data even six months ago when the pandemic was actually much more prevalent. So we feel pretty confident that this is a sound approach, and we certainly are not alone in this. Most companies are doing this, and physicians right now are currently dictating how they want to see sales reps. So they will tell you if they want you to come in person or they want you to come in via remote detail, and we we're going to use data analytics to make sure that we're approaching them correctly.

Okay. Great. That's really helpful. Thanks. And then just an 05 Alzheimer's agitation, just wondering about the environment for usage there. Do you envision that the drug would be mostly something for the home and the community setting, or do you also expect to see sort of a large uptake in the long-term care setting?

So our studies were, well we conducted one trial, so our pivotal trial and also just our currently ongoing study, is or were conducted in patients who were based in the community, and we did that for a lot of reasons. And then so, but there is no reason to believe that the drug would not work in any setting. The reason why we focused on community dwelling patients is one, you want to prevent patients from actually being institutionalized. So if you can't treat them, you want to keep them out of the hospital and out of nursing homes. However, once you show that the product works, there's no reason to think that the pharmacology is going to change depending on the setting.

Got it. Great. Thanks so much for taking my questions.

Thank you.

We have no further questions. Thank you. I turned the call back over to the presenters for closing remarks.

Well, thank you all for joining us on the call today. This year will be an important one for Axsome as we move closer to potential commercialization of our product candidates. We look forward to keeping you updated on our progress.

Thank you everyone. This will conclude today's conference call. You can now disconnect.