Axsome Therapeutics, Inc. Q2 FY2021 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, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. 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 on the Company's financial results for the Second Quarter of 2021 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 and the scope of future clinical trials, regulatory plans, future Research & 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. We caution you not to place undue reliance on these forward-looking statements which are only made as of today's date. 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; Dr. Kevin Laliberte, Executive Vice President, Product Strategy; Lori Englebert, Senior Vice President of Commercial and Business Development; and Dr. Amanda Jones, Senior Vice President for Clinical Development. Herriot will first provide an overview of the Company and then review recent developments and upcoming milestones. Following Herriot, Lori will provide a commercial update, and then Nick will review our financial results. We will then open the line for questions. Questions will be taken in the order they are received. And with that, I will turn the call over to Herriot.

Thank you, Mark. Good morning everyone, and thank you all for joining Axsome Therapeutics’ Second Quarter 2021 financial results and business update conference call. Since our last update, we continued to make significant strides toward becoming a premier CNS biopharmaceutical company focused on delivering potentially life-changing medicines to people living with serious CNS conditions. I will provide an update on our development pipeline before turning it to Lori, who will provide a commercial update. Starting with our first lead product candidate, AXS-05, which is undergoing an NDA review for the treatment of major depressive disorder with a PDUFA date of August 22, 2021. On July 30, we received a letter from the FDA stating that as part of their ongoing review of our NDA, they have identified deficiencies that preclude discussion of labeling at this time. The letter did not state what the deficiencies are. Immediately upon receipt of the letter, and continuing through today, we have been in communication with the FDA to attempt to learn the nature of these deficiencies so that we can address them. In response, the FDA has informed the Company that their review is ongoing and that they have no specific questions for the Company at this time. Although the letter stated that the notification does not reflect a final decision on the information under review, this development may lead to a delay in the potential approval of AXS-05. We will keep you informed as we learn more. This morning in a separate release, we announced positive topline results for the Phase 2 MERIT trial of AXS-05 in treatment-resistant depression. AXS-05 met the primary endpoint by substantially and statistically significantly delaying the time to relapse of depressive symptoms as compared to placebo with a p-value of 0.002. AXS-05 also met the key secondary endpoint by significantly preventing relapse of depression over at least six months, with relapse occurring in 36% of subjects receiving placebo, compared to zero subjects receiving AXS-05 with a p-value of 0.004. The robust results from this small trial add to the body of controlled data demonstrating the benefits of AXS-05 in depression. AXS-05 is also being developed for the treatment of Alzheimer's disease agitation. Enrollment in the Phase III ACCORD trial for the indication is progressing with study completion anticipated in the Fourth Quarter of 2022. Moving on to our second lead product candidate AXS-07, a multi-mechanistic acute treatment for migraine. The NDA for AXS-07 was filed at the end of the Second Quarter, and we expect to announce the FDA's decision regarding its acceptance of the filing this quarter. With two NDA filings, Axsome is approaching commercialization stage for these programs. Lori will provide some details on our pre-launch commercial activities to ensure successful launches assuming FDA approval. The rest of our differentiated late-stage pipeline continues to advance. Our AXS-12 product candidate for narcolepsy is on track for initiation of the planned Phase 3 trial this quarter. And we anticipate submitting an NDA for our AXS-14 product candidate for the management of fibromyalgia in the Fourth Quarter of 2022. I will now turn the call over to Lori who will provide a commercial update.

Thank you, Herriot. And good morning, everyone. This is an exciting time at Axsome as we continue to prepare to launch both AXS-05 in major depressive disorder and AXS-07 for the acute treatment of migraine. Today, I will give you an update on our commercial activities as it relates to launch readiness. The U.S. is in the middle of a mental health crisis, and the need for awareness and support for those suffering is apparent. Recently, we have witnessed an increased spotlight on mental health as celebrities and athletes are bringing awareness to the forefront for the many Americans who may be suffering. During the pandemic, prevalence of depression symptoms in U.S. adults has increased greater than fourfold versus 2019. One out of every three U.S. adults experienced depressive symptoms in 2020. Given the personal and economic burden associated with mental health conditions, there is an undeniable urgent need to bring support to those affected. If approved, AXS-05 would be an important new treatment option for the many Americans living with depression. We are prepared and ready to bring this meaningful innovation to patients by commercializing the product soon after a potential approval. If approval is received on our expected PDUFA date of August 22, we anticipate launch to occur within three months. Our commercial launch strategy is innovative and purposeful with the intent to bring meaningful new products to patients in an efficient and effective way. Our digital-centric commercialization, or DCC platform, is now fully implemented, and testing of the platform for execution at launch is well underway. As a reminder, we have designed our DCC platform to use streamlined systems and digital enablement tools combined with sophisticated data and analytics to allow for a more effective, efficient, and meaningful engagement with physicians and consumers. Importantly, our field leadership team is now fully staffed. I'm incredibly impressed by the caliber, experience, and talent that we have attracted and look forward to their leadership. Field Representative hiring has commenced with all offers being made contingent upon approval. We anticipate having all field representatives on board and trained by launch. The market access team continues to engage with payers in ongoing permitted discussions, ensuring awareness of Axsome, our pipeline, and the clinical profile of AXS-05. We look forward to engaging with payers immediately after approval. Our market access team is also actively setting up comprehensive patient support services to ensure that patients can easily receive product, if prescribed. It is important to note that although our launch readiness discussions are currently focused on AXS-05, we are also actively preparing for a potential subsequent launch of AXS-07 for the acute treatment of migraine, a debilitating disease that continues to have a tremendous unmet need and impacts an estimated 37 million U.S. adults. The differentiated clinical profiles for both AXS-05 and AXS-07 has the potential to bring significant benefit to patients and the physicians who treat them. We are excited about the opportunity to bring these meaningful products to market. I will now turn it over to Nick who will review our financials.

Thank you, Lori, and good morning, everyone. Today, I will discuss our Second Quarter 2021 results and provide some financial guidance. We ended the Second Quarter with approximately $141 million in cash compared to roughly $165 million in cash at the end of the First Quarter, a net decrease of approximately $23.5 million. R&D expenses were $14.5 million for the quarter ending June 30, 2021, versus $10.5 million for the comparable period in 2020. The increase was driven by costs to support the NDA filings and in personnel expense, which includes an increase in headcount along with an increase in non-cash stock compensation expense. During the Second Quarter, we received a refund from the FDA in the amount of $2.9 million which was paid in the First Quarter related to the PDUFA application fee for AXS-05 in MDD, as part of the FDA granting us a small business waiver. The current quarter included a $2.9 million charge related to the PDUFA application fee for the NDA submission for AXS-07 in the acute treatment of migraine. G&A expenses were $16.3 million for the quarter ending June 30, 2021 and $7.2 million for the comparable period in 2020. The increase was primarily due to pre-commercial activities and personnel expense, which includes an increase in headcount along with an increase in non-cash stock compensation expense. Net loss was $32.3 million or $0.86 per share for the quarter ended June 30, 2021, compared to a net loss of $18.3 million or $0.49 per share for the comparable period in 2020. As a reminder, we currently have a $225 million term loan facility, of which $175 million in funding remains available. This committed, non-dilutive capital gives us additional financial flexibility through both anticipated potential commercial launches for AXS-05 and AXS-07. We believe our current cash position of $141 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 into at least 2024. That concludes our Second Quarter 2021 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?

Certainly, sir. At this time we would like to take any questions you might have for us today. The operator provided instructions for asking questions. Our first question comes from Charles Duncan from Cantor Fitzgerald.

Good morning, folks. Herriot and team, thanks for taking the question, and congratulations on the MERIT trial results. However, the first question that I have is regarding AXS-05 in MDD. I know you're not going to be able to be all that definitive, but I'm wondering if you can speculate at all as to the nature of the questions that are being contemplated by the agency? Was there a full buy-in in terms of the trial designs that supported this NDA?

Good morning, Charles and thank you for the questions. So with regards to the deficiencies, we just want to reiterate that we do not know what the deficiencies are. So, the letter did not state what the deficiencies are or even what discipline they pertain to. As a reminder, we did receive priority review for this application. This was a very large submission and package. To what extent that has an impact on the current situation, it's hard to say, but up until now, the review has been going on track from our perspective. We believe that we've responded adequately to all of the questions during the review period. And importantly, we have not been made aware of any deficiencies in the application up to this point. Since we've learned of the existence of these deficiencies through the letter, we have made attempts to learn what the deficiencies are; and up to this point, we still don't know. And as soon as we find out, we will let you know.

Okay. And then with regard to the manufacturing inspections that occurred during the review, were there any observations noted, specifically 483 observations?

So Charles, we haven't commented on the specifics of the inspections. And so to this day, we've not been aware of any 483s in connection with any of our inspections.

Okay. Okay. And then if I could ask one question on the MERIT trial, very intrigued with the TRD results. As you know, there's a lot of work being done by psychedelic-oriented companies to generate efficacy in TRD. And I guess I'm wondering as you think about the unmet need there, which of the two endpoints are most important to you, the time to relapse or call it responder rate over 6 months, say 36% control, having response or having relapse versus 0% in the drug arm? When you talk to KOLs, what do they focus on?

Thanks for that question, Charles, on MERIT. The way our study was designed, we looked at time to relapse as the primary endpoint. This is a standard endpoint for relapse prevention trials. We also looked at prevention of relapse as a key secondary endpoint, and that is a very important measure. It is one thing for a drug to delay relapse of depressive symptoms, but it is a higher bar to actually prevent relapse altogether. I think both endpoints are relevant to clinicians, but preventing relapse, if possible, is especially important and something clinicians would focus on. As the results show in the MERIT trial, over at least six months of treatment — the minimum — and in some patients out to a year, no relapses were observed.

Okay. Very good, last question for Lori, sales contingent offers. Can you share with us the number of them that you have out, and importantly, the timelines, how long do those offers last? I assume they're contingent on approval as I think you mentioned.

Hey, Charles. They are being made contingent upon approval, and we're still not revealing the size of the sales force. So, I don't want to give you that estimate just yet. We are well on our way of ensuring that we will have everyone on board by launch if we stay on the current timelines.

Okay. Thanks for taking the questions.

Thank you. Our next question comes from Marc Goodman with SVB Leerink. Your line is open.

Yes, good morning. Herriot, can you kind of help us understand how you're thinking about what the FDA is asking for you? So, maybe take us back to your meetings with FDA, your pre-NDA meeting, pre-filing, anything that's gone along in the process. What did the FDA say was needed here in the filing, and just talk about whether you feel like you've checked those boxes and maybe you can give us a little bit more detail. In the previous question, you talked a little bit about CMC. So, is it your understanding that CMC is completely done, like everything was stability, everything like, there were no issues there? I mean, we're just trying to understand here what happened. Obviously, you are too, and that we are just not going to find out until you have a meeting with them and you've requested — you've requested a meeting, I assume or I guess you have to wait until the PDUFA date, maybe to give us a little more color there? Thanks.

Thank you Marc for the questions. So I just want to reiterate that we have not been made aware of what the deficiencies are. With regards to the process up to this point, the process has been going very smoothly. As a reminder, this is a breakthrough therapy-designated product, so we felt that we've gotten very close feedback from the agency, every step along the way including our pre-NDA meeting. And as a reminder, the filing was accepted and not only was it accepted, but it was granted priority review. So, that would be an indication that all of the boxes have been checked. With regards to CMC, all the CMC work was complete per the agreements prior to filing the application. And during the review, we've answered all questions adequately and we feel that process has been going smoothly. And in terms of requesting a meeting with the agency, as you can imagine, upon receiving the letter, we've made attempts to learn what the nature of the deficiencies are, including requesting a meeting. Now, there's still time on the PDUFA clock. Admittedly, it's — the time is dwindling. However, as soon as we learn of what the deficiencies are or of any additional details, you'll be the first to know.

Just talk about the manufacturing plants. Have they been inspected completely, like, everything as far as you're concerned is — that box is checked, I mean, this is probably not a manufacturing issue.

So Mark can provide you some more details on that. But as a reminder, the product is being manufactured at a commercial blue-chip CMO that regularly gets inspected.

Hey, Marc, good morning. So just a reminder, the drug substances are available under open DMF here in the U.S. and from sources that we are comfortable with — that we have ourselves audited and inspected. That's the drug substance. In terms of drug product, as Herriot mentioned, that is a major CDMO that makes multiple commercial products, and has numerous facilities and the facility that we use is in North America. We have also done our inspections prior to engagement. And as Herriot mentioned earlier, that facility is regularly inspected by FDA and we have not, as mentioned earlier with any of our inspections, been made aware of any issues that may preclude or may lead to a development like this.

I mean, I know this might just be a basic question because you were accepted, but you have the appropriate numbers of patients for safety, you've got two positive studies and the FDA basically said unequivocally, you had two studies. Like I'm just trying to understand where the problem is. Obviously, you are too, and as soon as we are made aware of exactly what the deficiencies are, we'll communicate them to you.

Thank you. Our next question is from Vamil Divan with Mizuho, your line is open.

Great, thanks for taking my question. Maybe one more just on this deficiencies letter — we've seen a few of these now in the last few months from other companies as well. So just trying to get a sense, I think we only saw it a few months ago with another company; some thought that maybe because of COVID and the FDA being strapped and your project manager is kind of coming in and out of the review process. That may have played a role. Again, I think that was also sort of speculation, but just I'm curious if there's anything during your review process or maybe there were changes to personnel, or different project managers along the way, and maybe that's led now to this deficiency notice very late in the process. And then my second question just separately with the TRD data. Just curious, again. I think, as you've described it before, is ultimately you're not expecting anything around TRD in the label or an indication. And as we more versus for medical education purposes, can you just remind me if I am thinking of that correctly? Or do you think that ultimately you will be able to try and get a TRD indication as well? Thanks.

We'll take those two questions in reverse order with regards to the MERIT study and TRD, our current focus is ensuring approval and launch of AXS-05 in MDD. So we are very excited by the results of the MERIT trial; this is an additional source of data. Obviously we will be thinking about what those results mean for any kind of future plans. But currently our focus is to ensure approval in MDD and launch of AXS-05. With regards to changes at the FDA during the review process, we do recognize as you do also, that the agency has been definitely stressed resource-wise as a result of the COVID pandemic. With regards to our particular application, there's nothing that we can point to specifically. But we do know that globally overall that the FDA is like every other organization dealing with the COVID pandemic and so there has been resource strain that comes from that.

Thank you. Our next question is from Vikram Purohit with Morgan Stanley. Your line is open.

Great. Good morning. Thanks for taking our questions. Just two for my side. So just to clarify, assuming things progress with the AXS-05 NDA and some clarity does become available in the near-term, what exactly is the plan for incorporating data from the MERIT study towards your commercial efforts and if there is one? And secondly, just going back to the deficiency letter, I think the press release mentioned some language around post-marketing commitments. Was there any additional color available on that topic from the FDA about that specific area of the NDA?

So with regards to the part of the language that we put in the press release around post-marketing commitments, that's identical language from the letter. So we wanted to just provide it to you as we got it. There are no specifics identified there with regards to specifics. With regards to MERIT, we have made the agency aware, as you can imagine, of the results. The study was unblinded over the weekend. And so, it is clearly relevant to depression as an indication in general, so MDD. Our focus is, of course, the indication that we filed for which is MDD, and not TRD. I'll turn it over to Lori to discuss how the study might impact commercialization.

The data, given that this was a Phase II, we'll reuse the supplemental data in our conversations. The data are very relevant to patients that physicians are having a difficult time treating and that only provides further validation to the body of work that AXS-05 has. I do believe that the durability that is expressed in this patient population from the study will be highly relevant to physicians as well.

And then a quick follow-up. Understanding that this is relatively new news for you as well. But do you have any current thoughts on how the deficiency letter impacts your plans for the AXS-05 outside of MDD, whether that's with the NDA program or meeting that you were supposed to have on smoking cessation with the FDA later this quarter?

We don't believe that it has any impact on the other indications.

Okay. Understood. Thank you.

Thank you. Our next question is from Ram Selvaraju from H.C. Wainwright. Your line is open.

Thanks very much for taking my questions. Again, not to beat a dead horse, I wanted to ask whether you had had any feedback from the FDA as to whether the letters that they sent were in any way related to any citizen petition they may have received regarding AXS-05?

We have not been made aware of any details related to the deficiencies. We don't know what they are or what is behind them or what the cause is. As soon as we learn that information, we'll let you know.

Okay. And then as a follow-up to that, do you think you will be able to arrange a meeting with the FDA or obtain more clarity regarding these deficiencies before the scheduled PDUFA date or do you anticipate that this is likely to only be scheduled around the PDUFA date?

It's hard for us to speculate. As you can imagine, our goal right now with time still on the PDUFA clock is to learn the nature of the deficiencies as quickly as possible, and with the goal of addressing them. Whether or not we're given that information, or granted requested meetings is not within our control, but that is something that obviously we're trying to do, and we'll let you know as soon as we get any information or as soon as there are any other developments.

Okay. And just to clarify what the potential scenarios might be. One scenario is that the drug actually gets approved by the PDUFA date and other scenario is that the PDUFA date is extended by some period of time, yet to be determined. And yet a third scenario is that there is a complete response letter and then you would have to go through the resubmission process. Is that correct?

Those are the possibilities.

Okay. And then just very quickly on the MERIT study, I just wanted to know if you had some more detailed thoughts on the prevention of relapse over the six month time frame that was reported, how significant this finding is, and how differentiated this could make AXS-05 within the TRD context?

We think it's a very important finding. A lot of companies in relapse prevention studies do not actually have prevention of relapse as one of the endpoints because a drug may work in delaying relapse, but it's another thing to actually prevent relapse. So that is a higher bar. We think it is very relevant as Lori mentioned. It also speaks to the durability of activity of the drug. As a reminder, patients prior to enrollment into MERIT had been on drugs, some of them for as long as 12 months. Then they were randomly discontinued. So they either remained on AXS-05 or they discontinued AXS-05 for another 6 to 9 months, at least. So that's a very long period of time to demonstrate durability of the product, so the fact that none of the patients relapsed is significant.

Thank you. Our next question is from Joseph Thome with Cowen and Company. Your line is now open.

Hi there. Good morning. And thank you for taking our questions. Just a little point of clarification, based on the timing of the notification from the FDA. Have you submitted any additional information to them? I think Herriot maybe you mentioned you provided sort of the topline results of MERIT; is that correct? And maybe how long would it take to scrub the data to give it to them in maybe a more thorough fashion, if that's necessary? And then the second point, is AXS-07 manufactured in the same facility as AXS-05?

So I'll take the first question and then I'll let Mark answer the second question. With regards to MERIT data, as I mentioned, we received the data over the weekend. We have made the agency aware of the topline results from the study. If they request to see additional data, we are prepared to provide it to them.

So Joe, it's Mark. For the manufacturing process for AXS-07, that actually is a bit more complicated and there are two facilities that we utilized for the manufacture of the drug product. The APIs are also available under open DMF in the U.S. Of the two facilities that we used for drug product manufacturing, one of them is the same that we used for AXS-05.

Okay. Great. Thank you. And maybe just one more on the MERIT data that has been telling result in the patients that were switched to placebo that did relapse. How quickly would we be seeing relapse, was it relatively rapid or was it towards the end of the six-month follow-up period? Any initial color on that would be helpful.

We will be presenting the full results at a medical conference, so we look forward to providing you all of the data there, including the relapse curves, which will provide some of that information.

Thank you. Our next question is from Joon Lee with Truist Securities, your line is open.

Hi, thanks for taking our questions. So at this point, given the PDUFA is just a couple of weeks away. Do you think the most likely outcome is a CRL? And is that when you would find out what the deficiencies are? Just curious what you think is the most likely outcome? And then another question on CMO, is there a strategic reason for not disclosing who the CMO is? We've seen companies who disclose the CMO and others who choose not to disclose who the CMO is. So wondering if that's based on any strategic or competitive advantage of not disclosing versus disclosing who the CMO is. Thank you.

As mentioned earlier, there are a couple of different potential actions that could occur between now and the PDUFA date. We still have time, two weeks remaining until PDUFA. There is a possibility that approval is possible and labeling can proceed. There is also the possibility that the PDUFA date is extended if, for example, the MERIT data is relevant for their review. And then the third option, as mentioned, is a complete response letter. Based on what we know today, which is we don't know what the deficiencies are, those are the options that are available for the agency at this point.

Maybe a quick follow-up. Are there any obligations by the FDA regarding the level of disclosure and interaction with the sponsor companies, in terms of communicating what those deficiencies are and best to facilitate the resolution of those deficiencies? I know the times are very tight, given PDUFA is only two weeks away. But just curious what you or the FDA could hope to achieve in that two-week period?

We can't comment on any kind of internal guidelines that the agency has but we certainly are trying to learn what the deficiencies are and it's not curiosity on our part. It's with a goal of addressing them.

Thank you.

Thank you. Our next question is from Yatin Suneja with Guggenheim Partners. Your line is open.

Hey guys. Couple questions from me, just clarifying. So I think it is our understanding that FDA doesn't engage with a sponsor after such a letter is issued because of the legal implication, but it seems like you are implying that you have reached out to them and there might be some engagement. So can you clarify? Did you hear anything from the FDA since that letter has been received?

Hi Yatin. What we've shared with you is that clearly, since we've gotten the letter, we've reached out to the agency to try and learn what the deficiencies are. In response, the agency has informed us that the review is still ongoing, that no final decision has been made on the review. We obviously still want to know what the deficiencies are so that we can address them, and once we know, we'll let you know.

Okay. And then the other question is with regard to the launch, like the timeline you said, if approved pretty much a month after that you will be ready; what's the gating factor?

So, given that this is our first launch of the Company, there are just general administrative hurdles that we have to clear prior to being able to distribute the product. And so that's the only reason for the delay.

Okay. And could you give any update on the narcolepsy study that's ongoing, and then the agitation study, what the status is in terms of enrollment? Thank you.

With regards to the narcolepsy program, we are on track to initiate a Phase III trial with that program this quarter. With regards to the Alzheimer's disease agitation trial, enrollment there is going as planned. We are nearing 20% enrollment which puts us on track to complete the study as previously guided in the fourth quarter of 2022.

Thank you. Our next question is from Ashwani Verma with Bank of America. Your line is open.

Hi, thanks for taking our questions. Just one on AXS-05. I see here in the language in the PVR, I think it says preclude discussion of labeling and post-marketing requirements. Are there any other topics that are not precluded? That's my first one. And then the second is on the fibromyalgia program. I think you mentioned that it's going to be filed in 4Q '22. There's some pending manufacturing and other activities. Can you elaborate on that a little bit? Thanks.

Thanks Ash for the questions. With regards to the first question around other topics that may be precluded, the letter specifically references labeling and post-marketing commitments, that's all it said. So it's hard to interpret it fully without first getting additional details from the agency but what we've put in the release is the exact language from the letter. With regards to fibromyalgia, this is a new chemical entity and we need to ensure that we have manufacturing in place for both the API and the drug product at the scale required for a filing and potential launch. Kevin can provide additional details.

Yeah. We need to establish and start to establish our own facilities for the production of both the API and drug product and of course, the rate limiter is typically collection of stability data that would support the expiration dating for the product as we file an application. So a lot of it is just waiting for stability data to be accrued before we can file that application.

All right. Okay. Thank you.

Thank you. Our next question is from Chris Howerton with Jefferies. Your line is open.

Great. Good morning. Thank you for taking the questions. I think we've had a healthy discussion on the deficiency letter. So maybe I'll just ask about narcolepsy. I think you're saying that we're going to have a Phase III study soon; I guess the question is, how do you see the positioning of AXS-12 in the setting? I think that there's been some questions as to the significance of cataplexy, and the breakthrough designation that was taken back, I guess as a result of another product achieving that label, so I guess how do you see AXS-12 positioning in narcolepsy first of all. And then the second question is with respect to the Phase III design, are there any features within that program that you're anticipating that can highlight some of those differentiations? Thank you.

In terms of the positioning of AXS-12 in narcolepsy, it's important to remember that this is still an area of high unmet medical need. Even with another product having a label for cataplexy, there are still only two products that are approved to treat cataplexy, the other being the oxybate salts. So it's still an area of high unmet medical need where many products are scheduled and most patients are not adequately treated. For AXS-12, the product profile showed profound effects on cataplexy which were rapid in onset, and it also rapidly impacted excessive daytime sleepiness. So not only does it address those two key symptoms of narcolepsy, but it also has speed of onset. Another important point of differentiation is that we showed an improvement in cognition, which is a symptom complex important to patients with narcolepsy and is not targeted by other products. In our Phase 2 CONCERT trial, we did show a rapid and highly statistically significant improvement in the ability to concentrate. All of those endpoints would be studied in our Phase 3 program and we look forward to starting that trial in short order.

Okay. That's great. Thank you very much.

Thank you. The next question is from Matt Kaplan with Ladenburg Thalmann. Your line is open.

Good morning and thanks for taking the questions. Just wanted to talk a little bit about the deficiency letter. I guess, beyond the pivotal studies and long term safety studies, can you talk a little bit about the ancillary studies that were part of the NDA, did you have to complete likeability studies or any drug-drug interaction studies where those part of your package as well?

We did not have to complete palatability or likeability studies. Drug-drug interaction studies were definitely part of the package. The package included a full array of clinical pharmacology studies. The drug-drug interaction studies would fall into that. So it was a very full, complete package.

Okay. Thanks. And then congrats on the MERIT study results. Can you talk a little bit about how the durability that you saw up to six months compares to some other available treatments for TRD or MDD in general, in terms of durability that you saw?

It is hard to make cross-trial comparisons but we are very excited by the durability. This is not new; we did show durability that was very impressive in the COMET trial, where patients were treated for up to 12 months. So not only was there a rapid reduction in depressive symptoms, but it was maintained out to 12 months of treatment. So this is not new information and what's new is that even beyond that, in MERIT patients were still stable and did not relapse for an additional period out to at least 6 months and in some cases 9 months. This was in a randomized fashion which lends credibility to the data since it is controlled data.

Thank you. Our next question is from Myles Minter with William Blair. Your line is open.

Hey guys, thanks for taking the questions. I'm just wondering in any of your previous interactions with the agency on the product filing whether they made mention of requiring efficacy demonstration across a broad range of depression patients and not just a subset, but ended up in ASCEND and GEMINI. Just asking that off the back of another company's CRL where the agency seems to want efficacy across multiple dementia subsets in that case. And secondly, if that did come up as a deficiency and now we're kind of pointing towards STRIDE-1 being technically negative, could you actually use the target sub-study that you recently presented as a response to that deficiency if it showed up?

The answer is that has not come up in prior discussions with the agency. It's hard for us to speculate since we don't know what the deficiencies are.

And then maybe just on the duration of the drug run-in period that was up to 12 months in MERIT. Was that similar to what we saw in STRIDE-1 or is that detail that you're going to be presenting at a later medical conference?

When we looked at the COMET data, that study included patients not only who had TRD but also patients with other prior lines of treatment. The patients with TRD who were in stable remission were the ones randomized into MERIT. We'll perform the calculations to provide the exact comparison and we would anticipate providing that information when the data are fully presented.

Thank you. We have our last question from the line of David Hoang. Your line is open.

Hey, good morning. Thank you for fitting me in. So just a couple of quick questions. Again, I realize this is going to be a little bit speculation here, but in the event you were to receive a CRL, can you just talk a little bit about sort of what the next steps would be there? Would you look to schedule a meeting? And do you think there's anything in the MERIT study that you could potentially bring forth as supportive of the application?

With regards to next steps after a CRL, that is typically requesting a Type A meeting. In that eventuality, that is exactly what we would do and we would do it as quickly as possible. With regards to the usefulness of MERIT under any scenario, it's very difficult to speculate since we do not know what the deficiencies are.

Got it. Understood. And then just one on AXS-14 for fibromyalgia. Maybe just remind us but if I understand correctly the molecule originally originated with Pfizer development for some time. So just curious as to why Pfizer never proceeded with filing for approval and whether they ever saw an approval for the drug in fibromyalgia?

What we can tell you is that it was a decision made as part of a portfolio decision at Pfizer. That was disclosed by Pfizer, but we can tell you that it had nothing to do with the efficacy of the product or the safety of the product. Importantly, that portfolio decision was made before the readout of the positive Phase III trials.

Okay. Really helpful. Thank you for taking the questions.

Thank you. Since there are no more questions, I will turn the call back to Axsome's CEO for any concluding remarks.

Well, thank you all for joining us on the call today. We remain committed as always to advancing our portfolio of differentiated product candidates for the benefit of patients living with CNS disorders. We will keep you updated on the progress of our NDA for AXS-05 as we learn more, as well as on the rest of the pipeline. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect. Have a great day.