Good morning, and welcome to the Axsome Therapeutics Conference Call. Currently, all participants are in 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 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. This morning, we issued our earnings press release providing a corporate update and details of the company's financial results for the full year and the fourth quarter of 2022. The release 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 source of future clinical trials, regulatory plans, future research and development plans, our commercial plans regarding Sunosi, Auvelity and our pipeline products, revenue projections 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 only made 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, Executive Vice President of Commercial and Business Development. Herriot will first provide an overview of the company, and then review progress made during 2022 and the fourth quarter as well as upcoming milestones. Following Herriot, Nick will review our financial results, and then, Lori will provide a commercial update, including details on the first quarter of Auvelity, sales and our second quarter with Sunosi. We'll then open the line for questions. Questions will be taken in order they are received. And with that, I will turn the call over to Herriot.

Well, thank you, Mark. Good morning, everyone, and thank you all for joining Axsome Therapeutics year-end and fourth quarter 2022 financial results and business update conference call. 2022 was a transformative year for Axsome as we successfully transitioned to two commercial stage and delivered on our goal to become a leading CNS-focused biopharmaceutical company. Now with two differentiated products, Auvelity and Sunosi commercialized, encouraging early launch metrics of Auvelity abroad and advancing our late-stage pipeline, and a strong financial position, Axsome is well positioned to continue to deliver significant value to patients and shareholders. The fourth quarter was an important milestone for Axsome as it is the first quarter with sales for both Auvelity and Sunosi. Total net product sales in the quarter were strong at $24.4 million. Later, Nick and Lori will provide further details on our financial and commercial performance. To improve these updates, I'd like to start by talking about the topic that brings us all here, which is making a difference for patients. In just more than a quarter, Auvelity has already been prescribed to thousands of patients and we have seen repeat prescribing by healthcare professionals and refills by patients. Lori will provide additional perspective later. But these observations suggest that the unique mechanistic and clinical profile of Auvelity is having a positive impact on the treatment landscape for major depressive disorder and making a meaningful difference in the lives of MDD patients. Furthermore, with just half a year of Sunosi sales that will be excellent efforts, we've seen steady growth both in the U.S. and overseas. We view the potential for Sunosi in its current indication as largely untapped, leading to significant potential for future growth. Just last week, we announced an important licensing deal for Sunosi, providing our lead partner Pharmanovia with commercial rights to Sunosi in Europe and certain countries in the Middle East and North Africa. Pharmanovia shares our excitement and commitment to maximizing the potential of Sunosi for patients worldwide. Our strong commercial platform is well suited to expand the availability of this important treatment in the licensed region. In addition to our clinical progress, our broad late-stage CNS pipeline continues to advance, positioning us to drive further significant value creation in 2023 and beyond. Our leading CNS pipeline includes AXS-07 for migraine, AXS-05 for Alzheimer's disease agitation and smoking cessation, AXS-12 for narcolepsy, and AXS-14 for fibromyalgia, along with solriamfetol for ADHD. In the fourth quarter and subsequently, we made significant progress in our Alzheimer’s disease agitation program, AXS-05, including the announcement of positive top line results for the ACCORD trial, advancements in the ADVANCE-2 trial, and obtaining FDA feedback on our development plan for AXS-05 in smoking cessation. With regards to ADVANCE-2, our parallel group trial, based on recent enrollment trends, we now anticipate completion of this trial in the first half of 2024 versus our prior guidance of mid-2025. Given all the progress in our Alzheimer’s disease agitation program, we recently received feedback from the FDA. The FDA requested the generation of additional safety experiences with AXS-05 in this elderly population, including placebo-controlled safety information from the ongoing ADVANCE-2 trial, as well as long-term safety data in the target patient population consistent with ICH E1 guidelines. Based on this feedback, the company intends to submit an NDA for AXS-05 after completion of the ongoing ADVANCE-2 trial and the open label safety extension trial. In parallel, we expect to initiate a Phase 2/3 trial of AXS-05 in smoking cessation in the fourth quarter of 2023. Regarding AXS-07 for the acute treatment of migraine, manufacturing activities related to the planned resubmission of the NDA for this product candidate are ongoing, and we expect the resubmission to occur in the second half of this year. For AXS-12, our product candidate for the treatment of narcolepsy, enrollment in the pivotal Phase 3 SYMPHONY trial is progressing, and top line results are expected in the first half of 2023. As a reminder, AXS-12 has been granted Orphan Drug designation by the FDA for the treatment of narcolepsy. Our AXS-14 product candidate for fibromyalgia is also progressing with manufacturing and activities related to the preparation of the planned NDA submission ongoing, and we expect to submit the NDA for this product candidate in 2023. With regard to Solriamfetol, or Sunosi, for the treatment of ADHD, we are preparing to initiate a Phase 3 trial in this indication in the first half of 2023. In the fourth quarter, we also shared positive top line results from the SHARP trial, demonstrating improvements in cognitive function with solriamfetol treatment and highlighted new mechanistic data. These results further highlight the clinical potential and differentiated pharmacology of this molecule. As you can see, the Axsome team is busy and continues to be excited as we prepare to deliver ongoing commercial success and potentially hit on multiple pipeline milestones, including clinical trial readouts and initiations, NDA filings in the next 12 to 18 months. I will now turn the call over to Nick, who will review our financial results.

Thank you, Herriot, and good morning, everyone. Today, I'll discuss our fourth quarter and full year results and provide some financial guidance. Total revenue in the fourth quarter of '22 was $24.4 million, consisting of net sales from our two commercialized products, Auvelity and Sunosi. There were no net sales in the comparable prior period. Auvelity was launched in the fourth quarter on October 19, and for the partial quarter, it generated net sales of $5.2 million. Sunosi generated total net sales to Axsome of $19.2 million in the fourth quarter, consisting of U.S. net sales of $18.3 million and international net sales of $900,000. Because the ex-U.S. acquisition of Sunosi closed on November 14, the reported international net sales reflect the first quarter. Total revenue for the full year of 2022 was $50 million. Again, there were no reported sales for the prior year because the acquisition of Sunosi and the launch of Auvelity both occurred in 2022. For the full year of 2022, Auvelity net sales were $5.2 million. For the full year 2022, Sunosi generated total net sales to Axsome of $44.8 million, consisting of U.S. net sales of $43.9 million and international net sales of $900,000. As a reminder, the U.S. portion of the acquisition of Sunosi was completed on May 9. Cost of product sales were $2.3 million and $5.2 million for the fourth quarter and full year of 2022, respectively, compared to none in the prior year. Research and development expenses were $14.7 million and $57.9 million for the fourth quarter and full year 2022, respectively, and $13.8 million and $58.1 million for the comparable period in 2021. The increase for the fourth quarter was primarily related to higher costs associated with ongoing clinical trials, including post-marketing commitments for Sunosi and Auvelity. Selling, general and administrative expenses were $61.5 million and $159.3 million for the fourth quarter and full year of 2022, respectively, and $18.8 million and $66.6 million for the comparable period in 2021. The increases for the fourth quarter and full year were primarily related to commercial activities for Sunosi and Auvelity, including sales force onboarding, marketing spend, as well as higher non-cash stock compensation expenses. Net loss for the fourth quarter of 2022 was $61.2 million or $1.41 per share compared to a net loss of $34 million or $0.90 per share for the comparable period in 2021. The net loss for the fourth quarter included $10.8 million of non-cash stock compensation expense compared to $5.9 million in the comparable period in 2021. The net loss was $187.1 million or $4.60 per share for the full year of 2022 compared to a net loss of $130.4 million or $3.47 per share for the comparable period in 2021. The net loss for the full year of 2022 included $37.7 million of non-cash stock compensation expense compared to $20.8 million for the full year of 2021. We ended the year with $201 million in cash and equivalents compared to $86.5 million as of December 31, 2021. During the fourth quarter, we did not utilize our capital facility. In January of 2023, we amended our loan agreement with Hercules Capital to increase the size of the facility to $350 million to reduce the interest rate and to extend the maturity and interest-only periods while accessing a $55 million tranche. Additionally, in February of 2023, the company received approximately $66 million from the out-licensing of ex-U.S. Sunosi rights. Inclusive of these events, our pro forma year-end cash balance now exceeds $300 million. We believe that our current cash balance, along with remaining committed capital from the $350 million term loan facility with Hercules Capital, is sufficient to fund anticipated operations into cash flow positivity based on our current operating plan. I will now turn the call over to Lori, who will provide a commercial update.

Thank you, Nick. Q4 was certainly an exciting quarter for Axsome with the launch of Auvelity and the continued relaunch of Sunosi. Both of our commercial products address serious, highly prevalent conditions and bring meaningful innovation to millions of potential patients. We are pleased with our commercial progress on Sunosi. And although it is still early days, we are encouraged by Auvelity's launch progress. I will share our key metrics from our commercial efforts for both brands, starting with Sunosi followed by Auvelity. As a reminder, Sunosi is the first and only DNRI for excessive daytime sleepiness from obstructive sleep apnea and narcolepsy and the first and only wake-promoting agent proven to improve wakefulness for up to 9 hours. In the fourth quarter, total prescriptions for Sunosi in the U.S. grew 11% year-over-year and 1% quarter-over-quarter. For the full year 2022, U.S. federal Sunosi prescriptions showed strong growth with a 21% increase versus 2021. The total prescription split by the diagnosed patient population for Sunosi is 70% for EDS due to OSA and 30% for EDS due to narcolepsy. Payer coverage for Sunosi remains broad with 96% of commercial lives and 83% of total lives covered. The growth potential for Sunosi in the currently approved indication remains substantial. Sunosi currently has only a 2% share of drug-treated OSA patients and a 7% share in drug-treated narcolepsy patients. Sunosi is the only branded therapy available for patients who suffer from EDS and OSA and we expect increased and enhanced promotional and disease education efforts to drive market share growth for the product in 2023 in the U.S. With the recently announced licensing of ex-U.S. marketing rights for Sunosi to Pharmanovia, we are well positioned to increase the availability of this important treatment to patients worldwide. Turning to Auvelity, we launched Auvelity on October 19 and despite launching in Q4, a traditionally challenging quarter due to multiple holidays, we saw early signs of encouraging uptake with our initial HCP adopters. With only a limited promotion in Q4, 2,200 unique HCPs wrote prescriptions for over 6,000 new patients. Those metrics have grown to 4,300 unique HCP writers and over 13,700 new patients since launch. Importantly, HCPs who have prescribed Auvelity are gaining critical early clinical experience and are reporting promising patient responses that are consistent with what we saw in clinical trials, with many reporting rapid onset of action and rapid achievement of remission. Regarding payer coverage, the commercial channel is expected to be the primary channel for Auvelity as it accounts for more than 60% of antidepressant prescriptions. Interactions with commercial payers as they relate to Auvelity have been active and productive. Effective January 2023, we contracted with one of the largest group purchasing organizations for potential coverage of Auvelity. As a result, pharmacy benefit managers and health plans under this GPO will now be able to make formulary coverage decisions for Auvelity based on the contracted terms. These interactions with commercial payers are proceeding as expected during the standard six to nine month period post-launch when new drugs are blocked while coverage decisions are being made. In the non-commercial channel, Medicaid coverage became effective in 49 states on January 1, and Medicare plans have up to six months post-launch to determine coverage and add Auvelity to their formularies. We expect additional formulary decisions over the next six months. I look forward to discussing more as the payer process progresses. We are extremely encouraged by the initial launch progress and remain committed to our launch focus of driving fast HCP adoption, empowering patients and enabling quality access. We are all aware that there is a mental health crisis happening in the U.S. and major depressive disorder is a significant public health concern with 21 million U.S. adults diagnosed in 2020, with a reported significant increase in prevalence as a result of the pandemic. Auvelity is an important new therapeutic option for patients living with this debilitating condition, and we are proud of our efforts to make Auvelity available to patients and their physicians. I will now turn the call back to Mark to lead the Q&A discussion.

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

Yes. Thank you. Our first question is from Charles Duncan with Cantor Fitzgerald. Please proceed with your question.

Yes. Hey. Good morning. Thanks, Herriot, and team for that great overview, and congrats on the good quarter. I had a couple of questions on Auvelity, one is commercial, one is more development. And that is regarding the commercial question, I'm just kind of wondering, I think what Lori just said addresses this question, but I'm wondering if she could drill down on any feedback she's getting from the market in terms of response rates and even persistence, and I know it's too long or too early to know real persistence, but what are prescribers seeing in their patients with regard to comparison in patients who are experienced with SSRI-based therapy? Thanks.

Yeah. Hi, Charles. Thanks for taking the question, and good morning. So again, you're right, it is very early days for us and most of that, what we're receiving back from the field is purely anecdotal. So I hope you take that for what it's worth. What we are hearing anecdotally is that patients are responding very consistently with the label. So that rapid onset of action is happening. They are seeing very early achievement of remission. Again, it's a little too early to talk about persistence with Auvelity because we're just a few months into launch, but we've not seen anything that would suggest it will be different from what we see in the label or what we saw in the clinical trials.

Yeah. And maybe to add to that, I think one of the things that we are seeing is repeat prescriptions, so patients are receiving prescriptions, which suggests persistence.

Exactly. And just to give you some additional color there, last week's reported data showed that about 50% of growth was from repeat prescriptions.

Okay. That's great to hear. Regarding TAM expansion efforts for AXS-05 in Alzheimer's agitation, Herriot, you mentioned some feedback from the FDA. I wasn't completely clear on that in terms of timing. I think that you mentioned possibly completing the trial in '24 versus prior '25; if you could provide more color on that? And then explicitly, you thought an NDA would happen after ADVANCE-2, but then also after an open-label extension study. So could you give us a sense of timing on when an NDA could be filed?

Yeah. Thanks for the follow-up question, Charles. With regards to Alzheimer’s Disease Agitation from the ADVANCE-2 trial, you're correct. Based on the fact that enrollment is going to be faster than we had expected, we now expect that study to read out in the first half of 2024. The open-label extension trial has been ongoing, and we would also expect that to read out in 2024. Regarding NDA filing, we would be in a position to file within six months after we read out our clinical results.

Okay. That’s helpful. Thanks for taking my questions. Congrats on a good quarter.

Thanks, Charles.

Our next question comes from the line of Marc Goodman with SVB. Please proceed with your questions.

Herriot, just to continue on this agitation study. Can you confirm your discussions with the FDA? Have they signed off on both studies from an efficacy standpoint, and all we're waiting for now is the safety data? Can you just confirm that? And second question is, if you all can help us with how to think about gross to nets for both products for this year? Thank you.

Thanks for the question, Marc. With regards to the interactions with the FDA, we received feedback on the trials. The feedback that we got from the agency is that, in the elderly patient population, safety is really important, not just long-term safety data, but also the safety profile. The ACCORD trial was a randomized withdrawal study and therefore it does not provide the randomized safety data, which is really important in this patient population. Importantly, the FDA highlighted that the safety database must comply with ICH E1 guidelines. So we're in a position to provide all of those necessary data points for the NDA. We do have the ADVANCE-1 trial underway, which is enrolling, and so we're positioned well to provide the safety data needed for the NDA filing.

Herriot, if ADVANCE-2 fails from an efficacy standpoint then what?

Well, that would be speculation. But we are encouraged that we currently have two positive trials in this indication.

Right. That's my question. Did the FDA agree that you have two positive trials?

The FDA never agrees to anything until you file an NDA and they review it. However, it's clear that we do have two positive trials, and we're very encouraged by that. We’re on track to provide the necessary safety information for an NDA filing.

Okay. And then the gross to nets for both products for this year, how do we think about that?

Yeah, sure. Hey, Marc. It's Nick. For gross to net sales for the quarter for Auvelity, gross net for the quarter was in the 60s. As of right now, we're not currently in a position to provide specific guidance around GTN. However, there's no reason to expect that's actually going to improve from this quarter and then obviously, could potentially worsen based on Q1 typically having seasonal headwinds like planned coverage resetting in the year. This includes deductibles, co-insurance, prior authorizations, and possibly needing to be recreated for some plans. So we would expect in Q1 and Q2 not to see anything better than where we are today and potentially it could worsen. Specifically around Sunosi, we were in the low 50s for GTN. Again, for this quarter, we did have a favorable adjustment from the prior quarters of $1.8 million. The GTN adjustment as we received updated claims, which is typical to receive in this quarter. Otherwise, for Sunosi, it's pretty much been stable in the low 50s.

Thank you.

You’re welcome.

Our next question is from the line of Vikram Purohit with Morgan Stanley. Please proceed with your questions.

Hey. Good morning. Thanks for taking our questions. So we had two on Auvelity. So first, just wondering if you could provide some color on the typical profile of patients that are currently receiving Auvelity in terms of their prior treatment history and the lines of therapy that they have been on prior to being prescribed Auvelity? And then secondly, I just wanted to see if you could provide an update on ex-U.S. commercialization and partnership discussions, if those have been happening, and if so, what you'd be looking for in a potential partner for AXS-05 ex-U.S.? Thanks.

Hey, Vikram. I'll take that. So currently, as we've mentioned multiple times, due primarily to standard commercial plans having Auvelity coming in an NDC block, which requires quite an effort to get patients online. This is why we're really excited about the demand we're driving despite these challenges. However, this means that therapy use has been relatively later line right now with about 28% sitting in second line and 61% sitting in third line-plus. The response has been very consistent with the label. To see that in later line patients is extremely encouraging.

Just to add on the second part of your question, as it relates to what we would be looking for with regards to a potential partner for Auvelity in ex-U.S. territories, one of the key aspects we would look for is a partner with proven capabilities, particularly with navigating the complex reimbursement landscape in various international markets.

The next question is from the line of Jason Gerberry with Bank of America. Please proceed with your questions.

Hey. Good morning. Thanks for taking my question. Are you guys planning to increase enrollment of ADVANCE-2 to get to the 300 patients by six months? I was just doing the math on the, I think, what 50 patients from ACCORD went into randomized withdrawal, and the other 175 under the current enrollment plan for ADVANCE-2. So just curious how you get to the 300? And then if you can comment on how we should be thinking about SG&A and OpEx ramp is Q4 2022 a good place to think about some growth off of that number or is there going to be any step up from there? And then just last question, any comments on any inventory launch stocking here on the fourth quarter number? Thanks.

Lori, I'll take the first question, and Nick will address the others. The answer is no, we do not anticipate increasing enrollment in ADVANCE-2 to meet the required patient safety database. As a reminder, we do have patients from ADVANCE-1 in terms of general safety experience, and we also expect to have 170 patients who were enrolled in the first period of the ACCORD trial, most of whom will roll into the label safety extension trial. So if you consider the patients rolling over from both sources, we should be in a good position.

Sure. Hey, Jason. So related to OpEx guidance, I think you mentioned using Q4 essentially as a proxy; I think that's a fair estimate. We stated in the press release that we expect expenses to increase year-over-year. Obviously, with the launch of Auvelity and Sunosi being acquired in the second quarter of this year, we'll have a full year of SG&A expenses, and Q4 being almost a full quarter, you can expect to view that as a proxy and potentially see modest growth from the SG&A piece as it relates to thinking about 2023 on a quarterly basis. As for your other question regarding inventory channel, we have approximately 2.5 weeks of future demand in the channel for Auvelity. Given that it's a growing brand, we expect interim levels to fluctuate at our distributors as Auvelity builds additional momentum in the market. For Sunosi, we did see increased wholesale buying at the end of Q4 due to seasonality. The inventory levels were somewhat elevated, but we believe that in Q1, these inventory levels will come down to approximately 2 to 2.5 weeks. It's worth noting that we changed our operational distribution model from a title model to a traditional 3PL model. This shift effectively reduces the role of the middleman distributor, leading to an anticipated inventory reduction in the channel which could impact Q1 sales for Sunosi by roughly two weeks.

Okay. Thank you.

Our next question is from the line of David Amsellem with Piper Sandler. Please proceed with your questions.

Thanks. So just had a couple. First, on Sunosi, just broadly, what do you think you can do differently from the predecessor company that controlled the asset in terms of driving an inflection in volumes? And is the focus going to be more on OSA versus narcolepsy? And just give us a sense of what you're prioritizing and how you believe the commercial landscape for Sunosi might prove to be different over time to the extent it is at all? So that's number one. And then number two, on Auvelity, how should we think about eventual expansion of the sales organization to the extent you need to and just talk about how that's going to evolve over time as the product gets more into its commercial life? Thank you.

Yeah. Hi, David. I'll take both of those. So first of all, starting with Sunosi and how do we think we will have an inflection point with this relaunch? The predecessor company had a strong foundation for the initial launch, but it's important to remember that it faced significant challenges due to the COVID pandemic that began shortly thereafter. We believe we are doing right now that will help drive an inflection point is a hyper-focus on identifying and targeting the highest potential prescribers. Our plan is to make sure that we penetrate those prescribers quickly, then expand our reach further. Doing this will help us gain market share rapidly as we get more sophisticated in our approach. In terms of OSA versus narcolepsy, given the prevalence of OSA with approximately 22 million patients compared to narcolepsy with about 200,000 patients, it is clear that the larger opportunity lies within OSA. However, we are not neglecting narcolepsy as there remains considerable growth potential there as well. Now, regarding Auvelity's expanded sales organization, we currently have about 165 reps servicing around 25,000 HCPs. Our confidence in utilizing our delivery channels is very high. Our focus remains on ensuring strong penetration among our original target list of high-potential prescribers before we expand further.

Okay. Helpful. Thank you.

Next question comes from the line of Joon Lee with Truist Securities. Please proceed with your questions.

Hey. Thanks for taking our questions and the updates. In the press release, you mentioned potential for up to four NDAs over the next 12 to 18 months. I'm assuming that it also includes narcolepsy. And if so, is SYMPHONY and the Phase 2 sufficient to file? And I have a follow-up.

Thank you for the question. Yes, we do believe that SYMPHONY and the Phase 2 trial will be sufficient to file, assuming SYMPHONY is positive.

Great. And regarding the Sunosi deal, at a high level, it looks like you were able to monetize the European rights at a very attractive valuation, possibly more than what you had for the worldwide rights. What do you think changed that allowed you to extract such value?

Well, we felt strongly about the potential for Sunosi and the overall value of the product. This transaction reflects the value we believe it has, consistent with our view of its potential.

Our next question is from the line of Joseph Thome with Cowen & Company. Please proceed with your questions.

Hi there. Good morning, and thank you for taking our questions. Maybe the first one, just a clarification on the Auvelity number that you gave earlier. That 13,700 new patients was that as of last Friday or what was the cutoff date for that? And then second, we did see the ANDA for TEVA on Auvelity. If you can just give us overall thoughts on your strength of the 2034 and 2040 patents. I know they're only challenged in 2040, but what are next steps here? And how does the company think about that? And then I'll have a quick follow-up. Thanks.

Yes. Hi, Joseph. Thanks for the question on the cutoff date — that would be as of the last reporting week, which is February 17.

And you cut-off, from the second part of the question.

Yeah. So just in terms of, we saw the ANDA submission from TEVA challenging those 2040 patents. So what are sort of the next steps in terms of litigation or potential settlement and maybe if you could just comment on your confidence in the strength of the 2040 and the 2034 patents for Auvelity?

Hi, I'm Hunter Murdock, the company’s General Counsel. As we've previously announced earlier this month, we did receive the paragraph 4 notice from Teva related to Auvelity. The receipt of the letter is normal, being part of the Hatch-Waxman process. Response to your question, it’s not indicative of the quality of our IP portfolio, which we’re extremely proud of. Under the Hatch-Waxman Act, we have 45 days to respond to Teva if we wish to invoke the 30-month regulatory stay, and we're carefully analyzing Teva’s Paragraph 4 notice right now. I won’t provide additional commentary regarding the notice or any subsequent steps.

Great. Thank you. And then just really quickly, I know you mentioned that for narcolepsy, the Phase 2 and the Phase 3 would be sufficient on an efficacy standpoint. Would you need an additional open-label safety experience? And will you have that necessary exposure once this trial reads out? Thank you.

We do have the label safety extension trial ongoing, so that safety experience will be part of the filing. Additionally, in conjunction with our licensing deal with Pfizer, we obtained extensive safety data regarding the molecule, which will also be included in our submission.

At this time, we have time for two more additional questions. The next question comes from the line of David Hoang with SBMC. Please proceed with your questions.

Hey. Good morning. Thank you for the update and fitting me into the Q&A. So I just had a quick question on gross to net for Auvelity in coming quarters. Can you give us any sense of how quickly we should expect the GTN to improve over time? And would improvement correlate with the rate at which you can establish favorable coverage with major health insurance plans? I know you mentioned a six months to nine months window for that to generally take place. Is that fair to assume GTN should also improve over that time?

Yes, David. Thanks. It's Nick. I think that's the guidance that we previously provided, and we're really sticking to that. It's hard to provide any further quantitative guidance on GTN until we start seeing broader payer coverage, and then we will be able to have a better sense of GTN. So several quarters from now, I think we'll be able to give you a better perspective.

The next question is from the line of Yatin Suneja with Guggenheim Securities. Please proceed with your questions.

Hey. Good morning and thanks for taking our questions. This is Eddie for Yatin. Just a few from us. On AXS-12, can you provide a little bit more detail on the timing of those data this year? And what you would need to see to give you confidence moving forward, especially in comparison to Sunosi? And then just a quick follow-up on the Auvelity inventory. How much of that 5.2 in reported revenue for the quarter was due to channel stocking? Thanks.

You want to take the last question?

Yeah. I haven't quantified the actual amount related to specifically the inventory. But as I mentioned earlier, it amounts to roughly 2.5 weeks of future demand. You can estimate that this 2.5 weeks incurs GTN deductions since it hasn't been sold yet — it has been sold to our distributor.

Regarding the timing for AXS-12, we expect to have results from that trial in the first half of this year. So that's the guidance, leading through the end of June. We want to see a positive trial; this is a placebo-controlled study. We want to see a positive trial that would provide two studies demonstrating the efficacy of the product. Comparatively, the indications are different. Sunosi is approved to treat excessive daytime sleepiness in patients with narcolepsy, whereas AXS-12 is studying cataplexy in patients with narcolepsy.

And Eddie, adding context, for narcolepsy patients, 100% of narcolepsy patients experience excessive daytime sleepiness, and approximately 70% suffer from cataplexy, providing context on the patient difference.

Got it. Thank you so much.

Our next question comes from the line of Graig Suvannavejh with Mizuho Securities. Please proceed with your questions.

Great. Thanks for taking my question. Congrats on the quarter and the year. Maybe my question is a bit bigger picture in perspective as it relates to your marketed products and Auvelity and Sunosi. I know you've just launched Auvelity and you've just gotten your hands on Sunosi, but do you have a sense of at what point you as a company might be in a position to provide financial guidance around what you see for sales for each of those products? And maybe even from a bigger picture perspective, could you remind us as you think about the total revenue opportunity for Auvelity or AXS-05 either in depression and also in AD agitation and what you think about Sunosi in EDS, both in OSA and narcolepsy? Thanks so much.

I'm sorry, Graig, could you repeat the first part of your question?

Yeah. It was really more about the timing of when, as a company, you might feel that you're comfortable enough to provide financial guidance on forward-looking sales for any particular year for this. Is this the situation where perhaps maybe three years down the line, or two years? Just how you're thinking about that timing?

I would say that, obviously, the way you prefaced your question is that we're in very early stages for Auvelity as well as Sunosi. We haven't discussed when we would potentially give sales guidance for both products, but certainly with Sunosi being the somewhat more mature product, we would be able to give some guidance on that one first. As for Auvelity, we're examining various models here, and that could fluctuate drastically. So it would be a bit longer before we provide sales guidance.

As for peak sales potential, we have talked about this before. We believe that Sunosi has a peak sales potential of $300 million to $500 million with its current indication. We also believe that it has a potential leading sales total of at least $1 billion if you take into account the potential new indications. With regards to Auvelity, we think that Auvelity has $1 billion potential in both MDD and Alzheimer's disease agitation individually, considering the market size and the number of untreated patients.

And then maybe one more follow-up for me. Just on Sunosi, where the split in its current use is, I believe, 70% in OSA and 30% currently in narcolepsy. I'm wondering if, as you look out into the future with your current plans, whether that is a number that will evolve from there or if it will stay there. And if it does evolve, any sense on which direction it might evolve in terms of that split? Thanks.

Yes. Thanks, Graig. I don't see — or I don't foresee that this current indication split will evolve much. As I mentioned, our focus is heavily on OSA, given the sheer size of the prevalence of that condition; however, we are maintaining our efforts on narcolepsy as well as it has considerable growth potential.

Thank you. Our next question is from the line of Bert Hazlett with BTIG. Please proceed with your questions.

Yeah. Thank you for taking the question and the clarifying comments here. My question is on the smoking cessation program. Could you just frame some of the parameters and timing surrounding the Phase 2/3 there, size of trial, again, timing, and endpoints, things like that? And then, with regard to the administration dosing of AXS-05, would you expect it to be dosed in a similar fashion titration to a top dose as it is in MDD and AD agitation? Thank you.

Thanks, Bert, for the question. With regards to the timing, we expect to initiate the Phase 2/3 trial in the fourth quarter of this year. The team is working very hard to finalize that. In terms of the trial design, this will be a standard parallel group trial. We will provide more details once we launch the trial. Rest assured that the endpoints will be registration endpoints. We have received feedback from the FDA on what that will look like, and we'll provide further info once we launch the trial. Now regarding dosing, we will also provide that information once we initiate the study.

Great. Looking forward to that. Thank you.

At this time, we have time for one more question. The next question comes from Myles Minter with William Blair. Please proceed with your questions.

Hi. Thanks for taking the question. Just wondering how many or what percentage of covered lives are actually represented through the plans that will use the GPO brought online last month, and when you anticipate those plans making those decisions?

Yeah. Mike, I'll take that one. As updated in the prepared remarks, it was one more of three GPOs that are currently operating. Each of these GPOs covers a substantial number of lives, and the PBMs and plans underneath them now have access to those contracted rates. Once they work through their standard processes, we expect the decisions to be made over the next six months.

Okay. And then just as a follow-up. Last year, when you met with the FDA and decided to run ADVANCE-2, I think they guided that they wanted to see an additional placebo-controlled study for AD agitation because they wanted to see additional placebo-controlled efficacy as well as safety data at that time. Has that commentary changed at the current meeting that you just had?

Sure. Thanks, Myles, for the question. Regarding the decision to initiate the ADVANCE-2 trial, that was a decision we made from a business perspective rather than at the FDA's recommendation. However, once we received feedback on the safety data requirements, it was clear that they would need both placebo-controlled safety data and a sufficient safety database based on ICH guidelines.

Okay. Thank you.

Our final question is from the line of Matt Kaplan with Ladenburg Thalmann. Please proceed with your questions.

Hi. This is Raymond in for Matt. Congrats on the quarter and thanks for taking our questions. Just a quick one. I wanted to ask about Auvelity and the DCC platform. You've had early success with Sunosi and the DCC. I was wondering how DCC in your initial experience with Auvelity has driven sales, and if there are any initial learnings that you'd hope to incorporate as the launch progresses? Thanks.

Yeah. Hi. Thanks for the question. It’s a good one. As you mentioned, we've had success with Sunosi, so I won't rehash that. On Auvelity, we're still very early. We've set up the same platform that Sunosi operates on. We're confident in our sales force size and the tools that we've provided to reach the number of HCPs we believe will drive strong growth. It’s a bit too early to really comment, but we are very pleased with how the team is using the platform and how they are helping drive growth that way.

Thank you. I will now turn the call back to Axsome's CEO for any concluding remarks.

Well, thank you again for joining us on the call today. We are proud of the hard work of the Axsome team, which is now resulting in meaningful differences in patients' lives. There is much more great progress to come. 2022 was a pivotal year for Axsome. We are not the same as we were a year ago, and we’re excited about the growth we anticipate next year. We are aligned to report value-driving updates with multiple NDA filings and multiple late-stage clinical trials addressing some of the most challenging CNS disorders in the next 12 to 18 months. Axsome aims to have five commercial products in the market by 2025, and we're hard at work to achieve those goals. Thank you. Have a great rest of your day.

This will conclude today's conference. Thank you for your participation. You may now disconnect your lines at this time.