Axsome Therapeutics, Inc. (AXSM) Earnings Call Transcript & Summary

Good morning, and welcome to the Axsome Therapeutics Second Quarter 2026 Earnings Conference Call. My name is Kevin, and I'll be your operator for today's call. [Operator Instructions] Please note, this call is being recorded. I would now like to hand the call over to Ashley Dong, Senior Director of Investor Relations. Please go ahead, Ashley.

Thank you. Good morning, everyone, and welcome to Axsome's Second Quarter 2026 Earnings Conference Call. Joining me today to discuss our results for the quarter are Dr. Herriot Tabuteau, Chief Executive Officer; Nick Pizzie, Chief Financial Officer; and Ari Maizel, Chief Commercial Officer, who will begin our call with prepared remarks. Mark Jacobson, our Chief Operating Officer; and Hunter Murdock, our General Counsel, will also be available for Q&A. Before we begin, I encourage everyone to visit the Investors section of our website to find the press release and presentation for today's call. Please note that today's discussion includes forward-looking statements regarding our financial performance commercial strategy and operational plans, including research, development and regulatory activities. These statements are based on current expectations and assumptions and are subject to risks and uncertainties that may cause actual results to differ materially. Please refer to our SEC filings, including our quarterly and annual reports for a description of these and other risks. You are cautioned not to rely on these forward-looking statements, which are made only as of today, and the company disclaims any obligation to update such statements. And with that, I'll hand it over to Herriot.

Thank you, Ashley, and good morning, everyone. The second quarter was highly productive for Axsome as we grew our commercial business robustly and made important regulatory and clinical progress across our innovative neuroscience pipeline. In the second quarter, our commercial portfolio generated $218 million in net product revenue, a 46% increase year-over-year, driven by strong performance for Auvelity and Sunosi. In the quarter, we launched Auvelity in Alzheimer's disease agitation and completed the expansion of the Auvelity sales force. Early metrics for the sales force expansion in Alzheimer's disease agitation launch point to growth acceleration for Auvelity. Underlying demand growth for SYMBRAVO is also accelerating, and we expect Sunosi growth to continue outpacing the market, positioning us for continued strong growth across the entire commercial portfolio. Later in the call, Nick will comment further on our financials, and Ari will provide additional detail on our commercial performance, including early observations in the Alzheimer's disease agitation launch. During the quarter, we also advanced our leading neuroscience pipeline of 6 innovative product candidates, which we are developing for 10 serious conditions. Our broad late-stage neuroscience pipeline positions us to potentially file on average on new NDA each year between now and 2030, delivering potentially significant value to patients and stakeholders. Following Ari's remarks, I'll provide an update on each of these programs. With that, I'll turn the call over to Nick.

Thanks, Herriot. Good morning, everyone. I'll begin with a review of our financial results for the quarter. Revenue increased to $218 million compared to $150 million in Q2 of 2025, representing a 46% year-over-year growth. Performance was driven by Auvelity with steady growth from Sunosi and continued strength in prescription demand for SYMBRAVO. We recorded net product sales for Auvelity of $180.3 million in the quarter, that's a 51% increase compared to the second quarter of 2025 and an 18% increase quarter-over-quarter. Sunosi net product revenue for the quarter was $35.8 million, representing a 20% year-over-year growth. Sunosi revenue consisted of $33.8 million in net product sales, $1.5 million in royalty revenue associated with Sunosi sales in out-licensed territories and $0.5 million in milestone revenue. Net sales for SYMBRAVO were $2.3 million in the quarter. SYMBRAVO was launched in June of 2025 and had net product sales of $400,000 for the second quarter of 2025. The decrease of $1.8 million in net sales from Q1 of 2026 primarily reflects a prior period adjustment and increased utilization of our patient service program driven by underlying demand growth. As such, SYMBRAVO gross to net discount deviated from trend during the quarter into the high 80% range. We anticipate SYMBRAVO-GTN to return to prior levels for the remainder of the year. Gross net discounts for Auvelity and Sunosi were each approximately 50% for the second quarter. We continue to anticipate gross net discount for both products to improve throughout the year, consistent with prior year trends. Turning to expenses. Cost of revenue in the quarter was $13.6 million represents 6% of total net revenue. Cost of revenue for the second quarter of 2025 was $13.4 million. Research and development expenses decreased to $46.2 million for the second quarter of 2026 compared to $49.5 million in the second quarter of 2025, which primarily reflects lower costs associated with AXS-05 and AXS-14. Selling, general and administrative expenses in the quarter were $208.1 million compared to $130.3 million for the second quarter of last year. The increase was primarily driven by commercialization activities for Auvelity and SYMBRAVO. Finally, net loss for the quarter was $51.3 million or $0.99 per share compared to a net loss of $48 million or $0.97 per share for the second quarter of 2025. Net loss in the quarter includes $27.1 million in stock-based compensation expense. Turning to the balance sheet. We ended the quarter with approximately $320 million in cash and cash equivalents. This compares to $323 million as of end of 2025. As evidenced by this quarter's financial performance, we are seeing continued improvement in operating leverage while investing behind our key commercial opportunities and pipeline priorities. Based on our current operating plan, we continue to expect that our current cash balance is sufficient to fund anticipated operations into cash flow positivity. Now I'll turn the call over to Ari with a commercial update.

Thanks, Nick. During the second quarter, we saw strong underlying demand growth across our portfolio of 3 differentiated medicines. In addition, during the quarter, we further strengthened our commercial foundation positioning us to drive growth across the portfolio over the balance of the year. Beginning with Auvelity. In the quarter, we launched Auvelity in the Alzheimer's disease education market and completed the expansion of the Auvelity sales force. I'm happy to share that early metrics indicate that these 2 developments are already beginning to have a meaningful impact on demand growth, positioning Auvelity for continued momentum over the balance of the year. Regarding Alzheimer's disease agitation, during the first 8 weeks following the launch in this indication, new-to-brand prescriptions among patients 65 years of age and older increased 126% compared to the same period in the prior quarter. reflecting expanding adoption in this patient segment. New-to-brand prescriptions represent new patients starting on Auvelity for the first time and are considered a key leading indicator of growth. While it's early days in the commercialization of Auvelity and Alzheimer's disease agitation, we are excited by the initial feedback that we have received from prescribers which includes positive anecdotal evidence of Auvelity's differentiated clinical profile reflected in real-world patient experience. In particular, providers and care partners alike view the reduction in agitation symptoms and safety and tolerability profile favorably. These early experiences have reinforced our belief that Auvelity has the potential to transform the treatment paradigm for Alzheimer's disease agitation and we look forward to sharing continued progress in the months ahead. We are also beginning to see the early impact of our expanded sales organization with overall new-to-brand prescriptions in the second quarter of 2026, increasing 26% compared to the first quarter of 2026. This momentum has continued into the third quarter. In addition to accelerated new patient starts, the expanded sales force activated more than 6,800 new Auvelity prescribers in the quarter, representing 21% growth versus the previous quarter, bringing the total number of unique prescribers since launch to approximately 69,000. The inflection in new-to-brand prescriptions and increased velocity of new writer activation are strong leading indicators of our expanded sales force investment and resulted in market share gains for both new-to-brand and total prescriptions in the quarter. We expect these trends to continue to build in Q3 and Q4, translating into positive TRx trends and further market share penetration. Overall, total prescriptions for Auvelity in the second quarter reached approximately $266,000, an increase of 34% year-over-year and 12% sequentially substantially outpacing the antidepressant market, which grew 1% and 2% in the same time period, respectively. In addition, Auvelity market access continued to improve during the quarter, with coverage now at approximately 89% of total lives across channels, including 82% of commercial lives and approximately 100% of lives in the government channel. Our market access team is working closely with payers in both the commercial and government channels, and we expect patient access for albeit in both the MDD and ABA markets to continue to expand and evolve. Taken together, we expect the momentum from the sales force expansion, continued growth in MDD and uptake in Alzheimer's disease agitation to drive continued growth over the rest of the year. For SYMBRAVO, demand was strong, growing 30% quarter-over-quarter to approximately 23,500 total prescriptions. Prescriber and patient feedback continue to be very positive supporting our commercial strategy to drive prescription volume while improving market access to support sustained growth over time. As mentioned on our prior earnings call, based on the strong demand for SYMBRAVO to date, our previously announced sales force expansion to approximately 150 sales representatives is substantially complete. Finally, following the previously announced addition of approximately 17 million lives in Q2, overall payer coverage is now at approximately 57% of lives covered across channels, including approximately 56% of commercial lives and 57% of government lives. We expect coverage for SYMBRAVO to further improve moving forward. Sunosi delivered another quarter of durable growth with approximately 61,000 total prescriptions written during the quarter. representing 14% year-over-year growth and 8% sequential growth compared to a 1% decline and 2% increase for the waste promoting agent market in the same periods, respectively. More than 17,000 clinicians have now prescribed Sanofi since launch, and we continue to maintain broad payer coverage of approximately 82% of lives covered across all channels. Overall, the underlying commercial performance in Q2 reflects positive momentum for Axsome's portfolio of differentiated CNS products. Acceleration of Auvelity in MDD and Alzheimer's disease education continued market penetration for SYMBRAVO and migraine and consistent growth from Sunosi and EDS associated with narcolepsy and OSA position Axsome for a strong second half of 2026 and robust growth in the years ahead. I will now turn the call back to Herriot.

Thank you, Ari. We are excited by our innovative neuroscience pipeline, which targets high unmet medical needs, novel indications first-in-class mechanisms of action and best-in-class profiles. I'll now review the recent pipeline progress and discuss key upcoming clinical and regulatory milestones. In the quarter, the FDA accepted our NDA submission for AXS-12 for the treatment of cataplexy in narcolepsy with a PDUFA target action date of May 1, 2027. based on its differentiated mechanism of action and resulting clinical profile, AXS-12 has the potential to provide a meaningful addition to the treatment armamentarium for patients living with narcolepsy if approved. For AXS-05, the next indication under development is smoking cessation. We are on track to initiate our planned Phase II/III trial in this indication this quarter. Exploring the full clinical potential of AXS-05 remains a top priority for us based on its unique pharmacology, which is potentially applicable across multiple neuropsychiatric disorders. Solriamfetol, our clinical programs across 4 new indications continue to advance. As a reminder, the new indications being explored are ADHD, binge-eating disorder, MDD with excessive daytime sleepiness or EDS symptoms and EDS associated with shift work disorder. All in all, we currently have 5 Phase III trials underway across these indications. In ADHD, we recently initiated the FOCUS-2 and FOCUS-3 studies of solriamfetol in children and adolescents with ADHD. These studies use a parallel group design with a primary endpoint of change from baseline to week 6 in the ADHD rating scale. These 2 studies if positive, together with the previously completed positive FOCUS Phase III trial of solriamfetol in adults would form the basis of an NDA filing for solriamfetol in the treatment of ADHD. In binge eating disorder, our ENGAGE Phase III trial continues to enroll, and we anticipate top line results from the study in the fourth quarter of this year. Our CLARITY Phase III trial of solriamfetol in MDD with ADS. Our SUSTAIN Phase III trial soloinfetol, NEDS associated with the shift work disorder are also advancing. For AXS-14, which we are developing for fibromyalgia enrollment in our FORWARD Phase III trial continues to progress. The FORWARD trial, if positive, together with the previously completed positive Phase II and Phase III trials would support an NDA filing for AXS-14 for the treatment of fibromyalgia. With AXS-20, our first-in-class selective PDE10A inhibitor, we are making good progress in our chemistry, manufacturing and controls activities with the goal of initiating a Phase III trial with this molecule in schizophrenia. We are also advancing Phase II enabling activities for AXS-17, our GABA subtype selective PAM, which we are developing for epilepsy. In summary, we are excited by the programs in our leading neuroscience pipeline. Combined with building momentum in our existing commercial business, these programs targeting areas of unmet medical need lay the groundwork for continued growth and value creation for patients and stakeholders. I will now turn the call back to Ashley.

Thanks, Herriot. This concludes our prepared remarks, and we'll now begin the Q&A session. To allow enough time for as many questions as possible, we kindly ask that you limit yourself to one question. Operator, please open the line.

[Operator Instructions] Our first question today is coming from Leonid Timashev from RBC Capital Markets.

Just one maybe on the Alzheimer's agitation launch, specifically as it relates to long-term care I guess, can you talk about the trends that you're seeing in the long-term care, I guess, the enthusiasm there? And then given that it's a new area that you're launching into sort of any successes or challenges that you're seeing there?

Thanks, Leo, for the question. As we stated on the -- earlier on the call, we're just 8 weeks into the launch. We're really encouraged by some of the early data we're seeing, the early patient experience has been very promising. We're seeing strong growth in new-to-brand prescriptions in patients aged 65 and older. And that feedback is consistent from both the community and long-term care settings. So obviously, as we get further into the launch, we'll be able to share some additional details around specific settings of care, but we've been really encouraged by what we're seeing across both LTC and community.

Our next question is coming from Malcolm Hoffman from BMO Capital Markets.

You highlighted some pretty strong growth in NBRx for Auvelity and the 65-plus patient group there. Can you maybe break this out further to indicate how much of this may be driven by agitation versus MDD expansion as well?

Yes. Thanks so much for the question. As we mentioned on the call, NBRx growth was very positive, 26% versus Q1. We are seeing meaningful increases in both MDD and Alzheimer's disease agitation, which we would expect to continue moving forward.

Our next question is coming from Ash Verma from UBS.

Congrats on the progress here. Maybe just on like Alzheimer's agitation. Can you talk about the level of sampling that you need to do early in the launch. And as the time progresses, would that gradually be lower -- is this sampling going to be more or less than the MDD launch that you did? Just help us understand so that we can correlate to data that we are seeing at our and other third-party sources.

Yes. As it relates to sampling, particularly in the community setting, sampling is important to gain trial with patients, and we've been committed as an organization to ensure that patients are appropriately titrated based on the approved dosage and administration. I think it's a little too early for us to indicate how sampling will change over time. But right now, we're very pleased with the strong demand for samples and it's been applauded by the clinical community in order to get patients started effectively and to give them the best chance for the clinical profile that we saw in our Phase III clinical trials.

Next question is coming from Rudy Li from Wolfe Research.

For ADA, can you provide more color on the capital rate of like IQVIA of the prescription data for the titration package and what additional key commercial metrics you'll be monitoring to track the progress?

Yes. I would say on the capture rate for the titration pack specifically, there's really limited data. So we'll learn more as we get further into the launch. In terms of ongoing performance data, I think obviously, sharing information about adoption or utilization with patients who are 65 years and older was an important signal for this particular call. And as we get more data into the launch, I think we'll update based on the most relevant trends related to the launch.

Our next question is coming from Marc Goodman from Leerink Partners.

Nick, can you talk about where you think Auvelity gross to nets will settle out in, let's say, 2 years after both of these indications or kind of going? And just for depression alone, what first line, second line, what percentage are we up to now?

Sure. Mark, so maybe first, where we were for the LD and GTN for -- this quarter, we were around 50%, as I shared in the opening remarks, that's obviously with the increase in covered lives and also with improving the quality of coverage to the first-line or for switch. As you alluded to in a couple of years, we anticipate Medicare scripts to become a higher proportion of scripts compared to commercial. What we've shared longer term is that we would anticipate GTN to remain in the 50s. And we'll be able to give better guidance probably towards the end of the year as we see this launch grow in ADA.

Yes. And as it relates to first, second line use in this quarter, we saw about more than half of the patients, 56% were treated in the first or second line setting. As we've shared previously, we don't have a particular percentage in mind. We know that Auvelity has been effective in patients as early as treatment naive and its latest as treatment experience. And so we're very comfortable with what we've seen over the past few years, and it's certainly supporting continued growth in both MDD and Alzheimer's agitation.

Our next question is coming from Ami Fadia from Needham & Company.

Maybe if you can talk about some of the market dynamics with SYMBRAVO and talk about the evolution of the adoption rate there and how do you see that progressing over the coming months?

Yes. Thanks for the question. I mean we're very pleased with the underlying demand for SYMBRAVO. As we stated earlier, it grew 30% versus Q1 and we're receiving very positive feedback from both patients and providers around SYMBRAVO's clinical profile and impact on patients. We expect that to continue. We mentioned that our sales force is expanding to approximately 150 sales representatives. That will enable us not only to call on higher decile headache specialists with more frequency, but also continue to expand and penetrate the primary care setting, which has been key source of growth over the past several quarters.

Your next question today is coming from Andrew Tsai from Jefferies.

Congrats on the quarter. This is [ Matt Marcus ] on for Andrew Tsai. I just wanted to ask, can you confirm what the exact percentage of your Alzheimer's agitation scrips or samples right now? And then since samples tend to run out in 2 to 3 weeks, any patient in June, July, a sample should be converting to a national patient by now, you think? So is the total Auvelity weekly script growth in the last couple of weeks, representative of the weekly growth profile that could be going forward? Or would you absolutely expect a faster cadence in August and September compared to June and July?

Yes. Thanks for the question. We don't share specific details regarding sampling as a proportion of overall demand. But we've been very pleased with the overall demand for samples in the community setting. And again, I think that, that's a very important aspect of the launch to support effective titration for elderly patients. In terms of weekly growth, as we mentioned, we've got 8 weeks of data that we're sharing today. We expect to learn much more in the coming months related to the launch, but we've been very pleased with the early indicators.

Our next question is coming from Pete Stavropoulos from Cantor Fitzgerald.

Congrats on the quarter. For AXS-12 reboxetine, there was the first approval of an orexin 2 receptor agonist last week. How do you think about the underlying commercial opportunity for reboxetine in the neurocolelpepsy market that has this new class of drug approved. Also, have you had discussions with payers around the profile of AXS-12 and possible pricing?

Great. Thanks for the question. I'll take the first part of that question, and Ari can take the second part. If you look at the narcolepsy market, we know that it is characterized by a lot of heterogeneity in the narcolepsy patient population. So more treatments are better for patients. We're excited by the potential for AXS-12 to provide a new and differentiated treatment option for patients living with narcolepsy. If you think about it mechanistically, it works on the orexin pathway. Orexin stimulates the local cereals to produce norepinephrine and AXS-12 also stimulates norepinephrine production. What we like about AXS-12 clinically or a few things. One, it works very quickly. We have onset of action, which is demonstrated at 1 week. Secondly, the efficacy is durable. We have data out to 6 months. And if you look at the side effect profile, it is very favorable. You combine that with a first-in-class mechanism interaction for narcolepsy. And also, you look at the clinical data, which shows that there is the potential to affect EDS as well as cognition. So we're very excited by the potential to provide a new treatment option for patients, and we think that, that will be welcome in the marketplace.

Yes. And regarding your question about market access, we've had very productive conversations with payers as they're learning more about AXS-12. And obviously, there's a lot of interest in narcolepsy. We won't comment on pricing until closer to the launch. But we feel very optimistic about the potential for patient access for AXS-12.

Next question today is coming from Ram Selvaraju from H.C. Wainwright.

Just wanted to see how you're thinking about the relative positioning of balipodect in schizophrenia. And if you are thinking about specific treatment combinations positioning as adjunct treatment versus stand-alone and what the prospects are for applicability of this drug in neuropsych indications beyond schizophrenia down the road?

Sure. Thanks, Ram, for the question. We're really excited by the prospects for balipodect in schizophrenia. Right now, what we're doing is we are conducting chemistry manufacturing controlled activities to at able the start of a Phase III trial in schizophrenia. So stay tuned. That work is well underway, and that is a priority for that program. Other indications that we're looking at or Tourette's syndrome. So we've stated that we do intend to initiate a Phase III trial -- a Phase II trial in that indication also. So that molecule and the clinical programs are progressing. As it relates to how it would be used either as monotherapy or with other products, it's too early. We want to do the experiment, and that's the Phase III trial. We are encouraged by the results of the Phase II trial, which was conducted in this patient population, which showed a very significant treatment effect if you look at a product as well as a favorable side effect profile, which dovetails very nicely with the unique mechanism of action of the product.