Axsome Therapeutics (AXSM) Q1 2024 Earnings Call Transcript

adminMay 6, 2024

AXSM earnings call for the period ending March 31, 2024.

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Axsome Therapeutics (AXSM 1.77%)
Q1 2024 Earnings Call
May 06, 2024, 8:00 a.m. ET

Prepared Remarks:

Operator

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. (Operator instructions) As a reminder, today’s conference call is being recorded.

I would now like to turn the conference over to your host, Darren Opland, director of corporate communications at Axsome Therapeutics. Please go ahead.

Darren Opland — Director, Corporate Communications

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 first quarter of 2024. 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 nonclinical 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 other 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; Mark Jacobson, chief operating officer; and Ari Maizel, executive vice president and head of commercial. Herriot will provide an overview of the company and progress made in the first quarter of 2024, as well as key upcoming milestones. Following Herriot, Nick will review our financial results, then Ari will provide a commercial update. 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.

Herriot Tabuteau — Chief Executive Officer

Thank you, Darren. Good morning, everyone, and thank you for joining Axsome Therapeutics’ first-quarter 2024 financial results and business update conference call. The first quarter of 2024 was marked by strong financial performance for our on-market products, which are delivering important and differentiated treatment options for patients living with depression, narcolepsy, and obstructive sleep apnea. Total net product revenue in the quarter was $75 million, representing year-over-year growth of approximately 160%. We will share additional details on our financial and commercial performance later in the call.

We also significantly advanced our innovative neuroscience pipeline in the quarter, including announcing positive top-line results for AXS-12 in narcolepsy, advancing AXS-07 and AXS-14 toward NDA submissions, initiating pivotal trials in new indications with solriamfetol, and advancing and expanding our Alzheimer’s Disease agitation program for AXS-05. We expect to continue the commercial and pipeline momentum in the balance of 2024. I will now provide a brief update on our industry-leading neuroscience pipeline and expected milestones. Starting with our two NDA-stage products, AXS-07 for the acute treatment of migraine is on track for an NDA resubmission this quarter. Additionally, we are conducting the EMERGE study, a multicenter phase 3 single-group trial evaluating the efficacy and safety of AXS-07 in adults with a prior inadequate response to an oral CGRP inhibitor.

We anticipate top-line results from this trial in the second half of 2024. For AXS-14, which we are developing for the treatment of fibromyalgia, pre-submission activities for the NDA for this product are nearing completion. We continue to target submission later this quarter. In March, we announced that the phase 3 SYMPHONY trial of AXS-12 in narcolepsy achieved its primary endpoint and significantly reduced the frequency of cataplexy attacks as compared to placebo.

AXS-12 also reduced excessive daytime sleepiness severity, improved cognition, and reduced overall narcolepsy severity. An open-label safety extension trial for AXS-12 is ongoing with results expected in the fourth quarter of 2024. We are excited about the potential of AXS-12 to provide a differentiated treatment option to patients and HCPs for this debilitating condition. Moving on to AXS-05, we continue to anticipate completion of the phase 3 ADVANCE-2 trial in the treatment of Alzheimer’s disease agitation in the second half of 2024. Today, we announced that we launched the ACCORD-2 study, a double-blind placebo-controlled, randomized control trial to evaluate the efficacy and safety of AXS-05 in the treatment of Alzheimer’s disease agitation. This study is similar in design to the completed positive ACCORD-1 trial.

With ACCORD-2, the clinical development program will now include four controlled efficacy trials. Importantly, ACCORD-2 further increases the robustness of our clinical program that allows disease agitation without impacting our overall development timeline. Enrollment in ACCORD-2 is very far along, and we expect enrollment completion around midyear, With respect to solriamfetol, our dopamine and norepinephrine reuptake inhibitor and TAAR1 agonist, in addition to continued commercial performance, we launched the phase 3 PARADIGM trial in major depressive disorder and the phase 3 ENGAGE trial in binge eating disorder in the first quarter. Results from both trials are expected in 2025. We are on track to initiate a phase 3 clinical program in shift work disorder this quarter. Solriamfetol is also being evaluated in the FOCUS phase 3 trial in ADHD for which we continue to anticipate top-line results in the second half of this year. Overall, our innovative neuroscience portfolio encompasses five late-stage patent-protected product candidates targeting 10 serious psychiatric and neurological conditions with substantial market opportunities.

Each product candidates have the potential to transform the treatment landscape for serious and difficult-to-treat CNS disorders which affect more than 150 million people in the U.S. I will now turn the call to Nick who will provide details of our financial performance. Nick?

Nick Pizzie — Chief Financial Officer

Thank you, Herriot, and good morning. Today I will discuss our first-quarter results and provide some financial guidance. Total product revenues were 75 million for the first quarter of 2024. This consisted of net product sales of 74.1 million and royalty revenue of 900,000.

Total product revenues for the comparable period in 2023 were 94.6 million, which consisted of net product sales of 28.6 million, royalty revenue of 300,000, and 65.7 million in one-time license revenue received from the outlicensing of Sunosi in certain ex-U.S. territories. Auvelity net product sales were 53.4 million for the first quarter of 2024, representing year-over-year growth of 240%. Auvelity net product sales for the comparable period were $15.7 million. Sunosi net product revenue was $21.6 million for the first quarter of 2024 and consisted of $20.7 million in product sales and $900,000 in royalty revenue associated with Sunosi sales in our licensed territories. Sunosi net product revenue for the comparable period in 2023 was $13.2 million, consisting of $12.9 million in product sales and $300,000 in royalty revenue. Total cost of revenue was 6.3 million for the first quarter of 2024. Total cost of revenue for the comparable period in ’23 was 7.6 million, which included $5 million in Sunosi licensing transaction fee-sharing expense.

Research and development expenses were $36.8 million for the first quarter of 2024, compared to $17.8 million for the comparable period in 2023. The increase was primarily related to the initiation of the solriamfetol PARADIGM trial for major depressive disorder, the solriamfetol ENGAGE trial for the binge eating disorder, the advancement of the solriamfetol FOCUS trial for ADHD, the ongoing trials of AXS-05 and AXS-12, manufacturing costs associated with the anticipated NDAs for AXS-07 and AXS-14, post-marketing commitments for both Auvelity and Sunosi, and higher personnel costs including noncash stock-based compensation. Selling, general, and administrative expenses were $99 million for the first quarter of 2024, compared to $74.2 million for the comparable period in 2023. The increase was primarily related to commercialization activities for Auvelity and Sunosi, including sales force and marketing expenses, and higher personnel costs related to organizational growth, including noncash stock-based compensation. Net loss for the first quarter of 2024 was $68.4 million, or $1.44 per share, compared to a net loss of $11.2 million, or $0.26 per share, for the comparable period in 2023. The net loss in the first quarter of 2024 includes $21 million in noncash charges, of which the majority is comprised of noncash stock-based compensation expense. The 2023 comparable period included approximately $62 million in net gain from the Sunosi outlicensing.

Q1 typically has a negative seasonality effect on GTN, which we saw in both Auvelity and Sunosi versus the prior quarter. Auvelity GTN discount for Q1 was in the low to mid-50s, and Sunosi GTN discount was in the mid-50s. We ended the first quarter of 2024 with $331.4 million in cash and cash equivalents, compared to $386.2 million as of year-end. We believe that our current cash balance is sufficient to fund anticipated operations into cash flow positivity based on the current operating plan. I will now like to turn the call over to Ari who will provide a commercial update.

Ari Maizel — Executive Vice President, Head of Commercial

Thank you, Nick. Axsome delivered solid brand performance in the first quarter of 2024. Auvelity demand trends in Q1 once again outpaced growth rates for the market and branded competitors with approximately 95,000 prescriptions, representing 12% quarter-over-quarter growth and 206% growth compared to the first quarter of 2023. Nearly 18,000 new patients started Auvelity in the quarter, bringing the total number of unique patients treated with Auvelity since launch to more than 89,000.

Our sales team continues to activate new prescribers at a consistent rate with more than 3,600 first-time Auvelity prescribers in Q1, illustrating strong underlying demand for the product and expanded use among depression treaters in both psychiatry and primary care offices. We’re especially proud of this performance in light of seasonal dynamics which were compounded by the industrywide Change Healthcare cyberattack. Payer coverage was stable in Q1 as Auvelity remains accessible to patients, representing approximately 70% of covered lives. As noted in our press release this morning, we just contracted with a large group purchasing organization for a potential formulary coverage of Auvelity, laying the groundwork for future increases in covered lives. Pharmacy benefit managers and health plans under this GPO are now able to make coverage decisions for Auvelity based on the contracted terms. With this agreement, Axsome has now contracted with two of the three largest GPOs for potential coverage of Auvelity.

We are very pleased with the strong commercial foundation we have created to support Auvelity performance, including our expanded psychiatry sales team, a recently enhanced sales and marketing campaign, and expansion of digital capabilities to maximize reach to targeted HCPs. Of note, we observed an inflection in weekly new patient starts, or NBRx, in March, a positive signal of both the impact of our optimized commercial footprint and continued adoption of Auvelity as a go-to treatment option for adults with major depressive disorder. Transitioning now to Sunosi, total prescriptions were just over 41,000, representing a 1.6% decline versus Q4 2023 and 14% growth versus Q1 2023. Demand in the first quarter was impacted by typical seasonality in the EDS market as evidenced by the 3% decline observed in the wake-promoting agent market this quarter. Approximately 3,700 new patients started Sunosi treatment during the quarter, bringing the total number of unique patients treated with Sunosi to approximately 68,000 since launch.

More than 400 new writers were activated in Q1, resulting in a total cumulative prescriber base of more than 12,600 since launch. Payer coverage for Sunosi in Q1 remained 83% of lives covered across channels. In closing, Q1 was a very positive start to 2024 for both Auvelity and Sunosi, with leading indicators such as trends with new patient starts and newly activated prescribers, reinforcing our confidence that Axsome will deliver strong commercial performance in our second year as a commercial company. We continue to receive compelling feedback from healthcare professionals and patients about the positive impact our products are having in real-world settings. And we are proud of Axsome’s growing reputation as a leader in the CNS space that delivers differentiated and impactful products for serious psychiatric and neurological conditions. I will now turn the call back to Darren for Q&A.

Darren Opland — Director, Corporate Communications

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

Questions & Answers:

Operator

Thank you. We will now be conducting a question-and-answer session. (Operator instructions) Our first question comes from Charles Duncan with Cantor Fitzgerald. Please proceed with your question.

Charles Duncan — Cantor Fitzgerald — Analyst

Hey, good morning, Herriot and team. Congrats on a great quarter and appreciate you taking our questions. I had a commercial question and then one on the pipeline. Regarding the commercial question, I’m not sure if I heard it, Ari was speaking fast.

Can you give us a sense of new-to-brand versus refill rates for Auvelity? Thanks.

Ari Maizel — Executive Vice President, Head of Commercial

Yeah, thanks, Charles. New to brand at the moment accounts for roughly 25% to 30% of weekly prescriptions. You know, that’s a healthy number at the moment. We expect new to brand to continue to grow, but TRx obviously should outpace just based on the existing patient base and the refill rates, which, at this point, we feel very comfortable with. We’re seeing good adherence and persistency, generally.

So, hopefully, that answers your question. Let me know if there are any specific follow-ups.

Charles Duncan — Cantor Fitzgerald — Analyst

It’s just a little more color on persistency. I know it’s probably too early, but how do you feel about that so far with Auvelity?

Ari Maizel — Executive Vice President, Head of Commercial

Yeah, I feel really good. In fact, we recently were engaged with a group of KOLs to receive feedback. And this is anecdotal, you know, we — we don’t have specific claims data to prove this out, but they’re — they’re seeing adherences, you know, roughly twice what they have seen historically with SSRIs, which bodes very well for the brand. Just showing that, you know, the impact of the clinical profile is meaningful for patients, and they’re sticking with it longer than other — other antidepressants from the past.

Charles Duncan — Cantor Fitzgerald — Analyst

OK. And then, in terms of development, perhaps for you, Herriot, can you provide us any information on the percent responder rate that you anticipate out of the first part of the ACCORD-2 study, and then, a sense of how you feel brexpiprazole has changed that unmet need? Would you anticipate AXS-05 to become front line. or would it — I guess would it sequence after brexpiprazole use in those — in those patients? Thanks.

Herriot Tabuteau — Chief Executive Officer

Thanks for the question. With regards to the responder rate in ACCORD-2, I don’t want to misspeak in terms of the exact responder rate, but it is exactly what we modeled or what we included as inclusion criterion in ACCORD-1. So, the studies are very similarly designed, and as a reminder, the ACCORD-1 trial was able to very effectively detect a signal. In terms of brexpiprazole and the unmet need, we don’t view that brexpiprazole has changed the need for a safe and effective, you know, long-term treatment for Alzheimer’s disease agitation. So, as a reminder, our patients were being treated off-label necessarily with atypical antipsychotics.

Brexpiprazole does fall into that class. And so, we don’t view we don’t view the opportunity for AXS-05 as changing materially based upon that approval. And then, in terms of front-line usage, assuming that we continue to generate data that replicates what we saw in ADVANCE-1 and also in ACCORD-1, we would fully expect that AXS-05 could be a front-line treatment and would be a front-line treatment for Alzheimer’s disease agitation.

Charles Duncan — Cantor Fitzgerald — Analyst

Makes sense. Thanks for taking the questions.

Operator

Our next question comes from Leonid Timashev with RBC Capital Markets. Please proceed with your question.

Leonid Timashev — RBC Capital Markets — Analyst

Hey, guys, congrats on a quarter — good quarter, and thanks for taking my question. Can you guys talk about the price volume impact you’d expect from this latest GPO add? And should we expect some acceleration in scripts with an impact to gross to net in the near term, or would it be more incremental, gradual change? And then, maybe just related to that, with two out of the three major GPOs in hand, can you talk about maybe the progress with the third that you’ve made? Thanks.

Ari Maizel — Executive Vice President, Head of Commercial

Yeah, thanks, Leonid. This is Ari. So, regarding price volume trade-offs, it’s a little premature to talk about impact on gross to net for this particular agreement. And obviously, part of the effort right now is to ensure that we’re effectively pulling through the contract terms with the PBMs that are underneath the GPO umbrella.

But we do expect there to — to be volume growth once we are able to expand coverage, and we’ll provide updates on the impact of the gross to net, you know, when appropriate. Regarding your question around the third GPO, what I’d say is, you know, we’re having very fruitful discussions with — with all of the major payers and PBMs, including the GPOs. And, you know, these are complicated negotiations. Obviously, it’s important for us not only to expand coverage but to also be mindful of profitability over the long term because we have a growing portfolio that we need to plan for. So, no specifics on the — the — the details of the negotiation, but we feel very good about the nature of the dialogue and look forward to future updates.

Leonid Timashev — RBC Capital Markets — Analyst

Thanks.

Operator

Our next question comes from Ash Verma with UBS. Please proceed with your question.

Ash Verma — UBS — Analyst

Hey, thanks. Thanks for taking our questions. Congrats on the progress. So, I had to — want to just — on this last comment that you had about the GPO, can you maybe elaborate, like, what percentage commercial lives are covered through this GPO? You have 48% coverage prior to this, I believe. And then, second, regarding this new study for AD agitation, can you remind us like — like, is that something that you need for — for a regulatory package, or do you think that the ADVANCE-2 study would be sufficient? Like, why do this study now versus — you already have another study going on and you had a successful randomized withdrawal study earlier. So, just wanted to get your thoughts on that.

Thanks.

Herriot Tabuteau — Chief Executive Officer

Sure, thanks for the question. So, there’s two questions there. I’ll take the last one and then I’ll turn it over to Ari to answer the first question. So, with regards to the ACCORD-2 trial, no, we do not need it for a regulatory submission.

This was an opportunity for us to increase the robustness of the program while also not affecting at all the timing of an NDA submission. So, it just made sense. We want to have the most robust package, the strongest package, going into an NDA review. And this is such an important indication. It’s always helpful to generate additional data, which may also, you know — which may also not just in terms of a regulatory submission, but also in terms of future publications, be useful from a commercial perspective. So, you know, we think it was the right thing to do.

It’s very efficient. It allows us to leverage the large number of patients who are experiencing stable responses in the current open-label safety and efficacy trial.

Ari Maizel — Executive Vice President, Head of Commercial

Yeah, and, Ash, this is Ari. Your question around percent of lives with new GPO, obviously, as you know, the GPOs represent a pool of — of PBMs. And so, because we — each of the PBMs has a different number of lives covered and has the ability to make their own coverage decisions, I can’t give you a specific number of the incremental percentage of lives covered. But it is meaningfully above the 48% that we have publicly stated today.

And so, part of our focus, you know, moving forward is to ensure that the majority of the PBMs underneath those GPOs are accessing the rates that we’ve agreed to. So, it is a meaningful percentage increase if we were successful with all of the PBMs underneath the umbrella.

Operator

Our next question comes from Ram Selvaraju with H.C. Wainwright. Please proceed with your question.

Ram Selvaraju — H.C. Wainwright and Company — Analyst

Thanks so much for taking my questions. Just very quickly on the commercial front, I was wondering if there are specific factors that you expect to impact discussions with the third of the three largest GPOs that you are currently looking to secure contracting for Auvelity with? And if so, what those factors might be? And then, on the development side, I was wondering, Herriot, maybe if you could comment on the profile of AXS-12 relative to the existing approved marketed agents, and whether you believe the impact on cataplexy is likely to be the most significant selling point, and if you anticipate that the impact on sleepiness is going to be sufficient for AXS-12 to be positioned commercially in a competitive way in this indication. Thanks.

Ari Maizel — Executive Vice President, Head of Commercial

Sure, I’ll start with the first question. So, factors that impact negotiations, generally speaking, are the demand growth that we’re driving in the marketplace. And in fact, all of the recent access discussions we’ve had really focus on how quickly the brand is growing And so, you know, the best way to — to secure access is to show volume growth in the absence of formal coverage. I think it’s important to note that, you know, as a rule, while we negotiate for coverage with major plans of PBMs, one of the areas of focus has been to optimize our patient savings and reimbursement support services to support continued demand growth within the existing access paradigm. And our ability to drive growth is the primary factor in — in — in driving interest with GPOs and major plans and PBMs, and so we’re really, you know, proud of the growth that we’ve seen to start off the year.

You know, we — I mentioned on my opening comments that we’ve seen about a 30% increase in weekly new patient starts, March compared to December, and that’s with the existing access we have. So, that only strengthens our ability to negotiate and ultimately have meaningful discussions with the insurance companies.

Ram Selvaraju — H.C. Wainwright and Company — Analyst

Have you started doing DTC promotion of Auvelity? And if so, you know, to what extent?

Ari Maizel — Executive Vice President, Head of Commercial

Well, we have DTC largely in the digital space at the moment. We do not currently have a TV or video ad that’s running, but that is something that is under consideration at the moment. and you know, we’ll share updates when appropriate.

Ram Selvaraju — H.C. Wainwright and Company — Analyst

Great. Thanks.

Herriot Tabuteau — Chief Executive Officer

So, Ram, with — with regards to your question on AXS-12 and the profile, so, what we saw in the trial, which was a replication of what we saw in the CONCERT study, was a pretty important and significant impact on cataplexy. So, not only was there a large percent reduction in cataplexy, but if you looked at remission of cataplexy, which is total elimination, the results were very stark. So, a third of the patients had 100% reduction in cataplexy attacks versus less than 10% of patients in the placebo group. And we also did see an effect on excessive daytime sleepiness severity, as well as cognition. So, we like the profile, and the profile as it relates to agents that are currently on the market is incredibly favorable. We know that of the agents that are on the market, not all patients, in fact, a minority of patients actually tolerate them.

So, there is a significant unmet need. We did conduct also a very large patient survey of NTRK1 patients in conjunction with Narcolepsy Network. And what that showed was that even on current treatments, 77% of patients continue to experience cataplexy. As it relates to your question around whether around the EDS data that we generated, if that would be enough for clinicians and patients to think about adopting the product, the — what we saw in the study was a clear impact on excessive daytime sleepiness. And we also saw a clear impact on overall narcolepsy severity. So, AXS-12 reduced excessive daytime sleepiness.

Severity also improved, overall narcolepsy severity, as well as quality of life. So, the way that we think about it is should this product be made available to clinicians and to patients, that profile will be — will be very apparent to — to — to patients and to clinicians when it’s treated based on the patient-reported outcomes as well as the clinician global impression outcomes. So, we really like the profile, and we think this will be an important treatment for patients.

Ram Selvaraju — H.C. Wainwright and Company — Analyst

Thank you very much.

Operator

Our next question comes from Marc Goodman with Leerink. Please proceed with your question.

Marc Goodman — Leerink Partners — Analyst

Good morning. Nick, can you talk about was there any inventory for Auvelity in the quarter, anything unusual that may have helped sales? And second, can you talk about gross to net, how you’re thinking about the rest of the year? And with these contracts that are now being put in place, you know, how should we be thinking about it over the next couple of years? And then, Herriot, can you just talk about AD agitation for one second? Obviously, you know, last quarter, you delay by — we’re not exactly sure, but into the second half the completion of ADVANCE-2. Maybe you can just give us a little more color there, like, are we — are we now back on track, is this going to be something that’s going to happen early in the second half of the year, is this late in the second half of the year? And just to confirm that this new study that you’re talking about here, this is just patients who’ve already gone through that open-label, so it’s not really competing against it at all, right? Thanks.

Nick Pizzie — Chief Financial Officer

Hey, Marc, it’s Nick. So, for inventory, inventory remains in channel at two weeks. So, nothing has changed specifically around inventory for Auvelity nor Sunosi, remains continuing at two weeks. And then, the Auvelity GTN discount, for Q1, was in the low to mid-50s. Sunosi’s GTN discount was in the mid-50s for the quarter.

As you know, Q1 typically does have a seasonality — a negative seasonality effect on GTN, which we both saw in Auvelity and Sunosi versus the prior quarter. For Auvelity, GTN did fluctuate in Q1 and ended the quarter with March being in the mid-50s. And right now, we have no reason to expect it to vary significantly from that level moving forward.

Herriot Tabuteau — Chief Executive Officer

OK, great. And, Marc, as it relates to the question around Alzheimer’s disease agitations, so, starting with — with ADVANCE-2, the guidance is second half of this year. We’re very comfortable. We remain very comfortable with that guidance based on enrollment trends.

So, what we’re seeing is — is very positive with regards to how that study is proceeding. And then, as it relates to ACCORD-2, it is not competing with ADVANCE-2, so you are correct. So, you have a large number of patients who are in the open-label portion who are experiencing stable responses. So, that allows us very efficiently to enroll ACCORD-2. So, we do expect for enrollment in ACCORD-2 to complete in — to complete midyear. And, you know, the reason for the confidence around that is that the study is very far along in terms of enrollment.

Marc Goodman — Leerink Partners — Analyst

And so, just to understand, for ADVANCE-2, enrollment really picked up over the past three months and that’s why you’re confident.

Herriot Tabuteau — Chief Executive Officer

So, we’re confident based on where enrollment was and has been. Enrollment in ADVANCE-2 is also very far along, and it continues to enroll at a predictable pace.

Marc Goodman — Leerink Partners — Analyst

OK, thanks.

Operator

Our next question comes from David Amsellem with Piper Sandler. Please proceed with your question.

David Amsellem — Piper Sandler — Analyst

I have a couple of questions on the pipeline. First, for reboxetine in narcolepsy, can you just remind us of the path forward? In other words, are you expecting to file after your — you’ve completed the — the extension, or are there any other — are there any other gating items to an NDA filing? So, can you talk about that and your timeline for filing on reboxetine in narcolepsy/ cataplexy? In solriamfetol, can you talk to your pediatric ADHD study plan? I believe that’s a gating item to a filing in ADHD, so it would be helpful to talk to that. And then, lastly, esreboxetine in fibromyalgia, how big of a commercial priority is that? And what’s the extent to which you’re going to need to expand the commercial organization to support that product commercially? Thank you.

Herriot Tabuteau — Chief Executive Officer

Thank you for those questions. So, I’ll take the first two on AXS-12 and solriamfetol, then I’ll let Ari comment on esreboxetine. So, in terms of the timing for NDA filing for AXS-12, so the gating factor is completion of the open-label safety extension trial which we expect to complete in the second half of this year. And then, it’ll take us then some time, you know, to put together the NDA filing, but that is the gating factor. So, once that study is completed, we will then be able to file the NDA.

As it relates to solriamfetol in the pediatric ADHD study plan, you are correct that that is a trial which needs to be part of the initial NDA package. And we have been working on that, as — as you can imagine, in terms of speaking with the FDA to get that in place. And we have not yet provided the precise guidance, but this is a study that we will be targeting to start this year. And with regards to esreboxetine?

Ari Maizel — Executive Vice President, Head of Commercial

Yeah, thanks for the question. I think for AXS-14, fibromyalgia, we do view this as a meaningful commercial opportunity. There are three approved agents, but there’s a lot of room for improvement in terms of overall clinical profile for patients. And we feel very optimistic about the profile AXS-14 offers for patients.

As it relates to, you know, how — how it will impact the sort of commercial footprint, you know, part of what we’re analyzing this year is how to effectively size and structure our sales force to accommodate a growing portfolio of products. Although fibromyalgia is not, you know, a psychiatric product, there is a lot of overlapping comorbidity with major depressive disorder that will influence some of our thinking. And so, it’s a little too early to say, you know, how many additional reps we would want to build into the plan or how we would structure it. But we do think that there’s a way to promote AXS-14 efficiently while also putting plenty of attention on the other approved products on the market.

David Amsellem — Piper Sandler — Analyst

That’s helpful. Thank you.

Operator

Our next question comes from Yatin Suneja with Guggenheim Partners. Please proceed with your question.

Yatin Suneja — Guggenheim Partners — Analyst

Hey, guys, thank you for taking my question. I have two quick ones. One is a clarification one. With regard to the ACCORD-2 study, so that’s a new study, and this is the fourth study within the AD umbrella.

Is that a requirement from the FDA that you have to do two randomized withdrawal study? And then, will the NDA package be contingent upon completion of that study or the outcome of that study? So, that’s one. And then, with regard to Auvelity, I mean very nice quarter, so congrats on that. Any — any thoughts on thinking about providing guidance for the product maybe on a quarterly or on a yearly basis? Thank you.

Nick Pizzie — Chief Financial Officer

Yeah, yeah, so — sure. Hey, Yatin, thanks for the questions. It’s Nick. It’s just too early in Axsome and Auvelity’s life cycle to provide sales guidance given the fluid nature of some of the market dynamics and the unpredictability of external factors that could have different impacts.

We have shared that we believe peak sales for Auvelity in MDD alone are in the $1 billion to $3 billion range, and Sunosi, 300 milion to 500 million for its current indications.

Herriot Tabuteau — Chief Executive Officer

Yatin, with regards to ACCORD-2, this is not an FDA requirement, However, it does increase the robustness of the package, and it is a pivotal trial. So, we like that. We like having four different studies. So, basically, if you think about it, ADVANCE-1 and ADVANCE-2 are 2 parallel group studies, and ACCORD-1 and ACCORD-2 are two randomized withdrawal studies. So, a very nice source of evidence generation with those four studies.

And then, with regards to the NDA filing, is it contingent upon completion of that study. Since it’s not required, it’s not really contingent. However, we do think that based upon where we are with enrollment of that study, we do expect the study to be fully enrolled midyear and also the timing of the relapses in the ACCORD-1 trial, which was positive, that there is the potential for that study to read out around year-end. That’s not formal guidance, and formal guidance would be based upon the number of relapses and the timing of relapses but just to give you a sense of how one might think about it.

So, we’re really happy with the way that we’ve been able to efficiently increase the robustness of — of the program for this very important product.

Operator

Our next question comes from Jason Gerberry with Bank of America. Please proceed with your question.

Jason Gerberry — Bank of America Merrill Lynch — Analyst

Hey, guys, thanks for taking my question. So, just — just on ACCORD-2, so it sounds like the motivation with the study is that, you know, kind of like think about it as a marketing study. And along those lines, is there an opportunity for you to pull ACCORD-1 and 2 such that, I don’t know, if the data has a better chance of getting into the label given that ACCORD-1 was a really small trial? And then, you guys did mention the cyberattack in 1Q. So, I know some of your peers had kind of indicated it wasn’t really a material impact to numbers.

So, can you quantify to what extent the cyberattack did affect Auvelity revenues in 1Q? Thanks.

Herriot Tabuteau — Chief Executive Officer

Sure. So, with regards to ACCORD-2, just to be clear, this is — it can be used for marketing obviously, but it is a registration trial. So, you know, we’re — so we like that. So, it does provide a very objective source of evidence.

And as it relates to being able to pull it with ACCORD-1, the two studies, as they’re similarly designed, could definitely be combined. And that’s typically something that is done in NDA packages.

Ari Maizel — Executive Vice President, Head of Commercial

Yeah. And regarding the Change Healthcare cyberattack, the impact for Auvelity was really focused on two week at the end of — of February, beginning of March. Basically, what we saw was, you know, roughly a 30 to 40% impact on — on weekly prescriptions for those couple of weeks. During that time, we put in a number of technology optimizations and patient savings optimizations and saw a very quick bounce-back in — in early to mid-March for our demand trend.

And it’s been stable since then, stable to growing since then. So, it’s largely behind us at this point. We don’t expect any continued disruption. And, you know, for some brands, it was more impactful just related to time and market, you know, whether patient savings cards were tied to the Change Healthcare switch, things of that nature.

And so, that’s why it impacted us, but it was transient in nature. We feel really good about the solutions we put into place, and we’ve seen really nice growth since.

Jason Gerberry — Bank of America Merrill Lynch — Analyst

Thank you.

Operator

Our next question comes from Joon Lee with Truist Securities. Please proceed with your question.

Joon Lee — Truist Securities — Analyst

Yeah, thanks so much. Thanks for taking our questions. Regarding ACCORD-2, what was the rationale behind designing it as a randomized controlled trial as opposed to a standard (Inaudible) trial which appeared to have a — you have better success in? And are the endpoints in ACCORD-2 identical to that used in ACCORD-1? Thank you so much.

Herriot Tabuteau — Chief Executive Officer

So, thanks, Joon. You — you were somewhat muffled. So, I’ll try and answer the question the way that I interpreted it but not necessarily what you said. But I think the question was around ACCORD-2 and what was the rationale for the design versus other designs.

So — so, the — the rationale was we wanted to take advantage already of the fact that we had a study which was treating patients in an open-label fashion and, therefore, would allow assessment of stable response. So, it — it made a lot of sense, so — since — since that — since our open-label safety extension trial is essentially the same way that all randomized control studies begin. So, that was the rationale there. And in terms of the endpoint, as compared to ACCORD-1, the endpoint is identical. So, this is — this is a way for us to be able to take the learnings from ACCORD-1 and apply them to ACCORD-2 to generate additional data.

Joon Lee — Truist Securities — Analyst

Thank you.

Operator

Our next question comes from Joel Beatty with Baird. Please proceed with your question.

Joel Beatty — Robert W. Baird and Company — Analyst

All right, thanks for taking the questions. First one is on Auvelity. Could you provide a breakdown between usage and earlier-line and later-line therapy? And with the second large purchasing contract, could the use as an earlier-line therapy be impacted at all?

Ari Maizel — Executive Vice President, Head of Commercial

Yeah, hey, this is Ari. Thanks for the question. We have seen a really nice increase since last quarter in line of therapy. The increase is — we saw, you know, roughly 5% increase in first or second line use.

So, at this point, we’re around 50%. Auvelity prescriptions are first or second line, which is, you know, a very healthy trend, and we expect that to continue. Your question around the GPO contract and the impact on line of therapy, generally speaking, when we negotiate with plans and PBMs, we are negotiating for first or second-line access for patients. And so, we would expect if we’re — if we’re successful in pulling through that — those contract terms that that would further increase, you know, the earlier usage of Auvelity in patients.

Joel Beatty — Robert W. Baird and Company — Analyst

Thanks. And last question is, can you provide any context on how the spending trajectory is looking going forward?

Ari Maizel — Executive Vice President, Head of Commercial

I’m sorry, you were hard to hear. Do you mind repeating the question?

Joel Beatty — Robert W. Baird and Company — Analyst

Sure. So, how does this spending trajectory look going forward, just spending overall for R&D and SG&A and so on?

Nick Pizzie — Chief Financial Officer

Got it. Thanks — thanks for your question. So, as for R&D, expense for the quarter was 37 million, which ticked up slightly from the previous quarter. We expect R&D spend to continue to increase gradually as we — as the two solriamfetol phase 3 trials commence during the quarter, with the third starting in Q2 in shift work.

These will be partially offset by the completion of the SYMPHONY trial for AXS-12. And as a reminder, in Q2, we do plan to submit the NDA for fibromyalgia, so we will have a one-time charge for the NDA filing fee. As for SG&A, total expense for the quarter was 99 million, as I mentioned in my opening remarks. That was higher than the previous quarter but anticipated as it really related to the sales force expansion. We would anticipate SG&A expense to be in this range in future quarters.

Joel Beatty — Robert W. Baird and Company — Analyst

Thank you.

Operator

Our next question comes from David Hoang with Citi. Please proceed with your question.

David Hoang — Citi — Analyst

Hi, good morning, and thanks for taking my question. Congrats on the quarter. I want to ask about the impact of the — the GPO negotiations in terms of timing on, you know, any increases in the number of commercial covered lives. Just, I guess, what could the cadence in covered lives that you pick up look like, and can we look toward next quarter as, you know, potentially seeing a meaningful step-up in the number of covered lives? Thanks.

Ari Maizel — Executive Vice President, Head of Commercial

Thanks for the question, David. So, we expect coverage to increase, but it is difficult to predict the exact timing. The way to think about GPOs are effectively gatekeepers for PBMs, which is why the first step toward securing access is agreeing on contract terms, which include the rebates and utilization management parameters. So, the agreement we announced today enables the PBMs under that umbrella to now access the contracted rates for their members. I can’t provide a specific percentage increase in covered lives from the 48% we have today.

But I will say that depending on how many of the PBMs underneath that umbrella access the rate, it is a meaningful increase over and above the 48%. The timing is just — it’s too difficult to — to provide. And your question about next quarter, obviously, our intent is to try to improve it as quickly as possible, and we will provide updates at the appropriate time.

Operator

Our next question comes from Graig Suvannavejh with Mizuho. Please proceed with your question.

Avantika Joshi — Mizuho Securities — Analyst

Hi, this is Avantika for Greg. I just had a question about AXS-05. Have you thought more about the branding for AXS-05 in AD agitation and if you would keep it under the Auvelity brand? Thanks and congrats on the quarter.

Herriot Tabuteau — Chief Executive Officer

Thanks for the question. So, whenever you have a new indication, and especially one which is — is different, as it is in the case of AXS-05, for AD agitation versus major depressive disorder, that is always a consideration, and it’s one that requires a lot of good thought. And it’s not just something that can just be answered on the fly. So, this would require us to really think about it and do some quantitative work, so stay tuned. And this is something that we would not obviously communicate or announce ahead of time, but it’s something that we’re working on.

Ari, anything that you would add to that?

Ari Maizel — Executive Vice President, Head of Commercial

No, I think you’re spot on. And I think the — the reality is that there are advantages and disadvantages to either maintaining the same name or having an alternative brand name, and we’re going through the work right now in anticipation of filing down the road.

Avantika Joshi — Mizuho Securities — Analyst

Great. Thank you.

Operator

Our next question comes from Vikram Purohit with Morgan Stanley. Please proceed with your question.

Vikram Purohit — Morgan Stanley — Analyst

Hi, good morning. Thanks for taking our questions. We had two: one on Auvelity, one on the pipeline. So, for Auvelity, could you talk a bit more about how you expect the sales force expansion that you completed recently to help kind of inflect scripts and inflect sales throughout the — the rest of the year, and whether you’d expect there to be kind of a visible kind of acute lift in — in either of those metrics over the next couple of quarters? And then, secondly, for solriamfetol in ADHD, can you confirm, is this phase 3 readout expected in the second half of the year? Is this going to be the study based on which you can submit potentially a filing for the indication? And then, also if you could just kind of frame out for us what you’ll be reporting and what you would think constitutes a successful readout here, that’d be helpful.

Thank you.

Ari Maizel — Executive Vice President, Head of Commercial

Sure. Yeah, I’ll start with the Auvelity question. So, sales force expansion, we are seeing an impact certainly on activity levels and effort with customers. We’re seeing a, you know, roughly 40% increase in — in — in weekly calls to customers.

We are engaging with a broader group of providers that includes a primary care audience. And we are seeing that a meaningful increase in new prescriptions and total prescriptions from primary care, which is sort of commensurate with the additional focus we’ve been able to — to provide with the expanded sales team. I would say that we’re in the early phases of — of seeing the impact from a demand perspective. Referenced on the opening comments that we’ve seen a 30% increase in weekly new patient starts. That is typically the first indicator that demand growth is reaching an inflection.

But it’s still early days in many ways, and we expect that net growth to continue over time. So, we feel really optimistic about the impact of the sales force expansion has had thus far and expect that to continue to build over the course of the year.

Herriot Tabuteau — Chief Executive Officer

Great. And with regards to solriamfetol in the current ADHD study, that phase 3 trial is a registration trial. So, this is the study that would enable an NDA filing, along with a study in pediatric patients. So, we do need to include that data and efficacy data from pediatric patients that’s required for any kind of ADHD NDA filing. So, we’re looking forward to the results of the FOCUS 3 trial in the second half of this year.

So, we’re on track for that. As it relates to what we’re looking for, well, I think the first thing that we’re looking for is to demonstrate efficacy in the first large, multicenter randomized parallel-group study. So, that’s what we’re looking for. The results of that will inform the profile of the product. There has been one prior study with solriamfetol in ADHD, which we sponsored.

That was an investigator-initiated trial that was a single-center study. So, this will be — the FOCUS study will be the first — the multicenter trial.

Operator

Our next question comes from Matt Kaplan with Ladenburg Thalmann. Please proceed with your question.

Matt Kaplan — Ladenburg Thalmann and Company — Analyst

Hey, good morning, guys, and congrats on the quarterly results. Just a quick follow-up on the ADHD program for solriamfetol. Will you, I guess, wait for the readout of the adult study prior to starting the pediatric study in ADHD?

Herriot Tabuteau — Chief Executive Officer

No, we would not. You know, our goal is to start the pediatric study as soon as practicable.

Matt Kaplan — Ladenburg Thalmann and Company — Analyst

Great. Thanks.

Operator

We have time for questions from two more analysts. Our next question comes from Myles Minter with William Blair.

Myles Minter — William Blair and Company — Analyst

Hey, guys, thanks for taking the questions. Just on the Alzheimer’s disease agitation program, you’re enrolling from the open-label extension of ADVANCE-2 into this new ACCORD-2 study. So, does that really imply that you’ve already got all of the long-term safety data that is required for a potential AXS-05 filing for that indication? And then, the second one is about the messaging that ACCORD-2 could be a pivotal study if it is required. Why is that the case when I believe ACCORD-1 went through some protocol amendments and was obviously concluded early? And I think the messaging was that that may have been pivotal when it first started, then it turns out, it wasn’t.

So, I guess what has changed there to say that ACCORD-2 would be pivotal and ACCORD-1 wasn’t? Thanks.

Herriot Tabuteau — Chief Executive Officer

Thanks — thanks for the questions. With regards to the open-label extension study, so we continue to enroll the open-label safety extension trial. As a reminder, that requires — or what we’re trying to do is to meet ICH guidelines, which are 300 patients treated for six months and 100 patients treated for one year. And we’re well on track to accomplish those goals. So, ACCORD-2 does not affect that.

And then, also, the patients who are completing ACCORD-2 are also able to then go on and continue to be dosed. So, we’re very comfortable with regards to meeting the necessary number of patients. As it relates to ACCORD-2 being a pivotal study, the — and it also is comparing that to ACCORD-1. So, what’s nice about ACCORD-2 is we’ve completed ACCORD-1.

And so, all of the learnings in terms of — in terms of our confidence around the endpoint, which would be necessary in a study like this, we have. And so, we’re able to design ACCORD-2 very prospectively. And we have also received feedback from the FDA that this could be a registration trial based on the design. So, I think, you know, that it’s the fact that that ACCORD-2, you’re designing it and we have designed it, with the benefit of the knowledge from ACCORD-1, which is a benefit in this case.

Myles Minter — William Blair and Company — Analyst

Thanks for the questions.

Operator

Our next question comes from Troy Langford with TD Cowen. Please proceed with your question.

Troy Langford — TD Cowen — Analyst

Hey, congrats on all the progress this quarter, and thanks for taking our question. On AXS-14, how confident do you feel that the FDA has all it would need for the — from a clinical efficacy perspective to approve the application? And then, on Sunosi, can you just provide any additional color on the powering assumptions for the phase 3 trial in MDD?

Mark Jacobson — Chief Operating Officer

Troy, hey, I’ll take 14. It’s Mark. So, you know, we’re targeting this quarter here, and the — you know, in terms of content, that’s the — that’s essentially complete. So, we’re — you know, those things are being finalized, and really it’s just building out the submission and we’re going through that.

We’re going to take the time to get that as robust as possible, but it’s — the work is substantially complete.

Herriot Tabuteau — Chief Executive Officer

As it relates to the powering for solriamfetol in MDD, we powered that study similar to — similarly to the way that we powered our other studies in major depressive disorder. So — and as you know, we do have quite a bit of experience there with the Auvelity program. So — so, think about the powering as being similar. And I think, you know, in general, for these studies, the effect sizes, which one would expect with these drugs, is very well laid out and there’s a lot of precedent. So, that’s how we powered the study.

So, to summarize, it’s 90% powered to detect an effect size, which is similar to the effect size which we detected in the Auvelity program.

Troy Langford — TD Cowen — Analyst

Great. Thanks for the color.

Operator

Since there are no more questions, I will now turn the call back over to Axsome’s CEO for concluding remarks.

Herriot Tabuteau — Chief Executive Officer

Well, thank you for taking the time to join us for today’s quarterly update. The first quarter of 2024 marks strong progress for Axsome. We look to continue our focus on commercial and pipeline execution throughout the balance of the year with the goal of delivering innovation and value to patients, healthcare professionals, and investors alike. Thank you and have a great rest of your day.

Operator

(Operator signoff)

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