Axsome Therapeutics (AXSM) Q1 2022 Earnings Call Transcript

Axsome Therapeutics (AXSM 0.49%)
Q1 2022 Earnings Call
May 02, 2022, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the Axsome Therapeutics conference call. [Operator instructions] I would now like to turn the conference over to your host, Mark Jacobson, chief operating officer at Axsome Therapeutics. Please go ahead.

Mark Jacobson -- Chief Operating Officer

Thank you, operator. Good morning, and thank you, all, for joining us on today's conference call. This morning, we issued two press releases, our earnings press release, providing a corporate update and details of the company's financial results for the first quarter of 2022 and the release relating to the FDA's action on the AXS07 NDA. These crossed the wire a short time ago and are 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; commercial plans; and possible intended use of cash and investments. These forward-looking statements are based on current information, assumptions, and expectations that are subject to change and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our periodic filings made with the Securities and Exchange Commission, including our quarterly and annual reports.

You are cautioned not to place undue reliance on these forward-looking statements, which are 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; and Dr. Amanda Jones, senior vice president of clinical development.

Herriot will first provide an overview of the company and then review recent developments and upcoming milestones. Following Herriot, Lori will provide a commercial update, and then Nick will review our financial results. We will then open the line for questions. Question will be taken in the order they are received.

And with that, I will turn the call over to Herriot. And with that, I'll turn the call over to Ariel.

Herriot Tabuteau -- Chief Executive Officer

Thank you, Mark. Good morning, everyone, and thank you all for joining Axsome Therapeutics first quarter 2022 financial results and business update conference call. The past few months have been incredibly busy and productive for Axsome. We have made progress in FDA reviews of both of our NDAs, announced the agreement to acquire Sunosi, and continue to advance the rest of our rich late-stage pipeline, which includes AXS-05 in Alzheimer's disease agitation, AXS-12 in narcolepsy, and AXS-14 in fibromyalgia.

Axsome is poised to transform into a commercial entity, potentially as early as this month, a direct result of our team's focused execution. I will provide an update on the status of our NDAs, the pending Sunosi acquisition, and the rest of our pipeline before turning it over to Lori and Nick, who will provide a commercial and financial update. With regards to AXS-07, this morning we announced that we have received a complete response letter, or CRL, from the FDA for the AXS-07 NDA for the acute treatment of migraine. Importantly, the CRL did not identify or raise any concerns about the clinical efficacy or safety in the NDA.

And the FDA did not request any new clinical trials to support the approval of AXS-07. The principal reason given in the CRL relate to chemistry, manufacturing, and controls, or CMC, considerations. The CRL identified the need for additional CMC data pertaining to the drug product and manufacturing process. We believe that all the issues raised in the CRL are addressable.

We are excited by the prospects for AXS-07. This excitement is driven by the strong clinical data and product profile AXS-07. The approval of AXS-07 would offer a much needed new multi-mechanistic treatment option for the millions of people living with migraine. It is our goal to work closely with the FDA to provide them with the information they need so that we can make this important new medicine available to patients as quickly as possible.

We intend to provide potential timing for a resubmission following consultation with the FDA. With regards to AXS-05, review of the NDA is progressing. Based on feedback from the FDA, we believe that the previously disclosed CMC deficiencies have been resolved. In addition, we recently received and agreed to post-marketing requirements and commitments proposed by the FDA for AXS-05.

Based on this interaction, we anticipate potential FDA action on the NDA in the second quarter of 2022. With regards to our Alzheimer's disease agitation program, enrollment in the phase 3 ACCORD trial of AXS-05 in this indication continues to progress. As previously disclosed, we are evaluating the design of the study and will provide an update following consultation with the FDA. Moving on to the Sunosi acquisition.

In March 2022, we entered into a definitive agreement to acquire Sunosi or solriamfetol from Jazz Pharmaceuticals. Sunosi is a dual-acting dopamine and norepinephrine reuptake inhibitor indicated to improve wakefulness in adults with excessive daytime sleepiness due to narcolepsy or obstructive sleep apnea. The Hart-Scott-Rodino waiting period for the acquisition has now expired, and so we expect the transaction to close this month. Between the pending FDA action on our NDA for AXS-05 in depression and the expected closing of our acquisition of Sunosi, Axsome is poised to potentially make two important new medicines available to patients living with serious CNS disorders in the coming months.

The rest of our late-stage pipeline continues to advance. For AXS-12, our product candidate being developed for the treatment of narcolepsy, enrollment in the SYMPHONY phase 3 trial is progressing and top-line results are anticipated in the first half of 2023. For AXS-14, our product candidate for the treatment of fibromyalgia, manufacturing and other activities related to the planned submission of an NDA are ongoing. And we expect to submit the NDA for this product candidate in 2023.

I will now turn the call over to Lori, who will provide a commercial update.

Lori Englebert -- Senior Vice President, Commercial and Business Development

Thank you, Herriot, and good morning. The commercial team remains focused on preparations for potential commercial launches and simultaneously have been working hard to ensure a smooth transition of Sunosi into the Axsome infrastructure. I am extremely proud of the efforts from the entire Axsome team and immediately upon deal close, we look forward to welcoming the Jazz employees to Axsome. Axsome is on the verge of becoming a commercial entity, and we are excited about the opportunity to bring potentially life-changing therapies to patients.

The addressable diseases of focus for our near-term products are highly prevalent and have substantial unmet need. Our products, if approved, will bring a differentiated clinical profile to their respective markets. As a reminder, Sunosi is the first and only FDA-approved dual-acting DNRI to treat excessive daytime sleepiness in adults with narcolepsy or OSA. EDS associated with narcolepsy or OSA is a serious condition that is associated with impaired neurocognitive functions and can have effects on attention, memory, and executive functioning.

Narcolepsy is an orphan condition that affects close to 200,000 people in the U.S., all of whom experienced EDS. OSA, on the other hand, is a highly prevalent condition that affects an estimated 22 million U.S. adults. An estimated 75% of OSA patients experienced EDS.

Many of them continue to experience EDS despite the use of continuous positive airway pressure, or CPAP. Regarding AXS-05 and major depressive disorder, the mental health crisis impacting the U.S. continues, with an estimated 21 million U.S. adults experiencing MDD each year.

And recent studies estimate that number has likely increased threefold due to the COVID-19 pandemic. MDD is a common and serious medical illness that negatively affects how people feel, the way they think, and how they act. MDD is also the No. 1 cause of disability worldwide.

Given the personal and economic burden associated with mental health conditions, there's an urgent need to bring support to those affected. If approved, AXS-05 would be an important new treatment option for the many Americans living with depression. We are prepared and ready to commercialize, if approved. Shifting to AXS-07, despite recent innovation and acute migraine market, there continues to be close to 70% dissatisfaction rate with currently available therapies, demonstrating high unmet need for the 37 million Americans who experience migraine.

Regardless of any delay on AXS-07 due to the CRL, we have been actively preparing for launch and will be ready to do so if approved. Promotional efforts on Sunosi, combined with our near-term potential launch for AXS-05 in major depressive disorder, allows for a highly complementary sales force effort. Forty percent of the current prescriber base for weight-promoting agents is made up of psychiatrists and neurologists, our primary targets for AXS-05 and AXS-07. As a reminder, all sales force offers are contingent upon approval.

Lastly, our first-in-class digital centric commercialization, or DCC, platform remains fundamental to our commercialization strategy. Our DCC platform was designed to augment our promotional efforts to allow for highly effective, efficient, and more meaningful engagement with physicians and patients. The goal of DCC is to meet customers where and how they want to be engaged with the right content at the right time. Our commercial launch strategy is innovative and purposeful, with the intent to bring important new products to the market in a meaningful way.

The differentiated clinical profiles of Sunosi, AXS-05 and AXS-07 have the potential to bring significant benefit to patients and the physicians who treat them. I look forward to discussing in greater detail the commercial plans for AXS-05 upon potential approval and for Sunosi after the close of the transaction. We remain excited about the opportunity to potentially bring these important new products to market in the near term. I will now turn it over to Nick, who will review our financials.

Nick Pizzie -- Chief Financial Officer

Thank you, Lori, and good morning, everyone. Today, I will discuss our first quarter results and provide some financial guidance. We ended the quarter with approximately 85 million in cash compared to roughly 86 million at the end of the year, a net decrease of approximately $1 million. During the first quarter, we access our ATM facility, receiving net proceeds of approximately $31 million.

R&D expenses were $12.6 million for the three months ended March 31, 2022, and $15.6 million for the comparable period in 2021. The decrease was driven by expenses related to the NDA filing, which occurred in the prior comparable period. GAAP expenses were $25.7 million for the three months ended March 31st, 2022, and 11.2 million for the comparable period in 2021. The increase was primarily related to pre-commercial activities and personnel expense, along with an increase in noncash stock compensation expense.

Net loss was $39.6 million or $1.03 per share for the three months ended March 31, 2022, compared to a net loss of 29.3 million or $0.78 per share for the comparable period in 2021. The net loss for the current period included $7.6 million of noncash stock compensation expense compared to $3.7 million in the comparable period. Regarding the Sunosi acquisition, the acquisition is being funded through our existing $300 million facility with Hercules Capital plus an additional equity investment from Hercules Capital. We believe that our current cash balance, along with the remaining committed capital from the $300 million term loan facility, is sufficient to fund anticipated operations into 2024 based on our current operating plan, which includes the potential launch of AXS-05 and MDD, and the acquisition and commercialization of Sunosi.

That concludes our first quarter 2022 financial review. I will now turn the call back to Mark to lead the Q&A discussion.

Mark Jacobson -- Chief Operating Officer

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

Questions & Answers:

Operator

Thank you. [Operator instructions] Our first question is from Charles Duncan of Cantor Fitzgerald. Charles, your line is open.

Charles Duncan -- Cantor Fitzgerald -- Analyst

Hey, good morning, Herriot and team. Thanks for taking our question. I have a couple of questions primarily on 07 and then on 05. Regarding 07 and the CRL, I guess, you know, I know you haven't met with the agency, but can you provide us any additional color, not only this subject but of this CRL in terms of CMC? But what gives you confidence in your ability to address it? And how related is it, if at all, to the CRL -- or not the CRL, the CMC issues that you've received with 05?

Herriot Tabuteau -- Chief Executive Officer

Hi, Charles. Thanks for the question. I'll make some overarching comments and then I'll turn over to Mark, who maybe can provide some more details. With regards to the relationship question between 05 and 07, there is no relationship.

The issues are distinct. And then, also, with regards to 05, we did also announce that the safety-related deficiencies have been addressed and resolved. Now, with regards to 07 CRL, it's just important to reiterate that the CRL did not identify or raise any concerns around the clinical efficacy or safety of the data in the NDA. So we feel very good about that and feel that it's great to get affirmation from the FDA at the end of a review with regards to our clinical data.

So, it's -- we love the product. We think it's an incredibly exciting profile, and it's good to get to the end of a review. Now, with regards to the CMC questions and considerations, I'll turn it over to Mark.

Mark Jacobson -- Chief Operating Officer

Hey, Charles. Good morning. So, as we mentioned, the questions and the requests for additional information, they principally relate to drug product and the manufacturing process. So, just a reminder that that AXS-07 incorporates our MoSEIC technology.

We need a novel technology that Axsome developed. And so, that does increase the complexity of the manufacturing process, the MoSEIC technology. And so, we understand the basis for many of the questions, and we do believe they're addressable. And to give you just a little bit more detail, the technology is a molecular inclusion complex buffering system, and many of the questions relate to that.

And one other bit of information that may be helpful just to try and address the different element of your question is our impression in the facility inspection that we had previously shared that we were informed was required, and that was completed, and that there were no findings as a result of that inspection.

Charles Duncan -- Cantor Fitzgerald -- Analyst

Right. So, it sounds like really a distinct set of issues relative to 05. But you feel like it's addressed -- they're addressable, and you'll provide us timing after you meet with the agency. Do you have a sense of when that could be?

Mark Jacobson -- Chief Operating Officer

So, that's correct that that will be the approach we plan to take and how we share with folks. So, we want to do that expediently. We do want to make sure we take our time to prepare for the consultations, and we will do that expediently. And as soon as we have a sense of granularity for timing, we'll let you all know.

And then related to timing, we would expect this to be a Class 2 resubmission. And so, that, I think, as everyone is aware, that that's a six-month review.

Charles Duncan -- Cantor Fitzgerald -- Analyst

Got it. And then one quick, two-part question on 05. And that is great to hear that you've received some communication from the agency on post-marketing requirements. I'm sure that you can't provide a lot of detail on that.

But I'm wondering if the post-marketing requirements for 05, should it be approved? Does that include a REMS? And if so, can you provide any color? And then the second part is, given the kind of changing therapeutic landscape to incorporate perhaps more intermittent treatment, for example, with zuranolone, you know, out of Biogen; Sage, their filing. Do you anticipate there to be this same kind of demand or opportunity set that you'd seen when you initiated a program like, say, AXS-05? Thanks.

Herriot Tabuteau -- Chief Executive Officer

Sure. Thanks, Charles, for those follow-up questions. With regards to the question around the REMS, a REMS was not part of the PMRs or PMCs that we agreed to or discussed with the FDA. And there's some overarching comments on your question around intermittent treatment before I turn it over the Lori, who might be able to provide some additional details there.

But some overarching comments are that the way that major depressive disorder is treated had always been intermittent treatment. So major depressive episodes are treated, of course. And then many patients, once they get better and they've been better for a while, clinicians would take them off their medications. The important aspect of treatment here is that not only should patients receive relief from their depressive symptoms, but that that should be maintained.

So durability is really important. And, you know, we've shown significant durability with the AXS-05 over a long treatment period. We've treated patients now to one year. So, we feel as good as ever, if not better, about the prospects for AXS-05 in MDD.

Lori?

Lori Englebert -- Senior Vice President, Commercial and Business Development

Yeah. Hi, Charles. Good morning. You know, there's estimated up to 80 million prevalent MDD patients in the U.S.

right now. And as we all know, you know, we're in the middle of a mental health crisis. So, any new therapies coming to market, you know, we're excited about for patients and their ability to get treatment. What we know now with the current available therapies, you know, two-thirds do not achieve remission.

And given the clinical profile of 05, you know, with the fast onset of action being really fast achievement of remission and the durability as Herriot was mentioning, we do believe it is differentiated and compelling for physicians. And we don't see this as hindering our demand at all.

Charles Duncan -- Cantor Fitzgerald -- Analyst

Very good. Thanks for taking my questions. Congrats on the progress.

Herriot Tabuteau -- Chief Executive Officer

Thanks.

Operator

Our next question is from Joon Lee of Truist Securities. Joon, your line is open.

Joon Lee -- Truist Securities -- Analyst

Hi. Thanks for taking our questions, and thanks for the updates. So, for -- on 05, have you started labelling discussions yet?

Herriot Tabuteau -- Chief Executive Officer

Joon, thanks for the question. What we've said is that as soon as we enter into labelling discussions, we will let the Street know.

Joon Lee -- Truist Securities -- Analyst

Great. And then can you remind us the conditions under which you can draw the [Inaudible] funds from the Hercules loan facility? Does it require approval of 05?

Herriot Tabuteau -- Chief Executive Officer

Nick?

Nick Pizzie -- Chief Financial Officer

Yeah, sure. So for upon approval of AXS-05, there is $100 million that is tied to that approval. However, we do have a amendment that we had signed and becomes executed upon the Sunosi transaction. And that will accelerate the later tranches to fund up to $45 million of the Sunosi transaction.

I think it's also important to note that Hercules has also committed $5 million to $8 million in a direct equity investment upon the close of the transaction.

Joon Lee -- Truist Securities -- Analyst

Thank you. And the last question, quickly, you know, the trial amendment that you're contemplating for, the Alzheimer's education study for AXS-5, is that in any way related to sort of the discussion you're having with the FDA with regards to the depression indication?

Herriot Tabuteau -- Chief Executive Officer

No, it's not related to that.

Joon Lee -- Truist Securities -- Analyst

Great. Thanks for the questions.

Operator

Our next question is from Vikram Purohit of Morgan Stanley. Vikram, your line is open.

Vikram Purohit -- Morgan Stanley -- Analyst

Great. Thank you for taking my questions. A few on the pipeline from our side. So, first, Staying on the topic of the ACCORD study, so you did mention previously that relapse events have been below your initial projections.

So I just wanted to see if you could give us an update on how those have been trending since you last provided an update. And then also, um, do you have any sense of timing at this point on when you might be able to speak with the FDA about amendments to the study design that you might have in mind?

Herriot Tabuteau -- Chief Executive Officer

Sure. I'll let Amanda take that question.

Amanda Jones -- Senior Vice President, Clinical Development

Sure. Thank you. Regarding the, you know, rate of relapses currently. So we have not disclosed any numbers.

And we will disclose that when we provide top-line data for this study. And in regards to the timing of discussion with the NDA, you know, we haven't provided any granularity, but we Do intend to do so as soon as possible.

Vikram Purohit -- Morgan Stanley -- Analyst

OK. And as a follow-up for fibromyalgia, I know you've guided to an NDA submission in 2023. What needs to happen between now and then for that NDA submission? And do you know specifically when in 2023 that might be expected? Is it more the first half event or second half event?

Mark Jacobson -- Chief Operating Officer

Hey, Vikram. It's Mark. So, we haven't given granularity on the timing yet for 2023. As we get closer, we'll narrow that guidance for you all.

Right now, the rate limiting step continues to be the manufacturing and stability. We do have to recapitulate and are the manufacturing from the prior process. And that work is ongoing.

Vikram Purohit -- Morgan Stanley -- Analyst

OK. Understood. Thanks.

Operator

Our next question is from Marc Goodman of SVB Leerink. Marc, your line is open.

Marc Goodman -- SVB Leerink Partners -- Analyst

Yes. Good morning. Herriot, I think I heard you say that you have affirmation with respect to 07 that there is nothing else related to efficacy or safety. Can you make that same comment when it comes to 05?

Herriot Tabuteau -- Chief Executive Officer

It's impossible for us to make any comment like that with regards to 05 prior to an NDA action. So, we're able to make comments with regard to 07 because now, the review is officially completed and the FDA has formally provided us with the determination that the NDA has completed and what the outstanding issues are. So, with regards to 05, while we are very positive on the efficacy profile and on our package, and while we are encouraged by the latest developments in the review process with the PMRs and the PMCs, we -- as you can understand, you know, it's not over until we get the FDA action, and we're very much looking forward to the FDA action hopefully soon.

Marc Goodman -- SVB Leerink Partners -- Analyst

Yeah. And, you know, just on 05, there seems to be, you know, just a concern out there that there could be a problem with how this thing gets labeled. I assume it's because of the dextromethorphan, you know, component. You mentioned specifically that there will be no REMS.

So, that's great news. Are there any other issues that seem to be out there with the FDA regarding dextromethorphan? Or, you know, you don't think that's going to end up being a labeling issue at all?

Herriot Tabuteau -- Chief Executive Officer

Well, all we can speak to is our product. And just as a reminder, the technology with the AXS-05 is, you know, we're using metabolic inhibition to inhibit the metabolism of dextromethorphan. So, therefore, the pharmacology is going to be different, which is why the FDA, you know, did require us to conduct a very large open-label safety extension study and also to have exposure in, you know, thousands of patients. So, we've done that, which is fantastic.

We're confident in the data. We've released those data. And, you know, we're looking forward to the conclusion of the review and the NDA action.

Marc Goodman -- SVB Leerink Partners -- Analyst

OK. And then lastly, just on a big picture, manufacturing, you know, obviously, it seems to be a discussion here on just about every product. Can you just remind us, are you using the same manufacturing companies with respect to all of these products, 07, 05, 14? You know, I mean, are we going to have the same kind of issues, you know, or what? Thanks.

Herriot Tabuteau -- Chief Executive Officer

Yeah, there is some natural overlap, as you can imagine, among vendors. However, we do not think that the issues related to one NDA versus the other are related at all in any way. And then the other thing you mentioned -- I'm sorry, the other thing that I would mention to is, you know, while this is while it is disappointing, you know, obviously, to get to the end of a review and have a CRL, there does seem to be just more globally, if you look at the industry, an increase in the percentage of NDA that receives CRL, especially for manufacturing, that may be an indication of the climate at the FDA. But for example, you know, the rate of the CRL has been roughly, you know, 50% at least in the first half of so far this year compared to around 15% historically.

And most of those are related to CMC. So, you know, we fully understand the reasons why the agency would want to make sure that, you know, any new technology, any new manufacturing process is fully vetted.

Marc Goodman -- SVB Leerink Partners -- Analyst

Well, you're working on manufacturing right now for 14. So, it just kind of lends the question of, you know, are you learning some things from, you know, the issues before? Is this the same manufacturing people who, you know, will learn from what the FDA needs with these other products? That's really the question.

Mark Jacobson -- Chief Operating Officer

Hey, Marc. So, each program we have selected CMO that we think are best suited to commercialize the product candidates. And so at AXS-14, that's an entirely different -- that has its own facility, its own company's API, interim product with AXS-07. There are multiple facilities involved there.

As we mentioned, one of them had a required inspection and our understanding was that there were no findings. And so, this question about, "Oh, is there an underlying issue with the CMO?" We're not aware that that's the case. And there is some overlap with the programs. But generally, each is distinct.

Herriot Tabuteau -- Chief Executive Officer

Yeah. And another way of answering your question, Marc, is, yes, there are learnings from every interaction with the FDA, from every NDA. And, you know, by the time that we filed the NDA for fibromyalgia, you know, we would have gone through, you know, at least two, maybe three NDA filings. And we will take every lesson that is possible.

We'll mine those experiences to make sure that we increase our probability of success in the future.

Marc Goodman -- SVB Leerink Partners -- Analyst

Thanks, Herriot.

Operator

Our next question is from Vamil Divan of Mizuho Securities. Vamil, your line is open.

Vamil Divan -- Mizuho Securities -- Analyst

Great. Thanks for taking my questions and for all the info today. So, maybe just a couple separate questions. One on 05, I think we still got a lot of questions from investors on sort of the payer dynamics here since this is your two older products.

Obviously, we're still waiting for approval here. But I'm wondering if you could give us your updated thoughts on kind of how you think payers will respond to this product? And what sort of hurdles patients have to go through before they can get on to the product? And then for Sunosi, just had a question there on -- I know you probably somewhat limited on what you can say before the deal officially closes. But I mean, your expectations for us are a billion-dollar product and you are quite a bit above, you know, the Street has generally thought of this product. I assume it's because there's sort of newer indications that you're looking to move this product into.

I'm just wondering if there's any more you could share at this point in terms of how you're hoping to expand this product out into other indications beyond what it's already approved for. Thank you.

Herriot Tabuteau -- Chief Executive Officer

Thanks, first, Vamil, for the question. For the questions, actually, there were two. I'll take the Sunosi question before turning it over to Lori to take the payer dynamics question on 05. Yeah, we're really excited about the Sunosi acquisition we did put out in the U.K.

this morning, announcing that the HSR waiting period has now expired. So, we do expect the transaction to close very shortly. And we do anticipate, you know, having some kind of investor forum to discuss what the new indications are and what the timing of that, the timing of us, making sure that that we take the steps that we need to take to get to that, you know, $1 billion plus market potential, which we outlined when we first announced the signing of the acquisition. So, we're really excited about Sunosi.

And I'll turn it over to Lori to talk about the pay dynamics and to add anything more that she may want to add about Sunosi.

Lori Englebert -- Senior Vice President, Commercial and Business Development

Sure. And, hi, thanks for the question. So, you know, we started payer -- permitted payer discussions back on 05 about a year ago, and nothing's changed. Payers, you know, continue to recognize the unmet need in MDD, and they, you know, continually express their, you know, their understanding of the fact that AXS-05 will bring a novel mechanism of action to market.

You know, they recognize that there's a need for fast and rapid onset of actions and also durability for those patients. And we look forward to keep telling you more once the, you know, potential approval comes and we engage more affairs. In terms of Sunosi, you know, we are excited about the current indication as well. We do believe that there's incredible untapped potential in the current indication for EDS, especially with narcolepsy or OSA.

We're also really excited about how the Jazz team has -- that will come over Axsome has been working during this transition period. Last week, in fact, you know, [Inaudible] new-to-brand prescriptions were the second highest of the year. And that came during, you know, a time of transition. So, we are really excited about the caliber of Jazz employees coming over to Axsome and look forward to welcoming them upon the deal close.

Vamil Divan -- Mizuho Securities -- Analyst

OK. Thank you.

Operator

[Operator instructions] Our next question is from Joseph Thome of Cowen and Company. Joseph, your line is open.

Joe Thome -- Cowen and Company -- Analyst

Hi, there. Good morning, and thank you for taking our questions. Maybe just on the AXS-05 review. It's been a couple of weeks now almost, I think, since you announced that you agreed to the post-marketing commitments.

I guess, in the interim, do you continue to interact with the FDA? What's sort of the cadence of interaction is around this? And I guess, during that discussion, were you able to kind of find out maybe what the initial deficiencies noted in the July letter of last year happened to be? Thank you.

Herriot Tabuteau -- Chief Executive Officer

Thanks for the question. As you can imagine, during this phase of the NDA review, there are multiple interactions. So, those continue. And with regards to the initial deficiencies, all we are aware of are what the deficiencies are that had been communicated to us, and those deficiencies were CMC.

And as we've stated, we have addressed those deficiencies, and they are now resolved. We've not been made aware of any other deficiencies.

Joe Thome -- Cowen and Company -- Analyst

Great. Thank you. Maybe just one follow-up. How are you thinking about Europe? And obviously, you'll get to those here, hopefully in the third quarter.

Is that something that you want to launch yourself? And when you think about AXS-05 and AXS-07, how far do you want to take those in discussions with Europe before making a decision on marketing? How do you think about that overall?

Herriot Tabuteau -- Chief Executive Officer

The way that Sunosi factors into our European strategy is now it gives us an additional product in Europe, a product which is approved and marketed currently in Europe, and which has also a rollout in multiple new European markets on the roster. So, as it relates to our overall corporate strategy, prior to the Sunosi acquisition announcement, which was to outlicense our product candidates outside of the U.S., this only puts us in a much stronger position. As you can imagine, that might lead to greater interest from potential partners.

Joe Thome -- Cowen and Company -- Analyst

OK. Thank you very much.

Operator

Our next question is from Ram Selvaraju from H.C. Wainwright. Ram, your line is open.

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

Thanks very much for taking my questions. Firstly, I just wanted clarification regarding the timeline for potential approval of AXS-07. Since you mentioned that this is likely to be considered a Class 2 resubmission, is it appropriate for us to assume at this juncture that the earliest AXS-07 could be approved in the U.S. would be in 2023?

Herriot Tabuteau -- Chief Executive Officer

So, Ron, thanks for the question. What we're looking to do is to meet with the FDA as expeditiously as possible. That's a Type A meeting. We want to make sure that we get our ducks in a row prior to requesting that meeting and getting a date.

Once we have that meeting and we get feedback on the agency, in other words, we confirm exactly what it is that should go into the resubmission so that we can have success, then we'll be in a position to provide you with updated guidance on timing. Apart from what we've already said, which is that we do expect that once we resubmit that the resubmission would likely be treated as a Class 2 resubmission, leading to a six-month review.

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

Great. And then just two very quick additional ones from me. Can you comment on how you anticipate deploying the Sunosi sales force that is coming over in the Jazz acquisition transaction, and if you anticipate a meaningful role for those sales representatives in the ultimate promotion of drugs like AXS-05 and AXS-07? And then, also, if you could comment on any plans that you may have with respect to deployment of either Sunosi or AXS-12 in the area specifically of idiopathic hypersomnia? Thank you.

Herriot Tabuteau -- Chief Executive Officer

So taking those backwards, you know, with regards to the additional indications that you mentioned, we always think about additional indications. With regards to the specificity, we don't have any specifics to share with you right now. And I'll turn it to Lori to comment on the sales force question.

Lori Englebert -- Senior Vice President, Commercial and Business Development

Hey, Ram. Thanks for the question. So, you know, I think it's very important for sales force especially during launch periods, and, in this case, you know, for Sunosi initially viewing this as somewhat of a relaunch coming over to us. You know, they need to stay focused on their priority targets.

And so, they will be deployed to high-prescribing, high-potential, high-value prescribers in the markets, respective markets. The AXS-05 sales force will primarily focus on those targets related to AXS-05, where we believe we will have the highest potential, and the same for the Sunosi. However, we do know that there is a very high overlap between prescribers. And, you know, as appropriate, we will leverage those synergies.

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

Thank you.

Operator

Our next question is from Jason Gerberry from Bank of America. Jason, your line is open.

Jason Gerberry -- Bank of America Merrill Lynch -- Analyst

Hi, guys. Thanks for taking my questions. One clarification. Just in terms of REMS, is that something that you learn about via label discussion? Or is it more something that you learn about what the post-market requirements? And then there's been some recent neurocyte launches that have exceeded investor expectations.

So, just curious if you think there's read across [Technical Difficulty] effectively. Is there any, you know, structural challenges at all in contracting cycles? Thanks.

Herriot Tabuteau -- Chief Executive Officer

Sure. Yeah. Just with regards to the question on the REMS, this is one of the first NDAs actually. These are our first two NDAs that we are going through.

REMS is not anything that we were thinking would be needed with regards to these product candidates. You never know, though. And until the review is over, we can't really assure you of the FDA's findings or decisions or more requirements. What we can communicate to you are the PMRs and the PMCs, which we have agreed to and which have been communicated to us.

And they have not included the REMS. Lori?

Lori Englebert -- Senior Vice President, Commercial and Business Development

Jason, sorry, your second question kind of faded in and out. Would you mind repeating that question?

Jason Gerberry -- Bank of America Merrill Lynch -- Analyst

Yeah. [Technical Difficulty] expectations. So, curious if you think there's read across AXS-05 from what you're seeing. It seems like maybe payer coverage is coming online a little faster than expected.

I mean, you guys will have effectively a mid-year launch. I don't know if that will be like a 2022 challenge in terms of where you're at in the contracting cycle or non-issue.

Lori Englebert -- Senior Vice President, Commercial and Business Development

Yeah. Great. Great question. Thank you.

You know, we will -- you know, all we have are the committed payer discussions that, you know, we've had thus far and that we are highly encouraged by how the payers are reacting to, you know, this product profile of AXS-05. So, you know, once we get approval and we know the timing of that approval, we'll be happy to discuss more around what we expect from a payer coverage standpoint then.

Herriot Tabuteau -- Chief Executive Officer

Yeah. And if I may add to that, Lori. I think just part of Jason's question related to the broader environment in neurocyte as it relates to recent launches, recent neurocyte launches, which have exceeded expectations, and is there something broader going on, it's hard to know if the performance of individual product launches, even though they coincide in time, reflect anything that's underlying. There is one underlying trend which is worth repeating, which is that we are in the middle of a mental health crisis.

So, there has been an increase, a significant increase in neurocyte disorders. We think -- scientists think that it's related to the COVID pandemic, so that is one backdrop that has been occurring. We know that that's the case, for example, in depression, certainly. But not just in depressions.

But even across, for example, migraine, the incidence of migraine has gone up in patients who have experienced COVID-19. So, there is that aspect to it. And I think what it speaks to more broadly is the high unmet medical need in neuropsychiatry indications in general. You know, that's why Axsome is a CNS-focused company, and that's why we're really excited about what we're doing.

Jason Gerberry -- Bank of America Merrill Lynch -- Analyst

Got it. Thanks, guys.

Operator

Our next question is from Yatin Suneja from Guggenheim. Yatin, your line is open.

Yatin Suneja -- Guggenheim Partners -- Analyst

Thank you. A few clarification questions for me. So, first is on AXS-05, what are your expectations for labeling? Do you expect the box warning similar to what we see with wellbutrin or other antidepressant?

Herriot Tabuteau -- Chief Executive Officer

So we -- since bupropion is a component of AXS-05, we would expect that aspects of the program label would be reflected in the 05 label.

Yatin Suneja -- Guggenheim Partners -- Analyst

OK. And then when you say that -- this is again related to 05. So, when you say that the CMC issues have been resolved, did you get an acknowledgment from the FDA that they are satisfied with your response? Or it has been resolved just that you have submitted the response? Just trying to get a little bit of clarity there, what does the resolution mean here?

Herriot Tabuteau -- Chief Executive Officer

It's pretty clear to us that that is been resolved based on the communications and also the PMRs and the PMCs.

Yatin Suneja -- Guggenheim Partners -- Analyst

OK. And then finally, how quickly you might be able to launch once approved for 05? Thank you.

Lori Englebert -- Senior Vice President, Commercial and Business Development

Yeah. Hi, Yatin. We expect to launch within a quarter of approval.

Yatin Suneja -- Guggenheim Partners -- Analyst

Any comment on the pricing? How should we think about pricing, what work you've done? Any sort of recent comp for us to look at in terms of the price?

Lori Englebert -- Senior Vice President, Commercial and Business Development

Yeah. We haven't communicated price yet. And, you know, we will do that upon approval when we announced price. We expect to price -- this product to recognize the clinical differentiation of the product.

But we also, you know, have an eye toward providing patients with the approach of appropriate access.

Yatin Suneja -- Guggenheim Partners -- Analyst

Thanks.

Operator

Our next question is from Chris Howerton of Jefferies. Chris, your line is open.

Chris Howerton -- Jefferies -- Analyst

Great. Really appreciate you taking all the questions this morning and all the extra info. So, I think for me, I was just curious if you could provide any comments or color on how the 05 approval and launch plays into your current stated cash runway? And as a sequela to that, if there was a delay or nonapproval for 05, how might that affect your cash runway guidance? Thank you.

Nick Pizzie -- Chief Financial Officer

Yeah, sure. Thanks, Chris, for the question. So, again, upon 05 approval, there is $100 million tied to that approval with our Hercules facility. So, we feel that we are, you know, in a very good position to launch the product.

And, you know, we are planning that for this quarter. We do have sufficient cash for over a 12-month period. And as I stated in the opening remarks, we did tap our ATM facility in Q1 for upwards of $31 million to bridge the delay in the approval of 05.

Chris Howerton -- Jefferies -- Analyst

OK. And maybe just as a quick clarification. If there was a further delay to 05, how might that affect your current kind of cash runway guidance?

Nick Pizzie -- Chief Financial Officer

So, if there's a further delay, we'll reassess it at that time. But as I said earlier, we do have north of 12 months of cash on hand to fund our current operating plan.

Chris Howerton -- Jefferies -- Analyst

OK. All right. Thanks so much. Appreciate it.

Operator

Our next question is from Matt Kaplan of Ladenburg Thalmann. Matt, your line is open.

Matt Kaplan -- Ladenburg Thalmann and Company -- Analyst

Thank you. Good morning. Just wanted to have a little more detail perhaps on the AXS-07 CRL. Beyond CMC questions, was there anything else detailed in the CRL that needs to be addressed?

Herriot Tabuteau -- Chief Executive Officer

Matt, so principally with all CMC, there was one item related to non-clinical, which was just our quest for additional information, which we believe we can provide. So for us, the real focus is -- the standard focus is CMC.

Matt Kaplan -- Ladenburg Thalmann and Company -- Analyst

OK, very good. Thank you. And then, I guess, a question for Lori. Can you give us some more metrics in terms of how you're thinking about the sales organization as you go into launch several products here in terms of some of the metrics around the size of the Sunosi and -- dedicated force, and 05 and 07 dedicated sales forces.

How they will kind of interact?

Lori Englebert -- Senior Vice President, Commercial and Business Development

Hey, Matt. Yes. sure. So, a couple of things to keep in mind as you think through how we plan to structure.

You know, we haven't revealed the size of the sales forces yet. But what I can tell you is that we plan, you know, to target -- for AXS-05, we plan to target at least 85% of high-value prescribers, which is more than 25,000 HCPs. You know, we will not only have a sales force in place, but we will also intend to leverage our DCC platform to help ensure, you know, that we have optimal reach to those high-value prescribers. For AXS-07, it will be a very similar approach in terms of how we structure the sales force, highly targeted, highly strategic, highly focused.

We plan to have a coverage, you know, of 50% to 60% of the high-value prescribers like with 05 -- I mean with 07. And then on Sunosi, you know, virtually all the offers that we extended to the Jazz employees were accepted in that sales force size. You know, we look forward to talking to you more about on the deal close, but it will be exactly the same kind of structure and decision-making, highly focused on those high-value prescribers. To make sure that we get our reach, we will augment with DCC.

Matt Kaplan -- Ladenburg Thalmann and Company -- Analyst

OK. Great. Thanks for that detail.

Operator

Our next question is from Bert Hazlett of BTIG. Bert, your line is open.

Bert Hazlett -- BTIG -- Analyst

Yes. Thank you for taking the question A quick follow-up to Matt. And the additional ask for information regarding CRL for 07, is that related to MoSEIC technology? Or can you be any more specific with regard to the additional ask? Thank you. Then I've got one or two other.

Herriot Tabuteau -- Chief Executive Officer

Hey, Bert, you know, I think we characterize it -- I mean, much of it does relate to MoSEIC and the process around that and drug product.

Bert Hazlett -- BTIG -- Analyst

OK. Then just shifting to ACCORD for just a second. What are the goals of the interaction with the agent? What can you do with the study? Is it an issue where you might change the design and study like in powering? What are the goals of the discussions with FDA with regard to evaluating the study design?

Herriot Tabuteau -- Chief Executive Officer

So, Bert, the reason why it's prudent to have as much feedback as possible is this is a registration trial. And so, we want to make sure that we take the right steps and avail ourselves of the fact that this is a breakthrough therapy-designated product to get that feedback.

Bert Hazlett -- BTIG -- Analyst

OK. Thank you. Just one other for me. Smoking cessation, you talked about a pivotal in phase 2/3 later this year.

Do you think you can get away with one? Or is that something you're going to do sequentially with regard to two pivotals for smoking cessation for 05? Thanks.

Herriot Tabuteau -- Chief Executive Officer

We expect that we would need two pivotal studies. And currently, the plan would be to do those sequentially.

Bert Hazlett -- BTIG -- Analyst

OK. Thank you. Thank you for taking the question.

Operator

The next question is from Myles Minter of William Blair. Myles, your line is open.

Myles Minter -- William Blair and Company -- Analyst

Hi. Thanks for taking the questions. Just on the 05 timing guidance that you put out when the PMRs and the PMCs were agreed upon and you said this quarter. I'm gathering that was based on precedent of some sort, but was that directly communicated to you by the agency that timing? Or was that from your regulatory consultants that from work that you've done? You know, obviously, the Streets are saying labeling discussions triggering that one month clock.

But just wondering how you've got that clarity from the PMR/PMC stage. Thanks.

Herriot Tabuteau -- Chief Executive Officer

So, Myles, thank you for that question. Just to be clear, there is no new PDUFA date. So the FDA has not beholden to any particular date. What we try to do is to provide the Street with actionable information.

So, any change in terms of our internal estimates as quickly as possible. So what drove our statement are the PMRs and the PMCs. So, with regards to those discussions, sometimes there are timing elements tied to those. And so, that has allowed us to focus our estimate.

But again, this is our estimate, and it's not tied to a formal PDUFA date.

Myles Minter -- William Blair and Company -- Analyst

OK. Thanks. And then just on the PMRs and PMCs. Obviously, not disclosing the nature of them.

But if we were to look at the guidelines, the FDA guidance documents for antidepressant job development, are they 100% encapsulated in the language in there, so like maintenance dosing studies that might be required post-marketing or safety in certain populations? Or are there certain PMRs and PMCs within those that are, you know, would be unique to the product that might not be talked about in those guidance documents? Thank you.

Herriot Tabuteau -- Chief Executive Officer

Yeah. So as you can imagine, the PMRs and the PMCs would necessarily incorporate both items that are only required for an indication, which might be included in guidance, as well as items that are specific to the individual product. What we can say is that the PMRs and PMCs that were discussed and that have agreed to are consistent -- excuse me, they are consistent with our expectations, and there was nothing surprising. You know, we're happy with them.

We do not expect them to, in any way, impede commercialization of AXS-05 for MDD.

Myles Minter -- William Blair and Company -- Analyst

OK. Beautiful. Thanks for the questions.

Operator

Two final questions. Our next questioner is David Hoang from SMBC. David, your line is open.

David Hoang -- SMBC Nikko Securities -- Analyst

Yeah. Thanks for taking the questions. Just had one on commercialization and the sales force. In terms of your digital component there, what's your level of confidence that, that's, you know, going to be able to supplement the sales force at the current size that you plan to bring on board? And is this something, you know, that you would have a high level of confidence in? Or would you consider potentially expanding, you know.

the number of reps down the line?

Lori Englebert -- Senior Vice President, Commercial and Business Development

Hey, David, thanks for the question. So, our DCC platform, the way that we designed it was really to ensure that engagement with HCPs and patients are optimized. Meaning, you know, we have the ability to have efficient promotional efforts but also effective commercial efforts. So what I can tell you is that we're not going to sacrifice to not have those effective promotional efforts.

So, we believe, based on not only research, physician preference data, historical data of how physicians are engaging, how physicians continue to engage, how patients are showing up at physicians' offices or not, meaning, you know, the level of virtual engagement in our target therapeutic areas still remains extremely high. So, we feel very confident in the augmentation that DCC will provide our sales force.

David Hoang -- SMBC Nikko Securities -- Analyst

OK. Thanks a lot.

Operator

Our final question is from Esther Hong of Berenberg. Esther, your line is open.

Esther Hong -- Berenberg Capital Markets -- Analyst

Hi, good morning. So on AXS-07 and the CMC issues, I was wondering, number one, did the FDA find this issue? And then number two, did this occur after the facility inspection? Thanks.

Herriot Tabuteau -- Chief Executive Officer

Hey, Esther. So, good morning. I don't know that it's a finding from the inspection, as we mentioned that there were no findings that we're aware of. And our sense is, this is the result of their review during the course of the review cycle.

And so, that's our impression. But they didn't give us feedback when they identify these needs for additional information.

Esther Hong -- Berenberg Capital Markets -- Analyst

OK, got it. Understood. Thanks so much.

Herriot Tabuteau -- Chief Executive Officer

Thank you.

Operator

That ends our question-and-answer session. So, I would now like to pass the conference back to the management team for any closing remarks.

Herriot Tabuteau -- Chief Executive Officer

Well, thank you again for joining us on the call today. We are committed to bringing potentially life-changing medicines to people living with serious CNS conditions. We look forward to updating you over the coming months on our continued pipeline and commercial progress. Have a great day.

Operator

[Operator signoff]

Duration: 65 minutes

Call participants:

Mark Jacobson -- Chief Operating Officer

Herriot Tabuteau -- Chief Executive Officer

Lori Englebert -- Senior Vice President, Commercial and Business Development

Nick Pizzie -- Chief Financial Officer

Charles Duncan -- Cantor Fitzgerald -- Analyst

Joon Lee -- Truist Securities -- Analyst

Vikram Purohit -- Morgan Stanley -- Analyst

Amanda Jones -- Senior Vice President, Clinical Development

Marc Goodman -- SVB Leerink Partners -- Analyst

Vamil Divan -- Mizuho Securities -- Analyst

Joe Thome -- Cowen and Company -- Analyst

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

Jason Gerberry -- Bank of America Merrill Lynch -- Analyst

Yatin Suneja -- Guggenheim Partners -- Analyst

Chris Howerton -- Jefferies -- Analyst

Matt Kaplan -- Ladenburg Thalmann and Company -- Analyst

Bert Hazlett -- BTIG -- Analyst

Myles Minter -- William Blair and Company -- Analyst

David Hoang -- SMBC Nikko Securities -- Analyst

Esther Hong -- Berenberg Capital Markets -- Analyst

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