Axsome Therapeutics (AXSM) Q4 2022 Earnings Call Transcript

Axsome Therapeutics (AXSM 2.79%)
Q4 2022 Earnings Call
Feb 27, 2023, 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. Currently, all participants are in 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 is being recorded.

I would now like to turn the conference over to your host, Mark Jacobson, chief operating officer at Axsome Therapeutics. Please go ahead.

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 our earnings press release providing a corporate update and details of the company's financial results for the full year and the fourth quarter of 2022. The release crossed the wire a short time ago and is available on our website at axsome.com.

During today's call, we will be making certain forward-looking statements. These statements may include statements regarding, among other things, the efficacy, safety, and intended utilization of our investigational agent; 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 pipeline product; revenue projections; and possible intended use of cash and investments. These forward-looking statements are based on current information, assumptions, and expectations that are subject to change and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These and other risks are described in our periodic filings made with the Securities and Exchange Commission, including our quarterly and annual reports.

You are cautioned not to place undue reliance on these forward-looking statements, which are only made as of today's date. And the company disclaims any obligation to update such statements. Joining me on the call today are Dr. Herriot Tabuteau, chief executive officer; Nick Pizzie, chief financial officer; Lori Englebert, executive vice president of commercial and business development.

Herriot will first provide an overview of the company and then review progress made during 2022 and the fourth quarter, as well as upcoming milestones. Following Herriot, Nick will review our financial results, and then Lori will provide a commercial update, including details on the first quarter of Auvelity, sales, and our second quarter with Sunosi. We 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, Mark. Good morning, everyone, and thank you all for joining Axsome Therapeutics year end fourth quarter 2022 financial results and business update conference call. 2022 was a transformative year for Axsome as we successfully transitioned to commercial stage and deliver on our goal to become a leading CNS-focused biopharmaceutical company. Now, with two differentiated products in Auvelity and Sunosi commercialized, encouraging early launch metrics for Auvelity, a broad and advancing late-stage CNS pipeline, and a strong financial position, Axsome is well positioned to continue to deliver significant value to patients and shareholders.

The fourth quarter was an important milestone for Axsome that ended the first quarter with sales for both Auvelity and Sunosi. Total net product sales in the quarter were strong at 24.1 million. Later, Nick and Lori will provide further details on all financial and commercial performance. [Inaudible] these updates, I'd like to start by taking -- by talking about the topic that brings us all here, which is making a difference for patients.

In just more than a quarter, Auvelity has already been prescribed to thousands of patients, and we've seen repeat prescribing by HCPs and refills by patients. Lori will provide additional perspective later. But these operations suggest that the unique mechanistic and clinical profile of Auvelity is having a positive impact on the treatment landscape for major depressive disorder and making a meaningful difference in the lives of MDD patients. Furthermore, with just half a year of Sunosi sales, after the Axsome relaunch efforts, we've seen big growth both in the U.S.

and overseas. We view the potential for Sunosi in the current indication as largely on track, leading room for significant potential for future growth. Just last week, we announced an important licensing deal for Sunosi, providing our lead partner, Pharmanovia, commercial rights to Sunosi in Europe and certain countries in the Middle East and North Africa. Pharmanovia shares our excitement and commitment to maximize potential of Sunosi for patients worldwide maybe a strong commercial platform is well suited to expand the availability of an access for this important treatment in the licensed region.

In addition to our clinical progress, our broad late-stage CNS pipeline continues to advance, positioning us to drive further significant value creation in 2023 and beyond. Our leading CNS pipeline improves the effects of AXS-07 for migraine, AXS-05 for Alzheimer's disease agitation and for smoking cessation, AXS-12 for narcolepsy, AXS-14 for fibromyalgia for solriamfetol for ADHD. In the fourth quarter and subsequently, we made significant progress in Alzheimer's disease agitation program, AXS-05, including the announcement of positive top-line results for the ACCORD trial, advancement on the ADVANCE-2 trial, and obtaining FDA feedback on our development plan for AXS-05 in the [Inaudible]. With regards to ADVANCE-2, our parallel group trial, based on recent enrollment trends, we now anticipate completion of this trial in the first half of 2024 versus our prior guidance of mid 2025.

Given all the progress in Alzheimer's disease agitation program, we recently saw and received feedback from the FDA on the registration front. The FDA requested generation of additional safety experience with AXS-05 in the elderly population, including placebo-controlled safety information from the ongoing ADVANCE-2 trial, as well as long-term safety data in the target patient population consistent with ICH E1 guidelines. Based on this feedback, the company intends to submit an NDA for AXS-05 after completion of the ongoing ADVANCE-2 and open label safety extension trial. In parallel, we expect to initiate a phase 2/3 trial of AXS-05 in smoking cessation in the fourth quarter of 2023.

With regards to AXS-07 for the acute treatment of migraine, manufacturing activities related to the planned resubmission of the NDA for this product candidate are ongoing, and we expect the resubmission to occur in the second half of this year. For AXS-12, our product candidate for the treatment of narcolepsy, enrollment in the pivotal phase 3 SYMPHONY trial is progressing, and top-line results are expected in the first half of 2023. As a reminder, AXS-12 has been granted orphan drug designation by the FDA for the treatment of narcolepsy. Our AXS-14 product candidate for fibromyalgia is also progressing with manufacturing and activities related to the preparation of the planned NDA submission ongoing, and we expect to submit the NDA for this product candidate in 2023.

With regard to solriamfetol or Sunosi for the treatment of ADHD, we are preparing to initiate a phase 3 trial in this indication in the first half of 2023. In the fourth quarter, we also shared positive top-line results from the SHARP trial, demonstrating improving the cognitive function with solriamfetol treatment and highlighted new mechanistic data for solriamfetol [Inaudible]. These results further highlight the clinical potential and differentiated pharmacology of this molecule. As you can see, the Axsome team is busy and continues to be excited as we prepare to deliver ongoing commercial success and potentially hit on multiple pipeline milestones, including clinical trial readouts and initiations and NDA filings in the next 12 months to 18 months.

I will now turn the call over to Nick, who will review our financial results.

Nick Pizzie -- Chief Financial Officer

Thank you, Herriot, and good morning, everyone. Today, I will discuss our fourth quarter and full year results and provide some financial guidance. Total revenue in the fourth quarter of '22 was $24.4 million, consisting of net sales of our two commercialized products, Auvelity and Sunosi. There were no net sales in the comparable prior period.

Auvelity was launched in the fourth quarter, on October 19th, and for the partial quarter generated net sales of $5.2 million. Sunosi generated total net sales to Axsome were $19.2 million in the fourth quarter, consisting of U.S. net sales of $18.3 million and international net sales of 900,000. Because the ex-U.S.

acquisition of Sunosi closed on November 14th, the reported international net sales reflect a partial quarter. Total revenue for the full year of 2020 was $50 million. Again, there were no reported sales in the prior year because the acquisition of Sunosi and the launch of Auvelity both occurred in '22. For the full year of 2022, Auvelity net sales were 5.2 million.

For the full year 2022, Sunosi generated total net sales to Axsome of $44.8 million, consisting of U.S. net sales of 43.9 million and international net sales of 900,000. As a reminder, the U.S. portion of the acquisition of Sunosi was completed on May 9th.

Cost of product sales were 2.3 million and 5.2 million for the fourth quarter and full year of 2022, respectively, compared to none in the prior year. Research and development expenses were 14.7 million and 57.9 million for the fourth quarter and full year 2022, respectively, and 13.8 million and 58.1 million for the comparable periods in 2021. The increase for the fourth quarter was primarily related to higher costs associated with ongoing clinical trials, including post-market commitments for Sunosi and Auvelity. Selling, general, and administrative expenses were 61.5 million and 159.3 million for the fourth quarter and full year of 2022, respectively, and 18.8 million and 66.6 million for the comparable period in 2021.

The increases for the fourth quarter and full year were primarily related to commercial activities for Sunosi and Auvelity, including sales force Onboarding, marketing spend, as well as higher noncash stock compensation expense. Net loss for the fourth quarter of 2022 was 61.2 million, or $1.41 per share, compared to a net loss of 34 million, or $0.90 per share, for the comparable period in 2021. The net loss for the fourth quarter included 10.8 million of noncash stock compensation expense compared to 5.9 million in the comparable period in 2021. Net loss was 187.1 million, or $4.60 per share, for the full year of 2022, compared to a net loss of 130.4 million, or $3.47 per share, for the comparable period in 2021.

The net loss for the full year of 2022 included $37.7 million of noncash stock compensation expense compared to 20.8 million for the full year of 2021. We ended the year with $201 million in cash and equivalents compared to 86.5 million as of December 31st, 2021. During the fourth quarter, we did not utilize our ATM facility. In January of 2023, we amended our loan agreement with Hercules Capital to increase the size of the facility to $350 million to reduce the interest rate and to extend the maturity and interest-only periods while accepting a $55 million tranche.

Additionally, in February of 2023, the company received approximately $66 million from the out-licensing of ex-U.S. Sunosi rights. Inclusive of these events, our pro forma year-end cash balance now exceeds $300 million. We believe that our current cash balance, along with remaining committed capital from the $350 million term loan facility with Hercules Capital, is sufficient to fund anticipated operations into cash flow positivity based on our current operating plan.

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

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

Thank you, Nick. Q4 was certainly an exciting quarter for Axsome with the launch of Auvelity and the continued relaunch of Sunosi. Both of our commercial products address serious, highly prevalent conditions and bring meaningful innovation to millions of potential patients. We are pleased with our commercial progress on Sunosi.

And although it is still early days, we are encouraged by Auvelity's launch progress. I will share key metrics on our commercial efforts for both brands, starting with Sunosi, followed by Auvelity. As a reminder, Sunosi is the first and only DNRI for extensive daytime sleep in obstructive sleep apnea and narcolepsy, and the first and only wake-promoting agent proven to improve wakefulness through 9 hours. In the fourth quarter, total prescriptions for Sunosi in the U.S.

grew 11% year over year and 1% quarter over quarter. For the full year 2022, U.S. Sunosi prescriptions showed strong growth with an increase of 21% versus 2021. The total prescriptions split by the diagnosed patient population for Sunosi is 70% for EDS due to OSA and 30% for EDS due to narcolepsy.

Payer coverage for Sunosi remains broad, with 96% of commercial lives and 83% of total lives covered. The growth potential for Sunosi in the currently approved indication remains substantial. Sunosi currently has only a 2% share of drug-treated OSA patients and a 7% share in drug-treated narcolepsy patients. Sunosi is the only branded therapy available for patients who suffer from EDS in OSA, and we expect increased and enhanced promotional and disease education efforts to drive market share growth for the product in 2023 in the U.S.

With recently announced licensing of ex-U.S. marketing rights for Sunosi to Pharmanovia, we are well positioned to increase the availability of these important treatments to patients worldwide. Turning to Auvelity, we launched Auvelity on October 19th. And despite launching in Q4, a traditionally challenging quarter due to multiple holidays, we saw early signs of encouraging uptake with our initial HCP adopters.

With only 10 full weeks of promotion in Q4, 2,200 unique HCPs wrote prescriptions for over 6,000 new patients. Those metrics have grown to 4,300 unique HCP writers and over 13,700 new patients since launch. Importantly, HCPs who have written Auvelity are gaining critical early clinical experience and are reporting promising patient response that is consistent with that -- with what we saw in clinical trials, with many reportedly seeing rapid onset of action and rapid achievement of our mission. With regard to payer coverage, the commercial channel is expected to be the primary channel for Auvelity as it accounts for more than 60% of antidepressant prescription volume.

Interactions with commercial payers as it relates to Auvelity have been active and productive. Effective January 2023, we have contracted with one of the largest group purchasing organizations, or GPOs, for potential coverage of Auvelity. As a result, pharmacy benefit managers, or PBMs, and health plans under the GPO will now be able to make formulary coverage decisions for Auvelity based on the contracted terms. These interactions with commercial payers are proceeding as expected during the standard six to nine month period post-launch, when new drugs are blocked while coverage decisions are being made.

In the noncommercial channel, Medicaid coverage became effective in 49 states on January 1st, and Medicare plans have up to six months post-launch to determine coverage and add Auvelity to formulary. We expect additional formulary decisions over the next six months. I look forward to discussing more as the payer process progresses. We are extremely encouraged by the initial launch progress and remain committed to our launch focus of driving fast HCP adoption, empowering patients, and enabling quality access.

We are all aware that there is a mental health crisis happening in the U.S.. And major depressive disorder, or MDD, is a major public health concern with 21 million U.S. adults diagnosed in 2020. And it reported a significant increase in prevalence as a result of the pandemic.

Auvelity is an important new therapeutic option for patients living with this chronic and devastating condition, and we are proud of our efforts to make Auvelity available to patients living with MDD and their physicians. I will now turn the call back to Mark to lead the Q&A discussion.

Mark Jacobson -- Chief Operating Officer

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

Questions & Answers:

Operator

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

Charles Duncan -- Cantor Fitzgerald -- Analyst

Yeah. Hey, good morning. Thanks, Herriot and team, for that great overview, and congrats on the good quarter. I had a couple of questions on Auvelity, one is commercial, one is more development, and that is, regarding the commercial question, I'm just kind of wondering, I think, Lori -- what Lori just said addresses this question, but I'm wondering if she could drill down on any feedback she's getting from the market in terms of response rates and even persistence.

Now, I know it's too long or too early to know real persistence, but what our prescribers see in their patients with regard to comparison in patients who are experienced with SSRI-based therapy? Thanks.

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

Yeah. Hi, Charles. Thanks for the question, and good morning. So, yeah, you're right, it is very early -- early days for us.

And most of what we're receiving back from the field is purely anecdotal, so I hope you take that for what it's worth. You know, what we are hearing anecdotally is that patients are responding very consistent to label. So that rapid onset of action is happening. They are seeing very early achievement of remission.

Again, it's a little bit too early to talk about their ability because we're just a few months into launch. But we have not seen anything that would suspect would be different than what we see in on the label and what we saw in clinical trials.

Herriot Tabuteau -- Chief Executive Officer

Yeah. To add to that, I think one of the things that we are seeing are repeat prescriptions. So, you know, patients are [Inaudible] switched off if there is no resistance.

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

Exactly. And just to give you some additional color there, you know, last week's reported data, about 50% of the scripts were from results.

Charles Duncan -- Cantor Fitzgerald -- Analyst

OK. That's great to hear. Regarding TAM expansion efforts for 005 in Alzheimer's agitation, Herriot, you mentioned some feedback from agency. I wasn't completely clear on that in terms of timing.

I think that you mentioned possibly completing the trial in '24 versus prior '25. If you could provide more color on that. And then, explicitly, you thought an NDA would happen after ADVANCE-2, but then also after an open label extension study. So, could you give us a sense of timing on when an NDA could be filed?

Herriot Tabuteau -- Chief Executive Officer

Thanks for the follow-up question, Charles. With regards Alzheimer's disease agitation from the ADVANCE-2 trial, you're correct. So, based on the fact that enrollment is going, frankly, faster than we had expected, you know, we now expect for that study to read out, you know, first half of 2024. The open label extension trial has been ongoing, and we also expect that to read out in 2024.

And with regard to an NDA filing, we will be in a position to file an NDA within six months after the readout of those studies.

Charles Duncan -- Cantor Fitzgerald -- Analyst

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

Herriot Tabuteau -- Chief Executive Officer

Thanks, Charles.

Operator

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

Marc Goodman -- SVB Securities -- Analyst

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

Herriot Tabuteau -- Chief Executive Officer

Thanks for the question, Charles.

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

Mark.

Herriot Tabuteau -- Chief Executive Officer

I'm sorry, Mark. Oh, my God. You know, all these sell-side analysts are starting to blur into one. No, of course not.

All of you are very distinct. So, Mark, you know, with regards to interactions with the FDA, we saw feedback on the trials. The feedback that we got from the agency is that in the elderly patient population, safety is really important, not just long-term data, but also placebo-controlled safety data. So, the ACCORD trial was a randomized withdrawal study, so it does not provide the randomized safety data, which the FDA mentioned is really important in this patient population.

And the other aspect of the study with the FDA did highlight, not necessarily a show-stopper, is the fact that this was a truncated study. So -- and importantly, though, the feedback with regards to exact patient numbers for the safety database is that it must meet ICH E1 guidelines. So, what's good is we're in a good position to provide actually all of those data points to the NDA. We do have the ADVANCE-1 trial, which is already ongoing, which is enrolling.

And so -- I'm sorry, the ADVANCE-2 trial, which is already enrolling. And so, we're in a good position to provide all the safety data which would be required for the NDA filing.

Marc Goodman -- SVB Securities -- Analyst

OK. And then, the gross-to-net for both products for this year. How do we think about that?

Nick Pizzie -- Chief Financial Officer

Yeah, sure. Hey, Mark. It's Nick. For growth-to-net, so, for the quarter for Auvelity, I'll start with, the gross-to-net for the quarter was in the 60s.

As of right now, we're not currently in a position to give specific guidance around GTN. However, we will remind you that there's no reason to expect that GTN will improve from this quarter and then, obviously, could potentially worsen based on Q1 being typical -- you know; the seasonality that you expect; the headwinds in planned coverages resetting in year, inclusive of deductibles, co-insurance. PAs would need to be -- in some plans would need to be recreated again, so, potentially utilization -- higher elevation of co-pay part. And then, obviously, mix and channel distribution always impacts GTN.

So, you know, we would expect in Q1 and Q2 that we wouldn't expect anything better than where we're at today. And, potentially, it could worsen. Specifically, around Sunosi, Sunosi, we're in the low 50s again for this quarter. We did have a favorable adjustment from prior quarters of 1.8 million.

That was the GTN adjustment we received of these claims, which is typical that we receive them in this quarter. Otherwise, you know, for Sunosi, it's pretty much been stable in the low 50s.

Marc Goodman -- SVB Securities -- Analyst

Thank you.

Nick Pizzie -- Chief Financial Officer

You're welcome.

Operator

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

Vikram Purohit -- Morgan Stanley -- Analyst

Hey, good morning. Thanks for taking our questions. So, we had two on Auvelity. The first, just wondering if you could provide some color on kind of the typical profile of patients that are currently receiving Auvelity in terms of their prior treatment history and the lines of therapy they had been on prior to being prescribed Auvelity.

And then, secondly, I just wondered to see if you could provide an update on ex-U.S. commercialization and partnership discussions, if those have been happening and, if so, what you'd be looking for in a potential partner for AXS-05 ex-U.S. Thanks.

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

Hey, Vikram. I'll take that. It's Lori. So, you know, currently, as we've mentioned multiple times and as a standard, most of the commercial plans have Auvelity coming in NDC block, which requires quite an effort to get patients online, which is why we're really excited about the demand that we're driving despite these challenges.

However, due to the -- you know, a lot of therapy use have been relatively later on line right now with, you know, about 28% sitting in second line and 61% sitting in third line plus. The response has been -- again, to the question I answered with Charles, the response has been very, very consistent with the label. And to see that in later-line patients is extremely encouraging.

Herriot Tabuteau -- Chief Executive Officer

With regards to the second part of your question which relates to what would we be looking for with regards to potential partner for Auvelity in ex-U.S., I think one of the things that we would look for is a partner with proven capabilities, but also a partner that has experience with regards to navigating the pretty complex reimbursement landscape in certain geographies, such as Europe.

Vikram Purohit -- Morgan Stanley -- Analyst

OK. Got it. Thank you.

Operator

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

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

Hey, good morning. Thanks for taking my questions. Are you guys planning to increase enrollment of ADVANCE-2 to get to the 300 patients by six months? I was just doing the math on, you know, I think 50 patients from ACCORD went into randomized withdrawal, and then you have like 175 under the current enrollment plan for ADVANCE-2. So, just curious how you get to the 300.

And then, if you can comment on how we should be thinking about SG&A and opex ramp this 4Q 2022 on an annualized basis, sort of a good place to think about some growth off of that number. Or is there going to be any step-up from there? And then, just, you know, last question, any comments on any inventory launch stocking here on the fourth quarter number? Thanks.

Herriot Tabuteau -- Chief Executive Officer

Yeah, I'll take the first question, and then Nick will take the opex. The answer is no. We do not anticipate having to increase enrollment in ADVANCE-2 to meet the required patient database. As a reminder, you know, we do have patients from ADVANCE-1 in terms of general safety experience.

But then, we also have 117 patients, as a reminder, who are enrolled in one of the ACCORD trial. And a lot of those patients are mostly patients who went into the open label safety extension trial. So, if you take the patients rolling over from ACCORD, as well as the expected patients rolling over from ADVANCE-2, that should put us in pretty good shape. Nick?

Nick Pizzie -- Chief Financial Officer

Sure. Hey, Jason. So, related to opex guidance, I think you mentioned using Q4 essentially as a proxy, I think that's a fair estimate. We stated in the press release that we expect expenses to increase year over year.

Obviously, with the launch of Auvelity and Sunosi being acquired in the second quarter of this year, we'll have a full year of SG&A expenses. And Q4 being almost a full quarter, I think you can expect to use that as a proxy and potentially a modest growth from -- on the SG&A piece as it relates to thinking about 2023 on a quarterly basis. And then, I think your other question is -- you broke up a little bit, but I think your question is relating to inventory channel and where we were as of the end of the year, for Auvelity, we had roughly two and a half weeks of future demands in the channel. Obviously, it's a growth brand, we just launched it, and we, you know, do expect entry levels to fluctuate our distributors as Auvelity builds additional momentum in the market.

It's not unexpected, we believe wearing patterns would really reflect the strong patient demand that we've seen. For Sunosi, we did have increased wholesale buying during -- due to the seasonality at the end of Q4. The inventory levels were somewhat elevated. However, we do see in Q1 that these inventory levels are coming down to approximately two to two and a half weeks.

And one note is that we are actually in Q1, we operationally for distribution, we changed our model from a title model to the traditional 3PL model. Title model was -- as it relates to -- as we launched and ensuring that we got licenses in every state, we changed to a traditional retail model and just reduced essentially the distributor, the trick, the middleman distributor. So, we will see an inventory reduction in the channel which will impact Q1 sales for Sunosi by probably two weeks.

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

Thank you.

Operator

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

David Amsellem -- Piper Sandler -- Analyst

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

Thank you.

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

Yeah. Hi, David. I'll take both of those. First of all, I'll start with Sunosi, how do we think we'll have an inflection point with this relaunch that we just talked about with Sunosi.

You know, Jazz laid a really strong foundation for the launch, for their, you know, the initial launch. The important thing to remember about the initial launch with Jazz was that they launched about three months prior to the COVID shutdown. So, the initial launch was heavily impacted for the majority of the first, you know, 18 months of the launch for that product. What we believe we are doing right now that will help provide an inflection point is that we have gotten really hyper-focused on the highest potential prescribers.

And our plan is to make sure that with our differentiated clinical profiles, that those type of prescriber -- that we penetrate those type of prescribers drivers and then start to expand out in terms of targets. Doing that will help us gain market share very quickly as we really get sophisticated on the approach. In terms of OSA versus narcolepsy, OSA has a prevalence of about 22 million patients, and narcolepsy is 200,000. So, that stark difference right there tells you that a much larger opportunity is there.

I think we will, right now, continue to focus on OSA, but we're not letting our foot off the gas on narcolepsy because there's still a lot of room for growth there as well. In terms of Auvelity in the expanded sales organization, you know, right now, we have about 165 reps calling on 25,000 HCP. We are very, very confident and are using our DCC approach to make sure that our reps are able to have the tools that they need to make effective calls and to be very efficient about doing it. And because of that, we are very focused on making sure that penetration in the original target list, which are the highest potential prescribers in the MDD space is really high before we comment any further on any additional plans.

David Amsellem -- Piper Sandler -- Analyst

OK. Helpful. Thank you.

Operator

Our next question is from the line of Joon Lee with Truist Securities. Please proceed with your questions.

Joon Lee -- Truist Securities -- Analyst

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

Herriot Tabuteau -- Chief Executive Officer

Thanks for the question. Yes, we do believe that SYMPHONY and phase 2 trial would be sufficient to file, assuming that SYMPHONY is at positive state.

Joon Lee -- Truist Securities -- Analyst

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

Herriot Tabuteau -- Chief Executive Officer

Well, I think that we always felt strongly about the potential for Sunosi and the overall value of the product. The transaction, the ex-U.S licensing, it reflects the value of the product. So, it's consistent with our perspective, what our strategy has always been, and what we communicated with regards to the potential of the product.

Operator

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

Joe Thome -- Cowen and Company -- Analyst

Hi there. Good morning and thank you for taking our questions. Maybe the first one, just a clarification on the Auvelity number that you gave earlier, that 13,700 new patients as of last Friday, or when was the cutoff date for that? And then, second was the -- we did see the ANDA for Teva on Auvelity. If you can just give us overall thoughts on your strength in the 2034 and 2040 patents.

I know they're only challenging 2040, but what are the next steps here and how does the company think about that? And I'll have a more very quick follow-up. Thanks.

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

Yes. Hi, John. Thank you for question on the cutoff date. That would be as of the last reporting week, which is February 17.

Herriot Tabuteau -- Chief Executive Officer

And you cut out there from the second part of the question.

Joe Thome -- Cowen and Company -- Analyst

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

Herriot Tabuteau -- Chief Executive Officer

OK. So, Hunter, our GC, will take that.

Hunter Murdock -- General Counsel

Hi. Nice to see you. This is Hunter Murdock, the company's general counsel. And so, as we previously announced earlier this month, we did receive a Paragraph IV notice from Teva relating to Auvelity.

The receipt of the letter was normal. It was an expected part of the Hatch-Waxman process. And to get to your question, it's no way indicative of the quality of our IP portfolio, which we're extremely proud of. Under the Hatch-Waxman Act, we have 45 days to file a lawsuit against Teva if we wish to invoke the 30 month regulatory stay.

And we're carefully analyzing Teva's Paragraph IV notice right now. We're carefully evaluating our next steps. I'm not able to provide much additional commentary regarding the notice or the steps we may take in light of the potential for future legal proceedings.

Joe Thome -- Cowen and Company -- Analyst

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

Herriot Tabuteau -- Chief Executive Officer

We do have an open label safety extension trial ongoing. So, that safety experience will be part of the filing. As a reminder, in conjunction with our licensing deal with Pfizer, we did get the safety data, which is of safety experience, which is extensive with the molecule that will also be part of -- should be a success.

Joe Thome -- Cowen and Company -- Analyst

Great. Thank you very much.

Operator

Thank you. Our next question is from the line of David Hoang with SMBC. Please proceed with your questions.

David Hoang -- SMBC Nikko Securities -- Analyst

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

Is that fair to assume GTN should also improve over that time?

Nick Pizzie -- Chief Financial Officer

Yeah. Thanks, Nick. I think that's the guidance that we previously gave. And we're really staying to that.

It's hard to give any further quantitative guidance on GTN until we start seeing broad payer coverage. And then, we'll be able to give a good sense of, you know, of what's the GTN, where the GTN will lie. So, you know, several quarters from now, I think we'll be able to give a better -- give you a better sense of where GTN will be.

David Hoang -- SMBC Nikko Securities -- Analyst

Great. Thanks.

Operator

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

Unknown speaker

Hey, good morning, and thanks for taking our questions. This is Eddie on for Yatin. Just a few from us. On AXS-12, can you just provide a little bit more detail on the timing of the data this year and what you would need to see to give you confidence moving forward, especially with comparison to Sunosi? And then, just a quick follow-up on the Auvelity inventory.

How much of that 5.2 and reported revenue for the quarter was due to channel stocking? Thanks.

Herriot Tabuteau -- Chief Executive Officer

You want to take the last question.

Nick Pizzie -- Chief Financial Officer

Yeah. I haven't quantified the actual amount related to specifically the inventory. But I think as I mentioned earlier on the question, it was roughly two and a half weeks of a future demand. So, you can kind of ballpark with that.

That two and a half weeks we do take GTN deductions on that. So, even though it hasn't been sold, it's been sold to our distributor, has been sold to the channels. So, we are accruing based on the proceeds. We expect January and GTN would fall on it.

Herriot Tabuteau -- Chief Executive Officer

And with regards to the timing for AXS-12, we expect to have results from that trial in the first half of this year. So, I think you can figure out what the first half is. So that, through the end of June. And then, in terms of what we want to see, we want to see a positive trial.

And it is the placebo-controlled study, so, obviously, we want to see a positive trial that would give us two studies that demonstrate the efficacy of the product. And with regards to the comparison to Sunosi, the indications are different. So, Sunosi is approved to treat. It has a big significance in patients with narcolepsy.

And AXS-12, you know, we're studying [Inaudible] cataplexy in patients with narcolepsy.

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

And, Eddie, if I could just add, Herriot, if you don't mind, just to help provide context there. For narcolepsy patients, 100% of all narcolepsy patients suffer from excessive daytime sleepiness. And it's only estimated that about 70% suffer from cataplexy. Just want to give you context in terms of patient difference -- the difference in patients.

Unknown speaker

Got it. Thank you so much.

Operator

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

Graig Suvannavejh -- Mizuho Securities -- Analyst

Great. Thanks so much for taking my question. Congrats on the quarter and the year. Maybe my question is a bit bigger picture and perspective as it relates to your marketed products in Auvelity and Sunosi.

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

Nick Pizzie -- Chief Financial Officer

I'm sorry, can you repeat the first part of your question one more time, Graig?

Graig Suvannavejh -- Mizuho Securities -- Analyst

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

Nick Pizzie -- Chief Financial Officer

Yeah. I would say, obviously, the way you prefaced your question originally is, you know, we're in very early stages for Auvelity, as well as Sunosi. You know, so we haven't discussed when we would potentially give sales guidance as it relates to both products, one would surmise, though, with Sunosi being a somewhat more mature product, that we would be able to give some guidance on that product first. Auvelity, we're looking at various models here and would fluctuate, you know, drastically.

So we're -- you know, it would be further along. I can't give you any specific timing when we give sales guidance.

Herriot Tabuteau -- Chief Executive Officer

I mean, you know what, we -- to answer the second part of your question here, we have talked about the sales potentials, the peak sales potentials for both Auvelity, as well as Sunosi. Starting with the Sunosi, just with the current indication, we expect the product -- we believe that the product for HCP sells $300 million to $500 million. And we've also said that we believe the product has brought us a potential leading -- sales potential of at least $1 billion, if you take into account potential new indications. And as we discussed, we are about to launch the pivotal trial [Inaudible].

And with regards to Auvelity, we think that Auvelity has $1 billion potential in both MDD individually, as well as in Alzheimer's disease agitation individually. MDD based upon the size of that market in terms of the number of patients who have in the MDD, and [Inaudible] treated Alzheimer's disease agitation based upon not just the prevalence of Alzheimer's disease and the percentage of patients who have agitation, which is about 70%. We also base it on the fact that there's nothing currently to treat those patients.

Graig Suvannavejh -- Mizuho Securities -- Analyst

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

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

Yes. Thanks, Graig. I don't think -- or I don't foresee, especially in this current indication, that that's going to evolve much. As I mentioned before, our focus is heavily on OSA, just given the sheer size of the prevalence of that condition.

But we're not taking our foot off the gas on narcolepsy because it is a very, very efficacious product and -- you know, for narcolepsy.

Graig Suvannavejh -- Mizuho Securities -- Analyst

Thank you.

Operator

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

Bert Hazlett -- BTIG -- Analyst

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

Herriot Tabuteau -- Chief Executive Officer

Thanks, Bert, for the question. With regards to the timing, we do expect to initiate the phase 2/3 trial in the fourth quarter of this year. The team is working very hard to get that done. And sort of the design of the trial, this will be a standard parallel trial design.

We will have more to say once we launch the trial as we always do. We'll provide details in terms of the endpoints that we're looking at. But rest assured that the endpoints will be registration endpoints. And we have gotten feedback from the FDA on exactly what that will look like, and we will provide those details once we launch the trial.

And in terms of the dose recommended, we'll also provide that information once we launch the study.

Bert Hazlett -- BTIG -- Analyst

Great looking forward to that. Thank you.

Operator

Thank you. At this time, we have time for -- to take two more additional questions. The next question comes from Myles Minter with William Blair. Please proceed with your questions.

Myles Minter -- William Blair and Company -- Analyst

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

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

Yeah. Hi, Myles. I'll take that one. So, you know, as updated, you know, in the prepared remarks, it was one of the three GPOs that are currently operating right now.

Each of the three have, you know, fairly substantial amount of covered lives. And the PBMs and plans that are underneath them now have the ability to access those contracted rates once they work through their standard and expect six to nine months NDC block. So, you know, discussions are active with the other GPOs and payers, both from product reviews, as well as discussions on formulary decisions. We do expect those to be made over the next six months.

Myles Minter -- William Blair and Company -- Analyst

And then, just as a follow up, last year, when you met with the FDA and you decided to run ADVANCE-2, I think -- you know, did they guide that they wanted to see an additional placebo-controlled study for early agitation because they wanted to see additional placebo-controlled efficacy, as well as safety data at that time? And has that tone or commentary changed at the current meeting that you just had? Thanks.

Herriot Tabuteau -- Chief Executive Officer

Thanks, Myles, for the question. When we made the decision to initiate the ADVANCE-2 trial, that was a decision that we made based from a business perspective. And so -- but that is not based upon requirement or feedback from the FDA. However, once we did meet with them, safety data, in particular, placebo-controlled safety data, as well as safety data based on ICH guidelines.

In fact, that was -- that information that was provided to us and -- I mean that will be required when filing.

Myles Minter -- William Blair and Company -- Analyst

OK. Thank you.

Operator

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

Unknown speaker

Oh, hi. This is Raymond in for Matt. Congrats on the quarter, and thanks for taking our question. Just a quick one.

I want to ask about Auvelity and the DCC platform. You've had early success with Sunosi and DCC. I'm wondering how DCC in your initial experience with Auvelity has kind of driven sales. And any initial learnings that you hope to incorporate as the launch progresses? Thanks.

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

Yeah, Hi. Thanks for the question. It's a good one. So, you know, as you mentioned, we have talked about what we're seeing on Sunosi, so I won't rehash that.

And on Auvelity, we're still very early. What we've done is we've, you know, established a platform. It's the same platform that Sunosi is operating off of. We are very confident in our sales force size, as well as the tools that we've given them to reach the number of HCPs that we believe will drive rapid growth.

And so, you know, it's a bit too early to really comment on that. But we are very pleased with how the team is using the platform and how they are helping companies drive growth that way.

Unknown speaker

Appreciate that color. Thanks.

Operator

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

Herriot Tabuteau -- Chief Executive Officer

Well, thank you again for joining us on the call today. We are proud of the hard work of the Axsome team, which is now resulting in meaningful differences in patients' lives. This is only the start of more great things to come. 2022 was a pivotal year for Axsome.

We are not the same company we were a year ago, and we won't be the same company next year with all the strategic growth we anticipate. We are in line to report value-driving updates with multiple [Inaudible] candidates, multiple late-stage clinical trials in some of the most challenging-to-treat CNS disorders in the next 12 to 18 months. Following the plan, Axsome has potential at five commercial products in the market by 2025, and we're hard at work to meet those goals. Thank you.

Have a great rest of your day.

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Mark Jacobson -- Chief Operating Officer

Herriot Tabuteau -- Chief Executive Officer

Nick Pizzie -- Chief Financial Officer

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

Charles Duncan -- Cantor Fitzgerald -- Analyst

Marc Goodman -- SVB Securities -- Analyst

Vikram Purohit -- Morgan Stanley -- Analyst

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

David Amsellem -- Piper Sandler -- Analyst

Joon Lee -- Truist Securities -- Analyst

Joe Thome -- Cowen and Company -- Analyst

Hunter Murdock -- General Counsel

David Hoang -- SMBC Nikko Securities -- Analyst

Unknown speaker

Graig Suvannavejh -- Mizuho Securities -- Analyst

Bert Hazlett -- BTIG -- Analyst

Myles Minter -- William Blair and Company -- Analyst

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