Axsome Therapeutics, Inc. (AXSM) Earnings

Management highlights

### Commercial Performance - Ovelity completed its Salesforce expansion and launched in the new indication of Alzheimer's disease (AD) agitation in Q2 2026. Early results show 126% growth in new-to-brand prescriptions for patients 65 and older compared to the prior quarter, and 26% total new-to-brand prescription growth quarter-over-quarter. The expanded sales force activated 6,800 new prescribers (21% quarter-over-quarter growth), bringing total unique prescribers to ~69,000. Total prescriptions reached 266,000, up 34% year-over-year and 12% sequentially, outpacing overall antidepressant market growth. Payer coverage now reaches 89% of total lives, including 82% of commercial lives and 100% of government lives. 56% of Ovelity patients are currently treated in the first or second-line setting. - Sembravo, launched in June 2025, saw 30% quarter-over-quarter prescription growth to 23,500 total prescriptions. The 150-person sales force expansion is complete, and total payer coverage has reached 57% of lives across channels, with further expansion expected. - Synose delivered 14% year-over-year and 8% sequential prescription growth to 61,000 total prescriptions, outperforming the overall weight-modifying agent market which saw a 1% year-over-year decline. Over 17,000 clinicians have prescribed Synose since launch, with 82% of total lives covered by payers. ### Pipeline & Clinical Progress - The FDA accepted the NDA submission for AXS-12 for the treatment of cataplexy in narcolepsy, with a PDUFA target date of May 1, 2027. - AXS-05 is on track to initiate a Phase 2-3 trial for the smoking cessation indication in Q3 2026. Five Phase 3 trials are currently underway across additional new indications: ADHD, binge eating disorder, major depressive disorder with excessive daytime sleepiness (EDS), and EDS associated with shift work disorder. Two Phase 3 ADHD trials (FOCUS-2, FOCUS-3) in children and adolescents have recently initiated. - The ENGAGE Phase 3 trial for AXS-05 in binge eating disorder is ongoing, with top-line results expected in Q4 2026. - Enrollment in the FORWARD Phase 3 trial for AXS-14 (fibromyalgia) continues to progress. - For AXS-20 (selective PDE10A inhibitor for schizophrenia), chemistry, manufacturing, and controls (CMC) activities are progressing toward initiation of a Phase 3 trial. A Phase 2 trial for AXS-20 in Tourette's Syndrome is also planned. - Phase 2 enabling activities are ongoing for AXS-17, a GABA subtype selective PAM for epilepsy. ### Financial Performance - Cost of revenue was $13.6 million (6% of total net revenue), flat year-over-year. - R&D expenses decreased to $46.2 million from $49.5 million year-over-year, driven by lower costs for AXS-05 and AXS-14. - SG&A expenses increased to $208.1 million from $130.3 million year-over-year, primarily due to Ovelity and Sembravo commercialization activities. Management expects SG&A to plateau at current levels for the remainder of 2026. - Net loss was $51.3 million ($0.99 per share), compared to a $48 million net loss ($0.97 per share) in Q2 2025, including $27.1 million in non-cash stock-based compensation. - Ending cash and cash equivalents totaled $320 million, which management expects is sufficient to fund operations through to cash flow positivity.

Guidance

- Management expects current SG&A expense levels to plateau for the remainder of 2026 after the completion of sales force expansions, with operating leverage to continue improving in the second half of 2026. - Gross-to-net discounts for Ovelity and Synose (currently ~50% in Q2 2026) are expected to improve through the remainder of 2026, consistent with prior year trends. Sembravo's elevated gross-to-net discounts in Q2 2026 are expected to return to prior trend levels for the rest of the year. - Long-term gross-to-net discounts for Ovelity are expected to remain in the 50% range as the ADA indication scales, even as Medicare becomes a larger proportion of total prescriptions. - The company is on track to hit its target of an average of one new NDA submission per year between 2026 and 2030 from its late-stage pipeline. - Management expects the growth momentum from Ovelity's sales force expansion, MDD growth, and ADA agitation launch to drive continued commercial growth in the second half of 2026, with Sembravo and Synose also contributing to robust long-term growth. - Current cash balance is expected to be sufficient to fund all planned operations through to cash flow positivity, maintaining prior guidance with no upward or downward revision.

Segment performance

Axiom Therapeutics reported total net product revenue of $218 million in Q2 2026, representing 46% year-over-year growth. The segment breakdown is as follows: - Ovelity: $180.3 million in net product sales, accounting for 82.7% of total net revenue. This reflects a 51% year-over-year increase and an 18% quarter-over-quarter increase. - Synose: $35.8 million in total net revenue (comprising $33.8 million in net product sales, $1.5 million in out-licensed territory royalty revenue, and $0.5 million in milestone revenue), accounting for 16.4% of total net revenue. This represents a 20% year-over-year increase. - Sembravo: $2.3 million in net product sales, accounting for 1.1% of total net revenue. This is a decrease from $4.1 million in Q1 2026, primarily due to a prior period adjustment and higher discounts from the patient service program, with gross-to-net discounts reaching the high 80% range in the quarter.

Risks & headwinds

- All forward-looking statements related to clinical trial results, regulatory approvals, commercial launch uptake, and future financial performance are subject to inherent risks and uncertainties that could cause actual results to differ materially from expectations, as detailed in the company's SEC filings. - Early commercial launch data for Ovelity's AD agitation indication is limited, and actual long-term uptake, conversion from samples to filled prescriptions, and prescriber adoption trends may differ from early indicators. - Placebo response rates can be relatively high in binge eating disorder clinical trials, which creates risk that the ongoing ENGAGE Phase 3 trial may not meet its primary endpoint of statistical significance. - Market competition from newly approved treatments in the narcolepsy and AD agitation markets may impact the commercial opportunity and uptake of AXS-12 and Ovelity, respectively.

Analyst Q&A

• Q: What early trends is Axiom seeing in Ovelity's AD agitation launch specifically in the long-term care (LTC) setting? What challenges or successes have emerged in this new care setting? /

  A: Only eight weeks into the launch, management reports that early new-to-brand prescription growth in the 65+ patient population is strong, with positive early feedback that is consistent across both LTC and community care settings. More granular data by care setting will be shared as the launch progresses, but early results have been broadly encouraging to date.

• Q: Following the recent approval of a new orexin-2 receptor agonist for narcolepsy, how does Axiom view the commercial opportunity for AXS-12, and have payer discussions about pricing and access started? /

  A: The narcolepsy patient population is highly heterogeneous, so additional treatment options benefit patients. AXS-12 has a differentiated mechanism of action, rapid onset of action at one week, durable efficacy out to six months, and a favorable side effect profile that positions it well to meet unmet need. Productive early payer discussions are ongoing, but no pricing details will be released until closer to potential launch, and management is optimistic about securing favorable patient access.

• Q: Can you clarify how much of Q2 2026 revenue comes from channel stocking, what is the company's underlying operating cash burn, and what is the current path to break-even? /

  A: All Q2 2026 revenue reflects actual dispensed demand, with no channel inventory stocking; the company maintains a steady two weeks of inventory on hand. Adjusting for non-cash stock-based compensation, operating cash burn for the quarter was in the low to mid-$20 million range. SG&A is expected to plateau at current Q2 levels after commercial buildout is complete, while R&D will increase as new trials initiate, but operating leverage is expected to continue improving in the back half of 2026.

• Q: What is the nature of sampling during the early AD agitation launch, and are most new-to-brand prescriptions currently free samples? /

  A: Sampling refers to free point-of-care trial doses provided to clinicians to give patients, which are not counted as prescription fills in third-party data. Sampling is especially important for the elderly AD population to allow patients to experience efficacy and tolerability before a formal prescription, and it supports proper titration to the maintenance dose. Management notes that more data on sample conversion to filled prescriptions will be available as the launch progresses.