What changed in this filing

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Item 1A. Risk Factors

2020-11-05 compared with 2020-08-10 · 61 added, 72 removed, 1362 unchanged (9% of the section changed)

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Since inception, we have incurred significant operating losses.

Our net losses were $50.8 million and $68.3 million for three months ended June 30, 2020 and the year ended December 31, 2019, respectively.

As of June 30, 2020, we had an accumulated deficit of $226.7 million.

Our net losses were $73.7 million and $68.3 million for the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively.

As of September 30, 2020, we had an accumulated deficit of $249.6 million.

To date, we have not received regulatory approvals for any of our product candidates or generated any revenue from the sale of products, and we do not expect to generate any revenue in the foreseeable future.

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● seek regulatory approval for any product candidates that successfully complete late-stage clinical trials;

● hire additional clinical, medical, quality control, and scientific personnel;

● hire additional commercial, clinical, medical, quality control, and scientific personnel;

● add operational, financial, and management information systems and personnel, including personnel to support our product candidate development and planned future commercialization efforts;

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● undertake additional manufacturing activities of our product candidates to satisfy FDA requirements for marketing application submissions;

● continue to conduct our open-label, long-term safety extension trial for AXS-05;

● continue to conduct our open-label, long-term safety extension trial for AXS-07;

● ccontinue to onduct our three Phase 2 clinical trials with AXS-05 in MDD;

● continue to conduct our Phase 2 clinical trial with AXS-05 in TRD;

● conduct our planned Phase 3 clinical trial with AXS-05 in AD agitation;

● conduct our two planned Phase 3 clinical trials with AXS-12 in narcolepsy;

● conduct our planned Phase 3 clinical trial with AXS-12 in narcolepsy;

● continue to evaluate, plan for, and conduct, clinical trials for AXS-05 as an aid to smoking cessation treatment and AXS-09 for the treatment of CNS disorders;

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● in-license other product candidates.

We believe our currently available cash will be sufficient to fund our anticipated operating cash requirements for at least two years.

We believe our currently available cash along with the committed capital from the Hercules facility will be sufficient to fund our anticipated operating cash requirements into at least 2024.

We have based this estimate on assumptions that may prove to be wrong and we could spend our available financial resources faster than we currently expect.

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● the rate of progress and costs related to the development of our product candidates;

● the costs associated with conducting additional non-clinical studies with any of our product candidates;

● the costs associated with conducting additional clinical and non-clinical studies with any of our product candidates;

● the potential for delays in our efforts to seek regulatory approval for our product candidates, and any costs associated with such delays;

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If adequate funds are not available, we may be required to delay, reduce the scope of, or eliminate one or more of our development programs or our commercialization efforts.

Our operating activities may be restricted as a result of covenants related to the outstanding indebtedness under our loan agreement and we may be required to repay the outstanding indebtedness in an event of default, which could have a materially adverse effect on our business.

In March 2019, we entered into a loan and security agreement with SVB and WestRiver Innovation Lending Fund VIII, L.P., or the 2019 Term Loan, consisting of an initial $20.0 million tranche, or the Term A Loan Advance, which was funded shortly upon closing, with the remaining $4.0 million, or the Term B Loan Advance, initially available to be drawn, at our option, subject to the achievement of positive data, on or prior to August 15, 2019, with respect to our ongoing Phase 2 clinical trial for AXS-12 in narcolepsy, sufficient to submit a Phase 3 protocol to the FDA, provided that we have not received any objections from the FDA within thirty days after submission of such Phase 3 protocol, which we refer to as the Milestone Event.

A portion of the first tranche was used to satisfy our existing obligations under our original term loan facility with SVB, as amended, and such obligations are considered to be fully repaid and completed.

The new term loan facility matures in February 2023 and initially had an interest-only monthly payment period for twelve months, extendable to eighteen months upon funding of the Term B Loan Advance.

We refer to the Term A Loan Advance and the Term B Loan Advance together as the Loan Advances.

In July 2019, we entered into a first amendment to the loan and security agreement, or the First Amendment to the 2019 Term Loan.

Under the First Amendment to the 2019 Term Loan, the interest-only monthly payment period of the 2019 Term Loan was extended to 18 months after the date of the 2019 Term Loan, which may be further extended to 24 months upon receipt by us of the Term B Loan Advance.

Our ability to draw down the Term B Loan Advance was extended to December 31, 2019, subject to our achievement of the Milestone Event prior to or on December 31, 2019.

We did not draw down on the Term B Loan Advance, and therefore, the interest-only monthly payment period was not extended.

The Loan Advances mature on February 1, 2023, which we refer to as the Maturity Date.

Pursuant to the 2019 Term Loan, as amended by the First Amendment to the 2019 Term Loan, following the interest-only payment period, we will begin making monthly payments of principal in equal monthly installments for 30 consecutive months and monthly payments of interest, until the Maturity Date.

Interest will accrue on the unpaid principal balance of the outstanding Loan Advances at a floating per annum rate equal to the greater of (i) seven and one-half of one percent (7.50%) and (ii) two percent (2.0%) above the prime rate.

The First Amendment to the 2019 Term Loan increased the final payment fee, payable upon our repayment of the Loan Advances from 6.0% to 6.30% of the original principal amount of the Loan Advances.

We may prepay all, but not less than all of the Loan Advances, subject to a prepayment fee of 3.0% of any amount prepaid prior to the first anniversary of July 25, 2019, or the First Amendment Effective Date, 2.0% of the amount prepaid if the prepayment occurs after the first anniversary of the First Amendment Effective Date through and including the second anniversary of the First Amendment Effective Date, or 1.0% of the amount prepaid if the prepayment occurs after the second anniversary of the First Amendment Effective Date, but prior to the Maturity Date.

These percentages are unchanged from the original 2019 Term Loan.

The loan subjects us to various customary covenants, including requirements as to financial reporting and insurance, and restrictions on our ability to dispose of our business or property, change our line of business, liquidate or dissolve, enter into any change in control transaction, merge or consolidate with any other entity or acquire all or substantially all the capital stock or property of another entity, incur additional indebtedness, incur certain types of liens on our property, including our intellectual property, pay any dividends or other distributions on our capital stock other than dividends payable solely in capital stock or redeem our capital stock.

Our operating activities may be restricted as a result of covenants related to the outstanding indebtedness under our loan and security agreement with Hercules and we may be required to repay the outstanding indebtedness in an event of default, which could have a materially adverse effect on our business.

In September 2020, we entered into a Loan and Security Agreement, or the Loan Agreement, for a term loan of up to $225.0 million, which we refer to as the 2020 Term Loan, with Hercules Capital, Inc., or Hercules, in its capacity as administrative agent and collateral agent and as a lender, and the other financial institutions that from time to time become parties to the Loan Agreement, collectively referred to as the Lenders, secured by a lien on substantially all of our assets, including intellectual property.

The Loan and Agreement contains various covenants that limit our ability to engage in specified types of transactions.

These covenants limit our ability to, among other things, sell, transfer, lease or dispose of certain assets;

incur indebtedness;

encumber or permit liens on certain assets;

make certain investments;

make certain restricted payments, including paying dividends on, or repurchasing or making distributions with respect to, our common stock;

and enter into certain transactions with affiliates.

Our business may be adversely affected by these restrictions on our ability to operate our business.

Additionally, we may be required to repay the outstanding indebtedness under the 2019 Term Loan if an event of default occurs under the 2019 Term Loan.

Under the 2019 Term Loan, an event of default will occur if, among other things, we fail to make payments under the 2019 Term Loan;

we breach any of our covenants under the 2019 Term Loan, subject to specified cure periods with respect to certain breaches;

we or our assets become subject to certain legal proceedings, such as bankruptcy proceedings;

we are unable to pay our debts as they become due;

or we default on contracts with third parties which would permit SVB to accelerate the maturity of such indebtedness or that could have a material adverse effect on us.

While our current cash reserves are sufficient to repay such indebtedness if an event of default were to occur in the near term, we may in the future not have enough available cash or be able to raise additional funds through equity or debt financings to repay such indebtedness at the time any such event of default occurs.

In that case, we may be required to delay, limit, reduce or terminate our product candidate development or commercialization efforts or grant to others rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

SVB could also exercise its rights as collateral agent to take possession and dispose of the collateral securing the loan for its benefit, which collateral includes all of our property other than our intellectual property.

Our business, financial condition and results of operations could be materially adversely affected as a result of any of these events.

Our management has broad discretion in the application of the proceeds from the 2019 Term Loan, subject to the covenants and limitations described in the 2019 Term Loan.

The covenants also include, to the extent the principal amount of the advances under the Loan Agreement equals or exceeds $55.0 million, maintaining cash in an account or accounts in which the Lenders have a first priority security interest, in an aggregate amount greater than or equal to $15.0 million, plus the amount of our accounts payable under U.S generally accepted accounting principles not paid after the 180th day following the invoice for such account payable, which we refer to as the Qualified Cash A/P Account.

Further, effective upon the later of (i) the last calendar month of the calendar quarter that is twelve months following the earlier of (x) the date of approval of our NDA for our AXS-05 product candidate for the treatment of major depressive disorder reasonably satisfactory to the Lenders, and (y) the date of approval of our NDA for our AXS-07 product candidate for the treatment of migraine, or (ii) the date on which the outstanding principal amount of the term loan advances under the Loan Agreement is equal to or greater than $65.0 million, we are obligated to (A) ensure that at all times our market capitalization exceeds $2.0 billion, and that we maintain cash in an account in which the Lenders have a first priority security interest in an amount not less than 65% of the sum of the outstanding principal amount of the term loan advances plus the Qualified Cash A/P Amount, (B) ensure that at all times that we maintain cash in an account in which the Lenders have a first priority security interest in an amount not less than 100% of the sum of the outstanding principal amount of the term loan advances plus the Qualified Cash A/P Amount, or (C) achieve at least 60% of the net product revenue solely from the sale of AXS-05 and AXS-07 (which may include royalty, profit sharing, or sales-based milestone revenue recognized in accordance with GAAP, but will not include any upfront or non-sales-based milestone payments under business development or licensing transactions), measured on a trailing six-month basis as of the date of our most recent quarterly financial statement, included in the projections we delivered to Hercules on September 9, 2020, as updated from time to time, determined on a quarterly basis.

A breach of any of the covenants under the Loan Agreement could result in a default under the 2020 Term Loan.

Upon the occurrence of an event of default under the 2020 Term Loan, the Lenders could elect to declare all amounts outstanding, if any, to be immediately due and payable and terminate all commitments to extend further credit.

If there are any amounts outstanding that we are unable to repay, the Lenders could proceed against the collateral granted to it to secure such indebtedness.

We have a limited operating history and no history of commercializing products, which may make it difficult to evaluate our business and prospects.

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Our product candidates will require additional clinical and non-clinical development, regulatory approval, commercial manufacturing arrangements, establishment of a commercial organization, significant marketing efforts, and further investment before we generate any revenues from product sales.

We began enrolling patients in two open-label safety studies for (i) AXS-05 in the treatment of depression and (ii) AXS-07 in the acute treatment of migraine in July 2019.

Additional Phase 3 trials with AXS-05 in AD agitation and AXS-12 in narcolepsy are planned.

Phase 3 trials with AXS-05 in AD agitation and AXS-12 in narcolepsy are planned.

As a result of one or more risks discussed in this section, we cannot assure you that we will meet projected timelines related to these trials.

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Comparable foreign regulatory authorities, such as the European Medicines Agency, or EMA, impose similar restrictions.

In the United States, we currently plan to, at least initially, seek approval of our product candidates using the 505(b)(2) pathway.

In the United States, we currently plan to, at least initially, seek approval of most of our product candidates using the 505(b)(2) pathway, with the exception of AXS-12 and AXS-14.

The FDA interprets Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act, or FDCA, for purposes of approving an NDA, to permit the applicant to rely, in part, upon published literature or the FDA’s previous findings of safety and efficacy for an approved product.

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For instance, antidepressants, including bupropion, include a class-wide black box warning regarding the increased risk of suicidal thoughts and behavior.

Based on the side effects disclosed in FDA product labels for marketed drugs that contain the same active molecules as our product candidate, AXS-05 may result in dry mouth, nausea, insomnia, dizziness, pharyngitis, abdominal pain, agitation, anxiety, tremor, seizure, increase in blood pressure and heart rate, hepatoxicity, hypoglycemia, thrombocytopenia or other hypersensitivity reactions, QRS prolongation, left ventricular hypertrophy or left ventricular dysfunction, palpitation, sweating, tinnitus, myalgia, anorexia, urinary frequency, rash, seizure, hypertension, activation of mania or hypomania, psychosis and other neuropsychiatric reactions, suicidal ideation, suicide attempt, completed suicide, angle closure glaucoma, allergic or anaphylactoid or anaphylactic reactions, diarrhea, cough, vomiting, asthenia, peripheral edema, urinary tract infection, influenza, increased gamma-glutamyltransferase, flatulence, or other adverse events or potential adverse events reported or discussed in the product labels for bupropion-containing products or dextromethorphan-containing products including Wellbutrin, Wellbutrin SR, Wellbutrin XL, Aplenzin, Forfivo, Zyban, Contrave, and Nuedexta.

Based on the side effects disclosed in FDA product labels for marketed drugs that contain the same active molecules as our product candidate, AXS-05 may result in dry mouth, nausea, insomnia, dizziness, pharyngitis, abdominal pain, agitation, anxiety, tremor, seizure, increase in blood pressure and heart rate, hepatoxicity, hypoglycemia, thrombocytopenia or other hypersensitivity reactions, QT prolongation, left ventricular hypertrophy or left ventricular dysfunction, palpitation, sweating, tinnitus, myalgia, anorexia, urinary frequency, rash, seizure, hypertension, activation of mania or hypomania, psychosis and other neuropsychiatric reactions, suicidal ideation, suicide attempt, completed suicide, angle closure glaucoma, allergic or anaphylactoid or anaphylactic reactions, diarrhea, cough, vomiting, asthenia, peripheral edema, urinary tract infection, influenza, increased gamma-glutamyltransferase, flatulence, or other adverse events or potential adverse events reported or discussed in the product labels for bupropion-containing products or dextromethorphan-containing products including Wellbutrin, Wellbutrin SR, Wellbutrin XL, Aplenzin, Forfivo, Zyban, Contrave, and Nuedexta.

Based on the side effects disclosed in FDA product labels for marketed drugs that contain the same active molecules as our product candidate, AXS-07 may result in fatigue, confusion, dry mouth, diarrhea, nausea, insomnia, anemia, increased appetite, anxiety, sweating, dizziness, palpitations, arrythmia, tachycardia, abnormal vision, syncope, seizure, tremor, tinnitus, dizziness, somnolence, paresthesia, dysgeusia, dyspepsia, constipation, weight increase or decrease, gastritis, hematuria, flatulence, esophagitis, gastric ulcers, gastroesophageal reflux, gastrointestinal hemorrhages, colitis, rash, pain or tightness in the chest, neck, throat or jaw, upper respiratory tract infections, influenza-like symptoms, or other adverse events or potential adverse events reported or discussed in the product labels for meloxicam-containing or rizatriptan-containing products including Anjeso, Vivlodex, Mobic, and Maxalt.

Based on the side effects disclosed in EMA product label for marketed drugs that contain the same active molecule as our product candidate, AXS-12 may result in decreased appetite, insomnia, agitation, anxiety, dizziness, headache, paresthesia, akathisia, dysgeusia, accommodation disorder, mydriasis, glaucoma, vertigo, tachycardia, palpitations, vasodilation, hypotension, hypertension, dry mouth, vomiting, hyperhidrosis, rash, sensation of incomplete bladder emptying, urinary tract infection, dysuria, urinary retention, erectile dysfunction, ejaculatory pain, ejaculatory delay, chills, or other adverse events or potential adverse events reported or discussed in the product labels for reboxetine containing products including Edronax.

Based on the side effects disclosed in EMA product label for marketed drugs that contain the same active molecule as our product candidate, AXS-12 and AXS-14 may result in decreased appetite, insomnia, agitation, anxiety, dizziness, headache, paresthesia, akathisia, dysgeusia, accommodation disorder, mydriasis, glaucoma, vertigo, tachycardia, palpitations, vasodilation, hypotension, hypertension, dry mouth, vomiting, hyperhidrosis, rash, sensation of incomplete bladder emptying, urinary tract infection, dysuria, urinary retention, erectile dysfunction, ejaculatory pain, ejaculatory delay, chills, or other adverse events or potential adverse events reported or discussed in the product labels for reboxetine containing products including Edronax.

In addition, because we plan to file our product candidates under an NDA submitted pursuant to 505(b)(2), we will rely, at least in part, upon a reference listed drug and published literature.

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As product candidates are developed through preclinical studies to late stage clinical trials towards approval and commercialization, it is common that various aspects of the development program, such as manufacturing methods and formulation, are altered along the way in an effort to optimize processes and results.

For instance, as we begin scale-up efforts for commercial-size manufacturing batches, formulation changes may necessary to improve tablet robustness.

For instance, as we begin scale-up efforts for commercial-size manufacturing batches, formulation changes may be necessary to improve tablet robustness.

Such changes carry the risk that they will not achieve these intended objectives.

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Market exclusivity awarded by the FDA upon the approval of an NDA is limited in scope and duration.

Our commercial success will depend in part on obtaining, maintaining, enforcing, and defending against third-party challenges, our patent and trade secret protection for any of our current and future product candidates that we may develop, license, or acquire, and the related manufacturing methods.

We will only be able to fully protect our technologies from unauthorized use by third parties to the extent that valid and enforceable patents or trade secrets cover them.

Our commercial success will depend in part on obtaining, maintaining, enforcing, and defending against third-party challenges, patent and trade secret protection for our current and future product candidates that we may develop, license, or acquire, as well as the related manufacturing methods.

We will be able to protect our technologies from unauthorized use by third parties to the extent that the technologies are covered by valid and enforceable patents or trade secrets.

The patent prosecution process is expensive and time consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner.

It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection.

Moreover, should we enter into additional collaborations we may be required to consult with or cede control to collaborators regarding the prosecution, maintenance, and enforcement of our patents.

Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.

Moreover, should we enter into additional collaborations we may be required to consult with or cede control to collaborators regarding the prosecution, maintenance, and enforcement of our patent applications and patents.

Therefore, these patents and patent applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.

The patent positions of pharmaceutical and biotechnology companies can be highly uncertain and involve complex legal and factual questions for which important legal principles remain unresolved.

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Changes in either the patent laws or in interpretations of patent laws in the United States and other countries may diminish the value of our intellectual property.

Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in our patents or in third-party patents.

Accordingly, we cannot predict the breadth of claims that may be allowed or enforced in our patents and patent applications or in third-party patents and patent applications.

The degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage.

Moreover, the patent application process is also subject to numerous risks and uncertainties, and there can be no assurance that we or any of our future development partners will be successful in protecting any of our current or future product candidates that we may develop, license, or acquire by obtaining and defending patents.

● we may not have been the first to make the inventions covered by each of our pending patent applications and issued patents;

● we may not have been the first to conceive of and reduce to practice the inventions covered by each of our pending patent applications and issued patents;

● we may not have been the first to file patent applications for these inventions;

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● patents of others may have an adverse effect on our business;

● noncompliance with governmental patent agencies requirements can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction, potentially allowing competitors to enter the market earlier than would otherwise have been the case;

● noncompliance with requirements of governmental patent agencies can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction, potentially allowing competitors to enter the market earlier than would otherwise have been the case;

● our competitors, many of whom have substantially greater resources than we do and many of whom have made significant investments in competing technologies, may seek or may have already obtained patents that will limit, interfere with, or eliminate our ability to make, use, and sell our potential product candidates;

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The actual length of the extension will depend on the amount of patent term lost while the product was in clinical trials.

However, the applicable authorities, including the USPTO and the FDA in the United States, and any equivalent regulatory authority in other countries, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to our patents, or may grant more limited extensions than we request.

However, the applicable authorities, including the U.S.

Patent and Trademark Office, or USPTO and the FDA in the United States, and any equivalent regulatory authority in other countries, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to our patents, or may grant more limited extensions than we request.

If this occurs, our competitors may be able to take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data, and then may be able to launch their product earlier than might otherwise be the case.

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The Leahy-Smith Act includes a number of significant changes to U.S.

These include provisions that affect the way patent applications will be prosecuted and may also affect patent litigation.

These include provisions that affect the way patent applications are prosecuted and may also affect patent litigation.

In particular, under the Leahy-Smith Act, the United States transitioned in March 2013 to a "first to file"

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patent position.

The results of these types of proceedings may reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third party patent rights.

The results of these types of proceedings may reduce the scope of, or invalidate, our patent rights, may allow third parties to commercialize our technology or products and compete directly with us, without payment to us, or may result in our inability to manufacture or commercialize products without infringing third party patent rights.

In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to license, develop, or commercialize current or future product candidates.

Such results could have a material adverse effect on our business, financial condition, results of operations, and prospects.

In addition, the patentability of claims in pending patent applications covering any of our current or future product candidates can be challenged by third parties during prosecution in the USPTO, for example by third-party observations and derivation proceedings, and the validity of claims in issued patents can be challenged by third parties in various post-grant proceedings such as post-grant review, reexamination, and inter-partes review proceedings.

In addition, the patentability of claims in pending patent applications covering any of our current or future product candidates can be challenged by third parties during prosecution before the USPTO, for example by third-party observations and derivation proceedings, and the validity of claims in issued patents can be challenged by third parties in various post-grant proceedings such as post-grant review, reexamination, and inter-partes review proceedings.

For example, petitions for post-grant review of 9 U.S.

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In July 2020, the PTAB entered final written decisions for U.S.

and 10,052,338, each containing claims directed to the use of neridronic acid for the treatment of CRPS, holding that the claims were invalid for obviousness.

and 10,052,338, each containing claims directed to the use of neridronic acid for the treatment of complex regional pain syndrome, or CRPS, holding that the claims were invalid for obviousness.

In June, the PTAB entered a final written decision for U.S.

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In February 2020, the PTAB entered a final written decision for U.S.

9,820,999, containing claims directed to the use of neridronic acid for the treatment of complex regional pain syndrome, or CRPS, holding that thirteen of the claims were valid, and seventeen of the claims were invalid for lacking novelty.

9,820,999, containing claims directed to the use of neridronic acid for the treatment of CRPS, holding that thirteen of the claims were valid, and seventeen of the claims were invalid for lacking novelty.

The PTAB previously entered final written decisions for U.S.

and 9,539,268, each containing claims directed to certain dosage forms containing zoledronic acid or the use of certain dosage forms containing zoledronic acid, holding that the claims were invalid for lack of written description, lack of enablement, novelty, and/or obviousness.

Any claim the PTAB determines to be unpatentable as a result of these proceedings would be stricken from the challenged patents or modified.

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Numerous U.S.

and foreign issued patents and pending patent applications, which are owned by third parties, exist in the general field of treatment and management of pain and other CNS disorders and cover the use of numerous compounds and formulations in our targeted markets.

and foreign issued patents and pending patent applications owned by third parties, exist in the general field of treatment and management of pain and other CNS disorders and cover the use of numerous compounds and formulations in our targeted markets.

Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future.

Because of the uncertainty inherent in any patent or other litigation involving proprietary rights, we and our licensors may not be successful in defending intellectual property claims by third parties, which could have a material adverse effect on our business, financial condition, results of operations, and prospects.

Regardless of the outcome of any litigation, defending the litigation may be expensive, time consuming, and distracting to management.

Regardless of the outcome of any litigation, defending against litigation may be expensive, time consuming, and distracting to management.

In addition, because patent applications can take many years to issue, there may be currently pending applications, unknown to us, which may later result in issued patents that any of our current or future product candidates may infringe.

There could also be existing patents of which we are not aware that any of our current or future product candidates may inadvertently infringe.

If a third party claims that we infringe on their products or technology, we could face a number of issues, including:

If a third party claims that we infringe their intellectual property rights, we could face a number of issues, including:

● infringement and other intellectual property claims which, whether meritorious or not, can be expensive and time consuming to litigate and can divert management’s attention from our core business;

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license to Pfizer data for reboxetine and esreboxetine encompassing a full range of nonclinical studies, and short-term and long-term clinical trials involving more than five thousand patients.

The licensed data includes results of a positive Phase 3 and a positive Phase 2 trial of esreboxetine in the treatment of fibromyalgia.

The licensed data includes results of a positive Phase 3 trial and a positive Phase 2 trial of esreboxetine in the treatment of fibromyalgia.

We will have the exclusive right and sole responsibility of developing AXS-14 (esreboxetine) in the U.S.

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Pfizer will also have a right of first negotiation on any potential future strategic transactions involving AXS-12 and AXS-14.

Under the agreement, we are obligated to use commercially reasonable efforts to develop, manufacture and commercialize the compounds and products in the United States and seeking and maintaining regulatory approvals for the compounds and products The agreement will expire on a product-by-product basis upon expiration of the last-to-expire royalty term for such product.

Under the agreement, we are obligated to use commercially reasonable efforts to develop, manufacture and commercialize the compounds and products in the United States and to seek and maintain regulatory approvals for the compounds and products The agreement will expire on a product-by-product basis upon expiration of the last-to-expire royalty term for such product.

On expiration (but not earlier termination), we will have a perpetual, non-exclusive, fully paid, royalty-free and irrevocable license under the licensed patent rights and related data to develop, manufacture, use, commercialize and otherwise exploit the compounds.

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We or our licensors may not be able to protect our intellectual property rights throughout the world.

Filing, prosecuting, and defending patents on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States.

Filing, prosecuting, and defending patent applications and patents on product candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries outside the United States can be less extensive than those in the United States.

In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States.

Consequently, we may not be able to prevent third parties from practicing our inventions in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions.

Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but enforcement rights are not as strong as those in the United States.

Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but where enforcement rights are not as strong as those in the United States.

These products may compete with our product candidates and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

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We will need to significantly increase the size of our organization, and we may experience difficulties in managing growth.

As of August 3, 2020, we had only 43 full-time employees.

As of October 30, 2020, we had only 53 full-time employees.

We will need to substantially expand our managerial, commercial, financial, manufacturing, and other personnel resources in order to manage our operations and prepare for the commercialization of our product candidates, if approved.

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Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.

As of August 3, 2020, our executive officers, directors, and 5% stockholders and their affiliates beneficially owned an aggregate of approximately 41% of our outstanding common stock.

As of October 30, 2020, our executive officers, directors, and 5% stockholders and their affiliates beneficially owned an aggregate of approximately 41% of our outstanding common stock.

As a result, these stockholders have significant influence and may be able to determine all matters requiring stockholder approval.

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We are unable to predict the effect that sales may have on the prevailing market price of our common stock.

As of August 3, 2020, we have outstanding 37,284,266 shares of common stock and 4,166,792 shares of common stock equivalents that would increase the number of common stock outstanding if these instruments were exercised or converted, including stock options to purchase common stock based on vesting requirements and warrants to purchase common stock, as well as outstanding restricted stock units.

As of October 30, 2020, we have outstanding 37,344,201 shares of common stock and 4,082,739 shares of common stock equivalents that would increase the number of common stock outstanding if these instruments were exercised or converted, including stock options to purchase common stock based on vesting requirements and warrants to purchase common stock, as well as outstanding restricted stock units.

Of our currently outstanding shares of common stock, 29,382,477 are freely tradable.

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We have never declared or paid any cash dividends on our capital stock.

In addition, the terms of our existing credit facility with SVB and WestRiver preclude us from paying cash dividends without SVB’s and WestRiver’s consent.

In addition, the terms of our existing credit facility with Hercules preclude us from paying cash dividends without Hercules’ consent.

We currently intend to retain all available funds and any future earnings to support our operations and finance the growth and development of our business and do not anticipate declaring or paying any cash dividends on our common stock for the foreseeable future.

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INDEX OF EXHIBITS

WeWork Membership Agreement effective as of August 1, 2020, by and between the Company and 22 Cortlandt Street HQ LLC.

Axsome Therapeutics, Inc.

Amended and Restated 2015 Omnibus Incentive Compensation Plan.

WeWork Membership Agreement effective as of August 1, 2020, by and between the Company and 22 Cortlandt Street HQ LLC (Incorporated by reference, Exhibit 10.1 to the Company’s Form 10-Q filed August 10, 2020).

Agreement, dated as of September 3, 2020, by and between Axsome Therapeutics, Inc.

and David Marek.

Loan and Security Agreement, dated as of September 25, 2020, by and among Axsome Therapeutics, Inc., the Lenders who from time to time may be party thereto, and Hercules Capital, Inc., in its capacity as administrative agent and collateral agent for itself and the Lenders.

Warrant Agreement, dated as of September 25, 2020, by and between Axsome Therapeutics, Inc.

and Hercules Capital, Inc.

Direct Agreement, by and among Axsome Therapeutics, Inc., Antecip Bioventures II LLC, and Hercules Capital Inc., as collateral agent for itself and the Lenders.

Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

12 unchanged sentences

** Filed herewith.

+ Certain portions of the Exhibit have been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AXSOME THERAPEUTICS, INC.

August 10, 2020

November 5, 2020

/s/ Herriot Tabuteau, M.D.

2 unchanged sentences

(Principal Executive Officer)

August 10, 2020

November 5, 2020

/s/ Nick Pizzie

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors