What changed in this filing

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Item 1A. Risk Factors

2021-08-09 compared with 2021-05-10 · 35 added, 29 removed, 1391 unchanged (4% of the section changed)

16 unchanged sentences

If safety and efficacy data for our product candidates, a reference drug, or published literature does not satisfactorily demonstrate safety and efficacy to the FDA, or if the FDA and other regulators do not permit us to rely on the data of a reference drug or published literature, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.

Although Breakthrough Therapy, Fast Track, and other designations are designed to expedite the development and review of drugs, Breakthrough Therapy designation by the FDA for AXS-05 for the treatment of MDD and for the treatment of AD agitation, and AXS-12 for the treatment of cataplexy in patients with narcolepsy, for example, may not ultimately lead to a faster development or regulatory review or approval process, and it will not increase the likelihood that these product candidates will receive marketing approval.

Although Breakthrough Therapy, Fast Track, and other designations are designed to expedite the development and review of drugs, Breakthrough Therapy designation by the FDA for AXS-05 for the treatment of MDD and for the treatment of AD agitation, for example, may not ultimately lead to a faster development or regulatory review or approval process, and it will not increase the likelihood that these product candidates will receive marketing approval.

We face significant competition from other pharmaceutical and biotechnology companies, academic institutions, government agencies, and other research organizations.

Our operating results will suffer if we fail to compete effectively.

If we are unable to establish effective marketing and sales capabilities or enter into agreements with third parties to market and sell our product candidates, if they are approved, we may be unable to generate product revenues.

Even if we obtain FDA approval of an NDA for our product candidates, if we are unable to establish effective marketing, sales and distribution capabilities or enter into agreements with third parties to market, sell and distribute our product candidates, if they are approved, we may be unable to generate product revenues.

If any of our current or future product candidates do not achieve broad market acceptance, the revenues that we generate from their sales will be limited.

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Our business operations, financial condition, results of operations and cash flows may be adversely affected by the effects of health epidemics, pandemics, or outbreaks of infectious diseases, including the recent COVID-19 pandemic.

We may rely on third parties to perform many essential services for any products that we commercialize, including services related to warehousing and inventory control, distribution, government price reporting, customer service, accounts receivable management, cash collection, and adverse event reporting.

As an NDA applicant (and if an NDA is approved) and as a potential commercial “virtual manufacturer,” we may rely in many cases on third parties to perform many essential services for any products that we commercialize, including services related to warehousing and inventory control, distribution, government price reporting, customer service, accounts receivable management, cash collection, and adverse event reporting.

If these third parties fail to perform as expected or to comply with legal and regulatory requirements, our ability to commercialize any of our current or future product candidates will be significantly impacted and we may be subject to regulatory sanctions.

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Since inception, we have incurred significant operating losses.

Our net losses were $29.3 million and $32.5 million for the three months ended March 31, 2021 and three months ended March 31, 2020, respectively.

As of March 31, 2021, we had an accumulated deficit of $308.1 million.

Our net losses were $61.5 million for the six months ended June 30, 2021 and $102.9 for the year ended December 31, 2020.

As of June 30, 2021, we had an accumulated deficit of $340.3 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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undertake additional manufacturing activities of our product candidates to satisfy FDA requirements for marketing application submissions;

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

continue to conduct our Phase 3 clinical trial with AXS‑05 in AD agitation;

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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;

continue to evaluate, plan for, and potentially conduct clinical trials for AXS-14 in fibromyalgia;

continue to evaluate, plan for, and submit an NDA for AXS-14 in fibromyalgia;

develop, in‑license, or acquire additional product candidates;

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the costs of filing, prosecuting, defending, and enforcing any patent claims and other intellectual property rights associated with our product candidates;

the cost and timing of manufacturing sufficient supplies of our product candidates in preparation for commercialization;

the cost and timing of manufacturing (or having manufactured by third parties) sufficient supplies of our product candidates in preparation for commercialization;

the effect of competing technological and market developments;

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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.

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 per the board of directors approved forecast 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.

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Any significant delays in obtaining approval for and commercializing our product candidates will have a material adverse impact on our business and financial condition.

Although we recently submitted an NDA with the FDA, we have not previously submitted an NDA to the FDA, or similar drug approval filings to comparable foreign authorities, for any product candidate, and we cannot be certain that our current or future product candidates will be successful in clinical trials or receive regulatory approval.

Although we submitted an NDA to the FDA for AXS-05 for the treatment of MDD and for AXS-07 for the acute treatment of migraine, we have not previously submitted an NDA to the FDA, or similar drug approval filings to comparable foreign authorities, for any product candidate, and we cannot be certain that our current or future product candidates will be successful in clinical trials or receive regulatory approval.

Our product candidates are susceptible to the risks of failure inherent at any stage of product development, including the appearance of unexpected adverse events or failure to achieve its primary endpoints in subsequent clinical trials, including our initiated and planned Phase 3 clinical trials.

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hire, train, and deploy a sales force to commercialize our product candidates in the United States;

manufacture our product candidates in sufficient quantities and at acceptable quality and manufacturing cost to meet commercial demand at launch and thereafter;

manufacture (or have manufactured by third parties) our product candidates in sufficient quantities and at acceptable quality and manufacturing cost to meet commercial demand at launch and thereafter;

establish and maintain agreements with wholesalers, distributors, and group purchasing organizations on commercially reasonable terms;

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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‑glutamyl transferase, 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 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.

Based on the side effects disclosed in FDA product labeling 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 required 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 most of our product candidates under an NDA submitted pursuant to 505(b)(2), we will rely, at least in part, upon a reference drug and published literature.

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the Phase 3 MOMENTUM trial, conducted pursuant to a Special Protocol Assessment, or SPA, and the Phase 3 INTERCEPT trial to support an NDA for AXS-07 for the acute treatment of migraine;

and the Phase 3 ADVANCE-1 trial and the ongoing ACCORD trial to support an NDA for AXS-05 for the treatment of AD agitation, the FDA could still require additional studies to support the approval of an NDA for these product candidates.

the Phase 3 ADVANCE-1 trial and the ongoing ACCORD trial to support an NDA for AXS-05 for the treatment of AD agitation;

and the completed Phase 2 trial and Phase 3 trial to support an NDA for AXS-14 for the management of fibromyalgia, the FDA could still require additional studies to support the approval of an NDA for these product candidates.

Finally, for AXS-12, we will need to conduct a Phase 3 clinical trial in order to file an NDA for this product candidate.

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To date, the most commonly reported adverse events observed in the completed clinical trial of AXS-12 include anxiety, constipation, and insomnia.

To date, the most commonly reported adverse events observed in the completed clinical trials of AXS-14 include anxiety, constipation, and insomnia.

If any of our other product candidates are associated with serious adverse events or undesirable side effects or have properties that are unexpected, we may need to abandon development or limit development of that product candidate to certain uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe, or more acceptable from a risk‑benefit perspective.

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In addition, the FDA may later decide that the products no longer meet the designation conditions.

Although the breakthrough therapy process is designed to expedite the review and development of drugs, Breakthrough Therapy designation by the FDA for AXS-05 for the treatment of MDD and for the treatment of AD agitation, and AXS-12 for the treatment of cataplexy in patients with narcolepsy may not ultimately lead to a faster development or regulatory review or approval process, and it will not increase the likelihood that these product candidates will receive marketing approval.

We received Breakthrough Therapy designation for AXS-05 for both the treatment of MDD and the treatment of AD agitation, and for AXS-12 for the treatment of cataplexy in patients with narcolepsy.

Although the breakthrough therapy process is designed to expedite the review and development of drugs, Breakthrough Therapy designation by the FDA for AXS-05 for the treatment of MDD and for the treatment of AD agitation may not ultimately lead to a faster development or regulatory review or approval process, and it will not increase the likelihood that these product candidates will receive marketing approval.

We received Breakthrough Therapy designation for AXS-05 for both the treatment of MDD and the treatment of AD agitation.

A breakthrough therapy is defined as a product candidate that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the product candidate may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

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In addition, the FDA may later decide to rescind the Breakthrough Therapy designation for one or more of our applicable product candidates if such product candidates no longer meet the conditions for qualification of this program.

For example, we were initially granted Breakthrough Therapy designation for AXS-12 for the treatment of cataplexy in patients with narcolepsy in August 2020.

In July 2021, the FDA rescinded our Breakthrough Therapy designation due to the FDA approving an additional drug product for the treatment of cataplexy in narcolepsy.

Regulatory approval is limited by the FDA or comparable foreign regulatory authorities to those specific indications and conditions for which clinical safety and efficacy have been demonstrated, and we may be subject to fines, penalties, injunctions, or other enforcement actions if we are determined to be promoting the use of our products for unapproved or “off ‑label” uses, resulting in damage to our reputation and business.

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Depending on what changes the FDA may make to its orphan drug regulations and policies, our business, financial condition, results of operations, and prospects could be harmed.

We are currently building a commercial infrastructure for the marketing, sale, and distribution of pharmaceutical products.

We plan to build a commercial infrastructure, including the creation of a sales force to launch that product candidate throughout the United States.

We plan to build a commercial infrastructure, including the creation of a sales force to launch that product candidate throughout the United States, which will require consideration of a range of federal and state laws..

If we commercialize our product candidates outside the United States, we intend to partner with marketing and sales collaborators, rather than with our own sales force.

We have no prior experience in the marketing, sale, and distribution of pharmaceutical products, and there are significant risks involved in the building and managing of a commercial infrastructure.

The establishment and development of our own sales force and related compliance plans to market any products we may develop will be expensive and time consuming and could delay any product launch, and we may not be able to successfully develop this capability.

Our role as an NDA holder (if we obtain approval) and a virtual manufacturer, and t he establishment and development of our commercial infrastructure and our own sales force, and related compliance plans to market any products we may develop, will be expensive and time consuming and could delay any product launch, and we may not be able to successfully develop these capabilities.

We will have to compete with other pharmaceutical and biotechnology companies to recruit, hire, train, manage, and retain marketing and sales personnel.

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our inability to effectively oversee a geographically dispersed sales and marketing team;

the application of federal and state drug distribution and supply chain requirements to our business;

the costs associated with training sales and marketing personnel on legal and regulatory compliance matters and monitoring their actions;

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We may utilize contract manufacturers to manufacture our investigational products and plan to utilize contract manufacturers if and when we obtain FDA approval.

The FDA announced it would resume domestic facility inspections, after a previous temporary delay.

Although the agency continues its general suspension of foreign facility inspections (although “mission-critical” inspections may be considered on a case-by-case basis).

Because of the global pandemic, decision-making around facility inspections by the FDA (including Pre-Approval and for cause inspections) continues to evolve.

The FDA announced it would resume domestic facility inspections, after a previous temporary delay , and more recently the agency stated that it is transitioning back to standard operations for conducting domes tic facility inspections.

The agency continues its general suspension of foreign facility inspections (other than “mission-critical” inspections).

Because of the global pandemic, decision-making around facility inspections by the FDA (including Pre-Approval and for cause inspections) continues to evolve, , especially given the recent report from the Government Accountability Office noting that the FDA had a significant backlog of domestic and foreign inspections resulting from the COVID-19 pandemic .

Depending on the length of the COVID-19 pandemic and FDA’s related internal policies, this could impact future applications and product candidates.

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Azar) on November 2, 2020.

Thereafter, the Department of Justice under the new Biden Administration did submit a new amicus brief in February 2021 following the oral hearings asserting that they now believe the ACA is constitutional, and the mandate is severable from the rest of the ACA.

The Court has yet to issue its opinion, and we cannot say for certain what the decision will be or what impact, if any, it may have on our business.

It is unclear how regulations and sub-regulatory policy, which fluctuate continually, may affect interpretation and implementation of the ACA and its practical effects on our business, particularly entering an election year.

Thereafter, the Department of Justice unde r the new Biden Administration did submit a new amicus brief in February 2021 following the oral hearings asserting that they now believe the ACA is constitutional, and the mandate is severable from the rest of the ACA.

In June 2021, the Supreme Court upheld the ACA.

It is unclear how regulations and sub-regulatory policy, which fluctuate continually, may affect interpretation and further implementation of the ACA and its practical effects on our business, particularly entering an election year.

We are unable to predict the future course of federal or state healthcare legislation in the United States directed at broadening the availability of healthcare and containing or lowering the cost of healthcare, including drugs and biologics.

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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 May 3, 2021, we had 70 full‑time employees.

As of August 2, 2021, we had 93 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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Such levels of gain are unlikely to continue in the future.

For example, throughout the course of fiscal year 2020 and already during the first quarter of 2021, we have seen both significant appreciations and depreciations in our stock price.

For example, throughout the course of fiscal year 2020 and already during the first half of 2021, we have seen both significant appreciations and depreciations in our stock price.

As a result of this volatility, investors may not be able to sell their common stock at or above the price paid for the shares.

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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 May 3, 2021, our executive officers, directors, and 5% stockholders and their affiliates beneficially owned an aggregate of approximately 43% of our outstanding common stock.

As of August 2, 2021, our executive officers, directors, and 5% stockholders and their affiliates beneficially owned an aggregate of approximately 43% 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 May 3, 2021, we have outstanding 37,570,390 shares of common stock and 4,780,112 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 August 2, 2021, we have outstanding 37,681,948 shares of common stock and 5,020,267 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, 29,693,124 are freely tradable.

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AXSOME THERAPEUTICS, INC.

August 9, 2021

/s/ Herriot Tabuteau, M.D.

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(Principal Executive Officer)

August 9, 2021

/s/ Nick Pizzie

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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