Axsome Therapeutics, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. The filing was signed May 2, 2022. Axsome is a clinical-stage biopharmaceutical company developing therapies for central nervous system disorders; it reported no product revenue.
Financial performance and liquidity
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $12.6 million | $16.6 million; down $4.0 million |
| General and administrative expense | $25.7 million | $11.2 million; up $14.5 million |
| Total operating expenses | $38.3 million | $27.8 million |
| Net loss | $39.6 million | $29.3 million |
| Net loss per share, basic and diluted | $1.03 | $0.78 |
| Cash used in operating activities | $32.7 million | $27.2 million |
R&D expense declined primarily because the prior-year period included expenses related to an NDA filing. G&A increased mainly from pre-commercial activities, personnel costs, and higher stock-based compensation. Operating cash use increased primarily due to pre-commercialization activities. No operating margin is meaningful because the company had no revenue.
Cash and cash equivalents were $84.7 million at March 31, 2022, versus $86.5 million at December 31, 2021. Current assets were $86.8 million and current liabilities $24.5 million. Stockholders’ equity was $14.7 million; accumulated deficit was $448.8 million.
Outstanding loan principal was $50.0 million, with a $49.3 million carrying value after debt discount and accreted fees. The term loan facility provides for up to $300 million, subject to its conditions and tranches; the March 2022 amendment is contingent on closing the Sunosi acquisition. The company reported covenant compliance at quarter-end. Debt is secured by substantially all assets, including intellectual property.
Material developments and outlook
- In March 2022, Axsome agreed to acquire Sunosi from Jazz Pharmaceuticals for an upfront payment of $53 million, plus royalties; the company also assumed certain commitments, including up to $165 million in revenue milestones and $1 million in development milestones. Closing was expected in Q2 2022, subject to conditions. The acquisition had not closed by March 31, so its purchase accounting was not reflected in these statements.
- Axsome raised approximately $32.0 million gross, or $31.0 million net, through sales of 1,044,081 shares under its at-the-market program during the quarter. A new ATM agreement permits up to $200 million of additional share sales, creating potential dilution.
- Management said existing cash alone was expected to cover anticipated operating needs for at least 12 months after filing. Including remaining committed term-loan capital, management estimated funding into 2024 under its current plan, which assumes potential AXS-05 approval and the Sunosi acquisition. Without AXS-05 approval, management estimated cash coverage of at least 12 months. These estimates depend on assumptions and may change.
- AXS-05’s MDD NDA review remained ongoing; the company anticipated potential FDA action in Q2 2022 and reported accepting proposed postmarketing requirements/commitments. On April 29, 2022, after quarter-end, the FDA issued a complete response letter for AXS-07. The letter cited chemistry, manufacturing, and controls matters, not clinical efficacy or safety, and did not request new clinical trials. Resubmission timing was not yet provided.
- The company expected continued significant expenses and operating losses and may need additional financing. Key uncertainties include regulatory review, clinical development, manufacturing, commercialization, market acceptance and reimbursement, competition, and access to capital. COVID-19 effects on future operations and liquidity remained uncertain; the company said trials had not been significantly affected to date.
Important facts for investors to verify
- Whether and when the Sunosi acquisition closed, its final financing, and the resulting royalties and milestone obligations.
- The status and timing of FDA action on AXS-05 and the company’s response and resubmission plan for the AXS-07 CRL.
- Actual access to remaining Hercules loan tranches, their conditions, covenants, interest costs, and repayment schedule.
- Cash burn, commercial-launch spending, and potential dilution from the $200 million ATM program.
- Whether management’s funding estimate into 2024 remains supportable as regulatory, clinical, and commercialization plans develop.