From Truist _target 150
We conducted a Doc call with Dr. Sanjay Mathew M.D., Vice Chair of Research and Professor of Psychiatry at Baylor College of Medicine.
High level, Dr. Mathew was enthusiastic about Auvelity based on:
Rapid onset of action within a week
Good safety with no REMS or DEA scheduling
Overall psychiatrist familiarity with bupropion (Wellbutrin) and comfort with dealing with its DDI related issues
Dr. Mathew added that, in an ideal world, where there are no payor restrictions, he would probably use Auvelity as first-line therapy in the vast majority of his MDD patients, primarily due to its rapid antidepressant effects. However, Dr. Mathew anticipates payor pushback, pending pricing of Auvelity and given cheap generics, though they may not be as effective.
While Auvelity label comes with numerous warnings, mostly related to DDI, Dr. Mathew did not see anything particularly concerning in terms of safety. He did not find anything particularly onerous that would act as a hindrance for prescribers. In fact, heviewed the lack of REMS requirement and DEA scheduling as possibly having a commercial edge against some of the other drugs in development that are likely to have DEA scheduling, at least at first, if approved
Also, while some investors have historically pointed out that AXS-05 (Auvelity) is a combination of DM and BUP, which can be compounded, Dr. Mathews mentioned that "astronomically small proportion" of psychiatrists would send patients to compounding pharmacy due to associated liabilities and availability of an FDA approved drug
We spoke with AXSM management today, who expressed commercial readiness of Auvelity, come 4Q22, based on highly differentiated drug profile. Management reiterated that Auvelity satisfied two key conditions necessary to qualify as rapid-acting antidepressant, as defined per FDA draft guidance on MDD drug products (HERE). The draft guidance defines rapid-acting antidepressant as those that demonstrate efficacy within a week with durable effects. Management reiterated that Auvelity has fullfilled both prespecified conditions in a prospective trial.
Net-net we came away incrementally positive on the commercial outlook for Auvelity and see significant upside to current share price of AXSM. Reiterate BUY
