0000950170-22-016143 | 10-Q | XBRL Viewer

Document and Entity Information - shares	6 Months Ended
Document and Entity Information - shares	Jun. 30, 2022	Aug. 01, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Jun. 30, 2022
Entity File Number	001-37635
Entity Registrant Name	AXSOME THERAPEUTICS, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	45-4241907
Entity Address, Address Line One	22 Cortlandt Street
Entity Address, Address Line Two	16th Floor
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10007
City Area Code	212
Local Phone Number	332-3241
Title of 12(b) Security	Common Stock, Par Value $0.0001 Per Share
Trading Symbol	AXSM
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		40,304,124
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q2
Entity Central Index Key	0001579428
Amendment Flag	false

Consolidated Balance Sheets - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 73,394,640	$ 86,472,854
Accounts receivables, net	16,167,927
Inventories, net	10,323,746
Prepaid and other current assets	4,091,369	45,286
Total current assets	103,977,682	86,518,140
Equipment, net	634,611	283,846
Right-of-use asset - operating lease	667,582	660,162
Goodwill	11,897,407
Intangible asset, net	62,874,350
Other assets	507,464	322,910
Total assets	180,559,096	87,785,058
Current liabilities:
Accounts payable	19,430,961	13,149,329
Accrued expenses and other current liabilities	16,480,322	9,295,180
Operating lease liability, current portion	709,120	620,675
Contingent consideration, current	5,950,000
Total current liabilities	42,570,403	23,065,184
Contingent consideration, non-current	29,330,407
Loan payable, long-term	93,458,824	49,089,522
Total liabilities	165,359,634	72,154,706
Stockholders’ equity:
Common stock, $0.0001 par value per share (150,000,000 shares authorized, 39,914,411 and 37,816,794 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively)	3,991	3,782
Additional paid-in capital	505,465,383	424,825,655
Accumulated deficit	(490,269,912)	(409,199,085)
Total stockholders’ equity	15,199,462	15,630,352
Total liabilities and stockholders’ equity	$ 180,559,096	$ 87,785,058

Consolidated Statements of Operations - USD ($)	3 Months Ended		6 Months Ended
Consolidated Statements of Operations - USD ($)	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021
Revenues [Abstract]
Revenue	$ 8,819,786		$ 8,819,786
Type of Revenue [Extensible List]	us-gaap:ProductMember		us-gaap:ProductMember
Operating expenses:
Cost of product sales (excluding amortization and depreciation)	$ 982,836		$ 982,836
Type of Cost Good or Service [Extensible List]	us-gaap:ProductMember		us-gaap:ProductMember
Research and development	$ 15,792,202	$ 14,503,326	$ 28,377,343	$ 31,099,014
Selling, general and administrative	31,160,140	16,344,361	56,863,871	27,592,734
Change in fair value of contingent consideration	(860,000)		(860,000)
Intangible asset amortization	925,650		925,650
Total operating expenses	48,000,828	30,847,687	86,289,700	58,691,748
Loss from operations	(39,181,042)	(30,847,687)	(77,469,914)	(58,691,748)
Interest income (expense)	(2,257,474)	(1,436,522)	(3,600,913)	(2,852,431)
Net loss	$ (41,438,516)	$ (32,284,209)	$ (81,070,827)	$ (61,544,179)
Net loss per common share, basic	$ (1.06)	$ (0.86)	$ (2.09)	$ (1.64)
Net loss per common share, diluted	$ (1.06)	$ (0.86)	$ (2.09)	$ (1.64)
Weighted average common shares outstanding, basic	39,081,100	37,595,069	38,704,227	37,512,716
Weighted average common shares outstanding, diluted	39,081,100	37,595,069	38,704,227	37,512,716

Consolidated Statements of Stockholders' Equity - USD ($)	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit
Beginning balance at Dec. 31, 2020	$ 113,792,909	$ 3,737	$ 392,585,265	$ (278,796,093)
Balance (in shares) at Dec. 31, 2020		37,374,088
Stock-based compensation	3,731,097		3,731,097
Issuance of common stock upon exercise of options	1,913,299	$ 10	1,913,289
Issuance of common stock upon exercise of options (in shares)		94,000
Issuance of common stock upon vesting of RSUs (in shares)		1,917
Issuance of common stock upon financing	6,115,864	$ 9	6,115,855
Issuance of common stock upon financing (in shares)		93,877
Net loss	(29,259,970)			(29,259,970)
Ending balance at Mar. 31, 2021	96,293,199	$ 3,756	404,345,506	(308,056,063)
Balance (in shares) at Mar. 31, 2021		37,563,882
Beginning balance at Dec. 31, 2020	113,792,909	$ 3,737	392,585,265	(278,796,093)
Balance (in shares) at Dec. 31, 2020		37,374,088
Net loss	(61,544,179)
Ending balance at Jun. 30, 2021	71,436,620	$ 3,765	411,773,127	(340,340,272)
Balance (in shares) at Jun. 30, 2021		37,648,948
Beginning balance at Mar. 31, 2021	96,293,199	$ 3,756	404,345,506	(308,056,063)
Balance (in shares) at Mar. 31, 2021		37,563,882
Stock-based compensation	5,456,242		5,456,242
Issuance of common stock upon exercise of options	958,895	$ 7	958,888
Issuance of common stock upon exercise of options (in shares)		68,503
Issuance of common stock upon vesting of RSUs (in shares)		144
Issuance of common stock upon financing	1,096,503	$ 2	1,096,501
Issuance of common stock upon financing (in shares)		16,419
Shares tendered for withholding taxes	(84,010)		(84,010)
Net loss	(32,284,209)			(32,284,209)
Ending balance at Jun. 30, 2021	71,436,620	$ 3,765	411,773,127	(340,340,272)
Balance (in shares) at Jun. 30, 2021		37,648,948
Beginning balance at Dec. 31, 2021	$ 15,630,352	$ 3,782	424,825,655	(409,199,085)
Balance (in shares) at Dec. 31, 2021	37,816,794	37,816,794
Stock-based compensation	$ 7,598,329		7,598,329
Issuance of common stock upon exercise of options	181,637	$ 2	181,635
Issuance of common stock upon exercise of options (in shares)		18,015
Issuance of common stock upon vesting of RSUs (in shares)		4,555
Issuance of common stock upon financing	31,008,601	$ 104	31,008,497
Issuance of common stock upon financing (in shares)		1,044,081
Shares tendered for withholding taxes	(88,594)		(88,594)
Net loss	(39,632,311)			(39,632,311)
Ending balance at Mar. 31, 2022	14,698,014	$ 3,888	463,525,522	(448,831,396)
Balance (in shares) at Mar. 31, 2022		38,883,445
Beginning balance at Dec. 31, 2021	$ 15,630,352	$ 3,782	424,825,655	(409,199,085)
Balance (in shares) at Dec. 31, 2021	37,816,794	37,816,794
Issuance of common stock upon exercise of options (in shares)	24,706
Net loss	$ (81,070,827)
Ending balance at Jun. 30, 2022	$ 15,199,462	$ 3,991	505,465,383	(490,269,912)
Balance (in shares) at Jun. 30, 2022	39,914,411	39,914,411
Beginning balance at Mar. 31, 2022	$ 14,698,014	$ 3,888	463,525,522	(448,831,396)
Balance (in shares) at Mar. 31, 2022		38,883,445
Stock-based compensation	10,161,678		10,161,678
Issuance of common stock upon exercise of options	176,412		176,412
Issuance of common stock upon exercise of options (in shares)		6,691
Issuance of common stock upon vesting of RSUs (in shares)		1,122
Issuance of common stock upon financing	30,794,647	$ 103	30,794,544
Issuance of common stock upon financing (in shares)		1,023,153
Issuance of warrants upon debt financing	826,153		826,153
Shares tendered for withholding taxes	(18,926)		(18,926)
Net loss	(41,438,516)			(41,438,516)
Ending balance at Jun. 30, 2022	$ 15,199,462	$ 3,991	$ 505,465,383	$ (490,269,912)
Balance (in shares) at Jun. 30, 2022	39,914,411	39,914,411

Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
Consolidated Statements of Cash Flows - USD ($)	Jun. 30, 2022	Jun. 30, 2021
Cash flows from operating activities
Net loss	$ (81,070,827)	$ (61,544,179)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	17,760,007	9,187,339
Amortization of intangible asset	925,650
Amortization of debt discount	683,022	560,752
Depreciation	104,430	18,075
Change in fair value of contingent consideration	(860,000)
Amortization of operating lease right-of-use asset	553,960	530,437
Change in operating lease liability	(472,935)	(631,591)
Changes in operating assets and liabilities:
Accounts receivable, net	(16,167,927)
Inventories, net	277,254
Prepaid expenses and other current assets	(1,204,490)	(287,431)
Accounts payable	6,281,632	(1,892,026)
Accrued expenses and other current liabilities	7,185,142	1,449,582
Other assets	(184,554)
Net cash used in operating activities	(66,189,636)	(52,609,042)
Cash flows from investing activities
Purchases of equipment	(455,195)	(48,872)
Cash paid for business combination	(53,000,000)
Net cash used in investing activities	(53,455,195)	(48,872)
Cash flows from financing activities
Proceeds from draw down	45,000,000
Payment of debt issuance costs	(487,160)
Proceeds from issuance of common stock upon financing, net	61,803,248	7,212,367
Proceeds from issuance of common stock upon exercise of options	358,049	2,872,194
Payments of tax withholdings on stock award	(107,520)	(84,010)
Net cash (used in) provided by financing activities	106,566,617	10,000,551
Net (decrease) increase in cash	(13,078,214)	(42,657,363)
Cash at beginning of period	86,472,854	183,876,453
Cash at end of period	73,394,640	141,219,090
Supplemental disclosures of cash flow information:
Interest paid	2,586,375	$ 2,312,917
Operating lease right-of-use asset obtained in exchange for operating lease liability	561,380
Supplemental non-cash investing activities:
Fair value of contingent consideration in a business combination	$ 35,280,407

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2022

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 2. Summary of Significant Accounting Policies

Significant Risks and Uncertainties

The Company’s operations are subject to a number of factors that can affect its operating results and financial condition. Such factors include, but are not limited to: the results of clinical testing and trial activities of the Company’s product candidates; the Company’s ability to obtain regulatory approval to market its products, if approved; competition from products manufactured and sold or being developed by other companies; the price of, and demand for, the Company’s products, if approved; the Company’s ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products, if approved; and the Company’s ability to raise additional financing. If the Company does not successfully commercialize any of its products, it will be unable to generate sufficient additional recurring product revenue to achieve and maintain profitability.

Use of Estimates

Management considers many factors in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. In preparing these financial statements, management used significant estimates in the following areas, among others: stock‑based compensation expense; the determination of the fair value of the warrants; the accounting for research and development costs; accounting for acquisitions; impairments goodwill and intangible assets; contingent consideration; chargebacks, cash discounts, sales rebates, returns and other adjustments; and the recoverability of the Company’s net deferred tax assets and related valuation allowance.

Revenue Recognition

Effective January 1, 2018, the Company adopted FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”). The Company did not generate any product related revenue until the Sunosi acquisition, and therefore the adoption of ASC Topic 606 did not have an impact to the Company’s financial statements for any prior periods or upon adoption. In accordance with ASC Topic 606, the Company recognizes revenue when the customer obtains control of a promised good or service, in an amount that reflects the consideration that the Company expects to receive in exchange for the good or service. Transfer of control is based on contractual performance obligations, this occurs upon transfer of the title along with the physical transfer of the Company's goods to the Company's third-party logistics provider ("3PL") as that is when the customer has obtained control of significantly all of the economic benefits. The reported results for the three and six months ended June 30, 2022 reflect the application of ASC Topic 606.

To determine revenue recognition for arrangements that the Company determines are within the scope of ASC Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to arrangements that meet the definition of a contract under ASC Topic 606, including when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. For a complete discussion of accounting for product sales, see Product Sales, net (below).

Product Sales, net

The Company sells Sunosi in the United States through a single 3PL, which takes title and control of the goods. The 3PL distributes the product to wholesale distributors (collectively the "Distributors") with whom we have entered into formal agreements for delivery to retail

pharmacies.

Reserves for Variable Consideration

Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of its anticipated performance and all information (historical, current and forecasted) that is reasonably available. These reserves reflect our best estimate of the amount of consideration to which we are entitled based on the terms of the contracts. The amount of variable consideration that is included in the transaction price may be constrained and is included in the net sales price only to the extent that is considered probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known.

Trade Discounts and Allowances - The Company generally provides discounts which include incentive fees that are explicitly stated in the Company’s contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized. In addition, the Company compensates (through trade discounts and allowances) its distributors for distribution services and data. These payments have been recorded as a reduction of net sales within the consolidated statements of operations through June 30, 2022, as well as a reduction to accounts receivable, net on the consolidated balance sheets.

Product Returns - Consistent with industry practice, the Company generally offers a limited right of return for product that has been purchased from the Company based on the product’s expiration date. The Company estimates the amount of its product sales that may be returned and records this estimate as a reduction of revenue in the period the related product revenue is recognized, as well as a component of accrued expense and other current liabilities on the consolidated balance sheets. The Company currently estimates product return liabilities using available industry data and its own sales information.

Provider Chargebacks and Discounts - Chargebacks for fees and discounts to providers represent the estimated obligations resulting from contractual commitments to sell products at prices lower than the list prices charged to distributors. Distributors charge the Company for the difference between what they pay for the product and the ultimate selling price. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and accounts receivables, net.

Rebates - Rebates apply to: Medicaid, managed care, and supplemental rebates to all applicable states as defined by the statutory government pricing calculation requirements under the Medicaid Drug Rebate Program. Tricare rebates to the TRICARE third party administrator based on the statutory calculation defined in the Agreement with Defense Health Agency. Part D and Commercial Managed Care rebates are paid based on the contracts with PBMs and Managed Care Organizations. Rebates are paid to these entities upon receipt of an invoice from the contracted entity which is based on the utilization of the product by the members of the contracted entity. The Company estimates these rebates and records such estimates in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability recorded as an accrued expenses and other current liabilities on the consolidated balance sheets.

Coverage Gap - The Medicare Part D coverage gap is a period of consumer payment for prescription medication costs which lies between the initial coverage limit and the catastrophic-coverage threshold, when the patient is a member of a Medicare Part D prescription-drug program administered by the Centers for Medicare & Medicaid Services. The Company estimates the percentage of goods sold under Coverage Gap and adjusts the transaction price for such discount at the time of sale resulting in a reduction of product revenue and the establishment of a current liability recorded as an accrued expenses and other current liabilities on the consolidated balance sheets.

Other Incentives - Other incentives which the Company offers include voluntary patient assistance programs, such as the co-pay assistance program, which are intended to provide financial assistance to qualified commercially-insured patients with prescription drug co-payments required by payers. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that the Company expects to receive associated with product that has been recognized as revenue. The adjustments are recorded in the same period the related revenue is recognized, resulting in a reduction of product sales and the establishment of a current liability which is included as a component of accrued expenses and other current liabilities on the consolidated balance sheets.

The Company makes significant estimates and judgments that materially affect its recognition of net product revenue. Claims by third-party payors for rebates, chargebacks and discounts frequently are submitted to the Company significantly after the related sales, potentially resulting in adjustments in the period in which the new information becomes known. The Company will adjust its estimates based on new information, including information regarding actual rebates, chargebacks and discounts for its products, as it becomes available.

Foreign Currency Translation

Expenses denominated in foreign currency are translated into U.S. dollars at the exchange rate on the date the expense is incurred. Assets and liabilities of foreign operations are translated at period-end exchange rates. The effect of exchange rate fluctuations on translating foreign currency into U.S. dollars is included in the Statements of Operations and is not material to the Company’s financial statements.

Segment and Geographic Information

Operating segments are defined as components of an enterprise for which separate discrete information is available for evaluation by the chief operating decision maker or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business as one operating segment, which is the business of developing and delivering novel therapies for the management of CNS disorders.

Cash Equivalents

The Company considers all highly liquid investments that have maturities of three months or less when acquired to be cash equivalents. The Company’s cash and cash equivalents includes holdings in checking and overnight sweep accounts. The Company’s cash equivalents, which are money market funds held in a sweep account, are measured at fair value on a recurring basis. As of June 30, 2022, the balance of cash and cash equivalents was $73.4 million, which approximates fair value and was determined based upon Level 1 inputs. The sweep account is valued using quoted market prices with no valuation adjustments applied. Accordingly, these securities are categorized as Level 1.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash. The Company maintains its cash at financial institutions, which at times, exceed federally insured limits. At June 30, 2022, the majority of the Company’s cash was held by one financial institution and the amount on deposit was in excess of Federal Deposit Insurance Corporation insurance limits. The Company has not recognized any losses from credit risks on such accounts since inception. The Company believes it is not exposed to significant credit risk on cash. At the time of contract inception or customer account set-up, the Company performs a collectability assessment on the creditworthiness of such customer. In 2022, all of the Company’s accounts receivable arose from product sales in the U.S. and all customers have standard payment terms. The Company’s accounts receivable balance as of June 30, 2022 is compromised solely from transactions with the Company’s 3PL.

Business Combination

The Company accounted for the Sunosi acquisition as a business combination using the acquisition method of accounting, which requires that all identifiable assets acquired, and liabilities assumed be recorded at their estimated fair values. The excess of the fair value of purchase consideration over the fair values of identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions. Critical estimates in valuing certain intangible assets include but are not limited to future expected cash flows from acquired patented technology. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

As a result of the acquisition of Sunosi from Jazz, the Company recorded goodwill and an intangible asset.

Goodwill

Goodwill is deemed to have an indefinite life and therefore not amortized. The Company tests the carrying amounts of goodwill for recoverability on an annual basis or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company performs a one-step test in its evaluation of the carrying value of goodwill if qualitative factors determine it is necessary to complete a goodwill impairment test. In the evaluation, the fair value of the relevant reporting unit is determined and compared to its carrying value. If the fair value is greater than the carrying value, then the carrying value is deemed to be recoverable, and no further action is required. If the fair value estimate is less than the carrying value, goodwill is considered impaired for the amount by which the carrying amount exceeds the reporting unit’s fair value, and a charge is reported in impairment of goodwill in the Company’s consolidated statements of operations. As of June 30, 2022, the Company has determined that it has one reporting unit. The Company has not identified any events or changes in circumstances that indicate the existence of potential impairment of goodwill during the six months ended June 30, 2022.

Intangible Assets

All of our intangible assets are amortized using the straight-line method over their estimated period of benefit of ten years. The Company evaluates the recoverability of intangible assets periodically by considering events or changes in circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired.

Contingent Consideration

Consideration paid in a business combination may include potential future payments that are contingent upon the acquired business achieving certain milestones in the future (“contingent consideration”). The royalty payments due to Jazz are a high single-digit royalty on the Company's U.S. net sales of Sunosi in the current indication and a mid single-digit royalty on the Company's U.S. net sales of Sunosi for future indications. Contingent consideration liabilities are measured at their estimated fair value as of the date of acquisition, with subsequent changes in fair value recorded in the consolidated statements of operations during such period a change is recognized. The Company estimates the fair value of the contingent consideration as of the acquisition date using the estimated future cash outflows based on future sales. Contingent consideration liabilities expected to be settled within 12 months after the balance sheet date are presented in current liabilities, with the non-current portion recorded under long term liabilities in the consolidated balance sheets.

Fair Value of Financial Instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Assets and liabilities that are measured at fair value are reported using a three‑level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

Level 1—Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

Level 2—Inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly.

Level 3—Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. An asset's or liability's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The Company’s financial instruments are cash, accounts receivable, accounts payable, accrued liabilities, current and long-term debt, current and non-current contingent consideration. The carrying values for cash, accounts payable and accrued liabilities reported in the accompanying consolidated financial statements approximate their respective fair values due to their short-term maturities. The carrying value of debt on the Company’s balance sheet (see Note 6 – Loan and Security Agreement), is estimated to approximate its fair value as the interest rate approximates the market rate for loans with similar terms and risk characteristics. The key assumptions used to determine the fair value of acquisition-related assets and liabilities are estimated by management, not observable in the market and, therefore considered Level 3 inputs within the fair value hierarchy.

Accounts Receivable, net

The Company’s accounts receivable, net, arise from product sales. They are generally stated at the invoiced amount and do not bear interest. Accounts receivable allowances result from chargebacks, prompt pay discounts, and distribution fees.

The Company monitors the financial performance and creditworthiness of its customers so that it can properly assess and respond to changes in the customers’ credit profiles. In 2022, 100% were generated from the Company's 3PL. The Company estimated the current expected credit losses of its accounts receivable by assessing the risk of loss and available relevant information about collectability, including historical credit losses, existing contractual payment terms, actual payment patterns of its customers, individual customer circumstances, and reasonable and supportable forecast of economic conditions expected to exist throughout the contractual life of the receivable. The Company has not historically experienced significant credit losses. Based on its assessment, as of June 30, 2022, we have not recorded any allowances on receivables.

Debt Issuance Costs

Debt issuance costs consist of costs incurred in obtaining long-term financing. These costs are classified on the consolidated balance sheet as a direct deduction from the carrying amount of the related debt liability. These expenses are deferred and amortized as part of interest expense in the consolidated statement of operations using the effective interest rate method over the term of the debt agreement.

Inventories, net

The Company values its inventories at the lower of cost or estimated net realizable value. The inventory associated with the Sunosi acquisition is stated at fair value due to purchase accounting. The Company determines the cost of its inventories, which includes amounts related to materials, labor, manufacturing overhead, and shipping and handling costs on a first-in, first-out (“FIFO”) basis. The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and it writes down any excess and obsolete inventories to their estimated net realizable value in the period in which the impairment is first identified. Such impairment charges, if they occur, are recorded within cost of product sales.

The Company capitalizes inventory costs associated with the Company’s products after regulatory approval when, based on management’s judgment, future commercialization is considered probable and the future economic benefit is expected to be realized. Inventory acquired and manufactured prior to receipt of regulatory approval of a product candidate is expensed as research and development expense as incurred. Inventory that can be used in either the production of clinical or commercial product is expensed as research and development expense when selected for use in a clinical manufacturing campaign.

Equipment, net

Equipment consists primarily of computer equipment and is recorded at cost. Equipment is depreciated on a straight‑line basis over its estimated useful life, which the Company estimates to be three years. When equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in operating expenses.

Cost of Product Sales

The Company's cost of product sales relates to sales of Sunosi. Cost of product sales primarily includes product royalty fees, overhead, and direct costs (inclusive of material, shipping, handling, and manufacturing costs). Cost of product sales excludes depreciation and amortization. Cost of product sales were approximately $1.0 million and $0 for the three and six months ended June 30, 2022 and 2021, respectively. There were no sales in 2021.

The Company also assumed the commitments of Jazz to SK Biopharmaceuticals (“SK)” and Aerial Biopharma (“Aerial”). SK is the originator of Sunosi and retains rights in 12 Asian markets, including China, Korea, and Japan. In 2014, Jazz acquired from Aerial worldwide rights to Sunosi excluding those Asian markets stated previously. The assumed commitments to SK and Aerial include single-digit tiered royalties based on the Company's sales of Sunosi, and the Company is committed to pay up to $165 million based on revenue milestones and $1 million based on development milestones. The related royalties are recorded within cost of product sales on the statement of operations.

Research and Development Costs

Research and development costs are expensed as incurred. Research and development expenses consist primarily of employee-related expenses including salaries, benefits, travel, and stock‑based compensation expense, contract services, costs incurred to third-party service providers for the conduct of research, preclinical and clinical studies, laboratory supplies, product license fees, consulting and other related expenses. We estimate research, preclinical and clinical study expenses based on services performed, pursuant to contracts with third-party research and development organizations that conduct and manage research, preclinical and clinical activities on our behalf. We estimate these expenses based on discussions with internal management personnel and external service providers as to the progress or stage of completion of services and the contracted fees to be paid for such services. If the actual timing of the performance of services or the level of effort varies from the original estimates, we will adjust the accrual accordingly. Payments associated with licensing agreements to acquire licenses to develop, use, manufacture and commercialize products that have not reached technological feasibility and do not have alternative future use are expensed as incurred. Payments made to third parties under these arrangements in advance of the performance of the related services by the third parties are recorded as prepaid expenses until the services are rendered.

Income Taxes

Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, operating losses, and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company estimates an annual effective tax rate of 0% for the year ending December 31, 2022 and has not recorded an income tax benefit for the six months ended June 30, 2022 and 2021 since it determined that a full valuation allowance is required against the Company’s deferred tax assets.

The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position as well as consideration of the available facts and circumstances. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. As of June 30, 2022, the Company does not believe any material uncertain tax positions are present. In the event the Company determines that accrual of interest or penalties are necessary in the future, the amount will be presented as a component of income tax expense.

Stock-Based Compensation

For stock options issued, the Company estimates the grant date fair value of each option using the Black‑Scholes option pricing model. The Black-Scholes model takes into account the expected volatility of the Company’s common stock, the risk-free interest rate, the estimated life of the option, the closing market price of the Company’s common stock and the exercise price. The estimates utilized in the Black-Scholes calculation involve inherent uncertainties and the application of management’s judgment. In addition, the Company recognizes expense for equity award forfeitures as they occur.

For restricted stock units (“RSUs”), the Company issues them in the form of Company common stock. The fair market value of these awards is based on the market closing price per share on the grant date.

For awards subject to service-based vesting conditions, the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period, which is generally the vesting term. For awards subject to performance-based vesting conditions, the Company recognizes stock-based compensation expense using the accelerated attribution method when it is probable that the performance condition will be achieved. The expense related to the stock-based compensation is recorded within the same financial statement line item as the grantee’s cash compensation.

The Company’s policy upon exercise of stock options and RSUs is that shares will be issued as new shares drawing on the Company’s 2015 Omnibus Incentive Compensation Plan share pool that was adopted by the stockholders in November 2015.

Basic and Diluted Net Loss per Common Share

Basic net loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as warrants, stock options, and RSUs, which would result in the issuance of incremental shares of common stock. As the impact of these items is anti-dilutive during periods of net loss, there was no difference between basic and diluted net loss per share of common stock for the three and six months ended June 30, 2022 and 2021.

Leases

The Company determines if an arrangement is a lease at contract inception. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. When evaluating whether a contract contains a lease, the Company considers whether (1) the contract explicitly or implicitly identifies assets that are contractually defined and (2) the Company obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract.

The Company’s lease agreement contains lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. The Company has applied the practical expedient to combine fixed payments for non-lease components with lease payments and account for them together as a single lease component, which increases the amount of lease assets and corresponding liabilities. Payments under the Company’s lease arrangement are primarily fixed, however variable payments, are expensed as incurred and not included in the operating lease asset and liability.

Operating lease assets and liabilities are recognized at the commencement date of the lease based upon the present value of lease payments over the lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company uses the implicit interest rate when readily determinable and uses the Company’s incremental borrowing rate when the implicit rate is not readily determinable based upon the information available at the commencement date in determining the present value of the lease payments.

The Company’s operating leases are reflected in the right-of-use operating asset; operating lease liability, current portion; and operating lease liability, long-term portion in the Company’s consolidated balance sheets. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Short-term leases, defined as leases that have a lease term of 12 months or less at the commencement date, and do not include an option to extend the term or purchase the underlying asset that the Company is reasonably certain to exercise, are excluded from this treatment and are recognized on a straight-line basis over the term of the lease.

Recent Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2021-08, Business Combinations (Topic 805) . This update requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification (“ASC”) 606. This differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value. The amendments in this update should be applied prospectively, and are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

Business Combination

6 Months Ended

Jun. 30, 2022

Business Combinations [Abstract]

Business Combination

Note 3. Business Combination

Acquisition of Assets of Jazz Pharmaceuticals

On March 25, 2022, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Jazz, pursuant to which the Company will acquire Sunosi from Jazz (the “Acquisition”). The Company accounted for the Acquisition as a business combination using the acquisition method of accounting. The acquisition of Sunosi will occur in two separate closings. The sale and purchase of Specified Initial Assets as defined and contemplated by the Purchase Agreement occurred on May 9, 2022 (“Initial Closing”), following the satisfaction or waiver of the closing conditions under the Purchase Agreement. The sale and purchase of Specified Ex-U.S. Assets contemplated by the Purchase Agreement is expected to occur during the fourth quarter of 2022 (“Final Closing” or “Ex-U.S. Closing”).

Under the terms of the Asset Purchase Agreement, the Company received from Jazz worldwide commercial, development, manufacturing, and intellectual property rights to Sunosi, except for certain Asian markets. Jazz received from the Company a total upfront payment of $53 million. In addition, Jazz will receive a high single-digit royalty on the Company's U.S. net sales of Sunosi in the current indication, and a mid single-digit royalty on the Company's U.S. net sales of Sunosi in future indications. The Company also assumed the commitments of Jazz to SK Biopharmaceuticals (“SK)” and Aerial Biopharma (“Aerial”). SK is the originator of Sunosi and retains rights in 12 Asian markets, including China, Korea, and Japan. In 2014, Jazz acquired from Aerial worldwide rights to Sunosi excluding those Asian markets as stated previously. The assumed commitments to SK and Aerial include single-digit tiered royalties based on the Company's sales of Sunosi, and additionally, the Company is committed to pay up to $165 million based on revenue milestones and $1 million based on development milestones. The Company financed the transaction via its existing $300 million term loan facility with Hercules Capital, Inc.

In conjunction with the Acquisition, the Company incurred approximately $0.5 million in transaction costs, which were expensed as selling, general, and administrative expense in the consolidated statement of operations during the six months ended June 30, 2022.

Our Consolidated Statement of Operations for the three and six months ended June 30, 2022, include $8.8 million of Product sales and $4.6 million of Net Loss associated with the result of operations of Sunosi from the acquisition date to June 30, 2022.

Preliminary purchase consideration consisted of the following:



Cash at settlement	$	53,000,000
Fair value of contingent consideration		36,140,407
Total	$	89,140,407

The preliminary allocation of the fair value of the Sunosi acquisition is shown in table below:


	Estimated fair value
Inventory	$	10,601,000
Other current assets		3,551,000
Developed technology		63,800,000
Goodwill		11,897,407
Accrued expenses and other current liabilities		(709,000	)
Total	$	89,140,407

The above allocation of the purchase price is based upon certain preliminary valuations and other analyses that have not been finalized as of the date of this filing. As such, the purchase price amount and allocations for this transaction are preliminary estimates including developed technology, goodwill and contingent consideration, which may be subject to change within the measurement period.

The net assets were recorded at their estimated fair value. In valuing acquired assets and liabilities, fair value estimates were based primarily on future expected cash flows, market rate assumptions for contractual obligations, and appropriate discount rates.

Inventories acquired included raw materials, work in process and finished goods for Sunosi. Inventories were recorded at their estimated fair values categorized as Level 3. The fair value of finished goods was determined based on the estimated selling price, net of selling costs and a margin on the selling activities. The fair value of work in process was determined based on estimated selling price, net of selling costs and costs to complete the manufacturing, and a margin on the selling and

manufacturing activities. The fair value of raw materials was estimated to equal the replacement cost. A step-up in the value of inventory of $1.1 million was originally recorded in connection with the Acquisition.

Other current assets acquired were sample inventory and the rebates for Sunosi sales by the Company after the Initial Closing to be covered by Jazz.

Intangible assets include acquired developed technology. The fair value of the acquired developed technology asset was determined by applying the income approach, which recognizes that the fair value of an asset is premised upon the expected receipt of future economic benefits such as earnings and cash inflows based on current sales projections and estimated direct costs, using a discount rate of 43.5 % that reflects the return requirements of the market. This intangible asset is being amortized over an estimated useful life of 10 years.

Goodwill is considered an indefinite-lived asset and relates primarily to intangible assets that do not qualify for separate recognition, such as the assembled workforce and synergies between the entities. Goodwill of $ 11.9 million was established as a result of the Acquisition. The Company expects that the entire amount of the purchase price allocated to goodwill will be deductible for U.S. income tax purposes over a 15-year period.

Accrued expense and other current liabilities acquired were the Company's assumed sales returns liability for Sunosi after the transaction close date related to Jazz sales prior to the Initial Closing

Pro Forma Consolidated Financial Information

The following unaudited pro forma summary presents consolidated information of the Company, including Sunosi, as if the business combination had occurred on January 1, 2021, the earliest period presented herein:


	Six Months Ended
	June 30,			June 30,
	2022			2021
Net revenues	$	32,848,000		$	21,328,000
Net Loss		(108,332,000	)		(169,365,000	)

These pro forma results are illustrative only and not indicative of the actual results of operations that would have been achieved nor are they indicative of future results of operations.

Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Note 6. Fair Value of Financial Instruments

In connection with the Sunosi acquisition, we pay a royalty on net sales of Sunosi. The discounted cash flow method used to value this contingent consideration includes inputs of not readily observable market data, which are Level 3 inputs. As of the May 9, 2022 acquisition date, the contingent consideration had a fair value of $36.1 million. The fair value of the contingent consideration was $35.3 million as of June 30, 2022 and is reflected as current accrued contingent consideration of $6.0 million and non-current contingent consideration liability of $29.3 million in the consolidated balance sheet.

The fair value of financial instruments measured on a recurring basis is as follows:


May 9, 2022	Level 1		Level 2		Level 3		Total
Liabilities:
Contingent consideration	$	—	$	—	$	36,140,407	$	36,140,407


June 30, 2022	Level 1		Level 2		Level 3		Total
Liabilities:
Contingent consideration	$	—	$	—	$	35,280,407	$	35,280,407
Total	$	—	$	—	$	35,280,407	$	35,280,407

The fair value of the contingent consideration was remeasured at June 30, 2022. The fair value of the financial instruments as of June 30, 2022 is as follows:




	Contingent Consideration
Balance at December 31, 2021	$	—
Initial estimate		36,140,407
Gain in fair value of contingent consideration		(860,000	)
Balance at June 30, 2022	$	35,280,407

The recurring Level 3 fair value measurements of contingent consideration for which a liability is recorded include the following significant unobservable inputs:


			As of June 30, 2022	As of May 9, 2022
	Valuation Methodology	Significant Unobservable Input	Weighted Average (range, if applicable)	Weighted Average (range, if applicable)
Contingent Consideration	Probability weighted income approach	Discount rate	13.2%	11.7%
		Revenue Discount rate	20.9%	20.8%

The fair value measurement of the contingent consideration is sensitive to the change in discount rate. As of June 30, 2022, if the discount rate increases or decreases by approximately 1%, the fair value of the contingent consideration would range

from $33.6 million to $37.0 million. As of June 30, 2022, if the revenue discount rate increases or decreases by approximately 1%, the fair value of the contingent consideration would range from $34.1 million to $36.6 million.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Loan and Security Agreement

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Loan and Security Agreement

Note 9. Loan and Security Agreement

Hercules Capital, Inc.

Second Amendment to the Loan Agreement

On March 27, 2022, in connection with the Acquisition (as described above), the Company entered into a Second Amendment to the Loan and Security Agreement (the “Second Amendment”) with Hercules Capital, Inc., or Hercules. The Second Amendment closed on May 9, 2022 concurrently with the closing of the Acquisition.

The Second Amendment amends the terms of that certain Loan and Security Agreement, dated as of September 25, 2020 (as amended by the First Amendment to the Loan and Security Agreement, dated of October 14, 2021) (the “Loan Agreement”). The changes in the Term Loan Advances (as defined in the Loan Agreement) amounts and dates are as follows: (i) increasing the Tranche 1 (as defined in the Loan Agreement) from $60.0 million to $95.0 million, whereby $45.0 million was drawn upon the Second Amendment closing date (ii) changing the Tranche 2 Advances to three sub-tranches of $35.0 million, $35.0 million and $30.0 million, respectively, for a same total value of $100.0 million, upon Approval of AXS-05 (iii) changing the Tranche 3 Advance to two sub-tranches of $15.0 million and $5.0 million, respectively, for the same total value of $20.0 million, upon Approval of AXS-07 (iv) decreasing the Tranche 4 Advance from $55.0 million to $50.0 million, available upon achievement of certain combined sales and outstanding debt criteria and (v) decreasing the Tranche 5 Advance from $75.0 million to $35.0 million, subject to the approval from Hercules. The outstanding balance of the debt bears interest at a floating rate based on the greater of (a) 8.95% or (b) US WSJ Prime + 5.70%) to not exceed 10.70%.

As collateral for the obligations, the Company has granted to Hercules a senior security interest in all of Company’s right, title, and interest in, to and under all of Company’s property, inclusive of intellectual property, which includes one of the Company’s existing license agreements (the “License Agreement”) with Antecip Bioventures II LLC (“Antecip”), an entity owned by Axsome’s Chief Executive Officer and Chairman of the Board, Herriot Tabuteau, M.D., subject to limited exceptions. Antecip consented to the collateral assignment of the License Agreement, among other things, under a direct agreement (the “Direct Agreement”) with the Company and Hercules.

The Loan Agreement contains customary representations, warranties and covenants, including covenants by the Company limiting additional indebtedness, liens (including a negative pledge on intellectual property and other assets), guaranties, mergers and consolidations, substantial asset sales, investments and loans, certain corporate changes, transactions with affiliates and fundamental changes. At the initial closing, there were no applicable financial covenants contained in the Loan Agreement. Only after additional amounts are drawn down by the Company in the future, if the Company decides to do so, under the terms set forth in the Loan Agreement, there will be certain limited financial covenants that will apply, including:

•

Effective upon closing of the Second Amendment of the Loan Agreement, the Company at all times thereafter must maintain cash in an account or accounts in which Hercules has a first priority security interest, in an aggregate amount greater than or equal to $40.0 million, plus the amount of the Company’s accounts payable under U.S. GAAP not paid after the 180th day following the invoice for such account payable (such amount, the “Qualified Cash A/P Amount”). The $40.0 million threshold decreases to $25.0 million upon achievement of the AXS-05 milestone.

•

Effective upon the (i) the last calendar month of the calendar quarter that is nine months following the earlier of (x) the date that the First Milestone is achieved (y) the date that the Second Milestone is achieved, or (z) the final closing date of the Sunosi acquisition (A) ensure that at all times its market capitalization exceeds $1.0 billion, and that it maintains cash in an account which Hercules has a first priority security interest in an amount not less than 50% 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 it maintains cash in an account which Hercules has a first priority security interest in an amount not less than 85% 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, AXS-07, and Sunosi (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 the Company’s most recent quarterly financial statement, determined on a quarterly basis.

•

Restrictions on the Company’s ability to incur additional indebtedness, pay dividends, encumber its intellectual property, or engage in certain fundamental business transactions, such as mergers or acquisitions of other businesses, with certain exceptions.

The Company’s obligations under the Loan Agreement are subject to acceleration upon the occurrence of specified events of default, including payment default, insolvency and a material adverse change in the Borrower’s business, operations or financial or other condition.

In addition, the Company is required to pay a final payment fee equal to (A) $2,910,000 in connection with the drawn amount of Tranche 1A plus (B) 4.5% on the draw down of Tranche 1B and the aggregate amount of all term future loan advances. The final payment fee is being accreted and amortized into interest expense using the effective interest rate method over the term of the loan.

The Company may, at its option prepay the term loans in full or in part, subject to a prepayment penalty equal to (i) 2.0% of the principal amount prepaid if the prepayment occurs prior to the first anniversary of the First Amendment Closing Date, (ii) 1.5% of the principal amount prepaid if the prepayment occurs on or after the first anniversary and prior to the second anniversary of the First Amendment Closing Date, and (iii) 1.0% of the principal amount prepaid if the prepayment occurs on or after the second anniversary and prior to the third anniversary of the First Amendment Closing Date. These percentages are unchanged from the First Amendment to the Loan Agreement.

The Company evaluated whether the Hercules Term Loan entered into in March 2022 represented a debt modification or extinguishment in accordance with ASC 470-50, Debt – Modifications and Extinguishments. As the present value of the cash flows under the terms of the Second Amendment to the Hercules Agreement is less than 10% different from the remaining cash flows under the terms of the First amendment, the Second Amendment was accounted for as a debt modification. The unamortized balance of debt discount costs incurred in connection with those loans and additional debt discount costs incurred in connection with entry into the Hercules Second Amendment to the Loan Agreement, are being amortized through maturity in October 2026 utilizing the effective interest rate method.

Loan Interest Expense and Amortization

The interest expense, amortization expense for the final payment fee and debt discount related to the issuance costs and warrants for our debt is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Interest Expense	$	1,874,674	$	1,156,458	$	2,998,632	$	2,300,208
Amortization of final payment fee		160,179		149,281		258,039		292,870
Amortization of debt discount related issuance costs and warrants		299,486		132,508		424,983		267,882

The outstanding debt and unamortized debt discount balances are as follows:


	June 30, 2022			December 31, 2021
Total Outstanding Debt	$	95,000,000		$	50,000,000
Add: accreted liability of final payment fee		952,722			706,407
Less: unamortized debt discount, long-term		(2,493,898	)		(1,616,885	)
Less: current portion of long-term debt		—			—
Loan payable, long-term	$	93,458,824		$	49,089,522

Scheduled Principal Payments on Outstanding Debt, as of June 30, 2022, are as follows:


2022		—
2023		—
2024		—
2025		15,202,884
2026		79,797,116
Total principal payments outstanding	$	95,000,000

The Company was in compliance with all covenants and requirements of its financing arrangements as of and during the six months ended June 30, 2022.

Stockholders' Equity

6 Months Ended

Jun. 30, 2022

Equity [Abstract]

Stockholders' Equity

Note 12. Stockholders’ Equity

Capital Structure

In December 2019, the Company entered into the December 2019 Sales Agreement with SVB Leerink, pursuant to which the Company may sell up to $80 million in shares of the Company’s common stock from time to time through SVB Leerink, acting as the Company’s sales agent, in one or more at-the-market offerings utilizing the 2019 Shelf Registration Statement. SVB Leerink is entitled to receive a commission of 3.0% of the gross proceeds for any shares sold under the December 2019 Sales Agreement. The December 2019 Sales Agreement was replaced by the March 2022 Sales Agreement (see below).

In March 2022, the Company entered into the March 2022 Sales Agreement with SVB Leerink, pursuant to which the Company may sell up to $200 million in shares of the Company’s common stock from time to time through SVB Leerink, acting as the Company’s sales agent, in one or more at-the-market offerings utilizing the 2019 Shelf Registration Statement. SVB Leerink is entitled to receive a commission of 3.0% of the gross proceeds for any shares sold under the March 2022 Sales Agreement. The March 2022 Sales Agreement supersedes the December 2019 Sales Agreement, dated December 5, 2019, by and between the Company and SVB Leerink LLC.

Under the December 2019 Sales Agreement and March 2022 Sales Agreement, for the six months ended June 30, 2022, the Company received approximately $58.6 million in gross proceeds through the sale of 1,914,747 shares, of which net proceeds were approximately $56.8 million.

Upon the closing of the Second Amendment, Hercules also purchased 152,487 of the Company’s unregistered common stock for a total consideration of $5.0 million at a share price equal to $32.79 per share, pursuant to a share transfer agreement.

The holders of shares of common stock are entitled to one vote for each share of common stock held at all meetings of stockholders and written actions in lieu of meetings. The holders of shares of common stock are entitled to receive dividends, if and when declared by the board of directors.

Shelf Registration Statement

On December 5, 2019, the Company filed an automatic shelf registration statement (“2019 Shelf Registration”) with the Securities and Exchange Commission (“SEC”) for the issuance of common stock, preferred stock, warrants, rights, debt securities and units. It became effective upon filing with the SEC and is currently the Company’s only active shelf registration. Through the date of this report, the Company has issued common stock of approximately $292.9 million pursuant to such shelf registration statement.

Under SEC rules, the 2019 Shelf Registration Statement allows for the potential future offer and sale by the Company, from time to time, in one or more public offerings, of an indeterminate amount of the Company’s common stock, preferred stock, debt securities, and units at indeterminate prices. At the time any of the securities covered by the 2019 Shelf Registration Statement are offered for sale, a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of any such offering.

Equity Incentive Plans

There were 3,341,813 shares available for the issuance of stock options or stock-based awards under the Company’s 2015 Omnibus Incentive Compensation Plan at June 30, 2022.

Stock Options

The following table sets forth the stock option activity for the six months ended June 30, 2022:


	Number of shares			Weighted average exercise price		Weighted average contractual term		Aggregate intrinsic value
Outstanding at December 31, 2021		5,090,377		$	28.89
Granted		1,590,426			31.62
Exercised		(24,706	)		14.49
Forfeited		(111,376	)		41.51
Expired		(22,160	)		46.50
Outstanding at June 30, 2022		6,522,561		$	28.98		7.5	$	95,081,479
Vested and expected to vest at June 30, 2022		6,522,561		$	28.98		7.5	$	95,081,479
Exercisable at June 30, 2022		3,170,564		$	17.70		5.8	$	76,800,643

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. The expected term of the Company’s stock options has been determined utilizing the “simplified” method as described in the SEC’s Staff Accounting Bulletin No. 107 relating to stock-based compensation. The simplified method was chosen because the Company has limited historical option exercise experience due to its short operating history. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for a period approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. Expected volatility is based on historical volatilities of similar entities within the Company’s industry which were commensurate with the Company’s expected term assumption.

The weighted average grant date fair value of options granted was $23.70 per option for the six months ended June 30, 2022. As of June 30, 2022, there was $90.3 million of total unrecognized compensation cost related to non-vested stock options which is expected to be recognized over a weighted average period of 3.1 years. These amounts do not include 6,169 options outstanding as of June 30, 2022, which are performance-based and vest upon the achievement of certain corporate milestones. Stock‑based compensation will be measured and recorded if and when it is probable that the milestone will occur.

Restricted Stock Units

In 2020, the Company began granting RSUs covering an equal number of its shares of common stock to employees. The fair value of RSUs is determined on the date of the grant based on the market price of its shares of common stock as of that date. The fair value of the RSUs is recognized as an expense ratably over the vesting period of four years. As of June 30, 2022, total compensation cost not yet recognized related to unvested RSUs was $19.2 million, which is expected to be recognized over a weighted-average period of 3.3 years.

The following table sets forth the RSU activity for the six months ended June 30, 2022:


	Number of shares			Weighted average grant date fair value
Outstanding at December 31, 2021		302,764		$	42.93
Granted		482,793			23.85
Vested		(63,330	)		42.19
Forfeited		(8,916	)		40.51
Outstanding at June 30, 2022		713,311		$	30.12

Stock-based compensation expense recognized for the three and six months ended June 30, 2022 and 2021 was allocated as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Research and development	$	2,679,848	$	2,302,504	$	4,489,325	$	3,836,899
General and administrative		7,481,830		3,153,738		13,270,682		5,350,440
Total	$	10,161,678	$	5,456,242	$	17,760,007	$	9,187,339

Warrants

The following table summarizes warrant activity for the six months ended June 30, 2022:


			Weighted
			average
	Warrants		exercise price
Outstanding at December 31, 2021		15,541	$	80.43
Issued		35,255		31.91
Exercised		—		—
Outstanding at June 30, 2022		50,796	$	46.75

Outstanding Warrants

In connection with the entry into the Second Amendment, Hercules received warrants to purchase an aggregate 35,255 shares of the Company’s common stock at an exercise price of $31.91 per share ("2022 warrants") and in connection with the first advance of the 2020 Term Loan, Hercules received warrants to purchase an aggregate 15,541 shares of the Company’s common stock at an exercise price of $80.43 per share ("2020 warrants").

Both the 2022 warrants and 2020 warrants were priced using the volume weighted average price of the Company’s common stock over the ten-day trading period immediately preceding the initial closing, subject to certain limited adjustments as specified in the warrant. The warrants are exercisable for seven years from the date of issuance. The warrants were classified as a component of stockholders’ equity. The relative fair value of the warrants of approximately $0.8 million for the 2022 warrants and $0.9 million for the 2020 warrants at the time of issuance, which was determined using the Black-Scholes option-pricing model, was recorded as additional paid-in capital and reduced the carrying value of the debt. The discount on the debt is being amortized to interest expense over the term of the debt utilizing the effective interest rate method.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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+ Details

Summary of Significant Accounting Policies (Policies)	6 Months Ended
Summary of Significant Accounting Policies (Policies)	Jun. 30, 2022
Accounting Policies [Abstract]
Significant Risks And Uncertainties	Significant Risks and Uncertainties The Company’s operations are subject to a number of factors that can affect its operating results and financial condition. Such factors include, but are not limited to: the results of clinical testing and trial activities of the Company’s product candidates; the Company’s ability to obtain regulatory approval to market its products, if approved; competition from products manufactured and sold or being developed by other companies; the price of, and demand for, the Company’s products, if approved; the Company’s ability to negotiate favorable licensing or other manufacturing and marketing agreements for its products, if approved; and the Company’s ability to raise additional financing. If the Company does not successfully commercialize any of its products, it will be unable to generate sufficient additional recurring product revenue to achieve and maintain profitability.
Use of Estimates	Use of Estimates Management considers many factors in developing the estimates and assumptions that are used in the preparation of these financial statements. Management must apply significant judgment in this process. In addition, other factors may affect estimates, including expected business and operational changes, sensitivity and volatility associated with the assumptions used in developing estimates, and whether historical trends are expected to be representative of future trends. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements if these results differ from historical experience, or other assumptions do not turn out to be substantially accurate, even if such assumptions are reasonable when made. In preparing these financial statements, management used significant estimates in the following areas, among others: stock‑based compensation expense; the determination of the fair value of the warrants; the accounting for research and development costs; accounting for acquisitions; impairments goodwill and intangible assets; contingent consideration; chargebacks, cash discounts, sales rebates, returns and other adjustments; and the recoverability of the Company’s net deferred tax assets and related valuation allowance.
Revenue Recognition	Revenue Recognition Effective January 1, 2018, the Company adopted FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC Topic 606”). The Company did not generate any product related revenue until the Sunosi acquisition, and therefore the adoption of ASC Topic 606 did not have an impact to the Company’s financial statements for any prior periods or upon adoption. In accordance with ASC Topic 606, the Company recognizes revenue when the customer obtains control of a promised good or service, in an amount that reflects the consideration that the Company expects to receive in exchange for the good or service. Transfer of control is based on contractual performance obligations, this occurs upon transfer of the title along with the physical transfer of the Company's goods to the Company's third-party logistics provider ("3PL") as that is when the customer has obtained control of significantly all of the economic benefits. The reported results for the three and six months ended June 30, 2022 reflect the application of ASC Topic 606. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to arrangements that meet the definition of a contract under ASC Topic 606, including when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. For a complete discussion of accounting for product sales, see Product Sales, net (below). Product Sales, net The Company sells Sunosi in the United States through a single 3PL, which takes title and control of the goods. The 3PL distributes the product to wholesale distributors (collectively the "Distributors") with whom we have entered into formal agreements for delivery to retail pharmacies. Reserves for Variable Consideration Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of its anticipated performance and all information (historical, current and forecasted) that is reasonably available. These reserves reflect our best estimate of the amount of consideration to which we are entitled based on the terms of the contracts. The amount of variable consideration that is included in the transaction price may be constrained and is included in the net sales price only to the extent that is considered probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. Trade Discounts and Allowances - The Company generally provides discounts which include incentive fees that are explicitly stated in the Company’s contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized. In addition, the Company compensates (through trade discounts and allowances) its distributors for distribution services and data. These payments have been recorded as a reduction of net sales within the consolidated statements of operations through June 30, 2022, as well as a reduction to accounts receivable, net on the consolidated balance sheets. Product Returns - Consistent with industry practice, the Company generally offers a limited right of return for product that has been purchased from the Company based on the product’s expiration date. The Company estimates the amount of its product sales that may be returned and records this estimate as a reduction of revenue in the period the related product revenue is recognized, as well as a component of accrued expense and other current liabilities on the consolidated balance sheets. The Company currently estimates product return liabilities using available industry data and its own sales information. Provider Chargebacks and Discounts - Chargebacks for fees and discounts to providers represent the estimated obligations resulting from contractual commitments to sell products at prices lower than the list prices charged to distributors. Distributors charge the Company for the difference between what they pay for the product and the ultimate selling price. These reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and accounts receivables, net. Rebates - Rebates apply to: Medicaid, managed care, and supplemental rebates to all applicable states as defined by the statutory government pricing calculation requirements under the Medicaid Drug Rebate Program. Tricare rebates to the TRICARE third party administrator based on the statutory calculation defined in the Agreement with Defense Health Agency. Part D and Commercial Managed Care rebates are paid based on the contracts with PBMs and Managed Care Organizations. Rebates are paid to these entities upon receipt of an invoice from the contracted entity which is based on the utilization of the product by the members of the contracted entity. The Company estimates these rebates and records such estimates in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a current liability recorded as an accrued expenses and other current liabilities on the consolidated balance sheets. Coverage Gap - The Medicare Part D coverage gap is a period of consumer payment for prescription medication costs which lies between the initial coverage limit and the catastrophic-coverage threshold, when the patient is a member of a Medicare Part D prescription-drug program administered by the Centers for Medicare & Medicaid Services. The Company estimates the percentage of goods sold under Coverage Gap and adjusts the transaction price for such discount at the time of sale resulting in a reduction of product revenue and the establishment of a current liability recorded as an accrued expenses and other current liabilities on the consolidated balance sheets. Other Incentives - Other incentives which the Company offers include voluntary patient assistance programs, such as the co-pay assistance program, which are intended to provide financial assistance to qualified commercially-insured patients with prescription drug co-payments required by payers. The calculation of the accrual for co-pay assistance is based on an estimate of claims and the cost per claim that the Company expects to receive associated with product that has been recognized as revenue. The adjustments are recorded in the same period the related revenue is recognized, resulting in a reduction of product sales and the establishment of a current liability which is included as a component of accrued expenses and other current liabilities on the consolidated balance sheets. The Company makes significant estimates and judgments that materially affect its recognition of net product revenue. Claims by third-party payors for rebates, chargebacks and discounts frequently are submitted to the Company significantly after the related sales, potentially resulting in adjustments in the period in which the new information becomes known. The Company will adjust its estimates based on new information, including information regarding actual rebates, chargebacks and discounts for its products, as it becomes available.
Foreign Currency Translation	Foreign Currency Translation Expenses denominated in foreign currency are translated into U.S. dollars at the exchange rate on the date the expense is incurred. Assets and liabilities of foreign operations are translated at period-end exchange rates. The effect of exchange rate fluctuations on translating foreign currency into U.S. dollars is included in the Statements of Operations and is not material to the Company’s financial statements.
Segment and Geographic Information	Segment and Geographic Information Operating segments are defined as components of an enterprise for which separate discrete information is available for evaluation by the chief operating decision maker or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business as one operating segment, which is the business of developing and delivering novel therapies for the management of CNS disorders.
Cash Equivalents	Cash Equivalents The Company considers all highly liquid investments that have maturities of three months or less when acquired to be cash equivalents. The Company’s cash and cash equivalents includes holdings in checking and overnight sweep accounts. The Company’s cash equivalents, which are money market funds held in a sweep account, are measured at fair value on a recurring basis. As of June 30, 2022, the balance of cash and cash equivalents was $73.4 million, which approximates fair value and was determined based upon Level 1 inputs. The sweep account is valued using quoted market prices with no valuation adjustments applied. Accordingly, these securities are categorized as Level 1.
Concentration of Credit Risk	Concentration of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash. The Company maintains its cash at financial institutions, which at times, exceed federally insured limits. At June 30, 2022, the majority of the Company’s cash was held by one financial institution and the amount on deposit was in excess of Federal Deposit Insurance Corporation insurance limits. The Company has not recognized any losses from credit risks on such accounts since inception. The Company believes it is not exposed to significant credit risk on cash. At the time of contract inception or customer account set-up, the Company performs a collectability assessment on the creditworthiness of such customer. In 2022, all of the Company’s accounts receivable arose from product sales in the U.S. and all customers have standard payment terms. The Company’s accounts receivable balance as of June 30, 2022 is compromised solely from transactions with the Company’s 3PL.
Business Combination	Business Combination The Company accounted for the Sunosi acquisition as a business combination using the acquisition method of accounting, which requires that all identifiable assets acquired, and liabilities assumed be recorded at their estimated fair values. The excess of the fair value of purchase consideration over the fair values of identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions. Critical estimates in valuing certain intangible assets include but are not limited to future expected cash flows from acquired patented technology. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. As a result of the acquisition of Sunosi from Jazz, the Company recorded goodwill and an intangible asset. Goodwill Goodwill is deemed to have an indefinite life and therefore not amortized. The Company tests the carrying amounts of goodwill for recoverability on an annual basis or more frequently if events or changes in circumstances indicate that the asset might be impaired. The Company performs a one-step test in its evaluation of the carrying value of goodwill if qualitative factors determine it is necessary to complete a goodwill impairment test. In the evaluation, the fair value of the relevant reporting unit is determined and compared to its carrying value. If the fair value is greater than the carrying value, then the carrying value is deemed to be recoverable, and no further action is required. If the fair value estimate is less than the carrying value, goodwill is considered impaired for the amount by which the carrying amount exceeds the reporting unit’s fair value, and a charge is reported in impairment of goodwill in the Company’s consolidated statements of operations. As of June 30, 2022, the Company has determined that it has one reporting unit. The Company has not identified any events or changes in circumstances that indicate the existence of potential impairment of goodwill during the six months ended June 30, 2022. Intangible Assets All of our intangible assets are amortized using the straight-line method over their estimated period of benefit of ten years. The Company evaluates the recoverability of intangible assets periodically by considering events or changes in circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired.
Contingent Consideration	Contingent Consideration Consideration paid in a business combination may include potential future payments that are contingent upon the acquired business achieving certain milestones in the future (“contingent consideration”). The royalty payments due to Jazz are a high single-digit royalty on the Company's U.S. net sales of Sunosi in the current indication and a mid single-digit royalty on the Company's U.S. net sales of Sunosi for future indications. Contingent consideration liabilities are measured at their estimated fair value as of the date of acquisition, with subsequent changes in fair value recorded in the consolidated statements of operations during such period a change is recognized. The Company estimates the fair value of the contingent consideration as of the acquisition date using the estimated future cash outflows based on future sales. Contingent consideration liabilities expected to be settled within 12 months after the balance sheet date are presented in current liabilities, with the non-current portion recorded under long term liabilities in the consolidated balance sheets.
Fair Value of Financial Instruments	Fair Value of Financial Instruments Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Assets and liabilities that are measured at fair value are reported using a three‑level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1—Quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2—Inputs other than quoted prices in active markets that are observable for the asset or liability, either directly or indirectly. Level 3—Unobservable inputs for which there is little or no market data, which require the reporting entity to develop its own assumptions. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. An asset's or liability's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company’s financial instruments are cash, accounts receivable, accounts payable, accrued liabilities, current and long-term debt, current and non-current contingent consideration. The carrying values for cash, accounts payable and accrued liabilities reported in the accompanying consolidated financial statements approximate their respective fair values due to their short-term maturities. The carrying value of debt on the Company’s balance sheet (see Note 6 – Loan and Security Agreement), is estimated to approximate its fair value as the interest rate approximates the market rate for loans with similar terms and risk characteristics. The key assumptions used to determine the fair value of acquisition-related assets and liabilities are estimated by management, not observable in the market and, therefore considered Level 3 inputs within the fair value hierarchy.
Accounts Receivable, net	Accounts Receivable, net The Company’s accounts receivable, net, arise from product sales. They are generally stated at the invoiced amount and do not bear interest. Accounts receivable allowances result from chargebacks, prompt pay discounts, and distribution fees. The Company monitors the financial performance and creditworthiness of its customers so that it can properly assess and respond to changes in the customers’ credit profiles. In 2022, 100% were generated from the Company's 3PL. The Company estimated the current expected credit losses of its accounts receivable by assessing the risk of loss and available relevant information about collectability, including historical credit losses, existing contractual payment terms, actual payment patterns of its customers, individual customer circumstances, and reasonable and supportable forecast of economic conditions expected to exist throughout the contractual life of the receivable. The Company has not historically experienced significant credit losses. Based on its assessment, as of June 30, 2022, we have not recorded any allowances on receivables.
Debt Issuance Costs	Debt Issuance Costs Debt issuance costs consist of costs incurred in obtaining long-term financing. These costs are classified on the consolidated balance sheet as a direct deduction from the carrying amount of the related debt liability. These expenses are deferred and amortized as part of interest expense in the consolidated statement of operations using the effective interest rate method over the term of the debt agreement.
Inventories, net	Inventories, net The Company values its inventories at the lower of cost or estimated net realizable value. The inventory associated with the Sunosi acquisition is stated at fair value due to purchase accounting. The Company determines the cost of its inventories, which includes amounts related to materials, labor, manufacturing overhead, and shipping and handling costs on a first-in, first-out (“FIFO”) basis. The Company performs an assessment of the recoverability of capitalized inventory during each reporting period, and it writes down any excess and obsolete inventories to their estimated net realizable value in the period in which the impairment is first identified. Such impairment charges, if they occur, are recorded within cost of product sales. The Company capitalizes inventory costs associated with the Company’s products after regulatory approval when, based on management’s judgment, future commercialization is considered probable and the future economic benefit is expected to be realized. Inventory acquired and manufactured prior to receipt of regulatory approval of a product candidate is expensed as research and development expense as incurred. Inventory that can be used in either the production of clinical or commercial product is expensed as research and development expense when selected for use in a clinical manufacturing campaign.
Equipment, net	Equipment, net Equipment consists primarily of computer equipment and is recorded at cost. Equipment is depreciated on a straight‑line basis over its estimated useful life, which the Company estimates to be three years. When equipment is sold or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in operating expenses.
Cost of Product Sales	Cost of Product Sales The Company's cost of product sales relates to sales of Sunosi. Cost of product sales primarily includes product royalty fees, overhead, and direct costs (inclusive of material, shipping, handling, and manufacturing costs). Cost of product sales excludes depreciation and amortization. Cost of product sales were approximately $1.0 million and $0 for the three and six months ended June 30, 2022 and 2021, respectively. There were no sales in 2021. The Company also assumed the commitments of Jazz to SK Biopharmaceuticals (“SK)” and Aerial Biopharma (“Aerial”). SK is the originator of Sunosi and retains rights in 12 Asian markets, including China, Korea, and Japan. In 2014, Jazz acquired from Aerial worldwide rights to Sunosi excluding those Asian markets stated previously. The assumed commitments to SK and Aerial include single-digit tiered royalties based on the Company's sales of Sunosi, and the Company is committed to pay up to $165 million based on revenue milestones and $1 million based on development milestones. The related royalties are recorded within cost of product sales on the statement of operations.
Research and Development Costs	Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses consist primarily of employee-related expenses including salaries, benefits, travel, and stock‑based compensation expense, contract services, costs incurred to third-party service providers for the conduct of research, preclinical and clinical studies, laboratory supplies, product license fees, consulting and other related expenses. We estimate research, preclinical and clinical study expenses based on services performed, pursuant to contracts with third-party research and development organizations that conduct and manage research, preclinical and clinical activities on our behalf. We estimate these expenses based on discussions with internal management personnel and external service providers as to the progress or stage of completion of services and the contracted fees to be paid for such services. If the actual timing of the performance of services or the level of effort varies from the original estimates, we will adjust the accrual accordingly. Payments associated with licensing agreements to acquire licenses to develop, use, manufacture and commercialize products that have not reached technological feasibility and do not have alternative future use are expensed as incurred. Payments made to third parties under these arrangements in advance of the performance of the related services by the third parties are recorded as prepaid expenses until the services are rendered.
Income Taxes	Income Taxes Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, operating losses, and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date. Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company estimates an annual effective tax rate of 0% for the year ending December 31, 2022 and has not recorded an income tax benefit for the six months ended June 30, 2022 and 2021 since it determined that a full valuation allowance is required against the Company’s deferred tax assets. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position as well as consideration of the available facts and circumstances. When uncertain tax positions exist, the Company recognizes the tax benefit of tax positions to the extent that the benefit will more likely than not be realized. As of June 30, 2022, the Company does not believe any material uncertain tax positions are present. In the event the Company determines that accrual of interest or penalties are necessary in the future, the amount will be presented as a component of income tax expense.
Stock Based Compensation	Stock-Based Compensation For stock options issued, the Company estimates the grant date fair value of each option using the Black‑Scholes option pricing model. The Black-Scholes model takes into account the expected volatility of the Company’s common stock, the risk-free interest rate, the estimated life of the option, the closing market price of the Company’s common stock and the exercise price. The estimates utilized in the Black-Scholes calculation involve inherent uncertainties and the application of management’s judgment. In addition, the Company recognizes expense for equity award forfeitures as they occur. For restricted stock units (“RSUs”), the Company issues them in the form of Company common stock. The fair market value of these awards is based on the market closing price per share on the grant date. For awards subject to service-based vesting conditions, the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period, which is generally the vesting term. For awards subject to performance-based vesting conditions, the Company recognizes stock-based compensation expense using the accelerated attribution method when it is probable that the performance condition will be achieved. The expense related to the stock-based compensation is recorded within the same financial statement line item as the grantee’s cash compensation. The Company’s policy upon exercise of stock options and RSUs is that shares will be issued as new shares drawing on the Company’s 2015 Omnibus Incentive Compensation Plan share pool that was adopted by the stockholders in November 2015.
Basic and Diluted Net Loss per Common Share	Basic and Diluted Net Loss per Common Share Basic net loss per share of common stock is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as warrants, stock options, and RSUs, which would result in the issuance of incremental shares of common stock. As the impact of these items is anti-dilutive during periods of net loss, there was no difference between basic and diluted net loss per share of common stock for the three and six months ended June 30, 2022 and 2021.
Leases	Leases The Company determines if an arrangement is a lease at contract inception. Operating lease assets represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. When evaluating whether a contract contains a lease, the Company considers whether (1) the contract explicitly or implicitly identifies assets that are contractually defined and (2) the Company obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company’s lease agreement contains lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. The Company has applied the practical expedient to combine fixed payments for non-lease components with lease payments and account for them together as a single lease component, which increases the amount of lease assets and corresponding liabilities. Payments under the Company’s lease arrangement are primarily fixed, however variable payments, are expensed as incurred and not included in the operating lease asset and liability. Operating lease assets and liabilities are recognized at the commencement date of the lease based upon the present value of lease payments over the lease term. When determining the lease term, the Company includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company uses the implicit interest rate when readily determinable and uses the Company’s incremental borrowing rate when the implicit rate is not readily determinable based upon the information available at the commencement date in determining the present value of the lease payments. The Company’s operating leases are reflected in the right-of-use operating asset; operating lease liability, current portion; and operating lease liability, long-term portion in the Company’s consolidated balance sheets. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Short-term leases, defined as leases that have a lease term of 12 months or less at the commencement date, and do not include an option to extend the term or purchase the underlying asset that the Company is reasonably certain to exercise, are excluded from this treatment and are recognized on a straight-line basis over the term of the lease.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In October 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2021-08, Business Combinations (Topic 805) . This update requires that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification (“ASC”) 606. This differs from the current requirement to measure contract assets and contract liabilities acquired in a business combination at fair value. The amendments in this update should be applied prospectively, and are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of this ASU on its consolidated financial statements.

Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of fair value of financial instruments measured on a recurring basis

The fair value of financial instruments measured on a recurring basis is as follows:


May 9, 2022	Level 1		Level 2		Level 3		Total
Liabilities:
Contingent consideration	$	—	$	—	$	36,140,407	$	36,140,407


June 30, 2022	Level 1		Level 2		Level 3		Total
Liabilities:
Contingent consideration	$	—	$	—	$	35,280,407	$	35,280,407
Total	$	—	$	—	$	35,280,407	$	35,280,407

Schedule of fair value of the contingent consideration remeasured

The fair value of the contingent consideration was remeasured at June 30, 2022. The fair value of the financial instruments as of June 30, 2022 is as follows:




	Contingent Consideration
Balance at December 31, 2021	$	—
Initial estimate		36,140,407
Gain in fair value of contingent consideration		(860,000	)
Balance at June 30, 2022	$	35,280,407

Schedule of fair value measurements of contingent consideration recurring include significant unobservable inputs

The recurring Level 3 fair value measurements of contingent consideration for which a liability is recorded include the following significant unobservable inputs:


			As of June 30, 2022	As of May 9, 2022
	Valuation Methodology	Significant Unobservable Input	Weighted Average (range, if applicable)	Weighted Average (range, if applicable)
Contingent Consideration	Probability weighted income approach	Discount rate	13.2%	11.7%
		Revenue Discount rate	20.9%	20.8%

Loan and Security Agreement (Tables)

6 Months Ended

Jun. 30, 2022

Debt Disclosure [Abstract]

Schedule of Interest and Amortization Expense for Final Payment Fee and Debt Discount

The interest expense, amortization expense for the final payment fee and debt discount related to the issuance costs and warrants for our debt is as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Interest Expense	$	1,874,674	$	1,156,458	$	2,998,632	$	2,300,208
Amortization of final payment fee		160,179		149,281		258,039		292,870
Amortization of debt discount related issuance costs and warrants		299,486		132,508		424,983		267,882

Schedule of Outstanding Debt and Unamortized Debt Discount Balances

The outstanding debt and unamortized debt discount balances are as follows:


	June 30, 2022			December 31, 2021
Total Outstanding Debt	$	95,000,000		$	50,000,000
Add: accreted liability of final payment fee		952,722			706,407
Less: unamortized debt discount, long-term		(2,493,898	)		(1,616,885	)
Less: current portion of long-term debt		—			—
Loan payable, long-term	$	93,458,824		$	49,089,522

Schedule of Principal Payments

Scheduled Principal Payments on Outstanding Debt, as of June 30, 2022, are as follows:


2022		—
2023		—
2024		—
2025		15,202,884
2026		79,797,116
Total principal payments outstanding	$	95,000,000

- Definition

Tabular disclosure of long-debt instruments or arrangements, including identification, terms, features, collateral requirements and other information necessary to a fair presentation. These are debt arrangements that originally required repayment more than twelve months after issuance or greater than the normal operating cycle of the entity, if longer.

+ References

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-Topic 210
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.5-02.22)
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-Paragraph 3
-Subparagraph (SX 210.12-04(a))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e24072-122690

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+ Details

Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2022

Equity [Abstract]

Summary of Stock Option Activity

The following table sets forth the stock option activity for the six months ended June 30, 2022:


	Number of shares			Weighted average exercise price		Weighted average contractual term		Aggregate intrinsic value
Outstanding at December 31, 2021		5,090,377		$	28.89
Granted		1,590,426			31.62
Exercised		(24,706	)		14.49
Forfeited		(111,376	)		41.51
Expired		(22,160	)		46.50
Outstanding at June 30, 2022		6,522,561		$	28.98		7.5	$	95,081,479
Vested and expected to vest at June 30, 2022		6,522,561		$	28.98		7.5	$	95,081,479
Exercisable at June 30, 2022		3,170,564		$	17.70		5.8	$	76,800,643

Schedule of RSU Activity

The following table sets forth the RSU activity for the six months ended June 30, 2022:


	Number of shares			Weighted average grant date fair value
Outstanding at December 31, 2021		302,764		$	42.93
Granted		482,793			23.85
Vested		(63,330	)		42.19
Forfeited		(8,916	)		40.51
Outstanding at June 30, 2022		713,311		$	30.12

Schedule of Stock-Based Compensation Expense Recognized

Stock-based compensation expense recognized for the three and six months ended June 30, 2022 and 2021 was allocated as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Research and development	$	2,679,848	$	2,302,504	$	4,489,325	$	3,836,899
General and administrative		7,481,830		3,153,738		13,270,682		5,350,440
Total	$	10,161,678	$	5,456,242	$	17,760,007	$	9,187,339

Schedule of Warrant Activity

The following table summarizes warrant activity for the six months ended June 30, 2022:


			Weighted
			average
	Warrants		exercise price
Outstanding at December 31, 2021		15,541	$	80.43
Issued		35,255		31.91
Exercised		—		—
Outstanding at June 30, 2022		50,796	$	46.75

Summary of Significant Accounting Policies - Additional Information (Details)		1 Months Ended	3 Months Ended		6 Months Ended
	Mar. 25, 2022 USD ($) Market	Dec. 31, 2022	Jun. 30, 2022 USD ($) Institution	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) Segment ReportingUnits Institution Market	Jun. 30, 2021 USD ($)
Segment and Geographic Information
Number of operating segments \| Segment					1
Cash Equivalents
Cash Equivalents			$ 73,400,000		$ 73,400,000
Concentration of Credit Risk
Number of financial institutions that hold the Company's cash \| Institution			1		1
Business Combination
Intangible assets, Estimated period of benefit					10 years
Number of reporting units \| ReportingUnits					1
Accounts Receivable, net
Accounts receivable, Allowance for credit loss			$ 0		$ 0
Equipment, net
Estimated useful life					3 years
Cost of Product Sales
Cost of product sales			$ 1,000,000.0	$ 1,000,000.0	$ 0	$ 0
Sales				$ 0		0
Income Taxes
Income tax benefit					$ 0	$ 0
Sunosi
Cost of Product Sales
Number of Asian markets \| Market					12
Revenue milestones	$ 165,000,000				$ 165,000,000
Development milestones	$ 1,000,000				$ 1,000,000
Jazz Pharmaceuticals Plc \| Sunosi
Business Combination
Intangible assets, Estimated period of benefit					10 years
Cost of Product Sales
Number of Asian markets \| Market	12
2014-09
Recent Accounting Pronouncements
Change in accounting principle, accounting standards update, adopted			true		true
Change in accounting principle, accounting standards update, adoption date			Jan. 01, 2018		Jan. 01, 2018
Change in accounting principle, accounting standards update, immaterial effect			true		true
Forecast
Income Taxes
Effective tax rate		0.00%

Business Combination - Additional Information (Details)		3 Months Ended				6 Months Ended
Business Combination - Additional Information (Details)	Mar. 25, 2022 USD ($) Market	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($)	Jun. 30, 2021 USD ($)	Mar. 31, 2021 USD ($)	Jun. 30, 2022 USD ($) Market	Jun. 30, 2021 USD ($)
Business Acquisition [Line Items]
Goodwill		$ 11,897,407				$ 11,897,407
Intangible assets, Estimated period of benefit						10 years
Product sales		$ 8,819,786				$ 8,819,786
Type of Revenue [Extensible List]		us-gaap:ProductMember				us-gaap:ProductMember
Net loss		$ (41,438,516)	$ (39,632,311)	$ (32,284,209)	$ (29,259,970)	$ (81,070,827)	$ (61,544,179)
Selling, General and Administrative Expenses
Business Acquisition [Line Items]
Business combination, transaction costs						$ 500,000
Hercules Capital Inc \| Term Loan
Business Acquisition [Line Items]
Line of credit	$ 300,000,000
Jazz Pharmaceuticals Plc
Business Acquisition [Line Items]
Business combination purchase price allocated to goodwill deductible in number of years						15 years
Sunosi
Business Acquisition [Line Items]
Number of Asian markets \| Market						12
Revenue milestones	165,000,000					$ 165,000,000
Development milestones	1,000,000					1,000,000
Inventory step-up fair value		1,100,000				1,100,000
Goodwill		11,900,000				11,900,000
Product sales		$ 8,800,000				$ 8,800,000
Type of Revenue [Extensible List]		us-gaap:ProductMember				us-gaap:ProductMember
Net loss		$ (4,600,000)				$ (4,600,000)
Sunosi \| Jazz Pharmaceuticals Plc
Business Acquisition [Line Items]
Upfront payment	$ 53,000,000
Number of Asian markets \| Market	12
Cash and contingent consideration						89,140,407
Goodwill		$ 11,897,407				$ 11,897,407
Intangible assets, Estimated period of benefit						10 years
Sunosi \| Jazz Pharmaceuticals Plc \| Discount rate
Business Acquisition [Line Items]
Percentage of discount rate intangible asset measurement input		43.50%				43.50%

Loan and Security Agreement - Additional Information (Details) - USD ($)		1 Months Ended	3 Months Ended		6 Months Ended
	Oct. 14, 2021	Sep. 30, 2020	Jun. 30, 2022	Jun. 30, 2021	Jun. 30, 2022	Jun. 30, 2021	Mar. 27, 2022
Line Of Credit Facility [Line Items]
Interest expense			$ 1,874,674	$ 1,156,458	$ 2,998,632	$ 2,300,208
Amortization of debt issuance costs			160,179	149,281	258,039	292,870
Amortization of debt discount					683,022	560,752
Warrants
Line Of Credit Facility [Line Items]
Amortization of debt discount			$ 299,486	$ 132,508	$ 424,983	$ 267,882
Term Loan 2020
Line Of Credit Facility [Line Items]
Debt instrument maturity, month and year	2026-10
Base interest rate	8.95%
Minimum different from remaining percentage of cash flow	10.00%
Final payment fee		$ 2,910,000
Percentage of final payment fee		4.50%
Term Loan 2020 \| Prime Rate
Line Of Credit Facility [Line Items]
Interest rate basis	5.70%
Term Loan 2020 \| Prime Rate \| Maximum
Line Of Credit Facility [Line Items]
Interest rate basis	10.70%
Term Loan 2020 \| Prepayment Occurs Prior to First Anniversary of Closing Date
Line Of Credit Facility [Line Items]
Percentage of prepayment penalty		2.00%
Term Loan 2020 \| Outstanding principle and advances under the loans agreement exceeds 55 million
Line Of Credit Facility [Line Items]
Minimum cash to be maintain as a first priority security interest		$ 40,000,000.0
Period of unpaid invoices amount maintain as security		180 days
Long term debt increase decrease threshold amount		$ 40,000,000.0
Long term debt upon milestone achievement amount		25,000,000.0
Term Loan 2020 \| Outstanding principle and advances under the loans agreement exceeds 65 million
Line Of Credit Facility [Line Items]
Minimum amount of market capital to be maintained		$ 1,000,000,000.0
Minimum percentage of cash to be maintained as a security following market capitalization condition		50.00%
Minimum percentage of cash to be maintained as a security		85.00%
Term Loan 2020 \| Outstanding principle and advances under the loans agreement exceeds 65 million \| AXS-05 and AXS-07
Line Of Credit Facility [Line Items]
Minimum product revenue percent		60.00%
Term Loan 2020 \| Prepayment Occurs on or After First Anniversary and Prior to Second Anniversary of the Closing Date
Line Of Credit Facility [Line Items]
Percentage of prepayment penalty		1.50%
Term Loan 2020 \| Prepayment Occurs on or After Second Anniversary and Prior to Third Anniversary of Closing Date
Line Of Credit Facility [Line Items]
Percentage of prepayment penalty		1.00%
Term loan 2020 tranche one
Line Of Credit Facility [Line Items]
Maximum loan amount		$ 60,000,000.0
Remaining credit facility to be drawn							$ 95,000,000.0
Term loan 2020 tranche one \| Second Amendment To Loan and Security Agreement
Line Of Credit Facility [Line Items]
Maximum loan amount							45,000,000.0
Term loan 2020 tranche two
Line Of Credit Facility [Line Items]
Maximum loan amount	$ 100,000,000.0
Term loan 2020 tranche three
Line Of Credit Facility [Line Items]
Maximum loan amount	20,000,000.0
Tranche Two Sub-Tranche One
Line Of Credit Facility [Line Items]
Maximum loan amount							35,000,000.0
Tranche Two Sub-Tranche Two
Line Of Credit Facility [Line Items]
Maximum loan amount							35,000,000.0
Tranche Two Sub-Tranche Three
Line Of Credit Facility [Line Items]
Maximum loan amount							30,000,000.0
Tranche Three Sub Tranche One
Line Of Credit Facility [Line Items]
Maximum loan amount							15,000,000.0
Tranche Three Sub Tranche Two
Line Of Credit Facility [Line Items]
Maximum loan amount							5,000,000.0
Term loan 2020 tranche four
Line Of Credit Facility [Line Items]
Maximum loan amount	55,000,000.0						50,000,000.0
Term loan 2020 tranche five
Line Of Credit Facility [Line Items]
Maximum loan amount							$ 35,000,000.0
Remaining credit facility to be drawn	$ 75,000,000.0

Net Loss per Common Share - Computation of Basic and Diluted Net Loss per Common Share (Details) - USD ($)	3 Months Ended				6 Months Ended
	Jun. 30, 2022	Mar. 31, 2022	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2022	Jun. 30, 2021
Earnings Per Share [Abstract]
Net loss	$ (41,438,516)	$ (39,632,311)	$ (32,284,209)	$ (29,259,970)	$ (81,070,827)	$ (61,544,179)
Weighted average common shares outstanding, basic	39,081,100		37,595,069		38,704,227	37,512,716
Weighted average common shares outstanding, diluted	39,081,100		37,595,069		38,704,227	37,512,716
Net loss per common share, basic	$ (1.06)		$ (0.86)		$ (2.09)	$ (1.64)
Net loss per common share, diluted	$ (1.06)		$ (0.86)		$ (2.09)	$ (1.64)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

Stockholders' Equity - Additional Information (Details)		1 Months Ended		6 Months Ended
Stockholders' Equity - Additional Information (Details)	Dec. 05, 2019 USD ($)	Mar. 31, 2022 USD ($)	Dec. 31, 2019 USD ($)	Jun. 30, 2022 USD ($) Days Vote $ / shares shares	Dec. 31, 2021 $ / shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock, voting right per share \| Vote				1
Weighted average grant date fair value \| $ / shares				$ 23.70
Unrecognized compensation cost related to non-vested stock options expected to be recognized				$ 90,300,000
Expected vesting period for non-vested share-based compensation				3 years 1 month 6 days
Non-vested options outstanding \| shares				6,169
Exercise price of warrants (in dollars per share) \| $ / shares				$ 46.75	$ 80.43
Warrants \| 2020 warrants
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock to be issued if warrants are exercised (in shares) \| shares				15,541
Exercise price of warrants (in dollars per share) \| $ / shares				$ 80.43
Trading days \| Days				10
Term of warrants (in years)				7 years
Fair value				$ 800,000
Warrants \| 2022 warrants
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock to be issued if warrants are exercised (in shares) \| shares				35,255
Exercise price of warrants (in dollars per share) \| $ / shares				$ 31.91
Term of warrants (in years)				7 years
Fair value				$ 900,000
Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period				4 years
Compensation cost not yet recognized related to unvested RSUs				$ 19,200,000
Weighted average contractual term				3 years 3 months 18 days
2015 Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares available for future grant \| shares				3,341,813
2019 Shelf Registration
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Proceeds from issuance of common stock, gross	$ 292,900,000
SVB Leerink \| December 2019 Sales Agreement
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock sales agreement, commission percentage			3.00%
SVB Leerink \| March 2022 Sales Agreement
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock sales agreement, commission percentage		3.00%
SVB Leerink \| December 2019 and March 2022 Sales Agreement
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Proceeds from issuance of common stock, gross				$ 58,600,000
Shares issued \| shares				1,914,747
Proceeds from issuance of common stock, net				$ 56,800,000
Maximum \| SVB Leerink \| December 2019 Sales Agreement
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock sales agreement, authorized amount			$ 80,000,000
Maximum \| SVB Leerink \| March 2022 Sales Agreement
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock sales agreement, authorized amount		$ 200,000,000
Hercules Capital Inc
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares issued \| shares				152,487
Proceeds from issuance of common stock, net				$ 5,000,000.0
Share Price \| $ / shares				$ 32.79

Stockholders' Equity - Summary of Stock Option Activity (Details) - USD ($)	6 Months Ended
	Jun. 30, 2022
Number of shares
Number of shares, Outstanding, beginning balance	5,090,377
Number of shares, Granted	1,590,426
Number of shares, Exercised	(24,706)
Number of shares, Forfeited	(111,376)
Number of shares, Expired	(22,160)
Number of shares, Outstanding, ending balance	6,522,561
Number of shares, Vested and expected to vest	6,522,561
Number of shares, Exercisable	3,170,564
Weighted average exercise price
Weighted average exercise price, Outstanding, beginning balance	$ 28.89
Weighted average exercise price, Granted	31.62
Weighted average exercise price, Exercised	14.49
Weighted average exercise price, Forfeited	41.51
Weighted average exercise price, Expired	46.50
Weighted average exercise price, Outstanding, ending balance	28.98
Weighted average exercise price, Vested and expected to vest	28.98
Weighted average exercise price, Exercisable	$ 17.70
Weighted average contractual term
Weighted average contractual term, Outstanding	7 years 6 months
Weighted average contractual term, Vested and expected to vest	7 years 6 months
Weighted average contractual term, Exercisable	5 years 9 months 18 days
Aggregate intrinsic value
Aggregate intrinsic value, Outstanding	$ 95,081,479
Aggregate intrinsic value, Vested and expected to vest	95,081,479
Aggregate intrinsic value, Exercisable	$ 76,800,643

Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	39,914,411	37,816,794
Common stock, shares outstanding	39,914,411	37,816,794

Nature of Business and Basis of Presentation - Additional Information (Details)	Jun. 30, 2022 USD ($) Product	Dec. 31, 2021 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of late-stage candidates in Company's product candidate portfolio \| Product	4
Accumulated deficit \| $	$ 490,269,912	$ 409,199,085

Goodwill - Schedule of Goodwill (Details)	6 Months Ended
Goodwill - Schedule of Goodwill (Details)	Jun. 30, 2022 USD ($)
Goodwill [Abstract]
Goodwill from Sunosi Acquisition	$ 11,897,407
Goodwill impairment	0
Goodwill, ending balance	$ 11,897,407

Intangible Asset - Schedule of Net Book Value of our Intangible Asset (Details)	6 Months Ended
	Jun. 30, 2022 USD ($)
Intangible Assets [Abstract]
Gross Carrying Amount	$ 63,800,000
Accumulated Amortization	(925,650)
Net Book Value at June 30, 2022	$ 62,874,350
Remaining Weighted-Average Useful Life	10 years

Intangible Asset - Schedule of Finite Lived Intangible Assets Future Amortization Expense (Details)	Jun. 30, 2022 USD ($)
Intangible Assets [Abstract]
2022	$ 3,213,578
2023	6,374,760
2024	6,392,226
2025	6,374,760
2026	6,374,760
Thereafter	34,144,266
Total	$ 62,874,350

Goodwill - Additional Information (Details)	6 Months Ended
Goodwill - Additional Information (Details)	Jun. 30, 2022 USD ($)
Goodwill [Line Items]
Goodwill	$ 11,897,407
Goodwill impairment	0
Sunosi
Goodwill [Line Items]
Goodwill	$ 11,900,000

Fair Value of Financial Instruments - Additional Information (Details) - USD ($)	Jun. 30, 2022	May 09, 2022
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Accrued contingent consideration, current	$ 5,950,000
Contingent consideration liability, non-current	29,330,407
Fair value of contingent consideration	35,280,407
Maximum \| Discount Rate Increases or Decreases by Approximately 1%
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value of contingent consideration	37,000,000.0
Maximum \| Revenue Discount Rate Increases or Decreases by Approximately 1%
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value of contingent consideration	36,600,000
Minimum \| Discount Rate Increases or Decreases by Approximately 1%
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value of contingent consideration	33,600,000
Minimum \| Revenue Discount Rate Increases or Decreases by Approximately 1%
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Fair value of contingent consideration	34,100,000
Sunosi
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Accrued contingent consideration, current	6,000,000.0
Contingent consideration liability, non-current	29,300,000
Contingent consideration liability	$ 35,300,000	$ 36,100,000

Fair Value of Financial Instruments - Schedule Of Fair Value Of Financial Instruments Measured On Recurring Basis (Details) - Fair Value, Recurring [Member] - USD ($)	Jun. 30, 2022	May 09, 2022
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	$ 35,280,407
Contingent consideration
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	35,280,407	$ 36,140,407
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total	35,280,407
Level 3 \| Contingent consideration
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Contingent consideration	$ 35,280,407	$ 36,140,407

Fair Value of Financial Instruments - Schedule Of Fair Value Of Contingent Consideration Recurring Include Significant Unobservable Inputs (Details) - Probability weighted income approach - Contingent consideration - Level 3	Jun. 30, 2022	May 09, 2022
Discount rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent consideration, measurement input	0.132	0.117
Revenue Discount rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Contingent consideration, measurement input	0.209	0.208

Inventory - Schedule of Inventory (Details)	Jun. 30, 2022 USD ($)
Inventory Disclosure [Abstract]
Raw materials	$ 1,307,000
Work in process	8,430,000
Finished goods	586,746
Total	$ 10,323,746

Inventory - Additional Information (Details) $ in Millions	Jun. 30, 2022 USD ($)
Sunosi
Inventory [Line Items]
Inventory step-up fair value	$ 1.1

Accrued Expenses and Other Current Liabilities - Schedule of Accrued Expenses (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Accrued Liabilities and Other Liabilities [Abstract]
Accrued research and development	$ 2,792,715	$ 2,416,897
Accrued compensation	3,871,439	4,050,236
Accrued selling, general and administrative	3,496,776	2,442,700
Accrued sales discounts, rebates and allowances	4,816,205
Accrued royalties	705,583
Accrued Interest	797,604	385,347
Total	$ 16,480,322	$ 9,295,180

Loan and Security Agreement - Schedule of Outstanding Debt and Unamortized Debt Discount Balances (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Debt Disclosure [Abstract]
Total Outstanding Debt	$ 95,000,000	$ 50,000,000
Add: accreted liability of final payment fee	952,722	706,407
Less: unamortized debt discount, long-term	(2,493,898)	(1,616,885)
Loan payable, long-term	$ 93,458,824	$ 49,089,522

Loan and Security Agreement - Schedule of Principal Payments (Details) - USD ($)	Jun. 30, 2022	Dec. 31, 2021
Debt Disclosure [Abstract]
2025	$ 15,202,884
2026	79,797,116
Total principal payments outstanding	$ 95,000,000	$ 50,000,000

Net Loss per Common Share - Potentially Dilutive Securities Outstanding (Details) - shares	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2021
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities	7,286,668	4,786,652
Stock Options
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities	6,522,561	4,461,985
Restricted Stock Units
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities	713,311	309,126
Warrants
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Antidilutive securities	50,796	15,541

Commitments and Contingencies - Schedule of Future Minimum Lease Payments of Operating Leases (Details)	Mar. 31, 2022 USD ($)
Lessee, Operating Lease, Liability, to be Paid [Abstract]
2022	$ 615,000
2023	105,000
Total lease payments	720,000
Less imputed interest	(10,880)
Present value of operating lease liabilities	$ 709,120

Commitments and Contingencies - Additional Information (Details)	1 Months Ended	6 Months Ended
	Jan. 31, 2022	Jun. 30, 2022
Commitments and Contingencies Disclosure [Abstract]
Lessee, operating lease, description		In January 2022, the Company entered into an agreement to extend the lease of 22 Cortlandt Street for a term of six months from August 1, 2022 through January 31, 2023.
Lease term	6 months
Operating lease, remaining lease term		7 months 6 days
Operating lease, discount rate		6.00%
Lessee, operating lease, existence of option to extend [true false]	true
Lessee, operating lease, option to extend		extend the lease of 22 Cortlandt Street for a term of six months from August 1, 2022 through January 31, 2023.

Stockholders' Equity - Schedule of RSU Activity (Details) - Restricted Stock Units	6 Months Ended
	Jun. 30, 2022 $ / shares shares
Number of shares
Number of shares, Outstanding, beginning balance \| shares	302,764
Number of shares, Granted \| shares	482,793
Number of shares, Vested \| shares	(63,330)
Number of shares, Forfeited \| shares	(8,916)
Number of shares, Outstanding, ending balance \| shares	713,311
Weighted average grant date fair value
Weighted average grant date fair value, Outstanding, beginning balance \| $ / shares	$ 42.93
Weighted average grant date fair value, Granted \| $ / shares	23.85
Weighted average grant date fair value, Vested \| $ / shares	42.19
Weighted average grant date fair value, Forfeited \| $ / shares	40.51
Weighted average grant date fair value, Outstanding, ending balance \| $ / shares	$ 30.12

Stockholders' Equity - Schedule of Warrant Activity (Details)	6 Months Ended
	Jun. 30, 2022 $ / shares shares
Warrants and Rights Note Disclosure [Abstract]
Number of warrants outstanding beginning balance \| shares	15,541
Number of warrants issued \| shares	35,255
Number of warrants exercised \| shares	0
Number of warrants outstanding ending balance \| shares	50,796
Weighted average exercise price, Beginning balance \| $ / shares	$ 80.43
Issued (in dollars per share) \| $ / shares	31.91
Exercised (in dollars per share) \| $ / shares	0
Weighted average exercise price, Ending balance \| $ / shares	$ 46.75

License Agreements - Additional Information (Details)	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
License Agreements - Additional Information (Details)	Jan. 31, 2020 USD ($) $ / shares shares	Jun. 30, 2022 USD ($) shares	Jun. 30, 2021 USD ($)	Jun. 30, 2022 USD ($) shares	Jun. 30, 2021 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2012 Item	Dec. 31, 2021 USD ($) shares	Jan. 09, 2020 USD ($) $ / shares
Research And Development Arrangement Contract To Perform For Others [Line Items]
Number of common shares \| shares		39,914,411		39,914,411				37,816,794
Value of common stock		$ 3,991		$ 3,991				$ 3,782
Research and development expense recognized		15,792,202	$ 14,503,326	28,377,343	$ 31,099,014
License Agreement \| Antecip
Research And Development Arrangement Contract To Perform For Others [Line Items]
Number of exclusive license agreements \| Item							3
License agreement royalty, maximum reduction percent as a result of required third party payments							50.00%
License agreement term, from first commercial sale							10 years
License Agreement \| Antecip \| AXS-02
Research And Development Arrangement Contract To Perform For Others [Line Items]
License agreement royalty as a percent of net sales							4.50%
License Agreement \| Antecip \| AXS-05
Research And Development Arrangement Contract To Perform For Others [Line Items]
License agreement royalty as a percent of net sales							3.00%
License Agreement \| Antecip \| AXS-04
Research And Development Arrangement Contract To Perform For Others [Line Items]
License agreement royalty as a percent of net sales							1.50%
Pfizer Inc \| License Agreement
Research And Development Arrangement Contract To Perform For Others [Line Items]
Number of common shares \| shares	82,019
Value of common stock	$ 8,000,000.0
Prior trading days	10 days
Share price \| $ / shares	$ 97.54
Upfront cash payment	$ 3,000,000.0
Fair value share price \| $ / shares									$ 87.24
Fair value of common stock									$ 7,200,000
Research and development expense recognized						$ 10,200,000
Future milestone payments		323,000,000		323,000,000
Milestone payments or royalties		$ 0	$ 0	$ 0	$ 0

Royalty Agreements - Additional Information (Details) - Sunosi $ in Millions		6 Months Ended
	Mar. 25, 2022 USD ($)	Jun. 30, 2022 USD ($) Market
Research and Development Arrangement, Contract to Perform for Others [Line Items]
Number of Asian markets \| Market		12
Revenue milestones	$ 165	$ 165
Development milestones	$ 1	$ 1