SAGE Therapeutics Inc (SAGE) 2017 Q4 法說會逐字稿

Good morning, and welcome to Sage Therapeutics Fourth Quarter and Full Year 2017 Financial Results Conference Call. (Operator Instructions) This call is being webcast live on the Investors & Media section of Sage's website at sagerx.com. This call is a property of Sage Therapeutics and recording, reproduction or transmission of this call without the express written consent of Sage Therapeutics is strictly prohibited. Please note that this call is being recorded.

I would now like to introduce Paul Cox, Investor Relations at Sage.

Good morning. Today, we issued a press release with our fourth quarter and full year 2017 financial results, along with recent company highlights, upcoming milestones and progress on our corporate strategy. The press release and the presentation slides used on this call can be found on the Investors & Media section of our website at sagerx.com.

On Slide 2 of the presentation is the agenda for today's call. We will begin the call with prepared remarks by Dr. Jeff Jonas, Chief Executive Officer; Dr. Steve Kanes, Chief Medical Officer; and Kimi Iguchi, Chief Financial Officer. We'll be joined for the Q&A session by Mike Cloonan, Chief Business Officer; and Dr. Jim Doherty, Chief Research Officer.

On Slide 3 is our safe harbor statement. During today's call, we will make forward-looking statements, including statements about our expectations, plans and time lines for an NDA filing, a potential commercial launch and clinical development activities, the potential of our pipeline and business, the potential for expedited development as a result of breakthrough therapy designation, our estimates as to the prevalence of certain indications, our financial projections and our expectations regarding other upcoming events and activities. Actual results may differ materially. The risks and other factors that could cause actual results to differ are discussed in today's press release and in the Risk Factors section of our most recent quarterly or annual report filed with the Securities and Exchange Commission and other reports filed with the SEC. Any forward-looking statements represent our views as of today only. We may update these statements in the future, but we disclaim any obligation to do so.

I would now like to turn the call over to Jeff.

Thanks, Paul. Good morning, and welcome to our call. We're pleased to discuss our recent progress at Sage and our plans for 2018.

Turning to Slide 4. Sage continues to plan to build a global central nervous system, or CNS, company based on novel science, innovative approaches and differentiated medicines, with a clear focus on maximizing patient benefit. We believe we've taken big steps towards making this vision a reality, as you can see on Slide 5. Throughout our 6-year history, we've explored innovative methods of drug discovery and development as well as clinical trial design in pursuit of novel treatments for CNS disorders that may address gaps in the efficacy and safety profiles of current therapeutics.

Our portfolio is led by 2 breakthrough therapy designated product candidates, one of which is being prepared for a planned near-term NDA submission, and we have several development candidates behind it. So where is Sage today? On Slide 6, we are building a leading CNS biotech company that is positioned on the cusp of potential product commercialization and advancing a robust CNS pipeline from a position of financial strength. We've delivered what we believe is a strong track record to date, with positive results in 6 out of 7 placebo-controlled trials thus far. We believe the strength of our accumulated clinical data support the potential of our novel pipeline and our development approach and has enabled us to achieve these results in only a few years.

You can view our pipeline on Slide 7. As mentioned, our lead program, an IV formulation of brexanolone in postpartum depression, or PPD, is being readied for a planned new drug application, or NDA. This submission to the FDA seeks approval for brexanolone in PPD in the U.S. based on its positive Phase III development program as well as supportive Phase II studies.

Our second compound, SAGE-217, recently received Breakthrough Therapy designation in major depressive disorder based on the positive results of a Phase II trial, which we released at the end of last year. Breakthrough designation offers the potential for expedited development of our MDD program, and we're also studying SAGE-217 across a number of other indications, including Parkinson's disease and sleep disorders. We will also update you on our other molecules in the clinic or nearing the clinic, SAGE-718 and SAGE-324.

Turning to Slide 8. While we believe we have been successful in advancing compounds in clinical development, Sage is distinguished by its unique product engine. Our current focus is on exploring both positive and negative modulations of the GABA and NMDA receptor systems, key regulatory networks in brain function. While many of these programs are earlier stage, we are focused on positioning Sage for long-term success as a multiproduct neuroscience drug company with a deep and broad pipeline. Steve will have more details on some of these programs later on in the call.

First, Slide 9. I'd like to focus on our efforts in depression and how we are rethinking our understanding of the etiology of depression. For over 2 decades, depression has been thought about in the context of what we know as the monoamine hypothesis. Most of the therapeutics we see today have been based on this very hypothesis, yet traditional antidepressants have slow onset and require chronic therapy. As a result, we often view depression as a chronic disease and, as we all know, diseases are chronic when the treatments are inadequate, and we hope to change that. There are newer ways of thinking about depression as an episodic state involving hyperactive brain networks. And we believe our compounds have the potential to rapidly disrupt these hyperactive brain networks.

This brings me to our efforts to build a meaningful and distinctive depressive disorder franchise, shown on Slide 10. We completed Phase III development for brexanolone in postpartum depression. This was the first successful clinical development program ever in PPD and now also has the potential to be the first ever therapeutic to be approved in postpartum depression. SAGE-217, our oral molecule, has generated exciting and differentiated Phase II data in major depressive disorder, leading to what we believe is the first ever breakthrough designation for the broad MDD indication. And we believe these 2 development programs, if successful, could establish a footprint for our groundbreaking approach to these mood disorders, with the goal of offering potentially rapidly acting, durable and profound effects that are well tolerated.

On Slide 11, you can see a summary of our Phase II and Phase III data for brexanolone in PPD. In short, we have consistently seen rapid and profound antidepressant effect after only 2.5 days of treatment. That effect seems to be durable over the follow-up period across 3 placebo-controlled trials. We plan to present and publish additional data from the Phase III trials later this year.

We have also now seen consistent data across molecules and indications with SAGE-217 and MDD, and Steve will review those data in a moment. Turning to Slide 12, I'd like to quickly touch on our precommercial efforts. There is a crisis in innovation in psychiatric care. Treatment is often suboptimal and often chronic. At Sage, we hope to apply the same innovation that we've applied in R&D to our commercial programs and to changing patient care. We hope to take on this challenge with our first potential launch, which is brexanolone in PPD.

On Slide 13, our proprietary intravenous formulation of brexanolone offers the potential to create new treatment pathways for PPD, a serious disorder estimated to affect over 400,000 women in the U.S. each year, with 70% to 80% of those patients being categorized as moderate-to-severe disease. Brexanolone IV has the potential to be the first therapy ever approved for PPD, an indication for which there is significant need for therapeutics with rapid onset and potential for resolution in days.

Turning to Slide 14. We believe that we have made considerable progress in our commercial readiness, with our initial focus on the potential U.S. launch of brexanolone intravenous formulation. Our priority for us is disease awareness and taking on the stigma of PPD by establishing a knowledge base within the community that PPD is a medical complication of pregnancy with a clear biology. We are also engaging in [permitted] discussions with payers on the value proposition of brexanolone intravenous. In additional, we are developing a family-centered model, including plans to enable multi-site of care options, such as in the home setting. The potential for brexanolone launch also provided us with the opportunity to build a world-class commercial organization, and we already have key leadership in place in the commercial, technical operations and quality groups. And we are taking a Sage approach to bringing on a field force in the U.S. to be ready for a potential launch.

Slide 15 presents an overview of our brexanolone supply chain readiness activities. We remain on track for our planned commercial launch, which we anticipate in the first half of 2019 if our NDA is approved. While our 2017 achievements demonstrate the strength of our R&D organization, successful execution against our 2018 goals will drive our planned transition to a commercial company, with the opportunity to create a new standard of care for women with postpartum depression. In addition, we believe our broad portfolio of fully owned internally developed molecules affords further optionality with the potential to drive intermediate and long-term value.

I'll now turn the call over to Steve and Kimi to review the rest of our pipeline and our financial results before turning to Q&A. Thanks, everybody.

Good morning. I would like to provide an update on our clinical portfolio behind brexanolone, beginning with SAGE-217. Please turn to Slide 16. Sage is focused on cutting-edge science, addressing a diverse set of therapeutic areas in CNS, linked by biology and significant unmet need. For SAGE-217, we're interested in exploring its clinical potential, with a unifying focus on related symptoms. Based on its profile and clinical data to date, we believe SAGE-217's mechanism has potential to impact mood, motor and sleep disruption in a variety of indications. We're also interested in the potential to administer SAGE-217 in both episodic and chronic settings based on its potential therapeutic profile.

Slide 17 summarizes our top line results from our Phase II program of SAGE-217 in MDD. This includes both our initial open label, where we observed a strong activity signal, and also our placebo-controlled study in 89 patients, where we saw a highly statistically significant result, leading to our recent Breakthrough Therapy designation. We look forward to initiating our next clinical trial in MDD this year.

We also plan to present additional data from the placebo-controlled Phase II study at a medical meeting this year. We are also exploring 2 other depressive disorders with SAGE-217. We have an ongoing placebo-controlled Phase II trial studying SAGE-217 in severe PPD. We expect to enroll approximately 140 patients with top line results anticipated in the fourth quarter. We've recently upsized this trial based on our positive data with brexanolone in PPD and SAGE-217 in MDD and to increase the utility and powering of the study. In addition, we plan to initiate Phase II development of SAGE-217 in bipolar depression this year.

On Slide 18, we're also developing SAGE-217 in Parkinson's disease, where motor, mood and sleep disruption can contribute to significant disease morbidity. In the fourth quarter, we announced positive open-label Phase II data of SAGE-217 in Parkinson's disease that supported further clinical development in this indication. In 14 patients with tremor-predominant Parkinson's disease, SAGE-217 improved tremor symptoms as assessed by the MDS-UPDRS Part II/III tremor score by 40% by day 8. SAGE-217 was generally well tolerated in the study. The most common AEs were dizziness, sedation and somnolence. We plan to initiate a placebo-controlled Phase II clinical trial, exploring chronic dosing of SAGE-217 in Parkinson's disease patients with residual tremor, which we expect to commence in 2018.

Turning to Slide 19. We recently announced the results of a positive placebo-controlled Phase I/II critical trial of SAGE-217 in healthy volunteers, using a 5-hour phase advance model of insomnia. SAGE-217 achieved statistically significant improved sleep efficiency as assessed by polysomnography compared to placebo and was generally well tolerated. In addition, SAGE-217 demonstrated a dose response with statistical significance in total sleep time and time spent awake after sleep onset compared to placebo. We believe the results of this Phase I/II trial will provide guidance for the potential clinical development of SAGE-217 in sleep disorders, which we expect to initiate in 2018.

As you can see on Slide 20, SAGE-217, if successfully developed, has the potential to meaningfully impact several broad CNS indications affecting millions of Americans each year. I also would like to update you briefly on 2 earlier-stage compounds.

On Slide 21, SAGE-324, which is currently progressing in IND-enabling studies and is intended to be developed with a focus on indications involving GABA hypofunction, such as essential tremor and epileptiform disorders. We plan to initiate Phase I clinical development in the first half of this year.

Turning to Slide 22. SAGE-718 is our lead NMDA compound and is a first-in-class NMDA positive allosteric modulator. SAGE-718 completed Phase I single ascending dose studies and was generally well tolerated with no severe adverse events. We expect to initiate a Phase I multiple ascending dose trials of SAGE-718 in the first half, with results expected later this year. Sage is also investigating the effects of SAGE-718 on pharmacodynamic biomarkers.

Before I conclude, I'd like to express how excited I am with the progress we've made across our pipeline. It's an exciting time to be in CNS development, and I believe our deliberate approach to drug development and focus on innovating for patient benefit has the potential to produce truly differentiated medicines.

With that, I will now turn the call over to Kimi to discuss our financial results.

Thanks, Steve. Please turn to Slide 23 for a discussion of our fourth quarter and year-end 2017 financial results and 2018 financial guidance. We finished 2017 with a strong balance sheet, with $518.8 million in cash, cash equivalents and marketable securities as of December 31, 2017, compared with $397.5 million at December 31, 2016. The increase is primarily due to net proceeds of $325.8 million from Sage's follow-on public offering completed in November of 2017.

Earlier this month, we completed a follow-on public offering, including the full exercise of the underwriters' option to purchase additional shares, resulting in net proceeds of approximately $631.1 million, bringing our cash on hand to more than $1 billion. This robust balance sheet and our track record of disciplined spending supports our transition to a multiproduct, commercial stage biotech to the continued growth of our commercial, manufacturing, quality and medical affairs capabilities to support our first potential product launch. In addition, we'll continue our investment in Sage's broad CNS pipeline, including the continued development of SAGE-217 in depressive disorders and ongoing and planned SAGE-217 clinical trials across a number of indications.

Our balance sheet will also provide an important strategic flexibility as we advance our other clinical and preclinical programs, including SAGE-718, SAGE-324 and other pipeline candidates.

Turning to the rest of our financial results for the fourth quarter and full year. Research and development expenses were $50.9 million in the fourth quarter compared to $42.0 million for the same period of 2016. Research and development expenses were $210.3 million in the year ended December 31, 2017, compared to $120.8 million for the prior year. The increase in R&D spending was primarily due to our continued efforts in advancing our portfolio and expanding our team to execute on all of our goals.

Turning now to general and administrative expenses. They were $19.6 million in the fourth quarter compared to $14.4 million for the same period of 2016. General and administrative expenses were $62.9 million in the year ended December 31, 2017, compared to $39.4 million for the prior year. The increase in G&A expenses was primarily due to the increase in personnel-related expenses, professional fees to support expanding operations, the costs related to preparations for potential commercial launch and facilities-related costs to support expanding operations.

We reported a net loss in the fourth quarter of $69.4 million compared to a net loss of $55.9 million for the same period of 2016. We reported a net loss of $270.1 million for the year ended December 31, 2017, compared to a net loss of $159 million for the same period of 2016.

We're very pleased with our progress to date and believe we are financially well positioned as we head into the remainder of the year. Based on our current operating plan, our anticipated cash balance and estimated brexanolone product sales, if the product is approved, will enable Sage to fund its operating expenses and capital expenditures into 2020. We expect that our operating expenses will increase year-over-year in 2018 to support continued pipeline advancement and potential product commercialization of brexanolone in PPD.

Turning to Slide 24. This summarizes our upcoming milestones. Following our recent pre-NDA meeting, we are on track for our planned NDA filing in the first half of this year, with a potential product launch in the first half of 2019. On our R&D side, we also anticipate a number of trial initiations in the upcoming months, including SAGE-718 in Phase I multiple ascending dose trial, SAGE-324 in Phase I development, multiple trials of SAGE-217, including MDD, bipolar depression, Parkinson's and sleep disorders. And we also expect data readouts later in the year, including our placebo-controlled trial of SAGE-217 in PPD and a Phase I multiple ascending dose program of SAGE-718. As you can see, we plan to have another busy year with multiple milestones as we continue towards our goal of transforming Sage into a commercial stage company that's advancing a robust CNS pipeline. We look forward to updating you on our progress in the coming months.

And so with that, I'd like to open the call for Q&A. Please limit yourself to 2 questions so that we can leave enough time to get to everyone. Operator?

(Operator Instructions) Our first question comes from the line of Ritu Baral with Cowen. I apologize. It looks like he (sic) [she] dropped from the queue. So our first question comes from the line of Cory Kasimov with JP Morgan.

I guess, I have 2 for you on the PPD commercial front. So when you talk about engaging with payers for brexanolone in PPD, how do you think a potentially kind of one-time acute intervention for a psychiatric illness is resonating with them? Because you're kind of changing the paradigm here a little bit. Is there a range of potential price points that you're currently considering in this discussion that you're able to share? And then the follow-up on this is, the build-out of your sales force over the course of 2018 in preparation for potential 1H '19 launch, can you remind us of the number and kind of distribution of those reps and how we should be thinking about the SG&A spend going forward?

Yes. Cory, this is Mike. Why don't I take the second one first because that's easier, right. So on the sales force, what we've said publicly is, we're going to have 250 sales reps that we'll hire closer to launch, and we're splitting that into sort of 2 different departments, if you will. One will be a 50-person key account management team that will focus on the hospital setting, and then there are 200 sales reps -- the other 200 will focus on OB/GYNs and psychs in the outpatient setting. So that's how we'll setup the sales force. On your question around the payers and pricing, if you just step back for a second, one of the key tenets of our strategy has been, as we get ready for launches, engaging stakeholders, the payers being one of those. And where we focused initially on the payers really was around disease awareness, right. They're not -- PPD is not necessarily on their radar at this point, and we've had to spend a lot of time really understanding the unmet need, how brexanolone fits in the treatment paradigm and sharing the data that we have on brexanolone. What I can tell you is, they've been very excited about the novel approach, the rapidity of onset that brexanolone offers. So to your point around changing the paradigm, it does resonate with the payers, right. They see -- as we go through the data and as we go through what exists in PPD today, including the stigma, they understand that brexanolone could fill a need in the marketplace. And really what they're most concerned with is ensuring that appropriate patients are treated with brexanolone. On the pricing question specifically, it's a little early to talk about pricing. For us, what I can tell you is, we'll take a very thoughtful and reasonable approach to our pricing strategy and will be more forthcoming as we get closer to launch. We have not engaged payers yet on the pricing conversation because when we engage them, we want to have a Phase III data in hand, which we do now, and we'll continue those conversations with the payers. But we'll relay that pricing strategy as we get closer to launch.

And our next question comes from the line of Ritu Baral with Cowen.

I wanted to ask about the next 217 MDD trial. Steve and Jeff, I noticed you're not necessarily calling them Phase III studies. What's left on FDA interaction on planning them? And how are you thinking about the design, given, I guess, the dosing paradigm that remains to be elucidated around the study?

Thanks, Ritu. Firstly, good morning, everybody. Mike jumped in before I could say good morning. With respect to the MDD trials, there are a couple of points. As you know, we just received Breakthrough Designation for the entire indication of major depressive disorder. And as part of that process, we are now entitled to a Breakthrough Designation meeting, where we can articulate our proposal for the further development of the drug. That process is underway. And as you know, as a matter of policy with the company, we don't comment on interim or intermediate discussions with the agency. We'll communicate that after the meeting is done and after we have minutes. But that's a process already obviously well under way. The company believes based on the data we've seen not only in the MDD study, but across the platform in all of the mood disorders that we have enough information about how this mechanism acts to design and propose a pivotal program. But again, that's a discussion we'll have with the agency. One of the areas that we'll have to discuss is the level of follow-up. We are very comfortable that looking at our data across basically 4 placebo-controlled studies, looking at the patient level data that the responders by and large continue to respond throughout the duration of their therapy and beyond. So we're pretty comfortable that this novel model will have utility and is the appropriate way of treating depression in this setting, and that is, we believe that this drug may afford some sort of brain -- reset that -- after therapeutic intervention. But I think those are all discussion we'll have with the agency. And again, let me just turn this over to Steve for further details.

Yes. I think Jeff laid out in broad strokes where we're going. In general, what we're looking to do is keep our program a very straightforward one similar to what we did with postpartum depression and look for program that essentially will replicate on a larger scale the kinds of things that we've demonstrated in Phase II. And as Jeff said, we believe that the data that we have really support later-phase development and we look forward to articulating the program after our discussion with the agency.

And for my follow-up still on 217, as you think about your ongoing PPD study and the planned bipolar depression study, I guess, especially around bipolar depression, do you guys see that as a fundamentally different disease mechanistically? Are there any additional risks to a GABAergic agent in bipolar depression given the etiology and the bipolar nature and risk?

I think one of the challenges we have is that this is a brand-new mechanism with really very dramatically different activity and safety profile. So everyone is still learning. With that being said, we're already seeing [stereotypical] response across postpartum depression and major depression; one with 3 intravenous controlled studies, and one with the oral controlled study. That necessarily doesn't mean that these are the same disorders. It may mean that related disorders may be responsive to this generalized mechanism. So I think it's premature to say they're the same. And certainty, if you look at simply the phenomenology of MDD versus PPD, they are rather distinct. We're talking about an acute onset disease with PPD. Often a lot of people believe it's a little bit more -- it's closer in nature to bipolar than MDD, where MDD, the patients we treated, [whereas to remind them were all comers], whether or not they had a history of response or not. So we're seeing pretty global activity to date. With respect to bipolar, we believe that if you look at the treatment of bipolar that, firstly, the activity in postpartum may augur well for activity in bipolar. Secondly, I think that with bipolar disorder, we don't think this mechanism is likely to have a propensity to trigger cycling. That being said, there are probably some nuances in how we'll design a bipolar study mostly because of the concern of cycling and, potentially, you could see a longer-term period of treatment just because of that. But beyond that, we think this mechanism may have some [this -- advantages] with respect to the bipolar population.

And our next question comes from the line of Salveen Richter with Goldman Sachs.

With regard to the 217 study in PPD, were there any other changes apart from increasing patient numbers to improve powering? And then my second question around the pivotal strategy here. Could this study serve to be a pivotal study? Or is there a chance that you could look at running a large depression pivotal study that would encompass major depressive disorder as well as PPD?

I'm going to start -- this is Jeff, and I'll turn it over to Steve. I think strategically, we believe that there is enough commonality in response that there may be an approach that can accelerate a broad depression claim. But that's, of course, a discussion we'll have with the agency. Our intent with PPD was very straightforward. Obviously, we haven't looked at the data, but we felt with all -- remember, as a company, we've now seen 4 mood studies readout positively in a row in a controlled fashion with very [high] p-values. So the necessity for conducting a small exploratory trial was mitigated, we believe, by the strength of the overall data package. So we decided to expand the postpartum depression program basically in the hope -- I think it's fair to say in the hopes that this could serve at least as a support and potentially as a pivotal program in a larger program that we'll propose to the agency. I'll turn this over to Steve for some more color.

Yes. We're -- I think Jeff put it well. We're thinking differently about the development program in depression and how different kinds of trials may, otherwise, fit into that strategy. And with the -- with getting breakthrough therapy designation, it gives us the opportunity to have those more in-depth discussions about which kinds of trials in which patient populations and so forth. What we can say is that the data themselves across both PPD and MDD appear to be quite consistent. Until we have those discussions, it would be premature to say. But it's definitely something that we're interested in exploring.

And our next question comes from the line of Tazeen Ahmad with Bank of America.

On PPD, Jeff, can you kind of give us a sense of how you're thinking about the longer-term strategy? So you've got 547, which presumably could address the most severe of patients. But if it does end up that 217 becomes commercial, just given that it's orally dosed, do you see that drug as potentially over time also being able to address the severe population? And then on insomnia, you've obviously had some positive early-stage data reported recently. Can you give us a little bit more detail on how you're thinking about time lines to progress that indication? You've obviously got a lot of programs in play. And how do you think about prioritizing different indications, all of which arguably could be large indications for you?

So I'm going to start by just a bit of an overview and turn it over to some of the folks working on these areas. So with respect to 547, I think we should -- brexanolone, we should clarify there's no evidence that severity has any impact on activity. And in fact, the evidence is just the opposite that regardless of level of severity, you see the same level of drug activity. And remember that we saw in the MDD program, we went lower, we had 22 and above. There is no difference based on severity and we've always pointed that out. So we don't think that's going to be the determination. And the plan for brexanolone has always been to make it available across the appropriate points of care. And that will include, we believe, not only hospital-based infusion but also home infusion [where] we're making great progress. Right now we can't disclose more, but we're very comfortable that we'll be -- hopefully, be able to offer that. So we also see a role for coexistence though, at least certainly at the initial phases of the introduction of an oral. There are clearly women who require hospitalization with severe PPD, and we think brexanolone will always be an option for them. I think until we -- I think it's fair to say that if the oral works very well that, that will, obviously, make it more convenient for women. And I'm going to turn this over sequentially. I made a comment a little bit on the sleep data. The sleep data, as you know, we were very pleased with. The next pieces of data which will be announced, as they're ongoing, will be the things that we think will help position this drug in terms of what -- how we believe its value proposition -- what its value proposition is. And the first will be our analysis of morning performance and the second will be our analysis of sleep architecture, in particular impact on REM and delta sleep. If we see the findings, we'd like -- I think the drug has already shown activity that we think will make it useful. Its differentiation, I think, will be helped along once we look at those new pieces of data. So we need to have those data in hand and then I think the pathway for a sleep drug is pretty well articulated with a PRO, a patient-rated outcome study. And then the second piece, obviously, potentially with another sleep polysomnographic study and potentially a patient cohort. There are other fine points about sleep, which I won't get into here. But I think the pathway is well known. I -- we anticipate at least one more study this year pending the data analysis that -- I just mentioned that we have pending. I'm going to turn this over first to Mike Cloonan and then -- to talk about the commercial question, then I'll turn it over to Jim Doherty, who is our Chief Research Officer, to talk a little bit more about sleep.

Yes. So this is Mike. Just digging back into what Jeff said about 547 and 217 and the copositioning, right, that is how we see these 2 molecules living together. We think, at this point, there is the opportunity to coposition them together in the marketplace. Ultimately, that's going to be dictated by the product profiles. We haven't seen the product profile yet for 217. But if we see differences in those product profiles and, again, in terms of rapidity of onset, the efficacy data across the 2 molecules, breastfeeding implications, et cetera, it gives us an opportunity to look at patient segmentation and utilize that in a way that allows us to segment the market that we can attach in 217 certain segments of the patient population in 547. So it may not just be a moderate and severe play. As we get to the granularity of patient segmentation, it will really help us coposition these 2 molecules. So I'll turn to Jim maybe to talk about the insomnia.

Good morning. Yes, this is Jim Doherty. Considering the insomnia data with 217, as Jeff said, we're very excited about the results we've seen from our first experimental medicine study in this space. We are still analyzing the data. There's quite a bit of information that we collected with the study, and we're very interested in looking at things, like sleep architecture, to really understand in detail how this novel mechanism is improving sleep performance. And also, things like next-day performance are very, very valuable. There are 2 pathways that we're considering. As Jeff mentioned a couple of minutes ago, there is a well-trodden path around the profile for a sleep agent. So we are looking at initiating at least one study this year, either a patient-reported outcome-type study or an additional polysomnography-based study. But the other thing that we're considering is, how these results factor into our ongoing mood and movement disorder trials. And so as the team is pulling together their plans moving forward that Steve was talking about earlier, we're also looking to factor in sleep and sleep performance into those plans.

Okay. So the cash raise that you've completed most recently certainly would allow for enough funding to continue with this program as well as the rest. Correct?

Yes, that's right.

That's correct.

And our next question comes from the line of Adam Walsh with Stifel.

This is Neil Carnahan on for Adam. On SAGE-217 and MDD, do you think the FDA would be satisfied with an on-drug 3 months type trial design for a pivotal program? Or do you think they might need longer -- or could you just elaborate on your thoughts that there may be a 6- or 12-month program to meet their approval parameters?

No. That's -- this is Jeff. I mean, there is no basis to even think that. The approval -- you're thinking SSRIs where -- and you're thinking chronic maintenance therapy. We have no indication that, that's required. And in fact, that's what was so important about the PPD filing, which shows that if you get the patients better and they can stay better, that will be adequate for the indication. We see there's absolutely no evidence at all; in fact, a lot of contrary evidence that supports very clearly that this drug will have -- has activity after 1 to 2 weeks of therapy. So we absolutely don't see that as an issue. We may require -- we will do some -- we'll do follow-up to look at durability of response, and that's something we'll do. But remember, with every cyclic disorder at some point, you have to consider the fact that these diseases come back on their own. And that's a separate indication that we're not addressing. We're simply looking at relapse and rebound and that -- and we haven't seen that. In terms of the molecule itself, obviously, for depression, the safety requirements, we don't have -- we're not going to be treating -- using the drug chronically for MDD. So we don't have -- we don't believe that we'll be required to have classical ICH requirements simply because we're not going to be chronically dosing. That will change if the, for example, Parkinson's program, where we will be exploring chronic dosing, if that -- there you'll have to have more classical ICH chronic therapy.

And our next question comes from the line of Paul Matteis with Leerink.

I'm wondering from a commercial perspective, for Jeff and Mike, how important do you think it is to answer the question of whether or not a patient, who's retreated with 217 after relapsing, also responds? Do you think that's something that payers are going to care about? And how important is that to you when you -- as information you might need to price the drug?

So a couple of things. One is, retreatment occurs with every medical disorder. And basically, there's no evidence with this particular drug that you won't have the classic -- you won't see any lack of [stereotypical] response. So I mean, I think that's a.

(technical difficulty)

As you know, we've not seen any recurrences or relapses within the follow-up period. So that becomes a theory. Certainly, in animal models and any of the data we've had, there's no evidence that the drugs would not be useful in retreatment. In terms of that, I think that sort of like is actually what the future holds for every patient. And we -- no one knows. But what we can show today based on what we know today is that the people who respond, we followed out, as you know, to 42 days, we've not seen any loss of activity after the initial treatment period and the drug has been discontinued. And we believe that's related to the mechanism that this drug -- whereby this drug works. So I'll turn this over to Mike for further comments

Paul, it's Mike. I think to build off what Jeff said and what Steve has talked about just in terms of the development plan, what I can tell is, commercially, we're very much tied at the hip with Steve and the team as we think about the development plan, right, and how we develop this plan for some of the reasons that you mentioned, right, thinking through the payers, how they're going to receive this, but also, the providers, the health care providers as well as the physicians. If we're changing the paradigm here, we have to think about what's the data we need to help shift that paradigm. So we're thinking through all those things. We have already started to engage on the payers to your question specifically. So it's too early to talk about price, obviously. But we're engaging in those conversations today to really understand what their hot buttons are and how we can build that into development plans, both in terms of that launch, but also as part of the life cycle management plan.

Yes. I think the other point I just want to add about the science about this, and we really can't speak -- it's not appropriate to speak about head-to-head comparison. But I think it's well worth looking at the activity profile of some of the other newer agents and what they look like versus what ours look like. And the one point I'll continue to make is when you look at our patients, if you look at the patient curves, if you look at what happens after the drug is stopped, you're not seeing rebound and you're not seeing relapse. And that -- so I think it's important to understand the behavior of this molecule. And we've seen this now, and I would reiterate, 4 placebo-controlled studies, has been consistent that once the therapeutic interval has stopped, the patients remain at the level of response that they achieved while on drug -- the large, large majority of patients. And that is -- that we believe is a distinct feature. And so as people are contemplating what the Phase III program might look like, and I've said as we can't design it on the phone, the one point I'd make is, we don't have that -- that is not a problem that we have to solve for. The data suggests that in fact it is not a problem.

Okay. Okay. All right. So I guess, to kind of rephrase this back, Jeff, you don't feel like exploring the retreatment question or whether or not 6 months later, patient can re-respond to SAGE-217, you don't feel like that's a question you necessarily need to answer in Phase III or, I guess, at least for (inaudible) approval. You don't think that that's going to be information that's important to you for launching the drug. Is that fair?

I think, obviously, we'll have to talk with the FDA about all these things. But the answer is, I don't see why this drug would be held to the highest standard ever for any drug introduced in the U.S. beyond any SSRI or anything else of what happens 6 months to a year in the future. We don't believe that's a regulatory requirement. No. And I don't believe it's ever been a -- I can't even think of a drug where it has been a requirement. This is simply -- we understand it's a source of wonderment. But as I say, there's no evidence based on patient's safety or the activity we've seen that, that ought to be required.

And our next question comes from the line of Brian Abrahams with RBC Capital Markets.

On brexanolone, just wondering coming out of your pre-NDA meeting, what sort of feedback you've got there? And what kind of additional work, if any, is going to be required prior to filing there? And then also, on brexanolone, as you progress towards laying the groundwork for home infusion, just wondering if there's any other models of success that you can follow? How important this would be for adoption? And what additional degree of investment above and beyond the sort of typical sales force might be required to facilitate that infrastructure?

As we've noted in the release, we have completed and received the minutes from the pre-NDA meeting. We don't have any additional work and, as I said, we won't comment further, but no additional work. And we are on track to file the NDA, as we said, this half. So it's all -- so that's -- nothing else to say about that. I'll turn this over to Mike for the other question.

Yes. Maybe just to step back, Brian, on your question on home infusion. If you step back on what our strategy really is, we're really trying to create options for sites of care for patients, right, and that's we know the hospital is a setting that is open to brexanolone, if approved. We want to create another option, which is the home infusion setting, which I'll describe. There could be other settings and sites of care that materialize over time. But really, we want to create what we call a family-centric approach to brexanolone where patients and providers have an opportunity to choose the right site of care that they think that best matches the needs of the patients. And home infusion, if you think about that for a second and being family centric, the ability to maintain the family bonds, right, keeping bond with babies during that 2.5 days we think is important to at least have as an option, right. So we think there's that potential for home infusion to provide that option. On some of your specific questions, there are -- home infusion is a well-established industry actually. There's several national players, many regional players as well. So we're not recreating the wheel on home infusion, right. We've had several conversations with national home infusion providers. They're excited about the potential for brexanolone in this marketplace, and we're having those discussions. And in terms of your sort of investments and infrastructure that's required, really, what it would entail for us is partnerships with home infusion providers, right. They have nurse services. They would go out to the patient's home to deliver brexanolone. And so that's really the infrastructure we would build in addition to the sales force that I talked about before. So we think there's potential with home infusion, pharmacy model, home infusion site model. We'll continue to explore that up and through launch. And our goal again is to deliver multiple sites of care to patients at the time of launch.

And our next question comes from the line of Laura Chico with Raymond James.

This is [Hamza] on for Laura Chico. Could you perhaps talk a little more about the mechanistic rationale for exploring GABA modulation in the bipolar setting? We noticed a recent meta-analysis published by a French group that GABA levels were diminished in patients with unipolar depression versus healthy controls but more normalized in medicated bipolar patients. As you're thinking about your upcoming bipolar study, maybe you could remind us about the mechanistic rationale and perhaps how you'll address some of the heterogeneity associated with bipolar disease.

I'll turn this over to Steve.

Thanks for the question. One of the things that we look at when we think about bipolar disorder is, we think of it from a clinical perspective. And we know that in a depressive phase, the patients with bipolar disorder often respond potentially to -- the standard treatment is antidepressants and a certain percentage of those patients will respond. What's intriguing about the profile of SAGE-217 and other GABA-positive modulators is their potential that we've demonstrated to improve sleep, and we know the circadian disruption is a major feature of patients with bipolar disorder. And from a preclinical perspective, drugs in our class, and we have a lot of data on this, are also antiepileptic, and we know that many of those drugs also are mood stabilizers. If you put together the clinical profile that's emerging for SAGE-217, you see antidepressant activity, which seems to be inherent in the class, has potential to improve sleep, a really important issue in bipolar disorder, regardless of which pole of the bipolar disorder they're experiencing. And lastly, the potential -- again, this is a little bit speculative of the relationship between being antiepileptic and mood stabilizing, we think that feature set together is one that could be potentially very impactful with bipolar disorder.

And our next question comes from the line of Danielle Brill with Needham.

I was just wondering if you could provide some more detail on plans for the designs of the upcoming insomnia and bipolar depression trials? Are you -- any plans for placebo-controlled trials? Or should we expect the open-label proof-of-concept strategy that's worked so well for you?

This is Jeff. I think, in general -- I think -- let me start with sleep. I think it's pretty clear that the drug at least in the first study was active. And I think that alone indicates we already have a sense of how the drug works, so we have enough to go on with respect to designing a placebo-controlled patient-rated outcome study. I think, in general, our use of methodology studies is not really -- and I think not to get open-label data, but to provide information about how to design Phase II programs. I think with respect to bipolar, one could argue -- if this were a different mechanism, one might argue simply on the issue of triggering cycling that you might need to do open label. But I think if you listen to Steve's earlier commentary, we believe that profile of this drug because of the compound combines what we think potentially is a mood effect and an anticonvulsant effect may make it -- I think -- and plus the data we've already seen with the mechanism indicates that we have enough to go on in order to begin a placebo-controlled trial for bipolar. So that -- so remembering that the sleep was placebo-controlled as well. So I think -- and the depression was placebo-controlled, mechanistically, we think we have enough information to design a credible Phase II study. I think the issues that we might want to consider are ones that are more heuristic, and we won't have -- that will help us think about, which is how long do we treat for bipolar. And I think there because -- simply because I think the risk -- or people perceive risk of cycling, that study may be a little bit longer in duration. And I think also because of the types of drugs that often bipolars find themselves on, we may want a little bit longer time. But beyond that, we think we have more than enough data for both sleep and bipolar to begin placebo-controlled studies with a reasonable power and size. Beyond that, I think the design we'll make -- we're still thinking those through. We're intending to start those obviously this year. We haven't got firm [dates on], but we think those will be well powered studies.

And our next question comes from the line of Tim Lugo with William Blair.

You mentioned that Parkinson's is going to be more of a chronic dosing usage. Should we also expect that for the sleep and bipolar on next studies? And when do you start building out the long term kind of safety profile of 217 and a more chronic dosing pattern?

So sleep, obviously, is an -- insomnia program typically will be 7 to 14 days of therapy, which closely dovetails, frankly, with what we're doing with -- in the mood disorders. Parkinson's is probably going to the first larger chronically dosed study. We haven't really put the final touches on that. But you're talking somewhere between in the neighborhood of at least 4 to 6 weeks, I'd say, for Parkinson's. And there, we'll start acquiring some of the longer term safety data. All we can say about that today is, obviously, the data we've seen has been very reassuring. The animal data for this product at the doses we're treating don't show tachyphylaxis or withdrawal phenomena. We've not seen rebound. So we're pretty comfortable about so far moving it forward. And so as I say, though, the first chronic use will be Parkinson's and that will begin this year. And that will set the stage for the chronic use of the drug.

Okay. And for Parkinson's, do you need to have a major impact on a movement disorder scale or teasing out something like anxiety or depression in Parkinson's patients? Will that be enough to move forward?

Basically, I think we'd like to replicate what we've seen in the cohorts, which is a rather robust change in the UPDRS tremor scores Part II and Part III. We believe the -- Steve has said this earlier, I'll just repeat it. We believe the drug will have activity across other domains of Parkinson's where there may be benefit, anxiety and sleep in particular as well -- and potentially mood. But we think -- we're going to be targeting what we think will be an impact on tremor-resistant Parkinson's with somnolence which we think is an important and reasonably well articulated pathway that we can follow.

(Operator Instructions) And our next question comes from the line of Gary Nachman with BMO Capital Markets.

On brexanolone for PPD, are you expecting a 6-month priority review after you file? And are you anticipating a panel for it since it's the first product that would be approved for PPD?

Gary, thanks for the question. By and large, as you know, those are -- we don't know. We -- because it's breakthrough, we're hopeful we'll get priority review with respect to a panel. The FDA always reserves the right to have a panel, especially as you point out with a new indication and a new chemical entity with a new mechanism of action. So we won't know any of those questions until we have the file and the file is accepted. But as you know, given the fact it is breakthrough, it is eligible for priority review. So we're hopeful that we'll receive it. But beyond that, we won't have details until we actually file the NDA.

And then when will you look to start hiring the reps to prepare for the launch? Would you potentially consider doing that at risk? And then maybe just comment on the 200 reps. What percent of OB/GYNs and psychs will you be able to target with those?

I'm going to turn that over to Mike.

Gary, it's Mike. So on the rep side, the targeting aspect of this, we will focus on the OB/GYNs and psychs as you said, right. We're going to continue to look at our physician segmentation. I'm not going to get into exactly the percentage that we are going after, but we looked at the data, we feel comfortable with that division of the labor between the 250. The key account managers focus on the hospital base settings. So as you think about the hospital not being a site of care, we want the key account managers focused on breaking down barriers that will exist in the hospital, define that location for patients to get treated in the hospital if that's where they so choose. And then our 200 sales reps focus on OB/GYNs and the psychs, it's really about a lot of focusing on educating on brexanolone. And we think that coverage model that we've got with that 200 is going to be very sufficient and help us reach the goals that we have for brexanolone.

Okay. And then one last quick one on 217 for MDD. Would you guys consider doing additional studies in mood disorders like GAD and panic as part of the overall program? I think you mentioned that in the past, Jeff, maybe considering an even broader indication than just depression.

I think it's fair to say that I'm of the school and this is an area of psychiatry that's always been open for discussion -- although I think I'm right, that these are all related disorders. The GAD, panic, some of the other [affective] disorders fall under the affective spectrum. As a company, we've chosen to focus on the disorders for this year where we think there's a significant overlap in symptom presentation. So that's why you're seeing our proposals for bipolar depression, postpartum depression and major depressive disorder. I think for this year that we have enough to tackle. But I think it's fair to say that if the drug continues to show activity, one can anticipate that we would look for activity across other potential indications in the affective spectrum, but not this year. Let me just turn something over to Steve for a minute, too.

One other thing that's important to remember about SAGE-217 is that it's a drug that we have been already awarded the patent in composition of matter for it. So we have patent protection now through 2034. That gives us a lot of opportunity to develop the label over time. And so, Jeff is identifying which kinds of things we want to tackle first based on the data that we've collected. But certainly, the mechanism may very well support many of the indications that you are talking about.

And our next question comes from the line of John Newman with Canaccord.

A question for Jeff. Jeff, I'm curious on looking at Slide 16 where you're talking about different opportunities for SAGE-217. What I'm wondering is, in terms of insomnia, do you think that you might be able to use some of the data regarding insomnia from the other studies that you're running for 217 given that it's often the component when you push forward with the insomnia program and, ultimately, with the filing, hopefully?

Thanks, John. I think the data we've had from the other studies, I don't think it's systematic. But I think it's incumbent on us to really do the right study that's designed specifically for sleep parameters. I think -- I would view it sort of differently. We conducted the insomnia study. We had a lot of anecdotal reports, not anecdotal, but reports from the other studies about sleep benefit. And so the PSG study was a way to really hone down on what the potential benefit was. And I think we were reassured and, in fact, a little pleased to see the impact on sleep efficiency and total sleep time, which we think is the most important variable for people who can't sleep. You're not seeing middle, you're seeing decreased wake after sleep onset in terms of total time, et cetera. So we think that's where the benefit is -- where we hope to see it. I don't think the design of others -- I believe that design of other studies will not be daunting. I think the effect is likely to be consistent. So I don't think we -- I think the data from the other studies is useful, but I don't think it's probative enough. I mean, [it could be supportive]. Finally, I think the other piece that you have to remember is that we might be able to use those findings and other studies potentially in a label, say, for depression, where we can talk about this mechanism benefiting not only mood, but sleep. And that's one of our goals. But beyond that, I think we will probably -- we will need to conduct a classical sleep study program with a patient-rated outcome and at least one polysomnographic program and the usual safety data that is required.

Thank you. And this does conclude today's Q&A session. I'd like to return the call to Mr. Jeff Jonas for any closing remarks.

Well, firstly, thanks, everybody, for your attention today. I really appreciate your support. We're looking forward to a really exciting year for 2018 with the company poised for commercial launch, a lot of intermediate term and long-term catalysts that we're looking forward to. And so again, we're hopeful that 2018 will be a great year. We're beginning the year in great financial shape. So I want to thank everyone, and we're all excited at Sage to continue to report our progress over the coming quarters.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.