SAGE Therapeutics Inc (SAGE) 2018 Q1 法說會逐字稿

Good morning, and welcome to Sage Therapeutics First Quarter 2018 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 the property of Sage Therapeutics, and recording, reproduction or transmission of this call without expressed 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 first quarter 2018 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 Investor & Media section of our website at sagerx.com.

On Slide 2 of the presentation is the agenda for today's call. We will begin this call with prepared remarks by Dr. Jeff Jonas, Chief Executive Officer; Dr. Steve Kanes, Chief Medical Officer; Mike Cloonan, Chief Business Officer; and Kimi Iguchi, Chief Financial Officer. We'll be joined for the Q&A session by 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 potential NDA acceptance, regulatory approval and commercial launch of our proprietary formulation of brexanolone; our commercial launch plans; our planned regulatory activities in the EU; our clinical development activities related to our product candidates; the potential of our business and our current product candidates and for advancing and expanding our pipeline; the potential for expedited development as a result of Breakthrough Therapy designation; our estimates as to the prevalence of certain indications; our financial projections, including our cash runway; 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.

And with that, I would now like to turn the call over to Jeff.

Thanks, Paul. Good morning, everyone, and thank you for joining us on our call today. It's been a busy start to the year, and we're proud of the progress we've made at Sage in executing against key priorities for 2018.

Please turn to Slide 4. Sage is focused on developing and commercializing novel medicines to treat life-altering CNS, or central nervous system, disorders where there are either no approved therapies or inadequate therapies. Our goal is to build a multinational CNS company based on novel science, innovative approaches and differentiated medicines with a clear focus on maximizing patient benefit.

Please turn to Slide 5. At the time of our initial public offering in 2014, we had 1 therapeutic candidate in clinical development, our proprietary formulation of brexanolone. Today, that compound is on the cusp of potential commercialization if approved as the first-ever pharmacologic treatment specifically indicated for postpartum depression. And we are advancing a broad pipeline of wholly owned development candidates, including brexanolone IV, that have the potential to be developed in indications that impact over 300 million patients worldwide.

On Slide 6. We believe Sage is uniquely positioned within the CNS space due to our near-, intermediate- and long-term opportunities. In the near term, we are preparing for potential product commercialization and launch. For the intermediate term, we are rapidly advancing SAGE-217 into middle- to late-stage clinical programs in a number of indications. And in the long term, we are generating a robust development pipeline of new classes of CNS therapeutics. We have also made it a priority to build a strong balance sheet, and our over $1 billion in cash on hand will help us execute as we work to build Sage into a leading multinational CNS biotech company.

Turning to Slide 7. This is our broad, wholly owned pipeline focused in CNS, including areas of depression, neurodegeneration and epilepsy, led by brexanolone intravenous, or IV, for which we recently submitted a new drug application to the FDA. Beyond brexanolone, we look forward to moving 3 additional drug candidates forward through 7 clinical programs, several of which we expect to initiate this year. Steve Kanes will walk you through our clinical programs in more detail in a moment.

Before I turn the call over to Steve, I do want to highlight a key driver of our success, which is seen on Slide 8. Sage is distinguished by its unique product engine. Our current focus is on exploring both positive and negative modulation 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 with a deep and broad pipeline, and we look forward to continue advancement of these therapeutic candidates into development.

In conjunction with our discovery, clinical and regulatory efforts, we have made important progress in growing Sage as we seek to take on these big opportunities. Key to this growth is sustaining and evolving our culture, which we believe is a core strength and key competitive advantage at Sage. This is evident in some of the interests we are seeing in the marketplace. For example, we are currently hiring our team of regional sales directors. And for the 27 open roles, we received, in a matter of days, over 2,500 applicants. Even with the more than 100% headcount growth we've experienced in recent years, our plan is to increase to 800 employees by the end of 2018. Living our core values and scaling the company with a one Sage mindset is key to building a unique and differentiated company and is of critical importance to us and the leadership team. Later on the call, Mike Cloonan will discuss progress in expanding our commercial and medical affairs organization and efforts as we hope to follow through on our product candidates' potential to make positive impacts on the lives of patients and families, beginning with PPD.

Our focus at Sage continues to be on improving patient care through innovation. Driven by our science and commitment to patients, we are accomplishing what we set out to do at our funding in 2010, and we're just getting started.

I'll now turn the call over to the rest of the team for more detail on our updates and our financial results before we take question-and-answer. First, I'll turn the call over to Steve. Thanks, everybody.

Thanks, Jeff, and good morning. I'd like to provide an update on our broad CNS portfolio, which is led by 2 Breakthrough Therapy designated product candidates: brexanolone IV and SAGE-217.

On Slide 9, in developing our unique mood disorder pipeline of product candidates, we have sought to challenge the traditional modalities of neuropsychiatry research and practice, where there have been little to no major advances in recent decades. At Sage, we have focused on taking on this challenge the exploration of new treatment paradigms for depression, including the potential for developing a groundbreaking approach based on a target treatment profile that is profound, durable and with rapid onset effect that's well tolerated.

Please turn to Slide 10. Our proprietary formulation of brexanolone IV has completed Phase III clinical development for postpartum depression, which is a common biological complication of childbirth. Brexanolone IV has the potential to be the first therapeutic ever approved for PPD, an indication for which there is significant need for new treatment options. Detailed data from the Phase III Hummingbird program studying brexanolone IV and PPD were recently presented at the Annual Meeting for the North American Society for Psychological Obstetrics and Gynecology, or NASPOG; and the American College of Obstetricians and Gynecologists, or ACOG. Slide 10 summarizes our Phase II and Phase III data in PPD. We believe new treatment options for PPD could transform treatment of this disease. We also plan to feature these data at additional upcoming medical meetings and in journal publications.

In April, we submitted our first new drug application, or NDA, to the FDA for brexanolone IV in PPD. We expect to hear from the FDA regarding potential filing acceptance of the NDA in June. We are in the process of preparing for potential commercial launch of brexanolone IV and PPD in the U.S. in the first half of 2019 if the product is approved by the FDA. Mike will provide more detail on our progress later in the call.

Turning to Slide 11. For SAGE-217, our next-generation positive allosteric GABA receptor modulator, we have another opportunity if we're successful in our development efforts to deliver a truly new therapeutic profile to patients. In December, we announced promising data from a Phase II placebo-controlled study of SAGE-217 in major depressive disorder, or MDD. Slide 11 summarizes our data to date in MDD, including an open-label pilot study and a placebo-controlled trial in 89 patients, where we saw a highly statistically significant result at the primary endpoint following 2 weeks of treatment. We plan to present more details on these results at upcoming medical meetings in May, including the Annual Meeting of the American Psychiatric Association, or APA; and the Society of Biological Psychiatry, or SOBP. In light of these results, SAGE-217 was granted Breakthrough Therapy designation by the FDA, offering a potentially expedited development path that may include increased interaction and guidance from the agency. We look forward to a breakthrough meeting with the FDA to discuss the design of the SAGE-217 program in depression. Additional trials are expected to initiate in 2018. We look forward to updating you on our plans following discussions with the agency.

On Slide 12. We're also exploring SAGE-217's potential across a number of other indications, including other mood disorders, Parkinson's disease and sleep disorder, with a number of Phase II studies expected to begin this year.

Turning to Slide 13. We announced the results of a positive placebo-controlled Phase I/II trial of SAGE-217 in healthy volunteers using a model of insomnia. SAGE-217 achieved statistically significant improved sleep efficiency compared to placebo and was generally well tolerated. These results offer us the potential to explore unique development opportunities in disorders impacted by sleep, including mood disorders and our other pipeline indications. We currently have an ongoing placebo-controlled Phase II trial studying SAGE-217 in PPD. This trial, called the Robin Study, is expected to enroll approximately 140 patients with top line results expected in the fourth quarter of this year.

On Slide 14 is a summary of our open-label, proof-of-concept data for SAGE-217 in Parkinson's disease, where motor, mood and sleep disruption can all contribute to significant disease morbidity. Based on the exploratory findings, we are preparing to initiate a placebo-controlled Phase II trial in the second half. We plan to study 4-week dosing of SAGE-217 in the setting of Parkinson's disease patients with residual tremor and anticipate enrolling approximately 130 patients.

Please turn to Slide 15. Sage is also evaluating SAGE-324, a novel neuroactive steroid that, like brexanolone and SAGE-217, targets synaptic and extrasynaptic GABA receptors. This molecule is currently in the pre-IND phase. And if nonclinical studies and Phase I development are successful, we expect to study SAGE-324 as a potential therapy for epileptiform disorders, essential tremor and other indications involving GABA hypofunction. We now plan to initiate Phase I development for SAGE-324 in the third quarter of this year.

Please turn to Slide 16. Sage is also pursuing development of a novel class of NMDA receptor-targeting compounds that preclinical research strongly suggests may have potential in the treatment of a range of cognitive, neurological and behavioral symptoms. The most advanced compound from this portfolio is SAGE-718, a novel first-in-class positive allosteric modulator of the NMDA receptor currently in Phase I clinical development. Given the pharmacokinetic profile of SAGE-718 observed in the Phase I single-ascending dose study, we plan to further evaluate the safety, tolerability and PK/PD profile of 718 in a Phase I multiple-ascending dose study, which we plan to initiate this quarter. If Phase I development is successful, we plan to study SAGE-718 in neurological indications associated with a variety of cognitive, neurological and behavioral symptoms.

Our second NMDA positive allosteric modulator candidate, SAGE-904, is currently in IND-enabling studies.

And with that, I would like to turn the call over to Mike to discuss our progress towards potential commercialization.

Thanks, Steve, and hello, everyone. Thank you for joining our call today. You may have heard us speak on our pre-commercial efforts on prior calls, but I'd like to take the opportunity to provide a more detailed update on our progress to date.

I joined Sage a little over a year ago for the unique opportunity to potentially launch a first-of-its-kind product, brexanolone IV, for postpartum depression and to build world-class, global, commercial and medical affairs organizations driven to change the lives of patients and families. We have made significant progress in preparing for our first potential product launch and in transforming Sage into a commercial-ready biotech company.

Turning to Slide 17. Steve spoke earlier about the clinical profile of our proprietary formulation of brexanolone, which, if approved, will offer us the opportunity to provide the first therapeutic indicated for patients with PPD. Similar to Sage's approach to R&D, we are taking an innovative approach to our launch strategy, centered on customizing the traditional launch playbook for the uniqueness of both this product candidate and PPD indication, ultimately with the goal of brexanolone IV becoming the treatment of choice for women with PPD, if approved.

To set ourselves up for success, we are focusing on the 4 pillars of our go-to-market strategy, which are reducing the stigma of PPD; building a patient support model designed to streamline the patient journey from diagnosis through treatment of PPD, including clear pathways to care; establishing the potential for site-of-care optionality for patients with PPD; engaging with payers to raise awareness of PPD and the brexanolone product profile; and finally, building a world-class team of professionals at Sage, including the commercial and medical affairs groups. We've already made important progress across these 5 areas of execution. First, let me comment on the disorder itself.

Turning to Slide 18. PPD is a serious condition that involves a range of symptoms from feelings of fear and hopelessness to crippling isolation and a general sense of not being whole. We estimate that PPD affects greater than 400,000 women in the U.S. each year. And without proper screening, more than 50% of PPD cases may go undiagnosed.

Turning to Slide 19. The underdiagnosis of PPD is motivated by several factors, but chief among them are lack of sufficient treatment options and stigma of the disorder. We are working to disrupt the conventional wisdom about PPD, reinforcing that it is a medical complication of childbirth and instilling the urgency to identify the disorder in patients. We believe this may lead to a shift in the conversation about how PPD is addressed.

With respect to streamlining the patient journey and building our patient support organization, we're leveraging existing industry best practices while also innovating on a traditional model to construct a patient- and family centric approach. Currently, there is a lack of clear pathways to PPD care because there are so many touch points across healthcare providers. Oftentimes, patients with PPD do not know which healthcare professional they should see for support, and it can lead to many patients falling through the cracks. We are establishing a robust patient support model, including plans for in-house case management to deliver seamless and novel patient support. Given the product profile of brexanolone IV and the potential shift in PPD treatment paradigm, we believe a high-touch patient support program is critical to ensure a high-quality patient experience. We have identified a site in North Carolina as headquarters for the national patient support center where our case managers will quarterback a comprehensive strategy and process for delivering brexanolone IV to PPD patients.

Sage will also partner with a leading patient support services organization to deliver reimbursement verification support and financial assistance, where permitted. We are also advancing our strategy to deliver a family centric support model with various site-of-care options for patients. For example, we are progressing work towards development of a national network intended to provide high-quality and consistent service to support home infusion or other sites of care for brexanolone to patients across the U.S. After a thorough evaluation process, we plan to establish a robust distribution network with select home infusion companies that are best equipped to deliver brexanolone IV and related high-quality nursing services to patients. We expect to give further updates on the progress of establishing the network on future calls, but our expectation is that this will be in place at the time of launch.

In terms of payer engagement, we continue to engage in permitted discussions with commercial and Medicaid payers to raise awareness of PPD and on the value proposition of the brexanolone IV product profile. Many of these payers appreciate the unmet need in the screening, diagnosis and treatment of PPD, and we will need to continue our educational efforts to ensure the unmet need and the patient experience are well understood to help establish strong coverage for brexanolone.

Further, as Sage advances towards a potential product launch, we have continued to grow the commercial organization, including the addition of senior leaders across marketing, sales, market access and patient support services. We have initiated the field team build with the addition of the national sales directors and national and regional payer account directors across the entire organization. I am very pleased with the quality and caliber of the talent we've been able to bring into Sage. We really are building an outstanding team.

Like in the U.S., we are continuing to think very strategically about the investments we're making in Europe. There, we are also focused on conducting market research, examining the existing treatment paradigm as well as educating payers, where permitted, about our Phase III data. We anticipate receiving scientific advice from the EMEA on our brexanolone IV and PPD program in the second half of this year, which will guide our registration plans in the EU as well as the timing of the build of our EU footprint.

I hope all of this work gives you an idea of our efforts to prepare for Sage's first product approval and launch if brexanolone IV is approved as well as the significant opportunity to create a new standard of care for PPD. As we approach the first half of 2019, we will remain laser-focused on successful execution of our strategies to potentially deliver a new family centric treatment option for patients with PPD.

As a broader initiative, our medical affairs team has been highly focused on disease education. We are particularly focused on providing education to OB/GYNs about PPD. While other providers, including psychiatrists, are important, the OB-GYN is in a unique position to identify, screen and treat PPD early. We are establishing support of digital and live medical education programs on screening and the management of PPD among a broad base of healthcare providers. We are conducting ongoing, broad, multichannel disease awareness efforts via digital women's health apps, web-based adaptive education and advocacy partnerships to reduce the stigma of PPD and help patients and their families discuss symptoms of PPD with healthcare providers. And we are collaborating on educational initiatives with top academic societies, including ACOG.

And now I'll turn it over to Kimi to review our financials.

Thanks, Mike. As you heard from the team, the company has made great progress so far in 2018. Let me now walk you through the financial results for the first quarter and financial guidance.

Slide 20 outlines our financial results. We ended the first quarter with a strong balance sheet with $1.1 billion in cash, cash equivalents and marketable securities. That's compared with $342.6 million at the beginning of the year. In February of this year, we raised $632.2 million in a follow-on public offering. We are confident that the strength of our balance sheet will allow us to focus on the execution of critical activities. The key drivers include the continued build of our commercial infrastructure to support the potential launch of brexanolone, while also giving us the flexibility to maximize the potential of our broad portfolio.

Turning to the rest of our financial results for the first quarter. Research and development expenses increased to $49.3 million in the first quarter compared to $45.2 million for the same period of 2017. The increase reflects the growth in ongoing R&D efforts focused on identifying new clinical candidates and additional indications of interest. We also continue to build the R&D organization to support the growth in Sage's pipeline and operations. These increases were offset by the completion of a Phase III clinical development of brexanolone and the Phase II clinical trial of SAGE-217 that were ongoing in 2017.

General and administrative expenses increased to $28.8 million in the first quarter compared to $12.3 million for the same period of 2017. The increase is a result of the continued investment in the preparation for potential commercial launch and the build of the organization. We reported a net loss in the first quarter of $74.6 million compared to a net loss of $56.8 million for the same period of 2017.

Turning to guidance. Based on our current operating plan, we anticipate that our cash balance will enable Sage to fund its operating expenses and capital expenditure requirements into 2020. We expect that our operating expenses will increase year-over-year in 2018 to support the ongoing investment in the portfolio and the potential product commercialization of brexanolone in PPD. We're pleased with the progress that we've made to date in building the company, and we thank everyone for their support.

As I said, we're off to a good start in 2018. And Slide 21 summarizes our upcoming milestones. For brexanolone, we anticipate the potential acceptance for filing of our NDA submission this quarter, and we continue to plan for a potential commercial launch in the first half of 2019. We also expect several trial initiations across our pipeline, including SAGE-718 in a Phase I multiple-ascending dose trial; SAGE-324 in Phase I development; and multiple trials of SAGE-217, including MDD, bipolar depression, Parkinson's disease and in sleep disorders. We are also anticipating data readouts from our Phase II placebo-controlled trial of SAGE-217 in PPD in the fourth quarter of 2018 as well as the Phase I multiple-ascending dose trial of SAGE-718 in the second half of this year. The progress we expect to make in the coming months will be central to our goal of becoming a multiproduct, multinational biotech company.

With that, we'd now like to open the call for Q&A. (Operator Instructions) Operator?

(Operator Instructions) Our first question comes from the line of Salveen Richter from Goldman Sachs.

Can we just get your updated thoughts here in terms of options for a MDD pivotal program? And when is this FDA meeting? And what are the additional studies that you're planning for 2018?

Yes. So yes. This is Steve, the Chief Medical Officer. We are planning essentially to replicate what we've done already. We're looking at a placebo-controlled program where we keep it very basic. The approach that we've taken in Phase II was to do a 1:1 randomization and really look at the doses that we've studied with the same kinds of endpoints. So if you recall, 2 weeks of treatment, 30 milligrams a day in patients with major depressive disorder. The specifics will be worked out during the meeting, which is upcoming in the -- in this half of the year.

Yes. We should have -- we intend to have a guide -- we'll be able to provide guidance by before the end of this half. And otherwise, I think what Steve said summarizes nicely. We think the data we have should support a pivotal program. And again, we think we'll be able to communicate this certainly by the end of this half.

And then just a second question around this patient support model that you're going to implement around PPD. How should we think about the process here and in terms of diagnosis and then getting treatment in the hospital versus the home and how reimbursement will play a role here as well?

Yes. This is Mike Cloonan, so I'll take that question. Let me start with the patient support program, and -- so this is something we really are proud of initiating and making this a new and innovative model, I think, as it relates to PPD and the treatment today. And it will be really a hybrid model, right. We have an opportunity to build an in-house case management function and capability that will quarterback the process. Because when you think about the product profile of brexanolone, the 60-hour continuous infusion and what you referenced from a site-of-care perspective, there is some complexity, right, to brexanolone. And we believe with a high-tough patient support model, we'll have an opportunity to really shepherd the patient through the process, work closely with the healthcare provider to make sure the patient experience is really one that we're aspiring to achieve for them and the healthcare provider. And as you think about your question around the home infusion versus the hospital setting, right, from a site-of-care perspective, really our strategy revolves around creating optionality for both patients and healthcare providers that those options will be opened, both the home infusion side but also the in-patient setting. But there may also be some other options in between, hybrid options in terms of sites of care like outpatient settings that we're also investigating. And again, the key really is creating optionality for patients, their families and healthcare providers that those avenues are open to them and ultimately with a decision between the healthcare provider and the patient.

Our next question comes from the line of Gary Nachman from BMO Capital Markets.

First, a couple on the commercial plans for brexanolone. Are you still planning to hire about 250 reps? I think you had said 50 key account managers in hospitals and 200 for OB/GYNs and psychs. And when will you start that hiring? And will you give contingent offers to them? I'll just follow up -- and then could you provide some updated thoughts on pricing based on the conversations you've been having so far with payers?

Sure. So yes. This is Mike again. I'll take the reps question and the offers as you mentioned. So you have it right in terms of the headcount that we've articulated in the past. So it is the 50 key account managers that will focus on the hospitals and the inpatient setting, and then we'll have 200 reps focused on the outpatient side, focusing on OB/GYNs and psychiatrists. The timing of the hiring, right, we're still working through those plans. But as you heard on the call earlier, we did discuss -- we've started that process already. We've initiated the build of the sales force by adding our national sales directors. We also have a head of sales. And as Jeff mentioned on his call, we've opened up roles for the regional business directors, which are 27 roles, and we've had over 2,500 applicants, right. So we are starting that build today so that we are ready to launch as soon as that PDUFA date comes through and that we are fully approved with brexanolone. So -- and from a contingent offer, we -- that's something we will investigate, but we really need to be ready at the time of launch, right. So we're -- in terms

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to declare what the pricing is going to be, right. We'll give more guidance as we get closer to

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discussions with payers have gone very well to date, right, but we have not engaged on pricing yet. It's really been focused on disease awareness and the brexanolone product profile and then understanding for them what's important. And what I can tell you is that, for them, it's making sure appropriate patients are treated with brexanolone. And we think we're very much aligned to the payer feedback.

Actually this is Jeff. I think that Mike summarized it pretty well. We do think there'll be a compelling value proposition for the drug. We think that the ability to get the majority of patients in remission in 2.5 days will stand up well in terms of value pricing, and I think -- Mike's being a little modest. I think we've had very good reception from the payers with respect to the target product profile. But beyond that, I think, as Mike said, it's probably premature for us to comment on any price point at this time until approval comes along.

Okay. And one quick follow-up on 217 for MDD. Will you wait to see the Phase II data for 217 in PPD before you decide what you'll do with MDD? Or can you start a Phase III MDD study before you have that data?

No. We will intend to start the MDD before the completion -- before we read out on PPD. They're not related that way. There aren't any -- if you look at the data we've had to date and you look at the consistency across both the intravenous formulation and the oral, the pharmacodynamics of response of safety profiles haven't really given us major -- haven't given us a major cause for concern. So we don't really think that there's any other -- anything that we need to wait for before we start the MDD program. And obviously, our intent is to start that as soon as we have -- or we're able to issue a clear guidance to The Street.

Our next question comes from the line of Brian Abrahams from RBC Capital Markets.

I guess another question on home infusion. Is there any additional regulatory work you would need to do around permissiveness for home infusion safety, for instance, anything on the label? Are there any sorts of restrictions FDA could impose that would prevent the availability of home infusion as a potential site-of-care option for brexanolone? And I have a follow-up.

So typically the answer to that is no. The site of care is really determined by the patients and the way to appropriately administer the drug and then putting in place the appropriate kind of supervision and monitoring of patients, and this is a very established sort of form of care. It's used broadly in many medical areas. Oncology is a great example, but there are many others. And what we're looking to do is tap into an existing structure that's been used and potentially growing. It's preferred by patients. It's an area that allows -- it's a site of care that allows patients to maintain the relationships with their family and be in the most comfortable setting possible. So in general, the answer is no. And if you look -- if the drugs that are often given in home infusion setting, there isn't any particular restriction. It's really based on physician discretion.

That's really helpful. And just a follow-up on 217. Appreciate you outlining sort of the basics schematics of what a trial -- pivotal trial design might look like and the duration there. What's your sort of base case for duration of follow-up that might be necessary just given the unique sort of 2-week finite duration and how retreatment for patients who relapse might be investigated in a pivotal program?

So there's no -- one of the points that we always have to emphasize is that there is really no regulatory basis for requiring a retreatment in an episodic disorder that reoccurs. So that, we don't believe is a regulatory requirement. We, however, understand that the field may be interested in this. And that's something -- we don't believe that we'll -- we don't believe that a retreatment program for a disease that comes and goes is going to be required. However, we will probably look to 1 to 2 months of follow-up to make sure that patients remain stable. That's the observation we've made across all the 4 placebo-controlled studies in the mood disorder program, so I think that's what we'll be looking for. It is -- I have to say, though, that we know the field will always be interested in this because we think -- we hope that this drug, 217, as well as PPD will introduce a new paradigm in the treatment model for mood disorders. And that is the ability for patients not to be on chronic therapy but instead to be treated episodically only when symptoms arise. And we think that, that may be one of the most compelling potential advantages of this particular mechanism of action. So at some point, we're likely to explore that, but I don't anticipate that, that would be a requirement, a long-term requirement in terms of a pivotal program.

Our next question comes from the line of Cory Kasimov from JPMorgan.

This is Shawn on for Cory. Just a quick one on the poster presentation for moderate PPD at ACOG. So it looks like the patients on the placebo arm had sort of a very large reduction in their HAM-D score from day 7 to day 30, which prevented that big separation at this time point. So just wondering, is this something that you expected based on the natural time occurrence of moderate disease? Or was this sort of surprising for you?

So if you look at our overall data, which is kind of the way you need look at a program, our overall placebo response rate is very much in line with sort of industry standards. However, if you look at any individual trial, placebo response will vary. What's most important about the PPD data and pretty much any data in this field is to look what happens to the patients in the treatment arm. And in all of the trials that we've conducted to date, both with brexanolone and with 217, those patients remain remarkably stable. And that translates into what is the true benefit for patients. Placebo will bounce around the idea -- the notion that we're able to really demonstrate very robust rapid effects at the primary endpoint and have those effects be maintained is the most important part of our data.

Okay, got it. And then one more follow-up, so -- regarding 217 in PPD and the data coming in the fourth quarter. So what are your expectations around this data, just, I mean, thinking of the PK/PD profile and the structure to compound, differences between 217 and 547? And as based on the data we've seen both in PPD so far for brexanolone and in MDD, is there any reason to think that the patients, with the understanding that the dosing is done over 2 weeks as opposed over a quick infusion, is there any reason to think that the patients would respond differently sort of from the respect of a magnitude of effect than they did with 547 in PPD?

So this is Jeff. Yes. It sort of goes back to your other question, and Steve's answered the other question. If you look at the pharmacodynamics of the response between the PPD patients with IV and then the MDD patients with the oral, the time course looks pretty comparable, and they look almost super imposable, I think it's fair to say. And I think that is likely due to what we believe is a mechanistically driven response. You're seeing 2/3 of patients thereabout responding very robustly. So based on the data we have, we don't see any reason to suspect that PPD will behave differently when administered -- treated with an oral with 217. And of course, that was the fundamental thesis about why we designed the trial the way we did. The data speak, and you have to listen. And what they're telling us is that within these mechanistically driven responses that they look to be pretty stereotype, which is good. So we're not -- honestly, you have the standard trial risks going to larger number of centers, et cetera. But so far basically, you have to call in 4 placebo-controlled studies in mood disorders that the curves on the patient side and the response rates have all looked fairly similar, if not identical -- almost identical.

Our next question comes from the line of Matthew Harrison from Morgan Stanley.

I guess 2 for me. Can you just talk a little bit more about the Parkinson's study and what you hope to achieve in that 4-week time period? And then in terms of home infusion for brexanolone, I mean, any reformulation work or things that you need to do to provide -- I've heard about these sort of -- I want to call them like balls or something that are safer for home infusion. I don't know if there's work that needs to be done there from a manufacturing standpoint.

Yes. So this is Steve. First and foremost, the thing we want to demonstrate with Parkinson's is we want to replicate what we've demonstrated in an open-label trial and a placebo-controlled trial. This is following our general approach to clinical R&D where we sort of first demonstrate the appropriate patient population, what effect we need to see and then make sure that we can lock that in a placebo-controlled trial before making any decisions moving forward. So that's the next goal. And as soon as we have the study design specified, we start the -- we'll share those details. As far as the home infusion device, there are some various standard devices that are used for home infusion, typically fanny packs, but don't -- our program contemplated this through its development. And no, there's no need for specific reformulation in this regard.

Our next question comes from the line of Tazeen Ahmad from Bank of America.

Wanted to get a sense on your NMDA program. Relative to the programs that you've already got in the clinic and you are diversified already with many different programs, how are you thinking about the indications that you might want to pursue?

This is Jim Doherty. I'll take that question. Yes. So we -- we're excited about the opportunity we have in NMDA, and I would say the simplest way to put it is we think it offers us some complementary opportunities to engage to bring relative to what we're doing with the GABA system itself. We're looking at areas where loss of NMDA receptor function or a reduction of NMDA receptor function are related to disease. And so certainly areas like neurodegenerative disorders, Huntington's disease, Parkinson's disease. And of course, based on the preclinical evidence for the role of NMDA receptors, we're looking for the ability to enhance cognitive performance, and there are a number of ways to do that certainly associated with neurodegenerative disease but also more broadly.

I'm sorry. I couldn't catch the last part.

So I was saying it's certainly related to cognitive improvement in neurodegenerative diseases but also more broadly than that.

Okay. So would there be indications that you're currently pursuing now that you might also want to pursue with the NMDA program?

So they are different or related. Complementary is probably the right word. Complementary indications for the NMDA program compared to what we're doing for the GABA program.

I think it's -- sorry. This is Jeff again, I think it's fair to say that there won't be any identical indications at this point. We're likely to focus -- we are going to focus, presuming when we clear the multiple-ascending dose program, multiple dosing that, looking at indications, as Jim says, with this NMDA hypofunction where cognitive enhancement may be a benefit and where we can identify biologically relevant populations. So there will not be identical populations. More likely we'll think about Huntington's. We may look at subsets of ADHD and/or Alzheimer's or in other areas where cognition -- because there's a novel method of enhancing cognition where that may provide benefit to patients.

Okay. And then just a quick point of clarification about the home infusion option. Is this the case that a patient would be diagnosed while still in the hospital and then not start to receive treatment until the patient goes home? Or is it giving the option of monitoring for symptoms? And if it's diagnosed after the patient leaves the hospital, then home infusion would become an option.

One of the things that we did when we designed the program is to ensure that brexanolone, if it's approved, would be available for pretty much any potential combination of ways in which people enter into treatment. So some people might be identified in the hospital, but the more typical place that people will be identified is through screening at their OB/GYN during a visit or their primary care. So there's lots of ways that people can be diagnosed, and that provides pathways. And I'll let Mike talk to how that's being built into the way the commercial team is really thinking about ways to facilitate and enhance patients, both screening as well as entry into care.

Yes. And maybe just to build on that, I think, as Steve said, we really don't see the high percentage of patients being needed to be admitted into the hospital to be administered brexanolone, right. We really want to keep that optionality open from the site-of-care perspective and -- because we do -- we think about that family-centric approach that we referenced before, right. We really think the home infusion option creates a great option for both patients and healthcare providers because it keeps that mother-baby bond together, and you're not asking the mother to go into the hospital for 2.5 days to receive brexanolone. So as Steve said, that diagnosis comes at different times. It's not going to be solely done in the hospital setting, and so opening up those pathways for patients and healthcare providers is really important. And as Steve said, a lot of the work that we're doing for our medical affairs organization really is disease education, disease awareness, driving the -- an increasing urgency around diagnosis and evaluation of these patients, right, so that we -- in screening. So at the end of the day, that awareness will grow. And you heard us say earlier, only 50% of patients are getting diagnosed today, right. So there's a lot of work that needs to be done within PPD. But with a product like brexanolone, we have an opportunity to change that conversation and we think could lead to increased screening and diagnosis. And then the more optionality we can create on sites of care just opens up those avenues for patients.

Our next question comes from the line of Ritu Baral from Cowen.

Any thoughts on a potential Advisory Committee for brexanolone at this point? Or I'm sure you guys are thinking about prep already, but what could be the focus? And then a follow-up as we think about the launch and potential launch cost. Kimi, you gave very broad strokes guidance on, OpEx. But could we expect some more detail? Should we think about second half of 2018 heavy spend versus first half of '19? How does that sort of play out?

Ritu, this is Steve. We, first and foremost, know that our filing is a very straightforward one. I mean, we've shared and spoken about the data extensively with you as well as at scientific conferences, and so we don't think there's much complexity there. I would never speak for the FDA about what things they might or might not want to do because they make their own decisions in this regard. The only thing I'd say about an outcome is we're certainly prepared and are preparing. And if it's something that is needed on our pathway to approval, we're certainly able to do that. But other than that, we wouldn't be able to speculate on what kinds of questions or other things they may or may not ask if it was required.

Right. And Ritu, on the financial guidance. So first of all, we're in a strong financial position. I think you know that. And I'll just remind you that we've always taken a very disciplined approach to our investing, so we gave a lot of our investments very specific milestones, and that's allowed us to be very capital efficient so far and get us to where we are with the pipeline that we have and near-term commercial opportunity. So when we look at to 2018, I think you know that we completed the 2 Phase IIIs over the last couple of quarters. So there is a little bit of a low you'll see in the R&D line. But as we roll out the multiple Phase II trials, the SAGE-217 in the second half of the year, obviously that -- you'll see that ramp up quarter-over-quarter. And certainly, in the commercial side, we're seeing a ramp on that throughout the year. But again, in the later part of the year is where you'll see significant growth as we bring on board the field force and et cetera. So I think you'll see -- certainly see a growth in the spend and probably more towards the later part of the year.

And as far as when stabilization of the spend, especially SG&A for the launch, may happen, is that something that you would expect to see in the first half of 2019 or really in the second half of 2019?

We haven't given that level of guidance, and I think it really depends on the timing. So I think we'll have to play that one out with you and maybe inform you a little bit later on.

Got it. And one last follow-up. The -- where are your thoughts right now on where 217 might fit in PPD? How do you think about balancing that opportunity with brex? Is there a patient profile that would be far more ideal for an oral like 217 than a brex?

Yes. Ritu, this is Mike. I'll take that one. As we think about 217 and brexanolone living together, we think it's a great opportunity, right. Today, there's no treatment options for postpartum depression. And if we're fortunate enough to have 2 out there, it gives patients tremendous options, right, one in IV and one in oral. And the simple way to think about the 2 products together is we believe they can be co-positioned in such a way that if we segment the market based on patient profiles, we'll be able to discern which patient group would prefer the product profile of brexanolone versus the product profile of 217, right. So it's not just the IV and the oral product profile differentiation, it's the rapidity of onset, 2.5 days versus 2 weeks. It could be severe versus moderate. And there's also elements of like breastfeeding, right, how long they would have to be off each one of those products. But if you break down the product profiles and then you map them to the patient preferences, we believe there's really an opportunity here to create distinct segments for each product and for them to coexist in the market.

Our next question comes from the line of Danielle Brill from Needham.

I was just wondering how could the DEA scheduling on brexanolone impact the at-home infusion capabilities? Could that complicate things in any way? And then also when and where might we expect details like sleep architecture and whatnot from the sleep study that you conducted?

So yes. This is Steve. I'll take the DEA question first. There are plenty of examples of drugs that are controlled substances that are infused at home, so I think the 2 things are different. The DEA essentially more has to do with recordkeeping, numbers of prescriptions and so forth. However, I wouldn't speculate on anything regarding scheduling and so forth. That's all going to be part of the overall review of the -- of our FDA submission package.

And maybe just add -- this is Mike. Just add on to that. We have had -- Danielle, we've had conversations with home infusion pharmacies, right, and we've made them aware that it could be scheduled. It could not be scheduled. It's not a concern on their part at this point, but they're very excited about the opportunity to work with us and develop the home infusion network, right, regardless of whether it's scheduled or not.

And this is Jeff. Just -- we're preparing the data for the sleep architecture and the morning performance for -- we're going to be submitting that for publication or presentation. So that will be coming out, but I can't say when. It depends on which meeting we select.

Our next question comes from the line of Laura Chico from Raymond James.

I guess one question on brexanolone. I think the color here has been really helpful with regards to the conversations you're having with payers. I guess what about delivery partners? Should we be looking for you guys to establish partnerships with delivery partners such as home infusion providers ahead of a commercial launch?

Yes. So that's a big part of our strategy is to have the home infusion network set up at launch, right. So we will -- we are working through those conversations today with the home infusion pharmacies, both at a national level and a local level. And really, what we're trying to do is optimize that network for efficiency but also the patient experience, right. Any home infusion provider that we bring into that network has to provide the patient experience, which we think is critical that the patient has a great experience at that first time on a brexanolone and then throughout the process, right. So that's really how we'll select the home infusion pharmacy network. And again, our expectation is that will be set up at the time of launch, and it will be ready to go at the time of launch.

Okay. That's helpful. I guess one quick follow-up just out of curiosity. Could you think of any examples of a Breakthrough Therapy designated drug that did not have an NDA accepted or has received an RTF?

This is Jeff. We're all shaking our heads, but now we're all knocking on wood.

Our next question comes from the line of Sumant Kulkarni from Canaccord.

Given that 217 has the potential as an acute and chronic therapy depending on indication, it seems like that you're mainly addressing that by modifying dosing so far. But if dosing modification is not possible for any reason, can you provide some specifics on the formulation tweaks that you may be considering to realize the full potential of that product?

So one of the things we've been doing is not so much about formulation of the drug as to trying to identify what's the best dose depending upon the indication, and that's part of the exploratory approach we're taking. So there's -- we are able to dose 217 across a wide variety of dosage strengths. And really, we want to understand what's the best reach of the patient populations that we study in. That's our general approach to going into any new indication.

Yes. This is Jeff. I think -- I sort of -- another way to look at it is I think you've seen some of the PK curves. These are very well-behaved molecules. There's not a lot of intersubject variability. And the capsule formulation, it's been very consistent, and it actually has a very -- a rather nice profile. And I think you've seen -- I think we've shown some of the Cmax, P max data. So formulation is really not an issue for these molecules. And what the team has done -- the science team and the company has done a really great job in terms of -- with our NCEs and basically finding the actual chemical matter that has PK/PD differences rather than having to resort to formulation plays. And as long as we have this opportunistic visibility with literally thousands of molecules, that's going to be our approach versus trying to tweak the formulation. As I said, well-behaved molecules. They've been performing well, so we don't believe that's a pathway we have to explore in the near future.

Sure. And then at what point do you expect to have more clarity on a go/no go for developing an EU footprint yourself? And for partnering discussions in that geography, would it be -- would it merit waiting for PPD data in the 217 oral formulation?

So in your -- let me just give -- back up and give you a little update on Europe because we've been doing a lot of work there. Of course, we have -- we'll be looking for scientific advice in the second half of the year for brexanolone. And as you know, we already have prime designation. And so what we've done is we've made a lot of progress in building out the organization there. So first of all, we have our clinical operations team that's been out there for some time. They've been working with KOLs and established themselves over there. We've had those 2 big regulatory areas that we're working on, and then we've begun the start of our commercial organization build that's really been on this quarter. And why don't I turn it over to Mike to talk a little bit about what was done and what we're planning to do there?

Yes. So on Europe, as Kimi said, we initiated that build in Europe, and we'll continue to take a very disciplined approach, right. We're very focused on the U.S., but we think Europe provides a real strong opportunity for us as well to launch brexanolone. But we'll take a disciplined approach and think about it in terms of market by market, looking at each market, the reimbursement aspects, the treatment paradigm, how it's -- how PPD is to delivered today and making sure we think there really is value in each one of these markets. And we've raised the team now, and they're working through that assessment as to how we're going to launch which markets and how we sequence this. And we'll tie the build-out of the organization to that business case. And then Jeff wants to add one more thing.

Yes. Just one other -- you sort of mentioned the issue of partnership, and I just want to emphasize. I think we've built a really good commercial presence. We're really comfortable with our team. And the company's intent today, we believe we can -- basically, we intend to launch by ourselves in the U.S. and in the EU. We think that's the pathway to the greatest investor value and company value building. I think in the rest of the world, that's an area where we will be thinking about other opportunities. But the U.S. and the EU will remain a core focus for the company for the foreseeable future.

Our final question comes from the line of Tim Lugo from William Blair.

Myles Minter on for Tim Lugo. I'll keep it quick. The pivotal -- well, potentially pivotal PPD trial at the end of the year for SAGE-217 is -- you provided commentary that you'd potentially seek that to become pivotal when you meet with the FDA. Is that still on the cards? And if that does become pivotal, how do we think about patient numbers for safety? And any commentary you can provide on that would be great.

This is Jeff. Obviously, the plans for the FDA, we'll have that discussion later. Certainly, that trial, which will have about 140 patients, in theory, could serve as pivotal. Well, that's going to have to be a determination that we'll make with the FDA. And obviously, we'd be delighted if it could be or it certainly would be supportive or potentially one of pivotal programs. But until we have final -- the ability to issue final guidance on the pivotal -- on the overall Phase III program for MDD, it's probably premature to speculate beyond that.

Okay. That's fine. And then in the Parkinson's disease trial seems that, that GABA modulation could potentially have some non-motor complication therapeutic benefits. So in the trial that you potentially plan to initiate, is 4-week period enough to see those non-motor complications in the MDS Part I scale or something like that?

No. So these are data that we're working through now, but we believe that, yes, we would be able to demonstrate that. The most important thing, though, we're looking for is to show a replication of the effects on tremor and to use sort of the additional data that we're able to collect during the trial to see if there's indications on effects on some of the other areas. And the other areas that we're interested in as adjunctive treatment in Parkinson's are both effects on sleep, which is a major problem in patients with Parkinson's disease that's not addressed currently, as well as in mood. So many of the themes that we're building into the 217 program are very much directly related and potentially very impactful and a different way of thinking about treatment for Parkinson's disease.

This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Jeff Jonas for any further remarks.

Thanks, and thank you all again for joining us today and giving us time in your morning. We're really excited about what we have coming up for Sage in 2018, both on the commercial and on the research and development fronts. And of course, it's fair to say that we wouldn't be in this transformative position we are in today without the dedication of all the employees at Sage as well as the patients, the families, caregivers and the investigators, all of whom have participated in our studies. And we remain grateful to them, appreciate their continued contributions to Sage and helping us achieve our vision of really delivering differentiated medicines to patients in need. So I want to thank all of you for your support, and I hope you all have a great day. Thanks.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.