SAGE Therapeutics Inc (SAGE) 2018 Q4 法說會逐字稿

Good morning, and welcome to Sage Therapeutics Fourth 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 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 2018 financial results, along with recent company highlights, upcoming milestones and progress on our corporate strategy. The press release referenced on this call can be found on the Investors & Media section of our website at sagerx.com.

We will begin the call with prepared remarks by Dr. Jeff Jonas, Chief Executive Officer; Mike Cloonan, Chief Business Officer; and Kimi Iguchi, our Chief Financial Officer. We will be joined for the Q&A session by Dr. Steve Kanes, our Chief Medical Officer; and Dr. Jim Doherty, Chief Research Officer.

During today's call, we will make forward-looking statements, including statements about the potential and expected timing for approval of ZULRESSO; our commercial launch plans and expectations; the potential regulatory pathway for the development of SAGE-217 in depression; our plans and expected timing of our clinical development and regulatory activities; our views as to the potential of our business and our current and future product candidates; our prevalence estimates; our financial projections, including 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 annual report filed with the SEC and subsequent reports. 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, everyone, and thank you for joining us on our call today. We're pleased to update you today on our progress as a leading multi-franchise central nervous system company. As a reminder, we're focused on building a portfolio across our depression, neurology and neuropsychiatric franchises, all using novel mechanisms and Sage-developed approaches with the potential to treat patients with serious disorders impacting large patient populations. We'll focus today's call on recent progress and major updates before opening up the call for Q&A.

I'll begin with our depression franchise, led by ZULRESSO or brexanolone injection, that has been designated as a Breakthrough Therapy product by the U.S. FDA for the treatment of postpartum depression, or PPD; and SAGE-217, which has also been designated as a Breakthrough Therapy program in major depressive disorder, or MDD, and is being developed in a broad depression and mood disorder program.

For ZULRESSO, following a positive Advisory Committee meeting late last year, we are preparing for potential U.S. approval in the treatment of PPD with our Prescription Drug User Fee Act, or PDUFA, date on March 19, 2019. Many have inquired as to the impact of the government shutdown. From our view, our interactions with the FDA have proceeded well and in a timely fashion.

As we prepare to advance ZULRESSO from development to anticipated commercialization, we've made considerable progress ahead of a potential U.S. launch. And Mike will cover these preparations next on the call.

We believe that ZULRESSO, if approved as a onetime infusion, could transform the treatment of PPD, the most common complication of childbirth, by potentially relieving symptoms within days instead of weeks or months. More broadly, we believe ZULRESSO may set the stage for rethinking how psychiatric disorders such as PPD are treated: as medical illnesses rather than chronic lifetime conditions.

Our development of SAGE-217 also reflects this notion of medicalizing depression through a target profile of rapid onset of activity and durable treatment-free intervals, which may allow treatment as needed or maintenance as a monotherapy if we are successful in our development efforts. Multiple studies are underway across the pivotal program studying SAGE-217 as a short-course oral treatment for depression, which includes 2 already completed positive pivotal trials, one in MDD, and the ROBIN study in PPD, which we announced early in January. The ongoing development program includes the MOUNTAIN study, a placebo-controlled clinical trial of SAGE-217 in the treatment of MDD, which is currently enrolling. When we began the MOUNTAIN study, we have projected reporting top line data sometime in 2020, with a comment that as enrollment progressed we would refine the timing as possible. Today, based on the enrollment progress in this study, we now expect top line results in Q4 2019 or in Q1 2020. We are also evaluating SAGE-217 in the RAINFOREST study, which will assess this drug, SAGE-217, compared to placebo in patients with MDD and co-morbid insomnia. Another study, the SHORELINE study, evaluates SAGE-217 in an open-label treatment format, looking at treatment-free intervals and as-needed retreatment for the return of major depressive episodes over the course of up to a single year.

Further, based on the positive results of the ROBIN study in PPD and the ongoing Breakthrough dialogue with the FDA, the SAGE-217 depression program will now be expanded to generate monotherapy maintenance data through an additional study, MDD-302. This placebo-controlled trial will evaluate fixed-interval SAGE-217 monotherapy, that is, treatment without traditional antidepressants for up to a year, and if positive, would generate data that the company believes will maximize value, help fulfill registration requirements and offer more treatment options to clinicians if SAGE-217 is successfully developed and approved.

In total, Sage believes that these studies will provide support for Sage's vision to transform the treatment paradigm for MDD. In particular, results from the 301, 302 and 303 studies, if positive, will potentially inform 2 different treatment approaches to depression: one, based on PRN, or as-needed therapy, where retreatment is instituted as symptoms reoccur; and a second, on based a maintenance approach, where the goal will be keeping patients symptom-free through intermittent monotherapy, and again that is monotherapy without additional SSRIs. We believe this packet of data, if positive, will not only meet regulatory requirements but enhance the potential value and utility of SAGE-217 for patients and clinicians.

We are also interested in studying SAGE-217's activity in other mood disorders beyond PPD and MDD and are currently enrolling open-label Phase II ARCHWAY study in bipolar depression. And we continue to expect top line results from this study in the first half of 2019.

Let me turn now to our neurology and neuropsychiatry franchises, where we are announcing positive top line results from Phase I studies in both programs today. For SAGE-324 results from the Phase I single ascending dose study demonstrated that the profile of SAGE-324 includes good oral bioavailability and a pharmacologic and pharmacokinetic profile consistent with once-daily dosing. SAGE-324 demonstrated clear target engagement in the brain using for pharmaco-EEG beta-band power as a functional biomarker. The Phase I multiple ascending dose study in SAGE-324 is still ongoing, and we have also initiated a Phase I study to determine the safety, tolerability and pharmacokinetics of SAGE-324 in patients with essential tremor.

Our lead neuropsych compound, SAGE-718, has completed the SAD and MAD healthy volunteer portions of Phase I, and we are also announcing top line results today. Results from these Phase I studies demonstrated that the profile of SAGE-718 includes good oral bioavailability and a pharmacokinetic profile also consistent with once-daily dosing. Results from target engagement biomarker studies in healthy volunteers focusing on electrophysiology and imaging are ongoing, and the results are expected later in the first half of 2019.

In the second half of 2019, we also expect to have the results of the Huntington's disease patient cohort with SAGE-718.

Before I turn the call over to Mike and Kimi, I hope you get a sense of how big this year has been for Sage and also potentially how big it's been for patients affected by these disorders. We look forward to the potential of our company's first product approval in March and the continued execution across our entire portfolio this year.

So now I'll turn the call over to Mike.

Thanks, Jeff, and hello, everyone. Thank you for joining our call this morning. And as Jeff mentioned, we look forward to our upcoming PDUFA date for ZULRESSO in March. If approved, we plan to launch ZULRESSO in the U.S. in June 2019, following expected scheduling of the Drug Enforcement Administration, which is expected to occur within 90 days of approval. We've made considerable progress in preparing for our first commercial launch, and I'm proud to say that our commercial infrastructure build is complete, and the sales organization is launch-ready, subject to being trained on a final label in the REMS program. We continue to work with the FDA in preparing the final details of the REMS program for potential approval. The REMS program will require administration of ZULRESSO and monitoring by qualified trained staff in a health care setting that has been certified under the REMS program. The associated patient registry will provide important ongoing safety information to further characterize the risk of loss of consciousness.

As Jeff stated, we believe ZULRESSO has the potential to transform the treatment of PPD due to its demonstrated clinical profile. Our goal is to create options for women with PPD and their families and health care providers for the appropriate site of care for ZULRESSO to be administered, subject to the REMS criteria.

As I have outlined on prior calls, we expect the launch to initially focus primarily on centers of excellence in the hospital setting, with a focus on severe diagnosed PPD patients, which we estimate represents 20% to 30% of all diagnosed patients with PPD. We believe these centers of excellence will have the combination of provider champions, payer access, infusion capabilities and supervision consistent with the REMS criteria and the commitment to women suffering from PPD by providing a positive patient experience for the full 2.5-day infusion. Our goal is to enable these centers of excellence by helping to identify HCP champions, driving the REMS certification process and supporting the formulary review as permitted. Our team has made great progress with an initial profiling effort of 600 potential centers of excellence across the country. Our key account managers are now focused on honing that number down to a more concentrated target for the planned June launch and identifying those centers of excellence that can meet the criteria I mentioned previously with a high-quality experience for patients. We expect to provide additional context around the centers of excellence and a number of REMS-certified sites post launch.

As we prepare for a potential launch, we also continue to focus on executing across our other key pillars of our go-to-market strategy, including identifying patient access and reimbursement pathways to support the experience of women with PPD who are treated with ZULRESSO. We continue to engage in permitted discussions with payers, including to further educate on the high unmet need in PPD and have conducted over 300 commercial and government payer meetings to date. We also plan to help hospitals understand reimbursement pathways beyond ERG. Based on existing contracting processes, we expect hospitals to secure reimbursement through established avenues, such as carve-out payments and negotiated case rates. Many of the centers of excellence that we are targeting will have existing new technology clauses in their payer contracts that can create reimbursement pathways for the centers to negotiate directly with the payer for these carve-out payments and case rates for ZULRESSO. We have established our patient support center in Raleigh, North Carolina. The patient support center will include dedicated case management support to facilitate the process of the REMS for health care settings, patients and health care providers. And our goal is, where possible, to help reduce the barriers that could exist along the patient journey from PPD diagnosis to treatment with ZULRESSO in a REMS-certified health care facility.

As is typical with a hospital-based product, the initial uptake can be impacted by the time required to move through the hospital's internal processes. For ZULRESSO, there will be 4 key steps to establish the pathway to care in the hospital centers of excellence, including certifying sites under the REMS program; achieving formulary approvals; establishing site protocols to administer ZULRESSO; and securing satisfactory reimbursement from payers. We estimate that these 4 steps can take approximately 6 to 9 months from launch, although some centers may move more quickly. Given the June 2019 launch and the time required to create pathways of care for ZULRESSO, we expect to start seeing momentum in Q4 2019.

Turning to pricing. Our pricing strategy is focused on the clinical value of ZULRESSO and the high unmet need in PPD. We continue to expect to establish a price within the range for the effective average list price for course of therapy of $20,000 to $35,000. It's important to note that ZULRESSO is not a chronic therapy, by contrast to most other specialty CNS drugs. Sage is committed to helping women diagnosed with PPD access ZULRESSO, if it is approved. We are currently assessing potential patient support options to help lessen financial barriers to access for women with PPD in need of treatment, where appropriate and permitted. We plan to disclose the final list price at PDUFA if the decision is positive, and we will also provide more detail on our patient support program once we have the final label. We look forward to communicating the FDA's decision in March, and we believe we are well positioned for our anticipated first commercial launch with our field and patient support teams in place and ready.

And finally, I would like to thank the entire Sage team for their tremendous efforts to prepare for the ZULRESSO launch and to ensure this therapy, if approved, will be available to women suffering from PPD as quickly as possible. We are committed to making a difference in the lives of moms and their families, and I'm proud of our team's commitment to making this a near-term reality. It is truly an exciting time for all of us at Sage.

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

Thanks, Mike. Let me now walk through the highlights of our financial results and guidance. For a complete review of our fourth quarter and year-end 2018 financial results, please consult the press release we issued this morning or our Form 10-K filed with the SEC.

Starting with the balance sheet. Our operations are supported by a strong financial base of $922.8 million in cash, cash equivalents and marketable securities as of December 31, 2018. That's compared with $518.8 million at the end of 2017. We're confident that our cash balance will enable us to make disciplined strategic investments in our clinical assets and set the company up for long-term success.

Turning to the income statement. Research and development expenses increased to $88.8 million in the fourth quarter, compared to $50.9 million for the same period of 2017. For the full year, R&D expenses were $282.1 million, compared to $210.3 million in 2017. This increase reflects initiations of later-stage clinical studies across our pipeline as well as discovery efforts focused on identifying new clinical candidates and additional indications to grow our 3 CNS franchises. We've expanded our R&D team to support the growth in Sage's pipeline and operations. These increases were partially offset by the completion of the Phase III clinical development of ZULRESSO.

General and administrative expenses increased to $75.7 million in the fourth quarter, compared to $19.6 million for the same period in 2017. For the full year, G&A expenses were $201.4 million, compared to $62.9 million in 2017. This increase is a result of investments made to support a successful potential launch of ZULRESSO, including hiring a commercial team, including our field force as well as professional fees and other expenses associated with expanding operations.

We reported a net loss in the fourth quarter of $158.4 million and $372.9 million for the full year, compared to a net loss of $69.4 million and $270.1 million for the respective periods in 2017.

For updated financial guidance, based on our current operating plan, we now anticipate that our cash balance will be sufficient to fund operating expenses and capital expenditure requirements into the second half of 2020. We expect that our operating expenses will continue to increase year-over-year and quarter-over-quarter to support the ongoing investment of our multi-franchise portfolio, including ongoing pivotal studies for SAGE-217 and the anticipated product commercialization of ZULRESSO in PPD.

The company continues to make progress delivering on its vision to develop a leading CNS company. We look forward to providing updates throughout year.

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

(Operator Instructions) And our first question comes from Brian Abrahams of RBC Capital Markets.

I wanted to ask a little bit more on the 302 study. I was wondering if you could talk in a little bit more detail about the potential design there, how you might determine the intervals, your expected time lines. And maybe, can you clarify for us whether that study would be gating -- potentially gating for initial 217 approval or for a potential frontline label?

Firstly, thanks for joining the call, and thanks for the question, Brian. We were really encouraged by the 217 data, we always were with the major depression disorder program. And then with the most recent data readout, we become -- we think that we've obviously derisked the program substantially. One of the interests of the company has been to look at a way to inform clinical use in the most -- frankly, in the broadest sense possible. So the 302 study is really designed to look -- answer the question that we haven't really answered, which is how can one potentially maintain patients symptom-free with an intermittent dosing schedule. So that's really -- and as a monotherapy. We'd like to offer multiple treatment options. So the 303 study is basically a PRN option, where patients can be retreated as needed. But one of the questions that's come up, and we dealt with -- and we've discussed this with the agency, for us as a company, which is how do we optimize the value to clinicians for SAGE-217? And one way to do that is to think about a mechanism where you can keep patients symptom-free as a monotherapy, that is, without adjuvant use of SSRIs. So 302 is designed to look at that. And what we can say today, we are still finalizing some discussions with the FDA, we anticipate there will be 2 components to this. One, there will be an acute -- it's going to be against placebo as a monotherapy. And so that means we can use this also as another potential pivotal program after 2 weeks compared to placebo. But then, as you probably know, historically, maintenance studies have a much higher probability of success even in acute studies, although in our case we already have 2 positive acute readouts in Phase III. So that will be against placebo up to potentially a year, although we anticipate looking at potential adaptive designs that might allow us an earlier break. The concept here will be -- we think in terms of timing that we don't anticipate it will prolong the program because remember, we already are doing the 303 study, which also has to get some safety data out to 1 year. So we're looking at this as an opportunity to really craft the clinical market with a PRN program and a maintenance study, where we keep patients symptom-free. Based on the curves we've seen today and how we think -- and if you look at -- remember the PPD curves and the depression curves, we think we'll be able to treat something in the -- again, this has to be finalized, but our projected treatment course will be 2 -- basically 2 weeks every 2 months. And then we think that will -- based on our data to date, should remain -- allow patients to remain symptom-free. So you know that we don't anticipate this action to actually prolong the time line, especially given the -- what we're seeing in the enrollment in the MOUNTAIN study, which I think, as you can see from today's announcement, has gone very, very well. And the level of interest in these programs is -- I don't want to be hyperbolic, but it's extremely high.

That's super helpful, Jeff. And then maybe one quick follow-up. It looks like the bipolar data probably will be the next data point we see read out for 217. How should we be thinking about that upcoming data set with your expansion of the major depression program? And how -- what's the right way to sort of interpret that data with respect to MDD? What's your level of prioritization for that indication? And how similar or different are the pathophysiologies?

Yes, this is Steve. As you said, we are looking for the bipolar disorder data in the first half of this year, and it's a good example of how we've developed our clinical programs. We always start with an open-label trial. We look at the single and make a decision, and that really speaks to how we do portfolio prioritization. I think Kimi can address this a little bit with more detail, given that we have so many decisions of these sorts to make over the upcoming year.

Yes. Thanks, Steve. I think what Steve is pointing out is really one of the key factors that we use in making investment decisions -- again, if you step back and look at the vast amount of opportunities we have across the pipeline, the commercial and the build of the organization, it's really how do we make sure we spend our dollars right. And what we're talking about with bipolar is our unique development approach. This is where we start with efficient methodology trials with clear rapid endpoints to look for activity. And if we see activity, that also helps us to design an efficient trial going forward. So that's one key way that we try to be very capital-efficient with our development programs. Another key feature is really being focused and deliberate about our -- and disciplined about how we invest. I think I've said this over and over again in the past. I sometimes feel like a broken record. But I think it's really in the culture at Sage. And then lastly, we take a portfolio approach to how we think about investing. We make sure that we look at the long-, mid- and short-term opportunities, and we balance across it. We look at the risks. We look at the capital requirements. A good example is how we continue to invest in our earlier pipeline in our discovery efforts to make sure that we are spending for the long term. So that's a bit about our approach and how we've been thinking about investing. And I think the results demonstrate that we're on the right path.

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

This is Andrea on for Salveen. Two questions. First, based on your recent 217 data in PPD, which showed a durable response up to 30 days, how are you thinking about the period of redosing in the retreatment study in MDD? And then I have a follow-up.

Yes, this is Steve. One of the things that we're interested in, and we'll find this out from the SHORELINE study, is how long do patients stay well? This really speaks not so much to durability of the drug as it is to the natural course of the disorder with MDD. And what we've been seeing so far is once you can get people well, they can often stay well for very long periods of time. And the main concept with 217 is to treat patients when they need it and not when they don't. And that's what we'll understand both from the MDD trials that we're doing, including an extension of the follow-up with 201 -- excuse me, 301, as well as in the SHORELINE study. So those are the kind of information that we'll be using to both inform physicians on how best to use the medication as well as to gather the fundamental information about how patients are maintained.

Perfect. And then just circling back on the bipolar depression study, if you could provide some additional color on what your clinical bar of success might look like in order to move it forward into a Phase III trial?

Yes, this is Steve. What we always look for is large effect sizes. We know that this is a very variable patient population. We know that there is a lot of complexity. These patients are often on multiple medication. But what we look for is the kinds of things that have driven our decision-making in the past. We never put a number or a bar on that. A lot of it relates to clinical judgment and overall benefit for the patients. When we have the data, we'll be able to speak to it, I think, from a portfolio perspective as well. So from a scientific perspective, it's a very interesting study. It's a really important study for patients. Enormous unmet need. And when we have the data, we'll be able to put that into appropriate context.

Yes. The other comment I'd make, and I think Kimi alluded to this before and Steve has as well, with the PPD data now and with this mechanism, given the level of success we've had, and we've been fortunate -- we've had 5 studies in a row that have read out positively with similar effect sizes. One of the questions we are asking ourselves is, we think that the mechanism is somewhat derisked at this point, I think, just to try to be conservative about this. And so we think bipolar makes a lot of sense biologically, but we do have to ask ourselves the question, are there other indications now in the affective spectrum, where we also should think about investing? And that was what Kimi was alluding to. Because we think this mechanism is active and we think it may have unique advantages, so that's one of the things we'll be looking for as we even consider the bipolar data.

And our next question comes from Matthew Harrison of Morgan Stanley.

This is Vikram on for Matthew. So just one question from our side. Could you talk a bit more about your spending forecast? It looks like your expectations for the spend were to stay relatively consistent with the 4Q run rate going forward, but then there's minimal -- there were lesser revenues over the period. So just wondering if you could talk about those trends a bit.

Sure, sure. This is Kimi. So the question is on cash burn. And I guess I would start by saying that I'm really excited about all the progress that Sage has been making, and we've been able to do that with a strong balance sheet. So if you look at our funding -- our cash burn, it's really been a function of all of the things that we talked about on the call. It's -- the prelaunch activities with regards to ZULRESSO, the ongoing development of the Phase III programs that are going on for SAGE-217 and expansion of the early clinical pipeline. So from the perspective of the burn going forward, what we're looking at is, again, continued growth in the R&D spend as we continue to -- with our trials with SAGE-217. On the SG&A side, with the commercial spend, we have our team in place, we're ready to go. But we'll see some growth in the infrastructure on the SG&A side as well going into 2019. So what we said is we revised guidance to provide runway into the second half of 2020. Now let me find -- let me just have Mike talk about the ZULRESSO launch.

Yes. And just to segue, I mean you asked about the spending, right? As Kimi said, we -- our commercial infrastructure build is complete and so that's how you're going to start to see it in the spending profile. But I think it's important to recognize that ZULRESSO is a very important product for women, right? And we're really excited about the opportunity. The teams are out there doing great work. We're focused on our strategy of the centers of excellence, payer engagement, medicalizing the condition of PPD and also building our patient support organization. So really excited about what's happening out there. We do know it's going to take time to build the infrastructure. We're creating pathways to care here, but we've made a tremendous amount of progress and excited for the launch coming up in June.

And our next question comes from Paul Matteis of Stifel.

I have one follow-up to Steve's comment on the bipolar population being more variable. And I guess just drilling down into that, you have a patient population that can be on a variety of concomitant medications like lithium and antiepileptic or an antipsychotic. Do you feel like you can get -- or I guess, do you feel like it's realistic to get a consistent signal in this study? Or is this the kind of data that you might be looking more at subgroups as it relates to next steps?

Paul, this is Steve. So thanks for the question. One of the things we do is explore areas that we know have strong scientific underpinnings. And we look at the data to design next trials, and Kimi addressed this. A lot is going to depend upon want the indication or the data show, but any of those outcomes are possible. This is why it's entirely new science. It's a new mechanism. There's a lot of reason to think that this is a mechanism that would be useful in bipolar disorder. We've seen improvements in circadian biology and on clinical studies, the drug is antiepileptic. But again, how you move into a new area, how you move into a new disease patient population where there continues to be unmet need is by doing the studies first and then really understanding does it work across the board, does it work in subgroups, does it work on patients that have particular concomitant meds, all of that can emerge from the kinds of studies that we start with. So again, we're very excited about it and we'll know a lot more when we see the data.

Okay. All right, Steve. And Jeff, just one follow-up for you on the 302 study design, how long is the placebo-controlled portion in that study? And will patients in the placebo arm be allowed at some point to transition to a drug arm?

Again, I think this is a -- this is a study that will be designed to answer the question as Steve has said earlier; and I said to answer the question, is there a treatment regimen -- and we think there is -- that will eliminate PRN dosing in a long-term maintenance study? So -- and as you know, these are typically lower-risk studies. Our intention is it will go against placebo. And again, we have to finalize the design. But these are typically high-success studies, especially with an active moiety. So I think beyond that, we intend it to be monotherapy and we intend it to be placebo-controlled. And so what -- as is every typical maintenance program, the way we're envisioning it now, which is why we think it's a lower-risk study is we will just simply allow patients or placebo responders to be retreated with the same drug. We don't anticipate a crossover because that obviously complicates the design.

Okay. And you'll have these data and the PRN data both before approval so you'll be able to use the combination of each to figure out what a reasonable price based on an average number of annual courses might be? Is that a right way to think about it?

Well, no, I think it's probably premature to think about pricing per se. What we're trying to do is to simply -- is to offer 2 alternative treatment strategies and to make sure that when 217 is successful and launched has the most complete data package possible. And what that means is we need to -- we already have 2 acute studies, so we want to point -- and we already know that there are physicians who will simply want to maintain patients symptom-free. And so the goal of 302 is to say you can do that, if it's successful, with SAGE-217 as a monotherapy, without prophylactic SSRI treatment, so-called "just in case." So we think that would substantially enhance, frankly, the value of 217. And we think, given the current profile that we're seeing and if we can substantiate that, we think this would not only become potentially first-line therapy for acute therapy but also offer another pathway for maintenance therapy for physicians who want to take that tact, that is, maintaining just simply a regimen that maintains patients symptom-free.

To answer your question, Paul, just the pricing, it's -- nothing has changed from what we said in the past, right, in terms of how we're going to price 217. We have said in the past our strategy really is to price to the clinical value. We do think about it as an annualized price, and then we'll go back into the per course of treatment therapy. Now we have multiple studies that will allow us to do that. So the same strategy, as to your question.

And our next question comes from Cory Kasimov of JPMorgan.

Most of them have been asked already, but I wanted to follow up on a couple of topics. So first, on the bipolar data and the top line results we'll see in the first half. Is this going to be on all 30 patients? Or an interim look at a smaller subsegment of patients, as you've indicated you might do in the past?

Cory, what we've talked about, and this is how we always do this, is we list on places like ClinicalTrials.gov up to 30. We sort of design our trials to allow us flexibility that when we think that we have the appropriate level of data to make some sort of decision to be able to speak to it, we'll do that. So that's the way we've always approached these open-label trials, and that's what we intend to do for the bipolar study as well.

Okay. That's helpful. And then the other question I have is also following up on the 302 study. And I'm curious -- and I realize you still have to finalize the design of it, but to the extent you have an idea, can you talk a little bit about the eligibility criteria you may build into this protocol? I mean, you're looking to pick patients who previously had multiple relapses? Are you trying to make a case for chronic maintenance for a frontline patient?

No, I -- Cory, it's Jeff again. This is going to be typical -- the same inclusion criteria we've always used, which is basically generalize patients with MDD, I mean with the caveat or the understanding that many patients with MDD have already failed trials. We think the evidence we've shown so far with 217, just looking at how it's behaved, it's been active in patients who have not been on treatment before or who are on therapy. So we don't need to really slice that population. And we think that the activity level we've seen allows us to say that we will just take patients with -- who present with MDD, and with the same inclusion criteria that we've used throughout all of our programs.

And our next question comes from Akash Tewari of Wolfe Research.

So it looks like the final clinical data package for 217 will consist of patients largely who aren't on background therapy. Just going back to your Phase II MDD trial, for those 12 patients who were on background antidepressants, did you see any difference in response versus the larger population? And is there a reason to believe we'd get a different effect as we go into a more refractory setting? And then just looking at reports, there have been reports of like tachyphylaxis with GABA modulators in the past. And with the 302 study being a 1-year fixed maintenance trial but also kind of the unique design of 217, how confident are you that you won't see a similar dynamic in the 302 trial given kind of the dosing interval that you alluded to on the call today?

This is Steve. So a couple of things, just to clarify. So first, in fact, we see in all of our studies from PPD all the way through our MDD studies, between 1/4 and 1/3 of all patients are on underlying antidepressants and remain symptomatic. And that speaks to what Jeff was referring to before, meaning that we think this should be a general medication for patients. And what we've shown both in MDD as well as in PPD that the presence or absence of underlying antidepressants, SSRIs and so forth, has had no effect on the overall responsiveness of patients. So that's something that -- it's one of the reasons why we include both types of patients. The studies themselves are large enough to be able to interrogate. That subgroup's not powered for those subgroups but it allows us to look and see what are any of those differences. So that sort of speaks to the underlying approach that we're taking and the hope that if this is effective, this could potentially be a treatment of choice. With regards to the question of tachyphylaxis, I'll ask Jim Doherty, our Chief Research Officer, to speak to that because I think it's an important part of our overall strategy as well.

Thanks, Steve. This is Jim. Yes, Akash, thinking about -- you mentioned GABAergics and I would point first to the fact that there are lots of different ways to interact with the GABAergic system. And typically, folks are thinking about things like benzodiazepines. Our compounds interact with the system fundamentally in a distinct way. And certainly, preclinically, we have -- despite looking, we haven't seen a lot of evidence for that type of combination and tolerance in the short term.

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

First one for Kimi. You talked about your cash runway. And at the same time, you talked about the process that you used for moving indication forward in the clinic. So one clarifying question for me, does your cash runway assumption include the possibility of advancing bipolar into a pivotal study? And the reason I ask is that that's a rather large indication, and I don't know whether that would require a large program to advance it to commercial status. And then as a follow-up, Kimi, the stock's done really well and although you don't necessarily need to raise money, does that rule out the possibility that you would do an opportunistic raise?

Thanks, Tazeen, for the question. So of course, the guidance really reflects all of our current operating plans to date. So there's a whole host of things that are included in that. So with regards to our financing, yes, we are in a strong financial position right now. We're always evaluating the capital needs for the company. I think the funding, as I mentioned earlier, is really a function of the successes that we have with our portfolio and certainly with the commercial launch. So we'll continue to evaluate our capital needs and continue executing on a financing strategy going forward.

And our next question comes from Danielle Brill of Piper Jaffray.

I guess I'll just ask a quick one on the early pipeline. Will you be looking for signals of efficacy in your Huntington's and essential tremor Phase I? And if so, what kinds of details can we expect with those data this year?

Yes, this is Jim again. Happy to take the question. Yes, we're really very excited about the progress of our early development pipeline thinking in terms of our multi-franchise strategy. In that context, SAGE-718, which is an NMDA PAM, represents the front-end of our neuropsychiatric franchise. We're at this point completing the Phase I studies. The profile is looking as expected from a pharmacokinetic perspective. And as you mentioned, we're moving into studies looking at patient populations. And so an early look into Huntington's disease, we really came into this from the perspective of looking for areas where the natural ligand of that 718 is modeled on is reduced. And so we see that in early-stage Huntington's disease, which is characterized by deficits in cognition as well as some other things. So we're designing the study right now and we'll be looking for those endpoints where we expect to see modulation in NMDA receptor function, and cognition would be the likely one of those. We're doing a similar kind of thing with SAGE 324, where we're moving into a patient study looking at essential tremor and modeling, in that case, based on the data we've already got from our more mature programs, ZULRESSO and SAGE-217.

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

Thank you. And our next question comes from Jay Olson of Oppenheimer.

I was wondering about your thoughts regarding the FDA Advisory Committee discussion of the randomized withdrawal study for esketamine. And I was curious if you were surprised about the importance of that study and if it had any impact on your thoughts about the SHORELINE retreatment study for SAGE-217.

So honestly, a number of us watch the Advisory Committee, and I think -- the top line I think for us as a company is that we are -- and I'm a psychopharmacologist -- very are excited that CNS disorders are getting the attention they deserve and that have been lacking over the last 20 years. And so I think it shows -- congratulate J&J for a very successful Advisory Committee for a population of unmet medical need. I think patients always benefit. And I think it's -- let's always put that in context. I mean, there are a lots of patients who need treatment and I think more options are better. The randomized withdrawal design has always been an important design modality. I think -- I can't speak with the agency or J&J. I think we take away from the esketamine Advisory Committee the recognition that CNS disorders in general represent large areas of unmet medical need, and that the agency is really, as we've experienced, very willing to work with companies to both optimize the development programs of products and to make those products valuable. It is also something we thought about deeply. And of course, as you heard with the 302 study, the importance of maintenance information to the agency and allowing physician flexibility in how they approach the treatment of patients with major depression. I'm going to turn this over to Steve for another comment.

Yes, the only other thing I would say is that when we think about the patient populations -- and Jeff said it, but it's worth repeating, they're looking and have studied a very important but very different patient population that we are studying with SAGE-217. We're interested in major depression broadly, and we have a Breakthrough Therapy designation for that entire indication encompasses all levels of severity. And our program is geared towards that. So yes, there is definitely some interest in encouraging innovation within CNS and particularly depression. And we're very excited about the progress we're making as well with 217.

And our next question comes from Marc Goodman of SVB.

Just on the spending for the SG&A for this year, can you just give us a sense of just incremental change that will occur here? I think there was a comment earlier about the commercial infrastructure has been put in place. So does the 3 months ending December, the $75-ish million, does that include an annualized number for the sales force, everything that's been brought in? And then are there advertising promotion dollars for that program? But also, how much of 217 are you going to be -- just give us some type of idea of increment. And then just one question about the new depression study. I was curious if that is -- is that study needed for filing? Like was that the FDA encouraging you to do this? Or is this more for commercial usage and that's the reason that you're doing it?

I'll start and then turn it over to Kimi. The 3 -- new study is really -- there are a couple of reasons for them. One is we think that maintenance therapy is important to the agency. We've had those discussions. I think we really can't comment more beyond that. We are -- given -- and I think someone asked this -- told me this kind of before, maintenance studies of this design, withdrawal design studies tend to have a much higher rate of success. So we view it as a low-risk opportunity for us. We would like a maintenance claim at launch, and because we don't think it'll impact the time line, we thought it was important to do. Plus, we also think it could serve as another pivotal program as a contingency. So that's been the thinking around that. I'll turn this over now to Kimi.

Yes. Thanks. I think the question was on the commercial spend and what to expect for next year. If you look in the fourth quarter, we said that we broadened our field force of about 80 people, then that really happened in November. So that will be -- you need to annualize that into your next quarter. We also have -- we'll see continued growth in the rest of the organization to be prepared to be a commercial entity, so there will be some growth in the G&A as well. And of course, there's the launch costs that you expect as we have our launch in June of this year.

Will there be a lot of 217 kind of funding this year in advertising?

So the -- for 217 in the commercial space, why don't I turn that over to Mike?

Yes, Marc, no, advertising wouldn't take place on the precommercial setting, right? So right now the 217 spending is mainly focused on obviously the trials, right, the clinical trials. And obviously some work we're doing more around determining what the potential of the market is on the commercial side and what our positioning strategy will be, et cetera, but no advertising per se.

And our next question comes from Joon Lee of SunTrust.

Regarding 217 and treating depression on an as-needed basis and trying to move away from chronic indefinite treatment, unlike cancer or hepatitis C, I'm not aware of any biomarker known to track the disease process for depression. I don't think we even know what actually causes depression. So what data are you collecting in ongoing studies to convince psychiatrists that depression does not need to be treated chronically and prophylactically? And can you comment on the heterogeneity of depression as a disease that may make PRN method of treating challenged?

Thanks. This is Steve. So first of all, I'm a psychiatrist. My career prior to pharma, I treated many patients with major depressive disorder. And the most fundamental thing to think about is major depression, unlike some of the other disorders that you've mentioned, is by definition episodic. People experience episodes of depression, and the goal of treatment is to reduce the depth of those depressive episodes as well as the duration of those episodes. So that's fundamental. And that's exactly what we're doing with 217. With regard to whether patients are treated chronically, that's more of a by-product of the ways which drugs have been developed over the last half a century or longer, where it's taken very long periods of time for the medications to work. And there was always some implicit or implied risks that if somebody would have another episode and they weren't taking medication, it would again take them 6, 8, 10, 12 weeks to kick back in. So a lot of what we believe -- what physicians believe they know about antidepressants and its treatment really has been developed through the lens of how antidepressants work. We think we're doing -- we're working in a fundamentally different way, altering circuits and improving the overall balance between GABA modulation. And that's something that's fundamentally different. Ultimately, what's going to convince physicians is the data. And that's what we're collecting. So if you think about all of the trials that we've done with acute therapy, starting with brexanolone in postpartum depression and now extending into 217 both with MDD, where 2 weeks of treatment resulted in longer duration -- a long duration of being symptom-free. Postpartum depression, long duration of symptom-free. And the additional data that we'll be collecting in our program, longer-term follow-up in our MDD studies, the SHORELINE study, where we allow for retreatment that's triggered by recurrence of depressive symptoms, all of that will build into an understanding of how best to treat patients. It's sort of a conundrum, right, where you think like nobody wants to be treated for something when they don't need medicine. And what we're looking to do is to create that body of evidence that will allow us to do that. So that's the approach. It ultimately is clinical data and being able to communicate that effectively in ways that really resonate with physicians.

In the current treatment paradigm with current antidepressants, how often do those patients visit the treating psychiatrist for reevaluation?

So it very much depends. The majority of patients are actually prescribed the antidepressants by the primary care docs. So it's a mix of primary care and psychiatrists. But often, the treatment takes place in combination both with the prescribing physician and other professionals who are doing counseling and other kinds of therapy that allow for maintenance of efficacy. So a lot of it is very much dependent on the health system the patients are in, patient preference as well as the degree of need for the patients.

Okay. And last question, with 217, do you anticipate patients to have less or more frequent visits to psychiatrists?

I think that's hard to say. One of the things that we'll learn from the SHORELINE study is what's essentially the natural course of history for people that have been treated? And just based on my clinical experience, that will vary very much by individual patients and their need. So I would say one of the things that we're looking to do with this Breakthrough Therapy program is to change the way the people think about engaging with treaters around major depressive disorders. And at the end of the day, it's about options. It's about options for therapy. So the other piece that we announced today is that we will be doing this -- essentially a fixed-dose maintenance study, and that might also provide additional information for those patients that might want to take chronic therapy, although not on continuous therapy. And that's the main thesis of 217.

And our next question comes from Gary Nachman of BMO Capital Markets.

So for Mike, with ZULRESSO, could you elaborate on the mechanism for reimbursement at hospitals through carve-outs and case rates? How that process works and how you can help facilitate that potentially at launch? And then what forms your patient support programs might take?

Yes, Gary. So let me start off -- take it up one level. What our focus really is, before I get into the reimbursement, is on centers of excellence, which will tie into your question. Really, if you think about -- the key part for us right now on our strategy is developing the centers. We've been profiling over 600 over the last several months. Our key account management team is out there now honing that list down to get to a really tight list. And what we're really focusing on to identify those key centers is provider championship, the ability to certify according to the REMS, that they have access to reimbursement that we'll talk about and that they can create a real quality experience for the patient. And it's really those 4 things that will drive us in how we identify the centers of excellence. To your question specifically about reimbursement, it's really 3 paths right within -- in that hospital within the centers that we think are open. There's the DRG and then there's these carve-out payments and negotiated case rates. And what we have found, and we're encouraged by the conversations we've had with the centers, is that many of them have already in their contracts with payers these really carve-out new technology, right? So their -- in their contracts, they didn't contemplate new technology coming, but allows them to go back and identify when that happens that they can create a pathway back to reimbursement, which is the specific carve-out payment outside of DRG or negotiated case rates. So that will take time. They have to go back payer by payer and almost patient by patient, but we're encouraged by the information in the conversations we've had with the centers. From the patient support question that you asked, right, we're finalizing those programs as we speak now. We feel really good about the team that we hired down in Raleigh. So that will consist a really dedicated case management system that will help the patients from diagnosis all the way to treatment with ZULRESSO, right, making that as seamless as possible and breaking down some of the complexities that exist with ZULRESSO. And then we'll obviously be looking at financial assistance programs as well as part of that service offering that we'll have and we can provide more information sort of post launch on the financial assistance program because that's all going to be based on, where permitted, we can put those in place.

Okay. Great. And then just a follow-up on 217. I know it's still early but any reason to think it would have a REMS if it doesn't show any real cases of loss of consciousness in the Phase III MDD study, since it didn't show that in the PPD study and that was a real differentiator from ZULRESSO. And from a safety standpoint, anything you would watch out for in that longer-term maintenance study as patients get retreated?

This is Jeff. No, we don't really see any signals now that would require that. I mean it's been a very well-behaved molecule. It really is apples and oranges. I think you really can't conflate an intravenous administered at peak doses during the day with an oral therapy given at night. So no, we're not anticipating that for several reasons. I'll turn this over to Steve.

Yes, probably the most important one is to date, we have treated over 600 individuals with 217 in a variety of indications, both healthy volunteers and patients, into positive placebo-controlled trials. So we really are dialing in the overall benefit-risk profile of the drug. So again, we're very confident about the signals that we're seeing in the overall profile of the drug.

Okay. And what about scheduling? Is it possible? I mean, we'll see what the scheduling is for ZULRESSO, but would it be swept into that group overall? I know it's early, again, but any sense on that?

Yes, this is Steve. Every drug is evaluated on its own. It's way too early to speculate about what that may or may not be, but what we wouldn't anticipate that what happens for ZULRESSO will happen for 217 or any other drug in our pipeline. And so while we talk about a depression franchise, from the FDA's perspective, every drug is evaluated in its own merits, including benefit-risk, patient populations and so forth. So it's a requirement for any drug that gets into the [TNF] to do alternate studies, and that will be evaluated as part of the anticipated NDA.

Okay. And for ZULRESSO, you're still anticipating a schedule for it, correct?

Well, we have already submitted our information. We haven't spoken specifically about what we expect from scheduling. Our data wouldn't necessarily indicate the need for scheduling. And so we -- but we're still awaiting the final DEA scheduling which, of course, happens after the PDUFA date.

And our next question comes from Michael Higgins of Ladenburg Thalmann.

This is Rui in for Michael. I have a couple of questions on ZULRESSO and then also SAGE-217 in the MDD program. So on ZULRESSO, you mentioned you're looking at 600 centers of excellence right now, and you want to narrow that down. Do you have an idea how many centers it would be ultimately at launch? And what you would do, would you expand that going forward?

Yes. So this is Mike, I'll take that one. So at this point, we haven't given guidance on the number, right? What we've talked about is the process to get there and focusing on those 600 centers and then the 4 criteria that I mentioned before: provider champions, REMS certification, payer access and the quality of the patient experience. That's really where we're focused. We want to create as many options for patients as possible. But again, really that last point that I mentioned, that quality experience, is really important. So we're really being discerning around how many centers we think will meet those for 4 criteria, have the ability for patients to access care and we're really creating those treatment paradigms, right? So we'll give more guidance and more instruction on what we've come up with on the centers of excellence as we approach into launch.

Okay. And then still on ZULRESSO, have you received feedback, have you been discussing with European regulators on path to approval of ZULRESSO there? And is at-home treatment possible there?

So yes, this is Steve. We're in continuing dialogue with the EMA about the path forward for ZULRESSO. We think there's enormous unmet need in Europe. And when we have our plans, we'll share those.

Okay. And then just a broad question, I guess, on the whole SAGE-217 MDD PPD program. From what I heard throughout the call, it sounds like, and correct me if I'm wrong, you will wait for RAINFOREST, SHORELINE and 302 data to incorporate all of that into an NDA. But you think the gating factor, the rate-limiting factor here is the safety trial, the 300-patient safety trial? Could you give an update on when do you think that would be completed?

This is Jeff. I think all we can say today is our -- is that the enrollment and the interest in this program has been -- I don't -- has met our optimistic expectation. I wouldn't say they exceeded; they've met that. So we don't view a lot of this as limiting given the size of the unmet medical need and the size of the potential population. One of the points that we've tried to emphasize is that I think a lot of people are used to launches in smaller markets such as cancer and orphan diseases. But here, we're going into markets that potentially include tens of millions of people, so we will need a larger safety database. And we also really only get one opportunity to launch a drug like 217. So our intent is -- we don't see these as rate limiting, but we do hope that we will have a file that can include all of these to give us the optimal value proposition for both the company and clinicians.

And our next question comes from Sumant Kulkarni of Canaccord Genuity.

The first one is on ZULRESSO. So you're on the cusp of potential approval there. But how would your efforts on education on ZULRESSO and PPD play versus the recent guidelines by the U.S. Preventive Services Task Force that was published in January that called for preventive counseling in PPD versus therapeutic intervention? We were really surprised that we didn't get more questions from investors there. And my second question is, you mentioned you're thinking about an annualized price for SAGE-217. At what point do you expect to share that with investors?

This is Steve. I'll take the first part, and then I'll turn it over to Mike. So first and foremost, what we're seeing is a heightened awareness of the importance of postpartum depression broadly. And I mean I don't view any of the guidelines as being mutually exclusive. Remember, we're talking about people getting counseling, which may potentially be helpful, but also is important in terms of educating patients on what kinds of things may be triggers for a need for ongoing treatment. And we think that that's an enormously important message for women who are expecting babies, people who have just delivered and so forth. So I would say, right now, there's a moment where people are really attending to the needs of women, the risk of postpartum depression and all of the education. And anything that raises that profile is really important for patients from a public health perspective and will also allow those patients to engage with treatment. For the second part of that, I'll turn it over to Mike.

Yes, on the pricing question for 217, we try to give kind of a framework and a philosophy of how we're thinking about pricing. We'll get more clarity and guidance as we get closer to launch. But I think it's also important to note we're actually building a depression franchise, right? That if we're fortunate enough to have both ZULRESSO and 217 in the market, we can learn from ZULRESSO prior to 217 coming. And ZULRESSO is going to help -- is going to benefit 217. All the work that we're doing on ZULRESSO is going to pave the path, if 217 is approved, to really break down some of the stigmas, to build some of the paradigm shift that we've talked about from chronic to acute. So that leverage will be important to us back even on the pricing decisions that we'll make.

Thank you. And that concludes our question-and-answer session for today. I'd like to turn the conference back over to Jeff Jonas for closing remarks.

Again, thanks, everybody, again for joining us today. I think as you can tell from our release today and our question-and-answer that the company is extremely busy this year. And I really want to take a moment to thank all the employees at Sage who have done such a tremendous job, not only in the past but in executing and helping develop the company. So we're thankful for our employees. And I want to thank the patients and the investigators and the caregivers who continue to participate in our studies and have shown tremendous interest. We can't thank them enough for their contribution to the company. And I want to thank all of you for your support. And we want -- we hope you all have a great day, so thanks again, everybody.

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