SAGE Therapeutics Inc (SAGE) 2019 Q1 法說會逐字稿

Good morning. Welcome to Sage Therapeutics First Quarter 2019 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 expressed written consent of Sage Therapeutics is strictly prohibited. Please note that this call is being recorded.

I would now like to introduce Maren Killackey, Investor Relations at Sage.

Good morning. Today, we issued a press release with our first quarter 2019 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, our Chief Executive Officer; Mike Cloonan, our 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. These statements may include the anticipated timing of launch of ZULRESSO, our plans and expectations for commercial activities and results; our views as to the potential availability of sites of care and reimbursement for ZULRESSO; the potential product profile, indication, and regulatory approval pathway for SAGE-217; our clinical development plan and expected timing of data readout for our product candidate; our views as to the potential for success of our programs and business and value creation opportunity; our financial projections, including our expected cash position and potential timing of ZULRESSO revenue momentum and anticipated expense increases; 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 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, Maren, and good morning, everyone, and thanks for joining us on our call today. This morning, I'll update you on our progress in building out Sage's 3 central nervous system or CNS franchises, each of which represents an opportunity to fundamentally shift how brain disorders are thought about, studied and treated. Then I'm going to turn it over to Mike to talk about ZULRESSO launch plans. Kimi will close by providing an update on our first quarter financial results. Finally, we'll open up the call to Q&A.

I'll begin with an update on our depression franchise, which includes 2 therapies granted breakthrough therapy designation by the U.S. Food and Drug Administration, or FDA. ZULRESSO, which is approved for the treatment of postpartum depression, or PPD; and our late-stage oral product candidate, SAGE-217, which is currently being studied in patients with major depressive disorder, or MDD as well as BPD, bipolar depression and co-morbid MDD and insomnia.

ZULRESSO was recently approved by the FDA as the first and only treatment specifically indicated for PPD, the most common medical complication of childbirth. ZULRESSO is given as a onetime infusion that offers the potential for resolution of depressive symptoms in days, unlike traditional interventions that can take weeks or months. We believe this is what innovation looks like, and it could be game-changing for the treatment of PPD. The approval of ZULRESSO was a gratifying event for the company of course, but more importantly for patients, families, researchers, Sage employees and frankly everyone involved in securing the approval of this potentially transformational new drug.

We're ready to make ZULRESSO commercially available to patients in late June at health care centers certified under the ZULRESSO Risk Evaluation and Mitigation Strategy, or REMS, following DEA schedule. In the meantime and in response to the tremendous unmet need in women who are suffering from PPD, we've launched an expanded access program that allows eligible patients to be treated with ZULRESSO at health care settings that participate under an expanded access protocol prior to commercial launch. This is just one of the ways we are taking a patient and family-centered approach to our activities, a core value that carries through our commercial strategy, which Mike will describe shortly.

We believe ZULRESSO may set the stage for a paradigm shift in how psychiatric disorders such as PPD are thought about and treated. By medicalizing depression, the people with these disorders will receive the urgent care they need and deserve so that depression becomes a treatable disease rather than a lifestyle.

I'll now turn to a discussion of our clinical-stage candidates. SAGE-217 is being developed based on a potential target profile of rapid onset of activity, durable effect and clinically meaningful improvement in depressive symptoms obtained within days. Our groundbreaking pivotal program for SAGE-217, if successful, could allow us to secure approval for multiple indications with differentiated label claims. The program includes 2 completed positive pivotal studies, 201 in MDD and the ROBIN Study in PPD and an ongoing efficacy trial in MDD, the MOUNTAIN Study. We continue to see strong enrollment in that study and project a readout of top line data in Q4 of this year or Q1 of 2020.

We also plan to include the results from 2 retreatment studies, MDD-302 and SHORELINE, in our New Drug Application for SAGE-217 if our development efforts are successful. These studies will provide longer term follow-up data to inform options for patient treatments.

302 is a placebo-controlled maintenance study using a randomized withdrawal trial design, where patients who respond to initial treatment with SAGE-217 will receive SAGE-217 or placebo for 2 weeks every 2 months. Data generated from this study will evaluate the potential to prevent relapse of depressive episodes when administered as a monotherapy. It will also provide valuable safety and quality-of-life information about the maintenance use of SAGE-217.

In the ongoing open-label SHORELINE Study, we are evaluating treatment-free intervals and as-needed retreatment for a return of major depressive episodes. Patients will receive an initial 2-week course of SAGE-217 treatment, and the need for retreatment will be assessed every 14 days, with a minimum period of 8 weeks between treatment cycles. The SHORELINE Study will provide important information on the incidence of recurrence and the duration of treatment-free intervals. This PRN or as-needed treatment approach could potentially avoid exposing patients to months of unnecessary medication.

The last study in our Phase III program is the RAINFOREST Study, which will assess SAGE-217 compared to placebo in about 100 patients with co-morbid MDD and insomnia. This is a particularly exciting trial because it will provide us with useful biomarker data in addition to additional efficacy data. If positive, this study could support a claim regarding improvement of symptoms related to sleep in patients with MDD, a benefit unique among currently approved antidepressants. If data from these studies replicate the robust statistically significant findings we've seen to date, we believe SAGE-217 will be well positioned to be a first-line monotherapy.

Beyond MDD and PPD, we're assessing SAGE-217's effect in other mood disorders. Similar to the clinical approach we've used in the past, we started by running an open-label Phase II study in bipolar depression, the ARCHWAY Study with the goal of identifying a significant signal of activity before investing in larger trials. Data from the ARCHWAY Study will guide the portfolio decisions designed to maximize the value of SAGE-217 and inform our potential exploration of other indications for this novel compound and our other assets.

Based on our data acquisition, we're extending the data readout timing from ARCHWAY from the first half of 2019 to July of this year. This allows us to deliver the results in the context of the broader SAGE-217 portfolio decisions I've just mentioned and other portfolio updates happening at the same time, specifically from our earlier-stage neurology and neuropsychiatry assets, which I'll discuss now.

Our neurology franchise is being led by SAGE-324, a next-generation oral positive allosteric modulator, or PAM, of the GABA A receptor. Potential indications for SAGE-234 includes essential tremor and epileptiform disorders. In a single ascending-dose Phase I study, SAGE-324 was generally well tolerated with no serious adverse events and demonstrated a pharmacokinetic profile appropriate for once or twice daily dosing. We're currently conducting a multiple ascending-dose study in healthy volunteers and a single-dose open-label cohort of SAGE-324 in patients with essential tremor. Both are designed to confirm the safety, tolerability and pharmacokinetics of SAGE-324 and provide biomarker data that we hope will inform our design of potential later-stage studies.

Our lead neuropsychiatric compound, SAGE-718, is the first-in-class NMDA receptor PAM. Based on results of our preclinical studies, we believe SAGE-718 is active in up-regulating brain activity with the potential to enhance cognition. We've completed Phase I single and multiple ascending-dose studies in healthy volunteers in which SAGE-718 was generally well tolerated with no serious adverse events and demonstrated a pharmacokinetic profile consistent also with once-daily dosing. Ongoing studies remaining in the Phase I program for SAGE-718 include a target engagement biomarker study in healthy volunteers focusing on electrophysiology and imaging. We plan to make the results from these studies public in July.

There is also a study to determine the safety, tolerability and pharmacokinetics of SAGE-718 in patients with early Huntington's disease. Data from this trial are expected in the second half of 2019. Though we've already had a big year here at Sage, upcoming milestones, if positive, are expected to be transformational for the company. We look forward to keeping you updated in our progress as we work to realize the full, near, midterm and long-term potential of our 3 wholly owned CNS franchises.

Now I'll turn the call over to Mike and talk about ZULRESSO launch preparations. Thanks, everybody.

Thanks, Jeff, and hello, everyone. We're excited about the approval of ZULRESSO, and given its novel product profile, believe it represents the opportunity to set a new treatment standard for women with postpartum depression. Our commercial infrastructure build is complete, and we are launch ready subject to the final training of the field teams post-DEA scheduling. To date, we've made significant progress executing against our goal to identify new pathways to care in PPD. We are taking a family-centric approach in our go-to-market strategy with a focus on helping to open reimbursement channels and support access for women with PPD while activating REMS-certified centers of excellence. We also believe it will be important that health care settings where ZULRESSO is available provide a positive patient experience for women with PPD.

As a reminder, Centers of Excellence, or COEs, are sites of care that have a PPD health care provider champion, ability to secure appropriate payer reimbursement for ZULRESSO, certification under the ZULRESSO REMS, which includes monitoring by qualified trained staff, specific protocols and the maintenance of patient registry. We estimate that fully activating a COE can take 6 to 9 months from launch and will vary by center. Therefore, we expect to start seeing momentum in the fourth quarter of this year.

In the early stages of the launch, we expect ZULRESSO will primarily be used in the estimated 20% to 30% of women diagnosed with severe PPD. We are also working to identify a range of potential alternate sites of care capable of operationalizing and complying with the REMS in order to create more options for patients and their families.

We've had a high level of engagement with potential Centers of Excellence, as permitted, having profiled more than 600 leading up to the PDUFA. We are now narrowing down a targeted list that we expect to be REMS-certified at launch and in the months following launch. Since the approval of ZULRESSO, we have received a significant increase in inquiries from COEs, and we have driven increased engagement with a broad range of medical and administrative leaders in these potential COEs, as permitted. Through this engagement, we have been able to initiate the process of REMS certification at specific sites of care. We are encouraged by the early signals of interest at the COEs.

Also, key to our go-to-market strategy is helping to enable broad access to ZULRESSO for women with postpartum depression. Over the past year, we have completed over 500 payer engagement meetings with the majority of commercial and Medicaid payers. In the week since approval, we've had productive meetings with payers representing 90% of covered lives in the U.S. Based on the level and tone of engagement we've had so far, we believe payers now recognize the burden of the disease, the stigma, the challenges experienced by women with PPD and ZULRESSO's unique product profile. We also received significant inbound requests from payers since approval. There is a clear sense of urgency among these stakeholders to review the product profile and develop appropriate coverage policies designed to enable access for women with PPD at launch.

As I mentioned, part of the work of the Centers of Excellence will be to establish reimbursement pathways beyond DRG, including carve-out payments and negotiated case rates. Commercial accounts state our case rates with hospitals and health systems to cover the cost of ZULRESSO. Medicaid payers have expressed their intent to provide appropriate reimbursement to hospitals via existing pathways or negotiated case rates. Based on our interactions, we are confident that payers will provide coverage aligned to the label and our clinical studies for women with PPD with medical policies varying by payer. We expect the majority of formal medical policies to be finalized in the coming months.

Historically, women suffering from PPD avoided seeking treatment because of the complicated journey to care and stigma. We have made tremendous headway building our patient support organization headquartered in Raleigh, North Carolina, and our team's focused on several key areas. We will provide a range of patient support resources to assist women with PPD and their families including: dedicated case managers, who can provide information to help navigate the treatment journey; personalized support to assist with understanding insurance and coverage options; financial assistance programs for eligible patients; and access to educational resources and assistance with where to go for help on a particular topic and connecting to local resources.

Teams across Sage have demonstrated their commitment and dedication to engaging stakeholders in creating the infrastructure we believe will be necessary for ZULRESSO to be successful so that we can realize our commitment to making a difference in the lives of moms with PPD.

In addition to traditional metrics of success like revenue, post launch, we plan to provide updates on the number of REMS-certified COEs and other sites of care, the number of sites that have administered treatment to a patient and metrics on payer coverage and patient access. We look forward to providing these updates on future earnings calls.

With the approval of ZULRESSO, we have an opportunity to shift the paradigm of how PPD is treated. We'll be providing what we believe is a groundbreaking new treatment to patients who previously had access to a limited set of options. We look forward to creating even more optionality for patients and their families and potentially impacting generations of lives.

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

Thanks, Mike. I'll now walk you through the highlights of our financial results and guidance. For a complete review of our first quarter 2019 financial results, please consult the press release we issued this morning or our Form 10-Q filed with the SEC.

Starting with our balance sheet. We ended the first quarter with $1.4 billion in cash, cash equivalents and marketable securities compared with $922.8 million at the beginning of the year. In February of this year, we raised 50 -- $560.9 million in a follow-on public offering after costs and discounts. Our cash on hand keeps us in a strong financial position as we prepare to deliver upcoming milestones across all 3 of our CNS franchises.

As Jeff and Mike have described, we've developed a pipeline with enormous potential to improve the lives of patients suffering from life-altering brain health disorders. This success and value we've created to date would not have been possible if not for our proven financial playbook and disciplined approach to investing in our portfolio.

Turning to the rest of our financial results for the quarter. Research and development expenses increased to $86.4 million in the first quarter compared to $49.3 million for the same period of 2018. This increase reflects costs associated with the ongoing late-stage clinical studies of SAGE-217 and earlier-stage studies for our other product candidates across our pipeline as well as discovery efforts focused on identifying new clinical candidates and additional indications. We've also expanded our R&D team to support the growth in Sage's pipeline and operations.

General and administrative expenses increased to $83.9 million in the first quarter compared to $28.8 million for the same period of 2018. This increase is the result of the continued investment in preparation for the planned commercial launch of ZULRESSO and the ongoing build and expansion of the organization and operation.

We reported a net loss in the first quarter of $163.4 million compared to a net loss of $74.6 million for the same period of 2018.

For updated financial guidance, based on our current operating plan, we now anticipate that our cash balance will be at least $950 million at the end of 2019. We expect that our operating expenses will continue to increase year-over-year to support the ongoing investment in our multi-franchise portfolio, including ongoing pivotal studies for SAGE-217 in MDD and the commercial launch of ZULRESSO in PPD.

2019 has already been a productive year for the company, and there's a lot more to come as we aim to maximize the significant potential value of our pipeline assets. We've done a great job so far of making investments in our lead program that we hope will set us up for long-term success. We continue to maintain a solid financial foundation to do the same for our quickly progressing early-stage pipeline.

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

(Operator Instructions) Our first question comes from Brian Abrahams from RBC Capital Markets.

Congrats on all the progress on the ZULRESSO launch. Two questions for me, both on 217. If you look to further expand the long-term opportunity there, can you talk about what you might be looking for with respect to potential signals from the open-label bipolar study that might suggest opportunities to explore other affective disorders, perhaps disorders in the anxiety spectrum?

And then as you think about this expansion beyond MDD and PPD, how do you balance potential future revenue opportunity with the necessary investments? And are there ways that your work in depressive disorders could help streamline development for these expanded indications?

At first, thanks, and good morning, everybody. I just want to take one moment to basically acknowledge Sage has had a really exciting quarter, and the folks at Sage who have accomplished something that many people I think ever get to which is our PDUFA and approval for ZULRESSO with -- for the treatment of PPD. And I know we're going to have calls -- talk a lot of questions today about everything, but I just want to acknowledge what a great milestone this has been for Sage and the people who work for us.

So with that, I'm going to -- you have a couple of questions. So I'm going to speak about this in sort of top line and then pass it off to Steve and Kimi.

With respect to 217 in general, one of the points we're looking -- one of the things we're looking at is how -- as you ask, is how do we maximize the clinical utility and hence market value of the drug. And one of the things -- we've had more time since the completion of our Phase III study not only to think about -- and Steve will talk about this, bipolar, but also to examine much more critically what the findings have been in the MDD program as well as in the PPD program. And we think what we're learning from those double-blind studies is going to be very useful in helping us determine where to invest further dollars in maximizing SAGE-217.

Our plan, just as an aside, is to present a somewhat coordinated R&D update in July because we have so many milestones coming due over the next few months. We thought it was the most efficient and useful for both the public as well as us to discuss what opportunities lay before us and where we think the most prudent investments ought to be. So with that, I'm going to turn this over to Steve Kanes.

So first off, with regard to bipolar, this is a part of our -- the way that we explore the value of the many assets that we have within our portfolio, and we've always done this, where we start first with open-label data and make use of it to make decisions in the portfolio. As Jeff mentioned, there's a lot more information that goes into the decisions around life cycle management and other kinds of indications, including data that we've collected inside of our own trials. So those will all be information that we put together as we make decisions to how we're going to move forward with developing the 217. It's just a great example of how we approach drug development, which has been extraordinarily efficient.

I'm going to pass it on to Kimi because I think it speaks to the way we think about business decisions, around our portfolio as well and how we've gotten to where we are.

Yes. Brian, I think the question you were getting at was really around all the opportunities that we have here at Sage. It's not only just the clinical, but there's commercial opportunities. There's early-stage development. And how does Sage think about making decisions there? I think one of the ways we do that is, one, you've heard over and over again, which is our deliberate approach -- our disciplined approach to investing. And you've heard Steve talk about the derisking elements that we use in our clinical trials as well.

The other thing that we do is to really make sure that we think about the near, the mid and the long-term opportunity. We think about the risk associated with that, and we think about the capital needs. And so this is really -- one of the things that we've always done is we follow designs, and that is -- that's Sage.

And so the other part to that is we always think about how to best spend our dollars to maximize the value. So that's what we've been doing to date and what we'll continue to do going forward.

Our next question comes from Paul Matteis from Stifel.

This is Ben Burnett on for Paul Matteis. Just 2 quick questions. One on SHORELINE, the open-label study. So after patients receive the initial 2-week course of 217, I guess, logistically, how are physicians defining relapse? And then what triggers retreatment in this setting?

So yes. This is Steve. For SHORELINE, what we've done is we've established standards. We don't necessarily want patients to go all the way back to relapse. That would be inappropriate, but it ends up being a combination of clinical judgment -- are patients moving in the -- towards a recurrence of symptoms, and we've set specific standards within the trial. So really, the study itself, for those who are less familiar with it, is a much more naturalistic approach to understanding how often patients may need to be retreated. That's a way for us to really understand not only safety of the drug with retreatment, but also gives us a lot of information about the natural course of major depression itself.

Yes. This is Jeff. One other point to make about SHORELINE is there's been a lot of discussion about how depression is treated. And in reality, you speak to psychopharmacologists who are skilled in this area, many of them are already pursuing intermittent treatment. People that are on SSRIs, they actually do stop the SSRIs after a few months and evaluate the patients and watch them. So SHORELINE, in many ways is designed to replicate the way many experienced psychopharmacologists already treat their patients.

The 302 study, which doesn't yet have a landscape in that name, fortunately, is really designed to talk about the way many -- other physicians choose to treat patients, which is try to maintain them symptom-free. So that's the design of the 302 study. So our intent with both of those studies is to craft the data package at launch that will really best inform clinicians however they opt to choose patients with MDD.

Okay. So if I understand that, this is sort of physician's choice, patient's choice as to when treatment occurs and it's not through standardized, I guess, from center to center? Is that fair?

Yes. So the goal at the end is to have a data package that would support the maximal utility of the drug however physicians ultimately treat patients. And the data will -- and then each study is, of course, standardized as there are research protocols. But at the end of the day, the goal is to have a package that would support various approaches to treatment as appropriate.

Okay. Understood. And then just one more on 217. So you guys -- there's a number of studies ongoing or planned. And assuming these are all successful, I guess, can you just talk about what you see as being critical for filing for potential NDA and I guess specifically what do you see is needing to be in the NDA versus just being supportive? Just trying to get a handle as to what could be gating for filing.

This is Jeff. In terms of timing, we don't anticipate much gating with the enrollment. The enrollment has been extremely robust across the studies as has the level of interest. I think, generally speaking, the level of interest for most of our programs has been high, and I think that has to do with the novel way these mechanisms work in treating depression. You saw that with ZULRESSO, and we're seeing that now with 217. The filing package, obviously, will be determined by the data. We -- the understanding we have remains that we need evidence of acute activity. We already have 2 studies that show that. We believe that 302 could be pivotal. It's a standard withdrawal design that has been accepted as pivotal as the company -- by other -- in other drugs. 301 could also be pivotal. We also have the sleep study, which we think it was powered for efficacy. So we have a lot of shots on goal that we think can accommodate a filing. What -- which studies are prohibitive always depends on the data, of course. I think the final point, and this is one of the things that makes SAGE-217 somewhat unique in the annals of depression studies is that the drug's effect size has been regularly quite large and reproducibly quite large. It hasn't varied from study to study. And as a result, even with high powering, the size of our studies are not that large for efficacy, so a lot of our work is getting an adequate safety database.

Yes. The only other thing I'd add is the most important thing for a registration program other than many of the other features that we may build -- be built in are 2 positive placebo-controlled trials. And of course, we already have 2 pivotal trials that are positive with 217, both the MDD and PPD trial. So much -- I mean, that's not all you need for registration, but we already know that we're seeing very robust efficacy, a very reproducible efficacy in the outpatient setting. And so really, it's about, as Jeff said, understanding the data and making the maximal use of that to get the best label at the time of approval.

Our next question comes from Salveen Richter from Goldman Sachs.

Give us thoughts here to filing separately for 217 in PPD versus together with MDD. And then secondly, in your 302 study for MDD, what exactly is the fixed interval period?

Okay. This is Jeff. I'll take one, and I'll hand off the second to Steve. I think the company -- I think we've been very adroit at accelerating all of our programs. We're always looking for those opportunities. But right now, I think what we need to articulate the filing strategy of looking for 2 indications with 1 NDA filing is the one that we are -- is the only thing we can comment on today. I'm going to turn the 302 question over to Steve.

Yes. So the answer to the specific question is it's 2 weeks of treatment every 2 months, so for a maximum of 6 treatments in a year. And that's we think allows us to really understand patients and how well they do in those intervals.

We also know, Salveen, from our decay curves in terms of response rate that we think that's a very reasonable interval that patients will remain symptom-free.

Our next question comes from Matthew Harrison from Morgan Stanley.

This is Hannah on for Matthew. We were wondering if you could give us more color on how much of the patient population you believe can be addressed in those initial health care centers for ZULRESSO. And then just any more color you can give us on how much oversight is required for the REMS?

Yes. So this is Mike. I'll take the first question, and I'll turn the REMS piece over to Steve. So on the Centers of Excellence, just to step back, I think it's important learning that we really want to stress on this call is that we are launch ready, right, at this point. We see a lot of excitement out in the community both in terms of our COE engagement but also the payers. And we're on track, right? We're on track for our June 2019 launch. And we're doing something that's never been done before, right? When you think about the Centers of Excellence that have to be developed, this is something that we are paving the way and creating the standard of care here for postpartum depression in moms suffering from PPD.

Your specific point on the Centers of Excellence and what the segmentation will be. So as you heard us talk about, we've profiled 600 Centers of Excellence at this point, right, and we're now narrowing that list down to a very targeted list of COEs that we still want to maintain that broad access and create options for patients, right. That strategy has not changed for us. But as you also heard us talk about, we think the initial patient population for initial use is going to be in the severe patients. So our goal is to establish as many Centers of Excellence as possible to create that broad access for patients and provide that uptake for patients in the early months initially focused on the severe patient population.

Let me turn it over to Steve to talk a bit more about the REMS criteria.

Yes. And so just to bring it to a higher level, the goal of the REMS is to ensure that the drug ZULRESSO is delivered safely and is done in a way that it's not overly burdensome to health care facilities. And that's a driving force for us as well as for -- and to ensure patient access. So the specific features include, I would say, what would be considered relatively routine observations in hospitals. We will be using pulse oximetry as a way of monitoring the patients, this is routinely applied in hospitals. And a lot of the other features are really to make sure that the drug is distributed to places that have been trained appropriately and to patients that are enrolled in the registry. So those are the key features. They're not particularly burdensome for the health care facilities themselves and often fit directly into the kind of patient care that these patients would require.

Our next question comes from Cory Kasimov from JPMorgan.

I have 2 of them as well. So I guess, first, to follow up on the prior one asked about filing 217. How much safety data will you need from 302 and/or SHORELINE? So assuming that pivotal MOUNTAIN Study is positive, are you finding you're getting enough safety information from SHORELINE? And if not, would you be able to collect safety data from 302 if that's still ongoing to include in an NDA filing?

Cory, it's Jeff. Basically, we're looking for ICH criteria. The -- as you recall, the concern we had -- the positive concern we had with 303 is that we were concerned that not enough patients would relapse to require retreatment over a year, which is one of the advantages doing the 302 study. So we know we have information about potential maximal use scenarios. Remembering ICH is looking for 100 patients treated continually over a year. This is an intermittent therapy. So the 302, we think can help with that. But I know you know this -- there are a number of scenarios where with the 301 and safety data, you can do an NDA update. There are other scenarios that do this that allow acceleration of time lines. But as I said earlier, I think we're looking at several strategies, but I think today we should -- what we have to say is the plan we have is the one we're sticking with moving forward.

I was just saying since this is a breakthrough therapy program, we do have the ability as we go through to monitor overall patient numbers and have those discussions. One of the reasons why we, as Jeff said, really look for opportunities to accelerate the program and make sure that we have the appropriate level of data for the large indication of major depression.

Okay. That's helpful. And then my second question is on bipolar. There was a recent clinicaltrials.gov update that indicates you've extended the primary endpoints from 14 days to 42 days. So curious what drove that change and if you're seeing something in the data that warrants moving this out further.

Absolutely not. I think what we want to do is make sure that we can emphasize and get everything together so we can really give some focus to those decisions.

Our next question comes from Tazeen Ahmad from Bank of America Merrill Lynch.

With regards to indications that you're pursuing, Jeff, there are certain things that you're obviously looking at in terms of deciding which one you even want to explore. So you're clearly not the first to go into territories that others have gone and have gotten drugs approved in for MDD, for example, but there are others like schizophrenia that we haven't seen you try to pursue yet. How are you making the decision on which indications you want to pursue? And then I have a follow-up.

I mean, it's in some ways -- thanks for the question. So with respect to the larger questions, how are we making decisions, what to pursue. I think, with 217, our approach is really going to be towards affective or mood disorders. We have a substantial database now. Some of which we're going to talk about in July when we go -- because that's going to be very important to how we make our portfolio decisions. But with respect to some of the other disease, like you mentioned schizophrenia, we mentioned on the call -- and I'm going to turn this over to Jim in a minute, 718, we believe is already showing the activity that suggests it may have some cognitive-enhancing ability. We think there may be biomarkers involved that could predict patients who are more sensitive to intervention. So the fundamental premise is always going to be the activity of the drug in human studies, understanding the physiology of a particular pathological state and whether we have drugs that actually we think can impact those states. So for schizophrenia, I think you'd look more towards 718, but I'll turn this over to Jim.

Yes. Thanks, Jeff. Good progress is really continuing across that early-development pipeline. And you'll hear more about that in July when we get a chance to talk about both 324, which of course is the front end of our neurology franchise, GABA PAM, but also importantly, as Jeff was saying, 718, which is the leading program for our neuropsychiatric franchise. Of course, a lot of signs around schizophrenia and other indications and certainly a lot of signs around cognitive enhancement with NMDA receptors, and so we're very excited about the progress with 718. As you'll see, we're spending a lot of time trying to understand how 718 engages with the brain. And so in addition to the Phase I data around understanding the drug profile for 718, we're also really spending a lot of time to try to understand target engagement and how it's working with the brain.

One other point, Tazeen, I wanted to mention is that, one of the things that's happening with Sage and our molecules is that, as we demonstrated human activity, the pre-clinical and scientific literature is advancing looking at our particular mechanisms. And so a lot of times things are becoming apparent that have been hitherto unexpected. So a good obscure example would be, in a subpopulation of Alzheimer's where they have hyperactive neurocircuitry, may that be -- no, I'm not saying we're going to do this, that's an area where some of our molecules might be applied which no one would've thought about 2 years ago, hypothetically. So a lot of what we're doing is advancing the science. And we as a company have to adjust our targets based on new science, and I think Jim's team and Steve's team has been good at doing just that. So our indication selection is always going to be based on clinical feasibility, unmet medical need, what's best for patients, but it's always going to be driven by science. But a lot of that science, frankly, is evolving with our programs. So that's how we're thinking about it.

Okay. And then keeping on the same theme, looking at 718 also for Huntington's, it's an area of unmet need, but there are several companies that are also trying to do this indication at the same time. So I know it's very early days, but how do you think you can be distinguished from anything else that might also be potentially in development there?

Yes. Absolutely. So -- and of course, we do follow the science. We use the same process in how we move into different therapeutic areas. And so where we started with 718 is really looking at where are the disorders, where the endogenous mechanism is disruptive. And so what we're expecting to see with this, if we can normalize NMDA receptor function, is effects symptomatically improving things like cognitive dysfunction. So we're not necessarily going after Huntington gene issues per se, but we're looking at resolving symptoms and importantly, cognitive symptoms, which is something that really is underserved at the moment.

Our next question comes from Akash Tewari from Wolfe Research.

So you've mentioned that antidepressant maintenance trials usually have a higher success rate than a typical depression trial. But it looks like 217 trials really won't have a traditional design. Most notably, it doesn't seem that 217 will have the randomized withdrawal design that progresses patients only after they've kind of had a stable dose for at least 12 weeks. So how should we kind of rectify those trial design differences with the team's internal confidence that the maintenance study reads out positively? And I'd love to get some details on what data you've seen internally that helped inform the fixed maintenance interval for the 302 study, considering we haven't seen the PRN data yet?

Okay. Couple of points. One is some of the data is from internal follow-up we haven't made public. So you can just infer that we have data that suggest that 2-week -- the 2-month interval is adequate. With respect to the design, I think you have to think about the way these drugs aren't SSRIs. So our drugs are showing activity within days. They only require 2 weeks of treatment. So that is so -- but beyond that, so the efficacy treatment period is going to be shorter by getting to the fact that our drugs so far in every study have worked more rapidly and more completely. But beyond that, 302 is and will be, I don't think we've articulated the design, but it is a classic randomized withdrawal design at a fixed interval. I mean, the difference being it's a fixed interval because the drug doesn't require chronic dosing.

Our next question comes from Yatin Suneja from Guggenheim Partners.

This is Derek on for Yatin. Can you just maybe give us a little bit more on the mood-stabilizing effects of 217 beyond any antidepressant effects and sort of some of the consequences for the MDD indication as a whole? We're just trying to see -- get a feel for what we can infer towards MDD based on bipolar data.

Yes. So this is Steve. I think what we've talked about so far are some of the features, the key features of 217. And beyond simply the antidepressant effects, we've also seen some very dramatic improvements overall in anxiety. And of course, those 2 features often move together both in disease as well as with treatment. And that's been consistent across all of our studies, and it's something we're very interested in. The other information that we've seen so far is an improvement overall in sleep. And this is in a study in healthy volunteers where we did a phased advanced model, where we took patients. We essentially induced jetlag as a standard model to see whether or not the drug can improve sleep and sleep architecture. And again, we've seen a very positive effect, as a placebo-controlled trial and a very differentiated profile. So we're starting to make use of the data that we have to understand the potential utility of the drug.

So the other area that we have of interest, particularly as it pertains to bipolar disorder is, is there an opportunity to improve mood. Can the features that we've already articulated benefit potentially into bipolar disorder? But really for us, it's about exploring and making use of the drug at its best. So I think that's the way we think about it. And with the mechanism there are many, many opportunities to pursue. With all the data together, we'll be able to use that to make decisions into 217's development.

That is very helpful. And then maybe just one other quick one. I'm not sure if I missed it earlier. Have you provided commentary on sort of the rate of growth of Centers of Excellence, just trying to sort of model out how that may or may not slow down uptake of ZULRESSO.

Mike, I'll take that one. So we haven't even necessarily, but what we've talked about is the profiling efforts that we've done in 600 centers narrowing that down, very encouraged by the early signals we're seeing from the Centers of Excellence. We've actually initiated the REMS certification process. But what we've said is we'll give those metrics in the post launch setting around how many centers have been certified. And in those centers, how many have infused patients. So those metrics will come in the post launch setting. No center will be officially certified until the DEA schedule happens. So that's way we're waiting for the post launch setting to deliver some of the metrics. And we've also said that we expect, given how long it takes sometimes to set these centers up, established reimbursement, it can take 6 to 9 months, but it will vary by center. So in the next call, look for future updates on what those metrics look like.

Our next question comes from Andrew Tsai from Jefferies.

Congrats on all the progress. Maybe one question on bipolar. Even though Part A is open label, I think investors might be tempted to compare the initial dataset to what antidepressants currently achieve. So what do antidepressants or antimanic/antidepressant drug combos show in terms of NMDA reduction as well as remission? What would be the best comparable data out there?

So I think the way we think about bipolar is, as it pertains -- I had mentioned this before, this is really about the way that we develop drugs. We look to see the effects, and we use those effects to make decisions about our portfolio and how best to develop the drugs that we have as opposed to baselining against other drugs that are out there. Because what we've seen are very unique features of our drugs in development. So -- in some sense, we don't necessarily think to make direct comparisons with other drugs for the treatment of bipolar because it's not necessarily relevant. If you think about the features that we're demonstrating, at least with regard to 217, we're seeing improvements of sleep. Now that's something that may be very important in bipolar disorder, unique for SSRIs and so forth. They disrupt sleep. Likewise, what we've seen is very complete effects in depression. But what we know with SSRIs and others, they can flip patients into mania. And so what we're looking to do, and for any drug that we develop, 217 in particular, one of the unique features of the drug and then how to make use of those to develop the drug most appropriately, and that's what we'll do with bipolar as we'll do with any other indication.

And also you mentioned how antidepressants may cause patients to switch to mania. Any evidence to support -- suggest 217 wouldn't cause this?

Not at all.

Our next question comes from Gary Nachman from BMO Capital Markets.

It's (inaudible) on for Gary. For ZULRESSO, regarding the list price of $34,000 per course of therapy, what sort of discounting and rebates are you anticipating to ensure good access? What gross to net should we assume in the early stages of launch? And how should that normalize over time?

Yes. This is Mike. I'll take those questions. So on the pricing. So -- given the innovative nature of ZULRESSO, we've had extensive engagement with the payers, right, to really understand their needs and the education around PPD and how the product profile for ZULRESSO fits in. We don't expect a lot of contracting requirements or minimal requirements at this time, right? But we want to maintain broad access for patients. So we're continuing with conversations with payers. But at this point, our focus has been on minimal contracting needs given the innovative nature of ZULRESSO and the high unmet need that exists out there. From a gross to net perspective, that will come in the post launch setting. We haven't given guidance around that as well. But what I can tell you, that will depend on the different sites of care that exist at this point in time, things like 340B, et cetera, will depend on the mix of patients that go through either an outpatient center because 340B only applies to the outpatient setting. So once we have a little more data in the terms of the type of centers, how the reimbursement and where patients are going to go, we'll be in a better position to give you some gross to net guidance, which will come post launch.

And when do you expect to file ZULRESSO in Europe? And how long before a potential approval there?

Yes. So I'll take that one as well. So let's talk about European strategy and where we are in Europe. So if you remember from previous calls we've talked about, we're going back and getting scientific advice from the EMEA. We've done that, and there are -- as you probably know, there can be some differences in terms of how the EMEA reviews the file versus the FDA, but not differences that are -- that you can't address. And so in this particular case what the EMEA is requesting another study for ZULRESSO. And so for us, we're doing some clinical development strategies now to determine what path makes sense for us. But probably, more importantly, we're looking at this now from a portfolio perspective. We really want to look at this now with ZULRESSO and 217, what do we think the optimal approach in terms of how and when we enter Europe makes sense for us. And so we're continuing to engage with the EMEA and other stakeholders in the EU to determine what that best path is for us from a portfolio perspective. So we'll come back on future earning calls and give you an update on what that timing and expectation can be on the portfolio.

Our next question comes from Danielle Brill from Piper Jaffray.

You mentioned that you launched an expanded access program for ZULRESSO. I'm just curious, have any patients been treated yet? And have you received any initial feedback?

So first off, yes, we've launched an expanded access program. It's the right thing to do for patients. We have an approval. We're preparing for launch, and the need for treating patients is, as we've been saying along, immense. So a lot of interest. We won't be talking specifically about numbers, but I can say there's a lot of interest in being able to make this medicine available for patients. And there are absolutely patients in the queue, and we have a process in place to be able to help them in their time of need.

Got it. And sorry, just to clarify, the program's launched at your -- some of the identified Centers of Excellence, correct?

It's separate from that. Any patient or physician is able to, as long as they have the appropriate facilities, to make this available for patients.

Our next question comes from Ritu Baral from Cowen.

I've got one on SHORELINE and one on RAINFOREST. SHORELINE -- correct me if I'm wrong, SHORELINE is open label. Are you guys able to look at the safety data real-time? And is there any planned disclosure strategy for the safety data as that goes on?

Ritu, it's Steve. So an open-label study, and like all studies, we monitor safety very intently and in real-time. But there's no plan to disclose any of the emerging safety data unless there was something that was absolutely thrilling to -- that would be material. And what I can say is at this point more -- we're very comfortable with the -- we're very confident with the safety profile that we've been seeing so far. More than 600 individuals have been treated. We've seen a very consistent benefit/risk profile. So no surprises there.

And Ritu, one other point to remind folks. A lot of times -- we have a large number of programs underway in the company. And I think it's important to remember, people sort of think open label's like every patient is processed, and we get to see it. It's not how open-label studies work. I mean, the data are acquired at the site, but until the study is closed, it stays on the site. We're not -- we monitor safety, but efficacy and those things, those remain unanalyzed and unsorted basically until the study enrollment is complete. And even then, the analysis is perceived in a particularly ring-fenced manner so that until the analysis is complete, in order for it to remain as objective as possible, we're not seeing it. So I mean, there is a protocol to using open label, the way we're doing it. And again, remember, we do open labels not just for a signal of activity, but for methodology, clinical feasibility and portfolio decision-making. So I just want to clarify that the fact that is something is open label doesn't mean like Steve is getting a daily fax because he still uses fax.

That's fair enough. So is it fair to say that the retreatment, the real world retreatment data generated from SHORELINE isn't going to be available to you and to Steve until the end of the study essentially?

Yes. It's a pivotal program. And in every pivotal program, we have very strict engagement rules about how the data are handled, extremely strict. And so, no, they will -- when the study is done, we'll report it out, but not beforehand.

Got it. And then moving on to RAINFOREST. Is there any element of RAINFOREST, especially the safety, that's essential for the 217 depression filing? Should we think about that -- how should we think about the safety effect of that study as it relates to depression? And also, if you do plan on pursuing the co-morbid insomnia indications, do you have to do any additional safety studies like a driving study or anything?

So there are a couple of points here. One is we already have done in the sleep study, looked at next morning -- next day morning performance as well as in the Phase I. As Steve has mentioned, we probably treated more than 600 patients with 217, so we have a lot of data on the next-morning performance, and it's been very encouraging. I'll just leave it at that. We're not -- and if you look at our data from -- with respect to rebound and withdrawal, you don't see any of that. And if you look at what happens after this -- and in particular, Steve has alluded to this before, if you look at anxiety data, you're not seeing that increase. That appears to be a durable effect. So the sleep study is intended primarily as a biomarker study, looking to demonstrate improvement in sleep in patients with co-morbid insomnia. We are optimistic that could be included in the label in some way, and that's really the primary purpose. But we are already reassured by an extensive database of what happens the next morning. And as I mentioned, even though we're doing 20 and 30 milligrams in the study, in the sleep study, we were up to 45 milligrams. And again, it was very well tolerated.

Got it. And then did you -- sorry, the next -- the driving study?

So we're looking into the entire clin-pharm program. I mean, typically, you would do next day driving studies and so forth as part of the overall clin-pharm package. And one of the things we're looking to do, this is a drug that's intended for a large indication, and so we will put in everything that we need in order to maximize the value as well as to be able to demonstrate the appropriate -- all the warnings, precautions, everything else. So at the time of filing and approval, we'll have all the information necessary to give appropriate instructions for patients.

Our last question comes from Joon Lee from SunTrust.

Regarding BPD, my understanding is that BPD and MDD are often confounded given that this condition oscillates between mania and depression. What gives you confidence that any effect you see is indeed the effect of the drug and not confounded by the natural course of the disease? Some studies suggest that 25% of manic episodes recover in 2 weeks from onset while 50% to 75% spontaneously recover in 3 to 6 weeks.

And the second question is that, given the recent Phase III failures of Rapastinel which is a positive allosteric modulator of NMDA, I was curious if there's any read-through through your 718 program, which is also an NMDA positive allosteric modulator. What does it bind to, the glutamate or glycine site? And what gives you confidence that it won't meet the same fate as Rapastinel. And I think you mentioned something about disclosing some early studies data at a future date. Are you specifically aiming for a medical conference in July?

All right. So a couple of points. I'm going to pass this one around. But we're planning in July, to be specific, to do a summary. We have a lot of data readouts coming up. And as a company, we prefer not to drib and drab multiple press releases of single studies. So we think the right way to handle this, frankly, for us and for The Street is to consolidate this in a -- in one conference call, and we're planning this towards the end of July when all the data can be presented en masse because a lot of that's going to -- we'd like to also speak about a lot of the potential portfolio decisions we're planning to make. We also need to use this. I think as today's discussion nicely exemplifies, everyone is hyper-focused on 217 and ZULRESSO, and Sage is really so much more. We have so many more programs in the clinic. Remember, we have a large compound library of pharmaceutical-quality products. We're looking at multiple potential mechanisms, and we think it's behooved us as a company to point out that we not only have important near and intermediate term opportunities, but we can sustain this company in the long run with internally generated innovation. So we're going to spend the time in July to go through that with you folks to really talk about what's going on with program development, some of the earlier preclinical works and pre-IND work we're doing. We want to be explicit, but we're going to do that probably at the end of July, probably, hopefully when all of you are on vacation. It's a little joke. With respect to Rapastinel and the other question, I'm going to turn first to Rapastinel. You've actually not gotten that entirely correct. So I'm going to give that over to Steve, and I'll turn the next question over to -- on to Jim and then to Steve.

Right. Thanks, Jeff. So of course, Rapastinel has been proposed and tapped as an antidepressant molecule and really following the hypothesis around blocking NMDA receptor function. As far as the mechanism of action for Rapastinel, a lot of different studies are being conducted and I think there's still some discussion about exactly how it's interacting with the system. In contrast, we've been following the idea that an endogenous mechanism and natural mechanism modulates NMDA receptor function. So you asked about where the SAGE-718 interact with the NMDA receptor. It is at that novel site that's distinct from some of the other things that have already been tested. So we're very confident in the profile of 718 in positive allosteric modulating NMDA receptors and also the importance of this mechanism and how it can be modulated into these.

And specifically, about the question you had about bipolar disorder. The kind of questions you're asking are exactly the reason why we start with open-label data first. We look to see what is the effect of the drug in a patient population where we know there's going to be variability to help us plan how we would go ahead and do a placebo-controlled study. Not from culling the literature, but from real data that we've collected in our own hands. And one of the ways that we've been successful is we use those data both to make decisions, is this an opportunity we want to take now or later? But also, if we're going to go forward, how will we design the studies in order to be able to demonstrate signal over the noise that you've pointed out and potential other confounders as well. So we've moved from PPD open label to our pivotal program in ZULRESSO. We've moved from MDD into a very successful MDD program in 217 and now how we plan on doing all of our new indications with other products.

Thank you. This concludes our Q&A session. At this time, I'd like to turn the call over to Dr. Jeff Jonas, Chief Executive Officer for closing remarks.

Well, again, thanks all of you for joining us today. I want to also extend a thank you as always to everyone who's played a role in Sage. It's really a tremendous accomplishment. Looking at the progress we've made over the last 8 years since our founding, I believe we're really delivering on our goal of becoming the leading CNS company in the world. And as we always keep on saying, we're really just getting started.

So with that, I hope all of you have a great day and look forward to hearing from you. Thanks.

Thank you, ladies and gentlemen, for attending today's conference. This concludes the program. You may all disconnect. Good day.