SAGE Therapeutics Inc (SAGE) 2023 Q1 法說會逐字稿

Good morning. Welcome to Sage Therapeutics' First Quarter 2023 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 Helen Rubinstein, Director of Investor Relations at Sage.

Good morning, and thank you for joining Sage Therapeutics' First Quarter 2023 Financial Results Conference Call.

Before we begin, I encourage everyone to go to the Investors & Media section of our website at sagerx.com, where you can find the press release related to today's call, as well as the slides that we will be reviewing today. I would like to point out that we will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties and our actual results may differ materially. Please review the risk factors discussed in today's press release and in our SEC filings for additional detail.

We will begin the call with prepared remarks by Barry Greene, our Chief Executive Officer, who will provide an overview of our progress during the first quarter of 2023. We will also be joined by Jim Doherty, our Chief Development Officer, who will review recent progress and development activities across our programs. Our Chief Business Officer, Chris Benecchi, will provide an update on our preparations for the potential launch of zuranolone in MDD and PPD. And we will then be joined by Kimi Iguchi, our Chief Financial Officer, who will review the financial results from the first quarter of 2023. Laura Gault, our Chief Medical Officer, will be available during the Q&A portion of the call.

With that, I'll now turn the call over to Barry.

Thanks, Helen, and thank you, everyone, for joining us this morning.

At Sage, we are driven by our mission to develop brain health medicines that deliver what matters most to patients, so every person can thrive. We do this by acting with urgency and challenging scientific convention to think differently as we work to develop new and effective treatments.

This month marks Mental Health Awareness Month, which is an important reminder that the need for innovative brain health medicines has never been greater. Depression is the leading cause of disability for young people and those in their prime working years and the problem, as we all know, continues to grow. Alarming research published recently by the World Health Organization shows that rates of suicide have increased in the US by more than 40%. Simply put, Mental Health Awareness Month Reminds us all that we must do more to challenge these trends. People with depression deserve better. Time is now for Sage to lead the way in making a difference for patients.

2023 will be a pivotal year for Sage and is already off to a strong start. We are laser focused on preparing for the potential launch of zuranolone, and believe we're on our way to achieving our vision of transforming the treatment of depression if zuranolone is approved. We're also advancing our robust brain health pipeline comprised of several new chemical entity development candidates that is a result of our product engine. We believe our pipeline holds the potential to help millions of people suffering from brain health disorders and deliver significant long-term value creation.

Importantly, our work is backed by a strong financial foundation that we believe puts us in a position to further our pipeline ambitions, with the goal of being able to launch new drugs or new indications for years to come.

Looking forward, we have many key milestones on the horizon. First, the NDA filing for zuranolone in MDD and PPD is under review by the FDA, with a PDUFA action date of August 5. Now, as I mentioned during our last earnings call, during this review period, we'll not be making detailed comments on the potential label, FDA interactions or other related topics for zuranolone.

As we prepare for the potential launch of zuranolone, we and Biogen are continuing permitted pre-launch commercialization activities. We're actively engaged in discussions with payers and policymakers and collecting key insights from health care providers and patient advocates, with a goal of providing a model of care that works in the best interest of patients with MDD and PPD.

Additionally, our team and collaborators have presented data at several key meetings, highlighting the negative impact of depression on patients, their families and society. These findings provide an important backdrop to our ongoing launch preparation. Chris will provide additional details on our ongoing and planned commercialization activities later in the call. We and Biogen are also advancing SAGE-324, which we believe holds potential to provide differentiated benefits to patients with essential tremor and other movement disorders.

Now turning to neuropsych. We are making progress across our wholly-owned SAGE-718 NMDA PAM program. With SAGE-718, we're leading with Huntington's disease, a devastating condition were deficits and executive function manifest during prime working years. We're also continuing to execute Phase 2 studies with SAGE-718 and cognitive impairment due to Parkinson's and Alzheimer's diseases.

To close, I'm very pleased with our achievements so far this year and look forward to continued progress in 2023. The time is now to unleash the potential for our science and making meaningful impact on the lives of millions.

With that, I'll turn the call over to Jim for a more detailed discussion of our recent portfolio progress and current clinical expectations. Jim, over to you.

Thanks, Barry, and Good morning, everyone.

Over the first quarter, we have made important progress on our pipeline programs, and I'm pleased to detail our recent advancements and our plans for continued execution throughout 2023. I'll start with depression, where we're continuing to prepare for the potential launch of zuranolone in MDD and PPD. Our vision with zuranolone, if approved, is to transform the way depression is treated, and we know this will require support from many key stakeholders.

Throughout the development journey with zuranolone, we have engaged with a broad set of key medical experts, including gathering insights from key thought leaders. Their feedback has been clear. They are increasingly recognizing that the episodic nature of depression means it could be treated as needed with treatment-free periods between episodes. Additionally, as we've engaged in discussions about the unmet need in depression, physicians continue to highlight that the potential to achieve both a rapid and sustained effect matters deeply to them and remains critical to their patients.

We have received consistent feedback on what they consider the main strengths of the zuranolone clinical data. First, a robust clinical development program with approximately 3,500 subjects. Second, rapid onset of action seen in clinical trials, with an improvement in depressive symptoms observed as early as day 3. Third, improvement in depressive symptoms observed across multiple zuranolone use cases and patients populations in MDD and PPD. Fourth, a consistent safety and tolerability profile.

Additionally, physicians note that this clinical profile has the potential to be particularly impactful if zuranolone is approved, given zuranolone's 14-day oral course of treatment. We believe that scientific forums will continue to play an important role in educating physicians on the clinical data seen to date with zuranolone. We are also continuing to highlight data on the substantial economic burden associated with depression.

In March, we presented important Health Economics & Outcomes Research at the Academy of Managed Care Pharmacy Annual Meeting. These data reinforce the significant negative impacts MDD can have on patients, their families and society. These presentations highlighted the associations between MDD symptoms and reduced health-related quality of life scores and the burden that extends to other adults living in a home with someone with MDD. They also showed the increase in all health-related and MDD-related costs during the 90-day period following treatment with the current antidepressant.

Taken together, we believe these results reinforce the significant unmet need in MDD and PPD, and suggest an opportunity for new treatment options that have the potential to improve quality of life and reduce economic burden associated with depression. Combined with additional research our team has presented and published over the last year, these data provide an important backdrop as we continue to engage with payers, policymakers and patient advocates in pursuit of transforming the way depression is treated.

Turning to neuropsychiatry. We announced earlier this quarter that our wholly-owned lead NMDA receptor PAM, SAGE-718, has been granted orphan drug designation by the EMA, which follows the Fast Track Designation granted by the FDA in September 2021, in both cases in Huntington's disease. These designations advance our strategy to prioritize HD as the lead indication for SAGE-718, where we are currently enrolling 3 studies. Population was chosen as the lead indication as it is a genetically defined disorder and thus is more homogeneous than other populations with cognitive impairment. And there is a strong scientific rationale to support the use of an NMDA receptor PAM. Given the orphan nature of HD, we believe if our trials are successful, we have the potential to pave a novel regulatory pathway and to seek to globalize Sage by pursuing an ex-US strategy in a more concentrated orphan space first.

We're also continuing research into the HD patient journey and recently presented interim data at the CHDI Annual Meeting from 95 patients in a new US-based HD real-world study in collaboration with PicnicHealth. This study is examining the impact of HD on patients' activities of daily living, their health-related quality of life, functional independence and work productivity. The interim data cut demonstrated that patients with HD experienced cognitive impairment across all stages of the disease, impacting their independence and ability to function.

Additionally, we are investigating SAGE-718 in people with mild cognitive impairment due to Parkinson's disease and people with mild cognitive impairment and mild dementia due to Alzheimer's disease. These disorders represent some of the greatest areas of unmet need, and we know that globally they continue to become more prevalent and significantly disrupt lives. As we said, we expect data from the ongoing studies with SAGE-718 to start reading out in 2024 and we'll share more detailed timelines when appropriate.

Our portfolio also includes SAGE-324, our lead neurology candidate. SAGE-324 is an investigational positive allosteric modulator of GABA-A receptors, with significant potential in the treatment of movement disorders like essential tremor. Along with our collaborator, Biogen, our goal is to complete enrollment in the ongoing Phase 2b KINETIC 2 dose-ranging study for SAGE-324 late this year.

We are also continuing to advance Phase 1 studies with a fast-acting balanced GABA-A PAM SAGE-689 and an extra-synaptic preferring GABA-A PAM SAGE-319, as well as IND-enabling studies for our next NMDA PAM SAGE-421. Importantly, all of our product candidates are Sage invented new chemical entities with differentiated profiles, designed with pharmacologic characteristics that we believe are well suited to the target indication the programs pursuing.

We believe that with our product engine we have the potential to create significant long-term value if we're successful. 2023 is already off to a strong start, and I look forward to providing continued updates on our clinical execution throughout the remainder of the year.

Now, I'll turn the call over to Chris to provide additional context on our planned approach as we prepare for the potential commercialization of zuranolone in MDD and PPD. Chris?

Thanks, Jim.

I'm pleased to be with all of you this morning to share updates on our preparations for the potential commercialization of zuranolone. With our NDA filing for zuranolone in MDD and PPD under agency review, we are closely collaborating with Biogen to advance permitted discussions with payers, continuing scientific exchange with HCPs and engaging with patient advocates.

Further, we are building our internal capabilities by hiring experienced commercial leaders with depth and breadth of knowledge to further expand our commercial expertise. Together, these are important steps towards our goal of a rapid and successful launch of zuranolone. Based on our PDUFA action date of August 5, if there are no review extensions and if zuranolone is approved, we expect the potential launch of zuranolone near the end of 2023, following an anticipated 3 month DEA scheduling period.

We will be prepared and anticipate entering a market that will be ready to think about the treatment of MDD and PPD differently. Our vision with zuranolone is to transform the way depression is treated, focusing first on the PPD patient population. An estimated 1 in 8 new mothers in the US experience the symptoms of PPD each year. That's nearly 0.5 million women and their newborn babies and broader families were adversely impacted during what should be one of the most treasured times for new parents.

We believe zuranolone, if approved, holds unique potential to be a first-line therapy for many of these mothers who need help. Our goal with zuranolone, if we're successful is to provide HCPs with the first and only oral treatment specifically indicated for PPD, and to improve PPD diagnosis rates. We understand this will require working with the entire healthcare ecosystem to change the diagnosis and treatment paradigm. We believe that if we are able to offer zuranolone as an oral 14-day treatment option, it may serve as a critical tool in catalyst for HCPs to diagnose and help mothers suffering from PPD.

Based on the compelling and versable profile seen in the landscape clinical program to date, we believe that zuranolone, if approved, has high transformative potential as a first-line treatment option for MDD, especially in certain populations like young adults, given the 14-day treatment course.

We understand that while there is significant unmet need among the entire MDD patient population, we'll need to start our launch in a focused way given payer feedback in the current MDD market dynamics. Therefore, our planned strategy at launch is to focus our efforts on a subset of those 6.5 million patients already diagnosed with MDD, who are early in the course of their treatment and in need of a new medication as a first add-on or switch therapy.

While many believe that branded entrants in the MDD treatment market are often restricted to much later use, our payer, HCP, governed affairs and patient advocacy discussions all point to the potential for us to help a portion of those 6.5 million with a first add-on or switch launch strategy. Further, our launch strategy is designed to scale quickly with success. And we believe that over time with focus and determination anchored to our data, zuranolone has the potential to become standard of care in the treatment of MDD.

To achieve our vision for zuranolone in MDD and PPD, if approved, we must execute a fit-for-purpose launch that prioritizes deep and meaningful engagements with key stakeholders. We are advancing plans omnichannel efforts with a digital core designed to unite data from our content, media and in-person interactions. Our ambition is to strategically increase the impact, efficiency and agility of our execution through our sales force interactions and non-personal promotion.

We're powering this approach with predictive analytics, which are intended to deliver customized, personalized information to key stakeholders. It's also vital that our omnichannel work directly reaches people with MDD and PPD at launch. Our planned efforts are intended to directly engage them with education and resources, so they're aware of zuranolone and are prepared to self-advocate in discussions with our HCPs. We believe that if zuranolone is approved, many people with MDD and PPD when armed with appropriate education and information will ask their HCP about it by name.

Further, in order to be truly transformational, zuranolone must be accessible. Our market access team is engaging payers through permitted interactions. To date, we're encouraged by the early enthusiasm we've seen in those interactions. Our goal, if zuranolone is approved, is to ensure patients with MDD and PPD, who are prescribed it, can get it with minimal prior authorization and step edit requirements.

As such, we're continuing to explore the use of proactive value-based agreements that we believe may help provide the budget predictability that payers are looking for and favorable access for zuranolone. We also know that early experience with zuranolone in the treatment of MDD and PPD will be a driver of a successful launch. Our goal is to enable positive first impressions for both patients with MDD and PPD and providers.

To support those positive experiences, if zuranolone is approved, we plan to provide patient access and support service programs, which we believe will help patients with MDD and PPD navigate their zuranolone treatment journey. As we continue to prepare for a potential launch later this year, I look forward to sharing additional details on our plans and expectations for the launch of zuranolone.

We are working diligently to deliver a novel treatment option for those living with MDD and PPD, and are highly motivated with a sense of urgency given the real life impact of depression on people suffering from it and those who love them. We will be ready to execute if zuranolone is approved, inspired by our vision for zuranolone of transforming the way depression is treated.

Now, I'll turn the call over for a review of our financials. Kimi?

Thanks, Chris.

Our financial results for the first quarter of 2023 are detailed in our press release issued this morning. I'd like to take a moment to provide some context and highlight a few key points. We ended the first quarter with a strong cash position, and have made important progress across our pipeline and launch preparation activities so far this year. We've also seen continued growth in the use of ZULRESSO. I'm proud that since its launch, we've been able to help hundreds of women with PPD with ZULRESSO. We look forward to potentially expanding treatment options in PPD with zuranolone, if approved.

We're executing from a position of strength in a difficult macro environment as we prepare to support the potential commercialization of zuranolone and invest in development of our robust pipeline. As a reminder, as part of our collaboration with Biogen, we're jointly developing zuranolone and SAGE-324 with a 50-50 cost sharing in the United States. We know that to achieve our vision of transforming the care of depression, we must begin with a focused strategy and be prepared to scale quickly with success. And we will remain mindful of capital allocation prior to potential launch.

Our net loss for the first quarter of 2023 was $146.8 million, and we ended the quarter with cash, cash equivalents and marketable securities of approximately $1.1 billion.

Turning to operating expenses. R&D expenses were $92.8 million in the first quarter of 2023. The increase compared to the first quarter of last year was primarily related to the hiring of employees and corporate infrastructure costs such as information technology costs to support the growth in our operations. SG&A expenses were $65.7 million in the first quarter of 2023. The increase compared to the first quarter of last year was primarily related to hiring employees to support ongoing activities in anticipation of the potential launch of zuranolone.

We're also reaffirming that based on our current operating plan, we anticipate cash, cash equivalents and marketable securities, anticipated funding from ongoing collaborations and potential revenue will support operations into 2025. Included in this guidance is the potential to achieve milestones totaling $225 million from Biogen related to the first commercial sales of zuranolone in MDD and PPD.

As we said at the beginning of the year, given how dynamic we expect 2023 to be, including preparing for a potential launch, we're not providing year-end cash guidance at this time. However, looking forward, we expect that our spend will increase as we continue our ongoing and planned commercialization efforts and advanced planned and ongoing studies for our brain health pipeline throughout the year.

As we approach crucial catalysts, I'm confident that our strong balance sheet will enable us to execute from a position of strength. We have multiple upcoming potential value-creating milestones on the horizon, and we're laser focused on preparing to support the launch of zuranolone if approved. Backed by a strong balance sheet, we remain committed to making strategic investments in our developing pipeline programs and further establishing ourselves as a leader in brain health.

I'll now turn it over to Helen to handle Q&A with the operator. Helen?

Thanks, Kimi.

Before I turn it over to the operator, I'll ask that you limit yourself to one question. If you have an additional question, please feel free to return to the queue. Now, I'll turn it over to the operator to handle Q&A.

Operator?

(Operator Instructions) We'll take our first question from Anupam Rama with J.P. Morgan.

Just on the midyear SHORELINE update for zuranolone, can you remind us of what the focus will be here? And will this be presented in conjunction with the medical meeting? I think in your comments, you highlighted that scientific medical forms remain kind of like really important on the medical education front.

Yes. Anupam, thanks for the question. So just on your last point, as collaborators of Sage and Sage people continue scientific exchange at Congresses, it's critically important, it's a critical forum for us to share information and get feedback from health care providers. And as I know, you've noted in some of your notes, the volume of activity and the success of the scientific exchange continues to grow. People are very excited, if approved for zuranolone to come to market. That's growing and growing.

SHORELINE gives you a critical piece of that, what's new. And I'll ask Jim to comment a little bit further. And the update is that we will include the rollover patients from CORAL. So, I'll remind you that CORAL was a Phase 3 study comparing zuranolone plus antidepressant versus antidepressant and we saw positive and statistically significant, clinically meaningful results differentiating to a day 3. Those patients have an opportunity to roll over to SHORELINE and we are interested in whether the data are the same or slightly different in those lines.

Jim, do you want to take that?

Of course. And thanks for the question, Anupam. Yes. Absolutely. The SHORELINE study is a really important part of the overall zuranolone program in part because we get so much information out of it. Of course, we get a fair amount of safety data given how large the study is. But perhaps even more importantly, it really answers a number of questions around how zuranolone will be used in the real world. And so as Barry said, what you're seeing is an increasing amount of scientific exchange as we're presenting data from what is a very large study. There are multiple cohorts of patients that have gone through the study.

To Barry's point, the last cohort to go through the study are patients that have had the opportunity to roll over from the CORAL study. And what's really interesting there is, of course, CORAL study 2 arms, one with a standard of care antidepressant and standard of care antidepressant plus zuranolone. Both of those arms have an opportunity to roll into SHORELINE study. So, we really get a good look at subjects who have been on a standard antidepressant and then starting zuranolone for the first time. So, we're very interested to see the data. I think you can expect to see continued presentations around the SHORELINE study for quite some time.

We'll go next to Ritu Baral with TD Cowen.

I wanted to ask on a couple of comments that I heard about the zuranolone commercial strategy. One, Chris, I believe you mentioned something about a patient access and service program. Is this going to be something like a hub that we see for more specialty diseases with like reimbursement support, people work support, diagnostics support?

And then just holistically between your comments and Barry's, it sounds like there might be a DTC element out of the gates with something like this, given you mentioned that you expect patients to ask their doctors or clinicians about this. Is that something that I interpreted correctly?

Yes. Ritu, thanks for the question. And I will turn it over to Chris. But as we commented in our planned remarks, we're starting with a very focused approach to zuranolone launch and omnichannel, both through a personal and non-personal promotion, which will include reaching out to potential patients directly. And as Chris said, we plan on scaling fast with success, starting with sort of the think big, start small, scale fast there.

But specifically, to your patient access question, Chris, do you want to take that?

Yes. Thanks, Barry. So Good morning, Ritu. Our plan for launch is to make sure that patients who need zuranolone are absolutely able to get it regardless of the nature of the patient's payer status. And to that end, what we want to make sure that we do is that for patients at the time of launch as they have a need for the product that we provide the appropriate access and reimbursement support services to ensure that when that prescription gets filled, but that prescription actually gets adjudicated and the patient is able to get into the pharmacy for an affordable out-of-pocket. So having a full complement of patient access and support services is going to be absolutely paramount.

I think also what's going to be important is for physicians who want to experience the product to have access to not only the ability to prescribe the product, but to provide early experienced, essentially, a trial program for physicians to make sure that they gain that early experience at launch and are able to use it in the types of patients that they want to use it in. I think in and around your question around DTC and DTP, obviously, more to come in and around DTC and DTP, but as Barry mentioned that there are patients waiting for this medication.

We want to make sure that at the time of launch, we're able to provide information and education directly to patients and to those suffering with MDD and PPD, and access to tools and resources so that they can engage their clinicians in informed discussions as we go. Obviously, broader DTC is something that we would reserve for later in the launch, but focused DTC and DTP is definitely something that we want to make sure that we're able to offer through omnichannel efforts at the time of launch.

Just to round that out, Ritu, you can understand that strategically -- and SHORELINE data are a proof point where the majority of people that respond to zuranolone didn't need another medication for over a year and 80% required only the initial or a second 2-week course. This really is about physicians using zuranolone in their own hands and seeing the impact with their own eyes in their patient population.

We believe if the real world is consistent with what we see in clinical trials that some physicians will have the kind of comments you've heard from people like Greg Mattingly at St. Louis, things like I've never seen these kind of reactions before. If that happens out in the real world, and we believe it will, this really is about physicians getting comfortable using zuranolone for the use to grow.

We'll go next to Yasmeen Rahimi with Piper Sandler.

I'm going to stick with the topic of commercial preparation. Could you maybe provide a little bit color on sort of what you're visualizing sort of the size of the commercial team to be? What is the involvement or preparation that Biogen is taking through this process? How should we look at sort of the ramp of bringing in the team throughout the next 12 months to 18 months? Appreciate any color sort of on the execution side of the arm and specifically also what are your partners doing to help you. And I'll jump back into the queue.

Thank you, Yas, for the question and your enthusiasm. Really appreciate it. What I can say at this point -- I'll kick it over to Chris, is that we and Biogen are highly aligned on the go-to-market plan, the hiring plan and the kind of think big, start small, scale fast strategy.

Chris, do you want to take it?

Yes. Thanks, Barry. So, our ambition with the sales force is to really enable effective reach in frequencies, as you might imagine, on those clinicians who we believe will be new users of antidepressants like zuranolone, if approved. The group that we intend to target includes psychiatrists, OB/GYNs, a select group of primary care physicians and nurse practitioners and PH who are active in this market as well. We'll supplement, as Barry mentioned, our personal promotion efforts with a digital-first omnichannel effort designed to deepen our reach and to provide frequency on an additional group of physicians, who we believe that outside of the call universe that will reach with the sales force need to absolutely hear the message, because they have patients who are waiting as well for medication like zuranolone. We really believe that it's imperative to deliver messaging to zuranolone on a broad group of these potential prescribers because patients with depression, as you might imagine, are waiting and deserve better.

Now with respect to the comment about Biogen, yes, as Barry mentioned, we're in lockstep with Biogen around our go-to-market strategy with zuranolone, inclusive of how we think about deploying sales representatives at the time. Well, we obviously, right now, we're thinking about deploying it at the time of effectively the PDUFA date, making sure that we have representatives in the field who are ready to go and are able to optimize the time in between the PDUFA date and the DEA scheduling window, so that once the product is approved, both DEA scheduling, they're ready to go with full promotion. In terms of how we're thinking about moving beyond that, obviously, we'll continue to read data. And as the data reads out, we'll think about scaling with success in specific physician groups that we see really, really interested in as we move forward.

We'll go next to Salveen Richter with Goldman Sachs.

This is Sumant, on for Salveen. So with regard to the commercialization strategy, could you provide some color on your plans for sampling as in providing samples to doctors to drive the uptake of zuranolone during the early months particularly? And if you expect certain restrictions there given that you expect a DEA scheduling of a -- schedule for drug.

Yes. Thanks for the question. Please send our best to Salveen. As I said -- and I'll ask Chris to answer the specific question. But as I said at the beginning, strategically, we believe that health care provider experienced treating patients with zuranolone and seeing the results with their own eyes is critical to our launch and long-term success. So as you said, many access opportunities, including sampling will be a part of that overall strategy.

Chris, do you want to take it from there?

Yes. It's a build, Barry. What I'd say is it's important that physicians, as we think about launching the medication, have a clear and compelling use case in mind, anchored to the zuranolone data. And they couple that use case with early experience, as Barry mentioned, so that they get to see the impact that zuranolone can have in the specific patients that they want to use it in.

So with respect to how we think about that, we're going to make available -- effectively, I think you used the word samples. We would consider a full course therapy for a select group of patients, for physicians to actually experience the medication to see the impact that it can have because we believe that kind of experience is truly an amplifier to how they think about using it more broadly across their patient population.

We can move on to our next question.

Next to Jay Olson with Oppenheimer.

Congrats on the progress, and thank you for the update. Can you just talk about the impact of the IRA on your development plans for SAGE-718, especially since it's a potential pipeline in a molecule? What is the impact of the IRA on how you plan to develop broad indications either sequentially or in parallel? And also, if you could comment on the impact of the IRA on your plans for pricing zuranolone, that would be great.

Yes, Jay. Thanks for the question. So as we've said before, we think while there are important positive components of the Inflation Reduction Act, things like co-pay minimum pocket for patients and large. It's an act that will not be friendly to innovation. The good news for Sage, however, is that we have a very robust product engine. So it's too early to share specifics with zuranolone and 324. We are partnered with Biogen. So, I need to be completely aligned with them. But it's safe to say that we believe that innovators like Sage, whereas we can develop many, many molecules and many indications for molecules are well suited for -- to pave the way forward depending on how IRA is implemented.

So what that means is that for zuranolone, we certainly could increase the use case with other studies like general anxiety disorder or others, or we could take other molecules that differentiate pharmacology to develop them for future indications, then it will be clear as IRA's implemented and be aligned with Biogen on the long-term use of both zuranolone and SAGE-324. But great question, Jay. And again, the good news for Sage is that we've got a robust pipeline and a product engine capable of many, many products to come.

We'll go next to Paul Matteis with Stifel.

In your prepared remarks and talking about the commercial strategy, I find it really striking you're talking about positioning zuranolone as a first add-on anti-depressant. I think pretty much any company in depression would love that to be the case, but it just seems to never happen historically. All these new drugs get stuck in the treatment refractory population. So, I guess like point blank specifically, how are you actually going to do that? Are you making significant price concessions? Like how is this going to play out?

And then I wanted just to ask Barry for just a quick comment on any thoughts -- and I don't know exactly, what you can say on where Biogen is that as it relates to psychiatry? They're talking about that as a potential area for business development. They've talked about wanting revenue-generating assets. If they were to in-license a site drug, how might that impact Sage? And I guess, how are you kind of thinking about whether or not that's a good or bad thing for your positioning as you launch this product?

Yes, Paul. Great question. So let me start with the second question, and then I'll talk to the first one and then ask Chris to comment. You really have to ask Biogen about their strategy. What I can tell you from our interactions is that Chris Viehbacher has significant experience with depression given his Glaxo days. On public record, he's very excited about the potential for zuranolone to help millions of patients. And he's very bullish about the kind of revenue consequence of helping millions of patients. So all that's very, very well aligned. In terms of how they grow this development, that's really a question you'll have to ask Biogen. And I can tell you that a top, top, top, top priority of Biogen right now is the successful launch of zuranolone, so very well aligned with that.

From a Sage perspective, as we think about a potential in-licensing, our bar is very, very high. And I can't speak for Biogen, but expect to hold their bar very high as well. That's certainly how we think about it. In terms of positioning with zuranolone, we commented earlier in the call that strategically, we and Biogen, from the very beginning, aligned on proactive value-based agreements. And what that means is that we're going to work with the payers to give them budget predictability and that's critical. If you think about launches, particularly launches where brands launch into generic areas, often payers, because they don't know how the drug will be used, put significant prior open steps in place really for fear of how rapidly a drug will grow and their inability to budget.

We're partnering with the payers to make that more predictable. And what we've heard from payers and Chris will comment is that for postpartum depression, since this will be the first -- if it's approved, the first oral medicine ever specifically for PPD, that it doesn't make sense for moms to suffer for weeks or months on an unspecifically approved generic for PPD. If they can get better in 2 days or 3 days, reconnect with baby. And the long-term health economic consequences of not having a mom connect with baby are severe, and we presented data on this.

In terms of MDD, what we're hearing from payers is that in certain use cases, young adults, the elderly, frontline might make sense. And there's been recent brand launches, where about 10% to 15% of the drugs used in front line. But primarily at launch, we believe that in MDD will be used with patients that are already diagnosed with MDD that are on or try something that are not yet satisfied with their level of wellness.

Chris, do you want to take it from there?

Yes. Thanks, Barry. So Paul, I've been personally engaged with payers now for the better part of year and a half. And those conversations initially started around unmet need in the MDD and PPD markets. And we haven't had a payer yet that hasn't acknowledge the unmet need in MDD and PPD, and we progressed through to conversations around the compelling nature of the LANDSCAPE and NEST data and what we saw in our clinical studies. And we've anchored our conversations in and around proactive value-based agreements and the potential impact that those agreements can have with respect to providing payers with predictability and budget certainty that they are so looking for.

So between the unmet need and the data from those studies, it's really propelled conversations forward in and around how to think about VBAs and contracting more specifically. And as I mentioned, I've been personally engaged in conversations with national and regional payers, inclusive of PBMs for quite some time. And what I can tell you is the byproduct of those discussions, there is significant payer interest in zuranolone. At launch we are working to have as many payers lined up as possible to make zuranolone accessible.

And from a medical policy perspective, as you noted, what payers are telling us, there is a clear and compelling use case for zuranolone in PPD first line. In MDD, what they're telling us is there is a place in the line of therapy as a first add or first switch medication. And while they'll acknowledge that clinicians may want to try something first line before zuranolone, this is not the kind of medication in MDD that they see being pushed off to third, fourth or fifth line. Again, that use case is really specific for earlier lines of therapy.

Now compare that with Axsome's recent launch, what we've seen is restricted coverage. We've seen rejections and we've seen later line of therapy use. So, I think there's a number of reasons for that. But given the nature of how zuranolone works their physician interest in urgency to use it and a payer willingness to recognize the impact that it can have by allowing first-line use in PPD and first out-of-first switch in MDD.

We'll go next to Ami Fadia with Needham.

This is Eason Lee on for Ami. Maybe if I can ask one on 324. I guess there's been discussion from another company in the essential tremor space that the TETRAS ADL sub-scale maybe the preferred endpoint for regulatory purposes. I believe based on your Phase 2b, the primary endpoint is item for the performance of scale. So just curious, what do you guys think is ultimately what the FDA wants to see in terms of a registrational endpoints?

Yes. Great questions. Please send our best to Ami. I'll start and I ask Jim to comment further. So for SAGE-324, which is a GABA PAM that we've developed specifically for chronic use in humans or starting with essential tremor, we saw pretty spectacular results in the KINETIC study, and that is a statistically significant reduction in tremor scale as you said, measured by TETRAS. We also saw statistical alignment in activity of daily living. So while we haven't had the Phase 3 discussion with FDA on the endpoint, we've got tremendous optionality depending on which way we want the input to go, given the data we've seen to date.

Do you want to comment?

Yes. And I think, Barry, you nailed the key point that what we're seeing from the data are certainly clear results, both from the primary endpoint, but also to the question that is matched by a similar effect on ADLs. And that's really what you're looking for here is that there is a benefit -- a meaningful benefit to patients. And we believe that, that is likely to be a key point in the regulators thinking around the low programs here. But look, this all comes out of the process that we've used to identify patient populations who are most likely to benefit from these approaches. And that really did lead us to essential tremor. And so we're seeing substantial reductions in tremor activity from the KINETIC 1 study. So, we're very excited about the opportunity for modulating the GABA system with SAGE-324 as a truly novel way to treat essential tremor.

We'll go next to Sumant Kulkarni with Canaccord.

Clearly, zuranolone is a path-breaking product for depression. And you mentioned your preliminary engagement with various stakeholders have been largely positive. But if there's been any pushback or any portions of the value proposition of zuranolone that requires the most effort on convincing, what have those been about? And has that been from experts, payers or some other stores?

Yes. Sumant, thanks for the question. I'll ask Chris to comment. But what I can say is that, temporarily, the feedback has gotten more and more positive as the data has been understood actually on all fronts. I mean, from the very beginning, patient and patient advocates build-out, there was significant unmet need of depression. Even those that are on antidepressant stably aren't well, they are just numb. We heard that 2.5 years, 3 years ago from the beginning.

I think the big change we've seen from key opinion leaders is that they moved from a disbelief. There's never been anything new in 35 years other than modeling approaches. How can that lead to a huge belief given the totality of data, particularly SHORELINE that, wow, there's a new medicine that works quickly and patients responds early as 2 days or 3 days. And the majority only require 2 weeks of treatment and they're well. And we've got the SF-36 data to support that statement. So, I think we've seen a big shift.

The pushback historically has been -- and how do I know when to retreat? And I think people have understood and Laura has talked about this extensively. While this changes the approach to treating depression, it doesn't change the practice of management. We're still treating the patients and monitoring them out going forward. From a payer perspective, and Chris highlighted this earlier on the call, is payers all acknowledge the unmet need and realize when talking about the totality of practice data, they are offering something very, very new in treatment paradigm. This is not the new entrant that might work a little faster, might offer a little slightly less side effect. This is a completely new approach to impression. So it's not being looked at as the fourth, fifth, sixth seen as launch, needs to be pushed to backline.

Laura or Chris, anything to comment? Maybe Laura first?

Yes. So, I think as a clinician that's treated patients with depression, the thing that really strikes me about the zuranolone data is the rapidity of the response and the durability of that response, and how it will really change the conversation that you have with patients when you sit down with that and prescribe that initial treatment for depression. Instead of having a conversation about needing to wait for a response for 6 weeks to 8 weeks, needing to be patient, having to sort of power through some of the side effects that might occur early on in treatment, you can have a conversation about expecting to feel well within a few days. And that really is going to change the conversation and the expectations of those physicians and payers or patients.

And Chris, do you want to comment on the healthcare provider payer front?

Yes. I think there are 3 things, Sumant, that are going to drive our success from a health care provider and payer front. I think the first is, is giving physicians or health care professionals more broadly a clear and compelling use case that's really anchored to the data. I think Laura hit it nicely around the profile of zuranolone and why it's desirable for patients that are living with both MDD and PPD. And I think in the remarks and the slides that we shared, there were a number of use cases in there for patients with unresolved symptoms, patients who may have adherence or a tolerability challenge, patients who actually may have issues with breakthrough symptoms and those that are living with elevated anxiety. So again, I think that current compelling use case is essential.

I think the second is to enable early experience where they get to see the power of the medication in their hands and they get to have the patients' feedback. And I think that's to Barry's point about when we've heard from investigators the impact that they've seen by virtue of that experience has been really, really meaningful. And lastly, it's working to able broad unmitigated access without prior authorizations and step edits that are onerous using proactive VBAs to make sure that payers have the budget predictability and certainty that they're looking for. I think when we do those 3 things successfully at launch, we're going to have a very successful launch.

We'll go next to Vikram Purohit with Morgan Stanley.

This is Steven, on for Vikram. So, I wanted to ask about the scope of lifecycle innovation work you are conducting for zuranolone? And what kind of snobby we can expect and what the data would look like?

Yes, Vikram. Let me turn to Jim to talk more about that.

Absolutely. Of course, as we're moving forward with zuranolone, the goal is to sort of to winning depression and so there are a number of patient populations who we think could benefit from zuranolone. I think you begin to think about given the types of responses we're seeing with zuranolone in MDD and PPD, as well as the robust effects we're seeing in those patients on anxiety and those, you begin to think about other related anxiety disorders, depressive disorders as potential. But really going to specifics is going to require some detailed discussions with our collaborators at Biogen. Those discussions are underway. And so as we get a little bit further down the road and sort out the sequence of activities that will go to, we'll lay those out for you. But I think what we can certainly tell you is that there's a lot of active discussion around which patient population in addition to MDD and PPD, we think could benefit from zuranolone.

We'll go next to Yatin Suneja with Guggenheim.

This is Eddie on for Yatin. Just from a high level, when we think about price per patient per year for zuranolone, should we be thinking about it in terms of treatment courses or some weighted average of patient cost that would include some number of possible retreatments?

And then for PPD, should we expect a similar rate of yearly retreatment? And do you have data beyond SHORELINE to look at PPD retreatments?

Yes, Eddie. Great questions. So, we commented on access before. You heard Chris and me say several times on this call already. It really starts with proactive value-based agreements. And those provide some risk taking on our part and some budget predictability and price protection for payers. Now it's too early to talk about specifics of value-based agreement and every payer in a slightly different treatment.

But the context here is that what we're hearing from payers is that they -- it's important for us to stay below that specialty tier since the SOVALDI launch years ago. Every payer put automatic mechanism in place that people are in that specialty tiers to put prior ops and steps in place. This is a specialty tier and they're talking about per patient tier, not per pill or per pack. And that number is roughly around $10,000 per patient per year. So that's broadly how we're thinking about it. We then cycle that and think about the per pack price. Now it's unlikely that an indication specific type pricing makes sense here will be a price for the zuranolone pack of 14 days milligram. And that's how we'll think about price.

And retreatment with PPD.

Yes. You talked about retreatment data with PPD. So right now, what we've seen for the most part is that in both Phase 3 trials that the moms that respond in day 3 and day 15 hold that response up to day 45. So, we expect that, that will hold true in the real world.

Got you. And then just really quickly, I know in the SHORELINE, there were very few patients that needed multiple retreatment. But is there going to be a maximum number of yearly retreatments allowed maybe by the payer or from a safety standpoint?

Two questions. But let me answer that quickly. So again, we said we're not going to talk about specifics of label. What you see typically in label that we've said this before, statements about zuranolone being studied X amount of times, ZULRESSO studies over X amount of time, things like that. We don't think from a payer perspective there'll be any kind of restrictions.

(Operator Instructions) And we'll go next to Brian Abrahams with RBC.

This is Leonid on for Brian. I wanted to ask on some of the recent ended competitor launches and how you're picking up the learnings from those, both on the size of the market, targeting prescribers, potential detailing?

And then also maybe just a quick follow-up. Do you have any views on how zuranolone may pair with potentially antipsychotics, given the growing role that, that drug is playing in treating MDD, and not necessarily just in combination with SSRIs and SNRIs?

Yes. Leonid, thanks for the questions and please send our best to Brian. So, we are paying close attention to all the new launches, whether it's migraine launches or depression launches. And we are grabbing a whole bunch of learnings from those. Frankly, many of what we're seeing in the marketplace were highly predictable given our analytics.

But Chris, why don't you take that?

Yes. Thanks, Barry. So, as you take a step back and you think about the launches, we pay, as Barry said, very close attention to all facets from the way that they target their customers, the size of the sales force, the tools and resources that they're using to effectively manage their launch all the way through to external media and how they're spending their media dollars. So, we have quite a close lens trained on the various competitors and how they're acting in the market.

What I would take a step back and say is that the approval and initial use of other products is really an encouraging signal that both patients and clinicians are really looking for therapies that work. In the case of Axsome's product, it's a therapy that they are looking at because it has a new mechanism of action and works a little bit faster than maybe some of the other medications that have historically been available in the market for the last 30 years to 35 years. I think this really demonstrates that there's unmet need for new treatment options for the management of MDD. As you know, there still is no treatment, an orally available treatment for PPD, and there is significant need there for a product like zuranolone.

So, we anticipate that the opportunity for zuranolone to be used to manage the episodic treatment of depression is substantial given the novelty of the product, the potential indications that we would anticipate from our data. And we're going to be prepared to go to market to deliver this medication to those living with MDD and PPD as quite a novel product. And we're thinking rather successfully about how we could enter the market and launch the product most effectively.

Great. And second part of the question on antipsychotics. So in regard to your question about use of renal and with atypical antipsychotics, I think it's really important to consider the context in which atypical antipsychotics are used in depression. And that is they are typically used as an add-on treatment when patients have an insufficient response to their standard of care antidepressants, which is usually an SSRI or SNRI. When physicians are in the position of having to treat a patient that hasn't really responded to that first dose of medication, they don't have a lot of options right now.

And there's not a lot of good data to support many of the options that they might consider. And so they think long and hard before they add an antipsychotics on because of the side effect profile. And so as a physician myself, when I think about zuranolone is going to be used in looking for treatment paradigm, given the efficacy data that we've demonstrated in use both as mono and add-on and the side effect profile of zuranolone, which is clearly different and has much fewer side effects related to metabolic syndrome and weight gain compared to atypical antipsychotics. It's my lead proposition that zuranolone will be used as an add-on ahead of any atypical antipsychotics.

Leonid, thanks for the question. Or as monotherapy, the key that we see in depression, Laura said as well as when patients don't respond well, it becomes about polypharmacy. And as you know polypharmacy in patient populations is continuing to be an issue, particularly as people age and they are on other medications. So the opportunity to use a medication like zuranolone every night for 14 days, get well when patients respond and stay well without continued medication as a chronic therapy is a huge advantage.

We'll go next to treat Neena Bitritto-Garg with Citi.

Just kind of a follow-up to the last question. Just wondering how you educate, I guess, patients and physicians on the need to actually take the full 2-week course. I guess what I'm trying to get at is, is there a risk that patients take a few days of dosing kind of get well within that 2 to 3-day period and then decide to stop dosing until they need to be re-treated again by simply taking kind of their own treatment into their own hands and treating as needed that as they see fit? I guess any thoughts on that would be helpful.

Yes. Neena, thanks for the question. I'll ask Laura to answer that.

Yes. So, I think that this is a question of educating prescribers and patients on the importance of finishing the 14-day course. That is the treatment course that was studied in clinical trials and supports the efficacy and the benefit that zuranolone has demonstrated. So it will really be about making sure that the patient understands the need to finish that 14-day course.

We'll go next to Tim Lugo with William Blair.

When you talked about proactive value-based agreements, Chris, I think you mentioned that these were expected to come online at the time of launch. Can you give us kind of a rough idea of how many lives are covered through those agreement or at least expect to be covered at the time of launch? And is this a process, which will be gradual throughout the years of the launch, in the lifecycle of the product? Or is it something that is looking to be nailed down as early as possible?

Yes. Tim, it's a great question. Chris, why don't you take that and then I'll come back at the end.

Yes. What I would say, Tim, is it's early to talk about specific numbers. We're active and engaged with a number of payers right now around proactive value-based agreements and what contracting would look like. I think as you take a step back and think about it, you have to think about it temporarily. There are some payers who I think in and around the time and approval of zuranolone will be active and engaged around the conversation.

I think there are other payer types who may take a little bit of a longer approach in particularly, when you think about some of the payer types in and around Medicare may take a little bit longer to take a step back and review the product. We're actively engaged with all of those payers right now and engage to make sure that as quickly as possible as those payers are ready to agree to value-based agreements and contracts specifically that we're going to have the product available in that peri-launch window as rapidly as possible.

Yes. Great answer, Chris. And Tim, just to provide some further context, what I've seen in the past as being involved in value-based agreements is a number of payers or the more innovative payers get involved earlier and then other payers see press releases or other payers talk about it, they will call and say, hey, we need to get involved. Now the interesting piece here is that everybody you talk to is highly focused on mental health. So, we have that as an advent. Nobody you want to talk to think that depression is solved and everybody understands that, that at the end of the day, employers are the customers of payers and all employers want their people at work all the time, not absenteeism or presentee issues, often due to depression.

We'll go next to Marc Goodman with SVB Securities.

Yes. On the milestone slide for SAGE-324 talks about additional data that you're going to be showing this year for ET. Can you talk about what that data is?

And just secondly, how are you considering potentially studying that in tremor in Parkinson's disease? We've heard from doctors that, that actually could be another population, maybe even an easier population to demonstrate efficacy.

Thanks, Marc. Jim, do you want to take that?

Yes. Absolutely. So thanks for the question, Marc. We continue to do analysis on the data that we have from the KINETIC study. Remember as well that part of the reason we've moved into this place is that we done early pilot studies initially with ZULRESSO and then with zuranolone, really just identify whether or not this patient population would benefit. So, we've got quite a lot of data all throughout the program so far around the benefits of this mechanism in the treatment of essential tremor. And so those are the data that we're talking about, and you'll see those data continue to emerge as we go through the year.

Thank you. That will conclude the Q&A portion of today's call.

With that, I will turn it back over to Mr. Greene for closing remarks.

Thanks, Jennifer. And thanks again to everyone for joining us this morning to review our results from the first quarter of 2023.

Our progress during the first quarter of 2023 is the result of the teamwork and dedication of everyone at Sage and our collaborators. As we progress our pipeline development activities, we believe we're well positioned to deliver on our mission to develop and launch life changing brain health medicines, so every person can thrive. Thanks again, everyone, and have a great day. Bye.

This does conclude today's conference. We thank you for your participation.