Sage Therapeutics - Q2 2023

Transcript

Operator (participant)

Good morning, and welcome to Sage Therapeutics Business Update. Currently, all participants are in a listen-only mode. This call is being webcast live on the Investors and Media section of Sage's website at sagerx.com. This call is the property of Sage Therapeutics, and recording, reproduction, or transmission of this call without the express written consent of Sage Therapeutics is strictly prohibited. Please note that this call is being recorded. I would now like to introduce Ashley Kaplowitz. Please go ahead.

Ashley Kaplowitz (VP of Investor Relations and Capital Markets)

Good morning, and thank you for joining Sage Therapeutics conference call to discuss business updates, including the FDA approval of Zuranolone, now branded in the United States as ZURZUVAE, as a treatment for adults with Postpartum depression or PPD. Before we begin, I encourage everyone to go to the Investor and Media section of our website at sagerx.com, where you can find the press release related to today's call, as well as 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 details. We will begin the call with prepared remarks by Barry Greene, our Chief Executive Officer.

Laura Gault, our Chief Medical Officer, will review the label for ZURZUVAE and supporting clinical data. Our Chief Business Officer, Chris Benecchi, will highlight our commercial preparations and launch plans for ZURZUVAE and PPD. Kimi Iguchi, our Chief Financial Officer, will close with a financial update. Jim Doherty, our Chief Development Officer, will also be available during the Q&A portion of the call. With that, I'll now turn the call over to Barry.

Barry Greene (CEO)

Thanks, Ashley. Thank you everyone for joining us today. This is a historic moment for all women suffering from PPD. On Friday, we and our collaboration partner, Biogen, received approval from the FDA for Zuranolone, now known as ZURZUVAE, for the treatment of adults with PPD. ZURZUVAE is the first and only oral treatment specifically indicated for PPD. Hundreds of thousands of women have been waiting and hoping for this moment. We hear so many devastating stories about the impact of PPD, and many of us have been personally touched by this often neglected condition that's estimated to affect approximately 500,000 women each year. Today, there is a new source of hope.

Before we begin, I'd like to take a moment to sincerely thank the dedicated healthcare providers, patients, caregivers, and advocates who have made today possible, especially the patients who have placed their immense trust in us throughout our clinical trials. We are and will always be an inspiration for us. We applaud your dedication to seeking new treatment options for PPD. I'd also like to comment on the status of our NDA seeking approval for Zuranolone in the treatment of Major Depressive Disorder or MDD. As many of you have seen, late on Friday, we received a complete response letter from the FDA for Zuranolone as a treatment for adults with MDD. We are devastated for patients and deeply disappointed with the FDA's position in issuing the CRL. We are reviewing feedback from the FDA and evaluating next steps. As we have clarity, we'll share more.

Many have questions that we can answer and others that we just simply can't at this time. Just to be clear, progress in treating depression is not keeping pace with the accelerated prevalence and burden of this debilitating disease. Despite current treatment options, people with depression continue to struggle. A change in the treatment paradigm and approval of novel options is desperately needed. Later in the call, Kimi will provide an update on the financial implications given this development. For those of us who've been in biopharmaceutical industry for decades, going through adversity is an opportunity to come out more lean and agile on the other side. We will work through this. What I can say for now, for Sage, is that we'll be making smart, disciplined decisions intended to maintain a robust balance sheet.

This is an opportunity to emerge as a stronger company with a refined strategy and a focused approach. Now, turning back to our primary focus for today's call. Following Friday's approval, we have the first and only oral treatment specifically indicated for women with PPD. As a 14-day short course treatment, we believe that ZURZUVAE will provide women with PPD a desperately needed new treatment option, with the potential to treat their depressive symptoms quickly without the need for chronic treatment. Given the limited treatment options available for women with PPD, we're excited about the opportunity to bring ZURZUVAE to those patients. We expect ZURZUVAE to launch and be commercially available in the Q4 of 2023, shortly following the completion of scheduling as a controlled substance by the U.S. DEA, which is expected to occur within 90 days of this approval.

The widespread national media attention on the approval of ZURZUVAE for the treatment of women with PPD reinforces that this is truly a critical milestone, given the significant unmet need that currently exists for the treatment of women with this disease. PPD is a serious medical condition. We know that women with PPD often face extreme challenges in their daily lives and with infant bonding, often feeling overwhelmed, anxious, and isolated. If left untreated, depressive symptoms can persist beyond a year postpartum, which can be associated with prolonged maternal morbidity and mortality. While a woman's PPD can be associated with short-term consequences of newborns, it can also result in long-term developmental, psychological, cognitive, and physical ramification for her children.

Chris Benecchi (Chief Business Officer)

The devastating generational impact of PPD has been often overlooked. With the approval of ZURZUVAE, we now have the first and only oral treatment indicated for women with PPD, and we stand ready to help. I want to take a moment to recognize the entire Sage and Biogen teams and our collaborators who brought us to this important day for women with PPD. None of what we do is possible without your hard work, dedication, and unfaltering belief that together we have the potential to change the mental health landscape. I thank every one of you for your contributions towards our mission. With that, I'll now turn the call over to Laura.

Laura Gault (Chief Medical Officer)

Thanks, Barry. Good morning, everyone. The approval of ZURZUVAE in adults with PPD is a pivotal moment for the women who stand to benefit from this important therapy and a great moment for Sage and Biogen. The approval of ZURZUVAE further builds upon the foundation laid with Sage's first approved treatment for PPD and reaffirms our commitment to helping mothers in need. I will start by providing background on ZURZUVAE. I will highlight details of the prescribing information. The mechanism of action of ZURZUVAE in the treatment of PPD is thought to be related to its positive allosteric modulation of GABAA receptors, though the mechanism of action is not fully understood. As the primary inhibitory neurotransmitter, gamma-aminobutyric acid, or GABA, is widely distributed throughout the brain. It is present in brain regions functionally associated with mood, decision-making, and other behaviors.

GABAergic neurotransmission is vital for normal brain function, and evidence shows that GABAergic function may be disrupted in postpartum depression. I will summarize the clinical data supporting approval of ZURZUVAE in women with PPD. The approval is based on data from the NEST Clinical Development Program, which included the SKYLARK and ROBIN studies. These studies were phase III randomized, double-blind, placebo-controlled trials that evaluated a 14-day treatment course of ZURZUVAE once daily, used alone or as an adjunct to oral antidepressant therapy in women aged 18 to 45 with PPD. Both studies met the primary endpoint, showing a statistically significant improvement over placebo at day 15 on the 17-item Hamilton Depression Rating Scale, a common measure of depression severity.

As shown in the figures, in both the SKYLARK and ROBIN studies, an improvement in depressive symptoms was seen as early as day three and was maintained at day 45, four weeks post-treatment. The potential for rapid onset and the magnitude and durability of effect are all very important to women living with PPD. Now I'll provide an overview of the prescribing information, including the safety information. The recommended dosage of ZURZUVAE is 50 mg, taken orally once daily in the evening for 14 days with fat-containing food. The dose may be reduced to 40 mg once daily if CNS depressant effects occur. ZURZUVAE can be used alone or as an adjunct to oral antidepressant therapy. Importantly, there are no contraindications in the label.

In terms of safety, the box warning states that ZURZUVAE causes driving impairment, and patients are advised not to drive or engage in other potentially hazardous activities until at least 12 hours after each dose. Patients should also be advised that they may not be able to assess their own driving competence or the degree of impairment caused by ZURZUVAE. The label also describes the most common adverse reactions that occurred in at least 5% of patients who received ZURZUVAE and at a higher rate than placebo. These were somnolence, nasopharyngitis, dizziness, fatigue, urinary tract infection, and diarrhea. Finally, while I am personally disappointed that we will not be able to provide a new treatment option to patients living with MDD today as we had hoped, I am also truly excited that we and Biogen will be offering the first oral, rapid-acting, short-course treatment for women with PPD.

I can tell you from my clinical experience that we have the potential to help a lot of women with this debilitating condition. With that, I'll turn the call over to Chris. Chris?

Chris Benecchi (Chief Business Officer)

Thanks, Laura. I'm excited to be with all of you to share updates on our preparations for the planned commercial launch of ZURZUVAE as a treatment for adults with PPD. Today is a day of celebration. The approval of ZURZUVAE reaffirms our call to action and the urgency that exists to bring this critical new treatment to women suffering with PPD. We know that PPD is all too prevalent in our society, and the burdens that it places on new mothers can seem insurmountable. With this in mind, we are incredibly excited about the opportunity to bring a novel treatment option to market that we believe brings us closer to transforming the care of women living with PPD. We have been preparing for a potential launch for many months by advancing permitted pre-approval information exchange with payers, continuing scientific exchange with healthcare providers, and engaging with patient advocacy organizations.

Further, we have built an internal team of experienced commercial leaders whose depth and breadth of knowledge and experience further expand our go-to-market capability. We believe our preparations will enable us to be fully ready to execute the launch of ZURZUVAE to treat women with PPD by year-end. A tremendous opportunity exists in PPD, with estimates of approximately one in eight women experiencing PPD symptoms in the U.S. each year. That's about half a million women. Today, we know that only about 50% of PPD cases are diagnosed due to inadequate screening. Far too many women with PPD are not getting the care that they need because of the limited options available to them. With the approval of ZURZUVAE, we believe we have the potential to be a first-line therapy and become the standard of care. Our planned launch focus will be on women diagnosed with PPD requiring treatment.

We believe the addressable patient population at launch includes those who are newly diagnosed and those experiencing unresolved symptoms despite taking antidepressant treatment. We're not going to stop there with our efforts to help women with PPD. We believe it will also be important to support efforts to increase diagnosis rates in PPD, building upon the recent guidelines updated by the American College of Obstetricians and Gynecologists, which recommends increased screening during the pre and postpartum period. While thinking big about the unmet need in treating women with PPD, we, alongside our collaboration partner, Biogen, expect to implement a focused launch strategy that can be scaled with success to reach more women with PPD. We plan to leverage our omnichannel capabilities, powered by data and predictive analytics, that we expect will enable us to efficiently reach a broad base of healthcare professionals who treat PPD.

At launch, we plan to have our focused field sales teams targeting high-prescribing psychiatrists, OBGYNs, and PCPs who treat women with PPD with a consistent frequency of promotional messages and resources. Additionally, we plan to advance non-personal promotion efforts with digital platforms designed to reach a broad set of HCPs treating these patients. These digital platforms are intended to unite data from our content, media, and in-person interactions. It's also vital that our omnichannel work directly reaches women with PPD at launch. Our planned efforts are intended to directly engage these women with education and resources, so they're aware of ZURZUVAE as a treatment option in PPD and are prepared to have a meaningful discussion about ZURZUVAE with their HCPs.

HCPs will be a central focus of this planned omnichannel approach, as they will ultimately be directly responsible for making the decision to prescribe ZURZUVAE in the treatment of women with PPD. We believe early and positive clinical experience and accessibility for women with PPD will be critical to building confidence and accelerating adoption of ZURZUVAE in this indication. HCP experience with ZURZUVAE in treating women with PPD will be instrumental to update. We plan to have initiatives at launch in support of this. First, a full course therapy sample program that will distribute a 14-day short course of therapy to appropriate HCPs to trial ZURZUVAE in the treatment of women with PPD. We believe this targeted early experience program will be critical to enabling rapid clinical experience with ZURZUVAE that will ultimately drive long-term updates in this PPD population.

The second planned initiative is intended to help enable our goal that every woman with PPD who is prescribed ZURZUVAE can access it, regardless of her financial circumstances. We plan to facilitate this effort through patient access programs at launch, including co-pay assistance for eligible women with PPD who are commercially insured. We intend to discuss our planned commercial strategy, these initiatives, and other planned support for women with PPD closer to the time of launch. We are collaborating across the ecosystem with payers, healthcare providers, patient advocates, and policymakers with the goal of providing a model for care that works in the best interest of patients with PPD. In every state, there is a call to action to prioritize expanding and increasing access to treatment for maternal mental health. There is a need for solutions to address the significant gaps in care.

As a new standard of care for women with PPD and a harbinger for change, ZURZUVAE could improve outcomes for these patients, potentially lessen the overall burden and costs on society, and more importantly, support these mothers and their infants to help them thrive. We believe that a combination of these efforts will help build a positive experience with ZURZUVAE, both for women with PPD and HCPs who treat them. Finally, let's turn to market access. While it's too early to talk about price, here's how we're thinking about it. We plan to implement a PPD access strategy that recognizes the unmet need, considerable economic burden, and the novel clinical profile of ZURZUVAE. We will continue to work with payers with the goal of favorable access and identify ways we might partner, including the potential role of value-based agreements.

We've had numerous permitted engagements with payers in the months leading up to PDUFA. Payers recognize the significant unmet need for new treatment options in PPD and have been enthusiastic about the clinical profile of ZURZUVAE in this indication. As we said, our goal is that every woman with PPD who is prescribed ZURZUVAE can access it, regardless of financial circumstances. As part of our final preparation, Sage and Biogen are currently working to determine adjustments to our thinking on price, given the PPD label. We plan to provide more clarity on our overall thinking closer to product launch.

What we can say now is that approximately 55% of U.S. births are covered by commercial insurance. Our planned patient access approach for women with PPD who are commercially insured has the goal of enabling a vast majority of these women to have access to ZURZUVAE with minimal out-of-pocket costs. The remaining births receive coverage through Medicaid, which requires little or no financial responsibility for the patient. We expect decisions by payers as to coverage of ZURZUVAE in the treatment for women with PPD to be made in the months following DEA scheduling. We are prepared and eager to implement this launch strategy that we believe has the potential to maximize the impact of ZURZUVAE in the treatment of women with PPD by aligning with each of our stakeholders.

Through our planned commercialization efforts, we expect to rapidly reach both women with PPD and the HCPs who treat them. Finally, our goal is to enable a favorable access environment so that women with PPD who are prescribed ZURZUVAE are able to get it both rapidly and affordably. We feel this urgency because women with PPD are waiting. I'll now turn it over to Kimi to provide a financial update. Kimi?

Kimi Iguchi (CFO)

Thanks, Chris. Good morning, everyone. I want to share my excitement for this new chapter of opportunity and hope for women with PPD. We're energized to push forward and help so many of these women. As Barry noted earlier, we are reviewing the feedback from the FDA and the CRL for MDD and evaluating next steps. Given these recent developments, I'd like to briefly comment on what this update means for our financial position. We will continue to make smart, disciplined decisions as we work to balance cash on hand and revenue generation with our operating expenses. We believe we are well capitalized with $1 billion in cash as of June 30th. Based upon our current estimates, we expect that our cash, cash equivalents, and marketable securities, along with anticipating funding from ongoing collaborations and potential revenue, will support operations into 2025.

With that said, given the update relating to the CRL and MDD, we are refining our strategy. We plan to take action with the goal of extending our cash runway and are currently evaluating resource allocation, including pipeline prioritization and a workforce reorganization. As a result, we also anticipate operating expenses to decrease in 2024. As Barry said, we are working towards a successful launch in PPD and believe the changes we plan to make will enable us to be a stronger, leaner, and a more focused company. We expect to provide greater detail and next steps before the end of the Q3 as our plans unfold. Before I turn the call over to Ashley for Q&A, I want to reiterate our excitement around this monumental milestone for Sage.

We look forward to the commercial availability of ZURZUVAE later this year and will act with urgency to help enable women with PPD who are prescribed ZURZUVAE to have access to it. Let me also add that I know there are many questions out there given the CRL and MDD. As we always have, we'll provide updates when we can. With that, I'll turn the call over to Ashley.

Ashley Kaplowitz (VP of Investor Relations and Capital Markets)

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, feel free to return to the queue. I'll turn it over to the operator to handle Q&A. Operator?

Operator (participant)

Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Please limit yourself to one question. Again, please press star one to ask a question. We'll pause for just a moment. I'll go first to Salveen Richter with Goldman Sachs.

Salveen Richter (Managing Director, Equity Research Analyst)

Good morning. Thanks for taking my question, congratulations on the approval here in PPD. Maybe just to start here with, with the launch, you talked about the outreach effort with the prescribers. Could you just quantify the prescriber base for us and help us understand the targeted approach and also how a sampling program will work in the context of, you know, ensuring you're not soaking up all that initial demand? Thank you.

Barry Greene (CEO)

Yeah, Salveen, thanks. Thanks for the congratulatory note. We're really excited about the approval of ZURZUVAE and the treatment of women for PPD, and we're really looking forward to helping these women. We're excited about the opportunity and believe we have a strong business case. With the right sized organization and the right price, we've got many tailwinds that may help us in launching ZURZUVAE for the treatment of women. As you noted, it's a big unmet need. About 500,000 women in the U.S. experience symptoms each year. The fact is, it's the first and only oral treatment approved for women with PPD. We believe healthcare providers are looking for a tool like this to solve their dilemma on what to do when they diagnose a mom with PPD.

We know that the, the payers, and I'll ask Chris to comment more about the sample program, will, you know, We're looking forward to a new option for PPD. Certainly, and we mentioned this in script, that every state and policies. They're implementing policies that we believe will enable access for women at PPD. We can't talk about yet our targeting numbers per se, or the size of the sampling program, but maybe Chris can talk about the importance of the full course of treatment and activating healthcare providers to see the results in front of their own eyes.

Chris Benecchi (Chief Business Officer)

Yeah. Thanks, Barry. At launch, we're going to focus our field sales team, as I said in my opening remarks, on high prescribing OBGYN, psychiatrists, and PCPs. As you noted, it's going to be really important for that group of physicians to have early experience with ZURZUVAE. What that entails is giving them access to a 14-day full course therapy sample, so that they have that experience to see.

The impact that ZURZUVAE can have on women living with PPD in their practice.

Salveen Richter (Managing Director, Equity Research Analyst)

Could I just follow up real quickly just to get a sense of quantification of that physician base that you're targeting initially and, and just help us understand the flexibility you have on pricing in PPD?

Barry Greene (CEO)

Yeah. Right now, we really can't talk about the kind of the size of the physician base. As you're well aware, we and our collaborators, Biogen, have been working wholeheartedly on preparing for a PPD and MDD launch and have done a lot of work. Of course, we have PPD scenarios that we've laid out, but now the work begins for a PPD focus launch. As we get closer to launch, we'll come back out with specifics about how we're targeting. As Chris said in his remarks, we're thinking big about the opportunity, but we're gonna start in a very focused way and have clear metrics to scale with success.

You know, in terms of pricing, you know, as I said, we think that with the right price and the right size organization, we have a very strong business case, and we're setting about to do that work now.

Salveen Richter (Managing Director, Equity Research Analyst)

Thank you.

Barry Greene (CEO)

Thank you.

Operator (participant)

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

Ritu Baral (Managing Director and Senior Biotechnology Analyst)

Good morning, guys. Thanks for taking my question. I'd, I'd like to add my congratulations that the drug is available for PPD patients. I, I would like to focus a little bit on MDD, Barry. I, I know you can't talk too much about the interactions and the status, but could you go through at least what happened during the review, any review issues that were discussed at the mid-cycle review that are now, you know, a focus of unresolved questions? What is your expectations of timing for a Type A meeting to reach clarity on what else is needed?

Barry Greene (CEO)

Yeah, Ritu. Again, thank you for the congratulatory note. As you asked, we'll focus on this MDD. Just to be clear, we're extremely disappointed for patients with MDD. We're, you know, we're devastated that we're not able to help them right now. Actually, we do not agree with the FDA's view on ZURZUVAE for MDD. The mental health crisis is having a devastating impact on our communities, as you know, and we're in desperate need of innovation. If I back up, you know, we, in accordance with FDA, last year, filed our NDA package, and we had started the rolling submission earlier in the year with some of the modules.

In the clinical section, we had, we had what we believed was six of seven placebo-controlled, positive clinical studies that supported that package, which we believed was supportive of both PPD and MDD. We learned late in the review cycle about FDA's view on approvability for MDD. As we noted, we received the CRL late on Friday. You know, the review of the NDA filing package involves an analysis of the submitted information. We really can't speculate on the FDA's thinking or decision making. We can simply reflect on what they put in the CRL, which again, we got late Friday. We're reviewing the feedback and evaluating the next steps. We're excited to launch ZURZUVAE and PPD as we work with our collaborators, Biogen, in understanding what our next steps with FDA on MDD are.

Ritu Baral (Managing Director and Senior Biotechnology Analyst)

Do you anticipate interaction even before a Type A meeting?

Barry Greene (CEO)

I really can't say anything else, Ritu, except that we advise and are reviewing the feedback and evaluating the next steps. We've got the right team on it.

Ritu Baral (Managing Director and Senior Biotechnology Analyst)

Got it. Thank you.

Barry Greene (CEO)

Thank you.

Operator (participant)

We'll go next to Paul Matteis with Stifel.

Paul Matteis (Managing Director and Head of Therapeutics Research)

Thanks so much. I guess without being able to talk about the price, which was sort of my first question, I wanted to ask a little bit about the label, because I think there are a few things on there that surprise investors and might have readthrough out of the pipeline. One was commentary around abuse, another was a commentary on a prior dog study, which seems like it might have been an impediment to chronic administration, and then also, you know, restrictions around driving. How do, are those surprising to you that they were on the label, one? Two, do those put into question the profile of SAGE-324, which is being given chronically and has the same mechanism of action? Thank you.

Barry Greene (CEO)

Hey, Paul. Thank you for the question. Let me just start out, and I'll turn it to Laura to talk about some of the specifics. We, we believe that the label that's provided for, for us, for the treatment of, of PPD is a fine label. It's a label that is, is instructive. It's protective, and it's instructive for healthcare providers and their patients. Certainly, a label that allows us to sell ZURZUVAE for the treatment of PPD for women and a label we can move forward with. Nothing in the label is, is surprising per se or, or problematic, but maybe Laura can talk more about that.

Laura Gault (Chief Medical Officer)

Sure. Thanks for the question, Paul. I'll start first with your question related to driving. As you see in the label, there is a box warning for driving that instructs prescribers to counsel their patients not to drive or engage in other potentially hazardous activities until at least 12 hours after each dose of ZURZUVAE for the duration of the 40-day treatment course. This recommendation was based on data that's included at the end of the label that summarizes the results of two driving studies that Sage conducted. I can summarize briefly the results from the 50-milligram dose because that's the most relevant since it's the clinical dose. At the 50-milligram dose, ZURZUVAE caused driving impairment after one day of dosing and after seven days of dosing, which was the last time point measured.

The label contains very clear instructions for patients. From our perspective, patient safety has to be top of mind. It's good that these clear instructions are in the label because it will enable physicians to have good discussions with their patients about the benefit-risk profile of ZURZUVAE. With regard to abuse liability, this is not unexpected for a drug with a mechanism of action like ZURZUVAE. It, as you can see from what's in the label, there are results from abuse liability studies that show that ZURZUVAE has, at 30 and 60 milligrams, has less abuse potential than the control, which was a benzodiazepine, but at the 90 milligram dose, was approximately equivalent in abuse potential to benzodiazepines. Based on this, we expect that ZURZUVAE will be DEA scheduled, likely Schedule IV, like similar drugs, like benzodiazepines.

The prescribers who will be prescribing medications for PPD are experienced in prescribing Schedule IV agents, and we don't expect this to be an impediment to use.

Barry Greene (CEO)

Let me, let me wrap back with your question about the rest of the pipeline or, or, you know, Gabapentin. As we stated, we intend to complete the KINETIC 2 Study for SAGE-324 at the end of the year. Every new chemical entity has its unique entity, and it's hard to understand if there are any read-throughs in this label or not. Typically, labeling occurs on the basis of data for each and then each individual product. That's what we can say right now.

Operator (participant)

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

Yasmeen Rahimi (Managing Director and Senior Research Analyst in Biotechnology)

Good morning, team, and thank you so much for hosting this call and taking our question. I know there's a lot that you can tell us about MDD. Could you maybe comment on what are some of the requirements that you would want to maybe not go through in case, like, you know, if there's multiple additional studies required, is that something that you would want to do? I guess what, what we're trying to figure out is, like, your commitment to really move this forward in getting this approved.

Then the second question for me is just sort of helping us understand how many courses of ZURZUVAE would be used in patients with PPD, whether you would recommend one or two, and if you could maybe help us understand on sort of the use of this product in a within one year. I'll jump back into the queue. Thank you.

Barry Greene (CEO)

Yes, thanks for the question. Let me start with PPD, and I'll circle back. What we saw in our clinical studies on the profile of ZURZUVAE was, these women that took ZURZUVAE in the evening with a meal saw rapid response as early as three days, a continued response up to day 15 that's clinically relevant and statistically different than placebo, and that effectiveness lasted out to day 45, with statistical significance to clinical relevance. With that profile, we envisioned that a mom would take one 14-day course in the course of a year because the trigger event was getting pregnant or having that baby. I guess the short answer is one. Now, looping back to the CRL, I'll repeat it. We're extremely disappointed for patients, and we don't agree with the FDA's view.

They, they issued the CRL related to NDA for Zuranolone for the treatment of adults with MDD. What I can say is what the CRL says, which is: The application did not provide substantial evidence of effectiveness to support the approval of Zuranolone for the treatment of MDD and that additional study or studies are needed. We're reviewing the feedback and evaluating next steps, and we really can't comment further other than that.

Yasmeen Rahimi (Managing Director and Senior Research Analyst in Biotechnology)

Okay. Thank you. Thank you. Thank you so much.

Barry Greene (CEO)

Thanks, Yasmeen.

Operator (participant)

We'll go next to Anupam Rama with JPMorgan.

Anupam Rama (Managing Director and Senior Equity Analyst)

Hey, guys. Thanks so much for taking the question. Congrats on the PPD approval here. Barry, you, you've, you've mentioned a couple of times, you know, the right price in PPD. Maybe you can give us a little bit of color on the bookend to kind of consider whether it's ZURZUVAE or other products. What are the key considerations to getting to that right price? Thanks so much.

Barry Greene (CEO)

Yeah, Anupam, I'll start, and I'll turn it over to to Chris for that. Thank you very much for the congrats for Zurzo. Again, we're really excited to help women suffering from from PPD. Just to be clear, we can't comment on price or book ends right now. As I mentioned, we did a significant amount of approved pre-commercial payer introduction with the plan to launch MDD and PPD. We had a significant amount of conversations about what the value-based agreements would look like. You know, in fact, we were prepared for a PPD, MDD launch with payers to move forward in in contracting. We now have to go back, given the results from Friday and the fact that we got the CRL Friday, and reengage payers.

We have some, we have some basis to to do that. Maybe Chris can talk more about that.

Chris Benecchi (Chief Business Officer)

Yeah, sure. Thanks, Barry. You know, we, we historically said that to be truly transformational, we must be accessible with ZURZUVAE. We're committed to the goal of rapid and equitable access to ZURZUVAE for the hundreds of thousands of women who live with PPD. When we think about the approval of ZURZUVAE and the treatment of women with PPD in the absence of an MDD indication, we'll need to consider the size of the patient population, obviously, the strength of the clinical data, including statistical significance at all time points, and the clinical potential of ZURZUVAE to address significant unmet need for new innovative options in the treatment of

postpartum depression. These factors ultimately are what will influence our target Wholesale Acquisition Cost. However, regardless of the WAC, our goal is that every woman, as I said, with PPD is prescribed ZURZUVAE can access it regardless of her financial circumstances.

Anupam Rama (Managing Director and Senior Equity Analyst)

Thanks for taking our question.

Barry Greene (CEO)

Thanks, Anupam.

Operator (participant)

We'll go next to Tazeen Ahmad with Bank of America.

Tazeen Ahmad (Managing Director in US Equity Research)

Hi, good morning. Thanks for taking my question. I just wanted to clarify, did FDA ask you to submit both applications for PPD and MDD at the same time, or was it the preference, or was it Sage's preference to do it together? You mentioned that, you know, the comments from FDA about the concerns around MDD didn't come until late in the review cycle. Would there have been any opportunity to have an Ad Comm when they brought up the concerns in order to be able to flush it out better? Thanks.

Barry Greene (CEO)

Yeah, Tazeen, several different questions in there. If, if I go back historically, 2.5, three years, we did, as, as Sage announced that, we were gonna, we were gonna file the NDA for both PPD and MDD. You might remember, at some point, it looked like, our PPD study was delayed, and at that point, we went out and said we were going to file MDD first and PPD, after that. As the PPD study caught up, we, we, we announced that we were going to start a rolling submission and then launch both PPD and MDD at the end of the year. All of that was done in concordance with FDA.

In terms of what I can say about the interactions, you know, as you noted, we filed the NDA, the FDA in February. We announced the FDA gave us a PDUFA date of August 5th and priority review. About a month or so later, the FDA told us there was no Ad Comm required, which at the time, obviously, we took as a positive sign. Just to add to that, we found out late in the review cycle about the FDA's view on the approvability of MDD. Other than that, I can't say much more, Tazeen.

Tazeen Ahmad (Managing Director in US Equity Research)

Okay.

Operator (participant)

We'll go next to Brian Abrahams with RBC Capital Markets.

Brian Abrahams (Managing Director and Co-Head of Biotechnology Research)

Hi, good morning. My congratulations as well on the approval in PPD. Maybe a question on MDD. Do you see a potential for a more narrow or refined indication, like the treatment of an acute depressive episode or adjunctive treatment? Is this something that was ever discussed with the agency or potentially on the table? If this is a possibility, do you think additional studies would be required to support that or not? Thanks.

Barry Greene (CEO)

Brian, thank you. Thank you very much for a very insightful question. I guess what we can say at this time is we're extremely disappointed for patients, whether it's for the treatment of MDD or a different indication, and we don't agree with the FDA's view. We, are evaluating the CRL, and as soon as we can provide more clarity, we will on, on what the next steps are. We really do believe that Zuranolone should be available to treat patients with MDD, but we've got to get there. Until we're there, we'll be solely focused in marketing for ZURZUVAE to treat women with PPD.

Brian Abrahams (Managing Director and Co-Head of Biotechnology Research)

Thanks.

Barry Greene (CEO)

Thank you.

Operator (participant)

We'll go next to Jay Olson with Oppenheimer.

Jay Olson (Managing Director and Senior Analyst)

Oh, hey, thank you for taking the question, and congrats on the PPD approval. We have a financial question. Since you'll be eligible for a $225 million milestone from Biogen, and you'll also experience potentially significant cost savings in the near term without an MDD launch, are you in a financial position to accelerate the development of SAGE-718? Do you plan to continue that development independently or potentially seek a partnership? Thank you.

Barry Greene (CEO)

Yeah, Jay. First of all, thanks for the congratulatory note. I'll let Kimi talk about the milestone and some of our financial thinking. But in terms of, in terms of SAGE-718, we continue to be really excited by developing SAGE-718, our wholly owned NMDA PAM. The data we've seen to date is, is exciting in terms of, in terms of cognitive improvement that we saw in Huntington's, Parkinson's, and Alzheimer's, albeit, you know, probe studies and open label studies. As you're well aware, we have a significant number, five, well-controlled studies underway right now, several in Huntington's and then Parkinson's and Alzheimer's. Those should set us up for a very data-rich year next year in terms of SAGE-718.

As we've commented before, we believe that the Huntington's package is set up in a way that if we see robust data and given that it's an orphan indication, you know, we do believe there's some regulatory flexibility, and we'll, we'll, we'll pursue that flexible approach. Whether it accelerates or not is another question. That's a matter of, you know, clinical studies enrolling and, and how, how rapidly they enroll. We have, we have said previously that we're excited as Sage alone to launch SAGE-718 in Huntington's, given the orphan nature and the sort of, sort of smaller capital footprint that needs, we're excited to do that. Kimi, can you talk about, you know, kind of milestones and other financial guidance?

Kimi Iguchi (CFO)

Sure. Thank you. It's a great question. Just a reminder, earlier, I talked about that based on our current estimates, we expect that the cash on hand.

anticipated funding from collaborations and potential revenue will support our operations into 2025. We also mentioned that we have the potential to earn a milestone payment of $75 million from Biogen related to the first commercial sale of ZURZUVAE for the treatment of PPD. To be clear, based on the receipt of the CRL on Friday evening, we are looking forward to and plan to refine our strategy and spend. That's going to really include an evaluation of our resource allocation. We'll be looking at the pipeline. We'll be looking at a workforce reorganization, and that's all with the goal of extending our cash runway. We expect our evaluation of our resource allocation will incorporate the feedback from the FDA that we have at that point in time.

We expect that we'll be able to update all of you by the end of end of the Q3, and we'll certainly talk to you once we have this plan in place.

Barry Greene (CEO)

Jay, just some additional color since you mentioned it. you know, as, as Chris Vanek said, you know, we're thinking big about the opportunity to help moms with PPD. It's half a million women, women, but it, it certainly starts with a very focused footprint in terms of commercialization, omnichannel, and then we'll have markers that scale that with success. We're certainly not going to overscale the launch for PPD.

Jay Olson (Managing Director and Senior Analyst)

Great. Thank you very much.

Barry Greene (CEO)

Thanks, Jay.

Operator (participant)

We'll go next to Sumant Kulkarni with Canaccord.

Sumant Kulkarni (Managing Director)

Good morning. Thanks for taking my question. How collaborative with Biogen do you expect the ZURZUVAE launch to be? Do you expect to announce pricing on PPD prior to interacting with the FDA on MDD or after?

Barry Greene (CEO)

Sumant, thank you. Thank you for those questions. In terms of Biogen, we, we and Biogen have been working extraordinarily collaboratively, preparing for the potential of an MDD and PPD launch, if approved. We, we, and they got, you know, the label and the approval for PPD Friday night and the CRL for Friday night. As you saw, we together issued a joint press release, two hours later, announcing that we plan to launch ZURZUVAE for PPD, and have that launch available in the Q4 of this year and, shortly after the DEA scheduling, which we think takes approximately 90 days. That was a, a joint collaborative press release.

Now, with the approval of PPD in front of us and the CRL, we now turn our attention to working towards the appropriate launch of PPD in response to CRL, we plan on doing that, as I said, together. In terms of price timing, as we get closer to launch, we will be talking about our access strategy as well as some of the other aspects of our commercialization. That'll be closer to launch.

Sumant Kulkarni (Managing Director)

Thank you.

Barry Greene (CEO)

Thanks, Sumant.

Operator (participant)

We'll go next to Laura Chico with Wedbush Securities.

Laura Chico (Managing Director, Senior Biotechnology Analyst)

Good morning. Thanks very much for taking the question. I guess just kind of following up on that, I don't know if there's any additional color you can provide on kind of the remainder of 2023 in terms of the acceleration on SG&A, in terms of PPD launch preparation. I guess I'm trying to understand kind of the allocation of resources also between you and Biogen. I guess I'm just trying to understand more broadly. You, Barry, you had some good comments with respect to how those two partners have interacted over the weekend here, but what is Biogen's commitment to a PPD launch? That would just seem a little bit of a difference than if MDD was involved. Not sure if you can add any color there. Thank you.

Barry Greene (CEO)

Yeah, Laura, thanks for all those questions in one question. I guess what I can say is that, you know, look, I can point to the joint press release where we and Biogen committed that we'd have ZURZUVAE available for PPD in the Q4, shortly after DEA scheduling. I can't really talk more about the allocation of resources yet. As I said, you know, we worked really hard in preparing for the potential of an MDD and PPD launch, if approved, and had that, you know, clearly well mapped. With the news on Friday, the approval of PPD, the CRL for MDD, we're now turning our attention to do the work necessary for what the launch of PPD looks like.

As, as we get closer to launch, we can talk more about what, what that looks like. You know, in terms of SG&A or other bills, as Kimi said, you know, we, we anticipate looking at all resources a-as well as, as, as our workforce. As I commented earlier, we do believe that even in PPD, with the right price and the right size organization, we've got a really strong business case.

Operator (participant)

We'll go to our next caller from Ami Fadia, Needham & Company.

Speaker 22

Hi, good morning. This is Isa Leon for Ami. Thanks for taking our question. Maybe, maybe just kind of on regarding kind of Biogen again, I mean, just I think, you know, just kind of the recent comments at, you know, earnings and the acquisition they announced. It just I think it's created kind of a perception by some that maybe they could be less committed to MDD. I, you know, I, I kind of hear you on the joint press release and stuff, but maybe, like, how much I mean, can you give us a sense, just, like, how much commitment do you think, you know, Biogen is, you know, on Zuranolone and MDD?

Then, you know, with, with, with regards to a potential kind of resubmission effort and, and kind of the, you know, the effort that would be required for that, like, I mean, what role, you know, would you anticipate Biogen kind of playing in, in that venture?

Barry Greene (CEO)

Yeah. Again, thank, thank you for the question. I really can't say anything more than we've already said. ZURZUVAE and PPD and examining the CRL. We're reviewing the feedback and evaluating the next steps. I can't really comment more than that.

Operator (participant)

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

Speaker 22

Hi, this is Steve for Vikram. Thanks for taking our question, and congrats on approval. A quick question about the PPD. What do you expect the steady-state growth to net to be for ZURZUVAE, and how long did you think you can, you can get there? Thank you.

Barry Greene (CEO)

It's, since we, already talked about the, the idea that we are gonna turn our attention to work on WAC, and, and launch, it's too early to talk about gross-to-net.

Speaker 22

Thank you.

Operator (participant)

We'll go next to Marc Goodman with Leerink.

Marc Goodman (Senior Research Analyst)

Yes, good morning. My question is around MDD, and you, in guidance from FDA, they talk about two drug placebo-controlled studies that have to show duration of effect. You clearly had that in one of your studies, but it's not clear that you had that in a second study. I was curious if that was the reason that the FDA did not approve the MDD. If that is the case or whatever the case is, are you and your partner 100% committed to doing another study in order to do whatever the FDA needs to to get MDD? Thanks.

Barry Greene (CEO)

Thanks for the question, Marc. As I said, we're extremely disappointed for patients with the CRL, and we don't agree with the FDA's views. That's what I'm gonna say right now. Well, all we can say is what we did, which in concordance with FDA, we filed our NDA last year, with what we believe was six of seven positive studies that met their endpoints in well-controlled studies. That was our belief set when we filed the NDA, of course. We can just say what the CRL states, as I've already said, which is that the application lacks substantial evidence of effectiveness and that additional study or studies are required. We intend on evaluating the CRL and pursuing next steps with Biogen.

Marc Goodman (Senior Research Analyst)

If you need to do another study, which the FDA is saying, are you, "We're gonna do another study. We'll do whatever it takes to get MDD," or you're not, it's not clear yet?

Barry Greene (CEO)

Marc, let me just repeat. We're disappointed for patients, and we don't agree with the FDA. We're evaluating the feedback and reviewing next steps.

Marc Goodman (Senior Research Analyst)

Okay.

Operator (participant)

We'll go next to Akash Tewari with Jefferies.

Akash Tewari (Global Head of Biopharmaceutical Research)

Hey, thanks for taking my question, and congrats on the PPD approval. I guess in your collaboration agreement, it mentioned that Biogen could terminate the contract on a product-by-product basis by giving 150 days in advance written notice. Is there a development juncture where Biogen wouldn't be able to terminate the agreement, let's say, for Dalzanemdor? Have you received any notice from Biogen at this point? I just wanted to confirm. Thank you.

Barry Greene (CEO)

Yeah, Akash, I guess what I can say is there are termination provisions in the agreement. I can also say that, you know, after receiving the PPD approval and the CRL, we jointly worked to issue the press release that you saw, committed to launch ZURZUVAE in the Q4 for PPD shortly after the DEA scheduling. I'll leave it at that.

Operator (participant)

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

Tim Lugo (Partner, Group Head of Biotechnology Equity Research)

Thanks for the question. Can you walk us through the scheduling process in the next few months? It seems like most are viewing it as a formality. However, you know, we've had rises in benzo addiction and abuse in recent years, and sometimes class-wide issues can get wrapped up into single product discussions. Can you just help us frame the risk around that process?

Barry Greene (CEO)

Yeah. Thank, thanks for the question, Tim. You know, the FDA refers ZURZUVAE to the DEA for scheduling review. We anticipate that to occur within 90 days. As you heard Laura say, we expect to have a Class 4 label, which is not an issue for prescribers or for patients.

Tim Lugo (Partner, Group Head of Biotechnology Equity Research)

Great. Thank you.

Barry Greene (CEO)

Thanks, Tim.

Operator (participant)

We'll go next to George Farmer with Scotiabank.

George Farmer (Managing Director, Agriculture & Ag-Biotech Equity Research)

Hi, thanks for taking my question. Two things, if I may, real quickly. How long do you think that the sampling program will last, as we think about modeling drug penetration in the market? Also, can you speak to your comfort level of risk to feeding newborns and if you've done any particular studies to address that?

Barry Greene (CEO)

Yeah, thanks for the question, George. I'm glad for some new questions, thank you. Let me start a little bit, and then I'll ask Chris to talk about sampling and then Laura to talk about breastfeeding. If you take a step back, we believe that healthcare provider experience with ZURZUVAE in their own hands, seeing the profound and rapid effects that we saw in clinical trials, that ZURZUVAE has the potential to have on moms with PPD, is critical to strategy. Physician or healthcare provider activation, well, that's where we use the sampling program. Chris, can you talk about, or you can't talk about this, we color on use, and then we can turn it over to Laura for breastfeeding.

Chris Benecchi (Chief Business Officer)

Barry, what I can say is that, you know, as in my prepared remarks, we see this as an early experience program that really focuses on giving physicians that experience in and around the time of launch, once we have DEA scheduling. That's a finite window of opportunity for physicians to use that, you know, the actual duration, more later as we talk about, you know, our actual go-to-market strategy and the details of commercialization. But it is a finite window that we see that in and around the time of launch.

Barry Greene (CEO)

What I can add is, is, you know, we're not talking about all the markers, but it, you know, it's likely in our quarterly calls, after the launch of ZURZUVAE for PPD, we'll provide some color on, on how many samples are out there and how that's going. Laura, you want to talk about the breastfeeding?

Laura Gault (Chief Medical Officer)

Sure. Sure. You raised an important question, George, given that this is going to be used in a population that's breastfeeding. Sage has done a clinical lactation study, and the results of those, of that study showed that there's very low levels of ZURZUVAE present in human milk. In fact, the calculated maximum relative infant dose for ZURZUVAE is less than 1%. So what it says in the label then, is that a physician and patient should consider the developmental and health benefits of breastfeeding, weighed with the potential exposure to ZURZUVAE in the breast milk. It's really important that we have this data in the label. This, it differentiates this label from other drugs that are used off-label to treat MDD, where this data is either absent or the levels present in breast milk are much higher.

George Farmer (Managing Director, Agriculture & Ag-Biotech Equity Research)

Great. Thanks very much.

Barry Greene (CEO)

Thanks, George.

Operator (participant)

We'll go next to Uy Ear with Mizuho.

Uy Ear (Vice President and Senior Equity Analyst)

Guys, thanks for taking my question. I have two quick ones, if that's okay. The first one, do you think it's easier now with only PPD indications for you to obtain value base? Second one, just, could you sort of remind us in the collaboration with Biogen, are there any fees if you, if the collaboration is terminated, any payments that in either directions you have to pay Biogen or Biogen have to pay you? Thank you.

Barry Greene (CEO)

Yeah, let me start with the second one. There, there certainly, there are termination provisions in the contract. That's about as far as I can go on that one. You know, again, very insightful. We have, as I mentioned, we have many tailwinds for a PPD-focused launch. It's a large unmet need, with about 500,000 women in the U.S. experience symptoms each year, only about 50% of whom are diagnosed per year. Real big opportunity on improving diagnosis. This will be the first and only oral treatment approved for women with PPD, so that's a big advantage. Talking to healthcare providers who prescribe, they're anxious to have a product like ZURZUVAE.

The issue they have today, if, if they can't get access to ZULRESSO, is that the, the products they use take weeks to work, if, if at all. As we know, many patients cycle through many different drugs, and, and these, the drugs they use today often come with, with comorbidities, weight gain, sexual dysfunction, GI impacts. At a, at a prescriber level, let's say an OBGYN level, the, the course of treatment just doesn't fit into how they're dealing with mom and baby, whereas ZURZUVAE could be the solution to that problem. Certainly, payers have been, have been historically supportive of this indication. As, as we mentioned, maternal mental health is on everybody's mind. It's been on television almost every night.

It's at every state level for policies. We have now the first oral treatment that could be a solution set, at least in PPD, for maternal mental health and the policies that are happening at the statewide level.

Uy Ear (Vice President and Senior Equity Analyst)

Thank you.

Operator (participant)

We'll go next to Yatin Suneja with Guggenheim.

Yatin Suneja (Senior Managing Director, Biotechnology Analyst)

Guys, thank you for taking my questions, and let me add my congrats on the, on the approval. Just twoquestions, one clarification and then one follow-up. With regard to the sampling comment, it is our understanding that a controlled substance has limitation from a sampling perspective. Could you clarify that? Would you be able to sample it? Also. Yeah, just that. Then, you know, with regard to the commercial build, I understand, you know, you'll, you'll provide us more detail once you launch. Let's say if you got approved for MDD and that requires 100 sales rep, like, just trying to understand the commercial build around PPD. Is it 20 sales rep, 30 sales reps or 20% less? Just, just some sort of ballpark.

Just trying to gauge what the spend will be also as we model it. Thank you.

Barry Greene (CEO)

Yeah. Let me, let me, let me quickly answer both questions, because I know we're getting to the top of the hour. You know, what we said about the commercial build is that we're thinking big, but starting with a very focused way. Clearly, much more focused in PPD than it would be in MDD. We really can't provide numbers. You also heard from, from Kimi that we're prioritizing our pipeline and kind of, and we'll resize the organization appropriate for this opportunity in the pipeline in front of us. You know, we'll, we'll communicate that in, in the next month or so.

In terms of sampling, there are certain limitations on controlled substance states, whether you can use an actual sample or a voucher, but we don't see that being a limitation to the concept on the sampling program.

Operator (participant)

This does conclude the Q&A portion of today's call. I would like to turn the presentation back over to Barry Greene.

Barry Greene (CEO)

Thank you, Ruth, and thanks again to everyone for joining us today. This is a special day for Sage Biogen and all the women with PPD who stand to benefit from ZURZUVAE. We appreciate the continued support of all stakeholders, and we look forward to providing more updates in the coming months. Thanks again, everyone, and have a great day.

Operator (participant)

Goodbye. This does conclude today's call. You may now disconnect.