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Sage Therapeutics, Inc. (SAGE)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 total revenue was $11.9M, driven by $11.0M collaboration revenue from ZURZUVAE (+49% QoQ), and ~2,000 prescriptions shipped (+~40% QoQ), reflecting accelerating PPD adoption supported by broad payor coverage (>90% commercial/Medicaid) .
  • Net loss narrowed to $93.6M (vs. $201.6M YoY), with lower R&D and SG&A from prior restructuring; cost of revenues spiked on one‑time ZULRESSO excess inventory and intangible impairments ($3.6M) ahead of discontinuation on Dec 31, 2024 .
  • Strategic shifts: discontinuation of zuranolone for MDD in the U.S., sunsetting ZULRESSO, and an October reorganization (workforce -33%) to extend cash runway and prioritize ZURZUVAE commercialization and the dalzanemdor HD program .
  • Management reiterated cash runway into 2026 (pre-reorg savings update), expects 2025 OpEx to decline, and highlighted near-term catalyst: DIMENSION Phase 2 HD topline late 2024 .
  • Wall Street consensus estimates via S&P Global were unavailable for this period; we will update once mapping is resolved (S&P Global consensus unavailable).

What Went Well and What Went Wrong

What Went Well

  • Continued commercial traction in PPD: collaboration revenue from ZURZUVAE rose 49% QoQ to $11M, with ~2,000 shipped prescriptions (+~40% QoQ); inventory normalized and free goods declined as coverage improved .
  • Broad access achieved: “All three national PBMs have developed favorable coverage policies…more than 90% of commercial and Medicaid lives are covered…with first‑line access without burdensome prior authorizations,” enabling front‑line use by OB/GYNs (~70% of prescribers) .
  • Strategic focus and operating discipline: Q3 net loss improved significantly YoY ($93.6M vs. $201.6M), reflecting the impact of prior reorganization and reduced R&D/SG&A; October reorg aims to further extend cash runway .
    Quote: “We are committed to harnessing the full potential of ZURZUVAE…continued growth in revenue and shipments…establishing ZURZUVAE as the standard of care” – Barry Greene .

What Went Wrong

  • Pipeline setbacks: LIGHTWAVE Phase 2 in Alzheimer’s did not meet the primary endpoint; Sage will not pursue dalzanemdor in AD and discontinued SAGE‑324 in ET following negative KINETIC 2 .
  • ZULRESSO drawdown: product revenue fell to $0.8M (vs. $2.7M YoY), and Q3 cost of revenues rose to $5.3M due to $3.6M one‑time write‑offs and intangible impairments tied to ZULRESSO discontinuation .
  • Estimates could not be benchmarked: S&P Global consensus for EPS and revenue was unavailable for SAGE this quarter, limiting beat/miss assessment (S&P Global consensus unavailable).

Financial Results

Income Statement and EPS vs. Prior Periods

MetricQ3 2023Q1 2024Q2 2024Q3 2024
Total Revenues ($USD Millions)$2.716 $7.902 $8.654 $11.871
Collaboration Revenue – Related Party ($USD Millions)— $6.212 $7.420 $11.028
Product Revenue, net ($USD Millions)$2.716 $1.690 $0.600 $0.843
Loss from Operations ($USD Millions)$(211.849) $(117.675) $(111.300) $(101.202)
Net Loss ($USD Millions)$(201.630) $(108.483) $(102.854) $(93.551)
Net Loss per Share – Basic & Diluted ($)$(3.37) $(1.80) $(1.70) $(1.53)

Revenue Components (Segment-like Breakdown)

MetricQ3 2023Q1 2024Q2 2024Q3 2024
Collaboration Revenue – ZURZUVAE (50% of Biogen net) ($USD Millions)— $6.212 $7.420 $11.028
Product Revenue – ZULRESSO ($USD Millions)$2.716 $1.690 $0.600 $0.843
Other Collaboration Revenue ($USD Millions)— — $0.634 —

Balance Sheet Snapshot

MetricQ3 2023Q1 2024Q2 2024Q3 2024
Cash, Cash Equivalents & Marketable Securities ($USD Millions)$753.184 (Dec 31, 2023) $717.013 $646.793 $569.155
Total Assets ($USD Millions)$882.277 (Dec 31, 2023) $767.600 $697.105 $622.432
Total Liabilities ($USD Millions)$82.747 (Dec 31, 2023) $61.799 $69.043 $70.597
Stockholders’ Equity ($USD Millions)$799.530 (Dec 31, 2023) $705.801 $628.062 $551.835

Operating Expense Details (YoY context)

MetricQ3 2023Q3 2024
Cost of Revenues ($USD Millions)$0.905 $5.278 (incl. $3.6M ZULRESSO write-offs/impairments)
R&D Expenses ($USD Millions)$101.919 $54.576
SG&A Expenses ($USD Millions)$78.142 $53.219
Restructuring ($USD Millions)$33.599 —

KPIs (Commercial Execution)

KPIQ1 2024Q2 2024Q3 2024
ZURZUVAE Prescriptions Shipped>700 >1,400 ~2,000
Prescriber Mix – OB/GYNLargest share >70% of prescriptions written 70% of prescribers
Payor Coverage>65% commercial lives incl. 2 PBMs (mid‑Apr) ~80% commercial lives; Medicaid reviews ongoing >90% commercial & Medicaid lives; 3/3 PBMs favorable policies
Brand Awareness (Aided)——~90% among OB/GYNs & psychiatrists

Guidance Changes

MetricPeriodPrevious Guidance (Q2 2024)Current Guidance (Q3 2024)Change
Cash RunwayThrough 2026Into 2026 Into 2026; update post‑reorg planned Maintained; update pending
Collaboration Milestones (2024)2024No milestones expected in remainder of 2024 No milestones expected in remainder of 2024 Maintained
Operating Expenses2024 vs 2023; 2025 outlook2024 OpEx to decrease vs 2023 2025 OpEx to decrease vs 2024 Clarified lower OpEx in 2025
ZULRESSO Commercial Availability2024+Revenues to decrease over time Discontinue availability Dec 31, 2024 Lowered/Accelerated sunset

Earnings Call Themes & Trends

TopicQ1 (Apr 2024)Q2 (Jul 2024)Q3 (Oct 2024)Trend
PPD commercialization & demandEncouraging start; growing prescribers; majority covered by payors +19% QoQ collab revenue; >1,400 shipments; OB/GYN >70% of scripts; normalization of inventory +49% QoQ collab revenue; ~2,000 shipments; OB/GYN 70% prescribers; expanded sales force in field Accelerating adoption; promotionally responsive market
Payor access & PBMs>65% commercial coverage; 2 PBMs ~80% commercial coverage; Medicaid progressing >90% commercial/Medicaid; 3 national PBMs favorable Access broadened to near‑ubiquitous
Inventory & free goodsInitial build at launch Wholesalers reduced initial build Inventory normalized; fewer free goods Normalization supports revenue quality
Pipeline: dalzanemdorMultiple Phase 2s; PRECEDENT PD negative DIMENSION endpoint adjusted to SDMT; topline late 2024 LIGHTWAVE AD negative; DIMENSION HD topline late 2024 HD readout is key near-term catalyst
Zuranolone in MDD——No further U.S. MDD development Portfolio focus on PPD only
Organizational focusQ3’23 reorg effects in OpEx Continuing discipline Oct 2024 reorg (-33% workforce) to extend runway Further cost optimization underway

Management Commentary

  • “We are committed to harnessing the full potential of ZURZUVAE…establishing ZURZUVAE as the standard of care…” – Barry Greene, CEO .
  • “Zurzuvae generated $22.1M in total revenue in Q3 2024, of which Sage recognized $11M collaboration revenue…~2,000 prescriptions filled and delivered…reduction in free goods as coverage implemented” – Chris Benecchi, CBO .
  • “We expect operating expenses to decrease in 2025 relative to 2024…ended Q3 with ~$569M cash…plan to update cash runway guidance” – Kimi Iguchi, CFO .
  • “We will not pursue further development of zuranolone in MDD in the U.S.…logical to discontinue ZULRESSO and focus resources on Zurzuvae” – Barry Greene .

Q&A Highlights

  • Sales force expansion: Management expects uplift given promotional sensitivity; too early for quantified guidance, but impact should begin next quarter .
  • Coverage breadth: ~90%+ commercial/Medicaid coverage with first‑line access; 3/3 national PBMs favorable, enabling affordability and quicker fulfillment .
  • Telehealth collaboration: Talkiatry and similar resources can expand access for moms outside OB/GYN settings, speeding engagement and treatment initiation .
  • DIMENSION HD readout: Primary endpoint updated to SDMT; seeking clinically meaningful change with supportive functional endpoints; population homogeneity may aid signal detection .
  • Prescriber breadth/depth: Repeat utilization rising; Zurzuvae used across severity levels, as monotherapy or alongside antidepressants; OB/GYNs remain ~70% of prescribers .

Estimates Context

  • Wall Street consensus for quarterly EPS and revenue via S&P Global was unavailable due to data mapping constraints at this time; therefore, beat/miss analysis vs. consensus cannot be assessed (S&P Global consensus unavailable).
  • Observed performance drivers: collaboration revenue growth (+49% QoQ), shipped prescriptions (+~40% QoQ), and coverage breadth (>90% lives, full PBM participation) suggest estimates may need upward revision for ZURZUVAE trajectory and downward adjustments to ZULRESSO given the commercial discontinuation .

Key Takeaways for Investors

  • ZURZUVAE adoption is accelerating, with strong QoQ revenue and shipments supported by broad, first‑line payor coverage and intensified field efforts; watch for continued quarter‑to‑quarter growth and reduced free‑goods drag .
  • The October reorganization should further reduce OpEx and extend runway; updated cash guidance forthcoming—near‑term OpEx relief is likely a support for valuation .
  • Pipeline risk is concentrated in dalzanemdor HD; LIGHTWAVE AD failure heightens importance of the DIMENSION readout before year‑end as a binary catalyst for medium‑term narrative .
  • Portfolio focus: discontinuing ZULRESSO by year‑end and exiting U.S. MDD for zuranolone sharpen commercial execution in PPD; expect product revenue mix to tilt further toward collaboration revenue from ZURZUVAE .
  • Commercial KPIs (OB/GYN share, shipments, coverage) indicate a promotionally responsive market; incremental sales force/DTC investments could accelerate prescriber breadth/depth in 2025 .
  • Risk factors include reimbursement durability, real‑world safety and tolerability signals, and the magnitude/timing of incremental demand amid holiday seasonality noted by management .
  • Trading lens: near-term stock moves likely tied to HD readout and evidence of sustained ZURZUVAE growth; medium-term thesis depends on scaling PPD adoption and realizing reorg-driven OpEx efficiencies .

Citations: Q3 2024 8-K and press release ; Q3 2024 earnings call transcript ; Q2 2024 8-K ; Q1 2024 8-K ; Strategic Reorganization press release .