Sage Therapeutics Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 7, 2023

There are 13 speakers on the call.

Operator

Good morning. Welcome to Sage Therapeutics Third Quarter 2023 Conference Call. 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 atsagerx.com. This call is the property of Sage Therapeutics and recording, reproduction or transmission of this call without the expressed written Scent of Sage Therapeutics is strictly prohibited.

Operator

Please note this call is being recorded. I would now like to introduce Ashley Kaplowitz, Director of Investor Relations at Sage.

Speaker 1

Good morning, and thank you for joining Sage Therapeutics' 3rd Quarter 2023 Financial Results Conference Call. Before we begin, I encourage everyone to go to the Investors and Media section of our website atsagerx.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 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.

Speaker 1

We will begin the call with prepared remarks by Barry Green, our Chief Executive Officer, who will provide an overview of our progress during the Q3 of 2023. Our Chief Business Officer, Chris Bunecki, will provide an update on our preparations for the planned commercial availability and launch of XERZUVAX. We will also be joined by Laura Gault, our Chief Medical Officer, who will review recent progress across our pipeline and by Kimi Iguchi, our Chief Financial Officer, who will review their financial results from the Q3 of 2023. Mike Quirk, our Chief Scientific Officer, will be available for questions during the Q and A portion of the call. With that, I'll now turn the call over to Barry.

Speaker 2

Thanks, Ashley, and thank you, everyone, for joining us this morning. We at Sage have a purpose and the momentum that unites us all. The recent approval of ZERZUVE As a treatment for adults with postpartum depression sparked a national dialogue with countless women sharing their stories online, Building community and expressing anticipation for a desperately needed new treatment option. These brave and inspiring women are North Star And making a meaningful impact to women's health by focusing on the maternal mental health crisis brought about by PPD is our ambition. The approval of XERZUVE further validates our innovative approach to drug discovery and development, which starts with our work targeting the GABA and NMDA receptor systems in the brain.

Speaker 2

These pathways are key regulators of brain function and the main drivers of brain circuit activity. Research suggests that disruptions in these circuits are an underlying factor in many brain health disorders. Our deep understanding of these pathways, along with our robust neuroactive steroid platform are vital to unlocking We are not satisfied with the speed of innovation for brain health treatments. Brain health disorders are one of the leading causes of disability worldwide, yet the pace of innovation has not met the moment. To address this innovation gap, we're advancing our pipeline with the goal of elevating the standard of care to what truly matters most to patients.

Speaker 2

We're working to help people living with debilitating neurodegenerative disorders who have been seeking treatments to address cognitive impairment early In order to maintain their independence longer, and we strive to be the 1st company to deliver a new treatment for essential tremor in over 50 years. Patients are waiting and I'm proud to lead Sage forward. This starts with postpartum depression or PPD. As the first and only oral treatment approved for adults with PPD, DIRZURVE has the potential to transform the treatment landscape as a new option in care. Women with PPD need new solutions to this devastating disorder that has the potential to act rapidly, And we are now one step closer to helping these patients and their families.

Speaker 2

Untreated PPD is a burden And Kev, lastly, consequences for the mom, and it's often associated with negative outcomes for her baby and the entire family. Additionally, undertreated and untreated PPD has significant societal costs. We are pleased that the DEA completed its scheduling ZERZUVE is a Schedule IV drug, which is consistent with our expectations. We remain on track to make ZERZUVE commercially available in December of this year. Now Chris will provide specific updates related to this timeline.

Speaker 2

The heightened and persistent engagement we've seen from a diverse community of stakeholders Since the FDA approval of ZERZUVA in August, we believe will ultimately translate into strong tailwinds for the launch success of ZERZUVA. While we recognize that referral patterns, insurance coverage and current practices require change, we believe those women suffering from PPD Deserve our full support efforts starting now. PPD is a serious medical condition and deserves attention. We plan to join others in prioritizing, normalizing and destigmatizing this condition. While we remain focused on preparing for the launch of XERZUVE, We're also excited about entering what we believe will be a catalyst rich 2024 with multiple data readouts expected across our SAGE-seven eighteen and SAGE-three twenty four programs.

Speaker 2

Today, Laura will provide updates and more details on these programs. Looking ahead, we believe our future is bright. Following the reduction in our workforce and pipeline prioritization announced in late August of this year, We continue to operate from a strong financial foundation. Importantly, we remain well capitalized to accomplish our upcoming milestones. Kimi will provide more detail on our financial position later in the call.

Speaker 2

Now many continue to ask about Status of development of zuranolone and MDD. To be clear, our focus is on the successful launch of ZERZUVE For women with PPD and working to enable broad and equitable access for these patients to this important new treatment option. On MDD, we plan to provide updates when Sage and Biogen have made decisions on the program. For now, we're focused on commercializing ZERZUVE For the treatment of adults with PPD. To close, I want to reiterate that this is an exciting time to stage with many upcoming milestones on the horizon.

Speaker 2

As we look ahead, I'm confident we're positioned to make important progress in pursuit of our mission. With that, I'll turn the call over to Chris to provide additional context on our upcoming commercialization plans for ZERZUVE. Chris?

Speaker 3

Thanks, Barry. I'm pleased to be with all of you this morning to share updates on our preparations for the commercialization of XERZUVE as a treatment for women with BPD. Since the FDA approval in August, we've been working closely with our collaboration partner Biogen on the commercialization strategy for ZERZUVE. Urgency is top of mind given the significant unmet need that currently exists in PPD. In the U.

Speaker 3

S, it is estimated that approximately 1 in 8 women who have a live birth experience symptoms of PPD each year, Representing around half a 1000000 women. Only half of those cases are diagnosed and even fewer are treated, Leaving a substantial number of women experiencing harmful symptoms of this disease. These statistics highlight Tremendous unmet need and compel us to act with urgency to bring forward XERZUVE, the first and only oral treatment Specifically approved for women with PPD. We believe ZERZUVE has the potential to be a first line therapy And quickly become the standard of care for the many women with this disease. Following the approval of XERZUVE by the FDA in August And the recent DEA scheduling, we and Biogen remain committed to making XERZUVE commercially available in December.

Speaker 3

Making this treatment commercially available as soon as possible is our top priority. We know that weeks, days are expected to roll out in early 2024, including planned promotional activities delivered through omnichannel efforts. To support the commercial availability of XERZUVE, we and Biogen have continued to progress our commercialization preparations. I would like to detail a few specific developments essential to understanding our approach to launch. First, we are pleased to announce the completion of the hiring of the Sage field sales teams.

Speaker 3

Our field sales team of neuropsychiatry account managers are seasoned sales professionals with deep experience Launching treatments essential to improving brain health conditions. They come to Sage with strong track records of success promoting innovative products And bringing established relationships within the neuropsychiatry community, enabling them to rapidly and effectively engage with high prescribing psychiatrists, OBGYNs and PCPs who treat women with PPD. We will aim to amplify their selling efforts with a dynamic digital platform that provides HCP level insights designed to enable timely, improved and personalized experiences for customers. This includes tools and AI models to help communicate with HCPs at the right time with the right content. 2nd, we are inspired by the consistent feedback we've received from HCP that XERZUVE has the potential to be a breakthrough treatment for women with PPD.

Speaker 3

Achieving such status is predicated on our ability to reach the broader HCP community who treat women with PPD with our promotional efforts. Quite simply, we'll need to do more than just deploy a highly experienced focused sales force. We also plan to execute Targeted digital communications as part of a larger omnichannel effort to reach the broader audience of HCPs with PPD disease state education, product information And access to tools and resources so that women with PPD can find the care that they need. 3rd, our discussions with payers remain highly productive. We are actively engaged with national, regional and government payers communicating unmet need in PPD, Reinforcing the weight of the evidence observed in our PPD studies, discussing the economic burden associated with untreated PPD And engaging in dialogue about access and reimbursement for women with PPD.

Speaker 3

To be a truly breakthrough therapy in PPD, we recognize that XERZUVE must be both Accessible and affordable, and we found most payers to be aligned with its potential to be a first line therapy for women with this disorder. Historically, health plans and PBMs conduct formal formulary reviews once the product label is final. As we've just received DEA scheduling, Which now completes the ZERZUVE label. We now anticipate formulary reviews to begin and to continue over the course of 2024. Considering the totality of evidence from our ongoing interactions, we believe our stakeholders are increasingly recognizing that DIRZUVE has the potential to fill an important Patient need as the 1st and only oral once daily 14 day treatment that can provide rapid improvements in depressive symptoms for women with PPD.

Speaker 3

I'd like to now go into more detail on our planned access strategy for XERZUVE and approach to establishing the wholesale acquisition cost. Resolving PPD symptoms early is not only what's best for mom and baby, but can also begin to address The significantly higher healthcare resource utilization costs associated with PPD. For example, according to a 2017 model, The multi year average societal cost of untreated perinatal mood and anxiety disorders for mother child care was approximately $32,000 Women with PPD experienced more hospital admissions and overall higher healthcare resource utilization and healthcare expenditures than women who did not have PPD. Additionally, untreated PPD can have a generational impact. Perinatal mood and anxiety disorders can be associated delayed or impaired long term developmental, psychological, cognitive and physical outcomes in children.

Speaker 3

And societal costs for these outcomes in one study were estimated at nearly $2,000,000,000 for all impacted children through their first five years of life. Broad and affordable access for women with PPD who are prescribed XERZUVA has been and will continue to be a critical goal for Sage and Biogen. Over the last few years, Sage and Biogen have done significant stakeholder research and directly engaged payers to understand critical access considerations And the perception of value that XERZUVE can deliver in PPD. We have also been engaging with advocates and HCPs to gain their insights In these important areas, access for women with PPD, clinical value, the existing unmet need, Cost effectiveness and innovation have all been key considerations for the wholesale acquisition cost of XERZUVE. With all of this in mind, we have set the planned wholesale acquisition cost of XERZUVE at $15,900 We believe the wholesale acquisition cost accurately reflects the innovation, clinical value and impact ZERZUVE can have for women with PPD.

Speaker 3

What we've heard from payers in our market research and 1 on 1 meetings is that ZERZUVE remains a significant advancement The treatment of PPD and has the potential to be a first line therapy. ZERZUVA is within the annual wholesale acquisition cost range of other It can deliver. Sage and Biogen are working diligently with the goal of enabling all women with PPD Prescribe XERZUVE after commercial availability, be able to access it rapidly and affordably. That is ultimately achieved by working closely with payers with to drive formulary acceptance with coverage that does not require onerous utilization management tactics like prior authorizations that are complex And step edits. To this end, we and Biogen are actively engaged with national, regional and government payers.

Speaker 3

Further, both Sage and Biogen are committed to the goal of delivering broad patient access immediately at launch for women with PPD and where possible With little to no co pay regardless of financial means. We believe lack of financial means should not prevent any woman with PPD From obtaining access to ZERZUVE. Beyond these updates today, we and Biogen expect to share more details related to our patient support programs, distribution strategy and overall commercialization plans at the appropriate time. With that, I will turn it over to Laura for a more detailed discussion of our recent portfolio progress and current expectations. Laura?

Speaker 4

Thanks, Chris, and good morning, everyone. Over the Q3, we have made important progress on our pipeline programs, And I'm pleased to detail our recent advancements and our plans for continued execution over the coming quarters. I'd like to start by sharing my around the FDA's approval of Zazuban and the treatment of adults with PPD. This approval reinforces SAGES' commitment to supporting mothers. As our first FDA approved medicine, ZULRESSO was also approved in PPD.

Speaker 4

Bringing the 1st oral 14 day treatment to the market will be immensely impactful And marks a watershed moment for brain health. Women with the disease will finally have the option of a novel oral therapy specifically indicated for CPD that has the potential to rapidly improve symptoms and enable these women to fully engage with their baby and their families during this important time in their lives. For a full description of the risk benefit prophylaxis rebate in the treatment of PPD in adults, including important safety information, I encourage you to read the product insert. We are also encouraged to see strong enthusiasm from the medical and scientific community towards Azubay. And we look forward to continue to understand new insights from clinicians as they objectively observe in their practices the benefits of CIRZUVA in menopause PPD.

Speaker 4

Turning to our neuropsychiatry pipeline. We continue to advance SAGE-seven eighteen, Our wholly owned 1st in class NMDA receptor positive Alloster modulator. This is a potential oral therapy for cognitive disorders associated with NMDA receptor dysfunction, including Huntington's disease, Parkinson's disease and Alzheimer's disease. These disorders continue to grow in prevalence globally and represent some of the greatest areas of unmet need in medicine. The burden of cognitive impairment among people with these disorders is high, and for many occurs during their prime working years.

Speaker 4

As a consequence, employment changes resulting from cognitive impairment and associated functional decline can affect financial independence. Our goal is to reshape the treatment of patients with cognitive impairment, starting with our SAGE-seven eighteen program. I'd like to take the opportunity to highlight our clinical development strategy for SAGE-seven eighteen, where we are currently enrolling in 5 clinical trials with data readouts expected next year. Starting with Huntington's disease or HD, I was pleased to see the FDA grant orphan drug designation

Operator

for SAGE-seven eighteen and the treatment of HD

Speaker 4

last month. Work and drug designation is an encouraging regulatory milestone in our HD development program And it further advances our strategy to prioritize Hc as a lead indication for SAGE-seven eighteen. We are currently enrolling in 3 studies. The DIMENSION study is a placebo controlled Phase 2 study that will evaluate the efficacy and safety of Phase 718 compared to placebo in patients with HD, with the HD cab as the primary endpoint. The surveyor study is designed to advance our understanding of the effects of stage 18 Our cognition and functioning and participants with HD.

Speaker 4

It is designed to complement the DIMENSION study by generating evidence to better define the clinically meaningful change and the relationship between changes in cognition and function. Importantly, the MENTION study is powered to evaluate the SAGE-seven eighteen placebo difference in changes in cognition and function. While the Surveyor study will explore the relationship between changes in cognition and function and is not designed or powered to show statistically significant differences between groups. Finally, the PERFUSE study is an open label Phase 3 safety study in people with cognitive impairment due to HD, Designed to evaluate the long term safety profile of SAGE-seven eighteen. For our Parkinson's disease indication for SAGE-seven eighteen, We are enrolling in the PRECEDENT study, a placebo controlled Phase 2 study in people with cognitive impairment due to Parkinson's disease.

Speaker 4

We are also conducting the LIGHTWEIGHT study, a placebo controlled Phase 2 study of SAGE-seven eighteen in people with mild cognitive impairment Or mild dementia due to Alzheimer's disease. Recruitment for these studies remains on track and we look forward to sharing more detail on the timing of data readouts in the coming Now I'll turn to SAGE-three twenty four, an investigational next generation positive allosteric modulator of GABA A receptors. We believe SAGE-three twenty four holds significant potential in the treatment of movement disorders like essential tremor or ET. ET is a disease that has limited treatment options and high unmet need as there has been no innovation in the space for over 50 years. When you listen to patients living with ET, you realize that the tremor can affect nearly every aspect of their daily lives and can make the simplest task difficult, if not impossible.

Speaker 4

Currently, patients with BT often cycle through many ET treatments I have roughly twofold the healthcare spending of similar patients without ET. We and our collaboration partner Biogen Recognize the high unmet need in this space, and we remain on track to complete enrollment in the ongoing Phase 2b Kinetic 2 dose ranging study for Phase 3/24 As a reminder, the purpose of the KineticQ study is to define the dose and the associated safety tolerability profile for Phase 3 24 for use as a chronic treatment. We look forward to providing updates on this program, including the top line data readout of the Kinetic2 study Expected in mid-twenty 24. Lastly, we remain excited on the potential of our earlier stage programs, including SAGE-four twenty one, SAGE-three nineteen and SAGE-six eighty nine. And we are looking carefully at early data to determine potential signals or area of opportunity for the future.

Speaker 4

With that said, our near term focus remains on bringing forward SAGE-seven eighteen And SAGE 324. In closing, I am proud of our pipeline efforts this year, and I look forward to our future progress as we prepare to enter what we believe will be A catalyst rich 2024. Now, I'll turn the call over for a review of our financials. Kimi?

Speaker 5

Thanks, Laura. Our financial results for the Q3 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. Before discussing specifics with respect to the Q3 financials, I want to reiterate my gratitude to the entire Sage team for their resilience and continued dedication to our mission To support BrainHealth patients in the face of difficult circumstances. Following our strategic reorganization announced in August 2023, We maintain our strong financial foundation and continue to pursue focused execution across our pipeline.

Speaker 5

As a reminder, we believe the financial impact of the reorganization will result in annualized savings of approximately $240,000,000 Which includes $100,000,000 related to the workforce reduction. Looking ahead, We're prepared to execute on key milestones with the planned launch of ZERZUVE and multiple expected top line data readouts for SAGE-seven eighteen And SAGE-three twenty four. In the near term, we're laser focused on the commercialization of DIRZUVA In the treatment of adults with PPD. As a reminder, we and Biogen are jointly supporting the planned launch of XERZUVE With a fifty-fifty cost sharing in the United States. While we're thinking big about the launch opportunity in this indication, We intend to start with a focused approach and scale fast as we see success.

Speaker 5

Once launched, we expect to provide updates on ZERZUVE during our quarterly earnings Including metrics such as revenue and prescription data. In addition, we remain committed to making smart, Disciplined investments across our pipeline. While our current focus remains on SAGE-seventeen and SAGE-three twenty four, We've successfully built a strategic reservoir of molecules ranging from research through clinical Phase 2 ready that we believe provides optionality And agility in our portfolio. With a variety of programs across GABA, NMDA and new exciting targets, We will continue to make portfolio decisions informed by opportunities, timing and outcomes of our late stage portfolio and exploratory investment. Turning to our financial results for the Q3.

Speaker 5

Our net loss for the Q3 of 2023 was 202,000,000 As a reminder, we ended the Q3 with cash, cash equivalents and marketable securities of approximately 876,000,000 Turning to operating expenses. R and D expenses were $102,000,000 in the Q3 of 2023. The increase compared to the Q3 of last year was primarily due to expenses relating to canceling excess purchase commitments From manufacturing as a result of the CRL received from FDA for duranolone for the treatment of MDD. SG and A expenses were $78,000,000 in the Q3 of 2023. The increase compared to the Q3 of last year Was primarily due to stock based compensation expense related to performance based testing criteria during the Q3 of 2023.

Speaker 5

We're also reaffirming that based on our current estimates, we anticipate current cash, cash equivalents and marketable securities, Along with anticipated funding from ongoing collaborations, collaboration revenue from sales of ZERZUVE And a potential milestone payment totaling $75,000,000 from Biogen related to the first commercial sale of XERZUVE for the treatment of PPD We'll all support operations into 2026. As we near major expected clinical catalyst, I'm confident that our balance sheet with expected runway into 2026 will enable focused execution toward our mission. We look forward to 2024 as we believe we'll make a difference in the lives of brain health patients by accelerating our progress to bring medicines That matter to market. I'll now turn it over to Ashley to handle Q and A with the operator. Ashley?

Speaker 1

Thanks, Kimi. Before I turn it over to the operator, I'll ask that you limit yourself to one question.

Speaker 4

If you have an additional question,

Speaker 1

Now I'll turn it over to the operator to handle Q and A. Operator?

Operator

And we go to our first question from Ritu Baral with TD Cowen. Please go ahead.

Speaker 1

Good morning, guys. Thanks for taking the question. I wanted to ask for a little more detail on your HCP targeting effort, I guess, you mentioned OBGYNs, neuropsychs and I guess, HCP to see a large volume of PPD patients from other specialties, I'm assuming. How are you going to sort of Balance proportionally the targeting effort between those three groups. And insofar as you talk about a large volume of PPD.

Speaker 1

Are you talking about primary care, nurse practitioners, sort of how should we be thinking about That group. Thanks.

Speaker 2

Thanks, Ritu. I'll start and then ask Chris to dive into some more Details. So you've got it right. As we said in our prepared remarks, we believe that the majority of women suffering from postpartum Depression will be seen by their OBGYNs, psych and PCP in terms of treating They're postpartum. One of the big changes we see occurring in the market with PPD is that OB GYN, since there's no guidelines and they now Really the solution that they haven't had before is a big uptick in OBGYNs screening, diagnosing and treating These moms.

Speaker 2

So those are the 3 groups. Now we talk about OBGYN, psych or primary care, we're talking about the office. So it's the healthcare providers in general, physicians, physicians' assistants and nurse practitioners. And those 2 latter groups we actually see as a big part of the We're seeing groups like that set up specifically to treat maternal mental health. So that's how we're approaching it.

Speaker 2

We also are Enhancing the kind of reach and frequency with our omni channel approach, a broad digital approach providing healthcare provider Education as they want to see it, given this big shift we're seeing in our ability to treat PCD was the first oral treatment available that's clearly 14 days and very rapid acting. Chris, you want to add some more?

Speaker 3

Barry, what I would add and I mentioned in my opening remarks is we're going to use insights and analytics to provide Our sales organization with effectively real time insights to effectively target their messaging and their resources to augment what we're also going to be doing from a non personal or a digital perspective. So we're going to really engage high prescribing physicians whether OBGYNs, PCPs or psychiatrists with the With the right message at the right time with the right resource to effectively move this market with XERZUVE because moms can't afford We need to be out there. We need to be delivering messages rapidly and effectively.

Speaker 2

Thank you.

Operator

Next, we go to the line of Yasmeen Rahimi with Piper Sandler. Please go ahead.

Speaker 3

Hi, this is Liam on for Yaz. Thank you for taking our questions. I was just wondering

Speaker 2

Yes. Thanks, Liam. Again, I'll start and ask Chris to chime in. So as we thought about The wholesale acquisition cost and our approach for ZERZUVE, our goal is to ensure the largest number of women with DPD that are Scribes as they are able to access it while at the same time recognizing the value our innovation. We At Sage and Biogen, we're deliberate and thoughtful in determining wholesale acquisition costs.

Speaker 2

And the prior ops and step edits were part of that calculus. Chris, you want to add some more?

Speaker 3

Yes, Barry. What I'd add is we're right now actively engaged with national, regional and government payers. And based on the feedback that we've received to date, we don't anticipate complex prior authorizations and step edits associated with the prescription of ZERZUVE. We really believe that we're introducing a medication that is a breakthrough medication and offers really unique value to Patients that are part of the plan. With that said, most payers are aligned with the Duncra versus Zumeb to be first line therapy for women with postpartum depression.

Speaker 3

As we've heard from many of those payers, the wholesale acquisition cost of ZERUBE is within the value range for the impact it delivers. It is within the annual wholesale acquisition range of other commonly prescribed branded medications used to treat brain health disorders. Enzirzumab remains a significant advancement in the mindful payers for the treatment of post heart depression and has the potential to be a first line therapy.

Speaker 2

Great. Thanks, Liam, for the question.

Speaker 3

Thank you.

Operator

And next we go to the line of Anupam Rama with JPMorgan. Please go ahead.

Speaker 3

Maybe following up on some of the prior comments here, but Maybe you could give us a little color on what you're seeing from the initial formulary reviews. And I think you said this process could go into 2024, But just maybe speak about the urgency of completing some of these formulary reviews given the nature of PPD and the need to treat quickly? Thanks so much.

Speaker 2

Yes. Thanks, Anupam. That's a really important question. We are certainly with Biogen moving with urgency, which is why We highlighted that we're going to make ZERZUVA commercially available in December with the fuller launch capability early next year. And the payer on payer engagement, which Drew's comment and I'll ask him to comment further, we've already started.

Speaker 2

One of the tailwinds we're Given the clinical profile of DERZUVE is an appreciation that on or under treated PPD costs Payers cost the healthcare system a significant amount of money. And then of course, there's the humanistic side, which is really what we're focused on, Helping that mom, helping that mom connect with her baby so that an under untreated PPD mom does not have generational impact and become a burden Not to themselves or baby. So that's a big focus. From a payer front, I think the payers are recognizing The payers are recognizing the value of XERZUVA and Chris can talk about some of the economics. Now of course, formulary review takes some amount of time And there are certain plans that will be online quickly and other plans and everyone knows this.

Speaker 2

Unfortunately, part of their policy is kind of a 6 month wait until they We'll review. So we'll be moving as quickly as possible. That being said, we'll have programs in place, which Chris can talk about, so that when A prescription is written for someone suffering with PPD that prescription is filled. Chris, do you want to provide some more color there?

Speaker 3

Yes. Barry, what I would add is that we've engaged with payers. And as I noted earlier, we're engaging with national, regional and government payers. What resounds is that they appreciate the unmet need that exists in the PPD market. They certainly appreciate the clinical value That XERZUVE has the potential to offer to many of their enrollees and they also understand that there's an economic impact of untreated depression, whether it's societally or on their plans So all of those conversations have really bolstered the dialogue that we've had with payers over the course of the time that we've spent with them specifically talking about Since the PDUFA announcement.

Speaker 3

With that being said, we're going to do everything that we can to enable broad and affordable Equitable access with minimal restrictions so that patients that are part of these plans where appropriate have little to no co pay when possible because we don't want Financial barriers to prevent any mom from being able to access this medication throughout doing work for PACE.

Speaker 2

Thanks, Chris. Thanks, Anupam.

Operator

We go next to the line of Tazeen Ahmad with Bank of America. Please go ahead.

Speaker 6

Hi, good morning. Thanks for taking my questions. Two relatively simple ones. Maybe, Barry, can you tell us how long it's going to take? I know it's a little bit difficult because you're just starting.

Speaker 6

From the time a script is written to the time it's actually dispensed to the patients on a commercial basis, at least early in the launch, I'm just trying to get a sense of how the early ramp could progress even though clearly there's high demand. But assuming that That payment is the major driver, holding back, uptake. Just want to get a better sense of how you're thinking about it. And then secondly, on your pricing, you talked about it in the prep remarks. But I wanted to get

Speaker 4

a sense of can you give us

Speaker 6

a little bit of color On how this price might have differed from the price that you would have gone with if you were also launching with MDD? Thanks.

Speaker 2

Yes, Tazeen, thanks for the question. Let me start with the host acquisition cost side. And then Chris can talk about how we've set up the specialty pharma end time from script at the patient. Of course, Chris, you can certainly weigh in on the wholesale acquisition cost. So Yes.

Speaker 2

As I said earlier, Tazeen, we were very thoughtful and very deliberate in setting The host oxygen costs for Zuzuvi that we believe reflects the clinical and economic value and importantly, other key considerations, including access For women with PPD, the unmet need, the cost effectiveness of innovation, some of which we've talked about before. We believe that the wholesale acquisition cost set You help the idea that will limit complex prior auths, step edits. And if you kind of go too high, you have some of those. If you go too low, clearly leaving too much value on the table. Chris mentioned this before, but it's important to understand that, in a health in a model done by Mathematica in 2017, studying The value that we're potentially adding to the healthcare system, they understood that the multiyear average societal cost of untreated PPD And broader current conditions, it was approximately $32,000 So we believe that with the wholesale acquisition cost, we are providing value to the health You can't really compare that against how we might have approached different indications.

Speaker 2

As I mentioned earlier, we're solely focused on a successful launch Helping as many suffering from PPD as we can. And if another indication comes back on the table later, we'll make those adjustments later. Hopefully that helps, Tazeen. Chris, do you want to talk I don't see any color there, but talk about time from script to patients getting ZERZUMA?

Speaker 3

Yes. Barry, what I would add is that Folsage and Biogen expect to make ZERZUMA commercially available in December Of 2023 and that to do that we've created a distribution model designed to provide rapid access And high quality patient experience for women with PPD. So in effect, when a prescription is written that the physician can get the medication seamlessly for the patient When the patient is able to access the medication, he or she can do so affordably and we have the educational resources, the support services And the financial assistance programs in place to make sure that the patient is able to access the medication within days. And as I mentioned earlier, we know that for this population days Matters, so that's what we're squarely going to be focused on with respect to the distribution model

Speaker 2

that we've set up. Okay.

Speaker 6

Thanks for all that color.

Speaker 2

Sorry, as Chris said, it will be very fast. From the prescription going to the electronic medical system The patients getting in their home will be very rapid, as he said, within days is the goal.

Speaker 4

Okay. That's good. Yes, that's good to know.

Speaker 6

And maybe just to wrap that up, What should we expect the gross to net in the early part of the launch to be?

Speaker 2

Kim, do you want to talk about that?

Speaker 5

Yes. So, Tazeen, it's a little early to be providing that kind of guidance. When we can provide more, we'll update you.

Speaker 6

Okay. Thanks.

Speaker 2

Thank you.

Operator

We go next to the line of Salveen Richter with Goldman Sachs. Please go ahead.

Speaker 4

Good morning. Thanks for taking my question. With regard to your partnership here with Biogen, how has Since the CRL in MDD and in what aspects of commercialization do you expect them to take the lead? Thank you.

Speaker 2

Yes. Thanks for the question, Salveen. So when we issued our press release In early August announcing the approval of XERZUVA for PPD, we and Bison together committed to having XERZUVA commercially available by the end of the year. And we've reaffirmed that on this call that we'll have user day commercially available in December with The full complement of launch capabilities early next year, as Chris noted in his comments, we've been working diligently with Biogen to roll out And fully commercialized ZERZUVA and we're hand in hand in that. We have not talked about the specific Division of labor, is there some things that we're taking the lead on, others that they're taking the lead on.

Speaker 2

But I think sitting here right now, we're very well positioned for Commercial availability of DSUVY and the fuller launch armamentarium happening early next year.

Operator

Our next question or comment comes from the line of Jay Olson with Oppenheimer. Please go ahead.

Speaker 3

Hey, congrats on the progress and thanks for the update. Can you talk about the total potential commercial opportunity And when do you expect the ZERZOVI P and L to become profitable? Thank you.

Speaker 2

Yes. Thanks, I appreciate the congratulatory notes. We certainly have made a lot of progress. Let me start with the opportunity, I'll ask Chris to add any color there and then Kimi can follow-up with how we're thinking about the financials. So As we talked about, Jay, on the call, epidemiologically approximately 1 in 8 live births results And the potential for PPD, that's about a half a 1000000 women in the United States per year.

Speaker 2

Unfortunately, less than half of that is diagnosed And even far fewer are treated. Now, you think about the condition today kind of the as is, we have the ZULRESSO out there, of course, For treating PPD, but as we all know, there are certain access hurdles given the IV infusion. But mostly, those that have the Good fortune being diagnosed and treated or treated with antidepressants that can take weeks to months to work if ever and ended up working through a very complex Referral process. As you heard Krish talk about earlier on the call, we believe that ZERZUVE as a rapidly active Oral 14 day course of therapy fits into the physician's practice pattern, whether it's OBGYN, psych or PCP, And there's much more incentive to diagnose and screen. So we believe the opportunity is significant in the early years, but really continues to grow In the outer years as diagnosis and treatment rates should continue to increase.

Speaker 2

So we think it's I got you. We've got blockbuster potential and even more importantly, the ability to help all these women suffering from PPD. Chris, you want to add some more color and then can you follow-up on some of our financial thinking?

Speaker 3

Yes, Barry, what I would add is you covered the epidemiology and the blockbuster potential for this But the thing that I would add to those comments is that when we received approval for ZERZUVE at PDUFA, the media coverage was remarkable. The social media activity was really impressive. So what that really signals is that you have An active group of patients, clinicians and patient advocacy organizations waiting for this medication. And that's an opportunity that we're going to capitalize on at lunch. Because as I said earlier, we know that patients can't afford to wait for a medication like this, and we're going to do everything that we can to drive broad and rapid And equitable access to this medication to launch.

Speaker 5

And just to follow-up on the financials, we certainly are thinking big about the PPD opportunity as Chris and Barry just talked about. But when we think about the commercialization strategy, we're thinking that we're going to start small And then scale with success. We don't want to get ahead of ourselves with regard to building an infrastructure and building a cost structure. So we're going to scale that as we see success.

Speaker 3

Great. Thank you very much.

Speaker 2

Thanks, Gary. Thanks, Jay.

Operator

We go next to Brian Abrahams with RBC

Speaker 7

This is Leonet on for Brian. Thanks for taking our question. I actually wanted to follow-up on Some of what you've been hearing on the ground with respect to providers and physicians. And you guys had mentioned the initial enthusiasm from the media coverage. And I guess I'm curious, has that And pulling through into the request for information from physicians and providers.

Speaker 7

And are there any challenges in having, I guess, the launch Take place a few months after, you had all the fanfare from the media. And is there any efforts to sort of recapture that and rebuild it so you can pull that momentum into the launch? Yes.

Speaker 2

Thanks, Leland. That's a very insightful question. Let me start and I'll ask Chris to comment further. So The quick answer is that the media attention clearly has spilled over into patients, patient advocacies, healthcare providers. There's tremendous enthusiasm for improving diagnosis and to treat PPD in a whole new way.

Speaker 2

And now that we've announced that we're making ZERZUVA commercially available in December, I believe that uptick We'll continue. And we'll also add before turning over to Chris that the media attention was not by accident. There are very important Outlets that are very interested in maternal mental health and we're in constant dialogue with them and providing information that they importantly want to hear. So Chris, you want to add some color there?

Speaker 3

Harry, what I would add is that I see enthusiasm continuing to build amongst all of our stakeholders, Whether it's the interactions that we're having with payers or the dialogue that we're having with clinicians and key opinion leaders at various medical meetings and in 1 on 1 conversations Or with patient advocacy organization that as we continue to have all of those conversations, we would expect that that enthusiasm We are commercially available. Everybody is aligned and from a stakeholder perspective ready to prescribe this medication for women with BPD.

Operator

We go next To Paul Matteis with Stifel. Please go ahead.

Speaker 3

Hey, thanks so much for taking the question. I was curious now that you're getting ready to launch, how many PPD patients specifically are actively treated in the care of a psychiatrist right now? And do you have any kind of data or any grounded data you can give us on just patient flow for PPD In OBGYN practices, how many patients get either a Benzodiazepine or an SSRI? Just Any context there would be helpful. Thank you.

Speaker 2

Yes. Paul, thanks. I appreciate this is important for your modeling. We certainly understand the high prescribing physicians, but don't have perfect information about that flow and do believe it will change. So let me go through again at high level and then ask Kristen and Laura to comment about how we see it today and changing over time.

Speaker 2

So the numbers are already pretty significant. There's a couple of 100,000 women diagnosed a year and about half of those are treated. So 100 plus women treated with various I answered the questions today. So if we can simply get to those women with a better oral rapidly acting 14 day treatment course of Zuluvate, We're in pretty good shape. Of course, our drive is to see the diagnosis rates improve and Obviously, the treatment rates improve now that we have a different solution for them.

Speaker 2

But Chris, you want to add more and Laura maybe want to round it out?

Speaker 3

Hey, Derrick, what I would add is roughly speaking as we look at the prescriber universe, roughly a third of patients are coming through right now OBGYN practice is in effect what I would anticipate over the course of time with things like the ACOG guidelines and now the availability We know that historically through our interactions with OBGYNs from ZULRESSO perspective that Having something like this that is an oral therapy is going to profoundly change the way that OBGYNs think about utilizing a medication like XERZUVA to help their patients. So we continue to focus on OBGYNs. We'll also capitalize on the opportunity within psychiatry practices to make sure that they are Well aware of this therapy and the impact that it can have on their patients. Laura, anything that you'd like to add?

Speaker 8

Yes. And to add, I'd like to emphasize that The SIRSUBE with the 14 day treatment course really fits well into the practice pattern of the OBGYN and it's very different They've been able to access previously using treatments off label to treat PPD. So I do think that when there's a solution to a problem, You see people much more ready to identify the problem and then use the solution they have at hand. I think with regard to psychiatrists, What you'll see is that they will engage their patients who are already in their practices with depression and talk with them about The risk for postpartum depression during the pregnancy and also have a plan in place to treat them rapidly should those symptoms emerge in the postpartum period.

Speaker 2

Great. Thanks, Chris. Thanks, Laura. Appreciate the question, Paul.

Operator

We go next to the line of Ami Fadia with Needham. Please go ahead.

Speaker 9

Good morning and congrats on the progress. I had a question on the care coverage. You mentioned You don't expect any complex prior authorization. Would there be any prior authorization? And if so, what type of prior auths Are you anticipating?

Speaker 9

And as we think about the initial launch, how should we think about access for patients While payers are making the cautious decisions? Thank you.

Speaker 2

Yes. I mean, very important question. It's important, as You said that we're leaning in to make sure that access for patients with or without coverage is there. Chris, you want to take it?

Speaker 3

Yes, Barry. So with respect to the first part of the question, types of prior authorizations, when payers look at utilization In medications like ZERZUDA, they want to make sure that the right patient gets the right medication at the right time. So any prior authorization would be around something like The patient being a woman diagnosed with postpartum depression. So that's the kind of prior authorization that I would expect, which is not a complex prior authorization. That's Resources at the time of launch.

Speaker 3

So if a patient in effect is functionally uninsured, age is an organization along with Biogen is going to lean in and make sure that that patient doesn't have to wait an extensive period of time to get access to ZERZUVE. We're going to do everything that we can to get that patient on medication because as I said earlier, Women with PPD can't afford to wait.

Speaker 2

Thanks, Chris. Thanks, Ami.

Operator

We go next to George Farmer with Scotiabank. You may proceed.

Speaker 10

Hi, thanks for taking my question. Just wondering if you could go into some detail about what the diagnostic criteria are going to be In order for pre auth to get approved, it seems to me with such an expensive drug that One would want to differentiate say from just general baby blues to full on diagnostic diagnosed PPD. Can you speak to that?

Speaker 2

Yes. Let me start and I'll ask Laura and if Chris has more color to add Chris Let me start with George. I think, as we said at the beginning of the call, We and Biogen were deliberate and thoughtful when determining the wholesale acquisition count for ZERZUVA and I actually believe that we're adding Value to the healthcare system. We will publish the relative cost effectiveness of DIRZUVAY versus what's being Today, SSRI, SNRAs and others, which as you heard more talked about takes weeks to months to work. And the societal cost of under untreated PPD on mom and baby is very, very Significant.

Speaker 2

So we actually think that the way we position the hostel oxygen cost is adding value to the healthcare system, not expensive. In terms of how to diagnose, let me ask Laura to talk about how we believe the various healthcare providers We'll diagnose and then attest to that diagnosis.

Speaker 8

Sure. Thanks, Barry. So I know when people think about PPD, they think about the baby blues as well. And the baby blues is a real thing. It happens in about 80% of pregnancies in the 1st week So following delivery, but the presentation of the baby blues is very, very different from the presentation of In baby blues, people might be a little weepy.

Speaker 8

They might have some changes in mood, might feel a little anxious, But that lasts only a few days and it results. With postpartum depression, the magnitude of these symptoms, the severity is much higher And it lasts for much longer time. And it really interferes with the ability of the mom to take care of her baby and to take care of the other children and the family. It has Real functional consequences. And so the differences between these two are really abundantly obvious to people who are used to treating women in the postpartum period And they don't think that these will be confused.

Speaker 8

As a consequence, I believe that payers are also going to recognize that Clinicians are appropriately diagnosing the patients who will benefit from treatment.

Speaker 2

Yes. Chris, do you want to order on how we think where we have prior auth, they might work?

Speaker 3

Yes. So to talk about prior authorization, Barry, and let me take a step back and just say that Based on the fair feedback stated, we don't anticipate complex prior authorizations associated with the prescription of XERZUVE. In effect, what we would anticipate is that if there is any prior authorization, it would be a checkbox PA around something like the patient having A diagnosis of postpartum depression from her clinician. That's really the feedback that we're getting at this point today.

Speaker 10

So it will be just as simple as that, just to check the box diagnosis?

Speaker 2

Yes, George, that's what we're working towards. I mean, it's Sole indication. So, if prescriptions go in, there'd be a potential electronic question back, please confirm this is PPD Without a whole bunch of other heavy diagnostics. Again, the payer system understands the Economic burden associated with an underarm diagnosed PPD and it's extreme to that mom and In the baby as well as the style of the case, I think it's very well understood.

Speaker 10

Okay, great. Thank you very much.

Speaker 2

Thanks for the question.

Operator

We go next to the line of Sumant Kulkarni with Canaccord. Your line is open.

Speaker 3

Good morning. Thanks for taking

Speaker 11

my questions. It's nice to see that XERZUVA will be available for patients in the near future here. So we went through the review documents for XERZUVA and we're looking Specifically at the post marketing requirements and commitments, do you expect these studies, especially the non clinical safety study to have the potential to make any adjustments the language of the label as it stands today and would those have any bearing on your potential ability to still pursue the Ramelon for major depressive disorder?

Speaker 2

Hey, Sumant, thanks. So let me start and I can turn it over to Lorne. So as you are, we're very excited after all Time to make Zuzuva commercially available to those suffering from postpartum depression. We're really looking forward to getting out there And helping as many women as we possibly can. In terms of our focus, as I mentioned on the call, we're very, very focused on The success of Watson's Zuvi for PPD.

Speaker 2

As I commented on, if there are any other indications that come into the label or will we advise you to make any definitive Determinations, we'll certainly let you know, but I think everybody should be solely focused on Zuzumab for PPD for the foreseeable future. Laurie, you want to talk about they're not very significant, the post marketing requirements you have?

Speaker 8

Sure. So we received 2 post marketing requests on the approval of ZERZUVE for PPD. 1 is to conduct an embryo So each of these studies is in the process of being conducted. When we have the data, we will approach the agency and share that data with them.

Speaker 12

And we will have

Speaker 8

a discussion with them about whether changes to the label are warranted based on these new data.

Speaker 11

Got it. Thank you.

Speaker 2

Yes. Thanks, Seth. We certainly anticipate the 14 to 16 year old plus Data as we did with ZULRESSO being something that is the labeling changing activity. Were there anything else that is to be determined?

Operator

We go next to the line of Laura Chico with Wedbush Securities. Please go ahead.

Speaker 12

Hey, good morning guys. Thanks very much for fitting me in. Just referencing ZULRESSO, I'm wondering if you could kind of circle back to That timeline between writing a script and getting it issued for XERZUVE. And just remind us, what did that kind of evolution look like over the course of ZULRESSO's time on the market, were you able to condense that down and any learnings there in terms of how it might help with ZERZUVA? Thanks.

Speaker 2

Yes, Laura. Let me take that. So in terms of let's start with ZULRESSO. In terms of ZULRESSO, If a healthcare provider does a definitive diagnosis on PPD, start formacentib because the rest of requires A infusion site and then a lot of logistical support. It could be flights, caring of children.

Speaker 2

The fact that we had such an Increase and the numbers are small, but such an increase from the beginning of ZULRESSO to last quarter, almost a 3 or 4 fold increase in the number of women we're helping really shows The unmet need and the desire to treat given all the logistical challenges. With ZERSUVA, It's an oral treatment that comes in a pack as we showed on our slides during the call. And it works like any other script That will flow through a specialty pharma. So the script will be sent into the electronic medical system. Questions may be asked back to confirm it's PPD.

Speaker 2

And that's great. Our goals in days should arrive in the hands of the postpartum women and ready to treat. And hopefully, Each and every woman sees the kind of results we saw in clinical practice, so rapid or in clinical development. A rapid improvement in depressive systems as early as 3 days, Scripts written, those suffering received that drug very, very rapidly. And all of those lessons have been applied to The commercialization of Zuzuvi.

Speaker 12

That's great. Thanks, Barry.

Speaker 2

Thanks, Laura.

Operator

We now turn to Barry Greene for any additional or closing remarks.

Speaker 2

Thanks, Melinda, and thanks again to everyone for joining us this morning to review our results from the Q3 of 2023. As we look ahead to the commercial availability and subsequent launch of XERZUVE in the treatment of women with PPD and prepare to enter what we believe will be a Catalyst rich 2024 with multiple data readouts expected that provide the potential for long term value creation. I'm confident that we're making important progress to deliver our mission to develop and launch life changing brain health medicines so every person can thrive.

Operator

You may disconnect your lines at any time.

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Key Takeaways

  • XERZUVAX approval and launch: Sage’s first oral 14-day therapy for adults with postpartum depression received FDA approval in August and DEA Schedule IV status, with commercial availability expected in December 2023.
  • Launch preparedness: Sage and Biogen have built a seasoned field sales team targeting OBGYNs, psychiatrists, and PCPs, alongside an omnichannel digital platform, and set a wholesale acquisition cost of $15,900 to secure broad, affordable access with minimal utilization management.
  • Robust pipeline: Sage is advancing SAGE-718, an NMDA receptor positive allosteric modulator in Phase 2/3 trials for cognitive impairment in Huntington’s, Parkinson’s, and Alzheimer’s (including FDA orphan designation in HD), and SAGE-324, a GABAA PAM in Phase 2b for essential tremor, with multiple data readouts slated for 2024.
  • Solid financial footing: Q3 net loss was $202 million; Sage ended the quarter with $876 million in cash, equivalents, and marketable securities, securing a runway into 2026 supported by cost‐savings of ~$240 million from strategic reorganization and anticipated Biogen milestone payments.
AI Generated. May Contain Errors.
Earnings Conference Call
Sage Therapeutics Q3 2023
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