Sage Therapeutics, Inc. (NASDAQ:SAGE) Q4 2022 Earnings Call Transcript

Sage Therapeutics, Inc. (NASDAQ:SAGE) Q4 2022 Earnings Call Transcript February 16, 2023

Operator: Good morning. Welcome to the Sage Therapeutics’ Fourth Quarter and Full-Year 2022 Financial Results 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 at sagerx.com. This call is the property of Sage Therapeutics and recording, reproduction, or transmission of this call without the expressed written consent of Sage Therapeutics is strictly prohibited. Please note that this call is being recorded. I would now like to introduce Helen Rubinstein, Director of Investor Relations at Sage.

Helen Rubinstein: Good morning and thank you for joining Sage Therapeutics’ fourth quarter and full-year 2022 financial results conference call. Before we begin, I encourage everyone to go to the Investors and Media section of our website at sagerx.com, where you can find the press release related to today’s call, as well as the slides that we would be reviewing today. I’d 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, who will provide an overview of our progress during the fourth quarter and full-year 2022.

We will also be joined by Jim Doherty , who will provide an update on our launch preparations for the zuranolone in MDD and PPD if approved, and we will then be joined Kimi Iguchi, our Chief Financial Officer, who will review the financial results from the fourth quarter and full-year 2022; Laura Gault, our Chief Medical Officer will be available for questions during the Q&A portion of the call. With that, I’ll now turn the call over to Barry.

Barry Greene: Thanks, Helen, and thank you everyone for joining us this morning. At Sage, we’re advancing potential treatments for brain health by challenging convention and prioritizing what matters most to patients. And today, our work matters more than ever. We’ve reached the public health crisis tipping point. Brain health disorders are one of the leading cause of disability and threatened impact future generations. We see profound implications firsthand as friends, loved ones and neighbors continued to struggle. Yet over the last half century have been insufficient advances in the treatment of mood, cognition and were determined to change the trajectory of this crisis. This is an incredibly exciting time at Sage. We’re progressing a promising and targeted brain health pipeline with the potential impact millions of people globally.

The pipeline is a result of our innovative approach to drug discovery and development, which starts with our novel work on the GABAA and NMDA receptor systems. These pathways are important regulators of brain function and the key to unlocking potential breakthroughs that may improve brain health. Importantly, we believe our team and our strong financial foundation puts us in a position to further our (ph) ambitions. With the goal of being able to launch new drugs or indications for years to come. The time is now to unleash the potential of our science and making meaningful impact on the lives of millions. Moving to the next slide, we’re making progress across our pipeline as demonstrated by the latest regulatory milestone for Zuranolone, which we’re developing in collaboration with Biogen.

As we recently announced, we’re encouraged by the FDA acceptance of our NDA filing for Zuranolone with priority review a Major Depressive Disorder and Postpartum Depression with the PDUFA action date of August 5 of this year. If approved, we expect the potential launch near the end of 2023, assuming no extension of the FDA review period. With that timing in mind, we remain laser focused on preparing for the potential commercialization of Zuranolone, which Chris will walk through in more detail. Our commitment to be as innovative in helping to enable access to treatment as we’re developing (ph) medicines will be a key aspect of our overall commercialization strategy. To achieve that, we’re collaborating across the ecosystem with payers, healthcare providers, patient advocates and policymakers with a goal of providing a model for care that works in the best interest of patients with MDD and PPD.

We look forward to providing updates as appropriate. I would like to note since we now are in an FDA review period, we will not be making comments on the potential label, FDA interactions or related topics. In addition to Zuranolone, we have a robust pipeline of investigation programs that have potential to help patients at all stages of their lifespan. With nine clinical studies ongoing. These include SAGE-718, our first in class NMDA PAM, which are currently advancing in four placebo-controlled studies and an extensive study across Huntington’s, Parkinson’s and Alzheimer’s disease. We’re also making important progress in our neurology franchise led by SAGE-324, which is being evaluated as a potential treatment for people suffering from essential tremor and other neurological disorders.

I’d also like to highlight some of our earlier stage programs, including SAGE-319 and SAGE-689. These are great examples of our product engine that we believe will continue to deliver robust product candidates and have the potential for long-term value creation. To close, I am confident 2023 will be a pivotal year for Sage particularly as we look forward to the potential approval of Zuranolone in the advancement of our Brain Health pipeline. With that, I’ll turn the call over to Jim for a more detailed discussion of our recent portfolio progress and current clinical expectations. Jim?

Jim Doherty: Thanks, Barry, and good morning, everyone. We’ve made important progress across our development pipeline throughout 2022, and I am pleased to detail our recent advancements. Starting with depression, we’re excited about the recent FDA acceptance of our NDA filing for Zuranolone in MDD and PPD with priority review as Barry mentioned earlier. Our NDA package is supported by seven positive trials across the landscape in NEST clinical development program, which encompasses data from more than 3,500 patients. Importantly, we’ve seen a consistent clinical profile to-date across the development program in MDD and PPD, including a rapid and sustained reduction in depressive symptoms as early as two or three days, a generally well tolerated safety profile, improvements in quality of life and overall health across domains of feeling, functioning and well-being, which I’ll talk more about shortly.

And a short treatment course with the potential to be taken as needed with a novel mechanism of action. And finally, the potential for a flexible treatment approach in MDD and PPD that may provide optionality to healthcare providers and patients if Zuranolone is approved. And I’ll note the potential for flexibility we see with Zuranolone is exactly what HCPs have been asking for to help their patients. Let me expand on the well-being and functioning data I referenced. We touched on this during our JPM presentation, but it’s important to highlight in the context of the recent acceptance for filing of our NDA as these data suggest the potential for Zuranolone to improve measures of functioning and well-being that are important for patients with depression.

What you’ll see here is an integrated analysis from completed placebo-controlled trials across the MDD and PPD studies, showing that those treated with Zuranolone reported rapid and sustained improvements in health-related quality of life, compared to placebo as measured using SF-36 scores. These results were consistent at the day 15 and the day 42 endpoints. To summarize, these data are an important indicator as it relates to quality of life and overall health. Depression affects a person’s ability to feel, think, and function. The blunt sensations of pleasure closes off, connectedness and stifles creativity. It’s important to note that patients don’t want to feel less depressed, they want to feel well and get back to their normal everyday lives.

Zuranolone, if approved, has the potential to help patients achieve that. We see the opportunity for people to feel well, and we know that’s what matters most to patients. We also conducted interviews as a part of the open label SHORELINE study with over 30 patients, who responded to 50 milligrams of Zuranolone and were in the study for at least six months. These interviews illustrated that a substantial majority of surveyed responders noticed improvement in their mental and physical symptoms in the first week and were satisfied by it. In addition, a majority of surveyed responders were reported feeling fine, positive, or neutral about the need to be retreated and all were satisfied with Zuranolone as a treatment. This feedback reinforces the potential positive experience Zuranolone could provide for patients with MDD and PPD if approved.

I’ll now move to SAGE-718, our lead NMDA receptor PAM, that is an investigational oral therapy being developed for certain disorders where impairment of cognition is one of the main drivers of disability. This is one of our wholly-owned programs and was granted Fast Track designation by the FDA as a potential treatment for cognitive impairment in Huntington’s Disease or HD. We are also investigating SAGE-718 in people with mild cognitive impairment due to Parkinson’s Disease or PD and people with mild cognitive impairment and mild dementia due to Alzheimer’s Disease or AD. These disorders represent some of the greatest areas of unmet need and we know that globally they continue to become more prevalent and significantly disrupt lives. On that basis, we’re excited about the continued progress we’ve made across the program.

As we mentioned earlier this year, we recently initiated the LIGHTWAVE study, a Phase 2 study of SAGE-718 in people with mild cognitive impairment and mild dementia, due to Alzheimer’s Disease, as well as the PURVIEW study, a Phase 3 extension study in people with Huntington’s Disease. We expect data from the ongoing studies with SAGE-718 to start reading out in 2024, and we will share more detailed timelines when appropriate. We’re also advancing a robust portfolio that has the potential to help patients at all stages of their lifespan. Let me provide a couple of highlights, starting with SAGE-324 receptors. We believe that SAGE-324 holds significant potential in the treatment of neurological conditions like essential tremor or ET and we and our collaborator Biogen anticipate completion of enrollment in the ongoing Phase 2b KINETIC 2 dose ranging study late this year.

We’re also excited about the opportunities in our early development programs, including SAGE-319, our extra-synaptic preferring GABAA PAM, which we are advancing from IND enabling studies into Phase 1 studies. We also continue to make progress with SAGE-689 and SAGE-421 and believe that they will become important pipeline contributors over the coming years. In closing, I’m proud of our progress in the fourth quarter and full-year 2022, and I believe that we are well positioned to execute against clinical objectives and advance our efforts to develop brain health medicines with the potential to deliver what matters most to patients. Now I’ll turn the call over to Chris to provide additional context on our planned approach as we prepare for the potential commercialization of Zuranolone in MDD and PPD.

Chris?

Chris Benecchi: Thanks, Jim. I’m pleased to be with you all this morning to share updates on our commercialization preparation for Zuranolone. To ensure the successful launch of Zuranolone, if approved, we made important progress last year on the commercialization front. Core activities that have enabled our state of readiness include, advancing conversations with payers as permitted with the goal of enabling access at launch, engaging and educating HCPs through meaningful scientific exchange and hiring experienced commercial leaders to orchestrate plans intended to achieve a successful launch in Zuranolone if approved. With the recent announcement of the acceptance of our NDA filing, we remain laser focused on preparations to execute our launch strategy.

Let me outline our thinking on the potential timelines for Zuranolone. Based on our PDUFA action date of August 5, if Zuranolone is approved for the treatment of MDD and PPD without extension of the FDA review period, we expect the potential launch near the end of 2023, following an anticipated three-month DEA scheduling review. We will be prepared and anticipate entering a market that is ready for the approval of Zuranolone. As you’ll see on slide 14, we believe the opportunity in MDD is large with millions of patients not satisfied with current treatment options. People who continue to experience unresolved symptoms of depression are at risk. Many are unable to go to work or take care of their families. Is difficult for these people to live their normal lives, and the longer they wait to treat their symptoms, the more likely they are to experience negative outcomes.

Such as impaired functioning and subsequent relapse. This is why rapidity matters, both in terms of initiating a therapy as soon as patients show symptoms, as well as achieving the rapid improvement of depressive symptoms. The key takeaway here is a more rapid and sustained approach to treating a depressive episode may increase the likelihood of better symptomatic and functional outcomes. Given the rapid improvement seen in clinical trial to-date, we believe that if approved, Zuranolone has the potential to provide a new treatment option to patients suffering with MDD with the goal of helping them return to a state and well-being sooner. In PPD, there is similarly a large unmet need with an estimated one in eight mothers in the U.S. experiencing symptoms for postpartum depression.

Despite being a common mental health disorder, women experiencing symptoms may often go undiagnosed or untreated, and we see that clearly in the low diagnosis rates. Not only does PPD have an effect on a mother’s overall function, but it can also have an impact on the ability for that mother to take care of her baby. These mothers and their families deserve better. Our goal with Zuranolone, if approved, is to work with the entire ecosystem to change the treatment paradigm by significantly improving diagnosis rates in women with PPD and provide HCPs with the first and only FDA approved oral treatment indicated for PPD that has the potential to help moms get better sooner. As we enter 2023, we remain focused and diligent on our commercialization efforts in anticipation of potential launch.

We continue to engage with key stakeholders in scientific exchange and are also encouraged to see positive signals for the patient advocacy community on the importance of accelerating access to innovation in mental health. And as Barry mentioned earlier, we plan to be innovative on the patient access front. Our goal for this launch is successful is that those living with MDD and PPD, who are prescribed the therapy have timely access with limited complications such as step edits, and prior authorization. In addition to our own work, we are seeing state governments across the nation make reforms to fill first policy and have historically restricted patient access to the right treatment prescribed by their physician at the right time. People with MDD and PPD deserve rapid and effective therapeutic options introduced early during treatment.

Because early treatment is believed to deliver the best outcomes as I previously touched on. Given the unmet need, we believe that Zuranolone, if approved, is best positioned at launch for MDD patients requiring a first add or first switch therapy after continuing to experience depressive symptoms following their initial treatment course, including patients who have tolerability issues or non-compliance with chronic therapy. In PPD, we strive for Zuranolone to become standard-of-care at launch with use as first line therapy for treatment naive patients who are newly diagnosed with PPD or in place of other therapies currently administered. In the conversations we’ve had with payers, they’ve been highly engaged and receptive and we believe they see a role for a potential rapid acting sustained 14-day course oral therapy in treating both MDD and PPD.

We feel an urgency to deliver a new treatment option to patients given the profound unmet need that still exists in the treatment of MDD and PPD. We are dedicated in our efforts to continue to advance Zuranolone with the goal of gaining approval and being able to offer medicine with the potential to treat these patients rapidly and improve their symptoms. Now, I’ll turn the call over to Kimi for a review of our financials. Kimi?

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Q&A Session

Kimi Iguchi: Thanks, Chris. Our financial results for the fourth quarter and full-year of 2022 are detailed in our press release that we issued this morning. I’d like to take a moment to provide some context and highlight a few key points. We ended 2022 with a strong cash position, which provides us with the flexibility to support the launch of Zuranolone, if approved and strategically invest across our pipeline. Our net loss for the fourth quarter of 2022 was $147.1 million and we ended the quarter with cash, cash equivalents and marketable securities of approximately $1.3 billion. Turning to operating expenses. R&D expenses increased to $89.3 million in the fourth quarter of 2022, compared to $75.4 million for the same period in 2021.

The increase in spend was primarily related to ongoing investments in our wholly-owned and partnered programs, including SAGE-324 and SAGE-718. SG&A expenses increased to $67.3 million in the fourth quarter of 2022, compared to $51.6 million for same period of 2021. The increase was primarily related to hiring employees to support ongoing activities in anticipation of potential launch. As you heard from Chris, we’re continuing preparations to support the potential launch of Zuranolone, while gaining approval and commercialization of Zuranolone remain our top priority, we’re also committed to investing in our mid-term on long-term pipeline in a strategic and disciplined way. To this end, we expect that our spend will increase as we continue our commercialization efforts and advanced plans and ongoing studies for SAGE-718 and SAGE-324.

We know that to achieve our long-term vision of transforming the care of depression, we must begin with a focused strategy to be prepared to scale quickly with success. Therefore, we remain mindful of the capital allocation prior to launch. As a reminder, as part of our collaboration with Biogen, we are jointly developing Zuranolone and SAGE-324 with a 50:50 cautionary in the United States. Looking ahead, we are reaffirming that based on our current operating plan, we anticipate cash, cash equivalents and marketable securities, anticipated funding from ongoing collaborations and potential revenue will support operations into 2025, included in the $5 million from Biogen related to the first commercial sales of Zuranolone in MDD and PPD. Given how dynamic 2023 will be, including preparing for a potential launch, we will not be providing year-end cash guidance at this time.

As we embark on a pivotal year for Sage, I’m confident that our strong balance sheet will enable us to execute from a position of strength. With numerous potential value creating milestones on the horizon for Sage, we remain focused on making strategic investments in developing pipeline programs to best position ourselves as a leader in brain health. We remain well capitalized as we continue to build strong team executing on objectives across our pipeline. The time is now for patients. We are optimistic that our approach will lead to the development of treatments that people are desperately waiting for. I’ll now turn it over to Helen to handle Q&A with the operator. Helen?

Helen Rubinstein: 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. Now I’ll turn it over to the operator to handle Q&A. Operator?

Operator: Thank you. At this time, we’ll hear from Tazeen Ahmad from Bank of America. Please go ahead.