Sage Therapeutics, Inc. (SAGE) Earnings Call Transcript & Summary

Hi, everyone. I'm Gary Nachman, the biopharma analyst at BMO. We're really excited to have Sage management with us participating in BMO's Growth and ESG Conference. We have Steve Kanes, Chief Medical Officer; Mike Cloonan, Chief Operating Officer. This is a really exciting time for you guys, particularly with the recent Biogen collaboration. So it's great to have you here to give us the updates on all your progress. So thanks for your time today.

Thanks, Gary. Great to be here.

Good. So since there are some investors listening in that may not be as familiar with your story, describe what the company's overall strategy has been with respect to drug development in CNS and what your key strengths are in that area. And then with the recent transformational collaboration with Biogen that you just announced for 2 of your key products, zuranolone and SAGE-324, how do you see Sage evolving over the next several years to become more of a fully vertically integrated biopharma company? So...

Gary, why don't I start?

Yes.

Yes. I'll start and Steve -- I'll turn to Steve to add some color on some of the questions you have. So maybe just start at the macro level, again, what Sage is. You asked about our strategy and sort of what we do well. And I'll let Steve kind of take it from a drug development perspective, and then we'll bring it back to the deal. But if you think about where Sage is and what Sage is, we are -- our vision has been to be a leading brain health company, and that really cuts across the 3 franchises that we are focused on. So we have a depression franchise, we have a neuropsychiatry franchise and a neurology franchise. And 2 of those franchises were involved in the deal, which we'll get into. But we think that's our core strength is, is really drug development from inception and research all the way through clinical development and approval. And we've got such a rich and deep pipeline that we think we've got a great opportunity to be this leader in brain health, which is our vision. And now more than ever, right, we've talked a lot about this with you, Gary and others is that, that mission, specifically in depression is so important now when we think about mental health issues being on the rise. We all know what's happening with COVID and the pandemic, but I'm sure many of us have read articles that said the next pandemic could be mental health issues. And we're seeing that, right? The prevalence of major depressive disorder and postpartum depression is absolutely on the rise. And so we look at this mission that we're on is, is now more important than ever and the impact that we can make for patients and their families. So that's a really key part of our strategy. And this whole year, 2020 has been a year of execution for Sage, right? If you go way back to the beginning of the year, we started out having a restructure, which allowed us to reallocate our resources to put them against the 3 new paths that we had for zuranolone and also continue to invest in our pipeline in all 3 franchises. We've made excellent progress over the course of this year despite what's happening with COVID. The team at Sage has done a great job executing against the trials and moving those forward. I'm really pleased with where we are across all 3 franchises. And then we've set ourselves up with that execution for a very rich 2021 catalyst-rich year, right? And we'll get into some of the details of what we're having read out next year. And then also 2021 is going to be operationalizing the collaboration that you spoke about, Gary, which we'll get into details. But before I go to the collaboration and what it does for us, I want Steve maybe to add a little more color around some of our franchises and how -- where we think we have that expertise.

Sure. Among other things, we focused on mechanisms of action in our drug development programs that affect the brain activity fundamentally. And because of that, we have the opportunity to explore drug development programs across a wide variety of areas in brain health. And yes, we started with postpartum depression and major depressive disorder, but we're moving into areas as diverse as movement disorders, essential tremor in Parkinson's, epilepsy as well as cognition and beyond. And at the heart of it is really understanding the science. Where does the science lead us? And where are there enormous areas of unmet need that we can address directly with that unique science. Postpartum depression is a great example. But based on that, we're able to move into major depressive disorder and identify an entirely new way of thinking about depression, treating depression episodically as opposed to treating it chronically as has traditionally been done; or in the case of essential tremor, marrying up new scientific information about the role of GABA in making -- in progressing essential tremor, marrying that up with our mechanism and coming up with a program that would -- if it's approved, that'd be the first medication developed in this area in 50 years. So because we're looking at fundamental science, we're able to both explore new areas as well as identify areas of unmet need in a unique way. And I think that's something that's fundamental to the way that we've been moving forward and why we're so excited about the partnership with Biogen and all it allows us to do to unleash all of the research and all of the value, not just in the programs that are partnered but deep into our pipeline as well.

Yes. Maybe that's a good place for me to pick it back up, Gary, and talk about the deal. And obviously, you'll probably have very specific questions. But let's -- at the macro level, let's -- we've obviously gotten questions that say why the deal, why now, why Biogen. There's a lot that gets wrapped up. And if you take it at the macro level and what this deal really was about for Sage, it was really 3 things. One, the economics of the deal, we found, were very compelling, and we can talk through why that is. But we see this as a $3.1 billion potential transaction ahead of the data for waterfall and some of our other programs that we think really validates the science and the work that our teams have done and puts us in a great position to execute against the continued development of those programs, but also our pipeline, as Steve said. So it's the economic piece. But there's a story and the theme that we want to get into, which is there's value creation, right, the increasing of the pie, increasing of the size of the opportunity for both of these collaboration assets that we can talk about. And then the third is the theme of acceleration, right, which Steve sort of touched on. We have this opportunity now with a transaction like this and a partner like Biogen to really accelerate not only the programs that are in the collaboration, new indications, new areas that we can go into but the wholly-owned assets that we have, 718 and others. We now have these resources that we didn't have before that we can really maximize the potential of these programs. So if you really think about why we're excited about this deal, it is a compelling economic here, one of the largest deals ever done, I think, in this space. And we're really pleased with that. We've got a really strong partner on the commercial side that we think can increase the revenue potential of these products, expand globally outside the U.S. more rapidly than Sage could, take us into new indications more rapidly with the resources and the sharing of costs that we have as part of the collaboration. And then again, there is this real focus that we can have on the wholly-owned pipeline and acceleration. So we think it sets us up for the short -- these near-term opportunities, all the catalysts that we speak about in 2021, we still have those opportunities. But now this sets us up for mid- and long-term growth potential at Sage that we're really excited about.

Okay. So just picking up on that, Mike, just in terms of the deal, since you announced it, and it does seem very compelling. It's such a reputable partner with deep pockets, so it makes sense on so many levels. Just why do you think the stock hasn't reacted in the way that you probably thought it would? What do you think people are underappreciating about the deal? And then specifically, you touched on -- you said people asked questions about the timing. You have a couple of big value drivers next year, both with zuranolone and 324, so I think that was definitely part of it, people wondering, oh, why now as opposed to waiting for those value drivers to hit. So maybe touch on those points a little bit.

Yes. I think it's a good question, Gary. I think it's -- we know that when you come out with a deal like this, right, it does take some time for people to absorb, understand the strategy, the rationale, the timing and then what can you do, right? What does this now open stage up to do? And I think that's been a big part of what we've been doing over the last week to 10 days. But to your question about what do you think people are not seeing, and I think it does start, I think, with that economic piece first, right? As I said, there's sort of 3 parts of this. And if you look at the economics and what we get, it was a lot of it centered around the $1.5 billion, which is the upfront, right, the equity and also the upfront piece. And that's where people seem to focus. But we look at this as a $3.1 billion deal. And the way we do this is, obviously, there's the $1.5 billion, immediate cash infusion of $1.5 billion. And then we have $1.6 billion in additional milestones across the 2 products. And what we've been trying to really educate folks on is the way we look at that $1.6 billion is that this isn't your traditional sort of biobucks to talk about a big number, right? We look at the achievability and the probability of actually capturing those milestones as being high. There's $1 billion out of that $1.6 billion that are tied to regulatory and development progression and first commercial sale. So we believe strongly in the potential of both these products that they can make it to approval, so that gives us the [indiscernible] those milestones tied to that are going to be achievable, right? Yes, there's a time value of money components to when it comes in. But from an achievability perspective, we deem that as high. And I think that's probably something that isn't appreciated as much by The Street. And then I think the second is -- the $600 million that's left are more commercialization milestones, like revenue milestones that do come a little bit later. But again, we see it's very achievable based on the potential of both these products. So that's probably the first thing, is really just educating people on what the economics look like. And something that we probably haven't heard much coming back to us is the level of financial overhang we've removed from the company and the avoidance of future dilution, which is significant. When you look at $1.5 billion upfront and the potential for more cash inflows for these milestones, really important part of the deal for us as we think about the long-term value capture from the deal, right? So that's probably the first thing. And then I'd say the other part, which I think is -- you're starting to see it come out now, again, as this concept of -- does the pie get bigger, right? And then how do you value that, right? So if you take the partner, as you said, a reputable partner, like by some of the global capabilities and the ability to launch blockbusters, right, that was really appealing as to why we selected Biogen as a partner, was those -- that scope of how they can roll this out through their affiliate structure, and they can capture the full value globally of these products. But also, they've demonstrated the ability to launch blockbuster products. And we think now, with them onboard, 2 companies coming together to launch these 2 products, we think there is strong potential to accelerate the time to peak and even increase the peak. So your area under the curve, right, gets increased. That's the pie growing. And so I think that's something I think people are starting to appreciate, okay, maybe now with the level of investment these 2 parties can make together, sharing of cost, you can drive incremental value. And then there's this acceleration piece that I mentioned before. Accelerating -- we talked a lot about, of course, zuranolone we're developing in MDD and PPD. But you've heard Steve, myself and others talk about what other indications could we take this into: general anxiety disorder, bipolar disorder, TRD. We've talked about those, right? But now with a partnership like this, and the ability to together develop these programs, can you accelerate it and create more rapid value creation from those indication expansions? And you could say the same thing about 324, right? The potential in essential tremor or for epilepsy, Parkinson's disease, et cetera. So that's -- I think we got to keep hitting those messages homes, so people see the pie is getting bigger for Sage as a result of this deal. And then what else can you do with your wholly-owned pipeline and maybe you had to be more disciplined in your adjustments of the resources. And now we'll have $2.1 billion, at the time this transaction closes, in cash to really start to do some of that value creation and acceleration. And Steve, I don't know if you want to elaborate more on some of the indications I mentioned.

Yes, sure. So for 718, I mean, we've been exploring cognition broadly and again, an entirely new mechanism of action that was invented by us in collaboration with academic partners, and 718 itself was invented here, wholly-owned asset. And we've been seeing some very compelling data so far coming through with this molecule. So for example, in patients with Huntington's disease, we've seen improvements in what's called executive function. This is the ability to both plan and carry out complex tasks. If you think about that, that's something that, for patients with Huntington's disease, long before they start to develop the more sort of dramatic symptoms related to Huntington's, the movement disorders and dementia really affect quality of life. These are people that can be living with Huntington's for 20 or 30 years before they really experience these more dramatic symptoms. And this affects their -- this affects everything that they do, ability to work, drive, everything. Same thing with Parkinson's. So what we're doing right now is we're exploring in Huntington's and Parkinson's, Alzheimer's disease to understand both the mechanism as well as how many different cognition-related indications would potentially benefit from this mechanism. And those are data that we're going to have early next year, first quarter, and we'll be able to use that kind of information to make decisions about how we move forward. Beyond that, there are other molecules in this class. 904 is in Phase I development. We have a drug called SAGE-689. That's a GABA modulator. So to Mike's point, when we're able to unleash these assets and really drive them forward, these will be really important drivers for us, both scientifically for patients as well as for the company. So there's just a lot there, both in terms of what we can do with the partnered assets as well as those that are now nonpartnered, wholly-owned.

Yes. Gary, I guess just to round out the question, right, was that why now. Like why not wait, right? I mean that's sort of the -- what maybe people aren't fully appreciating in the deal and why we think this is such a compelling deal. And at the same time, when I think as people start to really step back and realize while there is a lot of value creation here and this potential to accelerate and a strong partner, the why now starts to fade away a little bit as people realize, okay, this is why you do it now, right, because of how compelling the deal was. And we could have waited. We put ourselves in a very good financial position with the cash that we had to work our way through the catalysts that were coming up. But as you know, these deals don't happen overnight, right? And so just saying, hey, let's wait until the next readout, you can't have a deal that's ready to execute the day after that. Or you're going to then start, okay, how is that going to work, you start talking to people and that plays out over a period of time as you start doing that math and you say, okay, this isn't about 3, 4, 5, 6 months. This could be a 12- to 18-month difference between executing now and maybe at some point in the future and think about what we can do now in that 12 to 18 months that we've been given and having a partner onboard at the time, say, waterfall reads out and you can start to build out things together, that was also very compelling to us that we feel, again, it's just this acceleration, the level of economic gain that we have from this and the future value creation, which is so compelling now that we didn't think it made sense to wait.

Okay. That's a great perspective, both of you. Steve, we'll get to 718 a little bit later. But my last question just on the deal itself. Like you said, I mean, these things don't happen overnight. So clearly, you had been in discussions with Biogen about potential partnership or other types of things that you could do with them for a while. Maybe some people could appreciate why Biogen a little bit more. Talk about how competitive the process may have been. Were there other companies that you were looking at? And I'm sure you could spend like a half hour talking about why you ended up with them, but maybe like the top 3 things that you think Biogen is bringing to the table that made them win the deal.

Yes. No, definitely, Gary. Yes, we haven't gotten -- as you know, we haven't gotten to the level of detail of exactly how this played out, right, because there's dimensions that you don't necessarily want to share. But what I think you're hitting on is why did we select Biogen and what was important to us in a partner. And that's absolutely something we can talk about. From an overall partnership and who we were thinking of partnering with, there were specific criteria that were important with us -- for us in terms of who we would select. And I think the first was, as Steve articulated, we're going after innovative disease -- innovative changes to disease areas of high unmet needs, including depression where we want to reshape that whole paradigm and move this more to a treatment-as-needed concept instead of chronic. So in any partner, they had to see what we see, right? They have a chance to do due diligence. They look through it and do they see the -- both innovation and the level of change that we're trying to bring out for the benefit of patients and families, and that was absolutely critical. Do you have a like mindedness, if you will, with a partner that comes in and sees the world the same way and wants to go after it? Not all partners see the world the same way in terms of, oh, why not just go after chronic versus this treat as needed. That's a lot of change you're asking. And what I can say is Biogen absolutely sees the world the way that we do. We had great conversations around what was possible. So that was one of the first thing, that like-mindedness and philosophically, are aligned, right? So that was first. The second was, as I already mentioned, global capabilities. We know that for us to get outside the U.S., it was going to take a period of time from an overall resource allocation. So we really wanted somebody who had strong global footprint and reach that can roll these products out and get patient access in markets that we just couldn't get to as rapidly. So that was really important. The third was other capabilities, manufacturing, obviously, commercialization. Do they know how to launch blockbusters? Can they think innovatively as it relates to commercialization? And then the fourth was, again, intrinsic to us, our overall goal was to continue to build. You actually said this before, to build a fully integrated company. That hasn't changed as a result of this transaction. We think it actually accelerates and helps us do that fully integrated build. And that was important. As we had conversations, we said, listen, this is a build together because Sage wants to continue to build our capabilities. We want to be a fully integrated company. We're not outsourcing these products to a third party and have them develop them and commercialize them. We're in it together. And again, that was important to the partner. So if you go down as to why Biogen, Biogen checked all those boxes: like-mindedness, saw what we saw, believed in the data, believed in the paradigm shift and what we're going after. The global capabilities and the reach was there. The ability to launch blockbusters, right, they've launched several blockbusters in their history. They know how to do that. They know how to develop new markets and be innovative; and then, again, this sort of true partnership mentality of working with us to build our company and maintain the vision that we think is really powerful to change the lives of folks with brain health disease. Those -- that was the criteria, right, that we laid out, and Biogen really hit the mark. And we're really pleased. We think they're going to be a great partner, and that level of collaboration is going to be very strong.

Okay. Great. Let's get into zuranolone. There's so much to talk about. Steve, maybe you could just set the table a little bit. And in the interest of time, just in a couple of minutes, just talk about the data sets that are out there, high level, what you've shown, the recent data, SHORELINE in the 30-milligram dose, also the 6-month data for MOUNTAIN and maybe how that contributed to Biogen ultimately getting comfortable with everything that Mike just talked about. And then we'll get into what happens from here. And anything as you have discussions with Biogen that you think might change in a meaningful way on the depression side before we talk about the additional indications?

All right. So I'll start at the top, which is for zuranolone. This is a drug that's being developed for the treatment of major depressive disorder and related conditions. And from the beginning, the concept has been to treat patients with major depression episodically. That is we know that, for many patients, major depression can be chronic, but it's really a chronic disease where patients have symptoms. They could have a depression. They can go away, and they can go away for long periods of time before they may necessarily need to be treated again. And so based on the science and based on the data that we've seen to date, we asked ourselves a question: What would it look like to treat patients during those periods when they're having depression but not when they don't need it? And then that very much challenges the current treatment paradigm but on the flip side is very focused on what patients are looking for, for a therapy, which is they do not want to be chronically treated. They do not want to continue to have to go and refill prescriptions when they don't necessarily need them. And moreover, it medicalizes the treatment of depression in ways that are much more familiar, which can address stigma and all the other barriers to care. So what we've seen so far, and this is now over a course of many clinical trials, is a very consistent overall profile Every piece of data that we have has been reinforcing this profile, and I'll get into the specifics. The drug has demonstrated rapidity of onset within days. We've seen very dramatic improvements in mood symptoms over the course of a maximum of the 2-week course of therapy. And with long-term follow-up now, both in SHORELINE as well as with MOUNTAIN, the idea that the majority of patients don't require a retreatment even over the course of a year. So I'll get into some specifics. The first study that we've shown which is considered a pivotal trial in major depressive disorder, was published in New England Journal of Medicine about 2 years ago, showed that within the course of 2 weeks of therapy, a greater than 15-point improvement overall in Hamilton depression score and about a 6- to 7-point difference in MDD over the course of those 2 weeks. That's dramatic. It's dramatic in terms of its onset, which was by day 3 -- third -- after 2 doses of therapy, also dramatic to the extent of response and remission as well as the overall change from -- difference from placebo. Similarly, in postpartum depression and related condition, same results over the course of 2 weeks of therapy. And in our third placebo-controlled trial, MOUNTAIN Study, we saw a very consistent profile where we saw statistically significant differences on day 3, day 8 and day 12. And it's a study that didn't meet its primary end point at day 15 but was a really informative trial for a variety of reasons. One, it confirmed the overall profile in terms of both benefit as well as a benefit-risk profile, and patients were rolled over into a long-term follow-up. So we've been able to see what happens to those patients after the first 2 weeks of therapy as well as a month of follow-up. And across all of those -- so again, across all those trials, a very, very consistent profile. And in terms of the long-term follow-up, more than 80% of those patients didn't require additional re-treatment over 6 months. So again, not only was it rapidly efficacious but something that will be important for patients, do they need to immediately start taking medicine again, and the evidence is not -- that's not the case. Similarly, we did a long-term prospective study. So first of its kind actually in the development program, where we took patients, treated them upfront, and if they were successful, we followed them. And if they needed additional re-treatment due to recurrence of a major depressive episode, we treated them again. And we followed those patients over the course of the year. And what we saw, and these are data that we released earlier this year, is that 70% of the patients required no more than 2 treatments in a year and 50% of the patients only required 1. Now that's -- if that [ still a ] drug that gets approved. I'll sort of put on my psychiatrist hat on. I'm a psychiatrist. Like from a patient perspective, that means that you would really only need to be taking no more than -- most patients needed no more than 4 weeks of treatment over the course of an entire calendar year, 48 weeks off therapy. I mean we all know people who've been treated for -- with antidepressants. They're often taking them for years at a time. Never quite sure if they're really helping but are fearful of stopping out of concern that the symptoms may come back again. The profile that we're seeing again and again is that, for some patients or appropriate patients, episodic treatment, if it starts to work within days and has these long-lasting benefits, may very well be a real viable treatment option. So the totality of the program and why we continue to think about this is it's patient-focused. It's absolutely revolutionary in the treatment of depression. And you ask what Biogen -- they see exactly this. We care very deeply, and you know this, Gary, about this program and what it can do for patients. We certainly don't want to put this in the hands of a partner who's not going to be able to share that vision. I personally -- I think of it very personally, but that's really important in terms of what we're trying to accomplish with the program. So a few other details because you asked. In the SHORELINE data that we released, we looked at an additional dose. We're always interested in looking for more doses or treatment. In this case, we've been using 30 milligrams across all of our trials. We also, in the SHORELINE study, included a 50-milligram cohort. And what we saw was 2 things: one, profile very similar to what we've seen across all of our studies, nothing new there; but incremental improvements in terms of improvement from baseline as well as response and remission. Now it's an open-label study. You can't compare apples to oranges, but we'd be looking for incremental improvements as well as in terms of response and remission when we increase dose. And that's really -- when a drug is approved, if zuranolone is approved, we'd like to have some ability for dose adjustment as well as both in terms of up titrations and down titrations, as you would for any medicine. So that study, SHORELINE, is still ongoing. We're following those patients in the 50-milligram cohort throughout the year, and we'll be looking to see how they fare as well compared to the 30-milligram cohort. But so far, as I said, it's an ongoing program. It's being pursued under breakthrough therapy designation. And the totality of the data that we've seen so far has been very consistent and really very compelling in terms of what opportunity it affords for patients. I would say there's 2 other trials besides the ongoing WATERFALL study. One is called the SKYLARK study. This is a placebo-controlled trial for postpartum depression. That's ongoing. And then a third called the CORAL study. And this is -- and we can talk about the strategy here. This is a study of zuranolone when administered in conjunction with a standard antidepressant, looking to leverage that early onset as well as to give an option successful to physicians and patients who may prefer to continue on with antidepressants afterwards. So a full suite of studies, each of which leads to an independent pathway to approval, which covers a lot of what we need to accomplish for us in terms of demonstrating evidence as well as changing hearts and minds about how best to treat patients with MDD. So I gave you a lot there. So you could just turn me on [indiscernible]

Yes. I knew I could just ask you a question on zuranolone [ and you could speed up ] the rest of the time.

Yes. Well, I won't do that, but I will answer one last question, which is that's the program that, of course, caught Biogen's attention, is what they partnered around. And it's anything -- so that represents really what we're looking to accomplish together. The other opportunity or other areas that have emerged through that exploration in terms of anxiety, treatment-resistant depression, bipolar disorder and so forth, and when we talk about acceleration, it's as much about trying -- getting to those other indications, which, whether it be life cycle management, and thinking about how to weave those in, in a potentially more efficient way.

Right. So just getting back to the MOUNTAIN study, which failed the primary. But like you said, there were a lot of things that you learned from it. So 2 things, first, talk about patient severity. And across the different studies that you're conducting now, if you realize -- just because of the placebo effect, we need to go higher on the HAM-D baseline just to make sure we have more severe patients if that's an important factor that you built into the ongoing studies. And then just in terms of the dosing, explore the 30, look good, going to have data on the 50. Why not even a little bit higher? You've shown a really good safety profile, why you think 50 is the right dose. And again, I know you could spend a lot of time on it. There's a lot there. Just take a few minutes to address those 2 specifically.

Sure. The first one is we include different severities into the program so that if we're successful, the label won't be locked into one level of severity or another. And so we always include some variety about the inclusion criteria. And that's something you'll see across all depression programs, ours included. So that's something that we always do. There's some pure math here, which is the more -- given the statistics that we've used, the more severe the symptoms, the easier it is to demonstrate drops in terms of change from baseline. And so it really speaks to study metrics. And so we've learned over time that in order to really get the best signal to noise, patients on the more severe end are ones that give us those larger differences separate from placebo. But we don't want to only be locked into only patients of a particular HAM-D score for regulatory reasons and purposes of labeling. So it's a bit about ensuring that we have the best patient population in as well as not be locked into a particular level of severity. And your second question was about -- I'm sorry I missed that.

Yes. Dosing, the 50-milligram versus going even higher potentially.

Right. So what we do is now that we've had more than 2,500 patients that have been exposed across all of our trials, clin pharm studies included, we're able to do PK/PD modeling both against efficacy as well as safety, and we're able to identify doses that are truly differentiated from one another but look like they will actually make differences in terms of exposure and response. And so when you do that, you're able to sort of pick the sweet spot of the next dose up, so 30 to 50. 40 isn't differentiated enough, and we know that if we go below 30, 20 didn't differentiate from placebo at all. And so really, we're looking at what is the next practical dose level higher. 50 hit the bill, and we're seeing the kind of responses in SHORELINE that gives us confidence to move forward with it.

Okay. Right. Great. In the interest of time, I want to move on a little bit. So let's go to the additional indication that Mike talked about, you talked about that both you and Biogen are excited about, anxiety, bipolar disorder. So what proof-of-concept data is there for those indications that gets you excited that it's worth spending a whole bunch of money on it? And also, the paradigm shift that you're trying to do in depression, acute, as-needed treatment, will that apply to those conditions as well potentially? Will it be a similar type of paradigm shift?

So the short answer is yes, and that's what we're looking to explore. So here's the evidence. In all of our studies, we include -- well, 2 things. We know that there's high comorbidity between depression and anxiety and true anxiety disorder is not just people being anxious. And by -- if you look at the Hamilton anxiety scale, which we've concluded in many of our studies, patients get better and they stay well. And we've been following that up after -- in terms of long-term follow-up as well. So for those patients who are anxious that we've studied, it's very clear that we can improve anxiety. And once people get over their -- whatever their acute anxiety is, they can remain well for long periods. And that's demonstrated through the trials that we've had. For treatment-resistant depression, we haven't done a study specifically for TRD. What we've done is look back into all of our studies for those patients that would otherwise be classified as TRD, patients that have failed multiple therapies and to see what -- how they responded. And those patients -- so this is a model group, and it's post-hoc analysis, but for patients that have failed 2 or more medications during the current episode, those patients responded similarly, which gives us a toehold in understanding the potential utility in TRD, especially since it's a new mechanism, one that patients haven't been exposed to. Sometimes you'll hear me say treatment-resistant depression, not necessarily a separate entity. It's when medications have failed to improve patient symptoms and one of the reasons why you want to go after new mechanisms of action. Lastly, with bipolar, we actually did a bipolar study. It was open-label study in patients with the depressed phase of bipolar disorder and showed the same kind of profile with their expressive symptoms that we've demonstrated in our MDD trials. And so that, while it wasn't a placebo-controlled trial, clearly showed the same improvement arc, the same overall benefit. And understanding how that would fit into a treatment paradigm for bipolar would be the kind of things that we'll be exploring. So we use the data that we have to understand where the potential lies, and that's the beginning of a development program around these mechanisms or these disorders.

Yes. I think it's probably worth noting, Gary, too, is you're hearing, right, the path that Sage was on prior to the collaboration was we still had that level of interest in these indications, right, and progressing the rest of our pipeline. But as you've heard us talk over 2020, a lot of this was portfolio prioritization, resource allocation, how do we do it all, right? How can we continue to move zuranolone in multiple indications but also develop 324 and 718 in our early-stage pipeline, et cetera? And now this -- as you're hearing, we have an opportunity now to really look at this and say, okay, how can we accelerate these indications with a partner who's like-minded, who's going to cover 50% of the cost in the U.S., can take it outside the U.S. That's where [indiscernible] on both sides. Both companies really came into play, as you look at the potential, right, to create value, the potential to bring new medicines to patients, and that's what is really the value creation and acceleration kind of come together through this indication expansion.

Okay. But presumably, next step for these indications would be Phase II dose ranging, right? Because some of the work that you've done, probably lower doses of zuranolone, so you'll need to look at the 30, the 50. Or would you just -- could you potentially go right into Phase III? That's up for discussion with Biogen.

Yes, it's a little early to speculate on where we go with that. But yes, what -- and that's -- those are kind of the implications of what I was saying, which is we have early data. That's the beginning of understanding how you would go ahead and develop these drugs. And one of the things I'm looking forward to is in the context of partnership understanding how to sequence them, how best to move them forward, how to understand how they fit into the overall treatment scheme and then press forward. But that's real work. That's work that we can begin to start thinking about it in the context now with this partnership that allows us to accelerate some of those questions and then answers.

Okay. Let's spend a couple of minutes on 324, similar mechanism to zuranolone. So just talk about how these molecules differ, why you decided to take 324 into essential tremor. And that's arguably even more in the sweet spot for Biogen, right, just given they're currently commercializing products. So there had to be a fair amount of excitement around that program. So what should we expect with the data that we're going to see in the first quarter of next year?

Okay. So I'll take that from the front. And I would say, yes, of course, this is an area that was of real interest. Obviously, it's a partnered program. 324, while it has a similar mechanism, is not identical to 217 or any other drug in our portfolio. There's differences in terms of the therapeutic index to somnolence, has a longer half-life and has the characteristics that we would dial in to be used chronically, not acutely. And for essential tremor and for the other indications that we've talked about in 324, epilepsy or Parkinson's, which we've done some preliminary work on, you need to have coverage throughout the day. You need to minimize their effects on adverse events, and you need to be able to demonstrate improvement overall in terms of potential tremor. So what have we seen so far? We know the mechanism work. We've done a lot of prototype in using ZULRESSO. We've done now with -- in placebo-controlled trials with 217, which is zuranolone. We've done Phase I studies in 324, all of which would point to how best to measure tremor, what level of improvement we expect to see at least with relatively short dosing and what kinds of end points we think we might want to explore. So all of that was built in to our many years of exploring this as an area. What we're doing right now with 324 is a placebo-controlled Phase II study. I would call it the first Phase II study. It's our first placebo-controlled trial, chronically dosed with this drug in this indication. And that will give us a much better sense of where we are in terms of overall effect size after -- on a treatment. We know that with additional doses, not just single doses, there continues to be improvement over time. So we'll understand the degree to the -- the degree of improvement with chronic dosing. We'll understand whether we need to do more exploratory work in terms of dose or any of the pieces that are related to the development program. And it will charter a path forward into the area of essential tremor. So first study, we'll have data in first quarter of this year, and it's something that we've been working towards for quite some time now. But it's an area of enormous unmet need, and Mike can speak to it. This is one of those areas that's sort of hidden in view with 6 million people in the United States, 130 million people globally with essential tremor. We're talking about a major condition where there's been no innovation for, what, 50 years. So really just an opportunity to really make a big impact to patients' lives.

Yes. And I think it's all said, I think, to your point, Gary, I mean that's -- again, getting back to the collaboration. As you stated, like putting these 2 programs together made a lot of sense, right? So with 217 and the ability to launch that potential game-changing product with a partner like Biogen, and then you throw in 324, a neurology asset, not only essential tremor and the high unmet need, as Steve said, but you can also make the same case that we just made on zuranolone around the acceleration of 324. And what both sides liked is beyond essential tremor, you might have the ability to go into orphan epilepsies, into Parkinson's disease, again sweet spots in many ways, provide you and the neurology capabilities. So again, that was another big part of selecting them as a partner. They're a pioneer in neuroscience and in this space.

Okay. So on the acceleration point, since, clearly -- I mean that was the main reason for the collaboration. But Steve, I mean, the way you guys have done drug development, you've been very disciplined and you have to take a certain approach. So I do question how much you could accelerate certain programs different from the way you were doing it. So maybe you could just enlighten us on that. Or is it more just having all of these running in parallel so we're not just looking at essential tremor, we're also evaluating epilepsy and Parkinson's at the same time?

Yes. Exactly. There's -- I'd put it this way. We have more opportunity given our approach to both work on the partnered assets as well as those that are nonpartnered than we would have without these additional resources. And so it's about -- it's as much about the cost sharing related to the R&D expenses, the cash and all that provides resources for us to be able to move forward in ways that we know we can with the non-partnered assets as well. And so yes, it's a way for us to really get to, I think you asked this earlier, really lean into where our strength is in terms of new mechanisms, new areas of activity as well as bringing forward all of the compounds that are in our library in order to be able to come up with novel programs and develop them efficiently. So yes, up until now, and Mike can speak to this, we've been making very much portfolio-level decisions. And we have a lot more opportunity to pursue programs independently now.

Yes. And I would say, Gary, to your question, it's not -- I think Sage is going to continue to be Sage in terms of how we develop, right, that disciplined, follow science, right, and make sure we're progressing these in the right way. But it was really in what you said. It's more of a win, right? Like when we would have gotten to some of these things, right, would have been sort of serial and sort of moving programs along one by one, et cetera. Now you have an opportunity, right, through the collaboration with Biogen and coming together and saying how do we maximize the value of both of these programs, right, and looking at all the indications. How do we bring this to as many patients who could benefit from them? And that was really compelling. And then again, I know we're going to get to 718. But just as compelling for us was what can we do with the assets that we maintain 100% ownership with, really important part of the deal for us, right. The ability to accelerate 718 and other programs, right, it was really transformational for us.

Okay. We only have a few minutes, so I'm going to ask a really quick one on 718, which is -- I know you guys are super excited about it. You talked a little bit about some of the data that you've shown so far. You could expand into other areas as well potentially. You'll evaluate that as the data come through. But why wasn't this part of the collaboration? And I know you still wanted to remain an independent company. Is it something that Biogen was interested in? I can't see why they weren't. And is it possible, considering some of the markets you would be going after, that it could be partnered with Biogen or someone else at some point down the road? Or do you really want to just keep that baby for yourself?

I'll start and Steve you can chime in. I think it was -- the simple answer to it, we never offered that as part of the package of assets where we felt 217 and zuranolone and 324 made a lot of sense with Biogen to partner. We're really excited about 718, really excited to keep that wholly-owned. And so we're going to progress that, right? Steve can get into the plans there and the data readouts we have upcoming next year, but that was the intention, is to have a sort of collaboration assets where you can maximize the value but then leave assets for Sage that we can continue to accelerate and do more with now as a result of the collaboration. And 718 absolutely fell into that category for us. We're really excited about having that independently, and we're going to progress it.

Yes. We will have data readouts in Parkinson's disease and Alzheimer's. We've already seen some, as I mentioned earlier, some compelling data around executive function in Huntington's and in healthy volunteers, experimental medicine space. So right now, for us, we're exploring a mechanism that is unique, is one that we have the lead in, in terms of the science and the understanding and are really looking forward to understanding where we can move it to have the biggest impact with patients. And right now we know that we can move forward with Huntington's. The question is, is this an extensible mechanism, can it go further into helping with some of the -- what we know are really distressing effects in patients with cognitive disorder. So again, a lot more to come there and something that we really look forward to sharing in the early part of next year.

Okay. In the last minute or so, since this is the growth and ESG conference, just spend literally a minute, now 30 seconds as I'm talking, just as a company in -- you mentioned this earlier with COVID, brain health. Clearly, you're filling an important role with your drug development. Maybe it's being appreciated now more than ever. But what are some other things internally that you guys are trying to do? And did that line up well with Biogen in terms of thinking of a long-term partner here, a marriage, so to speak? Did they also have to check that box? And did they have to think the same about you?

So Steve, maybe you can talk about what else we're excited about, and I can come back to the partnership piece of it.

Yes. I mean, look, you touched on it. We have been now in brain health disorders for the better part of a decade and for many of us, our entire careers. These disorders, particularly depression, anxiety, cognitive disorders, I mean all of them are coming to the forefront and they're all part of our day to day now because of COVID. But for us, they've been day to day since day 1. And so yes, when we think about what we do internally for employees, when we think about what we do for outreach with patient advocacy groups, when we think about like walking the walk, this is what we live and breathe. I mean this is -- for many of us, myself included, this is personal, and we really intend and now do feel that sense of mission. And Mike mentioned this before, and I had less contact with folks at Biogen. I know this is shared with the partners there. I mean you don't get into this business because it's easy, and you don't get into it because it's paths that are well tried. You get into it because they're important, and you know what kind of impact you could have on patients' lives. And that's what brings us to literally to work every day, and it's what we hold ourselves accountable to. It's what our employees are expecting from us as well. And so yes, I mean, this is now, I think, an opportunity to really rip the Band-Aid off of the stigma that's related to psychiatric disorders and neurological conditions. You can see it not just because of us, but because everybody from celebrities to athletes, to students, to everybody in all walks of life are now starting to understand that we shouldn't -- we should expect more. We should expect more from ourselves. We should expect more from our -- from the medicines that we take and the way we talk about things and do it in ways that really raise people up. And I -- and that's just not lip service. I mean that's why I do this every day, and it's a really important part of what we do as a company as well.

Yes. That's great, Steve, and well said. And I think just to your point, Gary, the collaboration does center on these 2 assets, right? It is -- we have on at SAGE-324, everything Steve talked about, we have the opportunity to do what we do best and continue to explore for the benefits of patients and their families and really make a meaningful difference. And this deal is really compelling for us and transformational because of what it affords us the ability to do now, right, both within the collaboration and then outside the collaboration. And the level of strategic, financial and operational flexibility is so dramatic for us right now that you can tell we're excited about the potential future of working with Biogen, progressing these 2 assets, but also the potential of our wholly-owned assets and what we can do.

Okay. That's a great way to end this chat. We are up on time. So thank you both, Steve and Mike, for being here.

Thanks, Gary.

Sure.

Anne and Jeff, and obviously we're glad to have them back. You did a great job. Thank you. All right. You guys have a good day.

Okay. Have a good one.