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

Good morning, everyone. Thanks for joining us at the Cowen Healthcare Conference for the fireside chat with Sage Therapeutics. I'm covering analyst, Ritu Baral. And joining us today from Sage is CEO, Barry Greene. Barry. Thanks for joining us this morning.

Thanks, Ritu, and thanks Cowen for having us. Appreciate it.

Of course. Lots going on. We've got 30 minutes. So I want to be able to hit on those topics of most intense investor focus as I've seen them in my investor calls recently. The first issue is the zuranolone MDD filing. Now that you have CORAL successfully behind you, statistical significance, it doesn't look like there's anything there that is necessarily going to be problematic for the filing. But folks want to know what's left? What are the remaining gating items specifically CMCs and CMC inspections because that's been a problem for a lot of people.

Right, Ritu, thank you. So we're in really good shape with the planned rolling submission of the NDA for zuranolone, which as you know, we're developing for the treatment of MDD and PPD. If I just take a step back and set some context, we started last year highlighting that we had 3 ongoing Phase 3 studies, 2 in MDD and 1 in PPD, any one of which if positive, constitute a filing, a positive filing. With positive waterfall last year, we met with the agency in the fall for a pre-NDA meeting, a formal pre-NDA meeting. We confirm that waterfall, In fact, was the last remaining piece to start an NDA and we're in good shape to do that. And as you mentioned, having a positive CORAL as part of that NDA is very, very helpful and will be instrumental as we commercialize. So our plans remain to start the rolling submission this year with the nonclinical modules. The clinical modules will likely be the last submitted in the second half of this year. You mentioned as we've completed the likability in driving studies, we believe we're in very good shape, and we look forward to presenting those data later this year. So, nothing in the way, we're...

Including the liking in the driving, will you present that?

Yes. We'll present those at conferences later this year. We're in a good shape.

Great. And those were at the 50 milligram. That's -- those are complete...the final...

Correct. We announced at the beginning of 2021 that while we had completed the 30-milligram liking and driving studies, we felt it's not worth the risk to only have the 30 milligrams. So we set out to also complete the 50 milligram. Those are complete and will be part of the filing.

Will you be filing for both 30 and 50 or just the 50?

So we think the 50-milligram dose should be the starting dose for most patients. And in fact, over 90% of the patients that completed on the 50-milligram dose, there were very few dose reductions. However, as with many drugs, including other antidepressants, we want to provide as much optionality to patients and their treating healthcare providers as we can. So we'll work with the agency on multiple dosage forms.

Got it. So what's the core efficacy package going to be? Can you run through those studies? And this is another question that you and I have discussed, how important is that Japanese Shionogi study?

Yes. So the planned NDA will include the efficacy data from 5 studies, MDD-201B which is published in New England Journal, the Phase 2. The WATERFALL study, the ROBIN study, while it's PPD, it is depression. And as you mentioned, the CORAL study as well as the Japanese study. And then we'll also have the data from SHORELINE to address the redosing and add to the totality of the safety. Now in terms of the Japanese study, it's one we haven't -- they haven't presented much details of, but it was a very positive study. And it's one of 6 positive studies with zuranolone completed to date. The Japanese study was the only pure placebo-controlled study where zuranolone was studied 20 and 30 milligrams and demonstrated clinically relevant and statistically significant improvement in depressive symptoms at day 3, 8 and 15...

And so that was 30. That wasn't 50.

It was 20 and 30, correct. It was important Ritu, you know this, it reinforces the profile of zuranolone that's been demonstrated each and every study. That is the rapid and durable effects with a well-tolerated safety profile.

Got it. Will we get more detail at some point? Is Shionogi planning on presenting that anywhere?

Yes, It's really up to them to present as with many Japanese companies, they tend to be a little bit more conservative and really focus on kind of the regulatory focus. So they'll be starting their Phase 3 soon, and we're encouraging them to present more of their data.

Got it. How much -- so SHORELINE is ongoing. You're continuing to follow patients. How much more follow-up from SHORELINE is required for the filing? Has the FDA sort of come down and said, this is what we need x number of patients, x amount of follow-up from SHORELINE?

Well, we have the data to follow. When we met with the agency in the fall of last year, we confirm that the efficacy studies that we talked about, overall safety in over 3,500 patients was sufficient for filing. So we have the data we need to file right now. What's important is the FDA has communicated that real-world evidence increasingly plays a role as a component of regulatory decision-making. So we're confident that SHORELINE, which is the largest prospective natural study done to date in MDD really aligns with FDA's efforts to emphasize real world evidence, and it's potentially transformative in the treatment of depression. So we've got the data we need. Now at some point, we'll cut it off as part of the filing. But today, we've surpassed 1,000 patients. And what will be really interesting going forward, this is more for publications and presentations to healthcare professionals rather than as part of the filing, the patients from CORAL are rolling into SHORELINE. So that will be real instructive as well.

Are we going to get any more detail presented at scientific meetings about the type of patients that actually needed I guess episodic retreatment over the course of the year of SHORELINE versus sort of a redosing to get to remission? Do you know what I mean, like a patient gets to Zuranolone, they respond, maybe they need another treatment 9 months later after some life event versus the patient that gets it, doesn't remit, has a response, gets it 6 weeks later and achieves remission for -- are we going to get analysis publicly presented about the proportion of sort of those 2 types of phenotype patients?

Right. So we haven't gotten into that level of detail yet. And at conferences this year, we will be presenting more analysis of SHORELINE data so that healthcare providers, patients and others have the information. But what I can say is that in the 50-milligram cohort, the majority of patients who responded to the initial zuranolone treatment received only 2 courses across the entirety of the year, 80% only needed 1 or 2 week courses. So that implies that those that responded did well for a long period of time. It's not a case where someone rebounds and needs another 2 week rapidly. Now the 3, 4 and 5 redose are dwindling in small numbers, but what this means to us, particularly when we look at the SHORELINE data, is commercially, we believe that we'll see a very significant response rate in the real world where again, a majority of patients take a drug for 2 weeks and are better for a long period of time.

Got it. So it sounds like you're saying that the average time point of redosing is further out. It's not close into that original, it's further out.

Yes. We're not ready to present that, but that's a good inference from the overall data set.

Got it. Okay. That's super helpful. Mice will go there now. Expectations for advisory committee meeting. waiting for the application, but what are your thoughts as far as new chemical entity, first-in-class, it's a different senior it's a different senior deck over at neuro and neuropsych than what ZULRESSO went through. So will they think about it differently? Well, they want to think about it differently?

Right. So we don't really know, Ritu. We are preparing, and we'll be very well prepared for an AdCom. We're looking at it really as an opportunity to showcase the totality of the zuranolone data and really tell the story. Ultimately, it's an agency decision whether to have an AdCom or not. If they do decide to have it, we'll embrace it, and we'll be very well prepared.

Got it. All right. Let's talk about this in CORAL, when you presented the data, you presented a new sort of cut of patients, those patients with anxious depression versus patients with more sort of classic depression with no predominant anxiety component. Can you talk about the total addressable market of this anxious depression market? And then how do you see them treated now? I mean, a portion of them get benzos? Do all of them get benzos? How long do they stay on benzos? Like how is the anxiety component of those patient depressions depressive patients managed beyond the SSRI?

Right. So you're pointing that population out, which we're calling MDD with all of anxiety, just [indiscernible] any kind of treatment issue because we're treating MDD. First, I can say that zuranolone works well across MDD in terms of absolute effect in improving depressive symptoms, anxiety, sleep. We work particularly well with MDD with elevated anxiety simply because -- and we know this from the STAR D longitudinal data, drug stages don't work well that present both with MDD and elevated anxiety. And those that present with MDD with elevated anxiety is a red flag in all clinical settings. If you ask most knowledgeable treating physicians, they will tell you, these are the hardest patients to treat. They don't get good treatment and many increase the risk of developing treatment-resistant depression as well. So -- and as you know, there's evidence that those with untreated depression and increased anxiety leads to the under depression, have short and long-term outcomes, develop downstream comorbidities like cardiovascular disease, diabetes and even more susceptible to infectious diseases. So we really don't have tools like zuranolone, we hope to treat MDD with elevated anxiety. Today...

Actually, Barry, can you back up for second... look at why do they develop the diabetes and the infections? Is it just because they -- the clinicians just pile on the meds like the atypicals and stuff and all the downstream effects of the additional medication? Or is it actually a function of the unmanaged depression and anxiety?

It's what unmanaged depression, anxiety does to the overall body and set you at a higher risk factor for all these other downstream diseases include a dependence on other drugs...

Right. Okay. So it's inclusive of both.

Yes. It sort of -- it starts with biology, uncontrolled biology and then leads to risk factors that lead to downstream comorbid other diseases.

Okay. Got it. Sorry, keep going.

No. So let's see, you asked about the addressable market. So there's over 20 million people in the United States living with depression today, about 7 million on an annual basis get diagnosed with MDD and retreated with an antidepressant. And of that 7 million and the data are all over the place, about 2/3 of those are MDD with elevated anxiety. If you step back and think about it, if there's 20 million people and 14-ish million are okay. I wouldn't say they're doing well, but they're okay. It's that 7 million that just aren't doing alone are seeking a better health. About 2/3 of that, we believe, are MDD with elevated anxiety. So it's not any extra large population that needs help.

And the benzos in this population?

We don't have great data on exactly how benzos are used. They're certainly not standards of care. And in fact, increasingly, physicians are moving away from benzodiazepines because of their issues. We think they're about 20-ish percent of patients are treated with the combination benzo. But again, the fact that 7 million people diagnosed pretty really show that an antidepressant plus benzo isn't helpful. And just to be really clear, it's not like benzos are easy to use or prescribe. It's got abuse potential that many would say, work to a patient's detriment. And in fact, in 2020, the FDA added Black Box warning, which most people don't know about for benzos to warn healthcare providers about the risks of physical dependence, withdrawal, misuse, abuse and addiction. And if you look at the FAERS database, it really highlights dependence on benzos that can occur after only a few doses, withdrawal symptoms exist if they try to remove it and these withdrawal symptoms can last up to 10 months after discontinuation. So these are not easy to use simple drugs.

Is this a black box that GABA PAMs might be at risk for? Have you spoken to FDA about that? But...

Well, we haven't gotten into label negotiations, there will be certain things in the label that are just kind of standard for brain [indiscernible] drug, maybe PAMs. But we certainly know with zuranolone, we have a very broad benefit risk profile, very broad. We do not believe that we have any substance abuse issues or likeability issues. And while we'll present those studies preclinically later, if you just take a look at SHORELINE, this is a perfect example. Patients took their drugs for exactly 2 weeks, they stopped taking with day 15, it's kind of a nocebo effect. And they weren't liking the drug needing to get back on it, they weren't suffering worse effects after day 15 and the fact that the majority of patients got better and stayed better for over a year really talks about the lack of abuse potential for zuranolone.

Got it. Okay. That's very helpful. Let's move to what you guys are seeing just on the commercial and potential payer front. It's a little longer range, but can you talk to, gosh, the overarching strategy of entering a highly genericized space with a novel mechanism, a differentiated clinical profile and a branded price point, what are the talks with payers that you're going to have to do and undertake, when will those start? And how is that going to translate into messaging for the prescribers?

Right. So a few different questions in there. So we -- first of all, we and Biogen have agreed that part of the payer strategy will be offering proactive value-based agreements. That's something that hasn't been done in a large market like this with generics, but we think important that we could have put our money over mouth of and understand the payers' risks and are willing to share risks upfront. But given that the talks have started, we're doing obviously in a very high-quality Reg FD compliant way. Payers are telling us that they know that the depressed patient population is not well controlled with current generic drugs. And we're not really hearing this is a well-served population that we can treat with cheap drugs. We're hearing quite the opposite, but they're quite concerned, particularly in the context of the COVID pandemic that their patients are not well served and they understand that they go on to have other downstream comorbidities, and we've already talked about those. So we're getting good traction on the payer side and believe that the discussion where we're leading is, if a healthcare provider believes this patient needs zuranolone, let's allow that to happen. Now keep in mind that even in those payers who want to use some utilization management, this isn't a rare disease. So even at day of launch, as we talked about, there's 7 million people out there, many of whom have already failed 1 or 2 or not failed, have been underserved with 1 or 2 antidepressants. So even in those payer cases that, say, someone must have had 1 or 2 other drugs first, there'll be millions of those people out there at launch. Now what we're hearing from the healthcare providers, there are very specific patients that when we present the totality of the zuranolone data that come to top of mind for them. So there's really 5 types. And it's important that when we launch, we're really focused on the types of patients that the providers think would benefit most for zuranolone. First is the treatment-naive young adult, we've talked about that. These are people potentially in their 20s, young 30s, starting graduate school or their first job that this acute stress might derail their life, and you don't really want to wait 6 to 8 weeks to see if a drug works and keep them on a chronic therapy when a 2-week course of treatment could get them back to work or back to school. There's the older patients where chronic polypharmacy is an issue and to try to integrate another chronic medicine to help relieve their depressive symptoms which may be comorbidity of another disease just doesn't make sense, where 2-week treatment that gets them better, fast and keeps them better wood. There's people, and we know this from the clinical studies we've conducted that are receiving an antidepressant but still suffering, somewhere between 30% and 40% of all those that entered our clinical studies were these kind of patients. The persistence depression symptoms exist even though they're on a stable antidepressant. We've got those that are actually doing well. That could be some of the 20 million we're talking about. But there's an acute trigger, a death in the family, a loss of job that amplifies their depression to spike their symptoms. And then finally, and there's a number of these folks that are just adherence challenged. They may suffer sexual dysfunction or weight gain. They're trying to go on and off their antidepressant to manage that and just need something else to really help them get better fast.

Got it. Do you have any early ideas of what a prior authorization might end up being? How sort of administratively burdensome that could be for clinicians and which of those patient types would be sort of war breaking through the red tape?

Well, look, I think -- and most would agree that if it's you or someone in your family that's suffering from depression, the opportunity get better in 2 or 3 days and stay better, everybody wants, no matter who you are. So we're going to do everything we can to minimize the paperwork and the red tape, as you said, between a physician diagnosing someone that they believe could benefit from zuranolone and that patient getting the drug. Hence, the lean in with proactive value-based agreements, the point of that, in addition to sharing risk is do everything we can to minimize the paperwork, which many physicians just don't have the capacity to do.

Yes. And that VVA is that sort of the template that you used over at Alnylam, are you sort of bringing that over? Are there aspects to neuropsych that will make the Sage agreements unique?

Well, every value-based agreement with every payer has some uniqueness. The overall framework of value-based agreements, not only was used at Alnylam, is used by others. The point is being proactive that out of the gate, we're not waiting for payers to say no or here's a step in so we're on our backheels negotiating. We're trying to lean in and offer that we want to do the right thing for patients. We are looking for payers to do the same. And as I said, the discussions are going well. We will get there for a number of payers so that people in their plans that need zuranolone will benefit.

Got it. I want to spend a couple of minutes on essential tremor 324 before we jump to 718, investor questions, but also one of my favorite programs, but essential tremor -- when are we going to see next data? How confident are you with the new sort of dose and administration schedule to -- that this next data will generate a commercially viable profile?

Yes. Thanks. So SAGE-324 is a GABA PAM that we're developing for essential tremor and other movement disorders. This drug has been designed with a bit of a longer half-life, so that can be administered chronically. And when you look at essential tremor movement disorders, there's a constant dysregulation that goes on where chronic treatment is required. It's not unlike what we believe we can do with depression, which is rewire neural networks. This is one where those networks are misfiring constantly or essential -- in the case of essential tremor when someone is actually trying to do something. So what we're looking to do in the KINETIC 2 study following the very successful KINETIC study is develop a dosing regimen that's amenable for chronic treatment. So something that people can take, stay on and has a low discontinuation rate. We made -- we've done several things for the KINETIC 2 study. We're studying multiple doses, 15, 30 and then 60. We're up titrating to get to the 60 milligram at a very specific schedule because as we've talked about before, it looks like some of the side effects, including the sedatory side effects are due to kind of Tmax that vertical to Cmax. So by titrating up, we think we can avoid that. We'll be administering SAGE-324 at night. So the instructions will be to take this at mealtime or before bed and go to sleep. And we're highly confident looking at the data that we'll have a dosing regimen that provides coverage for essential tremor without any tachyphylaxis with a profile that allows some to standard drug for long periods of time without discontinuation rates.

Got it. And when is -- when do you think you might have data from the next trial, which is just starting, I understand...

Right. Well, so KINETIC 2 off recently. And just whether it's us or any drug developers, the upfront Sage getting sites up and running, getting trained, once we get going with KINETIC 2, we'll be able to provide more guidance in terms of accrual schedule and data.

Got it. One program folks were really excited about is 718 or Huntington's Cognitive Impairment. And I don't think we got a whole lot of questions in on your most recent earnings call on it. You did unveil some new Phase 2 programs and a proposed Phase 3 open-label study. Can you walk us through the design of DIMENSION, Phase 2 DIMENSION, which is, I believe, it's enrolling. The Phase 2 SURVEYOR study, which is distinct from DIMENSION, correct?

Correct.

And then the Phase 3 open-label study that you have planned, is that going to be a pivotal study? Is it going to be sort of natural history comparison? Can you walk us through this...

Yes. So -- and as you said, Ritu, I'm really excited by Sage 718 and have been ever since I started in the end of 2020. And we don't time to get into all the details, but it's a very exciting program. It's the first NMDA PAM focused on cognitive improvement in neurodegenerative diseases. So there's really nothing like this being developed, certainly nothing on the market, but really nothing else like this being developed. Most drugs, as you know, study cognitive decline over a long period of decline with big ends. And this is an approach where we're trying to study cognitive improvement, which we believe downstream will lead to shorter trials with smaller ends, and that's for a future discussion. So as you mentioned, the first area of study is Huntington's, where the DIMENSION study is up and running and enrolling. In this study, patients will be treated for 3 months with an additional month of follow-up and then rolled on to the open-label study, which we'll talk about.

That's the thing.

I'm sorry, the Phase 3 open label right -- the primary endpoint of DIMENSION will be changed from baseline in composite score of Huntington's Disease Cognition Assessment Battery or HD CAB. And it's a battery developed for use in assessing cognition in HD trials. There'll be a series of key secondary endpoints as well. Patients will be randomized 1:1 SAGE-718 versus placebo. The dosing will be 1.2 milligrams daily from day 1 through 27 and then 0.9 thereafter. That will get the kind of blood concentration to levels where our earlier studies showed are required to improve cognition.

So it's a living period... Got it.

Yes. So that's the DIMENSION study. SURVEYOR is a different study. We haven't shared the details on the study design yet. We will when the study is up and running. But what I can say today is it will be a placebo-controlled Phase 2 study in Huntington's people and healthy volunteers with the goal of generating evidence linking efficacy signals on the cognitive performance to domains of real-world functions. So we can take the kind of HD CAB and the independent scales from DIMENSION and link them to the outcomes of SURVEYOR and really show that the scales are linked to real world function. And then finally, and you mentioned this, the Phase 3 open-label study, again, we'll share details when the study is up and running, there will be patients rolling over the other studies. This is a study that we'll share more of, and it will be part of the regulatory filing. This in and of itself isn't the pivotal study because it's an open-label study, but it will be part of the overall filing strategy going forward.

Got it. And then the last part of -- we got 2 minutes left, the other 2 programs for 718 and the Phase 2 programs PARADIGM and LUMINARY. Where do you expect this data to be presented? And with the second, how much buy-in do you have from FDA on what the approvable endpoint for PD and AD cognition is? I don't want to say there's less of an unmet need versus Huntington's, but Huntington's is just so much more horrible than even Alzheimer's horrible.

I think they're all horrible, but part of the biology here started with Huntington. So it was a natural first indication to start with. The other benefit of Huntington's is the blue ocean. There's nothing for these folks, the unmet need. And with an orphan disease, you often can forge new pathways in terms of regulatory pathways. So I'd say we're very well aligned with the agency in terms of forging new pathways. They certainly recognize the unmet need in Huntington's disease and very much want to partner in bringing new drugs for cognitive improvement to the market where none exists today. So we're in good shape and moving forward.

Got it. Got it. Just one last follow-up to Huntington's and DIMENSION and SURVEYOR. Given the suicidality rate in Huntington's patients, which is incredibly high, and I don't think that's well appreciated. Is that an aspect -- is that an end point, whether it's something that you're watching on the safety side or something that could potentially, if you improve cognition and executive function and mood, et cetera, is that something that could also be a well-powered efficacy signal?

Yes. So Ritu, I don't have a lot of time to get into all the details. What I can say is it's not -- it's something that will be observed. It's not one of the endpoints at this point, but it's just logical that if we can keep people independent and function, making the list, going to the store, buying the list, coming home, putting all the stuff back on the shelf remembering it. So they're able to maintain their independence. That can delay the depressive episodes that lead to suicidality. So over a long period of time, something we'll be looking at and certainly looking forward to helping patients with cognitive decline.

Great. Well, we're at time. But can you, in 30 seconds, pick your next favorite child from your...

What I can say is given the expertise in brain circuitry, both in GABA and NMDA, I believe in addition to the 3 lead programs we talked about, there's a whole series of programs coming for a variety of brain health disorders, and there'll be more on that in the future. Ritu, I also do want to say before we wrap that our heart and prayers go out for all in Ukraine and the Russians who are protesting this unwarranted war. So prayers out for everybody.

Same from the Cowen side. Thank you so much, Barry. Thank you, everyone, for tuning in. If anybody has any other follow-up questions, please e-mail me at [email protected], we'll get them answered by the Sage team. Thanks, everyone.

Thanks, Ritu.

Take care. Bye