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

For those of you who don't know me, my name is Akash Tewari. I am a biotech analyst here at Jefferies. Today, I have the pleasure of hosting the Sage management team. Joining us today are Kimi Iguchi, Jim Doherty and Chris Benecchi. And we are going to...

Albert Robichaud. He was not able to make it today.

Okay, my mistake. But either way, it's great to have you guys. That is true. So why don't we start off with heading into Kimi to give some brief introductory remarks, and then we'll get into our set of questions.

Great. Terrific. Thanks, Akash, and thanks for having us to the conference. We're excited to be here. I'm excited to be in Manhattan, it's been a while. But for those of you who aren't familiar with Sage, Sage is a company that's really focused in the area of brain health. And we started by looking at our focuses, on our expertise in brain circuitry and a very interesting development strategy, and that's led us to where we are today, which is a very prolific pipeline and a great team. So let me just give you some of the highlights across the program. We have 3 franchise areas that we are working on, the first being our depression franchise. And in our depression franchise, we're really trying to think differently about the depression, how it's thought about and treated. We're looking for another alternative for patients and for physicians. So we're thinking about a rapid-acting short course treatment with good tolerability with that. So a very different way of treating depression that's currently available. So we're very excited about that and made significant progress with our program called zuranolone. Zuranolone is a 2-week therapy, and we'll talk a lot more about it, I'll just give you a highlight of where we are right now as we just began the rolling submission for MDD with zuranolone. And we expect to finish that submission by the end of this year. So that's a major depressive disorder. Also with zuranolone, just last week, actually, we had some very exciting data in postpartum depression. It was our SKYLARK Study, where we saw really great data. We met the primary and all the key secondary endpoints in our postpartum depression trial. So where we go from here with that is that we'll put together a filing and associated filing, which we plan to file early in 2023 for postpartum depression. So a very robust program there. We're excited about the path forward, a lot of work now in the commercialization front, which you'll hear from Chris and obviously, in the registration. The second franchise I'll talk about is our neurology franchise, which is certified SAGE-324, which is a program that's being looked at in essential tremor. And essential tremor, it's a higher need in essential tremor and there's been very little innovation in the field as it hasn't been a new drug in over 50 years. So we're hoping that SAGE-324 has the potential in help patients in essential tremor. We have an ongoing Phase II study there. And then with our last franchise is our neuropsychiatry franchise. That's our wholly owned franchise, led by SAGE-718 very exciting program. This is actually an NMDA program, so a little different from the other 2 franchises I spoke about. And we've seen some really exciting data in cognition and executive functioning. And that's led us to a place where we said, we really feel good about it and confident about it, and we created a strategy where we're going to look at SAGE-718 across 3 indications, all with cognitive disorders in those indications. So we have an ongoing study in Huntington's disease, a Phase II study that we started late last year. And then we'll begin a study in Parkinson's and Alzheimer's throughout the remainder of the year. Again, all focused on cognitive impairment in those disorders. So we're taking a different approach again with SAGE-718 so we're very excited about that program. We do that with a great team. We have a great team in place. We'll be building that team as we prepare for a potential launch with zuranolone. And we do that with a very strong balance sheet. I'm happy to say that we had $1.6 billion in the bank at the end of last quarter, which allows us to really continue to execute well going forward. I will also say that we'll continue to take the same approach of being very diligent and very disciplined about how we deploy our capital. I think that's extremely important, especially in these times. So we will continue to do that. But we're looking forward to 2022 and continued execution and keeping you updated. So why don't I turn it back to you, Akash, for questions.

Great. Thank you so much. So maybe why don't we start off with zuranolone. And it's funny, very quietly, I think sentiment for your company has started to improve this year and I think a lot of people -- me included, I'm very interested to see the launch of zuranolone when it does get approved. I do think there's an unmet need. There's a lot of sexual dysfunction with current SSRIs, there is need for fast acting treatment. And I would call myself a believer of the episodic market. I think if we're thinking about the investor community and even for us internally, it's so difficult to read the FDA these days. It's a different regime. And there's no great precedent when we think about zuranolone, right? Like maybe esketamine is kind of the closest one, but that was for TRD and then also there was the same dosing phase as there was in Phase III. And so we're -- that -- I still feel like that's kind of the #1 thing that the investment community is really trying to figure out. You guys have always been very confident that you're going to get approval. So maybe let's start off with talking about what's been some of your interactions with the FDA? And this can go back even to 2020 to 2021, which makes you feel very confident that you're aligned in terms of the path forward for this medication.

I'll take that. I think we've been working with the FDA, as you pointed out, significantly through these process even from the days when we were trying to move [ Zoreso ] forward spoke with the FDA very early about this approach to treating depression and the difference between the standard of care that exists today, a rapid onset, short duration treatment and durability of effect. And they've been very excited about working with us to allow us to at least get the studies needed to demonstrate that and ultimately bring the data forward that would convince them this actually is a differentiated product. So it's been, I would say, I've worked at large pharma companies and has been very different from my experience in those avenues where the FDA is encouraged or really wanted to work with us. And the CORAL study came out of discussions with the FDA about what to do and how we wanted the use case scenario. So they've been working very closely with us to help us think about gathering all the data necessary to inform patients, caregivers and physicians, but how this dose -- how this drug could be use in depression and postpartum depression. And that's been our goal ever since and that's why we've done all these different studies with these different end points is to try and give as much data as possible to inform how to treat depression in a way that is very different, that's been done for the last several decades.

Yes. And in terms of your submission, you had noted it is a rolling submission. And yet again, something that I don't think is typical with some of these CNS indications. Can you talk about even post the CORAL data, which was -- it was a positive study. However, the original endpoint maybe it missed on. How has the FDA interpreted the CORAL data. And has there been any change in tone from a year ago in terms of what's needed to get approval for episodic depression? .

I think as we've described, there were several pass-forward for zuranolone and in approval that was a path forward, major suppressive disorder alone, postpartum depression alone. The CORAL study was a study that was done as a use case study. What if physicians want to dose this with concomitant addition of an antidepressants like an SSRI and SNRI. So the study was meant to address that exact scenario. And the real goal of the CORAL study was to demonstrate rapid onset because that was the difference between adding this to an antidepressants versus not having not having in the first place. And so the 3-day end point was really meant to demonstrate that and very robustly did. What we've seen from CORAL is exactly everything that we've seen from all the previous studies. We've seen a rapid onset of activity. You've seen activity out of we've seen a sustained effect out to the end of the monitoring point. So we were encouraged that we're seeing pretty much the same thing. Recall also that many of the studies that we did prior to CORAL, we did not exclude stable antidepressant therapy. So there's a number of percentage of patients in each of those studies that came in on antidepressant therapy. But CORAL was different in that -- those patients came in clean of any antidepressant or at least washed out from the antidepressant and they were started exactly at the same time as the zuranolone study was started. It's a very specific use case for a physician to inform, again, give physicians more information and more data in a real-world setting of how you would dose patients if that physician wanted to dose that patient with an antidepressant.

Got it. That really makes sense. So I guess, moving forward, what are some of the time lines you are paying attention to right? You're going to start -- you're going to initiate your rolling submission -- you've initiated your rolling submission. Is there a time [indiscernible] in Q3 and Q4, where we might expect some type of updated statement with the FDA or an acceptance of the NDA package.

As we've discussed, our plans are to complete the rolling submission by the end of the year and then ultimately to file for major depressive disorder and then to file an associated NDA or PPD in early 2023. We're on track to do that. It's a matter of getting all the data. All the studies are completed. All the clinical pharmacology studies are completed with the completion of SKYLARK. Now we have all the data for both PPD and MDD and the discussions with the agency. We believe we have all the data necessary to file for both MDD first and then PPD. It's a matter of now just collating and collecting all that data, getting it into the form that's necessary for submission to the agency and submitting [indiscernible].

Understood. Now going back to maybe the Phase II study, which showed a really dramatic and impressive effect size 72 or 73 I don't -- my memory is not helping me here. But either way, huge effect size, but also the design of that study also may be different from, let's say, the MOUNTAIN Study or WATERFALL inpatient versus outpatient and also there was a different dose that was kind of used here. So what do you -- how do you expect the FDA to kind of interpret a very, very positive file with zuranolone, but with potentially a different design than maybe what's going to be used in a real-world setting. So have they given any feedback on how they've been interpreting that phase II study.

Well, we're always constantly speaking with the agency that has -- and I don't know that it's that different in a real-world study. There is zuranolone in both ROBIN and in SKYLARK were dosed at-home administration for 2 weeks or 14 days. So the studies were pretty much identical. In fact, SKYLARK was very much like ROBIN and not surprise the results of SKYLARK look very much like ROBIN as well. I would also point out that compare -- PPD studies compared to the MDD studies that the drug effect also looks very, very similar, the effect, the response, the rapid acting response. Their ability response is pretty much the same between the MDD and PPD population. So the goal ultimately is to treat patients for 2 weeks with zuranolone and then monitor their progress as they go forward from the PPD [ monitoring ]. The 50-milligram that was done in the SKYLARK study is different than the 30-milligram that choice was made based upon the data that we had from the MOUNTAIN Study, where 30-milligram dose just missed statistical significance. I will point out that many patients in that study reached significant signal as well as remission of their depression just as a group together, the 30-milligram dose is probably on the lower end of the spectrum of what you might dose a larger group of patients. 50 milligrams gets us much closer to a concentration that we think more people will respond to with very little differences in the side effect profile between 50 milligrams and 30 milligrams is not a significant reason or a real driving reason why you wouldn't dose people with 50 milligrams. We also want to give patients optionality and allowing them if the somnolence, which they may experience on the 50 milligrams, if that is too much for a patient, we would allow them to dose titrate down to a lower dose.

Okay. And actually, I wanted to touch on that again because it was really interesting after MOUNTAIN and you look at the PK/PD data with the oral solution versus the capsule and that kind of 15-nanometer threshold in terms of what you needed to reach. I think the thing we always struggle to figure out was we didn't have multiple ascending dose data and we really didn't know the true exposure levels that you were getting with the 30-mg dose or 50-mg dose, but there's also -- since MOUNTAIN, there were other positive data sets with the 30 mg dose [indiscernible] [ U.S. ]. And so where do you kind of stand with the 30 mg dose? Do you consider that an active dose? And would that be an option that's going to be on the label if zuranolone does get approved?

It's a little early to talk about what the label may or may not say that's a discussion we have with our agency and look at the totality of the data. So we will present the data of the 50-milligram data, the 30-milligram data and the [indiscernible] ex U.S. studies that you're mentioning at a different dose as well. What we're really focused on is the concentrations and what exposure they get. And there is a significant overlap between the 50-milligram exposures and 30-milligram exposures. So the short answer to the question is do I think 30-milligram is a good dose for some people? I think for large majority people would be, but 50-milligram covers a larger percentage of that patient population to make sure that we're getting exposures high enough that we would see a positive signal if they were to respond to the medication. So those things are -- and as I said, the optionality is that patients experience on those is that they don't want to for the 2 weeks for the short course of therapy that they're on, they can dose down to a lower dose. But the goal ultimately is to work with the agency to [ regularize ] to come up with the right guidance for physicians and patients to understand how to the dose [ compound ].

Understood. And you had mentioned something that I think it's important to hone down on in terms of any additional you have to run from a safety perspective, driving abuse potential. Any of these kind of questions that often come up.

All these studies have been completed. We did them with the 30-milligram dose. We also did them with the 50-milligram dose. We weren't asked to, but we figured, we better in case the agency wants to understand is there a difference between your point, they're driving studies and other studies, other clinical pharmacology studies at the larger exposure. We can say that all those studies are completed. Now it's a matter of getting all those studies together and putting them with the rolling submission.

Understood. Now I think the question that's come up a bit more in investor debate is scheduling and whether the zuranolone will get scheduled at all. It doesn't -- you guys have mentioned it doesn't seem like there's a strong abuse potential with this medication. But at the same time, you don't want to go in with an expectation that there might be no scheduling at all. There's certainly a lot of discussable drugs out there that you have some level of scheduling. So what should we expect in an ideal world for stage in terms of the schedule that the zuranolone will get? And how do you feel like it would impact, if at all, your commercial update?

We are operating under the expectation that the molecule will have to be scheduled for -- at some point. ZULRESSO was a scheduled for molecule. Most [ gaba ] -- urgent molecules are scheduled for -- and our intent is to plan for that, ultimately submit all the data to the agency about the effects of the molecule in the clinical pharmacology studies and ultimately await their decision about what the schedule would be, but we don't expect anything beyond schedule for it.

Yes. And I think additionally, with respect to the commercial implications that this is a group of clinicians that as you said using Schedule IV, V medications or other scheduled medications in and of itself. So we don't see that as having any impact on the study.

Understood. Understood. So SKYLARK data was really strong, very similar to what we saw in the ROBIN Study. And I think you can't look at what happened with ZULRESSO and say, this is what the PPD market is really going to be. But I think 1 of the things that's also interesting is, can you talk a bit about the types of patients you had in the ZULRESSO PPD study versus maybe the data sets you had in ROBIN and SKYLARK. And specifically on women who maybe had postpartum depression, but it's not -- they weren't prospectively identify they didn't necessarily just have birth. Maybe there were 6 months to a year off of giving birth, but they still were -- they were still suffering from postpartum depression. What was the percent in both ROBIN and SKYLARK of those kind of 6 months to a year later stage postpartum patients? And how did that compare maybe with your ZULRESSO study?

I don't know that we've dove deep enough yet to disclose that data or to have even analyze it to that level of depth. But we plan to and we are doing that right now with our clinical scientists and the medical science team. It's fair to say that there's a criteria for being in this study that was not too different between ZULRESSO or different at all between ZULRESSO and zuranolone. We're looking for women suffering from postpartum depression or the Hamilton Depression scores are of a certain magnitude to qualify them for the study and to get randomized into the study. So we anticipate being able to share a lot more depth on the granularity of these studies and some of these interesting questions that you bring up. I think there are a lot of questions in there about this relatively new area, no one's ever really run kind of postpone depression studies that we've run with these 2 molecules. So we're learning a lot as we go along. We have a very significant scientific advisory board, specifically around depression specifically around postpartum depression that we're working with has some of these very interesting questions and ultimately, we'll publish the data and present the data at medical conferences.

Understood. And if we're going to zoom out 5 years into with this becoming an established treatment for postpartum and you think about the amount of your patients you're identifying prospectively because they do seem to be fairly accurate in terms of identifying women who are then suffer later from postpartum depression versus those who have given birth and they're 6 months to a year out, and that might be the larger pool of patients that might be easier to penetrate from a pharmaceutical perspective, what do you think that breakdown will ultimately be? And then what types of data sets will you be able to generate maybe down the line in later-stage postpartum patients that you think might be useful for a commercial update.

I think Chris' team has done a lot of work in this area and sort of looking at the patient populations and who might be. I haven't met with Chris. I don't know if you want to...

Yes. I mean, so I think if you take a step back and you see what's going on right now in this country. We're living in and amongst the [indiscernible]. If you flew out of Boston this morning, you picked up the Boston [indiscernible]. There was a story there about the impact of behavioral health on health care systems and patients and ability to get the therapies that they need and in and of itself, maternal health plays a key role in all of this. So today, what the landscape looks like, you've got 500,000 or so women that are suffering from PPD on an annual basis, 28% or so of those women are actually being diagnosed and 56% of those are actually being treated. The reality is when you're a woman suffering with PPD, whether it's within the first 6 months or it's after the first 6 months and you're sitting across from your clinician and you're expressing the symptoms that you're suffering from sadness and irritability, anxiety and potentially issues in and around social impact and somatic symptoms, the clinicians don't have the therapies that they need to actually help these women that are suffering because all that they have right now with respect to oral medications or SSRIs. And with respect to the SSRIs, we all know that they don't work rapidly. We know that they come with significant tolerability issues. And in and of itself, it presents a real challenge for clinicians and to the mom. And we know that for the moms themselves and for their babies, there's profound psychosocial and physical implications associated with that as well as developmental as well as for the families. So for us, when we think about the commercialization opportunities now and well into the future. This is about changing the way postpartum depression is treated by virtue of making that conversation about the urgency of treatment and the benefit of treating urgently from moms and for babies and for families. And we do know that from the data that we've demonstrated across both landscape and in this case, NEST, [indiscernible], you hit it. We work rapidly to sustained therapy over time, and we have lability profile that, quite frankly, is exactly what a mom is looking for, and she is having that in very difficult discussion.

Understood. Makes sense. Maybe let's touch a bit on 718, which could be the most interesting molecule in your pipeline. Your early data has been surprising. I mean, to show a cognitive benefit in healthy volunteers. I mean, I would have loved to try that. I get a little tired. But it's also been a little difficult interpreting that data. And then as we think about your luminary studies and the studies you're building out in Huntington patients, Alzheimer's patients or Parkinson's patients, the endpoints are also very different, right? And if you were sitting here as an investor and you've seen a really interesting better than [indiscernible] almost signal with your early data, but you're struggling to interpret how it's actually going to affect some of your studies in LUMINARY, how are you kind of thinking about translating that signal across. And when we think about clinically meaningful effects particularly preliminary for the MOCA data at day 14. What should we be thinking -- what would be considered as a success here?

I think 1 of the things that really excites us about 718 is the very similar effects we're seeing across a bunch of disease, different disease modalities. So Parkinson's disease, Huntington's disease and Alzheimer's is we've looked at the molecule in a battery of examinations in the beginning in open-label studies just trying to understand does a molecule have effects on those different diseases. These are very different diseases pathologically. The difference between this approach to treating mild-cognitive impairment in those diseases versus some others is we're not looking to -- this is not a disease modifying -- this is a disease course modification. We're trying to modify the course of the disease. What we're ultimately doing is we're working to improve synaptic function and brain function, which ultimately has an effect on cognitive impairment. It's not about stopping a beta or telepathology. It's about changing the function of the neurons that are left alive as those diseases progress. And what we've seen very consistently across those 3 different disease population is this is a very similar effect of improving cognitive function and executive function, which are things that really people struggle with as they start to get mild cognitive impairment. So we're very encouraged by that. The signal that we saw -- the MOCA that you referred to that we saw is also very encouraging to us because it was on a very short duration of therapy. Most therapies are looking to address these diseases are looking to change the course of the disease, and they may have to work for months, if not years, to look at measurable differences between performance. What we're seeing is in a very short amount of time improving the cognitive performance because our drug allows for improvement of synaptic function and brain function in a very short course. What we saw was a very nice signal over the 2 to 4 weeks, and we look forward studies that go along and to see if that continued signal improves as we go along the duration of the treatment of the [indiscernible].

Understood. Maybe lastly, just on SAGE-324. I think everyone understands the essential tremor is [ digitally ] a large untapped commercial market. And the other thing we're kind of seeing is there's no perfect treatment out there, right? You have mix encouraging but also at some -- in some cases, mixed data with the calcium channel blockers. In this case, you guys definitely have an active compound, but the question becomes what's the amount of somnolence that's really tolerable and acceptable and kind of a real world setting. And you guys have also alluded that there are ways whether you're modulating the dose as a formulation you may be able to improve upon that.

So the KINETIC study -- the KINETIC 1 study, we dose -- we very rapidly went to a very high dose. We wanted to see how much efficacy we can generate in the molecule. In fact, KINETIC showed much somnolence, it was enough surprising. We went to a very high dose, which is probably too high a dose for most patients. And then we backed off on some of those if they couldn't tolerate that dose. The KINETIC 2 study is designed to 2 very important differences with the KINETIC 2 study. We are randomizing patients to different doses and dosing up if provided they tolerate up to 60-milligram dose. In addition, in the KINETIC 2 study, we're dosing at nighttime not in the day. The KINETIC 1 study was dosing in the morning because we wanted to make sure that we were at -- the concentration of the drug when we can see the major impact on the person's tremor scores to be able to measure those. You can't do somebody at 6:00 or 7:00 at night and then at midnight wake him up to see what the termor score was. So that's why the KINETIC 1 study was done to look at efficacy. We've got a very clear efficacy study, we have a very good understanding of what the PK/PD relationship is. The KINETIC 2 study will now examine in a much closer real-world setting what the efficacy of the drug is over a long period of time.

Understood. And when will you be measuring efficacy? Is it still going to be in the morning or could it be at night?

I think there are multiple times when you measure efficacy of the drug through the course of the trial. I'm not the clinical guy, so I probably -- I don't want to say what those are exactly because I'd probably get them wrong, so I won't do that. But we're ultimately -- it's very similar to the Phase II study, but the measurements will go on periodically during the [indiscernible].

Understood. I will not make the mistake I did in the last session by going over. So I will pause here. Thank you so much for joining us. I really appreciate it. And if anyone wants to connect with the Sage team, they are having one-on-one also at today.

Thanks very much.

Thank you.