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

We're going to go ahead and get started. Thank you, everyone, for joining us for the Sage fireside chat at the TD Cowen Healthcare Conference this year. With us, we have the CEO of Sage, Barry Greene, who most of you, I think, know quite well. I'm Ritu Baral, covering analyst -- moderating.

Barry, do you want to give us just a few minutes on where we are in zuranolone's -- well, where Sage is, but also specifically where we are in zuranolone's clinical development and NDA review patent?

Absolutely, Ritu. First of all, thanks for having us, and I appreciate the organizers for TD Cowen putting us in this enormous room that we're in. So thank you for that. It took me longer to get here than it took to get from my home to the conference, but it's fine. So look, we're really excited by the progress we're making at Sage in general. We believe that we're a leader in brain health and have an opportunity to be a top-tier biopharmaceutical company. I know we'll talk a lot about zuranolone because that's fresh in mind. But I'll remind everybody that Sage was founded on deep understanding of both GABA and NMDA, 2 really important pathways in the brain and looking for endogenous neuroactive steroids that we then mimic with our drugs to make those pathways regulate up or down, depending on disease pathophysiology. We were the first company ever to get a drug approved specifically for postpartum depression, ZULRESSO. And while we're happy we're helping hundreds of moms, not thousands of moms, to me, ZULRESSO is really a testament to the Sage science and methodology that allows us to understand pathways and develop medicine. So we're really excited about where we are with zuranolone as well. So zuranolone, also called SAGE 217, is being developed specifically for MDD and PPD. We've run a number of trials of 6 positive well-controlled trials that are part of the NDA filing. We completed our NDA late last year, heard back from the FDA that the NDA has been accepted, with a PDUFA date of August 5 under priority review. So really excited by what's going on there. In terms of communication, and Ritu, you know this, what we said is we've clearly communicated that the NDA was filed. We communicated that was accepted with priority review. We've communicated our priority review date. If we hear about an AdCom from the agency, which we have not yet heard, it's completely at their discretion, we'll communicate the AdCom, and we will talk more about that. And then next communication about the regulatory interface, which is going very well, will be at approval with label and then subsequent launch and price and that kind of stuff. So you won't hear much from us other than AdCom, unless, of course, something different happens, and then, of course, we'll communicate.

So unfortunately, investors have been going through these communication gating points for a bunch of reviews recently. But given your priority review, when do you expect FDA to communicate their intentions around an AdCom? And when are they legally obligated to do so, which are different?

Yes, that's a great question. So there's not a statutory time line that says the FDA must tell you x date after approval, whether it's an AdCom or not, solely at their discretion whether to do an AdCom. If they -- typically, they want to build an AdCom a couple of months before PDUFA date if they do it, if getting closer to that gets down to the wire. So that's sort of the kind of the latest you might want to hear. We are preparing for an AdCom. These things take a tremendous amount of work, energy and effort. And the preparation for an AdCom actually has beneficial commercialization effects anyway because it really allows you to go through the data, think about any objection that might be out there and how to handle that objection. So the time and energy spent preparing for an AdCom is well spent because it helps us downstream. If they decide to do an AdCom, it's an opportunity for us to showcase the totality of our data, which we're thrilled to do. It's also a chance typically for patients and patient advocates to tell the story about the immense unmet need that has depression. Every once in a while, you'll hear someone commented that there's not a big unmet need with depression, which is shocking, but every once in a while you'll hear it. So this will remind everybody, when patients tell their story about the tremendous unmet need, and importantly, the need for pharmacologic innovation in the space, which we haven't seen in 30-plus years. So that -- if they don't do an AdCom as a signal of a rapid approval or even early approval, we'll take that too, and we'll be prepared to launch.

Are you already preparing to hold mock AdComs internally?

So as I said, we're preparing for an AdCom, should it occur. That preparation involves multiple mocks, multiple trials along the way, with experts that could potentially simulate those that sit on an AdCom. So we'll be very well peppered.

That's core to the process.

And I'll mention that at Sage, this is before my time, but Sage prepared for and held a very successful AdCom with ZULRESSO. So there's people internally that have been through this before, and we'll be very well prepared along with new people. .

Okay. I'm going to move up the FDA question because you brought up the last AdCom, which had a bit of a wildcard at one point. With the recent changeover in the office of neuroscience, do you expect -- have you had any changes on your review team since your agreements about WATERFALL and CORAL and SHORELINE have been in place, such that there's turnover that could lead to changes of the opinion? And will Billy, Dunn's departure have any impact on the division of neuropsych and how[indiscernible].

Yes. Look, having -- not just for Sage, but across any neuro company, having someone with the expertise of Billy leaving is a detriment to the whole industry because of his expertise and knowledge. But that being said, there's a senior team that's been consistent from the beginning with us, that's been engaged. And even before I started as CEO, I read every regulatory communication. What I can say is all of the regulatory communications and minutes have been consistent from day 1. The FDA was really helpful with Sage designing the landscape in these programs and talking about the Phase IIIs. They were very helpful in helping to understand one of the Phase IIIs that was designed in REDWOOD that didn't need to get run based upon the SHORELINE data. So the communication with the senior levels, medical reviewers and others has been consistent from the beginning. So we...

I believe they were the same.

Yes, they've been consistent from the beginning. So we think the totality of the data, the package we have, the nonclinical sections, manufacturing, we believe, with or without Billy, we're still in very, very good shape.

Okay. And do you think that any of the ZULRESSO safety concerns, loss of consciousness, the step that was, I guess, brought up by the former office head, even before Billy, will any of that be brought forward to zuranolone?

So what happens in an AdCom at the highest level is an evaluation of benefit-risk. And you -- when you look at the zuranolone package, I don't think there's any question...

In an NDA or AdCom?

AdCom, AdCom. That's the main [ thing ] in an AdCom, does the benefit outweigh the potential risk. When you look at the totality of the zuranolone data, the benefit-risk is incredibly clear. And we're not seeing any loss of consciousness.

Okay. So -- got it. Can you tell us what will be included with the SHORELINE update data coming mid-year? And will you submit any additional SHORELINE interim efficacy, updated efficacy as well as safety?

Yes. So what Ritu is talking about in SHORELINE is, we believe, the largest natural study run in MDD to date. Patients were diagnosed with MDD, given zuranolone for 2 weeks, and then checked in every 2 weeks to see if they were still okay. If they look like their depressive symptoms were coming back in, they were brought back in the office, reevaluated and given another dose of zuranolone, if warranted. The data we saw at the 50-milligram dose, 80% of those that responded to zuranolone required either the initial 2-week dose, which is over 50% or another 20-some percent, another 2-week dose. So 80% required 2 to 4 weeks of drug in the total course of the year. As I said, most that responded did not need another 2-week course, but those that did, the median time to the next course was 249 days. If you think about what happens in today's world, if someone is diagnosed, and they can get their depression under control, the medical regime there on, typically per the literature, works for about 6 to 8 months and another depressive episode might come up. So we're seeing -- what we're seeing was around, we believe, is that someone responds to treatment, they're well until the next potential triggering event, and they get another round of depression, which they're treated again and also respond. Interestingly enough, and we don't have a SHORELINE like data set for PPD, what we saw in the PPD studies, both 30 and 50 milligrams is the moms held their effect for the duration of the study. Now PPD is a little bit more homogeneous because moms are getting that depression triggered by either getting pregnant or having the baby, and these are a little bit more variable. But nonetheless, the data hold up very, very well.

Okay. But as far as that efficacy, will that efficacy -- I guess, the concern, of course, is major amendment and a delay. Will you top line the efficacy with that update to the investors? And will that go into the data package?

So what we've said about SHORELINE, and I'll explain what the new data will be, we've said SHORELINE midyear. We're very conscious about what the agency thinks are major amendments and how to keep them in a loop, so we're going to be smart about that. . What we've demonstrated so far, as I highlighted, is the SHORELINE data. The rollover from CORAL is the next data set. So CORAL was a study that we ran. It was a Phase II randomized placebo-controlled study where people were given a common antidepressant or an antidepressant, plus zuranolone. The primary end point was day 3 [indiscernible] effect and kind of area under the curve between 0 and day 15. Both of those endpoints were hit. We saw the safety profile consistent with all the other safety we've seen before. Most common side effects were sleepiness, somnolence, which kind of on the drug arm. That's the update that we'll provide. It's another 250th patients' worth of data, and we'll understand as those patients rolled over, who needs zuranolone, when they did and what the effects were. What we're expecting is data largely consistent with the data we've seen already.

Okay. So we talked a fair about SHORELINE today on the neuropsych KOL panel, and the doctors are disgruntled with the breadth of the data. Takeaways for what the data actually showed was positive. We had doctors basically say they would happily get it 3 times a year. The breakpoint is more like 6 times a year. And your data is below -- well below 3 times a year. but they want more, right? They -- we talked about this idea that there are going to be some cowboys who are going to want to keep hitting the patient over and over again, and we'll keep doing it. One of our KOLs brought up the example, zolpidem, which was originally approved for like a 7- to 10-day course. And yet, you have people on it chronically. So there are going to be those people, and they suggested either SHORELINE is enough. Post-marketing, post-approval trials that would help them more fulsomely understand what they are dealing with. Are there plans for that? And what may we see upon approval that has not -- is not yet in the public domain?

Yes. So seven questions, that's a new record for you. Let me take a step back and let's remind everybody that when the new classes of antidepressants were approved, SSRIs and SNRIs, they were not meant to be chronic treatments for the rest of your lives. That's not what they were meant to do. They're meant to get patients well and take them for maybe 6 months. And if you were better, you'd wean them off drug. So why hasn't that been the course over the last 30 years? Why? Because if you have someone depressed, it could take 4 to 6 to 8 weeks to get them on a drug or a drug regimen, if they have comorbidities, like anxiety and unable to sleep, to get them under control. They may not be in remission. They might just be less depressed or in a blunted state, but that's better than the state they were in before. So if you're treating me for that, why would you wean me off all the drugs when, at my next depressive episode, it might take 3 to 6 months for me to get well again? So we have a world where people are living on chronic meds, unable to get off their meds, not because that's how it was designed, because that's the challenge with depression. What we have with zuranolone is a whole new way of treating depression. We believe that we've developed zuranolone to rewire the dysregulated GABA mechanism back to a normative state. We saw that with ZULRESSO in PPD. We're seeing that in MDD and PDD with zuranolone. So you're supposed to get better in 2 weeks and stay better. And we already talked about the SHORELINE data. Some people might need another 2-week regimen. If you were a patient who took zuranolone and responded, but needed the drug every other month, it's not the right drug for you. That's not how this drug is meant to you. And we're going to be very clear when we -- we are clear today when we launch where this drug should be used, what effects we expect to see. And for that small percent of patients that don't respond, and there will be some, human biology is very variable, don't use this drug. Do something else for that patient because this is the wrong thing medically to do for that patient. So we'll be pretty clear about that.

So you -- are you going to -- like, allow is the wrong word, but would you support sort of independent research to show -- what 1 KOL asked for this morning, which is like longer than 2-week treatment experience or 5 -- a follow-up in patients who do require 4 to 6 times a year.

Yes. With a drug like zuranolone, that will be used potentially in millions and millions of patients in the United States alone, a number of investigator-sponsored studies, SAGE-sponsored studies will be done. Things like long duration studies that make sense, things like understanding sleep patterns make that sense. There might be other kinds of comorbidities that make -- that might make sense, like anxiety. So there's a number of post-marketing studies that we've done. And of course, we all want as much data as we can. What people might forget is that zuranolone is actually one of the most extensive programs in depression done to date. Now people also forget that a drug like Prozac, which ran 11 Phase IIIs, only 4 positive studies. So the fact that we're -- we've got 6 positive studies and the robustness of SHORELINE data really is a very large data package, over 3,500 patients, of course, we all want more. And we'll do more, but that's a very robust data package to go into approval with.

But there will be some patients who went into the review package who had 5 re-treatments, correct?

Yes. We saw the majority of patients, 80%, required 2 to 4 weeks, so 1 to 2. There was a smaller number of 3, 4. And then a very few patients required 5.

Safety experience perspective than the efficacy experience. But if FDA has this question, well, what happens if you give it 5x over again? That safety data is -- there is some signal of that suggestion of what happens in the NDA.

Yes. The SHORELINE data has been submitted as part of the NDA package primarily from a safety perspective, as you said. But let's think about the data for a moment. If the FDA looked at the data, and this is not necessarily what goes with our label, but typically, what they'll do with labels is say things like drug X has not been studied in this population or drug X has not been studied for more than 2 weeks continuously or drug X has not been studied, like, given more than 5x in the course of the year. They typically don't have language prohibiting that were used. That would be unprecedented if they do it that way. Now if for some strange reason that was in the label, commercially, it wouldn't be much of an effect because the majority of our -- of patients out there will be on either 1 or 2 weeks of drug. Very few patients require 3, 4. It would be the wrong thing to do for a patient who might need a third or fourth dose, but it would be unprecedented if that was in the label.

The label, okay. Let's move to commercial now. Do you expect any sort of safety data on the label as far as patients?

Yes. We -- so we ran the likability studies, the driving studies, all those things. And we expect to have -- again, we can't talk about negotiation of label, so I'm not going to talk about any specifics. But in general, let's look at over-the-counter meds like Benadryl, typically, there's language like don't drive or operate heavy machinery. We've seen how the drug works. What everyone needs to remember about zuranolone, just a reminder, is if those few patients are having some kind of adverse event, it's a 2-week course of treatment. This is not an adverse event that you have for the rest of your chronic life because you're not taking the drug after 14 days.

But if somebody picks up like Xanax bottle and sees the warnings on that, there's no reason they should expect something different from...

We should have all the typical warning like this.

All the usuals. Okay. Great. And then how have your payer discussions on coverage been going? And how do you view that need for potential re-treatments as part of VBA? So one thing that one of our KOL said this morning is that, like, if they have to -- if they are -- 2 or 3 re-treatments a year is fine. But if they have to do some complicated [indiscernible] for that second and third, like, primary care or front lines, they're not going to do that. So as you think about the re-treatments and the VBA, what's that structure?

Yes. So we've been talking, at least since I started Sage, about being as innovative on the access front as we were -- in developing zuranolone and the rest of our pipeline. So we're being very innovative. We are doing all the appropriate and allowed communications in payers starting with disease state awareness, but also talking about our willingness and desire to risk share, to lean in with proactive value-based agreements. And I can tell you, the payer discussions are going extremely well. And what do I mean by that? So payers are recognized that there's a huge unmet need here. We're not hearing from payers that depression is well controlled with cheap meds. They're not saying that. In fact, they're saying that, well, the category of depression is not a large drug category. Because it's largely genericized, it's not something we're focused on. Depression is costing us a lot of money. They know that -- and whether they have the databases that show them or not, they know as people, they know as payers that an undertreated depressed patient cost them a lot because they go on downstream -- live to have downstream comorbidities, things like obesity, things like diabetes, infectious diseases and cancer. They know that people that are undertreated for depression have these downstream comorbidities and cost them a lot of money. So we're hearing tremendous engagement with payers. Now of course, they want some budget certainty, so the aspects of the value-based agreements we're talking about is exactly what you said, how many 2-week course of treatment might your patient population have. And this isn't exactly the structure, but one payer said, "Well, look. What if my population is different? And my population, instead of 4 weeks of drug in a year, requires 4.4 weeks of drug in a year." And that's part of what we can build...

How do you even calculate that? Like what are they using to come up with? Is it age? Is it, yes, average age? Is it average gender balance? What...

It's just patient -- I mean, depression hits everybody. So it's patient population. So what they're saying is what if. And the answer is, if after probably 3 quarters, they look at their patients who received zuranolone, and their patient population was some surprisingly over 4 weeks of drug. That's part of what we can build into the value-based agreement. They can be rebated on any overage for an agreement, so they have some budget certainty.

Got it. And thoughts on -- or at least your initial thoughts on what prior authorizations are set that it's -- it will be coming out.

Look, there's likely going to be some utilization management tools that the payers will use. It's a new drug. They're going to have to get comfortable with it. But what -- the reason for the value-based agreement is to make those as easier, less onerous as possible. It could be as simple as the physician prescription is the physician attestation that the patient needs a drug. And we'll have all the backroom services, so that if a doc writes a script, all the work is done for that script to get filled without the doctor's office or the patient doing much work at all.

Okay.

It will look just like another script getting filled.

So imagine if you have a payer that just doesn't get it, right, what is the highest prior auth hurdles that they can put down?

Well, I mean, payers could -- I don't think they're going to because they're not telling us that, that's what they're going to do. But you could imagine that when like the PCSK9 monoclonal antibodies were launched, their books have prepared us. That's not working for payers. We're hearing from payers that they want their patients to get zuranolone. They just need to understand the potential budget impact over time. And because we're talking to them so openly and willing to risk share with them, they're telling us that to the extent they're going to use utilization management, it will be the less onerous kind of utilization management.

Okay. And there's -- has -- have you had any conversations with them about them restricting the type of patient who can prescribe it? Because given your first add or first switch strategy, you could still very much end up in the primary care.

So that's a great point, Ritu. So for MDD, we've told them at launch, we're positioning zuranolone for the first add or switch. It's that patient that's on something that's just not doing well enough on what they're on. About 1/3 of our patients in all our clinical studies were those kind of patients. They're on something, but they still had a huge HAM-D level. So they were MDD. For those -- they -- so for the -- for payers first add or first switch makes a lot of sense to them. And again, any kind of utilization management will be on the less onerous side. They completely agree that if approved, zuranolone be the first oral drug ever approved for PPD, and it should be frontline for PPD. So if a physician says he's a PPD patient, that will have very little, and that mom should get that drug quickly.

So we have been talking for 23 minutes about zuranolone. We've not yet mentioned Biogen. Where the -- where are -- where is their commitment to this? Can you just remind us what they've committed to on this launch? And how much direction do they have in all of the aspects of the commercial strategy that we've discussed?

Yes. So Biogen has been a great partner from the day we signed the deal in the fall of 2020. They've been a very strong partner. We've got really good relationships at every level of the organization. And clearly, what's going on at Biogen and their activities on zuranolone, and this is from Chris Viehbacher, zuranolone is their #1 priority. The successful launch of zuranolone is the highest priority they have as the organization. From the beginning, we've been very well aligned with Biogen in terms of strategy, approach, go to market. They've been wonderful on the manufacturing side, the NDA front. And of course, small company, big company, there's some partnership tax that goes along with it, but it's been a great relationship. With Chris Viehbacher coming on board, that relationship has only gotten better. Chris and I have known each other for a long time. He's certainly an incredibly strong industrial leader. He knows depression from his Glaxo days, and he recognized from the beginning that zuranolone has an opportunity to help millions and millions of patients. So we're highly aligned on zuranolone's go-to-market and really working hand-in-hand in this 50-50 co-co on bringing zuranolone approved to as many patients as possible.

And have you guys finalized how you want to break up the market as far as specialty, as far as tiers? Have they started hiring yet?

Yes. So our go-to-market plans and our omnichannel plans, which is all the digitization and virtualization, are very well aligned and completely timed out. So we're doing things in lockstep. In terms of the target audience, and this is a comment we made specifically at the beginning of the year, but I'll reiterate, we live in a world of really good information. So we're going to target the psychs or large offices that see a lot of psych patients that are comfortable prescribing branded medication and dealing with those kind of patients. That will be the target. And of course, OB/GYNs for the PPD side as well. We'll also have some nonpersonal omnichannel work in the pediatrician's office, where they see moms and babies quite frequently. So if we do our job right, both digitally, virtually and live, lots of people are going to know about zuranolone when launched. Of course, this is also a drug where patient activation will be critical. So we'll have work going on from the beginning, so that people potentially suffering from MDD or their loved ones from MDD and PPD know about zuranolone and the opportunity to ask for it. I think this is something that people are going to ask for by name. The other thing I think it's important to mention is that you have to think about any drug like this in a very temporal fashion. At launch for the first couple of quarters, it will be a very focused effort. But over a period of time, as payers get more comfortable, prescribers get more comfortable, we'll see the kinds of physicians or health care providers broadening the depth of their prescription broadening. And over some period of time, call it, a year or 2, this will be a large primary care drug that even naive young adults might get without being first add or switch because there's a group that if you had 100 experts in a room or you're throwing a panel and you ask, "Do you want to put an 18-year-old on the drug for the rest of your life?" They'd say, "No. I'd rather give them something for 2 weeks that gets them better and back to class." Everybody agrees to that.

Got it. Barry, you have 3 minutes to go through the rest of your pipeline.

All right. Let's do it quickly.

Huntington's, start with Huntington's.

Yes. So SAGE-324, a GABA PAM being developed for chronic treatment of -- sorry, yes, chronic treatment of tremor, 324, in essential tremor. We have the KINETIC 2 study up and running. We -- what we -- the data we have to date is that SAGE-324 when given lowers tremor amplitude, with a reasonable safety profile. We did that with a single dose, and we did that over 28 days with KINETIC. KINETIC 2 is meant to demonstrate that over a 3-month period. The trial is up and running. We've guided that we expect to accrue this year with data readout next year.

718, 718 is really interesting.

I'm really -- I've been excited by 718 from the get go.

And you had a bunch of trial. So can you walk us through the trials and the strategy? Like what data sets will they bring to the table to answer the ultimate question?

So SAGE-718 is a first-in-class and NDA PAM being studied in neurodegenerative diseases for cognitive improvement, higher order cognitive improvement, things like executive function, learning and memory. We've got 5 clinical studies up and running, 3 in Huntington's and then 1 in Parkinson's and 1 in Alzheimer's. The way the Huntington's trial has been set up with 2 Phase IIs in an open-label Phase III with 178 patients in 1 study and a parallel study show activities of daily living. If those data are positive or robust, and we expect them to be, then we won't be shy working with regulators on using that packet to get to market as quickly as possible. We expect with Parkinson's and Alzheimer's Phase IIs to require follow-on Phase IIIs.

Barry, say as quickly as possible. Does that mean maybe not with additional studies?

Correct.

Okay. And have -- and remind us of the endpoints because cognitive endpoints are squishy. And yet, they're really, really profound in Huntington's.

So what we did in the -- all the studies leading up to these studies is really understand through a whole series of cognitive battery test how SAGE-718 works. The primary endpoint in the Huntington's trial is CAB HD. It's a series of questionnaires that understands cognition. It's very common with a whole series of secondary endpoints. And again, what's different here is that we're not studying the slow diminution of memory. We're studying the improvement of memory in a very rapid fashion. That's a very unique trial design.

Got it. And as you think about the Huntington's population, will you -- is this a trial being conducted in earlier stage, sort of prodromal Huntington's versus that more motor stage of Huntington's that people are more -- investors, let's say, more used to?

Yes. So in general, in any kind of cognitive decline, the earlier you can get to the patients, the better. So these will be patients diagnosed with Huntington's disease. They've got the CAG repeat. They may or may not have the dyskinesias. They probably don't, but they have demonstrated some level of cognitive decline.

Already decline.

Yes.

Okay. But is this a case where the earlier you go, the harder it will show -- harder it will be to show improvement? Or...

No. In fact, because we're studying improvement, not slower decline, the earlier you go, the better off we're going to be because they've demonstrated some level of cognitive deficit. And if we can give them back to the precognitive deficits quickly, that's a huge win for these patients. The idea is for people to maintain their independence for as long as possible because that's what happens with these diseases.

Got it. We are at time, but I do want to give you a few seconds for Alzheimer's and Parkinson's because I totally cut you off on that for 718.

I think we can wrap it up saying, look, we've got Phase IIs running. If the data are robust, we expect to work with the regulatory agencies on what the Phase IIIs and fast approval for both Parkinson's and Alzheimer's look like, and we're excited to do that.

Great. Thank you, Barry. Thank you, everyone, for joining us.

Thank you. Thanks, everyone.