Sage Therapeutics, Inc. (NASDAQ:SAGE) Q1 2024 Earnings Call Transcript

Sage Therapeutics, Inc. (NASDAQ:SAGE) Q1 2024 Earnings Call Transcript April 25, 2024

Sage Therapeutics, Inc. misses on earnings expectations. Reported EPS is $-1.8 EPS, expectations were $-1.63. Sage Therapeutics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning, and welcome to Sage Therapeutics First Quarter 2024 Financial Results Conference Call. Currently, all participants are in a listen-only mode. This call is being webcast live on the Investors and Media section of Sage’s website at sagerx.com. This call is the property of Sage Therapeutics and recording, reproduction, or transmission of this call without the expressed written consent of Sage Therapeutics is strictly prohibited. Please note that this call is being recorded. I would now like to introduce Ashley Kaplowitz, Vice President of Investor Relations and Capital Markets at Sage.

Ashley Kaplowitz: Good morning, and thank you for joining Sage Therapeutics’ first quarter 2024 financial results conference call. Before we begin, I encourage everyone to go to the Investors & Media section of our website at sagerx.com, where you can find the press release and slides related to today’s call. I would like to point out that we will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties and our actual results may differ materially. Please review the risk factors discussed in today’s press release and in our SEC filings for additional details. We will begin the call with prepared remarks by Barry Greene, our Chief Executive Officer, who will provide an overview of our progress during the first quarter of 2024.

Our Chief Business Officer, Chris Benecchi will provide an update on the ongoing commercialization of ZURZUVAE. We will also be joined by Laura Gault, our Chief Medical Officer; who will review development activities across our programs. We will then be joined by Kimi Iguchi, our Chief Financial Officer, who will review our financial results from the first quarter of 2024. Mike Quirk, our Chief Scientific Officer will be available for questions during the Q&A portion of the call. With that, I’ll now turn the call over to Barry.

Barry Greene: Thanks, Ashley, and thank you everyone for joining us this morning. As we progress through 2024, we are singularly focused on addressing unmet needs in brain health. And while the science is extremely challenging, we remain motivated toward a common goal improving human health. As you may have seen last week we announced negative results from our PRECEDENT study in the dalzanemdor program and participants with mild cognitive impairment related to Parkinson’s disease. We’re deeply disappointed for patients and their families. As we know mild cognitive impairment in Parkinson’s disease can have a devastating impact on an individual life. We continue to believe that these results are not necessarily predictive of the results in our ongoing studies.

It’s important to remember that all cognitive impairment is common across Huntington’s disease and Alzheimer’s disease. The underlying pathophysiology and symptomatology of these diseases are very distinct. We look forward to data across the dalzanemdor program expected throughout 2024 as well as top-line data from our kinetic 2 study in essential tremor expected mid-2024. I’d now like to focus on a very encouraging area of opportunity for Sage and for women with PPD. You’ll soon hear from Chris, the launch of ZURZUVAE is off to a strong start as is reflected by our first full quarter performance. I’m inspired by the positive anecdotes and success stories we are starting to hear from women with PPD who have been treated since launch. The impact of ZURZUVAE on these moms and their families is profound and it’s energizing all of us.

We continue to believe ZURZUVAE is the key to unlocking the blockbuster potential of PPD enabling us to help many women suffering from this devastating disease. While early, we’re beginning to see signs of practice patterns changing particularly among OB/GYNs. With approved oral treatment specifically for PPD, we believe healthcare prescribers have started to shift from suspect and refer to screen diagnose and treat. I’ll highlight a few of the encouraging signals we’re seeing the first fourth quarter of launch. Demand in PPD has been strong and continues to grow. Interest among healthcare prescribers with whom we’ve engaged or who have learned about ZURZUVAE has been high, evidenced by ZURZUVAE being prescribed for women with PPD across a wide range of health care prescribers.

We’re also highly encouraged by the progress we made with commercial and government payers. Payers of these developed policies and for the majority of plans to-date we’re not seeing onerous prior offs or step edit to PPD. Our teams in the field remain busy engaging with critical stakeholders, educating prescribers and contributing to the recognition of PPD as an urgent medical condition. We believe the PPD opportunity is significant and have thought broadly about the initiatives needed to achieve commercialization success with ZURZUVAE. Our strategy is to launch with a focused approach and scale as we see success. As the early signs of launch have been encouraging, we’ve been increasing our marketing and non-personal promotion resources. If the positive trends continue, we believe additional scaling this year makes sense.

Our goals are clear, established ZURZUVAE as the first-line therapy and standard of care for women with PPD and advance our brain health pipeline. Our work is more important than ever. In the countless lives we have potential to positively impact continues to serve as our North Star. With that, I’ll turn the call over to Chris to provide additional context on the ongoing commercialization of ZURZUVAE. Chris?

Chris Benecchi: Thanks Barry. The ZURZUVAE launch is off to a strong start and exceeding expectations. We’ve made important progress during the first full quarter of commercial availability and I’m excited to share our recent launch accomplishments and ongoing initiatives. As we’ve engaged with health care professionals, patient advocacy organizations payers and policymakers, our mission is clear there is a desperate need in critical gaps in care for women with PPD. Sage is committed to working with all stakeholders with the goal of rapid affordable access to ZURZUVAE for women with PPD as there often can be incredibly hard breaking and unintended consequences for the mother, her baby, her family and future generations when PPD is not adequately treated.

It is critical to diagnose, treat and provide care and support for all women with PPD. We’re beginning to see the initial signs of hope and progress in the first few months following the launch of ZURZUVAE. As Barry noted, we are starting to see signs of practice patterns changing particularly among the OB/GYN community. In a short period of time, we believe we are already beginning to see PPD move from a disease where some HCPs would suspect PPD and then refer the patient for evaluation and treatment to a disease that HCPs are confident to diagnose and treat. I’m proud to be a part of this important movement and grateful for the countless agents working to accelerate our impact in collaboration with our partner Biogen. As we’ve said previously, our goal is to establish ZURZUVAE as the first-line therapy and standard of care for women with PPD.

We believe we are already making meaningful progress. Before I dive into the specifics of early launch performance, it’s an important reminder to note that IQVIA data does not reflect all shipments of ZURZUVAE. The key takeaway is that right now there is variability in the data and it may not provide a complete picture of ZURZUVAE demand in PPD. Even in the future we see potential for variability in the data. With that said, I’m now excited to share more detail on the encouraging progress seen during our first full quarter of launch. ZURZUVAE generated $12.4 million in total revenue, of which Sage recognized $6.2 million in collaboration revenue during the first quarter of 2024. In the first quarter there were more than 1,200 prescriptions written.

The growth in prescriptions this quarter was strong and reflective of the interest and enthusiasm we’re seeing for Zurzuvae in the treatment of women with PPD. While we believe the number of prescriptions is an important early indicator in the coming quarters as the launch matures we plan to focus primarily on shipments and collaboration revenue. We were pleased to see prescribing across a wide breadth of HCPs who treat PPD with the largest percentage of prescriptions coming from OB/GYNs. OB/GYNs are on the front-line of care for women with PPD and are often the first opportunity for an HCP to recognize symptoms, diagnose and treat. As we know the patient journey can vary greatly for women suffering from this disease. We also continue to expect growth in prescriptions from psychiatrists and PCPs for also actively diagnosing and treating women with PPD.

Further we are encouraged that the breadth of adoption of ZURZUVAE in the treatment of PPD continues to grow with the number of new ZURZUVAE prescribers increasing each month during the first quarter. We are also beginning to see signs of depth with repeat prescribing. A growing number of HCPs have already written multiple prescriptions for ZURZUVAE. Based on early claims data we see that many ZURZUVAE patients appear to be receiving ZURZUVAE as first-line therapy for PPD. As of the end of the first quarter more than 700 prescriptions were shipped and delivered to patients. Our goal is to get ZURZUVAE to women with PPD who are prescribed the medication as quickly as possible and we continue to make improvements intended to help optimize the experience for HCPs and patients.

This includes educating HCPs on the specialty pharmacy system as well as operational improvements designed to expedite prescription processing. We expect the process will get better and quicker through these efforts and as formulary coverage decisions were made. Working towards broad and equitable access for women with PPD continues to be a key priority and we know access is critical for a successful launch. Conversations continue to advance at an accelerated pace across national regional and government payers. Notably, two of three national PBMs have published policies for ZURZUVAE and PPD without step therapy or complex prior authorization and we’re progressing in conversations with the third national PBM. We’re encouraged by similar trends with national and regional insurers.

Today, we have over 65% of commercial lives covered for ZURZUVAE and PPD, with the majority having no step therapy or complex prior authorization and we expect this number to increase over the coming months as we continue engaging with payers who have not yet published policies. With respect to Medicaid, we are pleased to see almost half of the states including several of the largest states, have completed reviews much more quickly than is typically seen for product launch. For Medicaid policies continue to develop, most states that have made a decision to-date are covering ZURZUVAE for women with PPD in line with our expectation of no step therapy and no complex prior authorizations. Where Medicaid policies are in place, we are seeing most women with PPD access ZURZUVAE at a nominal cost or zero co-pay.

We expect the majority of Medicaid coverage decisions in PPD by the end of the year. We believe the strong payer progress we and Biogen have seen to-date is the result of our active and long-standing engagement with payers, our knowledge of the PPD market and the strong value proposition for ZURZUVAE in the treatment of women with PPD. It is also critical that we continue to work to enable access to all women with PPD who are prescribed treatment regardless of financial means and coverage for our patient support and financial assistance programs for those who are eligible. While we did see use of these programs, the majority of shipments were covered by commercial and government payers in the first quarter, even as coverage policies were being developed.

We anticipate that a formulary coverage decisions continue to be favorable and as the SP process is further optimized, the need for the functionally uninsured program will decrease over time. Lastly, I’m excited to share some color on our ongoing marketing efforts. Based on our experience, we believe this is a highly promotionally sensitive market, which benefits from the surround sound of omnichannel efforts. We continue to see enthusiasm from HCPs to learn more about ZURZUVAE and have expanded commercialization efforts across stakeholders with the gold at ZURZUVAE top of mind as first choice treatment for women with PPD. For example, we had executed HCP peer-to-peer live and virtual branded educational platforms, attracting wide attendance across multiple specialties to treat women with PPD.

We also launched our fully operational zurzuvae.com healthcare professional website at the end of February in conjunction with several media drivers encompassing paid search, programmatic displays, banner ads and HCP targeted e-mail. Recently, we launched the zurzuvae.com full consumer website where women with PPD can find branded education, support resources and opt-in to receive proactive ZURZUVAE communications. We’re highly encouraged by what we’re seeing so far and the launch has reaffirmed our belief that ZURZUVAE is an important treatment option to address the urgent and profound unmet need for women living with PPD. We want to build on the momentum we have seen in the first full quarter of launch to reach even more of the women with PPD who need ZURZUVAE.

We know we have more work to do to get there. We know that women living with the disease cannot afford to wait and now with ZURZUVAE available, the treatment option they should not have to. I look forward to sharing additional details in the coming quarters. With that, I’ll turn it over to Laura for a more detailed discussion of our recent pipeline progress. Laura?

Laura Gault: Thanks, Chris, and good morning, everyone. As a clinician, I’ve seen first-hand the challenges that women with PPD and their family space. And so it is gratifying to see the impact we are already making for these women. I’m excited to be part of such a significant moment in maternal health as we continue to execute on the launches of ZURZUVAE and PPD. I’ll now turn to Dalzanemdor, our wholly-owned first-in-class NMDA receptor positive allosteric modulator or PAM as a potential oral therapy for certain cognitive disorders associated with neurodegenerative disease. Last week we reported top line data from the PRECEDENT study, a double-blind placebo-controlled Phase II study in people with mild cognitive impairment or MCI in Parkinson’s disease.

After six days of treatment, patients who received Dalzanemdor does not demonstrate a seismically significant difference from baseline compared to placebo on the primary endpoint the wait for coding test score at day 42. Based on the data, we do not plan any further development of Dalzanemdor in Parkinson’s disease. As we said on our call last week, it is important to remember that these results are not necessarily predictive of the results we may see in our ongoing Huntington’s disease and Alzheimer’s disease studies, given the very distinct underlying pathophysiology and symptomatology of these diseases. While we’re disappointed by the results of the PRECEDENT study, we continue to believe in the potential of Dalzanemdor in the other indications we are studying and look forward to the various data readouts anticipated later this year.

Specifically, in mid-2024, we expect to report top line data from the SURVEYOR study, a Phase II study designed to generated evidence using cognitive performance to real-world functioning and people living with HD. In May 2024, we expect to report top line data from the LIGHTWAVE study, a double-blind placebo-controlled Phase II study of Dalzanemdor with MCI and mild dementia due to Alzheimer’s disease. We also expect to report top line data in late 2024 from the DIMENSION study, a double-blind placebo-controlled Phase II study designed to evaluate the efficacy of Dalzanemdor and cognitive impairment in HD over a three months treatment period. As we’ve described previously, we want to underscore that the primary objective of the SURVEYOR study is to understand the magnitude of the cognitive impairment in HD relative to healthy individuals.

A key secondary objective is to advance our understanding of the effects of Dalzanemdor on cognition and function and participants with HD. It’s important to emphasize that the SURVEYOR study is not designed nor powered to show statistically significant differences between Dalzanemdor and placebo. These data are meant to complement the DIMENSION study by generating evidence to better define clinically meaningful change and the relationship between changes in cognition and function. We look forward to sharing these results with you as they become available. I’ll now turn to SAGE-324, an investigational positive allosteric modulator of GABAA receptors with potential in the treatment of essential tremor or ET. We are developing SAGE-324 in collaboration with Biogen.

There has been a lack of innovation in treatment for ET with no new approved treatments in more than 50 years. Essential tremor can have a significant impact on an individual’s ability to perform everyday task. Developing new treatment options that could help an individual maintain his or her quality of life, daily functioning, and independence is critical. Following the encouraging data from our completed KINETIC study, which demonstrated statistically significant reduction from baseline in upper limb tremor amplitude. We look forward to seeing the data from the KINETIC 2 study. This study is a three-month study designed to identify a dose with a safety and tolerability profile that is suitable for chronic dosing and further development of SAGE-324 as a potential treatment for ET.

We look forward to sharing these data expected in mid-2024. And lastly I’d like to reiterate our excitement around our earlier-stage pipeline including SAGE-319, our extra-synaptic preferring GABAA receptor PAM and SAGE-421 our NMDA receptor PAM. We look forward to sharing more about these programs as they progress. With that I’ll turn the call over for a review of our financials. Kimi?

Kimi Iguchi: Thanks Laura. Our financial results for the first quarter of 2024 are detailed in our press release issued this morning. Before diving into the financials I want to share my excitement around the launch of ZURZUVAE and the opportunity to help so many women suffering with PPD. We and Biogen are mobilized with the goal of capitalizing on early success and jointly supporting the launch of ZURZUVAE in the United States. Commercialization of ZURZUVAE remains a key priority for us as we work to expand access in the treatment of women with PPD and build momentum. We also plan to continue to make disciplined pipeline investments backed by data to support our goal of near, mid, and long-term value creation. I’ll now turn to the financial.

Today we announce collaboration revenue in Q1 from sales of new ZURZUVAE of $6.2 million. Our reported collaboration revenue is 50% of the net revenues Biogen reports for ZURZUVAE. As a reminder, net revenues are recorded by Biogen when ZURZUVAE is shipped to the wholesalers and are not calculated based on the number of shipments to patients or prescriptions written for ZURZUVAE. Net revenues for the first quarter can be attributed to a combination of wholesalers purchasing ZURZUVAE to sell orders as well as building inventory in anticipation of increasing demand for ZURZUVAE in the treatment of women with PPD. We’re not guiding today on gross-to-net, other than to say, given the fact that ZURZUVAE is a novel medication and the only oral treatment specifically approved for women with PPD, we do not anticipate the type of discounting we see for other brand CNS agent.

Turning to operating expenses, R&D expenses were $71.7 million in the first quarter of 2024. SG&A expenses were $52.6 million in the first quarter of 2024. The decrease in both R&D and SG&A expenses, compared to the first quarter of last year was primarily related to decrease headcount, overhead in technology as well as decreased spend on the early-stage pipeline, the renal and clinical trials and manufacturing, primarily as a result of the Q3 2023 restructuring. As we previously stated, we expect operating expenses to decrease in 2024 relative to 2023. Our net loss for the first quarter of 2024 was $108.5 million. And we ended the first quarter of 2024 with cash, cash equivalents and marketable securities of approximately $717 million. We are reaffirming that based on our current operating plan, we anticipate cash, cash equivalents and marketable securities anticipated funding from ongoing collaborations and estimated revenues will support operations, into 2026.

As we said on our last earnings call, we do not anticipate receipt of any additional milestone payments from collaborations in the remainder of 2024. Before I turn the call over for Q&A, I want to reiterate that we remain dedicated to progressing, our mission of Better Brain Health for patients. Further, we believe we have a strong financial foundation, as we continue to progress through our catalyst-rich year for Sage. We look forward to providing updates on our progress in the coming quarters. I’ll now turn it over to Ashley, to handle Q&A with the operator. Ashley?

Ashley Kaplowitz: Thanks Kimi. I’ll ask that you limit yourself to one question. If you have additional question, feel free to return to the queue. Now, I’ll turn it over to the operator, to handle Q&A. Operator?

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Q&A Session

Operator: Thank you. [Operator Instructions] And our first question is coming from Yasmeen Rahmi with Piper Sandler. Your line is open.

Unidentified Analyst: Hi guys. Good morning. This is Lauren on for Yas. Just a quick one for us, for the KINETIC 2 study, have you guys guided any powering assumptions? And with that, have you detailed an efficacy and safety signal that would warrant moving forward into Phase 3. And then just coinciding with that have you started to engage with the FDA and KOLs in regard to a Phase 3 for this program? Thank you.

Barry Greene: Yeah. Lauren thanks for the question. About SAGE-324, our GABA PAM, meant for chronic administration that’s parking with Biogen and movement disorders initially starting with the essential tremor. Laura, you want to take the question?

Laura Gault: Yeah. Sure. So with regard to the study design, we have provided study design details on clinicaltrials.gov. And it’s also in investor deck that’s on our website. We don’t provide additional information beyond what’s available there. For Phase 3 of course in any development program as you come close to finishing Phase 2, you start to think about Phase 3 planning. We are certainly doing that in conjunction with Biogen. And as part of that we are engaging experts.

Barry Greene: Yes. And the key to kinetic 2 is a follow-up from the kinetic study, where we saw 28 days, a statistically significant improvement in tremor amplitude as well as activities of daily living. Kinetic 2 two is now we want to see that at three months. And the real key is to make sure that we have a benefit risk dose to move forward for chronic administration. So that’s really what we’re looking for at kinetic 2.

Unidentified Analyst: Perfect. Thank you. I’ll hop back in the queue.

Barry Greene: Thanks.

Operator: Our next question is coming from Anupam Rama with JPMorgan. Your line is open.

Anupam Rama: Hey, guys. Thanks so much for taking the question. One of the key questions we’ve gotten sort of post Biogen and your guys’ report this morning is – any more color on the inventory build in the quarter versus the orders filled for ZURZUVAE and how we should think about this moving forward? Thanks so much.

Barry Greene: Yes. Anupam, thanks for the question. And we share your enthusiasm off to the strong start. I’ll turn it over to Chris to talk about – Kimi to talk about that and then I’ll provide some color. Kimi?

Kimi Iguchi: Yes. Well, thanks, Barry. ZURZUVAE generated $12.4 million in total revenue, of which Sage recognized $6.2 million in collaboration revenue during Q1, which we talked about during our opening remarks. The net revenues for the first quarter can be attributed to a combination of wholesalers purchasing inventory to fill orders as well as building inventory. And that’s of course in anticipation of increasing demand for ZURZUVAE in the treatment of women with PPD. As the launch progresses and we have a better understanding of the demand and inventory levels, we’ll be able to share more at that point.

Barry Greene: Yes. And just to add some color there. It’s an important question. I know it’s gotten a lot of attention. I will comment that the wholesalers are very smart. They don’t want products sitting on the shelf and aging. So we really believe what we’re seeing is demand driven.

Anupam Rama: Thanks so much for taking our question and congrats on the strong launch.

Barry Greene: Thanks, Anupam.

Operator: Our next question is coming from Salveen Richter with Goldman Sachs. Your line is open.

Unidentified Analyst: Hi. This is Shimao [ph] on for Salveen. Thank you for taking my question and congratulations on the quarter. Could you speak to the process through which began are diagnosing CBD? And at what point are these visits happening? Is it proactive on the part of the doctor or the patient and also any general feedback you’ve received from doctors on the efficacy and safety profile?

Barry Greene: Yes Shimao. I’ll start and then I’ll see if Laura or Chris want to add any color after I answered. So what’s really important and what you’ve highlighted here is that healthcare providers in general are recognizing that PPD is a medical condition with urgency to treat and it’s not a moral failing. And that theme is critically important. The other practice pattern that I’ve highlighted and this is really important is that OB/GYNs we’re the front line of seeing moms with potential for PPD are moving from the perhaps pattern of suspecting depression and referring to either primary care of psychiatry to screening, diagnosing and treating. On that paradigm shift to continue when we see it accelerating. So – that’s really, really important.

In terms of what’s happening out in the real world, we’ve got a lot of anecdotes and lots of anecdotes don’t add up to data per se but just give us a flavor. We’re hearing from the field is that ZURZUVAE is performing in the real world as it performed in our clinical trials. And that is a very broad benefit/risk profile, rapid onset as early as two or three days. And that women appreciate, this is a 14-day course of treatment or completing that treatment.

Chris Benecchi: Yes. What I would add and I included it in my opening remarks is that in the first quarter of 2024 we saw that OB/GYNs accounted for the largest percentage of prescriptions. As Barry noted, that’s important because what that begins to signal is that treatment practice for women with PPD is beginning to change as you have OB/GYN the front line of care for so many of these women. I’d be remiss though, if I didn’t mention that we expect growth in prescriptions from psychiatrists and PCPs, as well as OB/GYNs moving forward. As they continue to actively diagnose and treat women with PPD, representing more broadly the adoption for Zurzuvae and really the need to change the way that we think about and treat PPD moving forward. So, encouraged by all of those physicians leading in.

Laura Gault: Yes. And Chris, I would add that when you think about diagnosing PPD there actually are a lot of tailwinds. And those tailwinds come from professional organizations like ACOG, and the American Academy of Pediatrics that have both issued guidance practice guidelines that suggest that patients should be screened throughout their pregnancies and in the postpartum period. In the case of AAP, they recommend that the moms are screened at all the well child care visits. So, in most health care settings at this point, this routine screening is happening, which enhance the ability to detect women with PPD earlier disease evolution.

Barry Greene: Thanks, Shimao [ph]. It’s a great question. And as you’re hearing, we’re pretty excited about the paradigm shift that we’re accelerating for Zurzuvae.

Unidentified Analyst: Thank you for the color.

Operator: Our next question is coming from Ritu Baral with TD Cowen. Your line is open.

Q – Ritu Baral: Good morning, guys. Thanks for taking the question. I wanted to ask about the difference between the 1200 prescriptions written and the 700 shipped and delivered. How should we think about the delta there? Are those prescriptions that may result in free drug? Are those prescriptions that are right now, sort of in that time to fill period? And can you comment on, percentage free drug and that time to fill period? Thanks.

Barry Greene: Yes, Ritu. Thanks for the question. Let me start with Chris, if Kimi has anything to add on free goods and I’ll move back to the end.

Chris Benecchi: Yes. So as we noted Zurzuvae launch is off to a strong start, and exceeding expense. And we’re encouraged by the breadth of adoption of Zurzuvae and the treatment of PPD, and see it continue to grow with new prescribers each and every month. And not just new prescribers, but a number of repeat prescriptions coming from many of those same providers, as we move forward. As you note, we do with respect to written versus ship prescriptions, you always expect particularly at a launch there to be a delta, between written and ship prescriptions. Although over time, what you would anticipate is that would actually catch up as the number of ship prescriptions catches up with the number of written prescriptions. We continue to see a trend of growing prescriptions each month in Q1 with the 700 prescriptions that were actually shipped and delivered to patients and we’ll see that number catch up to the prescriptions that were actually written.

Our goal really is to ensure that Zurzuvae gets to all women, who will prescribe the medication as quickly as possible. And we continue to make improvements to — in effect the system that we have in place to optimize the physician, patient experience to make sure that the SP models working is efficiently and effectively as possible. And as coverage policies come online, where there aren’t onerous prior authorizations and step at it — the medication flows from prescription to shipment quicker and quicker, with each successive day. So really excited about the work that we’re doing behind the scenes to make that happen, because moms deserve to have this medication, women with PPD deserve to have this medication as rapidly as possible.

Barry Greene: Okay. Great. Thanks, Ritu.

Operator: Our next question is coming from Laura Chico with Wedbush Securities. Your line is now open.

Q – Laura Chico: Hi. Good morning, guys. Thanks very much for taking my question. I guess, one thing you mentioned in the prepared remarks, centered on potentially scaling up the sales force at a given point, but trying to better understand, what type of metrics would you need to see the weren’t kind of scaling up. And then kind of related to that, how far from symptom onset are women typically receiving Zurzuvae prescription? I realize that might change over time, but just curious how — at what point from diagnosis are they getting the prescription? Thanks.

Barry Greene: Yes. Laura thanks for the couple questions there. I will start and see if Chris wants to add. Let me start with the second point. So, we don’t have solid data on the exact timing from onset of symptoms to treatment. The great sign we’re seeing however, is the number of scripts coming from OB/GYN. You can imagine the patient journey here, if a woman who has previously suffered depression therefore, is at risk suffers PPD, you might expect that the diagnosis and prescription comes from her treating primary care prescribe or primary care office or psychiatry. The fact that we’re seeing the OB/GYN prescribed and that about half of the women treated this early claims data, so take it with a grain of thought that about half the women treated were naive meaning they had not – did not have – depressed last year — suggests to us that PPD is being picked up fairly early on in the treatment in the landscape here.

So, that’s a great sign. Back to your first question as we talked about we really do believe that ZURZUVAE is the key to unlock the blockbuster potential of TPD helping as many moms as we can. As you know very well, Laura, we started with a focused approach and we’re already scaling. As we highlighted we’ve increased our personal, non-personal promotion as well as some of the other efforts around specialty pharma and others which Chris talked about. So we’re excited. As we see continued prescribing patterns. We and Biogen will talk about field force and other aspects of expansion. You’ll hear about that in the quarters to come.

Q – Laura Chico: Thank you.

Operator: Our next question is coming from Paul Matteis with Stifel. Your line is open.

Paul Matteis : Hey, thanks so much. I was wondering if you could expound upon what this midyear Huntington’s readout is going to look like. Like what are the key couple of analyses that you’re going to be doing? And more specifically I was wondering if you could sort of talk about your current thinking on endpoints and specifically the HD-CAB which I think you’re using as a primary in dimension, but more recently another company in the space had trouble getting the FDA on board with that measure? Thank you.

Barry Greene: Yes. Paul thanks for I guess the three or four questions in one. Let me turn it over to Laura to tackle the thousand questions you’re asking.

Laura Gault : Sure. Thanks for the question Paul. So the SURVEYOR study is the study that we expect to read out next in mid-2024. And that study is designed with a particular purpose in mind. It is designed to provide data to put context around the HD-CAB to help us understand what clinical clinically meaningful change looks like. And so with regard to how we designed the study there’s really two parts. The first part is comparing baseline HD-CAB scores for healthy participants versus patients with Huntington’s disease. And that looking at that delta is going to help us understand what the magnitude of the impairment is in this population and also hope to anchor the meaningfulness of any improvements that we see in the study.

The second part of the study takes those patients with Huntington’s and randomizes them one-to-one to Dalzanemdor placebo. Now this is a very small group of people 40 patients were randomized so you’re talking about 20 subjects in arm, and they’re treated for one month. And so what we’re looking at here is looking at trends in the data. We’re trying to understand how the magnitude of the change in cognition and how that pulls through the changes on the global measures and the functional measures. And again, these data are really important to help put the results of the HD-CAB in context. Operator, we can go to the next question.

Operator: Our next question is coming from Jay Olson with Oppenheimer. Your line is open.

Jay Olson : Hey, congrats on the ZURZUVAE launch progress. Since PCPs are relatively less familiar with scheduled drugs for mood disorders compared to psychiatrists and maybe OB/GYN’s. Can you talk about the strategy for increasing ZURZUVAE awareness and prescribing among PCPs? And then any color you could provide on your strategy for DTC? Thank you.

Barry Greene: Yes, I’ll start and then I’ll take it over to Chris. And thanks Jay. We’re also incredibly excited by the trends we’re seeing with the launch of ZURZUVAE. So as you highlighted while a majority of scripts are coming from OB/GYN, we are seeing prescriptions from psychs and primary care. And that pattern may shift over time although we’re very excited that OB/GYN were in the front line of picking up depression in moms here are the key prescribers. And we think that trend will continue. Now I talked about the patient journey. So what we are likely seeing if there’s been a prior history of depression and the moms diagnosed with depression in the pregnancy or postpartum and they are under the care of a psychiatrist a primary care physician.

We’re likely seeing scripts coming from that. If they’re newly diagnosed that’s where the OB/GYN are coming in. Actually primary care are very familiar with prescribing antidepressants. In fact the majority of SSRIs, SNRIs come from primary care versus special volumes. So they’re familiar with it, they’ve got licenses. They’re very familiar with scheduling vital drugs as needed. Chris, do you want to add anything more.

Chris Benecchi: Yes. I think the color that I would add to PCPs here Barry, is the group of PCPs that we’re calling on with the sales force right now. It’s a core group of PCPs, frankly who behave more like psychiatrist, they may be in a community where there is not a psychiatrist and therefore they become the de facto clinician to treat many of these patients. So that’s — those are the PCPs that are being called on from a sales force perspective. Obviously, as I had mentioned in my prepared remarks, we’re continuing to increase digital means in order to reach, broaden our reach and to increase our frequency across all physician types. And digital has been particularly effective in actually going forward in doing that and dialing up the investment in that over the course of the year, is going to have that impact, in terms of reaching PCPs as we go forward, because we know oftentimes, they’re the ones who become the first line of care after a woman has seen for pediatrician or other types of clinicians seeing women outside of OB/GYN in psychiatry.

So, we’ll continue to invest in that. I think your question around DTC is also an important one and certainly one I’m sure is on the mind of many people on the call here today. And we’ve talked about being focused with our investment in scaling with success. Obviously, the first step in this is making sure that we have a very well educated and prepared Cushion audience, so that when patients come in and ask for the medication by name, that they’re ready to effectively prescribe the metification with an understanding of the efficacy and the safety profile. Obviously, the first step is educating clinicians. We use both personal and nonpersonal to do that. And when the time is right to expand DTC, so that patients can go in and have that informed discussion, we’ll actually invest in that.

What I would be remiss though, if I didn’t mention was the helping tailwind that we have with respect to online and social media activity in and around Zurzuvae. And this is a popular topic of conversation. In many senses, that’s going to proceed and has preceded the DTC effort that we know will come in the future. And when the time is right, we’ll invest in DTC and moving forward.

Jay Olson: Thank you. Super helpful. Congrats again.

Barry Greene: Thanks, Jay.

Operator: Our next question is coming from Ami Fadia with Needham. Your line is open.

Ami Fadia: Good morning. Thanks for taking my questions and congrats on the progress on the Zurzuvae. Sorry about that. Could you talk a little bit more about the use of Zurzuvae in first line versus second line? And in what situation do patients get it — gets way as a second line treatment and are they getting it in combination with any existing SSRI-SNRI treatment? And just to follow up from an earlier topic. Could you sort of go over in what way the server data will inform the dimension study. Thanks.

Barry Greene: Yes. Let me start with your Zurzuvae question and I can ask Laura to talk about the dalzanemdor question. So, as we stated, Zurzuvae, the first and only oral medication specifically approved for postpartum depression. Our goal is for Zurzuvae to be used frontline. And what we’re seeing from a payer perspective is in fact support of that. As Chris highlighted, we’re seeing a very strong payer coverage. I call them kind of pair of tailwinds with no steps for majority of cut plans and very limited prior has. So that’s a very important thing. We’re seeing women’s step up to be treated. We’re seeing health care prescribers prescribe and OB/GYN leading that chart. So, all signals are that, Zurzuvae is becoming a frontline first choice for the treatment of postpartum pression.

I highlighted this earlier, but when we look at early claims data, almost half of the claims data suggests that those being prescribed Zurzuvae already in the first quarter which is pretty remarkable have not had an antidepression for the previous year. So, we are seeing the trend for Zurzuvae be used frontline and really no obstacles to make that happen. Laura, you want to talk about dalzanemdor?

Laura Gault: Sure. So your question related to dalzanemdor will inform the Dimension study. And I think there are really two main ways that we would see this happening. The first is, we will get some data that will help us understand the performance of the different scales that we’ve included in the studies because the scale is included in Dimension and survey are largely overlapping. The second is as I mentioned earlier, we’ll be looking to really better identify clinically meaningful change in patients with Huntington’s disease on the HD endpoints. And so that will help inform the data interpretation from Dimension. Of course, when we get the surveyor data, we’re going to learn as much as we can from it, but we don’t have plans at this time to change the DIMENSION study design. Well, as I mentioned, we’ll learn as much as we can from the data, but we don’t have plans right now to change the study.

Ami Fadia: Thank you.

Operator: And our next question is coming from Brian Abrahams with RBC Capital Markets. Your line is open.

Brian Abrahams: Hey, good morning, guys. Thanks for taking my question and congrats on the progress with the launch. I’m curious where are you seeing in these early days as the — what are you seeing in these early days is the biggest reasons why a diagnosed PPD patient might not receive a written prescription for a course of ZURZUVAE. Is it a matter of awareness or coverage? Are there certain types of practices or regions where these are — there are more later adopters, tend to be later adopters versus early adopters. I’m curious what you’re seeing on the ground there. Thanks.

Barry Greene: Yes, Brian, thanks for the question, and I appreciate the congratulatory note. Chris, do you want to take that?

Chris Benecchi: Yeah. So let me start with the payer piece here because I think it’s important to highlight this. I think with respect to where we stand today, we’re in a very privileged position with this medication and it’s launching and around payer coverage, as I noted in my prepared remarks, we’re encouraged by the progress that we’ve made with commercial and government payers. We know that are beginning to develop policies the majority that we’ve seen to date don’t come with onerous prior authorizations and step edits. And importantly, that enables a clinician when he or she wants to prescribe the medication to choose ZURZUVAE first line. We have 65% of all commercialized covered, that’s 180 million lives that are already under coverage with the majority of those being — or most of those being plans, that don’t have owners prior authorizations, and step and step edit.

So from a commercial perspective, we’re in good shape. Also with Medicaid, we see that with respect to the Medicaid coverage that we’ve had that over the first quarter of the year, almost half of the Medicaid states, including several of the largest stated already completed reviews. And again, those don’t come with onerous prior authorizations and step edits effectively meaning that patients can get access to this medication both equitably and affordably as we go forward. So what I would say to sort of round out my response is that ultimately, if a physician hasn’t prescribed ZURZUVAE yet, it’s a matter of getting to that clinician with the education that’s needed to ultimately understand the efficacy and safety profile of the medication. Between what we’re doing from a personal promotion perspective and now with increased and ongoing investment in non-personal efforts in addition to what we’re seeing from what’s being communicated socially and online.

We believe that we’re going to be able to enact that change to help a clinician we may not offer the message hear it and begin to prescribe ZURZUVAE.

Barry Greene: Yeah, Brian, just to round that out, I’d say that just like in drug development, the biology of the launch is working. Patients are advocating, health care prescribers — do you want to prescribing and payers are paying, as Chris highlighted. The rest of it is classic engineering of a launch. We need to get reach and frequency to educate and as you every well known, changing health care provider practice behavior is the key to success, and that’s what we’re in the midst of doing.

Brian Abrahams: Thanks, Barry. Thanks, Chris.

Barry Greene: Thanks, Brian.

Operator: Our next question is coming from George Farmer with Scotiabank. Your line is open.

George Farmer: Hi. Good morning. Congratulations on all the progress. I was wondering if you could comment on expanded geographies for ZURZUVAE and how that might be progressing and what other steps might be necessary. I think Biogen mentioned maybe another trial would be required. Wondering if you could potentially comment on that.

Barry Greene: So George, you talked about — when you say geography you’re talking about ex-US?

George Farmer: Yeah.

Barry Greene: Yeah. So I remind you that the relationship that we have in partnership with Biogen is we’re 50-50, co-co in the United States. You’ve heard over and over, that’s going incredibly well and outside, Japan, Korea and Taiwan, or we have another part Biogen response for the rest of the world. So it’s really a Biogen question to answer.

George Farmer: Okay. Thanks.

Barry Greene: Thanks, George.

Operator: Our next question is coming from Sumant Kulkarni with Canaccord. Your line is open.

Sumant Kulkarni: Good morning. Nice to see the progress on ZURZUVAE and thanks for taking my questions which is on dalzanemdor. So other than some factors you mentioned before that might make read-throughs to upcoming trial readouts challenging. Is there anything specific payment in Huntington’s and Alzheimer’s different versus Parkinson’s? I’m asking because there are most likely some nuances involved in specific areas of neuronal loss in these disease states and to see if there’s a potential mechanistic basis for a dozen to target specific parts of the brain in different ways.

Barry Greene: Yeah, Sumant. Thanks for the congratulations on ZURZUVAE and great question on dalzanemdor and a very important one. Let me ask Mike to start with the biologic appreciation that started Huntington’s in 24S, maybe Laura to talk about why we think the results we see are not necessarily predictive of future results. Mike?

Mike Quirk: Yeah. Thanks Barry. So what I would say is that there are decades of research that have really implicated NMDA receptor hypofunction and a range of disorders associated with cognitive impairment. And further there’s increasing evidence specifically in of NMDA receptor if loss or expression changes in disorders such as Huntington’s disease, Parkinson’s disease and Alzheimer’s disease. That being said, while cognitive impairment is a common feature across these diseases the underlying pathophysiology and the relative contribution of NMDA receptor dysfunction is likely to be distinct across these groups and we really have different hypothesis that we’re testing across the three studies that we’re running. And so for this reason we’ve always seen the studies in HD, Parkinson’s disease and Alzheimer’s disease as distinct and independent test of the NMDA receptor hypofunction where we’re really looking at different pathophysiological consequences there.

So as Barry mentioned in the context of Huntington’s disease, which is our lead indication, we’re really focusing on the loss of the endogenous modulator 24S hydroxy-cholesterol as the rationale for why a molecule such as dalzanemdor should work in treating these cognitive impairments. So that’s sort of the scientific rationale across these diseases. I’ll let Laura comment a little bit more about this distinct symptomology and as we think about the disorders.

Laura Gault: Right. So these disorders obviously are all characterized by impairment but they have accompanying symptoms that are quite different across. As we talked last week about Parkinson’s disease that’s the disorder where you see the onset of cognitive impairment after motor symptoms appear in most cases. In Huntington’s disease, the reverse is true. The onset of symptoms can be 10 or 15 years even before the onset of the motor symptoms. And so it’s a very different progression. You’re looking at a younger population, you’re also looking at a much more homogeneous population based on the underlying etiology. And then you move over to Alzheimer’s, disease a very different population again in terms of the underlying pathophysiology.

We have the amyloid plaques and the neurofibrillary tangles, which are driving the downstream pathology and NMDA receptor hypofunction, but that is a very distinct driver compared to Huntington’s and Parkinson’s. So for all these reasons as Mike said these are really distinct disorders with differences in the symptomatology differences in the study design and we expect that each of these is an independent test of the hypothesis.

Sumant Kulkarni: Thanks.

Barry Greene: Thanks, Sumant.

Operator: Our next question is coming from Yatin Suneja with Guggenheim. Your line is open.

Yatin Suneja: Thank you for taking my question, and congrats on the nice launch. Question on 324 with regard to the KINETIC 2 study, could you maybe help us understand the difference between the endpoint between KINETIC and KINETIC 2, what you would like to show? And then how should we think about pivotal endpoint, because I think there are other companies that are using ADL as an endpoint from pivotal development. So anything you can talk from the regulatory perspective on the endpoints? Thank you.

Barry Greene: Yeah, Yatin thank you for congratulating on our launch. Laura, you want to take the 324 question?

Laura Gault: Sure. So with regard to the original KINETIC study and the KINETIC 2 study that’s currently ongoing, we actually use the same primary endpoint, which is the upper limb extremity score from the TETRAS performance scale, I’m not sure because it’s a sensitive measure to the tech change. We are aware as you are that there has been regulatory feedback about using the ADL scale associated with the TETRA. We are collecting all of that data in the ongoing KINETIC study and we will be poised with a lot of data to discussions with regulators at the end of Phase II about, which instrument would be the best for a Phase III endpoint.

Barry Greene: Thank you, Yatin.

Operator: Our next question is coming from Douglas Tsao with HC Wainwright. Your line is open.

Douglas Tsao: Hi, good morning. Thanks for taking the question, and congrats on the progress. Just curious, what percentage of the overall sales details so far have been made by you versus Biogen? And I’m just curious in terms of how when you contemplate scaling up the launch, how do you coordinate that? And sort of determine or sort of the needed resources?

Barry Greene: Hi, Doug. Let me start and then Chris can keep up. So I was actually with our field team a couple of weeks ago and I can tell you that whether you’re Sage or Biogen they’re working incredibly all together as a wealth functioning machine. And the team is very well integrated or helping each other literally every day to do what’s right which is get mom diagnosed and treated with ZURZUVAE, ZURZUVAE get quickly as possible. So it’s a very well coordinated effort. Chris, do you want to talk about just mentioned the kind of scaling spec?

Chris Benecchi: Yes. I think in terms of the activity at a field level it’s 50-50 between the two organizations. We really work well and collaboratively around how we execute at a field level with respect to reach and frequency. I think in terms of scaling those are conversations that are ongoing. The teams talk about the future of this product on a daily basis. And it’s everything from the strategy that we employ all the way through to the tactics and specifically how we’re going to execute. And again I think as Barry noted that’s an ongoing interaction between the two business — two organizations that are committed to fundamentally changing the way PPD is thought about and treated for women that are suffering with the condition.

Douglas Tsao: Okay. Great. Thank you.

Chris Benecchi: Thanks, Doug.

Operator: Our next question is coming from Vikram Purohit with Morgan Stanley. Your line is open.

Unidentified Analyst: Hi. Thanks for taking my question. This is Morgan on for Vikram. So on reimbursement for ZURZUVAE, I know you had mentioned not guiding to gross to net just yet but where would you expect steady state growth in that to potentially settle out? And how long do you think it would take to reach this steady state? Thank you.

Barry Greene: Thanks for the question Morgan. Kimi, do you want to take that?

Kimi Iguchi: Yes. As we mentioned and as you just mentioned we are not guiding to gross to that today. But again we’ve been talking about the fact that we don’t anticipate kind of discounting that you’re seeing for recent branded antidepressants. And so — and another thing is if you think about the key components of we expect in our gross to net. There is a typical component. The rebates and discounts we’ll see the patient assistance programs including financial assistance. So all the similar kinds of things you’ll see but we just don’t anticipate the same type of discounting you see for the other recent antidepressants.

Barry Greene: Thanks, Morgan.

Operator: Thank you. That will conclude the Q&A portion of today’s call. With that I will turn it back over to Mr. Greene for closing remarks.

Barry Greene: Thanks, Shelly. Thanks again to everyone for joining us this morning to review our results from the first quarter of 2024. Just to close it out. The full quarter of ZURZUVAE launch has been completed and we remain highly encourage with the process and we are excited to helps the many moms suffering with PPD. Of course, we were disappointed with the outcome of the PRECEDENT study. But as you heard from Mike and Laura, we remain on track to read out important data across our pipeline throughout the remainder of the year. And we do not believe the PRECEDENT is necessarily predictive of future studies as you heard on the call. We’re also well positioned financially to take us through key milestones and we remain focused on our mission to develop and launch life-changing brain health medicines so every person can thrive. Thanks again everyone and have a great day. Bye.

Operator: This concludes today’s call. Thank you for your participation. You may now disconnect.