Sage Therapeutics, Inc. (NASDAQ:SAGE) Q3 2023 Earnings Call Transcript

Sage Therapeutics, Inc. (NASDAQ:SAGE) Q3 2023 Earnings Call Transcript November 7, 2023

Operator: Good morning. Welcome to Sage Therapeutics’ Third Quarter 2023 Conference Call. [Operator Instructions]. This call is being webcast live on the Investors and Media section of Sages’ website at sagerx.com. This call is the property of Sage Therapeutics and recording, reproduction or transmission of this call without the express written consent of Sage Therapeutics is strictly prohibited. Please note this call is being recorded. I would now like to introduce Ashley Kaplowitz, Director of Investor Relations at Sage.

Ashley Kaplowitz: Good morning and thank you for joining Sage Therapeutics’ third quarter 2023 financial results conference call. Before we begin, I encourage everyone to go to the Investors and Media section of our website at sagerx.com where you can find the press release related to today’s call as well as slides that we will be reviewing today. 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 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 third quarter of 2023.

Our Chief Business Officer Chris Benecchi will provide an update on our preparations for the planned commercial availability and launch of ZURZUVAE. We will also be joined by Laura Gault, our Chief Medical Officer, who will review recent progress across our pipeline, and by Kimi Iguchi, our Chief Financial Officer who will review the financial results from the third quarter of 2023. 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. We at Sage have a purpose and the momentum that unite to solve. The recent approval of ZURZUVAE as a treatment for adults with postpartum depression sparked a national dialogue with countless women sharing their stories online, building community and expressing anticipation for a desperately needed new treatment option. These brave and inspiring women are a north star and making a meaningful impact to women’s health by focusing on the material mental health crisis brought about by PPD is our ambition. The approval of ZURZUVAE further validates our innovative approach to drug discovery and development, which starts with our work targeting the GABA and NMDA receptor systems in the brain.

These pathways are key regulators of brain function and the main drivers of brain circuit activity. Research suggests that disruptions in these circuits are an underlying factor in many brain health disorders. Our deep understanding of these pathways, along with our robust neuroactive steroid platform are vital to unlock potential therapeutic breakthroughs for patients. We are not satisfied with the speed of innovation for brain health treatments. Brain health disorders are one of the leading causes of disability worldwide because the pace of innovation has not met the moment. To address this innovation gap, we’re advancing our pipeline with the goal of elevating the standard of care to what truly matters most to patients. We’re working to help people living with debilitating neurodegenerative disorders who have been seeking treatments to address cognitive impairment early in order to maintain their independence longer and we strive to be the first company to deliver a new treatment for essential tremor in over 50 years.

Patients are waiting and I’m proud to lead Sage forward. This starts with postpartum depression or PPD. As the first and only oral treatment approved for adults with PPD, ZURZUVAE has the potential to transform the treatment landscape as a new option in care. Women with PPD need new solutions to the devastating disorder that have the potential to [indiscernible] and we are now one step closer to helping these patients and their families. Untreated PPD is a burden and can have lasting consequences for the mom and is also associated with negative outcomes for her baby and the entire family. Additionally, undertreated and untreated PPD has significant societal cost. We are pleased that the DEA completed its scheduling of ZURZUVAE as a Schedule IV drug, which is consistent with our expectations.

We remain on track to make ZURZUVAE commercially available in December of this year. Now Chris will provide specific updates related to this time line. The heightened and persistent engagement we’ve seen from a diverse community of stakeholders since the FDA approval of ZURZUVAE in August, we believe will ultimately translate into strong tailwinds for the launch success of ZURZUVAE. While we recognize that referral patterns, insurance coverage and current practices require change, we believe those women suffering from PPD deserve our full support effort starting now. PPD is a serious medical condition and deserves attention. We plan to join others in prioritizing, normalizing and destigmatizing this condition. While we remain focused on preparing for the launch of ZURZUVAE, we’re also excited about entering what we believe will be a catalyst-rich 2024, with multiple data readouts expected across our SAGE-718 and SAGE-324 programs.

Today, Laura will provide updates and more details on these programs. Looking ahead, we believe our future is bright. Following the reduction in our workforce and pipeline prioritization announced in late August of this year, we continue to operate from a strong financial foundation. Importantly, we remain well capitalized to accomplish our upcoming milestone. Kimi will provide more detail on our financial position later in the call. Now many continue to ask about the status of development of zuranolone and MDD. To be clear, our focus is on the successful launch of ZURZUVAE for women with PPD and working to enable broad and equitable access to these patients to important new treatment options. On MDD, we plan to provide updates when Sage and Biogen have made decisions on the program.

For now we’re focused on commercializing ZURZUVAE for the treatment of adults with PPD. To close, I want to reiterate that this is an exciting time to Sage with many upcoming milestones on the horizon. As we look ahead, I’m confident we’re positioned to make important progress in pursuit of our mission. With that, I’ll turn the call over to Chris to provide additional context on our upcoming commercialization plans for ZURZUVAE. Chris?

Christopher Benecchi: Thanks, Barry. I’m pleased to be with all of you this morning to share updates on our preparations for the commercialization of ZURZUVAE as a treatment for women with PPD. Since the FDA approval in August, we’ve been working closely with our collaboration partner Biogen on the commercialization strategy for ZURZUVAE. Urgency is top of mind given the significant unmet need that currently exists in PPD. In the U.S., it is estimated that approximately 1 in 8 women who have a live birth experienced symptoms of PPD each year, representing around 0.5 million women. Only half of those cases are diagnosed and even fewer are treated, leaving a substantial number of women experiencing harmful symptoms of this disease.

These statistics highlight the tremendous unmet need and compel us to act with urgency to bring forth ZURZUVAE, the first and only oral treatment specifically approved for women with PPD. We believe ZURZUVAE has the potential to be a first-line therapy and quickly become the standard of care for the many women with this disease. Following the approval of ZURZUVAE by the FDA in August and the recent DEA scheduling, we and Biogen remain committed to making ZURZUVAE commercially available in December. Making this treatment commercially available as soon as possible is our top priority. We know that weeks, days and even hours matter in the lives of women with PPD and their families who struggle to live their daily lives. The broader complement of our commercialization capabilities are expected to roll out in early 2024, including planned promotional activities delivered through omnichannel efforts.

To support the commercial availability of ZURZUVAE, we and Biogen have continued to progress our commercialization preparations. I would like to detail a few specific developments essential to understanding our approach to launch. First, we are pleased to announce the completion of the hiring of the Sage field sales teams. Our field sales team of neuropsychiatry account managers are seasoned sales professionals with deep experience launching treatments essential to improving brain health conditions. They come to Sage with strong track records of success promoting innovative products and bringing established relationships within the neuropsychiatry community, enabling them to rapidly and effectively engage with high-prescribing psychiatrists, OB/GYNs and PCPs who treat women with PPD.

We will aim to amplify their selling efforts with a dynamic digital platform that provides HCP level insights designed to enable timely, improved and personalized experiences for customers. This includes tools and AI models to help communicate with HCPs at the right time with the right content. Second, we are inspired by the consistent feedback we’ve received from HCPs that ZURZUVAE has the potential to be a breakthrough treatment for women with PPD. Achieving such status is predicated on our ability to reach the broader HCP community who treat women with PPD with our promotional efforts. Quite simply, we’ll need to do more than just deploy a highly experienced focused sales force. We also plan to execute targeted digital communications as part of a larger omnichannel effort to reach the broader audience of HCPs with PPD disease state education, product information and access to tools and resources so that women with PPD can find the care that they need.

Third, our discussions with payers remain highly productive. We are actively engaged with national, regional and government payers, communicating unmet need in PPD, reinforcing the weight of the evidence observed in our PPD studies, discussing the economic burden associated with untreated PPD and engaging in dialogue about access and reimbursement for women with PPD. To be a truly breakthrough therapy in PPD, we recognize that ZURZUVAE must be both accessible and affordable and we found most payers to be aligned with its potential to be a first-line therapy for women with this disorder. Historically, health plans and PBMs conduct formal formulary reviews once the product’s label is final. As we’ve just received DEA scheduling, which now completes the ZURZUVAE label, we now anticipate formulary reviews to begin and to continue over the course of 2024.

Considering the totality of evidence from our ongoing interactions, we believe our stakeholders are increasingly recognizing that ZURZUVAE has the potential to fill an important patient need as the first and only oral once-daily 14-day treatment that can provide rapid improvements in depressive symptoms for women with PPD. I’d like to now go into more detail on our planned access strategy for ZURZUVAE, an approach to establishing the wholesale acquisition cost. Resolving PPD symptoms early is not only what’s best for mom and baby, but can also begin to address the significantly higher health care resource utilization costs associated with PPD. For example, according to a 2017 model, the multiyear average societal cost of untreated perinatal mood and anxiety disorders for mother-child pair was approximately $32,000.

Women with PPD experienced more hospital admissions and overall higher health care resource utilization and health care expenditures than women who did not have PPD. Additionally, untreated PPD can have a generational impact. Perinatal mood and anxiety disorders can be associated with delayed or impaired long-term developmental, psychological, cognitive and physical outcomes in children. In societal costs for these outcomes in one study were estimated at nearly $2 billion for all impacted children through their first 5 years of life. Broad and affordable access for women with PPD who are prescribed ZURZUVAE has been and will continue to be a critical goal for Sage and Biogen. Over the last few years, Sage and Biogen have done significant stakeholder research and directly engage payers to understand critical access considerations and the perception of value that ZURZUVAE can deliver in PPD.

We have also been engaging with advocates and HCPs to gain their insights in these important areas. Access for women with PPD, clinical value, the existing unmet need, cost effectiveness and innovation have all been key considerations for the wholesale acquisition cost of ZURZUVAE. With all of this in mind, we have set the planned wholesale acquisition cost of ZURZUVAE at $15,900. We believe the wholesale acquisition cost accurately reflects the innovation, clinical value and impact ZURZUVAE can have for women with PPD. What we’ve heard from payers in our market research in one-on-one meetings is that ZURZUVAE remains a significant advancement for the treatment of PPD and has the potential to be a first-line therapy. ZURZUVAE is within the annual wholesale acquisition cost range of other commonly prescribed branded medications used to treat brain health disorders and the wholesale acquisition cost or ZURZUVAE is within the value range for the impact it can deliver.

Sage and Biogen are working diligently with the goal of enabling all women with PPD prescribe ZURZUVAE after commercial availability, be able to access it rapidly and affordably. That is ultimately achieved by working closely with payers with the intent to drive formulary acceptance with coverage that does not require onerous utilization management tactics like prior authorizations that are complex and step edits. To this end, we and Biogen are actively engaged with national, regional and government payers. Further, both Sage and Biogen are committed to the goal of delivering broad patient access immediately at launch for women with PPD and where possible, with little to no co-pay regardless of financial means. We believe lack of financial means should not prevent any women with PPD from obtaining access to ZURZUVAE.

Beyond these updates today, we and Biogen expect to share more details related to our patient support programs, distribution strategy and overall commercialization plans at the appropriate time. With that, I will turn it over to Laura for a more detailed discussion of our recent portfolio progress and current expectations. Laura?

Laura Gault: Thanks, Chris, and good morning, everyone. Over the third quarter, we have made important progress on our pipeline programs and I’m pleased to detail our recent advancements and our plans for continued execution over the coming quarters. I’d like to start by sharing my excitement around the FDA’s approval of ZURZUVAE and the treatment of adults with PPD. This approval reinforces Sage’s commitment to supporting mothers as our first FDA-approved medicine, PURVIEW was also approved in PPD bringing the first oral 14-day treatment to the market will be immensely impactful and marks a watershed moment for brain health. Women with the disease will finally have the option of a novel oral therapy specifically indicated for PPD that has the potential to rapidly improve symptoms and enable these women to fully engage with their baby and their families during this important time in their lives.

For a full description of the risk benefit for ZURZUVAE in the treatment of PPD in adults, including important safety information, I encourage you to read the product insert. We are also encouraged to see strong enthusiasm from the medical and scientific community for ZURZUVAE and we look forward to continuing to understand new insights from clinicians as they have directly observed in their practices the benefit of ZURZUVAE in women with PPD. Turning to our neuropsychiatry pipeline. We continue to advance SAGE-718, our wholly owned first-in-class NMDA receptor-positive allosteric modulator. This is a potential oral therapy for cognitive disorders associated with NMDA receptor dysfunction, including Huntington’s disease, Parkinson’s disease and Alzheimer’s disease.

These disorders continue to grow in prevalence globally and represent some of the greatest areas of unmet need in medicine. The burden of cognitive impairment among people with these disorders is high and for many occurs during their prime working years. As a consequence, employment changes resulting from cognitive impairment and associated functional decline can affect financial independence. Our goal is to reshape the treatment of patients with cognitive impairment, starting with our SAGE-718 program. I’d like to take the opportunity to highlight our clinical development strategy for SAGE-718, where we are currently enrolling in 5 clinical trials with data readouts expected next year. Starting with Huntington’s disease, or HD, I was pleased to see the FDA grant orphan drug designation for SAGE-718 in the treatment of HD last month.

Orphan drug designation is an encouraging regulatory milestone in our HD development program and it further advances our strategy to prioritize HD as a lead indication for SAGE-718. We are currently enrolling in 3 studies. The DIMENSION study is a placebo-controlled Phase III study that will evaluate the efficacy and safety of SAGE-718 compared to placebo in patients with HD with the HD cab as the primary endpoint. The SURVEYOR study is designed to advance our understanding of the effects of SAGE-718 on cognition and functioning in participants with HD. It is designed to complement the DIMENSION study by generating evidence to better define the clinically meaningful change and the relationship between changes in cognition and function. Importantly, the DIMENSION study is powered to evaluate the SAGE-718 placebo difference in changes in cognition and function while the SURVEYOR study will explore the relationship between changes in cognition and function and is not designed or powered to show statistically significant differences between groups.

Finally, the PURVIEW study is an open-label Phase III safety study in people with cognitive impairment due to HD designed to evaluate the long-term safety profile of SAGE-718. For our Parkinson’s disease indications for SAGE-718, we are enrolled in the PRECEDENT study, a placebo-controlled Phase II study in people with cognitive impairment due to Parkinson’s disease. We are also conducting the LIGHTWAVE study, a placebo-controlled Phase III study of SAGE-718 in people with mild cognitive impairment or mild dementia due to Alzheimer’s disease. Recruitment for these studies remains on track and we look forward to sharing more detail on the timing of data readouts in the coming quarters. Now I’ll turn to SAGE-324, an investigational next-generation positive allosteric modulator of GABAA receptors.

We believe SAGE-324 holds significant potential in the treatment of movement disorders like essential tremor or ET. ET is a disease that has limited treatment options and high unmet need as there has been no innovation in the space for over 50 years. When you look into patients living with ET, you realize that that the tremor can affect nearly every aspect of their daily lives and can make the simplest task difficult, if not impossible. Currently, patients with ET often cycle through many ET treatments and have roughly twofold of the health care spending of similar patients without ET. We and our collaboration partner, Biogen, recognize the high unmet need in this space and we remain on track to complete enrollment in the ongoing Phase IIb KINETIC2 dose-ranging study for SAGE-324 this year.

As a reminder, the purpose of the KINETIC2 study is to define the dose and the associated safety tolerability profile for SAGE-324 for use as iconic treatment. We look forward to providing updates on this program, including the top line data readout of the KINETIC2 study expected in mid-2024. Lastly, we remain excited on the potential of our earlier Sage programs, including SAGE-421, SAGE-319 and SAGE-689. And we are looking carefully at early data to determine potential signals or area of opportunity for the future. With that said, our near-term focus remains on bringing forward SAGE-718 and SAGE-324. In closing, I am proud of our pipeline efforts this year and I look forward to our future progress as we prepare to enter what we believe will be a catalyst-rich 2024.

Now I’ll turn the call over for a review of our financials. Kimi?

Kimi Iguchi: Thanks, Laura. Our financial results for the third quarter of 2023 are detailed in our press release issued this morning. I’d like to take a moment to provide some context and highlight a few key points. Before discussing specifics with respect to the third quarter financials, I want to reiterate my gratitude to the entire Sage team for their resilience and continued dedication to our mission to support brain health patients in the face of difficult circumstances. Following our strategic reorganization announced in August 2023, we maintain our strong financial foundation and continue to pursue focused execution across our pipeline. As a reminder, we believe the financial impact of the reorganization will result in annualized savings of approximately $240 million, which includes $100 million related to the workforce reduction.

Looking ahead, we’re prepared to execute on key milestones with the planned launch of ZURZUVAE and multiple expected top line data readouts for SAGE-718 and SAGE-324. In the near term, we’re laser focused on the commercialization of ZURZUVAE in the treatment of adults with PPD. As a reminder, we and Biogen are jointly supporting the planned launch of ZURZUVAE with a 50-50 cost sharing in the United States. While we’re thinking big about the launch opportunity in this indication, we intend to start with a focused approach and scale fast as we see success. Once launched, we expect to provide updates on ZURZUVAE during our quarterly earnings call, including metrics such as revenue and prescription data. In addition, we remain committed to making smart, disciplined investments across our pipeline.

While our current focus remains on SAGE-217 and SAGE-324, we successfully built a strategic reservoir of molecules, ranging from research through clinical Phase II ready that we believe provides optionality and agility in our portfolio. With a variety of programs across GABA, NMDA and new exciting targets, we will continue to make portfolio decisions informed by opportunities, timing and outcomes of our late-stage portfolio and exploratory investments. Turning to our financial results for the third quarter. Our net loss for the third quarter of 2023 was $202 million. As a reminder, we ended the third quarter with cash, cash equivalents and marketable securities of approximately $876 million. Turning to operating expenses. R&D expenses were $102 million in the third quarter of 2023.

The increase compared to the third quarter of last year was primarily due to expenses relating to canceling excess purchase commitments from manufacturing as a result of the CRL received from FDA for zuranolone for the treatment of MDD. SG&A expenses were $78 million in the third quarter of 2023. The increase compared to the third quarter of last year was primarily due to stock-based compensation expense related to performance-based vesting criteria during the third quarter of 2023. We’re also reaffirming that based on our current estimates, we anticipate current cash, cash equivalents and marketable securities, along with anticipated funding from ongoing collaborations, collaboration revenue from sales of ZURZUVAE and a potential milestone payment totaling $75 million from Biogen related to the first commercial sale of ZURZUVAE for the treatment of PPD will all support operations into 2026.

As we near major expected clinical catalyst, I’m confident that our balance sheet with expected runway into 2026 will enable focused execution toward our mission. We look forward to 2024 as we believe will make a difference in the lives of brain health patients by accelerating our progress to bring medicines that matter to market. I’ll now turn it over to Ashley to handle Q&A with the operator. Ashley?

Ashley Kaplowitz: Thanks, Kimi. Before I turn it over to the operator, I’ll ask that you limit yourself to one question. If you have an 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: [Operator Instructions]. And we go to our first question from Ritu Baral with TD Cowen.

Ritu Baral: I wanted to ask for a little more detail on your HCP targeting effort. I guess you mentioned OB/GYNs, neuropsychs and I guess, HCP to see a large volume of PPD patients from other specialties, I’m assuming. How are you going to sort of balance proportionally the targeting effort between those 3 groups? And insofar as you talk about HCP that see a large volume of PPD, are you talking about primary care, nurse practitioners, sort of how should we be thinking about that group?

Barry Greene: Thanks, Ritu. I’ll start and then ask Chris to dive into some more details. So you’ve got it right. As we said in our prepared remarks, we believe that the majority of women suffering from postpartum depression will be seen by their OB/GYNs, psych and PCP in terms of treating their postpartum. One of the big changes we see occurring in the market with PPD is that OB/GYN, since it’s in our guidelines and they now have really the solution that they haven’t had before, is a big — a big uptick in OB/GYN screening, diagnosing and treating these moms. So those are the 3 groups. Now we talk about OB/GYN, psych or primary care. We’re talking about the offices. So the health care providers in general, physicians, physicians’ assistants and nurse practitioners.

And those 2 latter groups, we actually see as a big part of the treatment pattern going forward. We’re seeing groups like that set up specifically to treat maternal mental health. So that’s how we’re approaching it. We also are enhancing the kind of reach and frequency with our omnichannel approach, a broad digital approach, providing health care provider education as they want to suit given this big shift we’re seeing in our ability to treat PCD with the first oral treatment available that’s clearly 14 days and very rapid-acting. Chris, do you want to add some more?

Christopher Benecchi: Barry, what I would add, and I mentioned in my opening remarks is we’re going to use insights and analytics to provide our sales organization with effectively real-time insights to effectively target their messaging and their resources to augment what we’re also going to be doing from a non-personal or a digital perspective. So we’re going to really engage high-prescribing physicians, whether OB/GYNs, PCPs or psychiatrists with the right message at the right time with the right resource to effectively move this market with ZURZUVAE because moms can’t afford to wait. We need to be out there and we need to be delivering messages rapidly and effectively.

Operator: Next we go to the line of Yasmeen Rahimi with Piper Sandler.

Unidentified Analyst: This is on for Yas. I was just wondering if you could talk about if there are any prior authorization requirements for patients getting ZURZUVAE? And if so what would those be?

Barry Greene: Yes. Thanks, Liam. Again, I’ll start and ask Chris to chime in. So as we thought about the wholesale acquisition cost and our approach for ZURZUVAE, our goal is to ensure the largest number of women with PPD that are prescribed ZURZUVAE are able to access it, while at the same time recognizing the value our innovation. We at Sage and Biogen were deliberately thoughtful on determining the wholesale acquisition cost. And prior often step at . Chris, do you want to add some more?

Christopher Benecchi: Yes, Barry. What I’d add is we’re right now actively engaged with national, regional and government payers. And based on the feedback that we’ve received to-date, we don’t anticipate complex prior authorizations and step edits associated with the prescription of ZURZUVAE. It’s — we really believe that we’re introducing a medication that is a breakthrough medication and offers really unique value to patients that are part of these plans. With that said, most payers are aligned with the [indiscernible] for ZURZUVAE to be first-line therapy for women with postpartum depression. And as we’ve heard from many of those payers, the wholesale acquisition cost of ZURZUVAE is within the value range for the impact it delivers.

It is within the annual wholesale acquisition range of other commonly prescribed branded medications used to treat brain health disorders. And ZURZUVAE remains a significant advancement into my compares for the treatment of postpartum depression and has the potential to be first-line therapy.

Operator: [Operator Instructions]. And next we go to the line of Anupam Rama with JPMorgan.

Anupam Rama: Maybe following up on some of the prior comments here, but maybe you can give us a little color on what you’re seeing from the initial formulary reviews. And I think you said this process could go into 2024. But just maybe speak about the urgency of completing some of these formulary reviews given the nature of PPD and the need to treat quickly?

Barry Greene: Yes. Thanks, Anupam. That’s a really important question. We are certainly with Biogen moving with urgency, which is why we highlighted that we’re going to make ZURZUVAE commercially available in December with fuller launch capability early next year. And the payer and payer engagement with [indiscernible] and I’ll ask him to comment further, we’ve already started. One of the tailwinds we’re seeing here, given the clinical profile of ZURZUVAE is an appreciation that on or undertreated PPD costs payers, cost to health care system a significant amount of money. And I think, of course, there’s the humanistic side, which is really what we’re focused on, helping that mom, helping that mom connect with her baby. So that another undertreated PPD, mom does not have generational impact and become a burden for themselves or baby.

So that’s a big focus. From a payer front, I think the payers are recognizing the value of ZURZUVAE and Chris can talk about some of the economics. Now of course, formulary review takes some amount of time. And there are certain plans that will be online quickly and other plans and everyone knows this, unfortunately, part of their policy is kind of a 6-month wait until they will review. So we’ll be moving as quickly as possible. That being said, we’ll have programs in place which Chris can talk about, so that when a prescription is written for someone suffering with PPD, that prescription is filled. Chris, do you want to provide some more color there?

Christopher Benecchi: Yes. Barry, what I would add is that we’ve engaged with payers. And as I noted earlier, we’re engaging with national retail and government payers. What resounds is that they appreciate the unmet need that exists in the PPD market. They certainly appreciate the clinical value that ZURZUVAE has the potential to offer to many of their enrollees. And they also understand that there’s an economic impact of untreated depression, whether it’s societally or on their plans themselves. So all of those conversations have really bolstered the dialogue that we’ve had with payers over the course of the time that we’ve spent with them specifically talking about PPD since the PDUFA announcement. With that being said, we’re going to do everything that we can to enable broad and affordable and equitable access with minimal restrictions so that patients that are part of these plans where appropriate, have little to no co-pay when possible because we don’t want financial barriers to prevent any mom for being able to access this medication as we’re out doing work with payers.

Operator: We go next to the line of Tazeen Ahmad with Bank of America.

Tazeen Ahmad: Two relatively simple ones. Maybe, Barry, can you tell us how long it’s going to take, I know it’s a little bit difficult because you’re just starting, from the time a script is written to the time it’s actually dispensed to the patients on a commercial basis, at least early in the launch? I’m just trying to get a sense of how the early ramp could progress even though clearly there’s high demand. But assuming that payment is the major driver holding back uptake. Just want to get a better sense of how you’re thinking about it? And then secondly, on your pricing, you talked about it in the prep remarks, but I wanted to get a sense of, can you give us a little bit of color on how this price might have differed from the price that you would have gone with if you were also launching with MDD?

Barry Greene: Yes, Tazeen, thanks for the question. Let me start with the wholesale acquisition cost side and then Chris can talk about how we’ve set up the specialty pharma and time from scripts. That’s the patient of course, Chris, you can certainly weigh in on the wholesale acquisition cost. So as I said earlier, Tazeen, we were very thoughtful and very deliberate in setting the wholesale acquisition cost through ZURZUVAE that we believe reflects the clinical and economic value and importantly, other key considerations, including access for women with PPD, the unmet need, the cost effectiveness, innovation, some of which we’ve talked about before. We believe that the wholesale acquisition cost set helps the idea that will limit complex prior auths, step edits.

And if you kind of go too high, you have some of those, if you go too low, clearly leaving a tentative value on the table. Chris mentioned this before, but it’s important to understand that in a health — in a model done by in 2017 study, the value that we’re potentially adding the health care system, they understood that the multiyear average societal cost of untreated PPD and broader perinatal conditions is approximately $32,000. So we believe that with the wholesale acquisition cost, we are providing value to the health care system. You can’t really compare that against how we might have approached the different indications. As I mentioned earlier, we’re solely focused on a successful launch with helping as many suffering from PPD as we can.

And if another indication comes back on the table later, we’ll make those adjustments later. Hopefully, that helps Tazeen. Chris, do you want to talk — I don’t see any color there, but talk about time from script to patients getting through ZURZUVAE.

Christopher Benecchi: Yes, Barry, what I would add is that both Sage and Biogen expect to make ZURZUVAE commercially available in December of 2023. And then to do that, we’ve created a distribution model designed to provide rapid access and high-quality patient experience for women with PPD. So in effect, when a prescription is written, that the physician can get the medication seamlessly for the patient. And when the patient is able to access the medication, he or she can do so affordably. And we have the educational resources, the support services and the financial assistance programs in place to make sure that the patient is able to access the medication within days. And as I mentioned earlier, we know that for this population, days matter. So that’s where we’re squarely going to be focused on with respect to the distribution model that we’ve set up.

Barry Greene: Sorry, as Chris said, it will be very fast. And from the prescription going through electronic medical system to the patients getting at their home will be very rapid, within days is the goal.

Tazeen Ahmad: Okay. Yes. That’s good to know and maybe just to wrap that up, what should we expect the gross to net in the early part of the launch to be?

Barry Greene: Kimi, you want to talk about that?

Kimi Iguchi: Yes. So Tazeen, it’s a little early to be providing that kind of guidance. When we can provide more, we’ll update you.

Operator: We go next to the line of Salveen Richter with Goldman Sachs.

Salveen Richter: With regard to your partnership here with Biogen, how has the partnership evolved since the CRO in MDD? And then what aspects of commercialization do you expect them to take the lead?

Barry Greene: Yes. Thanks for the question, Salveen. So when we issued our press release in early August announcing the approval of ZURZUVAE for PPD, we advise them together committed to having ZURZUVAE commercially available by the end of the year. And we’ve reaffirmed that on this call that we’ll have usually commercially available in December with the fuller complement of launch capabilities early next year. As Chris noted in his comments, we’ve been working diligently with Biogen to roll out and fully commercialize ZURZUVAE and work more hand-in-hand in that. We have not talked about the specific provision of labor as there are some things that we’re taking the lead on, others that they’re taking a lead on. But I think sitting here right now, we’re very well positioned for commercial availability of ZURZUVAE and the fuller launch on happening early next year.

Operator: Our next question or comment comes from the line of Jay Olson with Oppenheimer.

Jay Olson: Congrats on the progress. Can you talk about the total potential commercial opportunity for PPD? And when do you expect the ZURZUVAE P&L to become profitable?

Barry Greene: Yes. Thanks. I appreciate the congratulatory note. We certainly have made a lot of progress. Let me start with the opportunity. I’ll ask Chris to add any color there and then Kimi can follow up with how we’re thinking about the financials. So as we talked about, Jay, on the call, epidemiologically, approximately 1 in 8 live birth results in the potential for PPD. So that’s about 0.5 million women in the United States per year. Unfortunately, less than half of that is diagnosed and even far fewer are treated. Now if you think about the condition today kind of the as is, we have ZULRESSO out there, of course, to treat PPD. But as we all know, there are certain access hurdles given the IV infusion. But mostly those that have the good fortune of being diagnosed and treated or treated with antidepressants, that can take weeks to months to work if ever and ended up working through a very complex referral process.

As you heard Chris talk about earlier on the call, we believe that ZURZUVAE as a rapidly acting oral 14-day course of therapy fits into a physician’s practice pattern, whether it’s OB/GYN, psych, or PCP and there’s much more extensive to diagnose and screen. So we believe the opportunity is significant in the early years, but really continues to grow in the outer years as diagnosis and treatment rates should continue to increase. So we think it’s clearly got blockbuster potential and even more importantly, the ability to help all these women suffering from PPD. Chris, do you want to add some more color? And then Kimi follow up with some of our financial thinking?

Christopher Benecchi: Yes. Barry, what I would add is you covered the epidemiology and the blockbuster potential for this medication. But the thing that I would add to those comments is that when we received approval for ZURZUVAE at PDUFA, the media coverage was remarkable. The social media activity was really impressive. So what that really signals is that you have an active group of patients, clinicians and patient advocacy organizations waiting for this medication. And that’s an opportunity that we’re going to capitalize on at launch because as I said earlier, we know that patients can’t afford to wait for a medication like this and we’re going to do everything that we can to drive broad and rapid and equitable access to this medication at launch.

Kimi Iguchi: And just to follow up on the financials. We certainly are thinking big about the PPD opportunity, as Chris and Barry just talked about. But when we think about the commercialization strategy, we’re thinking that we’re going to start small and then scale it success. We don’t want to get ahead of ourselves with regards to building an infrastructure and building a cost structure. So we’re going to scale that as we see success.

Operator: We go next to Brian Abrahams with RBC Capital.

Leonid Timashev: This is Leonid on for Brian. I actually wanted to follow up on some of what you’ve been hearing on the ground with respect to providers and physicians. And you guys had mentioned the initial enthusiasm from the media coverage. And I guess I’m curious, has that been pulling through into a request for information from physicians and providers? And are there any challenges in having, I guess, the launch take place a few months after you had all the fanfare from the media and is there any efforts to sort of recapture that and rebuild it so you can pull that momentum into the launch?

Barry Greene: Yes. Thanks, Leonid. That’s a very insightful question. Let me start and I’ll ask Chris to comment further. So the quick answer is that the media attention clearly has spilled over into patients, patient advocacies, health care providers. There’s tremendous enthusiasm for improving diagnosis and to treat PPD in a whole new way. And now that we’ve announced that we’re making ZURZUVAE commercially available in December, I believe that uptick will continue. And we’ll also add before I turn it over to Chris, that the media attention was not by accident. There are very important outlets that are very interested in maternal mental health and we’re in constant dialogue with them and providing information that they importantly want to hear. So Chris, do you want to add some color there?

Christopher Benecchi: Barry, what I would add is that I see enthusiasm continuing to build amongst all of our stakeholders, whether it’s the interactions that we’re having with payers or the dialogues that we’re having with clinicians and key opinion leaders at various medical meetings and in one-on-one conversations or with patient advocacy organizations that as we continue to have all of those conversations, we would expect that enthusiasm to continue to build up and through an announcement around commercial availability. So we’re going to capitalize on those dialogues over the course of the coming weeks to make sure that when we ultimately are commercially available, everybody is aligned in from a stakeholder perspective, ready to prescribe this medication for women with PPD.

Operator: We go next to Paul Matteis with Stifel.

Paul Matteis: I was curious now that you’re getting ready to launch, how many PPD patients specifically are actively treated in the care of a psychiatrist right now? And do you have any kind of data or any grounded data you can give us on just patient flow for PPD in OB/GYN practices, how many patients get either a Benzodiazepine or an SSRI, just any context there would be helpful?

Barry Greene: Yes. Paul, thanks. I appreciate this is important for your model. And we certainly understand the high-prescribing physicians, but don’t have perfect information about that flow and legal change. So let me go through again a high level of announcement. Chris and Laura, if you comment about how we see it today and changing over time. So the numbers are already pretty significant. There’s a couple of hundred thousand women diagnosed a year and about half of those are treated. So 100-plus women treated with various antidepressants today. So if we can simply get to those women with a better oral rapidly acting 14-day treatment course of ZURZUVAE, we’re in pretty good shape. Of course, our drive is to see the diagnosis rates improve and obviously, the treatment rates improve now that we have a different solution for them. But Chris, do you want to add more? And Laura, maybe you want to round it out?

Christopher Benecchi: Barry, what I would add is, roughly speaking, as we look at the prescriber universe, roughly 1/3 of patients are coming through right now OB/GYN practices. In effect, what I would anticipate over the course of time with things like the ACOG guidelines and now the availability of a medication like ZURZUVAE, which has the opportunity to be the first oral therapy for the treatment of PPD, that prescribing to only increase within OB/GYN practices as we go forward. We know that historically through our interactions with OB/GYNs from a ZULRESSO perspective that having something like this that is an oral therapy is going to profoundly change the way that OB/GYNs think about utilizing a medication like ZURZUVAE to help their patients.

So we’ll continue to focus on OB/GYNs. We’ll also capitalize on the opportunity within the psychiatry practices to make sure that they are well aware of this therapy and the impact that it could have on their patients. Laura, anything that you would like to add?

Laura Gault: Yes. And to add, I’d like to emphasize that ZURZUVAE with a 14-day treatment course really fits well into the practice pattern of the OB/GYN and it’s very different from what they’ve been able to access previously using treatments off-label to treat PPD. So I do think that when there’s a solution to a problem, you see people much more ready to identify the problem and then use the solutions they have at hand. I think with regard to psychiatrists, what you’ll see is that they will engage their patients who are already in their practices with depression and talk with them about the risk for postpartum depression during the pregnancy and also have a plan in place to treat them rapidly should those symptoms emerge in the postpartum period.

Barry Greene: Great. Thanks, Chris. Thanks, Laura. Appreciate the question, Paul.

Operator: We go next to the line of Ami Fadia with Needham.

Ami Fadia: And congrats on the progress. I have a question on the payer coverage. You mentioned you don’t expect any complex prior authorization. Would there be any prior authorization? And if so what type of prior auths are you anticipating? And as we think about the initial launch, how should we think about access for patients while payers are making the coverage decisions?

Barry Greene: Yes. Very important question. It’s important, as we said, that we’re leaning in to make sure that access for patients with or without coverage is there. Chris, do you want to take it?

Christopher Benecchi: Yes, Barry. So with respect to the first part of the question, types of prior authorizations, when payers look at utilization of medications like ZURZUVAE, they want to make sure that the right patient gets the right medication at the right time. So any prior authorization would be around something like the patient being a woman diagnosed with postpartum depression. So that’s the kind of prior authorization that I would expect, which is not a complex prior authorization. That’s a checkbox PA that clinicians are very familiar in dealing with. In terms of managing patients who don’t have insurance coverage, I said earlier that as an organization, we’re going to lean in with support services, with education and financial assistance resources at the time of launch.

So if a patient in effect is functionally uninsured, Sage as an organization along with Biogen is going to lean in to make sure that that patient doesn’t have to wait an extensive period of time to get access to ZURZUVAE. We’re going to do everything that we can to get that patient on medication because as I said earlier, women with PPD can’t afford to wait.

Operator: We go next to George Farmer with Scotiabank.

George Farmer: Just wondering if you could go into some detail about what the diagnostic criteria are going to be in order for pre auth to get approved. It seems to me it was such an expensive drug that one would want to differentiate, say, from just general baby blues to follow-on diagnostic — diagnosed PPD. Can you speak to that?

Barry Greene: Yes. Let me start and I’ll ask Laura and if Chris has more color to add, Chris comment on that. So let me start with, George, I think, as we said at the beginning of the call, we and Biogen were deliberate and thoughtful when determining the wholesale acquisition cost for ZURZUVAE. And I actually believe that we’re adding value to the health care system. We will publish the relative cost-effectiveness of ZURZUVAE versus what’s being used today, SSRIs, and others, which, as you heard Laura talked about, takes weeks to months to work and the societal cost of un or undertreated PPD on the mom and baby very, very significant. So we actually think that the way we position the wholesale acquisition cost is adding value to the health care system, not “expensive.” In terms of how to diagnose, let me ask Laura to talk about how we believe the various health care providers will diagnose and then attest to that diagnosis.

Laura Gault: Sure. Thanks, Barry. So I know when people think about PPD, they think about the baby blues as well. And the baby blues is a real thing. It happens in about 80% of pregnancies in the first week or so following delivery. But the presentation of the baby blues is very, very different from the presentation of postpartum depression. In baby blues, people might be a little weepy, they might have some changes in mood, might be a little anxious. But that lasts only a few days and it results. With postpartum depression, the magnitude of these symptoms, the severity is much higher and it lasts for a much longer time. And it really interferes with the ability of the mom to take care of her baby and to take care of the other children and the family.

It has real functional consequences. And so the differences between these 2 are really abundantly obvious to people who are used to treating women in the postpartum period. And I don’t think that these will be confused. As a consequence, I believe that payers are also going to recognize that clinicians are appropriately diagnosing the patients who will benefit from treatment.

Barry Greene: Yes. Chris, do you want to order on how we think, where we have prior auth, they might work?

Christopher Benecchi: Yes. So to talk about prior authorization, Barry, and let me take a step back and just say that based on the fair feedback state, we don’t anticipate complex prior authorization associated with the prescription of ZURZUVAE. In effect, what we would anticipate is that if there is any prior authorization, it would be a checkbox PA around something like the patient having a diagnosis of postpartum depression from her clinician. That’s really the feedback that we’re getting at this point to-date.

George Farmer: So it will be just as simple as that, just to check the box diagnosis?

Barry Greene: Yes, George, that’s what we’re working towards. I mean, it’s a sole indication. So if prescriptions go in, there’d be a potential electronic question back, please confirm this is PPD, without a whole bunch of other heavy diagnostics. Again, the payer system understands the economic burden associated with an under or undiagnosed PPD and it’s extreme to that mom and the baby as well as the societal indication. So I think it’s very well understood.

Operator: We go next to the line of Sumant Kulkarni with Canaccord.

Sumant Kulkarni: It’s nice to see that ZURZUVAE will be able available for patients in the near future here. So we went through the review documents for ZURZUVAE and we’re looking specifically at the post-marketing requirements and commitments. Do you expect these studies, especially the nonclinical safety study to have the potential to make any adjustments in the language of the label as it stands today? And would those have any bearing on your potential ability to still pursue zuranolone for major depressive disorder?

Barry Greene: Hey Sumant, thanks. So let me start and I can turn it over to Laura. So as you are, we’re very excited after all this time to make ZURZUVAE commercially available to those suffering from postpartum depression. We’re really looking forward to getting out there and helping as many women as we possibly can. In terms of our focus, as I mentioned on the call, we’re very, very focused on the successful launch of ZURZUVAE for PPD. As I commented on, if there are any other indications that come into the label or revise in making any definitive determinations, we’ll certainly let you know. But I think everybody should be solely focused on ZURZUVAE for PPD for the foreseeable future. Laura, do you want to talk about — they’re not very significant, the post-marketing requirements you have?

Laura Gault: Sure. So we received 2 post-marketing requests on the approval of ZURZUVAE for PPD. One is to conduct an embryofetotoxicity study in a second species and the other is to understand the PK safety and tolerability of ZURZUVAE in females aged 16 to 80. So each of these studies is in the process of being conducted. When we have the data, we will approach the agency and share that data with them. And we will have a discussion with them about whether changes to the label are warranted based on these new data.

Barry Greene: We certainly anticipate the 14 — the 16-year-old plus data as we did with ZULRESSO being something that is a labeling change in activity. Were there anything else is to be determined.

Operator: We go next to the line of Laura Chico with Wedbush Securities.

Laura Chico: Just referencing ZULRESSO. I’m wondering if you could kind of circle back to that time line between writing a script and getting it issued for ZURZUVAE. And just remind us, what did that kind of evolution look like over the course of ZULRESSO’s time on the market? Were you able to condense that down? And any learnings there in terms of how it might help with ZURZUVAE?

Barry Greene: Yes, let me take that. So in terms of — let’s start with ZULRESSO. In terms of ZULRESSO, if a health care provider does a definitive diagnosis on PPD, start [indiscernible] because ZULRESSO requires a infusion site and then a lot of logistical support. It could be flights, caring of children. The fact that we had such an increase — and the numbers were small, but such an increase from the beginning of ZULRESSO to last quarter, almost a three or fourfold increase in the number of women we’re helping really shows the unmet need and the desire to treat given all the logistical challenges. With ZURZUVAE, it’s an oral treatment that comes in 8 pack as we showed on our slides during the call, and it works like any other script that will flow through specialty pharma.

So the script will be sent into the electronic medical system. Questions may be asked back to confirm it’s PPD. And that script, our goals and days should arrive in the hands of the postpartum women and ready to treat. And hopefully, each and every woman sees the kind of result it’s on clinical practice, so a rapid improvement in clinical development, a rapid improvement in depressive systems as early as 3 days, complete your 14-day impacting. We have goals to reengage with baby and family. So we really do believe that ZURZUVAE in PPD works like other prescriptions out there, scripts written, those suffering receive that drug very, very rapidly. And all of those lessons have been applied to the commercialization of ZURZUVAE.

Operator: We now turn to Barry Greene for any additional or closing remarks.

Barry Greene: Thanks, Melinda, and thanks again to everyone for joining us this morning to review our results from the third quarter of 2023. As we look ahead to the commercial availability and subsequent launch of ZURZUVAE in the treatment of women with PPD and prepare to enter what we believe will be a catalyst-rich 2024 with multiple data readouts expected that provide the potential for long-term value creation, I’m confident that we’re making important progress to deliver our mission to develop and launch life-changing brain health medicines so every person can thrive. Thanks again, everyone. Have a great day.

Operator: Thank you. This does conclude today’s teleconference. We thank you for your participation. You may disconnect your lines at any time.