Sage Therapeutics, Inc. (NASDAQ:SAGE) Q4 2022 Earnings Call Transcript

Sage Therapeutics, Inc. (NASDAQ:SAGE) Q4 2022 Earnings Call Transcript February 16, 2023

Operator: Good morning. Welcome to the Sage Therapeutics’ Fourth Quarter and Full-Year 2022 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 Helen Rubinstein, Director of Investor Relations at Sage.

Helen Rubinstein: Good morning and thank you for joining Sage Therapeutics’ fourth quarter and full-year 2022 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 the slides that we would be reviewing today. I’d 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 fourth quarter and full-year 2022.

We will also be joined by Jim Doherty , who will provide an update on our launch preparations for the zuranolone in MDD and PPD if approved, and we will then be joined Kimi Iguchi, our Chief Financial Officer, who will review the financial results from the fourth quarter and full-year 2022; Laura Gault, our Chief Medical 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, Helen, and thank you everyone for joining us this morning. At Sage, we’re advancing potential treatments for brain health by challenging convention and prioritizing what matters most to patients. And today, our work matters more than ever. We’ve reached the public health crisis tipping point. Brain health disorders are one of the leading cause of disability and threatened impact future generations. We see profound implications firsthand as friends, loved ones and neighbors continued to struggle. Yet over the last half century have been insufficient advances in the treatment of mood, cognition and were determined to change the trajectory of this crisis. This is an incredibly exciting time at Sage. We’re progressing a promising and targeted brain health pipeline with the potential impact millions of people globally.

The pipeline is a result of our innovative approach to drug discovery and development, which starts with our novel work on the GABAA and NMDA receptor systems. These pathways are important regulators of brain function and the key to unlocking potential breakthroughs that may improve brain health. Importantly, we believe our team and our strong financial foundation puts us in a position to further our (ph) ambitions. With the goal of being able to launch new drugs or indications for years to come. The time is now to unleash the potential of our science and making meaningful impact on the lives of millions. Moving to the next slide, we’re making progress across our pipeline as demonstrated by the latest regulatory milestone for Zuranolone, which we’re developing in collaboration with Biogen.

As we recently announced, we’re encouraged by the FDA acceptance of our NDA filing for Zuranolone with priority review a Major Depressive Disorder and Postpartum Depression with the PDUFA action date of August 5 of this year. If approved, we expect the potential launch near the end of 2023, assuming no extension of the FDA review period. With that timing in mind, we remain laser focused on preparing for the potential commercialization of Zuranolone, which Chris will walk through in more detail. Our commitment to be as innovative in helping to enable access to treatment as we’re developing (ph) medicines will be a key aspect of our overall commercialization strategy. To achieve that, we’re collaborating across the ecosystem with payers, healthcare providers, patient advocates and policymakers with a goal of providing a model for care that works in the best interest of patients with MDD and PPD.

We look forward to providing updates as appropriate. I would like to note since we now are in an FDA review period, we will not be making comments on the potential label, FDA interactions or related topics. In addition to Zuranolone, we have a robust pipeline of investigation programs that have potential to help patients at all stages of their lifespan. With nine clinical studies ongoing. These include SAGE-718, our first in class NMDA PAM, which are currently advancing in four placebo-controlled studies and an extensive study across Huntington’s, Parkinson’s and Alzheimer’s disease. We’re also making important progress in our neurology franchise led by SAGE-324, which is being evaluated as a potential treatment for people suffering from essential tremor and other neurological disorders.

I’d also like to highlight some of our earlier stage programs, including SAGE-319 and SAGE-689. These are great examples of our product engine that we believe will continue to deliver robust product candidates and have the potential for long-term value creation. To close, I am confident 2023 will be a pivotal year for Sage particularly as we look forward to the potential approval of Zuranolone in the advancement of our Brain Health pipeline. With that, I’ll turn the call over to Jim for a more detailed discussion of our recent portfolio progress and current clinical expectations. Jim?

Jim Doherty: Thanks, Barry, and good morning, everyone. We’ve made important progress across our development pipeline throughout 2022, and I am pleased to detail our recent advancements. Starting with depression, we’re excited about the recent FDA acceptance of our NDA filing for Zuranolone in MDD and PPD with priority review as Barry mentioned earlier. Our NDA package is supported by seven positive trials across the landscape in NEST clinical development program, which encompasses data from more than 3,500 patients. Importantly, we’ve seen a consistent clinical profile to-date across the development program in MDD and PPD, including a rapid and sustained reduction in depressive symptoms as early as two or three days, a generally well tolerated safety profile, improvements in quality of life and overall health across domains of feeling, functioning and well-being, which I’ll talk more about shortly.

And a short treatment course with the potential to be taken as needed with a novel mechanism of action. And finally, the potential for a flexible treatment approach in MDD and PPD that may provide optionality to healthcare providers and patients if Zuranolone is approved. And I’ll note the potential for flexibility we see with Zuranolone is exactly what HCPs have been asking for to help their patients. Let me expand on the well-being and functioning data I referenced. We touched on this during our JPM presentation, but it’s important to highlight in the context of the recent acceptance for filing of our NDA as these data suggest the potential for Zuranolone to improve measures of functioning and well-being that are important for patients with depression.

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What you’ll see here is an integrated analysis from completed placebo-controlled trials across the MDD and PPD studies, showing that those treated with Zuranolone reported rapid and sustained improvements in health-related quality of life, compared to placebo as measured using SF-36 scores. These results were consistent at the day 15 and the day 42 endpoints. To summarize, these data are an important indicator as it relates to quality of life and overall health. Depression affects a person’s ability to feel, think, and function. The blunt sensations of pleasure closes off, connectedness and stifles creativity. It’s important to note that patients don’t want to feel less depressed, they want to feel well and get back to their normal everyday lives.

Zuranolone, if approved, has the potential to help patients achieve that. We see the opportunity for people to feel well, and we know that’s what matters most to patients. We also conducted interviews as a part of the open label SHORELINE study with over 30 patients, who responded to 50 milligrams of Zuranolone and were in the study for at least six months. These interviews illustrated that a substantial majority of surveyed responders noticed improvement in their mental and physical symptoms in the first week and were satisfied by it. In addition, a majority of surveyed responders were reported feeling fine, positive, or neutral about the need to be retreated and all were satisfied with Zuranolone as a treatment. This feedback reinforces the potential positive experience Zuranolone could provide for patients with MDD and PPD if approved.

I’ll now move to SAGE-718, our lead NMDA receptor PAM, that is an investigational oral therapy being developed for certain disorders where impairment of cognition is one of the main drivers of disability. This is one of our wholly-owned programs and was granted Fast Track designation by the FDA as a potential treatment for cognitive impairment in Huntington’s Disease or HD. We are also investigating SAGE-718 in people with mild cognitive impairment due to Parkinson’s Disease or PD and people with mild cognitive impairment and mild dementia due to Alzheimer’s Disease or AD. These disorders represent some of the greatest areas of unmet need and we know that globally they continue to become more prevalent and significantly disrupt lives. On that basis, we’re excited about the continued progress we’ve made across the program.

As we mentioned earlier this year, we recently initiated the LIGHTWAVE study, a Phase 2 study of SAGE-718 in people with mild cognitive impairment and mild dementia, due to Alzheimer’s Disease, as well as the PURVIEW study, a Phase 3 extension study in people with Huntington’s Disease. We expect data from the ongoing studies with SAGE-718 to start reading out in 2024, and we will share more detailed timelines when appropriate. We’re also advancing a robust portfolio that has the potential to help patients at all stages of their lifespan. Let me provide a couple of highlights, starting with SAGE-324 receptors. We believe that SAGE-324 holds significant potential in the treatment of neurological conditions like essential tremor or ET and we and our collaborator Biogen anticipate completion of enrollment in the ongoing Phase 2b KINETIC 2 dose ranging study late this year.

We’re also excited about the opportunities in our early development programs, including SAGE-319, our extra-synaptic preferring GABAA PAM, which we are advancing from IND enabling studies into Phase 1 studies. We also continue to make progress with SAGE-689 and SAGE-421 and believe that they will become important pipeline contributors over the coming years. In closing, I’m proud of our progress in the fourth quarter and full-year 2022, and I believe that we are well positioned to execute against clinical objectives and advance our efforts to develop brain health medicines with the potential to deliver what matters most to patients. Now I’ll turn the call over to Chris to provide additional context on our planned approach as we prepare for the potential commercialization of Zuranolone in MDD and PPD.

Chris?

Chris Benecchi: Thanks, Jim. I’m pleased to be with you all this morning to share updates on our commercialization preparation for Zuranolone. To ensure the successful launch of Zuranolone, if approved, we made important progress last year on the commercialization front. Core activities that have enabled our state of readiness include, advancing conversations with payers as permitted with the goal of enabling access at launch, engaging and educating HCPs through meaningful scientific exchange and hiring experienced commercial leaders to orchestrate plans intended to achieve a successful launch in Zuranolone if approved. With the recent announcement of the acceptance of our NDA filing, we remain laser focused on preparations to execute our launch strategy.

Let me outline our thinking on the potential timelines for Zuranolone. Based on our PDUFA action date of August 5, if Zuranolone is approved for the treatment of MDD and PPD without extension of the FDA review period, we expect the potential launch near the end of 2023, following an anticipated three-month DEA scheduling review. We will be prepared and anticipate entering a market that is ready for the approval of Zuranolone. As you’ll see on slide 14, we believe the opportunity in MDD is large with millions of patients not satisfied with current treatment options. People who continue to experience unresolved symptoms of depression are at risk. Many are unable to go to work or take care of their families. Is difficult for these people to live their normal lives, and the longer they wait to treat their symptoms, the more likely they are to experience negative outcomes.

Such as impaired functioning and subsequent relapse. This is why rapidity matters, both in terms of initiating a therapy as soon as patients show symptoms, as well as achieving the rapid improvement of depressive symptoms. The key takeaway here is a more rapid and sustained approach to treating a depressive episode may increase the likelihood of better symptomatic and functional outcomes. Given the rapid improvement seen in clinical trial to-date, we believe that if approved, Zuranolone has the potential to provide a new treatment option to patients suffering with MDD with the goal of helping them return to a state and well-being sooner. In PPD, there is similarly a large unmet need with an estimated one in eight mothers in the U.S. experiencing symptoms for postpartum depression.

Despite being a common mental health disorder, women experiencing symptoms may often go undiagnosed or untreated, and we see that clearly in the low diagnosis rates. Not only does PPD have an effect on a mother’s overall function, but it can also have an impact on the ability for that mother to take care of her baby. These mothers and their families deserve better. Our goal with Zuranolone, if approved, is to work with the entire ecosystem to change the treatment paradigm by significantly improving diagnosis rates in women with PPD and provide HCPs with the first and only FDA approved oral treatment indicated for PPD that has the potential to help moms get better sooner. As we enter 2023, we remain focused and diligent on our commercialization efforts in anticipation of potential launch.

We continue to engage with key stakeholders in scientific exchange and are also encouraged to see positive signals for the patient advocacy community on the importance of accelerating access to innovation in mental health. And as Barry mentioned earlier, we plan to be innovative on the patient access front. Our goal for this launch is successful is that those living with MDD and PPD, who are prescribed the therapy have timely access with limited complications such as step edits, and prior authorization. In addition to our own work, we are seeing state governments across the nation make reforms to fill first policy and have historically restricted patient access to the right treatment prescribed by their physician at the right time. People with MDD and PPD deserve rapid and effective therapeutic options introduced early during treatment.

Because early treatment is believed to deliver the best outcomes as I previously touched on. Given the unmet need, we believe that Zuranolone, if approved, is best positioned at launch for MDD patients requiring a first add or first switch therapy after continuing to experience depressive symptoms following their initial treatment course, including patients who have tolerability issues or non-compliance with chronic therapy. In PPD, we strive for Zuranolone to become standard-of-care at launch with use as first line therapy for treatment naive patients who are newly diagnosed with PPD or in place of other therapies currently administered. In the conversations we’ve had with payers, they’ve been highly engaged and receptive and we believe they see a role for a potential rapid acting sustained 14-day course oral therapy in treating both MDD and PPD.

We feel an urgency to deliver a new treatment option to patients given the profound unmet need that still exists in the treatment of MDD and PPD. We are dedicated in our efforts to continue to advance Zuranolone with the goal of gaining approval and being able to offer medicine with the potential to treat these patients rapidly and improve their symptoms. Now, I’ll turn the call over to Kimi for a review of our financials. Kimi?

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Q&A Session

Kimi Iguchi: Thanks, Chris. Our financial results for the fourth quarter and full-year of 2022 are detailed in our press release that we issued this morning. I’d like to take a moment to provide some context and highlight a few key points. We ended 2022 with a strong cash position, which provides us with the flexibility to support the launch of Zuranolone, if approved and strategically invest across our pipeline. Our net loss for the fourth quarter of 2022 was $147.1 million and we ended the quarter with cash, cash equivalents and marketable securities of approximately $1.3 billion. Turning to operating expenses. R&D expenses increased to $89.3 million in the fourth quarter of 2022, compared to $75.4 million for the same period in 2021.

The increase in spend was primarily related to ongoing investments in our wholly-owned and partnered programs, including SAGE-324 and SAGE-718. SG&A expenses increased to $67.3 million in the fourth quarter of 2022, compared to $51.6 million for same period of 2021. The increase was primarily related to hiring employees to support ongoing activities in anticipation of potential launch. As you heard from Chris, we’re continuing preparations to support the potential launch of Zuranolone, while gaining approval and commercialization of Zuranolone remain our top priority, we’re also committed to investing in our mid-term on long-term pipeline in a strategic and disciplined way. To this end, we expect that our spend will increase as we continue our commercialization efforts and advanced plans and ongoing studies for SAGE-718 and SAGE-324.

We know that to achieve our long-term vision of transforming the care of depression, we must begin with a focused strategy to be prepared to scale quickly with success. Therefore, we remain mindful of the capital allocation prior to launch. As a reminder, as part of our collaboration with Biogen, we are jointly developing Zuranolone and SAGE-324 with a 50:50 cautionary in the United States. Looking ahead, we are reaffirming that based on our current operating plan, we anticipate cash, cash equivalents and marketable securities, anticipated funding from ongoing collaborations and potential revenue will support operations into 2025, included in the $5 million from Biogen related to the first commercial sales of Zuranolone in MDD and PPD. Given how dynamic 2023 will be, including preparing for a potential launch, we will not be providing year-end cash guidance at this time.

As we embark on a pivotal year for Sage, I’m confident that our strong balance sheet will enable us to execute from a position of strength. With numerous potential value creating milestones on the horizon for Sage, we remain focused on making strategic investments in developing pipeline programs to best position ourselves as a leader in brain health. We remain well capitalized as we continue to build strong team executing on objectives across our pipeline. The time is now for patients. We are optimistic that our approach will lead to the development of treatments that people are desperately waiting for. I’ll now turn it over to Helen to handle Q&A with the operator. Helen?

Helen Rubinstein: 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?

Operator: Thank you. At this time, we’ll hear from Tazeen Ahmad from Bank of America. Please go ahead.

Tazeen Ahmad: Hi, good morning. Thanks for taking my question. Just wanted to clarify something that was said in the prepared remarks, because I think Barry, you said that post the PDUFA in August, you expect to be able to launch Zuranolone, if approved by the end of the year. What would be rate limiting factors that would prevent you from immediately launching and can you just narrow down when you think you would be able to start recording sales? Would it be in calendar 2023? Or would be assume it should be more in 2024? Thanks.

Barry Greene: Yes, Tazeen, thank you and thanks for the question and the attention. Look, we’re really excited that the FDA has accepted the NDA filing for Zuranolone for MDD and PPD with a PDUFA action date of August 5. I’ll remind you that following approval occurs on August 5 without delay, we then move to a three-month DEA scheduling period. There are actions we could take during that period, but we can’t start selling Zuranolone recorded sales until we have that official label with the DEA schedule. So that will happen towards the end of the year and we’ll be very well prepared to launch and excited to do so.

Operator: We’ll move next to Salveen Richter from Goldman Sachs.

Salveen Richter: Good morning. Thanks for taking my question. With regards to the payer work here, could you just comment on their understanding of pricing a drug at an annual price for a every — once a year, two-week period or using it maybe twice a year? And then secondly, I think the commercial payer mix is about 51% of the payer mix. And so when you think about DBAs and the strategy here, how effective are there going to be to kind of help you position the drug with the physicians in terms of adopting a new treatment paradigm? And then what do you do with the remainder of the kind of non-commercial payer aspect?

Barry Greene: Yes, Salveen. That was a few different aspects in there, one outcomes of the proactive value-based agreement strategy that we envision on employing, that the concept for us is to help payers with some budget certainty. That’s really what they want. They know that the prices is now well managed. Chris will get into that in a bit. But they want prices certainty. In return, we want if a physician or health-care provider believes that a patient requires Zuranolone or other script, we want that script so quickly. So, that’s sort of there is more detail to that we can get into. From a pricing perspective is that they think about per patient per year. They’re not thinking about per pill, per pack. They are really focused on understanding per patient per year. Chris, you want to comment further?

Chris Benecchi: Yes. So I think the DBA key to this, Barry is just frankly one component. I think to be truly transformational; we have to be accessible and that really starts with payers in and around understanding unmet need. I think in all of the interactions that we’ve had so far, there’s a high understanding of unmet need in and amongst the payers and truly a perception that they need something that looks quite differently than what they’ve seen historically. They’ve been impressed with the data, as I think they certainly understand for those interactions the opportunity that Zuranolone presents to deliver something that works, you know, in a rapid acting fashion after just three days, 14-day course something that’s durable over time, does it come with this phenotype of side effects so often associated with other therapies and actually has the potential to return patients to a state of welding.

In an essence, it takes a very complicated patient type and makes it far simpler to manage it historically what they may have had at their disposal. So, an incredible excitement around that, which then shapes the conversation on proactive value it experiments. I think in and around the second question around payer types, we’re going to work with all different payer types regardless of the mix that they see to come up with solutions and making sure that Zuranolone is accessible at launch and again to really build on that understanding of unmet need and what Zuranolone can deliver from what we’ve seen in the data so far from what

Salveen Richter: Thank you.

Operator: Moving next to Anupam Rama from JPMorgan.

Anupam Rama: Hey, guys. Thanks so much for taking the question. Maybe expanding on some of your comments in the introductory remarks here, but how are you thinking about sort of the initial ramp curve in PPD? And what are some of the pre-commercial

Barry Greene: The overall approach to PPD and how we’re educating in appropriate science we exchanged OBGYN and others.

Chris Benecchi: Yes, so as you might imagine, there’s a lot of focus on PPD within the organization. If you pick up the newspaper where you go online, you see that just like MDD, there is a significant normal crisis credit with moms from the most part of depression that we’re talking about 500,000 or so cases of PPD on an annual basis, so one in eight so it’s absolutely paramount that we continue to do the work that we’re doing in and around working with OBGYN and other prescribers that also see patients that are suffering from PPD to help understand the importance of diagnosis or screening and diagnosis. And subsequently, the opportunity that a new therapy potentially in light Zuranolone offers to them as it would be the first and only FDA approved oral therapy for the treatment of postpartum depression.

And we believe that through the permitted scientific exchange that’s happening right now through medical affairs team and whether it could congresses or one on one interactions with key opinion leaders, we’re going to continue to heighten the sensitivity and urgency around the need to treat moms that are suffering with PPD. And we believe that that community, the OBGYN community will be ready at the launch of the product. And we’ll be — we’ll happily receive Zuranolone, as I said, as the first and only oral therapy FD that FDA approves

Barry Greene: Yes. And just around that out, Anupam, when you launch a readily available oral medication like Zuranolone is approved. This is exactly the kind of paradigm shift that happens in medicine. As Chris mentioned, about 0.5 million moms per year are reported to have PPD, less than 20% of those are diagnosed, even lesser are treated. That’s really because of the challenging to get diagnostic treatment, when you have an agent like Zuranolone that works quickly with a 14-day regimen, we see the opportunity for physicians to look more rapidly for the diagnosis of PPD and certainly diagnostic paradigm is indeed less PPD.

Operator: Ritu Baral from Cowen. Your line is open.

Ritu Baral: Good morning, guys. Thanks for the update today. I wanted to just ask about the SHORELINE data contained in the submission. Can you guys confirm that what we have in the public domain is sort of the extent of the SHORELINE follow-up and retreatment data contained in the dual NDA? And can you give us any color as to what will be presented additionally from SHORELINE mid-year? Thanks.

Barry Greene: Yes. Thanks, Ritu. Jim, you want to take that?

Jim Doherty: Yes, of course, Barry. So the SHORELINE study, naturalistic study design, designed to follow patients within and evaluate both safety and tolerability’s around them and the need to repeat dosing for up to one year. The SHORELINE study has in the program first and foremost, it provides us with safety data for well over 1,000 patients now. Equally important, it provides some real-world evidence for how Zuranolone may be used if approved. So the SHORELINE is an important component in the NDA submission. So the data that completes the date is included in the NDA submission. The SHORELINE study also continues, so we have the newest cohort of SHORELINE, which is completing now. That cohort is a rollover cohort from the CORAL study. So that will provide some really additional interesting information for retreatment with Zuranolone?

Barry Greene: Yes. So — Ritu, so the data that you’ve seen today on SHORELINE is 1% multiple times. And it’s an essence what’s in the NDA filing, as Jim said, will be used largely from a safety database. We’ll have an update mid-year, which we think will be quite informative and when we get that update, we’ll let you know.

Ritu Baral: Great. And will that update be submitted to FDA at that time?

Barry Greene: There’s regular communications with FDA on data updates including SHORELINE.

Ritu Baral: Awesome. Thank you.

Barry Greene: Thanks, Ritu.

Operator: We’ll hear next from Yasmeen Rahimi from Piper Stanley.

Unidentified Participant: This is (ph) on for Yas. Thank you for taking our questions. So first one is, if you could provide a little bit of more color on the life cycle innovation study that you mentioned in the press release, related to design details and the timing of that study? And then second one is when should we expect to see the health economic data for the landscape and the next studies?

Barry Greene: Yes, . Thank you and please send our best to Yas. Jim, you want to take that?

Jim Doherty: Absolutely, Barry. So at the moment, we’re not providing any additional details on the lifecycle management study. So the (ph) data you’re referring to and there’s a lot of additional data for Zuranolone that is coming out in key publications and scientific conferences throughout 2023.

Helen Rubinstein : Thank you. I think we can move to the next question.

Operator: We’ll hear from Ami Fadia from Needham.

Eason Lee: Hi, good morning. This is Eason Lee on for Ami. Thanks for taking our question. So Biogen’s comments on its earnings call yesterday continue to be positive on the Zuranolone opportunity. Maybe could you provide some more details on how you all and Biogen are working together with regard to things like prepping the market, communicating with FDA, payers, et cetera? Thank you.

Barry Greene: Yes, Eason, thanks for the question. Yes, it was Biogen from the start, it’s been a phenomenal partner. And clearly with Chris Viehbacher coming on board, given his experience in leading larger , his leadership in pharma, as well as his experience of depression has really been an add to an already strong partnership. Together, we’re very bullish on the opportunity for Zuranolone help millions suffered from MDD and PPD. And we’re like minded in terms of the paradigm shift we’re looking to create in the treatment of depression. I’d say from a regulatory, development, commercialization, CMC, supply chain perspective, we’re step in step in how we’re working in the U.S. and it’s a 50-50 in the U.S. So we’re well prepared together, if approved to launch their own.

Operator: We’ll move next to Jay Olson from Oppenheimer.

Jay Olson: Hello? Hey, congrats on the progress and thank you for the update. Can you remind us what level of DEA scheduling you’re expecting to receive for Zuranolone and how the scheduling will impact the launch of the drug and physician and patient perception in Zuranolone? Thank you.

Barry Greene: Yes, Matt. Thanks for the question. So we — given the class of medicines that Zuranolone is a neuroactive steroid targeting GABAA, we anticipate that will be a schedule IV drug. And the three-month DEA year view after our two batch of data assuming were approved, will be the process to confirm that. What people need to understand is that the drug schedule has a lot to do with supply chain management and how these agents are handled across the supply chain, raw materials, active ingredients, attendance in the pharmacy. In terms of patients getting a prescription from their physician, every physician has a DEA number to write and there’s millions of millions of prescriptions that are being written for scheduled drugs by our target audience already. So really don’t keep being an issue at all.

Jay Olson: Great. Thank you very much.

Barry Greene: Thanks, (ph).

Operator: Laura Chico with Wedbush Securities. Please go ahead.

Laura Chico: Hey, good morning. Thanks for taking the question. I wanted to circle back to one that’s a little bit more logistical, but on the commercialization. Any additional commentary around kind of how you envision patient management or patient flow management is going to be handled in the commercial setting? I guess what I’m trying to understand a little bit more is who in the offices that’s going to be primarily responsible for managing patient follow-up patterns and I’m trying to understand a little bit more on the refill process? How are they going to be monitored and what would trigger a refill to be authorized? Thanks.

Barry Greene: Yes. Great, Laura. And that’s a really important question. So we think Zuranolone doesn’t change the practice of psychiatry or primary care to treat these folks, it really enhances. It’s another tool or where they all understand that patients are managed or patients respond more rapidly than the tools they have today. But let me ask Laura who’s treated most of these folks and how she thinks about the patient flow.

Laura Gault: So thank you for the question. It’s my belief that Zuranolone is approved, it’s really going to fit in with how ATPs are currently treating patients with depression. I think that they will continue to monitor patients over time and if there is a reemergence of symptoms that suggest another occurring, then they will undergo another treatment course with Zuranolone another physician and end patient compensation. I think what Zuranolone delivered to the people here is a tool that is different than the drug that physicians have been able to use in the past. It is a drug that works rapidly that has a durable effect. And that is a short-term statement for us. And from the discussions with physicians, what we hear is that either things that are doing highly valued. And we’ll see the important part of the armamentarium to depression moving forward.

Barry Greene: Yes. And just to round that out, some of the base of your question, Laura, is sort of a common belief, which is a misconception, that today a patient comes in, they are put on a chronic medication they stay on that medication and maybe it’s all over the six months and all as well. But the data don’t support that. The data suggests that a patient given a new antidepressant, only on the antidepressant for a median of seven weeks and that patients who continue to seek treatment and some don’t, some discontinuation and leave the system. But those are the (ph) treatment flow through two to three different medications a year. So just think about it. It’s not like today someone’s on chronic medicine, they’re just fine.

They’re not. So we think Zuranolone with the potential rapid effect. Again, as Laura said, enhances the practice of treating that patient, doesn’t really change how you monitor that patient. You also asked about refills. There will be a variety of ways that refills can happen, some might write scripts around with a refill already. Instructing their patients, and if they’re feeling better for extended period of time, but they’re dark and mood, elevated anxiety and insomnia come back, you know, to refill and try it again. If it doesn’t work, come and see me, I might have other tool for you. More refill can be called into a pharmacy just like any drug today.

Laura Chico: Thanks.

Operator: Moving next to Sumant Kulkarni from Canaccord. Please go ahead.

Sumant Kulkarni: Good morning and thanks for taking my question. So Zuranolone is relatively rapid acting. So either in SHORELINE or in any other setting, do you have data on patients that may have stopped taking the product before completing the full 14-day course of therapy simply because they have to sort of depression had gone away and they were feeling better. I’m asking because this discretionary patient action could have important implications of pricing and potential sampling and the dynamic might lead to large distributions around the per patient, per year pricing that payers are looking at versus maybe selling a flat price?

Barry Greene: Yes, Sumant, thanks for the question. So I’ll ask Jim to talk about specific data. Obviously, when you’re treating over 3,500 patients, it might — there are problems on patients who took a drug for a period of time and stopped, because they’re feeling so better. But that’s been a large part of not what’s happening. Just like if you are prescribed, as you have for your lower respiratory tract infection in total to feel better, but complete the full course. That would be the instruction for Zuranolone. And we don’t really believe there’s going to be much of a dynamic where a patient might take Zuranolone for three or four days and €œsave the rest of their pack€. So there will be instructions to complete the 14-day pack. And the data are supported as those that complete the 2 week and respond — remain responded. So we don’t really think that could give a big dynamic that plays out here.

Operator: We’ll hear next from Yatin Suneja from Guggenheim.

Yatin Suneja: Hey, guys. Thank you for taking my question. Just following up on a question that they asked earlier. So the profile of the drug is short-term and you have a de-scheduling to probably limit your ability to sample. Can you maybe just talk about the relevance of sampling? How could that impact you, especially in the PCP setting? Thanks.

Barry Greene: Yes, Yatin. Thanks for the question. Let me ask Chris to talk about our overall project.

Chris Benecchi: Yes, so from what we’re thinking about, there’s a number of different ways that we think about getting physicians early experience with the medication. While we haven’t communicated yet that we’re going to have an extensive sampling program. There’s a number of different ways to think about this and the team was really thinking through that. We know that from the experience that we’ve seen with investigators is that those physicians that have experience, they recognize the profound impact that Zuranolone have, so it’s not only experience has been critical. With respect to DE scheduling, we don’t anticipate it having a major impact on the way that we think about sampling. While there may be one or two states that may have some language around sampling and sampling stores.

There’s alternative ways to get physicians experience as well. So we don’t see DE scheduling, we see something that would in any way a position and getting early experience. And quite as that, we think that from the vast array of programs that we can employ that really experience is going to be something that’s going to have a profound impact on the launch in meditation.

Operator: Tim Lugo from William Blair has your next question.

Tim Lugo: Thanks for taking the question. For the launch, are you going to set up a central hub to deal with any preauthorization or access hurdles physicians may have to deal with kind of during the early part of the launch?

Barry Greene: Yes, Tim, thanks for the question. Look, we’ll — we have a very — we imagine a very robust channel strategy in place that deals with everything from — to the extent there’s prior author steps to make sure that if the script is written, that patient gets the drug. So look, that will all be set up and in place.

Tim Lugo: Okay, great.

Barry Greene: Thanks, Tim.

Operator: We’ll move next to Neena Bitritto-Garg from Citi.

Neena Bitritto-Garg: Hey, guys. Thanks for taking my question. I actually just had a question on the KINETIC 2 study. I was just wondering if you could give us an update on what you’re seeing on the enrollment front there? And if some of the measures you took to speed up enrollment have resulted in a faster pace? Thanks.

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

Jim Doherty: Yes, of course. Thanks, Neena. As you mentioned, we’re currently very focused on completing the KINETIC 2 Phase 2b study for central tremor in the Phase 3, Q4 program. The KINETIC 2 study is currently opened for enrollment and we’re anticipating completion of enrollment in late 2023. As I’ve spoken about previously, a number of factors have challenged the KINETIC 2 study, one of those was clearly some staffing challenges at sites and CROs coming out of pandemic, that’s something that’s being seen across the industry. We also saw a little bit of a slower pace in enrollment than we had originally anticipated, due to some specific criteria in protocol. And finally, there are multiple ET trials that are targeting a similar patient population that are going right now.

But we — as we mentioned previously, we made some modifications to the program and we’re confident that those modifications are having a positive impact. So as I say, we expect to complete enrollment in late 2023.

Operator: Douglas Tsao from H. C. Wainwright. Please go ahead.

Douglas Tsao: Hi, good morning. Thanks for taking questions. Just curious, how do you plan or do you plan on doing a post marketing study? And I’m just curious, in order to understand how frequently patients need to be treated with Zuranolone. Obviously, just given the fact that patients switch payers a lot and so forth and obviously there are sort of limitations with like IQVIA and so forth data. Just curious how do you over the long-term plan to understand the profile and how frequently patients need to be treated? Thank you.

Barry Greene: Yes. Thanks, Doug. That’s an important question. So what we know today and as Jim commented on this earlier is, SHORELINE is the largest naturalistic study impression on , and the data are pretty clear. Now, while SHORELINE isn’t exactly real world as close to real world as we get this point. And what we see for SHORELINE is for those that respond to the majority required only the initial two-week course of treatment, and then if the number is 80% required out of one or two course of treatment in calendar year. So we believe that that’s how it can pay out real world. Now once Zuranolone is approved, we’ll certainly work a number of different ways to understand what’s happening over time, whether it’s registries, or payer collaborations, we’ll have those data at hand.

And of course, because we have — we will have value-based agreements in place. Those will be informative as well, so there’ll be a number of sources for us to understand how many two-week courses a population needs over a period of time.

Douglas Tsao: Physicians, do you get a sense of they’re going to use Zuranolone initially as an add on? Or do they want to use it as a monotherapy as sort of a switch?

Barry Greene: So we — in the scientific exchange that we have with potential prescribers and our investigators, we’re hearing different views. And the good news is that we have data with Zuranolone as a monotherapy, on top of a stable antidepressant and co-administer with antidepressant. So we have a around Zuranolone to use the medicine as the patient feels appropriate for — as a physician feels appropriate for their patient. We’ve heard some physicians for certain patients such as young adults, they might want to use the monotherapy for someone that frequently suffers from the depressive episodes, they want to prescribe it as a co-administration. So we have the optionality and the data to support the way a healthcare provider can set to treat their patients.

Douglas Tsao: Great. Thank you very much.

Operator: We’ll move next to Marc Goodman from SVB Securities.

Rudy Li: Thanks for taking my question. This is Rudy on the line for Mark. I have two questions for SAGE-718. So the LIGHTWAVE and DIMENSION study using the initially higher dose followed by lower dose? Well, the other two study uses fixed dose as 1.2 milligram. You can talk about the rationale for the dosing selection? And secondly, can you talk about the difference between patients that using inpatient versus outpatient settings? Thanks.

Barry Greene: Yes, Rudy, thanks for the question. Look, we’re really excited by SAGE-718 as the first-in-class NMDA PAM that we’re studying for cognitive impairment across neurodegenerative diseases, including Huntington’s, Parkinson’s and Alzheimer’s. The program is progressing very well and we’re really excited to have data from that program in 2024. In terms of your specifics, Jim, do you want to talk about this dose in, in and out patient?

Jim Doherty: Absolutely, Barry. And as Barry said, we’re very excited about 718 here. We’re currently running five Phase 2 studies across three different indications. Huntington’s disease, Parkinson’s disease and Alzheimer’s disease. And really the dosing that you’re referring to where — what the strategy is to achieve and maintain a certain level of exposure for SAGE-718. And so what you’re seeing is as the program matures, we are doing that. So the goal is in the case of the DIMENSION study, which is dosing for over a three-month period to achieve and maintain that dosing level. We are at this point looking at outpatient studies for the SAGE-718 program, the profile of SAGE-718 both from a safety NPK perspective really allows them to do that. So all these studies are outpatient studies.

Barry Greene: Yes, I would just add in, Rudy, that the benefit risk we’re seeing for SAGE-718 is extremely broad. We’re seeing rapid improvement in higher order cognition, executive function learning and memory and it’s incredibly clean . So we’re really excited about continuing to move that forward.

Rudy Li: Got it. That’s very helpful. Thanks.

Barry Greene: Thanks, Rudy.

Operator: Gary Nachman from BMO Capital Markets. Your line is open.

Gary Nachman: Hi, good morning. With the priority review for Zuranolone, do you still think there’s a possibility for an AdCom, does that change at all with priority review timeline? And where would you find that out? And then the way the NDA has been filed, you’re obviously looking for an approval in both MDD and PPD together. But is it possible for the FDA to split those up and approve one indication first, and then the other at a later point if that ultimately wants to see more data? Thanks.

Barry Greene: Hey Gary, thanks for the question. So let me take the second part first. As you highlighted, we filed an NDA for both MDD and PPD and we think the data warrant approval for both MDD and PPD. So that’s our current thought at the time and advised as well along with that. In terms of AdCom, that solely is a discretion of the FDA, if the FDA decides, it was around the data and is typical in AdCom’s here from patient if they have advocates to highlight really devastating unmet needs that he’s out there with depression. So we’ll be well prepared if they have an AdCom. If the FDA decides not to hold an AdCom and that’s a signal of a fast approval, we like that too.

Operator: Moving next to Brian Abrahams from RBC Capital Markets.

Brian Abrahams: Hey, guys. Good morning. Thanks for taking my question and congrats on all the progress and on the filing acceptance. I’m curious if you could talk about your latest views on how you might gate the launch focus and investment from targeting psychiatrists initially to ultimately moving and expanding into the primary care setting? Curious, what feedback and metrics you might be looking for it to shape that potential progression? Thanks.

Barry Greene: Yes, Brian, thanks for the question, and thanks to it, congratulations. Glad to hear that you’re as excited as we are. Look, we live in a world of really strong information and have really good knowledge of those healthcare providers that are seeing the depression patients those that are willing to write prescriptions, particularly granted prescriptions. And we advise we’ll focus on where we think we’ll get the strongest patient flow that has the right insurance coverage first and then expand rapidly with success, so that’s the approach we’re taking. We’re certainly to focus on psychiatry and those larger offices irrespective this is when we see a lot of these patients, that will be — that will be our focus.

Chris Benecchi: there is a group of PCPs that you’ll be calling on a teaser PCPs that do behave more like psychiatrists, they see a number of patients with MDD. And we’ll also focus on OBGYNs, but I don’t want the piece about PPD to be lost. And I think as you said it’s very based on the metrics that we have both physician level and patient level data that we have at our disposal, we’re going to make decisions at the right time to continue to scale with success as we look forward.

Barry Greene: Yes, I’d also add Brian that we’re able again in the world we’re living to understand patient activation and kind of patients that are frankly going to absence of rental by name. We believe that that’s going to happen with the drug like this.

Brian Abrahams: Thanks so much.

Operator: Danielle Brill from Raymond James. Your line is open.

Alex Nackenoff: Hey, guys. This is Alex on for Danielle. Thanks for taking our question. So I know you’re not targeting treatment resistant depression in your commercialization strategy. But do you feel that it’s a risk for clinicians to initially trial Zuranolone in their patients that might skew towards this population? Potentially negatively coloring their perceptions of efficacy? In other words, do you think Zuranolone would work in TRD? And just on that front, what’s the gating factors now to initiating formal trials in treatment resistant depression and anxiety bipolar? Thanks.

Barry Greene: Yes. Let me start with the second part of that I’ll talk about first, so we believe the unmet need in MDD and PPD is so great. As we talked about 6 million to 7 million dynamic patients with — looking for new treatment options in MDD, 0.5 million moms that should be diagnosed with pressure in the year. That patient population is so significant, unmet need, so significant. That will remain our focus for the foreseeable future. If we can win in depression, we can really help millions of patients. So we’ll provide sort of future indications at later points in time. But right now, the focus is absolutely win in depression, trying to help as many people as we can. In terms of how at launch the drug will be used, as Chris already highlighted in PPD, we’d like to have Zuranolone being standard-of-care.

The only oral if approved, the only oral treatment approved specifically to treat PPD. And in MDD, our target is to educate physicians that Zuranolone should be used as your first switch or first add on should the patient not be adequately controlled with whatever they’re taking and that is our first .

Chris Benecchi: Yes. I think what I’d add to that, Barry, is if left to things to just happen, I could see where physicians across all different areas of treatment, use new products later. But here, what we have through not only the positioning and the identification of appropriate places of use, despite the idea of proactive value-based agreements. Proactive value-based agreements are designed to really ensure that physicians have access earlier in the treatment paradigm. So that you don’t have the owner’s prior authorization in step edits, which can ultimately take a new medication and push it to later utilization. So it’s — so important that we work across all stakeholders to make sure that physicians have the ability to really access really the treatment process and use it where they want to launch.

Operator: We’ll hear next from Joon Lee from Truist Securities.

Joon Lee: Hi thanks for taking our questions. Looking forward to additional data from get package? And also quickly, you mentioned lifecycle management for Zuranolone. Can you share what you have in mind? Thank you.

Barry Greene: Yes, Joon. Thanks for the question. So we’re not coming more on lifecycle management. As we commented earlier on the call, we’ll have a regular series of updates with the .

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

Barry Greene: Thanks, Lynette, and thanks again to everyone for joining us this morning to review our fourth quarter and full-year 2022 results. Our progress in the fourth quarter and throughout 2022 is the direct result of teamwork and dedication from everyone in our and our partner’s organization, so I want to thank everybody. As we make critical advancements, progressive development activities across brain health, we maintain a position of strength as we advance our mission to develop and launch transformative medicines for patients in need. Thanks again everyone and have a wonderful