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

Sage Therapeutics, Inc. (NASDAQ:SAGE) Q4 2023 Earnings Call Transcript February 14, 2024

Sage Therapeutics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning. Welcome to SAGE Therapeutics’ Fourth Quarter and Full Year 2023 Financial Results Conference Call. [Operator Instructions]. 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 express written consent of SAGE Therapeutics, is strictly prohibited. Please note that this call is being recorded. I would now like to introduce Ashley Kaplowitz, Executive Director of Investor Relations and Capital Markets at SAGE.

Ashley Kaplowitz: Good morning, and thank you for joining SAGE Therapeutics’ Fourth Quarter and Full-Year 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 and slides related to today’s call. I would like to point out that we will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties and our actual results may differ materially. Please review the risk factors discussed in today’s press release and in our SEC filings for additional details. We will begin the call with prepared remarks by Barry Greene, our Chief Executive Officer, who will provide an overview of our progress during the fourth quarter and full year 2023.

Our Chief Business Officer, Chris Benecchi, will provide an update on the ongoing commercialization of ZURZUVAE. We will also be joined by Laura Gault, our Chief Medical Officer, who will review recent progress and development activities across our programs. We will then be joined by Kimi Iguchi, our Chief Financial Officer, who will review the financial results from the fourth quarter and full year 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. 2023 was a pivotal year for SAGE, highlighted by the approval and commercial availability of our second FDA-approved product, ZURZUVAE the first and only oral treatment approved specifically for adults with postpartum depression or PPD. We have a big year ahead of us and even greater potential to build a leadership position in brain health and a top tier biopharmaceutical company. Our reach and expertise across various brain health conditions are key to our work to unlock potential breakthroughs to our patients suffering from a wide range of brain health diseases. Brain health diseases are one of the leading causes of disability worldwide, yet novel treatment options in care remain limited.

We are seeking to change that with a pipeline designed to address brain health disorders and improve public health. Brain health is fundamental to well-being and function at each stage of life. Through pioneering science, we aim to advance programs and have the potential to improve the lives of individuals living with brain health disorders and their families. We’re focused on modulating brain network function and disruptive circuits, an underlying factor in many brain health disorders, starting with compounds that selectively modulate GABA and NMDA receptor activity. Our expertise in neuroactive steroids includes hydroxycholesterol, allowing us to choose compounds for development based on a number of factors, including the potential to modulate these circuits.

ZURZUVAE is an important example of how we leverage our deep expertise and understanding of these receptor systems to discover a novel therapy. ZURZUVAE was made commercially available in mid-December 2023, giving us about 10 days in 2023 where women with PPD in need of treatment could access healthcare providers. We’re excited that we’re getting this new treatment option to women who desperately need it. Of course, our work has continued in 2024, and inspired by the stories from our teams in the field in just the first few weeks of launch. Women with PPD and their families now have a treatment option with the potential to make a profound difference in their lives. And the providers with whom we’ve spoken see ZURZUVAE as a potential catalyst to increase much needed screening, diagnosis, and treatment of PPD across the healthcare system.

It’s early, but I do believe that ZURZUVAE is the key to unlock the blockbuster potential of PPD, enabling us to help many women suffering from postpartum depression. Importantly, there have been encouraging developments across the treatment landscape. We’re starting to see PPD recognized as an urgent medical condition. There’s more conversation and dialogue about addressing stigma and the treatment system is mobilized to better support patients. I want to thank advocates and providers who have prioritized addressing maternal mental health treatment disparities. Turning to the launch progress, ZURZUVAE generated $824,000 in collaboration revenue during the fourth quarter of 2023. As a reminder, our reported collaboration revenue is 50% of the net sales Biogen records for ZURZUVAE.

As we are very early in launch stages, we’re not discussing specific revenue expectations or launch trajectory. However, what I can say today is that we’re encouraged by the initial progress we’re seeing. Our early initiatives aimed at establishing ZURZUVAE as the first line therapy for women with PPD, have begun to translate into strong tailwinds for the launch of ZURZUVAE. Just a few critical highlights. We’re hearing that women with PPD are starting to step forward to advocate for ZURZUVAE as they discuss treatment options with their healthcare providers. Healthcare providers, including psychiatrists, OB-GYN, primary care, nurse practitioners, and physician assistants, are writing prescriptions for ZURZUVAE in the treatment of PPD. A specialty distribution network is in place designed to provide a positive experience for patients with convenient home delivery.

The ZURZUVAE For You Patient Assistance program is helping to support timely access for eligible patients. Of course, as I said, we’re early in launch days, and there are aspects of launch we certainly need to optimize, but the initial response and uptake are highly encouraging. Chris, and Kimi will provide additional updates later in the call, and we look forward to sharing more detail on our progress in the coming quarters. While the launch remains our top priority, we’re also excited by all that we have ahead of us in 2024, with multiple data readouts expected across our ongoing studies in Dalzanemdor, also known as SAGE-718, as well as SAGE-324. We believe in the potential of both molecules to help patients in need and to become significant drivers of long-term value creation as we aim to strengthen our leadership position in brain health.

Additionally, we’re excited about the continued progress on our early-stage pipeline with SAGE 319 and SAGE 421. We remain confident in our ability to continue to execute across our pipeline as we head into a catalyst-rich 2024. With that, I’ll turn the call over to Chris to provide additional context on the ongoing commercialization of ZURZUVAE. Chris?

Chris Benecchi: Thanks, Barry. As Barry mentioned, we’ve made tremendous progress in these early days of ZURZUVAE’s launch in PPD, and I’m excited to discuss our recent achievements and ongoing initiatives. At SAGE, we share in the urgency to treat PPD. In the US, an estimated one in eight women, or approximately 500,000 women, who have a live birth, experience. Symptoms of PPD each year. Data suggests about half of those receive a diagnosis of PPD and approximately half of those begin treatment. The increasing recognition of PPD as a serious medical condition is a major step forward. However, we still have a collective responsibility to ensure maternal mental health is supported and treated as a core aspect of women’s overall health.

With the approval and launch of ZURZUVAE, we believe there is new hope for women with PPD. We also believe the focus on diagnosis, screening, and treating PPD, provides an opportunity to make a meaningful impact on mothers, children, and families. And now, I’m happy to share some color on what we believe is an encouraging start to the early launch. At the beginning of the year, Barry highlighted our objective in establishing ZURZUVAE as the first line therapy for women with PPD. We believe to do so will require delivering broad, equitable, and affordable access for women with PPD, enabling early positive HCP and patient experiences, partnering with communities to improve the focus on maternal mental health, and providing clear education on ZURZUVAE and PPD to all stakeholders.

With that in mind, we are encouraged by the demand we saw in the initial days of the launch. Let me share some metrics we believe are important and reflective of the progress we’ve seen. As a reminder, we announced commercial availability in mid-December, so the data I’m sharing reflects demand from around 10 days when women with PPD could access HCPs. As of the end of the fourth quarter, there were approximately 120 prescriptions written. With added launch capabilities and both SAGE and Biogen sales representatives active in the field, we continue to be encouraged by the increasing number of prescriptions in early 2024. I’d like to note that this is a metric we intend to show in the initial quarters. However, over time, we will likely move away from this metric and focus primarily on shipments and collaboration revenue.

In December, we were pleased to see prescriptions written by psychiatrists and importantly OB-GYNs, who prescribe in approximately equal numbers. We also saw a small number of prescriptions written from primary care physicians, and a number of HCPs wrote multiple prescriptions. All of these trends have continued into early 2024. Of the prescriptions written in December, over 70% were shipped in December and early January. Our goal over time is for most women who are prescribed ZURZUVAE to receive the medication as quickly as possible. We saw many scripts in December take longer to ship than we’d like, which can be anticipated in the initial days of launch and over a holiday period. We expect that as launch progresses, women with PPD will have access to ZURZUVAE more rapidly, particularly as factors such as payer formulary decisions are made, HCPs and patients become more experienced in using our FT network, and the specialty pharmacy process is further optimized.

Moving on, as Barry noted, our patient support program, ZURZUVAE For You, is activated and working well. In December, the commercial-insured patients using the ZURZUVAE savings card paid no copay expenses. We maintain our commitment to the goal of having ZURZUVAE be both broadly accessible and affordable for women with PPD. And importantly, on the coverage front, conversations are advancing across national, regional, and government payers, and in the early weeks of the launch, the vast majority of ship prescriptions are being covered by payers, even as coverage policies are being developed. We are so far not encountering significant payer headwinds, and to the contrary, we are seeing positive payer engagement. As we’ve said, we expect commercial coverage formulary decisions to continue to come on board in the first half of 2024, with Medicaid stretching into the second half for certain States, as that process typically takes more time.

The early demand for ZURZUVAE is reflective of the strong enthusiasm we’re hearing from HCPs and women with PPD for this medication. Further, as we look at who is driving the prescribing, we believe that the strong engagement across specialties and providers, represent HCP appreciation for the need to treat PPD as an urgent medical condition, regardless of the practice setting. And notably, these prescriptions are coming from HCPs, many of whom have been reached either through personal promotion, or who have engaged with our website digital content, reinforcing the initial impact of our omnichannel efforts. We are still in the early weeks of launch, and we know we have more work to do to help women with PPD access treatment. With that said, we’re encouraged by what we’re seeing so far.

The launch has reaffirmed the unmet need and urgency for a new medication for women living with PPD, and we know we need to continue to execute to maintain this momentum. I look forward to sharing additional details on our, and Biogen’s commercialization efforts, in the coming quarters. With that, I will turn it over to Laura for a more detailed discussion of our recent pipeline progress and current clinical expectations. Laura?

Laura Gault: Thanks Chris, and good morning, everyone. Over 2023, we have made important progress on our pipeline programs, and I’m pleased to share our recent progress and plans for continued development over the coming quarters. I want to share my excitement to be part of such a significant moment for maternal health, with the launch of ZURZUVAE in the treatment of women with PPD. Not only are we seeing growing interest from HCPs to learn more about ZURZUVAE, but we believe the launch of ZURZUVAE is a catalyst for positive change in the screening, diagnosis, and treatment of PPD. We are seeing increased awareness and attention to PPD in the media and by professional organizations. This has increased knowledge about the cause of PPD and potential treatments and reduced stigma, making it easier for women to seek care.

Further, I’m excited to see ZURZUVAE being recognized amongst clinicians and OB-GYNs in particular as a distinct new treatment option for women with PPD. It has a novel MOA and is a rapidly-acting short course treatment with a flexible approach that gives HCPs the option to use ZURZUVAE alone or in combination with other therapies. In a short period of time, we believe we are starting to see PPD move from a disease where some HCPs would suspect the diagnosis and refer for evaluation and treatment, to a disease that HCPs are confident to diagnose and treat. Supporting mothers has always been a core focus for us, and we are excited we finally have an oral option for HCPs who want to offer more to women with PPD. In addition to the work that we do in PPD, we have many interesting programs in our pipeline.

Dalzanemdor, also referred to as SAGE-718, is a program that we are really excited about. We are advancing Dalzanemdor, our wholly owned first-in-class NMDA receptor positive allosteric modulator or PAM, as a potential oral therapy for cognitive disorders associated with neurodegenerative diseases, including cognitive impairment in Huntington’s disease or HD, Parkinson’s disease, PD, and Alzheimer’s disease, AD. disorders with cognitive impairment represent some of the greatest areas of unmet need in medicine, and we know that globally they continue to increase in prevalence and pose significant challenges to patients in their everyday lives. The mechanism of action of Dalzanemdor is differentiated and leverages our deep understanding of how neuroactive steroids interact with the NMDA receptor.

A growing body of evidence suggests that NMDA receptor hypofunction may occur in a wide range of neurodegenerative disorders associated with cognitive impairment, including Huntington’s, Parkinson’s, and Alzheimer’s. Dalzanemdor is a novel molecule derived from our understanding of the pharmacology of a neuroactive steroid, 24s hydroxycholesterol, an endogenous NMDA receptor PAM. Dalzanemdor is believed to bind to the NMDA receptor, with the potential of modulating NMDA receptor activity to improve cognitive function. We are encouraged by the consistent effects on important domains of cognition, such as executive function and learning and memory that we’ve seen in our earlier studies in HC, PD, and AD, and we are excited to be progressing a clinical development program for Dalzanemdor, with five ongoing clinical trials.

Starting with HD, the lead indication for Dalzanemdor, we are currently enrolling in three studies in people with cognitive impairment due to Huntington’s. The DIMENSION Study is a double-blind placebo-controlled Phase 2 study designed to evaluate the efficacy of one daily Dalzanemdor dosed over three months. The SURVEYOR study is a double-blind placebo-controlled Phase 2 study designed to generate evidence linking efficacy signals of cognitive performance to real-world functioning. And the PURVIEW study is an open-label Phase 3 safety study of Dalzanemdor designed to evaluate the long-term safety profile and long-term functioning compared to HD natural history studies. As a reminder, the primary objective of the SURVEYOR study is to understand the magnitude of the cognitive impairment in Huntington’s relative to healthy individuals.

A key secondary objective is to advance our understanding of the effects of Dalzanemdor on cognition and function in participants with Huntington’s. It’s important to note that the SURVEYOR study is not designed or powered to show statistically significant differences between Dalzanemdor and placebo. Overall, these data are meant to complement the DIMENSION study by generating evidence to better define clinically meaningful change and the relationship between changes in cognition and function. Moving now to our PD and AD studies for Dalzanemdor. The PRECEDENT study is a double-blind placebo-controlled Phase 2 study in people with mild cognitive impairment due to Parkinson’s disease designed to evaluate the safety and efficacy of Dalzanemdor.

The LIGHTWAVE study is a similarly designed Phase 2 study to evaluate safety and efficacy of Dalzanemdor in people with mild cognitive impairment and mild dementia due to AD. We expect to announce top line data from PRECEDENT for PD in early 2024, SURVEYOR for HD in mid-2024, and DIMENSION for HD, and LIGHTWAVE for AD, both in late 2024. We’re very excited for these readouts, and if positive, they will help demonstrate a path forward for Dalzanemdor, and importantly, bring us one step closer to helping patients. Turning to SAGE-324, which is an investigational positive allosteric modulator of GABAA receptors with significant potential in the treatment of movement disorders like essential tremor. Essential tremor has suffered from a lack of innovation, with no new approved treatments in more than 50 years, and it has a significant impact on an individual’s ability to perform everyday tasks.

In the US, the total annual estimated economic impact of essential tremor is over $100 billion, including medical, loss of employment, and disability costs. We are excited about the potential of SAGE 324 in essential tremor, a program that we are developing in collaboration with Biogen. As a reminder, the KINETIC study demonstrated statistically significant reductions in baseline in upper limb tremor amplitude. KINETIC 2 is a three-month study designed to identify a dose with a safety tolerability profile that is suitable for use of SAGE-324 as a chronic treatment in essential tremor. While the primary endpoint for KINETIC 2 is a change from baseline in upper limb tremor amplitude, we will also evaluate a modified version of the TETRAS ADL to give us directional insight into the effects of SAGE-324 on quality of life and activities of daily living.

We have completed enrollment of KINETIC 2 and expect to report topline data mid this year. Lastly, I’d like to share our excitement around the earlier stage pipeline. In particular, I’d like to highlight two novel molecules, SAGE-319, our extra-synaptic GABAA receptor PAM, and SAGE-421, our NMDA receptor PAM. We look forward to sharing more about these programs as they progress. In closing, I am proud of our pipeline efforts this year, and I look forward to our future progress and clinical execution throughout 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 fourth quarter and full year 2023 are detailed in our press release issued this morning. Before discussing specifics, I want to share my excitement on the recent launch of ZURZUVAE and the opportunity to help so many women suffering with PPD. I also want to thank the entire SAGE team for their continued execution and dedication to our mission to support brain health patients. We and Biogen have mobilized with the goal of continued commercial momentum, and are jointly supporting the planned launch of ZURZUVAE, with 50-50 cost sharing in the United States. While we’re thinking big about the opportunity, we’re executing with a focused approach and plan to scale with success.

In addition, we are prepared to execute on a catalyst-rich year ahead, with multiple expected top line data readouts for Dalzanemdor and SAGE-324. We’re investing strategically in our broader pipeline to have the potential for value creation opportunities for the near, mid and long-term. I’ll now turn to the financials. Today, we announced collaboration revenue from the initial sales of ZURZUVAE of $824,000. As a reminder, our reporting collaboration revenue is 50% of the net revenue Biogen reports for ZURZUVAE. Net revenues are recorded when Biogen ships ZURZUVAE to the distributors, and are not based on the number of prescriptions delivered from a specialty pharmacy to patients. ZURZUVAE net revenues in December 2023 principally represent initial efforts of preparing the channel for the full launch in the first quarter of 2024.

Additionally, today we announced milestone revenue of $75 million from Biogen related to the first commercial sale of ZURZUVAE for the treatment of PPD. We earned the milestone in Q4 and received payment in January 2024. We’re not guiding on gross to net today, other than to say, given the fact that ZURZUVAE is a novel medication and the only approved oral treatment for women with PPD, we do not anticipate the type of discounting we see for other branded CNS agents. Turning to operating expenses, R&D expenses were $64.3 million in the fourth quarter of 2023. SG&A expenses were $55.1 million in the fourth quarter of 2023. The decrease in both R&D and SG&A expenses compared to the fourth quarter of last year was primarily related to reorganization cost-saving measures such as reduced headcount, budgeted expenditures, and prioritization of early pipeline programs.

We expect that operating expenses will decrease in 2024 relative to 2023. Cost of revenues for ZURZUVAE for the fourth quarter of 2023 included one-time charges in preparation for commercial availability. These one-time charges included distribution setup fees and charges for the manufacturing network. We do not expect this gross margin trend to continue. Our net loss for the fourth quarter of 2023 was $32.7 million, and we ended the fourth quarter of 2023 with cash, cash equivalents, and marketable securities of approximately $753 million. We are reaffirming that based on our current operating plan, we anticipate cash, cash equivalents, and marketable securities, along with a milestone payment received in January, anticipated funding from ongoing collaborations, and estimated revenues, will support operations into 2026.

I’d like to note that we have maintained a strong financial foundation as we enter a catalyst-rich year for the company. Before I turn the call over, I want to highlight the scope of our potential as a growing leader in brain health. The launch of ZURZUVAE demonstrates the culmination of our capabilities, starting from molecule discovery to FDA approval and now commercial launch. We look forward to the year ahead with many exciting catalysts across our pipeline and the continued commercialization of ZURZUVAE in the treatment of women with PPD. I’ll now turn it over to Ashley to handle Q&A with the operator. Ashley?

Ashley Kaplowitz: Thanks, Kimi. I’ll ask that you limit yourself to one question. If you have an additional question, 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]. Our first question comes from Salveen Richter with Goldman Sachs. Please go ahead.

Matt Leskowitz: Great, thanks. This is Matt on for Salveen. For the 120 scripts, could you share roughly what the split was between commercial and Medicaid and also between treatment-naïve and treatment-experience patients? Thank you.

Barry Greene: Hey, Matt. Thanks for the question. Appreciate it. Look, as we talked about on the call, the December numbers represent about 10 days where moms experiencing symptoms from PPD could access healthcare providers. We can’t really provide much more color on the 120 scripts. We’re happy with that kind of activity, and we’re really excited that the prescriptions came not only from psychiatrists, but from OB-GYNs, as well as primary care. We don’t have all the patient journey data in yet. We’ll certainly provide more color in the quarters to come.

Operator: We’ll take our next question from Anupam Rama with J.P. Morgan. Please go ahead.

Anupam Rama: Hey, guys. Thanks so much for taking the question. Yesterday on the Biogen earnings call, they mentioned positive payer dynamics. You guys talked about this this morning as well. Maybe you could expand on what you’re seeing on the experience to date on the payer side and how we should think about sort of first half sort of payer dynamics. Thanks so much.

Barry Greene: Yes, I’ll start, Anupam, and turn it over to Chris, and thank you very much for the question. It’s really important. So, as you heard yesterday from our colleagues at Biogen and we’ve commented on earlier, we’re experiencing very positive payer dynamics. The vast majority of prescriptions, this is even before formulary coverage were paid for, which we highly expected. We’ve been in PPD for a long time, and the fact that mental health and maternal health are top of minds for payers, really provides positive tailwinds in the long. So, we’re excited about what we’re seeing in terms of reimbursement, even before coverage decisions have been made. But Chris, you want to provide more color?

Chris Benecchi: Yes. We’ve historically said that to be truly transformational, you have to be accessible. And we’ve worked hard over the course of the last several years to really establish the unmet need in PPD and to really share the data associated with ZURZUVAE, particularly for the treatment of women with PPD. And we’ve been able to build on that as we’ve progressed into more formal formulary coverage discussions with payers. As Barry noted in his opening remarks, we’ve seen initially, before formulary decisions were made, commercial and government insurers, particularly Medicaid, actually paying for prescriptions as they flow through. And we believe this is really reinforcing of what we’ve already communicated, that there is the potential for ZURZUVAE to be a first line therapy for women with PPD without the onerous prior authorizations and complex step edits that could challenge that.

So, we’re really excited around the initial conversations that we’ve had with payers so far.

Operator: Our next question comes from Yasmeen Rahimi with Piper Sandler. Please go ahead.

Unidentified Analyst: Hi, this is (Jung) on for Yasmeen at Piper. Thanks for taking our question. For 718, what are the key gating factors and bars across studies to warrant further investments? And for essential tremor, given the competitive landscape, what do you need to show as you move into Phase 3 in terms of safety and efficacy? Thank you.

Barry Greene: Yes, (Jung). So, you’re talking about SAGE-324. So, SAGE-324 is our partnered program with Biogen, a GABA PAM designed for chronic administration for movement disorders, initially studied in essential tremor. I’ll start and then Laura can talk about the KINETIC 2 study. As we saw early, we saw statistically significant reduction in tremor amplitude correlated with activities with daily living in KINETIC. What we’re looking for in KINETIC 2 is the optimal dose for chronic administration. Laura, you want to talk more about the competitive landscape and what we’re looking for?

Laura Gault: Sure. So, we learned a lot from KINETIC 1 in terms of how we designed KINETIC 2. In KINETIC 1, the dose administered was 60 milligrams, and it was administered in the evening and many patients had sedative effects or somnolence. Before designing the KINETIC 2 study, we took that into consideration and did a number of things. First, we changed the administration of the drug to the evening so that the effects of somnolence and sedation would be less problematic. And we also are exploring a variety of doses, 15 milligrams, 30 milligrams, and a titration to 60 milligrams. With that in mind, we feel confident that these data will allow us to identify a dose that has an appropriate risk benefit profile for chronic use in ET.

With that said, what we’re looking for is – for that dose, 324, is a dose that provides efficacy that’s similar to or better than agents that are used currently to treat ET, with the safety tolerability profile that’s appropriate for chronic dosing in this population.

Barry Greene: And do you want to talk about the competitive landscape? There’s really been a positive innovation in essential tremor. Do you want to talk about what’s out there?

Laura Gault: Yes, it’s really incredible. There have not been new products approved in essential tremor for more than 50 years. The last one approved was propranolol, and there have been a number of companies who have ventured into this space recently, all with T-type calcium channel blockers. The data from some of these programs has been negative and the programs have been stopped. In other cases, the programs are moving forward with Jazz and Praxis, and we look forward to seeing their results.

Operator: We’ll move to our next question from Ritu Baral with TD Cowen. Please go ahead.

Ritu Baral: Hi, guys. Wanted to ask about plans for the formal PPD launch as you guys see it. On one hand, there was a huge sort of flurry of news reports, et cetera, around first approval. I understand that there was a commercial or a media outreach campaign around that. And I think there’s just a concern amongst investors interested in this program that you might be losing momentum essentially as we get further and further out from actual approval and availability, and not pushing the button on something like another media push, especially given what you’ve said about patients themselves advocating for access to ZURZUVAE, when we found in our own checks, that many OB-GYN clinicians are unaware of the drug still, amazingly enough.

Can you talk about the rationale for, and the status of timing of that real commercial launch? What aspects you can talk about now that’ll go into it, why you’re waiting, frankly. And if I could sneak another one in, another question in just about the free drug program that you have right now for ZURZUVAE. Thank you.

Barry Greene: Yes, Ritu. Thanks for the question. So, just to be clear, ZURZUVAE is launched. We received approval, as you know, in August for PPD. We had DEA scheduling, which took several months, and we and Biogen and made ZURZUVAE commercially available mid-December. We now in January have our full omnichannel up and running and our field force deployed. As you heard us say previously, as Kimi said on the call, we’re thinking big about the PPE opportunity, but starting with focusing and scaling fast. The media attention has continued and the sort of anecdotes and stories have continued well, and we are not seeing any slowing at all of momentum. So, we’re excited by and encouraged by what we’re seeing. The patient advocacy groups are certainly encouraged.

And as you heard us say, we’re beginning to see women with PPD stepping up and advocating. The other important major trends that we’re seeing, I’ll highlight this, are, PPD is seen as a serious medical condition and not a moral failing. That switch happened relatively fast. The other switch that happened relatively fast, I’m sort of surprised if you’ve polled OB-GYNS and they’re not aware of ZURZUVAE. We certainly haven’t encountered that. You’d have to sort of be under a rock to not have seen the media attention, which has continued. But the big trend here is that we’re seeing some healthcare providers move from the suspicion of depression and the referral, to the diagnosis and treatment. And the fact that the prescriptions have come equally from psychs and OB-GYN is a good proof point of that trend that we’re seeing.

You also asked – Chris, do you want to talk about the free drug program?

Chris Benecchi: Yes. So, let’s take a step back and talk about ZURZUVAE For You, the patient access program that we have in place that’s been up and running since the launch of the medication in mid-December, as we’ve noted. ZURZUVAE For You has been particularly effective in terms of mitigating patient out of pocket, those with commercial insurance down to zero. Everybody that’s enrolled in the program has paid $0 in order to get ZURZUVAE. So, it’s been particularly effective in making sure that not only is the medication accessible, but it’s also affordable. That’s particularly key. I think, in terms of the free good program, we’ve got the mechanics in place. If a payer is not particularly going to pay for the medication after a set period of time, we’ll actually step in and provide the medication to that patient at no out of pocket.

We’ve seen the vast majority of prescriptions actually be covered prescriptions going forward. We haven’t had to actually enact that program significantly, reflective of, as I said earlier, the support that we’ve seen from the payer community around making sure that this medication is available and flows through, regardless of the fact that patients are either commercial or Medicaid. So, we see ZURZUVAE For You as a particularly effective program and one that we’ll continue to implement in order to make sure all patients have access to the medication.

Operator: We’ll move to our next question from Paul Matteis with Stifel. Please go ahead.

James Condulis: Hi, this is James on for Paul. Thanks for taking our question. Kind of a similar question there around, of those 50 scripts that have actually shipped and been delivered, what percent are actually paid drug? And it sounds like just based on your prior answer, it’s the majority. And I guess, kind of baked into that, just wondering what you’re kind of seeing on a time lag basis from when a script is written and to when it’s actually given to the patient, and how you expect to see that evolve over time. Thanks so much.

Barry Greene: Yes, James, thanks for the question. Let me just take a step back and just clarify kind of the flow. So, when we ship drug to specialty pharma, that shipment to the specialty pharma is the revenue recognition. When a prescription’s written, typically in the electronic medical system, it’s automatically sent to a specialty pharma. That counts as a prescription. When that specialty pharma then ships the prescription to the patient’s home, that’s the shipment. So, those are kind of the three key metrics. The vast majority of those shipments were paid for. As we said, we’re not providing a specific breakdown, but the vast majority, as Chris already mentioned, it’s been paid for, not only by commercial, but also by government payers, specifically Medicaid.

So, we’re excited by that. We continue to work on the value proposition here. Obviously, ZURZUVAE is the first and only oral medication specifically approved for PPD. Its rapid onset of activity is key to the value proposition. So, the sooner mom gets drug, the better off mom is to reattach with family and baby. So, we’re cognizant of that. We had many shipments that were done in 24 to 40 hours. Of course, some took longer. So, that’s really an engineering issue as we optimize the processes, payers come online, and healthcare providers get comfortable with exactly how to get ZURZUVAE to moms. But again, highly encouraged in the early days.

Operator: We’ll move to our next question from Tazeen Ahmad with Bank of America. Please go ahead.

Tazeen Ahmad: Hi, thanks for taking my question. With regards to the prescriber base, you’ve talked about now for a bit interest coming in from the OBs in addition to psychiatrists, but how important is it going to be to penetrate PCPs, and what is your strategy? Can you just remind us of how the sales force is structured? Does a salesperson just target a particular specialty, or are they detailing all three specialties at the same time? Thanks.

Barry Greene: Yes, Tazeen, thanks for the question. I’ll start and then Chris can provide more color. So, again the fact that literally the about 10 days ZURZUVAE was available, in that short period of time, we already saw prescriptions coming in, not only from psychs, but also OB-GYNS and primary care, is really indicative of the recognition of PPD as a severe medical condition, not a moral failing. The awareness that our omnichannel approach and the media had in raising awareness of PPD. Chris, you want to talk about the sales force targeting, omnichannel, and sort of how we were approaching that?

Chris Benecchi: Yes, Barry. What I would say first is that what I think we’re seeing here is a paradigm shift. Historically, what’s happened in the diagnosis and treatment of PPD is clinicians have suspected and then they’ve referred out. What we’re actually seeing here are clinicians, the clinicians that we’re calling on, the clinicians that we’re reaching through omnichannel, diagnosing and treating, which is very different than what we’ve historically seen. In terms of the call universe that we’re calling on, we are calling on high prescribing, high volume clinicians with experience in treating postpartum depression. It’s a mix of OB-GYNs, psychiatrists, and a handful of PCPs that are all part of that cohort that we’re calling on actively with a sales force.

Obviously, we’re using omnichannel to broaden our reach and deepen our frequency because we believe all clinicians who see women with PPD need to hear the messages that we’re delivering and have access to the information, enable them to effectively treat women with PPD as we go forward. In terms of PCPs, what I believe will happen over time is that we’ll continue to expand with that first group that we’re calling on now, broadening to a broader group of PCPs, as well as psychs and OBS as we go forward, but that to come in time as we move forward.

Operator: We’ll move to the next question from Brian Abraham with RBC Capital Markets. Please go ahead.

Brian Abraham: Hey, good morning. Congrats on all the progress and thanks for taking my question. Maybe shifting gears to the pipeline, on 718, can you expand on what you’re looking for out of the SURVEYOR study in terms of trends and correlations? And I guess I’m curious how that might influence how you would tweak the DIMENSION study size, endpoints, population, or something else, and whether the goal would be for DIMENSION to potentially be registrational for Huntington’s. Thanks.

Barry Greene: Yes, Brian, well, first of all, thanks for the congratulations. We really are excited by the progress, and I congratulate you on sneaking five or six questions into your one question. That was good. I’ll turn it over to Laura to talk more about it, but before I do, so you’re talking about Dalzanemdor SAGE-718, which is our fully owned NMDA positive allosteric modulator that we’re studying in neurodegenerative diseases. And we’re excited to have readouts for both Huntington’s, Parkinson’s, and Alzheimer’s this year. Strategically, as we talked about, and Laura will get into specifics, as we’ve designed the series of Huntington’s studies, we’ve done so recognizing that Huntington’s is a rare orphan disease. We’ve done so in a way that if the data are positive, and let me emphasize, data matter here, that we believe that we have a package to work with regulators on speeding Dalzanemdor to help those suffering from cognitive disorders in Huntington’s.

The Parkinson’s and Alzheimer’s are truly Phase 2 studies where they’re learning studies that gives us better support and understanding of designing the Phase 3s. But, Laura, you want to talk more about the DIMENSION and SURVEYOR studies and how they fit together?

Laura Gault: Sure. So, as I mentioned in the introductory remarks, SURVEYOR is a study that really was designed to serve two purposes. First, to compare the degree of cognitive impairment in patients with Huntington’s Disease to healthy volunteers. And that’s important so that we can understand the clinical meaningfulness of the treatment effect that we see in our studies, both for SURVEYOR and DIMENSION. The second purpose of this study was to evaluate how changes in cognition track with changes in function. And this is important to provide supportive evidence both to regulators and to other stakeholders about the relationship between these two metrics. Of course, when we get the SURVEYOR data, we will look at it very carefully.

If there are suggestions in that data that there would be a benefit to changing something in the DIMENSION design, we would do that. It’s important to note that those changes would be limited to ordering of endpoints, not changes related to adding new endpoints or doing something that would really prolong the study length.

Operator: We’ll move to our next question from Ami Fadia with Needham & Company. Please go ahead.

Poorna Kannan: Hi, this is Poorna Kannan for Ami. Thank you for taking a question. Just had a question about the bridging program. Could you please talk about it and what type of utilization you’re seeing on this program? Should we be expecting use of this program as you complete your peer negotiation?

Barry Greene: Poorna, I’m not sure I understood. The bridging program?

Poorna Kannan: Yes.

Barry Greene: I’m not sure I understand the question.

Chris Benecchi: Yes, patient support, I believe. So, what we said is ZURZUVAE For You is a program that’s in place that’s largely designed to make sure that we’re mitigating patient out of pocket. And we talked about that, being able to mitigate the vast majority of these patients that are commercially insured down to a $0 out of pocket copay. We also make sure that patients who fundamentally fall in this functionally uninsured group of patients, patients that you would call in other organizations, bridge program patients, are actually able to access the medication. So, we have that resource in place to actually make sure that those patients don’t fall through the system, that they can actually get access to the medication. But as we also said, the vast majority of patients that are flowing through right now are actually covered patients, whether they are commercially insured or Medicaid patients, which again, is a very good sign or signal from payers around the support that they’re providing for women with PPD.

Barry Greene: Yes. And important, keep in mind that as Chris has mentioned many times, we believe that if a prescription’s written for a woman’s suffering from PPD, that we want to make sure that that woman had drugs. So, in our case, it’s not really a bridge because it’s a 14-day complete course of treatment, not a bridge to a chronic medication.

Operator: We’ll move to our next question to our next question from Laura Chico with Wedbush Securities. Please go ahead.

Laura Chico: Hey, good morning, guys. Thanks for the question. I had one on SURVEYOR and DIMENSION, and just kind of following up, I was wondering if you could talk a little bit more about the endpoint, and specifically I’m trying to understand, well, you’re using the primary endpoint as the Huntington’s Cognitive Assessment Battery. I’m trying to better understand how the Hi-DEF scale fits in here. And I guess, Laura, based on your comments, could that become a primary endpoint? Thanks.

Barry Greene: Yes, thanks for the question, Laura. On Dalzanemdor, I’ll turn it over to Laura to answer.

Laura Gault: Yes, thank you, Laura. As you noted, the HD-CAB is the primary endpoint for the DIMENSION Study. We have also included the Hi-DEF measure, which is a measure of function, and it’s a patient reported outcome that SAGE has developed specifically for this population. We have developed and validated that measure, and it would be appropriate to be in an application to support the efficacy profile of SAGE-718 or Dalzanemdor. At this point, we will take what we learned from the SURVEYOR study and make a decision about what the proper endpoints should be for DIMENSION, keeping in mind, of course, that the Huntington’s Disease Cognitive Assessment Battery is a battery that has been developed by experts in the field to measure domains of cognition that are impacted by Huntington’s, and actually reflect some of the domains that we believe Dalzanemdor will improve.

So, we have no reason to believe that that endpoint will not be appropriate or sufficient, but the Hi-DEF is also a good endpoint that will add additional information about how Dalzanemdor affects patient functioning.

Barry Greene: Yes, and Laura, it’s a really great question. As you’re well aware, with Dalzanemdor, we’re forging new pathways here. There’s not been a medicine specifically approved for cognitive impairment in Huntington’s disease. It’s a really huge unmet need. And given the orphan nature, again, data matter here, but we believe there’ll be tremendous flexibility in working with the package here.

Operator: We’ll move to the next question from Neena Bitritto-Garg with Deutsche Bank. Please go ahead.

Neena Bitritto-Garg: Hey, guys, thanks for taking my question. I just wanted to go back to the ZURZUVAE launch. So, just looking at some of the third-party script vendors, so specifically IQVIA, it looks like there’s a decently high capture rate versus what you’ve reported in terms of dispensed scripts. So, I’m just wondering if you can kind of comment on that and if we should look at those third-party vendors moving forward. And if you can talk at all about what you’ve been seeing kind of on a week-over-week perspective on scripts so far this quarter, that’d be great too. Thanks.

Barry Greene: Yes, Neena, let me start, and I’ll turn it over to Kimi to talk specifically about IQVIA. So, again, what we’ve reported out in the fourth quarter was roughly 10 days of commercial availability where moms could access healthcare providers to advocate for ZURZUVAE. We’re not really talking about the data specifically in January and February, other than the fact that we’re seeing positive trends continue. But Kimi, you want to talk more about the IQVIA data?

Kimi Iguchi: Sure. The launch is trackable through IQVIA. However, the data may not provide a complete picture of ZURZUVAE utilization. What you see in the data is shipments to patients, not prescriptions, and then data does lag by about a week. The data, I’d say, is directionally correct, but not precise. There are things like free goods that might not be captured in certain cases, or there might be specialty pharmacies we contract with that might not be covered. So, again, I’d say the data is directionally correct, but not precise.

Operator: We’ll move to our next question from George Farmer with Scotiabank. Please go ahead.

George Farmer: Hi, good morning. Thanks for taking my question. Back, still on the ZURZUVAE scripts, I mean, Biogen reported $2 million in sales in December, and you guys are reporting 120 scripts written over the same period. Just kind of back the envelope math suggests that all those scripts generated revenue. Are we thinking – is that the right way to think about this? And maybe you can comment on whether there were other scripts that didn’t get filled and how many – perhaps there were some other scripts that were part of the free drug program as well. Is that the right way to think about this?

Barry Greene: Yes, George, I’ll take that and thank you for the question. So, it’s important. Let me reiterate sort of the supply chain, if you will. When specialty pharmas need to stock the drug, they put an order in. When that order is sent to the specialty pharma, that’s where revenue comes in. So, revenue is drug into specialty pharma. The drug gets pulled from specialty pharma when a healthcare provider, and this is done mostly electronically, writes a script. That script automatically goes to specialty pharma, who does insurance verification, other backend processing. And when all that’s done, and it can happen in 24 to 48 hours, that prescription then is shipped to the patient. The IQVIA data that Kimi talked about are those shipment data.

So, that’s what you can see. We’re providing color on script, which as Chris mentioned, we’ll provide for the first couple of quarters, but likely we’ll drop that metric. So, it’s not a direct correlation. Now, the fact that we saw 120 scripts is exciting and encouraging in a very short period of time in December.

Operator: We’ll move to our next question from Sumant Kulkarni with Canaccord Genuity. Please go ahead.

Sumant Kulkarni: Good morning. Thanks for taking my question. Now that you’ve probably had some patients finish their 14-day course of therapy, what sort of real-world feedback are you getting from patients on how quickly ZURZUVAE may be working in the real world, and how patients might be feeling after the treatment, and if there are any unexpected positives or negatives you’ve seen post dosing?

Barry Greene: Yes, Sumant, great question. So, the early feedback we’ve heard from the field has been positive and we’re highly encouraged by the anecdotes of the early patient success stories. Of course, a bunch of anecdotes don’t add up to data. We’re also pleased that we’re hearing back from many healthcare providers, including OB-GYNs, primary care, and psychs, about ZURZUVAE. And in general, what we can say is in the real world, ZURZUVAE is performing, as we saw in clinical trials. And that is taken at night, rapid onset of options. 50 milligram is being prescribed and patients are completing the 14-day short course treatment.

Operator: We’ll move to our next question from Akash Tewari with Jefferies. Please go ahead.

Phoebe Tan: Hi, this is Phoebe on for Akash. Thank you for taking our questions. Biogen mentioned on their Q4 call yesterday that they aren’t sure if the initial set of prescriptions represents the bolus, given that ZURZUVAE was approved in August and then only launched in December. So, do you feel like demand may be a bit choppy out of the gate, and has there been – or has there been any increased demand in January? Additionally, just wondering why you didn’t guide to ZURZUVAE revs for 2024, and do you plan to guide in later quarters? Thank you.

Barry Greene: Yes, Phoebe, thanks for the couple of questions. I’ll start. I’ll ask Chris to comment more and then Kimi can talk about guidance. So, PPD is not a warehousing effect-type disease. We’re seeing tremendous demand continue into the early part of 2024. So, we can confidently say, there’s no warehousing here. We’re seeing demand continue. And the numbers, while encouraging, are really small relative to the half a million women a year potentially suffering from PPD. So, there’s a long way to go to help many of these women. Chris, you want to talk about through the early launch dynamic, and then maybe Kimi can talk about guidance?

Chris Benecchi: So, so what we’re hearing from clinicians out of the gate, and Barry touched on it in his opening remarks, we’re seeing strong positive performance coming from ZURZUVAE in and around prescriptions, prescribing patterns, patient support and coverage. Those are all areas that we’ve talked about significantly. But again, specifically around physician utilization of the medication, we’re seeing balanced prescribing across physician types, OB-GYNs and psychiatrists with a core group of PCPs that are also writing this medication as well, too. Those are clinicians that actually have women in front of them that are presenting in the moment with the signs and symptoms of PPD. These are not patients that have been waiting for the medication for a sustained period of time, as you might see in other categories.

So, we really believe here, and as Barry said, that this is a category where there is not warehousing effect. And we’re going to continue to make sure that we do all that we can through our sales organization and through our omnichannel efforts, in particularly digital, to provide physicians with the education, the information, and the support to prescribe ZURZUVAE in the moment when these women come through their offices. Yes, and before Kimi jumps in with guidance, Phoebe, let me highlight something that Chris said earlier on. We’re early in the launch, but we’ve already seen the paradigm shift from a healthcare provider suspecting depression and referring to a healthcare provider diagnosing and treating. We’re really in launch. So, that’s already a paradigm shift we’re seeing among these healthcare providers prescribing.

That’s highly encouraging.

Kimi Iguchi: On, on the revenue guidance, to start with, we’re pleased about the encouraging early launch of ZURZUVAE, as you’ve heard from our call. But we believe we need to take some additional time to better understand the dynamics around the uptake. We plan to communicate additional updates related to the commercial of ZURZUVAE in due course.

Operator: We’ll move to the next question from Yatin Sunej with Guggenheim. Please go ahead.

Yatin Sunej: Thank you for taking the question. Specifically on the PRECEDENT study, so the primary endpoint is the Wechsler Intelligence Scale. Could you help us understand like what is the relevance of the scale, number one? What do we see from a placebo perspective for this study? I understand maybe you’re not willing to go there and tell us what data you would like to see, but just help us understand how placebo perform on this scale so that we have a database line. Thanks.

Barry Greene: Yes, thanks for the question on Dalzanemdor and the PRECEDENT study. Laura, you want to take that?

Laura Gault: Sure. So, with the PRECEDENT study, we included the WAIS-IV coding as a primary endpoint based on information we had gotten earlier in our development program for Dalzanemdor. As I mentioned earlier, in the Dalzanemdor program, we conducted small probe studies in Alzheimer’s, Parkinson’s, and Huntington’s disease. And in each of those studies, we saw signals of efficacy in cognitive domains of executive function and learning and memory. And the WAIS-IV coding was a scale that we used in those early studies to detect that treatment difference. So, what we are doing now in the PRECEDENT study is using that as a primary endpoint, recognizing, of course, that it is not clear whether that could be a standpoint. So, the study also includes a number of other measures of cognition, including the MoCA and the SCOPA-Cog. And so, we will be looking at directional effects on those endpoints to make decisions about moving forward.

Chris Benecchi: And Laura, if I can add just one thing. I think across all these studies, it’s important to recognize that we are looking for an improvement upon baseline, not necessarily a slowing of change. And I think that will also factor into how we look at the differences versus placebo.

Operator: We’ll move to the next question from Vikram Purohit with Morgan Stanley. Please go ahead.

Vikram Purohit: Hi, good morning. Thanks for taking our question. We had one follow up on your initial read of prescribing behavior. So, I believe you mentioned in your opening remarks that there were certain providers who had written multiple prescriptions for ZURZUVAE in the first 10 days of the launch. So, we were wondering if there are any common characteristics across these providers or their patient bases that stick out to you. And more generally, if this gives you a read on how concentrated or not the prescriber base for ZURZUVAE could be throughout 2024. Thank you.

Barry Greene: Yes, thanks for the question. I’ll take that. I’ll ask Chris to add if there’s any additional color. So, we’re actually seeing broad prescribing across the United States among, as we said, psychiatry, OB-GYNs, and small numbers, but primary care. I don’t know that there’s trends that are indicative of multiple prescribers other than a prescriber that we assume had a positive experience, sees another patient suffering from PPD, and believes that ZURZUVAE is the right drug to reach for. As you know, our goal is for ZURZUVAE to be the first line treatment for women suffering for PPD, and we’re excited and encouraged by the early progress to date.

Operator: We’ll move to our next question from Marc Goodman with Leerink. Please go ahead. Yes, good morning. Two questions. First, for 324, can you remind us how long the drug is active, such that taking at night will still have activity throughout the next day? And then a question just on 718, can you talk about the rationale for using oxysterol in Parkinson’s? I understand that Huntington’s patients have low levels, but I didn’t understand why it makes sense in Parkinson’s. Thanks.

Barry Greene: Yes, I’ll quickly take the SAGE-324 question and ask Mike to comment on 718. So, the half-life of 324 is sufficient for coverage when taken at night for the next day. We’re not worried about that. We believe that the drug effect will last in multiple days actually. So, we’re really trying to get to a steady blood serum level that translate to a steady level in the brain. Mike, you want to talk about SAGE-718?

Mike Quirk: Yes. And I think the point when we’re thinking about SAGE-718 and its role as a modulator of NMDA receptors is, while we gained insight from the endogenous modulator 24s hydroxycholesterol, we’ve also done quite a bit of work with SAGE-718 and other similar molecules that we’ve worked on to show that it does not require there to be low levels of 24s for SAGE-718 and similar molecules to work. They work on different ways of impacting NMDA receptor function. So, we’ve been able to show that if you have hypofunction due to a genetic change, a pharmacological change, any way that you have a loss of NMDA receptor function, you can rescue those deficits with molecules such as 718. So, in the context of Parkinson’s and Alzheimer’s, we believe that there’s a strong rationale for NMDA receptor dysfunction, even if the proximal mechanism is not related to oxysterol changes per se.

And again, that’s why we’ve designed the 718 program to look at different patient populations where we think that there’s an underlying cause of NMDA receptor impairment regardless of the specific mechanism driving that change.

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

Barry Greene: Thanks, Karen. And thanks, everyone, for joining us this morning to review our results from the fourth quarter and full year 2023. As we look ahead to the ongoing launch of ZURZUVAE and enter a catalyst-rich 2024, with multiple data readouts expected, I’m highly confident that we’re making important progress to deliver on our mission, to develop and launch life-changing brain health medicines so every person can thrive. Thanks again, everyone, and have a great day.

Operator: This concludes today’s call. Thank you again for your participation. You may now disconnect, and have a great day.