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

Sage Therapeutics, Inc. (NASDAQ:SAGE) Q4 2024 Earnings Call Transcript February 11, 2025

Sage Therapeutics, Inc. misses on earnings expectations. Reported EPS is $-1.56 EPS, expectations were $-1.54.

Operator: Good afternoon. Welcome to Sage Therapeutics Fourth Quarter and Full Year 2024 Financial Results Conference Call. Currently, all participants are in a listen-only mode. This call is being webcast live on the Investors & 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, Vice President of Investor Relations and Capital Markets at Sage.

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

Our Chief Operating Officer, Chris Benecchi, will provide an update on the ongoing commercialization of ZURZUVAE and key financial results. Our Chief Medical Officer, Laura Gault, will then provide a brief update on our pipeline. In addition, 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 afternoon. 2024 was an important year for Sage, underscored by the early commercial success of ZURZUVAE, the first and only oral treatment approved for adults with postpartum depression, or PPD. We enter 2025 with a plan to build on ZURZUVAE’s commercial momentum, a recalibrated R&D approach, and a commitment to financial discipline as we focus on enhancing growth for our shareholders. As we outlined at the JPMorgan Conference in January, we’re focused on executing against these three core priorities in 2025, which are intended to deliver short, medium and long-term value creations for shareholders and serve unmet needs of patients and families. Our foremost priority is to continue efforts to establish ZURZUVAE as a standard of care for PPD.

The first year of launch exceeded expectations, and we plan to invest in 2025 to fuel top line revenue growth. In 2024, we were pleased to see more than 6,600 shipments of ZURZUVAE to women with PPD, which we believe reflects the growing demand for a fast-acting treatment for PPD and physician adoptions across HCPs who treat PPD. There are two important dynamics we’re starting to see as the launch progresses, a promotionally responsive market and a system-wide paradigm shift. Specifically, we’re seeing signs of ZURZUVAE changing practice patterns among OBGYNs and elevating a national dialogue around maternal mental health. These dynamics have the potential to accelerate growth and further drive urgency among HCPs in treating PPD. We believe these early successes validate our commercial strategy and provide greater evidence that ZURZUVAE is the key to unlocking blockbuster potential in PPD.

Importantly, that means helping many women suffering from this urgent medical condition. In addition to building on the commercial momentum of ZURZUVAE, we’re prioritizing our pipelines to focus on neuropsych and neurodevelopmental disorders. We believe our recalibrated R&D approach can create value over the long term. Laura will provide additional details on SAGE-319 and SAGE-324, as well as our NMDA receptor NAM platform. Lastly, we’re committed to maintaining the strength of our financial position. With the commercial momentum of ZURZUVAE and PPD, our R&D approach, and expected cash runway to mid-2027, we believe we are well positioned to focus on our goal of creating value for our shareholders. Now, before I turn the call over to Chris, I want to briefly acknowledge Biogen’s unsolicited, nonbinding proposal to acquire Sage, as well as our Board’s decision to initiate a strategic alternative process.

As we stated in our press release last month, the Sage Board concluded that the proposal significantly undervalues Sage and is not in the best interest of shareholders. The Board also decided to initiate a strategic review to evaluate a broad range of opportunities to maximize value for shareholders. As a reminder, we’ve not set a timetable for the review process, nor is there any assurance that the review process will result in any transactions or other strategic outcomes. With this in mind, we will not be talking about this further on this call. I do appreciate your understanding. Now, with that, we’ll move forward, and I’ll now turn the call over to Chris. Chris?

Chris Benecchi: Thanks, Barry. As mentioned, we’ve made tremendous progress in the first full year of ZURZUVAE’s launch in PPD, and I’m excited to discuss our recent achievements and ongoing initiatives. Afterwards, I’ll review our results for the fourth quarter and full year 2024. Starting with the launch of ZURZUVAE, we are pleased to see consistent demand growth quarter-over-quarter with nearly 2,500 prescriptions shipped to women with PPD in Q4. This represents a 21% increase from the third quarter of 2024, even with far fewer days in the field engaging with customers due to the holiday season. Across the full year of 2024, more than 6,600 prescriptions of ZURZUVAE were shipped to women with PPD. We believe that we have continued to see strong demand growth in patient shipments because HCPs are becoming confident in the value proposition of ZURZUVAE and what it potentially delivers.

In the fourth quarter, ZURZUVAE was prescribed across a breadth of HCPs who treat PPD, including OBGYNs, psychiatrists and PCPs. Almost 80% of those prescriptions came from OBGYNs who are the foundational focus of our launch strategy since they see women throughout their peripartum journey, the most critical time to screen, diagnose and treat. While OBGYNs are at the forefront, we believe that over time we will continue to see utilization of ZURZUVAE increase among all HCPs who treat women with this condition. More than 70% of ZURZUVAE patients are receiving ZURZUVAE as their first new treatment for PPD. Further, we saw strong trends among prescribers in 2024, with about 60% of targeted HCPs writing repeat prescriptions after prescribing ZURZUVAE.

We also see that once an OBGYN has prescribed ZURZUVAE, there is a significant increase in the number of women with PPD they treat, based on prescriptions for all medications. Our messages are resonating. ZURZUVAE has a greater than 90% aided brand awareness among OBGYNs and psychiatrists. Before I turn to our plans for 2025, I’ll provide an update on coverage. As of today, greater than 95% of commercial and Medicaid lives are covered, or have a path to coverage, with the majority having no step edits or complex prior authorizations. This remarkable level of coverage one year into launch reflects payer recognition of the value proposition of ZURZUVAE, which enables broad and equitable access for all women with PPD. To support the continued scaling of ZURZUVAE, we plan to move forward with a robust investment plan, which includes a joint sales force expansion to cover a wider reach of healthcare providers, investment in media opportunities intended to further amplify the message that PPD is an urgent medical condition, and greater visibility via social media designed to increase awareness and educational efforts.

We’re also planning to expand ZURZUVAE DTC, including the potential for targeted branded TV media later this year. Today’s technology allows us to meet women with PPD in their most trusted channels, empowering them to speak to their physician about their PPD symptoms and appropriate treatment options. In terms of personal promotion, we are already seeing an early impact from the sales force expansion. In the territories where we expanded our sales force in the fourth quarter, we saw a 33% growth rate in patient shipments. We believe these efforts are important as we are seeing PPD to be a promotionally responsive market with significant growth potential. We have made remarkable progress in 2024 and are continuing to think big about the commercialization of ZURZUVAE as a treatment for women with PPD.

We look forward to sharing additional updates in the coming quarters. Now, turning to our financial results for the fourth quarter and full year of 2024. As a reminder, our full financial results for these periods are detailed in our press release issued this afternoon. We reported collaboration revenue from the sales of ZURZUVAE of $11.4 million in the fourth quarter, a 4% increase compared to the third quarter of 2024, and $36.1 million for the full year. As a reminder, our reported collaboration revenue is 50% of the net revenues Biogen reports for ZURZUVAE. It is important to note that while revenue may fluctuate based on inventory dynamics, we continue to see strong quarter-over-quarter demand growth in patient shipments and expect this growth to continue.

R&D expenses were $37 million, and SG&A expenses were $54 million in the fourth quarter of 2024. Additionally, there were one-time restructuring expenses of $22.5 million in the fourth quarter of 2024. While ZURZUVAE joint commercialization investment will increase in 2025, we anticipate overall operating expenses will substantially decrease in 2025 relative to 2024. This reflects reductions in R&D and G&A from our pipeline prioritization and the cost savings from the October 2024 reorganization. The first full quarter of savings are expected to be realized in Q1 of 2025. Our net loss for the fourth quarter of 2024 was $95.8 million. Based upon our current operating plan, we anticipate that our existing cash, cash equivalents, and marketable securities of $504 million as of December 31, 2024, together with anticipated funding from ongoing collaborations and estimated revenues, and excluding any potential milestone payments we may receive under our collaboration agreements, will support our operations to mid-2027.

Now with that, I’ll turn the call over to Laura. Laura?

Laura Gault: Thanks, Chris. As Barry mentioned earlier, we remain focused on developing medicines for neuropsychiatry and neurodevelopmental disorders where there is a strong scientific rationale and opportunities to address meaningful unmet needs. I’ll begin with SAGE-319, our wholly-owned extra-synaptic-preferring GABA-A receptor positive allosteric modulator, or PAM, which is designed to have novel pharmacology and a differentiated profile from other GABA-PAMs in our portfolio. SAGE-319 is currently being investigated as a potential treatment for behavioural symptoms associated with certain neurodevelopmental disorders, including autism spectrum disorder, Tourette syndrome, and other rare neurological disorders. These disorders place a high burden on patients, families, and the healthcare system.

We are currently conducting a Phase 1 multiple ascending dose, or MAD, study to help us better understand the safety, tolerability, and target engagement of SAGE-319 across a range of doses. We expect to share data from the Phase 1 MAD study by late 2025 and anticipate that the upcoming results from this study could enable potential studies in a patient population in early 2026. Further, we have two orally administered NMDA receptor negative allosteric modulators, or NAMs, in preclinical development, SAGE 817 and SAGE-039. Our intention with these drug candidates is to provide a drug with similar or better efficacies than NMDA receptor blockers like ketamine, but with a potentially improved safety and tolerability profile. In addition, we continue to explore potential partnerships and out licensing opportunities for some clinical and preclinical stage compounds.

Lastly, as we have previously noted, we are also exploring SAGE-324 for potential indications, including seizures and developmental and epileptic encephalopathies, or DEEs. We expect to provide an update on next steps, if any, in mid-2025. To be clear, we are not spending to further develop SAGE-324 now, but rather we are evaluating SAGE-324 as part of an overall portfolio decision. With that, I will turn it over to Ashley to help facilitate the Q&A portion of today’s conference call.

Ashley Kaplowitz: Thanks, Laura. As a reminder, we will not be answering questions related to our Board’s decision to reject Biogen’s unsolicited acquisition proposal or to initiate a review of strategic alternatives and ask that questions be focused on our Q4 and full year 2024 results. Please limit yourself to one question. If you have additional questions, feel free to return to the queue. Now, I’ll turn the call over to the operator to handle Q&A. Operator?

Q&A Session

Operator: Thank you. [Operator Instructions]. We’ll take our first question from Ritu Baral with TD Cowen.

Ritu Baral: Hi, guys. Thanks for taking the question. Barry, I wanted to ask about Biogen’s buy-in to the expansion of the marketing opportunity or the marketing effort. You mentioned that the sales force expansion is underway. It’s in certain geographies. Can you elaborate on that specifically? Has Biogen matched the personnel expansion that Sage has implemented or sort of the number and depth of the programs that Sage has put into place?

Barry Greene: Thanks for the question, Ritu. Appreciate it. So, based upon the performance we saw in 2024 and, as Chris mentioned on the call, the success we saw in our salesforce expansion, we entered 2025 with an aligned integrated commercialization plan. That includes not just the increase of salesforce to a new level, but also appropriate investment behind all the other aspects of our commercialization effort, namely medical affairs, disease state awareness, DTC, including continued progress on the coverage side, which is outstanding, but we want to continue to make better. So, we’re highly aligned and excited for a very successful 2025, helping as many moms as we can this year.

Ritu Baral: Could we get a little more color on what the expanded efforts are?

Barry Greene: Let me ask Chris if he could provide some color.

Chris Benecchi: Yeah. So, beyond the point about salesforce expansion, social media and a social media influencer campaign through TikTok and Instagram, as well as Facebook, are an important part of the social media effort designed to reach not only those that are living with PPD, but also HCPs who are treating many of these women with PPD. As Barry noted, connected TV and DTC is an important part of how we think about another way to reach those that are living with PPD that are out in the community, as well as peer-to-peer education, digital efforts more broadly. And I would round that out by saying that we have seen an interesting dynamic that we talked about in our prepared remarks, where this is not only about the work that we do to make sure that physicians and women with PPD are aware of ZURZUVAE, disease state awareness also plays an important role here, and the importance of screening and diagnosis and all of this.

So, again, that’s a key component to our initiatives in 2025 as we think about reaching as many women with PPD as possible.

Ritu Baral: Great. Thanks.

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

Unidentified Analyst: Hi. Thank you for taking our question. This is Shrunatra [ph] on from Salveen. Could you please elaborate on the inventory dynamics for the quarter, noting the slight disconnect between the prescription growth and the sales growth? And also, could you speak to the proportion of free drugs being provided in full queue?

Barry Greene: Yeah, Shrunatra. So, we, as I just talked about, really happy with what we’re seeing across the board in terms of 2024 performance. And that is, we’re seeing OBGYN step up to own the disease, ACOG guidelines being in line. We’re seeing a promotionally responsive market, and we’re seeing accelerants in terms of system-wide change. Media continues to cover ZURZUVAE and PPD at an extraordinary high level. So, all the dynamics that set up ZURZUVAE entering blockbuster potential are there. We also were happy that we saw over 20% growth in demand quarter-on-quarter. And I’ll ask Chris to talk about sort of the inventory dynamic. But just to be clear, by demand, demand is when a specialty pharma, after a script is entered, ships that prescription to moms. That’s a true measure of future revenue because that’s the leading indicator. But Chris, you want to talk about kind of inventory demand in the supply chain?

Chris Benecchi: Revenue is measured when product moves from our alliance partner into the channel at the wholesaler level. Now, when it comes to inventory management, there’s inventory that sits at the specialty pharmacies and inventory that sits at the wholesalers. And what we saw over the fourth quarter is that based on channel dynamics, inventory can fluctuate through both what we’ve seen at specialty pharmacies as well as wholesalers. So, as Barry noted, when it comes to truly measuring performance, really looking at demand quarter-over-quarter is the most important metric that we can look at as we go forward. Now, with respect to the question about free drug, we’ve said that broad and equitable access is paramount for this launch.

And we’ve really worked to ensure that broad and equitable access. Free drug plays a role. Free drug helps those that not insured or underinsured have access to ZURZUVAE, moms with PPD who need this. And what we saw over the course of the fourth quarter is a reduction in the percentage of free drug from what we saw in Q3. And we would anticipate that based on additional coverage that we would see with respect to commercial and Medicaid plans, that that percentage would decrease over time. Again, very encouraging when it comes back to ensuring that all women with PPD have access to this very important medication. Thanks for the question.

Unidentified Analyst: Got it.

Operator: We’ll take our next question from Anupam Rama with JPMorgan.

Anupam Rama: Hi, guys. Thanks so much for taking the question. Just thinking a little bit more acutely about the first quarter, given historical sort of quarterly seasonality and 1Q in the industry due to payer dynamics, how are you thinking about this relative to how we should be thinking about ZURZUVAE potential headwinds in the first quarter? Thanks so much.

Barry Greene: Yeah, Anupam, thanks for the question. I’ll start and see if Chris wants to add color. So we anticipate continued quarter-on-quarter growth, including the first quarter. And keep in mind that our reimbursement is commercial and Medicaid reimbursement. So we don’t see a classic kind of Medicare donor whole first quarter issue. We should see continued growth on all dimensions in the first quarter. Chris, anything to add?

Chris Benecchi: What I would add is that we know that this is a promotionally responsive market from what we saw over the course of the first full year. And what we saw when we increased the salesforce during the fourth quarter of 2024, there were fewer selling days during the month of December and it’s part of November as well due to the holiday season. We don’t anticipate that kind of disruption based on holidays during the first quarter. So we’re excited about what we have in front of us with respect to our ability to continue the success of ZURZUVAE in Q1.

Anupam Rama: Thanks so much for taking the question, guys.

Chris Benecchi: Thanks, Anupam.

Operator: We’ll take our next question from Vikram Purohit with Morgan Stanley.

Unidentified Analyst: Hi, thanks for taking our question. I wanted to dig a little bit deeper on the sales force expansion and also this is Morgan [ph] on the phone for Vikram. So for this recent sales force expansion, how significant of a sales bump are you anticipating over time and how quickly does the addition of reps to the field result in incrementally higher revenues? And then additionally, how many reps were added through the last round of expansion and how large is the field force currently sitting? Thank you.

Barry Greene: Yes, Morgan, thanks for stepping in for Vikram. So I can give you some color on what you’re asking, but we’re not giving guidance or specifics. So as Chris noted, we increased our sales force in the fourth quarter. So we had them in place for the entire fourth quarter and those territories we expanded, we saw 33% increase. So we can’t give go forward guidance, but that’s what we saw in the fourth quarter. We’re very confident that the combined sales force expansion will continue to be an accelerant to our launch and we’ll see quarter to quarter demand and revenue growth going forward.

Operator: We’ll move to our next question from David Amsellem with Piper Sandler.

Unidentified Analyst: Hi, yes, this is Alex [ph] on for David. I have one question for you. On the back of the corporate restructure last quarter and the extended cash runway, do you think you were at all constrained in terms of how much commercial support you can put behind the ZURZUVAE, particularly relative to the support that Biogen provides for the asset? Thank you.

Barry Greene: Yes, I don’t think we’re constrained at all. As we’ve talked about from the beginning of the ZURZUVAE launch, we thought really a big about the opportunity with PPD. Again, we believe that ZURZUVAE has blockbuster potential. Epidemiologically, there’s about a half a million women a year that have symptoms of PPD. Less than half of those are diagnosed and even less are treated. So the opportunity here is significant. We’re thinking big about the opportunity. We continue to focus and scale with success. We’ve scaled with success based upon 2024 volts into 2025. And we can continue to do so where we believe that a dollar spent will result in immediate improvement in demand and revenue. So we don’t feel we’re constrained at all.

Operator: Our next question comes from Paul Matteis with Stifel.

Paul Matteis: Hi, thanks for taking my question. On the pipeline, Barry, can you just talk a little bit more about how you selected these indications? And I guess taking a step back, neurodevelopmental disorders is an extremely challenging area for drug development, and you probably pick one of the hardest DEs, those are the toughest to treat, epilepsies. Why are these the best uses for capital for Sage going forward over other alternatives? Thanks.

Barry Greene: Yes, Paul, I’ll start and I’ll ask Laura to jump in. So as we’ve talked about, we took a hard look at really the last decade of development of Sage and decided to focus on neurodevelopment, neuropsych with molecules that have pharmacologic properties that, you know, expresses the learnings we have. And I’ll let Laura talk about those a little bit more. So we think we’ve got the right molecules going forward and the right kind of match to pharmacology of these diseases. But Laura, you want to talk more about that?

Laura Gault: Yes, sure. As we thought about the pharmacology of the molecules in our pipeline, we realized that they would be a good fit for disorders like neurodevelopmental disorders or NDDs and for the DEs. For the DEs in particular, we have a lot of preclinical data looking at GABA-PAMs and animal models of seizure disorder, and we’ve seen efficacy across a number of GABA-PAMs including Sage 3-T4. We also know that another GABA-PAM, Ganaxalone, has demonstrated efficacy in one of the DEs. So there’s a strong evidence base there that suggests that we could be successful in moving Sage 3-T4 for an indication like that. With regard to the neurodevelopmental disorders, one of the reasons that drug development in this space has been so challenging is that people are trying to treat the core symptoms of the disorder like autism.

They’re trying to treat the communication difficulties. The approach that we’re taking is different. We’re really looking to address the behavioral symptoms associated with these disorders. And we believe, based on the biology of GABA-PAMs and how they work, that we are likely to have improvements in anxiety, in sleep, in sensory hypersensitivity, and in irritability. And so we believe strongly that moving Sage 319 forward for an NDB, such as autism, is warranted based on the data that we have.

Barry Greene: Yes, I’d add that, and we’ll share more in the quarters to come, but we’re also taking a capital allocation approach where we can get answers relatively quickly versus the way that Sage developed for the last decade. And Paul, you and I talked about this in January. The NMDA NAMs are an incredibly well-validated target relative to the PAMs where we took a big swing and didn’t see the results we wanted.

Paul Matteis: Right. And Barry, when do you think you could get POC for each of these?

Barry Greene: We’ll share more in the future. So for SAGE-319, we’ll have results from our multiple sending dose later this year. We said late this year. What that will tell us is, do we have an efficacy profile that looks good but differentiated from the balanced PAMs? And more importantly, or as importantly, do we see a broad therapeutic index? In other words, less CNS effects. So we’ll have that at the end of the year.

Paul Matteis: Okay. Thank you.

Barry Greene: Thanks, Paul.

Operator: We’ll take our next question from Tazeen Ahmad with Bank of America.

Tazeen Ahmad: Hi. Thanks for taking my question. Sorry if you already addressed it in your prepared remarks, but can you just talk a little bit about the dynamics of inventory? What have they been and how should we be thinking about incorporating that into our estimates for 2025? Thanks.

Barry Greene: Yes, Tazeen, we did. But let me start. I’ll hand it over to Chris. So we believe the most important metric to look at is shipments. That’s a true measure of demand. That is when ZURZUVAE exits the specialty pharma and gets into the hands of moms specifically directly to their home. And the fact that we saw over 20% growth quarter to quarter with far less days educating healthcare providers in the field is a very strong sign. The revenue is more of a function of inventory management. Chris, do you want to highlight where that supply chain?

Chris Benecchi: Yes. I mean, inventory is managed, as Barry noted, at the specialty pharmacy level and at the wholesaler level. And I think what we see is that at both of those points, you have organizations trying to manage inventory based on what’s happened in the past and their expectation for the future. And there’s variability in how they think about assessing channel dynamics in order to make those decisions. So as you noted, there’s fluctuations in how they see inventory. And it’s most important, instead of looking at inventory and the implications that it has on revenue, to really focus in on demand, which is the truest way of assessing the demand for this product, the interest in this product on behalf of physicians and the women that they’re trying to treat.

Barry Greene: And we’ve said this before, but just for clarity, revenue is a shipment to the wholesaler. And that’s when revenue is recorded. It’s then pulled through to specialty pharma, and then again, shipped to mom’s house. So that whole supply chain, that inventory dynamic fluctuates there.

Operator: We’ll take our next question from Ami Fadia with Needham.

Ami Fadia: Hi. Good evening. Thanks for taking my question. Just with regards to the additional investments that you highlighted, whether it’s through DDC and some of the other media and educational efforts, can you try and quantify by how much you’re increasing that? And with regards to the Salesforce expansion, is there additional expansion anticipated later this year? And at this point, in terms of investments from Sage and Biogen, is it about equal? Or if you could share any details on Biogen’s role in that, that’ll be helpful? Thank you.

Barry Greene: Thanks, Ami. I’ll start and I’ll ask Chris to come in. And again, we can give more color than detailed specifics because we’re not giving guidance. What I said is based on the success of 2024, we’ve entered 2025 with an aligned commercialization plan, which is a 50-50 COCO plan. So for every dollar spent, we’re each spending $0.50. We’re both expanding Salesforce and we’re both expanding efforts across all the other dimensions that I highlighted. Chris, any other color to add?

Chris Benecchi: What I would add is the Salesforce expansion and the investment in non-personal promotion, we’re amidst that. So we’re investing in the Salesforce expansion now and investing in, as I mentioned earlier, things like social media and the influencer campaign and getting ready to kick off DTC, particularly through channels like Connected TV, where we can be very precise around our ability to reach certain populations that are actually suffering with PPD using DTC, as well as disease state awareness to really not only highlight the importance of a medication like ZURZUVAE, but the importance of screening and diagnosis. And when you have symptoms, presenting those symptoms to your clinician, whether it’s an OBGYN, a psychiatrist or a PCP. So all of those things are coming together right now and we believe will have impact as we continue to build those out.

Operator: We’ll move to our next question from Brian Abrahams with RBC Capital Markets.

Unidentified Analyst: Hi, this is Kevin [ph] on for Brian. Thanks for taking our question. Can you maybe talk a little bit about whether there’s certain characteristics for OBGYNs that currently are not prescribing ZURZUVAE? Does it mostly come down to awareness or is there some other factor at play, maybe geographical location? Thank you very much.

Barry Greene: Yes, Kevin, let me ask Chris to comment on that.

Chris Benecchi: Yes, so I think it’s very noted, 80% or nearly 80% of our prescribers are OBGYNs who are on the forefront of care. These are the clinicians who see women throughout their peripartum journey and who have the best lens on what it is that they need when they express the signs and symptoms of PPD. What we see is that when we have an opportunity to engage an OBGYN with the safety and the efficacy profile of ZURZUVAE, and they have the opportunity to try the medication, that they respond very positively to that experience with more than 60% of those OBGYNs becoming multiple prescribers of the medication. So what I think it comes down to is just our ability to really increase our reach and to increase our frequency in order to deliver what is very compelling messaging from a product that is performing in the real world setting, much like it did in ROBIN and SKYLARK, our Phase III pivotal clinical studies.

So very excited about the opportunity, as I noted, about increasing the size of the sales force and the investment in non-personal ultimately to get to the broader audience of clinicians that we can reach.

Barry Greene: Yes, Kevin, once an OBGYN office has been educated and uses ZURZUVAE, we’re seeing a significant amount of rewriting and a significant amount of more, over 300% actually, more PPD in that practice area. So we’re excited as 2025 unfolds and we see the sales force expansion having an impact.

Operator: Our next question comes from Laura Chico with Wedbush Securities.

Unidentified Analyst: Hello, this is Dylan on for Laura Chico. Thanks very much for taking our question. Just one on PPD, would you anticipate any near-term revisions to treatment guidelines in the PPD setting from perhaps ACOG or AAP? I’m wondering how this might accelerate or impact commercial uptake.

Barry Greene: Yes, Dylan, I’ll start. ACOG, we’ve got phenomenal guidelines. Before ZURZUVAE was approved, there was ACOG guidelines that instructed OBGYNs and their office screen diagnosis and treat with pretty easy-to-use tools that don’t require special training. And ZURZUVAE, there’s the drug to specifically mentioned in guidelines. So I’ve launched a lot of drugs in my day. It doesn’t get any better than having your drug mentioned in guidelines before you launch. And ACOG’s been a great partner. In terms of other Congresses, we continue to work with others to update guidelines. The fact that ACOG did it so quickly is really helpful because, as we’ve already talked about, our prime audience here, because they’re at the beginning of the patient journey, are OBGYNs.

Chris Benecchi: Yes, Barry, what I would add, I think, as you noted, the ACOG guidelines were in place in and around the time of our approval and launch. There were a number of tailwinds, the ACOG guidelines being one of those tailwinds, the media behind the care ecosystem and how they really have enabled broad and equitable access to this medication. So a lot of things really supporting this launch out of the gate that really augment what we’ve been able to take advantage of with the ACOG guidelines.

Operator: We’ll take our next question from Douglas Tsao with H.C. Wainwright.

Douglas Tsao: Hi, good afternoon. Thanks for taking the questions. Just curious, you’ve obviously had a lot of success getting the OBGYNs to prescribe. Are you surprised that you haven’t had more penetration with psyches [ph]? Thank you.

Barry Greene: Yes, Doug, thanks for the question. So we’re not surprised by the dynamic we’re seeing at all. As we talked about, strategically in any drug launch you want to focus on the front end of the patient journey. In this case, that front end is OBGYNs. And we’re seeing tremendous penetration there and a tremendous uptake in OBGYNs. As we said, once an OBGYN is educated about ZURZUVAE and uses ZURZUVAE, we’re seeing significantly more rewriting and coverage of this disease in their practice. So that’s what we want to see. Now, as Chris highlighted, of course, there are other healthcare providers that we want educated on PPD and ZURZUVAE, psyches, primary care, because not every OBGYN picks up every mom and not every woman develops symptoms in the course of being seen by their OBGYN.

It could happen two or three months after giving birth. So we are seeing the dynamic exactly as we expected. And as we continue to expand use, OBGYNs will remain the front end of coverage here in care.

Douglas Tsao: Okay, great. And just as a follow-up, the questions I’ve gotten from investors in terms of 319 and the FAD and NAD that is you’ll have this year, I’m just curious, I think it’d be helpful to provide some additional perspectives on beyond just the exposure, but what types of information you’ll get from that study that will give people confidence that you have an active drug. I mean, obviously, you won’t have clinical data in terms of patients, but just in terms of what you’ll see that should give people increased confidence that this will ultimately have success in the clinic? Thank you.

Barry Greene: Yes, good point, Doug. Laura, I want to talk about the EEG signal we’ll have and then the safety database, both of which will be very helpful in instructing the path forward.

Laura Gault: So as we mentioned, we’re conducting a phase one program, includes a FAD study and a NAD study, very conventional. The primary endpoints, of course, are safety and tolerability. But we know from preclinical data using extra synaptic preferring molecules that there’s a different EEG signature that you can see in animals. And that different EEG signature represents a different type of engagement of brain circuitry. We are able to look in the clinic using EEG to look for that same signature. And so when we come to the end of these studies, we’ll be able to say whether that differential signal that reflects different activation of brain circuitry that we see pre-clinically also happens in patients.

Douglas Tsao: Okay, great. That’s really helpful.

Barry Greene: Thanks, Doug.

Operator: We’ll take our next question from Uy Ear, Mizuho.

Uy Ear: Hi, guys. Thanks for taking our question. It’s breaking away a bit from the other questions. Just wondering, maybe could you help us understand a little bit what’s going on with the agreement with your collaborator in Japan, Shionogi. Are you expecting any milestones or anything to that effect? I think they are expecting or there could be a decision on their MDD application sometimes in September? Thanks.

Barry Greene: Yes, absolutely. Thanks for going there. So I’ll comment and then Chris can talk about milestones. So what our Japanese friends have shared is that they expect a decision on MDD from Japanese FDA later this year. And it’s an MDD indication which in Japan also includes women that have given birth. So it’s folded under there as well. Chris, you want to talk about the milestones?

Chris Benecchi: Yes, sure, Barry. If approved, we’re entitled to receive regulatory and commercial milestones from Shionogi. Regulatory milestones amount to a approximately 55 million of which a portion would be achieved upon MDD approval. Now, there are additional commercially related milestones, including upon first commercial sale. Currently, no milestones have been assumed in our cash runway expectations into 2027.

Barry Greene: Yes, so if they’re successful in getting approval and we get the milestones and royalties, that’s upside to our cash runway.

Uy Ear: Could you maybe just speak a little bit about the potential opportunity in Japan for both of these indications?

Barry Greene: I think what I can say is the way Japan works and you need to talk to them about it is if they get the KOLs behind them, they should have a pretty interesting commercial uptake. But we have to talk to them directly about what their expectations are.

Uy Ear: Okay, thank you.

Barry Greene: Thank you.

Operator: We’ll take our next question from Joel Beatty with Baird.

Joel Beatty: Hi, thanks for taking the question. Could you give a sense of how sensitive the market is to marketing to physicians versus raising awareness among in patients and are scripts tending to come for patients who are already aware of ZURZUVAE and asking about it or more about patients who may not have heard of it before?

Barry Greene: Yes, Joel, I’ll ask Chris to comment.

Chris Benecchi: So, as I’ve already said, this is a promotionally responsive market. We see that whether it is the sales force or it is non-personal promotion and the various different tactics that we talked about, that really there is an impact of those. In terms of – is it coming from physician behaviour, is it coming from directly engaging with patients, either through DTP or DTC? The sense that we have is it’s coming from really a balance of both of those things that this is a market in which, as Barry noted, we have an activated group of healthcare professionals, OBGYNs, who are really willing recipients of this message, and then are subsequently not only treating, but screening and diagnosing at a higher level. We also know that this is a market where patients are activated with the information that we provide, and they’re engaging their healthcare professionals in informed discussions that enable those clinicians to provide them with perspective on not only the importance of treating PPD, but using a medication like ZURZUVAE.

So, we believe that what we’re doing right now is not only launching ZURZUVAE, but we’re building an opportunity, expanding opportunity through increased screening and diagnosis through education and disease state awareness.

Joel Beatty: Thank you.

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

Sumant Kulkarni: Good afternoon. Thanks for taking our question. Given what we know about the size of the PPD market in terms of patient and prescriber numbers, do you believe this collaboration is required to get commercialization right on ZURZUVAE, and how would you characterize the sales force’s level of focus with all the stuff that’s going on in the background?

Barry Greene: Yes, so the collaboration exists, so that’s how we’re operating, and I can tell you that on a day-to-day basis, the sales force and both commercialization teams are laser-focused in helping as many moms in 2025 as possible. There are no distractions.

Sumant Kulkarni: Thanks.

Operator: Our next question comes from Joon Lee with Truist Securities.

Joon Lee: Thanks for taking our questions. What proportion of the patients who get ZURZUVAE are getting it as their first-line therapy, and for those who are diagnosed with PPD but getting some form of therapy other than ZURZUVAE, what are some of the challenges there? Is this an issue of access or something else, like perception as a novel drug with relatively less safety data? Thank you.

Barry Greene: Yes, Joon, thanks. Chris, you want to start, and then I’ll loop back to fill in some of the other color?

Chris Benecchi: Yes, so what we’ve said is that with respect to all of the work that we’ve done with not only payers but also with physicians, we want to ensure broad and equitable access, and in doing so, this has enabled physicians to use this medication, ZURZUVAE, as a first-line treatment. What we’ve communicated in our prepared remarks is now that more than 70% of those that are receiving the medication through the targeted HCPs that we’re calling on, they’re able to get this medication as a first-line medication, which is really incredible when you think about it, to have that degree of first-line use right out of the gate. So, to me, I think that’s something really to reflect on, not only the work that we’ve done with physicians but also with payers.

Now, in terms of other patients who may not be getting this in the first line, there are patients who come through who have a prior history on other antidepressants because perhaps they’ve been diagnosed with a condition by a clinician in the past. So, those that aren’t getting it in the first-line position aren’t getting it because they’re being excluded from getting it. They typically come forward on another medication, and that’s the rationale for it.

Barry Greene: Yes, and as you said, Joon, in any novel drug launch, you have to overcome historical bias. Someone was used to using something one way, they’ve got to understand their ZURZUVAE and how to use it. We’re certainly seeing, as we highlighted, tremendous insurance coverage and very little, if any, out-of-pocket expenses. So, it really is about historical bias more than anything else to continue to move to frontline. And just to emphasize, as Chris said, for those that we’re targeting, we’ve educated, we’ve engaged, we’re seeing significant frontline use for ZURZUVAE.

Joon Lee: Thank you.

Operator: We’ll take our last question from Marc Goodman with Leerink Partners.

Unidentified Analyst: Hi, this is Basma [ph on for Marc. Thank you for taking our question. Can you provide some color on the growth to net in the quarter, given that there was higher, greater demand, but the revenue kind of seemed to be flattish if you compare the fourth quarter to the third quarter? And also, we have another question about, can you tell us now, after one year from the launch, if any other treated patient needed to receive more than one treatment course? If so, can you provide some color on the proportion of these patients and whether there has been any pay of pushback? Thank you.

Barry Greene: Yes, Basma, let me take that kind of in reverse order. So, what we’ve seen and what we’re hearing reported back is that the performance of ZURZUVAE in the real world is as good or better than we saw in our clinical trials. So, it’s a rapid and durable response. We’re not picking up much of any kind of retreatment at all. We’re seeing that the 14-day course works rapidly and is helping moms and that response is maintained. In terms of the dynamic, we’ve talked about this a couple times, the over 20% demand growth is encouraging in the fourth quarter. The revenue growth was really a matter of sort of channel management and inventory, not really a matter of gross to net. But again, we’re excited by the start to 2025 and where the launch is going.

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, Taryn. And thanks, everyone, for joining us on this afternoon to review our results from the fourth quarter of full year 2024. As we look ahead to the ongoing commercialization of ZURZUVAE and PPD and advancements in our focus pipeline, I’m confident we’re making important progress for patients. We move forward with investments intended to power ongoing commercial success and create value for shareholders. Thanks, everyone. Have a great evening.

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