Sage Therapeutics' (SAGE) CEO Jeff Jonas on Q1 2019 Results - Earnings Call Transcript

About: Sage Therapeutics, Inc. (SAGE)
by: SA Transcripts
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Earning Call Audio

Sage Therapeutics, Inc. (NASDAQ:SAGE) Q1 2019 Earnings Conference Call May 2, 2019 8:00 AM ET

Company Participants

Maren Killackey - IR

Jeff Jonas - CEO

Mike Cloonan - CBO

Kimi Iguchi - CFO

Steve Kanes - CMO

Jim Doherty - CRO

Conference Call Participants

Brian Abrahams - RBC Capital Markets

Ben Burnett - Stifel

Salveen Richter - Goldman Sachs

Hannah Latimer - Morgan Stanley

Corey Kasimov - J.P. Morgan

Tazeen Ahmad - Bank of America Merrill Lynch

Akash Tewari - Wolfe Research

Derek Johnson - Guggenheim Partners

Andrew Tsai - Jefferies

Danielle Brill - Piper Jaffray

Ritu Baral - Cowen

Joon Lee - SunTrust


Good morning. Welcome to Sage Therapeutics' First Quarter 2019 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

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 Maren Killackey, Investor Relations at Sage.

Maren Killackey

Good morning.

Today, we issued a press release with our first quarter 2019 financial results, along with recent Company highlights, upcoming milestones, and progress on our corporate strategy. The press release referenced on this call can be found on the Investors & Media section of our website at

We will begin the call with prepared remarks by: Dr. Jeff Jonas, our Chief Executive Officer; Mike Cloonan, our Chief Business Officer; and Kimi Iguchi, our Chief Financial Officer. We will be joined for the Q&A session by Dr. Steve Kanes, our Chief Medical Officer; and Dr. Jim Doherty, Chief Research Officer.

During today's call, we will make forward-looking statements. These statements may include the anticipated timing of launch of ZULRESSO, our plans and expectations for commercial activities and results, our views as to the potential availability of sites of care and reimbursement for ZULRESSO, the potential product profile, indication and regulatory approval pathway for SAGE-217, our clinical development plans and expected timing of data readout for our product candidates, our views as to the potential for success of our programs and business and value creation opportunity, our financial projections including our expected cash position, the potential timing of ZULRESSO revenue momentum, and anticipated expense increases, and our expectations regarding other upcoming events and activities.

Actual results may differ materially. The risks and other factors that could cause actual results to differ are discussed in today's press release and in the Risk Factors section of our most recent report filed with the SEC and subsequent reports. Any forward-looking statements represent our views as of today only. We may update these statements in the future, but we disclaim any obligation to do so.

I would now like to turn the call over to Jeff.

Jeff Jonas

Thanks, Maren, and good morning everyone and thanks for joining us on the call today.

This morning, I'll update you on our progress in building out Sage's three Central Nervous System or CNS franchises. Each of which represents an opportunity to fundamentally shift how brain disorders are thought about studied and treated. Then I'm going to turn it over to Mike to talk about ZULRESSO launch plans. Kimi will close by providing an update on our first quarter financial results. Finally, we will open up the call to Q&A.

I'll begin with an update on our depression franchise which includes two therapies branded breakthrough therapy designation by the U.S. Food and Drug Administration or FDA. ZULRESSO which is approved for the treatment of postpartum depression or PPD and our late-stage oral product candidate SAGE-217 which is currently being studied in patients with major depressive disorder or MDD as well as PPD bipolar depression and co-morbid MDD and insomnia.

ZULRESSO was recently approved by the FDA as the first and only treatment specifically indicated for PPD, the most common medical complication of childbirth. ZULRESSO is given at a one-time infusion that offers the potential for resolution of depressive symptoms in days unlike traditional interventions that can take weeks or months.

We believe this is what innovation looks like and it could be game changing for the treatment of PPD. The approval of ZULRESSO was a gratifying event for the company of course but more importantly for patients, families, researches, Sage employees, and frankly everyone involved in securing the approval of this potentially transformational new drug.

We're ready to make ZULRESSO commercially available to patients in late June at healthcare centers certified under the ZULRESSO risk evaluation and mitigation strategy or REMS following the EA schedule. In the meantime, and in response to the tremendous unmet need in women who are suffering from PPD, we've launched an expanded access program that allows eligible patients to be treated with ZULRESSO at healthcare settings that participate under an expanded access protocol prior to commercial launch. This is just one of the ways we are taking a patient and family centered approach to our activities, a core value that carries through our commercial strategy which Mike will describe shortly.

We believe ZULRESSO may set the stage for paradigm shift in how psychiatric disorders such as PPD are thought about and treated. By medicalizing depression the people with these disorders will receive the urgent care they need and deserve so that depression becomes a treatable disease rather than a lifestyle.

I'll now turn to a discussion of our clinical stage candidates. SAGE-217 is being developed based on a potential target profile of rapid onset of activity, durable effect, and clinically meaningful improvement in depressive symptoms obtained within days. Our groundbreaking pivotal program for SAGE-217, if successful, could allow us to secure approval for multiple indications with differentiated label claims. The program includes two completed positive pivotal studies 201 in MDD and the ROBIN Study in PPD, and an ongoing efficacy trial in MDD, the MOUNTAIN Study.

We continue to see strong enrolment in that study and project a readout of top-line data in Q4 of this year or Q1 of 2020. We also plan to include the results from two retreatment studies MDD-302 and SHORELINE in our new drug application for SAGE-217 if our development efforts are successful. These studies will provide longer-term follow-up data to inform options for patients treated.

302 is a placebo controlled maintenance study using a randomized withdrawal trial design where patients who respond to initial treatment with SAGE-217 will receive SAGE-217 or placebo for two weeks every two months. Data generated from this study will evaluate the potential to prevent relapsed or depressive episodes when administered as monotherapy. It will also provide valuable safety and quality of life information about the maintenance use of SAGE-217.

In the ongoing open label SHORELINE study, we are evaluating treatment free intervals and as needed retreatment for a return of major depressive episodes. Patients will receive an initial two week course of SAGE-217 treatment and the need for retreatment will be assessed every 14 days with a minimum period of eight weeks between treatment cycles. The SHORELINE study will provide important information on the incidence of recurrence and the duration of treatment free intervals. This PRM or as needed treatment approach could potentially avoid exposing patients to months of unnecessary medication.

The last study in our Phase 2 program is the RAINFOREST study which will assess SAGE-217 compared to placebo in about 100 patients with co-morbid MDD and insomnia. This is a particularly exciting trial because it will provide us with useful biomarker data in addition to additional efficacy data. If positive, this study could support a claim regarding improvement in symptoms related to sleep in patients with MDD, a benefit unique among currently approved antidepressants. If data from these studies replicate the robust statistically significant findings we've seen to-date, we believe SAGE-217 will be well-positioned to be a first line monotherapy.

Beyond MDD and PPD, we're assessing SAGE-217 affecting other mood disorders. Similar to the clinical approach we've used in the past, we started by running an open label Phase 2 study in bipolar depression the ARCHWAY Study with the goal of identifying a significant signal of activity before investing in larger trials. Based on the ARCHWAY Study, we will guide the portfolio decisions designed to maximize the value of SAGE-217 and inform our potential exploration of other indications for this novel compound and our other assets.

Based on our data acquisition, we're extending the data readout timing for ARCHWAY from the first half of 2019 to July of this year. This allows us to deliver the results in the context of the broader SAGE-217 portfolio decisions I've just mentioned and other portfolio updates happening at the same time, specifically from our earlier stage neurology and neuropsychiatry assets which I'll discuss now.

Our Neurology franchise is being led by SAGE-324, a next-generation oral positive allosteric modulator or PAM of the GABAA receptor. Potential indications for SAGE-324 include a essential tremor and epileptiform disorders. In a single ascending dose Phase 1 study, SAGE-324 was generally well tolerated with no serious adverse events and demonstrated a pharmacokinetics profile appropriate for once or twice daily dosing.

We're currently conducting the multiple ascending dose study in healthy volunteers and a single dose open label cohort of SAGE-324 in patients with essential tremor. Both are designed to confirm the safety, tolerability of pharmacokinetics of SAGE-324, and provide biomarker data that we hope will inform our design of potential later stage studies.

Our lead neuropsychiatric compound SAGE-718 is the first implant NMDA receptor PAM. Based on results from preclinical studies, we believe SAGE-718 is active in upregulating brain activity with the potential to enhance cognition. We've completed Phase 1 single and multiple ascending dose studies in healthy volunteers in with SAGE-718 was generally well tolerated with no serious adverse events, and demonstrated a pharmacokinetics profile consistent also with once daily dosing.

Ongoing studies remaining in the Phase 1 program for SAGE-718 includes a target engagement biomarker study in healthy volunteers focusing on electrophysiology and imaging. We plan to make the results from these studies public in July.

There was also a study to determine the safety, tolerability and pharmacokinetics of SAGE-718 in patients with early Huntington's disease. Data from this trial are expected in the second half of 2019.

So we've already had a big year here at Sage, upcoming milestones if positive are expected to be transformational for the company. We look forward to keeping you updated on our progress as we work to realize a full-year, mid-term and long-term potential of our three wholly-owned CNS franchises.

Now I'll turn the call over to Mike and talk about ZULRESSO launch preparations. Thanks everybody.

Mike Cloonan

Thanks, Jeff, and hello everyone.

We're excited about the approval of ZULRESSO and given its novel product profile, the lead it represents the opportunity to set a new treatment standard for women with postpartum depression. Our commercial infrastructure build is complete and we are launch ready subject to the final training of the field teams post-DEA scheduling.

To-date, we have made significant progress executing against our goal to identify new pathways to care in PPD. We are taking a family centric approach in our go-to-market strategy with a focus on helping to open reimbursement channels and support access to women with PPD, while activating REMS certified centers of excellence.

We also believe it will be important that healthcare settings where ZULRESSO is available provide a positive patient experience for women with PPD. As a reminder, centers of excellence or CoEs are sites of care that have a PPD healthcare provider champion, ability to secure appropriate payer reimbursement for ZULRESSO, certification under the ZULRESSO REMS which includes monitoring by qualified trained staff, specific protocols, and the maintenance of a patient registry. We estimate that fully activating a CoE can take six to nine months from launch and will vary by center. Therefore we expect to start seeing momentum in the fourth quarter of this year.

In the early stages of the launch, we expect ZULRESSO will primarily be used in the estimated 20% to 30% of women diagnosed with severe PPD. We are also working to identify a range of potential ultimate sites of care capable of operationalizing and complying with the REMS in order to create more options for patients and their families.

We've had a high-level of engagement with potential centers of excellence as permitted having profiled more than 600 leading up to the PDUFA. We are now narrowing down a targeted list that we expect to be REMS certified at launch and in the months following launch. Since the approval of ZULRESSO, we have received a significant increase in inquiries from CoEs and we've driven increased engagement with a broad range of medical and administrative leaders in these potential CoEs as permitted. Through this engagement, we've been able to initiate the process of REMS certification at specific sites of care. We are encouraged by the early signals of interest at the CoEs.

Also key to our go-to-market strategy is helping to enable broad access for ZULRESSO for women with postpartum depression. Over the past year, we have completed over 500 payer engagement meetings with the majority of commercial and Medicaid payers. In the weeks since approval, we've had productive meetings with payers representing 90% of covered lives in the U.S. Based on the level and tone of engagement we've had so far, we believe payers now recognize the burden of the disease, the stigma, the challenges experienced by women with PPD, and ZULRESSO's unique product profile.

We also received significant inbound requests from payers since approval. There is a clear sense of urgency among these stakeholders to review the product profile and develop appropriate coverage policies designed to enable access for women with PPD at launch.

As I mentioned part of the work of the centers of excellence will be to establish reimbursement pathways beyond DRG including carve-out payments and negotiated case rates. Commercial accounts favor case rates with hospitals and health systems to cover the cost of ZULRESSO. Medicaid payers have expressed their intent to provide appropriate reimbursement to hospitals via existing pathways or negotiated case rates. Based on our interactions, we're confident that payers will provide coverage aligned to the label and our clinical studies for women with PPD with medical policies varying by payer. We expect the majority of formal medical policies to be finalized in the coming months.

Historically women suffering from PPD avoided seeking treatment because of the complicated journey to care and stigma. We have made tremendous headway building our patient support organization headquartered in Raleigh, North Carolina, and our team is focused on several key areas. We will provide a range of patient support resources to assist women with PPD and their families including dedicated case managers who can provide information to help navigate the treatment journey, personalized support to assist with understanding insurance and coverage options, financial assistance programs for eligible patients, and access to educational resources and assistance with where to go for help on a particular topic and connecting to local resources.

Teams across Sage have demonstrated their commitment and dedication to engaging stakeholders and creating infrastructure, we believe will be necessary for ZULRESSO to be successful, so that we can realize our commitment to making a difference in the lives of moms with PPD.

In addition to traditional metrics of success like revenue, post-launch we plan to provide updates on the number of REMS certified CoEs and other sites of care, the number of sites that have administered treatment to a patient, and metrics on payer coverage and patient access. We look forward to providing these updates on future earnings calls.

With the approval of ZULRESSO, we have an opportunity to shift the paradigm of how PPD is treated. We'll be providing what we believe is a groundbreaking new treatment to patients who previously had access to a limited set of options. We look forward to creating even more optionality for patients and their families and potentially impacting generations of lives.

And now I'll turn it over to Kimi to review our financials.

Kimi Iguchi

Thanks Mike. I'll now walk you through the highlights of our financial results and guidance.

For a complete review of our first quarter 2019 financial results, please consult the press release we issued this morning or our Form 10-Q filed with the SEC.

Starting with our balance sheet, we ended the first quarter with $1.4 billion in cash, cash equivalents, and marketable securities compared with $922.8 million at the beginning of the year.

In February of this year, we raised $550.9 million in a follow-on public offering after costs and discounts. Our cash on hand keeps us in a strong financial position as we prepare to deliver upcoming milestones across all three of our CNS franchise. As Jeff and Mike have described, we've developed a pipeline with enormous potential to improve the lives of patients suffering from life altering brain health disorders. This success and the value we've created to-date would not have been possible if not for our proven financial playbook and disciplined approach to investing in our portfolio.

Turning to the rest of our financial results for the quarter. Research and development expenses increased to $86.4 million in the first quarter compared to $49.3 million for the same period of 2018. This increase reflects costs associated with the ongoing late-stage clinical studies of SAGE-217 and earlier stage studies for our other product candidates across our pipeline as well as discovery efforts focused on identifying new clinical candidates and additional indication.

We have also expanded our R&D team to support the growth in Sage's pipeline and operation.

General and administrative expenses increased to $83.9 million in the first quarter compared to $28.8 million for the same period of 2018. This increase is a result of the continued investment in preparation for the planned commercial launch of ZULRESSO and the ongoing build and expansion of the organization and operation.

We reported a net loss in the first quarter of $163.4 million compared to a net loss of $74.6 million for the same period of 2018.

For updated financial guidance based on our current operating plan, we now anticipate that our cash balance will be at least $950 million at the end of 2019.

We expect that our operating expenses will continue to increase year-over-year to support the ongoing investment in our multi-franchise portfolio including ongoing pivotal studies for SAGE-217 and MDD and the commercial launch of ZULRESSO and PPD.

2019 has already been a productive year for the company and there's a lot more to come as we aim to maximize the significant potential value of our pipeline assets. We've done a great job so far of making investments in our lead programs that we hope will set us up for the long-term success. We continue to maintain a solid financial foundation to do the same for our quickly progressing early stage pipeline.

With that, we would now like to open the call for Q&A. Please limit yourself to two questions each, so that we can leave enough time to get to everyone. Questions will be taken in the order that they are received. Operator?

Question-and-Answer Session


Thank you. [Operator Instructions].

Our first question comes from Brian Abrahams from RBC Capital Markets. Please go ahead.

Brian Abrahams

Hey guys, thanks for taking my questions and congrats on all the progress on the ZULRESSO launch. Two questions from me both on 217, if you look to further expand the long-term opportunity there. Can you talk about what you might be looking for with respect to potential signals from the open label bipolar study that might suggest opportunities to explore other effective disorders, perhaps disorders in the anxiety spectrum? And then, as you think about this expansion beyond MDD and PPD, how do you balance potential future revenue opportunity with the necessary investments and are there ways that you're working depressive disorders could help streamline development for these expanded indications? Thanks.

Jeff Jonas

Hey first, thanks, and good morning everybody. I just want to take one moment to basically acknowledge, Sage has had a really exciting quarter and the folks at Sage who have accomplished something that many -- few biotechs ever get to which is our PDUFA and approval for ZULRESSO for the treatment of PPD. And I know we're going to have calls, talk a lot of questions today about everything. But I just want to acknowledge what a great milestone this has been for Sage and the people who work for us.

So with that, I'm going to -- you have a couple of questions, so I'm going to speak about this in sort of top-line and then pass it off to Steve and Kimi. With respect to 217 in general, one of the points -- one of the things we're looking at, is as you ask, is how do we maximize the clinical utility and hence market value of the drug. And one of the things -- we've had more time since the completion of our Phase 3 study not only to think about, and Steve will talk about as bipolar, but also to examine much more critically what the findings have been in the MDD program as well as in the PPD program.

And we think what we're learning from those double blind studies is going to be very useful in helping us determine where to invest further dollars in maximizing SAGE-217. Our plan just as an aside is to present a somewhat coordinated R&D update in July because we have so many milestones coming due over the next few months. We thought it was the most efficient and useful for both the public as well as us to discuss what opportunities lay before us and where we think the most prudent investments ought to be. So with that I'm going to turn this over to Steve Kanes.

Steve Kanes

So first-off with regard to bipolar. This is a part of our -- the way that we explore the value of the many assets that we have within our portfolio and we've always done this where we start first with open label data and make use of it to make decisions in the portfolio. As Jeff mentioned, there's a lot more information that goes into the decisions around lifecycle management and other kinds of indications including data that we've collected inside of our own trials.

So those are all the information that we put together as we make decisions to how we're going to move forward with developing with 217. It's just a great example of how we approach drug development which has been extraordinarily efficient. I want to pass it to Kimi, so I think it speaks to the way we think about business decisions around our portfolio as well and how we've gotten to where we are.

Kimi Iguchi

Yes, Brian, I think the question you were getting at was really around all the opportunities that we have here at Sage, it's not only just the clinical but there is commercial opportunities, there's early stage development and how does Sage think about making decisions there. I think one of the ways we do that is when you've heard over and over again which is our deliberate approach and our disciplined approach to investing. And you've heard Steve talk about the de-risking elements that we use in our clinical trials as well.

The other thing that we do is to really make sure that we think about the near, the mid and the long-term opportunities. We think about the risk associated with that and we think about the capital needs. And so this is really one of the things that we've always done is we've followed the science and that is just that Sage.

And so the other part to that is we always think about how to best spend our dollars to maximize the value. So that's it. That's what we've been doing to-date and what we'll continue to do going forward.


Thank you. Our next question comes from Paul Matteis from Stifel. Please go ahead.

Ben Burnett

Thank you so much. This is Ben Burnett on for Paul Matteis. Just two quick questions, one on SHORELINE, the open label study, so after patients received the initial two week course 217, I guess logistically how are physicians defining relapse and then what triggers retreatment in the setting?

Steve Kanes

So, yes, this is Steve. For SHORELINE what we've done is we've established standards, we don't necessarily want patients to go all the way back to relapse that would be inappropriate but it ends up being a combination of clinical judgments are patients moving in towards a recurrence of symptoms and we've set specific standards within the trial. So really it's -- the study itself for those who are less familiar with it, is a much more naturalistic approach to understanding how often patients may need to be retreated. And it's a way for us to really understand not only safety of the drug with retreatment but also it gives us a lot of information about the natural course of major depression itself.

Jeff Jonas

Yes, this is Jeff. One other point to make about SHORELINE is there's been a lot of discussion about how depression is treated. And in reality, you speak to psychopharmacologist who are skilled in this area; many of them are already pursuing intermittent treatment. And people who are on SSRI they actually do stop the SSRIs just by a few months and evaluate the patients and watch them. So SHORELINE in many ways is designed to replicate the way many experienced psychopharmacologist already treat their patients.

The 302 study which doesn't yet have a landscape name fortunately is really designed to talk about the way many other physicians usually treat patients which is try to maintain them symptom free. So that's the design of the 302 study. So our intent with both the studies is to craft a data package at launch that will really best inform clinicians. However they opt to choose patients with MDD.

Ben Burnett

Okay. So if I understand that, this is sort of physician's choice, patient's choice as to when treatment occurs and it's not standardized, I guess from center to center; is that fair?

Steve Kanes

Yes. So the goal at the end is to have a data package that would support the maximal utility of the drug however physicians ultimately treat patients. And the data -- and yes -- and so -- and then each study is of course standardized as their research protocols. But at the end of the day, the goal is to have a package that would support various approaches to treatment as appropriate.

Ben Burnett

Yes, okay. Understood. And then just one more on 217. So you guys, there's a number of studies ongoing or planned and assuming these are all successful. Can you just talk about what you see as being critical for filing for a potential NDA? And I guess specifically what do you see as needing to be NDA versus just being supportive. Just trying to get a handle as to what could be gating profiling? Thank you.

Jeff Jonas

This is Jeff. In terms of timing, we don't anticipate much gating with the enrollment. Enrollment has been extremely robust across the study that has a level of interest. I think generally speaking the level of interest for most of our programs has been high and I think that has to do with a novel way these mechanisms work in treating depression. You saw that with ZULRESSO and we're seeing that now with 217.

The filing package obviously could be determined by the data. The understanding we have remains that we need evidence of acute activity. We already have two studies that show that. We believe that 302 could be pivotal, it's a standard withdrawal design that has been accepted as pivotal by other drugs, 301 could also be pivotal. We also have the sleep study which we think it was powered for efficacy. So we have a lot of short time goal that we think can accommodate a filing, which studies are probative always depends on the data of course.

I think the final point and this is one of the things that makes SAGE-217 somewhat unique in the annals of depression studies is that the drug's effect size has been regularly quite large and reproducibly quite large, it hasn't varied from study to study and as a result even with high powering the size of our studies are not that large for efficacy. So a lot of our work is getting an adequate safety database.

Steve Kanes

The only other thing I'd add is the most important thing for a registration program other than many of the other features that we may build; we built-in are two positive placebo controlled trials. And of course we already have two pivotal trials that are positive with 217 both the MDD and PPD trial, so much, I mean that's not all you need for a registration but we already know that we're seeing very robust efficacy, a very reproducible efficacy, in the outpatient setting. And so really it's about, as Jeff said, understanding the data and making the maximal use of that to get the best label at the time of approval.


Thank you. Our next question comes from Salveen Richter from Goldman Sachs. Please go ahead.

Salveen Richter

Thanks for taking my questions. I mean your thoughts here to filing separately for 217 and PPD versus together with MDD. And then, secondly, in your 302 study for MDD, what exactly is the fixed interval period?

Jeff Jonas

Okay. This is Jeff. I will take one and I'll hand off the second to Steve. I think the company; I think we've been very adroit at accelerating all of our programs. We're always looking for those opportunities. But right now I think what we need to articulate that the filing strategy of looking for two indications with one NDA filing is the one that we are -- it's the only thing we can comment on today. I'm going to turn the 302 question over to Steve.

Steve Kanes

Yes. So the answer to the specific question is it's two weeks of treatment every two months. So for a maximum of six treatments in a year and that's we think allows us to really understand that the patients and how well they do in those intervals.

Jeff Jonas

We also know, Salveen, from our decay curves in terms of response rate that we think that's a very reasonable interval that where patients will remain symptom free.

Steve Kanes



Thank you. Our next question comes from Matthew Harrison from Morgan Stanley. Please go ahead.

Hannah Latimer

Hi this is Hannah on for Matthew. We were wondering if you could give us more color on how much of the patient population you believe can be addressed in those initial healthcare centers for ZULRESSO. And then just any more color you can give us on how much oversight is required for the REMS? Thanks.

Mike Cloonan

Yes, so this is Mike. I'll take the first question and I'll turn the REMS piece over to Steve. So on the centers of excellence just to step back, I think it's important, one thing we really want to stress in this call is that we are at launch ready right at this point. We think we see a lot of excitement out in the community both in terms of our CoE engagement but also the payers and we're on track, right. We're on track for our June 2019 launch and we're doing something that's never been done before. Right, when you think about the centers of excellence that have to be developed, this is something that we are paving the way and creating the standard of care here for postpartum depression and moms suffering from PPD.

Your specific point on the centers of excellence and sort of what the segmentation will be. So you're to talk about we've profiled 600 Centers of Excellence at this point and we're now narrowing that list down to a very targeted list of CoEs that we still want to maintain that broad access and create options for patients, right. That strategy has not changed for us. But as you also heard us talk about, we think the initial patient population for initial use is going to be in the severe patients, right. So our goal is to establish as many centers of excellence as possible to create that broad access for patients and provide that update for patients in the early months initially focused on the severe patient population. So let me turn it over to Steve to talk a little more about the REMS criteria.

Steve Kanes

Yes. And so just to bring it to a higher level, the goal of the REMS is to ensure that the drug ZULRESSO is delivered safely and is done in a way that is not overly burdensome to healthcare facilities and that's a driving force for us as well as for -- and to ensure patient access. So the specific features include I would say what would be considered relatively routine observations in hospitals. We will be using pulse oximetry as a way of monitoring the patients, this is routinely applied in hospitals. And a lot of the other features are really to make sure that the drug is distributed to places that have been trained appropriately and to patients that are enrolled in a registry. So those are the key features. They're not particularly burdensome for the healthcare facilities themselves and often fit directly into the kind of patient care that these patients would require.


Thank you. Our next question comes from Corey Kasimov from J.P. Morgan. Please go ahead.

Corey Kasimov

Hey good morning guys. Thanks for taking my questions. I have two of them as well. So I guess first to follow-up on the prior one asked about filing 217. How much safety data will you need from 302 and/or SHORELINE? So assuming the pivotal MOUNTAIN studies positive, are you finding you're getting enough safety information from SHORELINE and if not would you be able to collect safety data from 302 if that's still ongoing to include in an NDA filing?

Jeff Jonas

Hey Corey, it's Jeff. Basically we're looking for ICH criteria. As you recall that the concern we had or a positive concern we have at 303 is that we were concerned that not enough patients would relapse to require retreatment over a year which is one of the advantages of doing a 302 study. So we know we have information about potential maximal use scenarios. Remembering ICA is looking for 100 patients treated continually in a year. This is an intermittent therapy. So the 302 we think can help with that. But I know you notice there are a number of scenarios where with a 301 and safety data you can do an NDA update. There are other scenarios to do this that allow acceleration of timelines. But as I said earlier, I think we're looking at several strategies but I think today we know what we have to say is the plan we have is the one we're sticking with moving forward.

Corey Kasimov

Okay. And then my second -- okay, go ahead.

Steve Kanes

I'm sorry. I was going to say since this is a breakthrough therapy program, we do have the ability as we go through to monitor overall patient numbers and have those discussions. One of the reasons why we just said really look for opportunities to accelerate the program and make sure that we have the appropriate level of data for the large indication of major depression.

Corey Kasimov

Okay, that's helpful. And then my second question is on bipolar. There was a recent update that indicates you've extended the primary endpoints from 14 days to 42 days. So curious what drove that change and if you're seeing something in the data that warrants moving this out further? Thanks.

Steve Kanes

Absolutely not. I think what we want to do is make sure that we can emphasize and get everything, everything together so we can really give some focus to those physicians.


Thank you. Our next question comes from Tazeen Ahmad from Bank of America Merrill Lynch. Please go ahead.

Tazeen Ahmad

Hi, good morning. Thanks for taking my questions. With regards to indications that you're pursuing, Jeff, there are certain things that you're obviously looking at in terms of deciding which one you even want to explore. So you're clearly not afraid to go into territories that that others have gone and gotten drugs approved in for MDD for example but there are others like Schizophrenia that we haven't seen you try to pursue yet. How are you making that decision on which indications you want to pursue and then I have a follow-up?

Jeff Jonas

I mean, it's in some ways, Tazeen, but thanks for the question. So with respect to the larger -- the larger question is how we are making decisions way to pursue. I think with 217, our approach is really going to be towards effective or mood disorders. We have substantial database now, some of which we're going to talk about in July when we go because that's going to be very important to how we make our portfolio decisions.

But with respect to some of the other disease like you mentioned Schizophrenia, we mentioned on the call. I'm going to turn this over to Jim in a minute, 718 we believe is already showing activity that suggests it may have some cognitive enhancing ability. We think there may be biomarkers involved that could predict patients who are more sensitive to intervention. So that the fundamental parameter is always going to be the activity of the drug in human studies, understanding the physiology of a particular pathological state, and whether we have drugs that actually we think can impact those states. So for Schizophrenia, I think you'd look more towards 718. But I'll turn this over to Jim.

Jim Doherty

Thanks, Jeff. Good progress is really continuing across the early development pipeline and you'll hear more about that in July when we get a chance to talk about both 324 which of course is the front-end of our neurology franchise, GABA PAM. But also importantly, as Jeff was saying, 718 which is the leading program for our neuropsychiatric franchise. Of course a lot of science around Schizophrenia and other indications and certainly a lot of science around cognitive enhancement with NMDA receptors and so we're very excited about the progress with 718 and as you'll see, we're spending a lot of time trying to understand how 718 engages with the brain. And so in addition to the Phase 1 data around understanding the drug profiles for 718, we're also really spending a lot of time to try to understand Target Engagement and how it's working with the brain.

Jeff Jonas

One other point, Tazeen, I want to mention is that one of the things that's happening with Sage on our molecules is that as we've demonstrated human activity, the preclinical and scientific literature is advancing looking at our particular mechanisms.

So and so a lot of times things are becoming apparent that have been hitherto unexpected. So a good obscure example would be a subset -- and subpopulations of Alzheimer's where they have hyperactive neuropsychiatry. Made that -- I'm not saying we're going to do this. That's an area where some of our molecules might be applied which no one would have thought about two years ago hypothetically. So a lot of what we're doing is advancing the science and we as a company have to adjust our targets based on new science. And I think Jim's team and Steve's team has been really good at doing just that. So our indication selection is always going to be based on clinical feasibility, unmet medical need, what's best for patients. But it's always going to be driven by science. But a lot of that science frankly is evolving with our programs. So that's how we're thinking about it.

Tazeen Ahmad

Okay. And then keeping on the same theme you're looking at 718 also for Huntington's. It's an area of unmet need but there are several companies that are also trying to do this indication at the same time. So I know it's very early days but how do you think you can be distinguished from anything else that might also be potentially in development there?

Jim Doherty

Yes, absolutely. So and of course we do follow the science. We use the same process in how we're moving to different therapeutic areas and so where we started with 718 is really looking at where the disorders, where the endogenous mechanism is disrupted. And so what we're expecting to see with this, if we can normalize NMDA receptor function is affects -- it is symptomatically improving things like cognitive dysfunction. So we're not necessarily going after Huntington's gene issues per se but we are looking at resolving symptoms and importantly cognitive symptoms which is something that really is underserved at the moment.


Thank you. Our next question comes from Akash Tewari from Wolfe Research. Please go ahead.

Akash Tewari

Thanks guys. So you've mentioned that antidepressant maintenance trials usually have a higher success rate than a typical depression trial but it looks like 217 trials really won't have a traditional design most notably, it doesn't seem that 217 will have the randomized withdrawal design that progressive patients only after they've kind of had a stable dose for at least 12 weeks. So how should we kind of rectify those trial design differences with the team's internal confidence that the maintenance study reads that positively? And I'd love to get some details on what data you've seen internally that helped inform the fix maintenance interval for the 302 study considering we haven't seen the PRN data yet. Thanks.

Jeff Jonas

Okay, a couple of points. One is some of the datas from internal follow-up that we haven't made public, so you can just infer that, we have data that suggests the two week, two month intervals adequate.

With respect to the design, I think you have to think about the way these drugs aren't SSRIs. So our drugs are showing activity within days. They only require two weeks of treatment. So that is so -- but beyond that, so the efficacy treatment period is going to be shorter by dent of the fact that our drugs so far in every study have worked more rapidly and more completely. But beyond that 302 is and will be -- I don't think we've articulated design but it is a classic randomized withdrawal design at a fixed interval. The difference being it's a fixed interval because the drug doesn't require chronic dosing.


Thank you. Our next question comes from Yatin Suneja from Guggenheim Partners. Please go ahead.

Derek Johnson

Hi guys. This is Derek on for Yatin. Can you just maybe give us a little bit more on the mood stabilizing effects of 217 beyond any antidepressant effects and sort of some of the consequences for the MDD indication as a whole. We're just trying to see get a feel for what we can infer towards MDD based on Bipolar data?

Steve Kanes

Yes. So this is Steve. I think what we've talked about so far are some of the features and key features of 217. And beyond simply the antidepressant effects, we've also seen some very dramatic improvements overall in anxiety. Of course those two -- those two features often move together in both in disease as well as with treatment. And that's been consistent across all of our studies and it's something we're very interested in.

The other information that we've seen so far is an improvement overall in sleep and this is in the study in healthy volunteers where we did a phase advanced model where we took patients, we essentially induced jetlag as a standard model to use -- to see whether or not the drug will induce sleep, the sleep architecture. And again we've seen a very positive effect. It's placebo controlled trial and a very differentiated profile.

So we're starting to -- we're starting to make use of the data that we have to understand the potential utility of the drug. So the other areas that we have of interest particularly as it pertains to bipolar disorder is there an opportunity to improve mood. Can the features that we've already articulated benefit potentially into bipolar disorder but really for us it's about exploring and making use of the drug is at its best. So I think that's the way we think about it and with the mechanism there are many, many opportunities to pursue with all the data together, we'll be able to use that to make decisions into 217 development.

Derek Johnson

That is very helpful. Thank you. And then maybe just one other quick one, I'm not sure if I missed it earlier. Have you provided commentary on sort of the rate of growth of centers of excellence just trying to start a model out how that may or may not slow down uptick of ZULRESSO?

Mike Cloonan

It's Mike, I will take that one. So we haven't given that specific that we've talked about it, the profiling efforts that we've done centers narrowing that down, very encouraged by the early signals we're seeing from the centers of excellence, we've actually initiated the REMS certification process. But what we said is we'll give those metrics in the post-launch setting around how many centers have been certified and in those centers, how many of infused patients, so those metrics will come in the post-launch setting. No center will be efficiently certified until the DEA scheduling happens. So that's why we're waiting for the post-launch setting to deliver some of those metrics. And we've also said that we expect given how long it takes sometimes to set these centers up establish reimbursement, it can take six to nine months but it will vary by center. So on the next call look for future updates on what those metrics look like.


Thank you. Our next question comes from Andrew Tsai from Jefferies. Please go ahead.

Andrew Tsai

Good morning. Congrats on all the progress. Maybe one question on bipolar even though Part A is open label, I think investors might be tempted to compare the initial dataset to what antidepressants currently achieve. So what do antidepressants or anti-manic/antidepressant drug combo show in terms of MDD reduction as well as remission? What would be the best comparable data out there?

Steve Kanes

So I think the way -- the way we think about bipolar as it pertains and I've mentioned this before is that this is really about the way that we develop drugs. We look to see the effects and we use those effects to make decisions about a portfolio and how best to develop the drugs that we have as opposed to baseline against other drugs that are out there because what we've seen are very unique features of our drugs in development.

So in some sense, we don't necessarily think to make direct comparisons with other drugs through the treatment of bipolar it's not necessarily relevant. If you think about the features that we're demonstrating at least with regard to 217, we're seeing improvements of sleep. Now that’s something may be very important to bipolar disorder unique for SSRIs and so forth they disrupt sleep likewise what we've seen is very complete effects in depression. But what we know with SSRIs and others, they can flip patients into mania. And so we're looking to do is for any drug that we develop, 217 in particular, what are the unique features of the drug and then how to make use of those to develop the drug most appropriately. And that's what we'll do with bipolar as we'll do with all the other indication.

Andrew Tsai

Thanks. And also you mentioned how antidepressants may cause patients to switch to mania; any other instance to support suggests 217 when it causes?

Steve Kanes

Not at all.


Thank you. Our next question comes from Gary Nachman from BMO Capital Markets. Please go ahead.

Unidentified Analyst

Hi, good morning. It's Rafe [ph] on for Gary. For ZULRESSO regarding the list price of 34,000 per course of therapy, what sort of discounting and rebates are you anticipating to ensure good access. What gross to net should we assume in the early stages of launch and how should that normalize over time?

Mike Cloonan

Yes, this is Mike. I'll take those questions. So on the pricing, so given the innovative nature of ZULRESSO, we've had extensive engagement with the payers rights really to understand their needs and the education around PPD and how that the product profile for ZULRESSO fits in, we don't expect a lot of contracting requirements or minimum requirements at this time, right. So we want to maintain broad access for patients. So we're continuing conversations with payers. But at this point, our focus has been on minimal contracting needs given the innovative nature of ZULRESSO and the high unmet need that exits out there.

From a gross to net perspective that will come in the post-launch setting we have been giving guidance around that as well. But what I can tell you that will depend on a different sites of care that exist at this point in time as things like 340B et cetera will depend on the mix of patients that go through either an outpatient center to 340B only applies to the outpatient setting. So once we have a little more data in terms of the types of centers, how the reimbursements, and where patients are going to go we will have a better -- we will be in a better position to give you some gross to net guidance which will come post-launch.

Unidentified Analyst

Thank you. And when you expect to file ZULRESSO in Europe and how long before a potential approval there?

Mike Cloonan

Yes, so I'll take that one as well. So let's talk about European strategy and where we are in Europe. So if you remember from previous calls and we talked about we're going back and getting scientific advice from the EMA. We've done that and there are as you probably know there can be some differences in terms of how the EMA reviews the file versus the FDA but not differences that are -- that you can address. And so in this particular case, what the EMA is requesting another study for ZULRESSO. And so for us, we're doing some clinical development strategies now to determine what path makes sense for us but probably more importantly, we're looking at this now from a portfolio perspective.

We really want to look at this now with ZULRESSO and 217, what do we think the optimal approach in terms of how and when we enter Europe makes sense for us. And so we're continuing to engage with the EMA and other stakeholders in the EU to determine what that best path is for us from a portfolio perspective. So we will come back on future earnings calls and give you an update on what that timing and expectation can be on the portfolio.


Thank you. Our next question comes from Danielle Brill from Piper Jaffray. Please go ahead.

Danielle Brill

Hi guys, thanks for the question. You mentioned that you launched an expanded access program for ZULRESSO. I'm just curious have any patients have been treated yet and have you received any initial feedback?

Steve Kanes

Yes. So first off, we launched an expanded access program is the right thing to do for patients. We have an approval. We're preparing for launch and the need for treating patients is as we've been saying along in that, a lot of interest. We won't be talking specifically about numbers but I can say there's a lot of interest in being able to make this medicine available for patients. Yes, and there are absolutely patients in the queue and we have a process in place to be able to help them in their time of need.

Danielle Brill

Got it. And sorry just to clarify the program is launched at some of the identified centers of excellence? Correct.

Steve Kanes

It's separate from that, any patient or physician is able to -- as long as they have the appropriate facilities to make this available for patients.


Thank you. Our next question comes from Ritu Baral from Cowen. Please go ahead.

Ritu Baral

Hi guys, thanks for taking the question. I've got one in SHORELINE, and one on RAINFOREST. SHORELINE, correct me if I'm wrong SHORELINE is open label. Are you guys able to look at the safety data real time or any planned disclosure strategy or the safety data if that goes on?

Steve Kanes

No, hi Ritu, it’s Steve. So it isn’t open label study and like all studies we monitor safety very intently and in real time. But there's no plan to disclose any of the emerging safety data unless there was something that was absolutely going to -- that will be material. What I can say is at this point, more -- we're very comfortable with the -- we're very concerned with the safety profile that we've been seeing so far more than 600 individuals have been treated, we've seen a very consistent benefit risk profile, so no surprises there.

Jeff Jonas

And Ritu, one other point to remind folks, a lot of time is that we have a large number of programs underway in the company and I think it's important to remember, people sort of think open labels like every patient is processed and we get to see it, it's not how open label studies work. I mean the data are acquired at the site but until the study is closed, it stays on the site. We are not -- we monitor safety but efficacy and those things those remain unanalyzed and unsorted basically until the study enrolment is complete and even then the analysis proceed in a particularly ring-fence manner, so that until the analysis is complete in order to remain as objective as possible, we're not seeing it.

So I mean there is a protocol to using open label the way we're doing it. And again remember, we do open labels not just for a signal of activity but for methodology, clinical feasibility and portfolio decision making. So I want to clarify that the fact that some of these open label doesn't mean like Steve is getting a daily facts because usually it's facts.

Ritu Baral

That's fair enough. So is it fair to say that the retreatment the real world retreatment data generated from SHORELINE isn't going to be available to you and Steve until the end of the study essentially?

Jeff Jonas

It’s a pivotal program and in every pivotal program; we have very strict engagement rules about how the data are handled extremely strict. And so, no, they will, when the study is done we’ll report it out but not before hand.

Ritu Baral

Got it. And then moving on to RAINFOREST, is there any element of RAINFOREST especially the safety that's essential for the 217 depression filing, should we think about that? How should we think about the safety aspect of that study as it relates to depression? And also if you do turn on pursuing the co-morbid -- co-morbid and insomnia indications, you have to do any additional safety studies like a driving study or anything?

Jeff Jonas

So there are a couple of points here. One is we already have done in the sleep study look at next morning -- next day morning performance as well as in the Phase 1. And Steve has mentioned, we probably treated more than 600 patients with 217. So we have a lot of data on next morning performance and it's been very encouraging. I'll just leave it at that.

We're not. And as we look at our data from with respect to rebound and withdrawal, you don't see any of that. And if you look at what happens after this and in particular Steve has alluded to this before, if you look at anxiety data you're not seeing that increase that appears to be a durable effect. So the sleep study is intended primarily as a biomarker study looking to demonstrate improvement of sleep in patients with co-morbid insomnia. We're optimistic that could be included in the label in some way. And that's really the primary purpose. But we're already reassured by an extensive database of what happens next morning and as I mentioned even though this is we're doing 20 and 30 milligrams on the study in the sleep study, we were up to 45 milligrams and again it was very well tolerated.

Ritu Baral

Got it. Thanks. And then did you, sorry the next -- the driving study?

Steve Kanes

So we're looking into the entire Fin Farm program. I mean typically you would do next stage driving studies and so forth as part of the overall Fin Farm package and one of the things we're looking to do. I mean this is a drug that's intended for a large indication and so we will put in everything that we need in order to maximize the value as well as to be able to demonstrate the appropriate -- all the warnings, precautions everything else. So at the time of filing and approval, we'll have all the information necessary to give appropriate instructions for patients.


Thank you. Our last question comes from Joon Lee from SunTrust. Please go ahead.

Joon Lee

Hi guys. Thanks for squeezing me in. Regarding PPD, my understanding is that PPD and MDD are often confounded given that this condition oscillates between mania and depression. What gives you confidence that any effect you see is indeed the effect of the drug and not confounded by the natural course of the disease. Some studies suggest that 25% of manic episodes recover in two weeks from onset, while 50% to 75% spontaneously recover in three to six weeks. And the second question is that given the recent Phase 3 failures of RAPASTINEL which is a positive allosteric modulator of NMDA. I was curious if there is any re-truth to the 718 program which is also an NMDA positive allosteric modulator. What does it bind to the glutamate or glycine site and what gives you confidence that it won't meet the same fate as with RAPASTINEL. And I think you mentioned something about disclosing some early studies data at a future date. Are you specifically in for a medical conference in July? Thank you.

Jeff Jonas

Hi. So couple of points, I'm going to pass this one around but we're planning in July to be specific to do a summary. We have a lot of data readouts coming up and as a company, we prefer not to drib and drab multiple press releases of single studies. So we think the right way to handle this frankly and for us answer the street is to consolidate this in a -- in one conference call and we're planning this towards the end of July, when all the data can be presented in mass because a lot of that’s going to return, we'd like to also speak about a lot of the potential portfolio decisions, we're planning to make.

We also need to use it, I think as today's discussion nicely exemplified everyone is hyper focused on 217 and ZULRESSO and Sage is really so much more. We have so many more programs in the clinic. Remember we have a large compound library of pharmaceutical quality products. We're looking at multiple potential mechanisms and we think it behooves us as a company to point out that we not only have important near and intermediate term opportunities but we can sustain this company in the long run with internally generated innovation. So we're going to spend that time in July to go through that with you folks to really talk about what's going on with program and development. Some of the earlier preclinical work and pre-IND works we're doing, so we ought want to be explicit with you to do that probably the end of July, probably hopefully when all of you are on vacation. That's a little joke.

With respect to RAPASTINEL and the other question I'm going to turn first to RAPASTINEL, you may actually not gotten that entirely correct. So I'm going to give that over to Steve and then I'll turn the next question over onto Jim and then to Steve.

Steve Kanes

Right, thanks Jeff. So of course RAPASTINEL has been proposed and touted as antidepressant molecule and really following the hypothesis around blocking and abuse as a function. As far as the mechanism of action for RAPASTINEL lot of different studies being conducted and I think there's still some discussion about exactly how it's interacting with the system.

In contrast, we've been following the idea that an endogenous mechanism and natural mechanism modulates NMDA receptor function. So you asked about where does SAGE-718 interact with the NMDA receptor. It is at that novel site that's distinct from some of the other things that have already been tested. So we're both very confident in the profile of 718 in positive allosteric modulating NMDA receptors and also in the importance of this mechanism and how it can be modulated in disease.

Jim Doherty

And specifically about the question you have about bipolar disorder. The kinds of questions you're asking are exactly the reason why we start with open label data first. We look to see what is the effect of the drug in a patient population where we know there's going to be variability. To help us plan how we would go ahead and do a placebo controlled study not from calling it literature but from real data that we’ve collected in our own hands.

And one of the ways that we've been successful is we use those data both to make decisions. This is an opportunity we want to take now or later. But also if we're going to go-forward, how will we design the studies in order to be able to demonstrate signal over the noise that you've pointed out and potential other contenders as well. So we've moved from PPD open label to our pivotal program in ZULRESSO, we've moved from MDD into a very successful MDD program in 217 and how we plan on doing all of our new indications with other products.


Thank you. This concludes our Q&A session. At this time, I'd like to turn the call over to Dr. Jeff Jonas, Chief Executive Officer for closing remarks.

Jeff Jonas

Well again thanks to all of you for joining us today. And I want to also extend a thank you as always to everyone who's played a role in Sage, it's really tremendous accomplishment. Looking at the progress we've made over the last eight years since our founding, I believe we're really delivering on our goal of becoming the leading CNS Company in the world. And as we always keep on saying we're really just getting started. So with that, I hope all of you have a great day and look forward to hearing from you. Thanks.


Thank you. Ladies and gentlemen for attending today’s conference. This concludes the program. You may all disconnect. Good day.