Sage Therapeutics, Inc.

Good morning. Welcome to Sage Therapeutics third quarter 2020 financial results conference call. Currently, all participants are in a listen-only mode. The call is being webcast live on the investor and media section of Sage's website at sagerx.com. This call is property of Sage Therapeutics and recordings, 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 Jeff Boyle, Head of Investor Relations at Sage.

Good morning, everyone, and thank you for joining Sage Therapeutics' third quarter 2020 financial results conference call. Before we begin, I encourage everyone to go to the Investor and Media section of our website at sagerx.com where you can find the press release related to today's call, as well as the slides that contain supplemental details. 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 consult 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 Mike Clunan, our Chief Operating Officer, Jim Doherty, our chief research officer, and Kim Iagucci, our chief financial officer. We will then be joined for the Q&A session of the call by Dr. Steve Keynes, our chief medical officer. Dr. Jeff Jonas, our chief executive officer, is recuperating at home from a surgical procedure and looks forward to connecting with many of you at upcoming investor conferences. And with that, I'll now turn the call over to Mike.

Thanks, Jeff, and thank you, everyone, for joining us this morning. We're pleased to update you on the progress across each of our development programs. But before I review results from the quarter, I want to let you know that Jeff is at home recuperating as expected from his scheduled surgical procedure and continues to make good progress in his recovery. We anticipate he will return full-time sometime in December and our thoughts are with Jeff as he continues his recovery. Today, I'll provide an overview of our third quarter activity and discuss progress across our depression, neuropsychiatry, and neurology franchises. I'll then turn the call over to Jim Doherty to provide an R&D and clinical update. And finally, Kim Iagucci will provide a review of our third quarter financials. Steve Canes will join us for the Q&A portion of the call. As we are now nearly nine months into the global COVID-19 pandemic, we've come to learn how the virus has impacted not only those infected, but all of us. particularly concerning is the effects the quarantine and pandemic have had on mental health. These past months have seen sharp increases in depression and risk factors for suicide. Now more than ever, our team is motivated to provide much needed options to patients suffering from debilitating brain health disorders. To that end, I'm pleased to report today that execution of our clinical programs remains on track. with a series of key milestones anticipated over the next 12 to 18 months. Our team of dedicated professionals has done a great job of driving this execution that we expect will set up a number of significant potential catalysts in the coming months. As you know, SAGE has a deep and robust clinical pipeline that spans across multiple disciplines with programs in early, mid, and late stage development. In September, we were pleased to host our annual FutureCast event, which gave a broad overview of each of our programs. Futurecast demonstrated that we follow the science with what we believe is a fundamentally different approach, one that aims to de-risk the drug development process. And we lean into the learnings from this process in a focused and creative way. In the nine years since our founding, we have generated very compelling data that support our methods. We believe the updates we provided at Futurecast, including clinical and patient perspectives, support our methodology. If you are unable to tune in, I encourage you to listen to the archive, which is available on our website in the investor relations section. Most recently, we announced positive interim data from our open label Shoreline study in major depressive disorder, or MDD, with Zoranilone. Jim will provide additional color about these data, but I want to take a minute to talk about what they mean to our depression program, patients, and for Sage as a company. We believe the Shoreline data supports the idea that depression is a medical condition that can be treated as needed. We look forward to the results of our ongoing and planned phase three programs, which we hope will provide further support. It would truly be a breakthrough if seranolone is successfully developed and approved for use as needed in treating MDD, representing a different approach to how depression can be thought about and treated going forward. And for patients, this approach would be potentially game changing. Our mission at Sage, as you've heard us say many times before, is to create and develop medicines that matter so people can get better sooner. We are working to bring new options to a spectrum of disease states where the unmet medical need is high. And in many cases, innovation is lacking and not just incremental changes. We have what we believe is one of the strongest pipelines in the brain health space with numerous novel chemical entities across multiple franchises. Our work to disrupt the treatment model in depression is only the beginning for Sage. We are excited as we plan for the continued progression of all three of our franchises, depression, neurology, and neuropsychiatry, over the near, mid, and long term. And now, I'll turn it over to Jim to walk you through the clinical updates. Jim?

Thanks, Mike, and good morning, everyone. This morning, I'll provide an update on our R&D and clinical efforts across our portfolio. Let me begin with an overview of our lead clinical asset, Zoranilone, which is currently being studied for the treatment of MDD and postpartum depression, or PPD. Our Zoranilone program is successful. It is designed to achieve a first NDA filing as efficiently as possible. We've initiated three new phase three studies. Each, if we have positive outcomes, would provide efficacy data to potentially support a unique filing pathway. In October, we reported positive interim topline results from a July data cut of the ongoing phase three open label shoreline study. We were very pleased with these initial data, not only by the safety profile seen in the study to date, but also by the potential for an as-needed treatment for patients diagnosed with MDD. As a reminder, this clinical study was designed to naturalistically follow patients with MDD, and evaluate the safety, tolerability, and need for repeat dosing of 30 milligrams of Zoranilone in patients for up to one year. In May of 2020, the protocol was amended to allow enrolled patients to receive retreatment with Zoranilone at 50 milligrams. We also began enrolling a new cohort of patients with MDD to receive de novo Zoranilone at 50 milligrams. The primary endpoint of the study was safety and tolerability. The data analyzed to date show that Zoranilone was generally well tolerated at the 30 milligram dose, as well as among the initial patients treated with the 50 milligram dose. Adverse events reported during the period analyzed were generally consistent with results seen in previous Zoranilone clinical trials. This is a data rich trial, and I'd advise you to review the details in our October 15th press release. There are, however, a couple of key points from Shoreline that I want to reiterate during this call. Number one, 72% of patients who only received 30 milligrams of Ritalin in the study achieved a response, meaning reduction in their HAMD score of at least 50%, and 40% achieved remission, meaning a HAMD score of less than seven after the two-week initial treatment cycle. Number two, 75% of patients treated with de novo 50 milligrams achieved a response, and 48% achieved remission by the end of the initial treatment cycle. Remember, this is early data with a small number of subjects, but we are encouraged by the data seen with the 50 milligram dose. And number three, nearly one half of the patients who had a positive response to the initial 14-day treatment with ziranolone at 30 milligrams did not need additional treatment during the study period based on the study criteria. And approximately 70% used two or fewer treatment courses a total of two or four weeks of treatment with geranolin 30 milligrams, which we believe will be the minimally effective dose if our development efforts are successful. As you may recall, the need for a repeat dosing was assessed every 14 days based on specified measures, and a maximum of five treatments was permitted for the follow-up period. This supports our theory that depression can be treated as needed. From a safety and tolerability perspective, Adverse events reported in this interim data cut were generally consistent with the known safety profile, and no new safety signals were identified. The most common adverse events at 30 milligrams were somnolence, headache, and dizziness. And at the 50 milligram dose, the adverse event profile was similar to that seen in patients who received 30 milligrams of Zoranilone. Events of somnolence, dizziness, sedation, headache, and tremor were observed to be more frequent in the 50 milligram cohort but were generally similar in severity to the events seen at 30 milligrams. Most adverse events across both the 30 and 50 milligram groups were mild to moderate. These interim results from Shoreline give us further confidence in the potential of Zoraniline. We plan to report comprehensive data from the 30 milligram dose in the first half of next year, which will include additional analyses of the dataset. Additionally, we expect to report top line results from the 50 milligram cohort later in 2021. Moving now to our other clinical trials for Zoranilone. Earlier this year, we initiated our phase three waterfall study investigating Zoranilone for as needed or episodic treatment of MDD. This placebo controlled trial is evaluating a two week course of Zoranilone 50 milligrams in patients with MDD. Based on our enrollment projections, we expect to report top line data from the waterfall study in the first half of 2021. We also continue to dose patients in our Phase 3 Skylark study, investigating Zoranilone as an oral therapy for women with PPD. This placebo-controlled trial is evaluating a two-week course of Zoranilone 50 milligrams, and top-line data is anticipated in 2021. Our Phase 3 CORAL study will investigate Zoranilone as an acute rapid response therapy in patients with MDD when co-initiated with a newly administered standard antidepressant therapy, or ADT. To be clear, this means patients starting a new ADT regardless of past treatment history, not just those who are trying an ADT for the first time. This placebo-controlled trial will evaluate a two-week course of geraniline 50 milligrams when co-initiated with an open-label ADT in patients with MDD. We expect to begin dosing this study by the end of the year with anticipated top-line data in 2021. With Waterfall, Skylark, and Coral, we entered 2021 with a robust program intended to generate efficacy data to support three pathways to a potential NDA filing for Zoranilone. If successful on these pathways, we believe Zoranilone as a potential first-in-class therapy for depression could offer a clinically differentiated treatment approach. This is reflective of our overall strategy and would serve as a potentially significant step forward in delivering paradigm shifting approaches for patients. Turning now to our neurology franchise, enrollment continues in the kinetic study, our phase two double blind trial with stage 324 in essential tremor. As a reminder, essential tremor is the most common movement disorder in the U.S., affecting an estimated six million people in our country, and there have been no new medicines for this disorder in more than 50 years. In fact, the only FDA-approved pharmacological treatment for essential tremor, propranolol, was approved in 1967. Earlier open-label data with SAGE 324 demonstrated it is a compound with pharmacological characteristics we believe are well-suited for development opportunities, not only in essential tremor, but also in epilepsy and Parkinson's disease. We anticipate reporting top-line data from this trial in the first quarter of 2021. In the third quarter, we initiated our Phase 2A paradigm study, an open-label study of SAGE 718, the lead asset in our neuropsychiatric franchise, and our most advanced NMDA PAM in patients with Parkinson's disease cognitive dysfunction. In Phase 1 studies, SAGE 718 was well-tolerated with no serious adverse events, and most treatment-emergent adverse events were mild. In the Phase 1 program, we also conducted certain assessments of executive function, in a small cohort of patients with early Huntington's disease and in a cohort of healthy volunteers. In these studies, we saw improved performance compared to baseline on tests of working memory and complex problem solving. We believe the data generated in our phase one program support our hypothesis that Sage 718 may be relevant for the treatment of multiple disorders with impaired cognitive dysfunction, including Huntington's, Alzheimer's, and Parkinson's disease. We expect to begin dosing in a new Phase IIa open-label study of SAGE718 in patients with Alzheimer's, mild cognitive impairment, and mild dementia, the Luminary study, by the end of 2020. Results from these studies will inform the potential advancement of SAGE718 in various disorders associated with cognitive dysfunction. Before I turn the call over to Kimi, I'd like to take this opportunity to thank the entire SAGE team for their continued dedication throughout these challenging times. As Mike mentioned earlier, patients suffering with brain health issues need better, more effective therapies now more than ever, and we are working tirelessly to deliver on our promise of bringing such treatments to patients so that they can get better sooner. And with that, I'll now turn over the call to Kimi for a review of the financials. Kimi?

Thanks, Jim. As I look towards the balance of 2020, this has been a year with many challenges for all of us. But with challenge comes opportunity, and SAGE has seized those opportunities throughout the year. We've advanced multiple clinical programs while maintaining a strong balance sheet, which we expect will support operations into 2022, allowing us to continue progressing a meaningful pipeline with many potential catalysts and milestones anticipated in the coming years. As you know, we take a portfolio approach to resource allocation. We've invested in multiple programs across several indications, and as a result, expect to achieve potential value-creating milestones in the coming 12 to 18 months. Now let me turn to the highlights of our third quarter 2020 financial results. Revenues were $1.6 million in the third quarter from sales of Zorresso, compared to $1.5 million for the same period in 2019. As we stated last quarter, Zolresto revenues have been significantly affected by COVID-19 in the U.S., and we expect the significant adverse impact of the pandemic on Zolresto revenues to continue. As noted last quarter, we also expect future revenue growth to be limited even after the pandemic as a result of the continued significant barriers to treatment and the refocus of our commercialization efforts after the April 2020 restructuring. Selling, general, and administrative expenses were $35.1 million in the third quarter, compared to $88.5 million for the same period in 2019. Our reduction in commercial support for Zareto as a result of our April 2020 restructuring was the primary driver of the decrease in SG&A in the third quarter. Research and development expenses were $74.1 million in the third quarter. compared to $102.1 million for the same period of 2019. The decrease in R&D expense was primarily related to the completion of the Mountain Study, a Phase III clinical trial of Zoranilone and MDD, a decrease in non-cash stock-based compensation expense, and decreased spending for clinical pharmacology studies, partially offset by an increase in the spending for the Waterfall Study. a Phase III clinical study of Xoranilone in MDD. Finally, we reported a net loss of 105.7 million for the third quarter of 2020, compared to 180 million for the same period of 2019. We ended the quarter with 671 million in cash, cash equivalents, restricted cash, and marketable securities. We anticipate ending the year with approximately 550 million in cash, which we believe will provide runway into 2022. Last quarter, I said the second half of 2020 would be highlighted by proof points. The third quarter was certainly a great start, and so with many catalysts and with the recent announcement of the shoreline data, I'm very encouraged by the possibilities ahead. We have streamlined operations to execute efficiently, continue to invest strategically across all three franchises, and maintained a strong balance sheet from which to support our mission of making medicines that matter so people with brain health disorders can get better sooner. Lastly, I want to emphasize how pleased I am with the resilience of the SAGE team in these challenging times. I'll now turn it back over to Mike for closing comments.

Thanks, Kimme. And thanks, everyone, for joining us this morning. As you just heard, we're pleased with our execution and we're on track with all of our clinical programs across the three franchises. We're excited about the potential for significant milestones over the next 12 to 18 months, and we believe we're well positioned to continue advancing our multi-franchise strategy. At this point, I think we're ready to open it up to Q&A, so I'll turn it over to the operator.

Thank you. Ladies and gentlemen, if you have a question at this time, please press star then 1 on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. To prevent any background noise, we ask that you please place your line on mute once your question has been stated. Our first question comes from the line of Corey Kazimow with JP Morgan. Your line is open. Please go ahead.

Hey, good morning, everyone. This is Turner on for Corey. I just want to speak on behalf of the team that we really hope Jeff is recovering well. So maybe with stage 718, now that data is in 1Q21, can you just help us set the stage here and what's a meaningful change on the C-SSRS scale at 14 days, just given it's an open-label study? And is there anything you can glean from the data that would give you more confidence with Alzheimer's or Huntington's? Thanks.

Good morning. This is Jim. Happy to take the question. Yeah, so SAFE718 is our lead asset in the NMDA platform and really as a positive allosteric modulator for NMDA, an opportunity to really deliver on a novel approach to treating neuropsychiatric disorders. It's been understood for a long time that the NMDA receptor plays a really important role in brain function. to be able to potentiate NMDA receptor function in the way that we are with 718 is a bit of a new approach. And so it really does inform our overall strategy with stage 718 to build on what we've seen to date. Now, it's kind of an example of stage's proactive and predictive approach to R&D, where what we do is build on the data that we've seen previously. And I'm sure you recall we've seen improvements in cognitive function originally in healthy volunteers, especially in the space of executive function. And that's not something that has been seen previously with agents like amphetamines or things like that that have been looked at for cognitive performance. We also saw the same kind of improvement in Huntington's patients, where we know from research in the space that in the early manifest space in Huntington's disease, their performance is a little bit down relative to healthy volunteers. But what we saw was an improvement in their performance on these same executive function tasks. So really we see that as very much consistent with this neurobiology around MDA receptor function and certainly potentially very exciting as treatment modalities for improving cognitive function. But since it is early days in this space, we're trying to understand what patient populations are the likeliest to have a robust response. And so that really takes us to the ongoing studies currently in Parkinson's disease, but also we are about to initiate the study in Alzheimer's disease. In both cases, the same strategy. They're open-label studies intended to see if we see the same kinds of cognitive improvements that we have seen in the Huntington's and Healthy Volunteer Studies. All those data together will allow us to decide what the strategy is moving forward with Stage 718 and the entire NMDA PAM platform. Great. Thanks.

Thank you. And our next question comes from the line of Sullivan Richter with Goldman Sachs. Your line is open. Please go ahead.

Good morning. Two questions for me. One is Can you just walk through how you're thinking about the potential to restart Redwood with regard to FDA discussions and the scenarios to maybe get rid of the need for that? And then secondly, and I apologize if you already discussed this, but for the essential tremor program, are you really looking for that 50% reduction level to be clinically meaningful and move forward? And maybe you could help us understand, you know, among the various endpoints, that you could use, how you're thinking about selection on the forward there.

I'll be sure. This is Jim. Happy to take the questions. So on the Zoranolone side of things and Redwood, so as we talked about, of course, we have multiple parallel pathways forward. And in this case, we're talking about the episodic pathway where the shoreline data are certainly informing our understanding of But we also are in the midst of the studies for across a couple of waterfalls and as you're asking, redwood. And so the situation is, as we've always said, we anticipate that redwood results will be needed for filing in the episodic pathway. We're certainly looking forward to sharing the data with regulatory agencies from shorelines. And we'll have a look at what that means for the landscape program, and we'll continue to move forward. For the 3-2-4 study in essential tremor, really this study, the kinetic study, is, as you mentioned, a placebo-controlled study, really looking to see can we replicate the types of responses that we've seen in our early open-label studies And we believe from both looking at similar kinds of study designs in the literature as well as, you know, available data, somewhere in that 30 to 50 percent reduction of tremor amplitude is probably clinically meaningful. And so, you know, although it's early days, that's generally the kind of range of activity that we think would be a meaningful effect. So, you know, beyond that, we will have a look at the data as we complete the study and move forward from there.

Great. Thank you.

Thank you. And our next question comes from the line of Mark Goodman with SVB Learing. Your line is open. Please go ahead. Mr. Goodman, your phone might be on mute. All right. We'll move to our next question, which is Ritu Barrow with Cowan. Your line is open. Please go ahead.

Hi, guys. Thank you for taking the question. This is Lila on for the two. Just really quickly, as you continue to progress with the 50-milligram dose cohort in the Shoreline trial, can you maybe speak to some of the trends you've seen in patients that have had to dose down to the 40-minute dose? And are you seeing any of this in the waterfall study? Thank you.

Sure. This is Jim. Lila, happy to take the question. Yeah, as we talked about, we are pleased to see the 50 milligram data from the shoreline study, and I think the way we look at it is twofold. As I mentioned, the tolerability profile is quite similar between 30 and 50 milligrams, again, very much consistent with the tolerability profile that we've seen for Zoranilam so far. I do think that does speak to pharmacology in the sense that as predicted, what we see is The adverse events rates are a little bit higher in the mild to moderate severity in the places we've seen them. So what we continue to see are sedation-related events. But again, I think very much consistent with the modeling that we've done previously around all the data we have from the study, as well as from our understanding of the pharmacology of Zoraniline. When it comes to waterfall, of course, you know, the waterfall study is blinded, and so we're really not much to talk about from waterfall data at this point.

Gotcha. Okay. Thank you. Very helpful.

Thank you. And our next question comes from the line of Mark Goodman with SVB. Your line is open. Please go ahead.

Sorry about that. I started talking. I'm not sure what happened, but a few questions. Kimmy, can you just talk a little bit about R&D spending for next year? Just give us a sense of how we should be thinking about it relative to this year. Second question is on the essential tremor product and how the product is different from 217 and whether you are seeing any of the same type of sedation that you see with 217, which is minimal, but I'm just wondering if it's the same type of sedation in the early work that you've done. And then just lastly, 904, we keep seeing it up there. I was just curious when that's moving into the clinic. Thanks.

Okay. This is Kimme. Why don't I start with the question on R&D spending? And I, you know, just want to start by saying that we really been managing our cash burn, uh, making it at a big emphasis, streamlining operations. And hopefully you, you saw that in this quarter, um, when you look at R and D spend and think about where it's going from here, uh, you know, we've had several, um, studies that have just begun. We have the three 24 study, the stage seven 18 study, uh, and we'll have multiple ongoing studies with the rent alone. So three fees, three studies, uh, in 2021. So you will see a gradual ramp in the R&D spend over the next several quarters into 2021.

Yeah, Mark, this is Jim.

I'm happy to take the questions around 324 and 904. And I think the question around 324 is differentiation from 217. You know, both compounds, both molecules are GABA PAMs. And so by design, similar pharmacologies between the two. What we're doing is we take advantage of the internal SAGE engine to allow us to craft related profiles. And so the differences in profile for 324 are around pharmacokinetics. It's been optimized for chronic dosing, and its PK profile is consistent with that. When it comes to sedation, so sedation-related adverse events are related to the primary pharmacology, and so that is also a feature for CH324. The compound was designed to have a wider window between the onset of activity and the onset of sedation-related AEs, and so that's one of the things that we're looking at in the clinical studies to see if that preclinical margin bears out. But I think that's what we'll look to see. I would expect that the sedation-related profile is, if anything, as mild or milder than with 217. But we'll have to see. That's what the data will tell us. When it comes to 904, so 904 is an NMDA PAM. So it's very much in the same family as SAGE-718 I was talking about a few minutes ago. We see a lot of opportunity in the space for NMDA-positive allosteric modulators. And so 904 continues to move through clinical development. It's currently in phase one in the single ascending dose phase.

And maybe just to add to that, Mark, the question for 904, which really goes back to some of the things you were saying about 718. We have multiple studies going on in 718, and we're really taking a portfolio approach. We have a deep breadth and depth of compounds to choose from, right, in our pipelines. But as King said, we're trying to be really disciplined and focused in our efforts to make sure we're pushing the molecules through the process that are going to drive the most value for patients and for SAGE. And so we'll continue to take that portfolio approach. We'll see the data, we'll follow the science, and then we'll make the right strategic decisions to align to our resource allocation strategy. Thanks.

Thank you. And our next question comes from the line of Andrew Tai with Jefferies. Your line is open. Please go ahead.

Thanks. Good morning, guys. So I have two questions for me. The first one is on Shoreline, the results. I think, if I recall correctly, 45% of responders stayed better for a year. And well, if that's the case, do you have any idea what kinds of patients those were? I'm just trying to reconcile this kind of valuable data point with how you would eventually run your Redwood study. And then my second question is on Waterfall. You recently increased the enrollment size. Can you help provide some color why that is? Thanks.

Sure, Andrew. This is Jim. Happy to take the questions. So, you know, the first question around... Sorry, could you repeat the first part of the question?

Yeah, so I guess 45% or 50% of patients didn't need retreatment in the first year, so... I'm just thinking, how do you tie that with running Redwood, I guess, potentially?

Yeah, and I think the first thing to mention, of course, is the shoreline data set, the very rich data set, gives us a tremendous amount of information. And as you say, the numbers are about a little under half of the patients were treated in the original 15-day dosing and then weren't retreated again. And then there's an additional population of patients who require a single retreatment sometime within that one-year time frame. And then there are also some patients who are being treated more frequently. And so not unexpectedly, there's some diversity in response, and that's something you see across depression patients. Part of what we're doing with the Shoreline data set is really digging into, you know, understanding what differences there are, and I think You know, that's something that we're in the midst of looking at right now. And so, you know, I think how that relates to the Redwood study, of course, the Redwood study design is intended to, rather than retreat as needed based on symptoms, retreat based on time and time interval. And so, of course, as you mentioned, that adds complexity as we're learning from the shoreline study that there is a persistent response in some fraction of the people. So that's something we're certainly aware of and, you know, factoring into our discussions. And maybe I'll bounce it over to Steve to weigh in a little bit on the topic.

Yeah, you're asking a fundamental question about how we would use the shoreline data. And as you say, the majority of patients didn't require more than one or two treatments over the course of a year, and that's really important. That's the fundamental question we were looking to ask ourselves, and we believe that's informative of how you would actually identify what an appropriate treatment regimen might be, particularly even if you wanted to establish a fixed-dose retreatment. So what we're looking for is to have the data from waterfall as well as the shoreline data, use that to really take a look at what that fixed-dose scheme might be for shoreline. So we've always said we follow the data. We want to make sure that we do that as mindfully as possible to really provide the appropriate set of information that informs both regulators, physicians, patients on how best to use the medicine. The other thing I'd say about shoreline is Jim spoke about this during the call. It is the largest naturalistic study ever conducted within a development program. It's fundamental data and actually will show the way on how a medicine like this would be used if approved. So again, this is how we think about the program and it's how we use the data that we've created to plot our next steps.

And to your question around the waterfall study, The purpose in increasing the sample size there was really to ensure sufficient power for all of the subgroup analyses that we were conducting in the waterfall study. It's not particularly shoreline study related. But, you know, and I think it's the case, as Mike said it earlier, nine months into this global pandemic, you're seeing sharp increases in depression and things like risk factors for suicide. So there's a tremendous amount of need out there.

Great. Thanks for all the color. Appreciate it.

Thank you. And our next question comes from the line of Akesh Tarari with Wolf Research. Your line is open. Please go ahead.

Hi. This is Leo Ma for Akash. Thanks for taking my question. My first question is about Zoranolam. And how do you think about the different responses to 30 mg and 50 mg as you have seen so far? Did you see a strong dose response in 50 mg or a more consistent response? My second question is about SAGE324. We noticed your recent poster at AAN that all six patients, those with 16 mg of SAGE324, had mild to moderate TAEs, while only two out of six patients, those with 45 mg, had TAEs. So we wonder when typically these TAEs occur, do they correlate well with the serum drug concentrations like we saw in the zirinalol baseline data? Thank you.

Absolutely. So yeah, so several questions in there. So you got that. Let's take the three, two, four question first. You know, I think, look, the goal of the phase one studies is to give us some signs of activity. We do a lot of work around understanding PK PD relationships. Of course, we're tracking adverse events in those studies, but I think one of the key aspects of a Phase II study, placebo-controlled studies, to really dig into an understanding and develop an understanding of adverse events and adverse event profiling. So I think that's part of what we'll see with the readouts from the kinetic data. And your question around Zoranolin again?

I wonder, like, what type of different responses I've seen so far to Zoranolin 30 meg versus 50 meg, do I see a strong dose response in the 50 meg or a more consistent response? Sure.

Yeah, you know, and I think, look, what we see from Shoreline overall is we think the data are both quite supportive of the overall program and really foundational for this potential different way of treating MND. And I think beyond that, When you look at the results, we have to be a little careful overall about comparing to other studies given the naturalistic design. Well, what we see is a fair amount of consistency in the 30 milligram data when you look at both the overall response change in handy, things like response rates and remission rates. So we think it's quite consistent with what we're seeing across the rest of the studies in the program. When you look at then 30 milligrams to 50 milligrams, The other thing to recall is that we're still relatively early days at 50 milligrams. This is a data cut that was taken in July, but we do have sufficient data at 50 milligrams with the data cut to present the results. But I think just a caution there that it's still relatively early days at 50 milligrams. Having given you those caveats, we are encouraged by the results that we see where from a response and remission point of view, you're seeing numerical increases in those numbers for the 50 milligram data. So, you know, I think what we're seeing so far is consistent with our expectations, but beyond that, I think we'll need to wait for the rest of the study data to come in.

And Jim, maybe just add one thing. Just from a patient perspective, as Jim was saying, the results from Shureline are compelling. We think it's validating of this potential or treat as needed. And if you think about some of the stats that Jim gave earlier, 70% of patients only needing one or two treatments and what that really means. Patients on therapy for two weeks or four weeks over the course of the year, right? There's a real potential here. That's what we get excited about. We'll continue to see some of the other data, as Jim said, come through. But if you step back and you think about what the shoreline data really indicated for us, you know, this is why we start to get excited about the potential here.

Thank you. Thank you. And our next question comes from the line of Paul Matisse with Stifel. Your line is open. Please go ahead.

Hi, this is Katie. I'm for Paul. We just had a quick follow-up question from a question asked earlier. On the luminary study that you're planning on initiating, we were wondering if you were planning on examining event-related potentials, such as P300 latency, or if you could provide any additional color on endpoints that you're planning on using. Thanks.

Hi, Katie. This is Jim. Happy to take the question. Yeah, so of course, those kinds of event-related potentials are quite interesting. So that's, again, part of the neurobiology of NMDA receptors. And there's some reason to think that some of those, especially a P300, which has been shown to be at least associated with cognitive processing, could be an interesting place to look. You know, I think that the luminary study is designed to give us data around cognitive processing. And so, you know, back to our mantra of we lead with human data, we're very much focused on those cognitive results. We have, of course, looked at event-related potentials in our experimental medicine studies, which we described last year. So I think that's certainly something that we always keep an eye on and we'll look at in the future of whether some of those endpoints are value-adding. But in the luminary study, the focus is on the cognitive performance for subjects.

Okay, great.

Thank you. Thank you. And our next question comes from the line of Brian Abrahams with RBC Capital Markets. Your line is open. Please go ahead.

Hi, it's Leo on for Brian. Thanks for taking my question. I just wanted to follow up on Shoreline. I just wanted to know if you guys could provide some more color on the tremor that you saw with the 50 milligram dose. And just curious what the rate of tremor was in Mountain and I guess we know that, you know, SSRIs can cause tremor, but one would think with the mechanism of GABA that actually 217 would reduce the potential for tremors. And so I'm just curious if this is, you know, if this could be a drug-drug interaction that could also potentially affect the coral study going forward. Thanks.

Yeah, hi, this is Steve. Let me just comment on it. You said it. You know, we have seen... tremor in a variety of trials, but the thing to keep in mind here is benefit-risk profile. So Jim said it during the call. We're seeing, you know, tremor in a vast minority of the patients, small numbers of patients, and they're mainly mild to moderate. So the way to think about it is in terms of benefit-risk and the way it impacts potential patient use, and it's had very little impact. You know, the 50 milligram is data that's still in In process, of course, we'll be following it, but it's nothing that's given us concern. And as you said, these numbers and what we've been seeing is well below what's typically seen in drugs that are used to treat patients with depression. So, again, you know, we'll be able to say more about it as the study finalizes, but not something that's given us pause at this point.

Got it. Thanks.

Thank you. And our next question comes from the line of Laura Chico with Bush Securities. Your line is open. Please go ahead.

Hey, thanks, guys, for taking the question and sending our best to Jeff. I've got two questions here. I guess first on Zoran alone, I'm just wondering if you could elaborate a little bit more on the clinical pharmacology safety data. At this point, what additional clinical studies outside of landscape are going to be necessary for an NDA submission? And then maybe one on 718. Obviously, there's this little advisory committee meeting tomorrow for educanumab. And I guess, you know, in the backdrop of that, I'm just wondering how the outcomes there might influence your development strategy for 718 in Alzheimer's. Just, I guess, perhaps most specifically on outcomes relating to executive function and memory. Thanks very much.

Hello, this is Jim. Yep, happy to take both questions. So the Zoranilone question says, Clinical pharmacology. So we do have a sort of a standard package of clinical pharmacology studies that we are running through to support the Zoranilone filing. These are things like drug-drug interaction studies and things like that. These are pretty standard package studies. So the clinical pharmacology package for Zoranilone is part of the overall program design. We don't end up talking about those studies a whole lot, so good to get a question about it. I think the The short answer is the teams done a great job of building those studies and the time for those studies into the overall program. And of course, we are able to use data from those studies in multiple ways to support the program. Certainly when we talk about modeling safety and tolerability, we're also including results from those studies into the overall program. So the ClinPharm package for Zoranilone is moving along quite well. To stage 718, yes. So, of course, for us, I was mentioning it earlier, what we see is the opportunity to modulate NMDA receptor function to improve cognitive performance. And it's certainly the case that a lot of the science in Alzheimer's disease suggests that NMDA receptor modulation is relevant for AD as well. Yeah, adecanumab is certainly a news of the week this week, and I think, of course, different approach there. That's looking at a disease modification approach to clear A-beta in Alzheimer's disease, and, you know, I think we see that as just very much a different approach, and certainly the approach that we're taking for symptomatic improvement of performance by enhancing NMDA receptor function is probably complementary to approaches for disease modification, and I think The real point is that there's a tremendous amount of unmet medical need in a number of neurodegenerative disorders, including Alzheimer's disease, but also certainly Parkinson's disease, frontotemporal dementia, Huntington's disease. And what we see with the NMDA-PAM approach is that there is opportunity to benefit patients for all of these patient populations. So we'll take the data from our studies that are running and we'll make decisions moving forward about what are the best patient populations that we think can benefit from this approach.

Thanks very much. Thank you. And our next question comes from the line of Matthew Harrison with Morgan Stanley. Your line is open. Please go ahead.

Hi, this is from Matthew. Thanks for taking our question. Would you maybe talk about the stopping rules related to events of excessive sleepiness or loss of consciousness in the studies? Like what would trigger a data safety monitoring board review?

Yeah, so I think the short version is, as we've always said, we're not seeing signs of loss of consciousness in the Zoranilone program. Steve, I don't know, is there anything you wanted to add?

No, I think that's it. You know, in all the studies that we've conducted to date, we just haven't seen it. And, of course, that's by design. Zoranilone is a very different, you know, while it shares pharmacology, it's a different drug. And now with, you know, greater than 2,500 patient exposures, we're very, you know, we're starting to see a very consistent and well-demonstrated benefit-risk profile for the drug. And that's the most important thing, whether we're talking about 30 milligrams or 50 milligrams, the drug has been pouring very, very consistently from a safety perspective. It's something that we're really excited to see even with the early shoreline data. Got it.

Thanks.

Thank you. And our next question comes from the line of Jay Olson with Oppenheimer. Your line is open. Please go ahead.

Oh, hey, guys. Thanks for taking my question. I had a couple, maybe start with a big picture question. Can you just talk about the potential advantages of the GABA ham versus an MDA antagonist for the treatment of MDD and And how do you see the differentiation of Zoranilone versus some of the other drugs in development for MDD that target NMDA? And then maybe just to follow up on SAGE-718, can you just talk about how you plan to decide which development plan to pursue with SAGE-718, given all the different indications that are under consideration? Thank you. Sure, Jay.

Yeah, so to the gap of time question, I'll talk a little bit about your question around the differentiation in mechanisms. And I'll ask Steve to sort of weigh in on what we see as advantages for Zoranilone as a therapy relative to some of the other approaches that are out there. Yeah, so of course, Gabapam and NMDA-NAM, you're talking about two receptors that are very much involved in the ongoing activity in brain circuitry. So, Gabapams tend to dampen down activity. NMDA receptors increase activity, so if you have blockers of that, you're also decreasing activity. But of course, that's at the very, very highest level. There's a lot of focus then depending on which parts of the brain we're talking about and exactly how those are acting in the circuitry. So it's a little hard to make direct comparisons, but I think you can go all the way down to how these different systems work. What we like about the GABA PAM mechanism especially neuroactive steroids that have effects on these extra synaptic receptors is they're perfectly well suited to sort of dampen overactivity in brain regions where there's just too much activity going on. And whether we're talking about essential tremor or other things like that, or whether we're talking about overactive brain circuits in depression, We do think that the neuracter steroid gabapans, like Zoranilone, are just very well positioned to provide relief from that overactivity without causing other major changes in ongoing function. So, Steve, would you want to take the question around applications for Zoranilone? Sure.

I mean, I think the most sort of dramatic differentiation for Zoranilone has to do with the concept that we're pursuing. And it's very patient-centric, as Mike was talking about. The idea is, and this is based on our data, that we're able to treat patients when they need it, providing prolonged periods in patients without need for additional medicines. So what we've seen in study after study, it's a very consistent profile, that two weeks of therapy results in prolonged benefit for patients. And that's what we're looking to demonstrate both in waterfall and choral and the postpartum depression trial. It's very, very different. You know, you think about some of the features here are really easy to take. It's once a day, a capsule. People take it at home. We're doing all outpatient trials. We're seeing in the Shoreline study, you know, 70% of patients, more than 70% of patients require more than two treatments over the course of the year. That's what patients are looking for. They're looking for a medicine that treats them. but doesn't become, you know, we sometimes say this is, you know, we want to treat disease, address stigma, but not have this become, you know, a lifestyle for people to be on medicines chronically. And so when we think about all the features that we're building, not just into the program, but also the mechanism, it really provides for all of those features. So that's very different. You know, it's different from any of the other things that are available. So if a psychiatrist, any of the things that we've had available, it's a unique mechanism and absolutely a very differentiated profile. We think that's based on the science, and it's what we've been pursuing and what we're so excited about.

And maybe just one, before the 718 question, Jim, to follow up on Steve, Jay, I think the other part where Steve mentioned that level of differentiation is the optionality that we're creating through the program as well, right? When you think about just in the MDD program with the RRT indication and the treat as needed indication, right, we're going to give patients and physicians options to choose how they want to treat with Zoranilone. If they want to co-initiate, With antidepressants, they would have that option if we get the past RRT, if they want to treat as needed, which we think is still the endgame, and that is the true level of differentiation we're shooting for to shift the paradigm. But we'll give those options because, as you can imagine, it does take time to change, you know, a paradigm the way that we're talking about, right? So giving patients and physicians options with the level of differentiation and the product profile that we're seeing with Serenola we think is very compelling. And I think, Jim, we can hand it back to you on the 718 questions. Sure, Mike.

Yeah, and the question around 718, I think what you're asking is, you know, how are we thinking about results from the ongoing studies and how will we use them to move the program forward? And, you know, I think this is just another example of the approach we take to R&D. And if you look at our more mature programs, whether it be Zorassos or Rinalon or even, say, H324, you're seeing that sort of proactive and predictive approach where we do this in a data-driven way. And I think that, you know, that is what we'll continue to do. These open-label studies provide us with a wealth of information, both in terms of which patients are responding and how, but also, perhaps as importantly, it gives us experience with working with these patient populations and working with the endpoints that we want to take into later stage clinical studies. So, when I talk about collecting all the data, it's certainly the efficacy and tolerability data, but it's also the experience we have in working with the patient populations, working with the clinical sites associated, and really it's pulling all that information together to understand where to best move into next. And I think beyond that, I wouldn't want to speculate on specifics. The studies for 718 are ongoing, so we're going to collect those data as we have for our much more mature programs. We'll be reading out on results from the studies, and that will also inform our pathway forward.

Yeah, and if I could just add one more thing to that. This is Kimmy, I'm sorry. But, you know, as Mike mentioned earlier, we take a portfolio approach. But it's not an either-or when it comes to these things, too. You know, this is a matter of we have all these opportunities, and it's a matter of thinking about balancing the near, mid, and long-term opportunities. So, you know, we'll always be thinking about, you know, the breadth of the pipeline as we make these decisions.

Super helpful. Thank you very much for the detailed answers.

Thank you. And our next question comes from the line of Gary Nachman with BMO Capital Markets. Your line is open. Please go ahead.

Hey, good morning. It's for Gary. I was hoping you could provide an update on the status of your collaboration with Shinogi and how that is progressing. And then just more broadly, I'm curious how you're thinking about the potential or additional collaborations or out-licensing transactions for specific assets, geographies, or indications? Thank you.

Yeah, I'll take that one. It's Mike. I'm first on Shinogi. So we're really pleased with how that collaboration is playing out. They're entering their phase two program in Japan, right? We are collaborating very closely with them. They see all the data that we see. We have very much a like-mindedness with Shinobi in terms of how we approach Zaran Loan. Just as a reminder, they have the rights to Zaran Loan in Japan, South Korea, and Taiwan. But very pleased and making good progress on that program. On your second question, just in general, sort of what is our strategy, right? Our BD strategy remains the same, right? Our strategy for BD has always been and will be if we can accelerate access for patients, if we can accelerate indications, developments, and access for patients, and also build capabilities, That's really the sweet spot as to how we think about business development. And Shinobi is a great example, right? That expansion that we saw into Asia allows us to accelerate access to patients there, at least the potential to. And we found a partner that sees what we see in Zaranlo, right? The ability to develop this program to shift the paradigm in multiple markets around the world. That's what we look for. So, again, we're really pleased with the collaboration and our strategy on BD will continue looking for ways to accelerate access for patients. Thanks.

Thank you. And our next question comes from the line of Douglas Cho with HCWaywright. Your line is open. Please go ahead. Sir, your line might be on mute.

Hi. Chris Bielson for Doug. Can you hear me? Yes. Awesome. So two quick ones for me. What's your strategy for the 324 program? You know, if you see a Good efficacy signal in kinetic. What study could we expect next? Maybe would it be another proof of concept and another neurological indication? Maybe a dose-ranging study, or would you try to jump into a phase three? And my second question is about Zoraso. You mentioned that you're kind of refocusing your commercialization resources away from that. What, if anything, could change your mind to invest more into Zoraso? Thanks.

Hi, Chris. This is Jim. I'll take the 3-2-4 question, and then I'll pass over to Mike to talk about Zorresso. Yeah, so I think the 3-2-4 program, as we said, front end of a neurology franchise, and we certainly see multiple opportunities in the neurology space for 3-2-4 and for a franchise. I think our focus in the state's 3-2-4 program at the moment is very much on essential tremor. It is 6 million people in the U.S. alone suffer with essential tremor, and it has been since 1967 since there has been an approval to treat essential tremor. So we think there's both a huge amount of unmet medical need and a space that's sort of ripe for innovation. So the current study, the kinetic study that's going on, builds off of what we've learned. We have, in previous times, done small studies with our other gabapams, showing benefits in reducing tremor activity. And then last year, in our Phase I studies, we did some open-label work showing that, indeed, with SAITs 324, we also see that reduction in tremor amplitude. So really, the kinetic study is intended to build on that. It is a placebo-controlled double-blind study over 28 days, so that provides us with a wealth of information. And then I think, you know, beyond that, depending on outcomes, we will, the team's building on what the plan looks like for 324 moving forward in essential tremor. Wouldn't want to speculate too much on which studies in what order, especially until we have results from the study, but a lot of work going on for essential tremor. And then, as Kimmy was talking about earlier, we take a disciplined approach to thinking about our sequencing of studies across the board. We do still keep an eye on the opportunity for SAGE 324 in epilepsy and in Parkinson's disease. And, you know, that is something that the team continues to evaluate at this point. And then I think, Mike, I'll hand over to you to talk about the rest of them. Yeah, thanks, Jim.

Yeah, so the question on Zorresso, as you probably know, our focus now is on the geographies that have an active treating site that are willing to take patients in and treat them with Zorresso. To take it back, you know, we did the restructuring, as Kimmy mentioned, back in April to right-size the support and the resources on Zorresso so that we could free up resources to invest in those three paths that we've talked about with Zorantalone and the rest of the pipelines. It was a tough decision to make. to ramp down some of the investment we have with Soresto, but we are still committed to supporting those sites and those geographies that have active treating sites. We'll always look at our resource allocation. You can imagine in the world of COVID, right, there are some challenges in COVID in terms of sites of care and their ability to take patients in and also patients' willingness to go into a hospital setting during COVID. But we'll continue to support those sites and we'll continue to look at the resource allocation and make sure it fits within our overall resource allocation strategies.

Thank you.

Thank you. And this does conclude our Q&A portion of today's conference, and I would like to turn the conference back over to Mike Clunan for any further remarks.

Thank you, Michelle. And thanks, everyone. I just want to thank everyone for joining this morning. Thanks for all the well wishes for Jeff. I know he'll appreciate that. He's doing well. We're excited to hear that. And we're really pleased with our progress, you know, over this quarter, but throughout this year. This is the year of execution for SAGE, and we're very much looking forward to the next 12 to 18 months, which is very catalyst-rich, and the potential that that then offers us. So we look forward to updating you on future calls, and thanks again for joining us. Have a good day.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.