Sage Therapeutics, Inc.

Good morning. Welcome to Sage Therapeutics' second quarter 2021 financial results conference call. Currently, all participants are in a listen-only mode. This call is being webcast live on the Investors and Media section of Sage's website at sagexrx.com. This call is the property of Sage Therapeutics, and recording, reproduction, or transmission of this call without the express written consent of Sage Therapeutics is strictly prohibited. Please note that this call is being recorded. I would now like to introduce Jeff Boyle, Vice President, Investor Relations at Sage.

Good morning, and thank you for joining Sage Therapeutics' second quarter 2021 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 a 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 filing for additional details. We will begin the call with Barry Green, our Chief Executive Officer, who will provide an overview of accomplishments during the quarter and some general context. Barry will be joined by Steve Canes, our Chief Medical Officer, who will review recent clinical progress, and Kim Iagucci, our Chief Financial Officer, who will review second quarter financials and discuss financial guidance. So with that, I'll turn the call over to Barry. Barry? Thanks, Jeff, and thank you, everyone, for joining us this morning. We've made tremendous progress over the first half of the year on our mission to become the leader in brain health in a top-tier biopharmaceutical company, by transforming the lives of patients with debilitating disorders of the brain. And with four positive data readouts in the first half of the year and multiple potential catalysts pending in the coming months, we are demonstrating the SAGE methodology is working while executing across all three of our franchises, depression, neuropsych, and neurology. Innovation in drug development requires a flexible and thoughtful approach with the intention to provide the best patient impact and experience. Sage has been innovating since day one with a goal of delivering medicines that matter so people can get better sooner and stay better longer. I'll start the call by reviewing the progress made this quarter and our approach to supporting the millions of patients worldwide with brain health disorders who are in need of innovative medicines. I'll then turn the call over to Steve to review the clinical implications and potential importance to patients from our recent data readouts in more detail. Kimi will then provide an update on our financial progress during the quarter. In June, we announced positive top-line data from the Phase III Waterfall Study of Zoranolone in patients with major depressive disorders, or MDD. The study met its primary endpoint, demonstrating a statistically significant and clinically meaningful reduction in depressive symptoms as measured by HAMD-17 compared to placebo, after the standard two-week treatment regimen. And as we've seen in all studies with Zoranolone, In addition to day 15, a significant reduction in HAMD scores began at the first measurement during treatment. That's, in this case, day three. And I'll remind you that's after only two doses. Reductions were also seen at day eight and day 12. Perhaps just as importantly, we saw clear maintenance of effect through day 42, four weeks after treatment was stopped. These data further support our belief in the potential for a differentiated benefit-risk profile for Xeronolones as demonstrated in the clinical development program today. And as we believe, the millions of people suffering depression deserve a treatment option with a rapid and sustained reduction in MDD symptoms. Now, thinking about the results from Waterfall in the context of the entire landscape and nest development programs, Zoranolone has shown a remarkably consistent and differentiated profile. To date, three of four late-stage pivotal studies with Zoranolone have been positive, with HAMD reductions from baseline after two weeks of oral treatment ranging from around 12 to 18 points. These results, in the context of the overall benefit-risk for an oral medication, are unlike anything currently available or in development, and these data give us tremendous confidence in our belief of the regulatory path forward. Notably, in addition to our announcement of the top-line data from the waterfall study, results from Zoranolone with the positive Phase III Robin study and PPD recently published in JAMA Psychiatry. It's a striking paper that I suggest you read. With waterfall data and the totality of the landscape and nest programs to date, we in Biogen are planning to discuss the potential NDA package and timing with the FDA. As we've said, we believe we have the efficacy data in hand to file the first NDA for Xuranolone, and our goal is to provide an update later this year, including an update on potential timing of an NDA filing. if our discussions with the FDA align with our expectations. In addition to the ongoing clinical studies, we're also currently running clinical pharmacology studies at the 50 milligram dose needed for an NDA. At this time, after discussions with the agency, we do not believe the Redwood and Rainforest studies, which were suspended in early 2020, need to be completed for an anticipated NDA filing package. As you may recall, Redwood was designed to study fixed schedule intermediate dosing of Zoranolone throughout the course of a year. We believe data from the Shoreline study address this question. Rainforest was designed to investigate the efficacy and safety of Zoranolone in comorbid MDD and insomnia. While Zoranolone has consistently improved sleep across clinical studies as measured by sleep component of the MDD scale, we do not believe Rainforest is required for initial filings. Real innovation has been abstaining treatments for depression for decades. There have been more than 35 treatments approved over the last 30 years, but the benefit-risk profile and approach to treatment have been largely unchanged, and rates of depression continue to rise steeply. Despite the available treatments, there are still more than 19 million adults who experience at least one major depressive episode each year in the U.S. alone, with cases increasing every year. Additionally, there's been as high as a fourfold increase in depressive symptoms during the COVID-19 pandemic. We firmly believe Zoranilone has the potential to offer a unique and compelling profile, if approved, with clinical data to date showing clinically meaningful reductions in depressive symptoms with consistent improvements in mood, anxiety, and sleep. Rapid onset, a two-week treatment regimen that offers the potential to treat as needed with maintenance of response after treatment completed, and a well-tolerated safety profile with no evidence of weight gain, sexual dysfunction, euphoria, GI upset, or sleep disruption, symptoms that are typically the cause of treatment discontinuation with standard-of-care antidepressant drugs. Together with Biogen, we're now taking the steps in building a best-in-class commercialization program for Zoranilone to meet the needs of patients with depression, HCPs, and payers. And if we're successful in our efforts to gain approval, We've illustrated this on slides 19 and 20. As we focus on our goal to bring Zoranolin to market, our commercialization work is imperative. We intend to revolutionize the way depression is thought about and treated. Current standard of care treatments for MDD can be slow for patients to experience response, if any, are chronic, with most patients staying on some form of chronic treatment for at least two years, and are often accompanied by burdensome side effects causing adherence issues and drug regimen changes. We believe the target profile for Zoranolone, with clinical trial data to date showing a rapid, clinically meaningful reduction in depressive symptoms, time-limited treatment regimen, and well-tolerated safety profile, will be welcomed by patients living with depression. The work to create a paradigm shift in the treatment of depression has started. We look forward to sharing more on our approach to engaging and educating key stakeholders as we ramp up our disease education and launch planning efforts for Zoranolone. Now, let me remind you that SAGE has a deep pipeline of programs invented in-house, and we've made great progress in expanding and accelerating our pipeline during the quarter. Our neurology franchise is led by SAGE 324, which is also part of our collaboration with Biogen. And in April, we announced positive data from our Phase II kinetic study in essential tremor. In the study, SAGE 324 met the primary endpoint by demonstrating a statistically significant reduction from baselines in the Tetris Item 4 upper limb tremor score at day 29 in the total study population compared to placebo. We also saw a statistically significant correlation between Tetris scores and activities of daily living at every time point. These observations are important as they may help provide future regulatory flexibility. For patients, essential tremor can affect nearly every aspect of day-to-day living, and can make the simplest task difficult, if not impossible. We believe the pharmacologic characteristics of SAGE 324 are well suited to address unmet needs for these patients. We are progressing this program and expect to initiate a phase two dose ranging study in late 2021 with a goal of optimizing the dose and frequency with a good tolerability profile and a dosing schedule to maintain plasma concentrations that translate into sustained tremor symptom control. Turning to our neuropsych franchise, we are evaluating SAGE-718, our wholly-owned first-in-class NMDA receptor PAM, as a potential oral therapy for cognitive disorders associated with NMDA receptor dysfunction. In May, we announced positive data from Part A of the Paradigm Study on SAGE-718 in Parkinson's disease cognitive dysfunction, and I'm pleased to report that the first patient has been dosed in Part B of that study. We believe that this four-week dosing arm will provide additional information about SAGE-718 to inform development path forward. Additionally, the luminary study with SAGE-718 and Alzheimer's disease cognitive dysfunction remains on track to read out later this year. And also later this year, we intend to initiate a randomized placebo-controlled phase two study in Huntington's disease, which if positive, we expect will bring us one step closer in pursuing an initial regulatory indication per Sage 718. As you can see, so far in 2021, we've executed on the promised expansion and acceleration across our growing portfolio. We look forward to providing more updates, including additional analysis of previously reported data to allow key stakeholders an opportunity to further assess the data in detail. That's all going to come in the second half of this year, and we expect to do a lot of education around those data. With that, I'll turn the call over to Steve for more detail on the data we reported this quarter, as well as our additional ongoing clinical programs. Steve?

Thanks, Barry, and good morning, everyone. I'm thrilled with the data we've generated to date and the progress across all three franchises throughout 2021. Starting with our depression franchise led by Zoranilone, our next generation positive allosteric modulator of GABA-A receptors. We've seen remarkably consistent and differentiated data with seranolone throughout the landscape and nest clinical development programs that was further supported most recently by the positive outcome in the pivotal waterfall study. And as Barry mentioned, we believe the data we've generated to date, along with the ongoing pharmacology studies and safety data from Coral, supported... I'd rather not submit anything than... We specifically discussed these data in the regulatory NDA filing pathway. In the waterfall study, Zoranolin met the primary endpoint, demonstrating a statistically significant and clinically meaningful improvement compared to placebo and HanB scores at the end of the two-week dosing period. We also saw rapid onset of activity beginning at day three, the earliest time point measured. As a group, patients who responded to Zoranilone after two weeks of treatment retained, on average, more than 85% of their improvement through the end of the trial, in this case, a full 30 days after the last dose of medication, with the majority of these patients maintaining most, if not all, of the improvement. As we continue to analyze the data from this study and the entire landscape program, we look forward to presenting additional data pertaining to the overall profile of Zoranilone along with the patient-reported outcomes, to speak to the potentially paradigm-changing profile that Zoranolin may present for patients if we're successful. What I can say is that the data to date tell us that Zoranolin has shown rapid onset, large improvements in overall depressive symptoms, prolonged benefit after completing the two-week treatment regimen, and a well-tolerated safety profile. For example, in the Shoreline study, the largest naturalistic study conducted in an MDD development program, we observed that nearly 50% of patients who responded to 30 milligrams only required one treatment in a 12-month period. And roughly 70% of patients who responded to 30 milligrams required no more than two two-week treatments throughout the year. And as a psychiatrist, I believe patients are looking for rapid and sustained reductions in their depressive symptoms. with the confidence that they can use a treatment only when needed. The safety profiles around them has now been characterized in more than 3,500 patients, and the data from the waterfall study is consistent with this large and growing safety database. For example, in the waterfall study, the vast majority of adverse events were mild to moderate in severity, while most importantly, there were no deaths or loss of consciousness. There were also no reports of weight gain, sexual dysfunction, no euphoria, all of which can be associated with current standard of care antidepressants and can lead to discontinuation. To that end, importantly, very few patients discontinued from the study because of adverse events, with 3.4% of those receiving ziranolone and 1.5% on placebo discontinuing because of AEs. There were only two serious adverse events in the ziranolone group and two in the placebo group. As we continue to review the substantial amount of data from the waterfall study and the rest of the landscape program, also committed to sharing data at premier scientific forums as quickly as possible. Slide 14 in our corporate presentation provides details on the types of data we plan to present at upcoming congresses, including patient-reported outcomes, which we believe will be very insightful. The totality of the data seen with Zoranolin to date supports our view of its target profile as a rapid, durable, and used as needed or episodic treatment that we believe has the potential to be meaningful for patients and our healthcare system overall. Recent health economics and outcomes research conducted by SAGE and published in the peer-reviewed journal Pharmaco-Economics showed that the economic burden of MDD treatment with multiple lines of treatment for depression was much higher compared to a single line of treatment for depression. In fact, there was an increased economic burden associated with delay of depressive episode resolution as early as the second line compared to the first line in MDD. It's clear that a rapid-acting, well-tolerated episodic treatment for depression is needed, and we believe Zoranilone has the potential to fill that void in the market. Turning to the three additional ongoing Phase III studies with Zoranilone, the CORAL and SHORELINE studies are on track to read out with data in late 2021. CORAL is investigating the efficacy and safety of Zoranilone 50 mg, when co-initiated with new open-label SSRI in patients with MDD. The positive results from the waterfall study, we believe, have sufficient efficacy data to support our first FDA filing for Zoranilone, although a consistent safety profile remains an important aspect of CORAL. That said, of course, we expect to see consistent efficacy profiles supporting the differentiated benefit-risk of Zoranilone in this trial, including rapid onset of effect. Shoreline is designed as a naturalistic, open-label safety and tolerability study to investigate as-needed repeat treatment with Zoranilone over a one-year period in patients with MDD. We expect to report a top-line data cut from the 50-milligram, one-year cohort in Shoreline in late 2021. We're also continuing to enroll patients in the study following our announcement last quarter that we expanded the target enrollment to 500 patients, and we're offering patients from the CORAL study the ability to roll over into Shoreline following the completion of the CORAL study. The other ongoing phase three study of Xerandalin is the Skylark study in postpartum depression. We're updating our guidance on the Skylark study, which is now expected to read out in mid-2022 as a result of a slower than anticipated pace of enrollment in the study due to a dramatically and unfortunate lower level of women diagnosed with CPD during the pandemic, possibly preventing women from accessing appropriate screening and diagnosis. Also in our depression franchise, today we announced top-line data from the Chickadee study evaluating the safety and tolerability and pharmacokinetics of Zorresso in adolescent females aged 15 to 17 with postpartum depression. This study was conducted as a post-marketing requirement to investigate Zorresso in adolescent females with PPB. The data showed that the safety and pharmacokinetic profile for Zorresso in this population was consistent with prior studies in adults and the FDA-approved product label. Importantly, the efficacy seen in a chickadee study is consistent with what will be seen in the clinical program in adults. We plan on working with FDA to potentially add this broader age group to the label. Moving to our neurology franchise, which is led by SAGE-324, a novel treatment that we believe has incredible potential in the treatment of essential tremor. The data we announced in April for the kinetic study A 36% reduction in upper limb tremor amplitude from baseline at day 29 in the total studied population seen with stage 324 with adverse events that were generally consistent with the safety profile of 324 seen previously are supportive of further development and the target product profile for 324 may potentially be very meaningful for patients. To that end, we plan to initiate a dose-ranging phase 2 clinical trial with stage 324 in essential tremor in late 2021. We also look forward to working with our collaborators at Biogen to optimize next steps for the continued development of Sage 324 to identify the profile we expect to move into pivotal trials. As a reminder, at this time, we don't believe additional formulation work is necessary for Sage 324. We're confident our proposed Phase 2b trial will result in a dose and frequency design to optimize benefit-risk as we continue to develop this novel product candidate for essential tremor. Beyond Sage 324, our neurology franchise includes Sage 689, a potent product candidate with rapid PK and solid formulation flexibility with potential in areas of high unmet need, including acute agitation, mania, or migraine. I'm pleased to share the first patient has been dosed in the Phase 1 program for Sage 689, and we're on track to complete the Phase 1 SAD study in late 2021. Additionally, I'm pleased to share that IND-enabling preclinical work is underway for SAGE 319, an oral extrasynaptic GABA-A receptor preferring PAM. The advancement of the SAGE 69 and SAGE 319 programs represents meaningful expansion and acceleration of our SAGE-developed only-owned pipeline. Turning to our neuropsychiatry franchise, where we are continuing to develop SAGE 718, our NMDA receptor PAM, in development as a potential oral therapy program for disorders where cognition is one of the main drivers of disability. Consistent with the data seen in Huntington's disease patients in our Phase I studies, in patients with Parkinson's disease, stage 718 has shown in an open-label Phase II trial of a paradigm study a positive impact on multiple domains of cognition, including executive function and learning and memory, while not altering simple attention or reaction times. In the study, patients aged 50 to 75 years old with mild cognitive impairment due to Parkinson's disease who received stage 718, three milligrams daily for two weeks, demonstrated improved performance from baseline on multiple tests of executive functioning over 14 days of treatment. To our knowledge, there is nothing in clinical development that has generated data suggesting this kind of profile. the potential ability to augment key cognitive domains without the challenges often associated with other approaches. Within the safety data available, the rates of adverse events reported have been low, with the most frequently reported AE being headache. No serious adverse events have been reported to date. We're confident in the potential of SAGE-718, and today announced that we have dosed the first patient in a four-week dosing arm in the PARADIGM study together additional data in the PD patient population and inform next steps. As we previously announced, we're planning to initiate a double-blind, placebo-controlled Phase II study of SAGE718 in Huntington's disease later this year and are on track to report top-line data from the Luminary study evaluating SAGE718 in patients with AD, mild cognitive impairment, and mild dementia later this year as well. In addition to SAGE718, Our Neuropsych franchise also includes SAGE 904, an NMDA receptor PAM product candidate being evaluated as a potential oral therapy for other disorders associated with NMDA hypofunction who are on track to complete SAD and MAD studies in late 2021. Our Neuropsych franchise also includes SAGE 421, an oral NMDA PAM being evaluated for potential use in neurodevelopmental disorders and cognitive recovery and rehabilitation which we expect to advance to preclinical studies this year. Lastly, today we announced that we're terminating our Phase III study evaluating bruxanilone in COVID-19-related acute respiratory distress syndrome, or ARDS. The study did not meet enrollment expectations and was closed to further enrollment this quarter. We will report the data collected to date after full analysis of the results. This was an important quarter for SAGE, marked by advancements across our pipeline, and we're excited about the second half of the year with several potential value-creating catalysts expected. We believe our significant progress this quarter leaves us well-positioned to build on our momentum and to advance our mission of making medicines that matter. I'll now turn the call over to Kimi for a review of the financials. Kimi?

Thanks, Steve. As you heard from Steve and Barry, we're executing well in 2021 and are making decisions based on data that we believe will ultimately help us deliver medicines that positively impact patients. It's an exciting time for Sage, and we're expanding and moving our pipeline forward from a position of strength underpinned by our strong financial position. Let me start with the highlights from our second quarter financials and then close with some commentary on our financial guidance. We recorded $1.6 million in net revenue in the second quarter from the sales of Zareso. That compares to $1.1 million of revenue from sales of Xeresso for the same period in 2020. We remain committed to our moms, their families, and all those impacted by PPD. Our targeted commercial efforts, including an integrated approach to engaging key stakeholders, are aimed to help moms with PPD who may benefit from treatment with Xeresso gain access. Selling general and administrative expenses were 43.3 million in the second quarter compared to 38.2 million for the same period of 2020. This includes an increase in expenses of 8.6 million and a reduction in expenses of 3.5 million due to reimbursement from Biogen as part of our collaboration. The increase in expenses was driven by an increase in activities focused on disease awareness, increased launch readiness activities, for a potential product launch if our Xeradolin development efforts are successful, and non-cash stock-based compensation expense from the achievement of a milestone for certain outstanding performance-restricted stock units. Research and development expenses were 66.2 million in the second quarter. That was compared to 73.3 million for the same period of 2020. This reflects an increase in expenses of $13 million and a reduction in expenses of $20.1 million due to reimbursement from Biogen as part of our collaboration. The increase in expenses was driven by clinical pharmacology studies that began in 2021 and non-cash stock-based compensation expense from the achievement of milestones for certain outstanding performance restricted stock units. Additionally, We had no restructuring expenses in the second quarter of 2021 compared to $28.4 million in the second quarter of 2020. We reported a net loss of $107.2 million for the second quarter. That was compared to a net loss of $136.3 million for the comparable period of 2020. I'd like to highlight the components that we expect will continue to support and build our financial strength for the remainder of 2021 and beyond. Specifically, there are three areas that give me confidence in our financial strength and our potential to create value. First, we expect our cash on hand of $1.9 billion plus ongoing funding and resources from the Biogen Collaboration will provide the financial flexibility to allow us to continue to make sound and strategic decisions designed to improve our probability of success. The Biogen Collaboration provides ongoing cost-sharing for R&D and SG&E expenses for agreed-upon activities related to Zoranarone and Stage 324. And we have the potential for up to $1.6 billion if we meet development and commercial milestones. Second, our thoughtful and flexible R&D approach, combined with our strategy to invest in the near, mid, and long-term, has led to a portfolio of multiple programs across three franchises all of which have shown promising signs of long-term value potential for patients and shareholders. And third, we're working to build a best-in-class commercialization program designed to help us address patients, HTPs, and payers if our products are approved and with the potential, if we're successful, to deliver significant shareholder value. Separately, we are reiterating our prior financial guidance that we expect to have a cash balance of more than $1.7 billion at the end of 2021. And as a reminder, we did not expect to receive any milestone payments from collaborations for the remainder of 2021. It's thrilling to see what has been achieved to date, and we're just getting started. I'm confident that our strong financial position and flexibility will allow us to continue to drive the portfolio expansion as we work to develop innovative treatments with the potential to impact millions of lives. I'll now turn it over to Jeff to handle Q&A with the operator. Jeff?

Thanks, Kimmy. Before I turn it over to the operator, I'll ask that you limit yourself to one question. If you have an additional question, feel free to return to the queue. Now I'll turn it over to the operator. Operator?

Ladies and gentlemen, if you have a question or comment at this time, please press star then 1 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press the pound key. Again, if you have a question or comment at this time, please press star then 1 on your telephone keypad. Our first question or comment comes from the line of Ritu Baral from Carlin. Your line is open.

Hi, good morning. This is Lailan for Ritu. Thank you for taking the question and congrats on the quarter. And maybe just to go back to the regulatory strategy, just to clarify, do you need CORAL to be successful to file an MDD? And in the decision to terminate redwood and rainforest, does that mean the FDA had indicated that Shoreline would provide sufficient retreatment data for the filing? Thank you.

Yeah, thanks for the question. So as we said on the call, we have sufficient efficacy data for filing. We take a step back. We've studied Zoranolone in over 3,500 patients and subjects to date, and the profile of Zoranolone has been consistent. We've seen a rapid onset of action. Efficacy as early as the first measured time point, day three. That's been consistent with day eight, 12, and 15. Consistent to significant clinical results. So we believe the totality of the efficacy data is fileable. As we mentioned on the call, we have ongoing pharmacology studies, which also need to be complete. And then we believe, and we need to confirm this definitively with the agency, that we'll take a snapshot of the safety data from all ongoing other clinical studies, including coral, and that package in totality will be sufficient for filing. We did, and we have breakthrough status, so we're in ongoing dialogue, and we were able to confirm redwood and rainforest would not be required for this filing. And then to your specific question with Shoreline, we saw really important data with Shoreline. As Steve mentioned on the call, 50% of the patients in Shoreline, and that was the 30 milligram dose, required one and two-week treatment in the entire course of the year. And 70% of patients only required one or two treatments in the entire course of the year. And then about 10% required three, 10, four, and 10, five. So even at the most frequently studied dose of 5-2 retreatments, we're talking about 10 weeks of drug versus 52 weeks of current antidepressants. So we believe that those data are sufficient to provide the retreatment evidence. Steve, anything to add? Steve, you might be on mute.

Yeah, the only thing I'd say is, you know, with a big important factor of all of these for filing is making sure you have an appropriate safety database. And now with more than 3,500 individuals dosed and handed a very clear safety profile, along with three positive trials, which includes waterfall, we believe that we definitely have the efficacy as well as the safety information necessary for a file. And as Barry said, we'll confirm that with our next meeting with the agency.

Got it. Thank you for the helpful call.

Well, thank you. Thank you. Our next question or comment comes from the line of Salveen Richter from Goldman Sachs. Your line is open.

Hey, good morning, and thank you for taking our question. This is Elizabeth on for Salveen. I'm just wondering if there are any additional steps that need to be taken ahead of the Phase 2 dose ranging study for 324. Thank you.

Yeah, Elizabeth, thank you. And I'm really important that you mention that. Taking a step back, we started the year articulating to everybody that our intention this year, based upon our strengths and balance sheet, is to expand and accelerate the pipeline. And the positive kinetic data, where we were asking the question, can we treat essential tremor patients throughout the course of 30 days and see consistent reduction in essential tremor with a favorable safety profile without any kind of tachyphylaxis or untoward safety, and that's exactly the result we had, which gives us confidence to move into a longer-term study of the sense of tremor. So together with our partners advising, we're designing that next step dose frequency study, where we hope to come out with a dose and frequency that provides the profile to move into phase three. So all we can do is we've agreed with Biogen. Now we have to work with the agency to make sure that we have the right study frequency, and we plan on initiating that later this year, and we will provide guidance and design details once we've initiated that study. So we're moving forward rapidly.

Thank you. Our next question or comment comes from the line of Corey Casamoff from J.P. Morgan. Your line is open.

Hi, this is Gavin on for Corey. Thanks for taking our question. We're just curious about investor feedback that you've gathered since the top line waterfall readout and what aspects of the data, if any, really stand out to the KOLs. Thank you.

Yeah, thanks for that question. So since we've had the waterfall readout, we've integrated that with the totality of data and had great discussions with various investigators and KOLs. And I think what everybody is seeing is really a paradigm shift here. When we think about the last 35 to 50 years of antidepressants, when we think about what's in development today, including some later stage programs, nobody is seeing an oral medicine that works after one or two doses. And as you know, we've seen statistical significance at day three with continued efficacy. And I'll ask Steve to talk about the totality of data and what we've seen in Shoreline to help emphasize that point.

Yeah, the profile itself is really unique. We talk a lot about the paradigm shift, but I'll just remind everybody that what we mean is something really substantial for patients. The typical treatment duration for a first episode for depression, six months. Typically, people are on their antidepressants for years. And what we're offering for successful is a time-limited treatment, 14 days, two weeks of therapy to treat a major depressive episode. That is a real revolution. It's something that patients as well as physicians are looking for. You know, the kinds of things that we're now working with, is really integrating the data to be able to illustrate the overall benefit-risk profile and working specifically with all of the KOLs that we're in touch with to both make sure they understand exactly what we're trying to do and then getting their feedback about how best to articulate that benefit-risk profile. You know, what we've seen so far is that most patients require no more than two treatments over the course of a year. That's four weeks. 48 weeks in a year they're not taking medication, a real revolution in the treatment of depression, one that patients themselves are really quite interested in. So the kinds of things we'll be looking to go more deeply into are what are the patient's views of this treatment, how does that reflect in the overall outcome, something that's very important in demonstrating clinical meaningfulness, and using that with KOLs and everybody else to really help everyone understand how this may be used in the treatment paradigm. It's going to be a very welcome new tool approved. And how best to then introduce it into clinical practice. So, you know, it's exciting for me because this is something that's entirely new. And I've been seeing the data for years now. If I had this medicine in my armamentarium when I was in practice, I would have used it on everybody. And finding ways to sort of and then ultimately change practices is kind of where we are right now, and it's a really exciting opportunity. Great. Thank you.

Thanks for the questions. Thank you. Our next question or comment comes from the line of Paul Matisse from Stifle. Your line is open.

Hey, thanks so much for taking the question. Hey, I just wanted to clarify one thing and then ask one quick question after that, but On your comments, Barry, is there a scenario here where you could initiate and complete an NDA filing for Zoranalone before we ever get the choral data? Just trying to understand if that's one of the possible permutations. And then can you just remind us where you are on abuse liability work for Zoranalone and kind of what your operating expectation is as you approach a regulatory review? Thanks so much.

Yeah, Paul, thanks for the question. And let me provide context in that, Steve, to fill it in. So what we said is that the efficacy data we have to date, three out of four positive phase three, including the data from Shoreline, are sufficient for an efficacy filing. We have ongoing, to your point, we have ongoing pharmacology studies. We did run the pharmacology studies at 30 milligrams, but changing to now the 50 milligram data from earlier phase three learnings, We're rerunning many of the pharmacology studies, including abuse studies, as you have, and those will be completed later this year. So those data will be part of the filing. In terms of other studies, Coral Skylar, we believe, and we need to confirm this with the agency, that a blinded snapshot of the safety data will be required to file. So it's conceivable that We are following the regulatory tactics before other phase threes root out, but that's simply a matter of timing. Steve, anything to add?

No, you asked specifically about whether or not the ClinPharm package is complete, and there are some ongoing studies, as Barry said, that say 50 milligrams. Obviously, for any drug that gets into the CNS, there's an abuse liability package that you do. We'll certainly have it in time for the filing, and there's nothing there that's giving us pause. You know, we expect that we'll have all of the data that we need to file at the time of completion after our meetings with the FDA. Okay. As Barry said, with the efficacy data as well as the safety data, it's really just a matter of the technical aspects of what goes into a filing that we need to sort of agree on.

Okay, thanks.

Thank you. Our next question or comment comes from the line of Tuzin Ahmad from Bank of America. Your line is open. Mr. Ahmad, you may need to unmute your phone.

Sorry about that. Can you hear me now?

Yes.

Okay, great. Thanks for taking my question, and good morning. One question that I have about the discontinued rainforest study, one thing that was being studied there, of course, was comorbid insomnia. And for the time that we've looked at this drug, one of the major benefits that Physician Chucks have given us is that the ability of patients to be able to sleep better at night would be a big positive and would increase their desire to want to prescribe seranolone. And so now that you've just continued that study, I'm just curious, how would we get a little bit more color on the ability to help sleep structure? And is that still something that you would want to have language in an ultimate label? Thank you.

That's a great question. So I will remind you that through the AMD scores and the patient-reported outcomes in the completed clinical studies, we have insight into not only mood and anxiety, but sleep and sleep architecture. And we believe that we have data sufficient in understanding that patients' sleep patterns have been improved. Now, obviously, label negotiations and exactly what's in labels is a matter of FDA negotiation, but we believe that we have those data. If we believe, after we get the label, that ongoing studies are required to make more definitive statements, we certainly can do studies. But we think we've got data in hand that helps us understand that patients are, in fact, and many of these patients, as you know, aren't sleeping. The patients are, in fact, sleeping better.

Steve, anything to add? Yeah. You know, Tazim, like you, we remain interested in the potential benefits of sleep. You know, and how to get at that is something that we'll be looking into. Certainly, we've seen consistently when we look at the individual factors that sleep is improved. It's not only sleep, of course. We're seeing improvements in the core symptoms of depression and so forth, which is what you need to be an antidepressant. But sleep is certainly a factor there and one that we think is going to be important as a benefit for patients. How we get to that, first, focus on depression, get the drug approved, something that's absolutely important during a brain health pandemic where the rates of depression are going up through the roof. And as we become successful, we'll be able to take another look at that. But certainly from scientific data, data communication, we'll be able to say words about that. Obviously, we've done a lot of sleep work already. And then through the individual factors from our trials, we'll be able to articulate those benefits. and those are some of the things that we're planning on doing near term. How we address that long term is something that obviously we're working at with Biogen as we move forward.

Okay. Thank you.

Thank you. Thank you. Our next question or comment comes from the line of Yasmeen Rahimi from Piper Sandler. Your line is open.

Hi, team. Thank you for taking my questions, and thank you for all the updates. I have questions on shorelines. The first one is, Can you tell me how many patients on the 50 milligram dose group will have one year completed for the data in late this year? And then two, when you look so far, is the rate of recourse or needing a second dose the same in the 50 milligram versus the 30 milligram dose that you have reported? Thank you.

Yeah, yeah. Thanks for the question. And thanks for asking about storyline. This is a really important study. that helps us understand the incredible durability that we're seeing in patients. And keep in mind that, and people have to reflect on this, patients are taking drugs for two weeks. And as we've seen in our Phase 3s, the four weeks or more after dose, patients are still reporting that they're in an enormous state. And Turline further reflects the durability of the drug. I'm going to turn it over to Steve to get into the details. But Turline is very important in the context of seranolone.

Yeah. The short answer, of course, is we'll know the actual number when the study is completed. And so, you know, we're following that. And the goal is to have as many patients as we can at the end of the study and to continue to roll patients in. In fact, we're rolling patients from the choral study into that trial. And what you do with long-term trials like this is take data cuts along the way. What I can tell you is, you know, we're seeing very remarkable results in terms of response and remission in the shoreline study during those initial 50 milligram doses, and that's been true since the earliest cuts. So, you know, our estimates now are that 80% plus of patients are showing a response, meaning a 50% reduction, and about 43%, a little bit more, are showing full remission. And those have been rock solid since the earliest days of our program, They're not only higher than what we saw in 30 milligrams, but in the same general range. So we're seeing, you know, really good response that's been continuing both, you know, for first the 30 milligrams and now throughout the 50 milligram dosing. We'll have the actual metrics and numbers, you know, when the study completes.

Thank you, Steve. Are you able to comment on, as of right now, the size of Shoreline, just like how many patients are currently in Shoreline?

You know, I can say that this is the last data cut. It was more than 500 patients enrolled in the trial. And this would be the equivalent of a long-term safety study where we expect attrition throughout the year. People are getting better. They're going about their business. They don't necessarily are interested, especially if they're feeling well, to continue to check in. So even, you know, the rates of attrition in the trial are things that we look at. But what we're seeing is very high levels of retention. You know, one of the points we like to make is not only in Shoreline are patients getting better, but only a small number of them are requiring additional retreatments. This would be the equivalent of a reverse placebo effect, meaning patients know they're not on therapy, and only a fraction of them require additional treatments. And so, you know, among other things, we start to understand what treatment in the real world would look like with our medicine, you know, and one treatment, you know, half of all patients only require that index treatment, another 20% required, and, you know, one more treatment in the course of a year, that's fundamental data. You're not going to find that in literature. And this is part of what we're doing, creating both a new approach to treatment as well as the foundational data that's necessary in order to make wise treatment choices. So that's why Shoreline is so important. And, you know, there's a lot there, but those are, from my perspective, those are the things that are really most important as this program progresses.

Thank you, Steve.

Yep. Yes.

Thank you. Our next question or comment comes from the line of Andrew Tsai from Jefferies. Your line is open.

Hi, morning, and thanks for having me. So my question is on coral. As investors start to think about the likelihood of success and what the study could show at day 15, is it fair for us to assume the comparator arm, which is the typical SSRI, could essentially be viewed as a traditional placebo arm since then? you know, SSRIs take six to eight weeks to work, or does co-initiating with an SSRI still somehow change the calculus? And then a corollary to that is that, you know, as we think about day 42, could both arms improve on HAMD as SSRIs start to kick in for some patients? Thanks.

Andrew, thanks for that question. I'm going to ask Steve to talk about our the rest of the experience out to, you know, multiple death doses. I'll answer that question for an improved drug. But let me say this. Coral, as you highlighted, is asking an important question. What happens when we co-administer an antidepressant with patients with geranolone? And the data we have today have patients on some of those events. These are not patients that you assume experience some of the horrific side effects that you might experience. antidepressants. So we're asking a different question, and we should learn from Coral. Now, I'll also say that as data is done each and every time, when we conduct clinical studies, we learn from those clinical studies, and we make adjustments to future studies based upon those learns. So if there's adjustments to be made to Coral, we will make those adjustments and work with the agency on any necessary adjustments. But to your specific point, you're right. We do not expect that the antidepressant alone will confer any benefits for, you know, four to six weeks. But we may, in fact, see side effects earlier. And that will be very interesting to date because, as Steve highlighted earlier, while we have seen somnolence and sleepiness with Zoran alone, we have not seen things like weight gain, sexual dysfunction, GI upset, and some of the other side effects you see with antidepressants. So hopefully that's helpful. And, Steve, maybe you can talk about how, you know, arms might come together multiple weeks off dosing when a patient's on another drug.

Oh, absolutely. You know, we don't contest that antidepressants, when given over the course of several weeks, may actually demonstrate benefit. And just like in our other clinical trials, you know, we do know that patients over time, they may improve even in the placebo arm. So we're not looking, as we haven't, for placebo drugs. drug differences out through day 42, especially not in coral. Recall, this study is looking to address a very particular use case, which is how do you jumpstart therapy when you co-initiate an antidepressant with sage 2 and 7 seranola with an antidepressant? In oncology, they call it induction with maintenance. How do you start people to get better more quickly? And so we're looking at those early time points that have shown consistent differentiation from placebo or any other drug that's available at day three, day eight, day 12, day 15, you know, really early on. You know, are there nonspecific effects that we need to take into account? Of course. I mean, we do that through the powering. We do that through the conduct of the trial and so forth. But we do think that if the study is successful, it will add just yet another use case. where patients may or physicians may want to choose this as a treatment option. And, you know, the technicalities of it, you know, are obvious. We plan for success, so we ensure that the powering is adequate to show those differences.

Very helpful call there. Thank you, guys.

Yep. Thank you. Our next question or comment comes from the line of Laura Chico from Wedbush. Your line is open.

Good morning. Thank you very much for taking the question. I have one on seranolone and PPD. So the Phase III JAMA paper shows a higher proportion of patients with symptom onset during the third trimester versus the Zolrezo studies. And it seems like a bit of a shift in diagnosis, but not much time elapsed between when the seranolone PPD and Zolrezo PPD studies were conducted. So with Skylark pushing back, I'm just wondering if you can comment on whether you think these are more permanent changes in the PPD landscape. it's interesting because you're seeing elevated depression rates elsewhere, but not in postpartum depression. So I guess the question here is how does this impact one on your PPD submission strategy, but then also how do you see this playing out in a commercial environment in terms of maybe who might be the primary point of care for seranolone? Thanks.

Yeah, Laura, thank you. A few different questions in there. So let me try to unwind it and get some help from Steve here. So thank you for highlighting the paper. We're really proud. of the Robin study, and as I highlighted in my prepared remarks, it's just a beautiful paper, and a paper that really reflects just how well xeraniline works in these moms with PPD. Let me start with kind of the commercial landscape. So if we're fortunate with our successful waterfall profile, as we expect with the agency, and get an indication for both MDD and PPD, which is what we expect, we will be reaching out and making sure that all moms, particularly those with risk factors, have a plan. Every mom, as you know, has a plan for when her water breaks. She knows where her bag is, who's taking her in, who her physician is going to be, where she's giving birth. But almost no moms have a plan for being depressed a week, two months, three months after the baby is born. So we're going to make sure that we work with patient advocates, we work with OBGYNs, we work with the psychiatry community to ensure that all moms have a plan after giving birth. That is probably broader than just depression symptoms. There's other health concerns that moms have after giving birth. So we will be aggressive in ensuring that moms with depression have access to Xarel. And we've heard some KOLs actually say that With certain mothers with risk factors, they intend for those moms to actually leave the hospital with a scripted hand in case depressive symptoms come up. So I think we'll be well prepared there.

Steve, do you want to talk about the timing differences that Laura highlighted? Oh, sure. So, Laura, you know, I'm glad you did the close reading. We've always included patients that had an onset during third trimester, so we think there are a few things that are going on. One of them is with the approval of Zolresso, there's a heightened awareness among treaters both to identify and diagnose patients. And that, I believe, is being reflected in the ability to at least identify patients prior to being treated. Importantly, we are not enrolling patients in the study despite when their diagnosis was made until a full month after the delivery. That's to ensure that we're not medicalizing sort of the normal changes in mood immediately after delivery. I mean, people have to have their onset of symptoms, and they have to be maintained for several weeks, four weeks plus, for them to really be appropriate for a diagnosis of MDD, and that's really important for us. I mean, unless those symptoms remain, they're not MDD. So we think there's, you know, awareness, screening, attention, and a bit of know-how on how to identify these patients, and that's important. With regard to the Epidemiology, well, we know a few things. One, rates of depression, if you just ask people, they're way up. We also know that births are down. And we also surmise, based on discussions with investigators and KOLs, that new moms are much more reluctant to come into care during the pandemic. So, you know, all of those factors taken together speak to, one, the importance of a portable treatment, a modern treatment, time-limited treatment that doesn't require people coming into a center. as well as the ongoing work related to the Skylark study. So, you know, as much as it's disappointing to change the timelines, the importance of the work remains, and we're really looking forward to getting that study over the finish line. I would also add that as part of our filing strategy, we do intend to discuss the utility of our current package for getting both an MDD and a PPD labeled. So all of that is part of our current approach based on the outcomes from the general psychiatry paper and the study.

Thanks, Chris.

Thanks, Laura. Thank you. Our next question or comment comes from the line of Jay Olson from Oppenheimer. Your line is open.

Thank you for taking the questions. We appreciate the importance of a rapid response in MDD, which you described earlier. Can you talk about how an early response correlates with positive longer-term outcomes in MDD, and also comment on how the onset of response for seranolone compares to other novel antidepressants such as esketamine? Thank you.

Yeah, Jay, thanks for the question, and really thank you for highlighting a really important point. So what we know about MDD, and there's been many studies from us and others, is that the earlier you diagnose and the more rapidly you get people better, the better the longer-term outcomes for depression and other comorbidities such as cardiovascular disease and diabetes. And there's literature from many that talk about the downstream effects of not treating a person with depression rapidly to get them better faster. Steve, why don't you talk about some of the health economic data that's out there about not treating people who are, in fact,

benefits of treating people early and getting them better faster? Yeah, I mean, the most important, I mean, let's start with patients first. Everyone wants to get better quickly. That's kind of the goal of all medicine. There's a few things we know with depression, though, which is the more quickly someone gets better, the more likely they are to maintain those benefits, regardless of what their treatment is. So when we lean into getting patients better within a two-week course of therapy, that very much builds on a well-described phenomenon, which is get people better quickly, and we know that we're going to be able to get them back into their life, their role functioning, and be able to begin that journey of true recovery, right? I mean, there's one thing to have symptomatic improvement. It's another to have improvement in your role functioning. And really looking at what that looks like for patients and from patient-reported outcomes is something that's really important for us. You know, so... Those impacts are ones that we're really looking to get out into the real world, both from the waterfall study, but more importantly from landscape. With regard to other drugs, including esketamine, while there are reports of very early onset, the real statistical significance and differences in this drug is really after multiple, multiple treatments. I would also point out that in Spravato, Esketamine, they're studying a very different patient population, an important one, which is treatment-resistant depression. Our program is focusing on what I would sometimes refer to as garden-variety depression patients who don't necessarily have multiple, multiple, and very severe episodes, but still deserve the opportunity to get better and get back on with their lives. So we're seeing faster onset as early as day three. We're seeing maintained benefit after a time-limited therapy, two weeks, and a really positive benefit-risk profile. We think this is something that, when it's approved, will really revolutionize the treatment for many people. I'd only add that with greater than 30 drugs approved in the United States for MDD, there are still upwards of 19 million people a year that have major depressive episodes. So As much as people view this as something that's relatively straightforward to treat, the unmet need is enormous. And we think everybody deserves to get better quickly and get back on their feet.

Thank you. And, Jay, all the data out there support what Steve just said. We know that patients that have recurring depression that are treated on multiple medicines and stay depressed for long periods of time, go on to develop diabetes, go on to develop cardiovascular disease and other comorbidities, which not only hurt that individual, but add cost to the whole healthcare system. And we were listening to one of the Wall Street analysts on a panel of KOLs, where KOL said, these data are remarkable. I'm going to give them to my patients that I need to get better faster. And when asked, well, which patients don't need to get better faster, that position was a bit dumbfounded. So, Everybody deserves to get better faster. Super helpful. Thank you very much.

Thank you. Our next question or comment comes from the line of Sumat Kulkarni from Canaccord. Your line is open.

Good morning. Thanks for taking my question. We've seen the durability and response data within potential real-world usage of Zoranolone. Is there anything particularly from a safety perspective that might limit an immediate second 14-day course of therapy if that's required? I guess ask another way this goes back to why a 14-day period was chosen in the first place and what the longest continuous safe use period for Zoranolone might be from a regulatory perspective.

Yeah, let me start and then ask Steve to comment. The science behind Xuranolone was a belief set that in depression, we can, by targeting positive allosteric with modulating GABA-A, that we can reset patients to kind of a normative state, kind of rewire the brain architecture. So the belief that's going on was it was going to be a short-duration therapy and not a chronic therapy. That's the paradigm shift we're talking about here. What we've seen now are patients treated for two weeks, they get better faster, and the shoreline data provides us evidence thus far about how often re-treatment is required. So we have top studies that have animals on for longer term without other deleterious effects, but the adverse event profile has been consistent, in fact, improved over time as patients are re-treated. So we think of this as kind of a... treat as needed therapy. And Steve mentioned this earlier on the call, and this is very important. When patients often go off antidepressants, typical antidepressants, and they're off drugs, they know they're off drugs, and they often seek to get back on drugs. With the shoreline data, we have patients off drugs, and Steve highlighted this earlier, and they stayed that way. So they're not seeking to get back on drugs, even though they're off drugs. We believe that As patients need the two-week therapy, they'll be able to get additional two-week therapies kind of in the real world. Steve, anything to add?

Yeah, just to speak specifically to your question, you know, there is, you know, I can't, obviously we don't have the label yet. We've been studying two-week therapy because when we do the modeling, and we've talked about this before, most of the improvement happens within the first week. By the end of two weeks, we're really starting to show you know, some incremental improvements, but, you know, really patients are doing well. And, of course, you know, these are really – I just want to point this out, and you guys can, you know, can go and do your research, but these are remarkable data. You know, we're seeing 80% responses and, you know, somewhere between 40% and 50% remissions. You're not seeing that, you know, with any drug, let alone after a limited course of therapy. And so – You know, for us, this is really transformative, and part of what was so exciting about the program when we were getting started is the opportunity to then use these data to think differently about a treatment paradigm which addresses patients' needs. We want to get better and not necessarily keep taking medication forever. So, you know, assuming the drug is approved, you know, we could potentially think about other kinds of dosing schemes. This already is really important, and we've seen it, you know, very consistent in terms of safety in study after study after study. And quite frankly, the time-limited aspect of this is what got the FDA's attention, why we have Breakthrough in the first place. It's a concept that I think will really add something unique to the treatment toolbox for patients with depression.

Got it. Thanks.

Thank you. Thank you. We have time for one final question. Our final question comes from the line of Gary Machman from BMO Capital Markets. Your line is open.

Hi. Thanks for taking my question. This is Evan Hua filling in for Gary Machman. I just had a quick question. So for Stage 689 and Stage 904 programs, are there any specific or potential indications you would be looking to target? Some color around that would be great. Thanks. Yeah, thanks for the question.

Steve, you want to take that?

Sure. For 904, you know, we're obviously, you know, we usually start at the highest level. We look for disorders where there's known or suspected NMDA hypofunction. And for 718, we're looking at neurodegenerative disorders. For 904, we think this may very well be beneficial for neurodevelopmental disorders, whether that be autism or schizophrenia or other places or other disorders where there's cognitive disorders. you know, where there's cognitive impairment and executive function deficits, a little bit different from neurodegeneration. So those are areas that we're looking at, and, you know, as we understand more about the drug, we'll be more specific. For 69, this is a rapid-onset parenteral drug. It's injectable now. It could be formulated in lots of ways. So we're looking at places where rapid onset of GABA-positive modulation may very well be helpful. So the kinds of things we've talked about are, say, agitation, where we know there remains an unmet need, whether it be in emergency settings or for people with severe dementia. Likewise, there is potential interest in areas like severe migraine or other places where people may come in and need very rapid responses. So a lot is going to be driven by the results of the Phase I and where we are in terms of our benefit-risk response. but we're looking to identify differentiated molecules and then develop them in very different ways than the molecules we have already.

Thanks, Steve. Thank you. At this time, I'd like to turn the conference back over to Mr. Barry Green for any closing remarks.

Thank you, and thanks, everyone, for joining us this morning. I'm thrilled with the substantial progress we've made in the first half of 2021. with several milestones achieved on our mission to become the leader in brain health. As we all know, this is serious business. For example, a recent study noted that up to 31% of people with MDD have attempted suicide, and our depression, neurology, and neuropsych franchises have potential to help millions. We're taking on diseases that have massive impacts on people, families, society, and generations, and we're committed to getting it right, even in the face of major paradigm shifts and major expectation changes. And let me just put this out there. Many of us are getting prepared to send kids back to college at uncertain times. If you have a daughter entering her sophomore year and you discover that she hasn't left the room for a couple weeks and you're fortunate enough to get her help and she gets a diagnosis of major depressive disorder, would you want her on a typical antidepressant that might take four to six weeks to work with unknown side effects, potentially losing her semester her year, or potentially her whole college career? Would you rather have her on a drug because you're better after one or two doses and vacuum classes? I know which one I would pick. So that's what we're focused on, despite some of the feedback we're hearing initially. The achievements of the SAGE team this year have set us up for several potential near, mid, and long-term catalysts throughout the rest of the year and into 2022. The SAGE team will continue to work tirelessly to deliver on our vision of bringing medicines that matter to patients, so that you get better sooner and stay better longer. Thanks again, and have a great day, everyone. Bye.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.