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?