Sage Therapeutics, Inc.

Please stand by, we're about to begin. Good morning. Welcome to Sage Therapeutics' fourth quarter and full year 2022 financial results conference call. Currently, all participants are in a listen-only mode. This call is being broadcast live on the Investors and Media section of Sage's website at sagerx.com. This call is the property of Sage Therapeutics. And recording, reproduction, or transmission of this call without the express written consent of Sage Therapeutics is strictly prohibited. Please note that this call is being recorded. I would now like to introduce Helen Rubenstein, Director of Investor Relations at Sage.

Good morning, and thank you for joining Sage Therapeutics' fourth quarter and full year 2022 financial results conference call. Before we begin, I encourage everyone to go to the investors 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 we will be reviewing today. I would like to point out that we will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. Please review the risk factors discussed in today's press release and in our SEC filings for additional details. We will begin the call with prepared remarks by Barry Green, our Chief Executive Officer, who will provide an overview of our progress during the fourth quarter and full year 2022. We will also be joined by Jim Doherty, our Chief Development Officer, who will review recent progress in development activities across our program. Our Chief Business Officer, Chris Bonecki, We'll provide an update on our launch preparations for Zorana Loan in MDD and PPD if approved, and we will then be joined by Kimi Iguchi, our Chief Financial Officer, who will review the financial results from the fourth quarter and full year 2022. Laura Galt, our Chief Medical Officer, will be available for questions during the Q&A portion of the call. With that, I'll now turn the call over to Barry.

Thanks, Helen, and thank you everyone for joining us this morning. At SAGE, we're advancing potential treatments for brain health by challenging conventions and prioritizing what matters most to patients. And today, our work matters more than ever. We've reached a public health crisis tipping point. Brain health disorders are one of the leading causes of disability and threaten to impact future generations. We see profound implications firsthand as friends, loved ones, and neighbors continue to struggle. Over the last half century, there have been insufficient advances in the treatment of mood, cognition, and other disorders of the brain. People deserve better, and we're determined to change the trajectory of this crisis. This is an incredibly exciting time at SAGE. We're progressing a promising and targeted brain health pipeline with the potential to impact millions of people globally. The pipeline is a result of our innovative approach to drug discovery and development, which starts with our novel work on the GABA and NMDA receptor systems. These pathways are important regulators of brain function and the key to unlocking potential breakthroughs that may improve brain health. Importantly, we believe our team and our strong financial foundation puts us in a position to further our pipeline ambitions. With the goal of being able to launch new drugs, or indications for years to come. The time is now to unleash the potential of our science in making meaningful impact on the lives of millions. Moving to the next slide, we're making progress across our pipeline as demonstrated by the latest regulatory milestone for Zoranolone, which we're developing in collaboration with Biogen. As we recently announced, we're encouraged by the FDA acceptance of our NDA filing for Zoranolone with priority review and major depressive disorder and postpartum depression with the BDUFA action date of August 5th of this year. If approved, we expect a potential launch near the end of 2023, assuming no extensions of the FDA review period. With that timing in mind, we remain laser focused on preparing for the potential commercialization of Zoranilone, which Chris will walk through in more detail. Our commitment to be as innovative in helping to enable access to treatments as we're developing our medicines, will be a key aspect of our overall commercialization strategy. To achieve that, we're collaborating across the ecosystem with payers, healthcare providers, patient advocates, and policymakers with a goal of providing a model for care that works in the best interest of patients with MDD and PPD. We look forward to providing updates as appropriate. I would like to note, since we now are in an FDA review period, we will not be making comments on the potential label, FDA interactions, or related topics. In addition to Xeran alone, we have a robust pipeline of investigational programs that have potential to help patients at all stages of their lifespan with nine clinical studies ongoing. These include SAGE 718, our first-in-class NMDA PAM, which we're currently advancing in four placebo-controlled studies and an extensive study across Huntington's, Parkinson's, and Alzheimer's disease. We're also making important progress and our neurology franchise led by SAGE 324, which is being evaluated as a potential treatment for people suffering from essential tremor and other neurological disorders. I'd also like to highlight some of our earlier stage programs, including SAGE 319 and SAGE 689. These are great examples of our product engine that we believe will continue to deliver robust product candidates and have the potential for long-term value creation. To close, I am confident 2023 will be a pivotal year for Sage, particularly as we look forward to the potential approval of Zoranilone and the advancement of our brain health pipeline. With that, I'll turn the call over to Jim for a more detailed discussion of our recent portfolio progress and current clinical expectations.

Jim?

Thanks, Barry, and good morning, everyone. We've made important progress across our development pipeline throughout 2022, and I am pleased to detail our recent advancements. Starting with depression, we're excited about the recent FDA acceptance of our NDA filing for Zoran Loan in MDD and PPD with priority review, as Barry mentioned earlier. Our NDA package is supported by seven positive trials across the landscape and NEST clinical development program, which encompasses data from more than 3,500 patients. Importantly, we've seen a consistent clinical profile to date across the development program in MDD and PPD, including a rapid and sustained reduction in depressive symptoms as early as two or three days, a generally well-tolerated safety profile, improvements in quality of life and overall health across domains of feeling, functioning, and well-being, which I'll talk more about shortly, and a short treatment course with the potential to be taken as needed with a novel mechanism of action. And finally, the potential for a flexible treatment approach in MDD and PPD that may provide optionality to healthcare providers and patients if the RAN loan is approved. And I'll note, the potential for flexibility we see with the RAN loan is exactly what HCPs have been asking for to help their patients. Let me expand on the well-being and functioning data I referenced. We touched on this during our JPM presentation. But it's important to highlight in the context of the recent acceptance for filing of our NDA, as these data suggest the potential for Zoranilone to improve measures of functioning and well-being that are important for patients with depression. What you'll see here is an integrated analysis from completed placebo-controlled trials across the MDD and PPD studies, showing that those treated with Zoranilone reported rapid and sustained improvements in health-related quality of life compared to placebo, as measured using SF36 scores. These results were consistent at the day 15 and the day 42 endpoints. To summarize, these data are an important indicator as it relates to quality of life and overall health. Depression affects a person's ability to feel, think, and function. It blunts sensations of pleasure, closes off connectedness, and stifles creativity. It's important to note that patients don't want to feel less depressed. They want to feel well and get back to their normal everyday lives. Zoranilone, if approved, has the potential to help patients achieve that. We see the opportunity for people to feel well, and we know that's what matters most to patients. We also conducted interviews as a part of the Open Label Shoreline Study with over 30 patients who responded to 50 milligrams of Zoranilone and were in the study for at least six months. These interviews illustrated that a substantial majority of surveyed responders noticed improvement in their mental and physical symptoms in the first week and were satisfied by it. In addition, a majority of surveyed responders reported feeling fine, positive, or neutral about the need to be retreated, and all were satisfied with the round loan as a treatment. This feedback reinforces the potential positive experience Zoranlone could provide for patients with MDD and PPD if approved. I'll now move to stage 718, our lead NMDA receptor PAM. That is an investigational oral therapy being developed for certain disorders where impairment of cognition is one of the main drivers of disability. This is one of our wholly owned programs and was granted fast track designation by the FDA as a potential treatment for cognitive impairment in Huntington's disease, or HD. We are also investigating stage 718 in people with mild cognitive impairment due to Parkinson's disease, or PD, and people with mild cognitive impairment and mild dementia due to Alzheimer's disease, or AD. These disorders represent some of the greatest areas of unmet need, and we know that globally they continue to become more prevalent and significantly disrupt lives. On that basis, we're excited about the continued progress we've made across the program. As we mentioned earlier this year, we recently initiated the LightWave study, a phase two study of SAGE 718 in people with mild cognitive impairment and mild dementia due to Alzheimer's disease, as well as the Purview study, a phase three extension study in people with Huntington's disease. We expect data from the ongoing studies with SAGE 718 to start reading out in 2024. and we will share more detailed timelines when appropriate. We're also advancing a robust portfolio that has the potential to help patients at all stages of their lifespan. Let me provide a couple of highlights, starting with SAGE324, an investigational positive allosteric modulator of GABA-A receptors. We believe that SAGE324 holds significant potential in the treatment of neurological conditions like essential tremor, or ET, and we and our collaborator Biogen anticipate completion of enrollment in the ongoing Phase IIb Kinetic II dose-ranging study late this year. We're also excited about the opportunities in our early development programs, including SAGE 319, our extrasynaptic-preferring gabapam, which we are advancing from IND-enabling studies into Phase I studies. We also continue to make progress with SAGE 689 and SAGE 421, and believe that they will become important pipeline contributors over the coming years. In closing, I'm proud of our progress in the fourth quarter and full year 2022, and I believe that we are well-positioned to execute against clinical objectives and advance our efforts to develop brain health medicines with the potential to deliver what matters most to patients. Now, I'll turn the call over to Chris to provide additional context on our planned approach as we prepare for the potential commercialization of Zoranilone.

in MDD and PPD.

Chris?

Thanks, Jim.

I'm pleased to be with you all this morning to share updates on our commercialization preparation for Xorana Loans. To ensure the successful launch of Xorana Loans, if approved, we made important progress last year on the commercialization front. Core activities that have enabled our state of readiness include advancing conversations with payers as permitted with the goal of enabling access at launch, Engaging and educating HCPs through meaningful scientific exchange and hiring experienced commercial leaders to orchestrate plans intended to achieve a successful launch of Zoranolone, if approved. With the recent announcement of the acceptance of our NDA filing, we remain laser focused on preparations to execute our launch strategy. Let me outline our thinking on the potential timelines for Zoranolone. Based on our PDUFA action date of August 5th, If Zoranolone is approved for the treatment of MDD and PPD without extension of the FDA review period, we expect a potential launch near the end of 2023, following an anticipated three-month DEA scheduling review. We will be prepared and anticipate entering a market that is ready for the approval of Zoranolone. As you'll see on slide 14, we believe the opportunity in MDD is large, with millions of patients not satisfied with current treatment options. People who continue to experience unresolved symptoms of depression are at risk. Many are unable to go to work or take care of their families. It is difficult for these people to live their normal lives, and the longer they wait to treat their symptoms, the more likely they are to experience negative outcomes, such as impaired functioning and subsequent relapse. This is why rapidity matters, both in terms of initiating a therapy as soon as patients show symptoms, as well as achieving the rapid improvement of depressive symptoms. The key takeaway here is a more rapid and sustained approach to treating a depressive episode may increase the likelihood of better symptomatic and functional outcomes. Given the rapid improvement seen in clinical trials to date, we believe that if approved, Zoranilone has the potential to provide a new treatment option to patients suffering with MDD with the goal of helping them return to a state of well-being sooner. In PPD, there is similarly a large unmet need with an estimated one in eight mothers in the U.S. experiencing symptoms of postpartum depression. Despite being a common mental health disorder, women experiencing symptoms may often go undiagnosed or untreated, and we see that clearly in the low diagnosis rates. Not only does PPD have an effect on a mother's overall function, but it can also have an impact on the ability for that mother to take care of her baby. These mothers and their families deserve better. Our goal with Zoranolam, if approved, is to work with the entire ecosystem to change the treatment paradigm by significantly improving diagnosis rates in women with PPD and provide HCPs with the first and only FDA-approved oral treatment indicated for PPD that has the potential to help moms get better sooner. As we enter 2023, we remain focused and diligent on our commercialization efforts in anticipation of potential launch. We continue to engage with key stakeholders in scientific exchange and are also encouraged to see positive signals from the patient advocacy community on the importance of accelerating access to innovation in mental health. And as Barry mentioned earlier, we plan to be innovative on the patient access front. Our goal for this launch, if successful, is that those living with MDD and TBD who are prescribed the therapy have timely access with limited complications such as step edits and prior authorizations. In addition to our own work, we are seeing state governments across the nation make reforms to fail-first policies that have historically restricted patient access to the right treatment prescribed by their physician at the right time. People with MDD and PPD deserve rapid and effective therapeutic options introduced early during treatment because early treatment is believed to deliver the best outcomes, as I've previously touched on. Given the unmet need, we believe that Zoranilone, if approved, is best positioned at launch for MDD patients requiring a first-add or first-switch therapy after continuing to experience depressive symptoms following their initial treatment course, including patients who have tolerability issues or noncompliance with chronic therapy. In PPD, we strive for Zoranolin to become standard of care at launch with use as first-line therapy for treatment naive patients who are newly diagnosed with PPD or in place of other therapies currently administered. In the conversations we've had with payers, they've been highly engaged and receptive, and we believe they see a role for a potential rapid-acting, sustained, 14-day course oral therapy in treating both MDD and PPD. We feel an urgency to deliver a new treatment option to patients given the profound unmet need that still exists in the treatment of MDD and PPD. We are dedicated in our efforts to continue to advance Serenolone with the goal of gaining approval and being able to offer a medicine with the potential to treat these patients rapidly and improve their symptoms. Now, I'll turn the call over to Kimi

for a review of our financials. Kimmy?

Thanks, Chris. Our financial results for the fourth quarter and full year of 2022 are detailed in our press release that we issued this morning. I'd like to take a moment to provide some context and highlight a few key points. We ended 2022 with a strong cash position, which provides us with the flexibility to support the launch of Duranalone if approved, and strategically invest across our pipeline. Our net loss for the fourth quarter of 2022 was 147.1 million, and we ended the quarter with cash, cash equivalents, and marketable securities of approximately 1.3 billion. Turning to operating expenses, R&D expenses increased to 89.3 million in the fourth quarter of 2022, compared to 75.4 million for the same period in 2021. The increase in spend was primarily related to ongoing investments in our wholly owned and partner programs, including Stage 324 and Stage 718. SG&A expenses increased to $67.3 million in the fourth quarter of 2022, compared to $51.6 million for the same period of 2021. The increase was primarily related to hiring employees to support ongoing activities in anticipation of potential launch. As you heard from Chris, we're continuing preparations to support the potential launch of Xeranolon. While gaining approval and commercialization of Xeranolon remain our top priority, we're also committed to investing in our mid-term and long-term pipeline in a strategic and disciplined way. To this end, we expect that our spend will increase as we continue our commercialization efforts and advance plans and ongoing studies for stage 718 and stage 324. We know that to achieve our long-term vision of transforming the care of depression, we must begin with a focused strategy and prepare to scale quickly with success. Therefore, we remain mindful of the capital allocation prior to launch. As a reminder, as part of our collaboration with Biogen, we are jointly developing Xeranalone and Stage 324 with a 50-50 cost sharing in the United States. Looking ahead, we are reaffirming that based on our current operating plan, we anticipate cash, cash equivalents, and marketable securities, anticipated funding from ongoing collaborations, and potential revenue will support operations into 2025. Included in this guidance is the potential to achieve milestones totaling $225 million from Biogen related to the first commercial sales of Duranolone in MDD and PPD. Given how dynamic 2023 will be, including preparing for a potential launch, we will not be providing year-end cash guidance at this time. As we embark on a pivotal year for Sage, I'm confident that our strong balance sheet will enable us to execute from a position of strength. With numerous potential value-creating milestones on the horizon for Sage, we remain focused on making strategic investments in developing pipeline programs to best position ourselves as a leader in brain health. We remain well capitalized as we continue to build a strong team executing on objectives across our pipeline. The time is now for patience. We are optimistic that our approach will lead to the development of treatments that people are desperately waiting for. I'll now turn it over to Helen to handle Q&A with the operator.

Helen?

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 to handle Q&A. Operator?

Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad. If you are joining us today using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is star key followed by the digit 1. We'll pause for just a moment. At this time, we'll hear from Kazin Ahmad from Bank of America. Please go ahead.

Hi, good morning. Thanks for taking my question. I just wanted to clarify something that was said in the prepared remarks. I think, Barry, you said that post the PDUFA in August, you expect to be able to launch Durandalone if approved by the end of the year. What would be rate-limiting factors that would prevent you from immediately launching and can just narrow down when you think you would be able to start recording sales. Would it be in calendar 23, or would we assume it should be more in 24? Thanks.

Yes, Zane, thank you, and thanks for the question and the attention. Look, we're really excited that the FDA has accepted the NDA filing for Zorano for MDD and PPD with a PDUFA action date of August 5th. I'll remind you that following approval that occurs on August 5th without delay, We then moved to a three-month DEA scheduling period. There are actions we could take during that period, but we can't start selling Xeran alone recording sales until we have that official label with the DEA schedule.

So that will happen toward the end of the year, and we'll be very well prepared to launch and excited to do so.

We'll move next to Salveen Richter from Goldman Sachs. Good morning. Thanks for taking my question.

With regard to the payer work here, could you just comment on their understanding of pricing a drug, you know, at an annual price for every once a year, you know, two-week period or using it maybe twice a year? And then secondly, I think the commercial payer mix is about 51% of the payer mix. And so, When you think about VBAs and the strategy here, how effective are they going to be to kind of help you, you know, position the drug with the physician, with the physicians in terms of adopting a new treatment paradigm? And then what do you do with the remainder of the, you know, kind of non-commercial payer aspects?

That's a few different aspects of it.

I'll start, and then I'll ask Chris to comment further. So in terms of the proactive value-based agreement strategy that we advise and are employing, the concept for us is to help payers with some budget certainty. That's really what they want. They know that depression is not well-managed, and Chris will get into that in a bit, but they want budget certainty in return for We want, if a physician or healthcare provider believes that a patient requires the right alone and the right script, we want that script filled quickly. So that's sort of the exchange there. And there's more detail to that we can get into, but that's sort of at the high level. In terms of what we hear from payers from a pricing perspective is that they think about per patient per year. They're not thinking about per pill, per pack. They're really focused on understanding per patient per year. Chris, you want to comment further? Sure. Yeah, so I think the VBA piece of this, Barry, is just frankly one component.

I think to be truly transformational, we have to be accessible, and that really starts with payers in and around understanding unmet need.

I think in all of the interactions that we've had so far, there's a high understanding of unmet need in and amongst the payers and truly a perception that they need something that works quite differently than what they've seen historically. They've been impressed with the data, and I think they certainly understand from those interactions the opportunity that Zoranolone presents to deliver something that works in a rapid-acting fashion after just three days, a 14-day course, something that's durable over time, doesn't come with the stigmatizing side effects so often associated with other therapies, and actually has the potential to return patients to a state of well-being. And in a sense, it takes a very complicated patient type and makes it far simpler to manage than historically what they may have had at their disposal. So incredible excitement around that, which then shapes the conversation on proactive value-based I think in and around the second question around payer types, you know, we're going to work with all different payer types regardless of the mix that they see to come up with solutions to making sure that Xeranolone is accessible at launch and, again, to really build on that understanding of unmet need and what Xeranolone can deliver from what we've seen in the data so far from both landscapes.

Thank you. Moving next to Anupam Rama from J.P. Morgan.

Hey, guys, thanks so much for taking the question. Maybe expanding on some of your comments in the introductory remarks here, but how are you thinking about sort of the initial ramp curve in PPD? And what are some of the pre-commercial sort of education activities you're doing in particular with the OBGYN segment? Thanks so much, guys.

Yeah, Anupam, great to have you on board and a great question. Let me ask Chris to talk about the overall approach to PPD and how we're educating and appropriate science to exchange OBGYNs and others. Yeah, so as you might imagine, there's a lot of focus on PPD within the organization. I think, you know, if you pick up the newspaper or you go online, you see that just like MDD, there is a significant mental health crisis occurring with moms from postpartum depression. In fact, we're talking about 500,000 or so cases of PPD on an annual basis or one in eight live births. So it's absolutely paramount. that we continue to do the work that we're doing in and around working with OBGYN and other prescribers that also see patients that are suffering from DPD to help understand the importance of diagnosis or screening and diagnosis, and subsequently the opportunity that a new therapy potentially like Xarelona offers to them, as it would be the first and only FDA-approved oral therapy for the treatment of postpartum depression. And we believe that through the permitted scientific exchange that's happening right now through our medical affairs team, and whether it's at Congress's or one-on-one interactions with the opinion leaders, we're going to continue to heighten the sensitivity and urgency around the need to treat moms that are suffering with PPD. And we believe that that community, the OBGYN community, will be ready at the launch of the product and will happily receive Zoranilone, as I said, as the first and only oral therapy FDA approved. Yeah, and just to round that out, Anna Palm, when you launch a readily available oral medication like we're planning to do for Zoranilone that's approved, this is exactly the kind of paradigm shift that happens in medicine. As Chris mentioned, about a half a million moms per year reported to have PPD, less than 20% of those are diagnosed and even less are treated. That's really because of the challenging to get diagnosis and treatment. When you have an agent like Zoranil that works quickly with a 14-day regimen, we see the opportunity for physicians to look more rapidly for the diagnosis of PPD and certainly more readily treated. So this is exactly the kind of medicine that changed the diagnostic paradigm and is indeed like PPD.

3-2 for all. From Colin, your line is open.

Good morning, guys. Thanks for the update today. I wanted to just ask about the shoreline data contained in the submission. Can you guys confirm that, you know, what we have in the public domain is sort of the extent of the shoreline follow-up and retreatment data contained in the dual NDA, and can you give us any color as to what will be presented additionally from Shoreline mid-year? Thanks.

Yeah, thanks, Ritu. Jim, you want to take that? Yeah, of course. Sorry. So, the Shoreline study, naturalistic study design, designed to follow patients with NDD and evaluate both safety and tolerability of Zoranolone and the need for repeat dosing for up to one year. The Shoreline study has multiple roles in the program. First and foremost, it provides us with safety data for well over 1,000 patients now. Equally important, it provides some real-world evidence for how the RAM loan may be used if approved. So the Shoreline is an important component in the NDA submission, so the data that's completed to date is included in the NDA submission. The shoreline study also continues. So we have the newest cohort of shoreline, which is completing now. That cohort is a rollover cohort from the coral study. So that will provide some really additional interesting information for retreatment with surrounding. Yeah, so the data that you've seen today on shoreline has been presented multiple times. In essence, what's in the NDA filing, as Jim said, will be used largely from the safety database. We'll have an update mid-year, which we think will be quite informative. And when we get that update, we'll let you know.

Great. And will that update be submitted to FDA at that time?

There's regular communications with FDA on data updates, including Shoreline. Awesome. Thank you. Thanks, Ritu.

We'll hear next from Yasmeen Rahimi from Piper Sandler.

Thank you for taking our questions. So, first one is, if you could provide a little bit of more color on the lifecycle innovation study that you mentioned in the press release related to design details and, like, timing of that study. And then second one is, when should we expect to see the health economic data for the landscape and the next studies?

Yeah. Thank you.

And please send our best to Yaz. Jim, do you want to take that? Absolutely very. So at the moment we're not providing any additional details on the life cycle management study. So the HUR data that you're referring to and there's a lot of additional data put around them that is coming out in key publications and scientific conferences throughout 2023.

Thank you. I think we can move to the next question.

We'll hear from Ami Fadia from Needham.

Hi, good morning. This is Ethan Leon-Farabi. Thanks for taking our questions. You know, so Biogen's comments on its earning call yesterday, you know, continue to be positive on the Zorana loan opportunity. Maybe you could provide, you know, some more details on how y'all and Biogen are kind of working together with regards to things like prepping the market, communicating with FDA payers, et cetera. Thank you.

Yeah, Ethan, thanks for the question. Yeah, Biden from the start has been a phenomenal partner, and clearly with Chris Diebacher coming on board, given his experience in leading larger organizations, his leadership in pharma, as well as his experience with depression, has really been an add to an already strong partnership. Together, we're very bullish on the opportunity for Zorana Loan to help millions suffering from MDD and PPD, and we're like-minded in terms of the paradigm shift we're looking to create in the treatment of depression. I'd say from a regulatory development, commercialization, CMC, supply chain perspective, we're step-in-step in how we're working in the U.S., and it's a 50-50 cocoa in the U.S., so we're well-prepared together if approved to launch their analytics.

We'll move next to Jay Olson from Oppenheimer.

Oh, hey, congrats on the progress, and thank you for the update. Can you remind us what level of DEA scheduling you're expecting to receive for Zoranilone and how the scheduling will impact the launch of the drug and physician and patient perception of Zoranilone? Thank you.

Yeah, Matt, thanks for the question. So, given the class of medicines that Zoranilone is a neuroactive steroid targeting GABA, we anticipate that we'll be a Schedule IV drug, and the three-month DEA review after our Purdue Action Day, assuming we're approved, will be the process to confirm that. What people need to understand is that the drug schedule has a lot to do with supply chain management and how these agents are handled across the supply chain, raw materials, active ingredients, as well as how it's handled in the pharmacy. In terms of patients getting a prescription from their physician, virtually every physician has a DEA number to write, and there's millions and millions of prescriptions that are being written for scheduled drugs by our target audience already.

So we really don't see it being an issue at all. Great. Thank you very much. Thanks, Matt.

Laura Chico with Web Voice Securities. Please go ahead.

Hey, good morning. Thanks for taking the question. I wanted to circle back to one that's a little bit more logistical, but on the commercialization. Any additional commentary around kind of how you envision patient management or patient flow management is going to be handled in the commercial setting? I guess what I'm trying to understand a little bit more is Who in the offices is going to be primarily responsible for managing patient follow-up patterns? And I'm trying to understand a little bit more on the refill process. How are they going to be monitored and what would trigger a refill to be authorized? Thanks.

Yeah, great, Laura. And that's a really important question. So we think Zoranolone doesn't change the practice of psychiatry or primary care that treats these folks. It really enhances. It's another tool in Two Belt where they'll understand if patients are managed or patients respond more rapidly than the tools they have today. But let me ask Laura, who's treated a bunch of these folks, and how she thinks about the patient flow.

So thank you for the question. It's my belief. that Duranolin is really going to fit in with how ATPs are currently treating patients with depression. I think that they will continue to monitor patients over time, and if there's a reemergence of symptoms that suggest another depressive episode is occurring, then they will undergo another treatment course with Duranolin or another appropriate agent depending on the physician and patient conversation. I think what Duranolin really brings to the table here is a tool that is different than the tools that physicians have been able to use in the past. It is a drug that works rapidly, that has a durable effect, and that is a short-term treatment course. And from discussions with physicians, what we hear is that these are things that are really highly valued and will really be an important part of the armamentarium to change fashion moving forward.

Yeah, and just to round that out, some of the basis of your question, Laura, is sort of a common belief, which is a misconception, that today a patient comes in, they are put on a chronic medication, they stay on that medication, and maybe get followed up at six months and all is well. But the data don't support that. The data suggests that a patient given a new antidepressant, only on that antidepressant for a median of seven weeks, and that patients who continue to seek treatment, and some don't, some discontinue, continuation and leave the system. But those that continue to seek treatment flow through two to three different medications in a year. So just think about it. It's not like today someone's on a chronic med and they're just fine. They're not. So we think Zoran, along with the potential rapid effect, again, as Laura said, enhances the practice of treating that patient. It doesn't really change how you monitor that patient. You also asked about... There will be a variety of ways that refills can happen. Some might write a script for Xeranolin with a refill already, instructing their patients that if they're feeling better for an extended period of time, but they're dark in mood, elevated anxiety, or insomnia, come back, do the refill, and try it again. If it doesn't work, come and see me. I might have other tools for you.

Or a refill can be called in to a pharmacy, just like any drug today.

Thanks. Moving next to Sumant Kulkarni from Canaccord. Please go ahead.

Good morning. Thanks for taking my question. So, zuranolone is relatively rapid acting. So, either in shoreline or in any other setting, do you have any data on patients that may have stopped taking the product before completing the full 14-day course of therapy simply because their episode of depression had gone away and they were feeling better? I'm asking because this discretionary patient action could have important implications for pricing and potential sampling. And the dynamic might lead to large distributions around the per-patient, per-year pricing that payers are looking at versus maybe setting a flat price.

Yeah, Saman, thanks for the question.

So I'll ask Jim to talk about specific data. Obviously, when you're treating over 3,500 patients, there are probably some patients who took a drug for a period of time and stopped because they're feeling so better. But that's in large part not what's happening. Just like if you are prescribed a Z-Pak for your lower respiratory tract infection and told you'll feel better but complete the full course, that will be the instruction for Zoranilone. And we don't really believe there's going to be much of a dynamic where a patient might take Zoranilone for three or four days and, quote, unquote, save the rest of their pack for another episode. There will be instructions to complete the 14-day pack. And the data are supported that those that complete the two weeks and respond, remain responding.

So, we don't really think that could be a big dynamic that goes out here.

We'll hear next from Yapin Sunita from Guggenheim.

Hey, guys. Thank you for taking my question. Just following up on a question that you asked earlier. So, the profile of the drug is short-term, and you have a DEA scheduling. probably limit your ability to sample. Can you maybe just talk about the relevance of sampling? How could that impact you, especially in the PCP setting? Thanks.

Yeah, thanks for the question. Let me ask Chris to talk about our overall approach there.

Yeah, so from what we're thinking about, there's a number of different ways that we think about getting physicians really experienced with the medication. While we haven't communicated Yes, that we're going to have an extensive sampling program. There's a number of different ways to think about this, and the team is really thinking through that.

We know that from the experience that we've seen with investigators is that those physicians that have experience, they recognize the profound impact that Xarelone has. So that early experience has been critical. With respect to DEA scheduling, we don't anticipate it having a major impact on the way that we think about sampling.

While there may be one or two states that may have some around sampling and sampling stores, there's alternative ways to get physicians' experiences in. So we don't see deviate scheduling as being something that would in any way inhibit a physician from getting early experience.

And quite in fact, we think that from the vast array of programs that we can employ, that early experience is going to be something that's going to have a profound impact on the launch of medication.

Kim Lugo from William Blair has your next question.

Thanks for taking the question. For the launch, are you going to set up a central hub to deal with any preauthorization or access hurdles physicians may have to deal with kind of during the early parts of the launch?

Yeah, Tim, thanks for the question. We have a very, we advise you have a very robust channel strategy in place that deals with everything from, to the extent there's prior author steps, to make sure that if a script is written, that patient gets

of the drug. So that will all be set up and in place. Okay, great. Thanks, Tim.

We'll move next to Nenna Bittre-Togar from Citi.

Hey, guys. Thanks for taking my question. I actually just had a question on the Kinetic II study. I was just wondering if you could give us an update on what you're seeing on the enrollment front there and if some of the measures you took to speed up enrollment have resulted in a faster maze. Thanks.

Thanks, Nina, for the question.

Jim, do you want to take that? Yeah, of course. Thanks, Nina. As you mentioned, we're currently very focused on completing the Kinetic II Phase IIb study for essential tremor in the Phase IIb-IV program. The Kinetic II study is currently open for enrollment, and we're anticipating completion of enrollment in late 2023. As I was talking about previously, a number of factors have challenged the Kinetic II study. One of those was clearly some staffing challenges at sites and CROs coming out of the pandemic. That's something that's being seen across the industry. We also saw a little bit of a slower pace of enrollment than we had originally anticipated due to some specific criteria and protocol. And finally, there are multiple ET trials that are targeting a similar patient population that are going right now. But we, as we mentioned previously, we made some modifications to the program and we're confident that those modifications are having a positive impact. So, as I say, we expect to complete the moment in late 2023.

Douglas Tao from HC Wainwright. Please go ahead.

Hi. Good morning. Thanks for the question. Just curious. How do you plan or do you plan on doing a post-marketing study? And I'm just curious, just in order to understand how frequently patients need to be treated with Xuran alone, obviously just given the fact that patients switch payers a lot and so forth, and obviously there's sort of limitations with IQVIA and so forth data. Just curious, how do you over the long-term plan to understand the profile and how frequently patients need to be treated? Thank you.

Yeah, thanks, Doug. That's an important question. So what we know today, and Jim commented on this earlier, is, you know, Shoreline is the largest naturalistic study in depression-run states to our knowledge. And the data are pretty clear. Now, while Shoreline isn't exactly real-world, it's close to real-world as you get at this point. And what we see for Shoreline is for those that responded, the majority reported only the initial two-week course of treatment. And then if the number is 80%, it would require either one or two course of treatment in the calendar year. So we believe that that's how it's going to pay off in the real world. Now, once we're launched and approved, we'll certainly work a number of different ways to understand what's happening over time, whether it's registries or payer collaborations. We'll have those data at hand. And, of course, because we will have value-based agreements in place, those will be informative as well. So there will be a number of sources

for us to understand how many TUI courses a population needs over a period of time.

Physicians, do you get a sense, are they going to use ziranolone initially as an add-on, or do they want to use it as a monotherapy, as sort of a switch?

In the scientific exchange that we have with

potential prescribers, and our investigators, we're hearing different views. And the good news is that we have data with Zoranol as a monotherapy on top of a stable antidepressant and co-administered with antidepressants. So we have a profile with Zoranol to use the medicine as the patient feels appropriate for, as a physician feels appropriate for their patient. You know, we've heard some physicians for certain patient types, like young adults, they might want to use the monotherapy. For someone that frequently suffers from depressive episodes, they might want to prescribe it as a co-administration. So we have the optionality and the data to support the way a healthcare provider thinks best to treat their patients.

Great. Thank you very much.

We'll move next to Mark Goodman from SVB Securities.

Thanks for taking my question. This is Rudy on the line for Mark. I have two questions for Sage 718. So the lightweight and dimension study is an initial higher dose followed by a lower dose, while the other two studies use a fixed dose of 1.2 mg. Can you talk about the rationale for the dosing selection? And secondly, can you talk about the difference between patients using inpatient versus outpatient settings? Thanks.

Yeah, Rudy, thanks for the question. Look, we're really excited by SAGE 718. It's a first-in-class, an MDA PAM that we're studying for cognitive impairment across neurodegenerative diseases, including Huntsman's, Parkinson's, and Alzheimer's. The program's progressing very well, and we're really excited to have data from that program in 2024. In terms of your specifics, Jimmy, you want to talk about the dose and internal patient? Absolutely, Barry. And as Barry said, we're very excited about stage 718. We're currently running five phase two studies across three different indications, Huntington's disease, Parkinson's disease, and Alzheimer's disease. And really, the dosing that you're referring to, the strategy is to achieve and maintain a certain level of exposure for stage 718. And so what you're seeing is as the program matures, we are doing that. So the goal is, in the case of the dimension study, which is dosing for over a three-month period, to achieve and maintain that dosing level. We are, at this point, looking at outpatient studies for the SAGE 718 program. The profile of SAGE 718, both from a safety and PK perspective, really allows us to do that. So all these studies are outpatient studies. Yeah, I would just, I would just add in, Rudy, that the benefit risk we're seeing for stage 718 is extremely broad. You know, we're seeing rapid improvement in higher order cognition, executive function learning and memory, and it's incredibly clean probability profile.

So we're excited about continuing to move that forward. Got it. That's very helpful. Thanks. Thanks, Rudy.

Ray Nachman from BMO Capital Markets. Your line is open.

Hi, good morning. With the priority review for Zorana Loans, do you still think there's a possibility for an ad time? Does that change at all with priority review timeline, and when would you find that out? And then the way the NDA has been filed, you're obviously looking for an approval in both MDD and PPD together, but is it possible for the FDA to split those up and approve one indication first and then the other at a later point if it ultimately wants to see more data? Thanks.

Yeah, Gary, thanks for the question.

So, let me take the second part first. As you highlighted, we filed an NDA for both MDD and PPD, and we think the data warrant approval for both MDD and PPD. So, that's our current thought at the time, and advise as well along with that. In terms of an adcom, that's solely at the discretion of the FDA. You know, if the FDA decides to hold an adcom, we would be excited to showcase the totality of this round data. And as typical in adcoms, I hear from patient and patient advocates to highlight the really devastating unmet need that continues out there with depression. So we'll be well prepared if they have an adcom. If the FDA decides not to hold an adcom and that's a signal of a faster approval, we'd like that too.

Moving next to Brian Abrahams from RBC Capital Markets.

Hey, guys. Good morning. Thanks for taking my question, and congrats on all the progress and on the filing acceptance. I'm curious if you could talk about your latest views on how you might gate the launch focus and investment from targeting psychiatrists initially to ultimately moving and expanding into the primary care setting. Curious what feedback and metrics you might be looking for to shape that potential progression. Thanks.

Yeah, Brian, thanks for the question. And thanks, too. Congratulations. Glad to hear that you're as excited as we are. Look, we live in a world of really strong information and have really good knowledge of those health care providers that are seeing depression patients, those that are willing to write prescriptions, particularly granted prescriptions. And we advise and we'll focus on where we think we'll get the strongest patient flow that has the right kind of insurance coverage first and then expand rapidly with success. So that's the approach. We're certainly going to focus on psychiatry and those larger offices, irrespective of discipline, that see a lot of these patients. That will be our focus. Chris, anything to add? Yeah, I think as a note, and I think we've communicated this in prior calls, is there is a group of PCPs that you'll be calling on. These are PCPs that do behave more like psychiatrists. They see a number of patients with MDD. And we'll also focus on OBGYNs. I don't want the piece about PDD to be lost. And I think, as you said, it varies based on the metrics that we have, both physician-level and patient-level data that we have at our disposal. We're going to make decisions at the right time to continue to scale with success as we move forward. Yeah, I'd also add, Brian, that we're able, again, in the world we live in, to understand patient activation and the kind of patients that are, frankly, going to ask for xeranolin by name.

We believe that that's going to happen with a drug like this. Thanks so much.

Danielle Brill from Raymond James. Your line is open.

Hey, guys. This is Alex. I'm for Danielle. Thanks for taking our question. So I know you're not targeting treatment-resistant depression in your commercialization strategy, but do you feel that it's a risk for clinicians to initially trial seranolone in their patients that might skew towards this population, potentially negatively coloring their perceptions of efficacy? In other words, do you think seranolone would work in TRD? And just on that front,

What's the gating factors now to initiating formal trials in treatment-resistant depression, anxiety, bipolar? Thanks.

Yeah, let me start with the second part of that, and then I'll talk about the first. So we believe the unmet need in MDD and PPD is so great. You know, as we talked about, 6 to 7 million dynamic patients with looking for new treatment options in MDD, half a million moms, that should be diagnosed with depression a year. That patient population is so significant, unmet needs so significant, that that will remain our focus for the foreseeable future. If we can win in depression, we can really help millions of patients. So we'll provide sort of future indications at later points in time, but right now the focus is absolutely win in depression and try to help as many people as we can. In terms of how at launch the drug will be used, As Chris already highlighted, in PPD, we'd like to have Zoranilone be standard care. It's approved, the only oral treatment approved specifically to treat PPD. And in MVD, our target is to educate physicians that Zoranilone should be used as your first switch or first add-on should a patient not be adequately controlled with whatever they're taking, and that would be our first. Yeah, I think what I'd add to that there is if left to things to just happen, I could see where physicians across all different areas of treatment use new products later. But here, what we have through not only the positioning and the identification of appropriate places of use is the idea of proactive value-based agreements. Proactive value-based agreements are designed to really ensure that physicians have access earlier in the treatment paradigm so that you don't have the onerous prior authorizations and step edits, which can ultimately take a new medication and push it to later utilization. That's why it's so important that we work across all stakeholder groups to make sure that physicians have the ability to really access really the treatment process and use it where they want .

We'll hear next from Jun Li from Truist Securities.

Hi, thanks for taking our questions. Looking forward to additional data from Shoreline mid-year. Is that something you'll be submitting to the SBA as part of the NDA package? And also quickly, you mentioned lifecycle management for Zoran Loan. Can you share what you have in mind? Thank you.

Yeah, June, thanks for the question. So we're not counting more on lifecycle management. As we commented earlier on the call, we'll have a regular series of updates with the agency, including Shoreline.

Thank you, everyone. That will conclude the Q&A portion of today's call. With that, I will turn it back over to Mr. Clay for closing remarks.

Thanks, Lynette, and thanks again to everyone for joining us this morning to review our fourth quarter and full year 2022 results. Our progress in the fourth quarter and throughout 2022 is the direct result of teamwork and dedication from everyone in our and our partners' organizations. I want to thank everybody. As we make critical advances in progressive development activities across brain health, we maintain a position of strength as we advance our mission to develop and launch transformative medicines for patients in need. Thanks again, everyone, and have a wonderful day.

That does conclude today's teleconference.

Goodbye.

We thank you all for your participation.