Sage Therapeutics, Inc.

Good afternoon. Welcome to Sage Therapeutics third quarter 2024 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 sagerx.com. This call is a 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 Katie Plant, Manager of Investor Relations at Sage.

Good afternoon, and thank you for joining Sage Therapeutics' third quarter 2024 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 and slides related to today's call. 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 third quarter of 2024. Our Chief Business Officer, Chris Benecke, will provide an update on the ongoing commercialization of Zervive. We will then be joined by Laura Galt, our Chief Medical Officer, who will review development activities across our program. We will then be joined by Kimi Iguchi, our Chief Financial Officer, who will review our financial results from the third quarter of 2024. Mike Quirk, our Chief Scientific Officer, will be available for questions during the Q&A portion of the call. With that, I will now turn the call over to Barry.

Thanks, Katie, and thank you, everyone, for joining us this afternoon. Discovering new medicines and bringing them to market, especially in brain health, is a formidable challenge, but when successful, has potential for major advances in human health. The impact of our work in postpartum depression is an important example of this. However, other areas of drug development, including the most devastating brain health conditions, remain the next frontier. Recent pipeline setbacks require us to further focus our business priorities. We announced earlier this month that we are implementing a reorganization of our business operations intended to strengthen our balance sheet and focus investment to support the ongoing launch of Zerzuve for the treatment of women with PPD, our upcoming readout in Huntington's disease, and exploring opportunities across our early stage pipeline. This decision was necessary. We believe that this restructuring will right-side sage for future success. I'm grateful to all our employees, including those departing, for their impact on our business and dedication to making a difference for patients. As you've seen in our recent press release, we're also making the strategic decision to stop making Xilresso commercially available after December 31st, 2024. As we've noted, we've made progress in supporting more women with PPD since the launch of Zirzuve, and we see this important treatment accelerating change in the PPD treatment paradigm. With the increased demand for Zirzuve in the treatment of women with PPD, we're also seeing an expected decrease in demand for Zilrezo. We believe healthcare providers who have prescribed Zilrezo will continue to transition to Zirzuve and that women with PPD will be well supported by Zirzuve. It's a logical business decision to discontinue availability and focus our resources on Zirzube so we can help even more women with PPD. Now, as we are focused on PPD, Sage and Biogen will also not pursue further development of Ziranolone as a treatment for major depressive disorder in the U.S. Based on the significant new investment and time we expect would be needed to conduct the additional studies, and we're prioritizing our resources on supporting the PPD patient community. We're grateful to all the patients, providers, and advocates who have supported our clinical trials and efforts in MDD. We believe these decisions will provide us with the agility, cash runway, and focus to advance our business. We continue to build a foundation for the future that is supported by the momentum we're seeing with Zerzuve. Last year, we set a goal to establish Zerzuve as a first-line therapy and standard of care for women with PPD. We're making progress as demonstrated in our third consecutive quarter of solid growth. Zuzube has a critical role in advancing PPD care by helping to support a dialogue between healthcare providers and women with PPD, a condition that has often been stigmatized and undertreated. As a result, more women have the potential to be treated for PPD and more OBGYNs should begin to screen, diagnose, and treat this disorder. We believe the shift in practice patterns is starting among OBGYNs who are now integrating maternal mental health with obstetric care and initiating medical treatment for PPD. In fact, once an OBGYN has written his resume, on average, we see an encouraging increase in the number of women with PPD they treat based on written prescriptions for all medications. Of those healthcare prescribers prescribing Zirzuve, the majority are using Zirzuve as a first-line PPD treatment. We're seeing broad and favorable coverage for Zirzuve and PPD, and progress across the ecosystem continues to energize our efforts. Since launch, women with PPD are going online and sharing their treatment success stories. Medical associations are publishing screening guidelines. Payers are recognizing the benefit of innovation. and the media continue to discuss PPD as an urgent and treatable medical condition. While progress in overall screening rates for PPD is encouraging, it should be the first step in a deliverable process to ensure women who are diagnosed with PPD understand their options for care. Chris will provide more specific breakdowns of our commercial performance in Q3. Looking ahead, we plan to continue to scale with success and believe that our strategic investments including our recent salesforce expansion, will accelerate the demand and market growth for Zuzuvay and PPG. Now, turning to the pipeline, earlier this month, we reported that the Phase II Lightwave Study in Alzheimer's disease did not meet the primary endpoint. We're disappointed for the millions of patients suffering with Alzheimer's disease. We look forward to reporting top-line data from the Phase II Dementia Study of Dowson-Amdor for people with cognitive impairment associated with Huntington's disease expected later this year. Finally, we announced in September that Biogen has decided to terminate our collaboration and license agreement for the Sage 324 program. With the termination of this agreement, Sage will have full ownership of Sage 324, and we plan to continue to evaluate potential indications, if any, for the program. We anticipate that any future investment in Sage 324 will be based on a broader portfolio review and pipeline prioritization. Our commitment to advance brain health medicines endures through our successes and setbacks. Patient impact, long-term growth, and value creation remain our guiding principles. With that, I'll turn the call over to Chris to provide additional context on the ongoing commercialization of Zerzuve.

Chris? Thanks, Barry. We have achieved notable progress in our launch of Zerzuve over the third quarter. We are making notable strides in our goal to establish Zerzuve as the first-line therapy and standard of care for women with BPD. Zerzuve generated $22.1 million in total revenue in the third quarter of 2024, of which SAGE recognized $11 million in collaboration revenue. This represents a 49% growth in revenue over the second quarter. We also observed increased demand as measured by shipments in the third quarter, with approximately 2,000 prescriptions filled and delivered to women with PPD. This represents an approximately 40% growth compared to the second quarter. Inventory levels have normalized since the initial build at launch. Additionally, we saw a reduction in the percentage of free goods as commercial and Medicaid policies covering Zerzuve have been implemented. Prescriber trends also signal encouraging growth of Zirzuve as a treatment for women with BPD. We're building from a strong foundation with data that suggests 90% aided brand awareness among OBGYNs and psychiatrists. Prescribers and repeat writers continue to increase quarter over quarter with most new prescriptions initiating after an interaction with a sales representative. These data and trends reinforce our view that this is a promotionally sensitive market with potential to further scale, as we've recently done with our field Salesforce expansion. The resume is being prescribed across a breadth of ACPs who treat PPD. Importantly, OBGYNs continue to lead the way, accounting for 70% of all prescribers. A majority of the OBGYNs who first wrote a script prior to July 2024 have written multiple prescriptions. This is noteworthy as OBGYNs are at the forefront of peripartum care, seeing these women at the most critical time to screen, diagnose, and treat PPD. At the same time, we continue to recognize broad and equitable coverage as a critical element of our efforts to ensure women with PPD get access to this important treatment. As of today, more than 90% of commercial and Medicaid lives are covered with a vast majority of policies enabling first-line access to Zirzuva for women with PPD without burdensome prior authorizations. I'm pleased to report that all three national PBMs have now developed favorable coverage policies for Zirzuva in the treatment of PPD. The progress we've made this quarter speaks to the need and strong value proposition for Zirzuva in the treatment of women with PPD. Barry articulated our drill strategy when we launched Zerzuve at the end of 2023. To think big about the opportunity in PPD, start with a focused approach and scale strategically with success. Our plan to accelerate growth of Zerzuve in PPD is centered around three key areas. First, we plan to continue to expand the HCP prescriber base through field force expansion and increasing peer-to-peer engagement, education, and awareness programs in Q4. SAGE's expanded sales force is in the field as of the start of Q4. We plan to support repeat writing in PPD by prioritizing a positive clinical and brand experience, including through an efficient prescription fulfillment process. Our goal is for HCPs and women with PPD prescribed Zirzuve to feel supported throughout the process. And finally, we plan to leverage targeted media, digital channels, and social media influencers to empower more women to discuss their PPD symptoms with their ACP and ask if Zirzuve is an appropriate treatment option. We are inspired by the ongoing efforts of the PPD community to create real and lasting change in the healthcare system, which fuels our shared commitment to support women with PPD. I look forward to sharing updates on our commercialization efforts in the coming quarters. With that, I will turn it over to Laura to highlight our pipeline updates. Laura?

Thanks, Chris, and good afternoon, everyone. We continue to believe that Zerzuve is contributing to the growing momentum in the healthcare community to recognize and treat PPD. I'm encouraged by the progress we are making and the potential to help even more women with PPD. With regard to the clinical stage pipeline, in early October, we announced the results from the Phase II Light Wave Study in Alzheimer's disease. Unfortunately, there was not a statistically significant difference from baseline to day 84, in participants treated with dalsanemdor versus placebo, as assessed by the WAIS-IV coding test, the primary endpoint. A difference between dalsanemdor and placebo was also not observed for secondary endpoints. Given these results, we do not plan to pursue further clinical development of dalsanemdor and Alzheimer's disease. While we are disappointed by the findings from the lightweight study, we extend our gratitude to all the participants, investigators, care partners, patient advocates, and the broader Alzheimer's community. All of whom contributed to this important research. We are also conducting the phase two dementia study that evaluates dalsanemdor in people with cognitive impairment associated with Huntington's disease. This cognitive impairment affects the ability of people with Huntington's disease to work and care for themselves, and there are currently no treatments. We look forward to the top line data from the dementia study, which are expected later this year. We continue to evaluate options across our early stage pipeline, including one I'll highlight today, Phase 319. This work is built on the insight that alterations in inhibitory GABA signaling may play an important role in the pathophysiology of many brain health disorders. Phase 319 is an extra synaptic preferring GABA-A receptor positive allosteric modulator, or PAM, that is designed to be differentiated from the other GABA PAMs in our portfolio. With SAGE 319, we see an opportunity to treat neurodevelopmental disorders where current treatment options are limited. I want to close on a note of appreciation for the hard work and dedication of our teams. They are on the front lines of advancing our understanding of the treatment of brain health disorders. Now, I will turn the call over for a review of our financials. Kimmy?

Thanks, Laura. Our financial results for the third quarter 2024 are detailed in our press release issued this afternoon. As Chris mentioned, we reported collaboration revenue from the sales of Zerzuve of $11 million in the third quarter. As a reminder, our reported collaboration revenue is 50% of the net revenues Biogen reports for Zerzuve. Note that certain variables in the fourth quarter, including holidays, could influence revenue. Turning to operating expenses, R&D expenses were 54.6 million in the third quarter of 2024. SG&A expenses were 53.2 million in the third quarter of 2024. We expect operating expenses to decrease in 2025 relative to 2024. Our net loss for the third quarter of 2024 was 93.6 million. We ended the third quarter of 2024 with cash, cash equivalents, and marketable securities of approximately $569 million. As we stated in our reorganization announcement earlier this month, we anticipate that implementation of the reorganization will extend our cash runway, and we plan to update cash runway guidance in the near future. Finally, I want to thank my colleagues for the opportunity to work alongside you as we built a company with a tremendous team. I'm proud of our efforts, especially in revolutionizing the approach to postpartum depression. It's been a privilege to make an impact in this area, and I wish you all continued success. I'll now turn it over to Katie to handle Q&A with the operator. Katie?

Thanks, Kimme. I will ask that you limit yourself to one question. If you have an additional question, feel free to return to the queue. Now, I will turn it over to the operator to oversee Q&A. Operator?

Thank you. If you would like to signal with questions, please press star 1 on your touchtone telephone. If you're 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 will be star 1 for questions, star 1. And our first question today comes from Anupam Rama with JP Morgan.

Hey, guys. Thanks so much for taking the question. I know it's only been a few weeks, but wondering what color you can provide on sort of what you're seeing on script trends from the Salesforce expansion. Thanks so much.

Hey, Anupam. Thanks. Appreciate it. So as we highlighted in the prepared remarks, we put the Salesforce in for the fourth quarter. So they're out there in the field. Given the promotional sensitivity we've seen with the territories that were already, we're confident that we're going to see an uptick with these, but it's too early to provide any guidance or color, other than they're in the field and operating effectively.

Got it. Thanks so much for taking our question. Thank you.

And the next question will come from Salveen Richter with Goldman Sachs.

Hi, guys. Thanks for taking our question. Just a couple from our side. Could you speak to your early-stage pipeline and if we'll be seeing any data there next year or the indications for stage 319? And also regarding the specialty pharma process for Zulzove, any color on the optimization there and if there's been any reduction in the lag between the prescriptions written and shipped?

Let me start with specialty pharma and then I'll turn it over to Laura to talk about the pipeline. As we talked about in the last quarter, working with specialty pharma is newer to the OBGYNs. Just to be clear, OBGYNs and that healthcare provider office is the right place to intercept PPD for moms early in the disease progress. As we educate and implement additional solutions, that process is getting better and better. We're not really hearing much complaints about drug getting shipped to moms' homes. In fact, it's a very efficient process that continues to improve quarter on quarter. Laura, you want to talk about the early stage pipeline?

Yeah, sure. So as I highlighted on the call, one of the interesting compounds in our early stage pipeline is SAGE319. And that differentiates from other equity in our GABA portfolio because it is an extrasynaptic preferring molecule. And so as compared to benzodiazepines, or to our prior GABA compounds that have been in development, it has a different pharmacological profile that we hope will translate into a different profile in the clinic. In preclinical data, we have seen that this compound behaves differently than benzodiazepines and the balanced GABA compounds. And it is currently in phase one, and we look forward to starting to uncover some of the information about how this molecule will differentiate in the clinic during the phase one program. With regard to the rest of the early pipeline, the approach that we've taken to develop our pipeline is to really understand the role of neurosteroids in impacting brain circuitry. And we've started with the GABA-A platform and followed with the NMDA platform. But these are just two examples of how neurosteroids could influence various circuitry in the brain. And so in our earlier stage pipeline, We're looking to identify other opportunities for neurosteroids for a platform approach.

Thank you.

And our next question will come from Yasmine Rahimi with Piper Sandler.

Thanks, Tim. First of all, Kimi, it's been great working with you, and you'll be greatly missed. Same goes to Chris, to all of you. And thank you for your contribution at Sage. I just want to maybe start that. And in terms of my question, I guess, you know, given sort of the setbacks recently around pipeline products, what evidence can you point us to get clients excited going into the Huntington's disease readout here at your end? Appreciate color.

Yes, thanks, and Kimi's going to look forward to her retirement, but certainly has done a wonderful job helping to build SAGE. Let me start, and then I'll ask Laura to talk about hunting and some of the earlier data we saw. So, look, you heard on the call, we're off to a very strong start with the launch of Zuzube and PPD, and we think seeing that continued growth of shipments quarter to quarter and really the transformation of PPD is very exciting for us. Additionally, we have an earlier stage pipeline that Laura already commented on, and seeing those data move along, we think create a short, medium, and potentially longer-term value as we follow the science there and apply all the lessons learned from all the compounds we've already got data on to earlier stage compounds. We were learning a lot over the last four years in applying those learnings to earlier stage pipeline. You should see some different thinking moving forward there. Laurie, you want to talk about dalsanemdor or Huntington's and some of the earlier data and some of the hope we have for the upcoming data readout?

Sure. So for those who may not be familiar, the dimension study is our study of dalsanemdor in patients with Huntington's disease who have cognitive impairment. And we are expecting results from that study before the end of the year. We have a very strong scientific rationale for this study. that relies on really two approaches. The first is decades of research into the role of the NMDA receptor in learning and memory. And the second is a later recognition that a neuroactive steroid, 24S hydroxycholesterol, is reduced in patients with Huntington's. Now, this is a neurosteroid that binds to the NMDA receptor and modulates it. And we expect that Dalsanemdar Dalsanendor could be expected to modulate the receptor in the same way, restoring the function of the NMDA system towards normal. One of the interesting factors of a study in Huntington's disease is that it is a genetically defined and younger population than what we've seen in some of our other studies. That means this population is more homogeneous, that has fewer medical comorbidities, and as a consequence, it's easier to detect a signal in this population. So as we said, we don't anticipate that the results we've seen in prior studies will necessarily predict the results from dementia. We're looking forward to seeing the results from those studies later this year.

Thank you so much.

Thanks, Yaz.

And the next question will come from Jay Olson with Oppenheimer.

Oh, hey. Thanks for providing this update. Could you please talk about the tachyotry collaboration that Biogen has initiated and the potential for that opportunity to drive uptake in PBD through telehealth? Thank you.

Yeah, Jay, that's a great question. I'll start and then I'll ask Chris to talk about it. So as we think about the paradigm shift we're trying to drive in PBD, it really does start with those that see mom's before during and then obviously at the birthing event and then directly after the pregnancy and that is OBGYNs and nurse practitioners and physicians assistants that that help them so that's the right time frame in place to screen and then if if appropriately diagnosed diagnosed and treat and as you saw from this quarter over 70% of the scripts are in fact coming from OBGYN so You were we are intercepting PPD early in the disease process. That's great some women are don't get screened and diagnosed and others frankly don't go on to develop symptoms until multiple months after birth. So they're outside the practice OBGYNs. So it's important for us to have access and educate psychiatrists and primary care physicians so that those moms that have gotten out of the OBGYN potential screening and diagnosis can get treatment for their PPD symptoms if diagnosed. And that's really where The other disease, the other specialties come in as well as tachyotry. Chris, you want to talk further about that?

Barry, I think you hit it. Telehealth and organizations like tachyotry are a much-needed resource for new mothers as they navigate the challenges of motherhood. And effectively what they do is they meet that woman at a place and time where if she needs supportive care, she's able to do so. from, you know, whatever environment that she's in. So we really believe, I think, as you said, that this is going to expand the opportunity for so many women to engage with a healthcare professional and gain deeper insight into how to manage their postpartum depression.

Yeah, and Jay, I think you highlighted this in terms of further uptake. It might take in certain areas of the country weeks to months to get into a psychiatrist, so this provides immediate access should a mom really need that help that Chris just highlighted.

Super helpful. Thank you very much. Thanks, Jay.

And the next question will come from Ritu Baral with TD Callen.

Hi, this is Athena on for Ritu. Thanks for taking the question. Another on your early stage pipeline, what is your timeline to unveiling promising early stage assets with cost effective development? And would these assets also be neuro-focused or neuropsych-focused? Thank you.

Thanks for your question, Athena. Let me ask Laura to start, and then Mike, you might want to chime in there as well.

Yeah. So, you know, right now we are in the process of evaluating all of the potential assets across our portfolio and are conducting a portfolio prioritization process. You know, when that is complete, we will share more. the details about the early pipeline.

And then just to build a little bit on what Laura said earlier, I think from the beginning of SAGE, there were two elements that we really focused in on in trying to understand the best way to bring forward new medicines in brain health disorders. And one, as Laura mentioned, was understanding how the neuropathology of neural circuits and role neural circuits play across a range of brain health disorders. And the other one was really around our in-house chemistry platform that focused on understanding you know, usually neuroactive steroids, but I think more broadly endogenous steroids and how they engage those neural circuits. And so, while we focus our clinical pipeline right now is really emphasize the GABA and NMDA receptors as critical ways of interacting with these neural circuits, we've also been working on research on understanding the other endogenous pathways within our chemistry platform that can engage these circuits that go beyond just the GABA and NMDA receptor. And as we continue to evaluate those opportunities, we'll have more information to share.

Thank you.

Thanks, Athena.

And we'll take a question from Amy Fadia with Needham.

Hi, good evening. Thanks for taking my question. With regards to some of the efforts in conjunction with Biogen, to support women that are sort of ending up being treated by a psychiatrist rather than an OBGYN. Can you just sort of step back and give us a sense of sort of how the market dynamics or how the market is split with regards to, you know, the number of women that actually get seen by an OBGYN versus a psychiatrist? help us understand also from the sense of, you know, the severity of PPD, if you've been able to get a better sense of how the severity level of these patients differs across the market, that'll be helpful. Thank you.

Yeah, I mean, thanks for the question. That's a good one. So just the numbers, as we've highlighted, over 70% of the prescriptions are coming from OBGYN, which we think is the right place to intercept PPD, like any disease, the earlier in the disease onset you can treat, the better off typically the outcomes. And as we all know, an under-treated mom has devastating consequences not just for mom but for baby. So the ideal state is during pregnancy or directly after the baby is born for the OBGYN office to be the primary spot of standard screening and, if appropriate, diagnosis, and then, if appropriate, treatment with an intervention. What we're seeing, and we highlighted this in the remarks, is that once an OB-GYN uses Zirzuve, they're seeing more PPD, and they're using Zirzuve more often than not and seeing that PPD. So that's the dynamic we want to create. Now, as we highlighted, not every mom with PPD gets picked up in the weeks being treated by OB-GYN. And several women develop symptoms weeks or months after delivering a baby that are PPD symptoms. And that's where primary care and psychiatry comes in. But just to be clear, our real focus is to continue to grow awareness in the OBGYN office because that's the right primary intervention for PPD. And we want to continue to see the scripts flowing from OBGYNs.

Love it.

Okay, you also asked about the severity.

Thanks, Ami. You also asked about the severity, so let's hit that quickly. So we are seeing mild, moderate, and severe PPD treated at all specialty levels, so it's not really differentiating by specialty. The other thing we're working on from a disease state awareness is really to help the healthcare community understand that since PPD doesn't really fit into the buckets of mild, medium, severe. A woman could show up on Monday and being diagnosed with mild PPD only develops severe PPD on Friday. So if someone has PPD, they need an intervention, whether it's another treatment through Zuvay or talk therapy, they need help.

Got it. Thank you.

And moving on to Brian Abrams with RBC Capital Markets.

Hi there. Thanks so much for taking my question. I'm curious, what will you guys be looking for in dimension on SDMT and across the secondary endpoints in order to move Dals and Emder forward? Would signals or trends across all or some of these endpoints be enough? And how has the bar evolved since the decision to restructure and refocus resources? Thanks.

Hey, Brian, thanks for the question. I'll ask Laura to start, and I'll circle back with potential additional color.

Yeah, so in the dimension study, we have recently adjusted the primary endpoint to the SDMT, the simple digit modalities test. And this is a test that's been around for nearly 100 years in multiple forms. Clinicians are aware of it. Regulators are familiar with it. And it's considered a reliable measure of cognition over time. We are looking in the study for obviously a clinically meaningful change between DELS and mDOR and placebo on this endpoint, and we'd like to see that supported by meaningful changes on the secondary endpoint, which is an endpoint of function called the independent scale in Huntington's disease, and across some of the other secondary endpoints.

Thanks, Laura. Thanks, Brad.

And the next question will come from Tazine Ahmad with Bank of America.

Hi, good afternoon, and thanks for taking my questions. On your survey, can you potentially give us a little bit of color on breadth and depth of use? Are most of the scripts coming from physicians who have had experience prescribing it before and are adding to their prescriptions for other patients? And can you just talk about the rate with which you're adding new prescribers now relative to when the launch first started? And then to go back to MDD, can you give us a little bit of color on the details around your decision to not pursue MDD? Is it that the trial would be difficult to design, or is it more that you feel you want to focus your resources on PPD? Thanks.

Yeah, good set of questions. Let me start with MDD, and then I'll provide some comment on Zerzuve, but just turn it over to Chris to elaborate further. So in terms of MDD, as we thought about the clinical trials required to generate a potential indication of the risk relative to our portfolio and our resource allocation, we think we're best off continuing to create Zerzuve as the key to unlock the blockbuster potential and PPE helping more and more moms. That's the right place for us to use our balance sheet, take risk, and spend other money, particularly after, you know, a more focused size of company. In terms of, and obviously Biogen also aligns with that decision. In terms of Zirzuve, our strategy is to drive both breadth and depth of prescribers. So our field force, our non-perishable motion, our marketing, are direct to consider. We're all out there drawing breadth and depth. Chris, you want to provide some more color?

Yeah. So, Barry, to reinforce what you said, we're seeing Zerzuvae prescribed across that breadth and depth of prescribers that you mentioned who treat PPD. Obviously, led by OBGYNs with 70% of prescribers being OBGYNs that we saw in the third quarter. And many of them are using Zerzuvae as a first-line therapy. So, of course, over time, over the course of the quarter, what we see is that Prescribers are increasing and repeat utilization of prescriptions are also increasing as physicians gain more experience with this medication. Obviously, that's enabled by the experience they have, the medication working as it did in our pivotal studies when they see it in the real-world setting, supported by the access and reimbursement ecosystem that we have that enables first-line access for this medication. So, in effect, what we have happening here is a number of different commercialization factors coming together, enabling breadth and depth of utilization across that group of physicians that we've talked about.

And we'll take our next question from Vikram Purehart with Morgan Stanley.

Hi, everyone. Thanks for taking our question. This is Morgan on for Vikram. So we have two. First, what magnitude of sales uplift do you think that the recent Salesforce expansion for Zuzube could drive? And over what period of time in terms of months or quarters do you think it'll take to see this pull through? And then our second question is, Morgan, that was actually three questions. Way to get it in there.

I'll start and I'll ask Chris to provide any comments. So just to back up, when we thought about the launch, we thought very big about the potential of PPD. We've said it a number of times. We see the blockbuster potential in Zirzuve, helping many, many women suffering with PPD. The epidemiology, the diagnosis rates, treatment rates support this, and we're already seeing tremendous use of Zirzuve frontline by many of those healthcare providers educated. So we're off to a really strong start with a third full growth. The field force is calling on targets, some of whom have been called on, some of whom have not. Those called on, we see immediate impact. Those newer ones might take one or two or three calls to see the impact. But we should be seeing some impact next quarter. And then in terms of growth, we see growth quarter to quarter here for a pretty extended period of time. I can't really provide a forecast or guidance there. But again, based upon the numbers, epidemiologically, half the women a year suffer from PPD. Less than half of those are diagnosed and half of those are treated. We're trying to change all of that, the number of treated with Zirzube, the increased diagnosis, and the increased awareness. So we see this continuing to grow for an extended period of time, quarter on quarter. As we see success, we might continue to invest in DTC, marketing, non-personal promotion, including additional Salesforce expansion if it's warranted and will drive further success.

What I would add, Barry, is that what we've learned very quickly is this is a promotionally responsive market. It's promotionally responsive to field force effort. It's promotionally responsive to non-personal efforts, which is why we're investing in both of these as we go forward. We want to certainly make sure that if there is opportunity, that we're capitalizing on that opportunity right now. And I think you hit it. We'll continue to assess the investments required to grow the market as we move forward. But again, through promotional responsiveness and what we've learned, the time is right right now to be doing the things that we're doing.

Thank you.

Thanks, Morgan.

And the next question comes from Yuri Ear with Mizuho.

Thanks for taking my questions. Yeah, so first question is, could you maybe elaborate a bit on coverage, particularly with, I guess, Medicaid reviews? I think in the last quarter you were saying that several large states were conducting reviews, just wondering how much more coverage have you gotten from Medicaid versus commercialized? And second question, would you give the number of prescriptions that were written in three queues? I might have missed it. I didn't see it in the press release. Thanks.

I'll start, and then I'll ask Chris to comment. So last quarter, we highlighted that We were going to provide shipments and revenues going forward and drop prescriptions. So we've done that. In terms of coverage, I characterize the coverage as way ahead of schedule in terms of where we are launched, both in terms of commercial, PBM, and Medicaid. But, Chris, you want to provide more color?

I mean, it's a part of our strategy, Barry. What we've historically said is that access and reimbursement is paramount to a successful launch, which is why we've worked so hard on ensuring that in this area, both with respect to commercial plans as well as Medicaid. What we've seen is that approximately 90% of all commercial Medicaid lives are now covered with a vast majority of really the policies enabling first-line access to Zuzube without burdensome prior authorizations. Again, it was a goal for us as we set out to launch this medication. I think with regard to Medicaid and the specificity of Medicaid, while we haven't given out the exact percentages of Medicaid, what we can say is the majority of Medicaid plans for which we've worked, there is a pathway to the utilization of Zirzuva again, in the sense of, you know, no prior, no onerous prior authorizations and no step at it. So regardless of whether you're a commercially insured patient or you're someone with Medicaid, you know, there's a high likelihood that not only are you able to get this medication, but you get it in the first line and you're able to do so rather affordably. So very encouraged by what we've seen so far, more work clearly to be done. And as I think the other thing that we said, uh, earlier today is that we now have three of three national PBMs. So, the wins in our sales from a market access perspective.

Okay. Thank you.

And moving on to Danielle Brill with Raymond James.

Hey, guys. This is Alex on for Danielle. Thanks for taking the question. Question on Zerzuve. Just wondering how much insight you have into the Zerzuve patient demographics I'm just curious if you have any visibility whether Zerzuve is being prescribed to mothers with a prior history of PPD or MDD, for that matter. And additionally, curious whether you're able to see a breakdown of percent of patients prescribed Zerzuve who are first-time mothers versus those having their second or third child, for example. Thanks.

Yeah, Gallup, thanks for the question. Chris, you want to start? So what I would say about what we know about patients, we actually know quite a bit. The mix of patients that we see Some do have a prior history of major depressive disorder, and a significant group of the patient population has no prior history. They're new to the experience of postpartum depression, but also say that across severity types, mild, moderate, or severe, we're seeing utilization of Zirzuve without focus on any one of those particular areas. And I think what's really important about that is it says that clinicians aren't making a determination based upon severity from a scale. They're really assessing the needs of the mother when she presents in front of them with the signs and symptoms of PPD, while also taking into consideration prior history. So what we have effectively happening here is that mothers with PPD have access to this medication, as I said. They have access with Tuzor Zubay as a first-line therapy in many cases, which is really exciting, because what it means is that there's the ability to fundamentally change the way PPD is not only thought about in terms of screening and diagnosis, but the way it's ultimately treated.

Yeah, just to round that out, I guess to take the opposite side of that, Alex, We're not seeing Ziruvae limited to prior history or not or limited to severity. It's being used across all kinds of PPD, including new mothers or mothers with, as I said, their second or third or more children, which is great.

That's the dynamic we want to see.

That's very helpful.

Thanks so much. Thanks, Alex.

And the next question comes from Joel Beattie with Baird.

Hi, thanks. Maybe a follow-up to the last question is, how is the use of SIRS-UV in patients who are already on a treatment for depression? Is that a setting for growth, and do OBGYNs feel comfortable prescribing there, or is that more a setting? Who has ever been managing the depression?

Yeah, Joel. So, what we're seeing, again, the majority of scripts, over 70%, are coming from OBGYNs, which is suggestive that As the OBGYNs do and ACOG guides them to do, they need to screen and diagnose for PPD. So we're seeing that. And as we highlighted with the previous question, we're seeing moms being prescribed Zirzube with or without prior history, irrespective of the number of the child they had, and across all ranges of severity, mild, immediate, severe, which which we shouldn't be using anyway. We are also seeing Zirzuva used as monotherapy on top of an antidepressant that a mom may have been on or reinitiated and concomitant use. So what's really good here is that we're seeing the opportunity for growth across all segments. There's not one segment that's primed for growth. It's really across all these segments. Again, that's exactly what we want to see at this point in launch.

Thanks. Thanks, Joel. And we will go to Mark Goodman with Learink.

Yes, two questions. One, Barry, on business development, are you looking outside at all for new products or should we be thinking internally developed and those products that we've talked about in the past that are preclinical and moving forward and and that's how we should think about your pipeline and then just the other question is can you talk about the inventory change in the quarter you were 5.5 weeks last quarter um where are you at the end of the third quarter and how much revenue did that you know eat into what you actually reported thanks yeah mark thanks for the questions i'll um i'll take the b you want to ask chris to talk about inventory so as as we've highlighted you know we we continue to be very intellectually curious

And to be frank, anything we've liked that we might want to bring in, others have really liked too, and it's gone for pretty significant pieces of equity or cash. So we'll continue to evaluate any potential opportunities that we believe support our business priorities and advance new therapeutic options for patients, including bringing business development in and bringing our pipeline forward. So we are open for opportunities there.

Chris, you want to take the inventory piece? So with respect to inventory today, we haven't commented on days on hand or weeks on hand for the revenue impact of inventory. But what we can say is that the strong revenue growth in Q3 was largely driven by an increase in demand and that revenue from shipped units to PPD patients increased by approximately 40% in the third quarter. And our belief is that where we stand right now, inventory levels have largely normalized off of where they were from the initial build and we're exactly where we should be. as of the third full quarter of launch.

What I'll highlight on the inventory side, as we continue... Go ahead, Mark.

No, I was going to say, didn't you say that your target was three to four weeks? I think I heard that maybe last quarter. Is that correct?

Yeah, so what I was going to say is, as we continue to see double-digit growth quarter-to-quarter, the number of units in inventory will obviously grow because to cover three or four weeks of hand, you need a bigger number. So we'll continue to see inventory grow because demand continues to grow. That three- to four-week target you highlighted is something we've highlighted in the past. Again, that's a decision that wholesalers and specialty farmers will be making.

Thanks.

Thank you.

Thank you. And that will conclude the Q&A portion of today's call. With that, I will turn it back to Barry for closing remarks.

Hey, thanks, Justin, and thanks again for all the questions and everyone for joining us this afternoon to review our results for the third quarter of 2024. I know I said it on the call, but I do want to take a moment to thank Kimi for her remarkable service to the company. Kimi's been instrumental in originating our exceptional culture, balancing top and bottom line, and really driving a grittiness and a fortitude that's part of the company now, really helping us to think about short, medium, and long-term value. So we wish Kimi the best and look forward to hearing about all her travels and adventures with Polly. In closing, we're encouraged by the strength of Zerzuve's launch momentum as a treatment for women with PPD and deliberate in our plan to sustain growth through our commercialization efforts. We're also looking forward to sharing top-line data from the Dimension Study of Dalzinamdor and people with cognitive impairment associated with Huntington's disease anticipated before the end of the year. And finally, we're making strategic decisions intended to build for short, medium, and long-term value creation. Thanks again, everyone, and have a great day.

Thank you. That does conclude today's conference. We do thank you for your participation. Have an excellent day.