Yahoo Finance Sage Therapeutics, Inc. (NASDAQ:SAGE) Q1 2024 Earnings Call Transcript
Sage Therapeutics, Inc. (NASDAQ:SAGE) Q1 2024 Earnings Call Transcript April 25, 2024
Sage Therapeutics, Inc. misses on earnings expectations. Reported EPS is $-1.8 EPS, expectations were $-1.63. Sage Therapeutics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning, and welcome to Sage Therapeutics First 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 the property of Sage Therapeutics and recording, reproduction, or transmission of this call without the expressed written consent of Sage Therapeutics is strictly prohibited. Please note that this call is being recorded. I would now like to introduce Ashley Kaplowitz, Vice President of Investor Relations and Capital Markets at Sage.
Ashley Kaplowitz: Good morning, and thank you for joining Sage Therapeutics' first quarter 2024 financial results conference call. Before we begin, I encourage everyone to go to the Investors & 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 Greene, our Chief Executive Officer, who will provide an overview of our progress during the first quarter of 2024.
Our Chief Business Officer, Chris Benecchi will provide an update on the ongoing commercialization of ZURZUVAE. We will also be joined by Laura Gault, our Chief Medical Officer; who will review development activities across our programs. We will then be joined by Kimi Iguchi, our Chief Financial Officer, who will review our financial results from the first 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'll now turn the call over to Barry.
Barry Greene: Thanks, Ashley, and thank you everyone for joining us this morning. As we progress through 2024, we are singularly focused on addressing unmet needs in brain health. And while the science is extremely challenging, we remain motivated toward a common goal improving human health. As you may have seen last week we announced negative results from our PRECEDENT study in the dalzanemdor program and participants with mild cognitive impairment related to Parkinson's disease. We're deeply disappointed for patients and their families. As we know mild cognitive impairment in Parkinson's disease can have a devastating impact on an individual life. We continue to believe that these results are not necessarily predictive of the results in our ongoing studies.
It's important to remember that all cognitive impairment is common across Huntington's disease and Alzheimer's disease. The underlying pathophysiology and symptomatology of these diseases are very distinct. We look forward to data across the dalzanemdor program expected throughout 2024 as well as top-line data from our kinetic 2 study in essential tremor expected mid-2024. I'd now like to focus on a very encouraging area of opportunity for Sage and for women with PPD. You'll soon hear from Chris, the launch of ZURZUVAE is off to a strong start as is reflected by our first full quarter performance. I'm inspired by the positive anecdotes and success stories we are starting to hear from women with PPD who have been treated since launch. The impact of ZURZUVAE on these moms and their families is profound and it's energizing all of us.
We continue to believe ZURZUVAE is the key to unlocking the blockbuster potential of PPD enabling us to help many women suffering from this devastating disease. While early, we're beginning to see signs of practice patterns changing particularly among OB/GYNs. With approved oral treatment specifically for PPD, we believe healthcare prescribers have started to shift from suspect and refer to screen diagnose and treat. I'll highlight a few of the encouraging signals we're seeing the first fourth quarter of launch. Demand in PPD has been strong and continues to grow. Interest among healthcare prescribers with whom we've engaged or who have learned about ZURZUVAE has been high, evidenced by ZURZUVAE being prescribed for women with PPD across a wide range of health care prescribers.
We're also highly encouraged by the progress we made with commercial and government payers. Payers of these developed policies and for the majority of plans to-date we're not seeing onerous prior offs or step edit to PPD. Our teams in the field remain busy engaging with critical stakeholders, educating prescribers and contributing to the recognition of PPD as an urgent medical condition. We believe the PPD opportunity is significant and have thought broadly about the initiatives needed to achieve commercialization success with ZURZUVAE. Our strategy is to launch with a focused approach and scale as we see success. As the early signs of launch have been encouraging, we've been increasing our marketing and non-personal promotion resources. If the positive trends continue, we believe additional scaling this year makes sense.
Our goals are clear, established ZURZUVAE as the first-line therapy and standard of care for women with PPD and advance our brain health pipeline. Our work is more important than ever. In the countless lives we have potential to positively impact continues to serve as our North Star. With that, I'll turn the call over to Chris to provide additional context on the ongoing commercialization of ZURZUVAE. Chris?
Chris Benecchi: Thanks Barry. The ZURZUVAE launch is off to a strong start and exceeding expectations. We've made important progress during the first full quarter of commercial availability and I'm excited to share our recent launch accomplishments and ongoing initiatives. As we've engaged with health care professionals, patient advocacy organizations payers and policymakers, our mission is clear there is a desperate need in critical gaps in care for women with PPD. Sage is committed to working with all stakeholders with the goal of rapid affordable access to ZURZUVAE for women with PPD as there often can be incredibly hard breaking and unintended consequences for the mother, her baby, her family and future generations when PPD is not adequately treated.
It is critical to diagnose, treat and provide care and support for all women with PPD. We're beginning to see the initial signs of hope and progress in the first few months following the launch of ZURZUVAE. As Barry noted, we are starting to see signs of practice patterns changing particularly among the OB/GYN community. In a short period of time, we believe we are already beginning to see PPD move from a disease where some HCPs would suspect PPD and then refer the patient for evaluation and treatment to a disease that HCPs are confident to diagnose and treat. I'm proud to be a part of this important movement and grateful for the countless agents working to accelerate our impact in collaboration with our partner Biogen. As we've said previously, our goal is to establish ZURZUVAE as the first-line therapy and standard of care for women with PPD.
We believe we are already making meaningful progress. Before I dive into the specifics of early launch performance, it's an important reminder to note that IQVIA data does not reflect all shipments of ZURZUVAE. The key takeaway is that right now there is variability in the data and it may not provide a complete picture of ZURZUVAE demand in PPD. Even in the future we see potential for variability in the data. With that said, I'm now excited to share more detail on the encouraging progress seen during our first full quarter of launch. ZURZUVAE generated $12.4 million in total revenue, of which Sage recognized $6.2 million in collaboration revenue during the first quarter of 2024. In the first quarter there were more than 1,200 prescriptions written.
The growth in prescriptions this quarter was strong and reflective of the interest and enthusiasm we're seeing for Zurzuvae in the treatment of women with PPD. While we believe the number of prescriptions is an important early indicator in the coming quarters as the launch matures we plan to focus primarily on shipments and collaboration revenue. We were pleased to see prescribing across a wide breadth of HCPs who treat PPD with the largest percentage of prescriptions coming from OB/GYNs. OB/GYNs are on the front-line of care for women with PPD and are often the first opportunity for an HCP to recognize symptoms, diagnose and treat. As we know the patient journey can vary greatly for women suffering from this disease. We also continue to expect growth in prescriptions from psychiatrists and PCPs for also actively diagnosing and treating women with PPD.
Further we are encouraged that the breadth of adoption of ZURZUVAE in the treatment of PPD continues to grow with the number of new ZURZUVAE prescribers increasing each month during the first quarter. We are also beginning to see signs of depth with repeat prescribing. A growing number of HCPs have already written multiple prescriptions for ZURZUVAE. Based on early claims data we see that many ZURZUVAE patients appear to be receiving ZURZUVAE as first-line therapy for PPD. As of the end of the first quarter more than 700 prescriptions were shipped and delivered to patients. Our goal is to get ZURZUVAE to women with PPD who are prescribed the medication as quickly as possible and we continue to make improvements intended to help optimize the experience for HCPs and patients.
This includes educating HCPs on the specialty pharmacy system as well as operational improvements designed to expedite prescription processing. We expect the process will get better and quicker through these efforts and as formulary coverage decisions were made. Working towards broad and equitable access for women with PPD continues to be a key priority and we know access is critical for a successful launch. Conversations continue to advance at an accelerated pace across national regional and government payers. Notably, two of three national PBMs have published policies for ZURZUVAE and PPD without step therapy or complex prior authorization and we're progressing in conversations with the third national PBM. We're encouraged by similar trends with national and regional insurers.
Today, we have over 65% of commercial lives covered for ZURZUVAE and PPD, with the majority having no step therapy or complex prior authorization and we expect this number to increase over the coming months as we continue engaging with payers who have not yet published policies. With respect to Medicaid, we are pleased to see almost half of the states including several of the largest states, have completed reviews much more quickly than is typically seen for product launch. For Medicaid policies continue to develop, most states that have made a decision to-date are covering ZURZUVAE for women with PPD in line with our expectation of no step therapy and no complex prior authorizations. Where Medicaid policies are in place, we are seeing most women with PPD access ZURZUVAE at a nominal cost or zero co-pay.
We expect the majority of Medicaid coverage decisions in PPD by the end of the year. We believe the strong payer progress we and Biogen have seen to-date is the result of our active and long-standing engagement with payers, our knowledge of the PPD market and the strong value proposition for ZURZUVAE in the treatment of women with PPD. It is also critical that we continue to work to enable access to all women with PPD who are prescribed treatment regardless of financial means and coverage for our patient support and financial assistance programs for those who are eligible. While we did see use of these programs, the majority of shipments were covered by commercial and government payers in the first quarter, even as coverage policies were being developed.
We anticipate that a formulary coverage decisions continue to be favorable and as the SP process is further optimized, the need for the functionally uninsured program will decrease over time. Lastly, I'm excited to share some color on our ongoing marketing efforts. Based on our experience, we believe this is a highly promotionally sensitive market, which benefits from the surround sound of omnichannel efforts. We continue to see enthusiasm from HCPs to learn more about ZURZUVAE and have expanded commercialization efforts across stakeholders with the gold at ZURZUVAE top of mind as first choice treatment for women with PPD. For example, we had executed HCP peer-to-peer live and virtual branded educational platforms, attracting wide attendance across multiple specialties to treat women with PPD.
We also launched our fully operational zurzuvae.com healthcare professional website at the end of February in conjunction with several media drivers encompassing paid search, programmatic displays, banner ads and HCP targeted e-mail. Recently, we launched the zurzuvae.com full consumer website where women with PPD can find branded education, support resources and opt-in to receive proactive ZURZUVAE communications. We're highly encouraged by what we're seeing so far and the launch has reaffirmed our belief that ZURZUVAE is an important treatment option to address the urgent and profound unmet need for women living with PPD. We want to build on the momentum we have seen in the first full quarter of launch to reach even more of the women with PPD who need ZURZUVAE.
We know we have more work to do to get there. We know that women living with the disease cannot afford to wait and now with ZURZUVAE available, the treatment option they should not have to. I look forward to sharing additional details in the coming quarters. With that, I'll turn it over to Laura for a more detailed discussion of our recent pipeline progress. Laura?
Laura Gault: Thanks, Chris, and good morning, everyone. As a clinician, I've seen first-hand the challenges that women with PPD and their family space. And so it is gratifying to see the impact we are already making for these women. I'm excited to be part of such a significant moment in maternal health as we continue to execute on the launches of ZURZUVAE and PPD. I'll now turn to Dalzanemdor, our wholly-owned first-in-class NMDA receptor positive allosteric modulator or PAM as a potential oral therapy for certain cognitive disorders associated with neurodegenerative disease. Last week we reported top line data from the PRECEDENT study, a double-blind placebo-controlled Phase II study in people with mild cognitive impairment or MCI in Parkinson's disease.
After six days of treatment, patients who received Dalzanemdor does not demonstrate a seismically significant difference from baseline compared to placebo on the primary endpoint the wait for coding test score at day 42. Based on the data, we do not plan any further development of Dalzanemdor in Parkinson's disease. As we said on our call last week, it is important to remember that these results are not necessarily predictive of the results we may see in our ongoing Huntington's disease and Alzheimer’s disease studies, given the very distinct underlying pathophysiology and symptomatology of these diseases. While we're disappointed by the results of the PRECEDENT study, we continue to believe in the potential of Dalzanemdor in the other indications we are studying and look forward to the various data readouts anticipated later this year.
Specifically, in mid-2024, we expect to report top line data from the SURVEYOR study, a Phase II study designed to generated evidence using cognitive performance to real-world functioning and people living with HD. In May 2024, we expect to report top line data from the LIGHTWAVE study, a double-blind placebo-controlled Phase II study of Dalzanemdor with MCI and mild dementia due to Alzheimer's disease. We also expect to report top line data in late 2024 from the DIMENSION study, a double-blind placebo-controlled Phase II study designed to evaluate the efficacy of Dalzanemdor and cognitive impairment in HD over a three months treatment period. As we've described previously, we want to underscore that the primary objective of the SURVEYOR study is to understand the magnitude of the cognitive impairment in HD relative to healthy individuals.
A key secondary objective is to advance our understanding of the effects of Dalzanemdor on cognition and function and participants with HD. It's important to emphasize that the SURVEYOR study is not designed nor powered to show statistically significant differences between Dalzanemdor and placebo. These data are meant to complement the DIMENSION study by generating evidence to better define clinically meaningful change and the relationship between changes in cognition and function. We look forward to sharing these results with you as they become available. I'll now turn to SAGE-324, an investigational positive allosteric modulator of GABAA receptors with potential in the treatment of essential tremor or ET. We are developing SAGE-324 in collaboration with Biogen.
There has been a lack of innovation in treatment for ET with no new approved treatments in more than 50 years. Essential tremor can have a significant impact on an individual's ability to perform everyday task. Developing new treatment options that could help an individual maintain his or her quality of life, daily functioning, and independence is critical. Following the encouraging data from our completed KINETIC study, which demonstrated statistically significant reduction from baseline in upper limb tremor amplitude. We look forward to seeing the data from the KINETIC 2 study. This study is a three-month study designed to identify a dose with a safety and tolerability profile that is suitable for chronic dosing and further development of SAGE-324 as a potential treatment for ET.
We look forward to sharing these data expected in mid-2024. And lastly I'd like to reiterate our excitement around our earlier-stage pipeline including SAGE-319, our extra-synaptic preferring GABAA receptor PAM and SAGE-421 our NMDA receptor PAM. We look forward to sharing more about these programs as they progress. With that I'll turn the call over for a review of our financials. Kimi?
Kimi Iguchi: Thanks Laura. Our financial results for the first quarter of 2024 are detailed in our press release issued this morning. Before diving into the financials I want to share my excitement around the launch of ZURZUVAE and the opportunity to help so many women suffering with PPD. We and Biogen are mobilized with the goal of capitalizing on early success and jointly supporting the launch of ZURZUVAE in the United States. Commercialization of ZURZUVAE remains a key priority for us as we work to expand access in the treatment of women with PPD and build momentum. We also plan to continue to make disciplined pipeline investments backed by data to support our goal of near, mid, and long-term value creation. I'll now turn to the financial.
Today we announce collaboration revenue in Q1 from sales of new ZURZUVAE of $6.2 million. Our reported collaboration revenue is 50% of the net revenues Biogen reports for ZURZUVAE. As a reminder, net revenues are recorded by Biogen when ZURZUVAE is shipped to the wholesalers and are not calculated based on the number of shipments to patients or prescriptions written for ZURZUVAE. Net revenues for the first quarter can be attributed to a combination of wholesalers purchasing ZURZUVAE to sell orders as well as building inventory in anticipation of increasing demand for ZURZUVAE in the treatment of women with PPD. We're not guiding today on gross-to-net, other than to say, given the fact that ZURZUVAE is a novel medication and the only oral treatment specifically approved for women with PPD, we do not anticipate the type of discounting we see for other brand CNS agent.
Turning to operating expenses, R&D expenses were $71.7 million in the first quarter of 2024. SG&A expenses were $52.6 million in the first quarter of 2024. The decrease in both R&D and SG&A expenses, compared to the first quarter of last year was primarily related to decrease headcount, overhead in technology as well as decreased spend on the early-stage pipeline, the renal and clinical trials and manufacturing, primarily as a result of the Q3 2023 restructuring. As we previously stated, we expect operating expenses to decrease in 2024 relative to 2023. Our net loss for the first quarter of 2024 was $108.5 million. And we ended the first quarter of 2024 with cash, cash equivalents and marketable securities of approximately $717 million. We are reaffirming that based on our current operating plan, we anticipate cash, cash equivalents and marketable securities anticipated funding from ongoing collaborations and estimated revenues will support operations, into 2026.
As we said on our last earnings call, we do not anticipate receipt of any additional milestone payments from collaborations in the remainder of 2024. Before I turn the call over for Q&A, I want to reiterate that we remain dedicated to progressing, our mission of Better Brain Health for patients. Further, we believe we have a strong financial foundation, as we continue to progress through our catalyst-rich year for Sage. We look forward to providing updates on our progress in the coming quarters. I'll now turn it over to Ashley, to handle Q&A with the operator. Ashley?
Ashley Kaplowitz: Thanks Kimi. I'll ask that you limit yourself to one question. If you have additional question, feel free to return to the queue. Now, I'll turn it over to the operator, to handle Q&A. Operator?
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