Sage Therapeutics, Inc.
Q1 2021 Earnings Call Transcript

Published: 4 May 2021

[Operator:]

Good morning. Welcome to Sage Therapeutics First Quarter 2021 Financial Results Conference Call. . This call is being webcast live on the investor and media section of Sage's website at sagerx.com. This call is 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 this call is being recorded. I would now like to introduce Jeff Boyle, Vice President of Investor Relations at Sage.

[Jeff Boyle:]

Good morning, and thank you for joining Sage Therapeutics' First Quarter 2021 Financial Results Conference Call. Before we begin, I encourage everyone to go to the investor and media section of our website at sagerx.com, where you can find the press release related to today's call as well as the slides that contain supplemental details. I'll point out that we will be making forward-looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. Please consult the risk factors discussed in today's press release and in our SEC filings for additional details. We'll begin the call with prepared remarks by Barry Greene, our Chief Executive Officer, who will provide an overview of accomplishments during the quarter and some general context. Barry will then be joined by Steve Kanes, our Chief Medical Officer, who will review recent clinical progress; and Kimi Iguchi, our Chief Financial Officer, who will review first quarter financials and discuss financial guidance. We will be joined for the Q&A session of the call by our Chief Research Officer, Jim Doherty. And with that, I'll turn the call over to Barry. Barry?

[Barry Greene:]

Thanks, Jeff, and thank you, everyone, for joining us this morning. As we pass the 1-year mark of the unprecedented public health crisis created by the COVID-19 pandemic, I'm extremely optimistic that we're turning the corner in containing this devastating impact the virus has had on society. However, and this is critically important, there is a hidden pandemic, the brain health pandemic. And while more and more is coming out about this pandemic, there's a long way to go. Indeed, as we know, during the COVID pandemic, we've seen rates of depression in the U.S. alone increased fourfold, while suicidality among adults has nearly doubled. These will likely affect the world for years to come, broadening the unmet need and further exposing the urgent need for novel brain health medicines. And I'm very proud of the ongoing efforts at Sage to make medicines that address the very real crisis in brain health. I'm pleased to report the significant advances we made over the last quarter across our depression, neuropsychiatry and neurology franchises as we continue our mission to become the leading brain health company and a top-tier biopharmaceutical company. I believe the progress we made in the first quarter of 2021 sets up for short, medium and long-term value creation opportunities as we further advance our deep Sage invented organic pipeline. At Sage, we believe we have the potential to transform the lives of millions of people with brain health disorders, who are in need of new innovative therapies by modulating the GABA and NMDA pathways. Now by understanding endogenous receptors, applying our unique chemical innovation to neuroactive steroids, including oxysterol chemistries, we have created novel therapeutics designed to modulate these pathways in highly specific and highly tailored ways.

[Stephen Kanes:]

Thanks, Barry, and good morning, everyone. We've made great progress across all 3 franchises to date, including positive data from our zuranolone and SAGE-324 program, as Barry mentioned, as well as positive results with SAGE-718 and the PARADIGM study. Since our path towards HD as the initial indications and supported further by the results of the PARADIGM study is the news of the day, I'd like to spend the majority of the next several minutes reviewing the progress in our neuropsychiatry franchise and our vision for further development of SAGE-718, our NMDA receptor PAM in development as a potential oral therapy for disorders where cognition is one of the main drivers of disability, including the very encouraging results from PARADIGM we're announcing today. Before I get to the PARADIGM results, and given the broad spectrum of potential indications for our NMDA program, we thought it would be really important to first level set and ensure that we clearly define what we're talking about when we use the word cognition. Cognition can be defined as the sum of all of our mental abilities, a fairly abstract definition, but 2 key domains of cognition are executive function and learning and memory. Executive function is the conductor of the brain's orchestra. It controls our ability to plan, make decisions and also adjust to the challenges or new situations as they arise. It's also the core skill that allows us to react and adapt in real-time to navigate our constantly changing and evolving environment. Executive functioning touches so many aspects of what we do on a daily basis, that it becomes very difficult to operate independently as executive function declines for example, in Huntington's and Parkinson's diseases. You're probably also familiar with the concept of learning and memory, which is the ability to take in information, file it away in our brain's internal organization system and then retrieve it at the appropriate time and place. What we don't expect to see, based on our mechanism of action, are any impact positive or deleterious on performance metrics like attention and psychomotor speed. So what's so exciting about SAGE-718 is that beginning with healthy volunteers and then patients with Huntington's disease, we were looking for and saw improvements in executive function. And now in patients with Parkinson's disease, SAGE-718 has showed a positive impact on multiple domains of cognition, including executive function and learning and memory, while not altering simple attention or reaction time, which are performance but not true cognitive attributes typically enhanced by amphetamines.

[Kimi Iguchi:]

Thanks, Steve. Let me start by congratulating the Sage team on another great quarter as a result of their commitment, determination and execution. We're off to a great start in 2021, reporting positive data from 3 trials with another 7, including 3 pivotal trials on track to read out later this year. As a reminder, this is the first full quarter of our transformative collaboration with Biogen for zuranolone and SAGE-324. This collaboration includes 50-50 cost and profit sharing for zuranolone in SAGE-324 in the United States. By design, the collaboration provides financial and operational flexibility, enabling us to potentially expand and accelerate not only our near-term development of zuranolone in SAGE-324, but also increase investment in our wholly owned products and accelerate our pipeline. So now let me walk through the highlights of our first quarter financials and then close on some thoughts on our financial guidance. Revenues were $1.6 million in the first quarter from the sales of ZULRESSO. That was compared to $2.3 million for the same period of 2020. We remain committed to moms, their families and all those impacted by PPD. Our targeted commercial efforts aim to help moms with PPD who may benefit from treatment with ZULRESSO gain access. Selling, general and administrative expenses were $40 million in the first quarter compared to $70 million for the same period of 2020. The decrease in SG&A expenses was primarily due to the restructuring the company underwent during the second quarter of 2020. Research and development expenses were $58 million in the first quarter, that was compared to $64 million for the same period of 2020. The decrease was primarily a result of the $22 million reimbursement by Biogen related to the ongoing zuranolone SAGE-324 clinical programs and offset by an increase in spending on our WATERFALL and CORAL study. Going forward, and prior to launch, we expect R&D and SG&A expenses related to zuranolone in SAGE-324 will represent approximately 50% of total collaboration program costs regardless of whether SAGE or Biogen performs the work. Essentially, this sharing of expenses establishes a new baseline for Sage, representing a lower net investment for spend on zuranolone in SAGE-324. Collaboration spend will increase as the programs advance, but will continue to be shared with Biogen 50-50 in the U.S. Additionally, this allows us to further invest in our wholly owned pipeline including SAGE-718 and our discovery engine. We reported a net loss of $96 million for the first quarter of 2021. That was compared to $127 million for the comparable period of 2020. Finally, we continue to maintain a solid financial foundation, ending the first quarter of the year with $2 billion in cash, cash equivalents and marketable securities. We do not expect any milestone payments from collaborations during 2021 and anticipate ending the year with a cash balance of more than $1.7 billion. The cash on hand in addition to the ongoing cost-sharing with Biogen, will allow us to work to expand and accelerate the pipeline and continue to invest thoughtfully, sequencing assets we believe will create near, mid and long-term value creation opportunities for our stakeholders, with the potential, if we're successful, to positively impact more than 450 million people worldwide. I'll now turn it over to Jeff to handle Q&A with the operator. Jeff?

[Jeff Boyle:]

Thanks, Kimi. Before I turn it over to the operator, I'll ask that you limit yourself to 1 question. If you have an additional question, feel free to return to the queue. Now I'll turn it over to the operator. Operator?

[Operator:]

. Our first question will come from the line of Salveen Richter from Goldman Sachs.

[Andrea Tan:]

This is Andrea on for Salveen. Maybe just 1 on this additional 4-week dosing cohort for the PARADIGM study, just if you could provide a little bit more color on what you're looking to understand there.

[Barry Greene:]

Yes. Andrea, I'll start out and then turn it over to Jim for additional detail. So you're asking about SAGE-718. We're really excited by the neuropsych franchise and SAGE-718, our first sort of NMDA receptor modulator in clinical studies. And as we talked about on the call, we're very excited by the forward progress into Huntington's disease as our initial indication and the continued efficacy and safety profile we're seeing with SAGE-718 through the LUMINARY data that we reported out today. So all in all, we have a very robust package. In doing drug development, we're looking to learn more and more as we advance SAGE-718, and maybe Jim can talk about some specifics with the 4-week program or 4-week study.

[Jim Doherty:]

Yes. Absolutely. Thanks, Barry. Yes. So of course, as Barry said, we're very excited about the potential for SAGE-718 and for the NMDA platform in general. And I think one of the things you're hearing today from Steve is that we're seeing consistent types of responses across multiple patient populations now. So some of the design in the study for PARADIGM was to keep things as close as possible to what we had done previously. So we're only varying patient population. And so because of that, the design for PARADIGM was quite similar to what we had done before a 2-week dosing period. Given the results that we're seeing today and given the investment that we've made to get the trial to this point, as we've done in the past, we're trying to be efficient here and continue to leverage our learnings and collect as much information as possible. And so moving to a part B where patients that are already teed up to enter into the trial to give us some information on slightly longer dosing interval is going to advance our understanding of the whole program.

[Operator:]

Our next question comes from the line of Ritu Baral from Cowen.

[Ritu Baral:]

I wanted to get your color on helping us inform the upcoming WATERFALL safety data. Specifically, I've had a lot of conversations with clients about what is acceptable sedation, and what is acceptable somnolence. Just going back to MOUNTAIN data, where you saw 6% to 7%, I believe, rates of each. And given the higher dose, how should we think about what's acceptable? And is there a threshold, a written threshold in the public domain by FDA on what might complicate actual approval either on sedation or somnolence?

[Barry Greene:]

Yes, Ritu. Let me start out with some context, and then I'll ask Steve to talk about what we're looking for out of WATERFALL more specifically and why we think zuranolone has the potential to be a transformative medicine. So I'll remind you that we have studied zuranolone in over 3,000 subjects and patients. And to date, the profile we've seen is extraordinarily consistent. We've seen rapid onset of action in 3 to 4 days, patients report they're feeling better. As we reported on the SHORELINE data, and I won't repeat everything Steve said, we've seen remarkable efficacy 2 weeks, both 30 and 50, with most patients requiring only 1 or 2, 2-week doses in the entire year. And the safety profile has been consistent also at dose and dose levels. What's important is not necessarily specific numbers of adverse events, it's whether patients stay on the drug or not. And because of the unique profile here, literally 2 weeks, maybe 2 to 4 weeks of dosing, we've seen remarkable compliance. And what we're looking for here is a drug that patients will take for 2 weeks, so they get better, faster and stay better. And what we said, and just to be clear, if we hit the primary endpoint, given the different benefit risk of zuranolone, over 35 years' worth of antidepressants, we have a very important medicine in the LANDSCAPE. Let me ask Steve to turn -- to provide a little bit more color.

[Stephen Kanes:]

Yes. So Ritu, thanks for the question. So first and foremost, we're really confident in the profile, every bit of information that we get from the trials really points to a unique profile, both in terms of benefit as well as in terms of what the adverse event profile might look like. I remind you and your clients on a few things. Number one, somnolence is something that is often desirable for patients with depression, many people have sleep disruptions. And we believe that's what's leading to the much smaller dropout rate, very low dropout rate from our clinical trials. We do exit interviews and patients' perceptions are that, that's not something that would potentially limit their use. Remember, patients are taking the medication for 2 weeks in any case, and often this can be beneficial. Many of these people are taking additional meds to help them sleep. The second is the numbers that we're reporting are actually comparable, if not better, than many drugs that are used right now to treat depression. And so I'd advise people to take a look at the labels for antidepressants that are in common use. And the reports that we have for either somnolence, sedation and so forth, are well within the parameters of drugs that are approved for the treatment of depression, even standard antidepressants. So right now the profile is one that we know it's going to be beneficial for patients. We're looking forward to the WATERFALL data, but we're very confident in terms of the overall profile.

[Operator:]

Our next question will come from the line of Tazeen Ahmad from Bank of America.

[Tazeen Ahmad:]

I guess as it relates to the WATERFALL study, in terms of durability, just based on the work that we've done, it seems like on day 15, you should have good data. As we look beyond that to maybe longer term, say, 42, things of that nature, I guess, first of all, would you have that information available at the top line? And how important is that based on your doctor feedback to have a longer durability of response for these acute treatment regimens?

[Barry Greene:]

Yes, Tazeen, thanks for the question. Let me -- I'll start out and turn it to Steve to provide a little bit more. So we're very excited and confident in our soon envelope opening for WATERFALL. We're looking forward to the data. And let me just be very clear, the primary endpoint in 15 days having the statistical significance is really what we're looking for this drug. There's nothing out there that gets patients better, faster and keeps them better. Of course, we're looking at all the secondary endpoints and hopeful that they show promise. For day 42, what we're looking for is consistency of effect in the drug arm, not necessarily versus placebo. But again, a p-value on the primary end point is the most important aspect of WATERFALL. Steve, do you want to provide a little bit more?

[Stephen Kanes:]

Sure. For many years, I was practicing psychiatrist in treating patients with depression. And the most important thing you look for is consistency of response in understanding exactly what's going to happen. So what we look for is an understanding of what to expect after somebody takes a medication. The data we've seen to date has been very consistent. Majority of the patients really remain well. They don't have an immediate bounce back after the 2 weeks of dosing as an initial concern. And in fact, even in the MOUNTAIN study, patients remained well and very few had recurrences and symptoms over the course of 6 months. So while absolutely critical our primary endpoint at day 15, what we want to understand is what proportion of patients stay well during the follow-up period as well as what proportion of patients may require retreatment. Those are data that we're getting for WATERFALL. And what we've seen is something we've talked about before, more than 70% of patients need no more than 2 treatments in a year. That's transformative for patients, and it's absolutely essential to understand that. We're talking about 4 weeks of treatment over the course of a year, 48 weeks without additional need for therapy. That's what's so unique about 217, and that's what we're looking for in both the WATERFALL data as well as the entire LANDSCAPE program. And so it's a profile that we think is going to be really, really important for patients once we are successful.

[Tazeen Ahmad:]

Okay. And we will see that level of data at the top line?

[Stephen Kanes:]

You can look to our prior releases to give you a sense of the kinds of information that we will have in the release. But as Barry said, the things that we're focusing on are the primary endpoint as well as the key secondaries very similar to what we've done for other acute studies.

[Operator:]

Our next question will come from the line of Yasmeen Rahimi from Piper Sandler.

[Yasmeen Rahimi:]

Congrats on the great progress in carrying data from PARADIGM for us. One question for you. I just wanted to understand maybe the thoughts behind really increasing the SHORELINE to enroll an additional 500 patients in CORAL. Is this expansion into the open-label based on communication that you had with regulators? If you could just put a little bit color around what prompted the interest to increase the numbers on the open-label arm would be very helpful for us.

[Barry Greene:]

Thanks for the question, Yasmeen. I actually very much appreciate the congratulatory note on the positive data. We're very excited by the emerging data for SAGE-718, and we're thrilled we're moving that forward so rapidly into Huntington's disease, supported by the data presented today in Parkinson's disease. So back to your question about SHORELINE. Look, we wanted an opportunity, first and foremost, as patients rolled off of clinical studies, CORAL, that should those patients continue to need another 2-week course of dosing. And you'll note in Steve's prepared comments that very few patients require additional doses, but the good news is those that did, responded yet again. So we've got a very promising benefit risk profile with zuranolone and wanted the opportunity for other patients to benefit by zuranolone, particularly those rolling off of CORAL and other patients out there. Jim, you want to offer other thoughts?

[Jim Doherty:]

I think that covers most of it, Barry. But the other thing I would add is to say there are -- with an integrated set of trials in the LANDSCAPE program, to Barry's point, as patients are rolling off of CORAL, there's the opportunity for them to participate in SHORELINE. And we are seeing quite a lot of value in our ongoing naturalistic study for SHORELINE. And our view of it is that it's going to continue to provide useful information for what we believe is going to be a transformative therapeutic approach. And so we were looking at all opportunities to gather more information on zuranolone, and SHORELINE will very likely continue to deliver very important data to the overall program.

[Barry Greene:]

Yes. Great comment, Jim. And just to put a fine point, Yasmeen, there was no specific regulatory requests or no regulatory requests at all to increase end. This was a Sage decision, as Jim highlighted, to provide opportunity to get more data and benefit patients.

[Operator:]

Our next question will come from the line of Cory Kasimov from JPMorgan.

[Turner Kufe:]

This is Turner on for Cory. So just one on 718. Can you provide any additional granularity on what sort of improvement you saw in cognition? Maybe just how it stacked up relative to your expectations, but also kind of relative to what we've seen in Huntington's disease since that seems like the lead indication going forward?

[Barry Greene:]

Yes. Thanks, Turner for the question. And let me ask Steve to address that.

[Stephen Kanes:]

Sure. What we're looking for as we move into other areas is to both look at not just executive function but learning and memory. So what we saw as we expanded the domains of cognition we looked at in these patients is not only improvements in executive function, but also learning and memory. And we think that's really important for 2 reasons. One, different patient populations have different challenges. So Huntington's is executive function primarily, and that was our hypothesis going in. In Parkinson's, there's both executive function, challenges as well as dementia, so learning and memory. And we think that will also lead into our broader understanding as we move into LUMINARY and Alzheimer's where the primary challenges are learning and memory. So as we learn more and more about the 718, the mechanism and its utility, that will really inform how we move forward in both the Huntington's as well as the other indications.

[Operator:]

Our next question will come from the line of Laura Chico from Wedbush.

[Laura Chico:]

I just wanted to circle back on the SHORELINE question. So you said FDA did not ask you for any additional data, but I guess I'm trying to understand, is there still a plan to submit a filing for the 30-milligram dose of zuranolone? And I guess, just back of the envelope, it would seem like with the expansion of the SHORELINE cohort and then enrolling the CORAL patients, there's probably over 1,000 subjects that would have been on the 50 mg dose at a longer-term once the study is complete. So just trying to understand how the 30-milligram dose fits into everything in terms of the regulatory strategy.

[Barry Greene:]

Yes. Laura, thanks for the question. And let me provide some broad context and ask Jim to provide a little bit more. So your math is close. We will have a significant end when submitting the package to the FDA should WATERFALL be successful and the ongoing discussions with the FDA successful. Just what I said earlier was there was no specific request by the agency to increase end, and the SHORELINE expansion was to provide greater opportunity for patients and more data. We also, as you can imagine, we're getting tremendous requests from investigators, KOLs and, of course, patients in desperate need. Before our studies read out, we can turn out the expanded access program. With most drugs, multiple doses are good to have. So we do plan on talking to the agency, both about 50- and a 30-milligram dose. But Jim, can you provide a little bit more?

[Jim Doherty:]

Sure. Laura, I think Barry said it well, the way we think about this is that the entire LANDSCAPE program is designed to produce a package of information about zuranolone. So absolutely, all of the data on zuranolone, including our extensive data set on the 30-milligram dose will be included in the filing. And yes, that isn't really anything out of the ordinary. The discussion will be around the drug itself and all of the data will be included in any potential filing.

[Operator:]

Our next question will come from the line of Akash Tewari from Wolfe Research.

[Lie M&A:]

This is Lie on for Akash. Recently, a practice mentioned they couldn't claim MDD treatment if they only choose patients for 15 days. So they also look at the day 28 data for their MDD drug candidate. In your case, we have the WATERFALL secondary endpoint at the 48 -- sorry, 42. And how important is that day 42 data for zuranolone filing? And how did FDA view the open-label SHORELINE study and supporting evidence for the durability of zuranolone? In addition, we also noticed the WATERFALL trial has completed enrollment of 543 subjects with only 2 arms and about like 15% to 20% dropout rate. Is it fair to think WATERFALL trial has about 80 -- sorry, about 90% power to detect 2.4 to 2.5 HAM-D differences to placebo? And lastly, what's the scale of HAM-D 17 tend to increase if we look at patients with HAM-D cutoff of 20 versus 24 versus 28?

[Barry Greene:]

Yes. I think there are a number of questions in there. So let me provide a little bit of context and ask Steve to comment. Maybe Jim might want to comment. So look, again, we're very excited by the WATERFALL readout. As we talked about previously, we had the opportunity to increase the end twice. Unfortunately, we are in a brain health pandemic. And as I commented on the call, the rates of depression are 3-4 fold in the United States alone. So unfortunately, there's a lot of people suffering from MDD out there at rates greater than we had prior to the pandemic lockdown. So that increased end provides significant powering on the primary endpoint. What we're looking for is statistical significance at day 15. That -- this is such unique profile the benefit risk here differentiates from, again, 35 years of drugs being developed in the area, and we're very excited by that. Steve, do you want to provide a little bit more?

[Stephen Kanes:]

Sure. The study itself is designed to show differences at day 15. That's the reason why we have breakthrough therapy designation, the ability to get patients better within 2 weeks is what got us to look at the FDA interested in this program. It's what's unique about the profile. And we've seen statistical significance and clinically meaningful differences as early as day 3, day 8, day 15, and those benefits are maintained. The only real way to assess what that looks like in terms of pattern for patients that have gotten better is to use SHORELINE data. And again, these are -- this is an overall program that was agreed with the FDA when we had breakthrough, where we actually naturalistically see what happens to patients when they're treated upfront and then followed over the course of a year for need for retreatment. And what we've seen is that patients require -- 70% of the patients plus require no more than two treatments in a year, about half of them only required 1 treatment. So this gives us a lot of information about how a drug that works very rapidly would be used in real life. And it's a very unique overall profile. So for our primary absolutely essential to day 15, we're looking to see essentially patients being -- that have improved, remain well. The real data for that aspect really comes from SHORELINE, and we have a very substantial and now growing database around that, and it continues to support the idea of episodic treatment.

[Operator:]

. Our next question will come from the line of Jay Olson from Oppenheimer.

[Jay Olson:]

I'm curious about the SAGE-324, I think you're leading that development program with Biogen. Can you just talk about the indications you're planning to pursue and whether or not you plan to study 324 in Parkinson's disease or epilepsy patients?

[Barry Greene:]

Yes, Jay, thanks for the question. So look, we're really excited about treating for a neurology franchise. We believe it's a novel potential treatment for chronic neurological conditions, and we thought very differently about movement disorders. So if this is successful in the initial indication of essential tremor, it will be the first new treatment in over 50 years. So we're really excited about that. As I mentioned, we're very confident that in the Phase IIb, we'll reach a dose and frequency that is a profile to take into Phase III and then a commercializable profile. With that profile and talking to our collaborators at Biogen, we'll map out additional indications, but we do believe that there are a number of additional indications we can pursue with SAGE-324 once we're over that next step of dose and frequency in essential tremor. Steve, anything else to offer?

[Stephen Kanes:]

Yes. I think what I'd say is as we dial in what profile we're looking for, we're working closely with investigators, we're working with patients and patient advocacy groups, we're even doing exit interviews with the patients that participated in our trials to understand exactly what they're looking for in a medicine. This is something that we've been looking to essential tremor for quite sometime. And right now, the data on hand really speaks to upper limb tremor being one that's a driver of disability. We can see that when we look at the correlation with improvements in activity of daily living. So overall, our growing understanding of 324 is something that not only is it unique, but it's something that we think is really a great example of the approach that we take to R&D. So we had preliminary data in some of these other indications, Parkinson's, nonclinical data in epilepsy. Right now, our focus is on essential tremor, but we certainly have broader interest in other areas moving forward. Jim?

[Jim Doherty:]

Yes. Maybe to build on that a little bit. The question was about other potential indications in 324, we see as the lead molecule for a neurology franchise. And just -- as Steve was just saying, it's a little bit to do with the way we think about R&D in general. And we talk a lot about 2 things following the science and leading with human data. And so following the science, in this case, means we understand that there are multiple patient populations who could potentially benefit from a GABA potentiating molecule like SAGE-324. And especially with that profile that's optimized for chronic delivery. And so that leads us to that second point of leading with human data. And although our key focus at the moment on the program is in essential tremor, as you've been hearing, we do have data from an earlier program, preliminary look at potential efficacy in Parkinson's disease, and we've got an absolute raft of preclinical data indicating that this mechanism and this molecule would be valuable treatment for epilepsy. So there's a lot of potential value for the neurology franchise, and that's something that our partners of Biogen are well aware of, and that will be the subject of ongoing conversations. But the key focus for now is essential tremor, but we think that there is a lot of potential for the molecule in other groups in neurology as well.

[Operator:]

And our next question comes from the line Paul Matteis from Stifel.

[Paul Matteis:]

Great. Have you guys talked with Biogen about scenario planning? If WATERFALL and CORAL were to fail, but the Phase III postpartum study were to succeed, would you launch this drug in PPD, and then kind of figure everything else out later, or would you wait? And then separately, what's the status of future trials in anxiety and bipolar depression? And is the kind of -- is the initiation of those studies at all contingent upon what we see in MDD?

[Barry Greene:]

Paul, thanks for the question. So again, I'll remind you that the data we've seen with zuranolone now in over 3,000 subjects and patients has been highly consistent with rapid onset of effect, 3 or 4 days, has been very durable as I and Steve and Jim have highlighted with an adverse event profile, it's been consistent. So we are highly encouraged by the upcoming data readouts. We sat down with the agency and mapped out 3 unique approaches, 3 unique different ways to potentially get approval to an MDD, as you've highlighted, and 1 in PPD. And we believe that 1 of those Phase III needs to be positive for us to have a drug on the market. So we're very enthusiastic about all 3 approaches and believe that as you see with many drugs, we need 1 positive Phase III here. And that's an agreement with the agency. Yes, we scenario plan with Biogen at a very high level, but not in any detail. And we believe we have a very important drug here not only for MDD and PPD but potentially other indications. And we'll share more about those paths forward as we map that out with Biogen.

[Operator:]

Our next question comes from the line of Andrew Tsai from Jefferies.

[Andrew Tsai:]

My question is around WATERFALL. And I know you guys are very good at controlling this, and I don't think this has ever been an issue for you, but I'm just curious to see what steps you've taken to ensure there won't be a higher-than-expected placebo response out to day 42. Basically, I'm just curious to see how confident you are the scenario wouldn't happen.

[Barry Greene:]

Yes, Andrew, thanks for highlighting that. And let me make the comment, and I'll turn it over to Jim to talk about the conduct of the study. So with the SHORELINE data, with the increasing end in WATERFALL, we're increasing our safety database. It's a very large indication, as you're all aware. So the bigger the safety database, the better. Importantly, Andrew, we've not changed guidance. We've committed to delivering top line results for Phase III in the first half of this year, and we tend to continue to do that. So we're enthusiastic about the progress of the program. It's fully enrolled, and we're looking forward to the readout. Jim, you want to talk about specifics of the control, placebo, entire thoughts there?

[Jim Doherty:]

Yes, absolutely. And, Andrew, thanks for the question. As I think you know, we put a lot of thought and focus into design. And I think the answer is that we've talked a lot about the WATERFALL design and modifications that we made in design based on learnings. But the other important thing to remember is many of the things that we have learned through multiple trials in the LANDSCAPE program very much remain in the design of WATERFALL. And I think that's our view on things like controlling for placebo effects. I think what we try to do is be very rigorous about our execution, and that is something that we are doing again with the WATERFALL study.

[Operator:]

And our next question comes from the line of Neena Bitritto-Garg from Citi.

[Neena Bitritto-Garg:]

So I'm just kind of curious about the next steps kind of after WATERFALL. I know you've talked about not necessarily meeting the REDWOOD study at this point given the data you're seeing from SHORELINE and a number of other studies. But I guess, is there -- are there kind of differences in next steps depending on the magnitude of effect that you see in WATERFALL? And assuming it is statistically significant, just depending on kind of the differential between drug versus placebo, is there -- do you envision there being kind of any differences in next steps, or as long as it's that big, there's really just one path forward?

[Barry Greene:]

Yes, Neena, thanks for the question. I'll take it. And if Steve has other color, ask him. So as we said, what we're counting on for WATERFALL is a statistically significant result at day 15. If that's true, and we have an adverse event profile that's consistent with what we've seen already in over 3,000 subjects and patients, we have a very important medicine with a very differentiated benefit risk than anything that exists in the market today. So statistically significant at day 15, we have a drug. And I think the unmet need is so extreme that KOLs, patient groups and the regulators appreciate that that's what we're looking for. So obviously, data matter and effect size matters to some extent. But we're really looking for statistically significance. Our plan should WATERFALL be positive, is to sit down with the agency and be very clear on mapping out next steps. We could start a rolling submission, we could file WATERFALL. A key that we're looking for, just to be clear, is also timing of CORAL. We would not want to get into a situation where we filed an NDA, had another major data readout, submitted that readout and went into kind of a 3-month extension. So should the agency want to see CORAL, we'd likely wait the whole clinical session for both WATERFALL and CORAL. Now you asked about REDWOOD. I'll remind you that before data existed, as it exists today, a question was asked, how many times in a year can you effectively and safely treat a patient? That's not really a question with all the data we have right now, WATERFALL, SHORELINE that needs to be asked. We're very confident assuming a positive WATERFALL that REDWOOD will not be a regulatory requirement for filing NDA. We might have other post-approval commitments that we'll map out as soon as we talk to the agency. Steve, anything to add?

[Stephen Kanes:]

Yes. The only thing I'd say is when we started this program, we set out to identify a drug with a very unique profile, a medicine that aligns closely with patient interest. It's quick, the effects are durable, and they're long treatment-free intervals. The data that we get from SHORELINE really supports that approach. What we're looking for is that next study, where we're showing the acute effects, that's the day 15 endpoint. So that is absolutely essential, and it's important. The other thing I'd add is that sometimes people wonder about effect versus effect size. What we've seen across the board, it's been very consistent. Our large, rapid and sustained improvements in the drug group, placebo varies quite a bit. And so that's why we're very confident around statistical significance being the primary endpoint here in the goal prior to filing.

[Operator:]

Our next question comes from the line of Gary Nachman from BMO Capital Markets.

[Evan Hua:]

This is Evan Hua filling in for Gary. So regarding SAGE-324, what are the next steps in terms of developing the protocol for Phase IIb? Are there like any additional cuts of data you'd be looking at in the next several months that could help inform how you move forward in terms of dose, timing of dose and patient population? And if so, when would you release some of that data?

[Barry Greene:]

Yes. Thanks for the question. So let me hit it at a high level and ask Jim to talk about it. So the team of Sage and Biogen is actually pouring through the detailed KINETIC data, looking at looking at dose, duration, PK/PD and the value of those data will help us design the Phase IIb dosing frequency, and we'll likely test a couple of different ones to make sure that we have the right profile going into Phase III. So we're very encouraged by the kinetic readout, particularly the patients that were the worse patients over 12 where we saw a 41% reduction in essential tremor, very important reduction for these patients. Jim, you want to talk about any specifics and next steps?

[Jim Doherty:]

Yes. Absolutely, Barry. And when we think about the results from KINETIC, as you heard earlier, statistically significant effects on the primary endpoint and sustained over a 28-day period with an adverse event profile that's consistent with what we understand about the drug and about the mechanism of action. So the question to be answered from KINETIC was can we see efficacy, can we see efficacy without tachyphylaxis which we're excited about because that's the result that we see. So the focus on the IIb and the rest of the Phase II program is on dosing strategy. And remember, 324 is a long half-life drug that's been optimized for chronic dosing that gives us a lot of flexibility in exactly the dosing strategy that we'll use for pivotal studies. And so that's going to be the focus. And as I think Barry mentioned, there are a number of different things that we can look at modifying. So certainly, dose levels, dose frequency, there are a number of aspects that we're looking at. And so the Sage and Biogen teams will figure out what's the most efficient way to answer those questions in Phase IIb.

[Operator:]

Thank you. Now that is all the time we have for questions today. I'll turn the call back over to Barry Greene for any closing remarks.

[Barry Greene:]

Thanks, operator. Thanks, everyone, for joining us this morning. We are very pleased with the significant progress in the first quarter, and we're excited about the potential for additional milestones throughout the balance of this year. And I want to acknowledge that May is mental health awareness month, and I'm excited to see the real movement across the world, a movement encourages people to speak up and change the narrative on brain health and mental wellness. There's also growing awareness of the global impact the current mental health pandemic is having on the young and the old. And in fact, just this week, MTV convened a groundbreaking coalition of media companies and mental health experts to harness the power of media in storytelling, kicking off at Better Together, a mental health storytelling summit, drawing talent, including Oprah Winfrey, Trevor Noah, Regina King, among many others. The coalition unveiled its first of a kind comprehensive mental health media guys, which provide best practices and evidence-based recommendations to empower content creators in entertainment to expand portrayals of mental health to further encourage viewers to speak up and get help. True progress as we further lean in, is a very real challenge presented by a lack of progress in talking about and treating brain health issues. We're excited to see this progress and for others joining us in what we have acknowledged is a big lift. Now more than ever, patients suffering with brain health issues need better, more effective treatment, and the Sage team is working tirelessly to deliver on our vision of bringing such treatments to patients so they can get better sooner. Thanks, everyone. Looking forward to further discussions. See you all.

[Operator:]

This concludes today's conference call. Thank you for participating. You may now disconnect.