Sage Therapeutics, Inc.
Q2 2018 Earnings Call Transcript

Published: 7 Aug 2018

[Operator:]

Good morning, and welcome to Sage Therapeutics' Second Quarter 2018 Financial Results Conference Call. [Operator Instructions]. This call is being webcast live on the Investors & Media section of Sage's website at sagerx.com. This call is a property of Sage Therapeutics and recordings, reproductions or transmission of this call without the express written consent of Sage Therapeutics is strictly prohibited. Please note this call is being recorded. I would now like to introduce Paul Cox, Investor Relations at Sage.

[Paul Cox:]

Good morning. Today, we issued a press release with our second quarter 2018 financial results, along with recent company highlights, upcoming milestones and progress on our corporate strategy. The press release and the presentation slides used on this call can be found on the Investors & Media section of our website at sagerx.com. On Slide 2 of the presentation is the agenda for today's call. We will begin the call with prepared remarks by

[Jeffrey Jonas:]

Thanks, Paul. Good morning, everyone, and thank you for joining us on the call today. On Slide 4, this quarter, we continued to make great progress on our goal of becoming a multinational biotech company, a leader in the field of CNS drug development and an innovator with a clear focus on maximizing patient benefit. We continue to make important strides across our entire portfolio, which is seen on Slide 5. Our pipeline is led by ZULRESSO, which is the proprietary name that was recently conditionally accepted by the U.S. Food and Drug Administration, or FDA, for our intravenous formulation of brexanolone. As a reminder, a New Drug Application for ZULRESSO as a treatment for postpartum depression, or PPD, is currently under review by the FDA. And we continue to execute our commercial build and launch readiness ahead of ZULRESSO's PDUFA target date of December 19. Mike will provide more commentary on these efforts later on in the call. We also continue to make important progress in advancing SAGE-217, our lead oral molecule in a broad psychiatric development program. In June, we were pleased to announce a plan for potential accelerated development of our breakthrough pivotal program for SAGE-217 in depression with key trial milestones expected in the fourth quarter of this year. We also plan to initiate a Phase II study of SAGE-217 in bipolar depression, beginning with an open-label phase to be followed as appropriate into a randomized, placebo-controlled trial. This is an example of our cost-efficient and stepwise R&D strategy to generate proof-of-concept data before advancing into larger controlled studies as we have already successfully demonstrated in both PPD and major depression. We also recently entered into a strategic collaboration with Shionogi on the development and commercialization of SAGE-217 in Japan, Taiwan and South Korea, accelerating and broadening geographic access if successfully developed and approved for this potentially paradigm-shifting treatment for depression. While ZULRESSO and SAGE-217 are potential near- and intermediate-term opportunities, we are also focused on our long-term R&D pipeline and have progressed our early clinical programs with recent initiations of a multiple ascending dose trial, Phase I of SAGE-718 and now a Phase I trial of SAGE-324, where our IND has been cleared by the FDA to begin. Even earlier in R&D efforts, we continue to invest in our discovery programs to find the next ZULRESSO or SAGE-217. And we hope to tell you more about our next development candidates early next year. Steve will provide some color on our R&D progress in a moment. But first, I would like to comment on Sage's broader mission before closing. With the upcoming potential approval and launch of ZULRESSO, we remain focused on our approach to forge new paths for the treatments of CNS disorders, not only by developing new medicines but by looking to impact the way mental health disorders are treated. We consider ZULRESSO as the tip of the spear for Sage as we continue to advance and expand our CNS portfolio, including our emerging depression franchise focused on groundbreaking treatment approaches. I would be remiss in not congratulating the Sage team for their incredible productivity over the past years. Today, after only a handful of years, our pipeline is comprised of 4 novel potential products developed by Sage scientists, and we believe there is much more to come. Our focus at Sage continues to be on improving patient care through innovation, and we hope to follow through on our product candidates' potential to make positive impacts on the lives of patients and families, beginning with those impacted by PPD. I'll now turn the call over to the rest of the team for more detail on our updates and financial results before we take Q&A. First, I'm turning the call over to Steve. Thanks, everybody.

[Stephen Kanes:]

Thanks, Jeff, and good morning. I would like to provide a brief update on our R&D efforts across our portfolio, which is led by 2 breakthrough therapy designated product candidates

[Michael Cloonan:]

Thank you, Steve, and hello, everyone. Thank you for joining our call today. On our last quarterly call, I outlined our pre-commercial strategy to prepare for our first potential product launch for ZULRESSO in PPD and our efforts to build world-class commercial and medical affairs organizations that are driven to change the lives of patients and families. We made important progress in our launch preparations and in transforming Sage into a commercial-ready biotech company as we continue to prepare for a potential first half 2019 commercial launch of ZULRESSO for the treatment of PPD, if the NDA is approved. Please turn to Slide 12. I'd like to provide some updates on our recent progress across the 4 pillars of our go-to-market strategy. We are focused on building a patient support model designed to streamline the patient journey from diagnosis through treatment of PPD, including clear pathways to care. We have partnered with Lash Group, a part of AmerisourceBergen, to establish a robust patient support model. This model will leverage innovative technologies, coupled with Sage-led case management support for PPD patients. We believe that streamlining the patient journey is crucial as there is a lack of clear pathways to PPD care currently due to the many touch points across health care providers. Oftentimes, patients with PPD do not know which health care professional they should see for support. And it can lead to many patients falling through the cracks. We believe a high-touch patient support program is critical to ensure a high-quality patient experience and are completing preparations for the opening of our National Patient Support Center in Raleigh, North Carolina this fall. We are also advancing development of a site-of-care strategy for PPD patients with potential options ranging from the inpatient hospital setting, supervised home care and alternate sites of care, subject to FDA approval of each option and agreement on the final ZULRESSO label. We expect to give further updates on the progress of establishing potential sites of care on future calls. In terms of payer engagement, we continue to engage in permitted discussions with commercial and Medicaid payers to raise awareness of PPD and on the value proposition of ZULRESSO product profile. We have conducted over 100 customer meetings and have met with all National Payer Accounts. Further, as Sage advances towards a potential product launch, we have continued to grow the organization, building a world-class team of professionals across the commercial and medical affairs groups. And specifically, we have made considerable progress in the build of the field team. On the disease education side, we are working to disrupt the conventional wisdom about PPD, which we estimate affects greater than 400,000 women in the U.S. each year, by reinforcing that it is a medical complication of childbirth and instilling the urgency to identify the disorder in patients. Our medical affairs team continues to focus on advancing multiple PPD disease awareness and screening efforts. We are seeing tangible signs of progress on these efforts to improve the urgency to manage PPD, including ACOG's recent Committee Opinion on Redefining the Postpartum Visit and recommendation on a comprehensive maternal mental care support by OB/GYNs throughout the fourth trimester of pregnancy. We also recently launched a broad digital disease awareness campaign, conducted live PPD educational symposia at recent medical congresses and supported development and launch of independent digital medical education programs. Also we continue to collaborate with national and local patient advocacy groups and continue ongoing permitted engagement with a broad number of maternal and psychiatric health centers across the U.S. And finally, while we are focused on a potential U.S. launch of ZULRESSO, we continue to think strategically about building Sage into a multinational biotech company, including investing in European operations. We anticipate receiving scientific advice from the EMA on our ZULRESSO PPD program by the fourth quarter, which will guide our future plans in the EU as well as the timing of the build of our EU footprint. Turning to Slide 13. We also recently entered into a strategic collaboration with Shionogi to potentially expand the global footprint for SAGE-217, alongside our ongoing efforts in the U.S. and Europe. We're pleased to collaborate with Shionogi to accelerate development, and if successful, to broaden geographic access to a potentially paradigm-shifting treatment for depression for patients in Japan, Taiwan and South Korea. As I hope you can see, we continue to make considerable progress in our launch readiness. And we are prepared for ZULRESSO's potential approval while we also continue to build the organization for long-term success as a multinational CNS leader. And now I'd like to turn it over to Kimi to review our financials.

[Kimi Iguchi:]

Thanks, Mike. Let me now walk you through the financial results and guidance. Slide 14 outlines our financial results for the second quarter. We're excited to announce that our collaboration with Shionogi enabled Sage to record revenue for the first time in the second quarter. This capital further strengthens our financial position and provides us the ability to make aggressive investments on our late-stage assets, including ZULRESSO and SAGE-217, as well as in our earlier-stage assets, such as SAGE-324 and SAGE-718. Collaboration revenues were $90 million in the second quarter of 2018 compared with no revenues for the same period of 2017. All revenues for the second quarter of 2018 are attributable to an upfront payment from Sage's strategic collaboration with Shionogi. Research and development expenses increased to $69 million in the second quarter compared to $55.9 million for the same period of 2017. The increase year-over-year reflects ongoing R&D programs and discovery efforts focused on identifying new clinical candidates and additional indications of interest and investments in R&D headcount to support the growth in Sage's pipeline and operations. These increases were offset by completion of Phase III clinical development of ZULRESSO. General and administrative expenses increased to $43.2 million in the second quarter compared to $15 million for the same period of 2017. The increase is the result of the continued investment in preparation for potential commercial launch and the continuing build of the organization and expanding operations. We reported a net loss in the second quarter of $17 million compared to a net loss of $70.2 million for the same period of 2017. Turning now to the balance sheet. We ended the second quarter with $1.1 billion in cash, cash equivalents and marketable securities. That's compared with $518.8 million at the beginning of the year. The increase was primarily due to our follow-on offering in February. We are confident that the strength of our balance sheet, coupled with our cost-efficient approach to drug development, will allow us to focus on the execution of critical activities across our diverse pipeline, setting us up well across near- and long-term opportunities. Turning to guidance. Based on our current operating plan, we anticipate that our cash balance will enable Sage to fund its operating expenses and capital expenditure requirements into 2020. We expect that our operating expenses will increase year-over-year in 2018 to support the ongoing investment in the portfolio and potential product commercialization of ZULRESSO in PPD. We are pleased with the progress we've made to date in building the company, and we thank everyone for their support. Slide 15 summarizes our upcoming expected milestones. For ZULRESSO, we have a number of regulatory milestones upcoming, including an FDA Advisory Committee meeting, which is planned for November 2; a PDUFA target date on December 19; and we will also expect to receive scientific advice from the EMA by the fourth quarter. We continue to plan for a potential commercial launch of ZULRESSO in PPD in the U.S. in the first half of 2019. We also expect considerable progress across our pipeline. For SAGE-217, we continue to expect top line results from the Phase III placebo-controlled trial of SAGE-217 in PPD in the fourth quarter. We also expect to initiate the Phase III clinical trial in MDD, the Phase II bipolar depression study and the Phase III trial in MDD patients with co-morbid insomnia in the fourth quarter. And now turning to the earlier pipeline. We recently initiated a Phase I single ascending dose trial for SAGE-324 and a Phase I multiple ascending dose trial for SAGE-718. And we expect to report results from both studies in the fourth quarter. As you can see, we expect significant progress across the entire portfolio in the coming quarters. And we believe execution against these milestones will position us well toward our goal of becoming a multiproduct, multinational biotech company. With that, we'd like now to open the call for Q&A. [Operator Instructions]. Operator?

[Operator:]

[Operator Instructions]. Our first question comes from Brian Abrahams with RBC Capital Markets.

[Brian Abrahams:]

First question is on the bipolar depression plan, I was wondering if you could talk a little bit more specifically about the plan there. I'm sort of interested in the bar to move forward from the open label to the randomized portion, how you're thinking about that, timelines and maybe how that study might potentially work into your pivotal plan in MDD, PPD or whether we should sort of think about that as a later potential label expansion opportunity. And then I have a quick follow-up.

[Jeffrey Jonas:]

I'll start off the answer and then I'll turn it over to Steve. So the study design in general is sort of -- is basically what we've done before, which is beginning with a methodology study. And so I know we call it open label. But it's really an idea to turn to look at how the patients respond, to get a sense of effect size, to get a sense of response criteria. And again, if we see what we hope to see, we're preparing in advance, as we've done before, to move quickly into a randomized trial. So I think that's the basic thesis for why we're doing it. Remember, bipolar is -- bipolar depression, some people think is a different animal than major depressive disorder, although -- and there's some people -- and there's a lot of opinions about this. But there are those who believe as I do that it's more closely aligned to postpartum than even MDD. So we're optimistic overall about this study. The other points, with respect to the placement and the strategy, I think we've made this -- we've discussed this before. How we approach bipolar will depend on some of the early data and discussions with the FDA about whether or not this can be serving as a pivotal program or simply a Phase II. And that's something that's yet to be determined. Let me turn this over to Steve for more granularity.

[Stephen Kanes:]

This is part of our overall approach when we move into new indications. And we look to build on the information we already have. So in the specific example of bipolar depression, which is what we'll be studying in this first study, we'll be looking to build on what we know about MDD. We are interested in seeing, similar to what we've seen prior with postpartum depression with brexanolone, with major depressive disorder with 217, rapid, large and sustained improvements overall in symptoms. And that will give us both clarity, as Jeff said, for designing subsequent trials as well as the information we need to make decisions on how to fit it into the strategy. So a lot more to come on bipolar disorder, but it's an exciting new extension for 217.

[Brian Abrahams:]

That's really helpful. And then one more question on retreatment. Conceptually, I think with the pivotal path that you have laid out and the recent FDA draft guidance, there seems to be greater clarity on the regulatory views on acute use antidepressants and the concept of retreatment. I'm sort of wondering if you've had any engagement thus far with payers and reimbursers on retreatment and any sense of how much data they might require from both a safety standpoint and efficacy standpoint. Will open-label retreatment be sufficient, do you think, to support payment for retreatment with 217 for patients who relapse?

[Jeffrey Jonas:]

Yes, I'm going to turn this over to Mike Cloonan to answer that.

[Michael Cloonan:]

Brian, yes, thanks for the question. We have been starting to engage with the payer groups on 217, right? And I think some of it is early days in those discussions. And it's really helping them understand what does the data look like today for 217. What does the clinical data look like? What is the unmet need? And how do we see this being positioned in the marketplace? And so we are getting some good feedback from the payers as to how they're seeing the 2-week treatment and how they're thinking about the follow-up and how we might build that into the trials. And so Steve and I obviously are very much linked on this one in terms of how we develop the study going forward so that we can have as much information as possible to help inform pricing and the payer discussions. So still a lot of work to be done, but we have started that engagement with the payers.

[Operator:]

Our next question comes from Paul Matteis with Stifel.

[Paul Matteis:]

A few quick questions. One is I was wondering if this SAGE-217 study in postpartum depression, if the results look like the study in MDD, could actually serve as the basis for a filing in PPD since at that point for 217, you have about just as much data as you had for brexanolone when you decided to file for that drug.

[Jeffrey Jonas:]

Was that your only question today, Paul?

[Paul Matteis:]

No, I've got like three more.

[Jeffrey Jonas:]

I thought so. I think at this point, the plan remains to do a consolidated filing around 217 for MDD and PPD. I think obviously we'll see what the data look like. That study is on track to report out this year. So that's, of course, we're very pleased by the execution for the team. But look, so I think right now the plan is [indiscernible]. The plan right now is to do a consolidated filing along with the MDD trial. And that is also on track to initiate this year. So I think our timelines remain sound. And I think that -- I think we'll have to see what the data look like at that point.

[Paul Matteis:]

Okay, fair enough. And then just two quick clinical questions. Jeff, I was wondering if you could just talk about historically in bipolar depression, sometimes potent antidepressants can drive patients into mania. So I was wondering, given that this drug seems to have a pretty potent activating effect in the MDD studies, if this is a theoretical risk and how you think about that. And then second, just a question for Mike, I'm wondering on the episodic treatment data, when you kind of look at that over the long term and how many doses patients are getting on an annual basis, how does that kind of fit into your framework of how you might come about an actual annual cost for 217?

[Jeffrey Jonas:]

Yes, I'll take the first one. I think, firstly, I think it's a misstatement to say that it's activating. I think the data are very clear that we're actually -- that at least from what we're seeing, we're talking about a hyperactive circuitry that, in fact, we are impacting through time of inhibition through some sort of durable effect. And if you take it from that standpoint, then -- and one of the things actually we think theoretically is the case, the drug -- we believe that there should -- there could be a uniform activity across the affective spectrum. And if you noticed, that's why I said earlier that many of us, who are sort of more old-style pharmacologists, think postpartum is actually most closely attuned to a bipolar disorder in terms of cyclicity and irritability than even MDD. So I think the mechanism of action in our view ought to provide a -- maybe a potential advantage over antidepressants, which I think most people believe can trigger manic episodes. Again, one of the reasons we're doing the methodology study in the way we're doing it and the way this study is going to be conducted is really to ask to make sure that we're not inducing cycling. But all the data so far in animals and in humans suggest just the opposite. Now I'm going to turn this over to Mike for the other question.

[Michael Cloonan:]

Yes. So Paul, on the pricing side, I mean, first and foremost, I mean, early days on the pricing. But a couple of things that I can share with you is clearly we want the pricing to represent the clinical value of 217. And as we think through that, I mean, your question really is around the retreatments and how many doses patients may require. So as we think about the pricing, obviously the open-label study is going to help us inform the pricing strategy. So it's an important study for us to really get to be able to reflect on how many doses patients on average are getting of 217. So as we see that data, that's going to really help inform our pricing. And as we're talking about a here and now, a lot of the way we think about 217 is sort of this annualized pricing. Or how do we think about the annual cost and price of 217? And then the retreatment data can then back in to on a per course, per dose basis. So more work to be done, but that's sort of the preliminary thinking of how we're thinking through this. And we will engage the payers to help us think through this as well.

[Jeffrey Jonas:]

Now Paul, Steve has a couple of -- has one more point to make about the mood of the impact.

[Stephen Kanes:]

Yes. So one thing that is very intriguing to us about 217's profile, particularly as it pertains to bipolar disorder, is its improvement in sleep. And that may potentially be very impactful for patients with bipolar disorder, particularly if it tracks to improvement in overall circadian rhythm activities. So that's number one. The other is this class of drugs, and you know that we're interested in 217 and 324 for epilepsy, may very well have antiepileptic activity. And that potentially would translate to some potential utility in bipolar as well. And so I think many aspects of this profile have yet to be demonstrated. But part of the reason that we're interested in moving into bipolar disorder specifically has to do with the mechanism of action and the emerging profile.

[Operator:]

Our next question comes from Matthew Harrison with Morgan Stanley.

[Vikram Purohit:]

This is Vikram on for Matthew. So two questions from our side. First, what do you expect to be the key points of discussion at the upcoming Advisory Committee? And secondly, you touched on your payer conversations a little earlier, but was wondering if you could provide some more detail on specific points of feedback that have come up. And what are some of the key themes coming up in those meetings? And overall, do you believe there's a receptivity to covering of a new novel medicine in PPD?

[Jeffrey Jonas:]

So this is Jeff. I'll start, then I'll turn it over to Mike. I think as everyone on the call knows, the FDA is currently reviewing our NDA. And we have ongoing discussions with them about a number of topics. They're all doing quite well. But I think personally, it's premature to talk about what we think or suspect or predict what will happen at the Advisory Committee. It hasn't even been announced yet, but it's tentative at this point. So it hasn't gone into the Federal Register. So I think we really can't comment on ongoing discussions with the FDA, simply to say that they're progressing well. And as what you might expect with a breakthrough therapy, it's been a very productive -- the NDA is moving along very productively. So I think that's all I can say about that. Let me turn it over then to Mike to answer the other question.

[Michael Cloonan:]

Yes, on the payer side, Vikram, so I'm really encouraged by the work our field-based market access team is doing. They've really done a great job in engaging the payers. As you saw and heard on the call today, we have engaged over 100 payers both on the Medicaid side and on the commercial side. And I think we're encouraged by the feedback we received on multiple fronts, right? So we spend a lot of time educating them on the unmet need, the disease, the stigma and then how does brexanolone fit in. And I think there's a lot of movement you can see, even through the course of those dialogues, as to how they think about PPD and where brexanolone can fit into the treatment paradigm. So we feel very encouraged by those conversations. And specifically to your point on coverage, we feel similarly that based on those conversations, we are encouraged by the feedback we're receiving on a coverage perspective, right? We haven't gone into pricing conversations specifically so that can also impact that, so still more time to play out. But the payer feedback has been positive. The data on brexanolone has been well received. And we're encouraged by what we're hearing from them.

[Operator:]

Our next question comes from Tazeen Ahmad with Bank of America.

[Tazeen Ahmad:]

A couple. You know I'm going to ask about insomnia, so let's make that first. Could you give us a little bit more detail on what kind of data we should expect to see later this year? You mentioned that on your prepared remarks. And as time has passed, you have a better idea of whether you would want to explore sleep as a stand-alone indication or whether you think a better path might be to examine sleep disturbances as a result of other indications, such as, for example, depression. And then I have another question for you.

[Jeffrey Jonas:]

Yes, it's Jeff. I'll start and turn it over to Steve. I think strategically, we're interested and the study design is pretty straightforward to look at sleep disorders in patients with MDD. And I think that's what you're seeing with us, a PSG study. It's a pretty standard study with typical sleep measures. Except out of the lab, you're more likely to see sleep latency versus the induced model, which has that issue. But that's part of a sleep program. I think as we said, we still intend to go to the agency to look for program for primary insomnia. But in terms of label expansion and potential benefit for patients with depression, we think the MDD study could be very informative and potentially lead to a claim around improvement of sleep in the treatment of major depression, which we think would distinguish 217 even further in addition to rapid action, robust response and the other things that we've already, we believe, preliminarily demonstrated. So it's really the step one in a larger sleep program. But this one is tied into the depression program. I'm going to turn this over to Steve now.

[Stephen Kanes:]

Yes. I mean, we know that patients with MDD often have very severe disruptions in sleep. That's a well-recognized phenomenon. And the vast majority of these patients are actually taking sleep aids in addition to antidepressants. So we think there's a real opportunity based on the profile of 217 to improve both sleep as well as mood. And we want to be able to demonstrate that specifically in those patients. So the next trial, we'll be looking at MDD patients with known sleep disruption. We'll be looking at, as Jeff said, polysomnography, which is an EEG measure, a very standardized measure to examine sleep architecture as well as some of the more standard endpoints, like wakefulness after sleep onset, latency to falling asleep, the ability to stay asleep and so forth, all of which may very well give us clear information about the improvement of sleep, specifically in these patients, as part of an overall strategy for insomnia. But that's the first step.

[Jeffrey Jonas:]

One other point, just to add, is that these will be patients who are symptomatic. So they will be getting therapeutic doses of 217. So there will be secondary endpoints in terms of the efficacy. And one of the things we'll be interested in seeing is seeing -- looking at -- there's a long and important literature that came out of Pittsburgh looking at sleep architecture and depression. And our ability to ascertain whether we impact architecture in a palliative way that's associated sleep with mood improvement, firstly, will be important scientifically and maybe very helpful therapeutically as well.

[Tazeen Ahmad:]

Okay, thanks for that color. Then maybe one question on 217 in PPD, I know you're just getting into the pivotal. But understanding that it could be in the near term at least one of your bigger indications, I was wondering in terms of the interactions with the agency whether any questions have come up about, I guess, potential for addictive nature of the drug and whether or not FDA has asked you to provide any details on dependency or the potential to develop dependency.

[Jeffrey Jonas:]

I'll turn this over to Steve.

[Stephen Kanes:]

Yes. So the overall development program for all drugs that enter the CNS includes a standard assessment of human abuse liability, which is, I think, where you're going with this. How we get to that point as part of an overall discussion, we generally don't comment on the specifics of our overall development program, other than to talk about the pivotal programs. But in this case, I would just say that we will be doing and have been doing all of the standardized studies that would allow us to understand the profile. Yes, I mean, so to date, we have not seen any withdrawal symptoms and no rebound. We think the profile from ZULRESSO also gives us some guidance on to where this mechanism may or may not be. And that's been relatively straightforward as well. And so again, other than doing standard tests, there hasn't been anything of specific concern in this area.

[Operator:]

Our next question comes from Salveen Richter with Goldman Sachs.

[Salveen Richter:]

Just one for me. With regard to PPD, I recognize the efforts to educate around the disease. But maybe could you just explain to us how motivated this patient population is to seek treatment or whether this is typically driven by family members?

[Michael Cloonan:]

Yes, Salveen, this is Mike. I'll answer that question. So it really is a combination of factors, right? I mean, as we've talked a lot around the stigma, right, so there are times when patients are falling through the cracks for a variety of reasons, right? They are afraid to come forward because of that stigma and what that might mean to their family situation, their work situation, et cetera. There are caregivers and family members that do play a key role now, to your point, and also physicians, right? There's lot of physicians that touch the patient throughout this process through the time of pregnancy and postdelivery. So you've got the OB/GYN. You've got psychiatrists. You even have the pediatricians and the primary-care physicians as well. So what we see is there's an activation that's going to happen across multiple fronts, right? The patient is clearly an education perspective, breaking down that stigma. We're taking that on. We're trying to convert PPD to a medical complication of pregnancy, right? And if we do that, we think we can reduce some of the stigma that exists today, making it easier for women to come forward. And on the same thing happening on the physician side is creating that urgency to treat and screen patients and diagnose and really creating that -- the safety net around the patients as best as we can so that they have -- they know where to go for that treatment. And it's not all on them or on their family members to identify it. And I'd say, lastly, is just ZULRESSO actually creates on opportunity, right? When you think about its product profile and its rapid-acting effect, this is different than what has been [indiscernible]. Nothing has been prescribed or has been approved, I should say, in postpartum today. Brexanolone has that opportunity to shift the paradigm. And we think that will change the conversation in PPD.

[Operator:]

Our next question comes from Laura Chico with Raymond James.

[Laura Chico:]

I guess, I have one question for Mike on ZULRESSO. You mentioned the partnership with Lash Group and kind of the high-touch portion of the business there. I'm just wondering if you could elaborate a little bit on that further. And thinking more broadly and down the road a little bit, does this type of infrastructure -- or I guess, how does this type of infrastructure, how can this be leveraged with other opportunities, like MDD and some of the other areas?

[Michael Cloonan:]

Laura, thanks for the question. So the patient support operations that we talked about on the call here is we're really excited about. We think this is a novel opportunity for us to create a unique patient experience to really create the support that we think is needed with ZULRESSO. When you think about everything I just described in the past question around the stigma and where they're going to get treated, who's going to treat them, the sites of care, there's a lot of complexity that comes with ZULRESSO. So this operation that we're setting up down in Raleigh, North Carolina is really a combination of two things. We have our in-house case managers, which will be the face to the patient. They will be the ones interacting on a day-to-day basis with the patient, helping them navigate through the prescription and the infusion. And that would include things like reimbursement and financial assistance, if it's required, medical education, those types of things. We're partnering with Lash really to leverage the expertise that they bring, which is mainly on the financial assistance and reimbursement services, right? They are a very well established, strong partner. I've got personal history with them and can speak to their expertise and talent that we have. So really excited to couple our expertise in case management with theirs so that we're not building out too much infrastructure and we can leverage the support that Lash can bring. But this really is novel for this disease. And we think it's going to add a lot of value for patients in PPD. To your question around other products, MDD and how it might play out, we do see it having a synergy here. There's lots of opportunity as we play out our pipeline, assuming they get approved, that we can leverage this patient support model for MDD and other indications as well. So we're excited to start it off with PPD, build that capability within Sage and then leverage this for our future pipeline downstream.

[Laura Chico:]

Great. And if I could just ask one quick follow-up then, in terms of, I guess, securing partners for home delivery and kind of some of the alternative sites of care that you mentioned, is that -- arranging those partnerships, is that predicated on kind of the final label? Or would you have further announcements before approval?

[Michael Cloonan:]

Yes. So our sites of care strategy, as a refresher to everyone, this is something that's really important to our overall strategy, right? We want to create as many options for patients and prescribers, if possible, where we see that having in the supervised home setting, we see it in the inpatient setting and potentially in outpatient settings as well. So we're exploring all those opportunities. But it is subject to the final label, as you've said. So we really have to go on a parallel path, right? Operationally, we're moving down that approach now, talking to national home infusion companies, looking at opportunities to partner with them. So we have to move in a parallel path so that we can be ready, subject to the final approval of the FDA and what that label looks like.

[Operator:]

Our next question comes from Danielle Brill with Piper Jaffray.

[Danielle Brill:]

First, as a follow-up to the various types of care, are there any specific gating factors for getting FDA approval for those various sites on the label?

[Jeffrey Jonas:]

Yes, it's Jeff. I think we have a series of ongoing discussions with respect that will impact the label. I think there's nothing specific. The issue with any medical administration is the nature of the supervision and the nature of the administration and some of the mechanics of simple -- of how the drug may be administered over what period of time, how many bags and things like that. So those are all part of our ongoing discussions. So we really can't say anything more, except to say, as Mike's pointed out, it's a process that has -- is going on in parallel. We think there are a number of opportunities across the spectrum of supervised care that we think we can -- where we can make this available to patients. But beyond that, I don't think we can comment specifically.

[Danielle Brill:]

Okay. And one more on 217, I know it's early, but are there any active education efforts on the potential paradigm shift for treating depression? And if so, what kind of feedback are you getting there?

[Jeffrey Jonas:]

Yes, I think -- there's a number of -- so psychiatry, as you probably know, is an interesting field. There hasn't been much happening over the last 20 years in terms of moving away from the concept of chronic pharmacotherapy. So I'm going to turn this over to Steve and then to Mike. But there are substantial interest in the idea of what we're calling it episodic treatment, but it's really symptom-based treatment, which is probably a better word. And so we're getting -- from people who have used the drugs, we're getting very strong support and the people who've seen the actual patients. But it is still a paradigm shift in terms of the way psychiatry in general has delivered care over the last pretty much forever. So I'll turn this over to Steve for more color.

[Stephen Kanes:]

Yes. So the first place that we look to start sort of changing people's thoughts about this comes straight from the data. It all begins there. So the first places where we're talking with specialists in the field is at medical conferences, discussing the material that we put together already, which is the Phase II data [indiscernible] put that here, its potential implications. It's a little premature to start education until we've really locked in all of the Phase III data to demonstrate and replicate the data that we have. However, as Jeff said, there's enormous interest in the field in a simple-to-administer drug that has kind of -- that has a rapid, very large and sustained improvement that we've been seeing so far. So that's the beginnings of those discussions. And from a medical affairs perspective, I know that they're looking to find ways to communicate this message more broadly in anticipation of having more data. And maybe, Mike, you want to comment on...

[Michael Cloonan:]

Yes. And the only thing I'd add to that, Steve, is we are doing advisory boards as well. As Steve said, we're trying to educate in smaller groups so that before we roll this out more broadly, so we can understand what are the points of emphasis that we need to focus on, right, to start to converse and educate people around this paradigm shift. So advisory boards are very helpful, the medical meetings that Steve mentioned as well. Those have really been our focus points. We have our field-based teams on the medical affairs side as well out there. But that work will start as we continue to move through the process there.

[Operator:]

Our next question comes from Cory Kasimov with JPMorgan.

[Shawn Fu:]

This is Shawn on for Cory. Just a couple of quick questions on the long-term safety study for MDD. Is the intent to roll over patients from the randomized trial? Or will you be enrolling directly into that study? And then is the eventual goal to be reporting [indiscernible] studies, such as rates and frequency of retreatment, et cetera?

[Jeffrey Jonas:]

I'll turn this over to Steve.

[Stephen Kanes:]

So first and foremost, we are viewing this retreatment study as a separate study. So no, we will not be rolling patients over. It's important for us to treat as many separate and individual patients as possible overall in our development program. It's one of the ways in which we really understand its overall safety profile. And the goal is safety. So we'll understand the sort of the outcomes from those patients but really to understand safety in the face of retreatment. And that's the primary goal of that trial as well. We'll understand more about the profile, the number of retreatments and so forth. But safety is really what that's about. And that's how we view it as part of our overall program.

[Operator:]

Our next question comes from Tim Lugo with William Blair.

[Myles Minter:]

I'm Myles on for Tim. I'm just wondering about the potential for a twice-daily dosing in your essential tremor and your Parkinson’s disease trials. I know that's why we switched from 217 to 324. So about 324, how much of that twice-daily dosing potential is based on the formulation as opposed to the active compound itself? I'm trying to get an idea of how to differentiate the target product profile for those two moving forward.

[Stephen Kanes:]

Yes. So first, let me clarify. We're not specifically looking at twice-daily dosing in 324. At our first SAD study, we'll be looking at the pharmacokinetics to understand exactly what that profile looks like as part of our dosing strategy, so way too early to say what the dosing specifically would be. We are interested in 324 as a drug that would be appropriate for chronic dosing that minimizes sedation profile because that's appropriate for essential tremor and epilepsy and so forth. So really, it comes down to what is the profile and how do we demonstrate that both in single doses and multiple doses. And that's part of what we'll be determining over the next, say, year during the Phase I program. I'll turn it over to Jim to give a little more detail about that.

[Jim Doherty:]

Thanks, Steve. We're really excited to have 324 moving into clinical development. And the program is having a benefit from the translational approach that we've developed for the brexanolone and 217 programs. And so in Phase I, we'll be using biomarkers that we developed for those programs to understand PK/PD relationships for 324 as it relates to the other molecules. And that will inform some of the things that Steve was just talking about. But even more importantly, we're going to be back-translating data from those programs in indications like essential tremor and Parkinson's disease, where you've heard from us earlier about data with 217 and brexanolone. And we'll be using that information in order to move 324 forward.

[Jeffrey Jonas:]

Yes, this is Jeff. Just a more -- a broader point. One of the things the scientists at Sage have done a really nice job on is creating this large series of compounds that modulate the extrasynaptic GABA space. But they do it somewhat differently. And each of these compounds has different techniques. One of the things I just want to point out is that, firstly, we're going to learn a lot from the new Phase I in 324. But also even today, we're just beginning to understand the activity of these compounds. Jim's group and the scientists at Sage and our collaborators, I mean, some of it obviously we disclose, some of it we need to publish, continue to find new mechanisms and new ways these drugs may impact the brain. And those discoveries, as Jim is alluding to, may impact which indications we move forward with 324. These drugs have a broad effect. There are things that we're still discovering even today that may allow them to be applicable across other indications. So a lot of it is going to -- so a lot of this is indigenous to the compound, not formulation. We do have a large pipeline even behind 324 that we're really excited by. But our indications are going to be driven both by the science and the behavior in Phase I.

[Operator:]

Our next question comes from Michael Higgins with Ladenburg Thalmann.

[Michael Higgins:]

I just want to circle back to the family-centric set of care strategy in PPD. Trying to understand it from a payer standpoint, [indiscernible] difference in their reimbursement and then impact on potential co-pay for the patients between the inpatient hospital settings, revised home care and alternate sites of care? And then second question, if you can just give us a recap on the hiring strategy again, number of reps and so forth. And then third is for the AdCom, is it going to be a two-day meeting? If so, is there another product being reviewed that you're aware of? Any specific areas you look forward the panel to focus on during that AdCom?

[Jeffrey Jonas:]

Yes, I'll answer the last one first, this is Jeff, and I'll turn it over to Mike. Again, I think this is a breakthrough program. We've had a productive relationship with the FDA. We have frequent discussions. The AdCom, we believe, is tentatively scheduled. It is not posted on the Federal Register. We're very comfortable on how things are progressing. But beyond that, we really just can't comment on ongoing discussions with the FDA beyond to say that they're moving along well. So apologies for that, but anyways -- so let me turn that over to Mike now.

[Michael Cloonan:]

Yes. So here, on the two questions, Michael, so the reimbursement side and the site of care. So there are different reimbursements as it relates to the different sites of care. If you think about outpatients of both home infusion and outpatient settings, it's a medical benefit, so there would be kind of coinsurance, out-of-pocket expenses for patients. But that's one of the things we are actively contemplating and reviewing now as part of our patient support program is a financial assistance program, so like to try and minimize where we can the amount of out-of-pocket expense for patients, right? So it's something we're very much looking forward to. We want to minimize the financial impact to patients. On the inpatient side, that's DRG-based reimbursement, right, on inpatients. So those are the way the reimbursement system would work. On the hiring side, to your question, just as a refresher, what we've stated publicly in the past is on the sales force, we'll have 250 sales reps out in the field comprised of two different groups

[Operator:]

And I'm not showing any further questions at this time. I'd like to turn the call back over to Jeff Jonas.

[Jeffrey Jonas:]

Well, again thanks, everybody, for joining us today. We're very excited about what we have coming up in 2018 and then in 2019, both on the commercial and the R&D fronts. And I just want to say, we wouldn't be in the position we are today without the dedication of the great people at Sage as well as the patients, the families, the caregivers and the investigators, all of whom participate in our studies. We're very grateful to them, and we appreciate their continued contributions to achieving Sage's vision of delivering novel, innovative and differentiated medicines to people in need. So with that, I'd like to close the call. Thank you all for your attention today, and have a great day.

[Operator:]

Ladies and gentlemen, that concludes today's presentation. You may now disconnect, and have a wonderful day.