Sage Therapeutics, Inc.
Q2 2017 Earnings Call Transcript

Published: 6 Aug 2017

[Operator:]

Good afternoon and welcome to SAGE Therapeutics Second Quarter 2017 Financial Results Conference Call. At this time, all participants are in a listen-only mode. This call is being webcast live on the Investors and Media Section of SAGE’s website at sagerx.com. This call is the property of SAGE Therapeutics and recording, reproduction or transmission of this call without the express written consent of SAGE Therapeutics is strictly prohibited. Please note that this call is being recorded. I would now like to introduce Paul Cox, Head of Investor Relations at SAGE.

[Paul Cox:]

Good afternoon. Today after market close, we issued a press release with our second quarter 2017 financial results along with the 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 Investor and 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 Dr. Jeff Jonas, our Chief Executive Officer, and Kimi Iguchi, our Chief Financial Officer. On Slide 3 is our Safe Harbor statement. During today’s call, we will make forward-looking statements, including statements about our expectations, plans and timelines for clinical development, reporting of clinical trial results and plan regulatory activities, the potential success of our development efforts and product candidates including the potential for approval and future commercial launch, our financial projections and expectations regarding other upcoming events. Actual results may differ materially. The risks and other factors that could cause actual results to differ are discussed in today’s press release and in the Risk Factor section of our most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission and other reports filed with the SEC. Any forward-looking statements represent our views as of today only. We may update these statements in the future, but we disclaim any obligation to do so. I would now like to turn the call over to Jeff.

[Jeff Jonas:]

Thanks, Paul. Good afternoon, everyone and welcome to our call. Please turn to Slide 4 for our current development pipeline. Our primary focus at SAGE is on building a company that can deliver differentiated medicines developed with a corporate dedication to making people’s lives better. Throughout our 6-year history, we’ve explored innovative methods of drug discovery and development as well as clinical trial design in pursuit of novel treatments for central nervous system, CNS disorders that may address gaps in the efficacy and safety profile of current therapies. We believe that this deliberate thoughtful and disciplined approach has facilitated the potential for two Phase 3 data readouts and multiple other clinical milestone events in the second half of this year. With our progress today, I am extremely proud of our team at SAGE. And the insight, they have made an understanding a diverse set of disease areas positioning SAGE for success as a potential multi-product CNS leader. Turning to Slide 5, I would like to update you on our progress in a number of our clinical programs. We recently completed enrolment in the Phase 3 STATUS trial, the first ever global randomized double-blind placebo-controlled trial and super-refractory status epilepticus or SRSE. We continue to expect to report top line results from the STATUS trial into third quarter of 2017 following completion of all study follow up periods and data analysis. We anticipate that this will be our next major data readout. As a remainder, we expect top line data to include the primary endpoint, safety intolerability and select secondary endpoints including open-label retreatment arm response and the CGI scale. We also expect to provide information on trial metrics such as response from RSE patients to the diagnostic screen and numbers of patients presenting for screening to provide greater granularity regarding the potential SRSE population at risk. Turning now to Slide 6. We are also making great progress in our other brexanolone program, our Phase 3 trials for developing brexanolone as a treatment for postpartum depression or PPD. This is the Hummingbird program consisting of two separate trials Study 202b and 202c. Both of these Hummingbird studies are enrolled and on track and we continue to expect top line results in the second half of 2017. As you may recall, the FDA has granted breakthrough therapy designation and the EMA has granted prime designation to brexanolone for the treatment of PPD. We conducted our prime meeting with the EMA earlier this year and recently received positive scientific advice. Incorporating a scientific advice from the EMA, we believe our proposed Phase 3 program if successful will be sufficient to support submission of an MAA to the EMA for the PPD indication in the EU. We anticipate that the outcome of the ongoing Hummingbird study if supportive of an MAA filing will inform any future regulatory discussions and potential post-marketing clinical development obligations. Also for brexanolone and PPD, we were pleased to have the Lancet recently publish the results from our Phase 2 double-blind randomized and placebo-controlled study of brexanolone in severe PPD. We are now focused on delivering Phase 2 results for brexanolone in both SRSE and PPD in 2017 and if successful, moving forward with efficient filings for regulatory approval in the U.S. and EU while incorporating the advice from EMA to better inform the timing and pathway for seeking approval in PPD in the EU. On Slide 7, let’s turn now to our lead oral product candidate SAGE-217 in Phase 2 development for both mood and movement disorders with 4 Phase 2 clinical programs now underway. SAGE-217 is a novel, proprietary, highly potent, orally-active neurosteroid that like brexanolone is a positive allosteric modulator of the GABA A receptor targeting both synaptic and extrasynaptic receptors. On Slide 8, we showed important update regarding 217 a major depressive disorder, AMDD. We are currently enrolling a multi-center double-blind placebo-controller randomized Phase 2 clinical trial of SAGE-217 in MDD. Due to the strong pace of enrolment, we now plan to increase expected enrolment to approximately 88 patients with moderate-to-severe MDD from approximately 66 patients. And we now also anticipate reporting top line results from the Phase 2 trial in the second half of 2017 rather than in 2018. As a remainder, the FDA grated fast-track designation to SAGE-217 in MDD in May based on our positive open label Phase 2 study, the results of which were recently presented at the Society of Biological Psychiatry Annual Meeting in May and these are shown on Slide 9 through 11. In addition to MDD, we have 3 additional Phase 2 clinical program study in SAGE-217 in both mood and movement disorders. We are currently conducting Phase 2 studies of SAGE-217 in PPD, essential tremor and Parkinson’s disease and we continue to anticipate top line results in the second half of this year. Now turning to Slide 12. We are also conducting a Phase 1 single-ascending dose trial of SAGE-718 in healthy volunteers. SAGE-718 is a novel, oral, first-in-class oxysterol-based positive allosteric modulator of the NMDA receptor. Positive modulation of NMDA receptors may have potential in the treatment of a range of neurological disorders associated with a variety of cognitive, neurological and behavioral symptoms. Top line results from the single-ascending dose study are also expected in the second half of 2017. And on Slide 13, we are continuing our research efforts on the earlier side of our GABA receptor modulation portfolio. We recently selected SAGE-324 as our next novel oral development candidate intended to be developed with a focus on indications involving GABA hypofunction. SAGE-324 is currently in IND-enabling studies. I would like to say that we are very pleased with the progress we are making across our portfolio with brexanolone in both SRSE and PPD with SAGE 217 across our Phase 2 programs and with our earlier stage compounds including SAGE-718 and SAGE-324. As I hope you can see, the remaining months of 2017 promise to be busy and potentially transformative. We expect to incorporate results from a number of clinical trials this year including our 2 Phase 3 clinical program which if positive would put us on the cusp of a potential product commercialization in 2018. Before I close, I want to say again, how proud I am of the great work and progress achieved by the SAGE team and their continued enthusiasm to develop novel and unique growth for people with CNS disorders. Our company building mission to position SAGE for long-term success as a multi-product neuroscience drug company. We believe that our wholly-owned internally generated pipeline and our great team at SAGE provide us with the opportunity for leadership in neuroscience R&D with the goal of bringing to market innovative medicines to address life altering CNS disorders. And while we are proud of our progress over these last 6 years, we are even more excited by what lies ahead and we look forward to updating you soon. With that, I will turn the call over to Kimi.

[Kimi Iguchi:]

Thanks Jeff. Let me start with the quick summary of our financial results for the second quarter and then provide an overview of our financial guidance. As you can see on Slide 14, we have a summary of our financial results for the second quarter. We ended the second quarter with $285.9 million in cash, cash equivalents and marketable securities. Research and development expenses were $55.9 million in the second quarter of 2017 compared to $26.1 million for the same period of 2016. The increase in spending was primarily due to several factors relating to advancing the portfolio and expanding our team For brexanolone and SRSE and PPD, we continue to incur expenses related to completing the Phase 3 STATUS trial in SRSE, conducting the ongoing Phase 3 trials of brexanolone and PPD and activities in preparation for a potential filing for regulatory approval. We also continue to advance our oral programs with SAGE-217 and SAGE-718. As Jeff described earlier, SAGE-217 is being studied in 4 ongoing Phase 2 clinical programs in the areas of mood and movement disorders. In SAGE-718 our first NMDA program has progressed into the clinical with A SAGE1 fair trial currently ongoing. We continue to invest in our preclinical and discovery efforts to identify our next potential development candidates. And finally, we are building our R&D organization to support development of our robust portfolio and anticipated growth. Turning now to general and administrative expenses. They were $15 million in the second quarter of 2017 compared to $8.9 million for the same period of 2016. The increase in G&A expenses was primarily due to the increase in personnel-related expenses, professional fees and facilities to support our expanding team and operation as well as continued preparation for a potential commercial launch. We reported a net loss in the second quarter of $70.2 million compared to a net loss of $34.7 million for the same period of 2016. As of August 3, we had 37.4 million shares outstanding. We are very pleased with our progress and our strong financial position and we are reiterating our financial guidance regarding our anticipated cash runway. We continue to expect that our cash, cash equivalents and marketable securities will fund the anticipated level of operations based on our current operating plans in to the second quarter of 2018. Our financial guidance takes in to account the continued advancement of brexanolone in SRSE and PPD including completing our Phase 3 clinical development programs, preparing potential regulatory submissions and continuing the ongoing precommercial activities to prepare for potential launch. Advancement of our Phase 2 development of our oral program SAGE-217 in mood and movement disorders, the Phase 1 development program for our first NMDA positive allosteric modular SAGE-718 and our discovery and research efforts to further advance and broaden our GABA and NMDA focus pipeline. We believe, we have taken a very thoughtful and disciplined approach to our financing strategy to-date. We have leveraged the achievement of significant milestones to efficiently and incrementally finance the growth in the portfolio and the organization. We have also been disciplined in our approach to spending, getting certain investments to specific milestones. This strategy has allowed us the flexibility to pursue our strategic and operational goals such as in – our expansion of our pipeline based on efficient and informative exploratory clinical trials. We plan to continue a thoughtful approach to financing our growth. We look forward to a significant number of milestones in the second half of 2017 which you can see on Slide 15. Each of these milestones and data readouts has the potential to further our efforts to develop innovative treatments to patients and we look forward to updating you on our progress in the upcoming months. With that, we now like to open the call for Q&A. Please limit yourself to 2 questions each so that we can leave enough time to get to everyone. Operator.

[Operator:]

Thank you. [Operator Instructions] Our first question comes from the line of Paul Matteis with Leerink. Your line is now open.

[Paul Matteis:]

Great. Thank you so much for taking my questions. Just one on SRSE and one on postpartum depression. On the STATUS study, Jeff, can you talk about the importance of secondary endpoints with respect to regulatory approval and commercial uptake and how well powered you are on various secondary endpoints of both clinical and pharmacoeconomic significance?

[Jeff Jonas:]

Thanks Paul. With respect to the regulatory pathway, the only prime – the only endpoint is the primary endpoint and that would be the freedom from recurrence, super-refractory status epilepticus, and the requirement to reinstitute third line anti-epileptic agents. The remainder of the endpoints obviously, I really can’t comment on powering per se but as a general – there are two – two ways to answer this. So as a general rule of thumb, the primary endpoint is the primary endpoint. There will always be interest in the secondaries but they are not a regulatory requirement, they may be of interest for the label and pharmacoeconomics. But that’s really all I think we can say about that. And as you all know, the study is robustly powered as it’s currently constituted.

[Paul Matteis:]

Okay, thanks. And then on the Phase 3 I.V. postpartum depression study, I am wondering when you guys look at these trials, what you think the biggest clinical risk is to success and I guess one theory that I was hoping you would offer your perspective on is whether or not when you look across CNS, you see a bigger placebo effect in Phase 3 versus Phase 2 and how the fact that this is an I.V. therapy with very strong Phase 2 data could come into play, is that at all concern for you. Thanks so much.

[Jeff Jonas:]

I think with respect to – with respect to the placebo effect, I think we showed pretty – well pretty low in the control study that the intravenous nature of the drug doesn’t have, and [ph] you’ve heard me say this, sort of more pharmacomythology. There is really no evidence that I.V. are inducing a placebo effect or deterring one. And I think as you look over the history of CNS, you will see that drugs with strong effect sizes almost always overcome placebo effect that are seen in populations. And I think, one of the aspects that we’ve tried to employ at SAGE is what we consider a sort of unique approach to these drug development and it’s one of the reasons we’ve been starting with the small methodology trials. I don’t know people sometimes characterize in these open label but these methodology trial has given us important insight into design of our Phase 2s and Phase 3s and has led us understand and articulate the pharmacodynamics of activity, led us understand the potential for placebo responses and I think, that’s why we’ve enabled to accomplish so much with the 8 data readout and with respect to PPD to design a relatively compact trial. We saw a very large effect size in a small study. We replicated it in the control study and so we believe that this should not be a factor given the effect size and the population that we are studying.

[Paul Matteis:]

Okay, so what do you think is the biggest risk success given the strength of the Phase 2 data?

[Jeff Jonas:]

That’s a – it’s a variant of what keeps me up at night. And the – I think for this type of study where you have a completely novel mechanism, you obviously have technical risk which is, can we replicate? We are pretty excited about what we’ve seen from the Phase 2 and the open label and the new preclinical data. So we think that we have a very high likely of activity. So then that usually comes down to trial metrics and trial performance patient selection. And I think, our team at SAGE has done a really good job of making sure that we get the right patients with the right disease stage at the right time. So we’ve done everything we can to mitigate that. But these are standard risk and we obviously have done everything we can to make sure they don’t happen to us.

[Paul Matteis:]

Okay, thanks so much Jeff.

[Jeff Jonas:]

Thanks Paul.

[Operator:]

Thank you. And our next question comes from the line of Cory Kasimov with JPMorgan. Your line is now open.

[Cory Kasimov:]

Hi good afternoon, guys. Thanks for taking my questions. I have got one on MDD and then a follow up on PPD. So for MMD, are you continuing to follow the initial 13 patients from the Part A non-randomized portion and if so do you have any additional insight into the persistence of the therapeutic effect past the 30 days. And with regard to that same study, what would you say is driving the more rapid and expected accrual in Part B. Is this mainly attributable to interest in this specific program. Is it the sheer unmet need of the syndication or perhaps both, and I have a follow up on PPD.

[Jeff Jonas:]

Okay, so exactly three questions.

[Cory Kasimov:]

Try to sneak it in.

[Jeff Jonas:]

Yes, really, very clever. Thank you. We have no more data that we can release on the patients from the first open label. I think, we have got everything we can from that open label study. I don’t think, we should say much more about it. We are obviously in this follow up study in the control study. We will be following, we will have data after day 42. What we found in this. And I think whenever you design a study around the novel therapeutic mechanism. So you hear from MDD, you think about the classic MDD study. You have your occupations around for 6 to 8 weeks. Here you are asking patients with really reasonably symptomatic disease to go on a study with only two weeks of therapy and so I think, we were pleased and by the level of interest both at the site and for patients with MDD to participate in the study. And so as you already know, we were put into a unique position of having a unique opportunity to both accelerate the time line and increase the number of patients at the same time. So we obviously took advantage of that. With respect to the actual mechanism, I think a number of us and myself included believe that there are other mechanisms for depression that transcend or maybe more important than the monoamine hypothesis, which has really been the underpinning of all these antidepressants for all these many years. And we’re all familiar with the STAR D study and other examples that suggest that SSRIs and related compounds are not – don’t really treat adequately the majority of these patients. If you look at our GABAergic mechanisms, we do have the operating hypothesis that depression may have some abnormal circuitry involved in its pathogenesis and that by attenuating that kind of hyperactive circuitry, you can actually in a sense reset the brain. And so in our theory, that’s always been the theory of why we saw the durability of effect with PPD and the same – obviously the hypothesis that we see with MDD. And you can, by analogy, look at what we do with SRSE where again you have a pathological circuit of hyperactive electrical circuitry that you basically break that with SAGE 547. Obviously, we have to confirm that in Phase 3 and then at that point, presumably you don’t have many relapses because you basically reset an abnormal circuit back to normal. So we think there may be some theoretical underpinnings that suggest that this mechanism of action may be distinct from more conventional and other types of molecules that impact the monoamine systems.

[Cory Kasimov:]

Okay. And I just had a very quick question on PPD and it was really just with regard to the Lancet publication from back in June. Curious whether it’s had much of an impact on the overall interest or awareness in this program or was the community already quite aware of 547 or brexanolone?

[Jeff Jonas:]

There are actually two answers to that. One is I think the patients who have the disease, the doctors that treat them are well aware of the significant level of unmet medical need that is attended to PPD. But what we have seen is the Lancet publication, it’s obviously a premiere journal, has really – and we’d had this experience with thought leaders who are not hitherto involved with PPD has really generated a great deal of interest in the disorder and also stimulating new types of approaches thinking that there may be different pathogenic pathways for PPD and other forms of depression. So we have seen a generalized information around PPD. I think among the more generalized psychiatric and neurological communities and the OBGYNs obviously.

[Cory Kasimov:]

Alright, great, thanks a lot. And good luck with all the upcoming data.

[Jeff Jonas:]

Thank you.

[Operator:]

Thank you. And our next question comes from the line of Ritu Baral with Cowen. Your line is now open.

[Ritu Baral:]

Hi guys, thanks for taking the question. Can you give us an updates on the Phase 3 data timelines. But you didn’t reiterate or mention when NDA submission might occur on the heels of any successful data. Should we think about that for both indications as a potential 2017 event or are we thinking 2018 and how does your CNC prep supply redundant supply inspections etcetera factor into all this?

[Jeff Jonas:]

With respect to the overall timeline, obviously, the company is going to do everything it can to expedite filing as rapidly as possible. One necessary meeting that you want – we will have obviously and that will determine the ultimate timeline will be the pre-NDA meeting subsequent to reporting hopefully positive data. So once you have the pre-NDA meeting, then we would probably at that point be in a much better position to formalize what we think the NDA submission timeline might be. So in general then we’re not yet prepared to provide any guidance on the NDA at this time. With respect to CMC, well I have to say, we had a – our team has done a great job in developing supply chain, developing commercial supply chain. We’ve already had, I think, we’ve made this public, pre-CMC meeting with the FDA. So we’re very comfortable with our CMC section, our supply chain, and clinical supplies. So all that’s going very, very well.

[Ritu Baral:]

Got it. My follow-up question is on the Hummingbird trial. Given the breakdown between 202B and 202C, the severe and the moderate patients, how do you see both those datasets feeding into any potential data, I’m sorry, potential label on successful data. Do you at this point expect a label restricted by severity or specifying severity or could it be more fluid than that?

[Jeff Jonas:]

We believe that the label will be a generalized label for postpartum depression and that by analogy we’ve seen that with depression where there’s almost routinely in many studies an healthy [ph] cutoff but nonetheless, you get the broad label. Also remember that our breakthrough designation encompassed the entire diagnosis of PPD. So we anticipate that these 2 studies will be sufficient both here and in the EU as we release today to provide a global label for the treatment of postpartum depression should the Phase 3 study readout positively.

[Ritu Baral:]

So a broad label globally with minimal parameters on severity then. Do you think that the data will then be more important for reimbursement versus the label? The 202C versus 202B?

[Jeff Jonas:]

No, I don’t think so. I think severity – there’s not always a correlation between severity and morbidity and I think that’s what you need to recognize. So severity, as you know, we started with severe mostly because of the requirement for hospitalization. So severity may determine for Sage 547 by example where a patient might be administered the drug but it’s not a biologically specific subtype. So we don’t anticipate that should impact it.

[Ritu Baral:]

Great, thanks for taking the questions, guys.

[Jeff Jonas:]

Thanks.

[Operator:]

Thank you. And our next question comes from the line of Tazeen Ahmad with Bank of America.

[Tazeen Ahmad:]

Hi good afternoon. Thanks for taking my question. The first one I have is probably for Kimi. It’s on expenses. So you’ve had a substantial jump in R&D. Can you kind of give us a scale of how to think about the rest of the year and directionally speaking going in for next year, you do have several studies underway. And a lot of them have a lot of patients in them, so that’s my first question. And the secondly, how do you view the competitive landscape in PPD. I think, one of your competitors announced that they would be starting a trial in PPD in the near term. How do you think your molecule might just be better than anything else that you are aware of in clinical development?

[Kimi Iguchi:]

Okay. I guess, I will start on the financial side and let me just tell you that we’re financially well positioned. I talked about this earlier. We have a very strong balance sheet. I can tell you that we take a very disciplined approach to how we do investing here at SAGE. The team really takes time to outline the plans and marry that to milestones and we really do a lot of looking at that and determining what spend we do now versus later. So the team has a very good handle on that and does a lot of prioritization along the way. And so that disciplined approach is going to really leave us a lot of flexibility going forward. Currently, our guidance remains the same from a cash perspective and we have cash runway into the second quarter of 2018.

[Tazeen Ahmad:]

Okay and then maybe just a quick follow-up on that. Do you expect the expenses for PPD and MDD to run equal to reach other? Or should one be potentially higher than the other?

[Kimi Iguchi:]

Well, we don’t really give that level of guidance at this point but I will say that we expect that the spend will continue to increase over time.

[Jeff Jonas:]

So you asked about PPD. A couple of points. One is all this – these classes of molecules are all the same and as we showed with our collaborators a few months ago, there are distinct differences between the molecules in SAGE’s pipeline and other companies. Our molecules in particular have the effect of upregulating extra synaptic GABAergic receptors, which appears to be unique to our compounds and we believe that activity may be instrumental in providing some of the benefit that we hope to display with our program. With respect to competitors in general, I think all I would say at this point is that we’re on the cusp of completing our Phase 3 program. Honestly, there’s no one else in Phase 3 and I don’t believe anyone has even begun rolling in an early Phase 2 program. So I think, what we’ve done at SAGE is beside establishing clear leadership I believe in the development pathway is we’ve established ourselves as leaders in the field with our relationship with thought leaders, our relationship with regulatory authorities, remembering that Sage 547 is the first psychiatric drug by example to get PRIME designation. So I think, we’re in a very good position to move forward very quickly and to provide this drug to patients in need.

[Operator:]

Thank you. And our next question comes from the line of Gary Nachman with BMO Capital Markets. Your line is now open.

[Gary Nachman:]

First on SRSE, now that you completed enrolment, have you reached the original target of 126 patients? Why did you have to go up to 180 sites? It seems like a big number and how were your able to have sufficient control of these sites in terms of enrolling the right patients and also the protocol?

[Jeff Jonas:]

We will provide – we’ve met our target enrolment and we’ll obviously, at the time of top line release, we’ll show all the patient numbers and all the data. So that’s number one. With respect to the number of sites, I think, we’ve said this all along. This is an orphan disease and episodic and we first had a lot of interest in patient and site wanting to join the study. So we did accommodate that but we always anticipated that in order to enroll these patients, we would need to have basically a net of sites ready to capture the patients wherever they got ill. Finally, we showed data I think last year at AAN or neuro-critical care, which one of those two, that showed we do extensive auditing. We have a lot of central control and so there’s a lot of regularization in the protocols of how – it was at NCS, on how these patients are treated. So we’re very comfortable with the regulatory and the conformity with respect to these patients across sites. Finally, just as a side point, given the dispersion of these patients, we understand, you always have a risk of site but it’s very unlikely that a single site in this kind of circumstance can be disruptive to the overall integrity of the database. So overall, we’re very comfortable with how the trial was conducted. Obviously, we’re pleased it’s completed and we’re looking forward to putting those data out in this quarter.

[Gary Nachman:]

And then on 217 for MDD, just remind us, is this something, you think you could market alone or would it be more ideal to have a partner before moving into a big Phase 3? And have you started discussions yet with any partners? And I guess also with greater visibility on filing in the EU for SRSE and PPD or are you having any discussions with any potential partners for ex-U.S. rights? Thanks a lot.

[Jeff Jonas:]

So one of the theses of SAGE, and I think it has been – we really want to become a leading CNS company. And we’re very proud of the people we’ve hired. We brought on some really – we have a great bench now, not only on R&D and financial, as Kimi is in the room – but also we brought on a great commercial team as well. So we are very – and I think our execution to date suggests that certainly on the development side, we’re perfectly capable of bringing most of our molecules forward by ourselves. With respect to marketing, I have a lot of confidence in the team we brought on and I think we can – I have a lot of confidence, we’ll be able to both develop and potentially launch a program, a drug for major depression in the future if we’re fortunate enough to have positive studies.

[Gary Nachman:]

That’s with MDD but what about looking outside the U.S.? If you file in the EU, I’m assuming you would need to have a partner to commercialize that.

[Jeff Jonas:]

We’ve actually begun work in the EU already. I’m very comfortable that we will be able to do that by ourselves especially for PPD and SRSE we have already had a lot of insights with payers and other entities in the EU, have begun work in that area. I’ll just say, as a publicly traded company, we’ll always do what’s best for the product. We will always do – if we, as we thought a partner could expedite development or expedite marketing in the EU, we’d certainly consider that. But at this time, we have extreme confidence in our team to be able to execute this globally.

[Operator:]

Our next question comes from the line of John Newman with Canaccord Genuity.

[John Newman:]

The first question I have is Jeff, I think in your prepared remarks, you mentioned that you will be discussing open label data for the – in the Phase 3 study for 547. I just want to confirm that that means you’ll be giving information on the percentage of patients that are able to maintain response for both the success and the failures.

[Jeff Jonas:]

Right. So basically, I think what we’re talking about that we’ll be providing the data on the re-treatment data for the patients who don’t respond during the placebo controlled portion of the trial. So those patients would be re-treated. Now to be precise, I’m just quibbling, it’s technically single blinded because of course the patients are – would be anesthetized and wouldn’t be aware of what they’re getting. But having said that, those data will be provided. We’re also intending to provide the relapse data out to the follow-up period. So all those will – that will all be provided.

[John Newman:]

Okay great. And then I wonder in terms of SAGE 217 in MDD for the Phase 2 study. Was the decision to increase enrolment made after the enrolment had already picked up or did the enrolment pick up after you decided to increase it?

[Jeff Jonas:]

I’m not sure, I could time these out. But all I can say is that enrolment was moving along very, very quickly and we had a lot of interest from the sites to enroll more patients and we simply accommodated that. It was simply an opportunity to both accelerate the trial and increase the end. So we just took this opportunity. It’s a unique opportunity, you don’t often get in running a trial and so we just took it.

[John Newman:]

Very good. Thank you.

[Jeff Jonas:]

Thanks.

[Operator:]

And our next question comes from the line of Tim Lugo with William Blair.

[Tim Lugo:]

Thanks for the question. Can you – is there a chance that we’ll get 202B data at a different time than 202C? And also, can you go over some of the advice that the European authorities discussed with you and any kind of adjustments that were made to incorporate that advice?

[Jeff Jonas:]

Okay so we’re not going to give anymore granularity on how the individual trials for PPD will readout. We’ll have to make the decisions based on – when they complete and at that point, we’ll have to determine whether we do them one at a time or not. So I really can’t comment beyond it at this point expect to say that both the studies are on track for reporting this half of the year. With respect to the EU, the top line result was that the file that we’re anticipating compiling now with the program for PPD will be adequate for filing an MAA in the EU. So we’re really very, very pleased with that outcome. Obviously, we suspect that having PRIME designation was helpful. We had a very good – a good response with EMA. Obviously, the content of most of the discussions remains proprietary for obvious both – for obvious reasons, I hope. I will say that with – as with every drug, there is always a profitability for post-approval commitments and there is for us. But a lot of that will be contingent on what the data show from the Phase 3. So it’s a little bit early to speculate what else might be required after a potential approval. But again, we had very clear communication with the EMA which is really all you can ask for as a company.

[Tim Lugo:]

Okay understood. And maybe for MDD, can you – did many of the patients from your proof of concept study, did they have prior ketamine use? I know that seems to be something that comes up a lot when I talk to KOLs. They seemed to be embracing ketamine more these days and I just want to know where do you think your 217 will fit in with that?

[Jeff Jonas:]

So I don’t have the data from the – from the patients from the first 10 but we should remember that we are not looking at treatment resistant depression. We’re looking at – we are developing this drug as a potential first line therapy for major depressive disorder. So we anticipate that these patients some may come in with having prior ketamine response, some may not. Usually, you’ll have a usual melanges of background medicines. Some may be first timers. So we are not proscribing it and the goal, obviously, for the program in the Phase 2 is to position this drug as first line and by that and by then, we will not proscribe any particular prior treatments.

[Tim Lugo:]

Understood. Thank you.

[Jeff Jonas:]

Thanks.

[Operator:]

Thank you. And our next question comes from the line of Edward Nash with SunTrust.

[Yun Zhong:]

This is Yun Zhong for Edward. Thanks for taking the question. And the first one is on the Parkinson’s disease program. I saw that the Part B is again an open label study in 10 patients seems to be a little different from the approach that you used for other programs and wonder is it because you just want to double confirm the efficacy signal before you move into maybe a large placebo controlled study?

[Jeff Jonas:]

That’s a great question. All the other questions are great too, by the way. Sorry. So what we did with Parkinson’s is sort of a good example of why we think we do things differently. So when we started this, no one had ever tested this mechanism in Parkinson’s before. So we used it – we look at a generalized population and we did this open label so obviously, we could titrate up and look at tolerability and things of that nature. And what we found, again, we could do it rather quickly that the patients who were tremor predominant were the ones who seemed to get the benefit. That allowed us to quickly pivot into this second trial that you’re alluding to also open label has adjuvant therapy for patients on their background medicines who have tremor predominant Parkinson’s. And so that now – that gives us the signal. We will then take those data and what we’ve learned from it much as what we’ve done with PPD as we did with tremor, as we did with SRSE and at that point use those data methodologically to help us design what we hope will be an efficient Phase 2 program hopefully in tremor predominant patients with Parkinson’s as adjuvant therapy. But I think, it’s important to point out that this is the nature of why we think we have a differentiated development approach. By doing these small, what we hope are methodologically appropriate open label studies that give us interpretable data that then allow us to design efficient Phase 2 programs.

[Yun Zhong:]

Do you have a clear hypothesis on the mechanism of action modulating GABA activity for tremor in Parkinson’s disease patient? I assume it’s probably – the tremor is probably different from essential tremor?

[Jeff Jonas:]

It is distinguished and the theory of that, that’s probably beyond a conference call, but there’s a fundamental theory that there’s the neurons in the substantia nigra that degenerate in Parkinson’s downstream are innervating GABAergic neurons. So there is a fundamental GABAergic deficiency. So that in theory, you can anticipate that positive allosteric modulation might be beneficial. How that conflates with the path of physiology in essential tremor, I think is not clear yet and I think some of the clinical data may in fact shed light on that.

[Yun Zhong:]

A question on the NMDA program if I can. So have there been any changes regarding the occasion that you want to pursue upon positive data from the Phase 1 study?

[Jeff Jonas:]

In terms of indication, I think the NMDA program, I think, is a one of a kind program at this point. So we’re still learning about the molecule and the mechanism. I think, it is fair to say that the team has done a good job exploring a universe of potential applications. So on the narrower side, I think, we made – we’ve discussed data already for Huntington’s disease. There’s some other rare diseases that we’ve noted. I’m not sure, we’ve articulated them where this mechanism may be amenable or useful therapeutically. On the larger market size, there are biomarker data across a number of large populations where an NMDA positive allosteric modulator might be useful. These include Alzheimer’s disease, schizophrenia, and even ADHD. All of these populations may have biomarkers that render them amenable to NMDA modulation. So we’ll be looking at those development opportunities once we clear the Phase 1 program. But I have to emphasize, we’re very excited about the 718 program. It’s a first in human program of its kind and we think it opens up a broad new range of possibilities for the company.

[Yun Zhong:]

Great, thank you very much for attending the questions.

[Operator:]

Thank you. And our next question comes from the line of Danielle Brill with Needham. Your line is now open.

[Danielle Brill:]

Thanks for the question. I’m just wondering with the timing of SRSE and PPD results being closer than originally anticipated, how are you thinking about your go-to-market plans?

[Kimi Iguchi:]

So this is Kimi. The commercial team has been quite busy, as you can imagine. And thinking about the sales force, this is just one piece of what they’ve been doing. Let me give you a little background at what they’re thinking. One of the things we’ve been talking about for some time is that we need a small hospital-based salesforce for SRSE. So that’s a small force of that 100 or so reps. With regards to PPD, initially, we can leverage the SRSE salesforce in the hospital setting but the team will continue to build out its specialty side salesforce that they’ll use for the outpatient setting.

[Danielle Brill:]

Okay great. And then can you just comment qualitatively on how enrolment is going in the other 217 programs, the PPD and essential tremor?

[Jeff Jonas:]

They’re all on track still for reporting out this half of the year. So we’re going to have a very busy half.

[Operator:]

Thank you. And our next question comes from the line of Carol Werther with H.C. Wainwright.

[Carol Werther:]

Thanks for taking my question. I was also wondering about the commercialization of PPD and exactly are you first going to focus on inpatient PPD patients in the EU and the U.S. and how many centers are there like that? And then where do you target next and can some of these patients be treated outside the hospital setting? Thank you.

[Jeff Jonas:]

Thanks for the question. Right now, our intent is to make the 547 available as broadly as possible with approval and we don’t anticipate the label will be restricted. One of the things that we’re looking at is how the patient’s own social situation and how the patient’s variant of illness might determine the locale of care. So we are looking at inpatient units. There are number of units around like that. We’re also in discussions with home infusion companies and there’s several companies of that nature who are very interested and eager to work with us to help us make the drug more broadly available. I think, it’s premature to go beyond that in terms of our actual logistics, but suffice to say, our intent is to make it broadly available as quickly as possible. I would make a slightly technical comment as well and that is that the drug itself is easy to administer. It’s not sclerotic. It’s given in low volumes, so it is – it would not be difficult to administer either at home or in a day hospital. So those are the things I just want to mention. But right now, our intent just to summarize is that we believe that we’ll be able to make it available not only in hospitals but through other venues as well.

[Carol Werther:]

Okay and then if you wouldn’t mind, how many employees you have now and how many do you plan to have in – say, the next year as you approach commercialization?

[Kimi Iguchi:]

Currently, we’re about 200 employees. And certainly, we take a very disciplined approach to how we add our headcount going forward. And so that will really depend on the milestones that we achieve.

[Carol Werther:]

Okay, thank you very much.

[Jeff Jonas:]

Thanks.

[Operator:]

Thank you. And our final question comes from the line of Laura Chico with Raymond James.

[Laura Chico:]

Good afternoon, guys. Thanks for squeezing me in. I think most of my questions have been answered here but just one last one. I guess obviously, the second half is let’s say a busy time of year for you guys in terms of readouts. How should we be thinking about specifically the Phase 2 readout for 217 in PPD and I guess kind of comparing that to 547 in severe PPD? I guess what does success look like for both of those? Is the benchmark different? Maybe any color you can provide there would be helpful.

[Jeff Jonas:]

Thanks for the question. We’re obviously hoping for a similar magnitude of effect with SAGE 217 and as you might expect. So beyond that, I’m not sure what else I could say. I think the course of therapies will be a bit long as you know from the design of the trial. And some of this is going to be learning for us is what the duration of an oral therapy might be required. But in general, our hope will be because we know 217 is well absorbed and we know that it has been very well tolerated our hope is that we will see a magnitude of effect that is somewhat in line or in line with what we’ve seen in the intravenous data so far.

[Laura Chico:]

Alright, thanks very much. Well I guess one follow-up to that too. As you’re thinking about all of these readouts, how are you considering prioritizing what advances next? Obviously, there’s a lot of puts and takes I realize. But is there any possibility that the Phase 2 MDD study right now could be a registrational study? And apologies if I missed that earlier.

[Jeff Jonas:]

Well I didn’t comment on that. I think, it’s premature to speculate. We think the study in size and design will certainly be a supportive study. A lot of it will depend on the MDD study and the nature of the data obviously, durability of effect, tolerability, and things of that nature. Most people think of depression based on the old style of program where you’re looking at three or four points on the AMD. You have to overpower a study, etcetera, etcetera, and you’re dosing for safety with a chronic oral therapy being administered over 6 months to a year. 217 may be distinctly – maybe distinct and different from that. So I think it’s premature to speculate how much more of a compact study requirement we might be able to achieve with that molecule. With respect to prioritization, we anticipated or we planned for success with these trials. And I think one of our core beliefs is that each of these indications that we’re focusing on or upon which we’re focusing, represents potentially important ground-breaking treatments for diseases that are really in need of new therapies. So for example, if essential tremor is positive or Parkinson’s is positive, we believe that we can accommodate those development programs moving forward. So I think from the standpoint of prioritization, we’re good for success with what we’ve had today. I think over the ensuring years, though for example with SAGE 324, we’ll be looking at other opportunities and prioritizing there as we introduce new indications for our newer molecules.

[Laura Chico:]

Thanks guys.

[Operator:]

Thank you. And this does conclude today’s Q&A session. I would like to return the call to Mr. Jeff Jonas for any closing remarks.

[Jeff Jonas:]

Well thanks again and thank you everybody for your attention today. I want to again thank the team at SAGE for all the great work that they’ve done this year and for getting us to the point where we have these multiple data readouts for this half of the year, which I think should be transformational for the company. So we’re all looking forward to seeing the data. I know I am and I want to thank everybody for your attention on the phone. I look forward to speaking with all of you in the future. So thanks again everybody and have a great afternoon.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a great day.