SAGE-319

Sage Therapeutics will also “pause certain earlier-stage programs, with the goal of making evidence-driven investments.” Sage Therapeutics will jettison 40% of its workforce as the company navigates a future for its Biogen-partnered drug after the therapy was rejected as a treatment for major depressive disorder (MDD). The company had already alluded to potential layoffs earlier in August when it revealed that the FDA had rejected the MDD approval application. The regulator did at least approve the drug, to be marketed as Zurzuvae, in the less financially lucrative indication of postpartum depression (PPD). It’s in PPD that Sage is now placing its bets, with CEO Barry Greene describing the biotech’s approach to Zurzuvae as “think big, start small and scale fast.” “Part of our efforts to become a leaner and stronger company means having to reorganize our workforce,” Greene added in the Thursday morning release. “Our business fundamentals are strong, we are well capitalized, and our goal is to put Sage in a solid position to optimize commercial execution and develop our pipeline with the goal of significant value creation.” It means that around 40% of the biotech’s employees will be heading for the exits. This major restructuring is “designed to right-size the organization as the company works to achieve sustained growth and allow for commercial hires to support the goal of a successful launch of Zurzuvae to treat women with PPD,” Sage said. The company will also “refine” its pipeline to advance its lead neuropsychiatric drug candidate SAGE-718. The NMDA receptor positive allosteric modulator is in development for various cognitive disorders including Huntington’s, Parkinson’s and Alzheimer’s diseases, with a slate of readouts lined up from next year. Sage also confirmed it will continue to work on SAGE-324, the biotech’s lead neurology program, which is in a phase 2 trial for essential tremor and being considered for other movement disorders like epilepsy and Parkinson’s. However, the company will “pause certain earlier-stage programs, with the goal of making evidence-driven investments,” it said. Sage didn’t go into further details, but the biotech's pipeline lists “additional clinical programs” as SAGE-319 for GABA hypofunction and SAGE-421 for NMDA hypofunction. The final major change outlined today by Sage was the move to “align its leadership team structure to scale with pipeline and commercial priorities.” The major C-suite shake-up will see long-standing Chief Scientific Officer Al Robichaud, Ph.D., leaving the leadership, along with Chief Development Officer Jim Doherty and Mark Pollack, senior vice president of medical affairs. Mike Quirk, currently SVP of discovery research, will step into the CSO role, with Chief Medical Officer Laura Gault, M.D., Ph.D., taking on Doherty’s responsibilities. Combined, the various pipeline, workforce and C-suite changes are expected to claw back annualized net savings of around $240 million, of which 60% will be related to R&D, Sage explained. The company is also still in line to pocket a $75 million milestone payment from Biogen once Zurzuvae notches its first sale for PPD. Sage ended June with around $1 billion in cash and equivalents, which it expects to keep the lights on into 2026.

The FDA requested an additional study before it could reconsider Sage Therapeutics' application in major depressive disorder. Sage Therapeutics is preparing to reduce its head count and pipeline in response to the FDA’s rejection of a Biogen-partnered drug as a treatment for major depressive disorder (MDD). It wasn’t all bad news, with Sage’s management saying they were “delighted” that zuranolone, which will be marketed as Zurzuvae, had been approved by the regulator as “the first-and-only oral treatment specifically indicated for adults with postpartum depression [PPD].” Sage is due to receive a $75 million milestone payment from Biogen upon the first sale of zuranolone for PPD. But in the far more commercially lucrative indication of MDD, zuranolone wasn’t as lucky. In a complete response letter, the FDA told the two companies they hadn’t provided “substantial evidence of effectiveness to support the approval of zuranolone for the treatment of MDD and that an additional study or studies will be needed,” according to Sage. “Sage and Biogen are reviewing the feedback from the FDA and are evaluating next steps,” the biotech added in a second-quarter earnings report Monday.  The company’s stock plummeted 48% to $18.71 as the markets opened Monday from a Friday close of $36.10. The failure of the MDD application also sent Sage into defensive mode, warning layoffs and a pipeline refocus could be coming down the tracks. “While we believe we are well capitalized, given the impact of the CRL for zuranolone in MDD on our plans, we are currently evaluating resource allocation, including pipeline prioritization and a workforce reorganization with a goal of extending our cash runway,” Sage CEO Barry Greene said in the release. Sage’s lead neuropsychiatric drug candidate SAGE-718 has a slate of readouts scheduled from next year, which should offer some distraction from the MDD rejection. SAGE-718 is a NMDA receptor positive allosteric modulator in development for various cognitive disorders including Huntington’s, Parkinson’s and Alzheimer’s diseases. Then there’s SAGE-324, the biotech’s lead neurology program, which is in development for movement disorders like essential tremor, epilepsy and Parkinson’s. Enrollment in a phase 2 trial in essential tremor is set to complete this year. Coming up behind it is SAGE-689, a GABAA receptor positive allosteric modulator in phase 1 development for disorders associated with GABA hypofunction. Also in phase 1 is SAGE-319, another GABAA receptor positive allosteric modulator Sage intends to study for social interaction disorders. “With a right-sized organization and portfolio, we believe we have an opportunity to emerge as an even stronger company,” Greene added in the release. “We plan to provide greater detail and next steps before the end of the third quarter.” On the surface, Sage hardly seems short of funds. The biotech ended June with $1 billion in cash and equivalents, which is expected to last into 2025. But in a hint of what’s to come, the company added elsewhere in the earnings release that as a result of the upcoming workforce and pipeline changes, Sage assumes its “operating expenses will decrease in 2024.” On a second-quarter earnings call with analysts Monday morning, Greene stuck close to his script, deflecting questions about whether Sage would be conducting further trials of zuranolone in MDD and the company's continuing working relationship with Biogen. “We don't agree with the FDA's view. We are evaluating the CRL and as soon as we can provide more clarity we will on what the next steps are,” the CEO said on the call. “We really do believe that zuranolone should be available to treat patients with MDD. But we've got to get there and until we're there we'll be solely focused on marketing Zurzuvae to treat women with PDD.” Chief Financial Officer Kimi Iguchi added that “when it comes to looking at the pipeline [and] workforce reorganization … we expect our evaluation of our resource allocation will incorporate the feedback from the FDA.” Zuranolone was designed to be a 14-day, fast-acting treatment—which stands in contrast to commonly approved depression therapies that can take weeks to kick in. But while investors have seen huge potential in the drug for both indications, they were “spooked … by the dearth of focus on the potential zuranolone approval in MDD/PPD in Biogen's earnings call,” Mizhuo analysts noted last month. Adding to the uneasiness has been Biogen’s own cost reductions, which included shaving off $700 million in operating expenses and another 1,000 employees cut from the roster. With all that going on, analysts had wondered at the time whether Biogen would still be committed to a big commercial launch for zuranolone. Reflecting on zuranolone’s MDD rejection by the FDA, Mizuho analysts pointed out that the depressive disorder was the “meaningfully larger opportunity” of the two indications Sage had requested, with potentially around an estimated $1.3 billion in 2030 sales for MDD compared to closer to $200 million for PPD. After zuranolone failed in the phase 3 MOUNTAIN trial in 2019, Sage increased the dose to 50 mg to ensure it passed the WATERFALL study. “Based on the MOUNTAIN/WATERFALL trials, it looks like increasing dose moderately doesn't appear to improve the treatment effect meaningfully and going significantly higher could lead to an undesirably higher sedation rate,” Mizuho analysts pointed out in a note Sunday. “As such, it's not clear what Biogen/Sage could do if they choose to run additional clinical trials,” the analysts concluded.