Q1 2020 Earnings Call
[music].
Operator: SAGE Therapeutics Inc. All Rights Reserved.
Question during the session you wanted to press Star one on your telephone. Please be advised that today's conference is being recorded if you were crying. Your brother assistance. Please press Star Zero I would now like turn the conference over to your speaker today Jetboil. Thank you. Please go ahead Sir.
Hello, and thank you for joining Sage Therapeutics first quarter 2020 financial results conference call before we begin I encourage everyone to go to the Investor and media section of all upside at stage or ex Dot Com, where you can find the customer.
Operator: Ladies and gentlemen, thank you for standing by, and welcome to the SAGE Therapeutics announced first quarter 2020 financial results conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you're requiring any further assistance, please press star zero. I would now like to hand the conference over to your speaker today, Jeff Boyle. Thank you. Please go ahead, sir.
Just related to todays call.
I would like to point out that we'll be making forward looking statements, which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties and our actual results may differ materially.
Please consult the risk factors discussed in todays press release and in our FCC filings for additional details.
You will begin the call the prepared remarks by Dr., Jeff Jonas Our Chief Executive Officer, Mike Hogan, our Chief operating Officer, Intuniv, Gucci, our Chief Financial Officer.
Jeff Boyle: Hello, and thank you for joining SAGE Therapeutics' first quarter 2020 financial results conference call. Before we begin, I encourage everyone to go to the Investors and Media section of our website at sagerx.com, where you can find the press release related to today's call. I would like to point out that we will be making forward-looking statements that are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties, and our actual results may differ materially.
Jeff Boyle: Please consult the risk factors discussed in today's press release and in our SEC filings for additional details. We will begin the call with prepared remarks by Dr. Jeff Jonas, our Chief Executive Officer; Mike Clunan, our Chief Operating Officer; and Kimi Iguchi, our Chief Financial Officer. We will be joined for the Q&A session of the call by Dr. Steve Kaines, our Chief Medical Officer. I will now turn the call over to Jeff. Thanks, Jeff.
He joined for today's session of the call by Dr., Steve King, Our Chief Medical Officer, I will now turn the call over to John.
Hey, Jeff.
And thanks, everyone for joining us this afternoon.
We're pleased to update you today on our first quarter results first.
Let me congratulate Mike on his promotion to chief operating.
Well I can I have worked closely together over the last three years and we share a bold vision for Sage I'm confident that in his new position.
Mike will help to fill the potential of our brain health lifeline to his knowledge of our business and industry, it's passing help patients and his strong leadership.
Now I'll provide an overview of our first quarter activity and discuss our depression nurse psychiatrists in neurology franchise.
Jeff Jonas: And thanks, everyone, for joining us this afternoon. We're pleased to update you on our first quarter results. Let me congratulate Mike on his promotion to Chief Operator. Mike and I have worked closely together over the last three years, and we share a bold vision. I'm confident that in this new position... Michael helped fulfill the potential of our brain health pipeline through his knowledge of our business and industry, his passion for helping patients, and his strong, Now I'll provide an overview of our first quarter activity. We're going to discuss our depression, neuropsychiatry, and neurology, and Mike will provide a more detailed business update. And lastly, Kimi will provide an update.
And Mike will provide a more detailed business update lastly, Andy will provide an update on financials.
I want to take a moment to acknowledge the challenges faced by the global Cobot 19 and Dan.
I'm extremely proud of the way our employees partners and the community have responded and unprecedented times I'm happy to say that our team. The stage are handling virtual worked quite well.
Our progress across the pipeline to date remained strong.
Mike will provide additional detail about potential impact to our business. Although at this point our timelines remain intact.
Dave remains committed to discovering and developing new treatment options for people with brain health disorders.
And we believe today excuse me on this mission is even more important than ever as mental health issues are coming to the forefront and we'll continue to have a significant impact even after the current phase of the pandemic is over.
Jeff Jonas: I want to take a moment to acknowledge the challenges faced by the global COVID-19 pandemic. I'm extremely proud of the way our employees, partners, and the community have responded in this unprecedented time. I'm happy to say that our teams at SAGE are handling virtual work quite well, and our progress across the pipeline to date remains strong.
We believe this strategic decisions, we made the first quarter habits on the right track to continue our pipeline development a potentially important medicines.
Jeff Jonas: Mike will provide additional detail about potential impact on our business, although at this point, our timelines remain. SAGE remains committed to discovering and developing new treatment options for people with brain health disorders. And we believe today, exceeding on this mission is even more important than ever as mental health issues are coming to the forefront and will continue to have a significant impact even after the current phase of the pandemic is over. We believe the strategic decisions we made in the first quarter have us on the right track to continue our pipeline development of potentially important medicines. So let me start first with our depression. First, we made the difficult but prudent decision to reduce our investment in Zoressa, resulting in an expected annualized cost savings from Zoressa-related expenses of approximately $150 million.
So let me start first with our depression franchise.
First we made it difficult, but prudent decision to reduce our investment in zilretta, resulting in Nick and an expected annualized cost savings from this iressa related expenses of approximately 150 million.
We remain committed to working with health care providers sites of care and patient access to the rest though.
But our downsized commercial efforts will now focus primarily on geography that have existing and active treating sites.
With Iran alone following our earlier discussions with the FDA, we plan to initiate three new short term clinical studies and Twentytwenty.
With the potential if successful for Threed thing indications.
Each of these studies are independent of each other in terms of potential filed so this is an efficient pathway requiring we believe just one additional positive acute study to demonstrate efficacy in order to bring this medicine to patients in each of the first indications.
Jeff Jonas: We remain committed to working with health care providers, sites of care, and patients seeking access to Zoresto, but our downsized commercial efforts will now focus primarily on geographies that have existing and active treatment sites. With Serantolone, following our earlier discussions with the FDA, we plan to initiate three new short-term clinical studies in 2020, with the potential for it to be successful for three distinct indications. Each of these studies is independent of each other in terms of potential filings, so this is an efficient pathway requiring, we believe, just one additional positive acute study to demonstrate efficacy in order to bring this medicine to patients in each of the first indications. Of note, if we're successful, this can be achieved while maintaining a longer-term strategy with the episodic treatment of major depressive disorder, or MDD.
Of note. If we're successful this can be achieved while maintaining a longer term strategy with the episodic treatment of major depressive disorder or MDD.
One of the questions. We've been hearing over the last several weeks is related to our decision to at a 50 milligram dose to the phase three program.
While we won't disclose proprietary data regarding this decision you may recall that overall reports of adverse event in the mouse study with similar between Saran alone 30 milligrams that placebo.
So you're going to me ability to go higher in does in fact.
So right alone has been well tolerated in our pivotal clinical studies to date with no reports of loss of conscious to be clear.
We have provided and discuss our available data set with the FDA.
Which includes subjects treated across a broad range of doses and formulation.
Jeff Jonas: One of the questions we've been hearing over the last several weeks is related to our decision to add a 50 milligram dose to the Phase III program. While we won't disclose proprietary data regarding this decision, you may recall that overall reports of adverse events in the Mountain Study were similar between seranilone 30mg and placebo, stimulating the ability to go higher in dose. In fact
And these data include our proprietary PK biomarker adverse event and response data.
So we have agreed and again agreement to proceed with a 50 milligram dose in are ongoing at upcoming studies.
Clinically we already believe from our studies that 30 milligrams of active with two positive pivotal trials, one in postpartum depression and another in Med D D.
Jeff Jonas: Seratolone has been well tolerated in our pivotal clinical studies to date, with no reports of loss of consciousness. To be clear, we have provided and discussed our available data set with the FDA, which includes subjects treated across a broad range of doses and formulations. And these data include our proprietary PK, biomarker, adverse events, and response data. So we have agreed and gained agreement to proceed with a 50 milligram dose in our ongoing and upcoming studies.
And one that just missed the primary endpoint, while still demonstrating rapid onset.
If the new phase three trials with 50 milligram doses are successful having multiple dose options makes sense for a patient clinician and the path.
Let me turn out to our neurology franchise and stage 324, our next GABAA path, we remain on track to initiate a phase two trial lets say 324, 60 milligrams and essential tremor in the first half of this year as a reminder.
Jeff Jonas: Clinically,
Jeff Jonas: We already believe from our studies that 30 mg is active, with two positive pivotal trials, one in postpartum depression and another in MDD, and one that just missed the primary end time while still demonstrating rapid onset. If the new Phase III trials with 50 mg doses are successful, having multiple dose options makes sense for a patient, a clinician, and the payer.
That's all from or is the most common movement disorder and affects an estimated 6 million people in the U.S. alone and there is nothing innovation in the treatment of this disorder in 50 years.
Earlier open label data with stage 324 demonstrated it is a compound with the pharmacologic characteristic we believe are well suited for development opportunities not only in essential tremor, but also in epilepsy and Parkinson's disease.
Jeff Jonas: Let me turn now to our neurology franchise in SAGE 324, our next GABA-PAM. We remain on track to initiate a Phase 2 trial with SAGE 324, 60 mg in a central tremor, in the first half of this year. As a reminder, central tremor is the most common movement disorder and affects an estimated 6 million people in the U.S. alone. Moreover, there has not been any innovation in the treatment of this disorder in 50 years.
We're also progressing the development of stage send money and NMD, a Pam has the lead acid in an order in our nurse psychiatry franchise.
We plan to initiate one or more phase two way open label studies and disorders associated with cognitive dysfunction in the second half of this year.
As a reminder.
In a phase one study in patients with early Huntingtons disease, Sage 718 was well tolerated and patients demonstrated improved performance compared to baseline on assessments of executive function.
Jeff Jonas: Earlier open-label data with SAGE 324 demonstrated that it is a compound with the pharmacologic characteristics we believe are well-suited for development opportunities, not only in essential tremor but also in epilepsy and Parkinson's. We're also progressing the development of SAGE Stem118 and NMDA PAM as the lead asset in our neuropsychiatry branch. We plan to initiate one or more phase 2a open-label studies in disorders associated with cognitive dysfunction in the second half of this year. As a reminder..., In a phase one study of patients with early Huntington's disease, SAGE 718 was well tolerated, and patients demonstrated improved performance compared to baseline on assessments of executive function. We believe these data support our belief that SAGE 718 may have potential as a treatment for multiple disorders with impaired cognitive function, including Huntington's, Alzheimer's, and Parkinson's.
We believe these data support our belief that sage seven when they may have potential as a treatment in multiple disorders with impaired cognitive function, including Huntington all farmers in Parkinson's disease.
Before I turn it over to Mike, There's one more point I'd like to me.
Our teams have been hard at work assessing the potential impact koby 19 on trial condo.
As of today, our analysis continue to indicate paths forward, including the enrollment of studies. It open sites at a foot procedures in place for social distancing and have available to patients who desire to participate in clinical trials, so with that I'll nights and turn it over now to Mike.
Thanks, Jeff and good afternoon, everyone.
As Jeff mentioned during the first quarter, we continue to rigorous prioritization and resource allocation process to provide it clearly defined path forward.
Jeff Jonas: Before I turn it over to Mike, there's one more point I'd like to make. Our teams have been hard at work assessing the potential impact of COVID-19 on trial conduct. As of today, our analysis continues to indicate paths forward, including the enrollment of studies at open sites that have put procedures in place for social distancing and have available patients who desire to participate in clinical trials. So with that, I'd like to turn it over now to Mike.
Allowing us to advance programs across our depression, neurology and neuropsychiatry franchises.
Let me start was the Russell.
I want to first acknowledge it was a difficult decision to reduce our investment in this innovative treatment.
As Jeff noted earlier, we will maintain a little back systems arrest. So by focusing primarily on geography is with existing treating sykes and continuing to support women with P. Beattie.
Mike Clunan: Thanks Jeff, and good afternoon everyone. As Jeff mentioned, during the first quarter, we continued a rigorous prioritization and resource allocation process to provide a clearly defined path forward, allowing us to advance programs across our depression, neurology, and neuropsychiatry franchises. Let me start with Zorasso.
During the first quarter, we continued navigating the batteries to treatment with so rest so and revenue was 2.3 million.
17% increase over Q4 2019.
A number of moms infused in the first quarter increased by more than 20% compared to the previous quarter and 12, new treating sites of care were added in the first quarter, increasing the total number of sites that have treated patients with so rest so to 41 since launch.
Mike Clunan: I want to first acknowledge it was a difficult decision to reduce our investment in this innovative treatment. As Jeff noted earlier, we will maintain a level of access to Xeresso by focusing primarily on geographies with existing treatment sites and continuing to support women with PPD. During the first quarter, we continued navigating the barriers to treatment with Xoreso, and revenue was $2.3 million, a 17% increase over Q4 2019. The number of moms infused in the first quarter increased by more than 20% compared to the previous quarter, and 12 new treatment sites of care were added in the first quarter, increasing the total number of sites that have treated patients with Xelresso to 41 since launch. That said, the recent rapid spread of COVID-19 in the U.S. has resulted in a significant reduction in patient demand, and sites of care have paused treating new patients with Xeresso. We started to see this trend in March, and the number of sites halting treatment has increased. As a result, only 15% of sites that were active in the first quarter remained active in April.
That said the recent rapid spread of Cobot 19 in the U.S. had resulted in a significant reduction in patient demand in sites of care paused treating new patients with the rest so.
We started to see this trend in March and the number of sites pausing treatment has increased.
As a result, only 15% of sites that were active in the first quarter remained active in April.
We also believe that concerns about exposure to the virus have caused a reduction in a number of winning with PPD seeking treatment was all right. So as evidenced by the approximately 75% decline in monthly start for one volume in April compared to the average monthly volume in Q1.
Mike Clunan: We also believe that concerns about exposure to the virus have caused a reduction in the number of women with PPD seeking treatment with Xoreso, as evidenced by the approximately 75% decline in monthly start form volume in April compared to the average monthly volume in Q1. Given the impact of the COVID-19 pandemic in the U.S., we expect de minimis revenues from sales of Xeresso in the second quarter of 2020. We do not plan to provide revenue guidance for the balance of 2020.
Given the impact of the Cobot 19 pandemic in the U.S., we expect Diminimus revenues from sales of the rest so in the second quarter of 2020.
We do not plan to provide revenue guidance for the balance of 2020.
But we believe the cobot 19 pandemic will continue to have an adverse impact on so wrestle sales even after a pandemic really the restrictions or east as we anticipate sites of care will focus efforts on adjusting to new processes and addressing ongoing concerns stemming from the evolving situation.
Beyond the impact of cold in 19 on the rest so I want to spend a few minutes of bidding on the potential impact to our clinical programs from the pandemic and on our efforts to create risk mitigation strategies.
We're actively monitoring the guidelines offered by regulatory authorities related to conducting clinical trials during the cobot 19 pandemic.
Mike Clunan: But we believe the COVID-19 pandemic will continue to have an adverse impact on Zolresil sales even after pandemic-related restrictions are eased, as we anticipate sites of care will focus efforts on adjusting to new processes and addressing ongoing concerns stemming from the evolving situation. Beyond the impact of COVID-19 on DORESO, I want to spend a few minutes updating you on the potential impact on our clinical programs from the pandemic and on our efforts to create risk mitigation strategies. We are actively monitoring the guidelines offered by regulatory authorities related to conducting clinical trials during the COVID-19 pandemic. We are aware of many clinical sites that are operating during the pandemic and continue to see trial subjects in person, and are instituting social distancing measures. Given that the primary endpoint in all Zoranilone trials is assessed by subject interview, if a site pauses in-person visits for some or all participants due to the pandemic, we have the potential to implement telemedicine approaches with the appropriate documentation as directed by the regulators. If that were to occur, we would evaluate the potential impact on the trial and consider whether to make any adjustments if we thought adjustments were warranted.
We are aware of many clinical sites that are open operating during the pandemic.
Continue to see trial subjects and person instituting social distancing measures.
Given that the primary endpoint in OLS around alone trials is assessed by subject interview, if a site pauses in person visits for some or all participants due to the pandemic, we have the potential to implement telemedicine approaches with the appropriate documentation as directed by the regulators if that were to occur we would evaluate the potential impact.
Act on the trial and consider whether it make any adjustments if we thought adjustments warranted.
At this time, our timelines for initiating new trials with Saran alone as well as the two phase two trials with stage 324, and stage 718 remain unchanged with anticipated initiation is for this year.
We are executing against the variables, we can control focusing on patient safety and data collection.
With the rent alone. Our plans include initiating three new short term clinical studies in 2020 with the potential if successful for three distinct indications postpartum depression.
Q rapid response therapy for arty.
[noise] MDD when coal initiated with a new standard antidepressants and episodic treatment at MTD.
Mike Clunan: At this time, our timelines for initiating new trials with Sirenalone, as well as the two Phase II trials with SAGE 324 and SAGE 718, remain unchanged with anticipated initiations for this year, and we are executing against the variables we can control, focusing on patient safety and data collection. With Soranalone, our plans include initiating three new short-term clinical studies in 2020 with the potential, if successful, for three distinct indications, postpartum depression, acute rapid response therapy, or RRT, in MDD when co-initiated with a new standard antidepressant, and episodic treatment of MDD. Importantly, these pending studies are designed to allow for an NDA submission for Zaranolone, potentially for a range of doses, with only one additional positive study to support efficacy in PPD and in RRT when co-initiated with a new standard antidepressant. For the episodic indication, we would need one additional positive efficacy study plus data from the Redwood study. We're also currently evaluating the ongoing Zaranulon Clinical Pharmacology and Safety Program and plan to finalize requirements to support a potential future NDA with the FDA. This is a good example of our overall approach.
Importantly, these pending studies are designed to allow for an Indian submission for is around alone potentially for a range of dosing with only one additional positive study to support efficacy in tpd and in our arty when co initiated with a new standard anti depressant.
For the episodic indication, we would need one additional positive efficacy study plus data from the Redwood study.
We're also currently evaluating the ongoing was around alone clinical pharmacology and safety program and plan to finalize requirements to support a potential future M.D.A. with the FDA.
This is a good example of our overall approach, we leveraged learnings quickly adapt our new and existing trials and create multiple shots on goal all with the mission of bringing medicines that matter to people with brain health disorders.
As we prepare to initiate these trials. Our efforts are currently focused on database development I RV approvals contracting investigator meetings and site activation all of which can be managed remotely and are therefore minimally affected by the cobot 19 pandemic at this time.
Mike Clunan: We leverage learnings, quickly adapt new and existing trials, and create multiple shots at goal. All with the mission of bringing medicines that matter to people with brain health disorders. As we prepare to initiate these trials, our efforts are currently focused on database development, IRB approvals, contracting, investigator meetings, and site activation, all of which can be managed remotely and are therefore minimally affected by the COVID-19 pandemic at this time. In addition, sites conducting the ongoing Shoreline trial remain active by utilizing social distancing policies and, where necessary, remote resources.
Mike Clunan: From a sequencing perspective, we expect that the new 50 mg cohort for the Shoreline study and the placebo-controlled 301B study, which we are now calling the Waterfall study, will begin enrolling at sites that are able to see subjects in person. We also plan to initiate the TPD study and finally the RRT study later this year. We also expect to initiate the phase two trial with SAGE 324 in a central tremor by the end of the second quarter, and one or more open-label phase 2A studies with SAGE 718 in disorders associated with cognitive dysfunction in the second half of this year. And again, we are currently focused on database development, IRB approvals, contracting, investigator meetings, and finalizing site activation. Before I hand it off to Kimi, I want to reinforce our commitment to leveraging learnings and creating medicines that matter. We look for multiple pathways to deliver on our mission, including innovative clinical trial designs, business development opportunities, and executing against well-thought-out strategies to get medicines that matter to patients as quickly as possible. And now, I'll turn the call over to Kimi to review our finances.
Kimi E. Iguchi: Thanks Mike, and good afternoon everyone. Before I update you on our financial performance for the quarter, I want to take just a moment to mention how pleased we are with the progress the team has made over the last few months in the face of some truly unprecedented circumstances. As an organization, we've leveraged our resilience to overcome difficulties. I remain as confident as ever that we have a strong financial foundation and the discipline to enable us to operate efficiently as we execute against our current goals.
Kimi E. Iguchi: While these unprecedented times have the potential to impact our business, we believe we're well capitalized financially to advance programs across our three brain health franchises for the remainder of 2020. Back in December of 2019, with the Mountain Data Readout, we made difficult prioritization and resource allocation decisions. At that point, we paused non-critical investments as we awaited clear direction on our path forward for Xurano. With that clear path forward for xeronalone, and in the light of the pace of xyloresto uptake, we determined the need for restructuring. This is a difficult decision.
Kimi E. Iguchi: This encompassed major cost reductions and a reallocation of resources intended to help SAGE advance its mission of bringing medicines that matter to people with brain health disorders. The restructuring included a workforce reduction of more than 50% as well as decreases in external spend. This will result in expected annualized cost savings of approximately $170 million. A significant portion of those cost savings will be related to Zilresso commercial operations and related GNA supplies. As part of the restructuring, we will record a charge of $31 million.