Q4 2024 Sage Therapeutics Inc Earnings Call
Good afternoon. Welcome to SAGE Therapeutics' fourth quarter and full year 2024 Financial Results Conference Call.
Currently, 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 Ashley Kaplowitz, Vice President of Investor Relations and Capital Markets at SAGE.
Good afternoon, and thank you for joining SAGE Therapeutics fourth quarter and full year 2024 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 and slides related to today's call.
I would like to point out that we will be making forward-looking statements which are based on our current expectations and beliefs. These statements are subject to certain risks and uncertainties and our actual results may differ materially. Please review 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 Barry Greene, our Chief Executive Officer, who will provide an overview of our progress during the fourth quarter and full year 2024.
Speaker Change: Our Chief Operating Officer, Chris Benecchi, will provide an update on the ongoing commercialization of Zerzube and key financial results.
Speaker Change: Our Chief Medical Officer, Laura Gault, will then provide a brief update on our pipeline. In addition, Mike Quirk, our Chief Scientific Officer, will be available for questions during the Q&A portion of the call.
With that, I'll now turn the call over to Barry.
Barry Greene: Thanks, Ashley, and thank you, everyone, for joining us this afternoon.
Barry Greene: 2024 was an important year for SAGE. Underscored by the early commercial success of Zerzuve, the first and only oral treatment approved for adults with postpartum depression or PPD.
Barry Greene: We enter 2025 with a plan to build on Zerzube's commercial momentum, a recalibrated R&D approach, and a commitment to financial discipline as we focus on enhancing growth for our shareholders.
Barry Greene: As we outlined at the J.P. Morgan Conference in January, we're focused on executing against the three core priorities in 2025, which are intended to deliver short, medium, and long-term value creation for shareholders and serve unmet needs of patients and families.
our former party,
Barry Greene: is to continue efforts to establish Le Rejuve as a standard of care for PPD.
Barry Greene: The first year of launch exceeded expectations, and we plan to invest in 2025 to fuel top-line revenue growth.
Barry Greene: In 2024, we were pleased to see more than 6,600 shipments of Zerzuve to women with PPD, which we believe reflects the growing demand for a fast-acting treatment for PPD and physician adoption across HCPs who treat PPD.
Barry Greene: There are two important dynamics we're starting to see as the launch progresses.
a promotionally responsive market, and a system-wide paradigm shift.
Barry Greene: Specifically, we're seeing signs of Zerzuvia changing practice patterns among OBGYNs and elevating a national dialogue around maternal mental health.
Barry Greene: These dynamics have the potential to accelerate growth and further drive urgency among HCPs in treating PPD.
Barry Greene: We believe these early successes validate our commercial strategy and provide greater evidence that Xerzuvé is the key to unlocking blockbuster potential in PPD. Importantly, that means helping many women suffering from this urgent medical condition.
Barry Greene: In addition to building on the commercial momentum of Zerzube, we're prioritizing our pipeline to focus on neuropsych and neurodevelopmental disorders.
Barry Greene: We believe a recalibrated R&D approach can create value over the long term.
Barry Greene: Laura will provide additional details on stage 319 and stage 324 as well as our NMDA receptor NAM platform.
Barry Greene: Lastly, we're committed to maintaining the strength of our financial position. With the commercial momentum of Zerzulli and PPD, our R&D approach, and an expected cash runway to mid-2027, we believe we are well positioned to focus on our goal of creating value for our shareholders.
Speaker Change: Now before I turn it over to Chris, I want to briefly acknowledge Biogen's unsolicited non-binding proposal to acquire SAGE, as well as our board's decision to initiate a strategic alternatives process.
Speaker Change: As we stated in our press release last month, the SAGE board concluded that the proposal significantly undervalued SAGE and is not in the best interest of shareholders.
Speaker Change: The board also decided to initiate a strategic review to evaluate a broad range of opportunities to maximize value for shareholders.
Speaker Change: As a reminder, we have not set a timetable for the review process, nor is there any assurance that the review process will result in any transaction or other strategic outcome.
Speaker Change: With this in mind we will not be talking about this further on this call. I do appreciate your understanding. Now with that we'll move forward and I'll now turn the call over to Chris. Chris?
Chris Benecchi: Thanks, Barry. As mentioned, we've made tremendous progress in the first full year of Zerzouve's launch in PPD, and I'm excited to discuss our recent achievements and ongoing initiatives.
Speaker Change: Afterwards, I'll review our results for the fourth quarter and full year 2024.
Speaker Change: Starting with the launch of Zerzube, we are pleased to see consistent demand growth quarter over quarter with nearly 2,500 prescriptions shipped to women with PPD in Q4.
Speaker Change: Across the full year of 2024, more than 6,600 prescriptions of Zyrzuve were shipped to women with PPD.
Speaker Change: We believe that we have continued to see strong demand growth in patient shipments because HCPs are becoming confident in the value proposition of Zerzube and what it potentially delivers.
Speaker Change: In the fourth quarter, Zerzuvia was prescribed across a breadth of HCPs who treat PPD, including OBGYNs, psychiatrists, and PCPs.
Speaker Change: Almost 80% of those prescriptions came from OBGYNs, who are the foundational focus of our launch strategy, since they see women throughout their peripartum journey, the most critical time to screen, diagnose, and treat.
Speaker Change: More than 70% of SIRS-UVAE patients are receiving SIRS-UVAE as their first new treatment for PPD.
Speaker Change: Further, we saw strong trends among prescribers in 2024 with about 60% of targeted HCPs writing repeat prescriptions after prescribing Zerzuvia.
Speaker Change: We also see that once an OBGYN has prescribed Zirzuve, there is a significant increase in the number of women with PPD they treat based on prescriptions for all medications.
Speaker Change: Our messages are resonating. Zerzube has a greater than 90% aided brand awareness among OBGYNs and psychiatrists.
Speaker Change: Before I turn to our plans for 2025, I'll provide an update on coverage.
Speaker Change: As of today, greater than 95% of commercial and Medicaid lives are covered or have a path to coverage, with the majority having no step edits or complex prior authorizations.
Speaker Change: This remarkable level of coverage one year into launch reflects payer recognition of the value proposition of Zerzube, which enables broad and equitable access for all women with PPD.
Speaker Change: To support the continued scaling of Zerzouve, we plan to move forward with a robust investment plan, which includes a joint sales force expansion to cover a wider reach of health care providers,
Speaker Change: Investment in media opportunities intended to further amplify the message that PPD is an urgent medical condition and greater visibility via social media designed to increase awareness and educational efforts.
Speaker Change: We are also planning to expand Zerzuve DTC, including the potential for targeted branded TV media later this year. Today's technology allows us to meet women with PPD in their most trusted channels, empowering them to speak to their physician about their PPD symptoms and appropriate treatment options.
Speaker Change: In terms of personal promotion, we are already seeing an early impact from the Salesforce expansion.
Speaker Change: In the territories where we expanded our sales force in the fourth quarter, we saw a 33% growth rate in patient shipments. We believe these efforts are important as we are seeing PPD to be a promotionally responsive market with significant growth potential.
Speaker Change: We have made remarkable progress in 2024 and are continuing to think big about the commercialization of Zerzuve as a treatment for women with PPD. We look forward to sharing additional updates in the coming quarters.
Speaker Change: Now, turning to our financial results for the fourth quarter and full year of 2024. As a reminder, our full financial results for these periods are detailed in our press release issued this afternoon.
Speaker Change: We reported collaboration revenue from the Sales Reserve of $11.4 million in the fourth quarter.
Speaker Change: a 4% increase compared to the third quarter of 2024, and $36.1 million for the full year. As a reminder, our reported collaboration revenue is 50% of the net revenues Biogen reports for Zerzuviae.
Speaker Change: It is important to note that while revenue may fluctuate based on inventory dynamics, we continue to see strong quarter-over-quarter demand growth in patient shipments and expect this growth to continue.
Speaker Change: R&D expenses were $37 million, and SG&A expenses were $54 million in the fourth quarter of 2024. Additionally, there were one-time restructuring expenses of $22.5 million in the fourth quarter of 2024.
Speaker Change: While Zerzoubi joint commercialization investment will increase in 2025, we anticipate overall operating expenses will substantially decrease in 2025 relative to 2024.
Speaker Change: This reflects reductions in R&D and G&A from our pipeline prioritization and the cost savings from the October 2024 reorganization. The first full quarter savings are expected to be realized in Q1 of 2025.
Speaker Change: Our net loss for the fourth quarter of 2024 was $95.8 million.
Speaker Change: and excluding any potential milestone payments we may receive under our collaboration agreements will support our operations to mid-2027.
Laura Gault: Now, with that, I'll turn the call over to Laura. Laura?
Laura Gault: Thanks, Chris. As Barry mentioned earlier, we remain focused on developing medicines for neuropsychiatry and neurodevelopmental disorders, where there is a strong scientific rationale and opportunities to address meaningful unmet needs.
Laura Gault: I'll begin with SAGE 319, our wholly owned, extra-synaptic-preferring GABA-A receptor positive allosteric modulator, or PAM, which is designed to have novel pharmacology and a differentiated profile from other GABA PAMs in our portfolio.
Laura Gault: Stage 319 is currently being investigated as a potential treatment for behavioral symptoms associated with certain neurodevelopmental disorders.
Laura Gault: including Autism Spectrum Disorder, Tourette's Syndrome, and other rare neurological disorders.
Laura Gault: These disorders place a high burden on patients, families, and the healthcare system.
Laura Gault: We are currently conducting a Phase I Multiple Ascending Dose, or MAD, study to help us better understand the safety, tolerability, and target engagement of SAGE 319 across a range of doses.
Laura Gault: We expect to share data from the Phase I MAD Study by late 2025 and anticipate that the upcoming results from this study could enable potential studies in a patient population in early 2026.
Laura Gault: Further, we have two Orally Administered NMDA Receptor Negative Allosteric Modulators, or NAMs, in preclinical development, SAGE 817 and SAGE 039.
Laura Gault: Our intention with these drug candidates is to provide a drug with similar or better efficacy than NMDA receptor blockers like ketamine, but with a potentially improved safety and tolerability profile.
Laura Gault: In addition, we continue to explore potential partnerships and outlicensing opportunities for some clinical and preclinical stage compounds.
Laura Gault: Lastly, as we have previously noted, we are also exploring SAGE 324 for potential indications, including seizures in developmental encephalopathies or DEEs.
Laura Gault: We expect to provide an update on next steps, if any, in mid-2025. To be clear, we are not spending to further develop SAGE 324 now, but rather we are evaluating SAGE 324 as part of an overall portfolio decision.
Laura Gault: With that, I will turn it over to Ashley to help facilitate the Q&A portion of today's conference call.
Ashley Kaplowitz: Thanks, Laura. As a reminder, we will not be answering questions related to our board's decision to reject BiGEN's unsolicited acquisition proposal or to initiate a review of strategic alternatives. And ask that questions be focused on our Q4 and full year 2024 results.
Ashley Kaplowitz: Please limit yourself to one question. If you have additional questions, feel free to return to the queue. Now, I'll turn the call over to the operator to handle Q&A.
Speaker Change: Thank you. If you would like to ask a question, please signal by pressing star 1 on your telephone keypad.
Speaker Change: If you are using a speakerphone, please make sure that your mute function is turned off to allow your signal to reach our equipment. Again, press star 1 to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal.
Speaker Change: We'll take our first question from Ritu Baral with TD Cowan.
Ritu Baral: Hi guys, thanks for taking the question. Barry, I wanted to ask about Biogen buy-in to the expansion of the marketing opportunity or the marketing effort. You mentioned that the Salesforce expansion is underway. It's in certain geographies. Can you elaborate on that specifically? Has Biogen matched
Speaker Change: the personnel expansion that SAGE has implemented or sort of the number and depth of the programs that SAGE has put into place.
Speaker Change: That includes not just the increase of sales force to a new level, but also appropriate investment behind all the other aspects of our commercialization effort, namely medical affairs, disease state awareness, DTC, including continued progress on the coverage side, which
Speaker Change: is outstanding but we want to continue to make better. So we're highly aligned and excited for a very successful 2025, helping as many moms as we can this year.
Speaker Change: Could we get a little more color on what the expanded efforts are?
Let me ask Chris if he can provide some color.
Speaker Change: point about Salesforce expansion. You have social media and a social media influencer campaign through TikTok and Instagram as well as Facebook are an important part of the social media effort designed to reach not only those that are living with PPD, but also HCPs who are treating many of these women with PPD. As Barry noted, connected TV and DTC is an important part of how we think about another way to reach those that are living with PPD that are out in the community, as well as peer-to-peer education.
Digital efforts more broadly.
Speaker Change: And I would round that out by saying that we have seen an interesting dynamic that we talked about in our prepared remarks where this is not only about the work that we do to make sure that physicians and women with PPD are aware of Zerzuvia, disease state awareness also plays an important role here and the importance of screening and diagnosis and all of this. So again, that's a key component to our initiatives in 2025 as we think about reaching as many women with PPD as possible.
Great, thanks.
Speaker Change: We'll move to our next question from Salveen Richter with Goldman Sachs.
Speaker Change: Hi, thank you for taking our question. This is Srinathorn for Salveen.
Speaker Change: Could you please elaborate on the inventory dynamics for the quarter, noting the slight disconnect between the prescription growth and the sales growth, and also could you speak to the proportion of free drugs being provided in 4Q?
Speaker Change: Yeah, Srinath, so we're, we as I just talked about, really happy with what we're seeing across the board in terms of 2024 performance, and that is we're seeing, you know, OBGYN step up to own
Speaker Change: to own the disease, ACOG guidelines being in line. We're seeing a promotionally responsive market, and we're seeing accelerants in terms of system-wide change. Media continues to cover Zerzube and PPD at an extraordinary high level. So all the dynamics that set up
Speaker Change: Zerzuvate entering Blockbuster potential are there. We also were happy that we saw over 20% growth in demand quarter-on-quarter and I'll ask Chris to talk about sort of the inventory dynamic but just to be clear but by demand demand is when a specialty pharma after script is entered ships that
Speaker Change: prescription to moms, that's a true measure of future revenue because that's the leading indicator. But Chris, you want to talk about kind of inventory demand in the supply chain?
Speaker Change: Revenue is measured when product moves from our alliance partner into the channel at the wholesaler level.
Speaker Change: Now, when it comes to inventory management, there's inventory that sits at the specialty pharmacies and inventory that sits at the wholesalers. And what we saw over the
Speaker Change: The fourth quarter is that based on channel dynamics, inventory can fluctuate through both what we've seen at specialty pharmacies as well as wholesalers. So, as Barry noted, when it comes to truly measuring performance, really looking at demand quarter over quarter is the most important metric that we can look at as we go forward. Now, with respect to the question about free drug.
Speaker Change: We've said that broad and equitable access is paramount for this launch, and we've really worked to ensure that broad and equitable access. Free drug plays a role. Free drug helps those that are not insured or underinsured have access to Zuzuve. Moms with PPD who need this.
Speaker Change: And what we saw over the course of the fourth quarter is a reduction in the percentage of free drug from what we saw in Q3. And we would anticipate that based on additional coverage that we would see with respect to commercial and Medicaid plans, that that percentage would decrease over time. Again, very encouraging when it comes back to ensuring that all women with BPD have access to this very important medication.
Thanks for the question.
Thank you.
Speaker Change: We'll take our next question from Anupam Rada with J.P. Morgan.
Speaker Change: Hey, guys. Thanks so much for taking the question. Just thinking a little bit more acutely about the first quarter, given historical sort of quarterly seasonality and 1Q in the industry due to payer dynamics, how are you thinking about this relative to how we should be thinking about Zerzouve potential headwinds in the first quarter? Thanks so much.
Speaker Change: Yeah, Anna Palm, thanks for the question. I'll start and see if Chris wants to add color. So we anticipate
Speaker Change: continued quarter-on-quarter growth, including the first quarter. And keep in mind that our reimbursement is commercial and Medicaid reimbursement, so we don't see a classic kind of Medicare donut hole first quarter issue. We should see continued growth.
on all dimensions in the first quarter.
Chris, anything to add? Yeah, what I would add...
Speaker Change: is that we know that this is a promotionally responsive market from what we saw over the course of the first full year. And what we saw when we increased the sales force during the fourth quarter of 2024, you know, there were fewer selling days during the month of December and it's part of part of November as well due to the holiday season. We don't anticipate that kind of disruption based on holidays.
Speaker Change: during the first quarter. So we're excited about what we have in front of us with respect to our ability to continue the successors of Zubay and Q1.
Thanks so much for taking the question, guys.
Thanks Anupam.
Speaker Change: We'll take our next question from Vikram Purit with Morgan Stanley.
Speaker Change: Hi, thanks for taking our question. I wanted to dig a little bit deeper on the Salesforce expansion, and also this is Morgan on the phone for Vikram. So for this recent Salesforce expansion,
Speaker Change: How significant of a sales bump are you anticipating over time and how quickly does the addition of reps to the field result in incrementally higher revenues?
Speaker Change: And then, additionally, how many reps were added through the last round of expansion and how large is the field force currently sitting? Thank you.
Speaker Change: Yeah, Morgan, thanks for stepping in for Vikram. So I can give you some color on what you're asking, but we're not giving guidance or specifics. So as Chris noted, we increased our sales for us in the fourth quarter. So we had them in place for the entire fourth quarter, and in those territories we expanded, we saw 33 percent.
Speaker Change: So we can't give go-forward guidance, but that's what we saw in the fourth quarter. We're very confident that the combined Salesforce extension will continue to be an accelerant to our launch, and we'll see quarter-to-quarter demand and revenue growth going forward.
Speaker Change: We'll move to our next question from David Amsalem with Piper Sandler.
Speaker Change: Hi. Yes, this is Alex on for David. I have one question for you. On the back of the corporate restructure last quarter and the extended cash runway, do you think you are at all constrained in terms of how much commercial support you can put behind the Zubay, particularly relative to the support that Biogen provides for the asset? Thank you.
Speaker Change: Yeah, I don't think we're constrained at all. As we've talked about from the beginning of Zerzubei launch, we thought really big about the opportunity with PPD. Again, we believe that Zerzubei has blockbuster potential.
Speaker Change: Epidemiologically, there's about a half a million women a year that
Speaker Change: have symptoms of PPD. Less than half of those are diagnosed and even less.
Speaker Change: are treated. So the opportunity here is significant. We're thinking big about the opportunity. We continue to focus and scale with success. We've scaled with success based upon 2020 for a vote since 2025, and we can continue to do so where we believe that a dollar spent will result in immediate benefits.
Speaker Change: improvement in demand and revenue. So we don't feel we're constrained at all.
Our next question comes from Paul Matisse with Stiefel.
Paul Matisse: Hey, thanks for taking my question. On the pipeline, Barry, can you just talk a little bit more about how you selected these indications? And I guess taking a step back, you know, neurodevelopmental disorders is an extremely challenging area for drug development, and you probably pick one of the hardest. You know, DEs, those are the toughest to treat, epilepsies. You know, why are these the best uses for capital for SAGE going forward over other alternatives? Thanks.
Paul Matisse: Paul, I'll start and I'll ask Laura to jump in. So, as we've talked about,
Paul Matisse: We took a hard look at, you know, really the last decade of development of SAGE.
Paul Matisse: and decided to focus on neurodevelopment and neuropsych with molecules that have pharmacologic properties that
you know, expresses the learnings we have.
Laura Gault: and I'll let Laura talk about those a little bit more. So we think we've got...
Speaker Change: As we thought about the pharmacology of the molecules in our pipeline, we realized that they would be a good fit for disorders like neurodevelopmental disorders, or NDDs, and for the DEEs.
Speaker Change: And we've seen efficacy across a number of GABA PAMs, including stage 3, 2, 4. We also know that another GABA PAM, Ganaxalone, has demonstrated efficacy in one of the DEs.
Speaker Change: So there's a strong evidence base there that suggests that we could be successful in moving Stage 3 to 4 for an indication like that.
Speaker Change: With regard to the neurodevelopmental disorders, one of the reasons that drug development in this space has been so challenging is that people are trying to treat the core symptoms of the disorder, like autism, they're trying to treat the communication difficulties.
Thank you.
Speaker Change: The approach that we're taking is different. We're really looking to address the behavioral symptoms associated with these disorders.
Speaker Change: and we believe based on the biology of GABA PAMs and how they work that we are likely to have improvements in anxiety.
Ashley Kaplowitz: Ashley Kaplowitz, Kimi Iguchi, Laura Gault, Barry Greene, Katie Plante, Kimi Iguchi, Laura
Yeah, I'd add that.
And we'll, you know, we'll...
Ashley Kaplowitz: We'll share more in the the quarters to come, but we're also taking...
Ashley Kaplowitz: a capital allocation approach where we can get answers relatively quickly versus the way that
Ashley Kaplowitz: And Paul, you and I talked about this in January, the NMDA NAMs are an incredibly well-validated target relative to the PAMs where we took a big swing and didn't see the results we wanted.
Speaker Change: Right, and Barry, when do you think you could get POC for each of these?
Speaker Change: We'll, you know, we'll share more in the future. So for SAGE 319...
Speaker Change: We'll have results from our multiple sending dose later this year, we've said late this year. What that will tell us is, do we have an efficacy profile that looks good but differentiated from the balanced PAMs? And more importantly, or as importantly, do we see a broadic therapeutic index? In other words, less CNS effects.
So we'll have that at the end of the year.
Okay, thank you.
Thank you all.
Speaker Change: We'll take our next question from Tizina Mott with Bank of America.
Speaker Change: Hi. Thanks for taking my question. Sorry if you already addressed it in your prepared remarks, but can you just talk a little bit about the dynamics of inventory? What have they been and how should we be thinking about incorporating that into our estimates for 2025? Thanks.
Thank you.
Speaker Change: We did, but let me start. I'll hand it over to Chris.
Chris Benecchi: We believe the most important metric to look at is shipments.
That's the true measure of demand that is
Chris Benecchi: When Zerzube exits the specialty pharma and gets into the hands of moms, specifically directly to their home. And the fact that we saw over 20% growth quarter to quarter with far less days educating healthcare providers in the field is a very strong sign.
Chris Benecchi: The revenue is more a function of inventory management. Chris, do you want to highlight where that supply chain... Yeah, I mean, inventory is managed, as Barry noted.
Chris Benecchi: at the specialty pharmacy level and at the wholesaler level. And I think what we see is that
Chris Benecchi: At both of those points, you have organizations trying to manage inventory based on what's happened in the past and their expectation for the future. And there's variability in how they think about
Chris Benecchi: you know assessing channel dynamics in order to make those decisions. So as you noted there's there's fluctuations in how they see inventory and it's most important.
Chris Benecchi: instead of looking at inventory and the implications that it has on revenue, to really focus in on demand, which is the truest way of assessing the demand for this product, the interest in this product on behalf of physicians and the women that they're trying to treat.
Chris Benecchi: And we said this before, but just for clarity, revenue is a shipment to the wholesaler, and that's when revenue is recorded.
Chris Benecchi: It's then pulled through to Specialty Farm and then again shipped to mom's house. So that whole supply chain, that inventory dynamic fluctuates there.
We'll take our next question from Amifatia with Needham.
Speaker Change: Hi, good evening. Thanks for taking my question. Just with regards to the additional investments that you highlighted, whether it's through DDC and some of the other sort of media and educational efforts, can you try and quantify
Speaker Change: by how much you're increasing that and with regards to the Salesforce expansion is that additional expansion anticipated later this year and you know at this point in terms of investments from Sage and Biogen
Speaker Change: Is it sort of about equal, or if you could sort of share any details on Biden's role in that, that would be helpful. Thank you.
Speaker Change: Thanks Tommy. I'll start and I'll ask Chris to come in and again we can give more color than...
Speaker Change: detailed specifics because we're not giving guidance. What I said is based on the success of 2024, we've entered 2025 with an aligned commercialization plan, which is a 50-50 COCO plan. So for every dollar spent, we're each spending 50 cents.
Speaker Change: We're both expanding Salesforce and we're both expanding efforts across all the other
Chris Benecchi: Dimensions that I highlighted. Chris, any other color to add? What I would add is the Salesforce expansion and the investment in non-personal promotion, we're amidst that. So we're investing in the Salesforce expansion now and investing in, as I mentioned earlier, things like
social media, and the Influencer Campaign.
Chris Benecchi: Getting ready to kick off DTC, particularly through channels like connected TV, where we can be very precise around our ability to reach
Chris Benecchi: certain populations that are actually suffering with PPD using DTC, as well as disease state awareness.
Chris Benecchi: to really, you know, not only highlight the importance of a medication like Suzube, but the importance of screening and diagnosis, and when you have symptoms, presenting those symptoms to your clinician, whether it's an OBGYN, a psychiatrist, or a PCP. So all of those things are coming together right now, and we believe will have impact as we continue to roll this out.
Speaker Change: We'll move to our next question from Brian Abrahams with RBC Capital Markets.
Speaker Change: Hi, this is Kevin on for Brian. Thanks for taking our question. Can you maybe talk a little bit about whether there's certain characteristics for OBGYNs that currently are not prescribing Zyruzuve? Does it mostly come down to awareness, or is there some other factor at play, maybe geographical location? Thank you very much.
Yeah, Kevin, let me ask Chris to comment on that.
Chris Benecchi: So, I think as Barry noted, 80% or nearly 80% of our prescribers are OBGYNs who are on the forefront of care. These are the clinicians who see women
Chris Benecchi: throughout their peripartum journey and who have the best lens on what it is that they need when they express the signs and symptoms of PPD. You know, what we see is that when we have an opportunity.
Chris Benecchi: to engage in OB-GYN with the safety and the efficacy profile of Zerzuve and they have the opportunity to try the medication that they respond very positively to that experience with more than 60% of those OB-GYNs becoming multiple prescribers of the medication. So what I think it comes down to is just our ability to really increase
Chris Benecchi: our reach and to increase our frequency in order to deliver what is very compelling messaging from a product that is performing in the real-world setting much like it did in Robin and Skylark, our Phase 3 Pivotal Clinical Studies. So very excited about the opportunity, as I noted, about increasing the size of the sales force and the investment in non-personal ultimately to get to the broader audience of clinicians that we can reach.
Speaker Change: Yeah, Kevin, once an OBGYN office has been educated and uses their zoovay, we're seeing a significant amount of...
Chris Benecchi: rewriting and a significant amount of more over 300% actually more PPD in that practice area. So we're excited as 2025 unfolds and we see the Salesforce expansion having an impact.
Our next question comes from Laura Chico with Wedbush Securities.
Speaker Change: Hello, this is Dylan Ong for Laura Chico. Thanks very much for taking our question.
Chris Benecchi: Just one on PPD. Do you anticipate any near-term revisions to treatment guidelines in the PPD setting from perhaps ACOG or AAFP? I'm wondering how this might accelerate or impact commercial outtake.
Chris Benecchi: pretty easy-to-use tools that don't require special training. And Zerzube, as the drug two specifically mentioned in guidelines, so...
Chris Benecchi: I've launched a lot of drugs in my day, it doesn't get any better than having your drug mentioned in guidelines before you launch and ACOG's been a great partner.
Chris Benecchi: In terms of other Congresses, we continue to work with others to update guidelines. The fact that ACOG did it so quickly is really helpful because, as we've already talked about, our prime audience here, because they're at the beginning of the patient journey are OB-GYNs.
Chris Benecchi: Barry, what I would add, I think, as you noted, the ACOG guidelines were in place in and around the time of our approval and launch. There were a number of tailwinds, the ACOG guidelines being one of those tailwinds, the media behind it, the fair ecosystem and how they really have enabled.
Chris Benecchi: broad and equitable access to this medication. So a lot of things really supporting this launch out of the gate that really augment what we've been able to take advantage of with the ACOG guidelines.
Douglas Sow: We'll take our next question from Douglas Sow with H.C. Wainwright.
Hi, Justin. Thanks for taking the questions.
Just curious, you've obviously had a lot of success getting
the OBGYNs to prescribe. Are you surprised?
that you haven't had more penetration with psychs. Thank you.
Yeah, Doug, thanks for the question.
Douglas Sow: We're actually, we're not surprised by the dynamic we're seeing at all. As we talked about, strategically in any drug launch, you want to focus on the front end of the patient journey. In this case, that front end is OBGYNs. Now, and we're seeing tremendous penetration there and a tremendous uptake in OBGYNs. As we said, once
Douglas Sow: NLBGYN is educated about Zerzuvia and uses Zerzuvia. We're seeing significantly more rewriting and coverage of this disease in their practice. So that's what we want to see.
Douglas Sow: Now, as Chris highlighted, of course, there are other health care providers that we want educated on, PPD and Zyzuve, Sykes, primary care, because
Douglas Sow: Not every OB-GYN picks up every mom, and not every woman develops symptoms in the course of being seen by their OB-GYN. It could happen, you know, two or three months after giving birth.
Douglas Sow: So, we are seeing the kind of dynamic exactly as we expected, and as we continue to expand use, OBGYNs will remain the front end of coverage here in care.
Speaker Change: Okay, great. And just as a follow-up, the questions I've gotten from
Speaker Change: investors in terms of 319 and the FAD and MAD-DEAD that you'll have this year. I'm just curious, I think it'd be helpful to provide some additional perspectives on, you know, beyond just the exposure.
Speaker Change: Well, what types of information you'll get from that study that will give people confidence that you have?
Thank you.
Speaker Change: Yeah, good point, Doug. You know, Laura, I want to talk about the kind of EEG signal we'll have and then the safety database, which is both of which will be very helpful instructing the path forward.
Speaker Change: So, as we mentioned, we're conducting a Phase I program, includes a SAD study and a MAD study, very conventional. The primary endpoints, of course, are safety and tolerability.
Speaker Change: But we know from pre-clinical data using exosynaptic preferring molecules that there's a different EEG signature that you can see in animals and that different EEG signature represents a different type of engagement of brain circuitry.
Speaker Change: We are able to look in the clinic using EEG to look for that same signature. And so when we come to the end of these studies, we'll be able to say whether that differential signal that reflects different activation of brain circuitry that we see pre-clinically also happens in patients.
and then the advertisers.
Thanks, Doug.
We'll take our next question from Oyer with Ms. Uho.
Hey, guys. Thanks for taking our question.
It's breaking away a bit from the...
Other questions?
Speaker Change: Just wondering, maybe could you help us understand a little bit what's going on with the agreement with your collaborator in Japan, Shionoji? Are you expecting any milestones or anything to that effect? I think they are expecting, or there could be a decision on their MDD application sometime in September. Thanks.
Speaker Change: Yeah, absolutely. Thanks for going there. So I'll comment and then Chris can talk about milestones. So what our Japanese friends have shared is that they expect a decision on MDD from the Japanese FDA later this year. And it's an MDD indication, which in Japan also includes women that have given birth. So it's folded under there as well.
Chris, you want to talk about the milestones?
Chris Benecchi: Yes, sure, Barry. If approved, we're entitled to receive regulatory and commercial milestones from Shinogi. Regulatory milestones amount to a total of approximately $55 million.
of which a portion would be achieved upon MDD approval.
Chris Benecchi: Now, there are additional commercially-related milestones, including upon first commercial sale. Currently, no milestones have been assumed in our cash runway expectations into 2027. Yeah, so if they're successful in getting approval and we get the milestones and royalties, that's upside to our cash runway.
Chris Benecchi: Could you maybe just speak a little bit about the potential opportunity in Japan?
for both of these institutions.
What I can say, what I can say is,
Chris Benecchi: The way Japan works, and you need to talk to them about it, is if they get the KOLs behind them, they should have a pretty interesting commercial uptake. But we have to talk to them directly about what their expectations are.
Okay, thank you.
Thank you.
We'll take our next question from Joel Beatty with Baird.
Joel Beatty: All right, thanks for taking the question. Could you give a sense of how sensitive the market is to marketing to physicians versus raising awareness among patients? And are scripts tending to come for patients who are already aware of Zerzube and asking about it or more about patients, you know, who may not have heard of it before?
Yeah, Joel, I'll ask Chris to comment.
Chris Benecchi: So, as I've already said, this is a promotionally responsive market. We see that whether it is the sales force or it is non-personal promotion and the various different tactics that we talked about that, you know, really there is an impact.
of those.
Chris Benecchi: in terms of, you know, is it coming from physician behavior? Is it coming from directly engaging with patients either through DTP or DTC? The sense that we have is it's coming from really a balance of both of those things, that this is a market in which, as Barry noted, we have an activated group of health care professionals, OBGYNs.
Chris Benecchi: who are really willing recipients of this message and then are subsequently not only treating but screening and diagnosing at a higher level. We also know that this is a market where patients are activated with the information that we provide and they're engaging their healthcare professionals in informed discussions that enable those clinicians to provide them with perspective on not only the importance of treating PPD but using a medication like SIRS-UV-A. So we believe that what we're doing right now is not only launching SIRS-UV-A but we're
Thank you very much.
We'll move to our next question.
We'll move to our next question from Sumat Kulkarni.
with Canaccord.
Sumat Kulkarni: Good afternoon. Thanks for taking our question. Given what we know about the size of the PPD market in terms of patient and prescriber numbers, do you believe this collaboration is required to get commercialization right on Zezou Way, and how would you characterize the sales force's level of focus with all the stuff that's going on in the background?
Sumat Kulkarni: Yeah so the collaboration exists so that's how we're operating and I can tell you that on a day-to-day basis the Salesforce and both commercialization teams are laser focused in helping as many moms in 2025 as possible. There are no distractions.
Thanks.
Thanks, Simone. You're welcome.
Our next question comes from June Lee with Truist Securities.
June Lee: Thanks for taking our questions. What proportion of the patients who get DERZUVE are getting it as their first-line therapy and for those who are diagnosed with PPD but getting some form of pharmacotherapy other than DERZUVE, what are some of the challenges there? Is this an issue of access or something else like perception as a novel drug without with relatively less safety data? Thank you.
Chris Benecchi: Yeah, June, thanks. Chris, you want to start and then I'll loop back to fill in some of the other color? Yeah, so what we've said is that with respect to all of the work that we've done with not only payers but also with physicians, we want to ensure broad and equitable access. And in doing so, this has enabled physicians to use this medication, Zerzuvia, as a first-line treatment.
Chris Benecchi: What we've communicated in our prepared remarks is now that more than 70% of those that are receiving the medication through the targeted HCPs that we're calling on, they're able to get this medication as a first-line medication, which is really incredible when you think about it, to have that degree of first-line use.
Chris Benecchi: Right out of the gate. So to me, I think that's something really to reflect on not only the work that we did with we've done with physicians, but also with payers now.
Chris Benecchi: In terms of other patients who may not be getting this in the first line,
Chris Benecchi: There are patients who come through who have a prior history on other antidepressants because
Chris Benecchi: perhaps they've been diagnosed with a condition by a clinician in the past. So, those that aren't getting it in the first-line position, aren't getting it because they're being excluded from getting it, they typically come forward on another medication, and that's the rationale.
Chris Benecchi: And as you said, June, in any novel drug launch, you have to overcome historical bias.
Chris Benecchi: Someone was used to using something one way, they've got to understand Joussouvi and how to use it. We're certainly seeing as we highlighted tremendous
Chris Benecchi: insurance coverage and very little if any out-of-pocket expenses so that it really is about historical bias more than anything else to continue to move to frontline and just to emphasize as Chris said
Chris Benecchi: For those that we're targeting, meaning we've educated, we've engaged, we're seeing significant frontline use for Zerzubek.
Thank you.
Speaker Change: We'll take our last question from Mark Goodman with Lear Inc. Partners.
Speaker Change: Hi, this is Basma for Mark. Thank you for taking our question. Can you provide some color on the growth in net in the quarter, given that there was higher, greater demand, but the revenue kind of seemed to be flattish?
if you compare the fourth quarter to the third quarter.
Speaker Change: Also, we have another question about, can you tell us now, after one year from the launch, if any of the treated patients needed to receive more than one treatment course, if so, can you provide some color on the proportion of these patients and whether there has been any pay or pushback? Thank you.
Speaker Change: Let me take that kind of in reverse order. So what we've seen and what we're hearing reported back is that
Speaker Change: The performance of Zerzube in the real world is as good or better than we saw in our clinical trials, so it's a rapid and durable response.
We're not picking up much, if any.
Speaker Change: kind of re-treatment at all. We're seeing that the 14-day course works rapidly and is helping moms, and that response is maintained. In terms of the dynamic, we've talked about this a couple times.
Speaker Change: The over 20% demand growth is encouraging in the fourth quarter. The revenue growth was really a matter of sort of channel management and inventory, not really a matter of gross to net.
Speaker Change: But again, we're excited by, thank you, we're excited by the starts to 2025 and where the launch is going.
Speaker Change: Thank you. That will conclude the Q&A portion of today's call. With that, I will turn it back over to Mr. Greene for closing remarks.
Barry Greene: Thanks, Taryn, and thanks everyone for joining us on this afternoon to review our results from the fourth quarter of full year 2024.
Barry Greene: As we look ahead to the ongoing commercialization of ZooZooVay and PPD and advancements in our focus pipeline, I'm confident we're making important progress for patients. We move forward with investments intended to power ongoing commercial success and create value for shareholders.
Thanks, everyone. Have a great evening.