Analyst Conference Summary

biotechnology

conference date: February 14, 2024 @ 5:00 AM Pacific Time
for quarter ending: December 31, 2023 (fourth quarter, Q4)

Forward-looking statements

Overview: Just starting to sell Zurzuvae.

Basic data (GAAP):

Revenue was $78 million, up sequentially from $3 million, and up from $3 million year-earlier.

Net income was negative $33 million, up sequentially from negative $202 million, and up from negative $147 million year-earlier.

Earnings per Share (EPS) were negative $0.55, up sequentially from negative $3.37, and up from negative $2.47 year-earlier.

Guidance:

Cash should support operations into 2026.

Conference Highlights:

Barry Greene, CEO, said "2023 was a pivotal year for Sage, with key accomplishments achieved across our pipeline, culminating with the recent encouraging launch of Zurzuvae, the first-and-only once daily oral treatment for adults with postpartum depression, or PPD. We are incredibly pleased with the early progress on the launch. I am proud of our team's relentless work toward our goal of Zurzuvae becoming the first line therapy for women with PPD and believe strongly in the potential for Zurzuvae to make an impact in treating this devastating disease. Beyond our ongoing commercialization efforts for Zurzuvae, we look forward to delivering on multiple anticipated catalysts in 2024, including topline data from our studies evaluating dalzanemdor and SAGE-324. We believe our work has the potential to make a difference in the lives of patients with brain health disorders, and we look forward to providing updates on our progress over the coming quarters."

The FDA approved Sage and Biogen's filing for PPD (postpartum disorder) for zuranolone, now Zurzuvae, in early August 2023. However, the FDA issued a CRL (complete response letter) for the treatment of MDD (major depressive disorder). In November 2023 received a Schedule IV classification from the U.S. Drug Enforcement Administration (DEA). Biogen started sales in late December 2023. A full treatment course wholesale acquision price is $15,900. Because there is now a good oral therapy, providers are working on better screening for PPD.

In q4 2023 Sage received $0.8 million in collaboration revenue from Zurzuvae, or 50% of net revenue. This represented shipments to distributors, more than patients, as only 50 prescriptions were filled in December, though 120 were written. Sage received a $75 million milestone payment from Biogen for the first commercial sale of Zurzuvae in Q4. Biogen and Sage have completed the hiring of the sales team. Most payers are aligned to provide access as a first line therapy. Seeing increasing prescriptions in Q1 2024. Coverage discussions continue to progress, with positive feedback.

Sage estimates that about 477,000 women experience PPD annually in the US. However, many cases are undiabnosed or untreated when diagnosed.

Zulresso revenue in Q4 was $2 million; expects to decline, replaced by Zurzuvae.

Believes reorganization will save $240 million annually.

SAGE-324 Phase 2 placebo-controlled study for essential termor completed enrollment in January 2024. Topline data likely mid-2024. Partnered with Biogen. The Phase 1 study showed a 50% tremor reduction in ET patients.

In October 2023 the FDA granted orphan drug designation to Sage-718, now Dalzanemdor, in Huntington's. Sage-718 remains in multiple Phase 2 trials for mild cognitive impairment for AD, Huntington's, and Parkinson's. It is in an open-label Phase 3 safety study for HD cognitive impairment. In 2024 top-line data is expectef from 4 of the Phase 2 trials.

IND enabling work is undersway for SAGE-319 for disorders in social interaction, advancing soon into Phase 1 studies.

IND enabling work is underway for SAGE-421 for neurodevelopmental disorders, cognitive recovery, and rehabilitation.

IND enabling work is underway for SAGE-689 for acute GAGA hypofunction.

Cash and equivalents balance ended the quarter at $753 million, down sequentially from $876 million. Th3 $75 million collaboration milestone was recorded in Q4, but received in Q1 2024.

Cost of goods sold were $0.8 million. R&D expense was $64 million. Selling, general and administrative expense $55 million. Restructuring expense $0 million. Total operating costs $120 million. Income from operations negative $42 million. Interest and other income $8 million.

Q&A selective summary:

120 script details? Just 10 days, no color yet. Did include written by psychiatrists.

Payor color, first half? Positive dynamics, prescriptions paid for before coverage decisions. Medicaid paid, for instance.

324 for essential tremors? Saw statistically significant reduction in early trial. Now looking for optimal dosing, including time of day. Looking for a dose good for chronic use. Looking for at least as effective as current therapies, but with better safety and tolerability. Most new competitors have been calcium channel blockers.

Losing momentum on media? In January have field force deployed, focussed. We see no slowing of momentum, media coverage continues. Seeing PPD as a serious medical condition, not a moral failing. Trend is from suspicion of depression to diagnoses.

Free drug program? Zurzuvae for You mitigates out of pocket. Zero dollars for patients. If a payer won't pay, we will supply the med free, but we have had few instances of that.

We ship drugs to specialty pharma, when it becomes revenue. Prescriptions arive at the specialty pharma. When the shipment arrives at the home, that is filled. We have had some shipments in 24 to 40 hours, some took longer. Overall encouraging so far.

We are calling on high volume physicians who have experience PPD first. But we believe all clinicians should be educated.

718 study? Excited to have readouts this year. We believe we are aligned with the FDA on Huntington's to speed up the process. Looking forward to data readouts, could make some changes based on that.

Too early to guide to Zurzuvae revenue in 2024. We do not think December represents a bolus, given the nature of PPD.

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