Analyst Conference Summary

biotechnology

conference date: July 31, 2024 @ 5:00 AM Pacific Time
for quarter ending: June 30, 2024 (second quarter, Q2)

Forward-looking statements

Overview: Zurzuvae revenue growing, but not that fast, and on a small base.

Basic data (GAAP):

Revenue was $8.7 million, up 9% sequentially from $8 million, and up 248% from $2.5 million year-earlier.

Net income was negative $103 million, up sequentially from negative $108 million, and up from negative $160 million year-earlier.

Earnings per Share (EPS) were negative $1.70, up sequentially from negative $1.80, and up from negative $2.68 year-earlier.

Guidance:

Cash should support operations into 2026.

Conference Highlights:

Barry Greene, CEO, said "We are pleased with the strength of Zurzuvae’s early commercial launch performance and its positive, real-world impact on women suffering from PPD. Supported by several tailwinds, including increasing demand among a mix of providers, particularly OBGYNs, we believe Zurzuvae is well-positioned to become the first line therapy and standard of care for women with PPD. While we are deeply disappointed by the results from the KINETIC 2 study and for the essential tremor community, we remain focused on progressing our pipeline and look forward to additional clinical data readouts expected in late 2024." Screening, diagnosis, treat for PPD are improving. Plans to expand the sales force in Q4. Biogen and Sage have been giving some free goods, but the rate of that is expected to decrease.

Biogen started Zurzuvae 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. Demand is strong and continues to grow.

In Q2 2024 Sage received $7.4 million, up 19% sequentially from $6.2 million, in collaboration revenue from Zurzuvae (50% of net revenue from Biogen). More than 1,400 prescriptions shipped and 2,000 writen in the quarter, about doubling Q1 rate. Most payers are aligned to provide access as a first line therapy. Coverage discussions continue to progress, with positive feedback. Medicaid review is ongoing, with most states completing in Q2. HCPs are becoming more confident in making diagnoses. Obgyns are the main prescribers so far. 80% of commercial lives now covered.

Sage estimates that about 477,000 women experience PPD annually in the US. However, many cases are undiabnosed or untreated when diagnosed. In Q2 Zulresso revenue was $0.6 million, other collaboration revenue also $0.6 million.

Inventory levels at wholesalers decreased in Q2, which is typical after initial stocking.

In late 2024 top-line data is expected from 2 of the Phase 2 Dalzanemdor trials. 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 and Huntington's. It is in an open-label Phase 3 safety study for HD cognitive impairment. In June the Surveyor Study met its primary endpoints for Huntington's Disease. Given results, primary endpoint for Progression Sduty in HD is being changed to Symbol Digit Modalities Test, with topline data expected in late 2024. The Lightwave Study, Phase 2, for HD with mild dementia should also report topline data in late 2024.

SAGE-324 program terminated after Phase 2 data in Q2 2024. Phase 2 placebo-controlled study for essential tremor completed enrollment in January 2024. Partnered with Biogen. The Phase 1 study had showed a 50% tremor reduction in ET patients.

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 $647 million, down sequentially from $717 million.

Cost of goods sold were $1.4 million. R&D expense was $63 million. Selling, general and administrative expense $56 million. Total operating costs $120 million. Income from operations negative $111 million. Interest and other income $8 million.

Q&A selective summary:

Zurzuvae sales revenue v. shipments and demand? The movement from the specialty pharmacy to the patient is shipments. Revenue is sales to wholesalers, inventory reduced to 5.5 weeks from 8 weeks in Q1. Free goods are a part of our strategy, went up in Q2.

Tracking to projections? We are seeing very much what we expected. Previously Obgyns had a lack of tools, now that they have a good tool they can screen and diagnose more. Also seeing prescriptions from psychiatrists as well.

PPD typically startes during pregnancy, so Obgyns are the typical place to start. We believe we can unlock more of the obgyn marketplace, so we are expanding our sales force.

HD endpoint change details? Dalzanemdor. Data showed smaller differences from placebo in overall, composite score than the particular endpoint.

Difference between prescriptions number and shipments number? Presciptions reported include both paid and free. We see little coverage denial. Shipments follow prescriptions, so cut off by end of quarter. Revenue is booked when Biogen ships drug to wholesalers.

Time from prescription to receipt of drug? Many get it in 2 to 3 days, some take longer. Want to shorten this for everyone.

Use of cash for business development? We do examine outside opportunities.

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