Analyst Conference Summary

biotechnology

conference date: October 29, 2024 @ 1:30 PM Pacific Time
for quarter ending: September 30, 2024 (third quarter, Q3)

Forward-looking statements

Overview: Zurzuvae revenue ramping decently.

Basic data (GAAP):

Revenue was $11.9 million, up 37% sequentially from $8.7 million, and up 341% from $2.7 million year-earlier.

Net income was negative $93.6 million, up sequentially from negative $103 million, and up from negative $201.6 million year-earlier.

Earnings per Share (EPS) were negative $1.53, up sequentially from negative $1.70, and up from negative $3.37 year-earlier.

Guidance:

Cash should support operations into 2026.

Conference Highlights:

Barry Greene, CEO, said "We are committed to harnessing the full potential of Zurzuvae as a transformative treatment for women with postpartum depression. Our encouraging third quarter results, highlighted by continued growth in revenue and shipments, brings us one step closer to our goal of establishing Zurzuvae as the standard of care to help more women suffering from this debilitating condition. Looking forward, we believe that our strategic decisions, including the recent reorganization, will best-position Sage to foster long-term growth and support our mission of better brain health for patients." But "Recent pipeline setbacks require us to further focus our business priorities."

A strategic reorganization of Sage was announced in October 2024. Focus will be on the Zurzuvae launch and on dalzanemdor for HD. Should reduce costs. Expects op ex to decrease in 2025 from 2024. Will discontinue research on Zurzuvae for major depressive disorder.

In Q3 2024 Sage received $11.0 million, up 49% sequentially from $7.4 million, in collaboration revenue from Zurzuvae (50% of net revenue from Biogen). More than 2,000 prescriptions shipped, up 40% sequentially. Most payers are aligned to provide access as a first line therapy. Coverage discussions continue to progress, with positive feedback. Obgyns are the main prescribers so far, about 70% of total. 90% of commercial and Medicaid lives now covered. Inventory levels have normalized.

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

In Q3 Zulresso revenue was $0.8 million. It is being discontinued in favor of Zurzuvae.

Sage-718, now Dalzanemdor, has an ongoing Phase 2 study in cognitive impairment associated with Huntington's Disease, and an open-label Phase 3 safety study in HD. Data later this year. The study in Alzheimer's failed in Q3 2024.

Biogen terminated collaboration on Sage-324 in September 2024. Sage is looking at potential indications for further study.

IND enabling work is underway 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 GABA hypofunction.

Cash and equivalents balance ended the quarter at $569 million, down sequentially from $647 million.

Cost of goods sold were $5 million. R&D expense was $55 million. Selling, general and administrative expense $53 million. Total operating costs $113 million. Income from operations negative $101 million. Interest and other income $8 million.

Q&A selective summary:

Script trends from sales force expansion? Put in for Q4. Confident will see an uptick.

Early stage pipeline? 319 is differentiated for GABA. We hope it will be differentiated in the clinic. Rest of early pipeline is about understanding how they impact brain chemistry.

Specialty pharma for Zurzuvae? It is newer to the OBGyns. The process is getting better, we are not seeing complaints about drugs being shipped direct to mom's homes.

Color on Huntington's readout? Expect results before end of year. Science is encouraging. Dalzanemdor should restore a crucial neurosteroid that binds to receptors. Huntington's is genetically defined, the population is more uniform than in the studies that failed, so it should be easier to see the signal.

MDD decision? We think we should use our cash to turn Zurzuvae into a blockbuster. Biogen aligns with that.

Magnitude of potential sales increase given sales force increase? We always thought it has blockbuster potential. Field force impact should be seen next quarter. The number of women with PPD is large, but many are undiagnosed or untreated when diagnosed. If we have success we could expand the sales force further. This market responds well to promotion.

We are now reporting only prescriptions shipped, not prescriptions written.

Z is being used across a broad variety of PPD patients, including those with no prior history of depression. And across all ranges of severity. Sometimes on top of another anti-depressant.

We do evaluate outside pipeline candidates. But they have to be reasonably priced.

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