SAGE (2020 - Q4)

Good morning. Welcome to Sage Therapeutics’ Fourth Quarter and Full Year 2020 Financial Results Conference Call. Currently, all participants are in a listen-only mode. This call is being webcast live on the Investors & Media section of Sage's website at sagerx.com. This call is the property of Sage Therapeutics and recordings, 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 Jeff Boyle, Vice President, Investor Relations at Sage. Jeff Boy

Good morning and thank you for joining Sage Therapeutics fourth quarter and full year 2020 financial results conference call. Before we begin, I encourage everyone to go to the Investors & Media section of our website at sagerx.com where you can find the press release related to today's call as well as the slides that contain supplemental details. 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 consult the risk factors discussed in today's press release and in our SEC filings for additional details. With me on the call today are Barry Greene, Our Chief Executive Officer who will set the context and provide some opening remarks. Steve Kanes, our Chief Medical Officer who will review our clinical progress to-date and Kimi Iguchi, our Chief Financial Officer who will provide a financial overview. We will then be joined in the Q&A by Mike Cloonan, our Chief Operating Officer. And with that I will turn the call over to Barry.

Thanks Jeff. And thanking everyone for joining us this morning. The end of 2020 and the beginning of 2021 have been terrific for Sage and we're pleased to update you on the progress we're making in our efforts to build the leading brain health company. Positioning Sage to become a top-tier biopharmaceutical company. With a pandemic raging the U.S. engaged in destructive political discourse and events highlighting once again the work to be done to eliminate racism and racial injustice 2020 was a particularly challenging year for all of us and on top of that Sage had additional significant challenges to work through. I'm proud to see however that the Sage team demonstrated grit and determination with a commitment to science, innovation and execution throughout 2020 and into 2021 and despite these headwinds 2020 was the year marked by progress across our entire pipeline. Today we have three programs in late stage development with five ongoing phase three trials due to readout this year. Additionally, we have five mid and early stage programs in clinical development and we're committed to a goal of developing two or more high quality IND enabling investigational products per year by 2023. Sage is tackling big problems of global health in areas where there has been little innovation over the past few decades. In just under a decade since the company was founded we made deep scientific progress in understanding brain circuitry by focusing on the GABA A and NMDA pathways and applying unique chemical innovation in the area of neuroactive steroids including oxysterol chemistries. The team has created innovative potential therapeutics focused on allosteric modulation building from knowledge of endogenous starting points to target receptors that dial in specific properties to engage these pathways with highly tailored approaches. As you all know I joined Sage as CEO in December. I believe Sage's mission making medicines that matters so people can get better and stay better is achievable through the innovative ways Sage discovers and develops medicines. Importantly, our approach to-date has worked. Sage developed the first ever treatment specifically approved for women with postpartum depression and has a rich pipeline of potential treatments focused on brain health that have successfully developed will give patients the opportunity to get their lives back. We have an extraordinary opportunity to transform the lives of millions of people with brain health disorders. Sage is at the forefront of developing therapeutics targeting brain health disorders. I believe this is the next frontier of innovation. What I saw and continue to see and Sage is scientific rigor with a proven track record of successfully converting robust chemical capability into a rich pipeline of novel clinical programs, a deep pipeline with multiple franchises, strong collaboration partners, the resources needed to become the leader in brain health and mission-driven employees who are determined to make a difference in the lives of patients and that cannot be underestimated. But what I was particularly struck by and what I consider to be one of our core strengths is that we are one of the few brain health companies that drives drug development every step of the way from Sage creative development programs through research into clinical development and approval. I'd like to walk through some of the highlights of 2020. In November, we announced a transformational global collaboration with Biogene for Zuranolone and SAGE-324. We believe Biogen is the right partner and this collaboration gives us the opportunity to reimagine depression and essential tremor while also potentially expanding and accelerating development of innovative brain health treatments on a global scale. We now have the potential to reach over 450 million people around the world with our innovative product candidates if we're successful and with an experienced partner for Zuranolone and SAGE-324 and more than $2 billion of capital we're in a stronger position than ever to accelerate not only the development of our late stage GABA programs but also our promising NMDA platform and the development of our novel discovery programs advancing our mission of making medicines that matter. In October 2020, we announced positive interim data from the open label phase 3 SHORELINE study 30 milligram dose. This first of a kind naturalistic longitudinal clinical development trial conducted as part of our program in major depressive disorder is designed to naturalistically follow patients with MDD and evaluate the safety and tolerability of both the 30 milligram and 50 milligram doses of Zuranolone in adults for up to one year. Importantly the interim data showed that more than 70% of patients who responded to an initial course of treatment with 30 milligrams of Zuranolone needed just two or fewer two-week treatments in a one-year follow-up period. That's a total of two to four weeks of treatment or better yet 48 weeks without Zuranolone treatment. For patients this alternative approach to treatment could mean they are no longer defined every day by their depression. Additionally Zuranolone was well tolerated in the study with a safety profile consistent with results to-date. We believe these data reinforced the potential of Zuranolone to become an as needed treatment option for patients with MDD. Steve will provide additional learnings from SHORELINE later in the call. I will say these data are very consistent with what we've seen with Zuranolone and clinical trials to-date with more than 3,000 subjects or patients dosed we've seen a rapid onset of activity, durable effect over the study period, clinically meaningful improvements and depressive symptoms and Zuranolone has been generally well tolerated. If Zuranolone continues to perform as well as these data demonstrate and we succeed in obtaining the necessary regulatory approvals it will be a significant advantage in how depression is treated and Sage along with our collaboration partners will be well-positioned to help patients across the globe deal with the brain health pandemic that hundreds of millions of people are today facing. I'm incredibly impressed by the Sage team and what they've accomplished over the last year. We initiated six new clinical trials across our portfolio in 2020 and demonstrated our ability to adapt and work flexibly across our organization. 2021 promises to be a catalyst rich year with 10 readouts expected across our multi-franchise brain health portfolio. If successful we believe we have ability to pursue treatments for diseases that affect hundreds of millions of people worldwide. With that I will turn the call over to Steve to discuss the progress in our clinical development programs. Steve?

Thanks Barry and good morning everyone. I will begin with an overview of our lead clinical program Zuranolone currently being studied for the treatment of major depressive disorder or MDD and postpartum depression or PPD in collaboration with Biogen. In 2020 we initiated six clinical trials across our portfolio; three of which were phase 3 pivotal studies with Zuranolone. We believe these if successful will be supportive of an innovative approach to treating MDD and PDD. In designing these studies we've diligently leveraged the learnings from our prior studies with Zuranolone including the MOUNTAIN study, our development program is designed to achieve an NDA as efficiently as possible and the ongoing studies may support paths to approval with three distinct opportunities to address patient needs. I will begin with MDD. Last year we initiated the pivotal phase 3 WATERFALL study investigating a two-week course of Zuranolone 50 milligrams for treatment of MDD episodes. Today we announced that this study is now closed to enrollment with more than 525 patients expected to be randomized and we're on track to report data in the first half of this year. These data if positive will further support our belief that depressive episodes can be treated as needed; a paradigm shifting approach. We are also evaluating Zuranolone in the phase 3 open label SHORELINE study designed to naturalistically follow patients with MDD and evaluate the safety and tolerability of Zuranolone with a two-week course of treatment is administered as needed in adults for up to a year. In May 2020 the study was amended to include a 50 milligram dose of Zuranolone and in October of 2020 we reported positive interim top line data from patients who received the 30 milligram dose and the initial patients in the 50 milligram cohort. Findings from the interim data announced in October showed that nearly half of trial participants with a positive response to the first 14-day course of Zuranolone 30 milligrams did not need an additional Zuranolone treatment course throughout the year and more than 70% required two courses of treatment or less. In the 30 milligram cohort the most common adverse events were somnolence, headache and dizziness and most adverse events were mild or moderate. For those who needed re-treatment with the 30 milligram dose safety, tolerability and efficacy results were similar to those seen with the initial treatment course and were similar in nature and frequency to those previously reported for completed Zuranolone studies. And in the initial patients treated with two weeks of Zuranolone 50 milligrams 75% of patients achieved response and 48% achieved remission. In this analysis response was defined as a decrease in HAM-D 17 score of at least 50% and remission was defined as HAM-D at or below 7. The adverse event profile in this interim look at 50 milligrams was similar to that seen in patients who received 30 milligrams of Zuranolone and while the most common adverse events were observed to be somewhat more frequent in the 50 milligram cohort they were similar in severity to the event seen with 30 milligrams. Most adverse events were mild or moderate and in patients who received Zuranolone 50 milligrams after having received 30 milligrams previously higher rates and levels of intensity with AEs were also noted. We believe these interim data are supportive of an as needed approach to treatment and look forward to the additional readouts from the SHORELINE study expected this year. Our phase 3 CORAL study evaluating Zuranolone as an acute rapid response therapy in patients with MDD when co-initiated with the newly administered standard antidepressant therapy is progressing as planned. This placebo control trial is investigating a two-week course of Zuranolone 50 milligrams when co-initiated with an open label antidepressant in patients with MDD. We anticipate reporting top line data later this year. Turning to PPD. Recall we have a positive chemical trial with Zuranolone 30 milligrams in PPD, the ROBIN study and we continue to dose patients in our second pivotal trial, the phase 3 SKYLARK study investigating Zuranolone as an oral therapy in women with PPD. This placebo-controlled trial is evaluating a two-week course of Zuranolone 50 milligrams in women with PPD, top-line data from the SKYLARK study are anticipated later this year. If successful in these trials and in our efforts to obtain regulatory approval we believe Zuranolone may offer not only a clinically differentiated treatment option but also a commercially differentiated approach; a treat as needed rapid acting therapy which has been consistently positioned by physicians, patients and pairs as a positive target profile. This approach is reflective of our overall strategy leveraging learnings to quickly adapt all with the mission of bringing medicines that matter to people with brain health disorders. Tuning now to our neurology franchise. We remain on track in our phase 2 double blind KINETIC study of SAGE-324 60 milligrams of essential tremor and plan to report data early this year. We're encouraged by the potential of SAGE-324 as earlier open label data demonstrated pharmacologic characteristics we believe are well suited for development opportunities in essential tremor and beyond. To put the KINETIC study in context we're looking for a 30% to 50% sustained reduction in tremor from baseline because for this initial phase 2 trial we're dosing near the top of the expected effective range we expect to see an AE profile consistent with GABA PAMs including somnolence or sleepiness. If we see sustained efficacy and there are no surprising AEs the next step would be to continue development with a phase 2b trial to optimize dose, administration and including a potential to explore additional formulations if needed. And we anticipate expanding the indications we're pursuing for both Zuranolone and SAGE-324 as part of our collaboration with Biogen. Beyond SAGE-324 we continue to build out our GABA A pipeline with the progression of SAGE-689 an investigational product with rapid absorption, low PK variability and solid formulation flexibility which we expect to advance in the phase 1 SAD earlier this year. SAGE-689 provides multiple potential pathways for us to explore CNS disorders with unmet need including acute agitation, mania or even migraine. Additionally, we plan to advance SAGE-319 and oral extrasynaptic GABA A receptor preferring PAMfor pre-clinical studies for potential use and disorders of social interaction. Lastly moving to the portfolio of investigational products in our neuropsychiatry franchise, we are evaluating SAGE-718 our first in class NMDA receptor PAM in development as a potential oral therapy for cognitive disorders associated with NMDA receptor dysfunction. In earlier studies including a phase 1 study in patients with early Huntington's disease SAGE-718 was well tolerated. In addition patients demonstrated improved performance in assessments of executive functioning compared to baseline. We believe the data we generated in our phase one program support our hypothesis that SAGE-718 may be relevant to multiple disorders with impaired cognitive dysfunction including Huntington's, Alzheimer's and Parkinson's disease. Early this year we expect to report top-line data from the ongoing phase 2a PARADIGM study an open label trial of SAGE-718 in patients with Parkinson's disease cognitive dysfunction. In addition we have initiated dosing in the luminary phase 2a open label trial in patients with Alzheimer's disease with mild cognitive impairment and mild dementia and expect to report top line data from that study later this year. SAGE-904 is our next NMDA receptor PAM product candidate, a potential oral therapy for disorders associated with NMDA hypofunction currently in phase 1 testing. We expect to complete phase 1 SAD and MAD studies this year and determine the path forward for this wholly owned product candidate. Additionally, we recently introduced SAGE-421 an oral NMDA receptor PAM that we plan to study for potential use in neurodevelopmental disorders and cognitive recovery and rehabilitation. We plan to advance SAGE-421 to pre-clinical studies later this year. So as you can see we have a milestone-rich year in front of us with 10 data readouts and other key milestones expected this year. Before I turn the call over to Kimi I'd like to thank the entire Sage team for their continued dedication throughout these challenging and unprecedented times. Now more than ever patients suffering with mental health issues need better more effective treatment and we're working tirelessly to deliver on our promise of bringing such treatments to patients so they can get better sooner. I'd also like to thank the patients, their families and caregivers and investigators who participate in our studies. Their contribution in the face of a global pandemic is invaluable. With that I will turn the call over to Kimi.

Thanks Steve. 2020 was an important year for Sage setting the stage for our catalyst rich 2021. During the year we made great progress advancing across all of our franchises including multiple new clinical trials and progressing the pipeline all in the context of a global COVID pandemic. From a financial standpoint we ended the year with a strong balance sheet with more than $2.1 billion in cash. We entered 2021 with a strategic collaboration partner in Biogen and the financial and operational flexibility to continue to build the company. We have the opportunity to maximize the investment in Zuranolone and SAGE-324 together with Biogen. Additionally our balance sheet gives us the ability to invest more aggressively in our wholly owned pipeline including our novel and NMDA modulators and other programs. Let me now turn to highlights from our fourth quarter and end of year 2020 financial results. As a result of our collaboration with Biogen we recorded $1.1 billion in net revenue in the fourth quarter. This included $1.7 million from the Zulresso sales and $1.1 billion of collaboration revenue recognized in the fourth quarter. That was compared to $2 million in revenue from Zulresso sales for the same period of 2019. Selling, general and administrative expenses were $53.5 million in the fourth quarter compared to $85.1 million in the fourth quarter of 2019. We ended the year with $197 million in SG&A expenses compared to $345.8 million for the same period of 2019. The decrease in SG&A expenses was primarily due to the restructuring that the company announced during the second quarter of 2020. Research and development expenses were $81.7 million in the fourth quarter compared to $91.3 million for the same period in 2019. We ended the year with $292.7 million in R&D expensive compared to $368.8 million for the same period of 2019. The decrease is primarily a result of the completion of the MOUNTAIN study and decreased spending for clinical pharmacology studies that was partially offset by an increase in spending for the WATERFALL and SKYLARK study. We reported a net income of $974.9 million for the fourth quarter of 2020 and $606.1 million for the full year of 2020. That was compared to a net loss of $168.7 million and $680.2 million respectively for the comparable periods of 2019. In both periods the difference is due to the collaboration revenue from Biogen. Finally, we continue to maintain a solid financial foundation ending the year with $2.1 billion in cash, cash equivalents, restricted cash and marketable securities and we anticipate a cash balance of more than $1.7 billion at the end of 2021. We're not anticipating any milestone payments from our collaborations in 2021. As you've heard me say before we take a deliberate and portfolio approach to our investments. Looking at the year ahead we plan to continue to invest thoughtfully to sequence programs we believe have a potential to create near, mid and long-term value. I believe our strong balance sheet will enable us to continue to advance meaningful pipelines and support many near-term opportunities this year with 10 clinical data readouts expected throughout 2021. Before I turn it over to Barry I want to reflect on the 9.5 years since our founding and think about the value we've created and the progress we've made. I believe we're not only well-positioned to deliver on our mission of making medicines that matter but also well-positioned in our efforts to build a top-tier biopharmaceutical company capable of providing significant value to patients and their families, HCPs and shareholders. We look forward to multiple milestone events over the coming year. I will now turn it back to Barry for his closing comment.

Thanks Kimi and thanks everyone for joining us this morning. I'm very pleased with the significant progress made throughout 2020 as a result of our disciplined execution and strategic planning positioning us for catalyst rich 2021 with 10 data readouts expected across our clinical programs. The team has built a strong foundation for near, mid and long-term value creation opportunities for patients and shareholders. Our leading brain health pipeline includes differentiated innovative programs across three core franchises and exclusively features Sage created innovation and our collaboration with Biogen will enable our plans to expand and accelerate our pipeline. We are very excited about the potential for significant milestones throughout this year as we build on the current pipeline including our goal of delivering two or more IND enabling programs per year by 2023. And we've already begun to realize this expansion and acceleration for the progression of four early stage programs announced earlier this year. I'd like to conclude with two thoughts. First; we remain thankful for the continued dedication of our employees and patient advocates patients and their families, caregivers and investigators who participate in our studies. Their continued contributions in the face of significant challenges throughout the year are invaluable and second I believe Sage created innovation has the potential to redefine what's possible and build the future care for brain health disorders. We're well-positioned to continue advancing our multi-franchise strategy and to further our mission of making medicines that matter so people with brain health disorders can get better sooner. At this point I will turn over to Jeff to handle the Q&A with the operator. Jeff?

Thanks Barry. Before I turn it over to the operator I will ask that you limit yourself to one question. If you have an additional question feel free to return to the queue and now I will turn it over to the operator. Operator?

Thank you. [Operator Instructions] Our first question comes from the line of Laura Chico with Wedbush Securities. Your line is now open.

Good morning. Thanks for the update and thanks for taking the question. On landscape I'm wondering if we could revisit the regulatory strategy here? So a number of readouts coming up starting with WATERFALL in the coming months but many of the other readouts like SHORELINE, SKYLARK, CORAL, those aren't arriving until later this year. So I guess I'm trying to understand what would you actually need to see in WATERFALL to advance towards a filing independent of those other readouts? Thanks.

Yes Laura. Let me make some opening comments and I will turn it over to Steve. So what we said historically was we have three distinct paths and three distinct opportunities with the LANDSCAPE study. Obviously we're all looking forward to WATERFALL and in these studies the data will matter. It's not entirely clear other than sort of a positive study in WATERFALL the totality of data but we'll be working closely with the agency in understanding WATERFALL to achieve that. Now I also say that we've said historically that the REDWOOD study which was designed to answer questions at a time where data didn't exist and that's dosing throughout the course of the year is the study that we believe at SAGE no longer needs to be run because those questions given the SHORELINE data that Steve articulated on the call 70% of patients only needed one or two doses in the course of a year really provide data that answer that question. So it's our belief set that WATERFALL will be very helpful but that the REDWOOD study is something that we likely would not like to run obviously if the agency exists upon it that's a study we're capable of running potentially as a post-marketing approval study. So that's what I can say at this point. Steve more to add?

Sure. I think you recognize this Laura we have multiple data readouts and you said it. The way to think about the program is there are multiple independent approaches to filing and ultimately approval and we're committed to finding the most efficient way possible to file for patients. And obviously one of them is MDD which is the WATERFALL study and all the rest of the program I mean there's a lot of other information behind besides simply the [efficacy] trials. Second is CORAL which is the rapid response therapy when administered with an antidepressant. Third is PPD. So as Barry said the filing strategy will really be led by the data. The way that we'll do this is we will put all of the materials that we have together after our next additional readout we do this each time, have discussions with the agency under breakthrough to propose a path forward and there the way I think about it is there are lots of potential ways forward but the data is very much going to lead the way.

Thank you.

Thank you. Our next question comes from the line of Andrew Tsai with Jefferies. Your line is now open.

Thanks and good morning everyone. It's great to see that you've completed enrollment in WATERFALL and so my question is how should we be thinking about the overall effect of the 50 mg dose in the WATERFALL study? Obviously there's a primary endpoint on HAM-D at 15 but maybe talk about what kind of response and remission rates even out to day 42 would be very compelling to you? Thanks.

Thanks Andrew and I will make some opening comments and ask for Steve to provide more color. Yes, we're incredibly excited that we were able to upsize the study to provide a more robust study and complete enrollment on time so that we have a first half data readout as we committed. So that's very exciting. The upsizing of the study obviously allows more powering on all the endpoints and also allows us to look at some subset analysis as well and Steve can go into that a little bit more. Because of the unique nature of Zuranolone and that is a benefit risk as we've articulated different than the 30 plus antidepressants approved over the last 30 years, we believe that to put it simply a positive study provides meaningful benefit for patients and is the kind of data we're looking for irrespective of the point change. So we're looking for a positive study and looking at the primary, secondary endpoints and some of the subset analysis. Steve you want to provide more color?

Sure. The Landscape program is obviously it's our top priority we continue to invest in it and we took the opportunity to increase the size of the trial and we now we've announced that we've completed enrollment. The goal of course is always to hit the primary endpoint. This is an acute efficacy study. It's the study that we need in order to move forward in MDD. It's an essential study for us. What we were able to do by increasing the trial size is be able to start looking at some of the secondary endpoints and you mentioned time points that's one piece of it. The other pieces have to deal with are there subgroups of patients, what does it look like in men, what does it look like in women. A lot of the kinds of things that we've talked about before with our trials the things that I can say is we were every bit of data that we have is pointing to a very consistent profile. We've seen rapid response. We've seen good tolerability. We've seen long durable effects where patients that have gotten better remained better. Those are the things that we're looking for in the trial. To some extent it's less about statistical significance as any of those time points. It's more about extracting as much clear data from the trial as we can which allows us in a really efficient way to make the most use of the study in the event that it's positive. So that's the way we think about it. Everything is designed for the primary endpoint. The rest of it is really to provide additional detail.

Very good. Thank you guys.

Thanks Andrew.

Thank you. Our next question comes from the line of Paul Matteis with Stifel. Your line is now open.

Hey great. Thanks so much for taking the questions. If you don't mind I really wanted to hone in on the upsizing of the WATERFALL study a little bit more. I guess I know that there's a rationale for powering for secondary endpoints but it's not like the presence of important secondaries in this trial are new. That was always known all along. So is there anything else or anything else behind the upsizing and I guess the reason why I'm asking is that I do remember MOUNTAIN being upsized due to kind of a blinded overview of the patient mix not being ideal and I guess I just kind of wanted to make sure there isn't anything else besides just this being upsized in a way that's opportunistic. Thanks a lot.

Yes. Paul. Thanks for asking a question. I'll provide some context and then ask Steve to come in further. So the first thing I'll say is there was no data review that led to a decision to upsize. So unlike a previous study that wasn't what drove it. The real ability to upsize was driven unfortunately by the unbelievable increase we're seeing in depressive episodes largely due to the raging pandemic. So there was an opportunity. Now if I step back Paul at Sage and this is true for companies across the industry. When companies design their phase 3s we estimate effect size and variability and then try to design the most efficient trial necessary to hit the right P value because we all want to use capital appropriately and obviously we want to subject as few patients to phase 3 trial. Because of the increase in depression across the United States and the world and without increasing our balance, our use of balance sheet or time frame we're really able to upsize just because there were so many more events and as Steve commented earlier it provides us to do a subset analysis and understand the impact of Zuranolone across these patient groups more effectively. So really happy we've done it and I'm happy that we've closed enrollment and we continue to point to a first half readout. Steve you want to add to that?

That pretty much summarizes it. If you recall we originally provided guidance the study would be completed in 2021 and when it was clear that we would be able to fully enroll and potentially even enroll further. We tightened up that guidance to where we are now and that's pretty much it. If there were other things of course we'd be talking about them so as we did with MOUNTAIN but yes no it's a great opportunity to extract information in a really efficient way. Machinery is all there. There is enormous interest in the study among the investigators as well as patients likely as Barry said due to the fact that there are increasing rates of depression unfortunately and if we have the opportunity to get even more information from the studies we'll take that opportunity every time.

Make sense. Thanks a lot for clarifying that.

Thanks Paul.

Thank you. Our next question comes from the line of Akash Tewari with Wolfe Research. Your line is now open.

Hi, this is [indiscernible] for Akash. Thank you for taking questions. We know from the PK of the multi-dose SAGE-324 we saw a significant accumulation of the drug in the body over time. So I wonder how do you plan to further optimize the formulation to prevent the exposure to getting too high? And the other question I have is about WATERFALL enrollment. Do you verify the enrolled patients needed to have prior confirmed MDD episodes so they are not just having one situational MDD episode due to the COVID pandemic? Thank you.

Yes. Thanks, let’s take. Steve, you want to take the WATERFALL first and then we can loop back on 324?

Sure. The patients in WATERFALL are the same patients that we've used across all of our studies. The only requirement that we have is that the person has an MDD episode at the time of enrollment whether it was their first or second episode in their lifetime. We don't anticipate perhaps you're curious about whether or not we think that major depressive episodes in the context of the COVID pandemic are somehow different. We view that as simply the kind of stressor that can cause increased rates of major depression but all patients need to meet normal criteria for a major depressive episode, depressed mood for several weeks with all overall neurovegetative signs and symptoms, concentration, weight loss, sleep disruption and so forth. So all of the patients that are enrolled need a formal diagnosis of MDD and that's the patient population that's been under study. Barry you want to go back to 324?

Yes. Let me just to comment on. That's great Steve for WATERFALL and just to put a finer point on it, as you've known we've demonstrated with SHORELINE we believe that while patients with depression is a chronic symptom it's driven by depressive episodes and whether those episodes are driven by the pandemic, genetics or having a baby we're demonstrating that with the two-week course of Zuranolone thus far with the data we're helping patients get better faster. So what Steve just said is consistent with what we've been saying all along. In terms of 324 let me just take a step back and remind you what we're trying to answer and we're trying to answer in this phase 2 study can we see the overall benefit to patients in sustained improvement. So what I'm looking for is 30% to 50% improvement in essential tremor over the dosing period which is 30 days and making sure those effects are sustainable. Secondly, I'm looking for an adverse event profile that's consistent with data we've seen so far. So we expect given the dose we're giving here we expect adverse events and then as Steve articulated we plan on doing a phase 2b after the study given the data to worsen those frequency and potentially formulations and just recall there's never been a trial like this before. It's a first phase 2, we're assessing this dose so that we see an effect size and understand the adverse event profile being consistent without any kind of new adverse events. Steve you want to add more?

Sure. The kinds of things that we look for, I know we sometimes talk about pharmacokinetics there are a lot of ways to overall identify steady state but it really comes down to dose exploration and various other potential formulations. Those might not be necessary. What we do is look at the data from the trial, understand with much more granularity what a month of dosing does in terms of our overall exposures and go from there and that's exactly what the team is going to do. So this is what phase 2 is about. It's optimizing the dosing scheme, the time of day where we dose, the frequency of dosing, potentially formulations; all based on optimizing the profile for the drug once that it's showing the benefits that we're expecting. So that's exactly how we'll go and we'll be able to articulate a plan when we have the data and be able to speak to it with more detail.

Thank you. That's very helpful.

Thanks [Neil].

Thank you. [Operator Instructions] Our next question comes from the line of Yatin Suneja with Guggenheim Partners. Your line is now open.

Hey guys good morning everyone and thank you for taking my questions. Just clarification questions for me. For the essential tremor study, so the primary endpoint is [indiscernible] performance subscale when you say 30% to 50% reduction in tremor are you referring to reduction in this particular scale? Can you help us clarify and what do you see with standard of care in that particular subscale? And then the other clarification question is on the WATERFALL study. It seems like there have been multiple changes in the or multiple sample size adjustment I think initially it was 240 moved to 370 in October then 575 in January and now you're saying it's 525. So can you help us sort through those changes? Thanks.

Yes, let me quickly do WATERFALL and then we can turn the essential tremor question over to Steve to answer. So as we've said several different times we had an opportunity to increase the size. So we did. We did that without much additional capital without changing timelines because of how much depression we're seeing out in the world and we've answered sort of the subset analysis and others. The other number you see out there from clinical trials that I will just say that please allow us to provide guidance rather than trying to get guidance from clinical trials that, it's therefore a different purpose not to provide guidance to analysts. Steve, you want to take the essential tremor question?

Sure. Just to remind everyone we've been prototyping work with Essential Tremor understanding which measurements to use, emphasizing those sub scales and other scales that demonstrate attract most closely with disability and that leads to the performance scales and particularly ones that track to upper limb tremor scores. So in the phase two we're using that as a way of detecting the signal. Now what we've seen so far across all of our compounds is this goes way back to [indiscernible] is as Barry said a 30% to 50% reduction and it's not just the level of reduction it's also in the percent of patients that show that response. So we're seeing some really impressive robust effects with this mechanism that we're looking. That's one of the reasons why we're so excited and our partners Biogen are so excited about moving forward with the program. What we'll do is look at those results of course and then understand with our team, with patient advocacy groups as well with the FDA what is the, what will ultimately be a registration endpoint. So for now yes we're focusing on upper limb tremor. We think that's a really important one and what we're looking to see and Barry mention this looking to see both the improvement as well as the sustained improvement over the course of the full dosing period.

Thank you so much.

Thanks Yatin.

Thank you. Our next question come from the line of Jay Olson with Oppenheimer. Your line is now open.

Hi, congrats on all the progress and thank you for taking our questions. For the PARADIGM study of SAGE-718 in Parkinson's mild cognitive impairment recognizing that primary endpoint is safety related could you maybe talk about what sort of efficacy signals you'll be looking for in the top line results and also comment on the rationale behind studying suicidality in this patient population and then maybe if you could address the similar questions for the LUMINARY study? Thank you.

Absolutely. Steve you want to take that?

Sure. You can get a good sense of the kinds of things that we're looking at for what we've reported previously for Huntington's. So we do a standard assessment of cognition. It's a battery of tests that look across all of cognition but what we've seen so far and what we'll be interested to see in Parkinson's is improvements in executive function and overall sort of high level cognitive ability and there are a lot of ways to look at that. It's everything from complex working memory tasks to the ability to solve abstract essentially puzzles. So those are the kinds of things that we look at for initial signals and they've shown some pretty impressive results so far both in experimental models and healthy volunteers as well as in patients with Huntington's. We start with Huntington's because the mechanism itself is related closely to some deficits that we've seen in the biochemistry and biomarkers of patients with Huntington's but we think the mechanism may extend well past simply that patient population. That's exactly what we're studying now. So more to come there but the kinds of things that we've looked at neurocognitive measures broadly are the ones that we're looking for. With regard to suicidality that's something that we include in all our trials. It's actually an FDA requirement. It's really a safety measure. This is a Columbia suicidality rating scale. All drugs that get into the CNS need to be assessed to make sure that we're not causing any undue complications but it's not around any specific concern there or concerned about potential benefit for suicidality. So thanks for asking that question. That's one that that's always included in all of our trials and you'll see it in almost all it should be in all CNS trials as well.

Yes. And Jay thanks for the question. I guess I would just remind you that this is our first in class NMDA receptor PAM and we're excited to see these data because it really sets up not just 718 but the rest of the whole in NMDA platform.

Great. Thanks for taking the questions.

Thank you. Our next question comes from the line of Salveen Richter with Goldman Sachs. Your line is now open.

Good morning. Thanks for taking my question. Could you just provide some insight into what other formulations you could look to explore for SAGE-324 report?

Yes. Let me provide some overall thoughts and thanks for the question Salveen. So as we've been saying what we're trying to see in this phase 2a is this, the efficacy 30% to [50%] that sustained an adverse event profile that's not surprising. We are giving a very big dose. So we expect to see the adverse events we've seen with these kind of molecules. As Steve said it depends on the data. We may not have to change formulations. We may be able to use dose and frequency in the phase 2b or we may look at formulations that provide less of a peak to trough and more of a sustained area under the curve versus having a large C-max. So there's a number of different ways we can go. Steve you want to maybe provide some additional color?

No. I think that pretty much covers it. I think what we're just simply talking about is the process of phase 2 and optimizing medication. You recall there hasn't been a medicine for patients with Essential Tremor in the last half a century. We're really working closely with physicians and patient advocacy groups to identify what profile would be ideal for those patients and we want to make sure that we get that right. So as Barry said the data will very much lead the way. We will understand much more about the parameters of the drug after a month of dosing which will be well into steady state. So we'll understand a lot more about it and if there's things that we need I think what we're saying is if there's things that need to do we'll do those things but that's not necessarily the case. We just need to see what the data are and then take it from there.

Thank you.

Thanks Salveen.

Thank you. Our next question comes from the line of Tazeen Ahmad with Bank of America. Your line is now open.

Hi. I wanted to get further clarification on Essential Tremor. So understanding you're looking at it for 30 days and understanding some of the clarification you just provided but what level of confidence does that give you about longer term durability when you're looking at it over that period of time? I think the reason why I'm asking is there are multiple companies that are trying to pursue ET in some fashion and we're just trying to get a sense albeit early of where we think your program could be distinguished from other things?

Yes. Thanks Tazeen. Steve you want to take that?

Yes. So Tazeen it's a great question. I think I mentioned this before. We've been doing prototype work with this mechanism in particular which is unique in the field for Essential Tremor for quite some time and we started years ago where we explored the role of GABA positive modulators with SAGE-547 which is now Zulresso and we've been using primarily relatively short periods of dosing. One of the key questions that we'll be, it will be looking to answer is with prolonged dosing do we see any changes in overall response rate. If those responses get improved over time which is what we saw with SAGE-217 in a trial several years ago and those are maintained we know that we're on the right track. With a month of dosing one of the things you might be concerned about is Tachyphylaxis. We're working with the drugs that are hitting the extra synaptic receptors and none of the models we've been using to see Tachyphylaxis. So that's something we want to demonstrate for Essential Tremor in patients with a month of dosing. We believe that gives us great confidence to move forward with chronic dosing for conditions where obviously the need for ongoing treatment is necessary. So first study with a new mechanism in a patient population above 50 years and we'll learn a lot from this trial. That's something that we've been really looking forward to getting to for quite some time and the data we've had today has been really encouraging.

Thank you. Our next question comes from the line of Sumant Kulkarni with Canaccord. Your line is now open.

Good morning. Thanks for taking my question. If we go back to MOUNTAIN, one of the reasons why that trial may not have worked as well with that some patients simply may not have taken the treatment. So what specifically is being done in the logistics of the WATERFALL study to ensure patient compliance especially given the environment today with the pandemic is quite different versus when MOUNTAIN was run?

Yes. Great. Steve do you want to take that?

Sure. We talked about a little over a year ago about MOUNTAIN and one of the things we noticed in the trial is there were some patients who didn't have medication, didn't take medication when removed from the analysis the study itself was positive. We shared that not because the rates of non-compliance were particularly high. We do use a number of methods to ensure compliance and ones that can be followed remotely. It was more to give a color on what we're seeing in terms of the consistent profile of the drug meaning that when people take the drug it works. The other thing we learned from MOUNTAIN is that for patients there is a threshold above which exposure increases the overall rate of response. So while we know that there'll always be some patients that don't take medication we do all of our diligence and additional measures a bit of place to assure to the degree that we can patients are participating but the rates that we had seen previously were not particularly high for trials. What we did do and what's going to be really important is we've increased the dose to ensure that a higher percentage of patients that are in the trial or above that threshold we've also increased the handy cutoff score for enrollment of the studies based on the ability to see a higher signal stimulus, so what we did is we take the learnings from MOUNTAIN, looked at it from the scientific perspective, from a safetyperspective, from a drug development perspective and applied those learnings to WATERFALL.

Got it. Thanks.

Thank you.

Thank you. Our next question comes from the line of Cory Kasimov with J.P. Morgan. Your line is now open.

Hey good morning guys. I think I know the answer to this question we've had a couple people ask me this morning so I'll ask you. With patient accrual in the WATERFALL now complete, can you just remind us of how much follow-up you'll wait for before starting your data analysis process? Is it the 15-day primary or are you going to wait for all patients to get through the full 42-day follow-up period that will capture the secondary endpoints as well as you, I think that's the approach you took with MOUNTAIN. Thank you.

Yes. Thanks Cory and Steve you want to talk about sort of at a high level the process for database lock and how we go forward?

Sure. I just remind everybody this is a phase 3 trial of a Breakthrough program. It's a regulatory study that's done with all of the diligence quality that entails. So what we will do is we'll continue enrolling up to the last patient who their last visit. We will continue to do the appropriate level of source verification which includes understanding every data point that's been entered by investigators and ensure that those are appropriately entered and of high quality and then we begin the analysis process. So it's a very detailed process that anyone would go through after the completion of a trial. We've been planning for this since the initiation of the study. Recall this is in all of our phase 3 programs, phase 2 programs all of the ones that we're working on now were all initiated during the pandemics. So we have processes and procedures that ensure that quality and when all of that is completed then we run the analysis. So yes, the last patient enrolled has to be back through the entire trial. We will lock the database and then begin the analysis.

Great. Thank you.

Thanks Cory.

Thank you. Our next question comes from the line of Ritu Baral with Cowen. Your line is now open.

Hey guys. Thanks for taking the question. I just wanted to check in on what high level safety you're seeing across the Landscape study not just WATERFALL but also CORAL and any sort of loss of consciousness that population is susceptible to and whether I'm sorry SKYLARK and whether you're concerned about overlapping sedation in CORAL with new onset SSRIs on top of Zuranolone?

Let me provide a high level then maybe Steve can provide more color and Ritu thanks for the question. As we've talked about we've dosed over 3000 subject/patients with Zuranolone and what we've seen consistently across that 3000 number is a rapid onset of activity of efficacy in two to three days, durability and very-very consistent adverse event profile. So we're not seeing anything new or different across the ongoing trials but Steve you want anything more to add?

Yes. But I can speak to Ritu the trials that you're referring to are ongoing speak to the places that we look to understand that those safety questions and with regard to the 50 milligrams with or without antidepressants you can look to the initial data cuts that we put out for the SHORELINE study for example where about a third of the patients are on underlying antidepressants and across all of our studies somewhere between a quarter and all patients have been on underlying SSRIs or other antidepressants and so we really are able to understand that profile and it really doesn't have, the reports I would say reflect that overall patient population and what we've been seeing so far is a very consistent profile. It's a large database of subjects. We will obviously have more information as the WATERFALL, CORAL and SKYLARK studies rehab will be able to speak to those trials with more specificity.

The other thing I'd add just for a point of clarity Ritu is that the sleepiness that we're seeing in the evening is actually very helpful in the context of depression because it potentially helps rewire a patient's sleep architecture. Many of these patients are on sleep aids because one of the challenges they have is they can't sleep. What you worry about is sleepiness in far into the next day and that's we're just not seeing much of.

Great. Thanks for taking the question.

Thank you. Our next question comes from the line of Neena Bitritto-Garg with Citi. Your line is now open.

Hey guys thanks for taking my question. So I just want to go back to the Essential Tremor for a minute. So I think at the phase 1b study for SAGE-324 the lower 45 mg dose that was tested there had a reduction of about 25% on the tetris upper limb score and I think the 60 mg dose had some around like 40% or so. So I guess can you just talk a little bit about kind of the therapeutic window? I mean it sounds like altering the formulation is one of the options but given your commentary around kind of safety and kind of the advocacy data from the phase 1b, can you just talk a little bit about the therapeutic window and thoughts on that and the ability to kind of use a lower dose and see similar efficacy.

Sure Neena. Steve, you want to take that?

Yes. These are sort of standard questions for a phase 2 study. So recall the results that you're referring to have to do with single doses. It is a long half-life drug. So what we'll need to understand is what is the effect that we see with repeated dosing and we know that would be appropriate studying case. It will about a week at this dose and that will allow us to dial in what exposures are really necessary in order to see benefit. So these are all pieces of a puzzle to understand what the profile is of the drug. There are few bits of data that I can point out that can kind of have you understand what the data will what we are looking to see. So let's say 217 for example which is similarly a long half life we did 14 days of dosing and there with each individual day we saw continued improvement over time. Obviously that's related to continued exposure and response. So what we will do, what we did in this trial is dose [variance] at the top of the range. That allows us to ensure that we are seeing the kinds of signals that we are looking for and then we will use that to model how and which dose to test in subsequent trials. So again we can answer a few questions about formulation. I wouldn't necessarily think that's the solution. There are a lot of ways to address the ideal profile whether that be dosing scheme, time of day, frequency of dosing all of those are tools at our disposal to optimize the profile of the drug. So remember this is the active pharmaceutical the drug inside of the drug it's how it's administered, it's when and in what frequency that really determines what its overall profile is. The other thing I would say is that 324 in animal models had a wider therapeutic window against somnolence versus efficacy in our animal models of tremor and so forth so we do think that this was ideally selected for this patient population. The job of the phase 2 program is to really optimize that profile before we make the final plans for subsequent development into later phase.

Great. Thank you.

Thank you.

Thank you. Our last question comes from the line of Gary Nachman with BMO Capital Markets. Your line is open.

Good morning. It's [indiscernible] on for Gary. With SAGE-718 if data from PARADIGM show a strong signal of efficacy would you plan on potentially moving forward with a larger study pretty quickly in Parkinson's or Huntington's or would you first want to see data from LUMINARY? Thanks.

Yes [indiscernible] at this point it's too early to provide specific path on the clinical development plan. Obviously we want to see the Parkinson's data. We have the Huntington's data and just kind of bookend it one end of the book end could be with Huntington's data, Parkinson's data we move independently in those paths. The other end of the book we see improvement in cognition executive function across all three neurodegenerative diseases and kind of do a basket study. So we're working through that right now. We're talking to agency about the best path forward and we'll share more when we have a clear path.

Thanks.

Thanks [indiscernible].

Thank you. This concludes today's question-and-answer session. I will now turn the call back to Barry Greene for closing remarks.

Well thanks everyone. We appreciate you being with us this morning and for all those great questions. Obviously 2021 is setting up to be a very exciting year for Sage; a year of transformational that I believe will allow us to start to continue on our path to being a leading brain health company and continue on our path to build a top-tier biopharmaceutical company. So thanks for your time. Take care. Be safe.

Ladies and gentlemen this includes today's conference call. Thank you for your participation. You may now disconnect.