Sage Therapeutics, Inc. (NASDAQ:SAGE) is a biopharmaceutical company at the forefront of pioneering solutions to deliver life-changing brain health medicines. The company's mission is to create a world with better brain health, and it has made significant strides in achieving this goal through the commercialization of its approved products and the advancement of its robust pipeline.

Financials

Sage Therapeutics reported annual net income of -$541,489,000, annual revenue of $86,455,000, annual operating cash flow of -$540,585,000, and annual free cash flow of -$541,138,000 in its most recent fiscal year. These financial results reflect the company's ongoing investments in research and development, as well as the commercialization efforts for its approved products.

In the second quarter of 2024, Sage Therapeutics generated $8.65 million in total revenues, a significant increase from the $2.47 million reported in the same period of the previous year. This growth was primarily driven by the company's collaboration revenue from the sales of ZURZUVAE™ (zuranolone), which reached $7.4 million, representing a 19% increase compared to the first quarter of 2024. The company's product revenue from the sale of ZULRESSO® (brexanolone) was $0.6 million in the second quarter of 2024, compared to $2.5 million in the same period of 2023, reflecting the increasing impact of ZURZUVAE on the postpartum depression (PPD) market.

Business Overview

Sage Therapeutics is a biopharmaceutical company with a focus on developing and commercializing novel chemical entities that target the GABA and NMDA receptor systems in the brain. The company's approved products, ZURZUVAE and ZULRESSO, are both neuroactive steroids that act as positive allosteric modulators of the GABA A receptor, targeting both synaptic and extrasynaptic GABA A receptors.

ZURZUVAE, approved by the FDA in August 2023, is the first and only oral treatment specifically indicated for the treatment of adults with PPD. The company is commercializing ZURZUVAE in the U.S. in collaboration with Biogen Inc., with the two companies equally sharing in the profits and losses from the product's sales. ZULRESSO, approved in 2019, is the first and only FDA-approved treatment for PPD in individuals 15 years and older, but it must be administered as a continuous intravenous infusion in a certified healthcare setting.

Sage Therapeutics is also advancing a pipeline of product candidates targeting various brain health disorders, including dalzanemdor (SAGE-718), a first-in-class NMDA receptor positive allosteric modulator (PAM) being developed for the treatment of cognitive impairment associated with neurodegenerative disorders, such as Huntington's disease and Alzheimer's disease.

Commercialization of ZURZUVAE

The launch of ZURZUVAE has been a key focus for Sage Therapeutics, and the company has reported encouraging progress in the second quarter of 2024. The company and its partner, Biogen, have been successful in establishing ZURZUVAE as a first-line therapy and the standard of care for the treatment of women with PPD.

During the second quarter, Sage Therapeutics and Biogen reported that ZURZUVAE generated $7.4 million in collaboration revenue, representing a 19% increase compared to the first quarter of 2024. This growth was driven by a significant increase in the number of prescriptions written and filled, with more than 1,400 prescriptions shipped and delivered to patients, a nearly 100% increase from the first quarter.

The company has seen strong adoption of ZURZUVAE among healthcare providers, particularly obstetricians and gynecologists (OB/GYNs), who have accounted for over 70% of the prescriptions written in the second quarter. Sage Therapeutics and Biogen have also made significant progress in securing broad and equitable access to ZURZUVAE, with approximately 80% of commercial lives covered and the majority of these plans not requiring onerous prior authorizations or step edits.

To further support the commercialization of ZURZUVAE, Sage Therapeutics plans to strategically expand its sales force in the fourth quarter of 2024, where the company believes additional resources will help accelerate demand for the product in the treatment of PPD.

Pipeline Advancements

In addition to the successful commercialization of ZURZUVAE, Sage Therapeutics has made significant progress in advancing its pipeline of product candidates targeting various brain health disorders.

Dalzanemdor (SAGE-718), the company's lead pipeline candidate, is a first-in-class NMDA receptor PAM being developed for the treatment of cognitive impairment associated with neurodegenerative disorders, such as Huntington's disease and Alzheimer's disease. In June 2024, Sage Therapeutics reported positive topline results from the Phase 2 SURVEYOR study, which met its primary endpoint by demonstrating a statistically significant difference in cognitive impairment between healthy participants and participants with Huntington's disease.

Based on the data from the SURVEYOR study and other relevant information, the company has decided to adjust the primary endpoint in the ongoing Phase 2 DIMENSION study in Huntington's disease from the HD-Cognitive Assessment Battery (HD-CAB) composite to the Symbol Digit Modalities Test (SDMT), one of the cognitive tests included in the composite. The company expects to report topline data from the DIMENSION study in late 2024.

Sage Therapeutics is also evaluating dalzanemdor in the Phase 2 LIGHTWAVE study in patients with mild cognitive impairment and mild dementia due to Alzheimer's disease, with topline data expected in late 2024.

In July 2024, Sage Therapeutics and Biogen announced the discontinuation of the development of SAGE-324 for the treatment of essential tremor (ET) after the Phase 2 KINETIC 2 study failed to meet its primary endpoint. The companies are evaluating next steps, if any, for other potential indications for SAGE-324.

Risks and Challenges

While Sage Therapeutics has made significant progress in its commercialization and pipeline efforts, the company faces several risks and challenges that could impact its future performance.

The successful commercialization of ZURZUVAE in the treatment of PPD is critical to the company's near-term success, and any setbacks or delays in the launch could have a material adverse effect on Sage Therapeutics' financial results and future prospects. Additionally, the company's ability to maintain and expand access to ZURZUVAE, as well as the product's market acceptance among healthcare providers and patients, will be key factors in determining the long-term success of the product.

Sage Therapeutics' pipeline of product candidates also faces the inherent risks associated with drug development, including the potential for negative results in clinical trials, regulatory hurdles, and competition from other therapies. The company's ability to successfully advance its pipeline and obtain regulatory approvals for its product candidates will be crucial to its long-term growth.

Liquidity

As of June 30, 2024, Sage Therapeutics had $646.8 million in cash, cash equivalents, and marketable securities, which the company believes will be sufficient to fund its operations into 2026. The company has not provided any specific financial guidance for the remainder of 2024, but it has stated that it expects operating expenses to decrease in 2024 compared to 2023 due to the restructuring measures implemented in the third quarter of 2023.

Sage Therapeutics' financial ratios, including a current ratio of 9.95 and a quick ratio of 9.95, suggest a strong liquidity position. However, the company's negative net income, operating cash flow, and free cash flow in recent years indicate the need for continued investment in its research and development efforts, as well as the commercialization of its approved products.

Conclusion

Sage Therapeutics is navigating the evolving brain health landscape with a focus on the successful commercialization of ZURZUVAE and the advancement of its promising pipeline of product candidates. The company's strong financial position, with $646.8 million in cash, cash equivalents, and marketable securities, provides the resources necessary to support its ongoing operations and future growth initiatives.

The launch of ZURZUVAE has been a key priority for Sage Therapeutics, and the company has reported encouraging progress, with strong adoption among healthcare providers, particularly OB/GYNs, and the achievement of broad and equitable access to the product. The company's plans to strategically expand its sales force in the fourth quarter of 2024 further demonstrate its commitment to maximizing the commercial potential of ZURZUVAE.

Sage Therapeutics' pipeline of product candidates, led by dalzanemdor, also holds significant promise, with the company making important advancements in its clinical development programs. The decision to adjust the primary endpoint in the DIMENSION study for dalzanemdor in Huntington's disease, as well as the ongoing LIGHTWAVE study in Alzheimer's disease, highlight the company's focus on optimizing its development efforts to increase the probability of success.

While Sage Therapeutics faces risks and challenges, including the successful commercialization of ZURZUVAE and the inherent uncertainties of drug development, the company's strong financial position, promising pipeline, and commitment to addressing unmet needs in brain health position it well for future growth and value creation.