Sage Therapeutics(US:SAGE)2024-04-25 11:15PART I – FINANCIAL INFORMATION This section presents the company's financial statements, management's analysis of operations, market risk disclosures, and internal controls Item 1. Financial Statements The company reported a net loss of $108.5 million in Q1 2024, an improvement from $146.8 million in Q1 2023, with total revenues rising to $7.9 million Condensed Consolidated Balance Sheet Data (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $172,653 | $70,992 | | Marketable securities | $544,360 | $682,192 | | Total Assets | $767,600 | $882,277 | | Total Liabilities | $61,799 | $82,747 | | Total Stockholders' Equity | $705,801 | $799,530 | Condensed Consolidated Statements of Operations (in thousands, except per share data) | Account | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Product revenue, net | $1,690 | $3,294 | | Collaboration revenue - related party | $6,212 | $0 | | Total Revenue | $7,902 | $3,294 | | Research and development | $71,734 | $92,826 | | Selling, general and administrative | $52,574 | $65,708 | | Loss from operations | ($117,675) | ($155,470) | | Net Loss | ($108,483) | ($146,828) | | Net loss per share—basic and diluted | ($1.80) | ($2.46) | Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | ($37,832) | ($153,682) | | Net cash provided by investing activities | $139,436 | $194,867 | | Net cash provided by financing activities | $1,557 | $2,672 | | Net increase in cash, cash equivalents and restricted cash | $103,161 | $43,857 | Notes to Condensed Consolidated Financial Statements This section details the company's business, including ZURZUVAE's FDA approval for PPD, key collaborations, and the August 2023 restructuring that reduced workforce by 40% - ZURZUVAE™ received FDA approval for PPD in August 2023, becoming commercially available in December, while zuranolone for MDD received a Complete Response Letter requiring further trials2829 - The company has a collaboration with Biogen to jointly develop and commercialize ZURZUVAE and SAGE-324 in the U.S., sharing costs and profits/losses equally, with Biogen holding exclusive ex-U.S. rights101105 - The August 2023 corporate reorganization included a 40% workforce reduction, incurring $32.8 million in charges, with $2.6 million accrued as of March 31, 2024153154 - A January 2024 stock option exchange program for non-executive employees resulted in $1.7 million in incremental stock-based compensation expense134135 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the commercial launch of ZURZUVAE, pipeline advancements and setbacks, and the company's financial performance, including a reduced net loss and projected cash runway into 2026 Overview This overview details the company's focus on brain health, commercialization efforts for ZURZUVAE, pipeline progress including dalzanemdor and SAGE-324, and the expected cash runway into 2026 - ZURZUVAE™ became commercially available in the U.S. in December 2023 for the treatment of PPD, co-commercialized with Biogen160 - The company is advancing dalzanemdor in Phase 2 trials for cognitive impairment in Huntington's disease (DIMENSION study) and Alzheimer's disease (LIGHTWAVE study), with topline data for both expected in late 2024169172 - The PRECEDENT Phase 2 study of dalzanemdor for Parkinson's disease failed its primary endpoint in April 2024, leading to discontinuation of development in this indication173 - The company anticipates existing cash and funding will support operations into 2026177233 Results of Operations Total revenue increased to $7.9 million in Q1 2024, driven by ZURZUVAE collaboration revenue, while R&D and SG&A expenses decreased due to the 2023 restructuring Comparison of Results for the Three Months Ended March 31 (in thousands) | Line Item | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Total revenue | $7,902 | $3,294 | $4,608 | | Cost of revenues | $1,269 | $230 | $1,039 | | Research and development | $71,734 | $92,826 | ($21,092) | | Selling, general and administrative | $52,574 | $65,708 | ($13,134) | | Net loss | ($108,483) | ($146,828) | $38,345 | - Collaboration revenue of $6.2 million was recognized in Q1 2024 from the company's 50% share of Biogen's ZURZUVAE net sales in the U.S213 Research and Development Expenses Breakdown (in thousands) | Program | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | zuranolone (ZURZUVAE) | $1,053 | $23,139 | ($22,086) | | SAGE-324 | $7,899 | $6,256 | $1,643 | | dalzanemdor (SAGE-718) | $23,568 | $13,064 | $10,504 | | Net reimbursement from Biogen | ($5,657) | ($17,282) | $11,625 | | Total R&D | $71,734 | $92,826 | ($21,092) | - SG&A expenses decreased primarily due to a $6.1 million reduction in personnel costs and a $3.4 million decrease in other expenses, both from the August 2023 restructuring222 Liquidity and Capital Resources As of March 31, 2024, the company held $717.0 million in cash and equivalents, with net cash used in operations significantly reduced due to a $75.0 million Biogen milestone payment, extending the cash runway into 2026 - As of March 31, 2024, cash, cash equivalents, and marketable securities totaled $717.0 million226426 - A $75.0 million milestone payment was received from Biogen in January 2024 for ZURZUVAE's first commercial sale for PPD in the U.S225228 - Management anticipates that existing cash, along with funding from collaborations and estimated revenues, will support operations into 2026233431 - An 'at the market' (ATM) offering program for up to $250.0 million in common stock is in place, with no shares sold in Q1 2024124127 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate fluctuations on its $717.0 million in cash and equivalents, with no material impact expected due to short-term investments - The company's primary market risk is from interest rate fluctuations on its $717.0 million in cash, cash equivalents, and marketable securities241 - The company does not believe that inflation had a material effect on its results of operations for the three months ended March 31, 2024 and 2023244 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal control over financial reporting during the quarter - Management concluded that as of March 31, 2024, the company's disclosure controls and procedures were effective at the reasonable assurance level246 - No material changes were made to the company's internal control over financial reporting during the first quarter of 2024247 PART II – OTHER INFORMATION This section covers legal proceedings, significant risk factors, and other relevant disclosures Item 1. Legal Proceedings The company is not currently subject to any material legal proceedings that would adversely impact its financial position or operations - The company is not currently a party to any material legal proceedings249 Item 1A. Risk Factors The company outlines significant risks, including dependence on ZURZUVAE commercialization, pipeline development uncertainties, a history of losses, the need for future capital, and impacts from healthcare reforms like the Inflation Reduction Act - The company's future prospects depend heavily on the successful commercialization of ZURZUVAE for PPD with Biogen, which faces risks of market acceptance, reimbursement, and competition251252 - There is significant risk in the development of other product candidates, as the PRECEDENT study of dalzanemdor for Parkinson's disease failed its primary endpoint, and the FDA issued a CRL for zuranolone for MDD, requiring additional trials257259 - The company has a history of significant operating losses, with a $2.7 billion accumulated deficit as of March 31, 2024, and anticipates needing to raise additional capital426430 - Healthcare reforms, particularly the Inflation Reduction Act of 2022 (IRA), pose a risk through potential Medicare price negotiations, inflation-based rebates, and other cost-containment measures that could adversely affect product pricing and revenue404410413