Sage Therapeutics Inc. (SAGE) Q4 2020 Earnings Call Transcript

Sage Therapeutics Inc. (NASDAQ: SAGE) Q4 2020 earnings call dated Feb. 24, 2021

Corporate Participants:

Jeff Boyle — Vice President, Head of Investor Relations

Barry Greene — Chief Executive Officer, Member of Board of Directors

Steve Kanes — Chief Medical Officer

Kimi Iguchi — Chief Financial Officer

Analysts:

Laura Chico — Wedbush Securities — Analyst

Andrew Tsai — Jefferies — Analyst

Paul Matteis — Stifel — Analyst

Anil — Wolfe Research — Analyst

Yatin Suneja — Guggenheim Partners — Analyst

Jay Olson — Oppenheimer — Analyst

Salveen Richter — Goldman Sachs — Analyst

Tazeen Ahmad — Bank of America — Analyst

Sumant Kulkarni — Canaccord — Analyst

Cory Kasimov — JPMorgan — Analyst

Ritu Baral — Cowen — Analyst

Neena Bitritto-Garg — Citigroup — Analyst

Rafay Sardar — BMO Capital Markets — Analyst

Presentation:

Operator

Good morning. Welcome to Sage Therapeutics Fourth Quarter and Full Year 2020 Financial Results Conference Call. [Operator Instructions]

This call is being webcast live on the Investor and Media section of Sage’s website at sagerx.com. This call is a property of Sage Therapeutics and recordings, reproduction or transmission of this call without the expressed 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 Boyle — Vice President, Head of Investor Relations

Good morning. And thank you for joining Sage Therapeutics’ fourth quarter and full year 2020 financial results conference call.

Before I begin, I encourage everyone to go to the Investor and 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’d like to point out that we’ll 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 some 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’ll turn the call over to Barry.

Barry Greene — Chief Executive Officer, Member of Board of Directors

Thanks, Jeff. And thank you, 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 and our efforts to build the leading brain health company, positioning Sage to become a top-tier biopharmaceutical company.

With the pandemic raging, the US engaged in destructive pool of 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 a year marked by progress across our entire pipeline today with three programs in late stage development with five ongoing Phase 3 trials due to read-out 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’ve made deep scientific progress in understanding brain circuitry by focusing on the GABAA and NMDA pathways and applying unique chemical innovation in the area of neuroactive steroids, including oxy sterile chemistries. The team has created innovative potential therapeutics focused on allosteric modulation, building from knowledge of endogenous starting points to target receptors to 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 matter 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, if 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 in 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 Biogen for zuranolone in 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 in 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 a 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 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 in 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 in depressive symptoms and zuranolone has been generally well tolerated.

If zuranolone continues to perform as well as these data demonstrate and we’ve succeeded obtaining necessary regulatory approvals, it will be a significant advance on how depression is treated. And Sage, along with our collaboration partners, will be well positioned to help patients across the globe deal with 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 issued 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’ll turn the call over to Steve to discuss the progress in our critical development programs. Steve?

Steve Kanes — Chief Medical Officer

Thanks, Barry. And good morning, everyone. I’ll 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 PPD.

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’ll 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 announce that this study is now close 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’re 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 within 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 retreatment 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 completing 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 events 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 a newly administered standard antidepressant therapy is progressing as planned. This placebo-controlled 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 pivotal 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 payers 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.

Turning now to our neurology franchise, we remain on track in our Phase 2 double-blind KINETIC study of SAGE-324 60 milligrams in 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 the zuranolone and SAGE-324 as part of our collaboration with Biogen.

Beyond SAGE-324, we continue to build out our GABAA pipeline with the progression of SAGE-689, an investigational product with rapid absorption, late 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, an oral extra-synaptic GABAA receptor preferring PAM for preclinical studies for potential use in disorders of social interaction.

Lastly, moving to the portfolio of investigational products in our neuropsychiatry franchise, we were 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 and assessments of executive functioning compared to baseline.

We believe the data we generated in our Phase 1 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 preclinical 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 treatments 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’ll turn the call over to Kimi.

Kimi Iguchi — Chief Financial Officer

Thanks, Steve. 2020 was an important year for Sage, setting the stage for a 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 enter 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 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 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 expenses compared to $368.8 million for the same period of 2019. The decrease was 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 studies.

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 $158.7 million and $680.2 million respectively to the comparable period for 2019. In both periods, the difference was 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 collaboration 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 pipeline 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 nine-and-a-half 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 are 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’ll now turn it back to Barry for his closing comments.

Barry Greene — Chief Executive Officer, Member of Board of Directors

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 feature Sage-created innovation. And our collaboration with Biogen will enable our plans to expand and accelerate our pipeline.

We’re 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 like 2023. And we’ve already begun to realize this expansion and acceleration for the progression of four early-stage programs announced early 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’ll turn it over to Jeff to handle the Q&A with the operator. Jeff?

Jeff Boyle — Vice President, Head of Investor Relations

Thanks, Barry. Before I turn it over to the operator, I’ll ask that you limit yourself to one question. If you have an additional question, feel free to return to the queue.

And now, I’ll turn it over to the operator. Operator?

Questions and Answers:

Operator

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

Laura Chico — Wedbush Securities — Analyst

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, 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.

Barry Greene — Chief Executive Officer, Member of Board of Directors

Yeah, Laura. Let me make some opening comments and then I’ll turn 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’ll 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 a study that we believe that Sage no longer needs to be run because those questions given the SHORELINE data that Steve articulated in the call, 70% of patients only had one or two doses in the course of the year. We 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 opposed to marketing approval study. So that’s what I can say at this point. Steve, more to add?

Steve Kanes — Chief Medical Officer

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 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 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.

Laura Chico — Wedbush Securities — Analyst

Thank you.

Jeff Boyle — Vice President, Head of Investor Relations

Yeah.

Operator

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

Andrew Tsai — Jefferies — Analyst

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 hand at day 15. But maybe talk about what kind of response in remission rates even out to day 42 would be very compelling to you. Thanks.

Barry Greene — Chief Executive Officer, Member of Board of Directors

Thanks, Andrew. And I’ll make some opening comments and ask 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 it 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 end point and some of the subset analysis.

Steve, you want to provide more color?

Steve Kanes — Chief Medical Officer

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, yeah, now we’ve announced that we’ve completed enrollment. The goal, of course, is always save the primary end point. This is an acute efficacy study to say 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 end points and you mentioned time points. That’s one piece of it. The other pieces have to do 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’re — 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 remain 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 end point. The rest of it is really to provide additional detail.

Andrew Tsai — Jefferies — Analyst

Very good. Thank you, guys.

Jeff Boyle — Vice President, Head of Investor Relations

Thanks, Andrew.

Operator

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

Paul Matteis — Stifel — Analyst

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 accounting for secondary endpoints, but it’s not like the presence of important secondaries in this trial or 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 the — 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 being upsized in a way that’s opportunistic. Thanks a lot.

Barry Greene — Chief Executive Officer, Member of Board of Directors

Yes, Paul. Thanks for asking the question. I’ll provide some context and then ask Steve to comment further. So, the first thing I’ll say is, there was no data review that led to a decision to upsize. So, unlike 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 that were 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 continue to point to a first-half readout. Steve, you want to add to that?

Steve Kanes — Chief Medical Officer

That pretty much summarizes it. If you recall, we originally provided guidance that 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’ve taken 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, yeah — no, it’s a great opportunity to extract information in a really efficient way. The machinery is all there. There’s 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 it gives the opportunity to get even more information from the studies. We’ll take that opportunity every time.

Paul Matteis — Stifel — Analyst

Thanks, guys. Thanks a lot for clarifying that.

Jeff Boyle — Vice President, Head of Investor Relations

Thanks, Paul.

Operator

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

Anil — Wolfe Research — Analyst

Hi. This is Anil [Phonetic] for Akash. Thank you for taking the 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 exposure to getting too high? And the other question I have is about WATERFALL enrollment. Do your verified enrolled patients need to have prior confirmed MDD episodes so they are not just having one situation of MDD episode due to the COVID pandemic. Thank you.

Barry Greene — Chief Executive Officer, Member of Board of Directors

Yeah. Thanks, Anil. Let’s take — Steve, do you want to take the WATERFALL first and then we can move back on SAGE-324?

Steve Kanes — Chief Medical Officer

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 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 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 [Speech Overlap].

Barry Greene — Chief Executive Officer, Member of Board of Directors

Yeah. Let me — just a comment on — that’s great, Steve, for WATERFALL. And just to put a finer point on it, as you’ve known and we’ve demonstrated with SHORELINE, we believe that while patients with depression are — 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 a 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 SAGE-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 we’re looking — what I’m looking for is 30% to 50% improvement in central 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 this study, given the data towards some dose frequency and potentially formulation. 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, do you want to add more?

Steve Kanes — Chief Medical Officer

Sure. The kinds of things that we look for and 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 potentially 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 you know that it’s showing the benefit 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.

Anil — Wolfe Research — Analyst

Thank you. That’s very helpful.

Jeff Boyle — Vice President, Head of Investor Relations

Thanks, Anil. Thank you.

Operator

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

Yatin Suneja — Guggenheim Partners — Analyst

Hey, guys. Good morning, everyone. Thank you for taking my question. Just clarification questions for me. For the essential tremor study, so the primary end point is TETRAS performance subscale. When you say 30% to 50% reduction in tremor, are you referring to a 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 to 240, moved to 370 in October, then 575 in January. But now, you’re saying it’s 525. So can you help us sort through those changes? Thanks.

Barry Greene — Chief Executive Officer, Member of Board of Directors

Yeah. 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 and without changing timelines because of how much depression we’re seeing out in the world. And we’ve entered sort of the subset analysis in others. The other number you see out there from clintrials.gov, I would just say that please allow us to provide guidance rather than trying to get guidance from clintrials.gov. It’s there for different purpose, not to provide guidance to analysts.

Steve, do you want to take the essential tremor question?

Steve Kanes — Chief Medical Officer

Sure. Just to remind everyone, we’ve been prototyping work in essential tremor, understanding which measurements to use, emphasizing those subscales and other scales that demonstrate and track most closely with disability. And that leads to the performance scales and particularly ones that track the upper limb tremor scores.

So, in the Phase 2, we’re using that as a way of detecting the signal. Now, what we’ve seen so far across all of our compounds — and this goes way back to brexanolone is, as Barry said, at 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. It’s one of the reasons why we’re so excited and our partner Biogen is 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 as to the — as well as with the FDA what is the — what will ultimately be a registration end point. 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 mentioned this, we’re looking to see both the improvement as well as the sustained improvement over the course of the full dosing period.

Yatin Suneja — Guggenheim Partners — Analyst

Thank you so much.

Jeff Boyle — Vice President, Head of Investor Relations

Thanks, Yatin.

Operator

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

Jay Olson — Oppenheimer — Analyst

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 end point 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 similar questions for the LUMINARY study. Thank you.

Barry Greene — Chief Executive Officer, Member of Board of Directors

Absolutely. Steve, you want to take that?

Steve Kanes — Chief Medical Officer

Sure. You can get a good sense of the kind 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’s look across all of cognition. 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 we look out 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 the 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 concern about potential benefit for suicidality. So, thanks for asking that question. That’s one that’s always included in all of our trials and you’ll see it in almost all, should be in all, CNS trials as well.

Barry Greene — Chief Executive Officer, Member of Board of Directors

Yeah. 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 SAGE-718 but the rest of the whole NMDA platform.

Jay Olson — Oppenheimer — Analyst

Great. Thanks for taking the questions.

Operator

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

Salveen Richter — Goldman Sachs — Analyst

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 in the fourth?

Barry Greene — Chief Executive Officer, Member of Board of Directors

Yeah. 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 the efficacy 30% that sustained in 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 dosing frequency in the Phase 2b or we may look at formulations that provide less of a peak to trough and more of a stained area under the curve versus having a large CMAC. So there’s a number of different ways we can go.

Steve, you want to maybe provide some additional color?

Steve Kanes — Chief Medical Officer

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’ll 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 we get that right.

So, as Barry said, the data will very much lead the way. We’ll understand much more about the parameters of the drug after a month of dosing, which will be rolling to steady state, so we’ll understand a lot more about it. And if there’s things that we need — I think what we say is, if there’s things that we’ll need to do, we’ll do those things. But it’s not necessarily the case. We just need to see what the data are and then take it from there.

Salveen Richter — Goldman Sachs — Analyst

Thank you.

Jeff Boyle — Vice President, Head of Investor Relations

Thanks, Salveen.

Salveen Richter — Goldman Sachs — Analyst

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

Tazeen Ahmad — Bank of America — Analyst

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 others. Thanks.

Barry Greene — Chief Executive Officer, Member of Board of Directors

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

Steve Kanes — Chief Medical Officer

Yeah. 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. I mean, we started years ago where we explored the role of gamma-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 will be — we’ll be looking to answer is, with prolonged dosing, do we see any changes in overall response rate? If dose responses can improve over time, which is what we saw in 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 drugs that are hitting the extra synaptic receptors and none of the models we’ve been using in 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 of 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 that we’ve had to-date has been really encouraging.

Operator

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

Sumant Kulkarni — Canaccord — Analyst

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 was 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?

Barry Greene — Chief Executive Officer, Member of Board of Directors

Yeah. Great. Steve, do want to take that?

Steve Kanes — Chief Medical Officer

Sure. We talked about — just 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 share 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’s 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 have been in 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 the 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 are above that threshold. We’ve also increased the handy cut-off score for enrollment of the studies based on the ability to see higher signal to noise. So, we just — so what we did is, we take the learnings from MOUNTAIN, looked at it from a scientific perspective, from a safety perspective, from a drug development perspective and applied those learnings to WATERFALL.

Sumant Kulkarni — Canaccord — Analyst

Got it. Thanks.

Jeff Boyle — Vice President, Head of Investor Relations

Thank you.

Operator

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

Cory Kasimov — JPMorgan — Analyst

Hey. Good morning, guys. I think I know the answer to this question. We’ve had a couple of 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 a 15-day primary or are you going to wait for all patients to get to the full 42-day follow-up period that will capture the secondary end points as well as — I think that’s the approach you took with MOUNTAIN. Thank you.

Barry Greene — Chief Executive Officer, Member of Board of Directors

Yeah. Thanks, Cory. And Steve, do you want to talk about sort of high level the process for database lock and how we go forward?

Steve Kanes — Chief Medical Officer

Sure. I’d just remind everybody this is a Phase 3 trial of a breakthrough program. That’s a — it’s a regulatory study that’s done with all of the diligence quality that that entails. So, what we will do is, we’ll continue enrolling up to the last patient — their last visit. We’ll 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 into 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 an — 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 pandemic. So we have processes and procedures that ensure that quality. And then, all of that is completed, then we run the analysis. So, yeah, the last patient enrolled has to be back through the entire trial, we’ll lock the database and then begin the analysis.

Cory Kasimov — JPMorgan — Analyst

Great. Thank you.

Jeff Boyle — Vice President, Head of Investor Relations

Thanks, Cory.

Operator

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

Ritu Baral — Cowen — Analyst

Hey, guys. Thanks for taking the question. I just wanted to check in on what high-level safety we’re seeing across the LANDSCAPE study, not just WATERFALL but also CORAL and any sort of loss of consciousness that perhaps the population is susceptible to — and whether — I’m sorry, SKYLARK. And whether you’re concerned about overlapping sedation in CORAL with new onset accessorize on top of zuranolone.

Barry Greene — Chief Executive Officer, Member of Board of Directors

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 dosed over 3,000 subjects/patients with zuranolone. And what we’ve seen consistently across that 3,000 number is a rapid onset of activity efficacy in two to three days, durability and a very, very consistent adverse event profile. So we’re not seeing anything new or different across the ongoing trials.

Steve, you want anything more to add?

Steve Kanes — Chief Medical Officer

Yeah. What I can speak to, Ritu, since the trials that you’re referring to are ongoing, I speak to the places that we look to understand the 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 a — the reports, I would say is, it reflects 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’ll obviously have more information as the WATERFALL, CORAL and SKYLARK studies we have, we’ll be able to speak to those trials with more specificity.

Barry Greene — Chief Executive Officer, Member of Board of Directors

The other I’d add is 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 help to 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 far into the next day and that we’re just not seeing much of.

Ritu Baral — Cowen — Analyst

Great. Thanks for taking the question.

Operator

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

Neena Bitritto-Garg — Citigroup — Analyst

Hey, guys. Thanks for taking my question. So I just want to go back to 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 TETRAS upper limb score. And I think the 60-milligram 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 a formulation is one of the options. But given your commentary around kind of safety and kind of the efficacy 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?

Barry Greene — Chief Executive Officer, Member of Board of Directors

Sure, Neena. Steve, you want to take that?

Steve Kanes — Chief Medical Officer

Yeah. 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, and it’s a long half-life drug. So, what we’ll need to understand is, what are the effects that we see with repeated dosing and we know that we’ll be approaching steady state. It’ll be about a week in 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 help you understand what the data we’re looking to see. So, with SAGE-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’ll do and what we did in this trial is dose, as Barry said, at the top of the range. That allows us to ensure that we’re seeing the kinds of signals that we’re looking for. And then we’ll use that to model how and which doses to test in subsequent trials.

So, again, we can answer a few questions about regulation. 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, there’s the active pharmaceutical ingredient, 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 only thing I would say is that SAGE-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 a subsequent development into later phase.

Neena Bitritto-Garg — Citigroup — Analyst

Great. Thank you.

Jeff Boyle — Vice President, Head of Investor Relations

Thank you.

Operator

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

Rafay Sardar — BMO Capital Markets — Analyst

Good morning. It’s Rafay Sardar on for Gary. With SAGE-718, is data from PARADIGM show a strong signal of efficiency? 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.

Barry Greene — Chief Executive Officer, Member of Board of Directors

Yeah, Rafay. 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 to bookend it. One end of the bookend could be with Huntington’s data or Parkinson’s data we move independently in those paths. The other end of the bookend as we see improvement in cognition, exactly a function across all three neurodegenerative diseases and we kind of do a basket study. So we’re working through that right now. We’re talking to the agency about the best path forward and we’ll share more when we have a clearer path.

Rafay Sardar — BMO Capital Markets — Analyst

Thanks.

Jeff Boyle — Vice President, Head of Investor Relations

Thanks, Rafay.

Operator

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

Barry Greene — Chief Executive Officer, Member of Board of Directors

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 our path to build a top-tier pharmaceutical company. So thanks for your time. Take care. Be safe.

Operator

[Operator Closing Remarks]