The FDA requested an additional study before it could reconsider Sage Therapeutics' application in major depressive disorder.
Sage Therapeutics is preparing to reduce its head count and pipeline in response to the FDA’s rejection of a Biogen-partnered drug as a treatment for major depressive disorder (MDD).
It wasn’t all bad news, with Sage’s management saying they were “delighted” that zuranolone, which will be marketed as Zurzuvae, had been approved by the regulator as “the first-and-only oral treatment specifically indicated for adults with postpartum depression [PPD].” Sage is due to receive a $75 million milestone payment from Biogen upon the first sale of zuranolone for PPD.
But in the far more commercially lucrative indication of MDD, zuranolone wasn’t as lucky. In a complete response letter, the FDA told the two companies they hadn’t provided “substantial evidence of effectiveness to support the approval of zuranolone for the treatment of MDD and that an additional study or studies will be needed,” according to Sage.
“Sage and Biogen are reviewing the feedback from the FDA and are evaluating next steps,” the biotech added in a second-quarter earnings report Monday.
The company’s stock plummeted 48% to $18.71 as the markets opened Monday from a Friday close of $36.10.
The failure of the MDD application also sent Sage into defensive mode, warning layoffs and a pipeline refocus could be coming down the tracks.
“While we believe we are well capitalized, given the impact of the CRL for zuranolone in MDD on our plans, we are currently evaluating resource allocation, including pipeline prioritization and a workforce reorganization with a goal of extending our cash runway,” Sage CEO Barry Greene said in the release.
Sage’s lead neuropsychiatric drug candidate SAGE-718 has a slate of readouts scheduled from next year, which should offer some distraction from the MDD rejection. SAGE-718 is a NMDA receptor positive allosteric modulator in development for various cognitive disorders including Huntington’s, Parkinson’s and Alzheimer’s diseases.
Then there’s SAGE-324, the biotech’s lead neurology program, which is in development for movement disorders like essential tremor, epilepsy and Parkinson’s. Enrollment in a phase 2 trial in essential tremor is set to complete this year. Coming up behind it is SAGE-689, a GABAA receptor positive allosteric modulator in phase 1 development for disorders associated with GABA hypofunction.
Also in phase 1 is SAGE-319, another GABAA receptor positive allosteric modulator Sage intends to study for social interaction disorders.
“With a right-sized organization and portfolio, we believe we have an opportunity to emerge as an even stronger company,” Greene added in the release. “We plan to provide greater detail and next steps before the end of the third quarter.”
On the surface, Sage hardly seems short of funds. The biotech ended June with $1 billion in cash and equivalents, which is expected to last into 2025. But in a hint of what’s to come, the company added elsewhere in the earnings release that as a result of the upcoming workforce and pipeline changes, Sage assumes its “operating expenses will decrease in 2024.”
On a second-quarter earnings call with analysts Monday morning, Greene stuck close to his script, deflecting questions about whether Sage would be conducting further trials of zuranolone in MDD and the company's continuing working relationship with Biogen.
“We don't agree with the FDA's view. We are evaluating the CRL and as soon as we can provide more clarity we will on what the next steps are,” the CEO said on the call. “We really do believe that zuranolone should be available to treat patients with MDD. But we've got to get there and until we're there we'll be solely focused on marketing Zurzuvae to treat women with PDD.”
Chief Financial Officer Kimi Iguchi added that “when it comes to looking at the pipeline [and] workforce reorganization … we expect our evaluation of our resource allocation will incorporate the feedback from the FDA.”
Zuranolone was designed to be a 14-day, fast-acting treatment—which stands in contrast to commonly approved depression therapies that can take weeks to kick in. But while investors have seen huge potential in the drug for both indications, they were “spooked … by the dearth of focus on the potential zuranolone approval in MDD/PPD in Biogen's earnings call,” Mizhuo analysts noted last month.
Adding to the uneasiness has been Biogen’s own cost reductions, which included shaving off $700 million in operating expenses and another 1,000 employees cut from the roster. With all that going on, analysts had wondered at the time whether Biogen would still be committed to a big commercial launch for zuranolone.
Reflecting on zuranolone’s MDD rejection by the FDA, Mizuho analysts pointed out that the depressive disorder was the “meaningfully larger opportunity” of the two indications Sage had requested, with potentially around an estimated $1.3 billion in 2030 sales for MDD compared to closer to $200 million for PPD.
After zuranolone failed in the phase 3 MOUNTAIN trial in 2019, Sage increased the dose to 50 mg to ensure it passed the WATERFALL study. “Based on the MOUNTAIN/WATERFALL trials, it looks like increasing dose moderately doesn't appear to improve the treatment effect meaningfully and going significantly higher could lead to an undesirably higher sedation rate,” Mizuho analysts pointed out in a note Sunday.
“As such, it's not clear what Biogen/Sage could do if they choose to run additional clinical trials,” the analysts concluded.
