Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Nasdaq  >  Sage Therapeutics, Inc.    SAGE

SAGE THERAPEUTICS, INC.

(SAGE)
  Report
SummaryQuotesChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector news

SAGE THERAPEUTICS : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

11/05/2020 | 07:18am EST
You should read the following discussion and analysis of our financial condition
and results of operations together with our condensed consolidated financial
statements and related notes appearing elsewhere in this Quarterly Report on
Form 10-Q, or Quarterly Report, and the audited financial statements and related
notes contained in our Annual Report on Form 10-K for the year ended December
31, 2019, or Annual Report. In addition to historical information, this
discussion and analysis contains forward-looking statements that involve risks,
uncertainties and assumptions. We caution you that forward-looking statements
are not guarantees of future performance, and that our actual results of
operations, financial condition and liquidity, and the developments in our
business and the industry in which we operate, may differ materially from the
results discussed or projected in the forward-looking statements contained in
this Quarterly Report. We discuss risks and other factors that we believe could
cause or contribute to these potential differences elsewhere in this report,
including under Part II, Item 1A "Risk Factors" and under "Cautionary Note
Regarding Forward-Looking Statements" in this Quarterly Report. In addition,
even if our results of operations, financial condition and liquidity, and the
developments in our business and the industry in which we operate are consistent
with the forward-looking statements contained in this Quarterly Report, they may
not be predictive of results or developments in future periods. We caution
readers not to place undue reliance on any forward-looking statements made by
us, as such statements speak only as of the date they are made. We disclaim any
obligation, except as specifically required by law and the rules of the
Securities and Exchange Commission, or SEC, to publicly update or revise any
such statements to reflect any change in our expectations or in events,
conditions or circumstances on which any such statements may be based, or that
may affect the likelihood that actual results will differ from those set forth
in the forward-looking statements.



                                    Overview

We are a biopharmaceutical company committed to developing and commercializing
novel medicines with the potential to transform the lives of people with
debilitating disorders of the brain. Our first product, ZULRESSO® (brexanolone)
CIV injection, was approved by the U.S. Food and Drug Administration, or FDA, in
March 2019 for the treatment of postpartum depression, or PPD, in adults, and
was made commercially available in the U.S. beginning on June 24, 2019. We have
a portfolio of other product candidates with a current focus on modulating two
critical central nervous system, or CNS, receptor systems, GABA and NMDA. The
GABA receptor family, which is recognized as the major inhibitory
neurotransmitter in the CNS, mediates downstream neurologic and bodily function
via activation of GABAA receptors. The NMDA-type receptors of the glutamate
receptor system are a major excitatory receptor system in the CNS. Dysfunction
in these systems is implicated in a broad range of CNS disorders. We are
targeting CNS indications where patient populations are easily identified,
clinical endpoints are well-defined, and development pathways are feasible.



The COVID-19 pandemic has caused and may continue to cause major disruptions to
businesses and financial markets worldwide. The pandemic continues to
significantly impact the U.S. Given the rapid development and continued fluidity
of the COVID-19 pandemic, we cannot predict its course or for how long and to
what extent it will continue to have a negative impact in the U.S. and
worldwide. We are closely monitoring the impact of the pandemic on our
employees, and our business operations. We have adopted a series of
precautionary measures in an effort to protect our employees and mitigate the
potential spread of COVID-19 in our community. For example, we have instituted a
remote work policy for our employees, including our field-based employees, and
have temporarily replaced all in-person meetings and interactions with virtual
interactions.



The rapid spread of COVID-19 in the U.S. has resulted in a significant reduction
in patient demand for ZULRESSO and in the number of sites available to
administer ZULRESSO. This has had a negative impact on our revenue from sales of
ZULRESSO.  The COVID-19 pandemic may also negatively impact our ongoing and
planned development activities. While to date we have not experienced
significant impacts to our development activities, concerns, precautions and
restrictions arising from the COVID-19 pandemic may substantially slow clinical
site recruitment and initiation; impede enrollment; impair the conduct,
auditing, monitoring, or completion of our trials; impair or impede the
timeliness and completion of our data collection and analysis efforts or the
integrity of our data; or cause us to pause trials. Any of these effects may
significantly impact our ability to meet our expected timelines or increase our
costs, impact other aspects of our business, or cause us to have to change our
plans. To date, we and our third-party suppliers and contract

                                       28

--------------------------------------------------------------------------------


manufacturing partners have been able to continue to supply ZULRESSO and our
product candidates without significant disruption, and we currently do not
anticipate any interruptions in supply. Any prolonged material disruptions to
the work of our employees, suppliers, contract manufacturers, or vendors as a
result of the COVID-19 pandemic could negatively impact our business, results of
operations, and activities. In addition, the COVID-19 pandemic has caused major
volatility in capital markets and a significant global economic downturn, and
the Company's ability to access the capital markets in the future could be
negatively impacted if volatility in the capital markets and the economic
downturn continue.

The following table summarizes the status of our product and product candidate portfolio as of the filing date of this Quarterly Report.



                               [[Image Removed]]



Our first product, ZULRESSO, is a proprietary intravenous, or IV, formulation of
brexanolone. Brexanolone is chemically identical to allopregnanolone, a
naturally occurring neuroactive steroid that acts as a positive allosteric
modulator of GABAA receptors. In March 2019, the FDA approved ZULRESSO for the
treatment of PPD in adults. We launched ZULRESSO commercially in the U.S.
beginning on June 24, 2019, after completion of controlled substance scheduling
of brexanolone by the U.S. Drug Enforcement Administration, or DEA, and
incorporation of the scheduling into the FDA-approved label and other product
information. The DEA placed ZULRESSO into Schedule IV of the Controlled
Substances Act. PPD is one of the most common medical complications during and
after pregnancy.



ZULRESSO is administered as a continuous infusion given over two and a half
days. Because of the risk of serious harm resulting from excessive sedation or
sudden loss of consciousness during the ZULRESSO infusion, ZULRESSO is approved
for administration only in a medically-supervised healthcare setting that has
been certified under a Risk Evaluation and Mitigation Strategy, or REMS, program
and meets the other requirements of the REMS program, including requirements
related to monitoring of the patient during the infusion. Patients who are
prescribed ZULRESSO are required to enroll in a registry which may allow us to
compile additional information to further our understanding of the risk of
excessive sedation or sudden loss of consciousness during administration of
ZULRESSO and to improve management of the risk. Given the mode and setting of
administration of ZULRESSO and the requirements of the REMS program, ZULRESSO
has been administered to date primarily to treat women with severe PPD, and we
expect that to continue to be the case. We estimate that about 20% to 30% of
women diagnosed with PPD fall into this category.



In the second quarter of 2020, we received clearance from the FDA, under the
Coronavirus Treatment Acceleration Program, or CTAP, to initiate a Phase 3
clinical trial with brexanolone in patients with advanced COVID-19 related acute
respiratory distress syndrome, or ARDS. We expect to initiate patient dosing in
this study in the fourth quarter of 2020. Topline data from this study are
anticipated in 2021.

                                       29

--------------------------------------------------------------------------------




Our next most advanced product candidate is zuranolone (SAGE-217), an oral
compound that is currently in Phase 3 clinical development for PPD and major
depressive disorder, or MDD. Zuranolone is a novel neuroactive steroid that,
like brexanolone, is a positive allosteric modulator of GABAA receptors that
targets both synaptic and extrasynaptic GABAA receptors. The FDA has granted
Breakthrough Therapy designation and Fast Track designation to zuranolone for
the treatment of MDD. To date, we have completed three pivotal clinical trials
of zuranolone, two in MDD and one in PPD. The first completed pivotal trial, a
Phase 2 clinical trial evaluating zuranolone in the treatment of MDD, and a
completed Phase 3 pivotal trial evaluating zuranolone in the treatment of PPD
both met their primary endpoints. In each case, these trials evaluated the
effect of zuranolone at a 30 mg dose. Our third pivotal trial of zuranolone, a
Phase 3 clinical trial evaluating the effect of 30 mg of zuranolone on
depressive symptoms in adults with MDD, known as the MOUNTAIN Study, did not
meet its primary endpoint. Following discussions with the FDA, we determined to
conduct three new Phase 3 clinical trials as part of our pivotal program for
zuranolone in MDD and PPD:

• a placebo-controlled trial evaluating a two-week course of zuranolone 50

mg in women with PPD, with additional short-term follow-up, known as the

SKYLARK Study;

• a placebo-controlled trial evaluating a two-week course of zuranolone 50

mg, when co-initiated with a newly administered standard antidepressant

        therapy, as an acute rapid response treatment in patients with MDD, with
        additional short-term follow-up, known as the CORAL Study; and

• a placebo-controlled trial evaluating a two-week course of zuranolone 50

mg in patients with MDD, with additional short-term follow-up, known as

the WATERFALL Study.



We initiated patient dosing in the SKYLARK Study and the WATERFALL Study in the
second quarter of 2020 and expect to initiate dosing in the CORAL Study in the
fourth quarter of 2020. Topline results from these three studies are anticipated
in 2021, with topline data from the WATERFALL Study expected in the first half
of 2021.

We are also continuing our SHORELINE study, an open-label Phase 3 clinical trial
evaluating the safety of as-needed repeat treatment with zuranolone in which
patients with MDD receive an initial two-week course of zuranolone and
responders from the first cycle are followed for up to one year and eligible to
receive as-needed retreatment during the follow-up period. The need for repeated
dosing is assessed every 14 days based on the results of a patient-reported
PHQ-9 score (?10) and 17-item Hamilton Rating Scale for Depression (HAMD-17)
assessment (?20). The protocol of the clinical trial requires a minimum of 56
days between zuranolone 14-day courses, to allow for a maximum of five
treatments during the follow-up period. Enrollment of patients receiving the 30
mg dose in the SHORELINE study was completed in the third quarter of 2019. In
May 2020, we amended the SHORELINE protocol to allow currently enrolled patients
to receive retreatment with zuranolone 50 mg. Additionally, in the second
quarter of 2020, we began enrolling a new cohort of patients with MDD in the
SHORELINE Study who are to receive zuranolone 50 mg from the outset of their
enrollment in the trial. In October 2020, we reported interim, topline results
from a July 2020 data cut of the ongoing SHORELINE Study. For the primary
endpoint of safety and tolerability, the analyzed data showed that zuranolone
was generally well-tolerated in the 30 mg dose and among the initial patients
treated with the 50 mg dose. Adverse events reported in the trial during the
period analyzed were generally consistent with results seen in previous clinical
trials of zuranolone, with the most common adverse events in the 30 mg group
(observed in > 5% of subjects) including somnolence, headache and dizziness. The
overall incidence of adverse events declined in subsequent treatment courses of
zuranolone 30 mg. Events >5% of somnolence, dizziness, sedation, headache and
tremor were observed to be more frequent in the 50 mg cohort, but were similar
in severity to the events seen with patients receiving 30 mg doses. Most adverse
events were mild or moderate. An increase in level of intensity of somnolence or
sedation was also noted at the 50 mg dose in patients who had previously
received a 30 mg dose. At the time of the data cut analysis, patients with a
clinical response (decrease in HAMD-17 baseline score of ?50%) at the end of the
initial 14-day course of zuranolone 30 mg used a mean number of 1.9 treatments
per year. We plan to report comprehensive data from the 30 mg dose in the first
half of 2021 and will include additional subsets of data within the primary and
secondary endpoints. Secondary endpoints included response and remission as
evaluated by HAMD-17 and the number of times a patient received retreatment. We
plan to report topline data from the 50mg dose in the second half of 2021.

In the fourth quarter of 2019, we paused enrollment in our REDWOOD study, a placebo-controlled Phase 3 clinical trial in MDD evaluating the efficacy (time to first relapse) and long-term safety of fixed interval zuranolone monotherapy

                                       30

--------------------------------------------------------------------------------


maintenance treatment (treatment without traditional antidepressants) in which
randomized patients receive a two-week course of zuranolone or placebo every two
months until the first relapse for up to one year. We also paused enrollment in
our RAINFOREST study, a placebo-controlled polysomnography Phase 3 clinical
trial of zuranolone in patients with MDD who have co-morbid insomnia. We paused
both of these studies, and have closed all clinical trial sites for these
studies, to focus our resources and activities on enrollment in the three new
Phase 3 clinical studies. We plan to evaluate whether to reinitiate the REDWOOD
and RAINFOREST studies at a later date. We also continue to evaluate the ongoing
zuranolone clinical pharmacology and safety program and plan to finalize
requirements to support a potential future new drug application, or NDA, with
the FDA.

In addition to zuranolone, we have a portfolio of other novel compounds that
target GABAA receptors. SAGE-324 is a novel GABAA receptor positive allosteric
modulator with preclinical pharmacokinetic and pharmacodynamic properties that
suggest suitability for chronic oral dosing. We plan to develop SAGE-324 for a
number of neurological conditions, including essential tremor, a disorder
causing involuntary and rhythmic shaking, and, potentially, epileptiform
disorders and Parkinson's disease. Based on the results of the Phase 1 clinical
program, including a positive signal observed in a small cohort of patients with
essential tremor and a safety profile consistent with GABAA positive allosteric
modulation, and our other work in this area to date, in the second quarter of
2020, we began enrolling patients in a Phase 2 clinical trial evaluating
SAGE-324 in the treatment of essential tremor, known as the KINETIC Study.
Topline data from this study are expected in the first quarter of 2021. Our
portfolio of novel GABAA receptor positive allosteric modulators also includes
SAGE-689, a product candidate intended for intramuscular administration, and for
which we have completed the non-clinical studies required to move into a Phase 1
clinical development program, and other compounds at earlier stages of
development with a focus on both acute and chronic CNS disorders.

Our second area of focus for future clinical development is the development of
novel compounds that target the NMDA receptor. The first product candidate
selected for development from this program is SAGE-718, an oxysterol-based
positive allosteric modulator of the NMDA receptor, which we are exploring in
certain cognition-related disorders associated with NMDA receptor dysfunction,
including Huntington's disease and Parkinson's disease. Examples of indications
involving NMDA receptor dysfunction also include certain types, aspects or
subpopulations of a number of diseases and disorders such as depression,
Alzheimer's disease, attention deficit hyperactivity disorder, schizophrenia,
and neuropathic pain. As part of our Phase 1 clinical program, we evaluated the
safety, tolerability and pharmacokinetics of SAGE-718 in a small cohort of
patients with early Huntington's disease. As part of this study, we also
conducted assessments of executive functioning with measures relevant to the
core cognitive decline observed in people with Huntington's disease. Based on
the signals observed in this study and in similar measures during an earlier
Phase 1 cohort of healthy volunteers without Huntington's disease, we initiated
patient dosing in September 2020 in a Phase 2a open-label study of SAGE-718
evaluating patients with Parkinson's disease cognitive dysfunction, known as the
PARADIGM Study, and plan to initiate dosing in a Phase 2a open-label clinical
study of SAGE-718 in patients with Alzheimer's disease cognitive dysfunction and
mild dementia, known as the LUMINARY Study, in the fourth quarter of 2020. We
expect that data from the PARADIGM Study and the LUMINARY Study will inform
potential advancement of SAGE-718 into further Phase 2 clinical development,
including potentially in Huntington's disease. We expect to report topline data
from the PARADIGM Study in the first quarter of 2021. Our second product
candidate targeting the NMDA receptor, SAGE-904, is in development as a
potential oral therapy for disorders associated with NMDA hypofunction. We
initiated a Phase 1 clinical trial of SAGE-904 in healthy volunteers in the
third quarter of 2019.

We expect to continue our work on allosteric modulation of the GABAA and NMDA
receptor systems in the brain. The GABAA and NMDA receptor systems are broadly
accepted as impacting many psychiatric and neurological disorders, spanning
disorders of mood, seizure, cognition, anxiety, sleep, pain, and movement, among
others. We believe that we may have the opportunity to develop molecules from
our internal portfolio with the goal of addressing a number of these disorders
in the future. We also continue to evaluate development opportunities in
potential new areas of interest as well as to explore partnering opportunities
where we believe a strategic partner may add significant value to our efforts,
including through capabilities, infrastructure, speed or financial resources.

We began to generate revenue from product sales in the second quarter of 2019 in
conjunction with the launch of our first product, ZULRESSO, which commenced on
June 24, 2019. Prior to the second quarter of 2019, all of our revenue had been
derived from a strategic collaboration we entered into in mid-2018 with Shionogi
& Co., Ltd., or Shionogi, for the clinical development and commercialization of
zuranolone in Japan, Taiwan and South Korea.

                                       31

--------------------------------------------------------------------------------


We have incurred net losses in each year since our inception, and we had an
accumulated deficit of $2.0 billion as of September 30, 2020. Our net losses
were $368.8 million for the nine months ended September 30, 2020 and $680.2
million for the year ended December 31, 2019. These losses have resulted
principally from costs incurred in connection with research and development
activities and selling, general and administrative costs associated with our
operations and our commercial build. We expect to incur significant expenses and
increasing operating losses for the foreseeable future.

We expect that we will incur significant expenses in the foreseeable future in connection with our ongoing activities, if and as we:

• continue to advance Phase 3 clinical development of zuranolone in PPD and

MDD, and potentially advance zuranolone for other indications;

• continue our commercialization efforts with respect to ZULRESSO for the

treatment of PPD in the U.S. with a primary focus in geographies that have

        existing, active ZULRESSO treating sites;


    •   advance SAGE-324 through completion of the ongoing KINETIC Study in

essential tremor, with potential future development not only in essential

tremor but also in certain epileptiform disorders, Parkinson's disease and

other neurological conditions;

• advance SAGE-718 through completion of the Phase 2a open-label PARADIGM

Study of patients with Parkinson's disease cognitive dysfunction, and

through the planned initiation and completion of the Phase 2a open-label

LUMINARY Study of patients with Alzheimer's disease cognitive dysfunction

and mild dementia, and potentially evaluate SAGE-718 in additional Phase 2

open-label clinical studies in patients with certain other

cognition-related disorders, prior to determining potential next steps for

advancing SAGE-718 further into Phase 2 clinical development, including

potentially in Huntington's disease;

• advance one or more non-clinical stage compounds into clinical development;

• continue our research and development efforts to evaluate the potential

for our existing product candidates in the treatment of additional

indications or in new formulations, and to identify new product

candidates, with the goal of developing a diversified portfolio of assets

with differentiated features;

• continue to explore opportunities to establish agreements or alliances

with pharmaceutical company collaborators or distributors for our product

        candidates where we believe the partnering opportunity will add
        significant value to our efforts, including through capabilities,
        infrastructure, speed or financial contributions;

• prepare for potential NDAs and pre-launch activities with respect to our

        product candidates at the appropriate time to support next steps if our
        pivotal programs are successful and support a filing;

• seek regulatory approvals for any product candidates that successfully

complete clinical development;

• refine the formulation and improve the manufacturing process for our

product candidates, and manufacture clinical supplies as development

progresses;

• commercialize any product candidates for which we obtain regulatory

approval, including the manufacture of commercial supplies;

• at the appropriate time if our development efforts progress successfully,

add personnel, including personnel to support our product development and

ongoing and future commercialization efforts, and incur increases in

stock-based compensation expense related to existing and new personnel

with respect to both service-based and performance-based awards;

• evaluate market opportunities for our products and product candidates in

markets outside the U.S.;

• continue to build, maintain, defend, leverage, and expand our intellectual

        property portfolio, including by utilizing the strengths of our
        proprietary chemistry platform and scientific know-how to expand our
        portfolio of new chemical entities to lessen our long-term reliance on the
        success of any one program and to facilitate long-term growth; and

• add or optimize operational, financial and management information systems.



                                       32

--------------------------------------------------------------------------------


Until such time that we can generate significant revenue from product sales, if
ever, we expect to finance our operations primarily through a combination of
revenue, equity or debt financings and other sources, which may include
collaborations with third parties. We may not be successful in our
commercialization of ZULRESSO or any other product, and may not generate
meaningful revenue or revenue at the levels or on the timing necessary to
support our investment and goals. We may never successfully complete development
of any of our current or future product candidates, obtain necessary regulatory
approval for such product candidates, or achieve commercial viability for any
resulting approved product. We may not obtain or maintain adequate patent
protection or other exclusivity for our products or product candidates. Adequate
additional financing may not be available to us on acceptable terms, or at all.
Our inability to raise capital as and when needed would have a negative impact
on our financial condition and on our ability to pursue our business strategy.
Arrangements with collaborators or others may require us to relinquish rights to
certain of our technologies or product candidates. We will need to generate
significant revenue to achieve profitability, and we may never do so.

                         Financial Operations Overview

Revenue


We began to generate revenue from product sales in the second quarter of 2019 in
conjunction with the launch of our first product, ZULRESSO, which commenced on
June 24, 2019. Prior to the second quarter of 2019, all of our revenue had been
derived from a strategic collaboration we entered into in mid-2018 with
Shionogi.

Our revenue from sales of ZULRESSO has been negatively impacted by significant
barriers arising from the complex requirements for treatment, and, more
recently, by the spread of COVID-19 in the U.S.  ZULRESSO is administered as a
continuous infusion given over two and a half days. Because of the risk of
serious harm resulting from excessive sedation or sudden loss of consciousness
during the ZULRESSO infusion, ZULRESSO must be administered only in a
medically-supervised healthcare setting that has been certified under a REMS
program and meets the other requirements of the REMS program, including
requirements related to monitoring of the patient during the infusion.  The
actions required for a healthcare setting to be ready and willing to treat women
with PPD are complex and time-consuming.  These actions include: becoming
REMS-certified; achieving formulary approvals; establishing protocols for
administering ZULRESSO; and securing satisfactory reimbursement. Sites must
often negotiate reimbursement on a payor-by-payor basis under commercial
coverage.  These requirements have created significant barriers to treatment,
and are expected to continue to limit future revenue growth. These barriers have
been compounded by the COVID-19 pandemic.  The spread of COVID-19 in the U.S.
has resulted in a significant number of sites of care pausing treatment of new
patients with ZULRESSO. We believe concerns about exposure to the virus have
also caused a significant reduction in the number of women with PPD seeking
treatment with ZULRESSO and in physicians willing to prescribe it. Given the
ongoing surges in the number of cases of COVID-19 in the U.S. and continuing
concerns about the pandemic across the country, we expect the significant
adverse impact of the pandemic on ZULRESSO revenues to continue. We anticipate
that the COVID-19 pandemic will also continue to have an adverse impact on our
results of operations from sales of ZULRESSO as pandemic-related restrictions
are expected to continue to be in effect for the foreseeable future. The scope
and timing of the expected negative impact will depend on, among other factors,
the duration and severity of precautionary measures taken to curb the spread of
COVID-19, the length and frequency of surges or waves of COVID-19 cases and the
timing and success of any return to normal business operations across the U.S.

In April 2020, we implemented a workforce reduction that primarily affected the
ZULRESSO commercial operation and related support functions, including
eliminating the entire salesforce. While we remain committed to working with
healthcare providers and women with PPD seeking access to ZULRESSO, our ongoing
commercial efforts, including our small account management field-based team, are
primarily focused on geographies that have existing, active ZULRESSO treating
sites. We expect that this approach to our commercial efforts may continue to
substantially limit the revenue opportunity for ZULRESSO.

We expect that ZULRESSO revenues are likely to fluctuate quarter to quarter. We
will not generate revenue from other products unless and until we successfully
develop, obtain regulatory approval of, and commercialize one of our current or
future product candidates. If we enter into additional collaboration agreements
with third parties for our product candidates, we may generate revenue from
those collaborations. We expect that revenue, if any, that we may

                                       33

--------------------------------------------------------------------------------


generate under collaboration agreements will fluctuate from quarter to quarter
as a result of the timing and amount of license fees, research and development
services and related reimbursements, payments for clinical materials or
manufacturing services, and milestone and other payments.

Effective June 12, 2018, we entered into a strategic collaboration with Shionogi
for the clinical development and commercialization of zuranolone for the
treatment of MDD and other potential indications in Japan, Taiwan and South
Korea. Under the terms of the agreement, Shionogi is responsible for all
clinical development, regulatory filings and commercialization and manufacturing
of zuranolone for MDD, and potentially other indications, in Japan, Taiwan and
South Korea. On October 26, 2018, we also entered into a supply agreement with
Shionogi for zuranolone clinical material. To date, revenue from the Company's
collaboration with Shionogi has come from an initial, upfront license fee upon
execution of the collaboration agreement of $90.0 million, which was recorded as
collaboration revenue in the year ended December 31, 2018, and for the supply of
API for Shionogi's clinical trials.

Cost of goods sold


Cost of goods sold includes direct and indirect costs related to the
manufacturing and distribution of ZULRESSO, including third-party manufacturing
costs, packaging services, freight, third-party royalties payable on our net
product revenues and amortization of intangible assets associated with ZULRESSO.



Operating Expenses

Our operating expenses since inception have consisted primarily of costs associated with research and development activities and selling, general and administrative activities.

Research and Development Expenses




Research and development expenses, which consist primarily of costs associated
with our product research and development efforts, are expensed as incurred.
Research and development expenses consist primarily of:

• personnel costs, including salaries, benefits, stock-based compensation

and travel expenses, for employees engaged in research and development

functions;

• expenses incurred under agreements with contract research organizations,

or CROs, and sites that conduct our non-clinical studies and clinical

trials;

• expenses associated with manufacturing materials for use in non-clinical

        studies and clinical trials and developing external manufacturing
        capabilities;


    •   costs of outside consultants engaged in research and development
        activities, including their fees and travel expenses;

• other expenses related to our non-clinical studies and clinical trials and

        expenses related to our regulatory activities;


  • payments made under our third-party license agreements; and

• a portion of our facilities and other related expenses, including rent,

        depreciation, maintenance of facilities, insurance and supplies.

Costs for certain development activities are recognized based on an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors and our clinical sites.


We have been developing our product candidates and focusing on other research
and development programs, including exploratory efforts to identify new
compounds, target validation for identified compounds and lead optimization for
our earlier-validated programs. Our direct research and development expenses are
tracked on a program-by-program basis, and consist primarily of external costs,
such as fees paid to investigators, central laboratories, CROs and contract
manufacturing organizations, or CMOs, in connection with our non-clinical
studies and clinical trials; third-party license fees related to our product
candidates; and fees paid to outside consultants who perform work on our
programs. We do not

                                       34

--------------------------------------------------------------------------------


allocate employee-related costs and other indirect costs to specific research
and development programs because these costs are deployed across multiple
product programs under research and development and, as such, are separately
classified as unallocated or stock-based compensation in research and
development expenses.

Research and development activities are central to our business. Product
candidates in later stages of clinical development generally have higher
development costs than those in earlier stages of clinical development,
primarily due to the increased size and duration of later-stage clinical trials.
We expect that our research and development expenses will continue to increase
in the foreseeable future as we continue or initiate clinical trials and
non-clinical studies for certain product candidates and pursue later stages of
clinical development of our product candidates.

We cannot determine with certainty the duration and costs of the current or future clinical trials of our product candidates. The duration, costs, and timing of clinical trials and development of our product candidates will depend on a variety of factors, including:

• the scope, size, rate of progress, and expense of our ongoing as well as

any additional clinical trials, non-clinical studies, and other research

        and development activities;


    •   future results of ongoing, planned or future clinical trials and
        non-clinical studies;

• decisions by regulatory authorities related to our product candidates;


  • uncertainties in clinical trial enrollment rate or design;


  • significant and changing government regulation; and


  • the receipt and timing of regulatory approvals, if any.


In addition, the COVID-19 pandemic and the rapid spread of the virus in the U.S.
and outside the U.S. may also negatively impact our ongoing and planned
development activities and increase our research and development costs.
Concerns, precautions and restrictions arising from the COVID-19 pandemic may
substantially slow clinical site recruitment and initiation and enrollment in
our clinical trials, may impair the conduct, auditing, monitoring, or completion
of our trials, may impair or impede the timeliness and completion of our data
collection and analysis efforts or the integrity of our data, or may cause us to
pause trials, in each case which may significantly impact our ability to meet
our expected timelines or cause us to change our plans and may significantly
increase our research and development costs.

A change in the outcome of any of these variables with respect to the
development of a product candidate could mean a significant change in the costs
and timing associated with the development of that product candidate. For
example, if the FDA or another regulatory authority were to require us to
conduct clinical trials beyond those that we currently anticipate will be
required for the completion of clinical development of a product candidate or
for regulatory approval, or if we experience significant delays in enrollment in
any of our clinical trials or need to enroll additional patients, we could be
required to expend significant additional financial resources and time on the
completion of clinical development.

Any failure to complete any stage of the development of any potential product
candidates in a timely manner could have a material adverse effect on our
operations, financial position and liquidity. A discussion of some of the risks
and uncertainties associated with not completing our programs on schedule, or at
all, and the potential consequences of failing to do so, are set forth in Part
II, Item 1A of this Quarterly Report under the heading "Risk Factors".

                                       35

--------------------------------------------------------------------------------

Selling, General and Administrative Expenses


Selling, general and administrative expenses consist primarily of personnel
costs, including salaries, benefits and travel expenses for our executive,
finance, business, commercial, corporate development and other administrative
functions, and stock-based compensation expense. Selling, general and
administrative expenses also include professional fees for expenses incurred
under agreements with third parties relating to the commercialization of
ZULRESSO; public relations, audit, tax and legal services, including legal
expenses to pursue patent protection of our intellectual property; and a portion
of our facilities and other related expenses, including rent, depreciation,
maintenance of facilities, insurance and supplies.

In April 2020, we implemented a workforce reduction that primarily affected the
ZULRESSO commercial operation and related support functions, including
eliminating the entire salesforce. We expect the workforce reduction to reduce
annualized operating expenses by approximately $170 million, of which $150
million is related to selling, general and administrative expenses. While we
remain committed to working with healthcare providers and women with PPD seeking
access to ZULRESSO, our ongoing commercial efforts, including our small account
management field-based team, are primarily focused on geographies that have
existing, active ZULRESSO treating sites.  Even with the expected reduction in
selling, general and administrative expenses as a result of the restructuring,
we expect to continue to incur significant commercialization expenses, including
payroll and related expenses, to support our ongoing commercial activities
associated with ZULRESSO.  We expect that selling, general and administrative
expenses will increase in the future if we are successful in our development
efforts and are preparing for potential commercialization of our current or
future product candidates, if approved. We expect to continue to incur
significant expenses associated with general operations, including costs related
to accounting and legal services, director and officer insurance premiums,
facilities and other corporate infrastructure and office-related costs, such as
information technology costs.

Results of Operations

Comparison of the Three Months Ended September 30, 2020 and 2019

The following table summarizes our results of operations for the three months ended September 30, 2020 and 2019:




                                                    Three Months Ended September 30,           Increase
                                                       2020                   2019            (Decrease)
                                                                      (in thousands)
Product revenue, net                             $          1,639       $          1,478     $        161
Collaboration revenue                                           -                  2,092           (2,092 )
Total revenue                                               1,639                  3,570           (1,931 )
Operating costs and expenses:
Cost of goods sold                                            149                    137               12
Research and development                                   74,078                102,108          (28,030 )
Selling, general and administrative                        35,099                 88,502          (53,403 )
Restructuring                                                (529 )                    -             (529 )
Total operating costs and expenses                        108,797                190,747          (81,950 )
Loss from operations                                     (107,158 )             (187,177 )         80,019
Interest income, net                                        1,347                  7,227           (5,880 )
Other income (expense), net                                    76                     (8 )             84
Net loss                                         $       (105,735 )$       (179,958 )$     74,223




Product revenue, net



During the three months ended September 30, 2020 and 2019, we recognized $1.6
million and $1.5 million, respectively, of net product revenues related to sales
of ZULRESSO. Sales allowances and accruals consisted of patient financial
assistance, distribution fees, discounts and chargebacks.



                                       36

--------------------------------------------------------------------------------

Collaboration revenue



For the three months ended September 30, 2020, we recognized no collaboration
revenue from our agreement with Shionogi. For the three months ended
September 30, 2019, we recognized $2.1 million in collaboration revenue from our
agreement with Shionogi related to the supply of zuranolone active
pharmaceutical ingredient, or API, for clinical development. For further
discussion regarding our collaboration agreement with Shionogi and the
accounting for revenue from collaboration agreements, refer to Note 6,
Collaboration Agreement in the Notes to Condensed Consolidated Financial
Statements included in Part I, Item 1 of this Quarterly Report.



Cost of goods sold



Cost of goods sold was $0.1 million for each of the three months ended
September 30, 2020 and 2019, and is made up of a low-single digit royalty cost
on net product revenue to CyDex and The Regents of the University of California,
the amortization of intangible assets associated with ZULRESSO and third-party
manufacturing and distribution costs associated with labeling, packaging, and
shipping of ZULRESSO. Prior to receiving initial FDA approval for ZULRESSO on
March 19, 2019, we manufactured ZULRESSO inventory to be sold upon
commercialization and recorded approximately $8.9 million related to this
inventory build-up as research and development expense. As a result, the
manufacturing costs related to the ZULRESSO inventory build-up incurred before
FDA approval were already expensed in a prior period and are therefore excluded
from the cost of goods sold for the three months ended September 30, 2020 and
2019. We estimate our cost of goods sold as a percentage of net product revenue
will remain in the mid-single digit percentage range for the foreseeable future.
We expect to utilize zero cost inventory with respect to ZULRESSO for an
extended period of time.

Research and development expenses



                                              Three Months Ended September 30,           Increase
                                                2020                   2019             (Decrease)
                                                                (in thousands)
zuranolone (SAGE-217)                      $        31,343       $          43,133     $     (11,790 )
SAGE-324                                             5,509                   8,212            (2,703 )
SAGE-718                                             2,126                   2,495              (369 )
Other research and development programs              8,888                  13,778            (4,890 )
Unallocated expenses                                16,285                  17,379            (1,094 )
Stock-based compensation                             9,927                  17,111            (7,184 )

Total research and development expenses $ 74,078 $ 102,108 $ (28,030 )

Research and development expenses for the three months ended September 30, 2020 were $74.1 million, compared to $102.1 million for the three months ended September 30, 2019. The decrease of $28.0 million was primarily due to the following:

• a decrease of $11.8 million in expenses for zuranolone, primarily as a

result of completion of the MOUNTAIN Study and decreased spending for

clinical pharmacology studies, partially offset by an increase in spending

for the WATERFALL Study;

• a decrease of $2.7 million in expenses for SAGE-324, primarily due to the

completion of Phase 1 studies;

• a decrease of $4.9 million in expenses for other research and development

        programs, related to a decrease in spending on non-clinical studies and
        for brexanolone (SAGE-547); and



• a decrease of $7.2 million in non-cash stock-based compensation expense.

There was no non-cash stock-based compensation expense recognized related

to the achievement of performance-based vesting criteria during the three

months ended September 30, 2020. The amount of non-cash stock-based

compensation expense related to the achievement of performance-based

vesting criteria was $4.5 million for the three months ended September 30,

2019. The remainder of the decrease is primarily from the impact of the

cancellation of option grants that had been made to terminated employees,

        including those terminated in the restructuring.




                                       37
--------------------------------------------------------------------------------

Selling, general and administrative expenses



                                             Three Months Ended September 30,          Increase
                                                2020                  2019            (Decrease)
                                                               (in thousands)
Personnel-related                          $         8,487       $        31,780$     (23,293 )
Stock-based compensation                            10,181                26,558           (16,377 )
Professional fees                                    8,612                16,880            (8,268 )
Other                                                7,819                13,284            (5,465 )
Total selling, general and
administrative expenses                    $        35,099$        88,502$     (53,403 )




Selling, general and administrative expenses for the three months ended
September 30, 2020 were $35.1 million, compared to $88.5 million for the three
months ended September 30, 2019. The decrease of $53.4 million was primarily due
to the following:


• a decrease of $23.3 million in personnel-related costs, mainly as a result

of the termination of employees in the restructuring;

• a decrease of $16.4 million in non-cash stock-based compensation expense.

There was no non-cash stock-based compensation expense recognized related

to the achievement of performance-based vesting criteria during the three

months ended September 30, 2020. The amount of non-cash stock-based

compensation expense related to the achievement of performance-based

        vesting criteria was $6.4 million during the three months ended
        September 30, 2019. The remainder of the decrease is primarily from the
        impact of the cancellation of option grants that had been made to

terminated employees, including those terminated in the restructuring;




    •   a decrease of $8.3 million in professional fees, primarily due to the

impact of the restructuring on our spending for commercial activities; and

• a decrease of $5.5 million in other costs, primarily due to the impact of

the restructuring and the impact of the COVID-19 pandemic resulting in our

employees working remotely and a reduction in business travel.

Interest income, net and Other income (expense), net

Interest income, net, and other expense, net, for the three months ended September 30, 2020 and 2019 were $1.4 million and $7.2 million, respectively. The primary reason for the decrease was the decrease in the balance of marketable securities and a reduction in interest rates.

                                       38

--------------------------------------------------------------------------------

Comparison of the Nine Months Ended September 30, 2020 and 2019

The following table summarizes our results of operations for the nine months ended September 30, 2020 and 2019:



                                          Nine Months Ended
                                            September 30,            Increase
                                         2020           2019        (Decrease)
                                                   (in thousands)
Product revenue, net                  $    5,014$    1,997$     3,017
Collaboration revenue                          -          2,911          (2,911 )
Total revenue                              5,014          4,908             106
Operating costs and expenses:
Cost of goods sold                           429            181             248
Research and development                 211,008        277,565         (66,557 )
Selling, general and administrative      143,454        260,648        (117,194 )
Restructuring                             27,873              -          

27,873

Total operating costs and expenses       382,764        538,394        (155,630 )
Loss from operations                    (377,750 )     (533,486 )       155,736
Interest income, net                       8,763         21,889         (13,126 )
Other income, net                            165             12             153
Net loss                              $ (368,822 )$ (511,585 )$   142,763




Product revenue, net



During the nine months ended September 30, 2020 and 2019, we recognized $5.0
million and $2.0 million, respectively, of net product revenues related to sales
of ZULRESSO. Sales allowances and accruals consisted of patient financial
assistance, distribution fees, discounts and chargebacks.



Collaboration revenue



For the nine months ended September 30, 2020, we recognized no collaboration
revenue from our agreement with Shionogi. For the nine months ended
September 30, 2019, we recognized $2.9 million in collaboration revenue from our
agreement with Shionogi related to the supply of zuranolone API for clinical
development. For further discussion regarding our collaboration agreement with
Shionogi and the accounting for revenue from collaboration agreements, refer to
Note 6, Collaboration Agreement in the Notes to Condensed Consolidated Financial
Statements included in Part I, Item 1 of this Quarterly Report.

Cost of goods sold




Cost of goods sold was $0.4 million and $0.2 million for the nine months ended
September 30, 2020 and 2019, respectively, and is made up of a low-single digit
royalty cost on net product revenue to CyDex and The Regents of the University
of California, the amortization of intangible assets associated with ZULRESSO
and third-party manufacturing and distribution costs associated with labeling,
packaging, and shipping of ZULRESSO. Prior to receiving initial FDA approval for
ZULRESSO on March 19, 2019, we manufactured ZULRESSO inventory to be sold upon
commercialization and recorded approximately $8.9 million related to this
inventory build-up as research and development expense. As a result, the
manufacturing costs related to the ZULRESSO inventory build-up incurred before
FDA approval were already expensed in a prior period and are therefore excluded
from the cost of goods sold for the nine months ended September 30, 2020 and
2019. We estimate our cost of goods sold as a percentage of net product revenue
will remain in the mid-single digit percentage range for the foreseeable future.
We expect to utilize zero cost inventory with respect to ZULRESSO for an
extended period of time.

                                       39

--------------------------------------------------------------------------------

Research and development expenses



                                             Nine Months Ended
                                               September 30,            Increase
                                            2020          2019         (Decrease)
                                                       (in thousands)
zuranolone (SAGE-217)                     $  83,402$ 110,813$    (27,411 )
SAGE-324                                     12,664        15,490           (2,826 )
SAGE-718                                      4,296         9,444           (5,148 )
Other research and development programs      25,432        35,515          (10,083 )
Unallocated expenses                         52,944        54,775           (1,831 )
Stock-based compensation                     32,270        51,528         

(19,258 ) Total research and development expenses $ 211,008$ 277,565$ (66,557 )

Research and development expenses for the nine months ended September 30, 2020 were $211.0 million, compared to $277.6 million for the nine months ended September 30, 2019. The decrease of $66.6 million was primarily due to the following:

• a decrease of $27.4 million in expenses for zuranolone, primarily as a

result of completion of the MOUNTAIN Study and decreased spending for

clinical pharmacology studies, partially offset by an increase in spending

for the WATERFALL Study;

• a decrease of $2.8 million in expenses for SAGE-324, primarily due to the

completion of Phase 1 studies;

• a decrease of $5.1 million in expenses for SAGE-718, primarily due to the

        completion of Phase 1 studies during 2019;



• a decrease of $10.1 million in expenses for other research and development

        programs, related to a decrease in spending on non-clinical studies and
        for brexanolone (SAGE-547); and

• a decrease of $19.3 million in non-cash stock-based compensation expense.

There was no non-cash stock-based compensation expense recognized related

to the achievement of performance-based vesting criteria during the nine

months ended September 30, 2020. The amount of non-cash stock-based

compensation expense related to the achievement of performance-based

vesting criteria was $14.0 million for the nine months ended September 30,

2019. The remainder of the decrease is primarily from the impact of the

cancellation of option grants that had been made to terminated employees,

        including those terminated in the restructuring.



Selling, general and administrative expenses



                                               Nine Months Ended
                                                 September 30,           Increase
                                              2020          2019        (Decrease)
                                                        (in thousands)
Personnel-related                           $  49,492$  93,945$   (44,453 )
Stock-based compensation                       41,192        71,024         (29,832 )
Professional fees                              26,371        55,926         (29,555 )
Other                                          26,399        39,753         (13,354 )
Total selling, general and administrative
  expenses                                  $ 143,454$ 260,648$  (117,194 )




Selling, general and administrative expenses for the nine months ended
September 30, 2020 were $143.5 million, compared to $260.6 million for the nine
months ended September 30, 2019. The decrease of $117.2 million was primarily
due to the following:



                                       40
--------------------------------------------------------------------------------

• a decrease of $44.5 million in personnel-related costs, mainly as a result

        of the termination of employees in the restructuring;




    •   a decrease of $29.8 million in non-cash stock-based compensation expense.

There was no non-cash stock-based compensation expense recognized related

to the achievement of performance-based vesting criteria during the nine

months ended September 30, 2020. The amount of non-cash stock-based

compensation expense related to the achievement of performance-based

        vesting criteria was $13.2 million during the nine months ended
        September 30, 2019. The remainder of the decrease is primarily from the
        impact of the cancellation of option grants that had been made to

terminated employees, including those terminated in the restructuring;




    •   a decrease of $29.6 million in professional fees, primarily due to costs
        incurred in the nine months ended September 30, 2019, related to
        preparations for the commercial launch of ZULRESSO in the U.S., which
        commenced on June 24, 2019 and the impact of the restructuring on our
        spending for commercial activities; and



• a decrease of $13.4 million in other costs, primarily due to the impact of

the restructuring and the impact of the COVID-19 pandemic resulting in our

        employees working remotely and a reduction in business travel.




Restructuring

In April 2020, we announced a restructuring plan to enable us to advance our
corporate strategy and pipeline that included the elimination of approximately
53% of our workforce. The workforce reduction primarily affected the ZULRESSO
commercial operation and related selling, general and administrative support
functions. In the nine months ended September 30, 2020, we recorded $27.9
million of expense, primarily for one-time termination benefits to the affected
employees, primarily for cash payments of severance, healthcare benefits and
outplacement assistance.

Interest income, net and Other income (expense), net

Interest income, net, and other expense, net, for the nine months ended September 30, 2020 and 2019 were $8.9 million and $21.9 million, respectively. The primary reason for the decrease was the decrease in the balance of marketable securities and a reduction in interest rates.

Liquidity and Capital Resources




Prior to the second quarter of 2019, we had not generated revenue from product
sales. We began to generate revenue from product sales in the second quarter of
2019 in conjunction with the launch of our first product, ZULRESSO, which
commenced on June 24, 2019. Prior to the second quarter of 2019, all of our
revenue had been derived from our collaboration with Shionogi. To date, we have
incurred recurring net losses. As of September 30, 2020, we had an accumulated
deficit of $2.0 billion. From our inception through September 30, 2020, we
received net proceeds of $2.2 billion from the sales of redeemable convertible
preferred stock prior to our initial public offering, the issuance of
convertible notes and the sales of common stock in our initial public offering
in July 2014 and follow-on offerings.

On February 27, 2019, we completed the sale of 3,833,334 shares of our common
stock in a follow-on underwritten public offering at a price to the public of
$150.00 per share, resulting in net proceeds of $560.9 million after deducting
commissions and underwriting discounts and offering costs paid by us.

As of September 30, 2020, our primary sources of liquidity were our cash, cash
equivalents and marketable securities, which totaled $668.5 million. We invest
our cash in money market funds, U.S. government securities, corporate bonds and
commercial paper, with the primary objectives to preserve principal, provide
liquidity and maximize income without significantly increasing risk.



                                       41

--------------------------------------------------------------------------------

The following table summarizes the primary sources and uses of cash for the nine months ended September 30, 2020 and 2019:



                                      Nine Months Ended September 30,
                                        2020                   2019
                                              (in thousands)
Net cash provided by (used in):
Operating activities              $       (346,691 )$       (411,980 )
Investing activities                       397,165               (125,240 )
Financing activities                         7,091                605,458
Total                             $         57,565       $         68,238




Operating Activities



During the nine months ended September 30, 2020, net cash used in operating
activities primarily resulted from our net loss of $368.8 million, which was
primarily attributable to our research and development activities and our
selling, general and administrative expenses, and changes in our operating
assets and liabilities of $54.7 million, partially offset by $76.8 million of
non-cash items. During the nine months ended September 30, 2019, net cash used
in operating activities primarily resulted from our net loss of $511.6 million,
which was primarily attributable to our research and development activities and
our selling, general and administrative expenses, and changes in our operating
assets and liabilities of $15.5 million, partially offset by $115.1 million of
non-cash items.

Investing Activities



During the nine months ended September 30, 2020 and 2019, net cash provided by
investing activities was $397.2 million and net cash used in investing
activities was $125.2 million, respectively. During the nine months ended
September 30, 2020 and 2019, we purchased marketable securities and had sales
and maturities of our marketable securities as part of managing our cash and
investments portfolio, including purchases using proceeds received in our
follow-on underwritten public offering in February 2019.

Financing Activities




During the nine months ended September 30, 2020 and 2019, net cash provided by
financing activities was $7.1 million and $605.5 million, respectively. During
the nine months ended September 30, 2019, we received $560.9 million of net
proceeds from our follow-on underwritten public offering, after deducting
commissions and underwriting discounts and offering costs paid by us.

Operating Capital Requirements


We began to generate revenue from product sales in the second quarter of 2019 in
conjunction with the launch of our first product, ZULRESSO. We anticipate that
we will continue to generate losses for the foreseeable future, and we expect
the losses to increase as we continue the development of our current and future
product candidates, and seek regulatory approvals for those product candidates
that are successfully developed; prepare for potential future commercialization
of product candidates beyond ZULRESSO that are successfully developed and
approved; begin to commercialize any such products, if successfully developed
and approved; and continue our efforts to identify and develop new product
candidates beyond our current portfolio. We also expect to incur significant
costs associated with general operations. In addition, we expect to incur
significant commercialization expenses for product sales, marketing and
outsourced manufacturing with respect to ZULRESSO and any future products that
are successfully developed and approved. Accordingly, we anticipate that we will
need substantial additional funding in connection with our continuing
operations.

Based on our current operating plans, we expect that our existing cash, cash
equivalents and marketable securities as of September 30, 2020, will enable us
to fund our operating expenses and capital expenditure requirements into 2022.
During that time, we expect to incur significant expenses as we:

                                       42

--------------------------------------------------------------------------------

• continue to advance Phase 3 clinical development of zuranolone in PPD and

MDD, and potentially advance zuranolone for other indications;

• continue our commercialization efforts with respect to ZULRESSO for the

treatment of PPD in the U.S. with a primary focus in geographies that have

        existing, active ZULRESSO treating sites;


    •   advance SAGE-324 through completion of the ongoing KINETIC Study in

essential tremor, with potential future development not only in essential

tremor but also in certain epileptiform disorders, Parkinson's disease and

other neurological conditions;

• advance SAGE-718 through completion of the Phase 2a open-label PARADIGM

Study of patients with Parkinson's disease cognitive dysfunction, and

through the planned initiation and completion of the Phase 2a open-label

LUMINARY Study of patients with Alzheimer's disease cognitive dysfunction

and mild dementia, and potentially evaluate SAGE-718 in additional Phase 2

open-label clinical studies in patients with certain other

cognition-related disorders, prior to determining potential next steps for

advancing SAGE-718 further into Phase 2 clinical development, including

potentially in Huntington's disease;

• advance one or more non-clinical stage compounds into clinical development;

• continue our research and development efforts to evaluate the potential

for our existing product candidates in the treatment of additional

indications or in new formulations, and to identify new product

candidates, with the goal of developing a diversified portfolio of assets

with differentiated features;

• continue to explore opportunities to establish agreements or alliances

with pharmaceutical company collaborators or distributors for our product

        candidates where we believe the partnering opportunity will add
        significant value to our efforts, including through capabilities,
        infrastructure, speed or financial contributions;

• prepare for potential NDAs and pre-launch activities with respect to our

        product candidates at the appropriate time to support next steps if our
        pivotal programs are successful and support a filing;

• seek regulatory approvals for any product candidates that successfully

complete clinical development;

• refine the formulation and improve the manufacturing process for our

product candidates, and manufacture clinical supplies as development

progresses;

• commercialize any product candidates for which we obtain regulatory

approval, including the manufacture of commercial supplies;

• at the appropriate time if our development efforts progress successfully,

add personnel, including personnel to support our product development and

ongoing and future commercialization efforts, and incur increases in

stock-based compensation expense related to existing and new personnel

with respect to both service-based and performance-based awards;

• evaluate market opportunities for our products and product candidates in

markets outside the U.S.;

• continue to build, maintain, defend, leverage and expand our intellectual

        property portfolio, including by utilizing the strengths of our
        proprietary chemistry platform and scientific know-how to expand our
        portfolio of new chemical entities to lessen our long-term reliance on the
        success of any one program and to facilitate long-term growth; and

• add or optimize operational, financial and management information systems.



Our current operating plan does not contemplate other development activities
that we may pursue or that all of our currently planned activities will proceed
at the same pace, or that all of these activities will be fully initiated or
completed during that time. We have based our estimates on assumptions that
could change, and we may use our available capital resources sooner than we
currently expect. We may also choose to change or increase our development,
commercialization or other efforts. Because of the numerous risks and
uncertainties associated with the development and commercialization of any
product or product candidates, we are unable to estimate the amounts of
increased capital outlays and operating expenditures necessary to complete
development of our current or future product candidates or to commercialize any
approved product.

                                       43
--------------------------------------------------------------------------------

Our future capital requirements will depend on many factors, including:

• the amount and timing of revenues from sales of ZULRESSO, which will be

impacted by a number of factors, including: the rate, degree and level of

market acceptance for ZULRESSO for the treatment of PPD in the U.S.; the

        impact of our April 2020 restructuring and the decision to focus our
        efforts primarily on geographies in the U.S. that have existing, active

ZULRESSO treating sites; the continued availability of healthcare settings

in those geographies to administer ZULRESSO and the ability and

willingness of such healthcare settings to make sufficient capacity

available; the level of reimbursement for both ZULRESSO and the infusion

in the healthcare setting both by commercial and government payors, and

the nature of limitations on reimbursement; the number of healthcare

        professionals willing to prescribe ZULRESSO and women with PPD who agree
        to be treated with ZULRESSO; and the scope, duration and timing of the
        impact of the COVID-19 pandemic;

• the timing and amount of costs associated with our commercialization of

ZULRESSO;

• the initiation, progress, timing, costs, and results of ongoing, planned

and future non-clinical studies and clinical trials for zuranolone and our

other existing and future product candidates; the number and length of

clinical trials required by regulatory authorities to support regulatory

approval; and the costs of preparing regulatory filings;

• the length, severity and costs of disruptions, if any, associated with the

COVID-19 pandemic on initiation and conduct of our clinical trials;

• the ability of zuranolone and our other clinical-stage product candidates

to progress through clinical development successfully; the timing, scope

and outcome of regulatory filings, reviews and approvals of such product

candidates, if we are successful in our development efforts; the scope and

cost of any clinical trials or other commitments required post-approval

        for any approved products resulting from such development efforts, if
        successful; and the level, timing and amount of costs associated with
        permitted prelaunch activities and preparing for a potential future

commercial launch of any such product candidate that is successfully

developed and approved;

• the size of the PPD market and the portion of the population for which

ZULRESSO may be prescribed; the size of the markets for which zuranolone

and our other product candidates may be approved in the future, if

successfully developed; the portion of the population in the approved

indications for which our future products are actually prescribed; the

rate and degree of market acceptance for our products, and the pricing,

availability and level of reimbursement for our products;

• the number and characteristics of the product candidates we pursue in

development and the nature and scope of our discovery and development

programs;

• the costs of preparing, filing and prosecuting patent applications,

maintaining and enforcing our intellectual property rights and defending

        intellectual property-related claims;


    •   the extent to which we acquire or in-license other products and
        technologies; and


    •   our ability to establish any future collaboration arrangements on
        favorable terms, if at all.




Until such time, if ever, as we can generate substantial product revenue and
achieve profitability, we expect to also finance our cash needs through a
combination of equity offerings, debt financings, collaborations, strategic
alliances, licensing arrangements and other sources of funding. Even if we
believe we have sufficient funds for our current or future operating plans, we
may seek additional capital if market conditions are favorable or in light of
other strategic considerations. To the extent that we raise additional capital
through the sale of equity or convertible debt securities, the ownership
interest of our stockholders will be diluted, and the terms of these securities
may include liquidation or other preferences that adversely affect the rights of
our common stockholders. Debt financing, if available, may involve agreements
that include covenants limiting or restricting our ability to take specific
actions, such as incurring additional debt, making capital expenditures or
declaring dividends and may require the issuance of warrants, which could
potentially dilute the ownership interest of our stockholders. If we raise
additional funds through collaborations, strategic alliances or licensing
arrangements with third parties, we may have to relinquish valuable rights to
our technologies, future revenue streams or research programs or to grant
licenses on terms that may not be favorable to us. Raising funds in

                                       44

--------------------------------------------------------------------------------


the current economic environment may present challenges. The COVID-19 pandemic
has caused major volatility in the stock market and a significant global
economic downturn. If the economic downturn caused by the pandemic continues for
an extended period or surges in the number of cases of COVID-19 continue or
worsen in the future, or if our business prospects are impaired or the capital
markets disrupted for other reasons, additional capital may not be available to
us on acceptable terms, or at all. If we are unable to raise additional funds
through equity or debt financings or other means when needed, we may be required
to delay, limit, reduce or terminate our product development or future
commercialization efforts or grant rights to develop and market products or
product candidates that we would otherwise prefer to develop and market
ourselves.



Contractual Obligations and Commitments

There have been no material changes to our contractual obligations and commitments as included in our Annual Report.

Off-Balance Sheet Arrangements

We do not currently have, nor did we have during the periods presented, any off-balance sheet arrangements as defined by SEC rules.

Application of Critical Accounting Policies


We have prepared our condensed consolidated financial statements in accordance
with accounting principles generally accepted in the U.S. Our preparation of
these condensed consolidated financial statements requires us to make estimates,
assumptions, and judgments that affect the reported amounts of assets,
liabilities, expenses, and related disclosures at the date of the condensed
consolidated financial statements, as well as revenue and expenses recorded
during the reporting periods. We evaluate our estimates and judgments on an
ongoing basis. We base our estimates on historical experience and on various
other factors that we believe are reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying value of
assets and liabilities that are not readily apparent from other sources. Actual
results could therefore differ materially from these estimates under different
assumptions or conditions.

There have been no material changes to our critical accounting policies from
those described in "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Critical Accounting Policies and Significant
Judgments and Estimates" included in our Annual Report.

Recently Issued Accounting Pronouncements


A description of recently issued accounting pronouncements that may potentially
impact our financial position and results of operations is set forth in Note 2,
"Summary of Significant Accounting Policies", in the accompanying Notes to
Condensed Consolidated Financial Statements included in Part I, Item 1 of this
Quarterly Report.

© Edgar Online, source Glimpses

All news about SAGE THERAPEUTICS, INC.
01/22SAGE THERAPEUTICS : BMO Capital Downgrades Sage Therapeutics to Market Perform F..
MT
01/22PRESS RELEASE : BB BIOTECH AG: Vaccines leading -2-
DJ
01/19SAGE THERAPEUTICS : Wedbush Adjusts Price Target on Sage Therapeutics to $98 Fro..
MT
01/07SAGE THERAPEUTICS, INC. : Results of Operations and Financial Condition, Other E..
AQ
01/07SAGE THERAPEUTICS : Provides 2021 Corporate Strategy Update at J.P. Morgan Healt..
BU
01/04SAGE THERAPEUTICS : Guggenheim Upgrades Sage Therapeutics to Buy From Neutral, S..
MT
01/04SAGE THERAPEUTICS : RBC Downgrades Sage Therapeutics to Sector Perform From Outp..
MT
2020SAGE THERAPEUTICS, INC. : Other Events (form 8-K)
AQ
2020SAGE THERAPEUTICS : to Present at the 39th Annual J.P. Morgan Healthcare Confere..
BU
2020SAGE THERAPEUTICS : Names Barry Greene CEO
MT
More news