Sage considering cuts after FDA setback

Sage Therapeutics is facing the possibility of job losses and other cutbacks in the wake of the narrower-than-hoped approval of its flagship antidepressant Zurzuvae by the FDA.

Shares in the company cratered as investors reacted to the news that the US regulator had approved Zurzuvae (zuranolone) for post-partum depression (PPD), but rejected it for major depressive disorder (MDD), a much larger and more lucrative market.

Chief executive Barry Greene said the company was "devastated for patients and deeply disappointed" with the MDD decision, adding that the company was now looking at "resource allocation, including pipeline prioritisation and a workforce reorganisation with a goal of extending our cash runway."

The company is still sitting on around $1 billion in cash reserves, enough to last it well into 2025, but the limited label for Zurzuvae has trimmed sales prospects for the Biogen-partnered drug from $1 billion-plus to $250 million to $500 million, according to Jefferies analysts.

There has also been speculation that the MDD failure may cause Biogen to re-evaluate its partnership with Sage on the drug, given that it appears another clinical trial would have to be run to support a future approval. Jefferies said that Biogen may baulk at investing in that effort, as it is negotiating its own cost-cutting drive.

Sage executives took pains to emphasise the positive of Zurzuvae's approval for PPD on a conference call, with Greene saying the drug will provide hundreds of thousands of women with PPD "with a desperately needed new treatment option, with the potential to treat their depressive symptoms quickly without the need for chronic treatment."

The once-daily pill provides an alternative to current PPD therapies that must be administered via intravenous infusion, or oral therapies that can take weeks to start working. "We believe healthcare providers are looking for a tool like this to solve their dilemma and what to do when they diagnose a mom with PPD," said Greene.

Sage's chief financial officer, Kimi Iguchi, told investors that the cost-savings from its reorganisation will start to accrue next year and that with the PPD launch Sage would emerge as "stronger, leaner, and a more focused company."

Shares in Sage closed down almost 54% after the update, given alongside its second-quarter financial results. The company already markets an IV drug for PPD called Zulresso (brexanolone) – its only marketed product – which brought in $2.5 million in the period.