Sage cuts a third of its workforce after R&D setbacks

Sage Therapeutics has launched another round of layoffs as it deals with the fallout of abandoning a key pipeline drug for Alzheimer's and Parkinson's disease.

The company has said it will reduce its headcount by around a third, with more than half of its R&D staff facing the chop, as it focuses its efforts on the commercialisation of Zurzuvae (zuranolone), which was approved by the FDA last year for postpartum depression. It has also implemented a revamp of its early-stage pipeline.

The 165 job cuts also include five executives in its top management, including its chief financial officer, general counsel, chief technology and innovation officer, and heads of technical operations and R&D strategy and business management. It has also elevated chief business officer Chris Benecchi to the role of chief operating officer.

The restructuring comes shortly after Sage abandoned the development of dalzanemdor in Alzheimer's after disappointing phase 2 results, which followed the drug's demise in Parkinson's earlier this year, and the loss of Biogen as a partner for SAGE-324, a candidate for essential tremor, after another lacklustre phase 2 readout.

Sage is still waiting for phase 2 results with dalzanemdor in Huntington's disease – the last shot on goal for the positive allosteric modulator (PAM) of the NMDA receptor – but expectations are not high.

And now, Sage is considering the future of a series of early-stage programmes including candidates targeting NMDA and GABA neurotransmitters for indications including epilepsy and neurodevelopmental disorders.

The biggest blow to Sage's prospects however was the decision by the FDA to restrict the approval of Biogen-partnered Zurzuvae to PPD and turn down the companies' application in major depressive disorder (MDD), a much larger opportunity. Once tipped as a blockbuster, the drug has started slowly with sales of $27 million in the first half of the year, following a US launch last December.

Sage said in an SEC filing that it expects a non-recurring charge tied to the workforce reduction of $26 million to $28 million that will mainly be booked in the fourth quarter of this year. It said it would give an indication of its cash runway "in the near future."

Sage's share price firmed slightly after the announcement but remains two-thirds down on the start of the year. It now has a market cap of $440 million, around a third of its valuation at the beginning of 2024.

Photo by Kayla Maurais on Unsplash