Sage Therapeutics plans to cut about 40% of its workforce following a setback for depression treatment Zurzuvae. Sage stock rose moderately Friday.
Earlier this month, the Food and Drug Administration approved Zurzuvae as the first and only oral treatment for postpartum depression. But the FDA rejected Zurzuvae for use in a much bigger market — major depressive disorder. Briefing documents posted Thursday suggest the agency had safety concerns, RBC Capital Markets analyst Brian Abrahams said in a report. A Sage spokesman contends the report is misleading.
Now, Sage said Thursday it is trimming its workforce with the hopes of saving $240 million annually.
Longtime Chief Scientific Officer Al Robichaud also is departing, though he will remain as a scientific consultant. Mike Quirk, current senior vice president of discovery research, succeeds him. Chief Development Officer Jim Doherty and Mark Pollack, senior vice president of medical affairs, are leaving to pursue new opportunities.
Sage also will incur a $36 million to $38 million charge this quarter due to the reorganization, but could soon earn a $75 million milestone from partner Biogen for the first sale of Zurzuvae.
On today's stock market, Sage stock rose more than 1%. Biogen stock was roughly flat.
Sage Stock Remains Under Pressure
Zurzuvae is a two-week pack of pills for postpartum depression. It aims to be more convenient than the company's first postpartum depression treatment, Zulresso. Zulresso, also developed in a partnership with Biogen, is a 60-hour infusion that causes extreme sleepiness. So, it must be given in a hospital.
Sage and Biogen plan to launch Zurzuvae in the U.S. in the fourth quarter. First, the Drug Enforcement Administration will schedule it as a controlled substance, meaning prescriptions will be tightly regulated.
But Sage stock didn't soar on the approval. Instead, shares plummeted almost 54% on Aug. 7 after the FDA said there wasn't sufficient evidence to support approving Zurzuvae in major depressive disorder. Sage and Biogen said they are evaluating their next steps.
According to Abrahams — who cited FDA briefing documents — one patient with major depressive disorder was unresponsive to stimuli for 50 minutes after receiving a high dose of Zurzuvae. That patient, given a dosage 30%-50% higher than what the FDA approved, also lost consciousness twice. Another patient lost consciousness for nearly five hours.
Company Offers Contrasting View
Sage spokesman Matthew Henson, though, says those participants were healthy and given a nearly double-sized dose of Zurzuvae. But there were no reports of loss of consciousness in any of the participants in the postpartum depression and major depressive disorder studies of Zurzuvae, he said.
"It is inaccurate and misleading to extrapolate findings associated with the oral solution to the PPD population," he said in an email.
There are far fewer options for patients with postpartum depression than major depressive disorder. According to Abrahams, the FDA "seriously considered" using the risk evaluation and mitigation strategies program for Zurzuvae. Patients who receive drugs in this program must receive additional monitoring for specific side effects — in this case, sedation.
Henson notes there is no REMS program for Zurzuvae.
The FDA also noted a higher rate of suicidal thoughts in patients with major depressive disorder who took Zurzuvae, Abrahams said. But that still needs additional testing. Henson says there was no signal for suicidal ideation and behavior in the postpartum depression studies of Zurzuvae.
Focusing On Postpartum Depression
Now, Sage says it's focusing on launching the drug in postpartum depression.
Abrahams sees $240 million in eventual sales of Zurzuvae in postpartum depression treatment. But he's bearish on the drug's chances in major depressive disorder where its use would likely be chronic.
"FDA seemed comfortable (with effectiveness) and durability were rapid and clinically meaningful, and had slightly fewer concerns on safety given likelihood of one-time use and lower possible suicidality risk," he said.
Abrahams has a sector perform rating and 25 price target on Sage stock.
As of June 30, Sage had $1 billion in cash, equivalents and securities. With expected collaborations and potential revenue, Sage believes it has enough powder to fund operations into 2026.
Still, Sage stock has a low IBD Digital Relative Strength Rating of 3, meaning it has performed in the lowest 3% of all stocks over the last 12 months.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
