Sage Cuts Staff by 40% After FDA’s MDD Rejection

 Sage Therapeutics on Thursday announced a strategic review and reorganization plan to support its long-term business growth and the launch of its postpartum depression drug Zurzuvae (zuranolone).

As part of the realignment, Sage will let go of approximately 40% of its workforce, which the company says will “right-size the organization” and help it achieve sustained growth. The layoffs are also meant to provide Sage with more resources for commercial hires that will support the launch of Zurzuvae. The company expects to launch the postpartum depression (PPD) drug later this year.

Thursday’s strategic reorganization follows the FDA’s bittersweet verdict earlier this month. While the regulator gave Sage’s fast-acting pill the greenlight in PPD, it rejected the drug’s use in patients with major depressive disorder (MDD)—a much larger and more lucrative indication. Despite winning one approval, Sage’s shares tanked nearly 50% in response to the MDD rejection.

In an interview with Reuters earlier this month, Jeffries analyst Mike Yee said that zuranolone had a more than $1 billion sales opportunity in clinical depression “compared with $250 million to $500 million potential for postpartum depression.”

Soon after zuranolone’s rejection in MDD, Sage CEO Barry Greene said in an investor call that the company is looking to extend its cash runway and is “currently evaluating resource allocation, including pipeline prioritization and a workforce reorganization.”

Alongside the layoffs announced Thursday, Sage said it will focus R&D efforts on two mid-stage assets. These include its oral neuroactive steroid SAGE-324, in development for essential tremor, epileptiform disorders and Parkinson’s disease. The company will also continue advancing its oral NMDA modulator SAGE-718, being trialed for Alzheimer’s disease and mild dementia, as well as cognitive dysfunction in Huntington’s disease and Parkinson’s disease.

Meanwhile, Sage will suspend work on “certain earlier-stage programs, with the goal of making evidence-driven investments,” the company said in Thursday’s announcement.

Sage will also adjust its leadership team structure to be more aligned with its pipeline and commercial properties. In line with these changes, CSO Al Robichaud will step down from his post but will stay onboard as a scientific consultant and will remain part of Sage’s Medicinal Chemistry and Pre-Clinical Scientific Advisory Boards. Robichaud has been with the company since its founding in 2011.

Sage CDO Jim Doherty and Senior Vice President of Medical Affairs Mark Pollack will also depart “to pursue new opportunities,” the company announced.

The pipeline and workforce reorganization plan is meant to help Sage strengthen its balance sheet by generating annualized net savings of $240 million. As of June 30, 2023, Sage had approximately $1 billion in cash, cash equivalents and marketable securities, which will help fund the company’s operations into 2026.

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