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Covid

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number: 001-36544

 

Sage Therapeutics, Inc.

(Exact name of registrant as specified in its Charter)

 

 

 

Delaware

27-4486580

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

215 First Street

Cambridge, Massachusetts 02142

(Address of principal executive office) (Zip Code)

Registrant’s telephone number, including area code: (617299-8380

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.0001 per share

SAGE

The Nasdaq Global Market

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company and emerging growth company in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

Smaller reporting company

Emerging Growth Company

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of August 4, 2020, there were 51,974,269 shares of the registrant’s common stock, $0.0001 par value per share, outstanding.

 

 

 

 

 


 

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “expects”, “intends”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential”, “continue” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

 

our views as to potential future results of our ongoing commercialization efforts in the U.S. with respect to ZULRESSO™ (brexanolone) CIV injection, which is approved in the U.S. for the treatment of postpartum depression, or PPD;

 

our planned clinical and regulatory activities with respect to zuranolone (SAGE-217) for the treatment of major depressive disorder, or MDD, and PPD and related timelines, and the potential for zuranolone in those indications and in additional indications, including our view of the potential product profile and treatment paradigm impact for zuranolone, if successfully developed and approved;

 

our plans for development of our other product candidates for the treatment of central nervous system, or CNS, diseases and disorders, and potentially for other indications, and expected timelines for our planned development activities;

 

our ability, within the expected time frames, to initiate clinical trials and non-clinical studies of existing or future product candidates, including pivotal clinical trials, and to successfully complete and announce the results of ongoing or future clinical trials;

 

our plans and potential outcomes with respect to interactions with regulatory authorities and other research and development activities;

 

our plans for and potential outcomes of business development efforts;

 

our plans and expectations with respect to the potential development of any product or product candidate for markets outside the U.S.;

 

our estimates regarding the level of expenses we may incur in connection with our activities; use of cash and projected cash on hand at any given timepoint; timing of future cash needs; capital requirements; sources of future financings; and our ability to obtain additional financing when needed to fund future operations;

 

our expectations with respect to the availability of supplies of ZULRESSO and our product candidates, and the expected performance of our third-party manufacturers;

 

our ability to obtain and maintain intellectual property protection for our proprietary assets and other forms of exclusivity relevant to our business;

 

the estimated number of patients with diseases or disorders of interest to us; the potential size of the market for ZULRESSO in PPD and for our product candidates in the indications we are studying or plan to study; the potential for ZULRESSO as a treatment for PPD and current or future product candidates, if successfully developed and approved, for the indications and in the markets for which they are approved; and our ability to serve those markets;

 

the potential for success of competing products that are or become available for PPD or MDD or any of the other indications that we are pursuing or may pursue in the future with our products and our product candidates;

 

the potential risk of loss of key scientific or management personnel;

2


 

 

our views as to the potential impact of the COVID-19 pandemic, our efforts to address the impact of the COVID-19 pandemic, and the resulting effects on our business, results of operations and activities and on any of the forward-looking statements in this Quarterly Report; and

 

other risks and uncertainties, including those listed under Part II, Item 1A, Risk Factors.

Any forward-looking statements in this Quarterly Report reflect our current views with respect to future events and with respect to our business and future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those described under Part II, Item 1A, Risk Factors and elsewhere in this Quarterly Report. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

We may from time to time provide estimates, projections and other information concerning, among other things, our industry, the general business environment, and the markets for certain diseases, including estimates regarding the potential size of those markets and the estimated incidence and prevalence of certain medical conditions. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties, and actual events, circumstances or numbers, including actual disease prevalence rates and market size, may differ materially from the information reflected in this Quarterly Report. Unless otherwise expressly stated, we obtained this industry, business information, market data, prevalence information and other data from reports, research surveys, studies and similar data prepared by market research firms and other third parties; industry, medical and general publications; government data; and similar sources, in some cases applying our own assumptions and analysis that may, in the future, prove not to have been accurate.

 

 

3


 

Sage Therapeutics, Inc.

INDEX

 

 

 

 

 

Page

PART I – FINANCIAL INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Financial Statements (Unaudited)

 

5

 

 

Condensed Consolidated Balance Sheets as of June 30, 2020 and December 31, 2019

 

5

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2020 and 2019

 

6

 

 

Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019

 

7

 

 

Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2020 and 2019

 

8

 

 

Notes to Condensed Consolidated Financial Statements

 

9

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

28

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

45

Item 4.

 

Controls and Procedures

 

46

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

47

Item 1A.

 

Risk Factors

 

47

Item 5.

 

Other Information

 

92

Item 6.

 

Exhibits

 

93

 

 

Signatures

 

94

 

4


 

PART I — FINANCIAL INFORMATION

Item 1.

Financial Statements

Sage Therapeutics, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

(Unaudited)

 

 

 

June 30,

2020

 

 

December 31,

2019

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

258,228

 

 

$

126,705

 

Marketable securities

 

 

498,294

 

 

 

881,688

 

Prepaid expenses and other current assets

 

 

28,862

 

 

 

26,700

 

Total current assets

 

 

785,384

 

 

 

1,035,093

 

Property and equipment, net

 

 

8,077

 

 

 

9,126

 

Restricted cash

 

 

2,367

 

 

 

2,367

 

Right-of-use operating asset

 

 

27,999

 

 

 

33,771

 

Other long-term assets

 

 

3,415

 

 

 

3,793

 

Total assets

 

$

827,242

 

 

$

1,084,150

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,387

 

 

$

15,266

 

Accrued expenses

 

 

53,328

 

 

 

86,618

 

Operating lease liability, current portion

 

 

8,577

 

 

 

10,244

 

Total current liabilities

 

 

64,292

 

 

 

112,128

 

Operating lease liability, net of current portion

 

 

22,661

 

 

 

26,848

 

Other liabilities

 

 

374

 

 

 

519

 

Total liabilities

 

 

87,327

 

 

 

139,495

 

Commitments and contingencies (Note 5)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value per share; 5,000,000 shares authorized

   at June 30, 2020 and December 31, 2019; no shares issued or

   outstanding at June 30, 2020 and December 31, 2019

 

 

 

 

 

 

Common stock, $0.0001 par value per share; 120,000,000 shares authorized

   at June 30, 2020 and December 31, 2019; 51,938,012 and 51,880,227

   shares issued at June 30, 2020 and December 31, 2019; 51,934,979 and

   51,877,194 shares outstanding at June 30, 2020 and December 31, 2019

 

 

5

 

 

 

5

 

Treasury stock, at cost, 3,033 shares

   at June 30, 2020 and December 31, 2019

 

 

(400

)

 

 

(400

)

Additional paid-in capital

 

 

2,645,255

 

 

 

2,587,322

 

Accumulated deficit

 

 

(1,906,654

)

 

 

(1,643,567

)

Accumulated other comprehensive gain

 

 

1,709

 

 

 

1,295

 

Total stockholders’ equity

 

 

739,915

 

 

 

944,655

 

Total liabilities and stockholders’ equity

 

$

827,242

 

 

$

1,084,150

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

5


 

Sage Therapeutics, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)

(Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Product revenue, net

 

$

1,089

 

 

$

519

 

 

$

3,375

 

 

$

519

 

Collaboration revenue

 

 

 

 

 

354

 

 

 

 

 

 

819

 

Total revenue

 

 

1,089

 

 

 

873

 

 

 

3,375

 

 

 

1,338

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

 

110

 

 

 

44

 

 

 

280

 

 

 

44

 

Research and development

 

 

73,320

 

 

 

89,059

 

 

 

136,930

 

 

 

175,457

 

Selling, general and administrative

 

 

38,224

 

 

 

88,227

 

 

 

108,355

 

 

 

172,146

 

Restructuring

 

 

28,402

 

 

 

 

 

 

28,402

 

 

 

 

Total operating costs and expenses

 

 

140,056

 

 

 

177,330

 

 

 

273,967

 

 

 

347,647

 

Loss from operations

 

 

(138,967

)

 

 

(176,457

)

 

 

(270,592

)

 

 

(346,309

)

Interest income, net

 

 

2,686

 

 

 

8,220

 

 

 

7,416

 

 

 

14,662

 

Other income (expense), net

 

 

(66

)

 

 

16

 

 

 

89

 

 

 

20

 

Net loss

 

$

(136,347

)

 

$

(168,221

)

 

$

(263,087

)

 

$

(331,627

)

Net loss per share—basic and diluted

 

$

(2.63

)

 

$

(3.28

)

 

$

(5.07

)

 

$

(6.65

)

Weighted average number of common shares

   outstanding—basic and diluted

 

 

51,926,074

 

 

 

51,257,640

 

 

 

51,917,417

 

 

 

49,882,377

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(136,347

)

 

$

(168,221

)

 

$

(263,087

)

 

$

(331,627

)

Other comprehensive items:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on marketable

   securities

 

 

2,501

 

 

 

1,681

 

 

 

414

 

 

 

2,090

 

Total other comprehensive gain

 

 

2,501

 

 

 

1,681

 

 

 

414

 

 

 

2,090

 

Total comprehensive loss

 

$

(133,846

)

 

$

(166,540

)

 

$

(262,673

)

 

$

(329,537

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

6


 

Sage Therapeutics, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities

 

 

 

 

 

 

 

 

Net loss

 

$

(263,087

)

 

$

(331,627

)

Adjustments to reconcile net loss to net cash used in operating

   activities:

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

55,142

 

 

 

78,883

 

Premium on marketable securities

 

 

(494

)

 

 

(1,887

)

Amortization of premium (discount) on marketable securities

 

 

304

 

 

 

(4,973

)

Depreciation

 

 

1,331

 

 

 

920

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(2,162

)

 

 

(5,102

)

Other long-term assets

 

 

378

 

 

 

(4,023

)

Right-of-use operating asset

 

 

3,461

 

 

 

4,713

 

Operating lease liabilities, current

 

 

(49

)

 

 

(48

)

Operating lease liabilities, non-current

 

 

(3,602

)

 

 

(4,298

)

Accounts payable

 

 

(12,815

)

 

 

(21,806

)

Accrued expenses and other liabilities

 

 

(34,082

)

 

 

5,970

 

Net cash used in operating activities

 

 

(255,675

)

 

 

(283,278

)

Cash flows from investing activities

 

 

 

 

 

 

 

 

Proceeds from sales and maturities of marketable securities

 

 

595,769

 

 

 

588,652

 

Purchases of marketable securities

 

 

(211,771

)

 

 

(918,233

)

Purchases of property and equipment

 

 

(346

)

 

 

(3,438

)

Net cash provided by (used in) investing activities

 

 

383,652

 

 

 

(333,019

)

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from stock option exercises and employee stock purchase

   plan issuances

 

 

3,546

 

 

 

31,282

 

Payment of employee tax obligations related to vesting of

  restricted stock units

 

 

 

 

 

(692

)

Payments of offering costs

 

 

 

 

 

(328

)

Proceeds from public offerings of common stock, net of commissions

   and underwriting discounts

 

 

 

 

 

561,277

 

Net cash provided by financing activities

 

 

3,546

 

 

 

591,539

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

131,523

 

 

 

(24,758

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

129,072

 

 

 

193,310

 

Cash, cash equivalents and restricted cash at end of period

 

$

260,595

 

 

$

168,552

 

Supplemental disclosure of non-cash operating and investing

   activities

 

 

 

 

 

 

 

 

Purchases of property and equipment included in accounts payable

 

$

 

 

$

252

 

Right-of-use assets obtained in exchange for new operating lease

   liabilities

 

$

 

 

$

872

 

Lease asset de-recognized upon lease cancellation

 

$

2,310

 

 

$

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

7


 

Sage Therapeutics, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

(in thousands, except share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

Total

 

 

 

Common Stock

 

 

Treasury Stock

 

 

Paid-in

 

 

Comprehensive

 

 

Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2018

 

 

46,888,263

 

 

$

5

 

 

 

3,033

 

 

$

(211

)

 

$

1,827,021

 

 

$

(515

)

 

$

(963,329

)

 

$

862,971

 

Issuance of common stock from exercise of stock options

 

 

287,659

 

 

 

 

 

 

 

 

 

 

 

 

14,072

 

 

 

 

 

 

 

 

 

14,072

 

Issuance of common stock under the employee stock purchase plan

 

 

16,398

 

 

 

 

 

 

 

 

 

 

 

 

1,799

 

 

 

 

 

 

 

 

 

1,799

 

Purchase of treasury stock

 

 

 

 

 

 

 

 

 

 

 

(189

)

 

 

 

 

 

 

 

 

 

 

 

(189

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

43,622

 

 

 

 

 

 

 

 

 

43,622

 

Public offering of common stock, net of offering costs

 

 

3,833,334

 

 

 

 

 

 

 

 

 

 

 

 

560,948

 

 

 

 

 

 

 

 

 

560,948

 

Unrealized gain on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

409

 

 

 

 

 

 

409

 

Vesting of restricted stock units, net of employee tax obligations

 

 

8,518

 

 

 

 

 

 

 

 

 

 

 

 

(692

)

 

 

 

 

 

 

 

 

(692

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(163,406

)

 

 

(163,406

)

Balances at March 31, 2019

 

 

51,034,172

 

 

$

5

 

 

 

3,033

 

 

$

(400

)

 

$

2,446,770

 

 

$

(106

)

 

$

(1,126,735

)

 

$

1,319,534

 

Issuance of common stock from exercise of stock options

 

 

434,932

 

 

 

 

 

 

 

 

 

 

 

 

15,601

 

 

 

 

 

 

 

 

 

15,601

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

34,280

 

 

 

 

 

 

 

 

 

34,280

 

Unrealized gain on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,681

 

 

 

 

 

 

1,681

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(168,221

)

 

 

(168,221

)

Balances at June 30, 2019

 

 

51,469,104

 

 

$

5

 

 

 

3,033

 

 

$

(400

)

 

$

2,496,651

 

 

$

1,575

 

 

$

(1,294,956

)

 

$

1,202,875

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2019

 

 

51,877,194

 

 

$

5

 

 

 

3,033

 

 

$

(400

)

 

$

2,587,322

 

 

$

1,295

 

 

$

(1,643,567

)

 

$

944,655

 

Issuance of common stock from exercise of stock options

 

 

7,196

 

 

 

 

 

 

 

 

 

 

 

 

367

 

 

 

 

 

 

 

 

 

367

 

Issuance of common stock under the employee stock purchase plan

 

 

33,429

 

 

 

 

 

 

 

 

 

 

 

 

2,793

 

 

 

 

 

 

 

 

 

2,793

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30,218

 

 

 

 

 

 

 

 

 

30,218

 

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,087

)

 

 

 

 

 

(2,087

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(126,740

)

 

 

(126,740

)

Balances at March 31, 2020

 

 

51,917,819

 

 

$

5

 

 

 

3,033

 

 

$

(400

)

 

$

2,620,700

 

 

$

(792

)

 

$

(1,770,307

)

 

$

849,206

 

Issuance of common stock from exercise of stock options

 

 

17,160