MW Sage Therapeutics' stock lower as biotech unveils plan to cut 33% of workforce

By Ciara Linnane

More than 165 jobs to go as company seeks to extend cash runway and focus on postpartum drug launch

Sage Therapeutics Inc.'s stock slid 1.4% early Thursday, after the biotech said it's cutting about 33% of its workforce as part of an overhaul of its business and pipeline that's expected to extend its cash runway.

The Cambridge, Mass.-based company (SAGE) said it would give priority to the launch of zurzuvae, a treatment for postpartum depression, and focus on a study readout from its dalzanemdor as a treatment for Huntington's disease that's expected later this year.

Sage said last week it was ceasing development of dalzanemdor as a treatment for mild cognitive impairment and mild dementia in Alzheimer's disease due to a failed trial.

The Phase 2 trial of dalzanemdor did not demonstrate statistically significant difference from baseline vs. placebo measured using the Wechsler Adult Intelligence Scale Fourth Edition Coding Test score at Day 84, the primary outcome measure of the study.

For more, read: Sage Therapeutics' stock slides after biotech says it will cease development of Alzheimer's treatment

The job cuts will impact more than 165 employees and include about 55% of its R&D workforce.

"We are being deliberate and purposeful in our efforts to reorganize the company with the goal of having the flexibility to execute immediate priorities and build for long term growth and value creation," Chief Executive Barry Greene said in prepared remarks. "This is difficult but necessary and we believe it will right-size Sage for future growth potential."

The cuts include the company's General Counsel Anne Marie Cook, Chief Financial Officer Kimi Iguchi, Chief Technology and Innovation offer Matt Lasmanis and head of R&D Strategy and Business Management Amy Schacterle, he said.

Sage is expecting to book a charge of about $26 million to $28 million, most of which will be incurred in the fourth quarter.

"The company anticipates that the implementation of the restructuring will extend its cash runway and expects to provide updated cash runway guidance in the near future," said Sage.

Zurzuvae was the first oral medication to win regulatory approval as a treatment for postpartum depression in August of 2023.

Sage's stock has fallen 66% in the year to date after a series of setbacks.

In addition to last week's disappointing Alzheimer's news, in July, the company and partner Biogen Inc. said they would abandon any further development of their experimental treatment for essential tremor, a neurological condition that causes involuntary shaking.

A Phase 2 study of the drug, SAGE-324, found no statistically significant differences between patients' response to any dose of the investigational treatment versus a placebo.

And in April, the company said dalzanemdor had failed to achieve statistically significant improvement in the treatment of mild cognitive impairment in Parkinson's disease.

The news sent the stock spiraling and raised concerns it would damage its collaboration with Biogen.

The SPDR S&P Biotech exchange-traded fund XBI has gained 12.2% in the year to date, while the S&P 500 SPX has gained 22.5%.

-Ciara Linnane

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October 17, 2024 08:14 ET (12:14 GMT)

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