- Sage Therapeutics will lay off a little over half of its roughly 650-person workforce, sharply cutting back on spending in a restructuring aimed at redirecting resources toward the Cambridge, Massachusetts-based biotech's experimental treatment for depression.
- The job cuts, announced by Sage Tuesday, mark a low point for a company that just nine months ago was worth nearly $10 billion and riding Wall Street expectations that its drug, called zuranolone, could be a fast-acting and safe antidepressant.
- Negative results from a key late-stage study scuppered those hopes and forced Sage in March to redraw its development plans for zuranolone. The biotech aims to launch three new clinical trials to gather sufficient new data for an application to the Food and Drug Administration.
Corporate restructurings often follow Phase 3 setbacks in biotech but, even so, Sage's planned layoffs hit particularly hard.
"This is a very difficult day for Sage," said company CEO Jeff Jonas on a conference call Tuesday following the announcement.
Some 340 employees will be let go, representing about 53% of the company. Most are in commercial and administrative roles, particularly ones related to Sage's approved drug for postpartum depression, Zulresso.
They will leave Sage at a time when the U.S. economy, largely shuttered to prevent the spread of coronavirus infections, has taken a dramatic turn for the worse. Some 181,000 Massachusetts residents filed for unemployment insurance in the week ending March 28 due to coronavirus-related impacts, amid a historic surge of 6.6 million claims nationwide.
Sales of Zulresso, which won approval last spring, were never expected to be fast-growing as the treatment needs to be administered intravenously over 60 hours in a certified healthcare setting — potentially challenging for mothers of newborn infants.
The rapid rise of COVID-19 cases in the U.S., though, throws Sage's ability to sell Zulresso in further doubt.
"Zulresso is a hospital-based treatment. We are in competition for beds with COVID-19," said Mike Cloonan, Sage's chief business officer, on Tuesday's call. "We've seen several sites pause infusing at this point as they work through the COVID situation."
Sage said it's committed to working with providers and physicians that seek to treat their patients with Zulresso, but noted that commercial efforts will be focused on those areas with already up-and-running sites.
Had the Phase 3 study of zuranolone, dubbed MOUNTAIN, succeeded, Sage would likely have been in a very different position. Unlike Zulresso, zuranolone is an oral anti-depressant and success in MOUNTAIN could've meant a near-term drug launch in the broader market for major depressive disorder therapies.
Now, needing to finance three new studies of zuranolone and with little money coming in, Sage made the decision to cut back on spending.
"We recognized that an important step was to reduce operating expenses as well as our workforce," said Jonas.
Sage expects the job cuts and reduced spending on marketing Zulresso to result in annualized cost savings of approximately $170 million, most of which is related to lower payroll expenses. That will help push out its cash runway to 2022, the company estimated.
All three planned Phase 3 trials of zuranolone in major depressive disorder and postpartum depression will be launched this year, with first results by sometime early next if all goes to plan.
Further disruption from COVID-19 could threaten that plan, too, but Jonas expressed confidence that the company could meet its timelines and adapt by using telemedicine if needed.
The biotech plans to begin testing two other experimental drugs in mid-stage trials this year as well.