Sage Therapeutics, Inc. SAGE announced a strategic reorganization and a portfolio reprioritization plan to support its ongoing business operations.

As part of this strategic reorganization, SAGE is looking to reduce its current workforce by 33% and implement changes in the leadership team. Shares of the company were down 4.3% in after-hours trading on Thursday, following the announcement of the news.

Owing to this reorganization, the company expects to record a non-recurring charge of around $26-$28 million in the fourth quarter of 2024. The restructuring process is likely to extend the company’s cash runway in the near future and support the long-term growth of its business.

As part of the reprioritization, SAGE will focus on the commercialization of its depression drug Zurzuvae (zuranolone), which is marketed in partnership with drug giant, Biogen BIIB.

Sage Therapeutics will also focus on its neuropsychiatric candidate, dalzanemdor (SAGE-718), which is being evaluated in various mid-to-late-stage studies as a potential treatment for patients with cognition dysfunction associated with Huntington’s disease (HD).

Year to date, shares of Sage Therapeutics have plunged 66.7% compared with the industry’s decline of 0.7%.

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SAGE's Licensing Agreement With BIIB

Sage Therapeutics and Biogen, equally share profits and losses for the commercialization of Zurzuvae in the United States. In ex-U.S. markets, BIIB records product sales (excluding Japan, Taiwan and South Korea) and pays royalties to Sage Therapeutics.

Zurzuvae, the first and only oral treatment indicated for adults with postpartum depression (PPD), was approved by the FDA in August 2023 and commercially launched in December.

However, the FDA issued a complete response letter (CRL) for the new drug application (NDA) for zuranolone for another indication, major depressive disorder (MDD) in August 2023. Per the FDA, the data supporting the NDA filing did not provide substantial evidence of effectiveness to support a potential approval. It recommended conducting additional clinical studies.

Following the FDA’s CRL to Zurzuvae in the MDD indication, Sage Therapeutics implemented a strategic reorganization plan. Back then, the company reduced its workforce by around 40% and reprioritized its pipeline development efforts to focus on the development of dalzanemdor.

SAGE's Recent Pipeline Setbacks a Worry

Earlier this month, Sage Therapeutics announced that the phase II LIGHTWAVE study, which evaluated dalzanemdor for treating mild cognitive impairment (MCI) and mild dementia in Alzheimer’s Disease (AD), failed to meet the primary endpoint.