Dalzanemdor

In 2010, neuroscientist and former Eli Lilly research leader Steve Paul started a company that he hoped would spark a revolution in drug discovery, built around a class of compounds dubbed neurosteroids that could help calm overactive brain circuits and fire up sleepy ones for a long list of psychiatric and neurological conditions. That company, Sage Therapeutics, briefly became one of the hottest tickets in neuroscience. Last year, it won a long-awaited approval for Zurzuvae, the first pill for postpartum depression, a condition that affects one in eight new mothers. But that landmark approval was marred by a sharp downturn in Sage’s fortunes. The FDA rejected the antidepressant’s much broader use in major depressive disorder, for which the data were murky. A slower-than-expected uptake of that pill — and three clinical failures of its other experimental drugs — have sent Sage’s stock down 76% this year, putting its market cap well below the amount of cash it has on hand. Those setbacks spurred two large rounds of layoffs and the departure of several longtime executives. Now, the company’s best shot at a turnaround hinges on a notoriously difficult-to-treat condition: Huntington’s disease, a rare neurodegenerative disorder that causes brain cells to die typically by the time a patient is in their 30s or 40s. Within the next six weeks, it expects to have the results from a Phase 2 study of its neurosteroid-inspired drug dalzanemdor, which Sage once hoped would help treat several neurodegenerative conditions. If the drug succeeds, it could provide Sage a lifeline. Huntington’s patients currently have extremely limited treatment options and, like in postpartum depression, an approval would mark a significant scientific milestone. But if the readout fails, it will prompt a lot of questions for Sage, according to Stifel analyst Paul Matteis. Given how the Zurzuvae story played out — winning a historic approval in postpartum depression but failing to expand that into the larger MDD market — the onus will be on Sage to convince investors it can move the drug forward. “Huntington’s is not necessarily existential for Sage,” Matteis said. “But it could, if it’s negative, start to initiate those types of conversations on, ‘What will actually become of Sage? Why should we have any confidence in the rest of your pipeline?’” Warning signs are already flashing. In July, Sage adjusted the primary endpoint in its Huntington’s trial after a separate study showed only a “small numerical difference” between the dalzanemdor and placebo arms on the primary endpoint, which measures cognitive decline. And dalzanemdor failed to improve cognition in mid-stage studies of two other diseases earlier this year. “Usually when companies have something profound and a remarkable effect size, they lead with it, right? That’s the headline on the press release,” TD Cowen analyst Ritu Baral said in an interview. “And it’s very clear that they did not see on this interim Huntington’s update some sort of blow-the-doors-off signal.” Sage executives have said they believe that Huntington’s disease is where dalzanemdor is most likely to succeed. That said, it’s the only drug in Sage’s pipeline after the company cut its other early-stage research last month. For now, the company is focused on increasing postpartum access to Zurzuvae, which pulled in $11 million in sales in the third quarter. A spokesperson for Sage declined an interview request about the Huntington’s program and what’s next for the company. Paul departed Sage’s board in June. In an interview with Endpoints News , he declined to comment on dalzanemdor or Sage’s future, but he said that even if Zurzuvae is the last drug Sage ever launches, he still views the company as a success. “Quite bluntly, I think people don’t give Sage enough credit for the work they did on zuranalone for postpartum depression,” Paul said. Neurosteroids help fine-tune the effects of GABA and glutamate, the brain’s main inhibitory and excitatory molecules, respectively. These counterparts, sometimes called the yin and yang of the brain, play a role in just about everything that goes on inside our heads. An imbalance between the two systems is implicated in most major psychiatric diseases, including anxiety, depression and schizophrenia. Sage’s work on drugs that enhance GABA receptors led to its sole success in postpartum depression amid failures in major depression, essential tremor and a severe form of epilepsy. Its work on glutamate receptors, specifically enhancing the activity of ones called NMDA receptors, has only led to disappointment so far. Dalzanemdor, previously called SAGE-718, is inspired by a natural neurosteroid called 24(S)-hydroxycholesterol that binds NMDA receptors. It boosts glutamate signaling without directly competing with the neurotransmitter to help stabilize neural networks in the brain. “More than 50 years of research has really suggested that this receptor is a critical node in higher-order cognitive processes, including things like learning and memory,” Sage chief scientific officer Mike Quirk told Endpoints earlier this year. Sage has been testing dalzanemdor in three neurodegenerative diseases, with those readouts marking what Quirk referred to as “a critical inflection point, not just for Sage, but I think also for the field.” The drug failed in Parkinson’s in April and Alzheimer’s in October. Sage executives have repeatedly insisted that there wouldn’t be any read-through from the Parkinson’s trial to the Alzheimer’s study, but analysts viewed success in either disease as a long shot. An added justification for Sage’s final test of dalzanemdor is the imbalance in NMDA signaling in Huntington’s disease that damages neurons. “Mechanistically, if one thing was going to work because of the NMDA mechanism and the NMDA toxicity that’s part of Huntington’s, it was going to be the Huntington's program,” Baral said. A reduction of the natural neurosteroid that dalzanemdor is based on is correlated with cognitive decline in Huntington’s. CMO Laura Gault previously told Endpoints that the drug is designed to improve patients’ cognitive outcomes rather than slow disease progression — a strategy that has worked for some older drugs for treating symptoms of Alzheimer’s. Paul said he still thinks that the drug’s mechanism of enhancing NMDA receptors makes sense. “But there's all kinds of reasons why a drug might not work,” he added. Sage is long past its Wall Street heyday, evidenced by the sharp decline of R&D announcements. In the years immediately following its IPO in 2014, Sage would unveil a new program at seemingly every earnings call, touting its ability to develop a sustainable pipeline and the company itself into a neurology powerhouse. That hasn’t happened, and it remains an open question as to what will happen to the remnants of the R&D engine, Baral said. The investor community feels there is an “opacity” to the R&D platform and whether it can continue to churn out more pipeline programs. Sage employed about 360 people on its R&D team in February 2023. After multiple rounds of layoffs, the remaining group is roughly one-third of its prior size, based on financial filings. The fate of Sage’s early-stage pipeline is even murkier. It doesn’t have anything beyond Zurzuvae and dalzanemdor after a restructuring last month. On its third-quarter earnings call in October, executives alluded to ensuring “longer-term value” but did not provide specifics about any new experimental drugs. A turnaround would have to be driven by CEO Barry Greene. He has consistently wanted to build Sage into the big company that investors want, according to Baral. “Even if Huntington's works, Zurzuvae and a Phase 2 Huntington’s asset is not where he wants Sage,” Baral said. “It's not what he wants for the Sage story in the near- to mid-term.” Sage’s path to success may have been finding a way to get Zurzuvae approved for major depression, an annual market that it estimated is 40 times larger than postpartum depression. Analysts had guided toward $1 billion in peak sales for Zurzuvae in MDD and up to $500 million in postpartum depression. But Sage recently said it would no longer pursue approval for the common condition. In April, two weeks after Paul announced he would step down from Sage’s board, he launched a new company called Seaport Therapeutics. The startup’s lead drug is a novel formulation of allopregnanolone, the same GABA-enhancing neurosteroid used in Sage’s original intravenous infusion for postpartum depression and the inspiration for its more recent pill. Despite Sage’s failed trials, Paul is convinced it will work in major depression. “There’s a lot of evidence that either reduced GABA levels or receptor function is involved in not just postpartum depression, but depression,” he said. “I still believe in the mechanism.”