Sage lays off 40%, shakes up C-suite to squeeze a profit out of partially rejected zuranolone

Sage Therapeutics will jettison 40% of its workforce as the company navigates a future for its Biogen-partnered drug after the therapy was rejected as a treatment for major depressive disorder (MDD).

The company had already alluded to potential layoffs earlier in August when it revealed that the FDA had rejected the MDD approval application. The regulator did at least approve the drug, to be marketed as Zurzuvae, in the less financially lucrative indication of postpartum depression (PPD).

It’s in PPD that Sage is now placing its bets, with CEO Barry Greene describing the biotech’s approach to Zurzuvae as “think big, start small and scale fast.”

“Part of our efforts to become a leaner and stronger company means having to reorganize our workforce,” Greene added in the Thursday morning release. “Our business fundamentals are strong, we are well capitalized, and our goal is to put Sage in a solid position to optimize commercial execution and develop our pipeline with the goal of significant value creation.”

It means that around 40% of the biotech’s employees will be heading for the exits. This major restructuring is “designed to right-size the organization as the company works to achieve sustained growth and allow for commercial hires to support the goal of a successful launch of Zurzuvae to treat women with PPD,” Sage said.

The company will also “refine” its pipeline to advance its lead neuropsychiatric drug candidate SAGE-718. The NMDA receptor positive allosteric modulator is in development for various cognitive disorders including Huntington’s, Parkinson’s and Alzheimer’s diseases, with a slate of readouts lined up from next year.

Sage also confirmed it will continue to work on SAGE-324, the biotech’s lead neurology program, which is in a phase 2 trial for essential tremor and being considered for other movement disorders like epilepsy and Parkinson’s.

However, the company will “pause certain earlier-stage programs, with the goal of making evidence-driven investments,” it said. Sage didn’t go into further details, but the biotech's pipeline lists “additional clinical programs” as SAGE-319 for GABA hypofunction and SAGE-421 for NMDA hypofunction.

The final major change outlined today by Sage was the move to “align its leadership team structure to scale with pipeline and commercial priorities.” The major C-suite shake-up will see long-standing Chief Scientific Officer Al Robichaud, Ph.D., leaving the leadership, along with Chief Development Officer Jim Doherty and Mark Pollack, senior vice president of medical affairs.

Mike Quirk, currently SVP of discovery research, will step into the CSO role, with Chief Medical Officer Laura Gault, M.D., Ph.D., taking on Doherty’s responsibilities.

Combined, the various pipeline, workforce and C-suite changes are expected to claw back annualized net savings of around $240 million, of which 60% will be related to R&D, Sage explained. The company is also still in line to pocket a $75 million milestone payment from Biogen once Zurzuvae notches its first sale for PPD.

Sage ended June with around $1 billion in cash and equivalents, which it expects to keep the lights on into 2026.