CAMBRIDGE, MA – Sage Therapeutics, Inc. (NASDAQ:SAGE), a pharmaceutical company focused on nervous system disorders, has announced significant restructuring plans, including a workforce reduction and changes in its executive team.
As part of its reorganization, Sage plans to reduce its workforce by approximately 33%, affecting about 55% of its research and development personnel. The restructuring is designed to support the ongoing launch of ZURZUVAE™ for postpartum depression treatment and to prioritize development efforts before the expected data readout for dalzanemdor in Huntington’s Disease later this year.
The company anticipates incurring a non-recurring charge for severance and related costs of approximately $26 million to $28 million, mainly in the fourth quarter of 2024. The workforce reduction is expected to be substantially completed by the end of the fourth quarter of 2024.
In conjunction with the reorganization, Sage announced the departure of Chief Financial Officer Kimi Iguchi and Senior Vice President, General Counsel Anne Marie Cook, effective October 31, 2024.
Following these departures, Chris Benecchi, the company's current Chief Business Officer, will be appointed as Chief Operating Officer and Treasurer, effective November 1, 2024. Benecchi will also assume the roles of principal financial officer and principal accounting officer.
Benecchi, 52, has been with Sage since July 2022 and previously held positions at Alexion Pharmaceuticals (NASDAQ:ALXN) and UCB, Inc. His promotion will come with an annual base salary of $560,000, and he will be granted stock options and restricted stock units as part of his compensation, subject to continued employment and certain vesting conditions.
This strategic move comes as Sage Therapeutics aims to streamline its operations and focus its resources on key projects, potentially impacting the company's financial outlook and operational strategy.
The information in this article is based on Sage Therapeutics' SEC filing.
In other recent news, Sage Therapeutics recently reported a net loss of $102.9 million for Q2 2024, despite generating $7.4 million in collaboration revenue from Zurzuvae. Analysts from Raymond James resumed coverage on Sage shares with a Market Perform rating, indicating a neutral stance on the stock.
The company's drugs SAGE-324 for essential tremor and SAGE-718 for Parkinson's disease and Alzheimer's disease have experienced setbacks.
In response to these developments, several analyst firms, including Scotiabank, Baird, Oppenheimer, and RBC Capital Markets, have adjusted their outlooks on Sage Therapeutics. These are recent developments in the company's journey.
InvestingPro Insights
Sage Therapeutics' recent restructuring announcement aligns with several key financial indicators provided by InvestingPro. The company's decision to reduce its workforce by 33% is likely influenced by its current financial position. InvestingPro data shows that Sage is quickly burning through cash and is not profitable over the last twelve months, with a negative gross profit of $207.7 million for the last twelve months as of Q2 2024.
The restructuring aims to support the launch of ZURZUVAE™ and prioritize development efforts. This focus is crucial, as InvestingPro Tips indicate that analysts anticipate a sales decline in the current year. The company's revenue for the last twelve months stands at $97.24 million, with a remarkable revenue growth of 837.55% over the same period. However, the negative gross profit margin of -213.59% underscores the need for operational changes.
Despite these challenges, Sage Therapeutics holds more cash than debt on its balance sheet, and its liquid assets exceed short-term obligations. This financial cushion may provide some stability as the company navigates through its restructuring phase.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Sage Therapeutics, providing deeper insights into the company's financial health and market position.
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