Sage Therapeutics Readies IPO Pitch to Develop CNS Drugs

6/18/14Follow @benthefidler

Sage Therapeutics made it pretty clear it was plotting an IPO when it added a group of public investment funds to its latest private financing round a few months ago. The Cambridge, MA-based company followed through today, filing papers outlining plans to tap Wall Street to develop drugs for rare neurological disorders.

Sage aims to raise up to $69 million through its IPO, according to filings with the Securities and Exchange Commission. It’ll trade on the Nasdaq under the ticker symbol “SAGE” if it completes the offering. JP Morgan Securities, Goldman Sachs, Leerink Partners, and Canaccord Genuity are underwriting the IPO.

Third Rock Ventures started up Sage in 2010 and led a big $35 million Series A round shortly thereafter. It still owns about 58.5 percent of the company’s stock. Arch Venture Partners, which jumped into Sage’s Series B round last year, holds a 21.3 percent stake. Entities associated with Fidelity Investments own 5.6 percent of Sage, which has raised north of $91 million since its inception, according to the IPO prospectus.

Sage has been positioning itself for this move over the past year and a half with a series of strategic moves. The company started up with a plan to use its platform of “allosteric receptor modulators”—drugs designed to create an equilibrium among the neurotransmitters in the brain—primarily for big central nervous system (CNS) diseases like schizophrenia. But the company fine-tuned its strategy in early 2013, and started focusing its own drug discovery efforts on rare, or specialty CNS disorders—like an uncommon, life-threatening form of epilepsy known as status epilepticus—with the idea that it could develop such drugs at a low cost and on accelerated timelines by qualifying for things like breakthrough or orphan designations from the FDA. Behind that, Sage also aims to use its platform to forge partnerships with companies to develop drugs for other CNS indications, according to the IPO filing.

Sage then hired a full-time management team, led by ex-Shire executive Jeffrey Jonas, roped in two separate financing rounds—most recently a $38 million haul—and kickstarted its first clinical trial. That last round included two unnamed “blue chip public investment funds,” signaling Sage’s next move was a trip to the IPO queue.

Now, Sage will gear up for its IPO roadshow. The company has already begun enrolling patients in a Phase 1/2 clinical trial for its first drug candidate, SAGE-547, in status epilepticus, and has said it plans to determine success or failure early with difficult trial endpoints. It’ll use the IPO cash for that trial, and to prepare its next two drugs, SAGE-689 and SAGE-217, for investigational new drug applications, which are both expected to be filed later this year and next year respectively. Those two drug candidates are each for treating different stages of status epilepticus. Sage indicated that other molecules in its portfolio could be tested in other CNS diseases like Fragile X syndrome.

Sage says three patients have been enrolled in its SAGE-547 study and treated so far. The company plans to report data from the study later this year. It’s received an orphan drug designation for SAGE-547 from the FDA.

Ben Fidler is Xconomy's Deputy Biotechnology Editor. You can e-mail him at bfidler@xconomy.com Follow @benthefidler

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