Dive Brief:
Sage Therapeutics CFO Kimi Iguchi, General Counsel and SVP Anne Marie Cook, and Chief Technology and Innovation Officer Matt Lasmanis will all be departing the biotechnology company as part of a broad restructuring plan, the company announced in a Thursday press release.
Chris Benecchi, the company’s chief operating officer, will take on an expanded role including overseeing finance, information technology and technical operations as part of the reorganization, Sage said.
The Cambridge, Massachusetts-based company will also lay off 165 employees, representing about 33% of its total workforce and approximately 55% of its research and development team, according to a securities filing. The workforce reduction is “expected to extend the company’s cash runway” as it looks to execute on the ongoing launch of its ZURZUVAE drug, a treatment for postpartum depression, the company said.
Dive Insight:
In association with his expanded responsibilities, Benecchi will receive an annual base salary of $560,000, according to a securities filing. Sage’s board also approved a grant allowing Benecchi to purchase 12,500 shares of common stock, as well as 6,250 of restricted stock, according to the filing.
As well as the departure of its CFO, chief technology and innovation officer, and GC, Sage’s SVP of Technical Operations Heinrich Schlieker and its SVP of R&D Strategy and Business Management Amy Schacterle will also leave the biotech, according to the press release. Greg Shiferman will assume the role of SVP and GC, meanwhile, while Vanessa Procter will take on an “expanded role” as the company’s SVP of corporate affairs, responsible for investor relations as well as corporate communications, government affairs and patient advocacy.
Both the layoffs and executive leadership shifts are aimed at helping to reduce Sage’s operating expenses and strengthen its balance sheet, the company said. The layoffs come approximately a year after Sage slashed its workforce by 40% in August 2023, with the similar goal of supporting the commercial launch of its ZURZUVAE drug that year, according to an SEC filing at the time.
The biotech has inched both its R&D and selling, general and administrative expenses downwards, reporting R&D expenses had declined to $62.6 million — which included $6.1 million in non-cash stock-based compensation — for its most recent quarter ended June 30, according to its Q2 earnings report.
This compared to $97.2 million for the prior year period, a decline Sage attributed to its 2023 layoffs, as well as “decreased spend on the early state pipeline…clinical development, and manufacturing” for its postpartum depression drug. Sage also narrowed its net loss for the quarter to $102.9 million compared to $160.3 million for the prior year period. The company also reported cash and cash equivalents totaling $647 million, compared to $717 million as of Mar. 31, according to its earnings release.
Sage expects a non-recurring charge between $26 million and $28 million associated with severance and employee costs related to the restructuring, which will primarily be incurred during its Q4, according to the SEC filing. Sage anticipates the layoffs will be “substantially completed” by the end of its Q4, according to the filing.
Sage’s reorganization also comes as headwinds continue in the larger biotechnology space, with smaller companies especially struggling to raise the necessary cash to fund costly research in a competitive industry, CFO Dive previously reported.
Revenues for the biotechnology space last year dropped over 10% from 2022 in the face of persistently high interest rates and as waning demand for COVID-19-related therapies offered diminishing returns for vaccine makers, Big Four firm Ernst & Young found in a recent report. While COVID-19-related revenue made up 15% of the sector’s total revenue in 2021, it represented just 5.2% in 2023, EY said.
Headwinds in the sector also prompted several biotechs to declare bankruptcy and shutter operations, with others following suit alongside Sage and cutting their staff in a bid to conserve cash — overall biotech employment in the U.S. and Europe dropped by 1% in 2023, according to EY’s report.
The biotech is set to report its Q3 results on Oct. 29.