Sage Therapeutics Nabs $20M Series B From Third Rock, Arch

Xconomy Boston — 

(Corrected, 10/17/13, 1:21 pm ET) It’s been a busy 2013 for Sage Therapeutics. First, it fine-tuned its strategy. Then it got a $10 million grant and hired its first, full-time management team. Now, the Cambridge, MA-based startup has landed a big $20 million Series B round and a new investor to help drive its first experimental central nervous system (CNS) drugs into the clinic.

Sage said today that new investor Arch Venture Partners has joined with founding investor Third Rock Ventures to provide the fresh round of cash. Counting the roughly $37.8 million Sage scored in its first financing in 2011, the startup has now raised $57.8 million in total venture dollars. Arch co-founder and managing director Robert Nelsen will join Sage’s board as part of the Series B.

“We have no pressure for cash right now, which is a very fortunate position for us to be in,” says Jeffrey Jonas, Sage’s CEO. Jonas, the former head of Shire’s regenerative medicine unit, took over for Third Rock partner Kevin Starr and began running Sage in July.

With the cash in the bank, Sage will now begin pushing its first drug candidates into clinical trials, where it’ll really see if its platform of “allosteric receptor modulators”—drugs designed to create balance among the transmitters in the brain—truly work the way it hopes they do. The experimental drugs are designed to do work by either dialing up or down the inhibitory transmitter known as GABA, or an excitatory one, NMDA. (An earlier version of this story referred to GABA as an excitatory transmitter.)

Sage now has to prove that translates to a meaningful clinical benefit. It plans to do so by going after rare, or specialty CNS disorders, with the idea that such drugs can be developed at a low cost and on accelerated timelines by qualifying for things like breakthrough or orphan designation from the FDA. Two of its preclinical candidates, for instance, target status epilepticus, a life-threatening form of epilepsy, and the social problems arising from Fragile X Syndrome, a rare form of autism. Sage’s lead program is the experimental status epilepticus drug, and it hopes it can find out very quickly if it has potentially effective drug for that condition.

“[We want to] really look at early determinations of success or failure using hard endpoints,” Jonas told Xconomy. “Areas where we think we can get to a value inflection point quickly, concretely, and unambiguously.”

Sage will file an investigational new drug application for the status epilepticus drug candidate later this year, and hopes to begin the first clinical trial of the drug early next year to test it. That trial could be a crossover study, for instance, in which one group of patients starts on a placebo or comparator drug before switching to Sage’s molecule. Sage might look at a study goal like a patient’s “return of normal brain function,” or an electroencephalography finding that shows the patient’s condition is changing for the better, Jonas says.

“That type of trial, because these patients are hospitalized, in theory would be reasonably short,” he says.

Jonas says Sage looks at that program as a “sentinel” program for other rare forms of epilepsy that might also be affected through GABA modulation.

Sage’s business plan is two-fold: Because it can design smaller trials for these niche and orphan CNS disorders, Sage hopes to be able to afford to keep those programs in house and develop them all the way through. Alongside that, Sage wants to form drug discovery partnerships to generate revenue. Sage could agree to help design and pick an allosteric receptor modulator for a pharmaceutical company, for instance, that wants to develop a drug for a CNS disease type that Sage isn’t interested in.

This isn’t the first time, meanwhile, that Arch and Third Rock have co-invested in a biotech startup. They’ve both been key investors in two other Cambridge companies, Agios Pharmaceuticals (NASDAQ: AGIO) and Bluebird Bio (NASDAQ: AGIO), which both enjoyed big IPO successes earlier this year.

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2 responses to “Sage Therapeutics Nabs $20M Series B From Third Rock, Arch”

  1. Pboxer says:

    The description of the neurotransmitters is reversed; that is, GABA is an inhibitory neurotransmitter and NMDA an excitatory one.