Our Product Pipeline

The following table summarizes the status of our development programs as of the date of this Annual Report:

SAGE-547

Overview

Our lead product candidate, SAGE-547, is in Phase 3 clinical development both as a potential adjunctive therapy in the treatment of SRSE and as a potential treatment for PPD.  SAGE-547 is a proprietary IV formulation of synthesized allopregnanolone, a naturally occurring neurosteroid that acts as a synaptic and extrasynaptic modulator of the GABA_Areceptor.

Our Phase 3 clinical trial of SAGE-547 is being developedin SRSE, known as an

adjunctive therapy in conjunction with underlying anesthesia, as a treatment for SRSE. In the third quarter of 2015, we initiated the STATUS Trial (SAGE-547 Treatment as Adjunctive Therapy Utilized in Status Epilepticus), is a global, randomized, double-blind, placebo-controlled Phase 3 clinical trial to evaluate SAGE-547 as a treatment for patients with SRSE. Enrollment in the STATUS Trial is ongoing.  We expect to announce top-line results forfrom the Phase 3 clinical trialSTATUS Trial in the secondfirst half of 2016.2017. If successful, we believe the results from this Phase 3 clinical trial, together with other clinical data obtained from the SAGE-547 development program, and results of completed and ongoing non-clinical studies, couldwill be sufficient to form the basis of an NDA submission for SAGE-547 in the U.S. in SRSE.   The FDA has granted us orphan drug designation for SAGE-547 in the treatment of SE, including SRSE, and Fast Track designation for our investigational new drug applicationIND for SAGE-547 as a treatment for SRSE. Based on scientific advice we received in the fourth quarter of 2016 from the EMA, we also believe our current Phase 3 clinical program in SRSE, if successful, will be sufficient to support an MAA filing with the EMA seeking approval of SAGE-547 for SRSE in the EU.    

Super-refractory Status Epilepticus (SRSE)The Phase 3 clinical trials of SAGE-547 in PPD, known together as the Hummingbird Study, are comprised of a randomized, placebo-controlled dose-ranging clinical trial of SAGE-547 in patients with severe PPD and a randomized, placebo-controlled clinical trial to evaluate SAGE-547 efficacy and safety in patients with moderate PPD.   We anticipate announcing top-line data from the Hummingbird Study in the second half of 2017.  In the third quarter of 2016, we received Breakthrough Therapy Designation from the FDA for SAGE-547 as a potential treatment for PPD. Breakthrough Therapy Designation is intended to offer a potentially expedited development path and review for promising drug candidates, which includes increased interaction and guidance from the FDA. In December 2016, we announced input from an FDA Breakthrough Designation meeting confirming that our ongoing clinical trial in PPD, with minor modifications, including increased sample size, is considered a Phase 3 clinical trial. Based on input from the FDA, we believe that, if successful, the results of the Hummingbird Study, together with the results of prior clinical studies of SAGE-547 in PPD, and ongoing non-clinical studies, will be sufficient to support the submission of an NDA with the FDA for SAGE-547 in the treatment of PPD.    In the fourth quarter of 2016, we also received PRIME designation from the EMA for SAGE-547 in the treatment of PPD.   The PRIME program was launched by the EMA in March 2016, and the designation is designed to aid and expedite the regulatory process for investigational medicines that may offer a major therapeutic advantage over existing treatments, or benefit patients without treatment options.

SRSE

SRSE is rare, life-threatening condition where a patient is in a state of SE and all standard treatment regimens normally sufficient in stopping seizure activity have failed. The Neurocritical Care Society defines SE as one continuous unremitting seizure lasting longer than five minutes, or recurrent seizures without regaining consciousness between seizures for greater than five minutes. Seizures are episodes of abnormal excessive or synchronous neuronal activity in the brain. The outward effect can vary from rapid uncoordinated movement of the trunk and extremities, known as tonic-clonic seizure, to a brief loss of awareness, known as an absence seizure. An electroencephalogram, or EEG, is a measurement of electrical activity within neurons of the brain. Each line of an EEG represents a different region of the brain and becomes aberrant during a state of seizure. In cases of recurring or frequent seizures, or with persistent and long seizures, uncontrolled neurotransmission results in remodeling or changes to brain synaptic function. These physiological and anatomical changes to the brain include changes to the receptor systems of neurons, and shape of the neuron thereby impacting its ability to function, resulting in disorganization of brain proteins and potentially neuronal death.

Common causesCauses of SE include: low antiepileptic drug levels in adults include preexisting epilepsy,patients with pre-existing epilepsy; cerebrovascular disease,disease; metabolic and electrolyte disturbances, encephalopathies,disturbances; encephalopathies; head trauma andtrauma; drug or substance intoxication. SE is more common in children, often as a result of high fever during the first year of life. It is the most common neurologic emergency in pediatric practice. intoxication; hypoxia; CNS infections; infectious diseases; genetic disorders or unknown causes.

An SE patient is first treated with BDZs and if no response, is then treated with other, second-line, anti-seizure drugs. If the seizure persists after second-line therapy, the patient is diagnosed as having refractory SE, or RSE, admitted to the intensive care unit, or ICU, and placed into a medically induced coma.  Currently, there are no therapies that have been specifically approved to treat refractory SE,RSE is commonly managed in the ICU by inducing either sustained seizure suppression or RSE; however, physicians typically use anesthetic agents to induce the coma and stop the seizure immediately.deeper near-complete electroencephalogram, or EEG, suppression, called “burst suppression”, using continuous IV general anesthetics.  The primary drugs used to induce coma are continuously infused IV agents such as propofol, midazolam or pentobarbital. The RSE patient is continuallycommonly monitored on a continuous basis through EEG to ensure sustained seizure suppression or burst suppression is achieved.  Burst suppression is a pattern of brain waves seen on an EEG characterized by periods of activity alternating with periods of little or no activity in the brain, informing medical personnel of the effectiveness of the medically induced coma. The goal of sustained seizure suppression or burst suppression using continuous IV general anesthetics is to allow the brain and corresponding neuronal tissue to restore function and reset to normal pre-seizure levels. After a short period, of burst suppression, typically 24 hours, physicians attempt to wean the patient from the medically induced coma to evaluate EEG activity to assess if the neuronal activity has returned to normal levels. If unsuccessful, the patient is placed back into the medically induced coma in order to protect underlying neurological activity and brain function. At this point, patients are considered to be in a state of SRSE. The current standard of care for SRSE is empiric, and there are no therapies at present that have been specifically approved for this indication. We estimate that there are approximately 150,000between 25,000 and 41,000 cases of SESRSE each year in the United States,U.S.

Clinical Trials of which approximately 25,000 progress to SRSE.

Clinical TrialsSAGE-547 in SRSE

We are currently conducting the STATUS trial,Trial, a global, randomized, double-blind, placebo-controlled Phase 3 clinical trial, to evaluate SAGE-547 as a treatment for patients with SRSE. We expect to enroll up to 140 patients, ages two and above, in the STATUS trial in order to obtain an estimated 126 evaluable patients. We

anticipate that we will qualify approximately 150180 sites in the United States,U.S., Canada and Europe. The trial design, endpoints and statistical analysis approach for the trial are based on an agreement we reached with the FDA under a Special Protocol Assessment. Subjects will beare being randomized in a 1:1 ratio to receive either SAGE-547 or placebo in addition to standard-of-care third-line anti-seizure agents for six days. The primary efficacy endpoint of the trial is continued resolution of SE for 24 hours following wean of all third-line agents and the blinded study drug (SAGE-547 or placebo). Patients who do not respond during the initial treatment period will beare eligible for open-labeled treatment with SAGE-547.

On August 17, 2015, we reported we had treated the first patient enrolled in the Phase 3 clinical trial. We expect to report top-line results from this trial in the secondfirst half of 2016.2017. If successful, we believe the results from this Phase 3 clinical trial, together with other clinical data obtained from the SAGE-547 development program, and results of completed and ongoing non-clinical studies, couldwill be sufficient to form the basis of an NDA submission for SAGE-547 in SRSE in the U.S. The FDA has granted us orphan drug designation for SAGE-547 in the treatment of SE including SRSE, and Fast Track designation for our investigational new drug applicationIND for SAGE-547 as a treatment for SRSE.  Based on scientific advice we received in the fourth quarter of 2016 from the EMA, we also believe our current Phase 3 program, if successful, will be sufficient to support an MAA submission to the EMA seeking approval of SAGE-547 for SRSE in the EU.

On May 14, 2015, we reported final results from our open-label Phase 1/2 clinical trial of SAGE-547 in SRSE. In the Phase 1/2 clinical trial, 77%17 of 22 (77%) evaluable patients met the key efficacy endpoint of being successfully weaned off their anesthetic agents while SAGE-547 was being administered at the maintenance dose. Subsequent post-hoc analysis involving duration of the weaning period (five days versus six days) showed that 16 of 22 (73%) evaluable subjects were successfully weaned off both anesthetic agents and SAGE-547 within five days of starting the SAGE-547 infusion without the need to reinstate anesthetic agents in the following 24-hour period, while 18 of 22 (82%) evaluable subjects were weaned off both anesthetic agents and SAGE-547 within six days of starting the SAGE-547 infusion without the need to reinstate anesthetic agents in the following 24-hour period which is the key efficacy endpoint of the ongoing Phase 3 clinical trial. SAGE-547 also showed favorable tolerability and a benefit-risk profile supporting further development for this acutely ill patient

population. Overall, 64% of the 25 patients enrolled in the trial experienced at least one serious adverse event, though none were deemed drug-related as determined by the Safety Review Committee. Independent of treatment response, six patient deaths occurred within the study period, all driven by underlying medical conditions. Safety and tolerability were assessed by monitoring adverse events, EEG, physical examinations, neurological examinations, vital signs, clinical laboratory measures, electrocardiograms and concomitant medication usage. In order to allow full assessment of pharmacologic activity, the trial employed broad inclusion criteria, primarily excluding patients only if there is major damage to the brain, such as anoxic injury, devastating stroke or the presence of a large lesion. Other secondary objectives used to measure efficacy included scores on global and specific scales relating to cognition, agitation and depth of coma and survival. We can provide no assurance that the positive results observed in the Phase 1/2 trial will be replicated in the ongoing Phase 3 clinical trial.

Emergency-use experience with SAGE-547

We have compiled evidence of activity with SAGE-547 in a small number of SRSE patients, on an emergency-use basis, in situations where administration of SAGE-547 was permitted outside of clinical trials. The data generated from these emergency-use cases supported further clinical development of SAGE-547 in the treatment of SRSE. We expect that there may be additional emergency-use cases, and also expect to continue enrollment in a Phase 3 open-label expanded access trial, designated Study 302, which was initiated in April 2015. Study 302 is designed to make SAGE-547 available to patients in the U.S. who are affected by SRSE, but who have not been admitted to, nor can be transferred to, a STATUS trial site.

SAGE-547 Proof-of-Concept StudiesPPD

We have also used SAGE-547 in proof-of-concept clinical trials to explore potential uses of GABA_A receptor modulators to treat post-partum depression, or PPD is a distinct and readily identified major depressive disorder that affects certainaffecting an estimated 10-20% of women following in the U.S. after childbirth, of whom an estimated 80% have moderate to severe symptoms.  PPD is the most common biological complication of

childbirth, and essential tremor,is characterized by symptoms that often include sadness and depressed mood; anxiety or agitation; loss of interest in daily activities; changes in eating and sleeping habits; feeling overwhelmed; fatigue and decreased energy; inability to concentrate; hypervigilance about the baby or lack of interest in the newborn; and feelings of worthlessness, shame or guilt, which can lead to significant functional impairment. Without sufficient treatment, PPD may inhibit the mother’s ability to perform daily activities and to bond with the baby and other members of the family. PPD also carries an increased risk for suicide in some women.  Onset of moderate or severe symptoms is typically in the third trimester of pregnancy or within 4 weeks after giving birth. Current standard of care for PPD comprises psychotherapy, and in some cases, the cautious use of pharmacological therapies such as selective serotonin reuptake inhibitors, or SSRIs and serotonin and norepinephrine reuptake inhibitors, or SNRIs. Women with severe PPD may be hospitalized to provide a debilitating neurological disordersafe and stable environment for recovery if they have suicidal ideation or attempt, are unable to function and care for themselves, or require monitoring during a change in or trial of a new medication. There are no current approved therapies specifically for PPD.  Naturally occurring allopregnanolone is found at its highest levels in women during the third trimester of pregnancy, returning to normal levels generally within 24 hours of giving birth.  Levels of allopregnanolone have been found to be lower in women with PPD than in healthy women.  Data also suggest that causes involuntary, rhythmic shakingwomen with no known cause.PPD may be unusually sensitive to the rapid decline in allopregnanolone, potentially causing GABA_A -system mediated mood disruption. Given these data, we believe that allosteric modulators of the GABA_A receptor may have potential in the treatment of PPD.

On June 9, 2015, we reported top-line data from our proof-of-concept open-labelClinical Trials of SAGE-547 in PPD

The Phase 3 Hummingbird Study of SAGE-547 in PPD commenced in the third quarter of 2016 as an extension of the Phase 2 clinical study.  The Hummingbird Study is comprised of a randomized, placebo-controlled dose-ranging clinical trial of SAGE-547 in patients with severe PPD (202B) and a randomized, placebo-controlled clinical trial to evaluate SAGE-547 efficacy and safety in patients with moderate PPD (202C).  We received Breakthrough Therapy Designation from the FDA for SAGE-547 in PPD in the third quarter of 2016. Breakthrough Therapy Designation is intended to offer a potentially expedited development path and review for promising drug candidates, which includes increased interaction and guidance from the FDA.  In the fourth quarter of 2016, we announced input from an FDA Breakthrough Designation meeting confirming that the Hummingbird Study, with minor modifications, including increased sample size, is considered a Phase 3 clinical trial. We expect to enroll 120 patients with severe PPD in part 202B of the Hummingbird Study, with patients randomized 1:1:1 to receive either 60 mcg/kg/h or 90 mcg/kg/h of SAGE-547 or placebo (40 per group), and to enroll 100 patients with moderate PPD in part 202C of the Hummingbird Study, with patients randomized 1:1 to receive 90 mcg/kg/h of SAGE-547 or placebo (50 per group).  We anticipate announcing top-line data from the Hummingbird Study in the second half of 2017.  Based on the input we received from the FDA during the Breakthrough Designation meeting, we believe that, if successful, the results of the Hummingbird Study, together with the results of prior clinical studies of SAGE-547 in PPD, and ongoing non-clinical studies, will be sufficient to support the submission of an NDA to the FDA for SAGE-547 in the treatment of PPD.  Additional patient safety data may be acquired through an open-label program. In the fourth quarter of 2016, we also received PRIME designation from the EMA for SAGE-547 in the treatment of PPD.   The PRIME program was launched by the EMA in March 2016, and the designation is designed to aid and expedite the regulatory process for investigational medicines that may offer a major therapeutic advantage over existing treatments, or benefit patients without treatment options. To be accepted, an investigational medicine must show the potential to benefit patients with unmet medical needs based on early clinical data.  Once an investigational candidate has been selected for PRIME, developers are assigned a dedicated contact point and a rapporteur from the Committee for Medicinal Products for Human Use, or CHMP, to provide continuous support and help ahead of a marketing-authorization application, as well as a meeting with a multidisciplinary group of experts to provide broader guidance on the overall development plan and regulatory strategy. Companies who receive PRIME designation for a product candidate in an indication are also eligible for accelerated assessment at the time of their regulatory application.

In the third quarter of 2016, we announced positive top-line results from our multi-center, placebo-controlled, double-blind Phase 2 clinical trial of SAGE-547 for the treatment of severe PPD. Twenty-one patients were enrolled in the Phase 2 clinical trial. Patients were required to have had a major depressive episode that began no earlier than the third trimester and no later than the first four weeks following delivery, and also to be less than six months postpartum at the time of enrollment. Trial participants were also required to have a Hamilton Rating Scale for Depression, or HAM-D, score of 26 or above prior to treatment. In the trial, SAGE-547 achieved the primary endpoint of a significant reduction in the HAM-D compared to placebo at 60 hours (p=0.008). In the trial, there was a greater than 20 point mean reduction in the depression scores of the SAGE-547 group at 60 hours through completion of the trial with a greater than 12 point difference from placebo. The statistically significant difference in treatment effect began at 24 hours (p=0.006) with an effect that was maintained at similar magnitude through to the 30-day follow-up period (p=0.01). Remission from depression, as determined by a HAM-D <7, measured at 60 hours, was seen in 7 of 10 of the SAGE-547 group compared with 1 of 11 in the placebo group. Similarly, at 30 days, 7 of 10 of the SAGE-547 group and 2 of 11 in the placebo group were in remission. SAGE-547 was found to be generally well-tolerated.  There were no deaths, serious adverse events or discontinuations due to adverse events.

The results of the Phase 2 PPD trial replicated and extended the findings of an earlier open-label probe study of SAGE-547 in severe PPD reported in 2015 that indicated a statistically significant improvement from baseline in depression in four women within 24 hours after administration of intravenous SAGE-547. During the SAGE-547 treatment period, all four patients rapidly achieved remission, as measured by the Hamilton Rating Scale for Depression, or HAM-D, and improved from a mean HAM-D score of 26.5 at baseline to a mean HAM-D score of 1.8 at the end of the 60-hour treatment period. All four patients also demonstrated consistent improvement as measured by the Clinical Global Impression-Improvement, or CGI-I scale. SAGE-547 was well-tolerated in all patients treated with no serious adverse events observed on therapy or during the 30-day follow-up period, and no discontinuations due to adverse events. A total of 14 adverse events were reported in four patients. The only adverse event reported in more than one patient was sedation (sleepiness) observed in two patients, which led to a decrease in dose. In November 2015,

SAGE-217

Overview

SAGE-217 is a novel neuroactive steroid that is a positive allosteric modulator of GABA_A receptors. Like SAGE-547, SAGE-217 targets synaptic and extrasynaptic GABA_A receptors. Our Phase 2 clinical program is focused on studying SAGE-217 in four indications: two movement disorder indications, essential tremor and Parkinson’s disease, and two mood disorder indications, MDD and PPD. While SAGE-547 is an IV infusion intended for acute administration, SAGE-217 is currently being studied as an oral solution. We are in the process of developing solid oral dosage forms of SAGE-217 which we initiatedplan to introduce into our Phase 2 clinical program in the first half of 2017.

Proof-of-Concept and Phase 1

Given the similar mechanism of action of SAGE-217 to SAGE-547 as a multi-center, placebo-controlled, proof-of-concept trialmodulator of the GABA_A receptor, the selection of mood and movement disorders as initial indications for development of SAGE-217 was determined based, in part, on the results of completed clinical trials of SAGE-547 in severe PPD, patients. We plan to enroll up to 32 patients diagnosed with severe PPD inas described above, and the trial which is intended to validate the activity signal observed in the earlier open-label studyresults of SAGE-547 in the treatment for PPD.

On September 3, 2015, we announced results from a proof-of-concept clinical trial of SAGE-547 to evaluatein essential tremor completed in 2015.  In the GABA_A mechanism of action as a treatment for essential tremor. In a randomized, double-blind, placebo-controlled, crossover trial of 25 patients affected by essential tremor, where patients were exposed to the target steady state dose of SAGE-547 for only two hours, several clinician-rated and accelerometer-rated measures showed significant reductions in tremor. These changes included a statistically significant reduction in accelerometer-measured upper limb kinetic tremor (p=0.046) which is one of the major manifestations of tremor impacting morbidity. Likewise, clinician ratings of large tremor motions, as well as smaller movements such as writing and spiral drawing, also showed improvement approaching statistical significance (p=0.056). In addition, SAGE-547 demonstrated a clinically meaningful reduction of tremor amplitude as measured by accelerometer (at

least a 30% reduction from baseline) in 33% of patients, compared with 16% of patients in the placebo arm. In this phase of the trial, anti-tremor activity of SAGE-547 was observed at non-sedating doses, and peak anti-tremor activity correlated with steady state SAGE-547 levels. The time points showing the greatest reductions in tremor corresponded to peak plasma measurements. Seventeen of these patients were exposed to higher doses of SAGE-547 in an open-label extension with 44% demonstrating at least a 30% reduction in tremor amplitude from baseline. The most common adverse events at higher doses were fatigue and dizziness. Hypotension led to discontinuation of one patient. No serious adverse events were observed on therapy or during the 30-day follow-up period.

SAGE-217

SAGE-217 is a novel neuroactive steroid that is aIn the second quarter of 2016, we announced positive allosteric modulatortop-line results of GABA_A receptors. Like SAGE-547, SAGE-217 targets synaptic and extrasynaptic GABA_A receptors. We are currently conducting a Phase 1 clinical program of SAGE-217. In the trial, SAGE-217 was found to be generally well-tolerated with no serious adverse events reported during the treatment and follow-up periods. Assessment of SAGE-217, which we expect to completeelectrical activity in the first halfbrain using an EEG, showed clear evidence of 2016. While SAGE-547 is an IV infusion intended for acute administration, SAGE-217 is currently being studied as an oral solution. We aretarget engagement (GABA_A receptor modulation) starting at the lowest dose tested (15 mg). The observed EEG effect was sustained throughout the 7-day dosing period without diminution. Rates of moderate to deep sedation defined by a structured rating scale (MOAA/S < 3) were comparable to placebo until the maximum tolerated dose (MTD) was reached, in both the processsingle and multiple ascending dose phases of developing a solid dosage formulationthe trial. The presence of SAGE-217 intended for chronic use. In the event the resultssedation was associated with maximum drug exposure. As part of the Phase 1 clinical trialprogram, the safety, tolerability and pharmacokinetics of SAGE-217 support further development, we planwere also studied in a small open-label cohort of essential tremor patients (n=6). While not designed to commencedemonstrate efficacy, preliminary data show that single doses of SAGE-217 resulted in a similar reduction in tremor symptoms as achieved with a single 12 hour infusion of SAGE-547 in our previous placebo-controlled probe study (n=25).

SAGE-217 Mood Disorder Programs

Our SAGE-217 clinical program in mood disorders is comprised of Phase 2 clinical trials of SAGE-217 in the treatment of orphan epilepsiesMDD and essential tremor, and potentially PPD.

Orphan Epilepsies

SAGE-217 has shown dose-related anticonvulsant activity in multiple acute seizure and chronic epilepsy models. If the results of the Phase 1 clinical trial of SAGE-217 support further development, we plan to develop the compound as an oral therapy for rare neurologic conditions associated with high frequencies of seizures, such as Tuberous Sclerosis and Dravet, Rett, PCDH-19, Dup15q and Lennox-Gastaut syndromes, all of which have small patient populations and an unmet medical need for additional treatment options to treat the seizures. Dravet syndrome, also called severe myoclonic epilepsy of infancy,MDD is a severe form of epilepsy. It typically appears during the first year of life with frequent fever-related seizures. Later, other types of seizures typically arise in patients with this disease. SE may also occur. Children with Dravet syndrome typically experience poor development of language and motor skills, hyperactivity and difficulty relating to others. Rett syndrome is a neurodevelopmental disorder that affects girls almost exclusively. It is characterized by normal early growth and development followed by a slowing of development, loss of focused use of the hands, distinctive hand movements, slowed brain and head growth, problems with walking, seizures and intellectual disability. Lennox-Gastaut Syndrome, or LGS, typically manifests in children between the ages of three and five, and is widely considered as a catastrophic childhood epilepsycondition in which multiple seizure types, including tonic and atonic, are common. LGS is typically associated with cognitive impairment and behavioral abnormalities such as hyperactivity. PCDH-19 is a pediatric epilepsy disorder linked to the X-chromosome and characterized by clustered seizures in girls with typical onset between ages one and three. Seizures may become infrequent or cease completely as the child ages. The long term prognosis for PCDH-19 patients is variable though most patients suffer from cognitive impairment. Tuberous Sclerosis, or TSC, is caused by abnormalities in the TSC1 and TSC2 gene. Seizures are common in TSC, affecting approximately 90% of patients. Approximately 50% of patients are cognitively affected. Dup15q Syndrome is an identifiable syndrome which results from duplicationspatient experiences at least two weeks of a specific chromosome. Babies with Dup15q Syndrome typically have poor muscle tone, also known as hypotonia. Motor milestone such as rolling over, sitting upmajor depressive episode which causes significant distress or walking are usually significantly delayed. Over half of patients withdisability where the Dup15q Syndrome will have at least one seizure. The majority of those patients will experience their first seizure before the age of five. Seizures are common in dup 15q syndrome patients with the idic(15) variant,episode is not due to medical or substance use and typically difficult to control, often presenting with infantile spasms and progressing to a Lennox-Gastaut-type syndrome. Despite being associated with different genetics and neuropathology these conditions both share growing evidence on the role of the GABA system in ameliorating seizures and other behavioral features of these disorders.

Essential Tremor

Essential tremor, or ET, is one of the most common neurological disorders. It is a non-life threatening, chronic, progressive disorder associated with involuntary, rhythmic shaking in the upper limbs and head that can cause substantial disability. Some cases of ET are inherited, and for others there is no known cause. We estimate that ET affects approximately 10 million people inhistory of mania or hypomania.  In typical depressive episodes, the United States, a significant portion of whom are thought to be undiagnosed and untreated. We estimate that approximately 1.5 million of those ET patients have moderate to severe symptoms. Common treatments for ET include primidone, propranolol, gabapentin and benzodiazepines. Current treatments are only moderately effective, reducing, but not resolving, tremor amplitudes in approximately 50% of patients. Data suggest that ET is associated with brain neurodegeneration, and GABA_A receptor dysfunction, thus providing a rationale for studying compounds that are allosteric modulators of the GABA_A receptor and show anti-convulsant activity as potential treatments for ET. As described above, in a randomized, double-blind, placebo-controlled, crossover trial of 25 patients affected by ET, where patients were exposed to the target steady state dose of SAGE-547 for only two hours, several clinician-rated and accelerometer-rated measures showed significant reductions in tremor. Given its similar mechanism of action, we believe that SAGE-217 also has potential as a treatment for ET, but with a bioavailability and pharmacodynamic/pharmacokinetic profile intended for once-daily oral dosing. If the Phase 1 clinical trial results support further development, we plan to commence a Phase 2 clinical trial of SAGE-217 in the treatment of ET.

Post-partum Depression

PPD is a depressive disorder affecting a small portion of women after childbirth, and is characterized by sadness andperson experiences depressed mood, loss of interest in daily activities, changes in eating and sleeping habits, fatigueenjoyment, and decreasedreduced energy inability to concentrate, and feelings of worthlessness, shame or guilt, leading to significant functional impairment. Without sufficientdiminished activity for at least two weeks. Many people with depression also suffer from anxiety symptoms and medically unexplained somatic symptoms. A person with moderate or severe MDD will typically have difficulties carrying out his or her usual work, school, domestic or social activities due to symptoms of depression.  Antidepressants are widely used in the treatment PPD has devastating consequences forof MDD,

but many patients do not adequately respond to existing treatments.  According to estimates, approximately 16 million adults in the motherU.S. reported one major depressive episode in 2015.  Preclinical and for her family. PPD inhibitsclinical evidence suggest the mother’s abilityrole of GABA_A receptor dysfunction in depression.  Low GABA and allopregnanolone levels have been found in the brain, cerebrospinal fluid and plasma of depressed patients.  Our SAGE-217 MDD program is a two-part Phase 2a clinical trial evaluating the safety, tolerability, pharmacokinetics and efficacy of SAGE-217 in moderate to perform daily activities and to bond withsevere MDD patients.  In February 2017, we announced top-line results from the baby and other membersopen-label proof-of-concept portion (Part A) of the family. PPDPhase 2 clinical trial evaluating SAGE-217 in 13 MDD patients.  The primary endpoint of Part A was to evaluate safety and tolerability. SAGE-217 was found to be generally well-tolerated with no serious adverse events or discontinuations reported.  The most common adverse events were sedation/somnolence, headache, dizziness, and myalgia.   The trial also carries an increased riskexamined the effect of SAGE-217 on the HAM-D total score, in addition to other secondary measures. Patients in the trial had a mean HAM-D total score of 27.2 at baseline.  Data demonstrated a mean reduction from baseline in the HAM-D of 19.9 points at Day 15, with 85% (11 of 13) patients showing at least a 50% reduction of their HAM-D and 62% (8 of 13) of patients achieving remission, as determined by a HAM-D ≤7.  Statistically significant mean change from baseline was observed by Day 2 of the study, following the first of once-daily, nighttime oral dosing of 30 mg of SAGE-217. A significant mean change from baseline was maintained throughout the treatment period (p<0.0001 at Day 15).  The reduction from baseline in depression ratings seen in Part A of the trial, met our criteria for suicideadvancing SAGE-217 into the double-blind, placebo-controlled portion of the Phase 2 clinical trial (Part B).  We expect to initiate Part B of the Phase 2 clinical trial in some women.the second quarter of 2017.

We estimate that PPD affects 10%-15% of mothers with onset at or before 6 months postpartum. Onset of moderate-severe symptoms is typically 2-4 weeks after birth. Initial treatment can extend for a minimum of 6 months. Current standard of care for severe PPD comprises the cautious use of pharmacological therapies. Women with severe PPD may be hospitalized to provide a safe and stable environment for recovery if they have suicidal ideation or attempt, are unable to function and care for themselves, or require monitoring during a change in or trial of a new medication. There are no current approved therapies specifically for PPD.

Naturally occurring allopregnanolone is found at its highest levels in women during the third trimester of pregnancy, returning to normal level generally within 24 hours of giving birth. DataAs discussed above, data suggest that women with PPD may be unusually sensitive to this rapid decline in allopregnanolone, potentially causing GABA_A-system mediated mood disruption. Given this data, we believe that allosteric modulators of the GABA_A receptor may have potential in the treatment of PPD.  As noted above, we have initiated a multi-center, placebo-controlled proof-of-conceptOur Phase 2 clinical trial of SAGE-547SAGE-217 in PPD is a Phase 2a double-blind, placebo-controlled, randomized trial that will evaluate the efficacy, safety, tolerability and pharmacokinetics of SAGE-217 in approximately 32 patients with severe PPD. The primary endpoint of the trial is evaluation of the effect of SAGE-217 compared to placebo following two weeks of treatment as measured by the HAM-D total score.  We planexpect to enroll up to 32 patients diagnosed with severereport top-line results from the SAGE-217 Phase 2 PPD trial in the trial whichsecond half of 2017.

SAGE-217 Movement Disorder Program

Our SAGE-217 clinical program in movement disorders is intended to validatecomprised of Phase 2 clinical trials in essential tremor and Parkinson’s disease.

Essential tremor is one of the activity signal observedmost common neurological disorders. It is a non-life threatening, chronic, progressive disorder associated with involuntary, rhythmic shaking in the earlier open-label studyupper limbs and head that can cause substantial disability. Some cases of SAGE-547essential tremor are inherited, and for others there is no known cause. We estimate that essential tremor affects approximately six to seven million people in the U.S., a significant portion of whom are thought to be undiagnosed and untreated. We estimate that approximately 1.5 million of those essential tremor patients have moderate to severe symptoms. Common pharmacological treatments for essential tremor include primidone; propranolol; anti-anxiety medications; and anticonvulsant drugs such as gabapentin and BDZs. Current treatments are only moderately effective, reducing, but not resolving, tremor amplitudes in approximately 50% of patients.  Non-pharmaceutical interventions in the treatment of PPD. Ifessential tremor include the ongoing proof-of-concept clinical trialresponsible use of SAGE-547 in severe PPD generates compelling dataalcohol, deep brain stimulation, focused ultrasound and thalamotomy.  Data suggest that confirms the potential of allostericessential tremor is associated with brain neurodegeneration, and GABA_A receptor modulation in the treatment of severe PPD, we plan to commence development of SAGE-217 in the treatment of PPD. SAGE-217 shares important GABA receptor pharmacology with SAGE-547.

SAGE-689

SAGE-689 isdysfunction, thus providing a novel positiverationale for studying compounds that are allosteric modulator of GABA_A receptors. SAGE-689 has shown anticonvulsant, anxiolytic and sedative properties in animal models. We believe SAGE-689 has potential as an acute adjunctive IV therapy for the treatment of indications where a high degree of anti-seizure activity and

sedation are desirable prior to the introduction of general anesthesia, including, for example, for the treatment of SE patients whose seizures have not resolved after treatment with BDZs. Patients with SE at this stage have been transported by ambulance to the hospital, and frequently have received treatment in the emergency room with anti-seizure drugs. If their seizure does not resolve rapidly the patient must be transferred to the ICU and immediately placed into a medically induced coma to minimize the risk of brain damage. We believe the profile of SAGE-689 supports development as a second-line therapy for the treatment of SE patients whose seizures have not resolved after treatment with BDZs prior to a patient being placed into a medically induced coma. These characteristics include a wide therapeutic window to allow for modulationmodulators of the GABA_A receptor without inducing deep anesthesia, and a short half-life to permit rapid onsetshow anti-convulsant activity as potential treatments for essential tremor. We are currently studying the efficacy, safety, tolerability and losspharmacokinetics of activity. The latter property is intended to facilitate rapid discharge or transfer to the ICU without residual drug on board. SAGE-689 is being formulated for IV or intramuscular administration to optimize these characteristicsSAGE-217 in a clinical setting.

In 2015, we filed an investigational new drug application, or IND, for SAGE-689, however, commencementPhase 2a double-blind, placebo-controlled, randomized withdrawal trial of ourapproximately 80 patients with essential tremor. The primary endpoint of the trial is to compare the effect of one week of SAGE-217 on overall kinetic tremor symptoms. Secondary endpoints include additional accelerometer-derived and clinician-rated rating scales.  We expect to report top-line results from the Phase 12 clinical trial of SAGE-689 hasSAGE-217 in essential tremor in the second half of 2017.

Parkinson’s disease is a progressive neurodegenerative disorder associated with motor and non-motor symptoms, including resting tremor, and mood disorders.  We estimate that Parkinson’s disease affects an estimated 700,000 patients in the U.S, with an estimated 60,000 new cases each year.  Parkinson’s disease is thought to be caused by a reduction of dopamine levels as a result of loss of dopamine producing cells in the brain.  Dopamine plays a key role in smooth and coordinated muscle movements.  Current treatments for Parkinson’s disease include: levodopa/carbidopa, dopamine antagonists, MAO-B inhibitors and anticholinergics.   The part of the brain that produced dopamine also produces high levels of allopregnanolone.  Dopamine neurons are under control of the GABA system.  Decreased levels of allopregnanolone have been delayedmeasured in the plasma and cerebrospinal fluid of patients with Parkinson’s disease. Given these data, we believe that allosteric modulators of the GABA_A receptor may have potential in the treatment of Parkinson’s disease.   Our Parkinson's disease Phase 2 program is comprised of a two-part Phase 2 clinical trial evaluating the safety, tolerability, pharmacokinetics and efficacy of SAGE-217 in moderate Parkinson's disease patients. Part A of the Phase 2 trial is an open-label, proof-of-concept study evaluating SAGE-217 in approximately 10 patients which, if promising, may lead to respondthe Part B randomized, placebo-controlled Phase 2 trial. The primary endpoint for the Part A study is evaluation of the safety and tolerability of SAGE-217. The secondary endpoint is evaluation of improvement in motor symptoms as assessed by the change from baseline after one week in the Movement Disorder Society - Unified Parkinson's Disease Rating Scale (MDS-UPDRS) Part 3 (Motor

Examination) total score.  We expect to a requestreport top-line results from the FDA for additional non-clinicalPart A open-label study data. There is no guarantee that we will be able to generate data that will satisfyof SAGE-217 in Parkinson's disease in the FDA, and enable us to commence the Phase 1 clinical trial. If we are able to successfully address the FDA’s questions, we plan to commence a Phase 1 clinical development program for SAGE-689 which will be designed to rapidly assess relevant product characteristics for this compound, such as qualityfirst half of sedation, impact on EEG in normal patients and possibly in patients with epilepsy, pharmacokinetics and general safety. If early Phase 1 clinical trials are successful we plan to use our Phase 1 clinical trials to evaluate SAGE-689’s ability to induce EEG-confirmed effects on brain activity, including EEG burst-suppression.2017.    

SAGE-718

SAGE-718 is the first product candidate selected for development from our NMDA receptor modulator program. SAGE-718 is a novel oxysterol-based positive allosteric modulator of NMDA receptors. In 2013, our scientists and collaborators published an article in The Journal of Neuroscience describing data from animal studies demonstrating that 24(S)-Hydroxycholesterol (cerebrosterol), a naturally occurring oxysterol, shows potent and selective activity in animal models as a positive allosteric modulator of NMDA receptors acting at a novel oxysterol modulatory site. SAGE-718 has been designed to be a highly potent and selective modulator of NMDA receptors with an optimized pharmacokinetic profile intended to support oral dosing. SAGE-718 has demonstrated robust activity in preclinical models of NMDA receptor hypofunction. We have begun non-clinical studies ofare developing SAGE-718 with an initial development focus on two rare conditions, Smith-Lemli-Opitz Syndrome and Anti-NMDA Receptor Encephalitis for which there are currently no approved treatments.and cerebrosterol (24S-HC) deficit disorders such as Smith-Lemli-Opitz Syndrome, or SLOS.  Anti-NMDA Receptor Encephalitis, or ANRE, is a rare autoimmune disorder in which antibodies attack NMDA receptors. Symptoms of ANRE include a highly characteristic set of neuropsychiatric deficits, including cognitive and behavioral disturbances, movement disorders and loss of consciousness. SLOS is a rare metabolic disorder caused by a mutation in the DHCR7 (7-dehydrocholesterol reductase) gene which codes for an enzyme that is involved in the production of cholesterol in the brain. SLOS is associated with significantly decreased plasma levels of cerebrosterol, suggesting that normal oxysterol-based modulation of NMDA receptors is disrupted in these patients. People affected by SLOS are unable to make enough of the necessary cholesterol in the brain to support normal growth and development, and are affected by a broad range of neuropsychiatric and neurodevelopmental symptoms. Anti-NMDA Receptor Encephalitis, or ANRE, is a rare autoimmune disorderWe have completed IND-enabling non-clinical studies of SAGE-718, and plan to commence the Phase 1 clinical program in which antibodies attack NMDA receptors. Symptomsthe first half of ANRE include a highly characteristic set of neuropsychiatric deficits, including cognitive and behavioral disturbances, movement disorders and loss of consciousness.2017.  

Beyond SLOS and ANRE, we believe measuring levels of anti-NMDA antibodies or decreased cerebrosterol levels may represent biomarkers to identify for future study broader patient populations characterized by cognitive dysfunction and neuropsychiatric symptoms resulting from NMDA receptor dysfunction or hypofunction. Examples of these potential areas for future evaluation include certain types, aspects or subpopulations of a number of diseases such as depression, Alzheimer’s disease, attention deficit hyperactivity disorder, schizophrenia, Huntington’s disease, and neuropathic pain.

SAGE-105, SAGE-324 and SAGE-689

SAGE-105 and SAGE-324 are novel neuroactive steroids that, like SAGE-547 and SAGE-217, target synaptic and extrasynaptic GABA_A receptors. In late 2016, we initiated non-clinical studies of SAGE-105 and SAGE-324 with a focus on orphan epilepsies and indications involving GABA hypofunction.  Based on data generated with SAGE-217 showing dose-related anticonvulsant activity in multiple acute seizure and chronic epilepsy models, we plan to develop SAGE-105 or SAGE-324 as an oral therapy for rare neurologic conditions associated with high frequencies of seizures, such as Tuberous Sclerosis, Dravet, Rett, PCDH-19, Dup15q and Lennox-Gastaut syndromes, all of which have small patient populations and an unmet medical need for additional treatment options to treat the seizures.  

SAGE-689 is a novel positive allosteric modulator of GABA_A receptors shown to have anticonvulsant, anxiolytic and sedative properties in animal models. The characteristics of SAGE-689 include a wide therapeutic window to allow for modulation of the GABA_A receptor without inducing deep anesthesia, and a short half-life to permit rapid onset and loss of activity. In 2015, we filed an IND for SAGE-689 with an intended focus on the treatment of SE patients whose seizures have not resolved after treatment with BDZs prior to the patient being placed in a medically-induced coma.  In response to the IND, the FDA requested additional non-clinical study data prior to commencement of a Phase 1 clinical trial.   We are in the process of assessing next steps for the SAGE-689 program, and are evaluating possible alternative formulations for SAGE-689.  

Further Exploitation of GABA_A and NMDA Receptors

We expect to continue to focus our focusresearch and development efforts on allosteric modulation of the GABA_A and NMDA receptor systems in the brain. The GABA_A and NMDA receptor systems are broadly accepted as impacting many psychiatric and neurological disorders, spanning disorders of mood, seizure, cognition, anxiety, sleep, pain, epilepsy, and movement disorders among others. We believe that we will have the opportunity to develop molecules from our internal portfolio to address a number of these disorders in the future. Our ability to identify and develop such novel CNS therapies is enabled by our proprietary chemistry platform that is centered, as a starting point, on a scaffoldknowledge of chemically modifiedthe chemical scaffolds of certain endogenous neuroactive steroid compounds. We believe our know-how aroundknowledge of the chemistry and activity of allosteric modulators allows us to efficiently design molecules with different characteristics by enabling

characteristics.  This diversity enables us to controlregulate important properties such as half-life, brain penetration and the types of receptors with which our drugs interact with the goal of developingreceptor pharmacology to develop product candidates that have the potential to bind with targets in the brain with more precision,for better selectivity, increased tolerability, and fewer off-target side effects than either current CNS therapies or previous therapies which have failed in development.

Our current focus will remain on those indications where we can independently develop and commercialize our products, if approved. We believe our broad potential pipeline lessens our reliance on the success of any one program. We believe our ability to design and develop novel molecules with distinct profiles and receptor subtype selectivity will also provide us, in the future, with an opportunity to create value by potentially partnering these assets with third parties who possess the development and commercialization capabilities to pursue these programs.

Manufacturing and Supply

We do notneither own nor operate, and currently have no plans to own or operate, any manufacturing facilities. We currently resource all of our non-clinical and clinical material supply through third party contract manufacturing organizations, or CMOs, and intend to buy all of our future commercial supplies from CMOs if our product candidates are approved.

We have established relationships with several CMOs under which the CMOs have manufactured non-clinical and clinical supplies of SAGE-547, SAGE-217 SAGE-689 and SAGE-718 active pharmaceutical ingredient, or API, as well as drug product. All clinical supplies are manufactured under current Good Manufacturing Practices, or cGMP. Starting materials and key intermediates to support the production of these candidates are manufactured by other CMOs on a purchase order basis. We do not currently have arrangements in place for either long-term supply or redundant supply of bulk drug substance or drug product for any of our product candidates. It is our intent to put long-term supply agreements in place for commercial manufacturing at the appropriate time, and to mitigate potential commercial supply risks for any products that are approved in the future through inventory management and through exploring additional manufacturers to provide API and/or drug product.

We currently have sufficient SAGE-547 drug product on hand for our Phase 3 clinical trialtrials in SRSE and Phase 2a clinical trial in severe PPD and ongoing non-clinical studies, and are working with our CMOs to prepare for validation and commercial manufacturing of SAGE-547. We currently have sufficient SAGE-217 drug substance on hand for our ongoing Phase 12 clinical trials using an oral solution as the dosage form. We are in the process of developing a solid oral dosage formforms of SAGE-217 for futurewhich we plan to introduce into our Phase 2 clinical trials. We currently have sufficient SAGE-689 drug substance on hand to supportprogram in the planned Phase 1 clinical trial if we are able to satisfy the FDA’s request for additional information sufficiently for the FDA to allow us to commence the Phase 1 trial.first half of 2017.

SAGE-547, SAGE-217 SAGE-689 and SAGE-718 are small molecules isolated as stable crystalline solids. We believe the syntheses of SAGE-547, SAGE-217 SAGE-689 and SAGE-718 are reliable and reproducible from readily available starting materials, and the synthetic routes are amenable to large-scale manufacturing and do not require unusual equipment or special handling in the manufacturing process. The enantiomeric purity of

SAGE-547, SAGE-217 SAGE-689 and SAGE-718 is derived from starting materials that are obtained from natural sources. We expect to continue to identify and develop drug candidates that are amenable to cost-effective manufacturing at contract manufacturing facilities.

Research and Development

Research and development expenses for the years ended December 31, 2016, 2015 and 2014 and 2013 were $120.8 million, $69.4 million and $24.1 million, and $14.4 million, respectively.

Sales and Marketing

Given our stage of development, we have not yet established a commercial organization or distribution capabilities, nor have we entered into any partnership or co-promotion arrangements with an established pharmaceutical company.  We are concentrating our internal efforts on CNS disorders where we believe that we can efficientlysuccessfully launch and commercialize our products, if approved,SAGE-547 on our own. For example,own in SRSE and PPD in the United States we believeU.S. and Canada, if the product is approved for both indications, using a small and highly specialized sales force similar in size to sales forces that other companies have used to marketing products for orphan indications.  We expect to focus our future sales and marketing efforts, if SAGE-547 is approved in both indications, on critical care specialists, neurologists, epileptologists and clinical pharmacologists, in the case of SRSE, patients are easily identifiableand OB/GYNs, psychiatrists, select primary care physicians, clinics, home infusion companies, and group practices, in the case of PPD, and together approximately 1,200 target hospitals particularly tertiary care centers where there are ICUs and staff trained to treat SRSE and other areas in the hospital capable of treating refractory or SRSE patients. In a recent secondary analysis of Premier Network Hospitals’ 2012 billing data, we found approximately 70% of SRSE discharges, as determined by business rules we and our consultants established, occurred in 925 U.S. hospitals of 300 beds or more. As a result, we believe we can successfully launch and commercialize SAGE-547 in SRSE, if approved, on our own, using a small and highly specialized sales force similar to those of other rare-disease companies.PPD patients with IV infusions.    

While we are focused on CNS disorders where we believe we can efficiently commercialize our product candidates on our own, weWe may decide to establish agreements or alliances with one or more distributors or pharmaceutical company collaborators to develop and commercialize our products, if approved, particularly in certain territories outside the United States where we do not

believe it makes commercial sense for us to proceed on our own.  We may also consider other partnering opportunities for assets geared toward treating CNS disordersif we believe the partnering opportunity will add significant value to our efforts, including through capabilities, infrastructure, speed or financial contributions, particularly in areas such as depression and cognition that impact large patient populations, in each case depending on, among other things, the applicable indications, the expected development pathway and related costs, anddeal terms, our available resources. In order to effectivelyresources and efficiently develop product candidates for these larger markets or more difficult indications or regions, we intend to partner at an appropriate stage with companies who have clinical expertise and pre-existing commercial infrastructure in these areas.whether the transaction makes strategic sense.

Licenses

We have entered into several license agreements to support our various programs.

Washington University

In November 2013, we entered into a license agreement with Washington University, or WU. Under this agreement, and subject to certain rights of the U.S. government and rights retained by WU, WU granted to us an exclusive, worldwide license under certain patent rights to make, have made, sell, and offer for sale, use and import products covered by certain of its patent rights. WU’s rights in a patent applicationapplications disclosing and claiming SAGE-689 are included in this license agreement. Under this agreement, WU also granted us non-exclusive license under certain technical information and tangible research information to use such technical information and/or tangible research information to make, have made, sell, offer for sale, use and import products that embody or were made using a method or process covered in the technical information and/or tangible research information. The WU license also grants us a right to sublicense our licensed rights to third parties, provided each sublicensee enters into a written agreement with us with terms consistent with our agreement with WU. We must pay to WU a percentage of the revenue we receive from sublicensing our rights under this agreement, initially in the mid-teens and decreasing to the mid-single digits over time.

Pursuant to the WU license, we are required to use commercially reasonable efforts to continue active, diligent development of licensed products and to use commercially reasonable efforts to manufacture, promote and sell licensed products throughout the territory and in the field during the term of the agreement. We must deliver written reports to WU describing our progress no later than January 31 and July 31 of the first two calendar years of the agreement, and no later than January 31 of each calendar year thereafter.

We must pay to WU an annual maintenance fee until and including the year in which our first Phase 2 clinical trial is initiated, and we must make up to $0.7 million and $0.5 million in clinical development and regulatory milestones, respectively, to WU, for each licensed product, upon reaching certain milestones relating to the clinical development of our product candidates. The license agreement also requires us to make low single-digit royalty payments to WU in connection with the sales of licensed products.

The WU agreement will expire on a licensed product-by-licensed product basis upon the later of (i) the last day that at least one valid patent claim covering the licensed product exists, or (ii) the tenth anniversary of the day of the first commercial sale of the licensed product. We may terminate the WU Agreementagreement early for convenience upon providing WU with 90 days’ written notice. WU may terminate this agreement early in the event of our failure to cure a material breach within the applicable cure period or our bankruptcy. In the event of early termination of this agreement before the expiration of the last to expire of the patent rights, we must immediately discontinue manufacture, sale and distribution of any licensed products.

CyDex Pharmaceuticals

In September 2015, we amended and restated our existing commercial license agreement with CyDex Pharmaceuticals, Inc., or CyDex. Under the terms of the commercial license agreement, as amended and restated, CyDex has granted us an exclusive license to CyDex’s Captisol drug formulation technology and related intellectual property for the manufacture of pharmaceutical products incorporating SAGE-547 or SAGE-689, and the development and commercialization of the resulting products in the treatment, prevention or diagnosis of any disease or symptom in humans or animals other than (i) the ocular treatment of any disease or condition with a formulation, including a hormone; (ii) topical ocular treatment of inflammatory conditions; (iii) treatment and prophylaxis of fungal infections in humans; and (iv) any ocular treatment for retinal degeneration.

Pursuant to the CyDex license, we are required during the term of the agreement to use commercially reasonable efforts to continue active, diligent development of the licensed product, to seek regulatory approval of the licensed product and to commercialize the licensed product following regulatory approval. We must deliver periodic progress reports to CyDex.

We are obligated to make milestone payments under the amended and restated license agreement with CyDex based on the achievement of clinical development and regulatory milestones in the amount of $0.8 million in clinical milestones and $3.8 million in regulatory milestones for each of the first two fields with respect to SAGE-547; $1.3 million in clinical milestones and $8.5 million in regulatory milestones for each of the third and fourth fields with respect to SAGE-547; and $0.8 million in clinical milestones and $1.8

$1.8 million in regulatory milestones for one field with respect to SAGE-689. The CyDex license is perpetual until terminated. We may terminate the CyDex agreement for convenience upon providing 180 days’ prior written notice to CyDex. Either party has the right to terminate the agreement for failure to cure a material breach in the applicable cure period.

We will also be required to pay royalties to CyDex on sales of SAGE-547 and SAGE-689, if successfully developed, in the low single digits based on levels of net sales. We are also party to a supply agreement with CyDex which was amended in September 2015 to cover the supply of CyDex’s Captisol for use in the manufacture of products incorporating SAGE-689. Under the amended supply agreement with CyDex, we are also required to purchase all of our requirements for Captisol with respect to SAGE-547 and SAGE-689 from CyDex, and CyDex is required to supply us with Captisol for such purposes, subject to certain limitations.

University of California

In October 2013, we entered into a license agreement with The Regents of the University of California, or the Regents, which was amended in May 2014. Pursuant to this agreement, and subject to certain rights of the U.S. government and rights retained by the Regents, the Regents granted us a non-exclusive, non-transferable license under all personal property rights of the Regents covering the tangible personal property in an IND application package owned by the Regents, or the Data, and a specified quantity of cGMP grade allopregnanolone, or the Material, to (i) use the Data for reference or incorporation in an IND for the use of the Material as a treatment of SE, essential tremor and/or severe PPD and (ii) use the Material or modifications of the Material to develop a pharmaceutical formulation for clinical trials for SE, essential tremor and/or postpartum depression. The rights licensed to us are not sublicenseable.

Pursuant to this agreement, we are required to use commercially reasonable efforts to proceed with the development, manufacture and sale of one or more products containing allopregnanolone, a derived product under the agreement, for the treatment of SE, essential tremor and/or severe PPD. As of January 1, 2014, we must deliver written reports to the Regents describing our progress no later than 60 days subsequent to June 30 and December 31 of each fiscal year.

This agreement requires us to make up to $0.1 million in milestone payments in connection with the first derived product that meets the relevant milestones, and we must also pay royalties of less than 1% to the Regents for each derived product for a period of 15 years following the first commercial sale of such derived product. This agreement will terminate on the earlier to occur of (i) 27 years after the effective date or (ii) 15 years after the last-derived product is first commercially sold. We may terminate this agreement early for convenience upon providing 60 days’ prior written notice to the Regents. The Regents may terminate this agreement early in the event of material default, including failure to provide timely progress reports, after the applicable cure period, or in the event of our bankruptcy. In the event of early termination of this agreement, we have the right to sell any partially made derived products for a period of 120 days from the date of termination, but would not otherwise have rights after termination under the licensed rights to make, have made, use, sell, have sold, offer for sale or import products containing allopregnanolone.

In June 2015, we entered into an exclusive license agreement with the Regents whereby we were granted an exclusive license to certain patent rights related to the use of allopregnanolone to treat various diseases. In exchange for such license, we paid an upfront payment of $50,000, and will make annual maintenance fees of $15,000 until the calendar year following the first sale, if any, of a licensed product. We are obligated to make milestone payments following the achievement of specified regulatory and sales milestones of up to $0.7 million and $2.0 million in the aggregate, respectively. Following the first sale, if any, of a licensed product, we are obligated to pay royalties at a low single digit percentage of net sales, if any, subject to specified minimum annual royalty amounts. Unless terminated by operation of law or by acts of the parties under the terms of the agreement, the license agreement will terminate when the last-to-expire patents or last-to-be abandoned patent applications expire, whichever is later.

Intellectual Property

We strive to protect the proprietary technology that we believe is important to our business, including seeking and maintaining patents intended to cover our product candidates and compositions, their methods of use and processes for their manufacture, and any other aspects of inventions that are commercially important to the development of our business. We may also rely on trade secrets to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection.

We plan to continue to expand our intellectual property estate by filing patent applications directed to compositions, methods of use, treatment and patient selection and formulations and manufacturing processes created or identified from our ongoing development of our product candidates. Our success will depend on our

ability to obtain and maintain patent and other proprietary protection for commercially important technology, inventions and know-how related to our business; defend and enforce our patents; preserve the confidentiality of our trade secrets; and operate without infringing the valid and enforceable patents and proprietary rights of third parties. We also rely on know-how, continuing technological innovation and in-licensing opportunities to develop and

maintain our proprietary position. We seek to obtain domestic and international patent protection, and endeavor to promptly file patent applications for new commercially valuable inventions.

The patent positions of biopharmaceutical companies like us are generally uncertain and involve complex legal, scientific and factual questions. In addition, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and patent scope can be reinterpreted by the courts after issuance. Moreover, many jurisdictions, including the United States, permit third parties to challenge issued patents in administrative proceedings, which may result in further narrowing or even cancellation of patent claims. We cannot predict whether the patent applications we are currently pursuing, or may in the future pursue, will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide sufficient protection from competitors.

Because patent applications in the United States and certain other jurisdictions are maintained in secrecy for 18 months or potentially even longer, and since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, we cannot be certain of the priority of inventions covered by our issued patents, our pending patent applications or of patent applications we may file in the future. Moreover, we may have to participate in interference proceedings or derivation proceedings declared by the United States Patent and Trademark Office, or U.S. PTO, or similar proceedings outside the U.S., to determine priority of invention.

Patents

OurWe currently have one issued patent covering the composition of matter of SAGE-217.  We have received notices of allowances for genus and species claims covering SAGE-689 as well as for methods of use of SAGE-689.  We have a portfolio includesof patent applications in the earlyat various stages of prosecution and no patents have, as of yet, issued from our patent application estate. These patent applicationsthat fall into three categories: (1) SAGE-547-related; (2) GABA_A receptor modulators; including genus and species claims to SAGE-217, SAGE-105, SAGE-324 and SAGE-689; and (3) NMDA receptor modulators, including
SAGE-718.

We own fivesix patent application families generally related to SAGE-547. One of these patent families includes a patent application having claims to compositions containing allopregnanolone and a cyclodextrin. The compositions can be used for the treatment of CNS disorders such as SRSE, PPD and traumatic brain injury and SE.injury. The second patent family includes patent applications having claims directed to methods of treating seizure disorders, such as SE,SRSE, by administering allopregnanolone using particular dosing regimens or multiple dosage phases. Any U.S. patents that may issue from these families of patent applications would have a statutory expiration date in January and August of 2033, respectively. The applications are also pending in foreign countries, including Australia, Brazil, Canada, China, Europe, Hong Kong, Israel, Indian, Japan, Mexico, New Zealand, Russia, Singapore, and South Africa. A third familyTwo additional families of patent applications includesinclude methods of treating essential tremor and depression such as severe PPD. Included in these patent applications are courses of treatment and dosage regimens.  A fourthfifth family of patent applications includes claims to deuterated neuroactive steroid compounds and compositions. A fifthsixth family of patent applications includes claims to formulation and manufacturing of SAGE-547. Any U.S. patents that may issue from these families of patent applications would have a statutory expiration date in September 2035, April 2036, and June 2036, respectively. The time period for electing to pursue foreign patent protection for the inventions disclosed in these patent applications by filing national stage patent applications in individual jurisdictions has not yet expired, and we will need to decide whether and where to pursue ex-U.S. protection before expiration of the applicable deadlines.

In addition to the patent applications licensed from WU, we own 23 families of patent applications, resulting from work done exclusively by us and our contract research organizations, directed to additional GABA receptor modulating compounds beyond SAGE-547 and SAGE-689, including SAGE-217 and methods of using these compounds, for example in anesthesia or treatment of GABA-related disorders.compounds. Any U.S. patents that may issue from these patent applications would have a statutory expiration ranging from October 2032 to November 2036. Other than SAGE-547 and SAGE-689, weFor example, our issued patent covering the composition of SAGE-217 has a statutory expiration date of April 2034. We have

pending within these families of patent applications genus and species claims to the majority of the other compounds in our GABA_A receptor modulating compound collection, including SAGE-217.collection. These families of patent applications are in the earlyat various stages of patent prosecution and include families for which only provisional applications have been filed. The time period for electing to pursue foreign patent protection by filing national stage patent applications in individual jurisdictions has not yet expired for some of these patent families, and we will need to decide whether and where to pursue ex-U.S. protection before expiration of the applicable deadlines.

We have exclusively licensed a portfolio of patent applications owned by WU, which are directed to certain GABA receptor modulating compounds and methods of using these compounds, for example in anesthesia or treatment of GABA-related disorders. This portfolio includes seven families of patent applications. One of these seven families of patent applications is co-owned by us, and this co-owned family includes pending patent applications in the United States, Australia, Brazil, Canada, China, Europe, Israel, India, Japan, Korea, Mexico, New Zealand, Philippines, Russia, Singapore, and South Africa. This co-owned application discloses and claims SAGE-689 and its use in anesthesia or treatment of GABA-related disorders. Any U.S. patents that may issue from the

SAGE-689 patent family would have a statutory expiration date of December 2033. In addition, U.S. 7,781,421, solely owned by WU, expires in September 2027. Any patents that may issue, if any, from the remaining five families solely owned by WU wouldClaims generically and specifically covering SAGE-689 have statutory expiration dates that range from 2032 to 2034.been allowed.

We also own ninetwenty families of applications directed to modulators of NMDA receptors. FourFifteen of these families of patent applications are directed to compounds that modulate NMDA receptors, including SAGE-718, which can be used to treat NMDA receptor-related disorders such as CNS relatedCNS-related conditions. One of these families of patent applications is directed to using a naturally occurring compound as a biomarker for a subject who would benefit from treatment with a modulator of NMDA receptors. One of these families of patent applications is directed to using a modulator of NMDA receptors to treat a rare NMDA loss of function disorder. Any patents that may issue, if any, from these families of applications directed to modulators of NMDA receptors would have statutory expiration dates in September 2032 and July 2036.October 2037.

Patent term

The base term of a U.S. patent is 20 years from the filing date of the earliest-filed non-provisional patent application from which the patent claims priority. The term of a U.S. patent can be lengthened by patent term adjustment, which compensates the owner of the patent for administrative delays at the U.S. PTO. In some cases, the term of a U.S. patent is shortened by terminal disclaimer that reduces its term to that of an earlier-expiring patent.

The term of a U.S. patent may be eligible for patent term extension under the Drug Price Competition and Patent Term Restoration Act of 1984, referred to as the Hatch-Waxman Act, to account for at least some of the time the drug is under development and regulatory review after the patent is granted. With regard to a drug for which FDA approval is the first permitted marketing of the active ingredient, the Hatch-Waxman Act allows for extension of the term of one U.S. patent that includes at least one claim covering the composition of matter of an FDA-approved drug, an FDA-approved method of treatment using the drug, and/or a method of manufacturing the FDA-approved drug. The extended patent term cannot exceed the shorter of five years beyond the non-extended expiration of the patent or 14 years from the date of the FDA approval of the drug. Some foreign jurisdictions, including Europe and Japan, also have patent term extension provisions, which allow for extension of the term of a patent that covers a drug approved by the applicable foreign regulatory agency. In the future, if and when our pharmaceutical products receive FDA approval, we expect to apply for patent term extension on patents covering those products, their methods of use, and/or methods of manufacture.

Trade secrets

In addition to patents, we may rely on trade secrets and know-how to develop and maintain our competitive position. Companies typically rely on trade secrets to protect aspects of their business that are not amenable to, or

that they do not consider appropriate for, patent protection. We protect trade secrets, if any, and know-how by establishing confidentiality agreements and invention assignment agreements with our employees, consultants, scientific advisors, contractors and partners. These agreements provide that all confidential information developed or made known during the course of an individual or entity’s relationship with us must be kept confidential during and after the relationship. These agreements also generally provide that all relevant inventions resulting from work performed for us or relating to our business and conceived or completed during the period of employment or assignment, as applicable, shall be our exclusive property. In addition, we take other appropriate precautions, such as physical and technological security measures, to guard against misappropriation of our proprietary information by third parties.

Competition

The biopharmaceuticals industry is highly competitive. There are many public and private companies, universities, governmental agencies and other research organizations actively engaged in the research and development of products that may be similar to our product candidates or address similar markets. It is probable that the number of companies seeking to develop products and therapies similar to our products will increase.

Currently, there are no therapies that have been specifically approved for the treatment of SRSE. However, many products approved for other indications, for example,including general anesthetics, ketamine and anti-seizure drugs, are used off-label for various stages of SE therapy.therapy, including in the treatment of SRSE. Additionally, though not indicated, acupuncture, hypothermia, and electroconvulsive therapy are sometimes also used prior to withdrawal of care for patients with SRSE.

There are also no pharmacological therapies specifically approved for the treatment of PPD.  Current standard of care for PPD commonly consists of psychotherapy, however, patients with moderate or severe PPD are often prescribed anti-depressant medications such as SSRIs and SNRIs.  

Current treatments for Parkinson’s disease include levodopa/carbidopa, dopamine antagonists, MAO-B inhibitors and anticholinergics.

Common pharmacological treatments for essential tremor include primidone; propranolol; anti-anxiety medications; and anticonvulsant drugs such as gabapentin and benzodiazepines. Non-pharmaceutical interventions in the treatment of essential tremor include the responsible use of alcohol, deep brain stimulation, focused ultrasound and thalamotomy.

MDD patients are typically treated with a variety of anti-depressant medications such as SSRIs and SNRIs.    A number of companies are developing product candidates intended for the treatment of MDD.

In the field of neuroactive steroids focused specifically on modulation of GABA_A or NMDA receptors, our principal competitor is Marinus Pharmaceuticals, Inc., which we believeor Marinus.  Marinus is developing a reformulated form of ganaxolone, a known GABA_A positive allosteric modulator neuroactive steroid, forsteroid. A number of companies are working to develop products targeted at the potential treatment of drug-resistant partial complex seizuresNMDA receptor, both antagonists and fragile X syndrome. In addition, Marinus has announced initiation of the clinical phase of its intravenous Ganaxolone program in SE.agonists.

Many of our potential competitors, alone or with their strategic partners, have substantially greater financial, technical and human resources than we do and significantly greater experience in the discovery and development of product candidates, obtaining FDA and other regulatory approvals of treatments and the commercialization of those treatments. Mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated among a smaller number of our competitors.  If we are successful in developing and gaining approval of any of our product candidates, we expect competition in the indications we are pursuing will focus on efficacy, safety, convenience, availability, and price.  Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop. Our competitors also may obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a strong market position before we are able to enter the market.

Government Regulation

Government authorities in the United States at the federal, state and local level and in other countries extensively regulate, among other things, the research, development, testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion, advertising, distribution, post-approval monitoring and reporting, marketing and export and import of drug products. Generally, before a new drug can be marketed, considerable data demonstrating its quality, safety and efficacy must be obtained, organized into a format specific to each regulatory authority, submitted for review and approved by the regulatory authority.

U.S. drug development

In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FDCA, and its implementing regulations. Drugs are also subject to other federal, state and local statutes and regulations.

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The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources. Failure to comply with the applicable U.S. requirements at any time during the product development process, approval process or after approval, may subject a company to administrative or judicial sanctions. These sanctions could include, among other actions, the FDA’s refusal to approve pending applications, withdrawal of an approval, a clinical hold, warning letters, product recalls or withdrawals from the market, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement, or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse effect on us.

Our product candidates must be approved by the FDA through the NDA process before they may be legally marketed in the United States. The process required by the FDA before a drug may be marketed in the United States generally involves the following: