Was the market too critical of the SAGE-217 data?
The SAGE bears won this week. The stock is down over 30% on “positive” results of zuranalone (SAGE-217) in major depressive disorder (MDD) (See data release press release and presentation). Was the market too hard on SAGE? Here are some of the things SAGE bulls and bears are thinking about SAGE and specifically SAGE-217.
BULLS
SAGE-217 is a paradigm-shifting drug with respect to depression because of its rapid onset, with a statistically significant effect in as short as 3 days.
Regarding any issues with the length of response, as demonstrated in the SHORELINE study (See HERE), SAGE-217 can be effectively readministered multiple times.
As far as side effects, the fact that a higher percentage of patients on the SAGE-217 arm (90.3%) vs. the placebo arm (87.4%) completed the study, is a practical testament for the excellent tolerability of the drug candidate.
BEARS
With less than a 2 point improvement difference vs. placebo on the 56 point HAM-D scale (See here) of 14.1 vs 12.3, the “improvement” seen with SAGE-217 administration is not impactful enough to be meaningful to doctors and patients.
The small improvement observed with SAGE-217 over placebo is not sustained for a long enough period of time to be meaningful (Statistical significance only until day 15).
Biogen will be a poor partner for SAGE for SAGE-217 because Biogen does not have a large presence in psychiatry. Its commercial focuses on other specialties such as neurology.
Major depressive disorder (MDD) is a debilitating, chronic, biologically-based disorder characterized by low mood, inability to feel pleasure, feelings of guilt and worthlessness, low energy, and other emotional and physical symptoms, and which impairs social, occupational, educational, or other important functioning. In severe cases, MDD can result in suicide. According to the Department of Health and Human Services, an estimated 7.8% of U.S. adults, or approximately 19.4 million, experience MDD each year1. Nearly two-thirds of diagnosed and treated patients do not experience adequate treatment response with currently available first-line therapy, highlighting the need for additional therapies with new mechanisms of action. The majority of initial failures also fail second-line treatment.
Based on this high unmet healthcare need, there are a number of small and mid-cap biotech companies that are on the hunt to develop better MDD therapies (Table 1). Despite its valuation declines this year, SAGE is still the largest of these companies. It has experienced the biggest move down this week (-36%*) and only PRAX (-59%*) has moved down further this year to date (Table 1). SEEL has experienced the largest move up this year (100%*), followed by VTGN (48%*).
Table 1. Smid-Cap Biotech Companies Developing MDD Therapeutics
*Relative to the average of the biotech ETF, IBB, and index, XBI.
SAGE has the most advanced clinical candidate (Phase 3) except for AXSM, which has a PDUFA date set for this August for their NMDA receptor antagonist and sigma-1 agonist, AXS-05 (Table 2). In fact, with respect to upcoming readouts for drug candidates that target MDD, we don’t find any additional MDD readouts yet announced for this year in our database, except for SAGE’s readouts later this year for Zuranalone in the SHORELINE and CORAL trials (Table 3).
In summary, with respect to SAGE-217, it seems to us that the jury is still out. There are some additional phase 3 readouts this year that should provide more insight into this clinical asset. It's rapid action is quite intriguing and with a tolerable safety profile and short duration of treatment. We will have more information later this year about how well it combines with other anti-depressants because it might be a helpful short-term treatment while waiting for a longer term anti-depressant to kick in.
Table 2. MDD Drug Candidate Comparison
Table 3. MDD Drug Upcoming Readouts
#SAGE #SEEL #INMB #XENE #AXSM #RLMD #VTGN #PRAX #Zuranolone #SLS002 #Pegipanermin #XPro1595 #AXS05 #Xen1101 #REL1017 #PH10 #PRAX114 #MMD #majordepressivedisorder