Chardan Expecting Nearly 50% Downside In Sage Therapeutics, Starts At Sell

SAGE Therapeutics Inc SAGE is expected to announce Phase 3 data for its lead candidate SAGE-547 [allopregnanolone] in super-refractory status epilepticus [SRSE] in 2H16. Chardan Capital Markets' Gbola Amusa initiated coverage of the company with a Sell rating and a price target of $18, citing “scant evidence” of SAGE-547 working better than old drugs.

There is an absence of clinical evidence that SAGE-547 is differentiated from other, old GABAA-receptor-modulating anti-epilepsy drugs, analyst Gbola Amusa said. He added that Sage’s valuation relied heavily on its lead asset. The candidate is expected to produce phase III data in SRSE in 2H16 and phase II data in severe postpartum depression [PPD] in 2Q16.

Long On Marinus, Short On Sage

Amusa recommended going long on Marinus Pharmaceuticals Inc MRNS and short on Sage. He said that Sage seemed to have substantially overestimated prevalence data.

The analyst further wrote, “Sage guides to produce double-blind, placebo-controlled phase III SAGE-547 data in SRSE in 2H16, and does not have: 1) a phase I/II double-blind, placebo-controlled study to inform phase III design, or 2) convincing open-label phase I/II data.”

Referring to Marinus Pharma, Amusa mentioned that the company has a structurally-similar GABAA receptor modulator for epilepsy, ganaxolone, which is also in phase III, and has theoretical safety advantages. Despite this, Marinus Pharma’s stock trades at a tenth of Sage's market cap, lending upside potential to Marinus Pharma’s shares.