If Sage really is one of the hottest takeover targets in biopharma, it just got a lot more expensive. A big win in phase II for its follow-on depression project added a huge $2.5bn to the company’s market cap this morning, only a month after a successful pivotal study of its lead asset boosted its value by $1bn.
Today’s advance is a substantial vote of confidence in SAGE-217 considering its stage of development and industry’s poor research record in CNS disorders. Investors clearly believe that if Sage has done it once, it can do it again.
Still, the stock probably would not have put on the 66% advance seen this morning had Sage not delivered positive phase III results with brexanolone last month (Sage up on the downs, November 9, 2017). The two products share similar pharmacological properties and both modulate GABA receptor activity – brexanolone is a formulation of allopregnanolone and SAGE-217 was designed as a next-generation molecule.
Importantly for future commercial potential, brexanolone will receive only a couple of years of market exclusivity, while Sage reckons that SAGE-217 will be good for a couple of decades. Hence the amplified enthusiasm for this earlier-stage asset.
Of course SAGE-217 still needs to be tested in larger studies, and the fact that the latest results were generated in a small phase II study is the major red flag here. Only 89 patients were recruited and treated for 14 days, with six weeks of follow-up in total – far from a real-world test in a disease that affects millions of people.
Results were impressive, however, with primary and secondary endpoints all hit with statistical significance. And for a phase II study the randomised, double-blind, placebo-controlled design cannot be faulted – with no sign of data mining in sight.
On the primary endpoint, measured at day 15, the mean change in severity on the Hamilton Rating Scale for Depression (HAM-D) was 17.6 points for SAGE-217, compared with 10.7 points for placebo (p<0.0001). This is particularly impressive when considering that patients can take months to respond to existing depression treatments – Sage said that statistically significant reductions in HAM-D scores were seen following the first dose, and were maintained through the fourth week of the trial.
The response rate to the drug was also notable – 64% of SAGE-217 treated patients achieved remission at day 15, compared to 23% of placebo patients. Typically only a third of patients respond to anti-depressant drugs.
The results had excitable sellside analysts reaching for terms like “game changer” this morning, and SAGE-217 certainly deserves to be closely watched.
But the effectiveness of any drug will typically wane from phase II to phase III. This was seen with brexanolone – its placebo-adjusted mean HAM-D score change more than halved, from 12 in mid-stage trials to 3.7 to 5.9 in the pivotal studies released last week.
Even if a similar reduction is seen with SAGE-217, the product’s speed of onset and apparent tolerability would arguably still make it an attractive asset in a field that is desperate for innovation.
And there are plenty of large drug companies out there, desperate for innovation.