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Msg  34574 of 34972  at  9/30/2020 11:20:52 AM  by

Cougar3


Bank of America (Merrill Lynch) on SAGE


 

SAGE Therapeutics

Takeaways from our MDD doctor call Maintain Rating: BUY | PO: 68.00 USD | Price: 59.67 USD

Expert views zuranolone’s onset of action favorably

We hosted a call with a KOL on SAGEs zuranolone program in major depressive disorder (MDD) to discuss prior ph 3 MOUNTAIN data and to set expectations for the upcoming ph 3 SHORELINE readout (listen to the replay). We talked about the current treatment paradigm in MDD, in which our expert sees 3 areas of unmet need: (1) a need for effective therapies that can improve on current remission rates of about one-third in front-line and one-third in second-line pts; (2) faster onset of action than the average 6- 8 wks SOC therapies take to show effects; and (3) reduction of intolerable side effects such as somnolence, weight gain and sexual dysfunction. We discussed zuranolone, SAGEs GABAA modulator, which the doctor views as differentiated from SOC with its rapid onset of action. Our expert believes SAGE was unlucky to not meet the primary efficacy endpoint in MOUNTAIN at day 15, referencing sig. effects seen at all time- points before day 15. The doctor was bullish on zuranolone hitting efficacy endpoints in ongoing ph 3 trials, including the upcoming ph 3 SHORELINE readout expected in 4Q (see our preview here and survey here). For SHORELINE our KOL gave an efficacy bar of a 15.2 reduction in HAM-D from baseline at 2 wks (4 points over 11.2 pbo reduction in MOUNTAIN). He thinks increasing dosing to 50mg from 30mg should increase efficacy and may enhance sedative effects, which is potentially beneficial for pts with insomnia. SAGE reported that 20% of 50mg pts down-titrated to 40mg in SHORELINE due to somnolence, which our KOL doesnt see as an issue if it reduces side effects. Our KOL believes zuranolone has an 80/20 chance for approval, and intends to use zuranolone in a majority of his pts if approved. We view the commentary as supportive of our assumptions for zuranolone in MDD, which contributes $32/sh to our PO. We maintain our Buy rating with $68 PO.

Discussion of the competitive MDD treatment landscape

Our KOL thinks Axsomes AXS-05 has a high likelihood of approval given the positive ph 2 and 3 data that will be presented to the FDA, but believes it will be used after zuranolone if both drugs are approved, due to zuranolones rapid onset of action. He also thinks Relmadas REL-1017 ph 2 data is encouraging, but believes many physicians will be hesitant to prescribe due to negative association with opioids.

30 September 2020

Equity

Tazeen Ahmad

Research Analyst
BofAS
+1 646 855 4236
tazeen.ahmad@bofa.com

Brian Cheng

Research Analyst BofAS
+1 646 855 5222
bcheng@bofa.com

William Maughan

Research Analyst
BofAS
+1 646 855 3187
william.maughan@bofa.com

Stock Data

Price
Price Objective
Date Established Investment Opinion 52-Week Range
Mrkt Val (mn) / Shares Out (mn)
Average Daily Value (mn) BofA Ticker / Exchange Bloomberg / Reuters
ROE (2020E)
Net Dbt to Eqty (Dec-2019A)

Abbreviations

59.67 USD

68.00 USD 13-Sep-2020 C-1-9 25.01 USD - 155.33 USD 3,101 USD / 52.0

39.71 USD SAGE / NAS SAGE US / SAGE.OQ -55.3% -13.4%



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