Sage Therapeutics, Inc. (NASDAQ:SAGE) has made great progress in its pipeline along with its partner Biogen Inc. (BIIB), especially with the recent approval of its drug ZURZUVAE, which was approved by the FDA for the treatment of patients with postpartum depression [PPD]. There is an opportunity here with respect to this approval, because after the scheduling of this drug by the U.S. DEA, the drug launch is expected to happen in Q4 of 2023. With not receiving approval of this drug for major depressive disorder [MDD], the stock price tanked considerably.
It remains to be seen how ZURZUVAE will do on the market for PPD when it is released, but the reason why I believe it is important to highlight this biotech again is because there are several opportunities for it to recover. Especially, for the fact that there are 3 ongoing studies using its drug SAGE-718 for the treatment of patients with Huntington’s Disease [HD]. There are also two other studies, whereby SAGE-718 is also being explored for Parkinson’s Disease [PD] and Alzheimer’s Disease [AD], respectively.
Not only that, but the biotech has noted that it is gearing up to release results from several of these studies in 2024. Being that treatment options are limited for these HD patients, especially as some drugs only target involuntary movements associated with it, this might be a good opportunity to look into. SAGE-718 has potential way beyond HD, it could also eventually be applied to Parkinson’s Disease and Alzheimer’s Disease. There is also a data readout expected in 2024 from the phase 2b KINETIC 2 placebo-controlled study, which is using SAGE-324 for the treatment of patients with essential tremors [ET]. While Sage didn’t receive FDA approval of ZURZUVAE for the treatment of patients with MDD, it at least has other products in its pipeline for investors to look forward to in the coming years.
SAGE-718 For Neuropsychiatric Disorders Can Still Bring Enormous Value
There are still other good opportunities in Sage’s pipeline to look forward to, which is why I believe that value can still possibly be unlocked here. Especially, since it is targeting indications which have huge unmet medical needs.
A highly important program that should be watched closely in the coming year would be the advancement of SAGE-718, which is being advanced for the treatment of patients with Huntington’s Disease. The global Huntington’s Disease market is projected to reach $707.5 million by 2031. From what I see, there are treatments out there to treat chorea [random involuntary movement] of HD and then some symptoms, but nothing that deals with cognitive impairment as a result of it. For instance, INGREZZA was approved by the FDA to treat chorea [involuntary movements] associated with HD.
Other drugs that can’t slow or cure HD are haloperidol, tetrabenazine and amantadine. These drugs are more used for helping to control unusual movements caused by this disorder. The thing is that this disorder also involves cognitive impairment and psychiatric symptoms as well. Thus, it is important to develop a drug that might be capable of helping the cognitive aspect of it instead.
As I noted above, Sage Therapeutics is advancing a total of 3 studies which are using SAGE-718 for the treatment of patients with Huntington’s Disease. The five ongoing studies are known as follows:
- DIMENSION[CHI-201] study – Phase 2 – Cognitive assessment primary endpoint
- SURVEYOR [CIH-202] study – Phase 2 – Cognitive assessment primary endpoint
- PURVIEW [CIH-301] study – Phase 3 – Cognitive assessment primary endpoint.
The reason on why it is important to highlight these particular studies is because there are several of them for HD that are going to be released in 2024. Not only that, but as I stated above, SAGE-718 is also being developed to treat patients with PD and AD as well. Some results of this drug targeting these other patient populations could also be released in 2024. While the HD indication is not a multibillion-dollar market opportunity, the AD and PD indications are. Hopefully, the biotech will be able to expand its presence towards these other neuropsychiatric disorders.
Financials
According to the 10-Q SEC Filing, Sage Therapeutics had cash, cash equivalents and marketable securities of $1.1 billion as of June 30, 2023. It believed that its cash on hand would be enough to fund its operations into 2025. However, as I noted above, it was not able to obtain FDA approval of ZURZUVAE for the treatment of patients with MDD.
Due to this setback, it decided to restructure its organization to help commercialize ZURZUVAE for PPD and to conserve cash. It accomplished this by reducing its workforce by 40% and was able to save approximately $240 million because of this move. With such a restructuring move, it believes that it has been able to extend its cash runway into 2026.
Another positive to consider in terms of the financials would be the launch of ZURZUVAE, which I noted at the beginning above. The reason why is because upon first sale of this drug for the treatment of patients with PPD, Sage could receive a milestone payment of $75 million from Biogen.
Risks To Business
There are several risks that investors should be aware of before investing in Sage Therapeutics. The first risk to consider would be with respect to the use of SAGE-718, which is being advanced for the treatment of patients with Huntington’s Disease. That’s because it is expected that results from several studies could be released for this indication in 2024.
A second risk to consider would then be with respect to SAGE-718 being applied towards the other neuropsychiatric conditions of AD and PD. Even if, say for example, proof of concept of this drug is established in being able to treat patients with HD, there is no assurance that a positive outcome will be achieved for either AD or PD.
A third risk to consider would be with respect to the launch of ZURZUVAE for the treatment of women with PPD, which is expected to take place in Q4 of 2023. That’s because while this is a good market opportunity, which is expected to reach $55.28 billion by 2030, there is no guarantee that it will gain traction upon release.
The fourth and final risk to consider would be with respect to SAGE-324, which is being advanced with Biogen in the phase 2b KINETIC 2 study for the treatment of patients with essential tremor. There is no assurance that proof-of-concept in using this drug for the treatment of these patients will be established.
Conclusion
Sage Therapeutics, Inc. has great potential left in its pipeline, despite the fact that the stock has traded lower on the back of it not obtaining FDA approval of ZURZUVAE for the treatment of patients with MDD. It was at least able to get approval with respect to PPD, which as I laid out above, is expected to be a huge multibillion-dollar market opportunity. Regardless of what happens in terms of sales, I believe that should SAGE-718 prove itself in HD, PD, or AD then these would be other large multibillion-dollar markets for it to focus on. With several of data readouts expected in 2024 for SAGE-718 treating several of these disorders, barring that some/most are positive, such could still provide substantial shareholder value.
Not only that, but there is also an opportunity I laid out before with respect to SAGE-324, which is being advanced for the treatment of patients with essential tremor. This is not a large market opportunity like the other indications noted above, to be valued around $224.7 million in 2028, but could still be a good addition nonetheless.
I think the bottom line is that investors have not placed heavy value on the PPD market as of yet. Not only that, it has not even valued in the potential for SAGE-718 either, which is being used to treat various types of neuropsychiatric disorders either. All it needs with SAGE-718, in my opinion, would be to succeed with at least one of the four indications being sought out for.
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