SAGE Therapeutics Inc's (NASDAQ:SAGE) SAGE-547 may show a durable effect in Phase 3, as measured by secondary endpoints, reinforcing efficacy in super refractory status epilepticus (SRSE). Importantly, Canaccord does not believe investors have focused on these secondary endpoints to date. Sage will measure time to re-institution of any third-line agent after meeting the primary endpoint, among other secondary endpoints. Canaccord believes the 21-day follow-up period after primary endpoint measure could help bolster the case for SAGE-547's efficacy, assuming the primary endpoint is met (Prior analysis of Phase 3 design).
Importantly, super refractory status epilepticus can be caused by multiple underlying conditions, meaning time to relapse could be mixed. Canaccord believes that showing a benefit for time to relapse could therefore be even more meaningful. Also, Canaccord reminds investors that SAGE-547 is being tested as an acute treatment, and is designed to halt SRSE and bring patients out of a coma, and is not designed as an ongoing therapy.
Canaccord's prior analysis suggests upside to $110 on positive Phase 3 data for SAGE-547 in SRSE, and downside to $32 / $23 depending on outcome details. Canaccord sees a reasonable chance of success, but note uncertainty surrounding the efficacy rate for the control arm, and a moderate ~24-27% delta needed to reach p=0.05. Importantly, a low rate of efficacy for the control would increase commercial viability, because hospitals would likely see currently used generic drugs as poorly efficacious vs SAGE-547.
Canaccord maintain its BUY rating and $110 price target ahead of Phase 3 top-line Phase 3 data for SAGE-547 in SRSE, and see a reasonable chance of success. A clear win on secondary endpoints, which have received less investor focus, could push shares higher than expected assuming the primary endpoint is met and the rate of efficacy for the control arm is low.