Asclepia Capital
April 08, 2016

Sage Therapeutics, Inc. (SAGE): Further Clarifying The Misconceptions From The Short Report & Rebuttal - A Scientific ...

$SAGE

In reaction to our scientific response, the authors of the March 23rd short report, Kerrisdale Capital, offered a rebuttal of their own claiming to debunk our scientific analysis of Sage’s lead program. Once again, the short report and its rebuttal have failed to present a balanced analysis of SAGE-547 thereby perpetuating misconceptions that deserve further clarification. Our sole objective from the beginning has been to provide a scientific assessment of the lead program in order to allow investors to make a well-informed decision when considering an investment in Sage Therapeutics.

As such, we firmly stand by all of our original statements on the basic science, pharmacological, biophysical and biochemical properties of GABAA receptors and SAGE-547.

It is never wise to dismiss or alter established basic principles of pharmacology, biophysics and biochemistry to fit a thesis; rather a thesis should be constructed around those basic principles. This response balances the scales of an otherwise skewed analysis perpetuated in the short rebuttal and clarifies the salient misconceptions.

  • According to basic scientific principles, SAGE-547 represents a class of drug with a unique mechanism of action. The physical interactions between SAGE-547 and the GABAA receptor are distinguished from other pharmacological agents making the mechanism by which it modulates GABAA receptor activity unique
  • Experts in the field support the notion that halting seizures is just as imperative as treating the underlying disease. SAGE-547 is intended to reduce ICU stay and reduce morbidity associated with seizures, not to treat underlying disease
  • SAGE-547 was not added on top of an average of 12.9 anti-seizure agents
  • The results of the Phase 1/2 study underscore SAGE-547’s effects supporting a greater than 65% likelihood of Phase 3 success
  • The evolving definition of SRSE makes it difficult to accurately estimate the full market potential. Nonetheless, if approved, SAGE-547 will be the first drug to treat SRSE patients thereby altering the treatment paradigm
  •  We have yet to find investors who believed SAGE-547 could “rewire axons”
  • There is nothing “puzzling” or “misplaced” in a properly contextualizing study used to challenge the credibility of SAGE-547; it’s still not translatable to SRSE

From the onset, we aimed to clarify the misconceptions presented by Kerrisdale based upon the unequivocal basic principles of science. This scientific response redux has herein offered a more complete and balanced assessment of SAGE-547 that underscores its virtues as a potentially treatment paradigm-changing therapy.

Once again, while all Phase 3 studies inherently involve a significant level of risk, assessing the likelihood of success of STATUS based on the inappropriate scientific analysis from the short report & rebuttal poses a daring and unwise proposition. Rather, the scientific virtues of SAGE-547 described in both of our reports that clarify the misconceptions perpetuated by Kerrisdale suggest a favorable chance of success (> 65%) when the Phase 3 reports topline data in the second half of the year.


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