Analyst: Sage Therapeutics Holds A Breakthrough In Depression Treatment

Sage Therapeutics Inc SAGE is a buy ahead of the commercial launch of its safer alternatives to existing antidepressants, according to Ladenburg Thalmann.

The Analyst

Ladenburg Thalmann's Michael Higgins initiated coverage of Sage Therapeutics' stock with a Buy rating and $230 price target.

The Thesis

The bullish case for Sage is threefold, Higgins said in the initiation note:

• No approved postpartum depression-specific treatments exist, although there are multiple approved drugs in the market for major depressive disorder. There's an unmet need for better alternatives, as many MDD treatments come with significant safety concerns.
• The absence of safer treatments for depression bodes well for Sage, whose brexanolone therapy has demonstrated a significant decrease in depression severity scores in all trials so far and is being prepared for a potential commercial launch in the first half of 2019, Higgins said. Brexanolone could become the first approved treatment for PPD and would likely establish Sage as a "leader" in neurosteroid depression, even if it ultimately loses market share to second-generation neurosteroids over time, the analyst said. 
• Sage's ongoing Phase 2 trial of its SAGE-217 therapy for moderate-to-severe MDD is showing "equally impressive" results, Higgins said. A once-daily treatment for two weeks resulted in patients noting a "significant" reduction in depression scores, with improvements seen as early as the second day of treatment. SAGE-217 has shown "promise" in Parkinson's disease and insomnia, and new Phase 2s are planned for bipolar depression this year, the analyst said. 

Depression is a "large and underserved market," and both brexanolone and SAGE-217 have shown no significant safety concerns so far, according to Ladenburg Thalmann.

Price Action

Sage Therapeutics shares were trading 0.15 percent higher at the time of publication Wednesday afternoon. 

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