NEW YORK, March 23, 2016 /PRNewswire/ -- Kerrisdale Capital, a private investment manager, has published a report explaining its short position in Sage Therapeutics, a $1 billion US-based pharmaceutical company whose market value stems almost entirely from an experimental drug for super-refractory status epilepticus (SRSE). Kerrisdale believes that Sage is worth 70% less than its current stock price since its main drug, SAGE-547, will likely fail to outperform placebo and has minimal commercial potential.
The full report can be found at http://kerr.co/sage.
Kerrisdale has a short position in Sage and stands to benefit if the share price falls.
Conference Call Schedule
Sahm Adrangi, Chief Investment Officer, will host a conference call on Wednesday, March 23, 2016 at 4:00pm EDT to discuss the company's report.
To participate in the conference call, dial (888) 390-3983 (US and Canada) or (862) 255-5354 (international) and reference the Kerrisdale Capital conference call. The call can also be accessed at http://kerr.co/sage-mar23.
A replay of the call will be available following the call at http://kerr.co/sage-mar23.
SAGE-547 Is Just a Band-Aid
While Sage bulls sometimes suggest that SAGE-547 can cure SRSE, a condition in which patients have long or recurrent seizures and don't respond to conventional treatments, the drug is really only a temporary fix. It does absolutely nothing to address the many wide-ranging causes of SRSE, which run the gamut from infection to cancer to head trauma. Suppressing brain activity can pause seizures and give patients time to heal, but existing drugs can already accomplish this; Sage's drug has little to add. Sage management argues that its drug is special because it affects a specific type of neurotransmitter receptor in the brain, but Kerrisdale's analysis of the scientific literature reveals that many other drugs do the same thing. SAGE-547 is nothing special.
SAGE-547's Past Results Are Overstated
Kerrisdale argues that data from SAGE-547's small, uncontrolled Phase 1/2 trial, the main source of the market's optimism about the drug, are less impressive than investors appreciate. Sage's stated 77% response rate excludes certain patients who received the drug but didn't improve and includes patients whose status epilepticus later recurred after an initial reprieve. Moreover, Kerrisdale's review of the available evidence shows that at least two thirds of patients with advanced status epilepticus recover under existing therapies. Against that backdrop, SAGE-547 does not appear to confer a meaningful incremental benefit.
SAGE-547's Market Opportunity May Be Much Smaller Than Sage Claims
Kerrisdale believes that even if SAGE-547 manages to outperform placebo in Phase 3, its commercial prospects are dim. While Sage asserts that there are 25,000 cases per year of SRSE in the US, Kerrisdale uses published research to arrive at a dramatically lower estimate: just 4,000 cases.
About Kerrisdale Capital
Kerrisdale Capital Management, LLC, is a fundamentally-oriented investment manager that focuses on long-term value investments and event-driven special situations.
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SOURCE Kerrisdale Capital Management, LLC