Biogen, Sage tremor drug trial fails

In 2020, Biogen invested over $1 billion in two experimental drugs from Sage Therapeutics, another biotechnology company based in Cambridge, Massachusetts. Almost four years later, one of these drugs, SAGE-324, has encountered a significant setback. On Wednesday, Biogen and Sage announced that SAGE-324 did not perform well in a mid-stage study involving patients with the most common form of tremor. None of the three doses tested showed substantial improvement over a placebo in changing the severity of the disease after a three-month treatment period. Additionally, there were no notable differences in responses across the different doses.

As a result of these disappointing outcomes, the companies have decided not to further develop SAGE-324 for essential tremor. An ongoing open-label study, where all participants receive the drug, will also be discontinued. Biogen and Sage are now considering the next steps, if any, for other possible uses of the drug.

Analysts had already set low expectations for the study. Brian Abrahams of RBC Capital Markets and William Blair analysts Tim Lugo and Myles Minter both noted that while the results are disappointing, they had always viewed the program as high-risk and did not factor it into their valuation of Sage.

This skepticism partly stems from an earlier, smaller trial where SAGE-324 showed only modest effects in essential tremor. Furthermore, a significant number of patients struggled with side effects; 38% of those in the drug arm discontinued treatment due to issues like dizziness and sleepiness, compared to just 5% in the placebo group.

In the larger study, the most common adverse events among those receiving the treatment included sleepiness, dizziness, fatigue, abnormal sensations, headaches, and balance issues. Most of these events were mild to moderate in intensity.

While Biogen's share price remained stable following the news, Sage's share price dropped by about 20%. Over the past year, Sage has faced several challenges. On the research front, their experimental drug SAGE-718 failed in a mid-stage trial for Parkinson’s disease treatment. Although another study testing SAGE-718 in healthy volunteers and patients with Huntington's disease yielded positive results in June, it did not revive investor enthusiasm. Analysts Lugo and Minter described the data as underwhelming.

On the commercial side, Sage and Biogen are working to boost sales of Zurzuvae, another drug that was part of the 2020 billion-dollar deal. The companies had sought FDA approval for Zurzuvae to treat both postpartum depression and major depressive disorder. However, the FDA only approved it for postpartum depression, limiting its market potential and revenue since major depression is one of the most widespread mental disorders.

Lugo and Minter noted that this limited approval puts Sage in a difficult position commercially. They argue that the failure of SAGE-324 in essential tremor adds more pressure on the company to succeed with SAGE-718 in treating Huntington's and Alzheimer’s diseases.

Jefferies analyst Akash Tewari, who has a "Hold" rating on Sage, expressed uncertainty about the company's future prospects. Given the challenges Sage is facing and its current financial situation, Tewari and his team believe that external business development or a decisive strategy decision from the board may be necessary at this point.