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Why is Sage Therapeutics (SAGE) Stock Plunging Today?

On Wednesday, shares of biopharmaceutical company Sage Therapeutics Inc SAGE are falling, down over 15% to $28.20 in midday trading after Kerrisdale Capital issued an 18-page report saying the company's touted experimental product SAGE-547, a drug for super-refractory status epilepticus (SRSE), is likely to fail its current late-stage trial or become a commercial failure.

The firm believes that SAGE-547 is similar to drugs already on the market to treat SRSE, a rare but deadly condition that causes persistent seizures that fail to respond to common therapies, like benzodiazepines, anti-epileptics, and anesthetics.

Kerrisdale also believes that Sage has overestimated the drug's target market by maybe a factor of 6, suggesting SAGE-547, if approved, would only be a minor drug from a revenue stance.

They go one to argue that Sage's stock price should drop about 70% from current levels, since the company's remaining clinical assets are mostly in early development stages. Kerrisdale has basically valued Sage at just over its last-stated cash position of approximately $186 million.

Sage is expected to release the results of SAGE-547's late-stage trial in the second half of 2016.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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