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Satsuma: Launch Of 2nd Pivotal Trial For Migraine Med Ought To Cheer Share Price

Mar. 07, 2021 1:45 PM ETSatsuma Pharmaceuticals, Inc. (STSA)4 Comments


  • Satsuma's lead and only candidate STS101, targeting treatment of acute migraines, failed a pivotal trial in September last year.
  • After a long silence, management has announced that it will launch a 2nd pivotal trial sometime in 2022, and having taken learnings from the 1st trial is confident of success.
  • STS101 is a nasal spray formulation of DHE, which is efficacious but difficult to administer. Approved DHE nasal spray Migranal makes ~$55m of sales per annum, but faces generic competition.
  • STS101 may compare favourably to Migranal and current standards of care - CGRP inhibitors - on efficacy, if approved, but trial results will have to be strong.
  • Satsuma's share price collapsed from $24 to $4 after its first pivotal trial failed and currently trades at $6.5. Momentum may take it past $10 in the coming months. Long-term, an approval could see shares challenge previous highs.
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Investment Thesis

I posted my last note on Satsuma Pharmaceuticals (NASDAQ:STSA) last September, shortly after the company's lead and only candidate STS101 - a nasal powder formulation of dihydroergotamine mesylate ("DHE") indicated for the treatment of acute migraines - had failed to meet its co-primary endpoints in a 1,200 patient, pivotal Phase 3 trial.

It could be described as a narrow miss - STS101 demonstrated outperformance against placebo in both of the co-primary endpoints of freedom from pain and most bothersome symptom ("MBS"), but the results were not found to be statistically significant, and Satsuma's share price collapsed from a price of $24 to $4.5 overnight.

Since then Satsuma's share price has trodden water, and the company had remained silent on possible next steps - until last week, when management held a conference call to announce firstly, that it had raised $80m of fresh funding via a private investment in public equity ("PIPE") financing, and secondly that it intends to initiate a fresh Phase 3 trial of STS101 sometime in H121, with an expected readout in the 2nd half of 2022.

Since the beginning of the year, Satsuma's share price has crept up from $4.5, to a high of $6.8 in early February. Last week's announcements have failed to significantly lift the stock price - possibly due to the dilution caused by the share placement - and possibly because of the lengthy wait for results of the second pivotal trial.

Even so, there are reasons to believe that Satsuma can be successful second time around. Management has had time to review the results from the first trial in detail, and have released a 42 slide presentation detailing what they believe went wrong.

Satsuma has re-developed their proprietary nasal delivery system to make it easier to use, is considering using a higher

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This article was written by

Edmund Ingham profile picture

Edmund Ingham is a biotech consultant. He has been covering biotech, healthcare, and pharma for over 5 years, and has put together detailed reports of over 1,000 companies. He leads the investing group Haggerston BioHealth.

The group is for both novice and experienced biotech investors. It provides catalysts to look out for and buy and sell ratings. It also provides product sales and forecasts for all the Big Pharmas, forecasting, integrated financial statements, discounted cash flow analysis and market by market analysis. Learn more.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in STSA over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (4)

Now that IMPL drug is approved what is your view on satsuma or IMPL.
charly333 profile picture
If I understood that right it's only the method of application that is different to a drug that is sold in the market since over 20 years. Chances to success seem slim.
Joelg5 profile picture
Good article. If COVID vaccines can be approved for the entire population with an experimental use permit (EUP), a migraine headache remedy with few adverse effects should have something similar for the public good. FDA panels are overly pedantic; try a search on "Cult of Statistical Significance." BMJ articles have argued for more emphasis on clinical significance and patient significance. If you get into the literature on the subject, you will learn that clinical and patient significance differ from statistical significance. Drugs can produce statistical significance with large enough samples, even when they are a waste of money and little use to patients.

I bought a small number of STSA shares after the price collapse, mainly to watch. I agree with author, that upward movement is likely. Company will likely eventually get it right in the statistical tests, though at great cost in time and extra years. A product like this with low-risk and high potential benefits to sufferers should have the same EUP opportunities as the COVID vaccines.
Botox is not off label for Chronic Migraine prophylaxis refractory to conservative treatments, it has an FDA approval provided boxes are checked.
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