Correction: An earlier version of this column referred to a pill form of the antibiotic brilacidin instead of an injection. The column has been updated.

In this week's Biotech Stock Mailbag: A hedge fund view into Sage Therapeutics (SAGE - Get Report) , more red flags raised over Cellceutix (CTIX) and a warning against Alzheimer's optimism.

Edward A. asks, "Adam, I like when you ask your investor sources about predicting the outcome of clinical trials. Can you do that for Sage Therapeutics, please?"

The event Ed asks about is the phase III study of SAGE-547 in patients with a rare form of severe epilepsy known as super-refractory status epilepticus (SSRE.)

Sage is telling investors the SSRE study will read out in the first half of the year. The company refuses to offer more specific timing, which has been a source of frustration for investors. With March almost closed out, however, the SSRE study is now essentially a second quarter event.

I polled investor sources, per Ed's request. Six investors (all healthcare hedge funds) are bearish on the outcome of the '547 SSRE study. Five of the six investors gave the study a 30% chance for success. One investor was incrementally more bearish at 20%.

Six investors (again, hedge funds) were bullish on the '547 SSRE study. All gave similar odds in the 60-70% range.

Two more investors polled were noncommittal, calling the trial outcome a tossup.

6-6-2 doesn't offer much help. Sorry.

SSRE is a terrible condition. The seizures are so severe and resistant to treatment that patients must be anesthetized into a coma. With the phase III placebo-controlled study, Sage hopes to demonstrate '547 can wean SSRE patients out of coma without further seizures for a minimum of 24 hours.

In two prior, smaller studies, '547 weaned SSRE patients out of comas successfully 70% of the time. What was the corresponding placebo rate? Sadly, Sage's prior studies lacked a control arm. The phase III study has a placebo control arm, but trying to nail down what a placebo or natural history success rate might be is very difficult because patients fall into SSRE for many different reasons. Leerink, the healthcare investment bank, pegs the natural history success rate in the range of 33-38%. If that's true and '547 can replicate the 70% success rate from the prior studies, the phase III should be a win.

What my small and admittedly unscientific survey shows, however, is a lack of confidence and uncertainty in modeling out the real-world response rate in SSRE patients. The outcome of the Sage phase III study is a tough call to make.

"I hate going into phase IIIs with no randomized controlled trial data and an unclear natural history," says one of the fence-sitting investors I polled. "I mean, that screams fail, but Sage has done a good job marketing. Let's just say I'd rather invest post data, even at a higher price."

On a related note...

JLT76 asks, "On Sage, do you think the stock drops far if the [SSRE] study fails? I assume the stock will rocket if the results are good, but what is the downside?"

I can't give you a number. Of course, Sage's stock price, now trading at $65 (up 27% in 2017, 111% higher over the past year) will fall if the SSRE study fails. I also believe there are a significant number of investors out there sitting on the Sage sidelines who will be buyers on a '547 SSRE study failure.

The data from small studies of '547 and its follow-on SAGE-217 in postpartum depression and major depressive disorder are compelling enough to cushion the blow of an SSRE setback. Sage is also running another small, proof-of-concept study of '217 in Parkinson's disease. A readout from this study is also expected in the second quarter. 

Westonkdc writes, "Hi Adam, I'm invested in Cellceutix and see that you follow them. Quick question about their Brilacidin UPS study. Though it's only a small a proof-of-concept trial (18 patients), don't the results, to date, seem to suggest some strong activity in treating this limited form of ulcerative colitis? (50% of patients experienced complete remission and the remaining 50% a partial response.) And isn't it all the more impressive given that Brilacidin is being administered by enema, with a foam/pill formulation still in the works?"

Forty-two consecutive days of enemas. That's how brilacidin is administered to patients. That's a lot of enemas. I just wanted to make that point before I answer your question.

Cellceutix serves up a skewed view of brilacidin that, unsurprisingly, makes the experimental antibiotic look better than it is.

A 50% complete remission rate observed in 12 patients with mild-to-moderate ulcerative proctitis (UP) and ulcerative proctosigmoiditis (UPS) is an uninterpretable data point without a placebo comparison arm.

Knowing the baseline disease characteristics and prior/current treatment histories of the 12 enrolled patients is also necessary to interpret the Brilacidin data, but Cellceutix is withholding that information. Cellceutix CEO Leo Ehlrich did not provide the information when I asked for it.

Uceris is the brand name of the locally acting steroid budesonide approved to treat mild-to-moderate UP and UPS, marketed by the Salix division of Valeant Pharmaceuticals (VRX) . In two, large phase III studies of 546 UP/UPS patients, the rectal foam formulation of Uceris demonstrated complete remission rates of 38% and 44% compared to placebo complete remission rates of 26% and 22%.

The 12 UP/UPS patients enrolled in Cellceutix's brilacidin study could be treated with Uceris. There is no credible evidence to suggest brilacidin is any better than Uceris, which is why Cellceutix CEO Leo Ehrlich doesn't mention Uceris when he promotes brilacidin to investors.

Instead, Ehrlich likes to compare brilacidin favorably to anti-TNF biologics like Abbvie's Humira. In doing so, Ehrlich is assuming investors are dumb and don't know how UP/UPS or any form of ulcerative colitis is treated. Humira is a systemic (injected) therapy approved for patients with moderate to severe ulcerative colitis, including UP/UPS patients who do not respond to localized therapies like Uceris.

The brilacidin-Humira comparison made by Ehrlich is erroneous.

Another brilacidin red flag to consider:

Cellceutix has given up developing an injectable formulation of brilacidin in bacterial skin infections. Ehrlich says a planned (and heavily publicized) phase III study was put on the shelf because the company lacks money.

I hear different. A consultant who worked with brilacidin when it was owned by Polymedix tells me safety issues -- rapid spikes in systolic blood pressure spikes and numbness in patients' extremities -- killed any chance the oral antibiotic could be developed successfully for bacterial skin infections. Polymedix filed for bankruptcy, which is how Cellceutix purchased brilacidin.

Cellceutix seemed eager to start a phase III study of brilacidin in skin infection until last fall when the company received comments about the proposed study from the FDA. Without disclosing exactly what concerned FDA about the skin infection study, Cellceutix abruptly changed course to focus instead on diseases where localized administration of brilacidin -- oral, rectal -- could be implemented. Brilacidin is an antibiotic, making bacterial skin infection a logical development path. Yet, Cellceutix seems determined to keeps its antibiotic out of the bloodstream. That's odd.

Michael A. "Hi Adam, with the Eli Lilly (LLY - Get Report) solanezumab flop now four months behind us and several readouts for different molecules targeting other Abeta intervention points expected later this year. What is your expectation in the field going forward?"

Bleak. Be wary of anyone offering rosy assessments of effective Alzheimer's drugs. Unicorns are easier to find. Lilly's sola failure last December was followed in February by the forced halt to Merck's (MRK - Get Report) verubecestat phase III study due to futility at an interim analysis.

Coming up in the third quarter, Axovant Sciences (AXON) will announce results from its phase III study of intepiridine. Risky? Absolutely, given the spotty track record for 5-HT6 antagonists in Alzheimer's.

Beyond Axovant, the Alzheimer's field gets far more murky. Companies like Neurotrope (NTRP) and Anavex Life Sciences (AVXL) are best known for making unsubstantiated drug claims based on fringe science. A phase II study of Neurotrope's bryostatin in patients with moderate to severe Alzheimer's reads out in April. I wrote about bryostatin here.

Anavex uses rehashed, recycled data on Anavex 2-73 to help sell stock to a vulture finance fund, which in turn offloads shares to retail investors. The company says a larger, scientifically rigorous study of the drug is in the planning stages, but actual execution seems to be kicked down the road on a regular basis.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.