Emerging epilepsy treatment landscape: KOLs see substantial unmet need and constructive prospects for novel epilepsy therapies

Overview

Goldman Sachs summarizes a call with two epilepsy specialists on focal epilepsy and developmental and epileptic encephalopathies. The KOL discussion points to persistent unmet need and interest in differentiated mechanisms, while emphasizing that pivotal efficacy, safety, tolerability and access will determine commercial uptake.

Core views

The KOLs described a substantial unmet need in focal epilepsy: only approximately 25–30% of patients achieve seizure freedom despite numerous approved therapies, and roughly one-third remain refractory after multiple treatments. This backdrop supports physician interest in therapies with differentiated mechanisms, particularly Kv7 channel modulators and selective AMPA modulation. However, the physicians stressed that real-world tolerability and neuropsychiatric adverse events will ultimately determine use in refractory patients. For Rapport Therapeutics, the KOLs were encouraged by RAP-219's early efficacy and TARPy8-selective AMPA mechanism, which may selectively target the cerebellum while potentially sparing cortical and limbic structures associated with neuropsychiatric effects. They nevertheless cited historical caution toward AMPA agents such as Fycompa because of anger, irritability, aggression and agitation. Larger randomized Phase 3 validation is needed. Ahead of October Phase 2 bipolar-mania data, safety and tolerability are an investor focus because psychiatric adverse events could be read through to the focal-onset seizure program, although the KOLs saw limited direct read-through given the distinct conditions. They also expect possible translation from focal-onset seizures to primary generalized tonic-clonic seizures, for which Phase 3 initiation is expected in 1H27. For Xenon, the physicians viewed next-generation Kv7/M-channel approaches from XENE and BHVN favorably because the mechanism may preferentially suppress pathological neuronal firing rather than being ubiquitously expressed throughout the brain. They cited approximately 50% seizure reduction and a dose response for azetukalner as comparing well with existing antiseizure-medication studies. One physician initially envisaged use mainly in the third-line-or-later setting and estimated first-year use in roughly half of refractory patients; the other anticipated interest from one-half to two-thirds of patients. Both emphasized that psychiatric or behavioral effects and real-world tolerability remain important determinants of uptake. For Jazz, the KOLs characterized Epidiolex as a meaningful contributor to care. One physician estimated that one-third to one-half of patients have benefited through seizure reduction, tolerability and potential mood or behavioral calming effects, particularly after other medicines have failed. A solid oral capsule could improve adoption for patients challenged by the volume or taste of the sesame-oil, strawberry-flavored liquid, and one KOL expected the capsule to become the preferred formulation. For Praxis, physicians viewed relutrigine's state-dependent sodium-channel mechanism and emerging profile constructively. They considered the EMBOLD data in SCN2A- and SCN8A-DEEs encouraging and expect EMERALD to test whether efficacy can extend to broader DEE populations. Adoption will depend on preserving favorable tolerability in the larger study; the KOLs indicated that a more modest placebo-adjusted seizure reduction than in EMBOLD could still be acceptable if tolerability remains strong. They saw the state-dependent mechanism as potentially advantageous from a sodium-channel-toxicity perspective and noted that patients who have exhausted existing options are receptive to new mechanisms. For Stoke, the KOLs were broadly enthusiastic about zorevunersen and antisense-oligonucleotide therapies that target underlying genetic biology rather than only suppressing seizures. In Dravet syndrome, they saw potential value beyond seizure reduction through disease modification and improvement in developmental, cognitive, behavioral and functional outcomes. Intrathecal administration was viewed as acceptable given disease severity and unmet need, though the physicians would prefer alternative delivery routes for future therapies. The report also presents valuation and explicit risks for the covered companies. JAZZ's $337 target is based on a 100% DCF using a 9% WACC and 1% terminal growth rate. PRAX's $575 target uses a 70% DCF weighting and 30% theoretical M&A value; RAPP's $62 target uses a 70%/30% DCF/M&A blend; STOK's $44 target uses an 85%/15% DCF/M&A blend; and XENE's $75 target uses an 85%/15% DCF/M&A blend. Across the names, the report highlights risks from adverse clinical or regulatory outcomes, commercial uptake and reimbursement, competition, and company-specific execution challenges.

Analysis framework

The report uses a KOL call to assess unmet need, mechanism differentiation, likely physician adoption and tolerability requirements across focal epilepsy and DEEs. It then links those qualitative views to the companies' development programs, upcoming trials and target-price valuation frameworks.

Methodology notes

• Valuation methodsDCF (Discounted Cash Flow)

  Discounted cash flow valuation

  Goldman Sachs uses DCF values as all or part of the target-price frameworks for JAZZ, PRAX, RAPP, STOK and XENE, discounting projected future cash flows using company-specific WACC and terminal-growth assumptions.

• Valuation methodsPS valuation

  Theoretical M&A valuation based on forecast sales multiples

  For PRAX, RAPP, STOK and XENE, the report blends DCF value with a theoretical acquisition value derived using 11x estimated future sales.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Jazz Pharmaceuticals (JAZZ)

  Covered company with Epidiolex exposure in DEE care.

  Strengths

  KOLs cited seizure, tolerability and possible behavioral benefits; an oral capsule may improve convenience and adoption.

  Comparison

  The capsule may be preferred to the current oral liquid for patients affected by volume or taste.

  Risks

  Commercial concentration, access constraints, adverse events, regulatory setbacks and competition are cited risks.

• Praxis Precision Medicines (PRAX)

  Covered company developing relutrigine for DEEs.

  Strengths

  KOLs were constructive on its state-dependent sodium-channel mechanism and possible translation into broader DEEs.

  Weaknesses

  Adoption depends on efficacy and a favorable tolerability profile in EMERALD.

  Comparison

  A lower placebo-adjusted seizure reduction than EMBOLD could be acceptable if tolerability remains favorable.

  Risks

  Regulatory, commercial and clinical risks, including EMERALD failure in broader DEEs.

• Rapport Therapeutics (RAPP)

  Covered company developing RAP-219 for focal-onset seizures.

  Strengths

  Selective TARPy8 AMPA modulation and early efficacy were viewed positively.

  Weaknesses

  Larger randomized Phase 3 validation is required.

  Comparison

  The selective mechanism may reduce neuropsychiatric risk relative to historical AMPA-targeted therapies.

  Risks

  Clinical, adoption, reimbursement, regulatory, competitive, intellectual-property and financing risks are cited.

• Stoke Therapeutics (STOK)

  Covered company developing zorevunersen for Dravet syndrome.

  Strengths

  KOLs saw potential for disease modification and benefits beyond seizure reduction.

  Weaknesses

  Intrathecal delivery is acceptable but future alternatives would be preferred.

  Comparison

  The approach targets underlying biology rather than solely suppressing seizures.

  Risks

  EMPEROR trial failure, payer resistance to pricing or disease-modification claims, and patient-access challenges are cited.

• Xenon Pharmaceuticals (XENE)

  Covered company developing azetukalner, a Kv7 modulator.

  Strengths

  KOLs cited approximately 50% seizure reduction, dose response and a favorable mechanistic rationale for refractory patients.

  Weaknesses

  Initial use may be focused on later-line patients, with psychiatric and behavioral effects monitored.

  Comparison

  Physicians viewed Kv7 approaches favorably relative to historical GABAergic or AMPA-based approaches.

  Risks

  Clinical-data translation, business-development execution and commercialization-infrastructure risks are cited.

Key data

• Focal epilepsy seizure freedom~25–30%Share of patients achieving seizure freedom despite numerous approved therapies.
• Refractory focal-epilepsy patients~one-thirdPatients remaining refractory despite multiple therapies.
• XENE seizure reduction~50%Reported with a dose response in studies, according to the KOL discussion.
• JAZZ Epidiolex patient benefitone-third to one-halfOne KOL's estimate of patients benefiting from seizure reduction and tolerability.
• JAZZ 12-month target price$337100% DCF; 9% WACC and 1% terminal growth rate.
• PRAX 12-month target price$57570% DCF value of $554 and 30% theoretical M&A value of $625.
• RAPP 12-month target price$6270% DCF value of $54 and 30% theoretical M&A value of $81.
• STOK 12-month target price$4485% DCF value of $43 and 15% theoretical M&A value of $47.
• XENE 12-month target price$7585% DCF intrinsic value of $71 and 15% theoretical M&A value of $95.

Impact & implications

The report indicates that differentiated mechanisms may find meaningful demand in refractory focal epilepsy and DEEs, but commercial potential depends on pivotal-study validation, safety and tolerability profiles, reimbursement and practical delivery considerations.

Risks

• Clinical efficacy or tolerability may not replicate in larger pivotal studies.
• Neuropsychiatric adverse events could constrain uptake of AMPA-targeted and Kv7 therapies.
• Regulatory delays, unfavorable risk-benefit assessments or restrictive labels could reduce value.
• Reimbursement, payer friction and slower-than-expected adoption could limit commercial opportunity.
• Competitive entry and execution challenges remain risks for covered companies.

What to watch

• RAP-219 Phase 2 bipolar-mania data in October, particularly safety and tolerability.
• RAP-219 Phase 3 validation in focal-onset seizures and planned Phase 3 initiation in primary generalized tonic-clonic seizures in 1H27.
• PRAX's Phase 3 EMERALD study, including efficacy in broader DEEs and tolerability consistency.
• STOK's Phase 3 EMPEROR results, including seizure endpoints and secondary outcomes.
• Real-world uptake, psychiatric adverse events and access conditions for XENE's azetukalner.
• Availability and patient adoption of the Epidiolex oral capsule.