What happened

Shares of Sage Therapeutics (NASDAQ:SAGE), a clinical-stage biotech, dropped by 13.69% today, after the company reported that its experimental treatment for super-refractory status epilepticus (SRSE) missed its primary endpoint in a late-stage study. Super-refractory epilepticus is a life-threatening condition defined by severe seizures that continue, or reoccur, 24 hours after anesthetic therapy. Sage's experimental SRSE drug candidate, brexanolone (SAGE-547), was reportedly unable to outperform placebo in terms of reducing the rate of seizures when added to standard of care.

A man sits with his face down against the tabletop in response to a falling stock chart.

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So what 

As an FDA-approved treatment for SRSE, brexanolone was projected to generate somewhere between $33 million and $98 million in sales for Sage in 2018. Equally as important, though, the drug's lead indication was supposed to usher the company into the commercial-stage of its life cycle, thereby lowering its future cash-burn rate. With this pivotal stage miss, however, Sage and its shareholders will now have to pin their hopes on the drug's late-stage postpartum depression data that's due out later this year.    

Now what

The silver lining, if there is one, is that Sage isn't all that far away from reaching brexanolone's next major clinical milestone in postpartum depression, and the company has a fairly solid cash position of $285 million at last count. So while a significant chunk of the drug's value proposition did just get wiped off the table, Sage does have other value drivers in play that could send its shares higher in the coming months. In other words, this double-digit sell-off may turn out to be a compelling buying opportunity if -- and it's always a big "if" when it comes to clinical trials -- brexanolone can hit the mark in postpartum depression in the back half of 2017. 

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