Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Sage Therapeutics Rose as Much as 20.3% Today

By Maxx Chatsko - Updated Jun 12, 2018 at 5:27PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The FDA approved an accelerated path through the clinic for the biopharma's next major drug candidate.

What happened

Shares of Sage Therapeutics (SAGE 2.20%) soared more than 20% today after the company announced that the U.S. Food and Drug Administration will allow an expedited development program for one of its most promising drug candidates.

SAGE-217, being evaluated as a potential treatment for various forms of depression and insomnia, will be allowed to run a single 450-patient study for major depressive disorder to support an application for marketing approval. An ongoing trial in postpartum depression will also now be considered a "pivotal trial," and data generated can support an eventual application for approval.

As of 3:29 p.m. EDT, the stock had settled to a 18.8% gain.

Lines capped with arrows rising up, as drawn on a chalkboard.

Image source: Getty Images.

So what

The FDA has been changing things up since the start of 2017 in an effort to get more drugs through clinical trials, faster, which it thinks will help to increase competition in the marketplace and maybe even help to lower drug prices. This is the latest embodiment of the agency's new strategy.

As far as Sage Therapeutics is concerned, the decision will save a lot of time and money for its efforts to develop SAGE-217 and (hopefully) bring it to market. The drug is one of three in the pipeline that target GABA receptors in the brain, a completely new approach to treating depression disorders. In fact, they represent the first new mechanism for treating depression since selective serotonin reuptake inhibitors (SSRIs) hit the market decades ago.

Investors are excited about the parallels to the company's lead drug candidate, brexanalone IV. That GABA drug received the FDA's coveted Breakthrough Therapy Designation, which accelerated its development as a potential treatment for postpartum depression. Sage Therapeutics submitted a new drug application (NDA) -- the company's first -- for the therapy in late April. SAGE-217 appears to be following in those footsteps, as it also received Breakthrough Therapy Designation and now has an expedited path to market for multiple indications.

Now what

Sage Therapeutics will initiate a pivotal phase 3, placebo-controlled trial evaluating SAGE-217 as a potential treatment for major depressive disorder in the second half of 2018. Meanwhile, the FDA told the company that a similar trial currently under way in postpartum depression will now be considered as a "pivotal trial." Results for the ongoing trial are expected in the final three months of 2018, which could provide ample evidence of what's to come. While the trials have to be completed first, investors are excited that the timeline for approval just got moved up quite a bit.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sage Therapeutics, Inc. Stock Quote
Sage Therapeutics, Inc.
$32.53 (2.20%) $0.70

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/22/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.