What happened

Shares of Sage Therapeutics (NASDAQ:SAGE) skyrocketed 43.6% as of 11:20 a.m. EST on Monday. The biotech announced before the market opened that experimental drug SAGE-217 met the primary and secondary endpoints in a phase 3 clinical study targeting the treatment of postpartum depression. 

Patients treated with SAGE-217 experienced a statistically significant improvement based on a standard scoring system compared with a placebo after two weeks of treatment. This improvement was maintained through the end of a four-week follow-up as well. In addition, 45% of patients achieved remission for two weeks, compared with 23% of patients on placebo.

Scientist holding test tube with biotech icons in foreground

Image source: Getty Images.

So what

The U.S. Food and Drug Administration (FDA) told Sage in June 2018 that data from the phase 3 postpartum depression study for SAGE-217 could be used to support an application for approval. With overwhelmingly positive clinical results from that study in hand, Sage now appears to be in a great position to file for -- and likely win -- FDA approval for its experimental drug.

These results for SAGE-217 in postpartum depression also increased investors' anticipation on a couple of other fronts. Sage has already filed for FDA approval for lead candidate Zulresso in treating postpartum depression. The FDA is expected to make a decision on approval of the drug by March 19, 2019. 

In addition, Sage is evaluating SAGE-217 in another phase 3 clinical study targeting the treatment of major depressive disorder. With success for the drug in the late-stage study for postpartum depression, hopes are running higher than ever that Sage will be on track to pick up another approved indication in the not-too-distant future.

Now what

This should be a busy year for Sage Therapeutics. The most important development for the company will be the FDA decision for Zulresso. If the regulatory agency gives a thumbs-up for the drug, Sage will conduct its first commercial launch.

The company also will no doubt work frantically to prepare its regulatory filing for SAGE-217 in treating postpartum depression. And the study evaluating the drug in treating major depressive disorder is scheduled to wrap up in late 2019.  

Sage could very well have a megablockbuster franchise on its hands with Zulresso and SAGE-217 in the future. Despite the huge jump today, this stock still looks like a good pick for aggressive investors. 

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.