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.

Check out the latest Sage Therapeautics earnings call transcript.

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. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.