What happened

After sliding 41.8% in 2018, shares of Sage Therapeutics (SAGE 2.26%) jumped nearly 49% last month, according to data from S&P Global Market Intelligence. The sudden leap came after the company reported impressive results for SAGE-217 in a phase 3 trial studying the drug candidate as a potential treatment for postpartum depression.

Forty-five percent of patients taking SAGE-217 achieved remission after two weeks, compared with just 23% for those taking a placebo. The results held up at the four-week follow-up. The data for SAGE-217 should allow the drug candidate to receive marketing approval in the United States, especially considering it had previously received breakthrough therapy designation from the U.S. Food and Drug Administration. 

Two drawings of brains represented by colorful blocks, with one jumbled and the other orderly.

Image source: Getty Images.

So what

Wall Street is excited over the potential for SAGE-217, which is essentially the company's next-generation version of brexanolone. An intravenous formulation of brexanolone cleared two phase 3 trials for postpartum depression in 2017 and could win FDA approval soon. That was expected to occur in November, but an unexpected three-month delay pushed the date for a regulatory decision to March 19. 

That's creating somewhat of an awkward situation for Sage Therapeutics, which could receive regulatory approval for both intravenous brexanolone and its assumed replacement, oral SAGE-217, in the same calendar year. Investors certainly don't mind. More important, SAGE-217 is likely to be the company's future, as it's also being evaluated as a treatment for major depressive disorder, insomnia, and bipolar depression. 

Now what

The focus of Sage Therapeutics shareholders will shift from clinical development to commercialization in 2019. The company will need to earn marketing approval, ramp up marketing activity, and hit the ground running to deliver its novel depression treatment(s) into the hands of the most individuals. Wall Street will be closely watching the pace of progress as it eyes blockbuster potential for SAGE-217.

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