Biotech investors better buckle up for a wild ride this month. Some of the industry's biggest players are waiting for clinical trial results and decisions from the FDA that could send their stock prices rocketing higher overnight or stomp them into the dirt.

Here's why shares of Biogen (NASDAQ:BIIB), Vertex Pharmaceuticals (NASDAQ:VRTX), and Sage Therapeutics (NASDAQ:SAGE) will be extra jumpy this month. 

Scientist looking at a blue well plate.

Image source: Getty Images.

1. Biogen

This biotech is awaiting an extremely controversial decision the FDA has to make regarding its potential new Alzheimer's drug. Factions within the agency are eager to approve aducanumab for the treatment of early stage Alzheimer's disease despite a troubling lack of evidence it can keep patients from losing their minds.

It's been more than two years since the FDA's last commissioner, Scott Gottleib stepped down and the agency is still flying without an official pilot. The acting commissioner, Janet Woodcock is credited with pushing forward the FDA's most controversial new drug approval decision to date.

It's hard to tell which direction the FDA will take, but it's clear that Biogen needs a new growth driver. In the first quarter, product sales slid 24% year over year as the bottom fell out from under the company's aging multiple sclerosis franchise. Sales of spinal muscular atrophy (SMA) treatment, Spinraza also slid in response to recently approved alternatives like Zolgensma and Evrysdi.

Generic competition for Tecfidera that began last fall isn't going to subside and new treatment options for SMA aren't going away either. If the agency doesn't approve aducanumab, investors can expect Biogen's performance and stock price to deteriorate much further.

2. Vertex Pharmaceuticals

Before Vertex Pharmaceuticals launched its first cystic fibrosis (CF) drug in 2012, inheriting the disorder was considered a death sentence. Now it's a treatable condition for around 90% of people who inherit one of more than 1,700 known mutations to the CFTR gene that can slowly make it impossible to breathe.   

This company's oral treatments for cystic fibrosis (CF) have driven its topline and its stock price to astonishing heights, but there's a problem. Now that there aren't many CF patients left untreated, investors are worried that Vertex's bottom line won't continue growing at its usual pace. That's why all eyes are on expected trial data from VX-864, one of the company's most promising clinical-stage programs at the moment.

In the first quarter, Vertex Pharmaceuticals finished enrolling patients who are alpha-1 antitrypsin (AAT) deficient into a proof-of-concept study with VX-864. Investigators should have wrapped up the trial by now, so we can expect the results soon. 

Last October, Vertex's first attempt at correcting misfolded AAT proteins, VX-814 didn't work out as hoped. The company's hoping VX-864's slightly different structure will be able to get the job done. 

Scientist at work in the laboratory.

Image source: Getty Images.

3. Sage Therapeutics

This company develops drugs for depression, but its first treatment to earn FDA approval, Zulresson hasn't made the splash investors had hoped for. Despite launching in 2019, sales of the difficult to administer infusion for women suffering from post-partum depression came in at just $1.6 million in the first quarter.

The pressure's on to launch a new drug, which is why there will be a lot of attention this month for trial results from zuranolone, the most promising clinical-stage program in the company's pipeline. In May, Sage Therapeutics told investors to expect results of a phase 3 trial with zuranolone and MDD patients before the end of June.

Before getting too excited about Sage Therapeutics, you should know that this stock lost half its value when zuranolone failed to meet its primary endpoint as a treatment for major depressive disorder (MDD) in 2019. 

Instead of throwing in the towel, Sage Therapeutics started testing a higher dosage and so far it seems to do the trick. In March, the company showed that 80% of MDD patients who received a higher zuranolone dose responded to the treatment.

Reading the tea leaves

Investors should know that Sage Therapeutics corporate operating officer left the day before the company announced the revival of its zuranolone program. That doesn't necessarily mean it's destined to disappoint, but you'll feel awfully silly about ignoring this warning if the same candidate fails again.

I'll be pleasantly surprised if Vertex Pharmaceuticals AAT program delivers positive data this month. In April the company told investors it was evaluating new AAT treatment candidates beyond VX-864 giving the impression the company expects to move on.

I think the evidence supporting Biogen's Alzheimer's disease drug warrants another phase 3 trial, not approval. That said, I wouldn't be surprised if the agency gives in to pressure from lobbying groups that have been clamoring for aducanumab's approval.

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.