Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares in Sage Therapeutics (NASDAQ: SAGE) soared higher by more than 10% earlier today after the company announced that it had priced an offering of its shares at $52.50 per share.
So What: Previously, Sage Therapeutics had reported that it would offer $100 million of its stock, plus another $15 million as part of an over-allotment program, to bulk up its balance sheet ahead of a key late stage trial for SAGE-547, a treatment for a rare seizure disorder.
Sage Therapeutics plans to kick-off a phase 3 trial evaluating SAGE-547 in 126 patients suffering from super refractory status epilepticus, or SRSE. Patients with SRSE suffer extraordinarily long seizures, or multiple seizures without recovery in between or within a thirty minute period of time.
Approximately 150,000 Americans suffer from SRSE, and SRSE is responsible for roughly 35,000 intensive care hospital admissions every year. As a result, there's a significant need for new therapies.
During phase 1/2 trials, 71% of SRSE patients suffering responded to SAGE-547, suggesting that this therapy could prove to be a viable treatment option for use alongside existing standards of care.
Now What: This stock offering will go a long way toward paying for the costly late stage trials, and it will also provide additional financial flexibility that Sage Therapeutics can use to build out its team prior to any future potential product launch; however, investors should remember that there's no guarantee that SAGE-547 will succeed in its phase 3 trials, and that means that this company is a high-risk bet.
Although Sage Therapeutics is working on a drug that could make an important impact on patients, the company already boasts a market cap of nearly $1.4 billion. For that reason, I'm content to sit this one out until we have a bit more insight into the commercial potential for this drug.
Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.