Here’s why Sage Therapeutics fell 18% on Tuesday morning

Sage Therapeutics Inc (NASDAQ: SAGE) said on Tuesday its candidate drug for depression that it developed in collaboration with Biogen Inc was found effective in alleviating the symptoms, as per the results of the late-stage trial. Despite meeting the goal of the study, Sage’s stock tanked about 18% this morning.  

The news comes only a day after Biogen announced topline results from the Phase 3 gene therapy study on Choroideremia. Biogen, however, remained fairly stable in the stock market on Tuesday.

Sage/Biogen depression drug was generally well-tolerated

Are you looking for fast-news, hot-tips and market analysis?

Sign-up for the Invezz newsletter, today.

Sage Therapeutics’ late-stage trial involved 543 participants in total. Compared to placebo, those who received Zuranolone showed significant improvement in symptoms. According to the biopharmaceutical company, patients with the mood disorder are required to take its oral drug once for two weeks.

Pfizer’s Zoloft or Eli Lilly’s Prozac are two of the most widely used treatments for depression at the moment. These antidepressants, however, take months to treat the mood disorder, with effects starting to show after about six weeks of use.  

Sage Therapeutics and Biogen further highlighted in a joint statement that their depression drug was generally well-tolerated. Participants who showed signs of improvement on day 15^th maintained roughly 86% of the effect, even close to thirty days after the two-week drug course ended.

Commenting on the price action, analyst Andrew Tsai of Jefferies said on Tuesday:

“The stock reaction may be mixed as investor expectations on a key Day 15/Day 42 endpoints were a little higher, but we’d reiterate the results are fundamentally positive.”

Sage Therapeutics and Biogen had partnered last year in November

Biogen had partnered with Sage Therapeutics in a $1.5 billion deal plus milestone payments last year in November, to develop drugs for a range of neurological disorders, including depression. In separate news from the global healthcare sector, British pharmaceutical giant, AstraZeneca plc, published results from the ‘Storm Chaser’ study on Tuesday.  

Sage Therapeutics opened at $65 per share on Tuesday and is currently exchanging hands at $60 per share. This compared to its year-to-date high of $97 per share. The stock had started the year at a higher $85.82 per share.

The Massachusetts-based company performed fairly upbeat in the stock market last year with an annual gain of more than 15%. At the time of writing, it is valued at $3.52 billion and has a price to earnings ratio of 5.45.