Sage tumbles to record low on clinical depression pill setback

By Bhanvi Satija and Mariam Sunny

(Reuters) – Shares of Sage Therapeutics slumped to a record low on Monday after the U.S. health regulator approved the company and partner Biogen (NASDAQ:)’s pill for postpartum depression, but rejected it as a treatment for major depressive disorder.

The decision raises fresh questions about the growth prospects for the firms, analysts said, as the market for major depressive disorder (MDD), also called clinical depression, is much larger than that for postpartum depression (PPD (NASDAQ:)).

Jefferies had estimated peak sales of over $1 billion for the drug if approved to treat clinical depression, compared with $250 million to $500 million potential for postpartum depression.

At least one analyst said Biogen could potentially terminate its drug development deal with Sage to avoid further losses.

Biogen did not immediately respond to a request for comment.

Meanwhile, Sage is considering job cuts to save cash after the FDA’s decision, CFO Kimi Iguchi told investors on Monday.

The U.S. Food and Drug Administration’s (FDA) decision on Friday made the pill, called Zurzuvae, the first oral drug to be approved for PPD, a common complication that affects one in eight women during and after pregnancy, and impedes their ability to return to normal functioning.

The FDA said additional studies might be required to support approval for MDD.

Biogen is unlikely to “quickly move forward on another late-stage study for MDD”, given its focus on saving costs and job cuts, Jefferies analyst Michael Yee said.

Zurzuvae, which relieved PPD symptoms in just days in clinical studies, is required to be given for two weeks.

The only other existing treatment for PPD, also sold by Sage, needs continuous intravenous infusion for 60 hours. Other common anti-depressants take several weeks to work.

Sage’s shares were down 51.2% at $17.59 while Biogen’s rose about 1%.