Sage Therapeutics Inc said on Thursday its experimental drug failed to improve condition of patients with severe depression in a late-stage study, setting up the drugmaker to lose about $4 billion in valuation when the market opens.
The hotly anticipated data was expected to allow the company to widen its reach in the multi-billion dollar depression market it entered with its first-approved drug, Zulresso, for postpartum depression.
SVB Leerink analyst Marc Goodman had said in a note ahead of the trial results that a late-stage trial failure would be a major disappointment to investors and a setback for the company as it would be the first "chink in the armor" in the Sage story.
The oral therapy, SAGE-217, did not produce a statistically significant improvement in patients scored across 17 different parameters, including anxiety and insomnia, at the 15-day mark during the trial.
SAGE-217 works by targeting receptors of a neurotransmitter known as GABA, helping restore the normal balance in the brain.
The company expects to change the treatment paradigm for depression with SAGE-217, a once-daily night time pill, that is taken for a course of 14 days, unlike currently available antidepressants that are required to be taken for months, even years.
"We think that's really important just to take away the idea that depression is part of your identity and to treat it like what it is, which is a brain health disorder that not only ought to be treated, but to be treated effectively," Chief Medical Officer Dr. Steve Kanes, told Reuters before the data was published.
The drug is also being developed as an oral treatment for postpartum depression and is expected to be an alternative to Zulresso, a 60-hour continuous intravenous infusion therapy.
Shares of the company fell 56% to $67.25 before the bell.
(Reporting by Saumya Sibi Joseph in Bengaluru; Editing by Shinjini Ganguli) ((saumya.joseph@thomsonreuters.com; within U.S. +1 646 223 8780, outside U.S. +91 80 6749 2290; Twitter: @SaumyaSibi;))
