Over the last month, shares of Sage Therapeutics (SAGE) have experienced a significant decline of 45.6%, while the industry has seen minimal growth of 0.1%.
Image Source: Zacks Investment Research
Factors Contributing to the Stock Decline
The main reason for this decline can be attributed to the recent decision by the FDA regarding Sage Therapeutics’ new drug application (NDA) for zuranolone, specifically for treating postpartum depression (PPD) and major depressive disorder (MDD). While the FDA approved zuranolone for PPD, it issued a complete response letter (CRL) for the MDD indication.
The CRL stated that the NDA filing did not provide sufficient evidence of effectiveness to support zuranolone’s approval for MDD, indicating the need for additional studies.
Despite the approval for PPD, the market opportunity for MDD is larger and more lucrative. Additionally, the FDA approval for PPD includes a black box warning that advises patients not to operate heavy machinery or drive for at least 12 hours after taking Zurzuvae, the trade name for zuranolone. This warning is expected to negatively impact the drug’s sales prospects, leading to disappointment among investors and the subsequent share price crash.
Sage Therapeutics is collaborating with Biogen (BIIB) in the development of Zurzuvae. The two companies are currently evaluating their next steps.
Strategic Reorganization Plan
In response to these setbacks and to support the commercial launch of Zurzuvae, Sage Therapeutics recently announced a strategic reorganization plan. This plan involves a 40% reduction in their workforce and a focus on the development of their lead neuropsychiatric drug candidate, SAGE-718, and their lead neurology program, SAGE-324. Both of these programs are being developed in collaboration with Biogen. The reorganization plan aims to save approximately $240 million per year and extend Sage’s cash runway until 2026.
Advantages of Zurzuvae over Zulresso
PPD is a major depressive episode following childbirth, and Zurzuvae is expected to have a significant advantage over the previously approved medication for PPD, Zulresso, also marketed by Sage Therapeutics. While Zulresso is administered intravenously, Zurzuvae is an oral drug administered over a 14-day treatment course. This difference is expected to make Zurzuvae more appealing to patients and potentially allow Sage Therapeutics to capture a larger market share in the PPD patient population.
Stock Recommendations
Sage Therapeutics currently has a Zacks Rank #3 (Hold). If you’re looking for better-ranked stocks in the healthcare sector, consider ANI Pharmaceuticals (ANIP) and Annovis Bio (ANVS), both of which carry a Zacks Rank #2 (Buy). ANI Pharmaceuticals has experienced a significant increase in earnings estimates for 2023 and 2024, while Annovis Bio has narrowed its loss estimates for the same periods.
