SUMMARY
- FDA approves Sage Therapeutics' zuranolone as the first oral treatment for postpartum depression, denies application for major depressive disorder.
- The decision sends Sage's shares plummeting while modestly boosting Biogen's, who co-developed the treatment.
- Market analysts see missed opportunity in MDD market but potential pricing power in postpartum depression treatment.
Shares of Sage Therapeutics plunged by over half in value on Monday following a mixed decision by the Food and Drug Administration (FDA). The FDA gave a green light to the company's oral medication zuranolone for treating postpartum depression but turned down the application for using it against major depressive disorder (MDD), a more widespread condition. This surprising turn of events sent ripples across the stock market.
Meanwhile, Biogen, Sage's partner in developing the treatment, experienced a modest uptick in its shares. Together, they managed to break new ground by creating zuranolone, the first-ever orally administered treatment for postpartum depression—a condition affecting about 1 in 8 women during and after pregnancy.
The story takes a twist as the two firms' bid to extend the application of zuranolone to major depressive disorder was denied by the FDA. The agency cited insufficient evidence of the drug's effectiveness against MDD, a condition that touches the lives of roughly 17.3 million American adults annually.
Financial analysts weighed in on the matter, highlighting the differences in market potential between the two conditions. Zuranolone could have yielded a whopping $1 billion in sales for MDD compared to $250 to $500 million for postpartum depression. However, some saw a silver lining, suggesting that the pricing power for postpartum depression could be higher.
Finally, while the FDA hinted that more research might support zuranolone's approval for clinical depression, insiders believe Biogen is unlikely to invest in further late-stage studies. With the company's focus on cost-saving and recent announcement of layoffs, the future of zuranolone in treating clinical depression remains uncertain.
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