What happened
Shares of Sage Therapeutics (NASDAQ: SAGE) were down by more than 40% for the week at 11 a.m. on Friday, according to data provided by S&P Global Market Intelligence. The pharmaceutical company's stock closed last week at $36.10, then fell to a 52-week loss of $16.52 on Monday. The stock is down more than 44% this year.
What happened
The stock suffered a double whammy of news that drove it lower. First, last Friday, after the markets closed, Sage and Biogen announced that their therapy Zurzuvae (zuranolone) had been approved by the Food and Drug Administration (FDA) for postpartum depression (PPD) but not for major depressive disorder (MDD). The FDA sent a complete response letter to Sage regarding Zurzuvae's New Drug Application for its use on MDD patients, asking for more studies before approval. The problem for Sage is that roughly 600,000 women every year may have PPD symptoms, while MDD has a much larger patient population. According to the Anxiety and Depression Association of America, in 2020, roughly 14.8 million U.S. adults had at least one major depressive episode with severe impairment.
The second blow came when the company announced second-quarter earnings on Monday. Sage's revenue was reported as $2.5 million, up 66% year over year. However, the company also had a net loss of $160.3, compared to a loss of $126.3 million in the same period a year ago.
Now what
Sage's slump may be short-lived. The company is seeing increased sales from PPD therapy Zulresso, and Zurzuvae could ultimately be approved to treat MDD. The company has $1 billion in cash, enough to fund operations into 2025, it said. The company also said it is looking at possible cutbacks and workplace reorganizations to extend its cash runway.
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Jim Halley has no position in any of the stocks mentioned. The Motley Fool recommends Biogen. The Motley Fool has a disclosure policy.
