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Sage depression therapy fails much-awaited trial, stunning investors

Sage Therapeutics Inc's experimental drug for severe depression failed a closely-watched study, setting up the drugmaker to lose about $4.5 billion in valuation when the market opens.

By Saumya Joseph

Dec 5 (Reuters) - Sage Therapeutics Inc's SAGE.O experimental drug for severe depression failed a closely-watched study, setting up the drugmaker to lose about $4.5 billion in valuation when the market opens.

The trial data shocked investors rooting for the therapy, SAGE-217, that would have allowed the company to widen its share in the multi-billion dollar depression market it entered earlier this year with its postpartum depression drug Zulresso.

The company was testing SAGE-217 for a fixed course of 14 days. Currently available antidepressants are required to be taken for months, even years.

At the 15-day mark, however, the oral therapy did not produce a statistically significant improvement in patients scored across 17 different parameters, including anxiety and insomnia.

"These data will inevitably take the 'halo effect' off SAGE-217 in the eyes of investors," Stifel analyst Paul Matteis said in a note.

However, Matteis remains reluctant to throw in the towel on the potential blockbuster; says the data still showed evidence of effectiveness and that the drug achieved statistical significance at days 3, 8 and 12.

"The failure is a surprise in one sense, but in another sense, not at all unprecedented: even Prozac (had) failed in a number of efficacy studies," he added.

SAGE-217 works by targeting receptors of a neurotransmitter known as GABA, helping restore the normal balance in the brain.

The drug was generally well-tolerated with a safety profile comparable to placebo, the company said.

Shares of the company fell 58% to $62 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;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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