One of the biggest movers in the biotechnology space on Thursday was Sage Therapeutics (NASDAQ:SAGE). The company put out data from a lead trial of one of its primary development assets and, on the back of the news, has experienced a considerable upside revaluation in its market capitalization.

So what happened and what’s next?

The drug that was under investigation is called SAGE-217 and the company set up the trial that just read out in an attempt to show that it could be a safe and effective option for the treatment of moderate to severe major depressive disorder (MDD).

The drug is what’s called a positive allosteric modulator of the gamma-aminobutyric acid (GABA) receptor. That sounds pretty complicated, but in concept at least, it’s not all too difficult to understand. GABA receptors are a class of receptors that respond to the neurotransmitter GABA, the chief inhibitory compound in the mature vertebrate central nervous system. The idea is that by stimulating GABA receptors using a drug like SAGE-217, the neurotransmitter can stave off the chemical imbalances that are present in patients suffering from depression. This receptor has also been shown to play key role in the acquisition and storage of the neurotransmitters associated with fear and – in this regard – using it as a depression drug is not that dissimilar from a mechanism of action (MOA) perspective.

That’s the theory, at least.

What did the data show?

Well, in short, it looks as though the theory is valid. The primary endpoint of the study was a statistically significant mean reduction in what’s called the Hamilton Rating Scale for Depression (HAM-D) score from baseline to Day 15. HAM-D is an industry gold standard of depression scale and an improvement against this scale is what is generally regarded as necessary for a company to pick up a regulatory approval in a fresh depression target asset.

So, if Sage was able to show that its drug could perform against this scale, the company would have a pretty strong chance of replicating the success in a phase 3 study and, in turn, using the data from said phase 3 study to underpin a regulatory application for approval in the US.

And as per the data, it looks as though the company has a pretty solid chance of doing just that. The trial met the primary endpoint of the above mentioned statistically significant mean reduction in the HAM-D, with a score from baseline to Day 15 of 17.6 points for SAGE-217 treated patients (i.e. those on the active arm of the investigation), compared to 10.7 for those patients that received placebo. The p-value for the study came in at p<0.0001, which represents an incredibly strong degree of statistical significance.

There are a couple of outlying data points worth mentioning. First, that the safety and tolerability side of the trial seems pretty clean, with no patients suffering from serious adverse events in the study and the overall rate of adverse events coming in as comparable between the two arms – active and placebo. From a dropout standpoint, two active patients dropped out while no placebo patients dropped out. That’s not a big deal.

Second, the drug seems to lessen in effect over time. This isn’t overly surprising but length of efficacy is a pretty important metric when it comes to these neurological conditions so it’s worth mentioning as it may play a role in any forward investigation and – in turn – the labeling that the drug picks up if and when it gets approved in the US.

So what comes next?

As mentioned above, this was a phase 2 trial and so the company is going to have to replicate these data in a larger population before it can submit to the agency in the US. As far as what’s next is concerned, then, we’re looking for the initiation of a pivotal trial as the next major catalyst for the company. There’s some word that we will see this initiation during the first half of 2018 but this hasn’t been confirmed just yet.

As a catalyst leading into this one, we’re also looking for confirmation that the FDA will accept a similar protocol as the one that company managed to succeed against in the just completed phase 2.