The most notable mover in the biotechnology space midweek was Sage Therapeutics (NASDAQ:SAGE). The company took a hit on the release of some clinical trial data during the late evening session in the US and, given pre market volume, looks likely to continue to depreciate as standard participation ensues on Wednesday morning.

The trial in question was a phase 3 study set up to investigate the safety and efficacy of drug called brexanolone (SAGE-547). It’s a neuroactive steroid and positive allosteric modulator of both synaptic and extra-synaptic GABAA receptors and it is under investigation as a potential therapy for a rare form of epilepsy called super-refractory status epilepticus (SRSE). This is a tough condition to treat and there aren’t any effective treatments on the market right now, meaning patients don’t have access to anything outside of off label medication.

Sage was trying to change this with brexanolone, but as per the latest results, it doesn’t look like the asset will be picking up a regulatory approval anytime soon. The primary endpoint was rooted in what percentage of patients were successfully transferred from standard of care third line therapies to the investigative drug without any increase in the severity of symptoms, with the numbers coming in as 43.9% and 42.4% for the active and the control arms respectively. In other words, the drug didn’t perform any better than placebo and the slight increase in the side-by-side percentage figures cannot be regarded as statistically significant.

A number of secondary endpoints also fell in line with this result, with the drug failing to perform placebo against said metrics.

Safety, which was also under investigation, came in pretty much in line with expectations. This is a severe condition and adverse events on any form of targeted treatments are pretty common and the recent data supports the statement. However, just as with the efficacy data, there wasn’t any significant difference between placebo and control meaning that the adverse events, as well as the small number of deaths in the trial, were attributable to the underlying condition as opposed to the drug being studied.

So what does this mean for the company and its shareholders?

this developing program is a bit of an odd one. Sage decided to skip a mid-stage trial in favor of advance direct to pivotal (after meeting with the FDA) based on what it perceived as overwhelmingly positive data from an early-stage investigation. This led many to believe that the drug had a strong chance of success in the pivotal study and attracted a large amount of speculative volume towards the company stock ahead of initiation and during the study itself. The impact of this failure, therefore, is magnified as compared to what might’ve happened if the study was a phase 2. Why? Because phase 3 studies are far more expensive to conduct than phase 2 studies and there is a valid argument the company should have a phase II investigation (and, in turn, realized that the drug didn’t work) before raising equity and diluting shareholders in order to carry out a large-scale phase 3.

Management is expected to present the data in detail at an upcoming medical meeting (as yet unnamed) but chances are slim that the detailed numbers will serve to reverse sentiment surrounding both the asset on the company. As such, don’t expect this one to recover near term, and especially not on the back of any advance program in question.

In terms of where this drug goes now, we can elicit from the press release detailing the results that this is pretty much the end of the line for the asset in this indication. When the company reported supporting data like this, we normally see one of two things. Either management will help to conduct a review of the data and promise an update near term, or will Frank for study participants and suggest that data could be used as a foundation for different investigations in this same target indication. Here is a quote from the press release:

“…while I share the disappointment of patients and their families who participated in the trial, the STATUS Trial represents a significant contribution to SRSE research and I hope these data will provide a foundation for development of future treatments for patients with this devastating condition.”

As the quote illustrates, this falls very much into the latter of the two above outlined scenarios, suggesting that this is the last we will see of brexanolone in this indication for a while.