Here's Why Marinus Pharmaceuticals Rose as Much as 41.1% Thursday

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What happened

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Shares of clinical-stage biopharma Marinus Pharmaceuticals (NASDAQ: MRNS) rose over 41% today after larger peer Sage Therapeutics (NASDAQ: SAGE) reported positive top-line results for one of its drug candidates, SAGE-217, in a phase 2 trial in major depressive disorder. That's because SAGE-217 has a similar mechanism of action to ganaxolone, the sole drug in the smaller company's pipeline. 

The results hold promise that the new class of drugs could capture massive market share as treatments for various forms of depression, epilepsy, and other central nervous system ailments if clinical results hold up in later-stage trials.

As of 3:23 p.m. EST, Marinus Pharmaceuticals stock had settled to a 36.6% gain. Sage Therapeutics stock was up over 70% at that time, although it had gained up to 84.5% earlier in the day.

So what

Stock movements on that order have to be supported by awesome data, right? Right. The good thing is that SAGE-217 appears to have delivered for its phase 2 trial. The drug candidate blew away placebo on the Hamilton Rating Scale for Depression, with 64% of patients taking SAGE-217 achieving remission by Day 15 compared to only 23% taking placebo.

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SAGE-217 works by selectively modulating gamma aminobutyric acid, or GABA, receptors in the central nervous system. Since GABA receptors play a role in depression and epilepsy, Wall Street is optimistic that Sage Therapeutics stumbled upon a novel mechanism of action for a new drug class. Larger, later-stage trials are needed to prove that correct, but the mid-stage results in major depressive disorder are promising.

That excitement has lifted shares of Marinus Pharmaceuticals because ganaxolone is also a selective modulator of GABA receptors. The much tinier biopharma is advancing trials for pediatric epilepsy, adult epilepsy, and postpartum depression (SAGE-217 is also being evaluated in postpartum depression, the only clinical overlap between the two drug candidates at the moment). Early-stage trials have suggested that its drug candidate could also boast a similar effective and safe treatment option. 

Now what

Wall Street may be right to be excited about these (so far) promising drug candidates. The selective GABA modulators appear to work well, safely, and perhaps broadly. Of course, investors need to remember that the results from early and mid-stage trials need to be replicated in larger, later-stage trials before getting too excited.  

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Maxx Chatsko has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.