Why Sage Therapeutics Gained 70% Today

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What happened

Shares of Sage Therapeutics (NASDAQ: SAGE), a clinical-stage biotech, took flight today, after the company announced positive mid-stage trial results for its moderate-to-severe major depressive disorder (MDD) treatment, dubbed "SAGE-217."

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According to the company, SAGE-217 produced a highly significant mean reduction in the Hamilton Rating Scale for Depression among patients taking the drug, compared with those receiving a placebo. The drug was also reportedly well tolerated, with only a handful of patients discontinuing its use because of adverse side effects. Sage's shares ended the day higher by a noteworthy 70% on nearly 10 times the average daily volume as a result of this clinical update.

So what

Not that long ago, Sage's stock took an absolute beating after its lead clinical candidate, brexanolone, missed the mark in a late-stage study for super-refractory status epilepticus. Since then, the biotech's stock has come roaring back following brexanolone's successful late-stage readouts for postpartum depression, and now, SAGE-217's strong midstage results in MDD released today. Put simply, Sage appears primed to continue heading higher in the weeks and months ahead.

Now what

Sage plans on advancing SAGE-217 into a pivotal late-stage trial sometime next year. In the interim, investors can also look forward to the forthcoming regulatory filing for brexanolone's postpartum depression indication in early 2018. So this small-cap biotech already has multiple catalysts on the calendar heading into 2018.

While it's normally not a smart idea to chase an emerging biotech after a sizable move, Sage may be an exception to this rule. The company recently shored up its balance sheet with a massive $345 million public offering, and the company appears to have a viable shot at bringing multiple products to market within a few short years. As such, it might be a good idea to add this red-hot biotech stock to your portfolio soon.

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George Budwell 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.