Why Sage Therapeutics Inc. Shares Are Soaring Higher

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares in Sage Therapeutics jumped by more than 10% earlier today after the company announced positive results from a four-person investigational study of its postpartum depression therapy SAGE-547.

So What: Sage Therapeutics is a clinical stage company and SAGE-547 is the company's lead product candidate.

In this small trial, four patients suffering postpartum depression were given SAGE-547 intravenously and all four patients responded to the therapy based on the Hamilton Rating Scale for Depression. The patient's median rating on this scale was 26.5 at baseline and that rating dropped to 1.8 at the end of the 60-hour treatment period -- a level that is considered to be symptom free.

Now What: The findings suggest that SAGE-547 may have clinical potential beyond status epilepticus, or SE, a life threatening seizure disorder for which SAGE-547 is expected to enter late stage phase 3 trials soon.

According to Sage Therapeutics, 20% of all women suffer postpartum depression and given that all four of the women in this study had previously taken -- and failed to respond to -- antidepressant therapy, the potential opportunity could be big. However, that potential comes with a big grain of salt. The trial included less than a handful of patients and anything can and often does derail larger, later stage studies.

For that reason, Sage Therapeutics investors should probably continue to focus more on SAGE-547's potential in SE, at least until data from an upcoming placebo-controlled study in postpartum depression is released. Approximately 150,000 Americans suffer from SE, and SE accounts for 35,000 intensive care admissions annually, which suggests a significant need for new treatment options.

Regardless, since Sage Therapeutics is a development stage company without any approved products on the market or revenue, it's likely best suited only for the most risk-tolerant of investors.

The article Why Sage Therapeutics Inc. Shares Are Soaring Higher originally appeared on Fool.com.

Todd Campbell has no position in any stocks mentioned. Todd owns the equity research firm E.B. Capital Markets, LLC. E.B. Capital's clients may have positions in the companies mentioned.The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.