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Biogen makes risky bet on trial depression drug

The $1.5 billion deal with Sage Therapeutics will try to salvage an oral treatment that had a disappointing clinical trial

Under the agreement, Biogen will give Sage $875 million in cash and buy $650 million worth of its stock at a 40 percent premium.Scott Eisen/Bloomberg

Biogen, placing a major bet on a once-failed treatment, is paying $1.53 billion for the commercial rights to a Sage Therapeutics’ oral depression drug that disappointed in its last major clinical trial.

Under the agreement, announced Friday, Biogen will give Sage $875 million in cash and buy $650 million worth of its stock at a 40 percent premium. In exchange, Biogen is entitled to 50 percent of the US profits from zuranolone, a depression drug that could win approval in 2022 if proven safe and effective, and an earlier-stage treatment for movement disorders.

It’s a high-risk wager for Biogen. In December, Sage’s stock price fell by more than 50 percent when zuranolone failed to improve upon placebo in a Phase 3 study in major depression. Earlier this year, the company set out a new plan for the drug, starting three pivotal trials that will each read out next year. If all three studies are positive, analysts say zuranolone could eventually bring in more than $2 billion in revenue, making Biogen’s decision look wise. If one or more trials fail, the company may never recoup its investment.

The new studies cover three different uses of zuranolone: in postpartum depression; as a “rapid response treatment” when added to traditional antidepressants, known as SSRIs; and as a treatment to help patients undergoing an episode of depression.


Whatever happens, 2021 will be transformational for Biogen. In March, the Food and Drug Administration will decide whether to approve aducanumab, the company’s polarizing treatment for Alzheimer’s disease. Earlier this month, FDA staff seemed enthusiastic about the medicine, but a panel of independent experts recommended strongly against its approval. If the agency ignores their advice and approves aducanumab, Biogen will have a multibillion-dollar product. If not, the company will have to decide whether to spend hundreds of millions on a new clinical study or abandon the medicine altogether.


Elsewhere, Biogen’s core business is eroding. Revenue from the company’s successful portfolio of treatments for multiple sclerosis is shrinking each quarter, and its most successful drug, Tecfidera, is now facing generic competition. Spinraza, Biogen’s blockbuster treatment for the rare spinal muscular atrophy, is losing ground to newer medicines, with sales declining 10 percent in the last quarter.

The deal with Sage also gives Biogen the commercial rights to zuranolone outside the US, with the exception of Japan, Taiwan, and South Korea. Sage would be entitled to tiered royalty payments based on sales. The agreement also includes SAGE-324, a drug currently in Phase 2 development to treat essential tremor.

As with zuranolone, Biogen and Sage will split SAGE-324′s US costs and profits, with Biogen holding rights to the drug in the rest of the world. Sage is also entitled to as much as $1.6 billion in payments tied to development milestones for both treatments.