Biogen (BIIB) - Get Biogen Inc. Report and Sage Therapeutics (SAGE) - Get SAGE Therapeutics, Inc. Report announced an agreement Friday in which the biopharmaceutical companies will work together on Sage's depression drug.
As part of the accord, Biogen will pay Sage $1.525 billion in cash.
The companies will develop Sage’s zuranolone (SAGE-217) for major depressive disorder, postpartum depression and other psychiatric disorders. They also will focus on SAGE-324 for essential tremor and other neurological disorders.
"Major depressive disorder affects approximately 17 million people in the U.S. alone, and is a common co-morbidity of multiple neurological disorders in Biogen's core therapeutic areas," Biogen CEO Michel Vounatsos said in a statement.
"There is a tremendous unmet medical need in depression, and we are optimistic about the potential for zuranolone to help transform the treatment of depression and address the stigma often associated with chronic use of antidepressants," he added.
Zuranolone is currently in Phase 3 development, and it has breakthrough therapy designation from the U.S. Food and Drug Administration.
As for Biogen’s $1.525 billion cash payment, Sage will receive an upfront payment of $875 million and a $650 million equity investment in Sage from the purchase of approximately 6.2 million newly issued shares of Sage common stock at a price of $104.14 per share.
If the drug programs “achieve certain development and commercial milestones, Sage will be eligible to receive up to approximately $1.6 billion in potential milestone payments,” the companies said.
Sage was rising 3.92% to $85.94 in premarket trading Friday. The stock has 15% so far this year.
Biogen closed Wednesday at $241.75, up 0.31%, and has fallen 19% year to date through Wednesday.