(Reuters) – Sage Therapeutics Inc said on Thursday its experimental fast-acting drug aimed at treating severe depression failed a closely-watched study, sending shares down 60% and erasing about $4.6 billion of the drugmaker’s market value.

The trial data shocked investors who were betting on the success of SAGE-217, which would have helped the company garner a bigger share of the multi-billion dollar market for depression drugs.

“Expectations were so high for a positive outcome… this is going to be a painful setback for many,” said JP Morgan analyst Cory Kasimov in a client note.

The company was testing SAGE-217 for a fixed course of 14 days. Currently available antidepressants are required to be taken for months, or even years.

At the 15-day mark, however, the oral therapy did not produce a statistically significant improvement in patients scored across 17 different parameters, including anxiety and insomnia.

“These data will inevitably take the ‘halo effect’ off SAGE-217 in the eyes of investors,” Stifel analyst Paul Matteis said in a note.

However, Matteis said the data still showed evidence of effectiveness and that the drug achieved statistical significance at days 3, 8 and 12.

“The failure is a surprise in one sense, but in another sense, not at all unprecedented: even Prozac failed in a number of efficacy studies,” he said.

Sage said beyond the 15-day period, the drug showed sustained benefit in the patients during their follow-up assessments. It was also found to be generally well-tolerated with a safety profile comparable to placebo.

“Our plans are going to remain the same… We’re encouraged by the maintenance of the data we’ve seen here,” Chief Executive Officer Jeff Jonas said on a conference call with analysts.

SAGE-217 targets the receptors of a neurotransmitter known as GABA and is also being developed for other psychiatric disorders including postpartum and bipolar depression.

Shares of the company, which entered the market for depression drugs earlier this year with its postpartum drug, Zulresso, was trading lower at $57.


Reporting by Saumya Sibi Joseph in Bengaluru; Editing by Shinjini Ganguli and Arun Koyyur


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