News Summary

Sage Therapeutics is under investigation following disappointing results from clinical trials of its brain health drugs, SAGE-718 and SAGE-324. The company’s stock has dropped over 90% as it halts further developments and faces a securities class action lawsuit. Legal scrutiny is focusing on whether executives disclosed key information, raising concerns among investors and shareholders as the biopharmaceutical landscape continues to shift dramatically.

Sage Therapeutics Under Investigation Following Drug Development Stumbles

New Orleans – An investigation has been launched into Sage Therapeutics, Inc., by Kahn Swick & Foti, LLC, a firm led by former Louisiana Attorney General Charles C. Foti, Jr. This comes on the heels of some disappointing news regarding the company’s recent drug development efforts, particularly with their brain health medicines.

The Latest Developments

On April 17, 2024, Sage Therapeutics disclosed some unsettling results from its Phase 2 study of SAGE-718. The study aimed to assess cognitive function improvements in patients with Parkinson’s disease, but unfortunately, the results were not promising. There was no statistically significant difference from placebo on cognitive function scores—essentially, the drug didn’t perform any better than a sugar pill when tested on volunteers using the Wechsler Adult Intelligence Scale-IV Coding Test after a 42-day period.

As a reaction to these findings, Sage made the tough decision to halt further development of SAGE-718 for Parkinson’s disease, an announcement that surely raised eyebrows in the medical and financial communities.

More Failures Lead to Turmoil

Fast forward to July 24, 2024, and the news got worse. Sage unveiled that SAGE-324, another anticipated product aimed at treating essential tremor, also failed during a Phase 2 study. Patients in this trial showed no significant improvement in their tremors or daily living activities. To compound the problem, Sage and Biogen decided to terminate an ongoing open-label safety study of SAGE-324, effectively putting an end to its development.

These setbacks are causing ripples not just within the company but are also attracting legal scrutiny. Certain executives at Sage and the company itself are currently facing a securities class action lawsuit. Allegations have been made that these executives failed to disclose crucial information during the relevant period in violation of federal securities laws.

What’s at Stake?

The investigation by Kahn Swick & Foti is delving into potential breaches of fiduciary duties by Sage’s officers and directors. This means they are looking into whether the top brass at Sage acted properly in their roles and complied with both state and federal laws. Long-term holders of Sage shares are being reached out to for any input that might aid the investigation. This move is part of KSF’s broader commitment to recovering investment losses that stem from alleged corporate fraud or mismanagement, and they have a solid track record in securities litigation.

In addition, attorney Lawrence Rosen and his firm are taking steps to investigate possible claims on behalf of Sage’s securities purchasers, especially focusing on those who bought shares between April 12, 2021, and July 23, 2024. There’s a specific concern about potentially misleading information regarding the effectiveness of Sage’s products, including zuranolone, which was touted for postpartum depression and major depressive disorder but has not lived up to expectations.

Stock Performance Plummets

Investors have understandably reacted to these developments. Over the past year, Sage Therapeutics’ stock price has plummeted by over 90%, and it now hovers around $5 per share. This sharp decline reflects growing skepticism about the company’s viability in the wake of these significant clinical failures, not to mention its ongoing restructuring efforts that included laying off more than 165 employees and the departure of several top executives.

Conclusion

As the investigation continues, the future remains uncertain for Sage Therapeutics. Shareholders and employees alike are watching closely for any developments, as this story unfolds and the broader implications for the biopharmaceutical industry are examined. In an ever-evolving field where success can turn to failure in a heartbeat, Sage’s recent struggles serve as a sobering reminder of the risks involved in drug development.

Sage Therapeutics Faces Investigation Over Drug Development Failures