Biogen makes big bet on Sage neuroscience compounds

In a bid to reinvigorate its drug pipeline, Biogen is paying Sage Therapeutics $1.5 billion, comprising $875 million in cash and a $650 million ownership stake, to codevelop two small molecules for neurological conditions.

One, zuranolone, is part of a class of antidepressants called positive allosteric modulators of the γ-aminobutyric acid (GABA_A) receptor, which is part of a chemical messaging system that normally calms nerve activity. The compound is in Phase 3 studies to treat major depressive disorder and postpartum depression. The other, SAGE-324, is a positive allosteric modulator of GABA_A receptors in Phase 2 studies to treat a common movement disorder called essential tremor. Sage expects to see study results for both drug candidates in 2021.

Biogen says zuranolone will complement its other neuroscience drugs and drug candidates, as depression often accompanies neurological disorders like Alzheimer’s, multiple sclerosis, and Parkinson’s disease.

But the purchase is also meant to help allay concerns over the health of Biogen’s pipeline, which is heavily reliant on the success of the Alzheimer’s treatment aducanumab. The US Food and Drug Administration is currently weighing a new drug application for the antibody, which recently got a thumbs down vote from the agency’s advisory committee. The review panel was sharply critical of the weak evidence of aducanumab’s efficacy. While the agency can go against the recommendation of its advisors, most industry watchers believe the drug won’t be approved.

The disastrous panel added to pressure for Biogen to make a splashy move. Beyond thin near-term prospects for new drugs, the big biotech firm also faces declining revenues for its multiple sclerosis drug portfolio. And its spinal muscular atrophy treatment Spinraza, an oligonucleotide-based therapy, has seen sales fall as gene therapy and small-molecule treatments enter the market.

Although Biogen paid dearly for its share of Sage’s neurology compounds, “with aducanumab’s approval chances little more than a coin toss, a rapidly eroding MS franchise, and Spinraza facing increasing competition, we see moves like these as necessary,” Piper Sandler analyst Christopher J. Raymond writes in a note to investors. “In fact, we think investors should be looking for additional deals like this.”