(Adds details on treatment, share movement)
Nov 27 (Reuters) - Biogen Inc will take a $650 million stake in Sage Therapeutics and pay $875 million in upfront payment as they jointly develop and sell treatments for depression and other neurological disorders, the two companies said on Friday.
Under the terms of agreement, Biogen will purchase about 6.2 million newly issued shares of Sage for $104.14 apiece, a 26% premium to Sage's Wednesday closing price.
Apart from the $1.525 billion in cash, Sage will also be eligible to get up to $1.6 billion in potential milestone payments.
The companies will develop and sell zuranolone, an oral therapy being developed as a treatment for major depressive disorder (MDD) and postpartum depression. They will also develop SAGE-324 for essential tremor and other neurological disorders.
An estimated 16 million Americans experience symptoms of MDD each year, according to the U.S. Center for Disease Control and Prevention.
Biogen will get the exclusive rights to sell the drugs outside of the United States, excluding rights to zuranolone in Japan, Taiwan and South Korea. Zuranolone is in a late stage study, while SAGE-324 is a mid-stage trial.
Sage Therapeutics entered the depression drugs market in March 2019 with its postpartum treatment, Zulresso. However, in December, its experimental fast-acting drug, SAGE-217, aimed at treating severe depression failed a closely-watched study.
Shares of Sage were up nearly 4% before the bell. (Reporting by Mrinalika Roy in Bengaluru; Editing by Arun Koyyur)
Our Standards: The Thomson Reuters Trust Principles.