Baird, on Thursday, adjusted its price target on shares of Sage Therapeutics (NASDAQ: SAGE), reducing it to $13.00 from the previous $15.00 while maintaining a Neutral rating on the company's stock.
The revision, which came on Thursday, follows the announcement from Sage Therapeutics that the phase 2 KINETIC-2 dose-range study of SAGE-324 for essential tremor did not meet its primary endpoint.
Consequently, Sage, in collaboration with its partner Biogen (NASDAQ:BIIB), has decided to terminate the ongoing open-label safety study and will not pursue further clinical development of SAGE-324 for essential tremor.
The decision to halt the development of SAGE-324 was based on the study's unsuccessful outcome, which prompted Baird to remove the potential value of the drug for this indication from its valuation model.
Previously, Baird had assigned a value of $2 per share and a 20% probability of approval to SAGE-324 in the treatment of essential tremor.
The discontinuation of SAGE-324's development in this area is a significant shift for Sage Therapeutics, as the company and its partner Biogen will not be advancing this particular treatment option.
Meanwhile, Scotiabank revised its price target for Sage Therapeutics to $17, maintaining a Sector Outperform rating, despite the unsuccessful outcome of the KINETIC-2 study. The firm sees potential in the company's shares, particularly considering the recent approval of Zurzuvae, a medication for post-partum depression.
On the other hand, Mizuho Securities lowered its price target for Sage to $13, following underwhelming results from the same KINETIC-2 trial. This trial was aimed at treating essential tremor with SAGE-324, a drug developed in collaboration with Biogen. Despite the setback, Mizuho Securities sees potential in Sage's next-generation GABAA PAM, SAGE-319.
Also, JPMorgan (NYSE:JPM) downgraded Sage Therapeutics' stock from Overweight to Neutral, revising the price target to $12. This decision reflects a cautious outlook on the near-term potential for Zurzuvae. Despite this, JPMorgan believes that the company's broader pipeline of products still has significant milestones to achieve.
InvestingPro Insights
Following the recent developments at Sage Therapeutics, investors are closely monitoring the company's financial health and market performance. According to InvestingPro data, Sage Therapeutics holds a market cap of approximately $624.69M and is trading near its 52-week low, with a price/book ratio over the last twelve months as of Q1 2024 at a modest 0.89. This suggests that the market is valuing the company's assets conservatively relative to its stock price.
Notably, the company has more cash than debt on its balance sheet, which is a positive sign of financial stability. However, Sage is quickly burning through cash and has not been profitable over the last twelve months. The InvestingPro Tips also reveal that analysts do not anticipate the company will be profitable this year, and they expect a sales decline in the current year. This aligns with the recent decision to halt the development of SAGE-324, potentially impacting future revenue streams.
For those considering an investment in Sage Therapeutics, the InvestingPro platform provides additional insights and metrics that could guide investment decisions. There are currently 11 more InvestingPro Tips available for Sage Therapeutics, which can be accessed by using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. These insights may offer valuable context for the company's prospects in light of the recent pipeline setback.
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