On Thursday, Piper Sandler analyst David Amsellem adjusted the price target for Sage (LON:SGE) Therapeutics (NASDAQ:SAGE) stock, reducing it significantly to $9 from the previous $26 while maintaining an Overweight rating.
The reevaluation comes amid a challenging period for the company's key drug, Zurzuvae (zuranolone), which has faced a complex path in its development and commercialization efforts, particularly with its use in major depressive disorder (MDD) not yielding the anticipated results.
The analyst remains optimistic about Sage Therapeutics' prospects, especially with the product's performance in post-partum depression (PPD (NASDAQ:PPD)). Amsellem believes that despite the setbacks, the company's shares have the potential for value recovery.
He bases this on the expectation that Zurzuvae could realistically achieve peak U.S. sales between $800 million and $1 billion. It is important to note that Sage Therapeutics records 50% of U.S. sales from Zurzuvae, in accordance with its co-promotion agreement with Biogen (NASDAQ:BIIB), which holds a Neutral rating.
While the company's cost structure adjustments and the length of its cash runway remain uncertain, the analyst suggests that the current situation warrants a fresh look at Sage Therapeutics' shares. The revised price target reflects the recent developments and the analyst's confidence in the drug's market potential within its approved indication.
Sage Therapeutics has not yet provided clarity on how it will streamline its costs or the extent of its available financial resources moving forward. However, the Overweight rating indicates that Piper Sandler believes the stock could outperform the average total return of the stocks in the analyst's coverage universe over the next 12 to 18 months.
Investors and stakeholders in Sage Therapeutics will be closely monitoring the company's progress, especially in relation to the commercial rollout of Zurzuvae for PPD and any strategic measures the company may take to enhance its financial position and market standing.
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