On Thursday, TD Cowen adjusted its outlook on shares of Sage (LON:SGE) Therapeutics (NASDAQ: SAGE), reducing the company's price target from $10.00 to $9.00 but maintaining a Hold rating on the stock. The revision comes after Sage Therapeutics announced disappointing results from a Phase 2 study of its drug dalzanemdor for cognitive impairment in Huntington's disease patients.
The drug failed to meet the primary endpoint of change from baseline on the Symbol Digit Modalities Test at Day 84. Furthermore, no statistically significant or clinically meaningful differences were observed on the secondary endpoints. Following these outcomes, Sage has decided to halt further development of dalzanemdor, including the open-label safety study.
The decision to discontinue dalzanemdor's development was cited as the primary reason for the reduction in Sage Therapeutics' price target. The removal of dalzanemdor's projected value from the company's portfolio necessitated the adjustment in the price target.
Sage Therapeutics' announcement marks a setback for the company's development pipeline. The drug was under investigation to address cognitive impairments associated with Huntington's disease, a condition for which treatment options are currently limited.
The company's stock price and market expectations may be impacted by this development and the subsequent adjustment of the price target by TD Cowen. Sage Therapeutics has not provided any immediate plans for replacing the halted program or addressing the gap left by dalzanemdor in its drug development pipeline.
In other recent news, Sage Therapeutics has seen a significant shift in its business operations. RBC Capital has upgraded Sage Therapeutics to a Sector Perform rating following the discontinuation of its key pipeline drug, dalzamendor, for Huntington's disease. The company is now focusing on executing a strategic reset, which includes the launch of Zurzuvae, another drug in its portfolio.
Sage Therapeutics has reported a substantial increase in postpartum depression (PPD (NASDAQ:PPD)) treatment sales, particularly for Zurzuvae, with Q3 financial results revealing a 49% increase in revenue, totaling $22.1 million. However, the company reported a net loss of $93.6 million for Q3 2024.
The company's strategic shift also includes prioritizing PPD treatments and discontinuing Zulresso after December 31, 2024. Sage Therapeutics has regained full ownership of the SAGE-324 program after Biogen (NASDAQ:BIIB) ended their collaboration. These recent developments represent Sage Therapeutics' ongoing efforts to adapt its strategy and progress with its remaining drug candidates and potential business partnerships.
InvestingPro Insights
The recent setback for Sage Therapeutics' dalzanemdor program aligns with several InvestingPro metrics and tips that highlight the company's current challenges. According to InvestingPro data, Sage's market capitalization stands at $301.58 million, reflecting the impact of recent developments on investor sentiment. The company's revenue for the last twelve months as of Q3 2024 was $106.4 million, with a remarkable revenue growth of 837.6% over the same period. However, this growth hasn't translated into profitability, as evidenced by the negative gross profit of -$159.16 million.
InvestingPro Tips indicate that Sage is "quickly burning through cash" and "analysts do not anticipate the company will be profitable this year." These insights are particularly relevant given the discontinuation of the dalzanemdor program, which may further strain the company's financial resources. Additionally, the tip that the "stock has taken a big hit over the last week" is consistent with the market's reaction to the disappointing Phase 2 study results.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips that could provide valuable context to Sage Therapeutics' current situation and future prospects.
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