On Thursday, RBC Capital adjusted its stance on Sage (LON:SGE) Therapeutics (NASDAQ:SAGE), moving from an Underperform to a Sector Perform rating, while maintaining a price target of $4.00. The revision follows the announcement made earlier in the day regarding the failure of Sage's key pipeline drug, dalzamendor, in treating Huntington's disease, leading to the discontinuation of the program.
The analyst from RBC Capital noted that the prior concerns about potential stock downside ahead of and following the data readout have been realized. With the termination of the dalzamendor program, Sage Therapeutics is faced with the task of executing a strategic reset. This includes the launch of Zurzuvae, another drug in the company's portfolio.
Management at Sage has expressed confidence in the prospects of Zurzuvae, the promise of their '319 compound, and the potential for business development exploration. According to the analyst, as Sage Therapeutics navigates the launch of Zurzuvae and the development of its earlier-stage pipeline, the stock is anticipated to align more closely with market expectations.
The analyst's commentary highlighted the company's shift in focus following the setback with dalzamendor. Sage Therapeutics will now concentrate on advancing Zurzuvae and exploring strategic business development opportunities to bolster its offerings.
In summary, RBC Capital's upgrade to a Sector Perform rating reflects the analyst's view that Sage Therapeutics' share price will stabilize as the company adjusts its strategy and progresses with its remaining drug candidates and potential business partnerships. The price target for Sage Therapeutics remains set at $4.00.
In other recent news, Sage Therapeutics has reported a significant surge in postpartum depression (PPD (NASDAQ:PPD)) treatment sales, particularly for ZURZUVAE. The company's Q3 financial results revealed a 49% increase in revenue for ZURZUVAE, totaling $22.1 million with approximately 2,000 prescriptions filled. Sage has also announced its strategic shift towards prioritizing PPD treatments, which will include discontinuing ZULRESSO after December 31, 2024.
Despite setbacks in Alzheimer's research, Sage Therapeutics remains optimistic about its PPD focus and the forthcoming data from the DIMENSION study for Huntington's disease. The company has regained full ownership of the SAGE-324 program after Biogen (NASDAQ:BIIB) ended their collaboration.
These recent developments include Sage Therapeutics' expansion of its sales force to establish ZURZUVAE as a first-line therapy for PPD. The company is also aiming to improve access to mental health care for new mothers through collaborations and telehealth options. However, the company reported a net loss of $93.6 million for Q3 2024.
InvestingPro Insights
Recent InvestingPro data provides additional context to Sage Therapeutics' current situation. The company's market capitalization stands at $301.58 million, reflecting the market's reaction to recent developments. Despite the setback with dalzamendor, Sage has shown significant revenue growth, with a 337.08% increase in quarterly revenue as of Q3 2024. This growth may be attributed to the company's other products and ongoing research efforts.
InvestingPro Tips highlight some challenges Sage faces. The company is "quickly burning through cash" and "suffers from weak gross profit margins," which aligns with the need for a strategic reset mentioned in the article. Additionally, the stock has "taken a big hit over the last week," with a 1-week price total return of -8.57%, likely reflecting the market's response to the dalzamendor news.
These insights underscore the importance of Sage's focus on Zurzuvae and potential business development opportunities. Investors seeking a more comprehensive analysis can access 15 additional InvestingPro Tips for Sage Therapeutics, providing a deeper understanding of the company's financial health and market position.
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