Baird has initiated coverage on Sage Therapeutics (NASDAQ:SAGE) with a Neutral rating and a price target set at $15.00.
The firm's analysis suggests a conservative outlook for the biopharmaceutical company, citing the recent launch of its postpartum depression (PPD (NASDAQ:PPD)) treatment, Zurzuvae, in December as a basis for projected sales growth.
The forecast for Sage Therapeutics' revenue stream from Zurzuvae is a gradual increase, with expectations of reaching $262 million by 2029. This figure is anticipated to be evenly split with its partner BIIB. The Baird analyst has factored in the potential success of the company's other developmental drugs, assigning a 20% probability of success to both dalzanemdor, aimed at treating Huntington's disease, and SAGE-324 for essential tremor.
Dalzanemdor is currently undergoing a phase 2a study, with results expected in mid-2024. Additionally, a phase 2b study is projected to yield results later in the same year. For SAGE-324, which is being developed for essential tremor, phase 2 study results are also anticipated in mid-2024.
The initiation of coverage by Baird comes at a time when Sage Therapeutics is actively involved in advancing its pipeline of treatments for various neurological disorders. The company's collaborative efforts with BIIB indicate a strategic partnership aimed at enhancing the commercial potential of its products.
The Baird analyst's commentary underscores the cautious optimism surrounding Sage Therapeutics' prospects. The company's performance and the success of its clinical trials in the coming months are likely to be critical factors influencing the stock's future trajectory.
InvestingPro Insights
As Sage Therapeutics navigates the commercialization of its postpartum depression treatment and advances its clinical trials, real-time data from InvestingPro provides a snapshot of the company's financial health and market sentiment. With a market capitalization of approximately $717.97 million and a striking revenue growth of 868.96% in the last twelve months as of Q1 2023, Sage's financial metrics present a mixed picture. Despite this substantial revenue increase, the company is grappling with negative gross profit margins of -271.55% and an operating income margin of -558.59%, reflecting significant challenges in profitability.
The stock's performance has been turbulent, with a 1-year price total return of -76.25%, suggesting that investors have been reacting to the company's financial position and market dynamics. In light of these factors, InvestingPro Tips highlight that Sage holds more cash than debt, which could provide some financial flexibility. However, the company is also quickly burning through cash, and analysts have revised their earnings downwards for the upcoming period, indicating potential concerns about its near-term financial outlook.
To gain a deeper understanding of Sage Therapeutics' financial situation and for additional InvestingPro Tips, which currently number 12, visit InvestingPro. For those interested in a comprehensive analysis, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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