On Wednesday, Mizuho maintained its Neutral stance on Sage Therapeutics (NASDAQ:SAGE) with a consistent price target of $20.00, following the announcement of disappointing trial results for the company's drug candidate dalzanemdor. The Phase 2 PRECEDENT study, which tested the drug in Parkinson’s disease patients with mild cognitive impairment, did not meet its expected outcomes.
Sage Therapeutics disclosed that the trial did not show any cognitive effect from dalzanemdor in Parkinson’s patients, leading to the decision to halt further development of the drug for this particular condition. Despite the setback, the company's management remains confident that this result will not affect ongoing Phase 2 trials of dalzanemdor for Alzheimer's and Huntington's diseases, which are scheduled to report results by the end of 2024.
The market's reaction to the news was significant, with Sage Therapeutics shares plummeting 29% during the day to approximately $11, contrasting with a marginal 0.1% decline in the XBI biotech index. Mizuho's analysis suggests that at this lower share price, the market is attributing little to no value to dalzanemdor, especially considering that the company's cash position at the end of the fourth quarter of 2023 was approximately equivalent to $11 per share.
In contrast to the discouraging news about dalzanemdor, Sage Therapeutics' management expressed optimism regarding the launch of their new product, Zurzuvae. This positive outlook is anticipated to reflect favorably in the company's first-quarter results for 2024.
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