On Wednesday, Scotiabank adjusted its price target for Sage (LON:SGE) Therapeutics (NASDAQ:SAGE), a biopharmaceutical company, to $14.00, down from the previous target of $17.00. The firm retained its Sector Outperform rating on the stock.
The adjustment follows the report of Sage Therapeutics' sales for Zurzuvae, which totaled $22.1 million. This figure stood against Scotiabank's and the consensus estimates of $26 million and $19 million, respectively, marking a 49% quarter-over-quarter growth. Despite the sales figures not meeting Scotiabank's expectations, the launch is considered to be progressing well, with a boost anticipated from the recent expansion of the sales force.
Sage Therapeutics' management has indicated that the cash burn for 2025 is projected to decrease due to a 33% reduction in personnel, which should be finalized before the end of the year. However, they also foresee that the company's reserves, which amounted to $569 million as of September, will be depleted before the end of 2026.
The lowered price target is also preemptively accounting for a potential negative outcome from the upcoming DIMENSION Huntington’s disease study, where Sage's drug dalzanemdor is being evaluated.
The study results are expected later this year. Scotiabank suggests that a miss in this study could lead to further reductions in valuation. The new price target of $14 is based on a heavily risk-adjusted sum of parts analysis, with Zurzuvae and the company's cash reserves being considered the only tangible assets.
InvestingPro Insights
Recent InvestingPro data provides additional context to Sage Therapeutics' financial situation. The company's market capitalization stands at $517.71 million, reflecting the market's current valuation of the firm. Despite the recent sales figures for Zurzuvae, Sage's revenue for the last twelve months as of Q2 2024 was $97.24 million, with a remarkable revenue growth of 837.55% over the same period.
InvestingPro Tips highlight some key aspects of Sage's financial health. The company holds more cash than debt on its balance sheet, which aligns with the management's projection of cash reserves lasting until 2026. However, Sage is quickly burning through cash, a point of concern echoed in the article's mention of decreasing cash burn for 2025.
Interestingly, Sage has seen a significant return over the last week, with a 10.85% price total return, and a strong 17.45% return over the last month. This recent positive performance contrasts with the lowered price target from Scotiabank, suggesting market optimism despite analyst caution.
For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips for Sage Therapeutics, providing a deeper dive into the company's financial outlook and market position.
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