On Thursday, Truist Securities revised its stock price target for Sage Therapeutics (NASDAQ: SAGE), decreasing it to $18.00 from the previous $22.00, while keeping a Hold rating on the stock. The adjustment follows the initial success of Sage's new product launch, Zurzuvae, which the company is co-commercializing with Biogen (NASDAQ:BIIB), leading to a shared profit structure.
The analyst from Truist Securities noted that the launch of Zurzuvae appears to be promising. Still, the potential for significant profit growth is limited due to the 50/50 profit-share agreement with Biogen. This arrangement is perceived as a cap on the upside for Sage Therapeutics' earnings from this product.
Sage Therapeutics' pipeline development also faces challenges, according to the firm. The competitive environment for treatments of essential tremor and Huntington's disease is impacting the visibility and potential success of Sage's candidates, SAGE-324 and dalzanemdor, respectively. The recent failure of dalzanemdor in treating Parkinson's disease is seen as a negative indicator for the compound's prospects in upcoming trials for Huntington's disease (HD) and Alzheimer's disease (AD).
As a result of these developments, Truist Securities has chosen to eliminate the technology value previously attributed to Sage's sum-of-the-parts (SOTP) valuation. This reassessment underpins the decision to lower the price target for Sage Therapeutics' shares.
The analyst maintained a Hold rating on the stock, signaling a neutral stance on Sage Therapeutics' investment prospects at this time. The revised price target reflects a more cautious outlook on the company's financial performance and pipeline potential moving forward.
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