On Tuesday, Oppenheimer adjusted its outlook on Sage (LON:SGE) Therapeutics (NASDAQ:SAGE), reducing the price target to $9 from the previous $10, while keeping a Perform rating on the stock. The revision follows the announcement that Sage's drug dalzanemdor did not meet the primary goal in the Phase 2 LIGHTWAVE study, which evaluated the treatment in patients with Alzheimer's disease-related mild cognitive impairment (AD-MCI).
The LIGHTWAVE study outcome was seen as a setback, although it was somewhat anticipated after the drug's earlier failure in the Phase 2 PRECEDENT study for Parkinson's disease-related mild cognitive impairment (PD-MCI). Both studies used the WAIS-IV Coding Test score as the primary endpoint, but the drug will no longer be pursued for AD-MCI treatment, leading to the lowered price target.
Despite the unsuccessful results in the AD-MCI patient group, Oppenheimer expressed a cautious optimism regarding the ongoing Phase 2 DIMENSION study. This study is investigating dalzanemdor in patients with Huntington's disease-related mild cognitive impairment (HD-MCI) and is utilizing a different primary endpoint, the HD-CAB, which was validated in the Phase 2 SURVEYOR study.
Investors are advised to look out for further developments from Sage's partner, Biogen Inc. (NASDAQ:BIIB), which is expected to provide updates on the launch of Zurzuvae during its third-quarter 2024 update on October 30, 2024. This upcoming report may offer additional insights into Sage's commercial strategy and future prospects following the recent clinical trial outcomes.
In other recent news, Sage Therapeutics experienced a setback with its investigational drug, dalzanemdor. The drug, intended for Alzheimer's Disease, did not meet the primary endpoint in the Phase 2 LIGHTWAVE study. Despite this, Sage Therapeutics continues to focus on brain health and is conducting a Phase 2 study named DIMENSION, evaluating the effects of dalzanemdor on Huntington's Disease.
In the wake of these developments, RBC Capital Markets downgraded Sage Therapeutics, citing concerns about the company's financial outlook and the potential success of dalzanemdor. Other financial firms, including Truist Securities, Piper Sandler, Mizuho Securities, and Stifel, also adjusted their outlooks on Sage Therapeutics.
In addition, Sage Therapeutics announced the termination of its collaboration with Biogen on the SAGE-324 drug molecule, following negative results from the Phase 2 KINETIC 2 Study. Despite this, the partnership remains intact for ZURZUVAE®, a treatment for postpartum depression.
Finally, Sage Therapeutics reported $7.4 million in collaboration revenue for Q2 2024, attributed to Zurzuvae. Despite a Q2 net loss of $102.9 million, the company reported having $647 million in cash, projecting funding to last until 2026. Sage plans to expand its sales force in Q4 2024 to boost Zurzuvae sales in 2025.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Sage Therapeutics' financial situation, providing context to the recent clinical trial setback and Oppenheimer's price target reduction. The company's market capitalization stands at $396.83 million, reflecting the market's current valuation of the firm.
InvestingPro Tips highlight that Sage is "quickly burning through cash" and that "analysts anticipate sales decline in the current year." These insights align with the challenges faced by the company, including the recent disappointing results from the LIGHTWAVE study. The tip that "5 analysts have revised their earnings downwards for the upcoming period" further underscores the impact of the clinical trial outcome on market expectations.
Despite these challenges, Sage maintains a strong liquidity position. An InvestingPro Tip notes that the company "holds more cash than debt on its balance sheet," which could provide some financial flexibility as it navigates this setback and focuses on other pipeline candidates, such as the ongoing DIMENSION study for HD-MCI.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips that could provide valuable insights into Sage Therapeutics' financial health and market position.
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