On Friday, RBC Capital Markets adjusted its stance on Sage Therapeutics (NASDAQ: SAGE), downgrading the inventory to Underperform with a brand new worth goal of $4.00. The agency’s evaluation suggests a pessimistic outlook for the corporate’s key drug candidate, dalzanemdor, significantly in its effectiveness in opposition to Huntington’s and Alzheimer’s ailments.
The downgrade stems from RBC Capital’s analysis of the drug’s mechanism, endpoints, and beforehand gathered information. The agency anticipates that the upcoming part II readouts on the 12 months’s finish are unlikely to reveal vital scientific advantages in treating the talked about ailments. This evaluation casts doubt on the drug’s potential success and its contribution to the corporate’s profitability.
RBC Capital expressed issues about Sage Therapeutics’ monetary outlook within the absence of constructive outcomes for dalzanemdor. The analyst famous that attaining profitability could be a long-term problem, necessitating substantial changes to the corporate’s value construction. This is able to be the case even when Zurzuvae, one other drug developed by Sage Therapeutics, continues its cheap preliminary launch trajectory in Postpartum Despair (PPD (NASDAQ:)).
The agency concluded that, given the present expectations for the drug’s efficiency, Sage Therapeutics’ shares usually tend to underperform in comparison with its friends because the market anticipates the part II outcomes. The assertion from RBC Capital displays a cautious strategy to the inventory, bearing in mind the potential affect of the drug growth outcomes on the corporate’s monetary well being.
In different latest information, pharmaceutical firm Sage Therapeutics has terminated its collaboration with Biogen (NASDAQ:) on the SAGE-324 drug molecule, following detrimental outcomes from the Section 2 KINETIC 2 Research. The termination can be efficient from February 17, 2025. Regardless of this, Sage Therapeutics and Biogen proceed their partnership on ZURZUVAE, the primary and solely FDA-approved oral therapy for girls with postpartum despair.
A number of monetary companies have adjusted their outlooks on Sage Therapeutics. Truist Securities has decreased its inventory goal from $18 to $13, whereas sustaining a Maintain ranking. Piper Sandler additionally revised its outlook, chopping the worth goal from $70 to $52, and sustaining an Obese ranking. Mizuho Securities and Stifel adjusted their outlooks as properly, lowering their worth targets to $12 and $15 respectively.
Sage Therapeutics reported $7.4 million in collaboration income for Q2 2024, attributed to Zurzurvae. Regardless of a Q2 internet lack of $102.9 million, the corporate reported having $647 million in money, projecting funding to final till 2026. Sage plans to increase its gross sales power in This autumn 2024 to spice up Zurzuvae gross sales in 2025. These are latest developments that traders ought to pay attention to.
InvestingPro Insights
The latest downgrade by RBC Capital Markets aligns with a number of InvestingPro metrics and ideas for Sage Therapeutics. The corporate’s market cap stands at $426.74 million, reflecting the market’s present valuation. InvestingPro information exhibits that Sage’s inventory has taken a major hit, with a 6-month worth whole return of -57.84%, buying and selling close to its 52-week low at simply 24.73% of its 52-week excessive.
InvestingPro Suggestions point out that Sage is rapidly burning by way of money and isn’t worthwhile over the past twelve months, which helps RBC’s issues concerning the firm’s path to profitability. The income progress of 837.55% over the past twelve months is notable, however the detrimental gross revenue margin of -213.59% suggests vital challenges in value administration.
Two key InvestingPro Suggestions spotlight that analysts have revised their earnings downwards for the upcoming interval and anticipate a gross sales decline within the present 12 months. These insights corroborate RBC’s pessimistic outlook on Sage’s near-term prospects, significantly relating to the potential efficiency of dalzanemdor.
For traders searching for a extra complete evaluation, InvestingPro gives 9 further ideas that would present additional context to Sage Therapeutics’ monetary state of affairs and market place.
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