On Friday, RBC Capital Markets adjusted its stance on Sage Therapeutics (NASDAQ: SAGE), downgrading the stock to Underperform with a new price target of $4.00. The firm’s analysis suggests a pessimistic outlook for the company’s key drug candidate, dalzanemdor, particularly in its effectiveness against Huntington’s and Alzheimer’s diseases.
The downgrade stems from RBC Capital’s evaluation of the drug’s mechanism, endpoints, and previously gathered data. The firm anticipates that the upcoming phase II readouts at the year’s end are unlikely to demonstrate significant clinical benefits in treating the mentioned diseases. This assessment casts doubt on the drug’s potential success and its contribution to the company’s profitability.
RBC Capital expressed concerns about Sage Therapeutics’ financial outlook in the absence of positive results for dalzanemdor. The analyst noted that achieving profitability would be a long-term challenge, necessitating substantial adjustments to the company’s cost structure. This would be the case even if Zurzuvae, another drug developed by Sage Therapeutics, continues its reasonable initial launch trajectory in Postpartum Depression (PPD (NASDAQ:)).
The firm concluded that, given the current expectations for the drug’s performance, Sage Therapeutics’ shares are more likely to underperform compared to its peers as the market anticipates the phase II results. The statement from RBC Capital reflects a cautious approach to the stock, taking into account the potential impact of the drug development outcomes on the company’s financial health.
In other recent news, pharmaceutical company Sage Therapeutics has terminated its collaboration with Biogen (NASDAQ:) on the SAGE-324 drug molecule, following negative results from the Phase 2 KINETIC 2 Study. The termination will be effective from February 17, 2025. Despite this, Sage Therapeutics and Biogen continue their partnership on ZURZUVAE, the first and only FDA-approved oral treatment for women with postpartum depression.
Several financial firms have adjusted their outlooks on Sage Therapeutics. Truist Securities has reduced its stock target from $18 to $13, while maintaining a Hold rating. Piper Sandler also revised its outlook, cutting the price target from $70 to $52, and maintaining an Overweight rating. Mizuho Securities and Stifel adjusted their outlooks as well, reducing their price targets to $12 and $15 respectively.
Sage Therapeutics reported $7.4 million in collaboration…
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