On Tuesday, Citi reaffirmed its Sell rating on shares of Sage Therapeutics (NASDAQ: SAGE) with a price target of $8.00. The firm's stance came after evaluating the Phase 2 SURVEYOR study data for Sage's drug dalzanemdor, aimed at treating cognitive impairment in Huntington's disease (HD). The provided information was deemed insufficient to conclude the drug's effectiveness.
Sage Therapeutics disclosed topline results from the SURVEYOR study, noting a statistically significant difference in HD-CAB composite scores at baseline between healthy participants and those with HD. This difference, expected as a validation of the clinical trial endpoint, did not extend to revealing the drug's efficacy. Following the initial treatment period, the firm highlighted a small, undisclosed numerical difference between dalzanemdor and placebo at Day 28, which did not contribute to a definitive assessment of the treatment's success.
Citi's analysis pointed out that the SURVEYOR study was not designed to achieve statistical significance on the HD-CAB score due to the small size of the sample. The decision by Sage to withhold the specific numerical changes observed post-treatment was criticized for not aiding in the assessment of risks associated with the upcoming Phase 2 DIMENSION study, scheduled for the second half of 2024.
The price target set by Citi reflects skepticism about the prospects of dalzanemdor, basing its valuation on the limited data provided from the recent study. The lack of transparency in the results has left questions unanswered regarding the potential benefits of the treatment.
In other recent news, Sage Therapeutics has been in the spotlight following various analyst actions and company developments. Baird initiated coverage on the biopharmaceutical company with a neutral rating and a price target of $15, citing projections of gradual sales growth from its postpartum depression treatment, Zurzuvae. Concurrently, Citi initiated coverage with a sell rating and a price target of $8, indicating potential for further decline due to upcoming events and high cash consumption rate.
Meanwhile, Mizuho Securities revised its outlook on Sage Therapeutics, reducing the price target to $18 while maintaining a neutral stance, despite better-than-expected quarterly results. Truist Securities also adjusted its price target to $18, noting the limited potential for significant profit growth due to a profit-share agreement with Biogen (NASDAQ:BIIB) on Zurzuvae. Furthermore, Scotiabank reduced its price target to $19 following a setback in the Phase 2 trial of dalzanemdor, a drug aimed at treating cognitive impairment associated with Parkinson’s disease.
These are recent developments that underline the cautious optimism surrounding Sage Therapeutics' prospects, with the company's performance and the success of its clinical trials likely to be critical factors influencing its future trajectory. The company is actively involved in advancing its pipeline of treatments for various neurological disorders, with several Phase 2 studies slated for readouts in the current year.
InvestingPro Insights
In light of Citi's recent Sell rating on Sage Therapeutics, real-time data from InvestingPro offers additional context for investors evaluating the company's financial health and market performance. Sage Therapeutics holds a market capitalization of approximately $624.09 million and is trading near its 52-week low, with its stock price having experienced a significant decline over the last year. Despite a substantial revenue growth rate of 868.96% in the last twelve months as of Q1 2024, the company's gross profit margin stands at a negative 271.55%, reflecting underlying challenges in profitability.
Two pertinent InvestingPro Tips for Sage Therapeutics indicate that while the company has more cash than debt on its balance sheet, it is quickly burning through cash. Additionally, analysts have revised their earnings downwards for the upcoming period, and they do not anticipate the company will be profitable this year. These insights may be particularly relevant for investors considering the potential risks and opportunities associated with Sage's future performance.
Investors interested in a deeper analysis can find additional InvestingPro Tips on Sage Therapeutics by visiting https://www.investing.com/pro/SAGE. For those looking to access the full suite of tips and insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. There are 12 more InvestingPro Tips available that could further inform investment decisions regarding Sage Therapeutics.
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