On Thursday, Piper Sandler adjusted its outlook on Sage Therapeutics (NASDAQ:SAGE), reducing the price target to $52 from the previous $70. Despite the cut, the firm maintained its Overweight rating on the company's stock. The adjustment follows Sage's announcement of $7.4 million in collaboration revenue for the second quarter of 2024, attributed to the successful launch of its product, Zurzuvae.
The company's management highlighted that obstetricians and gynecologists (OBGYNs) are the main prescribers of Zurzuvae, indicating a significant shift toward early screening, diagnosis, and treatment of postpartum depression (PPD (NASDAQ:PPD)) instead of referring patients for psychiatric care. Sage Therapeutics underscored substantial insurance coverage for Zurzuvae, with around 80% of commercial lives covered.
Additionally, two-thirds of national Pharmacy Benefit Managers (PBMs) have established coverage policies, and most decisions by Medicaid have been finalized.
Sage Therapeutics also provided updates on the development of dalzanemdor (SAGE-718) for Huntington's Disease (HD) and Alzheimer's Disease (AD). It noted an adjustment in the DIMENSION study's primary endpoint to the Symbol Digit Modalities Test (SDMT), based on findings from the SURVEYOR study. The company expects this change to enhance the study's outcomes.
The firm remains optimistic about Sage's prospects, particularly with a planned salesforce expansion in early fourth quarter of 2024, which is anticipated to significantly boost Zurzuvae sales. By the end of the second quarter of 2024, Sage reported having $647 million in cash, with financial guidance suggesting a runway extending into 2026.
In conclusion, Piper Sandler's revised price target of $52 per share reflects an updated valuation based on Sage Therapeutics' current financial performance and strategic developments.
In other recent news, Sage Therapeutics has been the subject of multiple financial firm adjustments following its mixed second quarter results. Piper Sandler, Mizuho Securities, and Stifel have all revised their outlooks on the biopharmaceutical company. Piper Sandler reduced its price target to $52 from $70, Mizuho Securities to $12 from $13, and Stifel to $15 from $20, while all firms maintained their previous ratings.
The adjustments come after Sage Therapeutics reported $7.4 million in collaboration revenue for Q2 2024, attributed to the successful launch of its product, Zurzuvae. Despite sales figures for Zurzuvae falling short of some expectations, the product saw a notable 67% quarter-over-quarter increase in written prescriptions. Additionally, Sage Therapeutics announced plans to expand the Zurzuvae sales force in the fourth quarter of 2024 to foster growth in 2025.
The company also provided updates on the development of dalzanemdor (SAGE-718) for Huntington's Disease (HD) and Alzheimer's Disease (AD), including an adjustment in the DIMENSION study's primary endpoint. Sage Therapeutics remains committed to its ongoing projects and the expansion of its sales force to meet the growing demand for Zurzuvae.
Despite recent developments, the company ended Q2 with a net loss of $102.9 million and cash reserves of $647 million, projecting funding to last until 2026.
InvestingPro Insights
As Piper Sandler revises its stance on Sage Therapeutics, investors may find additional context in real-time data and insights from InvestingPro. With a market capitalization of approximately $658.99 million, Sage Therapeutics presents a unique profile in the biotech industry. Notably, the company's cash reserves outstrip its debt, suggesting a solid financial footing. However, InvestingPro Tips indicate that Sage is rapidly depleting its cash and analysts have downgraded earnings expectations for the upcoming period, which could signal caution for potential investors.
While the company's revenue growth over the last twelve months has been impressive at 868.96%, its gross profit margin paints a different picture, with a substantial negative margin of -271.55%. This discrepancy underscores the challenges Sage faces in converting revenue into actual profit. Additionally, the stock's price has declined significantly over the past year, with a 69.58% drop in total return, reflecting market sentiment and possibly the company's financial health.
For investors seeking a more in-depth analysis, there are over 10 additional InvestingPro Tips available, which provide a comprehensive view of Sage's financial metrics and market performance. With the next earnings date set for November 5, 2024, and an analyst fair value estimate of $12, complemented by InvestingPro's fair value assessment of $14.24, stakeholders should closely monitor the company's trajectory in the wake of its salesforce expansion and product developments.
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