Investing.com - Shares in Sage Therapeutics (NASDAQ:SAGE) were more than 36% higher in premarket US trading on Monday, fueled by news that drugmaker Biogen (NASDAQ:BIIB) has proposed to buy all outstanding shares in the group it does not already own for $7.22 each.
The size of the unsolicited, non-binding offer represents a roughly 30% premium over Sage's closing share price on Friday. Sage's equity, meanwhile, is valued at $441.7 million, Reuters reported.
A filing on Friday showed that Biogen, which has been grappling with sluggish sales of Alzheimer's drug Leqembi in the US, already owns a 10.2% stake in Sage.
There are no assurances that the proposal will be finalized, and the offer can be modified or withdrawn at any time, the filing showed.
In a separate statement, Sage said it will carefully review and evaluate the bid from Biogen "to determine the course of action that it believes is in the best interest of the Company and all Sage shareholders."
Sage's stock price has tumbled by over 78% over the past one-year period. The group abandoned the development of its dalzanemdor experimental drug for the treatment of neurological disorders last year following multiple trial failures, and said it would focus on its Zurzuvae postpartum depression medication it is currently working on with Biogen.
In a note to clients, analysts at Wells Fargo (NYSE:WFC) led by Mohit Bansal estimated the deal would see Biogen pay roughly $400 million for 100% ownership of Zurzuvae. Noting that the drug's projected peak value is tipped to be between $300 million to $500 million, the analysts argued that from a "numbers point of view" the move "does not look bad since it means [about a] 2x revenue multiple."
However, they flagged that Sage also comes with a "sizeable operating expense base" of $108 million quarterly since the third quarter of the 2024 fiscal year.
Overall, the analysts said they were "not convinced" that the deal is right for Biogen "or that it could happen at the current offer price."
"We see this as a financial deal which could take significant cost cuts and time before becoming accretive," the analysts wrote.
(Reuters contributed reporting.)