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Investing.com - Scotiabank (TSX:BNS) downgraded Sage Therapeutics (NASDAQ:SAGE) from Sector Outperform to Sector Perform on Tuesday, while lowering its price target to $9.20 from $12.00. The stock, currently trading at $9.17, has shown remarkable strength with a 56.75% gain over the past six months, though InvestingPro data indicates the shares may be overbought at current levels.
The rating change follows the June 16 announcement of Supernus’s tender offer for all outstanding Sage Therapeutics shares, which includes $8.50 per share plus a $3.50 contingent value right (CVR) tied to future zuranolone commercial milestones. The company maintains a strong financial position with more cash than debt and a healthy current ratio of 9.13.
Scotiabank had previously speculated that Biogen (NASDAQ:BIIB), which already owns a 50% profit share in Zurzuvae in the U.S., might present a counteroffer to acquire the remaining stake and eliminate future ex-U.S. royalty obligations.
After reviewing the published 14D-9 filing, Scotiabank now considers a counteroffer from Biogen or other parties unlikely, noting that Biogen had made what it describes as a "low-ball offer" in January.
Scotiabank’s new price target of $9.20 reflects the pending $8.50 per share tender offer plus a discounted value for the $3.50 CVR, with the firm calculating Sage’s cash position at approximately $4.76 per share by the end of Q3.
In other recent news, Supernus Pharmaceuticals (NASDAQ:SUPN) has announced its intention to acquire Sage Therapeutics for $8.50 per share in cash, valuing the company at approximately $561 million in total equity value. The acquisition also includes a contingent value right potentially worth an additional $3.50 per share, depending on future performance milestones. This offer represents a premium over Biogen’s previous bid of $7.22 per share, which Sage had rejected earlier. Analysts from H.C. Wainwright, TD Cowen, and Piper Sandler have adjusted their price targets in response to the acquisition, with H.C. Wainwright maintaining a Neutral rating and a $12.00 price target, while Piper Sandler downgraded Sage to Neutral from Overweight. TD Cowen lowered its price target to $8.50, aligning with the acquisition offer, and Truist Securities raised its target to $9.00, factoring in the potential value from contingent payments. The transaction is expected to close in the third quarter of 2025, with minimal regulatory hurdles anticipated. Analysts have expressed varying levels of confidence in Sage’s postpartum depression treatment, Zurzuvae, with some viewing it as a key value driver for the company. The acquisition news has led to significant market activity, with Sage’s shares experiencing notable movement following the announcement.
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