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On Wednesday, Baird has adjusted its outlook on Sage Therapeutics (NASDAQ:SAGE) shares, reducing the price target to $9.00 from the previous $13.00 while maintaining a Neutral rating on the stock. This decision follows the announcement of the unsuccessful phase 2 LIGHTWAVE trial of dalzanemdor for Alzheimer's disease. The trial's outcome has shifted the entire focus of investors towards another of the company's prospects, Zurzuvae.
The LIGHTWAVE trial was a significant part of Sage Therapeutics' portfolio, and its failure has notably impacted the company's valuation. Baird's analysis suggests that investors are now disregarding the potential of dalzanemdor, especially considering its recent unsuccessful trials. Attention is now turned to the upcoming phase 2b trial of dalzanemdor in Huntington's disease, although expectations are tempered due to the compound's track record.
The analyst from Baird remarked on the trial's failure, emphasizing that the future of Sage Therapeutics now heavily relies on the performance of Zurzuvae. The market is awaiting further updates, particularly the earnings report in the coming weeks, which may provide additional insights into the company's financial trajectory and the potential for Zurzuvae to achieve cash flow breakeven in the foreseeable future.
Sage Therapeutics is at a critical juncture with the recent developments, and investors are keen on understanding the implications of the trial's outcome on the company's financial health. The earnings update will be a pivotal moment for the company to clarify its position and strategy moving forward.
The adjustment of the price target by Baird reflects the recalibration of expectations for Sage Therapeutics in light of the recent trial results. The market will be closely monitoring the company's next steps and the progress of its remaining pipeline candidates.
In other recent news, Sage Therapeutics continues its focus on brain health, conducting the Phase 2 DIMENSION study, evaluating dalzanemdor's effects on Huntington's Disease. Following these developments, Oppenheimer and RBC Capital Markets adjusted their outlooks on Sage, reducing their price targets and maintaining cautious optimism about the ongoing studies.
Sage Therapeutics also announced the termination of its collaboration with Biogen (NASDAQ:BIIB) on the SAGE-324 drug molecule, following negative results from the Phase 2 KINETIC 2 Study. However, the partnership remains intact for ZURZUVAE®, a treatment for postpartum depression. Moreover, other financial firms, including Truist Securities, Piper Sandler, Mizuho Securities, and Stifel, adjusted their outlooks on Sage Therapeutics.
For Q2 2024, Sage reported $7.4 million in collaboration revenue attributed to Zurzuvae, despite a net loss of $102.9 million. The company, which has $647 million in cash, projects funding to last until 2026 and plans to expand its sales force in Q4 2024 to boost Zurzuvae sales in 2025. These are the latest developments in the company's journey.
InvestingPro Insights
Recent InvestingPro data paints a challenging picture for Sage Therapeutics, aligning with Baird's cautious stance. The company's market cap stands at $392.55 million, reflecting the significant impact of recent setbacks. InvestingPro Tips highlight that Sage is quickly burning through cash and has seen its stock price take a big hit over the last week, with a 7.88% decline. This trend extends further, with a substantial 61.08% drop over the past six months.
The financial metrics underscore the company's struggles, with a negative gross profit margin of -213.59% and an operating income margin of -462.25% for the last twelve months as of Q2 2024. These figures reflect the high costs associated with drug development and the absence of significant revenue streams.
On a more positive note, InvestingPro Tips indicate that Sage holds more cash than debt on its balance sheet, which could provide some financial flexibility as it navigates this challenging period. The company's liquid assets also exceed short-term obligations, offering a degree of short-term stability.
Investors seeking a more comprehensive analysis can access 12 additional InvestingPro Tips for Sage Therapeutics, providing deeper insights into the company's financial health and market position.
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