On Wednesday, Goldman Sachs affirmed its Neutral stance on shares of Sage Therapeutics (NASDAQ:SAGE), maintaining a price target of $28.00. The decision follows Sage's announcement that its Phase 2 PRECEDENT study of dalzanemdor for mild cognitive impairment (MCI) in Parkinson's Disease (PD) failed to meet its primary endpoint. Consequently, Sage will halt the development of dalzanemdor for MCI due to PD.
Sage Therapeutics disclosed the PRECEDENT study's primary endpoint, which was a change from baseline versus placebo on the Wechsler Adult Intelligence Scale Fourth Edition-IV (WAIS-IV) Coding test score at Day 42, was not met.
Following this announcement, Sage's stock experienced a pre-market drop of approximately 28%. This decline reflects investor concerns about the potential implications for other ongoing trials, despite management's caution that these results are not indicative of outcomes in other neurodegenerative conditions due to PD's unique pathophysiology.
Despite the setback with dalzanemdor, Sage reiterated its commitment to delivering Phase 2 topline data for MCI due to Huntington's disease and Alzheimer's disease, expected in mid-2024 and late-2024, respectively.
These are areas where the company remains most focused. Additionally, Sage's management expressed continued optimism regarding the ongoing launch of Zurzuvae for postpartum depression (PPD (NASDAQ:PPD)), anticipating the first quarter earnings report on April 25, 2024, for further updates.
Sage's management is closely monitoring the performance of Zurzuvae, with approximately 120 prescriptions written by the end of 2023 following its mid-December launch. The company is also awaiting commercial and Medicaid formulary decisions for Zurzuvae, which are expected in the first and second halves of 2024. The proportion of prescriptions from psychiatrists and OBGYNs is currently evenly split, according to the fourth quarter earnings update.
Looking forward, Goldman Sachs is also anticipating Phase 2b data for SAGE-324, a treatment for essential tremor, in mid-2024. This data will be significant for evaluating SAGE-324's potential as a differentiated treatment option compared to calcium channel blockers currently under development by competitors.
InvestingPro Insights
As Sage Therapeutics navigates the aftermath of its recent clinical trial setback, investors are closely scrutinizing the company's financial health and stock performance. Notably, Sage holds more cash than debt on its balance sheet, a reassuring sign of financial stability that could help the company weather the current storm. Additionally, with the stock trading near its 52-week low and an RSI suggesting it is in oversold territory, some investors might see a potential opportunity for value.
On the financial front, Sage's market capitalization stands at $759.75 million, with a striking revenue growth of over 1024% in the last twelve months as of Q4 2023. This exponential increase, however, comes with the caveat of a significant gross profit margin deficit of -314.54% in the same period, emphasizing the company's challenges in translating revenue growth into profitability. The next earnings date is set for April 25, 2024, a date that investors are likely marking on their calendars for further insights into the company's trajectory.
For those interested in a deeper dive into Sage's financials and stock performance, there are additional InvestingPro Tips available. These tips provide a comprehensive analysis that could help investors make more informed decisions. By using the coupon code PRONEWS24, readers can gain an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking even more valuable insights. With the upcoming earnings report and ongoing developments, staying informed with the latest data and expert analysis from InvestingPro could be crucial for investors following Sage Therapeutics.
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