Sage Therapeutics Draws Negative Commentary on Biogen Deal

Sage shares fell as two analysts offered negative assessments of its agreement with Biogen to work together on Sage's depression drug.
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Sage Therapeutics  (SAGE) - Get Report shares fell Tuesday as two analysts offered negative assessments of its agreement last week with Biogen  (BIIB) - Get Report to work together on Sage's depression drug.

The two biopharmaceutical companies will develop Sage’s zuranolone (SAGE-217) for major depressive disorder, postpartum depression and other psychiatric disorders. They also will focus on SAGE-324 for essential tremor and other neurological disorders. In addition, Biogen will pay Sage $1.525 billion in cash.

Sage recently traded at $73.38, down 0.96%, and has gained 1.65% year to date. Biogen recently traded at $242.64, up 0.95%, but has slumped 18.23% so far this year.

Raymond James analyst Dane Leone downgraded Sage to market perform from outperform, refraining from giving a price target. The Biogen deal "failed" for Sage, as its management couldn’t explain how the venture will accelerate Sage’s drug pipeline, Leone said in a commentary cited by The Fly.

In addition, Biogen officials failed to provide strong proof of their ability to build a presence within the field of psychiatry, Leone said.

Citi analyst Neena Bitritto-Garg cut her price target for Sage to $93 from $100, while maintaining a buy rating. The Biogen deal could bolster the prospects for zuranolone/SAGE-324 and solves Sage’s funding need, but she’s "perplexed regarding rationale," The Fly reported.

To be sure, Truist analyst Joon Lee lifted his price target for Sage to $70 from $60, maintaining a hold rating. The $1.53 billion upfront cash infusion from Biogen and up to $1.6 billion in potential milestone payments allow Sage to direct its resources toward more promising drug candidates, Lee said in commentary cited by The Fly.