SAGE Therapeutics Inc (SAGE) Wins Price Target Hike on Back of Encouraging MDD Data

Canaccord's John Newman now sees almost 18% in upside potential for SAGE following a big clinical home run in major depressive disorder.


SAGE Therapeutics Inc (NASDAQ:SAGE) is roaring up nearly 77% through the market ceiling after a massively successful Phase 2 read-out in major depressive disorder (MDD), earning a new shot of confidence from an already positive bull on the Street.

Canaccord analyst John Newman is taking notice that not only did SAGE deliver statistical significance in this Phase 2 trial, he emphasizes that the drug quite meaningfully outclassed the placebo “after the first dose.”

On the heels of this “unequivocally positive” breakthrough for the company’s depression asset, the analyst maintains a Buy on SAGE stock while meaningfully boosting the price target from $140 up to $191, which implies a nearly 18% upside from current levels. (To watch Newman’s track record, click here)

Consider that the current marketed selective serotonin reuptake inhibitor (SSRI) depression drugs usually need months and months of doses before revealing any impact. Meanwhile, the analyst commends the drug maker’s SAGE-217 for hitting a statistically significant through the fourth week, all while dosing had ended by the 15th day. By just 15 days of dosing, SAGE’s drug underscored a “strong effect on remission.”

Praising the depression drug’s safety profile, the analyst elaborates: “Safety clean, highly encouraging SAGE-217 showed a clean safety profile with adverse events consistent with prior studies, including headache, dizziness, nausea, and somnolence. Importantly, there were no deaths or serious adverse events, and only n=2 (4.4%) of patients in the SAGE-217 arm discontinued vs 0% for placebo. One case of liver function test elevation was seen resulting in discontinuation, but the effects seemed transient, and SAGE does not believe the event is drug related at this time.”

In the grander scheme, “While some investors may want to take profits (with stock up 75% before the open), we think the long-range prospects for SAGE are positive and maintain our BUY rating. We have increased our probability of success for SAGE-217 in MDD, PPD, and also essential tremor, in our valuation model as we believe there is read-through given the biology of these indications. We look for SAGE to discuss Phase 3 plans during 2018,” Newman surmises, quite confident on this depression asset’s potential.

TipRanks has an arrow pointing to the bullish camp when the analyst consensus on the Street boils down for this drug maker. Out of 11 analysts polled in the last 3 months, all 11 are bullish on SAGE stock. However, is this stock overvalued or undervalued in the biotech-verse? Taking under account analyst expectations, the 12-month average price target stands at $117.50, marking a nearly 28% downside from where the stock is currently trading.