Top Analyst Weighs in on SAGE (SAGE) Therapeutics as It Gets One Step Closer to FDA Approval

SAGE Therapeutics’ (SAGE) Zulresso, a post-partum depression drug – the first ever post-partum drug — is well along in its goal to become FDA approved. Ahead of the Dec. 19 approval decision, the drug was reviewed by a committee of 18 panelists who weigh the risk-benefit profile of the drug. Overall, Zulresso got 17 ‘yeses’ and 1 no in the final vote. As far as the side-effects go, the major worry is loss of consciousness. A panelist noted one danger is that mothers using the drug could lose consciousness and fall or drop their child while on the medication.

The old Wall Street maxim, “buy the rumor, sell the news” appears to apply to SAGE, as the stock tumbles nearly 9% as of this writing.

Cowen analyst Ritu Baral commented, “We believe there is an overwhelming (99%+) chance that Zulresso will be approved in this review cycle barring CMC issues. However, discussions on the drug’s safety profile, scrutiny on serious adverse events (no matter how theoretical) and subsequent panelists’ (and FDA’s) clear inclination to restrict the treatment setting will further depress consensus peak sales for brexanolone, no matter the panel’s effusive praise for the drug’s efficacy. We do not believe brexanolone’s loss of consciousness safety signal extends to next-gen ‘217, noting that no LOC events occurred in the Ph2 MDD trial.”

The analyst continued, “While we think FDA will very likely approve Zulresso in this review cycle (barring unexpected CMC issues), we also think they will approach Zulresso approval conservatively and will include a black box warning for excessive sedation and LOC. That said, we do not envision the warning having a negative impact on the sales of Zulresso, given a REMS will already be in place. We believe the label could also have warnings about concomitant use of benzodiazepines and barbiturates that can exacerbate the side effects of Zulresso.”

Bottom line: Baral reiterates an Outperform rating on SAGE stock, with a price target of $207, which represents a potential upside of 65% from where the stock is currently trading.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Ritu Baral has a yearly average return of 26.6% and a 49% success rate. Baral has a 67.7% average return when recommending SAGE, and is ranked #56 out of 4900 analysts.

Baral isn’t alone when it comes to supporting SAGE. Out of nine analysts surveyed by TipRanks in the last three months, every single one feels confident in the stock, rating it a Buy. The consensus price target is $220.25, showing a 73% upside from the current cost of a share. (See SAGE’s price targets and analyst ratings on TipRanks)

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