Biotech Stock Loses Steam, But Analysts Still Bullish On Depression Drug ALLISON GATLIN
4:40 PM ET
Sage Therapeutics ( SAGE) lost some of its steam Wednesday, but analysts remained bullish on the biotech company's plans for an acute depression treatment.
On the stock market today, Sage dipped 3.6% to close at 169.52. Earlier, shares fell as much as 5.7%. The stock is consolidating with a buy point at 188.92. On Tuesday, it jumped nearly 20% at the close, wrapping the session at 175.76. That was due to bullish sentiment on Wall Street over Sage's drug, SAGE-217.
Researchers are looking at the drug as a treatment for major depressive disorder and postpartum depression. Doctors would administer it over a short period of time — like an antibiotic — rather than chronically.
"We view SAGE-217 as a potential game-changer if the company successfully demonstrates that depression can be treated episodically vs. current practice that relies on chronic treatment," Canaccord analyst Sumant Kulkarni wrote in a note to clients.
FDA Backs Development Plans The biotech company already has backing from the Food and Drug Administration for its development plans. It will run a single additional study in major depressive disorder. Then it can use an ongoing study in postpartum depression to support its approval for that use.
FDA officials will also consider Sage's brexanolone as a postpartum depression treatment in December. But Kulkarni sees data from a study of SAGE-217 for the same use as the bigger stock catalyst given the insights it could lend to its use in major depressive disorder.
"While the results of the earlier (major depressive disorder) trial were very robust, we note trials involving drugs targeting central nervous system indications have historically tended to be relatively more unpredictable in their outcomes," he said.
Kulkarni boosted his expectations for Sage-217 getting approval in postpartum depression and major depressive disorder to 55% from 50%. He also sees Sage as 50% likely to get approval for the drug as an insomnia treatment.
He reiterated his buy rating and upped his price target to 220 from 210.
Changing Depression Treatment Strategy Raymond James analyst Laura Chico is similarly bullish. She has a strong buy rating on the biotech company.
"We acknowledge that changing the face of depression treatment and shifting toward an acute model is no small undertaking," she said in her report to clients. "That being said, should Sage demonstrate Phase 3 success, we think they will have a compelling asset to make just such an argument."
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