Cowen Bullish on Sage Therapeutics (SAGE) as 2021 is Expected to be a 'Transformative' Year

Cowen analyst Ritu Baral included Sage Therapeutics (NASDAQ: SAGE) in the “Best Ideas 2021” list as he believes the next year is likely to be a transformative year for the company.

One of the key drivers behind Baral’s bullish stance on SAGE is the belief that the firm has one of the strongest, most extensive neurology and neuropsychiatry-focused pipelines.

“Investor focus and the key driver to our valuation of Sage centers around zuranolone. We see blockbuster opportunity for zuranolone in major depressive disorder (MDD) and postpartum depression (PPD) based on strong efficacy/safety precedent from the Ph2 MDD trial and the Ph3 PPD trial. The program was recently partnered with BIIB as part of deal that includes a 50/50 profit and expense share in the US, and EU royalties,” Baral wrote in this morning’s note.

“Zuranolone is in three Ph3 trials for 1) MDD (WATERFALL, data due in 1H21); 2) rapid response therapy in MDD (CORAL); and 3)PPD (SKYLARK), all with data expected in 2021. Ph2 SAGE-324 (also partnered with BIIB under the same terms) for essential tremor (ET) and wholly-owened Ph2 NMDA candidate SAGE-718 for early cognitive dysfunction in Huntington’s disease further expand SAGE’s pipeline.”

The analyst sees higher revenue potential connected to the company’s pipeline. Moreover, numerous catalysts in 2021 represent the potential for value-creating opportunities over the course of the next year.

Overall, Baral argues that SAGE looks cheaper than it has been for a long time. There is a huge value potential, that is mostly underappreciated by investors, that exists in Sage's platform.

“An expanding, pipeline and potential for zuranolone in other indications is also underappreciated by investors. The overall blue-sky market potential for zuranolone MDD remains as high as ever, potentially reaching as high as $4B peak sales in our view. This level of sales would necessitate uptake from PCP, something that was unlikely with SAGE's prior resources and expertise,” Baral concludes.

Cowen rates SAGE with an “Outperform” rating and a price target of $100.00 per share.

For an analyst ratings summary and ratings history on Sage Therapeutics click here. For more ratings news on Sage Therapeutics click here.

Shares of Sage Therapeutics closed at $69.19 yesterday.

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