Sage Therapeutics revealed on November 27 that Biogen will acquire a $650 million stake and make an upfront payment of $875 million as part of an agreement to jointly develop and sell treatments for depression and other neurological disorders. Shares of SAGE tumbled 8.1% in response to the news.
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As per the deal’s terms, Biogen will purchase about 6.2 million newly issued Sage Therapeutics (SAGE) shares for $104.14 apiece, reflecting a 26% premium to SAGE’s closing price on November 25. Sage will also be eligible for up to $1.6 billion in potential milestone payments.
This agreement comes as part of Biogen’s efforts to strengthen its pipeline with treatments that have blockbuster potential.
The deal will give Biogen access to zuranolone, an oral therapy being developed for major depressive disorder (MDD) and postpartum depression, as well as SAGE-324, which was designed for essential tremor and other neurological disorders.
According to the U.S. Center for Disease Control and Prevention, roughly 16 million people in the U.S. experience symptoms of MDD each year.
Following the announcement, Mizuho Securities analyst Vamil Divan reiterated a Hold rating and a $77 price target (1% upside potential). He explained, “We previously expressed our concern with Sage being able to disrupt the large major depressive disorder (MDD) market with zuranolone on their own. Partnering with Biogen should help in that regard, although the terms of the deal lead us to wonder if
Sage could have extracted more value for the assets.”
Meanwhile, the rest of the Street is more optimistic. 12 Buys and 6 Holds add up to a Moderate Buy analyst consensus. Given the $86.33 average price target, shares could surge 14% in the year ahead. (See Sage Therapeutics stock analysis on TipRanks)
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