Biogen’s proposed acquisition comes after two difficult years of regulatory and clinical challenges, during which shares of Sage Therapeutics have fallen by more than 90%.
Sage Therapeutics has had a rough couple of years, its shares in freefall after regulatory and clinical setbacks. Now, long-time partner and current stakeholder Biogen is offering to buy the embattled biotech for around $469 million, according to a Friday securities filing.
As part of a $1.5 billion development deal struck in 2020, Biogen has already made a $650 million equity investment in the smaller biotech, resulting in its current 10.2% stake. Now, Biogen is looking to pick up the remaining shares for $7.22 apiece, according to the SEC filing. The proposal reflects a 30% premium over Sage’s Friday closing share price of $5.55, according to a letter written by Biogen CEO Chris Viehbacher to Sage CEO Barry Greene.
Biogen’s partnership with Sage has been focused on the development of zuranolone (now Zurzuvae) in major depressive disorder (MDD) and postpartum depression (PPD), as well as SAGE-324 in essential tremor and other neurological disorders. Results from the pact have been mixed, as the duo won FDA approval for Zurzuvae for PPD in August 2023 but missed out on the larger indication of MDD. As for SAGE-324, the candidate was discontinued in essential tremor last year after failing to meet the primary endpoint in a Phase II study in July.
The offer was unsolicited, according to a press release issued Friday by Sage, which will “carefully review and evaluate the proposal” to determine the course of action it believes is in the best interests of the company and its shareholders.
In his letter to Greene, Viehbacher made his case for the transaction. “We believe that our deep expertise in neurology and global commercial capabilities will enable more streamlined operations and efficient commercial execution that will enable access to ZURZUVAE for more patients in need of this important medicine.”
Analyst reactions to the proposed deal were mixed.
“As the first and only approved drug for post-partum depression (PPD), we think the offer undervalues Zurzuvae, which we think is off to a slow, but steady launch trajectory,” Truist Securities wrote in an investor note Sunday.
Meanwhile, William Blair analysts said that the acquisition would not be a growth driver for Biogen but added that it made sense for the company as Zurzuvae continues to roll out. On its Q3 2024 investor call on Oct. 29, Sage touted $11 million in third-quarter revenue for Zurzuvae, up 49% from Q2.
“We believe it represents a prudent way for Biogen to effectively market Zurzuvae and to maximize value of the Zurzuvae franchise,” the William Blair team wrote.
A Bad Run for Sage
Biogen’s offer price of $442 million is less than the $569 million in cash and equivalents that Sage reported in September and a fraction of what the company was worth a year ago. Over the past 18 months, shares of the neuro-focused biotech have fallen more than 90%, due in part to Zurzuvae’s rejection in MDD but also to a catastrophic clinical run for another asset, dalzanemdor.
In April 2024, the NDMA receptor modulator failed to show efficacy in Parkinson’s disease, kicking off a hat trick of disappointments that also saw the candidate stumble in Alzheimer’s and Huntington’s disease. The most recent blow, in Huntington’s, was the death knell for dalzanemdor as Sage announced it would end development of the asset.
Throughout the turmoil, Sage has endured two significant layoff rounds in the past two years. The biotech parted with more than 165 employees in October 2024 following dalzanemdor’s demise, representing around 33% of its workforce. This followed a 40% workforce reduction implemented in August 2023 after Zurzuvae failed to win approval in MDD.
Aside from Zurzuvae, Sage’s development pipeline is relatively slim. The biotech is currently in Phase I development for SAGE-319 for social interaction disorders, while two other programs are in preclinical development.
