Biogen’s effort to buy Sage reveals its “desire to expand its pipeline at a discount,” according to analysts from BMO Capital Markets.
Sage Therapeutics last week sued partner Biogen just days after receiving an unsolicited buyout offer from the pharma for nearly $470 million, according to reporting by Bloomberg Law.
The suit, filed in a Delaware court, is sealed, according to Bloomberg, but in a separate court document, Sage noted that it “is seeking preliminary injunctive relief to enforce a standstill agreement and a trial on a paper record on an expedited basis.” BioSpace has reached out to both companies for comment and will update this story accordingly.
In a letter to Sage CEO Barry Greene dated January 10, Biogen head Christopher Viehbacher offered to put down $7.22 in cash for each common stock of Sage, yielding a total proposed value of $469 million. Currently, Biogen owns a 10.2% stake in Sage.
Viehbacher called the proposal “compelling” for Sage and its stockholders, with the offer “corresponding to a 30% premium to Sage’s closing price per share of $5.55 as of January 10, 2025” and a 29% premium over the 30-day volume-weighted average share price. Biogen, according to Viehbacher, is “providing an attractive premium on top of [Sage’s] recent share price performance.”
In a press announcement following the buyout offer, Sage said that it would “carefully review and evaluate the proposal,” but reiterated that “there is no guarantee that any transaction will result from Biogen’s proposal.”
In an investor note last week, BMO Capital Markets said that “Biogen’s offer to acquire Sage Therapeutics looks to take advantage of Sage’s recent high cash burn and Biogen’s desire to expand its pipeline at a discount.” While the pharma’s proposal comes at a premium to Sage’s share price, “it is at a significant discount to Sage’s cash on hand,” the note read.
“Biogen’s potential acquisition of Sage may be financially savvy, but likely does little to address broader pipeline concerns for the company,” the BMO analysts continued, pointing out that Sage’s early-stage assets are unlikely “to be key difference makers for Biogen.”
Biogen and Sage are longtime partners. In 2020, the companies entered into a development pact involving an $875 million upfront payment and a $650 million equity investment. That alliance has resulted in the now-FDA-approved Zurzuvae (zuranolone), which won the regulator’s nod in August 2023 as the first-ever pill for postpartum depression.
Despite this win, however, the partnership has been strained. Biogen and Sage were initially developing zuranolone for major depressive disorder—a much larger and more lucrative market. The FDA declined to approve the pill in this indication, noting its lack of “substantial evidence of effectiveness” and pointing to the need for additional studies.
The partners were also working on SAGE-324, an investigational neuroactive steroid for essential tremor. SAGE-324 was discontinued for this indication in September 2024 following disappointing mid-stage data. By Feb. 17, Sage will regain full ownership over the asset, which it still plans to assess in other indications, “if any,” the biotech announced at the time.
