Sage Therapeutics (SAGE) drug's failure in Huntington's disease was "not surprising" as there was a "low likelihood of success" to begin with, RBC Capital Markets said in a note emailed Thursday.
RBC was referring to Sage's dalzanemdor, which failed to meet the main and secondary goals in a phase 2 study called Dimension.
Sage said Wednesday that the study was unable to demonstrate a statistically significant difference from baseline in subjects with cognitive impairment associated with Huntington's disease and that it was discontinuing development.
RBC said it had expected the probability of success to be low given the drug's mechanism, prior data and trial endpoints. The firm added that the drug's failure, and its thesis on potential stock downside into and through the data readout had played out.
With dalzanemdor no longer being developed, Sage will need to work through a "strategic reset" as it commercializes Zurzuvae, During this period, the company's shares should trade more in line, prompting RBC to upgrade the stock to sector perform from underperform while maintaining its $4 price target, according to the note.
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