Supernus Pharmaceuticals agreed Monday to buy beleaguered biotech Sage Therapeutics in a deal worth $561 million.
The news sent Sage stock flying 35.4% to 9.07, while Supernus stock rose 1.4%, ending the regular session at 32.47.
Supernus Pharma sells treatments for epilepsy, migraine, Parkinson's disease and attention deficit hyperactivity disorder, or ADHD. Acquiring Sage expands the company's presence in nonpsychiatric conditions. Sage Therapeutics sells Zurzuvae, a postpartum depression treatment, in partnership with Biogen.
"We see the SUPN bid as a best-case scenario for SAGE given the recent pipeline setbacks," Wedbush analyst Laura Chico said in a report. "Could another bidder emerge? This is a logical question to ask given neutral-rated BIIB's prior interest in the company and collaborative relationship."
Sage Therapeutics stock broke out at the open. Shares topped a consolidation with a buy point at 8.81, according to MarketSurge.
Sage Therapeutics' Recent Setbacks
Sage Therapeutics has had numerous setbacks over recent years, including the limited approval of Zurzuvae. Initially, Sage had hoped the Food and Drug Administration would sign off on the drug as a treatment for major depressive disorder, or MDD. Sage has also had multiple drugs fail in testing as treatments for Parkinson's, Alzheimer's and Huntington's diseases as well as essential tremor.
As a result, Sage stock has plummeted from a high point just below 200 in 2018 to under 10 this year.
"We believe that this is a good offer for SAGE shareholders given the ~26% premium over the last close," Needham analyst Ami Fadia said in a report. "We believe the deal appropriately contemplates the growth potential for Zurzuvae."
She estimates Zurzuvae was at a $110 million per year run rate.
Fadia notes the deal is a 17% premium to the bid from Biogen earlier in the year. Biogen offered to pay $7.22 per share. Supernus' deal includes an up-front payment of $8.50 per share, plus a non-tradable contingent value right worth up to $3.50 per share in cash if certain milestones are met. If the CVR is eventually paid out, the deal values Sage Therapeutics at $795 million.
"Bottom line — we see this as a best-case outcome for SAGE and do not assume a higher bidder emerges," Wedbush's Chico said.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
