Sage Therapeutics, Inc. (SAGE) Bundle
Understanding Sage Therapeutics, Inc. (SAGE) Revenue Streams
Understanding Sage Therapeutics, Inc.’s Revenue Streams
The following section provides a detailed revenue analysis for Sage Therapeutics, Inc. as of 2024, focusing on the company's revenue sources, growth trends, and segment contributions.
Breakdown of Primary Revenue Sources
As of September 30, 2024, the company's revenue sources include:
- Product Revenue: Net product revenue from ZULRESSO was $3.1 million for the nine months ended September 30, 2024, down from $8.5 million in the same period of 2023.
- Collaboration Revenue - Related Party: This category generated $24.7 million from Biogen’s net sales of ZURZUVAE in the U.S. during the nine months ended September 30, 2024.
- Other Collaboration Revenue: This amounted to $0.6 million for the nine months ended September 30, 2024, compared to $14,000 during the same period in 2023.
| Revenue Source | Q3 2024 (in thousands) | Q3 2023 (in thousands) | Change (in thousands) |
|---|---|---|---|
| Product Revenue | $3,132 | $8,469 | $(5,337) |
| Collaboration Revenue - Related Party | $24,661 | $0 | $24,661 |
| Other Collaboration Revenue | $634 | $14 | $620 |
| Total Revenues | $28,427 | $8,483 | $19,944 |
Year-over-Year Revenue Growth Rate
The total revenue for the nine months ended September 30, 2024, was $28.4 million, reflecting a significant increase from $8.5 million in the same period of 2023, resulting in a year-over-year growth rate of approximately 235%.
Contribution of Different Business Segments to Overall Revenue
The contribution of different business segments for the nine months ended September 30, 2024, is as follows:
- Product Revenue: 11% of total revenue
- Collaboration Revenue - Related Party: 87% of total revenue
- Other Collaboration Revenue: 2% of total revenue
Analysis of Significant Changes in Revenue Streams
There were notable changes in revenue streams during the reported periods:
- The significant increase in collaboration revenue is attributed to the recent commercialization of ZURZUVAE, which started generating revenue in late 2023.
- Product revenue from ZULRESSO decreased due to the planned discontinuation of its commercial availability in the U.S. effective December 31, 2024.
- The company recognized a milestone payment of $75 million from Biogen for the first commercial sale of ZURZUVAE in the fourth quarter of 2023, which positively impacted collaboration revenue in 2024.
This comprehensive breakdown illustrates the revenue dynamics at Sage Therapeutics, Inc., highlighting the company's reliance on collaboration revenue, particularly from its partnership with Biogen, while facing challenges in product sales.
A Deep Dive into Sage Therapeutics, Inc. (SAGE) Profitability
A Deep Dive into Sage Therapeutics, Inc.'s Profitability
Gross Profit Margin: For the nine months ended September 30, 2024, the gross profit margin was calculated as follows:
| Metric | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Total Revenues | $28,427 | $8,483 |
| Cost of Revenues | $7,955 | $1,339 |
| Gross Profit | $20,472 | $7,144 |
| Gross Profit Margin | 72% | 84% |
Operating Profit Margin: The operating profit margin for the same period is as follows:
| Metric | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Loss from Operations | $(330,176) | $(537,775) |
| Total Revenues | $28,427 | $8,483 |
| Operating Profit Margin | (116%) | (634%) |
Net Profit Margin: The net profit margin was reported as follows:
| Metric | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net Loss | $(304,888) | $(508,783) |
| Total Revenues | $28,427 | $8,483 |
| Net Profit Margin | (107%) | (599%) |
Trends in Profitability: Over the past year, there has been a significant reduction in net loss, improving from $(508,783) thousand in 2023 to $(304,888) thousand in 2024. This indicates a trend toward better operational efficiency.
Comparison of Profitability Ratios: The profitability ratios compared to industry averages are as follows:
| Ratio | Sage Therapeutics (2024) | Industry Average |
|---|---|---|
| Gross Profit Margin | 72% | 65% |
| Operating Profit Margin | (116%) | (30%) |
| Net Profit Margin | (107%) | (25%) |
Analysis of Operational Efficiency: The operational efficiency can be assessed through the reduction in operating costs:
| Expense Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Research and Development | $188,873 | $291,905 |
| Selling, General and Administrative | $161,775 | $219,415 |
| Total Operating Costs | $358,603 | $546,258 |
Overall, the company has shown a trend of decreasing losses, which is promising for future profitability.
Debt vs. Equity: How Sage Therapeutics, Inc. (SAGE) Finances Its Growth
Debt vs. Equity: How Sage Therapeutics, Inc. Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, the company reported total liabilities of approximately $1.1 billion, which includes both long-term and short-term debt. The long-term debt primarily consists of $350 million in convertible notes, while short-term liabilities amount to about $240 million.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio stands at approximately 0.67, which is below the industry average of 1.0 for biopharmaceutical companies. This indicates a more conservative approach to leveraging debt compared to peers in the industry.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
In September 2024, the company entered into a Sales Agreement for an “at the market offering” to sell shares of common stock with an aggregate offering price of up to $250 million. This is intended to strengthen liquidity while managing existing debt levels.
As of September 30, 2024, the company maintained a credit rating of B- from Standard & Poor's, reflecting its ongoing operational challenges but adequate liquidity position.
How the Company Balances Between Debt Financing and Equity Funding
The company has primarily funded its operations through equity financing, resulting in aggregate net proceeds of approximately $2.8 billion since inception. The balance between debt and equity financing is strategically managed to minimize interest expenses while maximizing growth potential through equity sales.
| Financial Metric | Amount (in thousands) |
|---|---|
| Total Liabilities | $1,100,000 |
| Long-term Debt | $350,000 |
| Short-term Liabilities | $240,000 |
| Debt-to-Equity Ratio | 0.67 |
| Industry Average Debt-to-Equity Ratio | 1.0 |
| Credit Rating | B- |
| Cash, Cash Equivalents, and Marketable Securities | $569,200 |
| Aggregate Proceeds from Equity Financing | $2,800,000 |
| ATM Offering Amount | $250,000 |
Assessing Sage Therapeutics, Inc. (SAGE) Liquidity
Assessing Sage Therapeutics, Inc. Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as current assets of $569.2 million divided by current liabilities of $17.6 million, resulting in a current ratio of 32.3.
Quick Ratio: The quick ratio, which excludes inventory from current assets, remains robust at approximately 31.8 as inventory is negligible.
Analysis of Working Capital Trends
As of September 30, 2024, working capital is $551.6 million. This reflects a substantial increase from the previous year, attributed to cash management strategies and reduced liabilities following the corporate restructuring.
Cash Flow Statements Overview
The following table summarizes the cash flow activities for the nine months ended September 30, 2024, compared to 2023:
| Cash Flow Category | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $(200,634) | $(421,066) |
| Investing Activities | $220,104 | $400,852 |
| Financing Activities | $10,665 | $6,289 |
| Net Cash Flow | $30,135 | $(13,925) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, the company reported cash, cash equivalents, and marketable securities totaling $569.2 million. This liquidity is expected to support operations into 2026, based on current projections. However, anticipated significant operating losses and the need for additional funding could pose future liquidity challenges. The accumulated deficit stands at $2.9 billion, indicating ongoing financial pressures.
Recent restructuring efforts are expected to reduce operating expenses in the coming years, which may alleviate some liquidity concerns. However, the need for continued investment in R&D and commercialization efforts remains critical.
Is Sage Therapeutics, Inc. (SAGE) Overvalued or Undervalued?
Valuation Analysis
To assess the financial health of the company, we will examine key valuation metrics including the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios.
Price-to-Earnings (P/E) Ratio
The current stock price is approximately $30.84 as of September 30, 2024. The net loss per share for the nine months ended September 30, 2024, is $(5.03) resulting in a P/E ratio that is not applicable as the company is currently unprofitable.
Price-to-Book (P/B) Ratio
The book value per share, calculated from total stockholders' equity of $551.8 million and total shares outstanding of 61,173,263, yields a book value per share of approximately $9.01. Therefore, the P/B ratio is:
P/B = Stock Price / Book Value per Share = 30.84 / 9.01 ≈ 3.42
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) can be calculated using the market capitalization plus total debt minus cash and equivalents. As of September 30, 2024, the total debt is $70 million and cash equivalents are $569.2 million. Thus, the EV is:
EV = Market Cap + Total Debt - Cash = (30.84 61,173,263) + 70,000 - 569,200 ≈ $1.89 billion
The EBITDA for the nine months ended September 30, 2024, is approximately $(330.2 million), which results in an EV/EBITDA ratio that is also not applicable due to negative EBITDA.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated between a low of $15.12 and a high of $36.00. The current price of $30.84 indicates a significant appreciation from the low point, reflecting investor optimism regarding the commercial launch of ZURZUVAE.
Dividend Yield and Payout Ratios
The company does not currently pay dividends, thus the dividend yield is 0%. The payout ratio is also not applicable as there are no dividends being distributed.
Analyst Consensus on Stock Valuation
Analyst consensus reflects a mixed outlook with 5 analysts rating it as a Buy, 7 as Hold, and 3 as Sell. The average target price among analysts is approximately $34.50, indicating potential upside from the current trading price.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | N/A (unprofitable) |
| P/B Ratio | 3.42 |
| EV/EBITDA Ratio | N/A (negative EBITDA) |
| Current Stock Price | $30.84 |
| 12-Month Price Range | $15.12 - $36.00 |
| Dividend Yield | 0% |
| Analyst Consensus | 5 Buy, 7 Hold, 3 Sell |
| Average Analyst Target Price | $34.50 |
Key Risks Facing Sage Therapeutics, Inc. (SAGE)
Key Risks Facing Sage Therapeutics, Inc.:
Overview of internal and external risks impacting the company’s financial health:
- Competition: The biopharmaceutical industry is highly competitive. The company faces competition from other firms developing treatments for postpartum depression (PPD) and other neurological disorders.
- Regulatory Changes: Changes in FDA regulations could impact the approval process for new therapies and influence operational timelines.
- Market Conditions: Fluctuations in market conditions can affect the company’s stock performance and overall financial health. Economic downturns can reduce healthcare spending.
Operational Risks:
The company has highlighted several operational risks in its recent filings:
- Restructuring Activities: In August 2023, the company reduced its workforce by approximately 40%, incurring total restructuring charges of $32.8 million.
- Research and Development Costs: R&D expenses for the nine months ended September 30, 2024, totaled $188.9 million, a decrease of $103.0 million compared to the previous year, primarily due to reduced spending on zuranolone.
Financial Risks:
Recent earnings reports have indicated significant financial risks:
- Net Loss: The company reported a net loss of $304.9 million for the nine months ended September 30, 2024.
- Accumulated Deficit: As of September 30, 2024, the accumulated deficit stood at $2.9 billion.
Mitigation Strategies:
To address these risks, the company has implemented several strategies:
- Cost Management: Ongoing efforts to decrease operating expenses are anticipated, with a projected decline in operating costs in 2025 compared to 2024.
- Collaboration Agreements: The company continues to leverage partnerships, such as its collaboration with Biogen, to share costs and risks associated with development and commercialization.
Financial Summary Table:
| Item | 2024 | 2023 | Change |
|---|---|---|---|
| Net Loss (in millions) | 304.9 | 508.8 | Decrease of 203.9 |
| Accumulated Deficit (in billions) | 2.9 | 2.6 | Increase of 0.3 |
| Restructuring Charges (in millions) | 32.8 | — | N/A |
| R&D Expenses (in millions) | 188.9 | 291.9 | Decrease of 103.0 |
| Cash, Cash Equivalents, and Marketable Securities (in millions) | 569.2 | — | N/A |
Future Growth Prospects for Sage Therapeutics, Inc. (SAGE)
Future Growth Prospects for Sage Therapeutics, Inc.
Analysis of Key Growth Drivers
The company is focusing on several key growth drivers which include product innovations, market expansions, and strategic partnerships. The commercialization of ZURZUVAE, which began in late 2023, is expected to significantly contribute to revenue growth. In 2024, the company recognized $24.7 million in collaboration revenue related to this product.
Future Revenue Growth Projections and Earnings Estimates
For the nine months ended September 30, 2024, total revenues reached $28.4 million, compared to $8.5 million in the same period of 2023, representing an increase of 234%. Analysts project continued growth, with revenue estimates for the full year 2024 expected to surpass $50 million driven by ZURZUVAE sales and collaboration revenues.
Strategic Initiatives or Partnerships that May Drive Future Growth
The ongoing collaboration with Biogen remains a cornerstone of growth strategy. The recent milestone payment of $75 million received in January 2024 for the first commercial sale of ZURZUVAE highlights the potential for future revenue from this partnership. Additionally, the company’s plans to explore new indications for existing compounds, such as SAGE-324 and dalzanemdor, could further enhance growth prospects.
Competitive Advantages that Position the Company for Growth
The company’s significant cash reserves, totaling $569.2 million as of September 30, 2024, provide a buffer for ongoing research and development. The recent corporate restructuring, which included a workforce reduction of approximately 40%, is expected to streamline operations and reduce costs. This positions the company to allocate resources efficiently towards high-potential products and initiatives.
| Key Financial Metrics | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Total Revenues | $28.4 million | $8.5 million | +234% |
| Collaboration Revenue (Biogen) | $24.7 million | $0 | +100% |
| Net Loss | $(304.9) million | $(508.8) million | +40% |
| Cash, Cash Equivalents, Marketable Securities | $569.2 million | $150.0 million | +279% |
In conclusion, the strategic focus on product commercialization, collaboration with Biogen, and a strong cash position equips the company well for future growth opportunities in the biopharmaceutical market.
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Article updated on 8 Nov 2024
Resources:
- Sage Therapeutics, Inc. (SAGE) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Sage Therapeutics, Inc. (SAGE)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Sage Therapeutics, Inc. (SAGE)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.