Sage Therapeutics Rejects Biogen's Buyout Offer, Initiates Strategic Review

Sage Therapeutics, a Massachusetts-based biopharmaceutical company, has unanimously rejected an unsolicited buyout offer from its partner Biogen, citing significant undervaluation. The board's decision has set the stage for a comprehensive strategic review that could reshape the company's future in the competitive pharmaceutical landscape.

Biogen's Bid and Sage's Response

Biogen, which already owns a 10.2% stake in Sage through a 2020 collaboration agreement, proposed to acquire the remaining outstanding shares for approximately $469 million, or $7.22 per share. This offer represented a 30% premium to Sage's share price at the time but was met with swift resistance from Sage's leadership.

In response to the proposal, Sage not only rejected the offer but also filed a lawsuit seeking a temporary restraining order to enforce a standstill provision previously agreed upon with Biogen. The company's board argued that the bid "significantly undervalues" Sage and is not in the best interest of shareholders.

Strategic Alternatives and Market Position

Following the rejection, Sage announced its intention to explore a range of strategic alternatives to maximize shareholder value. These options may include a potential strategic transaction, business combination, or sale. The company has not set a timeline for this review process and emphasized that there is no guarantee of a transaction resulting from these efforts.

Sage's decision comes amid a challenging period for the company. Its share price has declined by 71% over the past year, dropping from $26.54 on January 29, 2024, to $7.49 at the time of the announcement. This decline is largely attributed to setbacks in its drug development pipeline, including:

• The failure to secure FDA approval for Zurzuvae (zuranolone) in major depressive disorder (MDD), a potentially lucrative indication
• The discontinuation of SAGE-324 for essential tremor after failing to meet primary endpoints in a Phase II study
• The termination of dalzanemdor development following a third clinical failure

Focus on Zurzuvae and Corporate Restructuring

Despite these challenges, Sage remains focused on establishing Zurzuvae as the standard of care for women with postpartum depression (PPD). The drug, co-marketed with Biogen, received FDA approval for PPD in August 2023 and is projected to generate annual sales of around $100 million.

To streamline operations and conserve resources, Sage has implemented significant cost-cutting measures, including:

• Discontinuing sales of its earlier postpartum depression drug, Zulresso
• Laying off 33% of its workforce in October 2024
• Cutting 165 jobs and parting ways with several senior executives in a recent restructuring

The company reported approximately $569 million in cash and cash equivalents at the end of September 2024, which it expects will fund operations into 2026.

As Sage navigates this critical juncture, the pharmaceutical industry watches closely to see how the company's strategic review will unfold and what implications it may have for the broader neuroscience and mental health treatment landscape.