(Bloomberg) -- Former high flying biotechnology favorites Mirati Therapeutics Inc. and Sage Therapeutics Inc. have lost more than half their value from record highs, hurt by growing pessimism on new medicines as well as the higher rate environment damaging most stocks. 

Both companies, often touted as potential takeover targets by Wall Street, had setbacks this week in efforts to bring new drugs to the market. Mirati tumbled as much as 17% on Wednesday, while Sage sank 19%. The S&P 500 Index is little changed Wednesday, though it has dropped more than 6% this year amid concerns about inflation, higher rates and geopolitical tensions.

Biotechnology companies haven’t recovered from last year, one of the worst on record for the sector. The equal-weighted SPDR S&P Biotech ETF or XBI has already pulled back 46% from a 2021 record. A lack of big buyout offers has also tamped down the sector.

For San Diego-based Mirati, a longer than expected review process from the U.S. Food and Drug Administration for a once promising cancer drug sent the shares spiraling to a 20-month low. The company is valued at $5.2 billion today, compared with a $12.2 billion peak in 2020.

Still, Wall Street is generally optimistic about Mirati’s drug winning approval and the average analyst price target suggests the stock could climb 75% over the next 12 months, recapturing at least some of its former glory.  

Sage’s Biogen Inc.-partnered depression drug also looks approvable to analysts. It’s just not as effective over the long term as hoped and might not be the multibillion dollar blockbuster analysts once thought it would be. 

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