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Can Upcoming Catalysts Power Agios Pharmaceuticals Higher?

|Includes: Agios Pharmaceuticals, Inc. (AGIO)

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Note: If you would like more granular 8-15 page reports on small biotech stocks like the one below, we put out one FREE report every week to all those that register @ biotechfreereports.com! Our latest report came out Monday morning on a biotech stock under $6.50 a share. The company has a promising late stage vaccine candidate aimed squarely at a $2 billion market and a market cap of less than $200 million. The report is still available for free HERE. Early next week we will cover in detail my two favorite small cap biotech stocks headquartered in Israel. Both are "under the radar" concerns that I think have substantial upside potential.

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"The oak fought the wind and was broken, the willow bent when it must and survived." ― Robert Jordan, The Fires of Heaven

Robert Jordan

There was good piece on Agios Pharmaceuticals (NASDAQ:AGIO) 10 days ago by Jonathan Faison, a fairly new SA contributor that pens some solid articles about small & mid-cap biotech stocks and is worth following.

The stock is trading for 40% of its all-time highs and is right in the sweet spot (2-5 years as a public company) I like to target for new possible investments in the small & mid-cap part of the sector. In today's post we will take a deeper look at this developmental concern that might hit "Tier 3" status in 2018.

Company Overview:

Agios Pharmaceuticals is a Cambridge, MA based biopharmaceutical company. It is focusing on the discovery and development of medicines for the treatment of cancer and rare genetic metabolic disorders. The company came public in the second half of 2013 and currently has a market capitalization of just over $2.1 billion and trades just under $50.00 a share. The stock's 52-week high is north of $65 and its all-time high was just above $120.00 a share.

Pipeline:

The company has a couple of key drug candidates in the pipeline. Both target genetic mutations of isocitrate dehydrogenase {IDH}, a metabolic enzyme in the tricarboxylic-acid cycle, that is one pathway by which some tissues may become cancerous.

Iosidenib or AG-120:

This drug candidate is an investigational first-in-class, orally available and potent inhibitor of the mutated IDH1 protein and is being targeted for the treatment of patients with cancers that harbor an IDH1 mutation. The compound has received orphan drug and fast track designations from the FDA. The drug is wholly owned by Agios. The company should file a NDA for the treatment of IDH1m Relapsed/Refractory AML - cancer by end of the year. Data from a study combining AG-120 and VIDAZA in frontline AML patients that have a IDH1 mutation should be disclosed sometime in the second half of 2017.

Enasidenib:

This is an investigational first-in-class, orally available, selective, potent inhibitor of the mutated IDH2 protein. This is being targeted as a potential treatment of patients with cancers that harbor an IDH2 mutation. The compound has received orphan drug and fast track designations from the FDA.

This is being developed via one of myriad collaboration deals Celgene (NASDAQ:CELG) has made throughout the biotech sector. The biotech stalwart has worldwide development and commercialization rights for enasidenib. Agios has U.S. co-promotion and royalty rights. Agios is eligible for up to $120 million in milestone payments as well as royalties on any net sales. This compound has a PDUFA date at the end of August for the treatment of advanced hematologic malignancies with an IDH2 mutation. Peak sales could be in the half a billion-dollar neighborhood. If approved on August 31st, the compound should be on the market before year end.

The company is also targeting inherited mutations in red cell PK {PKR} enzymes cause a deficit in cellular energy within the red blood cell through its PKR program. AK-348 targeting Pyruvate kinase deficiency should disclosed additional Phase II trial data in the second half of this year and start a key pivotal trial sometime in the first half of 2018. AG-348 has the potential to be the first treatment to address the underlying causes of pyruvate kinase efficiency, a rare hemolytic anemia and has shown good results in proof of concept studies.

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Analyst Commentary & Balance Sheet:

The analyst community is generally warm to Agios. There have been four Buy ratings and one Hold rating on the name so far this year and the median analyst price target is $68.00 a share currently. The company ended 2016 with approximately $575 million in cash on hand which should fund the company through 2018.

Outlook:

The company has numerous traits I like to see in a "Tier 4" developmental concern before taking a small stake within a well-diversified biotech portfolio. It is well funded, has multiple 'shots on goal', upcoming milestones and a strategic partner in Celgene. I plan to purchase a few shares on Monday and perhaps add a bit to the holding if it gets below the $45 level or so.

Given its collaboration with Celgene, the stock is probably not a logical buyout target despite the focus on the oncology space in M&A right now. However, it does seem worthy of a small stake and ongoing monitoring on one's 'watch list'.

"Difficulties strengthen the mind, as labor does the body." ― Seneca

Thank You and Happy Hunting

Bret Jensen

Founder, Biotech Forum & Insiders Forum

Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in AGIO over the next 72 hours.