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Agios Pharmaceuticals Shares Rise on Buyout Speculation


Shares of Agios Pharmaceuticals, Inc. AGIO rallied almost 10% on Apr 9 after speculations were rife that the company might be acquired by other big players in the pharma and biotech industry. This bullish sentiment around the stock among investors was mainly triggered following Novartis’ NVS yesterday’s announcement that it has inked a deal to acquire the U.S. based clinical stage gene therapy company, AveXis, Inc AVXS.

Particularly, Celgene which already notched up a collaboration agreement with Agios for developing novel therapies, utilizing Agios’ innovative cellular metabolism research platform is being considered a front runner in buying Agios.

Let us have a look why Celgene or any other big drug biotech company may be interested in Agios:

Shares of Agios have surged 49.1% in a year’s time, outperforming the industry’s increase of 11.4%. FDA’s last-year approval of the Agios’ only marketed drug, Idhifa (enasidenib), and the company’s rapid progress on a robust pipeline in the past year accompanied with some study initiations and positive readouts have steadily pushed up its share price.

In August 2017, the FDA approved Idhifa for treating patients with relapsed or refractory acute myeloid leukemia (AML) with an isocitrate dehydrogenase-2 (IDH2) mutation. The drug provides a first-ever alternative treatment to patients living with the aforementioned indication in the United States. Notably, Idhifa also enjoys an Orphan Drug status in the EU for treatment of AML.

Agios’ progress with the pipeline has also been quite impressive. The company has some interesting candidates in its portfolio including an IDH1 mutant inhibitor, AG-120 (ivosidenib) and a pan-IDH mutant inhibitor, AG-881.

Last June, Agios presented positive data from the dose-escalation and expansion cohorts of the phase I study, evaluating single agent ivosidenib in mutant-positive cholangiocarcinoma at the ASCO.

Ivosidenib is also being evaluated in a phase I expansion cohort for treatment of patients with IDH1m R/R AML. Data from the study demonstrated durable responses, which allowed the company to submit a new drug application to the FDA for ivosidenib, late last December.

In the same month, the company also announced positive results from a phase I trial, assessing ivosidenib in combination with standard induction chemotherapy or Celgene’s Vidaza (Azacitadine) for treatment of newly diagnosed AML patients, not eligible for intensive chemotherapy.

Presently, a phase III AGILE study examining ivosidenib in combination with Vidaza is also underway for the given indication.

Apart from ivosidenib, Agios is conducting phase I programs on AG-881 for treatment of patients with advanced IDH1 or IDH2 mutant-positive solid tumors.

The company has another interesting candidate in its portfolio. Its lead rare genetic diseases candidate, AG-348, is under evaluation in a phase II study on adult, transfusion-independent patients with Pyruvate kinase deficiency.

A consistent progress with these investigational candidates makes Agios one of the most lucrative takeover options for other large players in the drug/biotech space at the moment.

M&A activity is expected to be aggressive in the drug biotech sector this year following the new tax law. This was evident from Sanofi and Celgene already announcing two deals each. Also, Pfizer PFE is aggressively on the lookout for a buyer to purchase its Consumer Healthcare unit after British firms Glaxo and Reckitt Benckiser Group pulled out of discussions. Moreover, this April, Japan-based Takeda Pharmaceutical announced its intention to acquire Shire plc.

Zacks Rank

Agios carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

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