Been an oncology biotech investor for 20 years, and a close watcher of AGIO. David Schenkein is a brilliant man - and an exceptional clinician. I am convinced that he will lead a new era of therapies that attack cancer metabolism as a new way of slowing/stopping a variety of different cancers.
That said, I am convinced that AGIO is currently overvalued at these levels. Let's look at what is currently "bankable" at the company. Roughly $250M in cash and a solid deal with Celgene ensures that AGIO has sufficient cash to support activities through mid-2017. AG-221 is a winner - and will be a drug that will move through development very fast, potentially receiving the Breakthrough Designation, if AGIO pursues this much-earlier-to-market approach. AGIO receives $120M in potential milestones from Celgene for 221 - AND IMPORTANTLY, only "low to mid-teen royalties on all sales". If we take an somewhat optimistic scenario that 221 reaches $500M in AML/MDS, AGIO stands to receive just $50M in revenue from this product. Apply the historical 8-9x revenue math to calculate market capitalization. This brings us to $450M from AG-221 + $250M in cash. Drop in another couple of $100M for potential with AG-120 and AG-348 - and you are still short of the $1.4B market capitalization that AGIO is currently getting in the market today.
Bottom line, if you are investing in AGIO today - you are convinced that data in AG-221 offers a positive "read through" in AG-120. AG-120 targets a similar target but they have significant differences too. AGIO will only be successful financially if AG-120 works - and currently there is no clinical data yet on this molecule. While it is extremely exciting to see positive results with 221, this product alone cannot make AGIO a viable company.
I will continue to follow AGIO closely - and I hope to take a position at lower prices (hopefully, low to mid-20s). GLTA.
The stock's breaking out this morning. If it were to ever get back to the $20's you wouldn't want to own it because it would be broken on bad news. Company's that bring blood cancer drugs to market do NOT trade with a sub $1Bil mkt cap, because their drugs lead to multiple intentions. Good luck
Help me get to the current market capitalization of $1.5B using the common ways of placing a valuation on a biotech stock. And don't tell me that all biotech is speculative. AGIO has great - possibly impeccable science but is "low-to-mid teen" percentage of future revenues on AG-221 better for AGIO or CELG? If you do your due diligence, you will see that even a $1B sales estimate for AG-221 (making it one of the top 10 selling therapeutics in the cancer space), would yield AGIO only $150M.
Again - I am in love with the science and the potential here, but the valuation is much to rich. Going to wait for biotech to cool off and enter at a lower price. There is a reason why 25% of the shares traded are short. Be careful if you want to battle the shorts on an overvalued company. You may be the one left holding the bag....