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Agios Pharmaceuticals, Inc. Message Board

  • enrjrr enrjrr Aug 15, 2014 8:36 AM Flag

    Great company, Great innovation, Yet Overvalued

    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.

    Sentiment: Sell

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