Canaccord Lays Out the Bullish Case for Agios Pharmaceuticals Inc (AGIO) Despite IND Withdrawal

Agios Pharmaceuticals Inc (NASDAQ:AGIO) shares were thundering down 19% yesterday after news came to light that the firm has withdrawn its Investigational New Drug Application (IND) for AG-519, an experimental drug AGIO had been developing for a rare form of anemia called pyruvate kinase (PK) deficiency.

This comes on the heels of the notification that the FDA had put the drug on clinical hold on back of safety concerns involving the Serious Adverse Event (SAE) of cholestatic hepatitis reported at the American Society of Hematology (ASH) Annual Meeting in San Diego on December 4th. Additionally, safety arose as a problem plaguing the drug last year at the European Hematology Association (EHA) in Copenhagen due to a SAE of thrombocytopenia.

Though Canaccord analyst John Newman acknowledges this as a “disappointing setback,” he stays the course in light of hopes for AG-348, the firm’s second experimental drug designed to treat PK deficiency, which is currently in the midst of a Phase II study. Therefore, the analyst maintains confidence in the rest of the pipeline, “which we still view as viable” and reiterates a Buy rating on shares of AGIO with a $90 price target, which represents a close to 100% increase from where the shares last closed.

Looking ahead, the analyst underscores, “Agios is now fully committed to development of AG-348, but also remains fully engaged in the Pyruvate Kinase Deficiency (PKD) space, suggesting additional backup compounds might be available in the future, although no specific statements have been made. We believe that Agios will continue to investigate potential mechanisms for aromatase inhibition and liver toxicity, but that Agios will push AG-348 forward at present.”

Overall, “Despite AG-519 being removed [from] the pipeline, we believe AG-348’s safety profile is reasonable, and complements its strong efficacy seen in Phase 2. We still see AG-348 as viable going forward, since no Serious Adverse Events have surfaced to date that are both fully and directly related to the reversible aromatase inhibition,” Newman concludes.

According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, John Newman is ranked #4,193 out of 4,279 analysts. Newman has a 32% success rate and loses 14.7% in his annual returns. However, when recommending AGIO, Newman gains 3.3% in average profits on the stock.

TipRanks analytics demonstrate AGIO as a Buy. Out of 6 analysts polled in the last 3 months, 4 are bullish on Agios stock and 2 remain sidelined. With a return potential of 32%, the stock’s consensus target price stands at $74.00.

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