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Agios (AGIO) to Sell Oncology Drugs to Servier for $2B, Stock Up

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Agios Pharmaceuticals, Inc. (AGIO - Free Report) announced that it has entered into a definitive agreement to sell its commercial, clinical and research-stage oncology portfolio to France-based pharmaceutical company, Servier, for up to $2 billion.

With this agreement, Agios is looking to solely focus on expanding its genetically defined disease portfolio, including the clinical development of lead pipeline candidate mitapivat, which is being developed for treating three types of hemolytic anemias.

Share of Agios were up 28.3% following the announcement of the news on Monday. However, the stock has declined 10.8% so far this year against the industry’s increase of 4.1%.

price chart for AGIO


Per the above agreement, Agios is eligible to receive an upfront cash payment of $1.8 billion from Servier and $200 million as potential milestone payment for one of its pipeline candidates, vorasidenib. The company will also be entitled to 5% royalties on net sales of its leukemia drug, Tibsovo (ivosidenib tablets), and 15% royalties on net sales of vorasidenib in the United States, if approved.

The transaction is expected to close in the second quarter of 2021 subject to approval by Agios’ shareholders and customary closing conditions. Upon closing, Agios plans to return at least $1.2 billion to its shareholders and use the proceeds to advance the genetically defined disease portfolio and strengthen its capital structure.

Importantly, mitapivat is one of the key pipeline candidates of Agios, which is being developed for treating patients with pyruvate kinase (“PK”) deficiency. In December 2020, the phase III ACTIVATE study, which evaluated mitapivat for treating PK deficiency in patients who do not receive regular blood transfusions, met the primary endpoint. The candidate is also being evaluated in the single-arm ACTIVATE-T study for addressing PK in patients who receive regular blood transfusions with top-line results from the same expected in the first quarter of 2021.

Agios is also developing mitapivat for treating sickle cell disease (“SCD”), a blood disorder, and thalassemia. The candidate has received orphan drug designation from the FDA for both the indications.

We note that apart from its wholly owned product Tibsovo, Agios’ oncology portfolio includes pipeline candidates vorasidenib and AG-270. Vorasidenib is currently being evaluated in the registration-enabling phase III INDIGO study for treating low grade (grade 2) glioma with an IDH1 or IDH 2 mutation. AG-270 is being developed in a phase I study for addressing multiple tumor types carrying methylthioadenosine phosphorylase (MTAP)-deleted tumors.

Notably, Tibsovo was approved for the treatment of relapsed/refractory acute myeloid leukemia with a susceptible IDH1 mutation by the FDA in July 2018. The drug was approved by the FDA in the first-line setting in May 2019. In the first nine months of 2020, Tibsovo generated sales worth $81.9 million reflecting a significant year-over-year increase. Several label expansion studies on Tibsovo are currently underway.

Zacks Rank & Stocks to Consider

Agios currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Owens & Minor, Inc. (OMI - Free Report) , LeMaitre Vascular, Inc. (LMAT - Free Report) and Bio-Rad Laboratories, Inc. (BIO - Free Report) , all sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Owens & Minor’s earnings estimates have been revised 4.8% upward for 2020 and 4.3% for 2021 over the past 60 days. The stock has skyrocketed 483.6% year to date.

LeMaitre Vascular’s earnings estimates have been revised 29.8% upward for 2020 and 16.8% for 2021 over the past 60 days. The stock has inched up 6.1% year to date.

Bio-Rad Laboratories’ earnings estimates have been revised 21.6% upward for 2020 and 7.5% for 2021 over the past 60 days. The stock has rallied 59.7% year to date.

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