Canaccord Downgrading Agios To Hold

Canaccord downgraded Agios Pharmaceuticals Inc AGIO Thursday from Buy to Hold and cut its price target from $163 to $103.

Analysts John Newman and Kevin Dai commented, “Agios announced plans to move AG-881, a dual IDH1 and IDH2 mutation inhibitor, into glioma patients, which suggests higher risk regarding AG-120, in our view.”

The analysts suspected that the current AG-120 trial in glioma has not shown “encouraging data,” thus 881 was moving forward.

“Agios pointed out higher blood brain barrier penetration for AG-881, which suggests testing in gliomas. Agios will present data for AG-120 in solid tumors by 2H15, which we believe may only show modest benefit in these patients, particularly CNS diseases,” according to Newman.

The analysts believed that AG-120 was not showing much activity in solid tumors, including gliomas, as the company would not present data at ASCO in early June, while trials in gliomas began in March 2014 and data had been expected earlier than 2H15.

Newman continued to expect “positive data for AG-120 and AG-221 in expansion cohorts during 2015,” however, the analyst expected results similar to prior data.

“Incremental upside is possible, but we would not expect surprises in these data. We remain bullish on prospects for AG-348, but do not expect to see data in humans until 1H16,’ Newman concluded.

The analysts decreased the probability adjustment for AG-120 for glioma from 80 percent to 30 percent and lowered the P/S multiple from 9x to the current 7x P/S multiple of NYSE ARCA Biotech index.

The price target was based on the 7x P/S multiple on peak sales for each indication, applying probability adjustments, and then discounting back to 2015.

Agios Pharmaceuticals recently traded at $94.37, down 4.9 percent.