Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Agios Pharmaceuticals (NASDAQ:AGIO), a clinical-stage biopharmaceutical company focused on developing therapies aimed at cancer metabolism and inborn errors of metabolism, plunged as much as 12% after reporting its first-quarter earnings results before the opening bell.
So what: For the quarter, Agios produced $8.4 million in revenue compared to $6.3 million in the prior-year period, which was comprised of amortized deferred revenue from a collaboration with Celgene (NASDAQ:CELG). The boost from last year came from Celgene's extension of its collaborative drug discovery agreement in Dec. through April 2015. As is also to be expected with more clinical work ongoing, research and development expenses rose, which pushed its net loss to $12.2 million, or $0.39 per share, from $7.2 million in the year-ago quarter. Agios ended the quarter with $167.3 million in cash and cash equivalents, down $26.6 million from the sequential fourth quarter; but it does anticipate $95 million in net proceeds from a share offering that was recently completed. By comparison, Wall Street was expecting a slightly narrower loss of $0.37 per share.
Now what: Short-sellers have been looking for any reason to get a good hold of Agios after its phenomenal run higher, and today's EPS miss could be it, at least over the short term. The two key points investors should focus on here, though, are Agios' cash position, which it believes will equal more than $200 million by year's end and sustain the company through mid-2017, and the ongoing development of AG-221, its blood cancer drug. Even though AG-221 has only been studied in phase 1 trials, the early results, including three complete responses and two partial responses, were astounding. There's obviously a long development process still ahead, but these early results from AG-221 signify possible blockbuster potential if everything continues to run smoothly. Agios is a company I'd strongly suggest you add to your watchlist.
Agios may hold a ton of potential, but even it could have a difficult time keeping up with this top stock over the long run
Give me five minutes, and I'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer handpicks one stock with outstanding potential. But it's not just any run-of-the-mill company; it’s a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year, his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252%, and 1,303% during the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
The Motley Fool recommends Celgene. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.