What happened

After filing for FDA approval of its second drug in acute myeloid leukemia (AML) and updating investors on its plans at the J.P. Morgan healthcare conference, shares in Agios Pharmaceuticals (NASDAQ:AGIO) rallied 37.8% in January, according to S&P Global Market Intelligence.

So what

Agios Pharmaceuticals already has one drug on the market, Idhifa, which is licensed to Celgene (NASDAQ:CELG),and it may have a second drug on the market in the same indication later this year if the FDA approves ivosidenib.

A golden capsule resting atop a pile of gold coins.


Ivosidenib is wholly owned by Agios Pharmaceuticals and, like Idhifa, it targets mutated, metabolic enzymes isocitrate dehydrogenase (IDH). Idhifa targets IDH2 mutations and ivosidenib targets IDH1 -- and together, Agios Pharmaceuticals thinks it can address roughly 10,000 relapsing and recurring AML patients per year.

Studies evaluating the use of these drugs earlier in treatment could expand that addressable market, though. For example, Agios Pharmaceuticals and Celgene plan to begin a phase 3 trial in front-line AML later this year.

There could be an opportunity for these drugs to be used outside of AML, too. Agios Pharmaceuticals is already enrolling a phase 3 trial of ivosidenib in cholangiocarcinoma, a devastating disease without any FDA approved targeted therapies. About 21,000 people are diagnosed with this disease annually, and Agios Pharmaceuticals expects its phase 3 trial will be fully enrolled in 2019. A trial evaluating ivosidenib in low-grade glioma is under way, as well.

Now what

Agios Pharmaceuticals has a well-heeled partner in Celgene, and in the past, Celgene hasn't hesitated to acquire companies with promising drugs in development. For example, it agreed to acquire Juno Therapeutics for $9 billion last month. 

It's a longshot, but perhaps Celgene might be willing to make buy Agios Pharmaceuticals someday, too. Celgene owned nearly 10% of Juno Therapeutics prior to making a bid to buy it outright, and similarly, it owns roughly 12% of Agios Pharmaceuticals stock currently.

If Celgene doesn't acquire it, Agios Pharmaceuticals is still an intriguing biotech to buy. If ivosidenib wins an FDA go-ahead this year, it could add nine figures in annual sales next year. With meaningful sales on deck and an opportunity to expand to other indications, investors' interest in owning Agios Pharmaceuticals shares is understandable. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.