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: Agios Pharmaceuticals (NASDAQ:AGIO) shares dropped by more than 10% earlier today after reporting financial results that included a wider-than-expected loss. The stock closed the day down about 8.5% from the previous close.
So What: The clinical stage biotech reported that its fourth-quarter revenue, which consists primarily of collaboration revenue from biotech goliath Celgene Corp (NASDAQ:CELG), totaled $14.6 million. That revenue performance was above the consensus target of $12 million. However, rising R&D expenses resulted in a loss of $0.76 per share, which was worse than Wall Street's guesstimate of a $0.55 loss.
Agios also reported that its full-year revenue reached $65.3 million in 2014, up from $25.5 million in 2013, and that its operating expenses totaled $119.5 million last year, up from $64.4 million in 2013.
The increase in R&D expenses were tied primarily the development of AG-120 and AG-221. Those drugs, which are being co-developed by Celgene, are both in phase 1 studies as treatments for blood cancers.
Agios expects to expand its AG-120 study in the first half of 2015 and expects results from earlier cohorts of its AG-120 study to be released by year's end. The company's AG-221 phase 1 study remains ongoing and Agios also expects to advance its AG-348 for PK deficiency into a phase 2 trial in the next two quarters.
Now what: Agios Pharmaceuticals appears to be very well-funded with $467 million in cash on the books at year's end. However, cancer trials are notoriously expensive and the failure rate of cancer drugs in these clinical trials eclipses 90%. Agios has a well-heeled partner in Celgene, which means that if AG-120 and AG-221 succeed in trials the company could receive substantial milestones and royalties. That is, however, a big if and that means that Agios is best-suited for only the most speculative investors.
Todd Campbell is long Celgene. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. 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.