Agios to Sell Oncology Business; Street is Bullish

Agios Pharmaceuticals has agreed to sell its cancer business to Servier, an independent global pharmaceutical company headquartered in France.

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Agios will receive an upfront cash payment of $1.8 billion and $200 million in potential future milestone payments for an experimental brain cancer treatment. It will also receive royalty payments on the net U.S. sales of their drugs. The company expects to conclude the deal in the second quarter of 2021.

Agios (AGIO) has decided to move ahead with a singular focus on genetically defined diseases. The company believes that its lead clinical candidate, mitapivat, is a potential blockbuster across three distinct blood disorders.

Jackie Fouse, Ph.D., chief executive officer of Agios, said in a statement, “We are proud of our heritage in oncology and the novel therapies we have advanced for patients with hematologic malignancies and solid tumors, and we are pleased to have found an excellent home for our oncology portfolio in Servier.”

“This transaction will allow the oncology portfolio to grow and thrive with Servier and will provide Agios with the resources required to optimize the development of our promising genetically defined disease therapies, ultimately enabling the greatest overall positive impact for patients,” she continued.

Agios’ share price was up 36% in early trading at the time of writing. (See AGIO stock analysis on TipRanks)

On December 8, Canaccord Genuity analyst John Newman reiterated his Buy rating, setting a price target of $70 (57% upside potential). Newman is currently ranked 373 out of 7,170 analysts on TipRanks and has an average return per rating of around 23%.

Overall, consensus among analysts is a Strong Buy based on 7 Buys and 1 Hold. The average price target of $66.86 implies an upside potential of around 50% over the next 12 months.