It is a beautiful Thursday morning and I am excited about the possibilities that today hold to profit from the options of pharmaceuticals. Today, I’m looking at options of Agios Pharmaceuticals Inc. (NASDAQ:AGIO). Agios with its market capitalization of $72.91 is passionately committed to applying its scientific leadership in the field of cellular metabolism to transform the lives of patients with cancer and rare genetic disorders of metabolism.
The company plans to apply its deep understanding of metabolism, coupled with the company’s ability to create medicines that can inhibit or activate metabolic enzymes, to fundamentally change the way cancer and inborn errors of metabolism (IEMs) are treated. The company has identified and validated novel and druggable targets in both cancer and IEMs.
Why We Are Looking at Agios Today
Shares of Agios Pharmaceuticals Inc. made a new 52-week high to $76.98 to mark a 388.14% increase over its 52-week low of $15.77. I am particularly impressed by how shares of Agios have traded in recent times. For instance, the stock has made 8 new highs and it has gained some 47.03% in the last one month. The stock has been soaring above its 20, 50 and 100-day moving averages as it heads towards new highs.
The chart above (with my annotations) shows how shares of Agios Pharmaceuticals have traded in the last one year. You will observe that the stock has been trading predominantly northbound in the last one year as mentioned earlier. The stock has experienced a $34 support in June-July while the $52 price support from March has still held at about the same time.
However, the stock has obtained an impressive bullish momentum as it heads up to establish new 52-week high yesterday. The most interesting thing is that the stock has strong fundamentals that support the bullish momentum. For one, the company expects its revenue to grow by an impressive 4250% and by another 107% next year. The company also expects its earning to increase by 31.40% this year and by 22.70% next year.
Why Shares of Agios are on a Bullish Ascent
One of the reasons the shares of Agios are surging ahead in recent times is its announcement of initiation of four expansions cohorts in Phase 1 study of Ag-221. AG-221 is the first targeted investigational medicine to show clinical activity in patients with an IDH2 mutation, validating IDH2 as an important target for patients with AML and potentially other cancers.
In another news, the company announced the initiation of a Phase 1/2 multicenter study of AG-221 in patients with advanced solid tumors, including gliomas, as well as angioimmunoblastic T-cell lymphoma (AITL) that carry an isocitrate dehydrogenase-2 (IDH2) mutation. It is expected that the study will enroll patients who have recurred or progressed following standard therapy or have not responded to prior standard therapy.
Quoting Chris Bowden M.D., chief medical officer at Agios, “evaluating AG-221 in patients with advanced solid tumors is an important next step in our efforts to understand the potential of this investigational medicine to treat a broad range of cancers with the IDH2 mutation.”
The initiation of Phase 1 study is good news as it shows that the company is moving ahead positively on its research and development activities.
How to Trade AGIO Calls
I am particularly optimistic about AGIO’s options going forward especially considering the fact that the stock has made a new 52-week high to $77.66 today. Agios Pharmaceuticals still has much upside potential ahead; hence, I recommend buying in-the-money options even with the low open interest. I recommend buying the AGIO Feb 2015 70.000 call (AGIO150220C00070000) at an asking price of $13.60.
— Daily Option Alerts