Who wants to take candy from a baby? AGIO

Here is a setup that I love...a pharmacuetical stock that announces that some early peliminary testing was postive and has no drug on the market and no garantee that the drug will make it through the rest of the phase testing by the FDA. People emotionally overreact and pile on a hope.

As you can see, the stock is up over 20% today on a POSSIBILITY. Lets look at the news release:

Shares of biotech startup Agios Pharmaceuticals (NASDAQ:AGIO) soared 20% in the stock market today to a new high above 64 after it said it would report data from a key clinical trial earlier than expected, leading analysts to believe the news will be good.

Agios said it will provide the first data from an ongoing phase one study of AG-120, a product it's developing as a treatment for blood cancer, on Nov. 19 at a symposium in Barcelona. The trial started in March; Agios had said data will first come out next year.

"Agios likes to present data only when reasonable conclusions can be drawn about a compound's activity," wrote Cowen analyst Eric Schmidt in a research note Friday. "Hence ... we are optimistic that the early data release will be associated with a strong efficacy signal."

 View Enlarged Image

Agios is developing AG-120 in collaboration with Celgene (NASDAQ:CELG), currently one of the biggest players in blood cancer. Also backed by Celgene is Agios' lead product AG-221, which is somewhat further along in phase one, with positive data reported earlier this year. Last month, the FDA granted it fast-track designation as a treatment for leukemia, though even with expedited review it's still years from the market.

Agios has turned out to be one of the most successful of the recent glut of biotech IPOs. It's now trading at more than triple its July 2013 IPO price of 18.

Follow Amy Reeves on Twitter: @IBD_AReeves.

Read More At Investor's Business Daily: http://news.investors.com/technology/092614-719157-agios-stock-hits-high-before-clinical-trial-report.htm#ixzz3ERytKFSE
Follow us: @IBDinvestors on Twitter | InvestorsBusinessDaily on Facebook
A few things:

1. This is based on early data from a Phase 1 study. There are 4 phases in pharmaceutical testing by the FDA before it can come to market
2. This drug even with a FDA fast track is years before it can come to market. Translate: years before it can bring in any money if at all.
3. The market is choppy and in a downward trend.

I am going to go ahead and recommend a SHORT on this stock. The options are too far out of range and I expect to make approx 4-6% on this play over the next few days.

Too Easy,
Mark