Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) Q2 2023 Earnings Call Transcript

Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) Q2 2023 Earnings Call Transcript August 3, 2023

Agios Pharmaceuticals, Inc. misses on earnings expectations. Reported EPS is $-1.51 EPS, expectations were $1.6.

Operator: Good morning, and welcome to Agios’ Second Quarter 2023 Conference Call. At this time, all participants are in a listen-only mode. There will be a question-and-answer session at the end. Please be advised that this call is being recorded at Agios’ request. I would now like to turn the call over to Chris Taylor, Vice President, Investor Relations & Corporate Communications for Agios.

Christopher Taylor: Thank you, operator. Good morning, everyone, and welcome to Agios second quarter 2023 conference call. You can access slides for today’s call by going to the Investors section of our website, agios.com. On today’s call, I’m joined by our Chief Executive Officer, Brian Goff; Dr. Sarah Gheuens, our Chief Medical Officer and Head of Research and Development; Tsveta Milanova, our Chief Commercial Officer; and Cecilia Jones, Chief Financial Officer. Before we get started, I would like to remind everyone that some of the statements we make on this call will include forward-looking statements, actual events and results could differ materially from those expressed or implied by any forward-looking statements as a result of risks, uncertainties, and other factors, including those set forth in our most recent filings with the SEC and any other future filings that we may make with the SEC. And with that, I will turn the call over to Brian.

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Brian Goff: Thanks, Chris. Good morning, everyone, and thank you for joining us. Agios is focused on delivering transformative therapies for patients living with rare diseases, and in particular we are the pioneering leader in PK activation focused on hematologic diseases. In the second quarter, we made significant progress advancing our industry leading pipeline of PK activators, targeting hematologic diseases that share a common underlying pathophysiology. With each step forward each data readout the probability of success for the platform has strengthened, and we are excited to share our updates with you today. As we articulated at the beginning of this year, we are prioritizing potential business development opportunities based on five key criteria, rare disease focus, transformative for patients, and identified regulatory pathway, potential to de-risk early and a clear path to value creation.

Earlier this morning, we were very pleased to announce a license agreement with Alnylam Pharmaceuticals, the leading RNAi therapeutics company that is highly aligned with these five criteria. Under this agreement, Agios will acquire the rights to develop and commercialize Alnylam novel preclinical siRNA for the potential treatment of Polycythemia Vera or PV. PV is a rare and potentially fatal hematologic disease that affects approximately 100,000 patients in the U.S. and for which phlebotomy is the standard of care. Our goal is to address the high unmet need in PV by delivering a convenient disease modifying treatment option that reduces or eliminates the need for phlebotomy. This agreement is therefore aligned not only with our business development strategy, but also our core scientific expertise and clinical and commercial capabilities in rare hematology.

We look forward to initiating IND enabling studies later this year. Sarah will provide more detail on the siRNA development candidate in just a few minutes. Also, this quarter we announced positive results from the Phase 2 portion of the operationally seamless Phase 2-3 RiseUP study of Mitapivat in sickle cell disease. The study met the primary endpoint of hemoglobin response for patients in both Mitapivat treatment arms. And in recent weeks, our team has continued to analyze the results and has selected the a hundred milligram dose for the Phase 3 portion of the study. We are now focused on Phase 3 execution and are quite eager to enroll the first patient later this year. Broadly, these results add to the growing body of consistent and compelling data that we have continued to generate with our PK activators, highlighting the potential of this differentiated mechanism of action to transform patient function, quality of life, and long-term outcomes across multiple disease areas.

In fact, with more than eight years of clinical experience and the largest data set for any PK activator, Pyrakine has demonstrated consistent results across three distinct diseases. In this context, we were all. In this context, we were also pleased to announce this quarter that we have completed enrollment in both Phase 3 studies of Mitapivat and Thalassemia, as well as the Phase 2A study of our novel PK activator AG-946 in lower risk MDS. This progress reflects our operational excellence in clinical development and investigator’s enthusiasm for the potential of PK activation in these indications. Based on this progress, we continue to expect two readouts from the energized and energized T Phase 3 studies in Thalassemia next year, and we have pulled forward the expected timing of the top line results for the Phase 2A study in lower risk MDS to the end of this year.

Turning to our commercial business, we are encouraged to see that the consistent and compelling efficacy of Mitapivat observed in the clinical trial experience has continued to translate to persistency on therapy among adults living with PK deficiency in the real world. As we continue to maximize the opportunity in the current launch in PK deficiency, we are building the capabilities needed to fully realize the potential of anticipated future launches in Thalassemia, sickle cell disease and lower risk MDS. Tsveta will provide a detailed update on our commercial performance in just a few minutes. As you’ll hear from Cecilia, we ended the second quarter with a cash position of nearly $950 million on the balance sheet. One brief reminder, as part of the divestiture of our oncology business to Servier in 2021, we retain the rights to a potential $200 million milestone upon FDA approval of Vorasidenib and royalties on potential U.S. net sales.

We were encouraged by the results of Servier’s Phase 3 trial and we look forward to tracking next steps. We are expecting a number of additional milestones by the end of the year, including enrolling more than half of the patients in the Phase 3 activate kids and activate kids T studies of Mitapivat in pediatric PK deficiency, filing the IND for our PH stabilizer for the treatment of PKU and the newly added milestone, the data readout from the Phase 2A study of AG-946 in lower risk MDS. We are very enthusiastic about the clinical development momentum we are building and look forward to anticipated readouts from the Phase 3 studies of Mitapivat and Thalassemia in 2024, and readouts from the Phase 3 studies of Mitapivat in sickle cell disease and pediatric PK deficiency in 2025.

With that, I will now turn the call over to Sarah.

Sarah Gheuens: Thanks, Brian. Sickle cell disease is a serious, potentially fatal hematologic disease that affects approximately 120,000 to 135,000 patients in the U.S. and EU5. Today, there are no novel oral treatment options that both improve anemia and reduce sickle cell pain crisis, and that is what we aim to deliver for these patients. Turning to the top line data of the RISE UP Phase 2 study treatment with Mitapivat demonstrated a statistically significant increase in hemoglobin response rate compared to placebo. Hemoglobin response was defined as an increase of one gram per deciliter or more in average hemoglobin concentrations from week 10 through week 12 compared with baseline. 46.2% of patients in the 60 milligram BID Mitapivat arm and 60% of patients in the 100 milligram BID Mitapivat arm achieved the hemoglobin response compared to 3.7% of patients in the placebo arm.

These increases in hemoglobin response were accompanied by improvements in markers of hemolysis and erythropoiesis, as well as numerical reductions in the analyzed rate of sickle cell pain crisis for this 12 week study. Specifically, patients in the placebo arm experienced an analyzed rate of sickle cell pain crisis of 1.71 compared to 0.83 in the 50 milligram arm and 0.51 in the 100 milligram treatment arm. The safety profile for Mitapivat observed in the study was generally consistent with previously reported data for Mitapivat in other studies of sickle cell disease and other hemolytic anemia. And there were no adverse events leading to discontinuation in any study arm. And finally, of the 79 patients enrolled in the study, 73 continued in the Phase 2 open-label extension.

These data further underscore the potential of Mitapivat to address the high unmet need of patients with sickle cell disease by delivering a novel oral treatment option that both improves anemia and reduces sickle cell based crisis. We are excited to present a full analysis of the Phase 2 data and have submitted an abstract for ASH later this year. Based on continued analysis of the compelling data observed at both doses in recent weeks, we have selected the 100 milligram dose for Phase 3. As a reminder, the Phase 3 portion of RISE UP will include a 52 week placebo controlled period in which 198 patients will be randomized two to one to either Mitapivat or placebo twice daily. The primary endpoints are hemoglobin response and analyzed rate of sickle cell pain crisis, and we look forward to enrolling the first patient in the Phase 3 portion of the RISE UP study in the fourth quarter of this year.

Turning to our broader development pipeline, we have been very pleased with the pace of enrollment across our programs in the first half of the year. We have completed enrollment in both Phase 3 studies of Mitapivat and Thalassemia, including Energize, which enrolled patients who are not regularly transfused with a primary endpoint of hemoglobin response and Energize T, which enrolled patients who are regularly transfused with a primary endpoint of transfusion reduction response. Together, these studies will deliver data relevant to the entire Thalassemia population and thus allow us to evaluate potential of Mitapivat to become the first oral therapy to improve hemolytic anemia and ineffective erythropoiesis across all Thalassemia subtypes.

We look forward to the readout of the Energize study in the first half of next year and the readout of Energize T in the second half of next year. We were also pleased to complete enrollment in the Phase 2a study of AG-946 in lower risk MDSS disorder several months ahead of schedule. AG-946 is a novel PK activator that has the potential to strengthen our PK activator franchise. We now expect top line results from the Phase 2a study of AG-946 in lower risk MDS by the end of this year, making this our next clinical data readout. As a brief reminder, the primary objective of this study is to establish proof of concept for AG-946 in participants with lower risk MDS by measuring the following primary endpoints. Hemoglobin response defined as an increase of 1.5 grams per deciliter or more from baseline in the average hemoglobin concentration from week-eight through week-16, and transfusion independence defined as transfusion free for eight or more consecutive weeks during the study for participants with low transfusion burden only.

In parallel, we continue to advance the Phase 3 activate kits and activate kit studies of Mitapivat in pediatric PK deficiency and progress toward the filing of the IND for small molecule pH stabilizers to directly address the underlying cause of Phenylketonuria or PKU. Finally, as Brian mentioned, we are pleased with the agreement that we announced this morning together with Alnylam, a pioneer in RNAi therapeutics with a best-in-class platform. Polycythemia Vera is a rare hematologic disease that is well aligned with our internal expertise. PV is a characterized by excessive production of red blood cells with leaks to increased blood volume and viscosity and can result in thrombosis, cardiovascular events and death. The sRNA development candidate targets temper six, a key driver of red blood cell production.

Knockdown of TMPRSS6 increases hepcidin and reduces red blood cell production. We look forward to initiating IND enabling studies later this year and leveraging our deep expertise in rare hematology as we progress this program towards the clinic. With that, I will now turn the call over to Tsveta.

Tsveta Milanova: Thank you, Sarah. Our commercial organization remains focused on maximizing the opportunity in the current launch in PK deficiency by executing on our strategy across all phases of the patient journey. The capabilities we are building today on disease awareness and education, access and initiation, and adherence and persistency will also serve as a foundation to fully realize the potential of anticipated future launches in Thalassemia sickle cell disease and low risk MDS. Our market research data continue to indicate that nearly 100% of our target healthcare providers are likely to recommend PYRUKYND to their adult patients with PK deficiency. For clinicians, key drivers of these recommendations include improvements in hemoglobin level, reduction in transfusion frequency, and a positive impact on long-term disease complications.

To better understand the treatment experience on PYRUKYND, we recently conducted interviews with a sample of patients or their caregivers. Most patients reported positive experiences including improvement in hemoglobin and in energy levels, reduction in fatigue and decreased transfusion burden. Importantly, this feedback from both patients and clinicians is consistent with the strong persistency of treatment use we observe in the real world after the initial payer reauthorization. Moreover, discontinuations remain low and reauthorizations have not been a barrier. In the second quarter of 2023, we generated $6.7 million in net PYRUKYND revenue. A 20% increase over Q1 this year, a total of 147 patients have now completed a prescription enrollment form or PEF, including 20 in the second quarter of 2023, a 16% increase versus the first quarter of 2023.

This has translated into net 99 patients on therapy, an 11% increase of over last quarter. Patients on therapy continue to stem from a growing and the reverse provider base of 130 physicians and represent a broad demographic and disease manifestation range that is consistent with a doubt PKD deficiency population. Given the ultra rare nature of this disease, we continue to expect slow and steady uptake. In these early stages, we remain focused on identifying providers likely to treat adult patients with PK deficiency. Our efforts center on utilizing data analytics to improve physician targeting as we believe there are a meaningful number of potential prescribers who may have adult PKD patients under management. We also continue to improve efficiency and impact educating, treating physicians, and instilling a sense of urgency regarding the benefits of diagnosis and appropriate treatment.

By doing so, we will have to maximize the potential of the current launch and lay the foundation for potential launches in meaningfully larger patient populations. The first of these potential launches is in 2025 in Thalassemia where approximately 60% of Thalassemia patients in the U.S. do not have an approved treatment option. This next slide illustrates the breakdown of Thalassemia subtypes in the U.S., including alpha and beta Thalassemia and transfusion dependence and non-transfusion dependent Thalassemia. Importantly, Mitapivat has the potential to become the first oral therapy to improve hemolytic anemia and ineffective erythropoiesis across the full range of Thalassemia patients. Given the relative prevalence and competitive differences across Thalassemia subtypes, we look forward to implementing a fit for purpose commercial strategy that leverages capabilities gained from the current launch.

Together, the full range of Thalassemia patients is comprised of approximately 18,000 to 23,000 patients in the US and EU 5 and a meaningful addressable market in additional geographies such as the Gulf Council Countries or GCC where the prevalence is approximately 70,000 patients. The prevalence of sickle cell disease is also concentrated in the U.S. and GCC region. This overlap in select geography provides an opportunity for us to leverage our commercial efforts in Thalassemia to accelerate and support the future launch in sickle cell disease. With that, I will now turn the call over to Cecilia.

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Q&A Session

Cecilia Jones: Thanks, Tsveta. Our second quarter 2023 financial results can be found in the press release we issued this morning and more detail will be included in our 10-Q which will be filed later today. I would like to take a moment to provide some context and highlight a few points. Second quarter 2023 net PYRUKYND revenue was $6.7 million, an increase of $1.1 million compared to Q1, 2023. As PYRUKYND is the first therapy for this ultra rare adult PKD patient population we continue to gather data and insights on the launch trajectory and will therefore not be providing guidance at this time, but we continue to expect a slow and steady trajectory to peak. Consistent with other rare disease launches, growth to net is expected to be in the 10% to 20% range on an annual basis.

Cost of sales for the quarter was $1.1 million. Moving to expenses on the balance sheet, R&D expenses were $68.9 million for the second quarter, a decrease of $5.6 million compared to the second quarter of 2022. This decrease was primarily driven by a decrease in workforce related expenses as a result of reduced headcount related to the evolution of a research organization. SG&A expenses were $30.4 million for the second quarter, an increase of $2.1 million compared to the second quarter of 2022. That was primarily driven by an increase in stock-based compensation expense. As a reminder, TIBSOVO Royalty has ceased given the sale of a right to 5% royalties on U.S. net sales of TIBSOVO to Sagard in October, 2022, and as part of the divestiture of our oncology business to Servier, we retain rights to a potential $200 million milestone upon FDA approval of Vorasidenib and 15% royalties on potential U.S. net sales.

We ended the quarter with cash, cash equivalent, and marketable securities of approximately $947 million. We expect that this patent together with anticipated product revenue, interest income, and the potential Vorasidenib milestone will enable the company to fund our operating expenses and capital expenditures through several value creating milestones and at least into 2026. This guidance does not include cash inflows from potential royalties from Vorasidenib, commercializing Mitapivat outside of the U.S. through one or more partnerships or other potential strategic business or financial agreements. We are excited about a potential near-term PYRUKYND launches and continue to expect peak sales of $200 million to $225 million for PKD in the U.S., and $1 billion for worldwide revenues for PKD and Thalassemia combined.

We remain focused on creating shareholder value, including by proactively managing our cost base and deploying a disciplined cash allocation approach as we prepare to support the potential additional launches of PYRUKYND and continue to make strategic investments to advance and grow our pipeline, all of which impact our timing to profitability. Following the significant momentum created through the execution of our development plans, and as we approach additional upcoming potential value creating milestones on the horizon, I am confident that our strong balance sheet will enable us to execute from a position of strength to continue to look for ways to create shareholder value. I will now turn the call back over to Brian for his closing remarks.

Brian Goff: Thanks, Cecilia. This was a tremendous quarter at Agios. We announced positive Phase 2 data in sickle cell disease, completed enrollment in three clinical studies in licensed, a compelling external program that has the potential to transform the course of a rare hematologic disease with profound unmet need, and we continue to strengthen our commercial capabilities to support future launches. The data we continue to generate across our industry leading pipeline of PK activators remain consistent and compelling, and we continue to make meaningful progress towards our vision for Agios, which is to develop an established hematology franchise with approval spanning three hemolytic anemias and an expanded portfolio fueled by business development and advancement of our internal pipeline that is aligned with our core expertise and rare disease.

As always, we will continue to strive to be responsible stewards of our balance sheet and evaluate meaningful opportunities for value creation. Finally, I would like to thank all of our employees for their hard work and dedication to our mission of transforming the lives of patients living with rare diseases and all of our partners, including the physicians, patients, caregivers and participants in our clinical development programs. With that, we will open the call for questions.

Q – Greg Harrison: To start off, curious what factors led you to the decision to license the PV treatment from Alnylam and is this a model for future BD in terms of development stage, and having the potential where you could add your own expertise and value and then would you expect this asset to be broadly applicable across PV patients, or would it be more focused on the specific patient population?