Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) Q1 2024 Earnings Call Transcript May 2, 2024

Agios Pharmaceuticals, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning, and welcome to Agios’ First Quarter 2024 Conference Call. [Operator Instructions] Please be advised that today’s conference is being recorded at Agios’ request. I would now like to turn the call over to Chris Taylor, Vice President, Investor Relations and Corporate Communications for Agios. Please begin.

Chris Taylor: Thank you, operator. Good morning, everyone, and welcome to Agios’ conference call and webcast to discuss first quarter 2024 financial results and recent business highlights. 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, Chief Medical Officer and Head of R&D; 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 results and events could differ materially from those expressed or implied by any forward-looking statements as a result of various 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’ll turn the call over to Brian.

Brian Goff: Good morning, everyone, and thank you for joining us. Our mission at Agios is to develop and deliver transformative medicines that elevate and extend the lives of patients living with rare diseases, and we are off to a fast start in 2024. Our foundation today leverages mitapivat’s novel mechanism of action, which focuses on overall red blood cell health, and has been a key driver for our recent clinical results. On January 3, we reported positive data from the Phase 3 ENERGIZE study of our lead PK activator, mitapivat, marketed as PYRUKYND, in patients with non-transfusion-dependent thalassemia. This study met both the primary endpoint of hemoglobin response rate as well as both key secondary endpoints associated with change from baseline in FACIT-Fatigue score and average hemoglobin concentration, and we look forward to presenting these data at an upcoming medical meeting.

As a reminder, the non-transfusion-dependent thalassemia accounts for approximately two-thirds of thalassemia in the U.S., and has no FDA-approved treatment options. Despite not requiring regular transfusions, it is increasingly understood that these patients experience a significant impact on their quality of life, a wide range of serious morbidities and an elevated risk of premature death due to chronic hemolysis and ineffective erythropoiesis. Based on these data, our team is actively preparing for a potential launch in thalassemia in the U.S. Complementing the ENERGIZE study in non-transfusion-dependent thalassemia, we continue to advance the Phase 3 ENERGIZE-T study of mitapivat in transfusion-dependent thalassemia. We expect to report data from this study in the second quarter, a slightly more refined time frame than previously communicated, and we plan to submit a single regulatory filing encompassing data from both ENERGIZE and ENERGIZE-T to the FDA by the end of the year.

In parallel, we look forward to near-term milestones across several additional clinical programs in our pipeline, including completing enrollment in the Phase 3 portion of the RISE UP study of mitapivat in sickle cell disease by the end of this year, and reporting data from 4 additional Phase 3 studies by the end of 2025. Sarah will provide a detailed update on our progress and upcoming milestones across R&D in just a few minutes. Given the consistent positive data we’ve generated across the mitapivat development program and the high unmet need in our target disease areas, we believe mitapivat has the potential to transform the course of multiple hemolytic anemias by improving red blood cell health and to become a multibillion-dollar franchise.

To help realize the full commercial potential of mitapivat and based on the strength of the ENERGIZE data, our commercial organization is laser-focused on building upon the infrastructure established through our current launch in pyruvate kinase deficiency, or PKD, to prepare for potential U.S. launches of mitapivat in thalassemia in 2025 and in sickle cell disease in 2026. Tsveta will provide greater detail on the market opportunity in thalassemia and the team’s robust preparation for launch, as well as an update on our current launch in PKD in just a bit. Finally, as you’ll hear from Cecilia, we ended the first quarter with a strong cash position, with approximately $714 million in cash and investments on the balance sheet. Importantly, we have the potential to further bolster our cash position in the near term, as Servier announced FDA filing acceptance and priority review for a new drug application for vorasidenib for the treatment of certain IDH mutant diffuse glioma.

You’ll recall that as part of the divestiture of Agios’ oncology business to Servier, Agios retains rights to a potential $200 million milestone upon FDA approval of vorasidenib and 15% royalties on potential U.S. net sales. If approved, vorasidenib would become a first-in-class targeted therapy for patients with IDH mutant gliomas, and we look forward to the PDUFA action date of August 20, 2024. With that, I’ll turn the call over to Sarah.

Sarah Gheuens: Thanks, Brian. As we approach top line data readout for the Phase 3 ENERGIZE-T study of mitapivat in transfusion-dependent thalassemia, I would like to highlight a few key elements of the mitapivat development program in thalassemia. As a reminder, the Phase 3 program of mitapivat with thalassemia, namely ENERGIZE and ENERGIZE-T, was designed to deliver data across all subpopulations of thalassemia, including alpha and beta thalassemia and populations with different transfusion needs. As Brian mentioned, only patients with transfusion-dependent beta thalassemia, which represents one-third of U.S. patients, have an FDA-approved treatment option. The other two-third of patients in the U.S., including all patients with alpha thalassemia and those patients with beta thalassemia who are non-transfusion dependent, have no approved treatment.

It is a common misperception that non-transfusion dependent or NTD thalassemia patients are less sick. When the reality is that these patients suffer from a poor quality of life and a higher rate of serious morbidities, including thrombosis and premature death, this population, which represents approximately two-thirds of total thalassemia patients in the U.S., has a high unmet need for any treatment. This unmet need was strongly reinforced through our Phase 3 ENERGIZE study by the speed of enrollment, the total number of patients enrolled and the high completion and rollover rates we observe. We were very pleased to announce positive results from this study in January and are eagerly awaiting the opportunity to present more complete results at an upcoming medical meeting.

Turning to those results. Our goal is to build from our Phase 2 findings with a more rigorous way to measure hemoglobin response in the Phase 3 ENERGIZE trial, which we defined in the primary endpoint as an increase of equal or more than 1 gram per deciliter in average hemoglobin concentrations from week 12 through week 24 compared to baseline, but in a much larger trial. We were excited to be able to announce success in this trial as treatment with 100 milligrams mitapivat BID demonstrated a highly statistically significant result on the primary endpoint of hemoglobin response rate, with 42.3% of patients in the treatment arm achieving a hemoglobin response versus 1.6% of patients in the placebo arm. In addition, treatment with mitapivat also resulted in statistically significant improvements in both key secondary end points, including a change from baseline in average FACIT-Fatigue score, an important patient-reported measure of how patients feel.

In line with its novel mechanism of action that improves overall red blood cell health, mitapivat is the first molecule that has shown in a randomized controlled trial that it does not only improve hemoglobin, but actually makes people with thalassemia feel less fatigue. In addition, across the primary and secondary endpoints, all prespecified subgroup analyses favored mitapivat compared to placebo, suggesting that no single subgroup was responsible for driving the results, which supports our aim to file for a broad label covering all thalassemia subtypes. Turning to ENERGIZE-T. Let me highlight 3 key reasons why we are excited about the upcoming readout in transfusion-dependent thalassemia. First, it is important to recall that regardless of a patient’s transfusion needs, thalassemia is a hemolytic anemia.

By [indiscernible] PK activity and improving overall red blood cell health, mitapivat’s novel mechanism of action directly addresses the underlying pathophysiology of hemolysis in all thalassemia subtypes. Second, this is a similar approach to the one we took for our PK deficiency program. In that case, in the Phase 3 ACTIVATE-T study of mitapivat in regularly transfused adults with pyruvate [indiscernible] deficiency, mitapivat demonstrated a statistically significant and clinically meaningful reduction in transfusion burden. These data, together with positive data from the Phase 3 ACTIVATE study in patients with PK deficiency who are not regularly transfused, led to FDA approval of mitapivat for adults with PK deficiency regardless of transfusion status, and we look forward to the potential to achieve the same in thalassemia.

And third, in line with mitapivat’s mechanism of action, we have seen consistency in the data with improvements in hemolysis and ineffective erythropoiesis in clinical studies across three hemolytic anemias, namely PK deficiency, sickle cell disease and non-transfusion-dependent thalassemia. As a reminder, the primary endpoint of ENERGIZE-T is a transfusion reduction response, defined as a 50% or greater reduction in transfused red blood cell units, with a reduction of equal or more than 2 units of transfused red blood cells in any consecutive 12-week period through week 48 compared with baseline. This definition allows two ways for patients to achieve a reduction in transfusion burden. First, we have an increased time interval between transfusions, or second, through the use of fewer units or both.

In order to standardize as much as possible the standard of care in this large global trial, each patient had a specific hemoglobin threshold value that was calculated based on their individual transfusion history prior to enrolling in the trial. Each patient’s individual hemoglobin threshold value that derms the hemoglobin value by which they will receive a transfusion in the trial. As the mechanism of action of mitapivat focuses on increasing red blood cell health and decreasing hemolysis, we are hoping to maintain hemoglobin levels above this threshold and reduce the need for transfusions. We designed this study by incorporating learnings from prior studies as well as agency feedback, and believe the primary endpoint dynamic assessment period reflects what matters to patients and physicians as well as regulators.

We now look forward to the readout of this study in the second quarter, and are planning to submit a single regulatory filing to the FDA encompassing data from both ENERGIZE and ENERGIZE-T by the end of this year, seeking a label that covers people living with all subtypes of thalassemia. Turning to sickle cell disease. Enrollment in the Phase 3 portion of the RISE UP study of mitapivat continues to progress, and we are on track to complete enrollment by the end of the year. We have increasing conviction about the role of mitapivat in sickle cell disease, where we believe we have the potential to be both best-in-class and first-in-class. We look forward to reporting top line data from this 52-week study next year and believe firmly in mitapivat’s potential to address the high unmet need in this disease by improving anemia, making patients feel better and reducing sickle cell [indiscernible].

We also remain on track to deliver on all milestones across the rest of our advancing pipeline. This quarter, we commenced dosing in the Phase 1 study of AG-181, an oral phenylalanine hydroxylase or PAH stabilizer for phenylketonuria, abbreviated as PKU, a patient population with limited treatment options. We are excited about the potential to introduce a novel mechanism of action for PKU treatment and look forward to providing an update on next steps as enrollment progresses. Based on the data generated in the Phase 2a study of our novel PK activator AG-946 in lower-risk MDS, we plan to increase the doses evaluated in the upcoming Phase 2b study, which we expect to initiate in mid-2024. And in pediatric PK deficiency, we expect to complete enrollment of the Phase 3 ACTIVATE-kids study in the middle of this year, and we also now expect to report top line data from the Phase 3 ACTIVATE-kids-T study in mid-2024, sooner than our original projection of year end.

This is a very exciting time at Agios, and we look forward to providing additional readouts and progress as we proceed through the year. In particular, we are looking forward to sharing with you the set of submissions for eHow and they are made public in a couple of weeks. With that, I will now turn the call over to Tsveta.

Tsveta Milanova: Thanks, Sarah. Today, a diagnosis of thalassemia can be daunting for patients and their families. Regardless of the disease subtype, treatment options are limited, and the burden of disease as well as the associated cost of care is significant. All forms of thalassemia, including non-transfusion dependent thalassemia brings higher rates of serious morbidities, reduced quality of life and a heightened risk of premature death. There are approximately 6,000 diagnosed adults living with thalassemia in the U.S. Approximately 4,000 of whom are non-transfusion dependent and has no available treatment options today. As Sarah mentioned, this patient population was studied in our ENERGIZE clinical trial, which demonstrated the benefit of mitapivat in non-transfusion-dependent thalassemia patients.

The remaining 2,000 are transfusion-dependent and has no oral treatment options. We are eagerly awaiting the data from our ENERGIZE-T study in the second quarter, which is focused on these transfusion-dependent patients. Our goal with mitapivat is to transform the treatment of thalassemia by becoming the first therapy approved for all subtypes of the disease. [indiscernible] by the positive data from the ENERGIZE study and the potential for positive data from ENERGIZE-T, our commercial organization is actively preparing to address this high unmet need, with a potential launch in thalassemia next year in the U.S. As we have highlighted, the thalassemia market in the U.S. has more favorable commercial dynamics than PK deficiency. In addition to the data we are generating through the mitapivat clinical development program, we believe there are three key factors that have the potential to support adoption of mitapivat in thalassemia in the U.S. First, driven by the availability of newborn screening and well-established IPD [indiscernible], the diagnosis rate in thalassemia is high, with many patients diagnosed before adulthood.

Second, both patients and providers are concentrated in limited number of centers, with approximately 50% of all diagnosed patients treated at fewer than 150 affiliated practices, providing a clear focus for our initial launch. And third, our clinical trial site in the U.S. are in some of the main centers of excellence, so many treating physicians will have first-hand experience with mitapivat. Given these data and mitapivat target product profile, we believe we are well positioned to provide a potential foundational treatment options for patients with thalassemia, regardless of subtype. Our team is focused on four areas of thalassemia U.S. launch preparations. First, we continue to advance extensive market research and claim data analysis to further refine our market insights and our HCP targeting.

Second, we are rolling out a disease education campaign in the coming weeks, designed for both patients and clinicians, highlighting the long-term complications and burden of disease across all thalassemia subtypes. Particularly, non-transfusion-dependent patients who suffer from the misconception that they are at less risk. Third, we are executing a disciplined expansion of our commercial and medical teams to rightsize the organization for a successful launch in this larger but still rare market. And fourth, our market asset team is already engaging with payers on disease state education. I’m proud that our team has obtained broad market access for PYRUKYND in PK deficiency, and we look forward to the same strong outcome in thalassemia. In addition to the U.S., we aim to maximize the potential of markets outside the U.S. through coordinated regulatory filings, which we intend to pursue with Mark 1 for more partners.

This market includes the Gulf region, which is home to approximately 70,000 thalassemia patients and some of the leading treatment centers in our clinical trials. Let me now provide an update on the current launch of PYRUKYND in PK deficiency. In the first quarter of 2024, we generated $8.2 million in net PYRUKYND revenue compared to $7.1 million in the fourth quarter of 2023. In the U.S., a total of 188 patients have completed a prescription enrollment forms, including 10 in the first quarter of 2024, a 6% increase versus the prior quarter. This has translated into net 120 patients on therapy, a 10% increase versus the prior quarter. Patients on therapy continue to spend from a growing and diverse prescriber base of 162 physicians and represent a broad demographic [indiscernible] patient range that is consistent with the adult PK deficiency population in the U.S. We continue to be encouraged by the persistency of patients on treatment and remain focused on efficiently identifying providers likely to treat patients with PK deficiency.

We believe the capabilities will continue to strengthen through the current launch, including efficient targeting analytics, patient and HCP awareness and education and patient access will provide a firm foundation to maximize potential future U.S. launches of mitapivat in thalassemia in 2025 and in sickle cell disease in 2026. Above all, Agios is once again incredibly proud to be pioneering of potential new therapy for these two underserved patient populations. With that, I’ll turn the call over to Cecilia.

Cecilia Jones: Thanks, Tsveta. Our first quarter 2024 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. Let me now take a moment to provide some context and highlight a few key points. First quarter 2024 net PYRUKYND revenue was $8.2 million, an increase of $2.6 million compared to the first quarter of 2023. Consistent with other rare disease launches, gross to net has been and is expected to be in the 10% to 20% range on an annual basis. Cost of sales for the quarter was $0.6 million. R&D expenses were $68.6 million for the first quarter, an increase of $1.3 million compared to the first quarter of 2023. This increase was primarily driven by an increase in process development expenses, offset by a decrease in workforce related expenditures.

SG&A expenses were $31 million for the first quarter, an increase of $2.6 million compared to the prior year quarter. This was primarily driven by an increase in commercial-related activities as we prepare for the potential approval of PYRUKYND in thalassemia. As a reminder, 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 equivalents and marketable securities of approximately $714.3 million. We expect that this balance, together with anticipated product revenue, interest income and the potential for vorasidenib milestone will enable the company to fund our operating expenditures and capital expenditures through several value-creating milestones and at least into 2026.

This guidance does not include cash inflows that could extend our runway beyond 2026, including the potential royalties or royalty monetization from vorasidenib, commercializing mitapivat outside of the U.S. through one or more partnerships or other potential strategic business or financial agreement. We remain focused on creating shareholder value, including by proactively managing our cost base and deploying a disciplined cash allocation approach, and we prepare to support potential future launches of PYRUKYND. As we move toward additional potential value-creating milestones in the near-term, I am confident that our strong balance sheet will enable us to execute from a position of strength. I will now turn the call back over to Brian for his closing remarks.

Brian Goff: Thanks, Cecilia. Driven by a novel and differentiated mechanism of action that improves red blood cell health and a clinical data package that includes positive data spanning 3 hemolytic anemias, we believe mitapivat is poised to become a first-in-class and best-in-class treatment option for multiple indications and with potential to become a multibillion-dollar franchise. I’m very proud of our team for steadily delivering significant progress. And looking ahead, I’m truly excited about the catalyst-rich 24 months in front of us. As we continue to take steps towards realizing our vision of becoming a leading rare disease company, we’ll continue to strive to be responsible stewards of our balance sheet, and evaluate meaningful opportunities for value creation.

Finally, I’d like to thank all of our employees for their hard work and dedication to our mission of developing and delivering transformative medicines that elevate and extend the lives of patients living with rare diseases, and all of our partners, including the patients, physicians, caregivers and participants in our clinical development programs. With that, we’ll now open the call for questions.

Operator: Thank you. [Operator Instructions] And our first question will come from the line of Gregory Renza with RBC Capital Markets. Your line is now open.

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