Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) Q3 2023 Earnings Call Transcript November 2, 2023
Agios Pharmaceuticals, Inc. beats earnings expectations. Reported EPS is $-1.64, expectations were $-1.69.
Operator: Good day and thank you for standing by. Welcome to the Agios Pharmaceuticals Incorporated quarter three 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question and answer session. To ask a question during this session, you will need to press star-one-one on your telephone. You will then hear an automated message advising that your hand is raised. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to Mr. Chris Taylor, VP Investor Relations and Corporate Communications. Please go ahead.
Chris Taylor: Thank you Operator. Good morning everyone and welcome to Agios’ third 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 am joined by our Chief Executive Officer, Brian Goff; Dr. Sarah Gheuens, Chief Medical Officer of 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 these 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. With that, I’ll turn the call over to Brian.
Brian Goff: Thanks Chris. Good morning everyone and thank you for joining us. Our vision for Agios is to build a leading hematology franchise with approvals spanning multiple indications, an expanded portfolio fueled by disciplined business development, and advancement of an internal pipeline aligned with our core expertise in rare disease. We’re excited to speak with you today to review our progress thus far this year and highlight a number of important near term clinical and regulatory milestones in the months ahead. Our momentum has been building and our accomplishments have been many - clinically, commercially, and in strategic business development. Most importantly, we’ve meaningfully advanced our pipeline through excellent execution and clinical development, generation of consistent and compelling clinical data, and investigators’ enthusiasm for the potential of PK activation in our lead indications.
In addition to the milestones achieved to date, I am pleased to announce that we have recently dosed the first patient in the Phase III portion of the RISE UP study of mitapivat in sickle cell disease and completed enrollment of the Phase III ACTIVATEkids-T study of mitapivat in pediatric PK deficiency ahead of schedule. With this progress, we are on track to deliver six mid to late stage data readouts by the end of 2025, including three by the end of next year, and we remain well positioned to generate significant value over both the near and long term. Sarah will provide a detailed update on our progress in R&D in just a few minutes. As you’ll hear from Tsveta, we remain encouraged that the durable efficacy observed in the clinical trials of mitapivat in PK deficiency has continued to translate to a low discontinuation rate among patients in the real world.
Importantly, we continue to maximize the current launch in PK deficiency while strengthening our commercial capabilities to support anticipated future launches in meaningfully larger patient populations, including a potential launch in thalassemia in 2025. As you’ll hear from Cecilia, we ended the third quarter with approximately $872 million in cash and investments on the balance sheet. We are very pleased to have added a promising early stage siRNA asset from Alnylam last quarter and we continue to explore opportunities to expand and diversify our pipeline in a disciplined fashion. We’re also keenly tracking Servier’s progress towards FDA approval of vorasidenib given our retained economics. Looking at the path ahead, we are on track to achieve each of our remaining 2023 milestones and advance priorities for next year.
Specifically, we’re focused on reporting top line data from the Phase IIa study of AG-946 in lower risk MDS by year end, and also by the end of this year, we plan to file the IND for our PAH stabilizer for the treatment of phenylketonuria, or PKU. Our other priorities moving into next year include preparing for two Phase III data readouts for ENERGIZE and ENERGIZE-T in thalassemia next year, ramping enrolment in the Phase III portion of the RISE UP study of mitapivat in sickle cell disease, and completing enrolment in the Phase III ACTIVATEkids study of mitapivat in pediatric PK deficiency. Overall, I’m very pleased with the significant progress we’ve made in 2023 and I look forward to finishing the year strong. With that, I’ll now turn the call over to Sarah.
Sarah Gheuens: Thanks Brian. We have made tremendous progress advancing our industry-leading pipeline of PK activators so far this year, and I’d like to thank our research and development team for their dedication and relentless focus on improving patient lives. Reflecting this progress, we are very excited for the upcoming ASH annual meeting in December and look forward to interacting with many stakeholders on our progress in PK deficiency, thalassemia, sickle cell disease, patient advocacy and more. We anticipate sharing additional details of our ASH abstracts when they go live later this morning. As some of you may have noticed in the online program for ASH, for the first time congress organizers have dedicated an educational session to PK activation as a treatment for hereditary hemolytic anemia, entitled Energizing the Red Cells: Novel Therapy for Hereditary Hemolytic Anemia.
The session will include presentations from leading KOLs on the therapeutic potential of PK activation in PK deficiency, sickle cell disease, and thalassemia. As leaders in PK activation, we were obviously thrilled to see this recognition. As Brian mentioned, we recently dosed the first patient in the Phase III portion of the RISE UP study of mitapivat in sickle cell disease, and the team is working diligently to bring sites onboard. The importance of our efforts was reinforced just a couple weeks ago as Brian and I had the opportunity to participate in the Sickle Cell Disease Association of America’s national convention in the DC area. We were able to further strengthen our connection with the sickle cell disease patient community by listening to the everyday challenges these patients face in their lives and reinforce Agios’ commitment to patient advocacy and clinical progress.
Switching to our second PK activator, AG-946, given the accelerated enrolment of the Phase IIa study in lower risk MDS, we expect to report top line data from this study by the end of this year. As a reminder, MDS is a heterogenous groups of rare hematological malignancies characterized by ineffective erythropoiesis, commonly leading to anemia. Importantly, lower risk MDS accounts for approximately 70% of MDS cases and shares [indiscernible] physiological features with other hematological diseases in our pipeline. This Phase IIa is a 16-week study in 20 patients and the primary end points are hemoglobin response, defined as an average increase of at least 1.5 grams per deciliter from baseline from Week 8 to Week 16, and/or transfusion independence, defined as remaining transfusion-free for at least eight consecutive weeks.
The primary objective of this study is to establish proof of concept for AG-946 in participants with lower risk MDS and through analysis of the results to determine if any protocols adjustments would be appropriate as we contemplate proceeding with Phase IIb. As Brian mentioned briefly, we are on track to achieve all of our remaining 2023 milestones. We expect to file the IND for our phenylalanine hydroxylase, or PAH stabilizer to address the underlying cause of phenylketonuria, or PKU by the end of the year. In our pediatric studies, enrolment in the Phase III ACTIVATEkids-T study of mitapivat in children with PK deficiency who are regularly transfused is now complete several months ahead of schedule. In the complementary study, the Phase III ACTIVATEkids study of mitapivat on children with PK deficiency who are not regularly transfused, our team achieved our goal of enrolling at least half of the patients in the study by year end and is now focused on completing enrolment.
Finally, the TMPRSS6 siRNA that we recently in-licensed from Alnylam has been integrated into our portfolio and our team is excited to begin advancing that program as a potential disease modifying treatment for polycythemia vera. Looking ahead to next year, we expect to report top line results from the Phase III ENERGIZE and ENERGIZE-T studies of mitapivat in thalassemia. Together, these studies are evaluating mitapivat across all thalassemia sub-types, including both alpha and beta thalassemia and patients encompassed in the full range of transfusion burden. For ENERGIZE, our primary end point of hemoglobin response, defined as an equal or more 1 gram per deciliter increase in average hemoglobin concentration from Week 12 through Week 24 compared with baseline.
For ENERGIZE-T, the primary end point is transfusion reduction response, defined as a 50% or greater reduction in transfused red blood cell units with a reduction of equal or more than two units of transfused red blood cells in any consecutive 12-week period through Week 48 compared with baseline. The design of these trials allows us to demonstrate clinical meaningfulness in a variety of ways via hemoglobin increase supported by a reduction in fatigue and/or transfusion reduction. Following the strong pace of enrolment, we expect data from the ENERGIZE study in the first half of next year and data from ENERGIZE-T in the second half of next year. 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 of the current launch in PK deficiency, which will lay the foundation for potential future launches in thalassemia, sickle cell disease, and lower risk MDS. In the third quarter of 2023, we generated $7.4 million in net Pyrukynd revenue, a 10% increase over the prior quarter. A total of 160 patients have completed a prescription enrolment form, including 13 in the third quarter of 2023, a 9% increase versus the second quarter. This translated into net 100 patients on therapy at the end of Q3. We continue to observe PEF conversion timelines in the range of four to six weeks. Patients on therapy continue to stem from a growing and diverse prescriber base of 142 physicians and represent a broad demographic and disease manifestation range that is consistent with the adult PK deficiency population.
We continue to expect slow and steady uptake over time and variability quarter-over-quarter. This is due to the ultra-rare nature of this disease and the long lead time between identifying a potential prescriber and then converting into a PEF and ultimately a patient on therapy. We remain focused on efficiently identifying providers likely to treat adult patients with PK deficiency and continue to be encouraged with the persistency of patient treatment. All of our work to build capabilities in targeting analytics, physician awareness and education, and patient access is helping to build a strong foundation to maximize the opportunity of potential future launches in meaningfully larger patient populations. The first of these anticipated launches is in thalassemia, where mitapivat has the potential to become the first therapy to improve hemolytic anemia and ineffective erythropoiesis across the full range of disease sub-types, including alpha and beta thalassemia and transfusion-dependent and non-transfusion dependent thalassemia.
Importantly, unmet need across thalassemia sub-types remains high. Approximately 60% of thalassemia patients in the U.S. do not have an approved treatment option. As highlighted on this slide, in contrast to PK deficiency, the thalassemia market in the U.S. is better established with a higher diagnosed prevalence and higher disease awareness. PK deficiency is an ultra-rare disease which includes approximately 3,000 patients with an estimated diagnosis rate of 30%. In contrast, thalassemia impacts approximately 8,000 patients in the U.S. The diagnosis rate for thalassemia is high given the availability of targeted newborn screening; in addition, thalassemia has well established ICD-10 codes. The availability of claims data in thalassemia will allow us to utilize the capabilities we are building today to inform our segmentation, targeting, and education efforts for launch.
Analyzing these data, we have identified that approximately half of the adult thalassemia patients are treated at less than 150 affiliated hematology and oncology academic and community practices; therefore, we plan to focus our initial launch efforts on thalassemia centers of excellence and these affiliated academic and community practices. As the launch progresses, we anticipate expanding to additional community practices with regularly monitored patients. With the potential future launches in thalassemia and sickle cell disease approaching, we are very excited by the prospect of expanding the range of patients we serve. With that, I will now turn the call over to Cecilia.
Cecilia Jones: Thanks Tsveta. Our third quarter 2023 financial results can be found in the press release we issued this morning, and more details 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. Third quarter 2023 net Pyrukynd revenue was $7.4 million, an increase of $0.7 million compared to Q2 2023. Driven by the variability that Tsveta spoke to a moment ago, third quarter revenue was lower than we anticipated. Given the ultra-rare nature of the disease and long lead times associated with initiating patients on therapy, we continue to expect slow and steady growth and quarter-to-quarter variability as we move forward. Consistent with other rare disease launches, gross-to-net 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 $81.8 million for the third quarter, an increase of $16.9 million compared to the third quarter of 2022. This increase was primarily driven by the $17.5 million upfront payment to Alnylam for the TMPERSS6 asset. SG&A expenses were $25.8 million for the third quarter, a decrease of $3.3 million compared to the third quarter of 2022 that was primarily driven by decreases in stock-based compensation expense and professional fees. 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% royalty on potential U.S. net sales. We ended the quarter with cash, cash equivalents and marketable securities of approximately $872.4 million.
We expect that this balance, 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 for vorasidenib, commercializing mitapivat outside of the U.S. in one or more partnerships, or other potential strategic business or financial agreements. 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 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 as we continue to pursue ways to create shareholder value.
I will now turn the call back over to Brian for his closing remarks.
Brian Goff: Thanks Cecilia. So far this year, we’ve made significant progress towards achieving our vision for Agios, and I look forward to the catalyst-rich period ahead of us with read-outs in three mid to late stage studies expected by the end of next year. As always, 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 transforming 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 open the call for questions.
Operator: Thank you. [Operator instructions] Your first question comes from the line of Divya Rao from TD Cowen. Your line is now open.
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