AGIO - NASDAQ

Good morning. And welcome to the Agios Fourth Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] 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 and Corporate Communications for Agios. Please go ahead.

Thank you, operator. Good morning, everyone and welcome to Agios’ conference call and webcast to discuss fourth quarter and full year 2023 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 am joined by our Chief Executive Officer, Brian Goff; Dr. Sarah Gheuens, 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 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.

Thanks Chris, and 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. Driven by this goal, we continue to generate consistent and compelling data across our industry-leading PK Activator franchise. And with seamless cross-functional collaboration of the Agios team, we made remarkable progress advancing this mission in 2023. Highlighting this progress, we reported three key data readouts in the last 12 months. In June, we reported positive top-line data from the Phase 2 Portion of the RISE UP Study at mitapivat, our lead PK Activator in sickle cell disease, followed by the full data set in December at ASH. Despite the field's recent progress in sickle cell disease, there are no novel oral therapies that both improve anemia and reduce sickle cell pain crises, and that is precisely what we aim to deliver with mitapivat. In November, we reported positive data from the open-label Phase 2a way study of our other PK Activator, AG-946, in lower-risk MDS, with 40% of patients achieving the transfusion independence endpoint. And just last month, we reported positive data from the Phase 3 ENERGI

Thanks, Brian. In 2023, our research and development organization made tremendous progress advancing our PK activator development program. Led by mitapivat, the industry's most advanced PK activator, now with over eight years of clinical experience, the consistent and compelling data we have generated to date in PK deficiency, thalassemia and sickle cell disease to continue to de-risk our ongoing development program and highlight the potential for this molecule to transform patient's function and quality of life. We are also enthusiastic about the potential for the rest of our growing pipeline, and we are pleased to note that we remain on track to deliver on our milestones, including, enrolling the first patients in the Phase 2b trial for AG-946 in lower risk MDS, and for the Phase 1 trial for AG-181, the compounds named for our PAH stabilizer for phenylketonuria. Reading our top line data for the Phase 3 ACTIVATE kids-T study in regularly transduced pediatrics patients with TK deficiency, and completing enrollment of the Phase 3 ACTIVATE kids-T study in pediatric patients with TKB. Turning to sickle cell disease, we were pleased to present detailed positive results from the Phase 2 Portion of the Phase 2/3 RISE UP Study mitapivat at ASH in December. The study achieved its primary endpoint of hemoglobin response, and in addition, an improvement in analyzed rates of sickle cell pain crises was observed. And we have been delighted by the enthusiasm of the investigators. We continue to advance enrollment in the Phase 3 portion of this study and remain on track to complete enrollment by the end of this year. While the treatment landscape in sickle cell disease continues to evolve, there remains an urgent and unmet need for convenient novel oral treatment options that address both anemia and sickle cell pain crises. And we believe firmly in mitapivat’s potential to deliver a best-in-class option for patients suffering from this devastating disease. And finally, on thalassemia, I'll take a moment to highlight a few key elements of our program, and the positive top-line Phase 3 data we reported last month in non-transfusion-dependent thalassemia. As a reminder, the Phase 3 program of PYRUKYND in thalassemia, and compacting two Phase 3 randomized placebo-controlled trials, was designed to deliver data across all sub-populations of thalassemia, such as alpha-and beta-thalassemia and populations with different transfusion needs. Both trials enrolled patients with alpha or beta-thalassemia, but enrolled different populations as it relates to transfusion needs. We want to highlight that ENERGI

Thanks, Sarah. Thalassemia remains an area of high unmet needs with few treatment options. The burden of disease on the patient is significant regardless of their transfusion needs. Thalassemia patients experience increased mortality compared to the general population and can be significantly worse in non-regularly transfused than those who are regularly transfused. Patients endure high rates of morbidities and increase complications as they age. Adult patient with non-transfusion dependent thalassemia may actually have similar or worse quality of life compared to transfusion dependent patients. Of course, this burden of disease correlates to increased healthcare costs. To address this unmet need and galvanized by the positive data from the Phase 3 ENERGI

Thanks, Tsveta. Our fourth quarter 2023 financial results can be found in the press release we issued this morning, and more detail will be included in our 10-K, which will be filed later today. Let me now take a moment to provide some context and highlight a few key points. Full year 2023 net PYRUKYND revenue was $26.8 million compared with $11.7 million in PYRUKYND revenue for 2022. Q4 2023 net PYRUKYND revenue was $7.1 million, a 4% reduction compared to the third quarter. The reduction was driven by lower number of weeks on hand of inventory compared to where we ended Q3, partially offset by favorability in gross-to-net adjustments. As a reminder, we anticipate low levels of inventory at any given time given our limited distribution network, which consists of one specialty pharmacy and one specialty distributor. Consistent with other rare disease launches, gross-to-net is expected to be in the 10% to 20% range on an annual basis. Based on our learnings to date, given the ultra-rare nature of the disease and the long lead times associated with initiating patients on therapy, we continue to expect slow and steady growth and quarter-to-quarter variability in 2024, similar to what we saw in 2023. Cost of sales for the fourth quarter was $0.6 million. R&D expenses were $77 million for the fourth quarter and $296 million for the full year 2023, an increase of $16 million compared to the full year 2022. These changes reflect an increase in development costs for mitapivat and the upfront payments associated with the license agreement with Alnylam. Offset by a reduction in expenses associated with the evolution of our research organization and the sale of our oncology business to Servier. SG&A expenses were $35 million for the fourth quarter and $120 million for the full year 2023, a decrease of $2 million compared to the full year 2022. 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 US net sales. Servier publicly communicated plans to file for approval before the end of 2023, so we are eager to track their progress. We ended the year with cash, cash equivalents and marketable securities of approximately $806 million. We expect that this balance together with anticipated product revenue, interest income, and the potential for vorasidenib milestone would 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 that could extend a runway beyond 2026, including the potential royalties or royalty monetization from vorasidenib, commercializing with a pivot outside of the US through one or more partnerships or other potential strategies 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.

Thanks Cecilia. As we turn the page on a highly productive 2023, we're focused on executing across the additional four Phase 3 readouts for mitapivat that we expect over the next two years, beginning with the Phase 3 ENERGI

[Operator Instructions] Our first question comes from the line of Eric Smith with Cantor Fitzgerald.

Thanks for the question and congrats on all the recent development successes. I guess maybe one for Sarah, given the next milestone, the next milestone, key milestone at least, might be the ENERGI

Great. Eric, thanks a lot for the question. Before Sarah goes, I just want to welcome you back to Agios earnings call. So Sarah, do you want to get started?

Sure. Thanks for the question. So indeed, our endpoint, our primary endpoint, has a different definition than the primary endpoint that Luspatercept used in the sense that we are looking at a 50% reduction in any 12-week rolling period, basically, over the 48 weeks that patients are assessed, which we believe is a more appropriate measure to assess a patient in the context of a dynamic disease over a longer stretch of time and which reflects better the real -world experience a patient may have. We do have a similar endpoint like the Luspatercept primary endpoint in our secondary endpoint. In regarding to the hurdles, it is a different endpoint indeed. The hurdle is not necessarily different in the sense that you have multiple assessment periods versus a fixed period in time. The bar of 50%, of course, is higher than 33%, but like I said, because it's every, any 12-week period, you have more shot on goal as to speak. This was an endpoint that Luspatercept also had in their assessment and in their review, but as it was not a pre-specified, like, primary or secondary analysis, that did not make it into the label.

Our next question comes from the line of Chris Raymond with Piper Sandler.

Thanks. Maybe just a question on the ENERGI

Sure. Thanks for the question. So the primary endpoint that we used in the Phase 2 was indeed different than the endpoint that we used in the Phase 3, meaning that for the Phase 2, we just looked at patients meeting the hemoglobin response at a single time point, and for the Phase 3, we incorporated duration in that endpoint over a longer stretch of time and measured at a later time point because it's a chronic disease. So then from a Phase 2 perspective, you're truly looking for maintenance over a longer duration of time. So we averaged hemoglobin over 12 weeks versus that just single time point, which is much easier to reach as a bar. In regards to the waning, we don't see waning of our hemoglobin response. So we talked about in this trial behaves very similarly to how it behaves in PKD. So once patients show a response, they tend to maintain that response over time. There's always a little bit of fluctuation on the hemoglobin over time, but overall it stays positive and the line kind of stays horizontal in comparison to their baseline. So we feel very confident with the results that we have observed in ENERGI

Okay. Thanks. And then maybe just a follow-up to Eric's question on the success bogey of ENERGI

Sure. So if we think about the non-transfusion dependent thalassemia patient population, they currently have no therapy available. So that is, we talked about if we get it through the next stages of development, it would be the therapy that it would be available for non-transfusion dependent patient populations. And it's oral, indeed, which is a huge benefit specifically for that population, because patients aren't going to clinic as frequently. And if you have a drug that requires frequent clinic visits, it adds to the burden of disease typically. For the transfusion-dependent patient population, there is indeed a subcutaneous product that’s available for transfusion-dependent beta- thalassemia patients. Our program has studied all genotypes of thalassemia. So that's one difference. The oral rise of administration here is very relevant because it's allowed for almost seamless incorporation into a transfusion schedule that a patient may have versus requiring more visits on top of the transfusion schedule. In that sense, it's also important to understand there's a very different mechanism of action between those two products, which -- this product is a stimulus. And red blood cell stimuli while mitapivat is trying to improve red blood cell health overall, and so we do think from that perspective, they're vastly different.

Yes, and Chris, I mean, that last point is the one that I would just emphasize, is that I know folks are trying to make comparisons, but in so many ways, they're incomparable because of the profound difference in the mechanisms. And you'll hear a lot from us because we continue to be emboldened by this, by the data that we see very consistently that the benefits of the of PYRUKYND kinase activation really do go beyond hemoglobin. So we'll await the data. Fortunately, we don't have to wait that long. ENERGI

Our next question comes from the line of Danielle Brill with Raymond James.

Hi guys, good morning. Thanks so much for the questions. I also have a question on powering assumptions for ENERGI

Thanks for the question. So in regards to powering assumptions, we haven't spoken about these, but we have, of course, studied all of the programs in front of us, which includes our own internal programs in which we took a very similar development approach for thalassemia as we have for PKD. In regards to the hemoglobin increase that you mentioned, so we don't, from a transfusion dependent perspective, we don't believe you necessarily need to increase hemoglobin on top of making people reduce their transfusions. This is truly a different approach because people, when they get transfused, their hemoglobin goes down over time. So what we are trying to do here is basically avoiding that people, their hemoglobin decreases back to a transfusion trigger, which then would trigger a transfusion. And it comes down again to that different mechanism of action. If you are like stimulating out red blood cells, ultimately, you're going to increase the hemoglobin versus what we're trying to do about keeping the red blood cells happier and healthier, thereby reducing hemolysis. It's a completely different way of actually trying to avoid transfusions.

Thanks, Sarah. That's helpful. And that actually is a perfect segway for my follow-up. Do you have data on the potential of mitapivat for extending the half -life of healthy red blood cells?

So we, in the context of, you mean, healthy volunteers red blood cells?

Or like, yes, extending the lifespan of transfused blood.

So, yes, so this is something that is extremely difficult to measure in the context of a transfusion setting as everything is kind of mixed. So it would require a very, very unique experiment to be able to tease apart those types of red blood cells that are available, so we're not planning on doing that right now for transfusion-dependent patients.

And our next question comes from the line of Gregory Renza with RBC Capital Markets.

Hey, good morning, Brian and team. Congrats on all the progress, and thanks for taking my questions. Brian, you certainly speak to the multibillion dollar opportunity available with PK activation and your portfolio. I'm just curious if you could maybe just elaborate a little bit on that, maybe provide some of the inputs or assumptions that you're using to get to that characteristic, whether it's with respect to mitapivat and the ramp of indications or the broader portfolio. And maybe I'll just layer in my second question, which with respect to the landscape in PK activation, perhaps if you and Sarah can just riff a little bit about maybe the differences with mitapivat versus others, especially etavopivat. Certainly you've mentioned the lead. You have the body of data, but when you think about some of the nuances on pan-PK activation or even selectivity, maybe just help us understand the differences between mitapivat and the landscape. Thanks so much.

Yes, thanks, Greg. So I'll get started on your first question about the multibillion dollar opportunities that I referenced in my prepared comments. That really comes from the fact that we're rapidly progressing in our pipeline, moving from clear ultra-rare with PKD into successively larger prevalent diseases. Some of those diseases, I think are well characterized in terms of opportunity, sickle cell for sure, where there's been lot of interest and a lot of therapeutic development focus. And here we're talking about moving from 3, 000 to 8, 000 patients across the US in EU5 in the case of PKD, jumping to just in the US alone 100, 000 patients with sickle cell disease. But it's more than that. I mean, as we've already discussed this morning, we had this really exciting opportunity relatively near term with a potential launch next year in thalassemia which is a prevalent step up in the case of the US from PKD. Sickle cell, I just mentioned. And then even after that with our other PK activator, AG-946, moving into low risk MDS. The great news about all this is we're moving in the right direction in terms of prevalence. And that is allowing us to enter into very compelling commercial opportunities. And it also allows us to navigate through the appropriate pricing dynamics as we go forward. But we are very excited, most importantly, with the fact that as we advance our pipeline and as we've already noted, we have two back-to-back launch potentials with thalassemia next year followed by sickle cell disease in 2026. And then, Sarah, you want to pick up with the next question?

Sure. So, in regards to PK activation and the differences between mitapivat and some other PK activators, so we indeed, well, while we stimulate PK, different PK isoenzymes amongst which the PKR, which is important for the red blood cell, but then also PKM2 is important, then we understand more and more the relevance of this specific isoenzyme in the context of the diseases that we are studying. And as you know, thalassemia, sickle cell disease, MDS, there is different components to these diseases in which stimulation of PKM-2 may be relevant as it is expressed in immature red blood cells. It is expressed in other tissues that are also touched by these diseases. We are planning to further study this clinically as well, specifically in sickle cell disease in the kidney. As we know, kidney is such an important organ in the context of sickle cell disease, and now many patients suffer from kidney disease, and we believe that PKM-2 may have an added advantage there. In regards to how that compares to other PK activators, specifically at our Etavopivat that is, they, this is the drug that used to be Forma's drug, they always spoke about being a PKR selective agent in regards to how they translate into other isoenzymes, they have not spoken about that. They have just highlighted their selectivity message.

Our next question comes from the line of Salveen Richter with Goldman Sachs.

Hi, this is Lydia on for Salveen. Thanks so much for taking our question. Just one on sickle cell. Could you just discuss where you see PYRUKYND fitting into the current commercial landscape just broadly? And then can you also speak to the enrollment progression and any physician feedback you've gotten so far? Thanks so much.

Sure. And maybe I will just start and then quickly turn it over to Tsveta and then Sarah can pick up on the enrollment aspects. I mean, the fundamental premise of what we're driving towards with sickle cell disease is we believe that mitapivat, PYRUKYND has the potential to be what we refer to as foundational therapy. This is a very different mechanism of action as we've talked about. Very unique from currently available options. We're increasingly convinced that the benefits on making the red blood cells healthier really position it as such. And then the fact that this is an oral treatment only adds to that potential. But I'll let Tsveta speak a little bit more about not just how we're thinking about sickle cell disease, but the bridge as we go from PKD to thalassemia and then the sickle cell.

Thanks, Brian. I'll start with sickle cell disease for us, but as you said, we have a very important milestone with the thalassemia launch ahead of that, which we believe will be an important point from growing the commercial capabilities executing on the thalassemia launch. And after that capitalizing on sickle cell disease. When we think about sickle cell disease, Brian mentioned that and Sarah mentioned that already the prevalence of the disease is 100, 000 patients in the US, which is a significant step up from where we are today with PK deficiency. It's a disease where patients are diagnosed and the burden of disease is well characterized. At the moment, the adult patient population with sickle cell disease has very limited treatment options available. They are either improving hemoglobin levels, which is the case of a brighter or improving VOCs based on the Phase 2 data and the target product profile, we have for a PYRUKYND for launch. We believe that we'll be very well positioned with PYRUKYND to provide a treatment option, which will bring benefits to physicians, patients, and ultimately, payers as well by improving hemoglobin, reducing VOCs, and ultimately improving the way patients feel and function. And that's going to be a unique value proposition if we were to deliver on that profile. So we are very excited about that opportunity to come. But before we get to sickle cell disease, we are actually very excited to progress with our launch preparations for thalassemia as well. After we saw the results from the ENERGI

And then, I was just going to say that's great, Tsveta. And I think everybody can sense of excitement about what we have in front of us and I was just going to ask Sarah to make a comment about the progress with RISE UP Phase 3 for sickle cell.

Exactly because we're equally excited to move towards those launches, so we are heavily focused on our Phase 3 enrollments of course right now. The trial is progressing as we are anticipating, there's a lot of enthusiasm both within our teams and of course by the investigators as well, and so everything is on track to deliver to the milestone that we have set out for this year.

Our next question comes from the line of Tess Romero with JP Morgan.

Great. Good morning, Brian and team. Thank you for taking our question. So, switching gear a little bit to commercial PKD. Do you still think that PKD could be a $200 million to $250 million peak opportunity here in the US? And if so, how long do you think it could take you to get there? And then my second question is, we know that you're moving AG-946 forward and lower risk MDS. But we were curious, have you formally deprioritized the program in sickle cell disease, as we hadn't heard anything on this in a while? Can you confirm if that's the case or not? Thanks so much for taking our question.

Thanks a lot, Tess. Actually, the second question, we can handle that very quickly, which is no. And we have not deprioritized anything with AG-946. I think we're inspired by the potential. And at the right time, we'll provide updates about the progress, not just in our pursuits of low risk MDS, but also where we stand with respect to sickle cell disease. Cecilia, do you want to comment on the first one?

Yeas sure. Thanks, Tess, for the question. So we definitely remain excited about the opportunity in PKD, and we continue to expect those peak sales at $200 million to $225 million for the US. We continue to make progress each quarter, and we're learning, and as Tsveta said, this is helping also build those capabilities for that launch. We think it's going to be slow and steady, continuing to see the trends we've seen in 2023 for the next few years. But we do still maintain our peak of $200 million to $225 million.

Yes, I mean, with PKD, and we've talked about this previously, but in the deep commercial experience that both Tsveta and I have across multiple rare disease cases, this one's tough. It's a challenge. It is ultra rare. It's diagnostically intensive. There are long lead times for patients. So slow and steady is the right phrase. What were continue to be inspired by each quarter is that persistency, which is something we saw relatively early with the launch of PYRUKYND and PKD, that is a really important feature as we think about chronic rare disease launch is to come that are in our sites. And so we'll take the slow and steady path and we're going to continue to expect that going forward. But the way PYRUKYND is performing is what we believe really puts us in a position of strength as we approach ENERGI

Our next question comes from the line of Greg Harrison with Bank of America.

Hey, good morning. And thanks for taking the question. Also, just wanted to follow up on AG- 946. How are you thinking just generally in development, about development and potentially overlapping indications with mitapivat that could be improvement? For example, in sickle cell, like you discussed, or even thalassemia. And what would you need to see from 946 in order to make that decision?

Yes, I'll start and then Sarah can jump in. First of all, Greg, I hope we're in that position where we have multiple indications, just as we have right now with PYRUKYND. One of the key advantages of, at Agios, of having really a leading PK activation franchise is we have not one, but two products that we're developing. And that allows us to have different economics, different pricing dynamics across the indications in between the products. I think there's a wide enough space for us right now, given where we are in the development program with AG-946 that we can tailor the appropriate target product profiles, whether it's for sickle cell disease or for low risk MDS. And in the case of low risk MDS, as I think folks know, we just reported out last year very encouraging proof-of-concept from our Phase 2a study. And we're in the process right now of making enhancements in the design so we can pursue Phase 2b. I feel very good about the work the team has done and that'll be the next step. And as I mentioned before, at the right time, we'll also report out the progress on sickle cell disease. Anything you want to add, Sarah?

Just high level, I think what you can expect from development is that we always try to design our trials to meet multiple stakeholders, their needs, meaning we take our target product profile very seriously. So that is something that for 946 is the same. We take that very seriously and we incorporate, we will be incorporating patient voice and the regulatory feedback obviously as well.

Yes, and a great example of that is in the case of sickle cell disease, a point that we are very proud of at Agios is we have deeply involved the community. In fact, Sarah and I attended the conference last year where we won an award from the community about how carefully and thoughtfully, we involved sickle cell disease warriors and caregivers in how we think about designing the trials, recruiting for the trials, and ultimately what the commercial profile should look like. And we will do the same thing with AG-946.

And our last question will come from the line of Divya Rao with TD Cowen.

Hi, guys. This is Divya on for Mark. Thanks for taking my questions. I have two kind of follow-up questions. One on Eric's question earlier, was the difference in the primary endpoint between mitapivat and Luspatercept for the transfusion-dependent patient, something that was recommended to you by regulatory authorities, or was it more of an internal choice? And then my second question is turning to the design of the Phase 2b and MDS. Do you plan to test multiple dose levels of AG-946? And any color on the enrollment criteria versus what [inaudible] will have in the command trial would be great. Thank you.

Awesome. Thank you. Thanks, Divya. So in regards to the first question, primary endpoint, yes, indeed we do, as I just mentioned on the previous question as well, we do our development in collaboration with regulators. So we take feedback from the regulators very seriously and try to really incorporate the feedback as best as we can. And so that's how we ended up settling for the 50% end points in a rolling 12 week period interval, which we indeed truly believe is a more dynamic endpoint and really reflects the real world experience of a patient. So this is where it's always very good. And we're always very grateful to be able to have those conversations because I do think incorporating feedback from multiple stakeholders always leads to better design choices. So that's that on the primary endpoint. And then in regards to your question for MDS Phase 2b, yes, the Phase 2b is indeed multiple doses that we are testing. We are going to test higher doses than we originally anticipated, just because we have learned from our Phase 2a that MDS patients overall have lower exposure to same amounts of drug than other patient populations and healthy volunteers. So we are incorporating those learnings into our Phase 2b. And in regards to our inclusion criteria, we have not -- we haven't presented a trial in progress post or anything like that yet, but you can expect the population to be relatively similar to how our population was in the Phase 2a. However, we will be focusing on transfusion, patients with transfusion burden. It will also be a broad MDS population, just like we allowed in the 2a. We're not excluding per se a population like specific mutations, things like that.

I would down like to hand the conference back over to Mr. Brian Goff for closing remarks.

All right. Thanks a lot, Norma. And thank you very much, everyone, for participating in today's call. Very good questions, which we very much appreciate. As you heard today, our team has great conviction in our potential to deliver transformative new therapies to patients and significant long-term value to shareholders. And we really look forward to speaking with all of you again soon. So thanks a lot.