AGIO - NASDAQ

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.

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.

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 ENERGI

Thanks, Brian. As we approach top line data readout for the Phase 3 ENERGI

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 ENERGI

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.

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.

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.

Great. Thanks. Hey, good morning, Brian and team, congratulations on the progress. And thanks for taking my question.

Sure. Thanks, Gregory.

Thanks. Brian, we certainly appreciate the more precision and timing for the ENERGI

Sure. Thanks, Greg. I’m going to let Sarah talk about the mechanics. But I will say that we are very much looking forward to the data. It’s a very special time at Agios because everyone who’s followed us, and I know, Greg, you certainly have been there, knows that we were delighted to have the ENERGI

Sure. And so the granularity of the timing is driven by the patients. The last couple of patients in the study, their decisions to roll over into open-label extension or not because, as you know, if a patient would have decided to not go into open label, then they would need to taper down the drug and then have a safety follow-up vintage which could – which really drives the time frame that creates basically a 7-week difference between potential readouts. So now we have much more precision around that type of information and so we can narrow our time frame. So that’s why we’ve updated our guidance today. We’re very excited about where we are right now, and the team is very focused on delivering the next steps for this specific trial.

Yes. And so this was the exact same scenario that we faced last year when we read out the RISE UP Phase 2 data for sickle cell disease and of course, the same for ENERGI

That’s great, Brian. Thank you very much. Maybe just a follow-up just broadly on the landscape. Certainly, with PK activation competition with the etavopivat from Novo maybe having some time lines now established. What do you make of that? How do you think about the landscape longer-term? You’re certainly moving fast. But as you think about the jocking between the two offerings for patients ultimately. Thanks, again.

Yes. Thanks for the question. I mean certainly, we take a lot of pride in the fact that we’re the worldwide leader in PK activation. And I think, given some of the recent competitive updates that have been made public, specifically with the other PK activator etavopivat from Novo Nordisk, we took note of the most recent updated time lines. And that’s why you heard in our prepared comments, that we’ve often said, we feel very confident in our best-in-class positioning. We feel increasingly confident now across both thalassemia and certainly sickle cell disease with first-in-class potential, and that all leads to this franchise having multibillion-dollar potential with mitapivat. We’re in a real significant position of strength.

Yes, absolutely. And when we think commercially for thalassemia, we are definitely very much ahead with [indiscernible] that they will be reading on data in 2023 for their Phase 2 study, and we don’t know about their commitment to Phase 3. So for thalassemia, we’re very excited to pioneer the way in having treatment options for all thalassemia patients. In sickle cell disease, equally exciting on our part, we are progressing with the recruitment of our clinic Phase 3 clinical trial. Everything going as planned. Well, we expect with as our [indiscernible] did, they are expecting sickle cell disease data in 2027, which will be – put them behind, our anticipated launch in 2026 again, giving us an opportunity to basically bring the first innovative product with the potential to hit on all the clinically meaningful and commercially meaningful end points of hemoglobin improvement, reduction in VOC and improvement in quality of life. So, we are excited to be moving forward.

And this is where we are taking full advantage of Tsveta’s expertise – deep expertise in rare disease launches. This is what you live for as a chance to change the lives of patients and thalassemia, certainly that scenario. And this launch has the potential to be next year, so coming soon.

Thank you. Our next question will come from the line of Divya Rao with TD Cowen. Your line is now open.

Good morning and this is Divya on for Mark. Thanks for taking our questions. One on the thalassemia, the transfusion-dependent thalassemia trial coming up, can you walk us through the powering assumptions for the primary endpoint? And then I have a follow-up.

Sure. Thanks Divya. Sarah, do you want to take that?

Yes. So, we haven’t spoken in detail about the powering assumption underlying the number. But we, of course have leveraged all information available to make sure that we have very good fiscal justification for this trial and feel confident in the primary endpoint and the sample size that we have selected. The primary endpoint, by itself as you know, the 50% reduction in any 12-week rolling period, which we believe can provide very meaningful assessment of a reduction in transfusion burden for thalassemia patients.

Got it. And then just quickly as a follow-up, for AG-946, can we still expect to see the full data from the Phase 2a trial in sometime this year?

So, we haven’t spoken about when we are going to release the Phase 2a data, as the team is assessing the best opportunity on when to do so in the best conference, also in line of when we are getting the Phase 2b up and running. So, very focused on that, very excited. We have a milestone around the Phase 2b for this year. And so we are on track to deliver that.

Okay. Thank you.

Thank you. And our next question comes from the line of Eric Schmidt with Cantor. Your line is now open.

Good morning everyone. Thanks for taking my question and congrats on all the progress. Maybe just two quick ones, first for Brian and Sarah on this thalassemia filing. One, I guess can you confirm whether it’s going to be an NDA filing? It sounds like you are already preparing that filing. Just to be very specific, if for some reason, the TDT study fall short, needs to be filing for non-transfusion dependent patients, is that correct?

So, thanks for the question. So, our goal is to file the two studies together. As you know, we have already the first part of the data. So, indeed our filing preparations are completely underway and the team is on track to deliver. And now we are waiting for that second study. So, the fact is that we already have great data for two-thirds of the patient population. So, we of course, want the second study to deliver and make it a great story. If the study would fall short, then it truly depends on what the data we would show, how we would approach that. But our intent is to file for all thalassemia patients and get that broad indication.

Thanks for the clarification, Sarah. And just a second question on the sickle cell Phase 3 study that’s enrolling. Can you provide any kind of color on how that’s going? And what percent of the study was already on board or maybe, time we expect and to your timelines for next year? Thanks.

Sure. So, we are very excited about the RISE UP study. Everything is going well and the team is doing an amazing job getting that study completely up and running. And we are on track with our enrollments and so are completely expecting to be able to deliver towards full enrollment towards the end of this year. We do not guide to specific number. We expect that the specific weeks or months. These things are very rapidly changing in big Phase 3 trial, so we guide for bigger milestones.

Thanks very much. Congrats again.

Thanks a lot Eric,

Thank you. Our next question will come from the line of Alec Stranahan with Bank of America. Your line is now open.

Hey guys. Thanks for taking our questions. Just a couple from us. First, a commercial question, assuming both transfusion and non-transfusion end up on the label. Any reason to think you need to maybe tailor your sales strategy differently between these two patient groups, or will it be more or less the same, given there like we see in the same prescribers? And then I have got a follow-up.

Sure. Thanks Alec, and welcome to the Agios’ call. And Tsveta, you want to start off?

Absolutely. We are super excited with seeing the positive data from the ENERGI

The only thing I would add is that with the transfusion-dependent patients, there is obviously more regularity of clinician visits than you tend to see with the non-transfusion dependent patients. But I am really proud of the fact that Tsveta and the team are prepared for all scenarios.

Okay. Perfect. And then just one question on the ex-U.S. opportunity, I know you have said that the plan would likely be to partner in ex-U.S. geographies. But any additional color you can provide around timing or scope of the ex-U.S. opportunity just from a modeling perspective for us. Thank you.

Absolutely. So, in addition to actively preparing for launch in the U.S., we are also actively searching for the best possible partner for us to maximize the ex-U.S. opportunity. We have mentioned on several occasions that the Gulf region is a high priority for us, given that there are 70,000 patients with thalassemia in that region. Sarah and the team are preparing for regulatory submissions in these regions actively as well to submit as quickly as possible that, that will allow us. And we will provide update as soon as we have progressive discussion and identify the partner, but we are in a very strong position, especially now with a positive data from ENERGI

Great. Thanks again for the question.

Thank you, Alec.

Thank you. Our next question comes from the line of Tessa Romero with JPMorgan. Your line is open.

Hi. Good morning Brian and team. Thanks so much for taking our question. A question for Cecilia here. I mean just curious, can you walk us through the pushes and pulls on your balance sheet and how you think about means to potentially extend that runway and what your latest thinking is there? We noticed you included in your release today, how interested specifically are you in potentially a royalty monetization for vorasidenib? And then on the partnering side, outside of the U.S., just to clarify that as comments here, could that occur this year? Thanks.

Thanks Tessa. I can start and we can add on the ex-U.S too. So, yes, we have guided that we have cash at least into 2026. And we purposely left out a couple of things that you mentioned. So, I will cover some of those. But there is other things like we obviously continue to manage our cost bases thoughtfully in a disciplined way. We now are starting to prepare for the launch, but we waited to make sure we had the data before we went ahead with that. On the vora side, that’s another option that we look as we evaluate to extend our runway. We – as we had in the prepared remarks, so Servier publicly announced that the FDA accepted their filing and they have a PDUFA date on August 20th. And as a reminder, we have a $200 million milestone on FDA approval and 15% royalties on U.S. net sales for that, and we will evaluate opportunities to sell that, the whole amount or a portion of that as part of our way to extend the runway as we will do with other things. The other option or the other piece that we left out, as you mentioned, is the ex-U.S. portion, that can come in different shapes and forms, and that’s part of the reason we left it out. The timing, obviously, the teams are working to make sure we have the best partner, and that is reflective of where the patients are like Tsveta described, and we want to try to obviously do that as fast as possible to get access to those patients.

Thank you.

Thank you. And our next question comes from the line of Salveen Richter with Goldman Sachs. Your line is now open.

Hi. This is Lydia on for Salveen. Thanks so much for taking our question. Just on the upcoming ENERGI

Thanks for the question. So, for – in regards to the ENERGI

Absolutely. You mentioned, it’s our – the clinical bar is obviously important from a regulatory perspective. But what we see here, both from patient and clinician, in terms of utilization, they will be looking to the reduce of transfusion even at a lower rate, and they will consider that clinically meaningful. Because even expanding the transfusion kind of frequency by a week, on patients, basically, it is very meaningful on actually healthcare system basis as well the initial visit is very meaningful. So, we are super excited to and wait to see the data and getting ready actively for launch.

And I will just give maybe one last comment, which is that, obviously, we are going for statistical significance in the ENERGI

Thanks so much.

You’re welcome.

Thank you. And our last question will come from the line of Danielle Brill with Raymond James. Your line is now open.

Hi guys. Good morning. Thanks so much for taking my question. First, I wanted to ask a question about the expected placebo response for ENERGI

Thanks. Yes. So, there is always fluctuation when you measure transfusion. So, 6% for the placebo in regards to the primary endpoint definition is a very reasonable observation. And that is also because in clinical practice, sometimes patients get transfused based on symptom presence and things like that. So, in regards to how we are going to announce the data, yes, we typically do a top line release via press release. We will not be able to present data at EHA because the timeframe for submission of data there is long gone. So, that will – that is not in the plan.

Understood. Thanks so much.

Thank you.

Thank you. And this concludes today’s question-and-answer session. I will now turn the call back to Brian Goff for closing remarks.

Thanks a lot, Norma and thank you very much everyone for participating in today’s call. I think it’s – I hope it’s clear. It’s a very exciting time at Agios. We believe that we are well poised to deliver transformative new therapies for patients as well as creating significant long-term value to shareholders. So, thanks again and we look forward to speaking with all of you again soon.