Agios Pharmaceuticals, Inc. Q1 FY2022 Earnings Call

Ladies and gentlemen, please stand by. Your conference call will begin momentarily. Once again, ladies and gentlemen, please stay on the line. Good morning, and welcome to the Agios First Quarter 2022 Conference Call. At this time, all participants are in listen-only mode. There will be a question-and-answer session at the end. Please be advised that this call is being recorded at Agios's request. I would now like to turn the call over to Holly Manning, Senior Director of Investor Relations.

Thank you, Operator. Good morning, everyone. Welcome to Agios's First Quarter 2022 Conference Call. You can access slides for today's call by going to the Investors section of our website, agios.com. With me on the call today with prepared remarks are Dr. Jackie Fouse, our Chief Executive Officer, Dr. Sarah Gheuens, our Chief Medical Officer, Richa Poddar, our Chief Commercial Officer, Jonathan Biller, our Chief Financial Officer and Head of Corporate Affairs, and Dr. Bruce Car, our Chief Scientific Officer who will join for Q&A. 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 will turn the call over to Jackie.

Thanks, Holly. Good morning, everyone, and thank you for joining our first-quarter 2022 results call. The first quarter of 2022 was a milestone moment for Agios, as we received U.S. FDA approval for PYRUKYND, a first-in-class PK activator and the first and only approved disease-modifying treatment for adults living with pyruvate kinase deficiency. From the scientists who first hypothesized the potential utility of PK activation, to the chemist who designed our molecule, to the clinical trial coordinators who helped enroll our trials, people across our organization, both past and present, have played a role in this important milestone. In addition, a tremendous number of people outside our organization were instrumental to this effort. Investigators, patients, caregivers, and advocates, all of whom have provided critical insights at every step of the way. Our connection to patients battling this rare, debilitating, lifelong hemolytic anemia, along with the promise of what we can deliver to their treatment options, is the reason we come to work every day. Our connections with patients, healthcare providers, partners, and each other are how we transformed this idea into a medicine. Looking ahead, we are highly motivated to execute the U.S. Adult PK deficiency launch to the best of our ability. We continue to believe PK activation has potential beyond PK deficiency. A huge focus for our team this year is executing on our aggressive clinical development plan spanning thalassemia, sickle cell disease, pediatric PK deficiency, and MDS, which Sarah will cover in more detail. I'm also pleased to share that we recently published our 2022 environmental, social, and governance report. In 2020, we published our first ESG report with the intent of disclosing relevant ESG initiatives and metrics from across the company that are aligned not only with our values and our culture but also with the United Nations' sustainable development goals and the standards for the biotechnology and pharmaceuticals industries set by the Sustainability Accounting Standards Board. Since that time, our ESG program has grown and evolved as we continue to prioritize our commitments to the patients we serve, our employees, our communities, and world and business ethics and values. We support an advanced range of ESG initiatives and encourage you to have a look at our report which is available on our website, agios.com under the corporate social responsibility section. A huge thank you to the cross-functional ESG working group for bringing this year's report to life. To wrap up, our commercial team is enthusiastically in the trenches with our U.S. adult PK deficiency launch, and Richa will update you on those details. Our clinical team is actively enrolling thalassemia and sickle cell patients in those pivotal programs, and Sarah will update you on those. All our other functional teams are working hard to support the achievement of our 2022 corporate objectives and our strategic vision. With that, I'll now turn it over to Sarah.

Thanks, Jackie. The clinical team has been working extremely hard to execute on our ambitious clinical development plans for 2022. I'll start with pyruvate kinase deficiency where we are proud to be the first company to create a treatment for this rare lifelong hemolytic anemia. Our marketing authorization application for PYRUKYND in adult PK deficiency remains under review in the EU, and we remain on track to receive a decision from the EMA by year-end. In addition, our team is actively working through startup activities for two pivotal trials in pediatric PK deficiency patients. We expect these trials to initiate in mid-2022. I'm also pleased to share that data from the core periods of the ACTIVATE study of PYRUKYND in adults with PK deficiency who do not receive regular transfusions were published on April 14, 2022, in the New England Journal of Medicine. This trial and the ACTIVATE-Kids study in PK deficiency patients who are regularly transfused supported the recent U.S. FDA approval of PYRUKYND and continue to generate important data in the extension study about the long-term impact of treatments. At the EHA meeting in June, we'll share new PRO data from ACTIVATE, data demonstrating the normalization of hemoglobin levels with long-term treatment of PYRUKYND, and additional comorbidities and complications data from the peak registry. Beyond PK deficiency, we believe PK activation has the potential to play an important role in the treatment of thalassemia and sickle cell disease. At the end of last year, we initiated our two global placebo-controlled pivotal trials of cytokines in thalassemia, ENERGIZE and ENERGIZE-T. As a reminder, ENERGIZE will evaluate 171 patients randomized 2-to-1 to 100 milligrams of Mitapivat daily for placebo, in both alpha and beta-thalassemia patients, who are not regularly transfused. The primary endpoint is hemoglobin response defined as an equal or greater than one gram per deciliter increase in average hemoglobin concentration from week 12 to week 24 compared with baseline. ENERGIZE-T will evaluate 240 patients randomized 2-to-1 to 100 milligrams of Mitapivat daily for placebo in both alpha and beta-thalassemia patients who are regularly transfused. They find a six to 20 red blood cell units transfused during the 24 weeks prior to randomization. The primary endpoint is transfusion reduction response, defined as a 60% or greater reduction in transfused red blood cell units, with a reduction of equal or greater than two units of transfused red blood cells in any consecutive 12-week period through week 48 compared with baseline. Last year, we also initiated the Phase 2 portion of our Phase 2/3 study in sickle cell disease, RISE UP, which will randomize 69 patients 1:1:1 to 50 milligrams Mitapivat twice daily, 100 milligrams Mitapivat twice daily, or matched placebo. The primary endpoints are hemoglobin response defined as an equal or greater than one gram per deciliter increase in average hemoglobin concentration from week 10 through week 12 compared to baseline and the type of adverse events. These data will be used to establish a clear building paradigm for the Phase 3 portion. Our team is focused on continuing global site activation and patient enrollment efforts across all three trials. AG-946 is our novel PKR activator currently being evaluated in a Phase 1 study. We recently completed the single ascending and multiple ascending dose healthy volunteer cohorts after reaching a maximum tolerated dose. As a result, we have identified the doses that we're moving forward with in the Phase 1 sickle cell disease cohort, as well as the MDS Phase 2A trial. We look forward to sharing updated data from the SAD and MAD cohorts at an upcoming medical meeting. In addition, we have initiated sites for the sickle cell disease cohort, and are on track to enroll the first patients shortly. As a reminder, the purpose of the sickle cell arm is to obtain data in patients with hemolytic anemia. In addition, we are working through operationalizing the two parts of our AG-946 Phase 2 A2B study in MDS. The Phase 2 component of the study is an open-label proof-of-concept study of one dose level of AG-946 in patients with lower-risk myelodysplastic syndrome. The study will enroll 20 patients who will receive AG-946 once daily for the 16-week core period. Patients who complete the core period will be eligible to continue in an extension period. The primary endpoints for the study are hemoglobin response, defined as an equal or greater than 1.5 grams per deciliter increase from baseline in the average hemoglobin concentration from week eight through week 16; and transfusion independence defined as transfusion-free for equal or greater than eight consecutive weeks during the core periods in patients with low transfusion burden only. Secondary endpoints include safety, additional measures of anemia, PK, and PD biomarkers. We look forward to initiating the trial by year-end. I will now turn the call over to Richa, our Chief Commercial Officer.

Thank you, Sarah. I'm pleased to provide the first quarterly pipeline launch update, where we generated net U.S. sales of $842,000 for the close decrease of launch following approval on February 17th. As we've said before, our commercial launch strategy focuses on connecting with the patients and educating the provider to ensure: First, that patients are accurately diagnosed through appropriate testing. Second, providers understand the urgency to describe an eligible patient’s advocate for treatments, and finally, patients connect to myAgios Support Services to optimize disease understanding, ensure access, and drive long-term medication adherence. Having been in the field for the last couple of months, our conversations with patients, physicians, and caregivers continue to underscore the value that we believe PYRUKYND brings to patients living with the disease. We have an opportunity to make a significant difference in the lives of these patients with a first-in-class disease-modifying therapy. We have gained important insights in the early days of launch to further reinforce our commercial launch strategy. Since our launch in mid-February through the end of the quarter, our team of hemolytic anemia specialists has had more than 1,100 customer interactions, raising awareness of PYRUKYND and educating physicians on how this first-in-class PKR activator can be used to benefit patients with PK deficiency. This positive engagement has been successful in driving prescriptions for those previously identified features. Our high-touch Patient Support program, myAgios, has effectively engaged with patients and physicians to begin disease and drug education and to navigate reimbursement challenges to ensure access and minimize abandonment. Additionally, a high priority for us is to drive the awareness of PYRUKYND among the patient community. We have been focused on generating awareness through social media pushes, word of mouth, patient events, myAgios, and partnerships with patient advocacy groups. These efforts are working as PK deficiency patients have been proactive and engaged, showing substantial and proactive requests for prior authorizations. In terms of payer dynamics, our national account directors have had dozens of positive interactions with payers to date. As anticipated, these early approvals have been through the medical exceptions process while prior authorization and utilization management criteria are being developed across payers. Finally, regarding AnemiaID, we have continued to see strong interest with more than 3,500 kits ordered since the start of the program. Of the completed tests, which represent a portion of the total kits ordered, the PK deficiency positivity rate is in the mid-single digit percentages, and within the range of what we would have expected. As a reminder, AnemiaID was designed for patients with undiagnosed hemolytic anemia of unknown etiology and is not specific to PK deficiency. As previously mentioned, we have seen continued appreciation among physicians regarding the benefits this program brings to patients, which will drive a long-term strategy to ensure accurate diagnosis, enabling higher diagnosis rates over time. We are encouraged by these early launch successes and the positive experiences we are creating with the broader PK deficiency community. It is important for us to remember, however, that PK deficiency is a rare chronic condition that is often poorly understood. Our efforts around disease education and patient identification continue to be paramount to ensure long-term success. The commercial team remains laser-focused on these initiatives, despite the ongoing challenges of the pandemic, which have impacted our engagement efforts. This is a challenging environment, especially with a rare disease that requires multiple interactions to educate on the disease, create urgency, and ensure accurate diagnosis. We have better clarity with respect to the launch trajectory as we move into future quarters. Based on our work to date, we continue to believe that approximately 1,500 to 4,000 consider PK deficiency patients in the U.S. represents a peak revenue potential in the U.S. of $200 million to $225 million via a dedicated commercial organization with significant rare disease experience. We are excited and grateful for the opportunity to make a meaningful impact in the lives of PK deficiency patients. Importantly, from this first-quarter data, we see that our commercial strategy, our knowledge base, and the connections we are making are setting us up for success as we continue to expand the applicability of PYRUKYND to all eligible PK deficiency patients, as well as longer-term for other genetically defined diseases. Finally, we believe there is potential to be a global blockbuster for PYRUKYND. With that, I'll now turn it over to Jonathan to review first-quarter financials.

Thanks, Richa. Our first-quarter 2022 financial results can be found in the press release we issued this morning, which I will summarize. More detail will be included in our 10-Q filing later today. As Richa shared, PYRUKYND revenue for the first quarter was $832,000. Cost of sales for the quarter was $339,000. Turning to operating expenses. Research and development for the first quarter was $70.1 million, an increase of $12.5 million compared to the first quarter of 2021. The year-over-year increase in R&D was driven primarily by startup costs for the PYRUKYND pivotal studies in thalassemia and sickle cell disease, and planned increases in preclinical activities, offset by closeouts of the ACTIVATE and ACTIVATE-T studies. Selling, General & Administrative expenses were $31.5 million for the first quarter, representing a $2 million decrease compared to the first quarter of 2021. The decrease in SG&A expense was primarily due to lower workforce-related spending. TIBSOVO royalty revenue, which is recorded under royalty income from the gain on sale of our oncology business on our income statement, was $2.7 million. We ended the quarter with cash, cash equivalents, and marketable securities of approximately $1.2 billion. With this cash balance, we expect to be able to execute our current operating plan through major catalysts and reach cash flow positivity without the need to raise additional equity. In the current environment, we are grateful for our strong balance sheet, but also mindful of the need to maintain this advantage and ensure the capital necessary to execute on the promising clinical programs and retain flexibility for business development. Consequently, as we begin our annual long-range planning process—a tradition we kick off in the early spring of each year—we will continue to remain laser-focused on capital allocation to our highest priorities, while actively managing our expense base. With that, Operator, please open the line for questions.

Our first question comes from Anupam Rama with JPMorgan.

Hey guys, thanks for taking the question. What are you seeing on the reimbursement front for PYRUKYND? And what are you seeing in terms of time to access in getting onto therapy? And then, what's the phenotype of the initial patients going on therapy in terms of severity, transfusion independence, and other things like that? Thanks so much.

Thanks for the question, Anupam. So, reimbursement conversations with the payers have been very positive. From a reimbursement standpoint, as expected, the majority have been processed through the medical exception process, and we expect that to continue in the second quarter as well, until payer policies are developed. Overall, I would say we are on track and where we expected to be. Payer policies are still being developed across the board, so it's really too early to comment on the specifics of the prior authorization and utilization management criteria, but we should have details of that in the next few quarters. Regarding your question about patient types, we're seeing a variety akin to what we would expect from the overall PK deficiency patient population. We are not seeing high utilization in any specific kind of PKD patient, but we're observing usage across different patient demographics, both transfusion-dependent and non-transfusion-dependent patients, reflecting the significant unmet medical needs.

Thanks so much for taking my questions.

Our next question comes from Marc Frahm with Cowen and Company.

Thanks for taking my questions, and congrats on the early launch. Was there any impact from stocking in the quarter, or is the $800,000 really true demand in the few weeks that you had in the quarter post-approval? Looking more broadly over the last three months, did you see an initial bolus of demand coming through in terms of start forms, or have the start forms really steadily built through the past three months since approval?

I'll address the second question first. In terms of the overall dynamics, there was no bolus; it is as we expected. When patients show up for appointments with their physicians, they're getting on PYRUKYND and going through the myAgios Patient Support Program to navigate the access portion. So a very steady flow consistent with our expectations. You'll continue to see ongoing impacts from the pandemic impacting our interactions, especially with a rare chronic condition that requires multiple interactions to create urgency and ensure accurate diagnosis. With regards to your question about stocking, that is represented based on orders we get from our distribution partners. There will be fluctuations between quarters, but the demand is genuine and reflective of actual patient needs.

Thanks, and congratulations. What are the adverse event findings that supported the determination of the maximally tolerated dose?

Sure. As expected in a phase 1 trial, we pushed the dose as far as we could. The dose-limiting toxicity we observed was thrombocytopenia, which was not associated with any other clinical adverse events and was manageable because everything returned to baseline when the drug was discontinued. We were able to identify safe doses for sickle cell disease and MDS patients that did not have these events. We're very excited about the operational components of both the sickle cell disease and MDS approaches being well on track.

Okay. Thank you.

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

Good morning. Thanks for taking my question. Are you able to talk about how many patients have started PYRUKYND therapy? What can we expect to see throughout the early launch in terms of metrics like patient starts, discontinuations, duration of therapy, and things like that?

We are not giving specifics yet, Greg, on patients that have started. It's still very early days of the launch, and it is a chronic condition. What we want to do is provide better insights over time and look at trends once we have a sense of what those trends look like. Currently, as we said, this was most of the approvals are prepared through the medical exception process, which is taking time because we want to ensure that payer policies are developed accurately for long-term patient access. So stay tuned for more updates in future quarters. It's just too early to tell.

Sorry, it's Jackie. I just wanted to add that we are seeing a nice steady flow, and things are going as we expected, just as Richa said. Prescriptions are being written, and we're already seeing refills, which indicates a positive dynamic within the first few months post-launch. Also, just to remind everyone, we're using one specialty pharmacy. So this is not a situation where there is a massive distribution network that needs to fill a pipeline.

Thanks. That's helpful. The other question I had was whether you have noticed any noticeable increase in disease awareness? What do you expect to be the impact on diagnosis rates as people become more aware that there is a treatment available?

On disease awareness, it's trending in the right direction. We'll have updates as we collect data over time. Regarding diagnosis rates, that's something that takes years to track, so you wouldn't expect updates on that quarterly. Our efforts around AnemiaID are particularly important, as this program helps with both disease education and ensuring accurate diagnosis, which will likely lead to improvements in diagnosis rates over time.

Great, thanks again.

Our next question comes from Mark Breidenbach with Oppenheimer.

Hey. Good morning, guys. Thanks for taking the questions and congrats on the launch. Can we expect cost of sales as a percentage of revenue to come down a little bit in future quarters? I guess I'm wondering where you're seeing that might stabilize to. And just with respect to SG&A for the quarter, which was pretty flat versus the previous quarter, does that imply that the commercial infrastructure and all the hirings needed to support the PYRUKYND launch have been completed at this point?

Hi Mark, this is Jonathan. I'll take your questions in order. Yes, you'll see that as volumes go up, cost of goods will indeed come down because we have fixed costs that become more leverageable as demand picks up and the launch progresses. So that number will decrease, and it’s a small molecule; you should ultimately see very healthy gross margins akin to TIBSOVO’s profile. Regarding SG&A, yes, we've been concentrated on ensuring that we have the right cost base to run our business efficiently. Richa's team has been in place since about mid-last year, so this is the run rate you're seeing. Overall, operating expenses should remain consistent through the year; there may be some fluctuations quarterly, but no significant increases are anticipated.

Thank you so much.

Our next question comes from Salveen Richter with Goldman Sachs.

Hi, thanks. This is Matt on behalf of Salveen. Could you please provide some color on where you stand in the patients enrolled in the Phase 2 portion of RISE UP, ENERGIZE, and ENERGIZE-T? When can we expect to look forward to any clinical catalysts from Agios or its academic collaborators this year? Thanks a lot.

For the ENERGIZE, ENERGIZE-T, and RISE UP studies, we are pleased to report that we have enrolled first patients, and we are focused on global site activation. We don't provide specifics on enrollment numbers as we progress, but we are on track to meet our outlined milestones and are excited about the efforts going on there. Regarding clinical data catalysts, the execution phase for these trials is ongoing. The Phase 3 ENERGIZE and ENERGIZE-T studies are blinded with no interim plans, so no immediate catalysts are expected. However, a key highlight will be the Phase 2 study of RISE UP, which is set for next year. We have several presentations lined up that will outline data from our programs that we're excited about. An abstract will drop next week, so we're very much looking forward to that.

Great, thank you.

Our next question comes from Andrew Berens with SVB Securities. Andrew, your line is open; you can ask your question.

Can you hear me? Great. Congrats and thanks for taking the question. I was just wondering a few on the launch. Do you know how many scripts were written that generated the $800,000 in sales? Also, what can you share about the addressable market that you highlighted in the prepared remarks? I think you mentioned up to 4,000 patients in the U.S. In the past, you've talked about a registry of identified patients that are around 1,100 to 1,200 patients. So, have these 4,000 patients been identified, or is it a hypothetical calculated prevalence? One on AG-946: how did the platelets behave at the maximum tolerated dose, and do you know the mechanism of the findings?

With regards to the number of scripts, we are not providing specifics yet. The agency will provide what it feels to distributors. However, over time, they will translate the reason behind that sales number, which reflects patient demand. There are inventory dynamics at play, and we should have a better sense of overall trends as we progress, but we are only reflecting what's booked on the orders with our distribution partners. Regarding the overall prevalence of PK deficiency, we have to triangulate data from various sources to arrive at the 1,500 to 4,000 patient range in the U.S. The diagnosis rate is currently about 40%, and our efforts have been aimed at improving it. We also recognize there are roughly the same number of patients in Europe.

As Richa mentioned, we believe there are around 3,000 to 8,000 patients between the U.S. and Europe, with about half in each geography. So, we have confidence in that 3,000 number in the U.S. that Richa noted. Again, there's a long path ahead in terms of enhancing our identification efforts, so we are focused on improving the diagnosis rate. Regarding the AG-946 trial, we've reached a level at which we observed dose-limiting toxicity, but we will not further explore those doses for this indication. We are on track to initiate studies focusing on the doses we selected, which are lower than those where thrombocytopenia was observed.

Okay, thanks for answering all the questions, and congrats again on the early launch.

Our next question comes from Danielle Brill with Raymond James.

Hey guys, this is Alex on behalf of Danielle. Thanks for taking our question. A question on AnemiaID: have all of the 3,500 kits been filled? Are those just ordered or actually processed? Do you have the type of information available to say how many of those identified patients resulted in a prescription written and started treatment? And then, a detail on AG-946, can you reveal the maximum tolerated dose in the healthy volunteers and/or the doses chosen for the SCD cohort?

With regards to AnemiaID, as we've mentioned, 3,500 kits have been ordered, but not all of them have been filled yet. Physicians may order the kits knowing they have patients coming to their practice in the future. Thus, not all ordered tests have been completed. The positivity rate has been in the mid-single digits, consistent with our expectations for AnemiaID. The process to convert identified patients to prescriptions takes time as patients must be followed up by their physicians, so we have systems in place to facilitate that process. Regarding AG-946, we will disclose details about our healthy volunteer cohort at an upcoming medical meeting. The doses selected for sickle cell disease and MDS have not changed based on the events we observed.

I want to emphasize that when evaluating AG-946, we pushed the doses as far as we could go, identifying a dose-limiting toxicity. However, we are not planning to utilize those doses in our further studies and have already planned lower doses that we believe will be safe.

I'm not showing any further requests at this time, so I'd like to turn the call over to Jackie for any closing remarks.

Thank you, Operator. And thank you, everyone, for the questions this morning. As always, I would also like to thank my Agios colleagues for their dedication and passion for making a difference for patients. I would also like to thank all patients, caregivers, and physicians who partner with us in so many ways, especially those participating in our clinical trials across all indications. Our connections across all of our stakeholders and our collective efforts together fuel ongoing innovation and impact for people with genetically defined diseases. Thank you for joining us this morning. You may now disconnect.

Ladies and gentlemen, that concludes today's presentation. You may now disconnect. Have a wonderful day.