Agios Pharmaceuticals, Inc. (AGIO) Earnings Call Transcript & Summary

Are we on? Okay. Great. Thank you very much. My name is Chris Shibutani, I'm a member of the Cowen biotech research team. Making sure that the microphone sounds here are working here. Very pleased to have Agios with us once again at our Cowen 40th Annual Conference here. Fireside chat format, which I think is a wonderful opportunity to really get more in depth, kick the tires on some issues for a story that has been long admired and is undergoing some very important transformations, which create a tremendous opportunity we feel for investors at this point in time. Joining me today, very pleased to have Jackie Fouse. Probably like the 1 year anniversary of your actually taking the...

Just about. Yes.

Being in actually the seat, wearing the hat and the whole thing. Chris Bowden, who is the guru behind a lot of the clinical trial work and the development path here. The room is littered with all sorts of other Agios celebrities. Andrew Hirsch, I see you in the back there, the CFO. Kendra Adams, no one gets past Kendra on the IR front. So a wealth of folks here on the Agios side.

So maybe we'll just start with an introduction on a big picture standpoint. I did mention that this is about a year in the seat here. This is a company that's over a decade long. David Schenkein, who is still the Chairman, clearly curated this company with a scientific heritage, took it to a certain stage, which is in rarified order in terms of being able to do the discovery, and development to commercialization. You take the helm with a wealth of experience, really, I think many investors in the health care specialty area have known of your capabilities for a long time here. Absolutely, fist bump. And you sort of chose to go on a bit of a listening tour and then we kicked off 2020 with our sort of like 2025 vision here, which is a bold thing to do, I think, actually was very appropriate and very helpful. Talk us through some of what was the thinking behind it. And a little bit of some of the nuts and bolts in terms of making sure that people understand because there were things like revenue targets, et cetera. What's in, what's not sort of the bigger picture thinking philosophically, and how we should think about that?

Great. Thanks for that. Thanks for attending our session this afternoon, everybody. So I think had I -- had we come out with the 2025 vision maybe a month into my tenure, nobody would have believed this anyway. So I think it coming now is at a great moment in time where we see a clear line of sight to some nice inflection points for the company, starting already in 2020, and we should have significant data readouts, approvals over every single year for the next 6 years out to 2025. So we want to go ahead and put those stakes in the ground. What you see now as a company, as you said, and you gave us some very nice compliment. So thank you for that. But we've got a very strong track record over the last 10 years of novel biology, sticking with our platform, our scientific platform in cellular metabolism. That has brought IDH inhibitors to market now with 2 commercial products in acute myeloid leukemia, and a positive Phase III trial in cholangiocarcinoma and ongoing trial in IDH mutant glioma. So this is a company that has gone from discovery all the way to commercialization with the IDH inhibitors and continues to invest behind making the most of the potential for those IDH inhibitors in IDH mutant patients, and that then will optimize value creation for shareholders as well. In the meantime, the -- our scientists continue to do what they do, sticking with what we're really good at in terms of cellular metabolism and where are we with that now. We're on the brink of a significant flow of data from pyruvate kinase reaction activation program and our lead molecule, mitapivat, where we have 2 Phase III trials in the pyruvate kinase deficiency indication that we'll read out by the end of this year. So you'll have that to look forward to. We look forward to bringing that drug to market to patients, again, an internally discovered and developed Agios drug, and we have significant data coming for proof-of-concept in thalassemia as well as sickle cell disease, where we expect presentations at EHA in the middle of this year. So same scientific platform, IDH inhibitors, commercial products, now PKR activation coming along with data on 3 indications this year. We have other programs in the clinic. And so when we look at where we are as we start 2020, both in terms of commercial momentum for our marketed product as well as a certain amount of derisking that we've experienced with the assets that we have in the clinic, all of the things that we're talking about in 2025 are drugs that are in the clinic today. We're not talking about only preclinical data. We see the ability for this company to go from 2 commercial products today to 4 commercial products in 2025 across at least 8 indications. And we do say at least 8 because we think that's the minimum that we can do. And we, in 2025, will have 6 drugs in the clinic, 4 of which will be different from the ones that we have in the clinic today. And we'll be cash flow positive by that point in time. We also believe that we'll have at least $1 billion of net product revenues, and that is being driven primarily by the ongoing ramp-up of TIBSOVO for IDH1 mutant AML, the ongoing ramp-up in AML, some contribution from IDH mutant cholangiocarcinoma, and then we'll be in the early innings, I would say, of mitapivat and pyruvate kinase deficiency. So the things that are not in there where we expect approvals towards the end of this time frame would be thalassemia, sickle cell disease, glioma, all of which are potentially quite large commercial opportunities for us and don't start to contribute meaningfully to revenues until we get to 2025 and beyond 2025, really. But lots of progress between here and there. So we felt confident as a management team in terms of putting some of those stakes in the ground. And I think 10, 11 years into our history, it's time to do that.

Yes. No, I think that's very helpful clarification and contextualization because I think those objectives are really founded based upon what we already largely know. And it's not a convenience of timing, but clearly, some of the most exciting inbound interest in the name and renewed interest in the stock has come from the question about the metabolic disease aspect of this, which we're going to be having many opportunities to turn over cards here. But again, just to maybe create a logical foundation. This is a company that really has a well-defined franchise in the oncology space, in the AML space, the IDH mutant franchise with TIBSOVO and IDHIFA as well. David used to always highlight the extent to which being able to get 2 drugs approved as quickly as you did. And so I think the investor eye was always on sort of the clinical trial path in terms of whether or not this could possibly happen, and piecing through different indications. I would argue that after navigating through 2019, where folks were somewhat uncertain about whether a company, who is so good at discovering and developing drugs could, in fact, reliably commercialize on your own, including TIBSOVO, wholly owned, not with just sort of like a side car to a well-established, well-oiled Celgene and Bristol. And that we are now at this point where there's much more of a comp about the question of the commercial trajectory. So to turn to you, Chris, in terms of thinking about data points that are going to read out. People are looking at this in terms of how is this going to move the needle in terms of patient use adoption, duration of use in the commercial numbers. How can I flex my projections to meet these 5-year objectives based upon the trials that are going to read out? Can you highlight for us, with that backdrop, particular readouts that you think are coming over the next 12, 18 months that will be really helpful to define the trajectory from an ultimate commercial standpoint?

Well, I think in AML, one of the most important pieces of data for us is going to be focused around our combination with azacitidine and TIBSOVO. Because that is the underpinning data for our Phase III AGILE study, which we're guiding to completing accrual at the end of this year, and then it's an event-driven analysis. However, what we're seeing in the use of TIBSOVO in AML is that it's being used in the frontline setting in combination with azacitidine. So we can't promote to that. Our indication is it's a single agent. However, based on the strength of the data, our data as well as the understanding in the AML community, we have a bunch of different drugs to now bring into the space, and they're using them in combination that this combination is becoming very commonly used. So for instance, at ASH, what we've presented was molecular data. So you're starting to see the depth of remissions that we're achieving in the combination. And that is comparing very favorably to now with some of the subset data that's coming out from venetoclax combinations. So I think from the frontline value creation perspective, it's really important that we drive accrual into the HOVON study, which is a 7 and 3 IC-eligible trial, that we drive accrual in AGILE and that we continue to follow up those patients with -- on those 19 patients in the Phase I study of azacitidine plus TIBSOVO because that's really differentiating us, I think, from a lot of data that you're seeing. For example, over the weekend, there was a trial disclosed from AbbVie of their low-dose Ara-C plus venetoclax. And while that's a directionally positive trial, it's negative. It didn't meet its survival endpoint. We think that speaks positively for lots of new agents coming in. It speaks negatively because the trial is negative. But there's a very important piece of data in that trial, which is a secondary endpoint, which is MRD negativity, which is very low in the combination on low-dose Ara-C plus venetoclax. Whereas in our complete remission patients, we see approximately 60% or higher, achieve molecular remission, looking by different various views. And that trial that read out on Friday, where they posted those data in ClinicalTrials.gov, it's 5%. And we think that predicts for longer depth -- or longer duration of being in CR. And that, of course, will drive patient benefit, which will drive use, which is why we think we're seeing that clinicians select when they say, what's your go-to regimen in an IDH1 positive newly diagnosed, I see an eligible patient that's in aza plus TIBSOVO.

Right. I think it's been interesting to watch. Certainly, on the regulatory front, the history has been tremendous receptivity to relatively early-stage modest data sets that has convinced regulators to bring these regimens to be commercializable. And what we're also seeing is that there's also an openness to creating relatively free label that enable the clinicians to stay on top of the science and implement. And you see there's a lot in oncology. NCCN Guidelines are very fast after ASCO, et cetera, or ASH and the community begins to adopt all those things. We've started to see evidence of some of this trend, particularly in the early earlier line use. Do you suspect that this will continue? These are 2 trials that obviously, we are keeping very close eye on. But nonetheless, there's still this journey of understanding that there's greater breadth of identifying these patients and using in earlier lines. Is this a year that we take a pause and wait for the data? Or might we still be able to see some of that increased penetration in a pragmatic way by the clinician experts?

Well, we don't promote to it. At the same time, I think AML continues to be directionally a disease that's treated at tertiary care centers because of the intensive nature of the disease. So they require a lot of blood product support and require a lot of support from the perspective of managing on their infectious disease complications. Those are the investigators that we have worked with. Those are the investigators that are publishing the data. So I would say, yes, it's possible that we'll continue to see continued use of aza plus TIBSOVO. Based on that data that we've published, I don't know what that means in terms of the numbers, in terms of percent penetration, et cetera. The one thing it does predict for, based on our data, is the time -- the amount of time that patients are on TIBSOVO is much longer. Yes. I mean, I think, the duration of CR, it's just a lot longer.

And I think -- I mean, I think it speaks to the mechanism of the IDH inhibitors. It also speaks to the data updates that you alluded to, and as we've updated our data over time, you see the complete response rates go up. The depth of response continuously improved, the duration of response improved. And I think importantly, as the commercial space evolves with these -- with AML, and we've seen it in some other hematologic malignancies, it's not a zero-sum game as drugs come to market. I think we're in a very good place with the IDH inhibitors because physicians are adopting target the target. But then if you have a convenient, safe drug that, as appropriate, can be used in some patients in combination with a variety of other drugs that may be in the same indication, it puts you in a very good place. We often talk about backbone therapies in oncology. And I think you can see where for certain mutations, the therapies that are targets for those mutations can become backbone therapies if they're safe, convenient and all of those other things. And I think we've still got a ways for that to play out in AML, like it's played out in some other indications into Chris' point, durations of treatment because patients are doing better on these therapies than the past. Those durations of treatment are just going to continue to increase.

Right. I think investors had come to San Diego at December 2018 ASH is sort of like it's a zero-sum game. It's a question of market share. The competition fears were overriding it. Jackie, I think you speak with a lot of credibility, particularly from your work in the myeloma space, managing that business for Celgene there in terms of understanding how these combinations are initially sort of contemplated, but then are invoked in terms of clinical practice and getting used to the notion of 2 or 3 good combinations is the reality that we will get to, perhaps not at the tempo that TheStreet is impatiently waiting for, but it is, nonetheless, a durable reality there. There's a couple of box-checking things related to the AML franchise before we move over to mitapivat, which is a real driver. European regulatory status we saw with IDHIFA, just contextualize for us, Bristol pulled back their application. You guys spoke confidently about continuing to move TIBSOVO through the European regulatory process. Give us why you continue to have confidence in TIBSOVO's path in Europe.

Yes. So we submitted our day 120 questions at the; end of the year. I think we guided to that. And so now we're under review, and we're heading into the finale, if you will, and we've also guided. We wouldn't expect to see a decision until the second half of the year. The important aspects of our submission are that, since we do not have a randomized trial in the relapsed/refractory space in contrast to IDHIFA, where the identified trial is ongoing, and I think Bristol and Celgene thought, well, that things don't look so good now. We can come back when we get the results from that trial. We made a decision very early on in the development of TIBSOVO that we actually thought we might get an accelerated approval in the U.S. and our conversion trial would be one of these frontline trials that we were just talking about. So we didn't have to do that. We got regular approval in the U.S. So that means we don't have a study in the relapsed/refractory setting, and the European authorities would really like to see that. So we knew that. And so therefore, we've done a lot more work in terms of going into historical databases and making -- trying to match our 001 data set that we used for approval in the U.S. against a number of different European databases, both in terms of from academic centers as well as from going in and doing chart review. That's one of the aspects. And then the other aspect that we're working on impressing upon them is that given the overall rarity of the patient population, that you're just not going to be able to conduct a trial in that setting. So making cross-trial comparisons is a valid thing to do. I think overall, certainly, the European authorities, EMA, CHMP's view to single-arm uncontrolled data sets, they bring more skepticism to the table than the FDA does. And so we've understood that, but we think we have a good case to make in terms of the rarity of the patient population, our ability to achieve CR as well as our transfusion -- removing transfusion requirements from patients when they do achieve CR. And then we think we have a strong case to make against outcomes in European patients who are IDH1 positive, who have relapsed/refractory AML. So we'll see how it plays out. But certainly, we continue to move on, and we're encouraged by the feedback we get from investigators, and time will tell.

Great. Let's move on to mitapivat. This is really something that's been in gestation for quite a while. One would argue that there was quite a curtain raising at the ASH meeting last year. And 2020 is arguably hashtag the year for mitapivat just sort of make itself evident, and it's certainly drawing a lot of attention here. A lot of different directions that you are going here. And obviously, with the PKD deficiency, but then also things like thalassemia and sickle cell become the shiny bright objects that -- attention deficit disorder, Wall Street people like to go towards. So maybe I'll frame the question this way. Walk us through the data information flow that we're going to get. I just sort of like anticipate a crescendo at EHA, Frankfurt, June will be there. But what are we going to learn progressively through the year to put in the pixels of our understanding for how real these opportunities can be and what kind of data we'll see?

People will have 2 crescendos. Can you have 2 crescendos at 1 year?

Absolutely. Absolutely. Yes. Yes, I think that to Jackie's point, the first story is at EHA, where we will present data from a Phase II trial in thalassemia. And to your point, Chris, we previewed that at the end of the year, when we issued a top line press release at ASH and disclosed a small amount of that data, where we saw an increase in hemoglobin in 7 out of 8 patients. We saw some other markers that one would look at in terms of understanding, are you affecting ineffective erythropoiesis, which is a hallmark of chronic hemolytic anemias in the setting of hemoglobinopathy. So that data in totality said, yes, we should move forward and start designing pivotal trials. So what we will show for thalassemia is that study has now completed accrual, that sample size of 17 patients. We will have additional follow-up. And in addition, we have alpha thalassemia patients who've also come into the study. So this will be demographics, disposition, safety, efficacy, pharmacokinetics and pharmacodynamics data that give people a sense of what it was that compelled us to make this declaration in December. At EHA as well an investigator-sponsored trial that we're running through an NIH CRADA agreement with the sickle cell branch of the NIH that, that first data from that study will also be disclosed. That trial is a total sample size of 25 patients. You shouldn't expect to see data from all 25. At this point, it's still accruing. We don't know when NIH will do their data cut. But it's the same theme from the perspective of how we're -- we've thought about thalassemia, which is in sickle cell, there's the possibility for a PKR activator, mitapivat, to have the potential to reduce sickling and therefore potentially have an impact on VOCs. But because of the nature of activating the pathway you increase ATP, we can also see effects of the increasing hemoglobin. So there are really two -- the mechanism of the drug lends itself to 2 potential areas of clinical benefit. So that study is a defined 6-week dosing period with 3 different doses. So it's pretty intensive from a pharmacodynamic standpoint, and should give the audience a readout in terms of how -- is there a proof of mechanism? Is there potentially proof-of-concept through increasing hemoglobin? And what does the safety look like as you're treating patients on drug? What does the safety look like as you taper them, as they come off-drug? These are all really important considerations. The totality of that data will inform as to whether we can declare a proof-of-concept, and we hope to be able to do that.

In crescendo #2, as we are in Phase III trials reading out at the end of the year, where we expect a headline that data in pyruvate kinase deficiency in nontransfusion-dependent and transfusion-dependent patients, which could be the first commercial or approval for mitapivat, and as early as late 2021, probably, and then we've got the other 2 indications coming along. We've also submitted the IND for AG-946, which is the next-generation PKR activator that's got a different profile than mitapivat, and we'll move that into healthy volunteers as soon as the IND clears, which we expect this quarter.

Got it. I did want to turn to that. But a little bit in terms of the thalassemia opportunity, it becomes like an eye-widening exercise to think about the potentially vast number of patients. But help us put some maybe more sort of goalposts around patient selection. What segment of the thalassemia population might we be talking about? I realize this will -- the penetration, et cetera, will be a function of how the data turns out. But just maybe -- just better frame for us what the opportunity could look like based upon how your data will inform that.

Well, we are looking at all -- at both alpha and beta thalassemia, the one product that's approved in the United States, luspatercept has an indication for beta thalassemia. So we have a broader population in that perspective. And in terms of how we're considering developing the drug in patients with thalassemia, there are generally 2 classes similar to pyruvate kinase deficiency, regularly transfused and not regularly transfused. These data are in patients who are not regularly transfused. But based on the data we are entertaining doing pivotal trials in both populations. So given that information that we -- that you saw a little bit of a snippet of at EHA -- at ASH and what we show at EHA, we're now taking this and putting together a package to get input from regulatory authorities. And we would consider both of those patient populations broadly. And the details there will be forthcoming after we get feedback from them. And think about the endpoints, size of the trial, budgets, all those things. And we're thinking pretty broadly at this point.

And then to keep playing the Wall Street game in terms of the timing of that engagement with regulators. We have early June for the data. Will you be able to engage with them in anticipation of the EHA meeting, so that when we attend whatever presentation, we'll be able to throw out some questions of what's next based upon any feedback? Or give us a sense for the timing of where you think this program will get to that next decision point.

Yes, yes. Well, our goal has been to guide to what our registration trial designs look like by the end of the year. And so that's the main goal because we want to get feedback from both EMA and FDA. So I think middle of the year is a little too soon, but we definitely are on track to be able to guide to what the next steps are by the end of the year at the latest.

Got it. And then sickle cell disease, another -- a broad horizon there. Update us on where -- what we'll learn and when.

Well, the data from the NIH study will be very important for us. And I think for people overall, getting a sense of PKR activators in this disease. And then if we feel that we have enough information there to move forward and we would like thalassemia start putting a package together to get in front of the regulators and talk about what a registration program looks like. And that's a disease that can be complicated when you think about it in terms of you're going to go after hemoglobin, you have VOCs. You have crises and the number of days in the hospital. There's a number of failed trials. There's been one recently successful trial. There's gene therapy coming in. So there is all sorts of different ways to think about it. So we're doing that now in anticipation of if we see a compelling data set because we don't want to miss a step.

Sure. Yes. No, there's clearly a collision course of many different sort of approaches to that. But if you had to have a hypothesis in terms of mechanistically, where you think your approach might be able to move a particular end point that might be clinically meaningful, what would be your working hypothesis?

Best case would be both that you can get a read-through on the basis of sickling curves and oxygen dissociation curves, 2,3-DPG that you think you have -- we have a shot at reducing the frequency of vaso-occlusive crises and that we would also see some indication that hemoglobin is going up. So then we would be -- best case scenario is, we have both to entertain. The problem of VOCs is predicting the outcome in the control arm, especially with new drugs coming onto the market, can be tricky. So hopefully, we'll be able to look at both.

Got it. And then the 2.0 mitapivat follow-on, where does that, again, hypothetically fit in, in terms of its profile? Where you think it may somehow be better positioned? Obviously, we'll wait for data. But again, what's the hypothesis based upon from a structural standpoint?

Well, the preclinical profile suggests it -- demonstrates it's more potent than mitapivat against wild type. It has a broader spectrum of activity potentially against mutations in pyruvate kinase deficiency that have not been sensitive to mitapivat, 1 of the ones we're most interested is R10 -- R510Q, which we've seen at a high enough frequency that if this drug makes it and it activates or stabilizes R510Q, then we could broaden the spectrum of activity in patients with pyruvate kinase deficiency. We think it has a potential to be once daily dosing. It doesn't touch aromatase at all. So there's a number of features that if it makes it through the hurdles of healthy volunteers then the next steps could be wide open. It is very interesting to think about as a follow-on compound, if it truly met and checked all those boxes, how you -- how, when and if you bring it into any or all of those 3 indications. And there are different ways to do it, going from a noninferiority approach to a superiority approach depending on what you see, a different population, where you get the drug approved and then people say, "Oh, I would like this. I'm just going to start using it in some of the other indications." We can't control some of that, but you can anticipate it. So lots of interesting things. It has to be safe. And it has to do what it's supposed to do. So I think the key message there is that we've been in this movie before, and that's why we keep pushing mitapivat forward because that drug is declared itself in fine form from the perspective of long-term safety and efficacy in pyruvate kinase deficiency and now in thalassemia. So we're in a good position to have that challenge. So think about as 946, but if 946 stumbles, we just keep moving with mitapivat.

Nice to have choices.

Absolutely. Yes, no. And on this foundation of the now well-established commercial franchise are becoming more well established to be able to have a whole another leg of this business, which, with less than 2 minutes, leads me to my last question, which is kind of in the strategic context in terms of historically, when this company was going through its adolescence, partnered with Celgene, which made a lot of sense. Celgene is now part of Bristol. And Jackie, you referred to sort of opportunities, certainly through the capabilities and relationships that you bring to bear, perhaps reimagining what makes sense for the company over the next 5 years. And tucked in with that question is, when you have a whole new limb of a business, there's metabolic franchise that could emerge as well. What is your vision in terms of how that will be built and supported from an infrastructure standpoint? Are you going to sell your own stuff? Do you see partnerships making sense? Talk to those issues.

And I think I've said before, we're very open to doing the right thing for patients and for all of our stakeholders. So whatever the best way is to create that value, we're open to doing that. I think we've -- the company benefited at moments along the way from some of the complementary skill sets that Celgene brought to the table as we brought those -- the IDH inhibitors really to market together, and we continue to do that together in the U.S. with IDHIFA. I think it's sort of logical to assume that when you put 2 companies of the size of Bristol Myers Squibb and Celgene together that there's probably going to be some portfolio prioritization exercise that goes on, which may create opportunities to talk about which assets are in whose hands and things like that. In the meantime, we continue to have a great partnership. When we think about the evolution of some of these other indications, we, I think, have clearly demonstrated that, particularly when we're dealing with specialist, physician groups where your commercial infrastructure is fairly targeted, we're quite good at the science behind the products. We have a great medical affairs group, and we have a great commercial group that those are models that probably fit what we're good at. So we need to see what the data looks like. And that's going to tell us what we think a commercial opportunity would be as well as how we want to approach different geographies because I think that's important too. We have a lean team in Europe right now that's already adding value in a number of ways, even though we don't have an approval in Europe yet. But there are some jurisdictions where it might make more sense to partner, depending on whether you can get 2 parties who come to the table with complementary skill sets, as it's kind of how I look at it. So...

Terrific. So we're out of time. I think the stock is very well positioned now. There's financing overhang, so to speak, at the midpoint of last year, which was addressed. We have a lot more confidence in the stability of the commercial IDH franchise and there's very exciting catalyst for the metabolic business. So I think an exciting year for the stock in 2020. Thank you both. Thank you, Chris, and thank you, Jackie.

Thank you.

Thank you. Thank you very much.