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

Good morning. I'm George Farmer, Senior Biotechnology Analyst with BMO Capital Markets. Thank you all for joining us this morning. Our next company that we'll be highlighting today is Agios. With me today is the CEO, Jackie Fouse. I'm very pleased to have joining with us to talk about the company in our fireside chat, so to speak. Jackie, welcome. So happy to have you join us. Why don't we kick off with your big strategic 2025 vision that you presented at the beginning of the year, just kind of remind us where you see Agios’ heading. And then we can dig into some pipeline specifics.

Great. Thanks so much. Thanks for having me, for having us, the company. So good morning, everybody. So real quickly, just in terms of our strategic priorities of where we are today in our 2025 vision, which is very much still on track despite the virus pandemic situation. So as many of you probably know, we have 2 IDH inhibitors that Agios has discovered and brought to market for acute myeloid leukemia. And one of our strategic areas of focus is creating the most value that we can from our IDH inhibition platform because the TIBSOVO for IDH1 mutated AML will be a big driver of our revenue vision out to 2025, that $1 billion number that we've spoken about. So we're very focused on commercial execution for TIBSOVO. We continue to co-promote IDHIFA with Bristol/Celgene, and we'll continue to do that. And we're also moving full speed ahead with the label-expanding programs, the AGILE trial and the HOVON trial that will continue the label expansions for TIBSOVO as well as we are waiting for the -- in the next month or so for data from our cholangiocarcinoma trial, the overall survival final data that will support that label expansion as well. And we have reopened an MDS arm from the TIBSOVO Phase I trial. So priority on those label expansions, running the glioma trial for vorasidenib, our pan-IDH inhibitor brain-penetrant molecules. So all of those things continue to support our IDH platform and its expansion and maximizing the revenue potential from those drugs. We're also venturing into a very exciting next wave of things for Agios as we are bringing PKR activation to patients. We now have data for mitapivat, our AG-348, our PKR activator in 3 indications of hemolytic anemias. You saw 2 sets of data presented during our event in conjunction with EHA recently. So we are -- that's a top priority for us. We're moving full speed ahead to put together pivotal trial plans for thalassemia in sickle cell disease for mitapivat. And we look forward to sharing more information later this year on dose and starting dose trials in 2021. And we're on track to have our ACTIVATE and ACTIVATE-T trials in PKD readout sometime between the end of this year and into the first half of 2021, a little bit delayed there just on releasing that data as a result of the virus pandemic. So maximizing value creation on the IDH inhibitors and moving ahead across 3 indications in hemolytic anemias with mitapivat. We're very excited about that one.

Great. So I do want to talk more about mitapivat, but maybe you could go back to this $1 billion revenue target that you have for 2025. Can you talk about what the constituents of that -- of the -- of that revenue, that $1 billion?

Yes. Great. Thank you for reminding me that. So the lion's share of that $1 billion will be acute myeloid leukemia for TIBSOVO. And just as a reminder, everybody probably remembers this, but IDHIFA revenues are not included in that. They never were. We do take credit for bringing IDHIFA to market because we discovered the drug, but they're not in our -- it's not in our revenue numbers. So most of it is from AML, and then we start to see mitapivat contribute a little bit with PKD, pyruvate kinase deficiency, the mutated hemolytic anemia that we're going after. And that's all that's in there. We expect approvals in the time frame for glioma and thalassemia, but late in the time frame. So we essentially have assumed there's almost no revenues in there that they would be late in that time horizon and starting to ramp up beyond 2025. So nice trajectory out to 2025 and then beyond as well. Same with sickle cell disease, it's out.

Okay. So TIBSOVO in AML, mitapivat in PKD. Those are really the big, big drivers of that…

Yes. Same with cholangio.

Oh, cholangio. Is that -- do you think that's a big opportunity?

We've always estimated it to be -- it's a little hard to say because of the assumptions just to make for duration of treatment. And if it's a second-line population, what does that look like? So somewhere between $150 million and $250 million peak probably for that indication. Honestly, it's a nice position, and we're bringing a drug to patients who don't have a lot of treatment options. There's no group there, that second-line setting.

What is the frequency of IDH mutations in? Is it just 1 or 2? Or is it focused on one or the other?

It's essentially IDH1, and it's around 10%, 11%.

Okay. Very good. All right. Let's talk about mitapivat. I think that's a lot of growth on some people's minds. We saw some interesting results first at ASH then in EHA. The beta thalassemia, alpha thalassemia, looked very encouraging. And then recently we saw some top line data from an ongoing sickle cell trial. Can you talk about your development plans there? Originally, we're just filling kind of signal-finding studies. Now that you have this signal, what do we do?

Yes. Very happy to talk about that. We're excited. So we've been extremely pleased to see how the drug has performed in terms of activating wild-type PKR. We knew that the drug worked well from our experience in PKD in terms of working on the mutant enzyme. And so we started the thalassemia trial last year. Now that trial is fully enrolled. It has 20 patients, that's a company-sponsored Phase II trial that thalassemia data is the one that we gave you a top 1 and declared proof-of-concept at ASH in 2019. That was 8 patients that we talked about at that time. And the update we gave just a couple of weeks ago was for 13 patients, where we had 12 of 13 responders. Of those, 4 alpha thalassemia patients. So we're the first company to study a drug in alpha thalassemia patients. And all 4 of those patients responded, 8 out of 9 of the beta-thalassemia patients responded. In terms of 1, at least 1 gram per deciliter increase in hemoglobin. And then all the other markers that we're looking at associated with that in terms of the -- what we're doing to modify the disease were going in the right direction. So we're moving quickly to put together our pivotal clinical trial plans for thalassemia. All of those patients were nontransfusion-dependent patients, just to remind people of that. But we expect to move into the pivotal plan with the ability to handle both nontransfusion-dependent, transfusion-dependent alpha thalassemia and beta-thalassemia patients. And there are some nuances to how you deal with those different patient populations. So we've said that we would disclose the details of that pivotal plan for thalassemia by the end of this year and start the trial in 2021. So we presented the sickle cell data for the first time a couple of weeks ago. That is an NIH-sponsored trial that can enroll up to 25 patients. It was slowed down because of the virus situation, but we did present data on 8 evaluable patients. There was a ninth patient that dropped down in the first week of treatment, so it wasn't evaluable. So we've been working very closely with NIH on that, and we're quite pleased with the results. We actually saw 7 out of 8 patients have an increase in hemoglobin. 5 of the 8 met the response criteria of at least 1 gram per deciliter. And again, the other markers that we're looking for in terms of what we're doing to modify the disease, so reducing 2,3-DPG, increasing ATP and some other things, those were all going in the right direction as well. So we feel very confident that we've seen the proof of concept for the drug. We think that we're seeing it's doing what we would have expected it to do from the PK/PD data and the efficacy data. What I'm happy about in terms of -- we realized it's a small move, patient-size numbers, but we're very happy with what we're seeing there and looking forward to moving along quickly as well. So we're also working on the pivotal plan for that indication. And we have said publicly that we expect to start that trial in 2021 as well as the thalassemia trial.

Okay. Back to thalassemia, do you think you need to get some treatment experience in transfusion-dependent -- in the transfusion-dependent setting before moving forward into a pivotal program or you just go right into an all-comer?

We're expecting to go right into that. We think that we're seeing everything that we feel comfortable that we need to see with respect to activating a wild type and the impact that we're having there. We also, over the course of time, have the benefit of seeing the drug in both transfusion-dependent and nontransfusion-dependent patients in PKD. So I think the totality of the data set that we're generating over quite a number of years now for mitapivat is, even though for different diseases, the data across the different indications is informative in terms of the mechanism of the drug, the safety profile, those things.

And do you think the NIH trial should be sufficiently informative to help you design a pivotal program in sickle cell? Or do you think you need to do some of your own internal work before?

We think that we can go into pivotal with what we're seeing.

Okay. And how do we think about pricing for mitapivat? I mean I know companies are hesitant to talk about pricing prior to approval. But your first indication is going to be pretty rare ultra-orphan indication, which could command a premium price tag. Thinking about getting this into larger indications, how should we think about as we build out our models, having impact on how it will be priced?

That's going to be an interesting situation to live through. I would say you have more flexibility clearly when you're coming to market with a more rare indication progress. So when we launch mitapivat, which we expect in 2022 for PKD, you can think about -- that we will price it in line with what you would expect for PKD. So the benchmarks for that would be other oral medications with less than 10,000 patient population size. So we will be able to come to market with the rare indication first. We think that thalassemia may also support that higher type of price point. And then with sickle cell, we'll see based on the totality of the data. I mean clearly, the approved drugs that are on the market today, one of them is labeled for increasing hemoglobin and the other one is labeled for reduction in VOC. If you were able to have both of those in your label, and again, depending on the totality of the data, you may have different options around how you price the drug. So we always make pricing decisions based on the totality of the data. And we'll have the flexibility to start at that higher price point and then potentially work with payers on how we deal with the net price and the other indications.

Okay. As Agios is the only company with a PKR activator out there, could you…

We're the first. We were first.

You're the first, yes. But can you help us, give us anything that can help us compare and contrast your program versus some of the other, well, a competitor out there? And also while you're doing that, maybe talk about your second-gen PKR activator that is in the works.

Yes. So I would just say that we've been doing -- we've been studying PKR activation for now at least 6 or 7 or more years. We've been in humans for about 5, and now we've got data across 3 different indications. I think we have a pretty deep understanding of the mechanism, and we certainly have built up a really nice body of data to support mitapivat's competitive positioning in the different indications as well as a large safety database. So we feel very good about taking mitapivat forward. What we've seen from the company I think you're referring to is that they presented data that shows they also have a PKR activator. We read the data, so we would have expected it to show based on the mechanism and it is doing what we would expect the drug to do. And otherwise, we've seen a limited amount of data, so it's hard to make too many comments about that. We do think that chronic dosing in these diseases is something to remember with respect to the safety profile of these drugs. Patients potentially are going to be on these drugs for very long periods of time, so even seemingly modest adverse events or side effects. So when you're talking about chronic, dosing can differentiate one product over another over time. So we'll see how all of that plays out. As you mentioned, we do have a next-generation PKR activator, it's called AG-946. You may be hearing my dog in the background. Even though I've got doors closed, they're very loud. So AG-946 is our next-generation PKR activator. That drug was originally designed to hit the -- some mutations that 348 does not hit in PKD. We know that it works on our passing few mutations in TKD, which 348 does not. So that's one thing. It also has no aromatase inhibition. With 348, we see in the lab values some modest aromatase inhibitions that have not turned out to be clinically meaningful at all. So we don't think that is an issue for 348, but 946 has none of that. And I'll just remind everybody, with 348, we have regulatory go-ahead to move forward with the pediatric program. So the regulators have also agreed that aromatase inhibition is not an issue clinically with 348. But 946 has none. It also is a more potent molecule, at least in the preclinical data. So it would have the potential for once-a-day dosing whereas mitapivat is twice-a-day. So those are some of the characteristics that make it different. I think it's good drug development to have a couple of choices, and we'll have some options as we move things forward for both molecules with respect to life cycle management, and we'll have to see. We need to get 946 into human. The IND cleared back in the first quarter. Because of the virus situation, we haven't been able to activate the healthy volunteer study yet. But it's all teed up, and we hope that we can get it into healthy volunteers really soon, make sure that it's doing what we think it should do, that it stays. And then we'll think about next steps. We did include a sickle cell cohort in -- alongside that healthy volunteer protocol. So we would be able to move quickly into sickle cell patients if we want to. As soon as we get the healthy volunteer data, we need to go into some hemolytic anemia to generate data, so we chose sickle cell to do that first. But we'll have a lot of options after we get through the healthy volunteers.

Because it'll generate the healthy volunteer data before you move forward into sickle cell?

Correct.

But just on the same protocol, is that correct?

Correct.

Okay. Good. All right. Let's move on to TIBSOVO. Let's see, you had thrown out guidance this year of $105 million to $115 million in sales. Are you feeling confident about hitting those targets? Okay.

We feel very confident. I'm very confident. It's only had a very good Q1, the fundamentals for the drug in the market are quite strong despite the virus situation. In fact, I think we see the benefit of oral oncolytics, safe, efficacious drugs that are fairly straightforward in terms of managing their patients. I think we see that reflected in the fact that the fundamentals for the drug held up well in Q1. And we said in our Q1 results call at the end of April that we had a very good start to Q2. So we feel good about where we are.

Very good. And how is TIBSOVO used now? Is it used mostly as a single agent? Is it in combination with HMAs? Does it use upfront IDH-mutant disease? Or is it safe for relapsed/refractory set?

So we've been seeing -- as you know, it's labeled for model therapy in both relapsed/refractory and newly diagnosed. But we're also seeing a spontaneous usage in combination with azacitidine, and that has been growing over time. So we'll probably see close to half of the usage in TIBSOVO now in combination with azacitidine, and in that nonintensive, therapy-eligible patient population in newly diagnosed AML. So strong -- there's a continued strong uptake in both relapsed/refractory and now that growth in newly diagnosed, mostly driven by the combination with azacitidine.

And how do you see TIBSOVO position vis-à-vis venetoclax, which is not indicated specifically for IDH use, but does -- even perhaps some pretty robust activity in that subset of patients? There was some pretty compelling data that came out of the EHA with one of the Phase III trials in frontline with HMAs with venetoclax. Does that change the way you're thinking with your strategy for how TIBSOVO may be positioned now and in the future?

No. It hasn't changed our strategy. We did see the data. And congratulations to them, venetoclax is a very good drug. And we would say, when a patient presents with AML, there's probably 80% of those patients that pay for venetoclax, right? Or you could think about them getting venetoclax over the course of their treatment need. We think the other 20% that haven't had IDH mutation should get targeted therapy first. So the data that was presented from the VIALE-A trial was potentially consistent with what we have seen in the data updates over time. So it didn't change how we view the competitive position of TIBSOVO in the marketplace. We have seen over time a tendency for physicians to embrace the concept of targeting the target. So if they have an IDH-mutant patient, more and more, they will start the patient on an IDH inhibitor. We think over the course of patients treatment in AML, they are going to see an IDH inhibitor at some point in their treatment course, be it in the newly diagnosed setting or the relapsed/refractory setting, and that's been consistent with what we've seen so far with TIBSOVO's performance in the marketplace. So we should have more treatment options for patients. We're glad to see all of these treatments are doing great things for patients, and we think we can continue to coexist nicely in the marketplace alongside venetoclax. You may also have noticed and continue to see Courtney DiNardo's updates on some of the investigator-sponsored trials that she is running where now she's starting to generate data for treatments of venetoclax HMA plus an IDH inhibitor. And we think that's going to be another potentially important treatment choice for patients over time as well. I think one of the things that's important to remember with these hematologic malignancies, as you get more treatment options for them, a bit like what happened with multiple myeloma over the years, it's not a zero-sum game. As new products come to market, you will see more and more combination therapies, sequencing of therapy. Sometimes patients can even get rechallenged with a therapy that they've been on before. And I think that is coming to AML. AML is clearly a different disease than myeloma. But with more treatment options, you'll get more coexistence of the products in the space together and not necessarily always one taking share from another.

Okay. Great. Can you provide us with an update on the AGILE trial, which is pretty important to future of TIBSOVO going forward in the MDS side?

Yes. So AGILE continues to enroll patients. We did see a slowdown as a result of the virus situation, the pandemic situation. We have now started to see enrollment in AGILE start to pick up again. We had previously expected that trial to fully enroll by the end of this year, but we updated that guidance in the Q1 results call and we said it would go into 2021 now because of the virus slowdown, but still moving along, seeing a return to enrollment of patients, and that is the trial that would take us into the combination, same with aza from a label standpoint in newly diagnosed AML. But we have reopened the Phase I trial MDS arm, and that trial is now enrolling patients as well. We expect that enrollment to complete in 2021. It also slowed down a little bit as a result of the virus, but we have seen patients enrolling in the last few weeks in that trial, too.

Great. All right. And then one last question. You got a big chunk of cash delivered to you nondilutively for Agios Pharma. How far does that get you? And how -- certainly, within the context of your vision for 2025, are you feeling pretty good about your cash run rate? How should we think about modeling our cash burn going forward?

Yes. So just as a reminder, when we -- in our Q1 results call, we had, through our internal prioritization efforts, created an additional 6 months of runway for ourselves. So at that time, we updated the cash runway guidance to the middle of 2022 through June. That scenario at that moment did not yet include the spin necessary for the pivotal programs for thalassemia and sickle cell disease. So with the Royalty Pharma transaction and after we got the news from Bristol that we weren't going to be able to get the commercial rights to IDHIFA back, we decided to go ahead and monetize the financial part of that assets among cash or royalty streams. So we liked it. We told investors we were going to do some nonequity financing for a while, we only did some. So from a cash flow standpoint, that allowed -- that $255 million allows us to include the pivotal plans for thalassemia and sickle cell disease into our base case of forecast and also extend the cash runway through at least the end of 2022. So we need to finalize those pivotal plans and refine our estimates for the cost of those and things like that. So that's why we're saying through at least the end of 2022.

Okay. Very good. Well, thank you so much for your time, Jackie. It's been a pleasure, and looking forward to continue to following your progress.

Thanks for having us on.

Sure.

Appreciate it. Take care. Thanks, everybody.

Thank you, Jackie.