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

Hello, welcome back to the Cowen Healthcare Conference. Thanks, everyone online, for joining. We're -- this session, we're very thrilled to be joined by the management team from Agios in Jackie Fouse, the CEO, as well as Chris Bowden, CMO. And before we hand it over to Jackie to give a brief overview, I just want to remind everyone that you can submit questions. [Operator Instructions] And with that, Jackie, maybe you want to start off with just a couple minute brief overview, status update of the -- of where Agios is, and then we can get into some of the specific questions.

Yes, great. Thanks so much for having us on the -- part of the conference this morning. So we're happy to be here. So you may have paid attention to our results call last week, and we've certainly had a lot going on at Agios, particularly since the announcement that we made on December 21 related to our strategic pivot and focus now in the future on genetically defined diseases, along with the divestiture of our oncology business to Servier Pharmaceuticals. So we updated some things last week, and just to summarize real quickly on our genetically defined disease business, our lead drug, mitapivat, now has positive Phase III data from the ACTIVATE trial, the ACTIVATE-T trial, for pyruvate kinase deficiency, respectively, in the non-transfusion and transfusion-dependent patient populations. And last week, we also disclosed that we now have all the prespecified secondary -- key secondary endpoints data, including the patient-reported outcomes data, and all of those were statistically significant in favor of the drug. So the team is proceeding with the filing package. We're on track to get that in in the first half of this year for the U.S. and middle of the year for Europe. So we're very pleased that we're looking forward to having approval in pyruvate kinase deficiency for mitapivat in 2022, and we'll be off to the races with our first commercial product and genetically defined diseases. We also shared our pivotal clinical development plans for sickle cell disease, and we can talk a little bit more about that in the session today. I'm sure that we will. And we teed up a few things that we expect to present at EHA coming in June. We also updated on the fact that we now expect the transaction with Servier to close around the end of this month around March 31, we have the shareholder vote teed up for March 25. The proxy statements out there for anybody who still hasn't had time to take a look at that. We're excited to get the transaction closed and move forward with our new focus. And you'll hear more about our share buyback plans a bit later this month or around the time that we close the transaction. We'll give you a little bit more visibility, but we would expect to kick off our share buyback plans shortly after the transaction closed. Everything else is on track. The oncology programs are on track. We're very proud of our oncology employees who are going to transition to Servier that they've kept the focus on patients, kept those programs moving. We had a great end of the year last year for TIBSOVO, a terrific performance for the product in its second full year on the market in 2020 with $121 million of revenues, a little bit better than our guidance. So with that, things are looking good. We're excited about the future and look forward to answering some questions here at this morning.

Maybe we'll start -- thanks for that, Jackie. And maybe we'll start from a high level with a strategic view of -- with the Servier transaction. Why was now the right time to do that transaction? I mean, was it just a kind of a factor of the price you were able to get? Or has it been in the strategy? And maybe tie into that the cadence of the transition to Servier on that part of the business, but also building -- starting to build the commercial infrastructure for PKD.

Great. So as we went through the latter half of 2019 and over the course of 2020, and we looked at -- because of our success and the promise that we think our science holds for patients, we looked at what areas would provide the most opportunity for us to have a truly differentiated position and to have the biggest impact on the greatest number of patients. And we looked at the evolving competitive landscapes in both oncology as well as genetically defined diseases outside of oncology. We looked at where we see things going with our research, a platform for our science, and it was -- as we saw those things come together, as well as the evolution of the data across 3 indications in serious hemolytic anemias for mitapivat progress, and with the other molecules that we're moving along, we decided that it was going to be best for us to focus our resources on genetically defined diseases so we can accelerate how we take those forward. We're still a company that's relatively modest size and scale, and we found that trying to bring our best to all of those opportunities across oncology and genetically defined diseases was stretching our resources. So the second part of the decision was, can we find a buyer for the oncology business that would invest behind it, would do great things for patients with it and give us a terrific financial deal, and we managed to negotiate the deal with Servier. So the ideas that we had around the best way to take our efforts forward then matched up well with our ability to find a great buyer for our oncology assets. And so that's why we decided to do this now. We also wanted to do it from a position of strength, and we wanted to do it when we had a pretty clear visibility, at least from our perspective, on the investments that we're going to make to prioritize the next wave of drugs coming to market for Agios. And so we're very happy that we, in mitapivat, have a drug that will get approved for its first indication in 2022, and it's a drug that we think has blockbuster revenue potential. In fact, we think the peak revenue potential just for the drug in PKD and thalassemia is $1 billion, and we think the sickle cell opportunity could be another $1 billion on top of that. So we see an anchor product that will generate resources in the future and support the business model, and we see some terrific things coming out of our research group. So with the deal closed, we'll transition our people over to Servier, and we'll start to focus on genetically defined diseases only. Over the course of the coming months, we will be -- and we're already in the process of hiring the new commercial team to support the launch of mitapivat in pyruvate kinase deficiency in 2022. It will be a lean, highly effective, I think, team given it's more of a rare disease model that we're looking at, with rare disease pricing for mitapivat in pyruvate kinase deficiency and a commercial infrastructure that's probably on the order of 20 or so sales reps and a handful of commercial management types. So we're in that process. Now as you know, we've been undergoing patient identification efforts. Those continue, and sponsoring things like the anemia ID program to continue to improve diagnosis of pyruvate kinase deficiency by supporting the testing for the mutations, and that has been highly successful and is off to a really terrific start. So...

In terms of building the team, and of course, you'll have some transition costs here as the oncology franchise moves away. How should we think of the pace of spending, I guess, through the end of the year, but then kind of in the 2022, 2023 time frames relative to where we are here and then at the end of the year?

So 2021 is a bit of a mix year because we start the year with everything, and then we will have the transition to Servier. As we move into 2022 and we think about the baseline spending for 2022, the best comparison for that would be to go back to 2020 or -- and in some respects, maybe even 2019, and just think about the differences between where we start without oncology and then starting to build again in genetically defined diseases. The current commercial team for oncology is 32 or so sales reps. When we start with PKD, we're going to have a commercial team that's about 2/3, maybe 60% the size of the existing commercial team. So the cost base in 2022 would then be relatively lower than it was by the comparable previous year of 2020. We also will be able to leverage and get some synergies out of our G&A infrastructure. So when we look at the total of SG&A spend, we think that in 2022 it's going to be something like 75%, maybe a little less than that, 65% to 75% of what it was in 2020. So we'll get some synergies there and we'll kind of reset is maybe the best way to think about it, and then we'll grow from that base on a go-forward basis. We'll also see the clinical portfolio evolve as well as we shift the clinical spin for oncology to Servier. We were also starting to see programs like thalassemia pivotal plan, now the sickle cell pivotal plan, those are going to start to ramp up, and it will take them maybe a year to start to ramp up to kind of replace the oncology programs, but we'll see a bit of a reset on the clinical spend as well. So overall cost base in 2022, again, but if we think probably on the order of 75% of what it was in 2020, that probably makes sense. And then we have the opportunity to grow as we see the PKD revenues ramp. And as we bring things through the research pipeline as well and we think about what the opportunities are -- we might want to have Chris speak to this -- but in the ongoing evolution of our PKR activators, but also PKM2 and then some of the other things that we have coming out of that pipeline. We've referenced PAH mechanism for phenylketonuria, PKU, and we've talked about another mechanism that we have in there, BCAT-II, and we'll be looking to accelerate those programs as we have the preclinical data to support moving them to IND and beyond. And the great news is, with the Servier transaction we're equity markets-independent until we get the cash flow positivity. So we can move fast on the opportunities as we see them.

Great. So you touched on it a minute ago, the patient ID efforts. Maybe Chris can probably add in some here as well. Just can you give us a status update? Where are you on how many patients have you actually identified in the U.S.? And then when we start thinking about the launch, who are the low-hanging fruit, given the data you've generated in terms of -- who's going to come on drug really quickly? Who's going to take more time to really push into therapy?

Well, maybe I'll talk about the patient numbers and then turn it over to Chris for the -- how he sees the treatment paradigm evolving. So we said probably a year ago that we've identified 1,000-plus patients. And as time goes on, we find a few more here and a few more there. It's not a linear function because these are -- it's a rare disease. And what we're also finding now that we have had the ACTIVATE and ACTIVATE-T results announced is greater awareness of the drug. As you know, there are no approved treatment options for PKD today. And so we're seeing -- and now we have the ability also to go out and -- with that data, talk even more with physicians and patients about this. And so we're seeing the number of patients that we've identified is constantly growing. I think the anemia ID program is going to help with that as well. If you ask me exactly how many do we have, we can't project that it's going to go from 1,000 to 1,100 to 1,200 in this linear fashion. We typically find these pockets and boluses of patients and then kind of a steady stream of a few here, a few there, and that just continues over time. So we're north of 1,000, for sure. COVID probably slowed those down a little bit, but with the data that we have, we're doing a lot of educating out there, raising awareness. And it's -- we feel like it's going really, really well. And Chris, do you want to talk about the treatment paradigm a little bit?

Yes. I think, Marc, your question of the lowest hanging fruit are those individuals who came on to the trials and remain and now have stayed into the extension. I mean they automatically would -- one would assume, would be safe to assume, that they would roll over to commercial drug once we get all those things straightened out. The next group of patients would be those adults who are in the peak registry, because they're going to be directly involved, and so I think the connection from clinician to patient. And then the third area is what Jackie has talked to, just spoken to, in terms of patients that we've identified through anemia ID and the increasing awareness. Certainly, the patient group, the advocacy group that's formed now on Facebook and communicates regularly, will -- my guess is that they'll pick this up. And so the immediate wave coming out of that will be people who know they have a diagnosis and then what their health care plans look like and plus connecting with us to -- for us to help and assist in any ways that are needed to make that happen. So -- and then there's going to be a number of individuals as our sales group gets out to and interacts with hematologists who are seeing these patients. And I think by virtue of the fact that hematologists who do any significant portion of benign heme, if you will, nonmalignant heme, there, by virtue of what's happening in sickle cell disease and thalassemia with new drugs coming into the market, are going to be very aware of these new developments. And given the application for mitapivat across 3 diseases, I think that that will help us in some way, I think, as well in terms of new patient identification and physician and health care provider sensitivities going up in terms of thinking about those patients previously that had a long-going hemolytic anemia and undiagnosed, or they haven't seen individuals for a long time because there's not much to do for them, and those individuals have decided as much as having a hemoglobin of 9 isn't the greatest quality of life, they're not that interested in getting into a regular transfusion cycle. But now there may be something that could clearly improve -- was worth testing, giving a trial to see if it will help them. So we're pretty excited about it.

You touched on the -- maybe the first is converting people from trials that are already on drug, just converting to commercial. Can you remind us how many patients that kind of represents between your trials? And I'm not sure, are you starting up kind of expanded access now that the trials are completed?

I don't know the numbers offhand. We've been talking about for a long time on DRIVE PK, there are 18 patients who are in long-term follow-up and they've been on the drug now, some of them, for 4-plus years. And then when we get to EHA, we'll be able to talk about the number of patients who've moved into the extension phases coming out of both ACTIVATE and ACTIVATE-T. It's a substantial number. And then how many of those patients we would expect to stay on drug for a long period of time, we'll also be able to address. I think that that's -- I think if you -- I actually don't know, and we'll be able to comment on that further, what proportion that looks like compared to the identified patient.

And you also mentioned that -- somebody who has maybe a hemoglobin of 9, like how much are they really wanting to get treated today when the option is getting a transfusion. I guess, how do you bucket the patients in terms of where there's a huge drive into care and clearly they're going to want either a transfusion today or a drug like mitapivat, who's the -- how big is that population versus the ones where you have to make a little bit of a case and then the others where you really need to convince them and link them to care because they're not feeling -- they don't know that they have a lot of -- a huge burden of disease because they don't know about it? They've never experienced anything else.

Yes. I think that there's a lot of overlap between those groups. And it will be very interesting to see how it plays out. So if you take your last category, an individual who, for any number of reasons, isn't that interested in drug therapy, that the areas that might interest that individual is one thing we're finding out, that as people age the symptomatology associated with the disease can become more severe. The other thing is that individuals with pyruvate kinase deficiency don't tolerate stressors as well as individuals who don't have an underlying chronic hemolytic anemia. So you'd wonder if they got into a situation with the flu or COVID or what have you, any number of things that can drop their hemoglobin, if that might represent an opportunity for an intervention that previously didn't exist. And then I think that given the rapidity of the treatment effect, especially in patients who are not on a regular transfusion regimen, that we saw from DRIVE PK that we've talked about, that within a couple of weeks you know what kind of bump you're going to get. I think you'll see the patients who stick their hand up, raise their hand and say, I'd like to understand, give this a shot, because getting an increase in your hemoglobin of 2 to 3, even more, grams, is really substantial. And one of the things we appreciate from talking to individuals with the disease, like when we did our PKD Day at -- in December last year, is that the blood and a transfusion is transformative for a short period of time. And so you have this honeymoon of about 3 weeks or so when you get -- and then over the course of the next 3 to 4, 5 weeks, you just continue to drop. And so for responding patients with mitapivat, it's reasonable today based on the DRIVE PK data, and we'll show you the activate data at EHA, that you're having the equivalent of 2 units of blood put into your tank, and that's pretty -- that can be pretty compelling for people.

You guys have spoken about filing this year -- a little bit later this year in the U.S. and then shortly thereafter in Europe. A lot of rare disease companies have also made significant businesses at the next tier of the pharma market. I guess, what's the plan there? And then also just kind of speak about how the market varies between the U.S., Europe and then maybe that next tier.

You're talking about like expanded access and things like that?

Well. Commercially, just like market opportunities. So maybe it's a little bit more of a Jackie question, strategic [indiscernible]...

So we've been -- from the patient finding efforts, we've been focused on the U.S. and Europe in terms of what we've been doing directly. And when we speak about the 3,000 to 8,000 potential PKD patients out there, that refers to the U.S. and Europe, we know or believe there are patients in other parts of the world. We continue the educational process. We have medical affairs people on the ground in Europe. Of course, we have close relationships with the clinical sites in Europe and the physicians there as well. So we continue all of those things. And as we get the filing in and think about next steps for -- we're supporting the work for the pricing reimbursement dossiers and all those things, too, we'll be thinking about the best next steps for how we address the commercial opportunity outside the U.S. And those will very likely will include partnerships, for sure, outside of Europe, but potentially in Europe as well, as we explore the best way to do that. We know it's an underappreciated disease. We have some work to do from an educational standpoint for sure. We'll have work to do with the payers. When -- I think when you see the totality of the data at EHA across ACTIVATE, ACTIVATE-T, and again, these key prespecified secondary endpoints, including the PRO data, we think we've got a very compelling package. So we would expect rare disease-type pricing in the U.S. and something in the norms for rare diseases outside of the U.S. as well, which clearly typically are going to be a little bit lower than the U.S. price. But -- so we'll be exploring some partnership opportunities to make the most of the drugs globally.

And when you think about partnering, would it be in a very specific manner for PKD? Or do you need to partner more broadly for the full potential of mitapivat and just PKR activation in general?

Well, we're thinking through that. I think there is probably an opportunity to partner more broadly when we think about the next indication that will come to market being thalassemia. And I think we know, or most people know, that when you look at the spread of thalassemia patients around the world, the opportunity outside the U.S. and Europe is quite significant. And so we think that we potentially could have some interesting discussions in -- with a partner for a broad collaboration with mitapivat outside the U.S. Our goal is to reach as many patients as we can globally that will benefit from the drug and do that in the most effective way from a business model standpoint. And having multiple indications gives you a little bit more opportunity to think about the mix of geographies for the patients and the different indications, as well as the opportunities associated with coming with a rare disease, rare disease pricing. We think thalassemia also supports rare disease pricing and then sickle cell after that. So we've got some optionality around how we roll out those indications and taking forward and price them.

So I mean we obviously hear from investors commonly what -- the fears about sickle cell is that pricing -- potential for pricing difference. And just strategically, how do you approach that when you do have multiple molecules that potentially that could address this. The timing is a little different. But just how do you approach the pricing when you're going to do -- need to do work to develop the PKD market and by the time you really start to see the fruits of that, you're going to be launching in sickle cell, where maybe the pricing is going to be a little bit different.

Well, I think it's -- you always have more flexibility when you're coming with the rare disease indication first. As I said, we also believe that thalassemia will support rare disease pricing, and we think that we'll have those in order, PKD, thalassemia, sickle cell, from an approval timeline standpoint. So when we speak about mitapivat having $1 billion peak revenue opportunity in PKD and thalassemia, that includes the period of time that we would be able to have the rare disease pricing. But it also takes into consideration that if we come with -- when we come to sickle cell disease, that we would probably have a reduction in the price across all of the indications at that point in time. So we've already built that into the model. I think with respect to sickle cell, and Chris can talk more about this from a medical standpoint, but we will have the ability to see the totality of the data that we will generate with our pivotal development program. And based on the totality of that data, then we'll figure out what the best price point is for sickle cell. And clearly, if you had a broad label that had statistically significant hemoglobin increase as well as VOC reduction and then potentially some of the PRO data, that would be a quite a differentiated label as compared to the therapies that are in the market today. So -- and along the way, you talked about other molecules. I mean we've got some things in the works that we haven't talked about that much. We have 946, which is in healthy volunteers now. From a timeline standpoint, we're riding the mitapivat horse as fast as we can because we think that's the best way to get into sickle cell first. But we'll have some options to look at 946 once we have the healthy volunteer data. And we'll also want to move that molecule into a proof-of-concept in a disease, so we actually see how the molecule performs, not just in healthy volunteers but also in patients with one of these hemolytic anemias. And it's very likely that we'll run that proof-of-concept for 946 in sickle cell. And then we'll see what it looks like and figure out how we deal with that portfolio of drugs and indications.

Okay. Would you expect to have that data in sickle cell patients before you've actually started the Phase III for mitapivat? Or...

No. We expect to move as fast as we can with quality with mitapivat in sickle cell. And then we'll see how 946 plays into the equation, whether it's part of life cycle management, whether it's a subset of sickle cell patients, whether it's other hemolytic anemias, maybe, that we're not in today. But we do think it makes sense to generate some data in a disease with 946, and why not do that in sickle cell?

And maybe some of your comments there can transition to sickle cell. We're of course, we'll have a broader conversation later this afternoon, which I'll advertise for everybody, for the panel discussion on the hemoglobin and sickle cell that Jackie will be on. But Chris, you did announce the Phase III design early last week. Maybe talk through that decision on the endpoint and that there's no interim for just hemoglobin? And I guess one thing that's a little puzzling is if hemoglobin isn't a sufficient endpoint at 24 weeks, why is it potentially on its own a sufficient endpoint at 52 weeks?

Yes, it still isn't by itself. The point -- and we've definitely gotten some questions about that, is that hemoglobin at 24 or 52 or 16 and 48, if all you show is an increase in hemoglobin of a gram or higher without any of the supporting evidence, other supporting evidence that Jackie spoke to, it won't be an approvable endpoint based on the feedback we got from FDA. So at a minimum, you've got to show some combination of factors that shows that you're reducing the hemolysis in a way that can -- you can convey as clinically relevant. So reducing -- [ if there's an ] EPO drive, you're reducing that, hopefully calming down the [ marrow ]. And -- but I think the more important parts would be as associated with that increase in hemoglobin. This is an outcome where you've not shown an impact on VOCs, right? That you would then be able to bring forward data that demonstrates improvements in 6-minute walk tests, other measures of quality of life, so that people can say -- so that you can show that people are feeling better when they're actually on the drug. And there's another scenario, and that -- this is all the gray in this, where you cross on the basis of hemoglobin. You have some supporting evidence that you have improved quality of life, but on a scale of 1 to 10, it's a 6. And even though you didn't cross on VOCs, you showed a compelling trend that didn't meet statistical significance. So the important thing is there's the endpoints that can dictate whether the trial is successful or not, and then there's the package of evidence, including safety, that the regulators weigh in determining whether this truly has clinical benefit. So the component around you not having an interim for hemoglobin is the very strong feedback we've got from EMA and FDA that it's too early to call clinical benefit on the basis of a hemoglobin increase at that point in time without all of these other important factors that they're looking at being able to disclose. And I think that -- hats off to voxelotor and Global Blood, they ran a study and demonstrated an improvement in hemoglobin, and were able to get accelerated approval and now are working on converting. And I think part of the -- at least FDA's message is that we don't need another package like that, we're going to need to do more.

Did that come down to a strategic decision? Could you have put it in and then kind of put the data in their lap? That was not the right approach? Or...

Yes, absolutely. That's one of the other things. So thanks for pointing that out. You have to make assessments about risk, right, you could decide to go ahead and do it and then keep fingers crossed that there's going to be some package that will allow you to get in the door. But when you've got -- based on the feedback we received, this plan sets us up for a regular approval on the basis of one end point or the other in a broad label. So that's how we took the decision. But it's definitely a strategic decision. You don't -- you can move forward and say, well, we'll unblind it and take our best shot. And one other thing I would point out is that our II, III design allows us potentially to make some changes if we see something that we like or even if we don't like.

If the Phase II data were -- I know we're out of time -- but were highly compelling, we would still be able to modify the protocol for the Phase III and add an interim, for example.

Okay. With that, unfortunately, we are out of time. We will have Jackie back for an hour with -- but with others this afternoon. So thanks, both Jackie and Chris, for joining us and everyone else for joining online.

Great. Thank you for the invitation.

Thanks for having us.

Bye.

Bye.