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

Welcome, everyone, to the 40th Annual J.P. Morgan Healthcare Conference. My name is Anupam Rama, I'm one of the senior biotech analysts here at JPMorgan. I'm joined by Caleb Smith, [ Malcolm Kuno ] and Priyanka Grover from the team. Our next presenting company is Agios, and presenting on behalf of the company, we have CEO, Jackie Fouse. I want to remind all the listeners of this session that there is an ask a question feature in the portal. And if you'd like to put a question in the portal, I would be happy to ask on your behalf. With that, Jackie, take it away.

Good morning, everybody. Thanks, Anupam. Great to be here with you this morning, and thanks for attending our presentation. I am sharing slides on the screen, and so I'm going to drive those slides. And for those of you who may want to follow along on your own, you can do that as well and you can see my slides on the screen and follow along with those. So, here are our forward-looking statements. And one of the things that we want to emphasize as we are sitting here today, starting 2022 in our first full year as a genetically-defined disease-focused company following the divestiture of our oncology business last year is that we feel history that we've built up over the 14 years of Agios and the strength of our cellular metabolism are all putting us in a position to be poised to expand our impact on a go-forward basis with our new focus. And one of the ways that we differentiate ourselves, and you'll see this as a theme throughout my talk this morning, is the connections that we have formed over the history of our company and that we have value very much across all of our stakeholders. And you'll see how those are helping us be even more effective in terms of how we bring life-changing therapies forward to the patients that we work with in genetically-defined diseases. We have very strong connections to the patient communities. We've built up very strong ties over the course of our history in hematology. And one of the things that we have learned over time is we can be even better and bring the promise of our science to create therapies for patients by working with patients and not trying to do things to patients. So, we are ever evolving and continuously trying to work more and more closely with our patients and bring therapies along for them by listening to them, and you'll see some of the things that we're doing in that regard reflected in how we approach clinical development, how we listen to patient needs, how we put our patient support programs together and we think this is even more important than ever with the focus on genetically defined diseases where many of these conditions are chronic conditions that patients have to live with for the course of their entire lives. And we're very grateful for the work that patients are doing with us. We think as we start 2022, we're in an even better position than we've ever been in before. We've already got a strong track record of delivering terrific medicines. We've got our core group of scientists that remain focused on the science of cellular metabolism. And now by focusing those efforts on genetically defined diseases, we feel like we're in a very strong position to leverage the capabilities and the connections that we have built out over time across our research, clinical and commercial areas. And we see some of the fruits of that in terms of the execution that we produced in 2021, and I'll talk about that in just a few minutes. There are a few things that I would like for you to take away from the presentation today. I've talked about this aspect of connections and will give you some concrete examples related to those. At Agios, for a company of our size and the stage that we are today, we have a very strong balance sheet that puts us in a unique position of not needing to raise equity capital at any point until we reach cash flow positivity. So, we can reach cash flow positivity without the need for equity capital. This is all following the divestiture of our oncology business. And we have the financial flexibility to advance new programs as they come out of our research engine and we move things into the clinic and also do some degree of business development to complement our strategy, and I'll talk about all of those things in just a moment. We have the deepest, broadest knowledge in cellular metabolism out there and we're seeing the fruits of our science continue to add to our research pipeline. We are the pioneers in PK activation in clinical development. We've been in the clinic for PK activation for over 7 years, and I'll look at that in a little more detail in a moment as well. And after having divested our commercial products in oncology a year ago, we're now back on the brink of receiving our first approval in genetically defined disease space for pyruvate kinase deficiency for adults in the U.S. where we have a PDUFA date of February 17, that's coming up very quickly. So, now I would like to walk through the 3 different areas of research, clinical and commercial, give you a little update on that and hopefully show you where we think some of our differentiated capabilities are. Our research engine has been in place since our founding in 2008. And we've got a strong track record of bringing drug candidates along through that discovery process; and 2, IND stage and then delivering successfully through clinical development. That core group of senior people and long-tenured scientists has remained with us throughout and we've added to our capabilities over time. We've done some very interesting things that may be a little bit behind the scenes. But when we talk about our leadership in PK activation, we've been looking at this over the entire course of history of our company. And over time, we've developed these specialized lab capabilities that are proprietary for us. We've developed interesting preclinical models that recapitulate human disease in better ways than ever that's allowing us to manage how we move drug candidates forward and increase our potential for success as we move them along the different stages of the process from discovery to development. Our team is also prioritizing new mechanisms, new targets that will give us the possibility to move into multiple indications with a given product or a given mechanism. You already see that reflected with our lead drug, mitapivat, and others that are coming along in our pipeline. And so as we take our research into new mechanisms, that's one of the things that we think about as our ability to create pipelines within products and pipelines within mechanisms, and that gives us more shots on goal and more chances for success. To that point, this is a very high-level snapshot of our pipeline with the top 2 drugs, mitapivat and AG-946, being drugs that are in the clinic now. And on the right side of the slide, you can see the different indications that those drugs may be able to go into. And you know that we already have data for 3 indications for mitapivat. And in the clinical section, I'll talk a little bit more about that. So, back to this concept of pipelines within drugs or pipelines within mechanisms, you already see that approach reflected here and the progress that we've made. Further down on this pipeline chart, we also are moving other mechanisms along under the PK activation umbrella. We have a suite of different chemical matter that span PKR activation to PKM2 activation, and we're pretty excited about where we think we can go with PKM2 activation. We have a brain penetrant program moving along as well as non-brain penetrant PKM2 programs. And we have 2 other mechanisms, PAH and BCAT2. And again, on the right side of the slide, you can see some of the indications that those might be able to go into. So, we're starting to see the fruits of our labors with respect to our research capabilities and our expertise in cellular metabolism in terms of moving our pipeline beyond PK activation and into additional mechanisms and the potential to go into different diseases. We have this great research engine, we're very proud of it, strong track record. We're also mindful that not all good ideas come from the inside. So, we have a strategy around business development to potentially bring candidates into the portfolio, some of the criteria that we have for how we look at those are up on the slide here. So, we do have active efforts underway to complement and augment our portfolio through in-licensing efforts and we're also mindful of the fact that we may come up with something from our research efforts that would be best served by working with someone else that has a particular expertise. And so, as we bring things forward, if appropriate, we also will be open to out-licensing or partnering to work with someone else to take some of those programs forward if they're in therapeutic categories that we think are not within our focus areas. So, you'll hear more about all of those things over time. Our research teams work very closely with our clinical teams, so that as we move things forward, it's a seamless transition through the discovery process, IND and into Phase 1 and then beyond. We see the quality of what we've done in PK activation reflected through some of the things that are up here on this slide. When we say that we're the pioneers and the leaders in PK activation, we do that -- we can say that from the basis of a tremendous amount of substance behind that statement and some of those things are reflected on the slide here. We're very active with publishing and a long history of publications in high-quality journals and coming at a number of aspects of the different disease states with respect to those publications. And across the bottom of the slide, I won't go through every one of them individually, but we have contributed to a number of firsts in the area of PK activation, and we're very proud of that and how we are working in a very connected way with a variety of parties to bring those firsts to PK activation. Now, here, I'm going to take just a moment to toggle between a couple of slides because when we announced back in 2020 the divestiture of our oncology business and we've talked about focusing our efforts on genetically defined diseases, this is what our pipeline looked at -- looked like at the time. And we saw a tremendous amount of potential here. We were in the late stages with our ACTIVATE and ACTIVATE-T programs for adult pyruvate kinase deficiency. We had our proof-of-concept data for alpha and beta thalassemia as well. It had been presented at EHA from the Phase 2 trial and we were moving into healthy volunteers with AG-946 in sickle cell disease. We started to have proof-of-concept for sickle cell disease from investigator-sponsored trial and we made that decision knowing that we needed to deliver in 2021 against our objectives for genetically defined diseases. And here's where we stand today with our pipeline for genetically defined diseases in 2021. And just because it's so impressive, I want to go back and make sure that you get the visual in terms of how this pipeline has evolved. So, the programs that were there in 2020 have all advanced. As many of you know, we are in regulatory discussions now for approvals in adult pyruvate kinase deficiency for the transfusion-dependent and non-transfusion-dependent patient populations both in the U.S. and Europe. And we've also added the pediatric program for PKD that is now underway and we have moved into pivotal programs for alpha and beta thalassemia, the ENERGIZE and ENERGIZE-T trials, moved into the pivotal program for sickle cell disease, RISE UP, and we're advancing AG-946 this year into the Phase 1 for sickle cell disease now that we have the healthy volunteer data. And we announced back in November that we would move AG-946 straight into a Phase 2 program for myelodysplastic syndrome. So, despite a transition year in the first part of 2021, divesting our oncology business, the team has done a stellar job of executing and moving forward all of these programs in genetically defined diseases to give us this great pipeline that we have as we move out of 2021 and into 2022. So, we're very proud of this. We think the work that we're doing in hemolytic anemias across the indications puts us in a differentiated position because there are commonalities across these diseases with respect to red blood cell health, and you see some of that highlighted on the slide here. And then there are also some commonalities, though these are our different diseases, every patient experience is different. There are some commonalities in terms of different aspects of the disease burden over the course of any patient's life who has a hemolytic anemia. We want to transform the course of treatment of hemolytic anemias and the impact that those have on patients' lives, and the experiences that we're having in pyruvate kinase deficiency and thalassemia and sickle cell disease are all coming together to inform our understanding of these diseases. And we learn something from every program that we're able to leverage across the entire area. I mentioned early in the presentation that we have over 7 years of clinical experience with mitapivat and PKR activation. And we have a tremendous body of clinical data that we have now built up across the 3 indications. We have shorter-term data, we have longer-term data, we have long-term extension data for PKD, we now have extension data for thalassemia and we have an ever-evolving set of data for sickle cell disease. And this is telling us a lot. It's -- we've built up a tremendous amount of safety-related data for mitapivat. So, as we bring the drug to market, we have the benefit of that as we launch the PKD and then expand into thalassemia and sickle cell disease over time. We have a terrific clinical team. You should be able to appreciate that from the execution that you saw over the course of 2021. There are some aspects of what we do that we think are unique, and we're happy to talk about those in more detail at any point in time, but we really do put forth very well thought through clinical development strategies that include global aspects, some of the things related to that are shown up here on the slide, and we have an extensive network from our roots in hematology and our name recognition over our 14-year history and just tremendous people in the team with both industry and academic experience. And, again, working with patients is one of the things that we think distinguishes us in terms of how we design our programs, set up our protocols, run our trials. So, they're as patient-friendly as possible. On the commercial side of things, we know that we are building a market for PK deficiency. We're very much looking forward to our first approval that's coming very soon. We know that there are a lot of things to think about as we work with patients and with healthcare providers to build this market, given that there are no approved treatment options today. We will be the first. And these are some of the things that we are addressing very actively, have been for quite a number of years now, and we'll bring all of the lessons that we've learned to bear as we move into our launch. We have been putting a number of programs into place over time to serve patients in this disease and to work with them and to work with healthcare providers on how we're addressing the areas of diagnosis, treatment, adherence, education, all of those things that you see those up here on the slide. It's a very complete and comprehensive set of approaches that we've taken to identify patients, help support diagnosis, work with healthcare providers and educate about this disease and the burden of this disease, so we can improve treatments for these patients. As we move into launch, it should be highlighted that about -- we expect about 55% of patients to be covered by commercial plans and then you can see the other numbers on the slide here. In those commercial patients, we would expect access -- full coverage to be first for that category of patients and then Medicare and Medicaid to follow, but we've got a very experienced team that's working quite diligently with payers on addressing the need to treat this disease. And so, we're confident that we'll be able to move that forward very effectively. We're also working very hard to support patients, not only with education, they can get signed up in myAgios today already and patients are being signed up daily. This is about education, helping patients get on drug, starting on their therapies, financial assistance as needed, but also long-term support related to adherence and anything that we can do, we get patient input on how we are supporting them and we refine these over time. We've had a myAgios program for quite some years from our history in oncology and took that backbone and then have treated as appropriate for genetically defined diseases, we're very proud of that. This is going to be the state of play as we launch in pyruvate kinase deficiency soon in the U.S. I'm not going to walk through all of these details, but this is just to give you some of the data points and the numbers, so those of you who want to walk through this and try to come up with your ranges of estimates for patients that we'll be able to treat over the near-term and then as we're addressing -- increasing those diagnosis rates over time, adherence and all of those sorts of things, how we're going to build this out over the near, medium and long term. So, this is a state of play snapshot at the time that we expect to go to market. And just as a reminder, as we come to the end here, we have learned so much over the years of working with pyruvate kinase deficiency patients and with physicians that treat hemolytic anemia that we see a tremendous advantage to being able to leverage that as we next move into alpha and beta thalassemias and sickle cell disease, and we like very much that our anchor product, mitapivat, is coming to market this way in the rare indication and going into the diseases with greater numbers of patients, and we think it gives us a pretty nice advantage with our connections with the healthcare provider networks, clinical sites for that matter and patients as we're addressing all of these hemolytic anemias. So, here are our anticipated 2022 key milestones and priorities that we want you to hold us accountable for over the course of this year to deliver on. I'm not going to go through all of them. I'll highlight 1 or 2. We've got the PDUFA date for PKD -- adult PKD coming up in the U.S., it's February 17. So, all eyes will be on that. And just a couple of things on the clinical side of things to highlight. We do expect to fully enroll the Phase 2 portion of our RISE UP sickle cell disease study by year-end and we expect to enroll around 50% or even potentially more of patients in the pivotal thalassemia program. So, we're committed to continue the strong execution that you saw from us over the course of 2021. And to wrap up with our 5-year vision that we provided a year ago for you, we're still very much on track to achieve this with approvals mitapivat in 3 indications by 2026. We expect to have at least 5 drug candidates exploring at least 10 indications, delivering a new IND every 12 to 24 months, and we will have cash flow positivity by 2026 at least, and we have enough capital to get us there. So, with that, I'm going to stop and I'm going to stop sharing my screen and we will open it up for Q&A. And Anupam?

Jackie, do you want to take a quick second and introduce the broader team on the line?

Sure. Thank you for that. So, I am joined today happily by Sarah -- well, I'm happy, I hope they're happy too, by Sarah Gheuens, who's our Chief Medical Officer. She has been with us for several years and has been in that role taking over from Chris Bowden back in September of last year. And we have Richa Poddar, who has also been with Agios for, I think, 6, maybe going on 7 years in a variety of positions with extensive experience in Agios and she is our new Chief Commercial Officer having taken over from Darrin Miles back in December. So...

I just want to remind the listeners of this session that there is an ask a question feature in the portal. And if you would like me to ask on your behalf, just put a question in there. We do have some questions in the portal. The first one being, can you give us an update on cash and runway and the status of your buybacks?

Yes. So, what I can tell you is that we had $1.4 billion of cash at the end of Q3. So, you've already seen that. You'll get the updated Q4 number in our first quarter results call, which is not that far away. So, we have, as I've mentioned, plenty of cash to get us out to 2026 with no need to raise equity. And within that amount of cash that we have, we have the flexibility to continue our buyback program, which we had paused for the moment because we saw opportunities and we still see them related to the potential for business development activity that I mentioned on one of the slides in terms of bringing things in to complement our pipeline. And we also are working hard where we see opportunities to advance some of our internal programs even faster. And so, you saw us announce that back in November with AG-946 as we're moving into Phase 2 for MDS. That was a program that was not previously included in our base case projections for the next 5 years. So, we have plenty of cash to get us to 2026 when we expect cash flow positivity and do all of those things. We've already executed on $800 million of the $1.2 billion authorization that we have from our Board for share buybacks. And though we've paused that for now as we sort out some of these other priorities, we can start it again, we have the flexibility to start it at any point in time. So, we think we're in a great position.

And so, the PDUFA for PKD, mitapivat, is almost a month from now. What's been the nature of your interactions with the agency? Have there been a lot of delays? How confident are you in a timely approval?

So, the interactions with the division of hematology have been very positive, timely as expected. So, we received priority review and everything has been going accordingly. And so, we are pretty comfortable and confident that we will receive a decision before or by February 17.

Okay. And then Jackie, for some time, the company has talked about kind of the U.S./EU PKD prevalence around 3,000 to 8,000 patients, about -- a pretty wide range in the U.S. and 30% diagnosed in the U.S. How has the epidemiology of the disease evolved over times? And what are the key levers for increasing that and better defining the range, both in the U.S. and OUS?

I'm actually going to let Richa answer that question since she's here.

So, it is -- we've been in -- as Jackie mentioned during her presentation, we've been doing PK activation and working in PK activation for a while. We have sort of provided that range based on what we understand from literature, but also talking to the broader PK deficiency community, both the patients as well as the physicians and are continuing to refine and crystallize that as we move towards launch. That being said, nothing will help more than the actual availability of the treatment option. So, we believe that once mitapivat is approved, we'll be able to better crystallize and understand exactly where that range -- where in the range the diagnosis lies. So, we're starting at 30%, but we believe that it will finish with a 2- to 5-year ramp at about 70% based on other [ realities' ] analogs. That being said, we are very focused. We've been fortunate to have a field team, very experienced field team in place for a while now, very much focused on the diagnosis efforts such as Anemia ID that was on one of the slides that Jackie presented, which is really focused around testing and diagnosis of patients. And that will be, for us, a key area of focus between now and approval, but also post-approval. From an outside of the U.S. perspective, at least in Europe, we do have some people on the ground that are helping us with patient identification. Of course, so that will also be an ongoing effort on our end.

How are you guys thinking about initial pricing range for mitapivat in PKD?

Yes. So, we've -- ultimately, the price will be very much dependent on how the label looks, but we've taken a very holistic approach to thinking about price. So, we've had a lot of conversations with physicians and payers as well as the patient and [indiscernible] community to really help us establish both what the unmet need is viewed as in this space, but also what value they believe mitapivat can add. So, we've taken all of that into consideration, we've looked at other rare disease analogs. And ultimately based on the label, based on the size of the patient populations less than 10,000 as well as the severity and the nature of the disease, which is chronic, we'll be looking at price in that context, also constrained portfolio considerations and the overall considerations from a business standpoint as well.

What does your market research suggest about where mitapivat fits both within the PKR activator class and within the broader competitive landscape in sickle cell?

Sarah, do you want to start? And then I can...

So -- well, for each indication, it's different, right? For PK deficiency, we're the first and only disease-modifying therapy that has been developed so far. So, it's a different landscape now, for instance, in sickle cell disease, where there are some treatment options available. Now Jackie highlighted already in her presentation, we've been studying PKR activation for a while and we have the benefit of being able to build from one hemolytic anemia on the next on the next and take those lessons forward into clinical development, but also in launch activities, which I can speak to. For sickle cell disease, specifically, I think we have designed a trial that will allow us to really hit on different aspects of the disease. So, one component being the hemolytic anemia, but also on vaso-occlusive crisis and [indiscernible] sickle cell pain crises. And that is supported by the mechanism of action of mitapivat that we believe we can hit on both of those aspects of the disease. Now it's a tricky landscape and it's hard development. So, the way the trial is set up is that also for the secondary endpoints are supportive to the primary endpoint of the hemoglobin response and will allow us to highlight other aspects that are important to patients, physicians and the regulators on how patients feel and function. So, there's multiple ways that the data will be able to deliver on a story for patients end to an unmet need.

Look, I realize that maybe I'm in the minority here, and sometimes people call me a crazy, but I've held a view that maximizing the value of mitapivat means keeping ultra-orphan pricing for PKD and thalassemia versus taking a price decline for sickle cell. Where would you push back on me on that?

First of all, Anupam, I love that question. I love you and I love that question. So, I'm going to give you my version of the answer and then my colleagues may want to jump in. But the beauty of coming to market with PKD first and the potential for rare disease pricing, moving into thalassemia second, where our payer research thus far shows that thalassemia should also support the same order of magnitude of pricing as PKD, and then moving into sickle cell win, we will have the totality of the data from the sickle cell disease pivotal clinical program will allow us to look at it at that point in time and say, what is that sickle cell disease data telling us? Because if you hit on both of your primary endpoints and have all of your secondary endpoints be highly supportive, you certainly could price in sickle cell disease at a level that's higher to where the existing therapies are today, but you can make that decision based on the totality of the data. If you looked at the totality of that data and you said, well, I'm going to forego potentially some market share in sickle cell disease and keep my price high in accordance with the PKD and thalassemia markets, I can make that decision at that point in time as well. So, the way that I look at this is your view of the world could be a view of the world that plays out or your view of the world may not be the view of the world that plays out. But we have optionality around pricing based on how we're bringing the drug to market. And by the way, certain aspects of our clinical development strategy foresaw that having that type of flexibility. And certainly, the way the sickle cell pivotal program has been designed, it's been designed to give us the chance for that potential home run sort of situation in sickle cell disease or a triple or a double or a single. I think it also merits us saying that we don't need -- even at a lower price point, we would only need to get 10% or even a little bit less market share in sickle cell disease to make the financial returns on the whole of mitapivat across the 3 indications even at the lower price point work. And we think mitapivat can be a $1 billion drug, if it's only ever in PKDs and thalassemia at a higher price point. And if it goes into sickle cell disease, even at a lower price point, we think it can be a $1.5 billion to $2 billion at least revenue peak potential drug. So, that was a long answer, but I love your question.

Maybe final question here, which is, how do we think about expenses over the next couple of years? And what does that mean for revenues to getting to profitability? What is the indication contribution that we should be thinking about kind of looking to 2026?

Yes. So, when we think about 2026, you're hearkening back to my CFO days now, and I'm going to have to tell you. But when we look at 2026, at this point in our base case modeling, what we would see there is we would have been in the market with PKD in the U.S. for the full years of '23, '24, '25. So, most of your revenues are still going to be from PKD. We would have entered the market for thalassemia in 2025. So, we'll start to have a full year of revenues from thalassemia in 2026. And across Europe and the rest of the world, we'll be in various states of things. So, not much contribution from sickle cell in 2026 because we expect an approval in 2026. So, when you think about the potential pluses and minuses on that, the biggest relative changes would be around where you are with PKD and then to some extent the early ramp on thalassemia from a revenue standpoint. On the expense side, post our oncology asset divestiture, we've kind of rightsized the company and we expect to be able to leverage our SG&A platform. And so, a lot of the expense is going to be driven by the progression of our clinical development programs and how that plays out over time. So, I think that's the...

Okay. Well, Jackie and team, I want to thank you guys so much for a super-productive session. It's been really, really cool, and I hope you guys have a great rest of the conference as well.

Thank you very much. Thanks for having us.

Thanks, everyone, for joining.