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

Great. Good afternoon. I'll just read a disclosure statement first. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Okay. Well, great. And so, with that, I'm very pleased to have the senior management team from Agios here, starting with Brian Goff, newly minted CEO of the company; and Richa Poddar, Chief Commercial Officer; and Sarah Gheuens, Chief Medical Officer. So, great to have you. And maybe, before we dive into some granular questions, since there's a lot going on at Agios, perhaps you can just give a high level as to status on some of the products, but also, I think, importantly, your background and your vision for the company.

Sure. No, thanks a lot, Jessica, and thanks for everybody who's joined us for your interest in Agios. And I am about 1 month in as the new CEO of the company. Thrilled to be here. It would be hard to imagine a more exciting time to join Agios, which we're very pleased to talk about. Quick snapshot of my background is, a little more than 30 years in the industry, and a good part of that was growing up in larger pharmaceutical companies, Johnson & Johnson, many years, Novartis. And then about 10 years ago, I moved into rare diseases, and that was with Baxter, which became Baxalta, and then, most recently, 4 years at Alexion until its acquisition by AstraZeneca. And so, I'm really pleased that I'm joining now a company that has recently pivoted from a broader focus on oncology, as well as rare genetically defined diseases, to, in the pure sense rare-genetically defined diseases, and that's where my passion exists. It's an exciting time at Agios because we've got a lot underway. So we have a launch that we'd be delighted to talk about. I know Richa is sitting to my left who would be quite pleased to talk about the PYRUKYND launch for PKD, which began with the FDA approval in February of this year. So, we're right about at the 6-month mark, still a very fragile dynamic time of launch learnings, but very important for PKD patients, and an important platform for us, as we build rare disease capabilities and think about pathways to other even larger launches ahead. And then, Sarah Gheuens, who is our Head of R&D, has amazingly, for a company of our size, 5 pivotal studies underway, across 3 different therapeutic areas. So, we have -- two of those studies are focused on extending the population of eligibility for PYRUKYND for PKD, that's the pediatric population in the so-called ACTIVATE and ACTIVATE-T KID studies. And then we have 2 studies that are focused on thalassemia. And I'll just say, thalassemia in the broad sense, both alpha and beta thalassemia, transfusion-dependent as well as non-transfusion-dependent, very similarly to how we set up the studies ACTIVATE for PKD. And what's exciting about that, is we've put a target as being meaningfully enrolled in those 2 studies by the end of this year, and you can put brackets around -- that is roughly halfway enrolled. So that gives us an exciting pathway towards not in the too distant future, getting that data readout once we're fully enrolled. Then we have one other study. Our fifth one is a seamless Phase 2/3 study called RISE UP, which is focused on sickle cell disease. And the target for the RISE UP study for the Phase 2 portion is to have full enrollment. It's a 69-patient study by the end of this year, 12 weeks in duration. So that gives us a pathway to get data readout sometime next year, which will guide us very thoughtfully as to what we do beyond Phase 2. We have a very clear criteria about what we believe it will take to get to the finish line from a regulatory perspective, and also, importantly, what it will mean, or what it will take to get to a differentiated product at the finish line. And that's what we're excited about in terms of the RISE UP study. The last thing I'll say is, we also have behind that another PKR activator, which we call AG-946. And that's as a complement to PYRUKYND. That -- it's not -- shouldn't be thought of as necessarily a follow-on or life cycle extension. We're looking at that in a Phase 1 anemia targeted study in sickle cell disease in this case, and then also in a Phase 2a proof-of-concept study in low intermediate risk, MDS, and then some other interesting research assets behind that. So, that's a lot of moving parts for Agios. But, again, it's an exciting time to talk about the company, and to the work that we're doing on behalf of patients. So, thanks again for the invite.

Great. Thanks very much for that. Well, you mentioned early days in the launch, approval back in February. Congratulations. No one can take that for granted. But perhaps, I think you have talked more granularly about the metrics that you're looking at, the patient demographics, prescriber demographics. Maybe you would like to touch on that?

Yes, I'm going to turn it very quickly over to Richa, but just to say that we only recently started talking about specific metrics, and that was in our second quarter call, that was the first full quarter of launch. And I'll turn it over to Richa to fill in a little more color.

Sure. So, as a reminder, PKD is a patient population that's diffused. So it's not a centers of excellence model. So, what we saw in this first full quarter of launch was 52 patients that had been prescribed PYRUKYND, with 37 of them having received drugs. What's exciting about that, given the diffused nature of the patient population, is that, this is a story of breadth. So, we're seeing breadth in terms of patients being prescribed drugs, as well as breadth in these kinds of physicians prescribing drugs. So, it's spread out throughout the country. So, knowing that the patient population is diffused, knowing that we have a broad label that's for adult PKD patients, we already wanted to see breadth of prescribing and breadth of the kind of patients being prescribed therapies. So, we're seeing that in these early days. And that's exciting because it suggests that things are moving in the right direction. Given that 37 patients have been on therapy, that again suggests that we are able to navigate through access, and get patients on therapy, which again is good news for us. So, these things are suggestive of launch -- good launch health in these early days. And more to come as we figure out. As Brian mentioned, we're getting to the point where those early patients will get to that 6-month mark where we'd be evaluating response and looking at how patients feel and function, to make a determination of how many patients we see in the real-world setting that will be responding to therapy. So more to come around that as payers develop their reauthorization criteria and we look at how patients respond to the real world.

Richa, perhaps you can just provide a little bit more detail on that 6 months? Because -- I think based on your clinical data set and the importance of response.

So, for our label, and what we saw in our clinical study, about 40% to 45% of patients responded, which was a very clinical definition of response, which was the 1.5 grams per deciliter, which was required by regulators from a clinical approval standpoint. But in the real-world setting and what we know from our clinical study, is that, patients feel and function better even despite that, without necessarily hitting that 1.5 grams per deciliter. So, what our label allows us to do is to make an assessment of response to that 6-month time period, to ensure that totality of the data, both in terms of hemoglobin parameters, but also in terms of other hemolytic parameters -- and looking at how patients feel and function is taken into consideration when physicians are evaluating response for the patients. So, when you think about it from a payer standpoint, this is an ultra-rare disease, so we don't expect this to be a managed category. But one of the key elements of education is to ensure that payers understand that it's really important that they look at the totality of the data, and that's the conversation that the patients and physicians need to have to ensure that we can get patients to continue therapy, they're seeing a benefit or a response to therapy. So, what that looks like in the real-world setting is something that we still have to see, and we expect to see more of that in the Q3-Q4 time frame when some of those early patients start to get at that 6-month mark.

And then, the ultra-rare arena, diagnosed, or identifying patients is always important. Maybe you've, I think, taken some very good steps there in the diagnosis side and the identification of patients.

So, again, like diffuse patient population, no centers of excellence. So, most physicians have a handful of patients. So, even in our early prescribing behavior, we are seeing only a handful of physicians that have more than one prescription, and we expect that trend to continue for a while. So, for our purposes, what we really want to drive home is the importance of disease awareness and disease education so that we can move PKD up in the triage funnel. So, what's happening typically is that physicians will stop at a diagnosis of hemolytic anemia of unknown etiology. They typically do a Coombs test, look for PNH, because they know there's an approved therapy for that. They eliminate other more higher incidence hemolytic anemias such as hereditary spherocytosis and G6PD, before they ever get to testing for PKD. So, what we want to do is elevate that, to elevate PKD in the triage, because it's really important now that you have a treatment option available. And a key component of that is the education around burden of disease, which we will continue to drive with the patients, the physicians as well as the payers. But again, the second component of that is the patient activation. So, a lot of what we had heard early on in the launch as well as just in general as we started to study PKD, was that, these patients because of the ultra-rare nature of the disease felt very isolated. They didn't think there were other patients like them. And it's really important for us to connect these patients with other PKD patients so we can amplify their voice and help them better characterize what living with PKD means for them, so that they can get both diagnosed as well as treated. So, we have a very multichannel approach to ensuring that we leverage both personal promotion as well as non-personal promotion, to drive both the differential diagnosis, get patients tested, and then also leverage and help patients advocate for treatment for themselves as well.

Yes. This is -- I think what I would add in my experience in rare diseases, especially skewed towards the ultra-rare side, is, this is a pretty classic dynamic that will be different in a way from thalassemia and sickle cell disease, presumably because here, the competition for us really is not another pharmaceutical player. It's more therapeutic inertia, I mean, forgive the term, but apathy in terms of changing behavior or triage, as Richa is saying, and that's -- a lot of the heavy lifting we have right now is how to activate the providers differently in their diagnostic efforts, as well as the patients in what their expectations should be for their own treatment. And those are great skill sets for us to learn and capabilities to build, again, as we think about launches to come.

And I think you're on track for EU approval by the end of this year? What are you having to do organization related to be ready for that launch?

Well, I think -- and Sarah can -- well, maybe I'll just mention very quickly that we have no red flags. We have put out the goal that we expect to have European approval by the end of this year. I think in all aspects, we're on track for that. What we need to do to get ready for that is, first and foremost, we just have a commitment to make sure that patients in the end state will have access to PYRUKYND. Now, how we go about that? There's a number of different things that we can do and approaches that we can explore. We're not per se in a rush because the reimbursement itself will take some time. And I would also say for the folks listening in and thinking about what does that mean for an opportunity standpoint, the bulk of the commercial opportunity is for sure in the U.S. because the challenges -- ex U.S., of course, in a disease like this is, price point, number 1, is -- can be very different between Europe and U.S. And secondly, again, for a diagnostically intense ultra-rare disease, the patient privacy dynamics are very different between Europe and the U.S. And while we're very careful about doing everything appropriately in the U.S., we'd be even more limited ex U.S. So that's -- we're putting together that whole puzzle as we think about the path ahead.

You mentioned the 2 clinical trials in the peds marketplace. I mean, what is the status there in terms of potential readout? And how would that expand the market certainty?

Sure. So, indeed, we have 2 pediatric trials ongoing right now for PK deficiency. And that would -- I mean, if the trials deliver on the benefit risk profile, that would extend the label to 1 and up instead of 18 and up. So, it would really cover the entire spectrum of the population. The status we're enrolling, but we haven't guided yet to when the data will come out because it's early days on that. And so, we're very excited about it, that these trials will offer that opportunity.

And just to give a sense of the magnitude, the pediatric patient population is about 20% of the overall prevalence. And in the U.S., we anticipate between 1,500 to 4,000 patients that are living with PKD, inclusive of the pediatric patient population.

And I think, again, there's expanded indications, both in the alpha and beta thalassemia arena, and in sickle cell. I will -- RISE UP, first of all, a great name for the clinical trial. But I also like the commentary in terms of the seamless -- in terms of your being able to make the decision between Phase 2 and Phase 3. So, let's just go to sickle cell and kind of describe what the clinical trials -- like, what are the parameters? What you're looking for in Phase 2 in terms of what would be considered it a success?

So, indeed, an operationally seamless design basically means it's one protocol with 2 studies in it, that allows for faster operationalization of certain aspects of a clinical trial, but it doesn't mean that we wouldn't take a look at the Phase 2 data and just rush forward into Phase 3. So it's really truly like any other clinical development program in which you assess the data of Phase 2 via pre-specified go-no-go framework, and then move forward to Phase 3. So, the Phase 2 component, the primary endpoints, they will deliver on hemoglobin response and safety. And then in the secondary endpoints, we'll be looking for hemolytic parameters changes, and also for a signal on sickle cell pain crisis. I'm saying it's signal because it's a 12-week trial, and this is typically measured as an annualized rate. So that's why we -- the true final outcome of that data will come from the Phase 3. But Phase 2 data package decision, move forward to Phase 3. In the Phase 3, we have 2 primary endpoints. One is, again, a hemoglobin response. The other primary endpoint is the annualized sickle cell pain crisis. And then, if one or both primary endpoints are positive, we can move onwards to secondary endpoint testing, which again are hemolytic parameters but also other ways of measuring how patients feel and function. So it's really a creative way to move as fast as you can, while delivering on a full data package at the end of the Phase 2.

And do you have like a profile in mind based on the endpoints that you've just characterized, as to what PYRUKYND would have to look like to be competitive in the sickle cell arena?

Yes, we do. And that that's what we designed the trial for, right? So, we are truly trying to deliver on a drug that can treat the totality of sickle cell disease, and that's why we're looking for a hemolytic anemia component with a 1 gram per deciliter increase in comparison to placebo. And for the sickle stop pain crisis, we're looking to bring a reduction of 3 VOCs to 2 VOCs via our clinical trial program. Of course, it's an always changing landscape. So, we're always going to be mindful of the ecosystem around us, to make sure that what we deliver on, is going to remain meaningful and impactful. And -- but this is -- definitely, the way it's designed right now, we know we're going to deliver on a drug that is meaningful for patients, physicians and regulators based on their input.

And I would also add, thank goodness, as Sarah just said, it's an ever-changing landscape, because this is a high unmet need population that one could argue, has probably been ignored in a way for too long from the industry. So, all the dynamics that are happening right now, I'd say, our perspective is, that's a really good thing. These are -- there's proper larger pharmaceutical companies that we deeply respect, that are getting involved in sickle cell, number 1. And number 2, it's quite clear that there's no one mechanism of action that will solve it all, I mean, by definition, from the data we've seen across the board. And we feel like we're in a really good position now to have a PKR activator that's continued to demonstrate efficacy across different anemias that have similar underlying pathophysiology. So that's -- it's really exciting to see the dynamism that's existing in sickle cell disease.

And in the thalassemia arena, ENERGIZE, ENERGIZE-T, another great name. So, if you can comment on that?

That program is set up very similarly to our PKD program. So, we have divided the population into 2 for the primary endpoint. So the program itself, though, is focused on delivering a therapy for the entirety of thalassemia, which is pretty unique. So, it's alpha thalassemia, which, there is no other development program ongoing, and then beta thalassemia. But beta thalassemia and alpha thalassemia would be for people who are regularly transfused and non-regularly transfused. And that's how the trials are being divided. So we have ENERGIZE which is, our trial in which patients who are not regularly transfused, can enroll. So alpha and beta thalassemia patients will be looking for hemoglobin increase there as in our primary endpoint, but again, supported by other meaningful endpoints as secondary end points, to be able to deliver on the totality of a data package that can truly assess benefit risk, and specifically speak to how patients feel and function because we know that, that is important. And then the other trial is for patients who are regularly transfused, and that's where we're looking for transfusion reduction. The only reason to divide the population is to be able to measure the primary endpoint, because we know that people who are regularly transfused, their hemoglobin is influenced by that, and that's why you cannot use the hemoglobin response as a primary endpoint in that population.

Any questions on PYRUKYND? No. Okay. Well, then, I think, we'll move on to AG-946 in terms of -- maybe a little bit more color in terms of how to characterize 946, its differentiation from PYRUKYND, and then the indications that you're pursuing there?

Maybe I'll start, and then Sarah, you should jump in on the clinical development program. The first point that I would make, as I said in the introduction, is that 946, we think of as another PKR activator, and we're very grateful to have not 1 but 2. We're consciously not positioning 946 as I've had in prior life, as a follow-on, as a life cycle management and so on, because it could grow up to be in a very different therapeutic area of pursuit. MDS is a really good example of that. And there's advantages to that as well that economically, if we're successful in that clinical trial program, we could price it differently. We're in a different swimming lane, so to speak, from PYRUKYND. In terms of differentiation, there's not a lot to say at this stage because we're still in the early development, other than this is being looked at as a once a day. It's clearly a more potent PK activator -- PKR activator than PYRUKYND, but the exact clinical profile itself, we're going to want to make more advancements in our clinical program before we really play out how they do actually look differently. And do you want to comment, Sarah, on the 2 programs that we have underway now?

Sure. So, we have completed our healthy volunteer portion of the development. And so -- it's currently in a Phase 1 in sickle cell disease, and we look at that program as delivering data in the context of hemolytic anemia. And then we also have a Phase 2 that was initiated for low to intermediate risk MDS, where we're, again, over a 16-week period of time, are looking for a hemoglobin response or transfusion reduction dependent on where the patients fall. And so, we're very excited about that trial as well, because we do believe that is -- the way that trial is designed, allows us to call for proof-of-concept efficiently, and then allows us to move forward into a true dose finding trial.

And, I believe, you're going to release additional data at ASH this year. What would that be? How would you characterize that?

That's a healthy volunteer component that we will -- that we have submitted at ASH. We, of course, need to wait for the official acceptances of everything that we have submitted, but that's what we're hoping to present, a healthy volunteer portion of the 946 program.

Earlier this year, you undertook a research prioritization in terms of, again, very full pipeline as to what you're pursuing, and you honed in on the PH stabilizers for PKU and the VCAT inhibitors for [ acidemia ]. Perhaps you could comment on the opportunities there and what we would see over the next couple of years there?

Sure. So those are 2 assets that are not in clinic yet, so they're in the pre-clinical phase. We're very excited about PH stabilizer. So it's meant to be a treatment for phenylketonuria. And we're currently moving towards an IND and doing all the necessary steps that you need to do, to get to that phase of development. And we have -- we are hoping that we can deliver on an IND next year in 2023. And then from there, it would move forward into clinical development. And then for -- and there's truly a big unmet need, and Brian always mentions that in our 101 talks, but it's a disease that has not many treatment options. Many people are still left with nothing and need to adhere to a very, very strict diet control, which is very burdensome. And despite that also still leads to complications in the context of the disease. So that's where we hope to be able to provide another therapy. But of course, it needs to go through all of the steps of development to get to that. And then for BCAT-2 inhibitor, that is a more rare disease, an ultra-rare disease in which there is basically a problem with a specific enzyme that leads to toxic accumulation of certain metabolites, and then leads to a range of complications in the disease as well, which, we believe, there is an opportunity there with that program as well. That one is later, right? It's going to follow after the stabilizer. So, we are hoping to bring that forward in the 2024 time frame.

I think Agios is in a great position from a capitalization standpoint. Obviously, all fully funded in terms of the plans that we've just talked about. Any plans with respect to perhaps some additional capital that would be directed towards other business development activities?

Well, just -- first of all, I'll emphasize what you just said, Jessica, that we really are in an enviable position from the strength of our balance sheet, and that is direct credit to my predecessor, Jackie Fouse, who, when I was on the outside looking in, I thought, while that's a pretty bold move to make the decision to cleave off oncology, it's almost an unprecedented decision to do that, but to really focus the company on rare and genetically defined diseases. So that put us -- after that sale to Servier, that put us in a real position of strength. And we reported in the second quarter call that we have $1.1 billion on the balance sheet. So, to the point of your question, what do we do with that capital? First of all, we're not just going to walk around talking about how strong our balance sheet is. We will be very disciplined with the deployment. And from a BD perspective, I think the strength of our organization will be getting really good at robust search and evaluation to make sure that we're not missing anything across the board. We're not necessarily -- with all the programs that we just talked about, we don't have an incredible urgent sense of, we've got to get a deal done right now. But there is good health in us constantly looking. And so that said, we have an ambition to look for opportunities internally with Sarah's team. And she just talked about a couple of very interesting earlier research assets. If we find a pathway for great value creation to invest the money to bring those forward faster, we will do it. Likewise, externally, we'll have the discipline to look across the board. Our sweet spot would obviously be cellular metabolism where we have 14 years almost of deep expertise. It could be non-malignant hematology. That would be very obvious places to go. And the other branch would be, as we look at the PYRUKYND launch in PKD and we build up rare genetically defined -- these capabilities, we may find an asset or 2 or more that, align with leveraging those capabilities, even if it's not therapeutically aligned with a space that we're currently in. And then the last thing I'll just say is in terms of the spectrum. We're not really locking ourselves into any one phase of development. It would be somewhat surprising if we found very late stage that nobody else is looking at, and has discovered as well where we felt like there was real strong value creation. So, I think we're probably going to be skewed more towards the earlier stage assets post proof of concept would be a sweet spot for us.

Great. Well, you seem really jazzed about everything that's going on here.

Very.

And I mean maybe in the final minute or so, perhaps re-highlighting the substance news flow that we're going to see through '22 and '23.

All right. Well, I would say, first of all, thanks again for listening in. Keep paying attention to what we have underway that we just talked about. Near term we're going to have quite a lot to talk about in terms of our PYRUKYND PKD launch. We will probably disappoint you because you're going to want to know all the details of the launch, and we're going to be very selective about how we report out on the progress. But the bigger picture for the PKD launch, again, for us, is, it's important as a launch for those patients. It's important as a starting point for revenue, but it really for us is a much bigger platform of capability building. So that's near term. Secondly, we've given a couple of very important year-end goals. One is to watch the thalassemia trials, ENERGIZE, ENERGIZE-T. And our goal is really to get to that meaningful level of enrollment by the end of the year. And then that puts us on a pathway towards finalization of the enrollment, and subsequently data readout. And then the other one, relatively near term, is full enrollment of the -- and you said you like the name of the trial, the RISE UP study, the Phase 2 portion, which will then -- once we're fully enrolled 12 weeks later, thereabouts, we'll have a good pathway towards data generation to guide us as to what we do next. And then the backdrop of all that is keep watching us for development of our research assets, and we'll see you in terms of business development opportunities. But thanks again for your interest.

Great. Well, we look forward to seeing you here next year because I think you're going to have even more to talk about. Thank you, Brian.

Thanks a lot. Thanks, everyone.

Thanks, Sarah.

Thank you very much.