AGIO - Agios Pharmaceuticals: Good Execution A Good Deal Of Cash Some Hurdles

2023-05-24 11:02:18 ET

Summary

• Agios Pharmaceuticals, Inc. has done well after its pivot to rare diseases.
• The move has also generated a huge amount of cash.
• Their SCD trial go/no-go decision will be very important.

I have been covering Agios Pharmaceuticals, Inc. ( AGIO ) since 2020, when it used to be a commercial oncology company. I also bought AGIO stock twice, making decent amounts of profits. In 2021, AGIO sold its oncology franchise to Servier for $1.8bn in upfront payment, and went from being a cellular metabolism focused commercial oncology company to a cellular metabolism focused rare disease R&D company. Its lead asset was mitapivat, targeting Pyruvate Kinase - PK - Deficiency, or PKD. Then, last year, mitapivat got approved for PKD. They are currently pursuing two indications, Thalassemia, and the much larger prize, Sickle Cell Disease or SCD. You should read my last three articles for the background - 1 , 2 and 3 .

So, currently, Agios has three programs in late stage development - the ENERGIZE trial for Non-transfusion Dependent Adult Thalassemia, the ENERGIZE-T trial for Transfusion Dependent Adult Thalassemia, and Rise Up trial for Adult Sickle Cell Disease. These are all phase 3 studies. The Thalassemia trial is now fully enrolled and will top line next year.

Here's what I wrote before about mitapivat's mechanism of action:

Mitapivat is an orally available small molecule and a potent activator of the wild-type and mutated PKR enzymes. PKR is an isoform (different proteins with same function) of the PK enzyme that occurs in red blood cells. PK is an enzyme that performs a critical function in glycolysis, a process that converts glucose to lactic acid. Mutations in PKR obstruct cellular glycolysis, which is the key pathway for producing ATP or adenosine triphosphate, the cell's energy source. Mitapivat works in two ways. By activating mutant PKR, it can restore glycolysis in PK-deficient patients. By activating non-mutated or wild-type PKR, mitapivat "can serve as an effective compensatory mechanism in hemolytic anemias such as thalassemia and SCD."

We have already seen that mitapivat works in PKD by activating mutant PKR and restoring glycolysis. In thalassemia and SCD patients, it can also activate wild-type PKR, acting as a compensatory mechanism. It is an orphan drug designated by the FDA for the treatment of thalassemia and sickle cell disease. The company has come out with positive results from its Phase 2 study of mitapivat in adults with non-transfusion dependent ?- or ?-thalassemia, meeting the primary endpoint. Data showed that 16 of the 20 patients (80%) in the trial achieved a hemoglobin increase of ?1.0 g/dL from baseline at one or more assessments during Weeks 4-12, including all 5 (100%) ?-thalassemia patients and 11 of 15 (73.3%) ?-thalassemia patients. Luspatercept is approved in ?-thalassemia.

In SCD, Global Blood Therapeutics' oxbryta and Novartis' (NVS) crizanlizumab have been approved. They have different MoA. Forme Therapeutics, which was acquired by Novo Nordisk (NVO), has FT-4202 or Etavopivat, another PKR activator in trials for thalassemia and SCD. The two molecules were vying neck to neck last year, however, Forme's strategy was for accelerated approval, while Agios wanted a complete phase 3 trial and full approval. Both molecules have shown good hemoglobin responders, in fact the same number of responders, but for Agios, the percentage is lower because of its higher patient population.

No comparative conclusion can be drawn from those results. Oxbryta's approval came from results that would be considered numerically poorer than both these PKR activators. Etavopivat does appear to have an edge in SCD, with updated data showing it is performing marginally better than mitapivat. However, neither molecule is able to completely control vaso-occlusive crises (VOCs); although, to be fair, more VOCs occurred during the 4-week withdrawal period in the trials of both drugs, when medicine was not given to the patients.

Another difference between the two molecules is that mitapivat requires twice daily dosing, while etavopivat requires just one dosing per day.

The company is "on track to announce the data readout from the Phase 2 portion of the operationally seamless Phase 2/3 RISE UP study of PYRUKYND in sickle cell disease and the go/no-go decision to Phase 3 in the middle of this year." In answer to a question, the company clarified that although this is only a 12-week study, they will be looking at VOC as one of the metrics for their go/no-go decision.

Since its approval, mitapivat/PYRUKYND has had strong uptake. Per the company:

Specifically, our market research data indicate that nearly 100% of our target healthcare providers are likely to recommend PYRUKYND to their adult patients with PK deficiency. For clinicians, key drivers of these recommendations include improvements in hemoglobin levels, reductions in transfusion frequency, and impact on long-term disease complications and comorbidities.

Financials

Agios Pharmaceuticals, Inc. has a market cap of $1.48bn and a cash balance of $1bn. R&D expenses were $67.3 million for the first quarter, SG&A expenses were $28.4 million, and COGS was $0.6mn. The company thus has cash for about 10 quarters. This ignores revenue from PYRUKYND; in this quarter, they generated $5.6mn.

AGIO will receive $200mn from Servier on FDA approval of vorasidenib. Recently, vorasidenib met the primary endpoint in its phase 3 trial:

We were therefore pleased to see that Servier's Phase 3 trial of vorasidenib in patients with residual or recurrent IDH mutant low-grade glioma met both its primary endpoint and key secondary endpoints.

Bottom Line

Agios Pharmaceuticals, Inc. has a lot of cash, and it has been successful in the PKD indication. However, in the two other targeted indications, there are some doubts, and it also has some competition. I would like to wait and see if they continue with the SCD phase 3 trial before I take a call. I also think Agios Pharmaceuticals, Inc. should consider buying some assets.

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