Agios Pharmaceuticals, Inc. — Q3 2020 Form 10-Q
Reporting period: Three and nine months ended September 30, 2020. Unaudited consolidated results. Agios is a biopharmaceutical company focused on cellular metabolism; TIBSOVO (ivosidenib) is its wholly owned commercial product.
Financial performance and liquidity
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Total revenue | $34.7M | $26.0M | $159.2M | $82.5M |
| Product revenue | $31.7M | $17.4M | $82.0M | $40.3M |
| Operating expenses | $125.0M | $135.1M | $382.9M | $402.9M |
| Loss from operations | $(90.3)M | $(109.1)M | $(223.7)M | $(320.4)M |
| Net loss | $(99.0)M | $(106.2)M | $(229.7)M | $(309.1)M |
| Basic and diluted loss per share | $(1.43) | $(1.81) | $(3.33) | $(5.27) |
Revenue increased 33% year over year in Q3 and 93% for the nine-month period, primarily reflecting higher TIBSOVO sales. Operating losses narrowed, supported by higher revenue and lower R&D expense. Nine-month related-party collaboration revenue included $64.1M from ongoing R&D services; the filing attributes the increase partly to an updated estimate of costs to complete a Celgene agreement obligation, so it should not be viewed as wholly recurring revenue. The filing does not present a conventional gross-margin measure; reported cost of sales was $0.6M in Q3 and $1.8M year to date.
Cash flow and balance sheet: Nine-month operating cash use was $241.4M, versus $277.0M in 2019. Investing activities provided $4.4M; financing provided $260.9M, principally from the RPI transaction. Cash and cash equivalents were $104.9M, and marketable securities totaled $617.6M, or $722.4M combined, at September 30. Current assets were $669.1M versus current liabilities of $69.8M. Accumulated deficit was $1.75B; stockholders’ equity was $480.5M.
Debt-like obligation: In June, Agios received $255.0M for selling its IDHIFA royalty rights and rights to up to $55.0M of outstanding regulatory milestones to Royalty Pharma (RPI). The company accounts for the transaction as a financing because it continues to co-promote IDHIFA and recognize related royalty revenue. The liability was $258.1M at quarter-end; estimated effective annual interest is approximately 16.4%, and Q3 non-cash interest expense was $9.8M. No conventional borrowings are reported in the supplied filing text. Operating lease liabilities totaled $106.6M.
Material changes and outlook
- TIBSOVO product revenue grew 82% in Q3 year over year. R&D expense fell 12% in Q3 and 11% year to date, largely due to lower ivosidenib trial costs and reduced discovery and AG-636 activity. SG&A rose 12% year to date, primarily from personnel costs, including stock compensation.
- Celgene declined to extend the research term or opt into further development of the MAT2A program under the 2016 agreement; those research services were completed in May 2020. Agios halted internal development of AG-636 because of limited trial enrollment.
- Agios withdrew its EU marketing authorization application for TIBSOVO in October 2020 after EMA feedback that data from the single-arm, uncontrolled Phase 1 trial did not sufficiently support a positive benefit-risk balance for the proposed indication.
- Management expected existing cash, cash equivalents and marketable securities, anticipated TIBSOVO revenue, interest income and collaboration reimbursements—excluding additional program milestones—to fund operating and capital needs through the end of 2022. It also stated liquidity was sufficient for at least 12 months from financial-statement issuance. Management expects continued losses and significant R&D and commercialization spending; future capital may be needed.
- Clinical outlook included expected AGILE Phase 3 enrollment completion in 2021; an FDA supplemental application for TIBSOVO in cholangiocarcinoma in Q1 2021; mitapivat ACTIVATE topline data by year-end 2020 and ACTIVATE-T data in Q1 2021. These timelines were subject to COVID-19-related disruptions.
- COVID-19 had not caused significant direct financial or supply-chain impact as of quarter-end, but disrupted some clinical enrollment and operations. Agios reported additional TIBSOVO safety stock and limited manufacturing campaign delays.
Key investor verification points
- Track TIBSOVO sales growth, net revenue reserves and payer access, and whether sales growth supports the company’s cash runway assumptions.
- Assess the sustainability and accounting drivers of collaboration revenue, especially the 2016 agreement estimate-related revenue recognized in 2020.
- Monitor operating cash burn, the stated runway through 2022, and whether Agios uses its $250M available at-the-market equity program or needs other financing.
- Review RPI royalty remittances, updated royalty-payment estimates and the resulting effective interest expense on the $258.1M liability.
- Follow the withdrawn EU application, the planned U.S. cholangiocarcinoma filing, trial readouts and enrollment timelines, including COVID-19 effects.
- Consider ongoing clinical, regulatory, competitive, manufacturing, collaboration and financing risks. Agios reported recurring losses and no assurance of future profitability.