Agios Pharmaceuticals, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Agios is a biopharmaceutical company focused on rare and genetically defined diseases. PYRUKYND (mitapivat) was FDA-approved in February 2022 for adults with PK deficiency; the company is also developing it for other indications and advancing AG-946.
Financial performance and position
Amounts below are in millions of dollars unless stated otherwise.
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $3.5 | $0 | $9.9 | $0 |
| Operating expenses | $94.6 | $91.2 | $299.8 | $273.6 |
| Operating loss | $(91.1) | $(91.2) | $(289.9) | $(273.6) |
| Net loss from continuing operations | $(81.7) | $(84.3) | $(268.3) | $(257.9) |
| Net income (loss), including discontinued operations | $(81.7) | $(88.8) | $(268.3) | $1,699.3 |
- Q3 product revenue was $3.5 million, with cost of sales of $0.5 million. The reported gross margin was approximately 85%; some manufacturing costs incurred before approval were expensed earlier as R&D.
- Nine-month revenue included $7.4 million of PYRUKYND sales and $2.5 million of milestone revenue related to licensing intellectual property for a preclinical Friedreich’s Ataxia program.
- Nine-month R&D expense rose $25.9 million to $209.6 million, primarily reflecting clinical-trial and personnel costs. SG&A was $88.9 million, down $1.0 million.
- Cash used in operating activities was $243.3 million for the first nine months, versus $234.1 million from continuing operations in the prior-year period. Investing activities provided $160.3 million; financing activities provided $2.3 million. Cash and cash equivalents declined $80.7 million to $122.4 million.
- At September 30, cash, cash equivalents and marketable securities totaled approximately $1.026 billion, down from approximately $1.286 billion at December 31, 2021. Current assets were $784.9 million and current liabilities were $53.6 million.
- Total liabilities were $130.2 million, primarily operating lease liabilities; the filing reports no material borrowings. Stockholders’ equity was $1.050 billion.
Changes, outlook and risks
- The prior-year nine-month net income largely reflected the March 2021 sale of the oncology business to Servier for approximately $1.8 billion. The 2021 comparison therefore includes substantial discontinued-operations income and is not comparable to ongoing results.
- Agios reported $9.9 million of royalty income from TIBSOVO U.S. sales in the first nine months of 2022. After quarter-end, on October 27, it sold its rights to those royalties to Sagard for $131.8 million, received that payment, and retained potential vorasidenib milestone and royalty rights.
- Management said cash, cash equivalents and marketable securities were expected to fund operations for at least 12 months from issuance of the financial statements. It also expected available resources, including the Sagard payment, to support its operating plan through major catalysts and to cash-flow positivity without additional equity; these expectations depend on assumptions and execution.
- Agios expects continued significant losses and R&D investment. In May 2022 it refocused exploratory research, reduced approximately 45 roles, and estimated average annual savings of $40–$50 million during 2023–2026. Management intends to prioritize pipeline development and potential business-development opportunities; share repurchases are paused.
- Regulatory outlook: the EMA committee issued a positive opinion for PYRUKYND in adult PK deficiency in September 2022; a Great Britain application was submitted in October. The company expected decisions from both authorities by year-end 2022. Enrollment was ongoing in trials for thalassemia, sickle cell disease and pediatric PK deficiency; a phase 2a AG-946 study in lower-risk MDS began in Q3.
- Key risks include commercialization, market access and reimbursement for PYRUKYND; clinical-trial outcomes and enrollment; regulatory approval; reliance on third-party manufacturers and CROs; competition; and the company’s concentrated rare-disease portfolio. COVID-19 disruptions had affected some CRO activities, but Agios reported no material supply impact to date. Investments had unrealized losses, which the company said it did not consider credit-impaired.
Important facts for investors to verify
- PYRUKYND launch performance, net pricing, patient uptake and reimbursement coverage.
- Timing and results of the EU and Great Britain regulatory reviews and ongoing clinical trials.
- Actual cash burn versus management’s funding and cash-flow-positivity assumptions, including the effect of the $131.8 million Sagard payment.
- Whether the potential $200 million vorasidenib milestone and related royalties are achieved; these depend on regulatory and commercial outcomes and are not assured.
- Progress toward the stated research-cost savings and the impact of the research-organization changes on pipeline execution.