Agios Pharmaceuticals, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Unaudited results. Agios is a rare-disease biopharmaceutical company; PYRUKYND (mitapivat) is its approved product for adults with PK deficiency in the U.S., EU and Great Britain.
Financial results and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $7.4m | $3.5m | $19.7m | $9.9m |
| Operating expenses | $108.3m | $94.6m | $304.9m | $299.8m |
| Operating loss | $(100.9)m | $(91.1)m | $(285.2)m | $(289.9)m |
| Net loss | $(91.3)m | $(81.7)m | $(256.1)m | $(268.3)m |
| Net loss per share, diluted | $(1.64) | $(1.49) | $(4.61) | $(4.90) |
- Revenue: Product revenue was $7.4m for Q3 and $19.7m year to date, up 110% and 165%, respectively, from the comparable periods, primarily reflecting PYRUKYND sales. Nine-month 2022 revenue also included $2.5m of milestone revenue.
- Costs and margins: Q3 R&D expense rose $16.9m to $81.8m, including a $17.5m Alnylam license upfront payment and higher PYRUKYND development costs. SG&A declined $3.3m to $25.8m. Product revenue less cost of sales implies an approximate 91% gross margin, but cost of sales excludes certain manufacturing costs expensed before product approval.
- Cash flow: Nine-month operating cash use was $223.6m, versus $243.3m a year earlier. Investing activities provided $144.1m, mainly as marketable-security maturities and sales exceeded purchases, partly offset by the Alnylam payment. Financing provided $4.6m. Cash and cash equivalents declined $74.9m to $64.3m.
- Liquidity and balance sheet: Cash, cash equivalents and marketable securities totaled $872.4m at September 30, 2023, down from approximately $1.10bn at year-end 2022. Total assets were $1.007bn and stockholders’ equity $886.8m. The filing reports no debt; liabilities were $120.4m, including $75.5m of operating lease liabilities.
- Loss and other income: Q3 net loss increased year over year, primarily because of the Alnylam upfront payment and absence of TIBSOVO royalty income after the rights were sold to Sagard in 2022. Higher interest income and PYRUKYND revenue partly offset these effects. Nine-month net loss narrowed year over year.
Material developments, outlook and risks
- In July 2023, Agios licensed Alnylam’s preclinical TMPRSS6-targeting siRNA candidate for potential treatment of polycythemia vera. Agios paid $17.5m upfront and may owe up to $130m in development and regulatory milestones, additional sales milestones and tiered royalties.
- Management said existing cash, cash equivalents and marketable securities, together with anticipated product revenue, interest income and the potential vorasidenib milestone, are expected to fund operating expenses and capital expenditures through several milestones and at least into 2026. The estimate excludes potential vorasidenib royalties, ex-U.S. mitapivat partnerships and other strategic transactions. The filing also states liquidity is expected to cover at least the next 12 months.
- Clinical outlook: topline ENERGIZE thalassemia data were expected in the first half of 2024 and ENERGIZE-T data in the second half of 2024. The AG-946 LR MDS Phase 2a topline results were expected by year-end 2023; an IND for the PAH stabilizer for PKU was also expected by year-end 2023. The SCD Phase 3 trial of PYRUKYND began enrolling in October 2023.
- Agios expects significant expenses and losses to continue as it advances clinical programs and commercializes PYRUKYND. Key uncertainties include clinical efficacy and safety, trial enrollment and timing, regulatory approvals, product uptake and reimbursement, manufacturing and third-party reliance, competition, and the possibility of needing additional capital. COVID-era disruptions at some CROs had occurred, though the company reported no significant direct financial or supply-chain impact as of the reporting date.
- Agios retains a potential $200m milestone if vorasidenib meets specified FDA approval conditions before January 1, 2027, plus potential royalties on vorasidenib sales. Achievement and proceeds are uncertain and outside Agios’s control. The company previously sold its future TIBSOVO royalty rights to Sagard.
- Available-for-sale securities had $5.9m of unrealized losses at quarter-end; the company reported no credit-loss allowance and did not consider the portfolio impaired. It identifies interest-rate and unhedged foreign-currency exposure, but does not expect an immediate uniform 100-basis-point rate change to materially affect portfolio fair value.
Important facts for investors to verify
- PYRUKYND sales growth, patient uptake, reimbursement and commercial economics, including the limited contribution of ex-U.S. managed-access programs.
- Timing and outcomes of the ENERGIZE, ENERGIZE-T, AG-946 and other clinical milestones, and any changes to stated timelines.
- Actual cash burn and whether the stated funding horizon remains supported as development and commercialization spending evolves.
- Potential proceeds and conditions for the vorasidenib milestone and royalties, and the future cash and royalty obligations under the Alnylam license.
- Competition, trial enrollment, regulatory, manufacturing and product-safety developments that could affect pipeline value or PYRUKYND commercialization.