Agios Pharmaceuticals(AGIO) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited condensed consolidated financial statements are presented, detailing the company's financial position and performance Condensed Consolidated Balance Sheets Total assets decreased to $1.09 billion as of June 30, 2023, driven by reduced cash and marketable securities Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $84,753 | $139,259 | | Marketable securities | $862,170 | $957,734 | | Total current assets | $757,239 | $832,772 | | Total assets | $1,085,153 | $1,238,718 | | Liabilities & Equity | | | | Total current liabilities | $55,141 | $62,629 | | Total liabilities | $120,917 | $137,904 | | Total stockholders' equity | $964,236 | $1,100,814 | Condensed Consolidated Statements of Operations Total revenue increased to $12.3 million, while net loss narrowed to $164.8 million for the six months ended June 30, 2023 Statement of Operations Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Product revenue, net | $6,712 | $3,082 | $12,321 | $3,914 | | Total revenue | $6,712 | $5,582 | $12,321 | $6,414 | | Research and development | $68,895 | $74,523 | $136,196 | $144,646 | | Total operating expenses | $100,412 | $103,222 | $196,634 | $205,199 | | Loss from operations | ($93,700) | ($97,640) | ($184,313) | ($198,785) | | Net loss | ($83,806) | ($91,806) | ($164,824) | ($186,580) | | Net loss per share | ($1.51) | ($1.68) | ($2.97) | ($3.41) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities improved to $161.9 million, resulting in a $54.5 million net decrease in cash Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($161,931) | ($171,964) | | Net cash provided by investing activities | $104,721 | $56,240 | | Net cash provided by financing activities | $2,704 | $1,141 | | Net change in cash and cash equivalents | ($54,506) | ($114,583) | | Cash and cash equivalents at end of period | $84,753 | $88,543 | Notes to Condensed Consolidated Financial Statements The notes provide detailed information on the company's operations, accounting policies, and key financial statement items - The company's lead product is PYRUKYND® (mitapivat), an activator of pyruvate kinase enzymes, approved for hemolytic anemia in adults with PK deficiency in the U.S., EU, and Great Britain, and is also in clinical trials for thalassemia, sickle cell disease (SCD), and pediatric PK deficiency[25] - The company is also developing AG-946, another PK activator, for lower-risk myelodysplastic syndrome (LR MDS) and hemolytic anemias, and has a late-stage research program for a PAH stabilizer for phenylketonuria (PKU)[25][26] - On July 28, 2023, Agios entered into a license agreement with Alnylam Pharmaceuticals to develop and commercialize a preclinical siRNA targeting TMPRSS6 for polycythemia vera (PV), involving a $17.5 million upfront payment and up to $130.0 million in potential development and regulatory milestones[75] - As of June 30, 2023, the company had $946.9 million in cash, cash equivalents, and marketable securities and expects this to be sufficient to fund operations for at least the next twelve months[35] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition and results, highlighting revenue growth, expense control, and liquidity into 2026 Results of Operations Total revenue increased, operating expenses decreased, and net loss narrowed to $164.8 million for the six months ended June 30, 2023 Revenue Comparison (in thousands) | Revenue Type | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Product revenue, net | $12,321 | $3,914 | | Milestone revenue | $0 | $2,500 | | Total revenue | $12,321 | $6,414 | Operating Expense Comparison (in thousands) | Expense Category | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Cost of sales | $1,662 | $774 | | Research and development | $136,196 | $144,646 | | Selling, general and administrative | $58,776 | $59,779 | | Total operating expenses | $196,634 | $205,199 | - The $8.5 million decrease in R&D expenses for the six-month period was primarily due to an $8.7 million decrease in indirect expenses (lower compensation and facilities costs), partially offset by a $0.2 million increase in direct expenses driven by higher costs for PYRUKYND® trials in thalassemia and SCD[108] - The decrease in net loss to $164.8 million for the first six months of 2023 from $186.6 million in 2022 was driven by higher interest income, lower R&D expenses, and increased revenue, partially offset by the elimination of royalty income from the sale of TIBSOVO® rights[113] Liquidity and Capital Resources The company had $946.9 million in cash, cash equivalents, and marketable securities, expected to fund operations into 2026 - The company's cash, cash equivalents, and marketable securities balance was $946.9 million at June 30, 2023[116] - The company expects its existing cash, anticipated product revenue, interest income, and the potential vorasidenib milestone payment to fund operating expenses and capital expenditures at least into 2026[123] - Future capital requirements depend on factors like PYRUKYND® sales, contingent payments from Servier, clinical trial costs, and potential in-licensing activities, including payments to Alnylam[124][203] Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($161,931) | ($171,964) | | Net cash provided by investing activities | $104,721 | $56,240 | | Net cash provided by financing activities | $2,704 | $1,141 | Item 3. Quantitative and Qualitative Disclosures About Market Risk Primary market risk is interest rate sensitivity on the $946.9 million cash portfolio, with immaterial foreign currency risk - The primary market risk is interest rate sensitivity on the company's $946.9 million portfolio of cash, cash equivalents, and marketable securities as of June 30, 2023[129] - The company has some exposure to foreign currency exchange rate fluctuations due to contracts with CROs in Europe and Asia, but this risk is considered immaterial as of June 30, 2023[130] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2023, with no material changes to internal control - Management concluded that as of June 30, 2023, the company's disclosure controls and procedures were effective[131] - No changes occurred during the fiscal quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[133] PART II. OTHER INFORMATION Item 1A. Risk Factors Significant risks include heavy dependence on PYRUKYND®, intense competition, reliance on third parties, and healthcare reform impacts - The company's success is heavily dependent on the successful commercialization of PYRUKYND® and the clinical development of its other product candidates, where failure or significant delays would materially harm the business[137][139] - The company faces substantial competition from major pharmaceutical and biotech companies like Merck, BMS, Novartis, and Vertex, which have greater resources and are developing therapies for the same or similar indications[168][170] - The company relies on third parties (CROs and manufacturers) for clinical trials and product supply, which introduces risks related to performance, regulatory compliance, and potential supply chain disruptions[212][219] - The business is subject to risks from healthcare reform, including the Inflation Reduction Act (IRA), which could lead to government price negotiations, and other downward pricing pressures that could harm profitability[277][286][287] - As a smaller, less diversified company focused on rare diseases after selling its oncology business, Agios is more susceptible to market fluctuations and risks specific to this sector[197][198] Item 5. Other Information This section details a significant exclusive worldwide license agreement with Alnylam Pharmaceuticals for a preclinical siRNA candidate - Agios entered into a license agreement with Alnylam on July 28, 2023, for an exclusive worldwide license to develop and commercialize an siRNA candidate targeting the TMPRSS6 gene[320][321] Alnylam License Agreement Financial Terms | Payment Type | Amount | | :--- | :--- | | Upfront Payment | $17.5 million | | Potential Development & Regulatory Milestones | Up to $130.0 million | | Royalties | Tiered percentages from mid-single digits to mid-teens on annual net sales | Item 6. Exhibits Exhibits filed include corporate governance documents, stock incentive agreements, and officer certifications - Exhibits filed include forms of stock option and restricted stock unit agreements under the 2023 Stock Incentive Plan[328] - Certifications from the CEO and CFO pursuant to the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002 are included as exhibits[328]