Agios Is A Gem, But It Will Need Patience (Rating Upgrade) (NASDAQ:AGIO)

Agios Pharmaceuticals, Inc. (NASDAQ:AGIO) produced positive data from its Thalassemia trial in non-transfusion dependent patients during premarket yesterday, January 3rd, although the stock hasn’t rallied too much on the news. I have been covering AGIO for four years now, and have been a buyer twice before. My last coverage was from May, and the stock has mostly traded sideways since then.

In 2020, I started covering Agios when it was a commercial oncology company, meaning, it had cellular metabolism targeting oncology molecules in the market. The company sold out its oncology business in 2020 for $1.8bn, and became a rare disease company. This helped Agios acquire a huge load of cash, and enabled the company to get its rare disease asset mitapivat approved for Pyruvate Kinase – PK – deficiency in 2022. Its next targets for mitapivat are thalassemia and sickle cell disease, a relatively smaller and larger market, respectively; however, the process is still ongoing.

Here’s how the current pipeline looks:

Thus, both assets are PK activators, and AG-946, while having a similar pharmacodynamic profile to mitapivat, is a next generation asset with enhanced PK-stabilizing properties. That’s the difference.

AG-946 announced proof of concept data late in November last year. This was in a phase 2a trial in anemia in adults with lower-risk myelodysplastic syndromes (LR-MDS). The primary endpoint was transfusion independence, which was achieved by four of the 10 patients with low transfusion burden (LTB). One of the 22 treated patients also achieved the hemoglobin response endpoint in the 16-week treatment (core) period.

Next month, at ASH, details from ex vivo (out of the body) treatment of RBC cells with AG-946 was published. This data showed:

Our findings show that RBCs from MDS patients have decreased PK activity and thermostability. We demonstrate that ex vivo treatment with AG-946 increases PK activity and ATP levels and restores PK thermostability. Moreover, ex vivo treatment with AG-946 improves RBC hydration, suggesting that improved energy status directly improves RBC functional properties. The preliminary results of the culture assay could indicate that in certain patients, dyserythropoiesis may be ameliorated upon PK activation.

Coming to mitapivat’s latest data, this was from the Phase 3 ENERGIZE study in adults with non-transfusion-dependent alpha- or beta-thalassemia. 194 patients were randomized 2:1 to 100 mg mitapivat (n=130) or placebo (n=64). Primary endpoint was hemoglobin response, defined as Mean Hb increase ≥ 1 g/dL from Week 12 through Week 24 compared with baseline. The study showed that mitapivat demonstrated a statistically significant increase in hemoglobin response rate compared to placebo.

Data was as follows:

Click to enlarge

Thus, the data is very convincing, with a very high statistical significance. Indeed, the study met both key secondary endpoints – FACIT-Fatigue Score and hemoglobin concentration – with statistical significance.

The drug was safe and well-tolerated. Four patients from the drug arm discontinued the trial due to adverse events.

The company plans to file NDAs based on both ENERGIZE and ENERGIZE-T, the transfusion-dependent patient study, by the end of 2024, with potential approval in 2025.

2025 is a year full of expected catalysts for the company, with this approval, as well as with three data readouts. Two of these are from the pediatric PK deficiency population, which is nice but not a big deal. The trials are Phase 3 ACTIVATEkids and Phase 3 ACTIVATEkidsT. The more important trial is the phase 3 RISE UP trial in sickle cell disease. This will also announce results in 2025. All these programs are expected to be approved in 2026. SCD is a much bigger market, with nearly 125,000 US/EU patients, where in PKD there are only 3-8000 patients and in thalassemia there are 18–25000 patients. LR-MDS is actually a bigger market with 75-80000 US/EU patients.

Relayed highlights from its November earnings call:

• First Patient Dosed in Phase 3 Portion of the RISE UP Pivotal Study of Mitapivat in Sickle Cell Disease

• Completed Enrollment in Phase 3 ACTIVATE-KidsT Pediatric Study of Mitapivat in PK Deficiency; ACTIVATE-Kids Study Achieves >50% Enrollment

• On Track for Data Readouts in Two Phase 3 Trials of Mitapivat in Thalassemia Next Year and Topline Data for AG-946 in LR-MDS by Year-end 2023.

Financials

AGIO has a market cap of $1.34bn and a cash balance of $872mn. Net revenue from mitapivat this quarter was $7.14mn, missing by a mere 0.13mn. R&D expenses were $81.8 million for the third quarter of 2023, while SG&A expenses were $25.8 million. These are very high figures for a biopharma this size, and reflects the huge cash overload they have from selling their onco business. At this rate, they have a cash runway of 7-8 quarters. However, I believe they could conserve some cash, especially in R&D, although, to be fair, 25% of the cash figure went to paying Alnylam for the TMPRSS6 asset.

AGIO stock is almost exclusively held by institutions, followed by hedge funds. Key holders are BlackRock, Vanguard and Bellevue. One interesting angle is that insiders have not bought stock in the last 2 years, although there have been numerous sells.

Bottom Line

Agios Pharmaceuticals, Inc. stock is poised to take off at some time in the next 12-18 months, as all its stars line up and multiple approvals hopefully occur in 2025. The PKD approval is simply too small to garner enthusiasm, but they have that huge pile of cash, so they can wait for the right time to break out. If you are buying, you will need patience, but things should work out.