Agios Pharmaceuticals Inc (AGIO) 2013 Q4 法說會逐字稿

Good morning, and welcome to the Agios fourth-quarter and year-end 2013 conference call.

(Operator Instructions)

Please be advised that this call is being recorded at Agios' request. I would now like to turn the call over to Agios. Please proceed.

Hello, this is Stephanie Ascher with Stern Investor Relations, and welcome to Agios' fourth-quarter and year-end 2013 conference call. You can listen to a live webcast or a replay of today's call by going to the Investors section of the website agios.com.

The agenda for today's call is David Schenkein, CEO, will discuss highlights of the fourth quarter and recent business and clinical pipeline update; Scott Biller, CSO, will provide an update on the Company's R&D efforts; Duncan Higgons, COO, will provide updates on our partnership with Celgene; and Glenn Goddard, SVP Finance, will review the Company's financial results. He will then make closing remarks and open the call for Q&A.

Before we begin, would like to remind you that today's discussion will include statements about the Company's future expectations, plans, and prospects that constitute forward-looking statements for purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent quarterly report on Form 10-Q, which is on file with the SEC.

In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views change. Therefore, you should not rely on these forward-looking statements as representing our views as of any date subsequent to today. Now, I will turn the call over to Agios' CEO, David Schenkein.

Thanks, Stephanie, and good morning everybody. Today, we will be providing important updates on our programs in both cancer metabolism and the inborn errors of metabolism or IEMs. 2013 was a important year for Agios as we successfully filed two INDs, completed IND activities for our third program, and started our first clinical trial. All at with novel first-in-class therapeutic candidates.

Our research programs continue to make excellent progress in new areas of biology. We continue to focus on hiring great people, and create an exciting culture that encourages our employees to push the frontiers of science and medicine, all in our efforts to realize our long-term vision of developing medicines that will be transformational for patients and also building a great multiproduct biopharmaceutical Company.

As you know, in the area of dysregulated metabolism, we have to areas of focus, cancer metabolism and the inborn errors. We remain committed to using precision medicine in all our development, meaning that every molecule we bring into the clinic will have a set of predictive biomarkers to identify the right patients. Give us a higher probability of technical success, while allowing us to move more quickly and efficiently through clinical development should they be safe and effective.

Our three lead programs are progressing rapidly and remain on track. IDH1 and IDH2 are two of the most promising targets in cancer biology today. Research led by Agios scientists validates our belief that these mutations are initiating and driving subsets of solid and hematological cancers via tumor production of the oncometabolite 2HG, or 2-Hydroxyglutarate. The enzymes are mutated in a wide range of cancers that in total affect over 40,000 patients in the major markets.

Our drug candidates AG-120 and AG-221 are potent against the mutated form of IDH1 and IDH2 respectively, and rapidly reduce of the level of 2HG to the normal the background levels in both cell lines and animal models. Both of these programs are part of our Celgene collaboration. We have demonstrated a wide therapeutic margin with both of our IDH candidates based on preclinical toxicology studies, and back in December, at the ASH meeting, we presented data featuring in vivo efficacy in acute myelogenous leukemia, or AML, for both candidates.

The results highlight the potential for our cancer metabolism therapeutics to provide significant clinical benefit to these genetically-identified patient populations, where patients have limited or no therapeutic options. Today, we are updating on the timing for the first clinical data emerging from the ongoing Phase 1 study of AG-221 for the treatment of patients with hematologic malignancies with an IDH2 mutation. The data will be presented at the upcoming AACR annual meeting in early April.

We will not be providing any additional information until the meeting, but we can tell you in the meantime that enrollment and dose escalation continue. As a reminder, this multi-center, open-label Phase 1 study is designed to evaluate AG-221 in patients with advanced hematologic malignancies, including AML, MDS, and the myeloproliferative disorders. The primary patient population in this trial is expected to be relapsed and/or refractory AML.

Approximately 15,000 adults are diagnosed each year in the US with AML, and an IDH mutation occurs in approximately 15% of these patients. The study only enrolls patients who are IDH2 mutant positive. In the first stage of the study patients receive ascending twice-daily oral doses of AG-221 in 28-day cycles. The primary endpoints are safety, pharmacokinetics, and pharmacodynamics, primarily using the level of 2HG. The secondary endpoint is the determination of clinical activity.

Once MTD has been reached, we plan to initiate several expansion cohorts to further evaluate the safety, tolerability, and clinical activity. We expect these cohorts to begin enrolling in 2014, and they will give us a more definitive safety and efficacy information in more homogeneous subsets of patients. Once MTD has been reached, we will also consider initiating trials in IDH2 mutant-positive solid tumors and combination trials. We look forward to sharing the initial AG-221 clinical data with you next month.

Let me now move to our IDH1 program where AG-120 is poised to enter Phase 1 clinical trials, and then later, Scott will review our third development program AG-348 for pyruvate kinase deficiency. For our IDH1 program, the FDA recently accepted our IND application, and we are on track to initiate two Phase 1 clinical trials earlier this year. AG-120 is an orally-available, selective, potent inhibitor of the mutated IDH1 protein. We recently elected to retain the US development and commercialization rights for AG-120 under our agreement with Celgene, with Celgene retaining its option to ex-US rights. Duncan will go into more detail on this shortly.

In addition to the hematologic cancers, like acute leukemia, mutations in IDH1 have been identified in a significant number of patients with difficult-to-treat cancers, such as the gliomas, Chondrosarcoma, and Cholangiocarcinoma, where the treatment options are limited and the prognosis for patients is poor. These provide an important opportunity for the rapid development of a targeted therapy like AG-120.

The Phase 1 trials for AG-120, one in advanced solid tumors and one in advanced hematological malignancies, will only enroll patients who carry an IDH1 mutation and will begin with the dose escalation phase, followed by multiple expansion disease cohorts once the MTD and Phase 2 dose have been established.

Back in December, we announced that the Celgene extended our cancer metabolism collaboration for an additional year. Celgene has been a tremendous partner, and we are pleased to continue this collaboration with them.

Turning briefly to our lead candidate in the IEMs, AG-348 is a potent oral activator of pyruvate kinase for the treatment of patients with pyruvate kinase deficiency. We have completed IND-enabling studies for AG-348 and expect to initiate Phase 1 clinical trials in healthy volunteers in mid 2014. Scott will go into further detail about this program shortly.

Since we opened our labs five years ago, we have worked hard to build a robust, multi-product, first-in-class pipeline in a new and disruptive area of biology that we hope will lead to a series of important medicines for both patients with cancer and those with the rare genetic diseases of metabolism. In 2013, we also successfully completed our initial public offering, allowing us to end the year in a very strong financial position with a runaway to drive all of our lead programs to meaningful clinical milestones and with a superb investors base.

We continue to hire great people and focus on building a culture that provides the environment for the discovery and development of breakthrough therapies. Looking ahead to the end of the year, we expect to have all three of our lead programs in clinical development, all driven by patient-derived biomarkers. As you can see, we are advancing these programs very quickly and efficiently. With that, I'll now turn the call over to Scott Biller, our Chief Scientific Officer.

Thanks, David. At Agios, we're building some broad first-in-class portfolio drug candidates in cancer metabolism and inborn errors of metabolism. David reviewed with you our clinical programs of mutant IDH inhibitors AG-221 and AG-120, and I'm going to spend some time reviewing our progress with AG-348, a therapy for pyruvate kinase deficiency, a severe and neglected genetic disease of metabolism.

As with our entire IEM portfolio, Agios has worldwide rights to AG-348. AG-348 is designed to treat pyruvate kinase deficiency, a rare form of hemolytic anemia that is usually diagnosed in infancy and affects approximately 1,000 to 3,000 patients in the US, with a similar numbers ex US. This disease results from mutations in pyruvate kinase R, also called PKR, an enzyme in glycolysis that provides energy in the form of ATP for the red blood cell.

AG-348 is a potent, orally-available, small-molecule activator of the mutated pyruvate kinase enzyme, a highly-targeted therapeutic candidate for this a debilitating disease. We believe there is a well-established clinical and regulatory pathway for AG-348 based on approved medicines developed for the treatment of other anemias. However, there are currently no available treatments for pyruvate kinase deficiency other than supportive care, which includes splenectomy, transfusion support, and chelation therapy.

The preclinical data on AG-348 that we presented at ASH in December support its efficacy in correcting the underlying metabolic lesion in PK-deficient red blood cells. The results demonstrate that AG-348 potently activates a spectrum of pyruvate kinase-mutant proteins and corrects the metabolic dysregulation in patient-derived blood samples ex vivo, including the restoration of ATP levels. These data support the hypothesis that drug intervention with AG-348 will restore glycolic pathway flux and normalized red blood cell metabolism in humans.

We have completed IND-enabling studies for AG-348, and we remain on track to initiate clinical trials in mid 2014. We will start Phase 1 trials in healthy volunteers with a single ascending dose escalation study, followed by multiple ascending dose study. These will be randomized, placebo-controlled trials at a single experienced US site. The primary endpoints will be safety, pharmacokinetics, and pharmacodynamics. The results from these studies will allow us to select the appropriate dose to move rapidly into a proof-of-concept study in patients with pyruvate kinase deficiency.

Following our first three therapeutic candidates, we have a robust research portfolio in both cancer metabolism and the inborn errors of metabolism. This portfolio is fueled by our continuing build and investment in platform technologies in cellular metabolism. We have successfully validated multiple novel targets, both in oncology and the rare metabolic diseases, several of which have moved into the drug discovery phase. These programs are all first-in-class innovative efforts that have been illuminated by deep scientific insight provided by Agios scientists.

In addition, these programs all follow the precision medicine paradigm in that we expect to have robust patient selection strategy with a genomic and metabolic biomarkers prior to entering clinical trials. Duncan Higgons, our COO, will now walk you through the specifics of our Celgene collaboration. Duncan?

Thanks, Scott. As David has already mentioned, in December of last year, Celgene extended our exclusive research collaboration in the area of cancer metabolism for an additional year. The collaboration began in April 2010, and the discovery phase of this collaboration has now been extended through April 2015. This extension means that they continue to have the option to obtain exclusive rights for the further development and commercialization of certain programs and geographies under the collaboration, while we retain rights to others.

They also have the option to extend the research collaboration for one additional year, potentially through April 2016. The development and commercialization of programs resulting from the collaboration fall into two categories. For programs in the first category, Celgene can choose to license worldwide rights, either upon IND acceptance or at the end of Phase 1. Celgene will pay all development costs for these programs. In addition to milestones and royalties, Agios can choose to participate in co-promotion activities in the US with Celgene. AG-221 falls into this first category.

In the second category, we have the option to retain full rights to develop and commercialize medicines in the US. For example, in the case of AG-120, we recently exercised the option for US development and commercialization rights, with Celgene retaining the option to ex-US rights. Agios and Celgene will equally share development costs for this program. For all programs, Agios is eligible to receive up to $120 million in potential milestones, as well as royalties on sales. Celgene has been a great partner on many different levels, and we are looking forward to the future success of this collaboration.

With that, I'll turn you over to Glenn Goddard, our Senior Vice President of Finance.

Thanks, Duncan. Agios is in a very strong financial position today. We have a robust and efficient R&D plan, a successful cancer metabolism collaboration with Celgene, and we believe that we are well capitalized to drive our lead programs to meaningful clinical milestones. As David mentioned, we are very pleased to have successfully completed our initial public offering in July of last year, raising net proceeds of $111 million. In addition, Celgene purchased $12.8 million through concurrent private placement.

Moving to our financials, our cash, cash equivalents, and investments, as of December 31, 2013, were $93.9 million (sic - see press release "$193.9 million"), compared to $128 million as of December 31, 2012. The increase was primarily driven by the proceeds from our IPO. We expect that our current cash will fund operations at least until the fourth quarter of 2016.

Our collaboration revenue was $6.7 million in the fourth quarter of 2013, compared to $6.3 million in the fourth quarter of 2012. Under our Celgene collaboration, we are recognizing revenue related to the upfront license fee and the October 2011 extension payment over a six-year period. In the second quarter of 2014, we expect to receive a $20 million extension payment from Celgene related to the extension of the research portion of the collaboration agreement.

Research and development expenses were $15.3 million in the fourth quarter of 2013, compared to $11.2 million in the fourth quarter of 2012. This increase was largely due to the increased spending on clinical activities for AG-221, along with IND-enabling activities for AG-120 and AG-348. General and administration expenses were $3.7 million in the fourth quarter for 2013, compared to $1.6 million in the fourth quarter of 2012. This increase was largely related to the expense of supporting a public company operations.

Looking ahead to the rest of 2014, we expect to announce key milestones from each of our three lead programs during the year. For AG-221, we expect to present an initial dose escalation data from our Phase 1 study at AACR in April. We also expected to initiate expansion cohorts late in the year. For AG-120, we plan to initiate two Phase 1 clinical trials in early 2014, one in advanced solid tumors and one in advanced hematological malignancies. Both studies will only enroll patients that carry an IDH1 mutation. For AG-348 we anticipate initiating single and multiple ascending-dose studies in healthy volunteers in mid 2014.

We'll now open up the call for Q&A. Operator?

(Operator Instructions)

Geoff Meacham, JPMorgan.

Hello, guys. This is Anupam Rama in for Geoff Meacham. Thanks for taking our question. I just got a quick question on the AG-120 trial. You mentioned a few indications that might be potentially used in that trial, but have you decided which exact indications are going to be used?

And then also a quick follow-on. What are you learning about IDH1 mutation and the prevalence in some of these indications? I think there was a recent publication in Clinical Opinion of Gastroenterology that showed for cholangiocarcinoma, that IDH mutations could be as high -- between 15% and 30% of the mutations for that disease. Thanks.

Yes. Thanks for your question. So I'll answer both those questions. This is David. I'll start with the first one around the types of patients that we will focus on in the solid tumor trial for AG-120. And so the way this trial has been designed is to allow any solid tumor malignancy that carries an IDH1 mutation into the trial. And we think that's where oncology drug development should be going, focusing less on the histology of the tumor but more on the molecular driver of the cancer.

So in the dose-escalation phase, patients with a variety of different malignancies will come into that trial to understand, obviously, safety, pharmacokinetics, pharmacodynamics. And then once we get to an appropriate dose that we know affects the biomarker and is safe, then we'll do disease-specific cohorts, and we'll focus on the major diseases in which we know the IDH1 mutation occurs. I've mentioned some of them, like gliomas, cholangiocarcinoma, chondrosarcoma, T-cell lymphoma, but there are others as well, and we'll make those final decisions as we get closer to that stage.

With respect to your second question around how do we think about refining the numbers? We do know that the IDH1 an IDH2 mutation, we believe, are very important in driving mutations in a wide range of both solid and liquid tumors.

These numbers are going to continue to be refined over the next several years as we and our collaborators do more and more research understanding how often these mutations occur. But the other, as you know, is that more and more patients are now having their tumors sequenced, either at the time of diagnosis or at relapse, in the community and the academic setting. So I suspect over the next several years, we'll see a refinement, and probably see more diseases pop up that we're not aware of today that carry these mutations.

Great. Thanks for taking our question.

Howard Laing, Leerink Partners.

Regina [Wong-Bowling] on for Howard. Thank you for taking my questions. My first question is on AG-221. Really glad to see that initial data will be presented at the AACR, which is a big jump in timeline. That was initially expected at ASH.

Should we assume that data mature quicker than initially expected? And if you see some promising activity before reaching the MTD, will you start expansion cohorts? And then a related question, since data will be mostly for AML patients, will AML expansion cohort be your main focus?

Yes. Thanks for those questions. This is David again. So we really can't say much about what will be presented at AACR, but it's only a few weeks away until then, and then obviously, we'll look forward to presenting the data and sharing with you at that time. What I can you that is it will be the initial data from the Phase 1 dose-escalation portion of the trial. And as I mentioned on -- in my original remarks, the dose-escalation phase is continuing at this time.

With respect to the expansion cohorts, as we've always said, in this first trial, the patients are primarily those with relapsed refractory AML, but there also patients could be patients with advanced myelodysplasia and the myeloproliferative diseases. And as we approach the MTD or the appropriate biologically-relevant dose to take into the expansion cohorts, we will make a decision about exactly which subsets of patients in those three diseases that we will enroll, and we certainly will let everybody know when we initiate those expansion cohorts and give you some details about the types of patients. As I said on our remarks, we are on track, as we've said before, to initiate those expansion cohorts in 2014.

Thank you.

(Operator Instructions)

Nicholas Bishop, Cowen and Company.

Hello. Good morning. I got on the call a little late, so I apologize if you've already remarked on this, but David, you've said in the past that you would only be reporting data from the 221 trial when you had an understanding of a meaningful chunk of information, if you will. So it would be helpful if you could give any guidance about what elements of the profile of 221 you would expect to be understood once this presentation at AACR is made.

Yes. Thanks. Thanks, Nick. So what I can tell you is we do think this is the right time to present the initial clinical data. And I can't really comment on any more details than that. As I said, we are only a few weeks away, but we do think it's the right time to present the first data.

Okay. And do you happen to know when the abstract will be available for this particular presentation?

Yes. We will be sending out a release once we get all the information. We have other likely presentations and posters at AACR, so we will send out a release well in advance of the meeting so that everybody knows where and when these presentations or posters will occur.

Okay. Thanks a lot.

Terence Flynn, Goldman Sachs.

Hello. This is Lee in for Terence. Thanks for taking our question. So on the 120, you guys recently filed an IND, and it was accepted. Can you talk a little bit about the preclinical tox profile and whether in those studies you actually reached an MTD? Thanks.

Yes. Thanks for your question. So we are not really giving out a lot of detailed information about the tox program. What we have said and -- is that we were obviously very pleased with the preclinical package that we have on these molecules, not only their toxicology profile, but their pharmacological properties, and that we have a wide therapeutic margin above the dose that we know we need to lower the level of 2HG, which, as you know, is important in this disease. And obviously, the FDA agreed with us and accepted the IND.

But we're really not giving out a lot of details. We will as we get further. As we publish on the aspects of these molecules, we'll provide that at a later date, but we're very pleased and ready to initiate these trials once they get through the IRBs at the sites.

Yes. And maybe one more. On the expenses, how should we think about it? Is fourth quarter the proxy we should use? And what are the components that are going into your cash guidance? Thanks.

Yes. Sure. This is Glenn. I'll take that one. So as you look at the fourth quarter, I think that is a good representation as we move forward into 2014. What we have been saying is the cash that we ended the year with will take us through the end of 2016, and we do expect to end 2014 with at least $130 million in cash. So hopefully, that gives you a good sense.

Thank you.

Howard Liang, Leerink Partners.

Hi. Thank you for taking my follow-up. I have another question on AG-348. So just wondering what kind of preparation you need to do in order to file R&D and initiate trial in mid 2014? And after the dose-escalation study in healthy volunteer, what are the key characteristics of target candidates in terms of age and stage of disease that you are seeking to optimize?

Yes. So this is a two-part question there. I will start with the second part, which are the patient characteristics.

So remember that the first trials that we'll initiate are in normal, healthy volunteers, not in patients. And they will be a single ascending-dose trial and then multiple ascending-dose trial. Once we've looked at some of the data from that trial, understand safety, pharmacogenetics, and pharmacodynamics, we will move as quickly as we can into a clinical trial in patients with pyruvate kinase deficiency.

We have not given out yet any real details on exactly which segment of patients we are likely to enroll in that trial other than it will be adults and not pediatric. We certainly will give you more guidance and color on that at subsequent calls or meetings once we have -- once we are ready to share that. With respect to what's left to do, again, we're really pleased that we have completed all the IND activities, and we as an organization don't announce when an IND has been filed, and we'll announce when the first patient gets enrolled. And so it's all the typical activities of processing through the FDA.

Thank you. That's very helpful.

(Operator Instructions)

Joe Aguilera, BioRevolution Capital.

Congratulations on the good work. Just a question on AG-221. Assuming we hopefully see a signal in the AACR data, what would be the plan for Phase 2? How many patients? And how long would that trial take, and what would be some of the endpoints, if you can collaborate on that?

Yes. Thanks for your question. This is David. What we've always said, when we design our clinical programs, and AG-221 is a perfect example of this, there are two important features. One is, as we've always said, only enrolling patients who carry the right either genetic or metabolism-based profile, so we've really restricted the population to the patients who we think are more likely to have a clinical effect, and so that's what we've done.

The second is designing an early development program, meaning this trial, the Phase 1 and its expansion cohorts, to give us all the information we need to know so that at the end of this trial, we know which way to go. Can we move into more definitive efficacy trials, or are we doing combination trials?

And so it's a bit early to give you guidance on exactly what those subsequent trials look like until we have fully reviewed this data, and obviously, presented it over a period of time. But again, these trials are designed to give us robust, not only safety, pharmacokinetics, pharmacodynamics, a look at efficacy, but also a lot of scientific underpinnings, a lot of correlative science, and all of that will give us the information we need to design the right clinical trials. It's a bit early, though, to give you any more color on exactly what those trials look like.

But roughly, would they start either the AML and the MDS Phase 2 in 2015? Is that what you are looking at?

Yes. It's a good question. Again, we're not giving out any guidance quite yet on that. We certainly will as we get closer to reviewing all the data and presenting it.

We'll give a pretty detailed view over time, not right now, around when those trials -- if they're going to start, what they would look like, and when they'll start, et cetera. We will give that. We have given out, historically, a very good glimpse of what our early development program is, and when we're ready, we'll share the late development program as well.

And in terms of AG-120, and let's say the Phase 1 gets through there, when would we look at the Phase 2 approximately to start there?

Yes. For AG-120, we have not given out yet any guidance on when to expect to see data from that trial. We're going to wait, like we've done with AG-221, until we initiate those trials, and then we'll guide and when to see that.

And like with 221, once we get through that Phase 1 trial, or at least a fraction of it, we'll then guide what later development timelines look like. I'll remind you that our key milestones -- clinical milestones for 2014 are the AG-221 data at AACR, the initiation of the expansion cohorts in 2014, and the clinical starts for AG-120 and AG-348.

And what were the main indications that you feel could be commercially available for AG-120? I'm just looking ahead. What are the top two indications that you're going to target?

So we'll let the science dictate exactly where we move. We think that's the most important way to make those decisions, based on the quality of the signal we're seeing, as well as the need that patients have. It is pretty clear that the diseases, the subsets of which carry an IDH1 mutation, are very, very much in need of new therapies, whether it's glioma, chondrosarcoma, cholangiocarcinoma, T-cell lymphoma, and the hematologic malignancies.

At this point, we think they're all really important to explore, and we plan to explore all of them, as well as some of the other solid tumor patients that carry the mutation. Once we understand both safety and a look at efficacy, then we'll make decisions on which ones to move, but many of these are diseases that really have no standard of care available to them.

And I'm showing no further questions at this time. I would like to turn the conference back over to our host for closing remarks.

Well, I'd like to thank everybody for participating today. Thanks for all your support in the past and in the future going forward, and look forward to seeing you at future meetings. So it thanks today.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.