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Funding Overview
Cambridge, Massachusetts-based Agios Prescription drugs (NASDAQ:AGIO) accomplished its Preliminary Public Providing over a decade in the past in July 2013, elevating ~$106m through the issuance of ~5.9m shares priced at $18 per share.
The corporate developed and efficiently received approval for the isocitrate dehydrogenase-1 (IDH1) inhibitor Tibsovo, in 2017, for sufferers with relapsed or refractory (“r/r”) acute myeloid lymphoma, and for newly recognized sufferers with IDH1 mutant AML in 2019, earlier than opting to sell its whole oncology portfolio to Servier Prescription drugs, an unbiased international pharmaceutical firm, for $1.8bn plus milestone funds and 5% royalties on US gross sales of Tibsovo, in a deal which accomplished in April 2021.
The corporate’s focus switched to a brand new pipeline drug – mitapivat, which was present process two Section 3 research in transfusion-dependent and non-transfusion dependent thalassemia, and a Section 2/3 examine in Sickle Cell Illness (“SCD”).
In February 2022, the Meals and Drug Company permitted mitapivat – an activator of each wild-type and mutant pyruvate kinase (“PK”) enzymes, in accordance with Agios’ newest (Q3) quarterly report, within the indication of hemolytic anemia in adults with PK deficiency, beneath the model title Pyrukynd. The drug has subsequently been permitted in the identical indication in Europe and Nice Britain.
Hemolytic anemia is a dysfunction during which the pink blood cells are destroyed sooner than they’re made, whose signs embrace weak point, paleness, jaundice, dark-colored urine, fever, and lack of ability to do bodily exercise (in accordance with hopkinsmedicine.org), which is normally handled with blood transfusions, or glucorticoids. Agios estimates that the “prevalence of PK deficiency is between roughly 3,000 and eight,000 people in the US and EU”, and though administration believes the situation is under-diagnosed, Pyrukynd generated simply $7.4m of revenues in Q3 2023, up solely 10% year-on-year, suggesting this might not be a profitable indication for the corporate.
However, Agios has continued to develop mitapivat within the beta-thalassemia and SCD indications – each illnesses with considerably bigger affected person populations of ~20k and ~130k respectively – and its inventory worth has been climbing this week on the again of promising new information from the Section 3 “ENERGIZE” examine of Pyrukynd.
ENERGIZE Research Outcomes
Within the 194-patient Phase 3 ENERGIZE study, non-transfusion-dependent thalassemia sufferers have been randomised 2:1 to both 100mg mitapivat or placebo, and the examine met its main endpoint as therapy with mitapivat demonstrated a statistically important improve in hemoglobin response fee in comparison with placebo. 55 sufferers within the mitapivat group have been deemed “hemoglobin responders”, versus only a single affected person within the placebo arm.
The examine additionally met its key secondary endpoints of change from baseline in each FACIT-Fatigue Rating and hemoglobin focus, and from a security perspective, the mitapivat arm was reportedly much like the placebo arm by way of hostile occasions.
In abstract, the outcomes have been arguably robust sufficient to assist a profitable FDA approval push for the orally obtainable remedy and open up a a lot bigger market alternative, however administration plans to attend till outcomes from the second Section 3 examine, ENERGIZE-T, which incorporates transfusion-dependent sufferers, come obtainable. Information from that ~240 affected person examine is anticipated mid-2024.
Agios hopes to have the ability to file its New Drug Utility in search of a broad indication for all thalassemia sufferers, and all being properly, expects to see Pyrukynd’s label expanded in 2025. The corporate says it’s in search of international business companions, with the Gulf area apparently residence to ~70k thalassemia sufferers.
As such, it is no marvel Agios shares have been climbing since administration offered the ENERGIZE information on third January, from ~$22 per share, to ~$25 per share, though traded worth on the time of writing is $24 per share. Not solely does the info assist a possible approval in beta-thalassemia in 2025, however it could additionally bode properly for the Section 2/3 RISE UP examine Agios is conducting in SCD, a a lot bigger market, which has already met its Section 2 portion main endpoint of hemoglobin response in sufferers in each 50 mg and 100 mg twice every day mitapivat arms.
Wanting Forward – Does Agios Advantage A Increased Valuation Amid Aggressive Threats?
Information of the profitable ENERGIZE examine rocked shares in a number of gene remedy firms which have additionally developed beta-thalassemia and SCD therapies – most notably, CRISPR Therapeutics (CRSP), which secured approval for its ex vivo cell remedy CASGEVY to deal with Sickle Cell Illness in early December, and bluebird bio (BLUE) whose Lyfgenia cell remedy was additionally permitted in SCD on the identical day.
Bluebird’s Zyntelgo is already permitted to deal with beta thalassemia, whereas CRISPR Therapeutics’ and associate Vertex’ (VRTX) CASGEVY may very well be permitted in transfusion-dependent beta thalassemia (“TDT”) on March twenty fourth, offered the FDA approves the drug, which appears seemingly given the approval in SCD.
Not like orally obtainable Pyrukynd, CASGEVY and Lyfgenia supply everlasting, “one and carried out” cures for SCD and TDT – in CASGEVY’s pivotal examine in TDT, 24/27 TDT sufferers achieved the first endpoint of transfusion-independence for at the least 12 consecutive months, and 16/17 SCD sufferers 16/17 (94.1%) achieved the first endpoint of freedom from vaso-occlusive crises (“VOCs”) for at the least 12 consecutive months. Bluebird’s information is equally compelling.
The key benefit that oral Pyrukynd might have is that each CASGEVY and Lyfgenia require sufferers to be hospitalised for a interval of a number of weeks in order that bone marrow cells may be harvested, engineered in a lab, after which reinfused again into the affected person. The remedy has been proven to be each secure, efficient, and long-lasting, however there are fears sufferers will object to the extended interval in hospital and the considerably radical nature of the therapy. Moreover, the businesses are initially specializing in a affected person pool of ~24k sufferers with the very best want and functionality of present process remedy, leaving a big portion of the SCD market untouched.
Agios – which hopes to safe approval for Pyrukynd in SCD by 2026, is 2/3 years behind its rivals on this indication, and sure at the least a 12 months behind them in TDT too.
That provides Bluebird and CRISPR Therapeutics/Vertex loads of time to influence sufferers and physicians that its therapy is secure and efficient, increase its addressable market, and doubtlessly safe the reimbursement offers with insurers that can enable the excessive one-time value of the gene therapies – $3.1m within the case of Lyfgenia, and $2.1m within the case of CASGEVY – to be met on behalf of sufferers.
The businesses argue that the one-off prices of their therapies are far decrease than the lifetime value of treating a affected person with TDT or SCD, to not point out the very fact both remedy might doubtlessly lengthen the lives of some sufferers and permit them to guide extra productive and wholesome lives.
However, the market doesn’t appear to be shopping for the gene remedy story but, at the least in these indications, and oral therapies are nonetheless extremely prized – for instance, in 2022, Pharma big Pfizer (PFE) paid $5.4bn to amass International Blood Therapeutics (“GBT”), which markets and sells Oxbryta, a once-daily oral remedy indicated for SCD. Oxbryta earned revenues of ~$230m throughout the primary 9 months of 2023.
Agios’ market cap is $1.3bn on the time of writing, and its share worth $23.4, down 16% on a 12-month foundation, and up 6% year-to-date. Talking on the corporate’s Q2 2023 earnings call, Agios CEO Brian Goff informed analysts he believed Pyrukynd might obtain revenues of $200 – $225m in hemolytic anemia, earlier than including:
And naturally, the larger image for us anyway, is that we’re approaching the readout of the Thalassemia information. That may be a meaningfully bigger launch that has potential in 2025. And we could also be in a state of affairs we begin to have a look at the collective steering of a number of launches.
With TDT being a market that’s estimated to be ~5x bigger than PK-deficient hemolytic anemia, we’d speculate that Pyrukynd might obtain “blockbuster” revenues (>$1bn each year) in these 2 indications alone if administration expectations have been met.
Arguably that’s too excessive, given present Oxbryta gross sales in SCD, a market that’s an order of magnitude bigger than beta thalassemia, are apparently ~$300m each year, though Pfizer has previously instructed that it could possibly tease >$3bn on peak annual gross sales from Oxbryta, and two pipeline medication in International Blood Therapeutics portfolio across the TDT and SCD indications.
Concluding Ideas – Money Wealthy, However Agios Has Floor To Make Up – Threat Reward Alternative Is Finely Poised
As of Q3 2023, Agios reported a money place of $872m, a web loss for the quarter of $91.3m, and $285m throughout the year-to-date. This means Agios, regardless of a heavy R&D spend, has a prolonged funding runway in place and traders needn’t worry dilutive fundraising actions within the brief time period.
Clearly, revenues from Pyrukynd in PK-deficient hemolytic anemia – $7.4m in Q3, and $19.7m year-to-date – are nowhere close to as excessive as administration has instructed they might develop – solely time will inform if this a real triple-digit-million income alternative or not, however on this indication alone, Pyrukynd and Agios in all probability don’t deserve a market cap valuation >$1bn.
The chance in TDT, nevertheless, is now a lot clearer after the constructive ENERGIZE information, and an approval in 2025 could also be thought-about seemingly, though there may be nonetheless one other Section 3 information set to evaluate, in transfusion-dependent sufferers, which can characterize the bigger market alternative.
Even when permitted, Agios faces some business challenges, in opposition to current therapeutic choices, and sure in opposition to CASGEVY and Lyfgenia too – whereas Agios is a cash-rich firm, Vertex, which boasts >$10bn of money on its steadiness sheet, has the ability to outspend its rival each by way of advertising and marketing and R&D, engaged on making the cell remedy extra palatable for sufferers, which, s talked about, might improve its addressable market in time.
In any other case, Agios lists rivals as follows in its 2022 annual report/10-Okay submission:
not too long ago permitted therapies for thalassemia, SCD, LR MDS and PKU embrace Reblozyl® from Merck (MRK)/BMS (BMY) (previously Acceleron/BMS); Revlimid® from BMS; Lentiglobin® from bluebird; Adakveo® from Novartis (NVS); Oxbryta® from Pfizer (PFE); Kuvan® and Palynziq® from BioMarin (BMRN) and Endari® from Emmaus
There’s important single-asset threat hooked up to an funding in Agios – though the corporate is creating a novel PK activator, AG-946, which has entered a Section 2 examine in myelodysplastic syndrome and a Section 1 in SCD, and can be creating a PAH stabiliser indicated for Phenylketonuria, and has in settlement in place with the RNA-interference specialist Alnylam (ALNY) to analyze short-interfering RNA targets.
However, many of the worth implied by Agios’ market cap valuation derives from its alternative with mitapivat/Pyrukynd. My concern could be round whether or not thalassemia is a bona fide triple-digit million alternative, with rival therapy choices in place, and a possible reluctance for sufferers to hunt therapy, and likewise whether or not Agios and mitapivat/Pyrukynd will merely arrive on the market too late to problem newly permitted cell therapies, and likewise maybe Pfizer’s Inclacumab, acquired from GBT and already in Section 3 research to deal with vaso-occlusive crises in SCD.
Alternatively, with information catalysts arriving each few months, robust information offered so far, a handy oral dosing routine for mitapivat, and a chance to achieve approval in a >100k affected person market in SCD, there are a number of causes to imagine Agios’ valuation can develop, particularly because the market takes a “wait and see” method to gene therapies on this market. Would a Large Pharma make a bid for Agios forward of an SCD information readout?
That might in all probability be too dangerous a transfer for a Large Pharma to make, however it could arguably be justified, given the energy of thalassemia information. A speculative funding in Agios on the present worth may show to be a clever funding selection in 2024. The corporate has already proven it could possibly develop a drug, safe business approval, and earn $2bn promoting it to an social gathering, in spite of everything. Maybe lightning can strike twice, this time with Pyrukynd.
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