AGIOS PHARMACEUTICALS, INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-looking Information The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023, and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 15, 2024. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations, estimates, forecasts and projections, and the beliefs and assumptions of our management, and include, without limitation, statements with respect to our expectations regarding our research, development and commercialization plans and prospects, results of operations, selling, general and administrative expenses, research and development expenses, and the sufficiency of our cash for future operations. Words such as “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “strategy,” “target,” “vision,” “will,” “would” or the negatives of these words and similar expressions are intended to identify these forward-looking statements, although not all forward-looking statements contain these identifying words. Readers are cautioned that these forward-looking statements are predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by our forward-looking statements are those discussed under the heading “Risk Factors” in Part II, Item 1A and elsewhere in this report, and in our Annual Report on Form 10-K for the year ended December 31, 2023. We undertake no obligation to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as required by law. Overview We are a biopharmaceutical company committed to transforming patients’ lives through leadership in the field of cellular metabolism, with the goal of creating differentiated medicines for rare diseases, with a focus on classical hematology. With a history of focused study on cellular metabolism, we have a deep and mature understanding of this biology, which is involved in the healthy functioning of nearly every system in the body. Building on this expertise, these learnings can be rapidly applied to our clinical trials with the goal of developing medicines that can have a significant impact for patients. We accelerate the impact of our portfolio by cultivating connections with patient communities, healthcare professionals, partners and colleagues to discover, develop and deliver potential therapies for rare diseases. The lead product candidate in our portfolio, PYRUKYND® (mitapivat), is an activator of both wild-type and mutant pyruvate kinase, or PK, enzymes for the potential treatment of hemolytic anemias. In February 2022, the U.S. Food and Drug Administration, or FDA, approved PYRUKYND® for the treatment of hemolytic anemia in adults with PK deficiency in the United States. In November 2022, we received marketing authorization from the European Commission for PYRUKYND® for the treatment of PK deficiency in adult patients in the European Union, or EU. In December 2022, we received marketing authorization in Great Britain for PYRUKYND® for the treatment of PK deficiency in adult patients under the European Commission Decision Reliance Procedure. In addition, we are currently evaluating PYRUKYND® in clinical trials for the treatment of thalassemia, sickle cell disease, or SCD, and in pediatric patients with PK deficiency. We are also developing (i) AG-946 (tebapivat), a novel PK activator, for the potential treatment of lower-risk myelodysplastic syndrome, or LR MDS, and hemolytic anemias, and (ii) AG-181, our phenylalanine hydroxylase, or PAH, stabilizer for the potential treatment of phenylketonuria, or PKU. In addition to the aforementioned development programs, in July 2023 we entered into a license agreement with Alnylam Pharmaceuticals, Inc., or Alnylam, for the development and commercialization of products containing or comprised of an siRNA preclinical development candidate discovered by Alnylam and targeting the transmembrane serine protease 6, or TMPRSS6, gene, and we have begun preclinical development of a product candidate for the potential disease-modifying treatment of patients with polycythemia vera, or PV, a rare blood disorder. Alnylam License Agreement In accordance with the license agreement with Alnylam, in the year ended December 31, 2023, we made an up-front payment to Alnylam and recognized in-process research and development of $17.5 million. We will also pay Alnylam for certain expenses associated with the development of the TMPRSS6 program, and these will be recorded in our Consolidated Statements of Operations as incurred. Additionally, we are responsible to pay up to $130.0 million in potential development and regulatory milestones, in addition to sales milestones as well as tiered royalties on annual net sales, if any, of licensed products, which may 16 Table of Contents be subject to specified reductions and offsets. Because the acquired assets under the license agreement with Alnylam do not meet the definition of a business in accordance with ASC 805, Business Combinations , we accounted for the agreement as an asset acquisition. Sale of Oncology Business to Servier and Sale of Contingent Payments and Royalty Rights On March 31, 2021, we completed the sale of our oncology business to Servier Pharmaceuticals, LLC, or Servier, which represented a discontinued operation. The transaction included the sale of our oncology business, including TIBSOVO®, our clinical-stage product candidates vorasidenib, AG-270 and AG-636, and our oncology research programs for a payment of approximately $1.8 billion in cash at the closing, subject to certain adjustments, and a payment of $200.0 million in cash, if, prior to January 1, 2027, vorasidenib is granted new drug application, or NDA, approval from the FDA with an approved label that permits vorasidenib’s use as a single agent for the adjuvant treatment of patients with Grade 2 glioma that have an isocitrate dehydrogenase, or IDH, 1 or 2 mutation (and, to the extent required by such approval, the vorasidenib companion diagnostic test is granted an FDA premarket approval), or the Vorasidenib Milestone Payment, as well as a royalty of 5% of U.S. net sales of TIBSOVO® from the close of the transaction through loss of exclusivity, and a royalty of 15% of U.S. net sales of vorasidenib from the first commercial sale of vorasidenib through loss of exclusivity, or the Vorasidenib Royalty Rights, with these royalties referred to as contingent payments and recognized as income when realizable. Servier also acquired our co-commercialization rights for Bristol Myers Squibb’s IDHIFA® and the right to receive a $25.0 million potential milestone payment under our prior collaboration agreement with Celgene Corporation, or Celgene, and following the sale Servier will conduct certain clinical development activities within the IDHIFA® development program. In October 2022, we sold our rights to future contingent payments associated with the royalty of 5% of U.S. net sales of TIBSOVO® from the close of the transaction through the loss of exclusivity to entities affiliated with Sagard Healthcare Partners, or Sagard, and recognized income of $127.9 million within the gain on sale of contingent payments line item in our consolidated statements of operations for the year ended December 31, 2022. In February 2024, Servier announced that it received filing acceptance and priority review from the FDA for its NDA for vorasidenib for the treatment of certain IDH-mutant diffuse glioma and accelerated assessment from the European Medicines Agency, or EMA, for its Marketing Authorization Application, or MAA, for vorasidenib. The FDA assigned the NDA a Prescription Drug User Fee Act, or PDUFA, action date of August 20, 2024, and Servier anticipates that the European Commission will approve its MAA in the second half of 2024. In May 2024, we entered into a purchase and sale agreement to sell the Vorasidenib Royalty Rights to Royalty Pharma Investments 2019 ICAV, or Royalty Pharma, for $905.0 million in cash, or the Upfront Payment, which sale is contingent upon NDA approval of vorasidenib by the FDA on or before October 31, 2024, and other customary closing conditions. Upon consummation of the sale, Royalty Pharma will acquire 100% of the Vorasidenib Royalty Rights payments made by Servier on account of up to $1.0 billion in net sales for each calendar year. In addition, any such Vorasidenib Royalty Rights payments made by Servier on account of U.S. net sales in each calendar year in excess of $1.0 billion will be split, with Royalty Pharma having the rights to a 12% earn-out on those excess payments and Agios retaining the rights to a 3% earn-out on those excess payments, or the Retained Earn-Out Rights. We retain our rights to the potential Vorasidenib Milestone Payment. Financial Operations Overview General Since inception, our operations have primarily focused on organizing and staffing our company, business planning, raising capital, assembling our core capabilities in cellular metabolism and classical hematology, identifying potential product candidates, undertaking preclinical studies, conducting clinical trials, establishing a commercial infrastructure, preparing for and executing on the commercial launch of PYRUKYND® and, prior to the sale of our oncology business to Servier on March 31, 2021, marketing TIBSOVO® and IDHIFA®. Through March 31, 2021, we financed our operations primarily through proceeds from the sale of our royalty rights, commercial sales of TIBSOVO®, funding received from our collaboration agreements, private placements of our preferred stock, our initial public offering of our common stock and concurrent private placement of common stock to an affiliate of Celgene, and our follow-on public offerings. Following the sale of our oncology business to Servier on March 31, 2021, we have financed and expect to continue to finance our operations primarily through cash on hand, royalty payments from Servier with respect to U.S. net sales of TIBSOVO® prior to the sale of these contingent payments to Sagard, proceeds from the sale of contingent payments to Sagard, a potential Upfront Payment from Royalty Pharma and a potential Vorasidenib Milestone Payment from Servier, both of which are contingent on if the NDA for vorasidenib is approved by the FDA, potential royalty payments with respect to the Retained Earn-Out Rights, the actual and potential future sales of PYRUKYND® and, potentially, collaborations, strategic alliances, licensing arrangements and other nondilutive strategic transactions. In addition, we may pursue opportunistic debt offerings, and equity or equity-linked offerings. 17 Table of Contents Additionally, since inception, we have historically incurred significant operating losses. Our net losses for the six months ended June 30, 2024 and 2023 were $177.7 million and $164.8 million, respectively. As of June 30, 2024, we had an accumulated deficit of $1.0 billion. We expect to incur significant expenses and net losses until such time we are able to report profitable results. Our net losses may fluctuate significantly from year to year. We expect that we will continue to incur significant expenses as we continue to advance and expand clinical development and commercialization activities for PYRUKYND®, including with respect to our anticipated regulatory submissions for the treatment of thalassemia; advance and expand clinical development of AG-946 (tebapivat); continue to advance AG-181, our PAH stabilizer; continue preclinical development of a licensed siRNA development candidate pursuant to our license agreement with Alnylam; expand and protect our intellectual property portfolio, including by in-licensing or acquiring assets for pipeline growth; and hire additional commercial and development personnel. Revenues Our wholly owned product, PYRUKYND®, received approval from the FDA on February 17, 2022, for the treatment of hemolytic anemia in adults with PK deficiency in the United States. Upon FDA approval of PYRUKYND® in the United States, we began generating product revenue from sales of PYRUKYND®. We sell PYRUKYND® to a limited number of specialty distributors and specialty pharmacy providers, or collectively, the Customers. These Customers subsequently resell PYRUKYND® to pharmacies or dispense PYRUKYND® directly to patients. In addition to distribution agreements with Customers, we enter into arrangements with healthcare providers and payors that provide for government-mandated and/or privately-negotiated rebates, chargebacks and discounts with respect to the purchase of PYRUKYND®. In July 2024, we entered into a distribution agreement with NewBridge Pharmaceuticals FZ-LLC, or the NewBridge Agreement, pursuant to which we granted NewBridge the right to commercialize PYRUKYND® in Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. For further discussion of our revenue recognition policy, see Note 8, Product Revenue , to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q. In the future, we expect to continue to generate revenue from product sales, and we may potentially generate revenue from royalties on product sales, milestone payments, and upfront payments under existing arrangements or future collaborations or licensing agreements. Cost of Sales Cost of sales consists primarily of manufacturing costs for sales of PYRUKYND®. Based on our policy to expense costs associated with the manufacturing of our products prior to regulatory approval, certain of the manufacturing costs associated with product shipments of PYRUKYND® recorded during the three and six months ended June 30, 2024 and 2023 were expensed prior to February 17, 2022, and, therefore, are not included in costs of sales during the three and six months ended June 30, 2024 and 2023. The amounts excluded from cost of sales were not significant during the three and six months ended June 30, 2024 and 2023. Inventories are reviewed periodically to identify excess or obsolete inventory based on projected sales activity as well as product shelf-life. Expired inventory is disposed of, and the related costs are recognized as cost of sales in our consolidated statements of operations, when, based on the expiry date, we do not believe we are able to sell the inventory. We have not reserved for excess or obsolete inventory during the three and six months ended June 30, 2024 and 2023. Research and Development Expenses Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect research and development costs related to our portfolio to increase as our product candidate development programs progress. However, the successful development of our product candidates is highly uncertain. As such, at this time, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development of and to commercialize these product candidates. We are unable to predict the amount of net cash inflows from PYRUKYND® or any of our product candidates. This is due to the numerous risks and uncertainties associated with developing medicines, including the uncertainty of: 18 Table of Contents • establishing an appropriate safety profile with an investigational new drug application, or IND, and/or NDA-enabling toxicology and clinical trials; • successfully enrolling in, and completion of, clinical trials; • receiving marketing approvals from applicable regulatory authorities; • establishing compliant commercial manufacturing capabilities or making arrangements with third-party manufacturers; • obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates; • launching commercial sales of the products, if and when approved, in the United States or in other jurisdictions, whether alone or in collaboration with others, including pursuant to the NewBridge Agreement; and • maintaining an acceptable safety profile of the products following approval. A change in the outcome of any of these variables with respect to the development of any of our product candidates would significantly change the costs and timing associated with the development of that product candidate. Research and development expenses consist primarily of costs incurred for our research activities, including our drug discovery efforts, and the development of our product candidates, which include: • employee-related expenses, including salaries, benefits and stock-based compensation expense; • expenses incurred under agreements with third parties, including contract research organizations, or CROs, that conduct research and development and both preclinical and clinical activities on our behalf, and the cost of consultants; • the cost of lab supplies and acquiring, developing and manufacturing preclinical and clinical study materials; and • facilities, depreciation, and other expenses, which include direct and allocated expenses for rent and the maintenance of facilities, insurance and other operating costs. The following summarizes our most advanced programs: PYRUKYND® (mitapivat): First-in-Class PK Activator We are developing PYRUKYND® for the treatment of PK deficiency and other hemolytic anemias such as thalassemia and SCD. PYRUKYND® is an orally available small molecule and a potent activator of the wild-type and mutated PK enzymes. In February 2022, the FDA approved PYRUKYND® for the treatment of hemolytic anemia in adults with PK deficiency in the United States. In November 2022, we received marketing authorization from the European Commission for PYRUKYND® for the treatment of PK deficiency in adult patients in the EU. In December 2022, we received marketing authorization in Great Britain for PYRUKYND® for the treatment of PK deficiency in adult patients under the European Commission Decision Reliance Procedure. In addition, we are currently evaluating PYRUKYND® in clinical trials for the treatment of thalassemia, SCD, and in pediatric patients with PK deficiency. We have worldwide development and commercial rights to PYRUKYND® and expect to fund the future development and commercialization costs related to this program. PYRUKYND® has been granted orphan drug designation for the treatment of PK deficiency by the FDA and the EMA. Additionally, PYRUKYND® has received orphan drug designation from the FDA for the treatment of thalassemia and SCD, and breakthrough medicine designation by the Saudi Food and Drug Authority for the treatment of thalassemia. We have built our commercial infrastructure to support the commercial launch of PYRUKYND® in adult PK deficiency in the United States. In connection with our regulatory approvals in the EU and Great Britain, we are currently providing access to PYRUKYND® on a free of charge basis for eligible patients in those jurisdictions through a global managed access program. We provide access to PYRUKYND® for adult patients with PK deficiency in other jurisdictions upon request through the global managed access program, on either a free of charge or for charge basis. Our global managed access program has not had a significant impact on our business, financial condition or results of operations. Beyond the global managed access program, we continue to evaluate options for the commercialization of PYRUKYND® outside of the United States, including through exploring potential partnership opportunities, such as the NewBridge Agreement which we entered into in July 2024. We are evaluating PYRUKYND® in numerous clinical trials, including the following: • An extension study evaluating the long-term safety, tolerability and efficacy of treatment with PYRUKYND® in patients from ENERGIZE, our completed phase 3, double-blind, randomized, placebo-controlled multicenter study pivotal trial of PYRUKYND® in adults with non-transfusion-dependent alpha- or beta-thalassemia. We announced topline data for ENERGIZE in January 2024 and a more detailed analysis of the data in June 2024. A total of 194 patients were enrolled 19 Table of Contents in the study, with 130 randomized to PYRUKYND® 100 mg twice-daily, and 64 randomized to matched placebo. 122 patients (93.8%) in the PYRUKYND® arm and 62 patients (96.9%) in the placebo arm completed the 24-week double-blind period of the study. The study met the primary endpoint of hemoglobin response, where treatment with PYRUKYND® demonstrated a statistically significant increase in hemoglobin response compared to placebo, as 42.3% of patients in the PYRUKYND® arm achieved a hemoglobin response, compared to 1.6% of patients in the placebo arm (2-sided p<0.0001). Treatment with PYRUKYND® also demonstrated statistically significant improvements compared to placebo for both key secondary endpoints: (i) change from baseline in average Functional Assessment of Chronic Illness Therapy-Fatigue, or FACIT-Fatigue, subscale score from week 12 to week 24 and (ii) change from baseline in average hemoglobin concentration from week 12 to week 24. During the 24-week double-blind period, four (3.1%) subjects in the PYRUKYND® arm experienced adverse events, or AEs, leading to discontinuation, and there were no AEs in the placebo arm leading to discontinuation. We aim to submit an sNDA for PYRUKYND® in thalassemia to the FDA by the end of 2024. • An extension study evaluating the long-term safety, tolerability and efficacy of treatment with PYRUKYND® in patients from ENERGIZE-T, our completed phase 3, double-blind, randomized, placebo-controlled multicenter study evaluating the efficacy and safety of PYRUKYND® as a potential treatment for adults with transfusion-dependent alpha- or beta-thalassemia, defined as 6 to 20 red blood cell, or RBC, units transfused and ≤ six-week transfusion-free period during the 24-week period before randomization. The primary endpoint of the trial is percentage of patients with transfusion reduction response, defined as a ≥50% reduction in transfused RBC units with a reduction of ≥2 units of transfused RBCs in any consecutive 12-week period through week 48 compared with baseline. Secondary endpoints include additional transfusion reduction measures and percentage of participants with transfusion-independence. We announced topline data for ENERGIZE-T in June 2024. A total of 258 patients were enrolled in the study, with 171 randomized to PYRUKYND® 100 mg twice-daily and 87 randomized to matched placebo. 155 patients (90.6%) in the PYRUKYND® arm and 83 patients (95.4%) in the placebo arm completed the 48-week double-blind period of the study. The study met the primary endpoint of transfusion reduction response, where treatment with PYRUKYND® demonstrated a statistically significant reduction in transfusion burden compared to placebo, as 30.4% of patients achieved a transfusion reduction response, compared to 12.6% of patients in the placebo arm (2-sided p=0.0003). Treatment with PYRUKYND® also demonstrated a statistically significant reduction in additional measures of transfusion reduction response compared to placebo as assessed by the three key secondary endpoints: (i) ≥50% reduction in transfused RBC units in any consecutive 24-week period through week 48 compared with baseline, (ii) ≥33% reduction in transfused RBC units from week 13 through week 48 compared with baseline, and (iii) ≥50% reduction in transfused RBC units from week 13 through week 48 compared with baseline. In addition, a higher proportion of patients in the PYRUKYND® arm (9.9%) compared to the placebo arm (1.1%) achieved the secondary endpoint of transfusion independence (transfusion-free for ≥8 consecutive weeks through week 48). During the 48-week double-blind period, 5.8% of the patients in the PYRUKYND® arm experienced an AE leading to discontinuation, compared to 1.2% of patients in the placebo arm. As mentioned above, we aim to submit an sNDA for PYRUKYND® in thalassemia to the FDA by the end of 2024. • RISE UP, a phase 2/3 study evaluating the efficacy and safety of PYRUKYND® in SCD patients who are 16 years of age or older, have had between two and 10 sickle cell pain crises in the past 12 months, and have hemoglobin within the range of 5.5 to 10.5 g/dL during screening. We enrolled 79 patients in the phase 2 portion of the trial, with 26 patients in the 50 mg twice daily mitapivat arm, 26 patients in the 100 mg twice daily mitapivat arm and 27 patients in the placebo arm. The primary endpoints of the phase 2 portion of the trial were hemoglobin response, defined as ≥ 1 g/dL increase in average hemoglobin concentration from week 10 to week 12 compared to baseline, and safety. In June 2023, we announced the phase 2 portion of this trial had achieved its primary endpoint of hemoglobin response in patients in both 50 mg and 100 mg twice daily mitapivat arms. 46.2% of patients (n=12) in the 50 mg twice daily mitapivat arm and 50.0% of patients (n=13) in the 100 mg twice daily mitapivat arm achieved a hemoglobin response, compared to 3.7% of patients (n=1) in the placebo arm (2-sided p=0.0003 and 0.0001, respectively). In December 2023, we announced the following additional results of the phase 2 portion of the trial: (i) the least-squares mean (95% confidence interval) for average change from baseline in hemoglobin levels, from week 10 through week 12, for patients in the 50 mg twice daily mitapivat, 100 mg twice daily mitapivat, and placebo arms, respectively, was 1.11 (0.77, 1.45) g/dL, 1.13 (0.79, 1.47) g/dL, and 0.05 (−0.28, 0.39) g/dL; (ii) we observed improvements in annualized rates of sickle cell pain crises as the annualized rate of sickle cell pain crises (95% confidence interval) for patients in the 50 mg twice daily and 100 mg twice daily mitapivat arms, respectively, was 0.83 (0.34, 1.99) and 0.51 (0.16, 1.59), compared to 1.71 (0.95, 3.08) for patients in the placebo arm; (iii) we observed improvement in patient-reported fatigue scores in the 50 mg twice daily mitapivat arm compared to the placebo arm, and the least-squares mean (95% confidence interval) for average changes from baseline in patient-reported fatigue score, from week 10 through week 12, for patients in the 50 mg twice daily mitapivat, 100 mg twice daily mitapivat, and placebo arms, respectively, was −3.80 (−7.16, −0.45), −0.10 (−3.27, 3.08), and −0.17 (−3.40, 3.07). The safety profile for mitapivat observed in the phase 2 portion of the trial was generally consistent with previously reported data in other studies of SCD and other hemolytic anemias. The most common 20 Table of Contents treatment-emergent adverse events, or TEAEs, in the 50 mg BID, 100 mg BID, and placebo arms, respectively, were: headache (n=6, 6, 7), arthralgia (n=3, 5, 9), dysmenorrhea (n=0, 3, 0), pain (n=3, 3, 2), pain in extremity (n=1, 3, 6), back pain (n=4, 2, 3), nausea (n=1, 2, 4), fatigue (n=4, 1, 5), and influenza-like illness (n=1, 1, 3). There were no serious TEAEs attributed to mitapivat and there were no AEs leading to drug reduction, discontinuation, interruption or death in either the mitapivat or the placebo arms. Of the 79 patients enrolled in the study, 73 continued into the Phase 2 open-label extension period. In October 2023, we enrolled the first patient in the phase 3 portion of this trial. The phase 3 portion includes a 52-week randomized, placebo-controlled period in which participants will be randomized in a 2:1 ratio to receive the recommended (100 mg twice daily) PYRUKYND® dose level or the placebo. The primary endpoints are hemoglobin response, defined as ≥1 g/dL increase in average hemoglobin from baseline to week 52, and annualized rate of sickle cell pain crises. Participants who complete either the phase 2 or phase 3 portion will have the option to move into a 216-week open-label extension period to continue to receive PYRUKYND®. We anticipate completing enrollment by the end of 2024 and announcing topline data for this trial in 2025. • ACTIVATE-kids and ACTIVATE-kidsT, double-blind phase 3 studies evaluating the efficacy and safety of PYRUKYND® as a potential treatment for PK deficiency in not regularly transfused and regularly transfused patients between one and 18 years old, respectively. The primary endpoint of ACTIVATE-kidsT is transfusion reduction response, defined as ≥33% reduction in total RBC transfusion volume from week 9 through week 32 of the double-blind period. We announced topline data for ACTIVATE-kidsT in August 2024. Using Bayesian methodology, the prespecified statistical criterion for the primary endpoint in ACTIVATE-kidsT was not met using low or moderate borrowing of data from the ACTIVATE-T study in adults. In the study, 28.1% of patients in the mitapivat arm achieved the primary endpoint of transfusion reduction response, compared to 11.8% of patients in the placebo arm. Transfusion-free response and normal hemoglobin response were secondary endpoints in this study and only observed in patients in the mitapivat arm. In the 32-week double-blind treatment period, mitapivat was generally safe and well-tolerated, with safety results consistent with the safety profile for mitapivat previously observed in adults with PK deficiency who are regularly transfused. We plan to provide a more detailed analysis of the data from this trial at an upcoming medical meeting. The primary endpoint of ACTIVATE-kids is percentage of patients with hemoglobin response, defined as ≥1.5 g/dL increase in hemoglobin concentration from baseline that is sustained at two or more scheduled assessments at weeks 12, 16, and 20 during the double-blind period. ACTIVATE-kids has completed enrollment and we anticipate announcing topline data for this trial in 2025. • An extension study evaluating the long-term safety, tolerability and efficacy of treatment with PYRUKYND® in patients from ACTIVATE and ACTIVATE-T, our completed pivotal trials of PYRUKYND® in not regularly transfused and regularly transfused adult patients with PK deficiency. • An extension study evaluating the long-term safety, tolerability and efficacy of treatment with PYRUKYND® in patients from DRIVE PK, our completed global phase 2, first-in-patient, open-label safety and efficacy clinical trial of PYRUKYND® in adult, not regularly transfused patients with PK deficiency. AG-946 (tebapivat): Novel PK Activator We are developing AG-946 (tebapivat), a novel PK activator, for the potential treatment of LR MDS and hemolytic anemias. We are evaluating AG-946 (tebapivat) in a phase 1 trial of AG-946 (tebapivat) in healthy volunteers and in patients with SCD. We have presented data from the healthy volunteer cohorts, and we have initiated the SCD patient cohort of this phase 1 trial. We initiated a phase 2a clinical trial of AG-946 (tebapivat) in adults with LR MDS in the third quarter of 2022, and the trial has completed enrollment with 22 patients, including 12 patients classified as non-transfused and 10 patients classified as low transfusion burden. Patients received 5 mg of AG-946 (tebapivat) once daily for up to 16 weeks. The two primary endpoints of the trial were transfusion independence (for patients classified as low transfusion burden), defined as transfusion-free for ≥ eight consecutive weeks during the 16-week treatment period, and hemoglobin response, defined as a ≥ 1.5 g/dL increase from baseline in the average hemoglobin concentration measured from week 8 through week 16. In November 2023, we announced that we achieved clinical proof-of-concept in the phase 2a portion of the trial. We observed that four of the 10 patients with low transfusion burden achieved the transfusion independence endpoint, and one of the 22 patients achieved the hemoglobin response endpoint in the 16-week treatment period. The safety profile observed was consistent with data reported in the healthy volunteer study of AG-946 (tebapivat). 19 patients elected to enroll in the extension period for up to 156 weeks. We intend to complete a full evaluation of the phase 2a trial results and assess the impact of those results on the phase 2b portion of the protocol in 2024. Based on the data generated in the Phase 2a trial, we plan to increase the dosage levels evaluated in the upcoming Phase 2b trial, which we expect to initiate in mid-2024. Other Programs 21 Table of Contents In addition to the aforementioned development programs, we are developing AG-181, a PAH stabilizer for the potential treatment of PKU, for which we filed an IND in December 2023. We initiated a phase 1 trial of AG-181 in healthy volunteers in the first quarter of 2024. Also, in July 2023, we entered into a license agreement with Alnylam for the development and commercialization of products containing or comprised of an siRNA preclinical development candidate discovered by Alnylam and targeting the TMPRSS6 gene, and we have begun preclinical development of a product candidate for the potential treatment of patients with PV. Selling, General and Administrative Expenses Selling, general and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in executive, finance, business development, commercial, legal, information technology and human resources functions. Other significant costs include facility-related costs not otherwise included in research and development expenses, legal fees relating to patent and corporate matters, and fees for accounting and consulting services. We anticipate that our selling, general and administrative expenses will increase in the future to support continued research and development activities, and ongoing and future commercialization activities related to our portfolio, including the ongoing commercialization of PYRUKYND® and any of our other product candidates, which may include the hiring of additional personnel. Critical Accounting Estimates Our critical accounting estimates are those which require the most significant judgments and estimates in the preparation of our condensed consolidated financial statements. We have determined that our most critical accounting estimates are those relating to revenue recognition, accrued research and development expenses and stock-based compensation. As of June 30, 2024, there have been no material changes to our existing critical accounting estimates discussed in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023. Results of Operations Comparison of the three and six months ended June 30, 2024 and 2023 Revenues Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2024 2023 2024 2023 Revenues: Product revenue, net $ 8,615 $ 6,712 $ 16,804 $ 12,321 Total revenue $ 8,615 $ 6,712 $ 16,804 $ 12,321 Total Revenue - Three Months Ended June 30, 2024 vs. Three Months Ended June 30, 2023 – The increase in total revenue of $1.9 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was due to increased product revenue associated with PYRUKYND®. Total Revenue - Six Months Ended June 30, 2024 vs. Six Months Ended June 30, 2023 – The increase in total revenue of $4.5 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was due to increased product revenue associated with PYRUKYND®. Total Operating Expenses Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2024 2023 2024 2023 Operating expenses: Cost of sales $ 1,495 $ 1,108 $ 2,122 $ 1,662 Research and development 77,401 68,895 146,021 136,196 Selling, general and administrative 35,536 30,409 66,550 58,776 Total operating expenses $ 114,432 $ 100,412 $ 214,693 $ 196,634 Total Operating Expenses - Three Months Ended June 30, 2024 vs. Three Months Ended June 30, 2023 – The increase in total operating expenses of $14.0 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily due to an increase in research and development expenses of $8.5 million which is described below under 22 Table of Contents Research and Development Expenses, and an increase in selling, general and administrative expenses of $5.1 million, driven by an increase in commercial-related activities as we prepare for the potential approval of PYRUKYND® in thalassemia. Total Operating Expenses - Six Months Ended June 30, 2024 vs. Six Months Ended June 30, 2023 – The increase in total operating expenses of $18.1 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily due to an increase in research and development expenses of $9.8 million which is described below under Research and Development Expenses, and an increase in selling, general and administrative expenses of $7.8 million, driven by an increase in commercial-related activities as we prepare for the potential approval of PYRUKYND® in thalassemia. Research and Development Expenses Our research and development expenses, by major program, are outlined in the table below: Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2024 2023 2024 2023 PK activator (PYRUKYND®) $ 27,968 $ 26,492 $ 54,004 $ 47,491 Novel PK activator (AG-946) (tebapivat) 4,488 4,129 6,383 7,597 Other research and platform programs 7,270 2,058 10,955 5,525 Total direct research and development expenses 39,726 32,679 71,342 60,613 Compensation and related expenses 27,476 26,263 55,110 55,954 Facilities and IT related expenses & other 10,199 9,953 19,569 19,629 Total indirect research and development expenses 37,675 36,216 74,679 75,583 Total research and development expense $ 77,401 $ 68,895 $ 146,021 $ 136,196 Total Research and Development Expenses - Three Months Ended June 30, 2024 vs. Three Months Ended June 30, 2023 – The increase in total research and development expenses of $8.5 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily due to a $7.0 million increase in our direct expenses. The increase in direct expenses was primarily due to an increase in other research and platform programs as a result of costs associated with the in-licensed siRNA TMPRSS6 program for polycythemia vera. Total Research and Development Expenses - Six Months Ended June 30, 2024 vs. Six Months Ended June 30, 2023 – The increase in total research and development expenses of $9.8 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily due to a $10.7 million increase in our direct expenses. The increase in direct expenses was primarily due to an increase in PYRUKYND® costs due to increased process development expenses and increased costs associated with clinical trials for patients with SCD, partially offset by lower costs associated with the phase 3 clinical trials of PYRUKYND® in patients with thalassemia, ENERGIZE and ENERGIZE-T, and an increase in other research and platform programs as a result of costs associated with the in-licensed siRNA TMPRSS6 program for polycythemia vera. Other Income and Expense Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2024 2023 2024 2023 Interest income, net $ 8,120 $ 8,254 17,009 16,345 Other income, net 1,579 1,640 3,213 3,144 Other Income and Expense - Three Months Ended June 30, 2024 vs. Three Months Ended June 30, 2023 – Interest income, net and other income, net in the three months ended June 30, 2024 were relatively consistent with the three months ended June 30, 2023. Other Income and Expense - Six Months Ended June 30, 2024 vs. Six Months Ended June 30, 2023 – The increase in interest income, net was primarily attributable to an increase in interest rates. Other income, net in the six months ended June 30, 2024 was relatively consistent with the six months ended June 30, 2023. 23 Table of Contents Net Loss Three Months Ended June 30, Six Months Ended June 30, (In thousands) 2024 2023 2024 2023 Net loss $ (96,118) $ (83,806) $ (177,667) $ (164,824) Net Loss - Three Months Ended June 30, 2024 vs. Three Months Ended June 30, 2023 – The increase in net loss for the three months ended June 30, 2024 compared to the three months ended June 30, 2023 was primarily driven by the increase in research and development expenses discussed above under Research and Development Expenses and the increase in selling, general and administrative expenses discussed above under Total Operating Expenses, partially offset by the increase in revenue discussed above under Revenues. Net Loss - Six Months Ended June 30, 2024 vs. Six Months Ended June 30, 2023 – The increase in net loss for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily driven by the increase in research and development expenses discussed above under Research and Development Expenses and the increase in selling, general and administrative expenses discussed above under Total Operating Expenses, partially offset by the increase in revenue discussed above under Revenues and the increase in interest income, net discussed above under Other Income and Expense. Liquidity and Capital Resources Sources of Liquidity Since our inception, and through March 31, 2021, we financed our operations primarily through proceeds from the sale of our royalty rights, commercial sales of TIBSOVO®, funding received from our collaboration agreements, private placements of our preferred stock, our initial public offering of our common stock and concurrent private placement of common stock to an affiliate of Celgene, and our follow-on public offerings. Following the sale of our oncology business to Servier on March 31, 2021, we have financed and expect to continue to finance our operations primarily through cash on hand, royalty payments from Servier with respect to U.S. net sales of TIBSOVO® prior to the sale of these contingent payments to Sagard, proceeds from the sale of contingent payments to Sagard, a potential Upfront Payment from Royalty Pharma and a potential Vorasidenib Milestone Payment from Servier, both of which are contingent on if the NDA for vorasidenib is approved by the FDA, potential royalty payments with respect to the Retained Earn-Out Rights, the actual and potential future sales of PYRUKYND® and, potentially, collaborations, strategic alliances, licensing arrangements and other nondilutive strategic transactions. In addition, we may pursue opportunistic debt offerings, and equity or equity-linked offerings. On March 31, 2021, we completed the sale of our oncology business to Servier. The transaction included the sale of our oncology business, including TIBSOVO®, our clinical-stage product candidates vorasidenib, AG-270 and AG-636, and our oncology research programs for a payment of approximately $1.8 billion in cash at the closing, subject to certain adjustments, and the right to a potential Vorasidenib Milestone Payment, as well as a royalty of 5% of U.S. net sales of TIBSOVO® from the close of the transaction through loss of exclusivity, and the potential Vorasidenib Royalty Rights. The Vorasidenib Milestone Payment, Vorasidenib Royalty Rights and royalty payments related to TIBSOVO® are referred to as contingent payments and recognized as income when realizable. Servier a lso acquired our co-commercialization rights for Bristol Myers Squibb's IDHIFA® and the right to receive a $25.0 million potential milestone payment under our prior collaboration agreement with Celgene, and following the sale Servier is responsible for conducting certain clinical development activities within the IDHIFA® development progra m. As discussed above in Note 1, Overview and Basis of Presentation , in October 2022, we sold our rights to the royalty on U.S. net sales of TIBSOVO® to Sagard for $131.8 million. We retained our rights to the Vorasidenib Milestone Payments and Vorasidenib Royalty Rights. In February 2024, Servier announced that it received filing acceptance and priority review from the FDA for its NDA for vorasidenib for the treatment of certain IDH-mutant diffuse glioma and accelerated assessment from the EMA, for its MAA for vorasidenib. The FDA assigned the NDA a PDUFA action date of August 20, 2024, and Servier anticipates that the European Commission will approve its MAA in the second half of 2024. In May 2024, we entered into a purchase and sale agreement with Royalty Pharma, pursuant to which we agreed to sell the Vorasidenib Royalty Rights for the Upfront Payment of $905.0 million. The consummation of the sale and payment of the purchase price are subject to approval of vorasidenib by the FDA on or before October 31, 2024, and other customary closing conditions. Upon consummation of the sale, Royalty Pharma will acquire 100% of the Vorasidenib Royalty Rights payments made by Servier on account of up to $1.0 billion in net sales for each calendar year. In addition, any such Vorasidenib Royalty Rights payments made by Servier on account of U.S. net sales in each calendar year in excess of $1.0 billion will be split, with Royalty Pharma having the rights to a 12% earn-out on those excess payments and Agios retaining the Retained Earn-Out Rights. We also retain our rights to the potential Vorasidenib Milestone Payment. Our cash, cash equivalents and marketable securities balance was $645.3 million at June 30, 2024. The potential Vorasidenib Milestone Payment, the Upfront Payment and the Retained Earn-Out Rights are our only committed potential external sources of funds. Whether the regulatory approval milestone for vorasidenib will be achieved is subject to various risks and 24 Table of Contents uncertainties, which are outside our control. Furthermore, we cannot predict what success, if any, Servier may have in the United States with respect to sales of vorasidenib, if approved, and consequently we cannot estimate the amount of payments, if any, we may receive on account of the Retained Earn-Out Rights. Cash flows The following table provides information regarding our cash flows for the six months ended June 30, 2024 and 2023: Six Months Ended June 30, (In thousands) 2024 2023 Net cash used in operating activities $ (172,456) $ (161,931) Net cash provided by investing activities 161,806 104,721 Net cash provided by financing activities 6,963 2,704 Net change in cash and cash equivalents $ (3,687) $ (54,506) Net cash used in operating activities. Cash used in operating activities of $172.5 million during the six months ended June 30, 2024 was primarily due to operating expenses driven by research and development costs described above under Research and Development Expenses, partially offset by cash received from interest income of $19.3 million and product revenues of $17.6 million. Cash used in operating activities of $161.9 million during the six months ended June 30, 2023 was primarily due to operating expenses driven by research and development costs described above under Research and Development Expenses, partially offset by cash received from interest income of $15.6 million and product revenues of $13.6 million. Net cash provided by investing activities . Cash provided by investing activities of $161.8 million during the six months ended June 30, 2024 was primarily due to higher proceeds from maturities and sales of marketable securities than purchases of marketable securities. Cash provided by investing activities of $104.7 million during the six months ended June 30, 2023 was primarily due to higher proceeds from maturities and sales of marketable securities than purchases of marketable securities. Net cash provided by financing activities . Cash provided by financing activities of $7.0 million during the six months ended June 30, 2024, was the result of net proceeds received from stock option exercises and purchases made pursuant to our 2013 Employee Stock Purchase Plan, or 2013 ESPP. Cash provided by financing activities of $2.7 million during the six months ended June 30, 2023 was the result of net proceeds received from stock option exercises and purchases made pursuant to our 2013 ESPP. Funding requirements We expect our expenses to increase as we continue the research, development and clinical trials of, seek marketing approvals for, and commercialize our product candidates in our portfolio, including as we continue to commercialize PYRUKYND®. If we obtain additional marketing approvals for PYRUKYND® in thalassemia or in other indications, or outside of the United States or for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution. We expect that our existing cash, cash equivalents and marketable securities as of June 30, 2024, together with anticipated product revenue, interest income and the potential Vorasidenib Milestone Payment and Upfront Payment, will provide the financial independence to prepare for potential PYRUKYND® launches in thalassemia and SCD, and to opportunistically expand our pipeline through both internally and externally discovered assets. Our future capital requirements will depend on many factors, including: • the amount and timing of future revenue received from commercial sales of PYRUKYND® or any of our product candidates for which we may receive marketing approval; • whether vorasidenib is approved by the FDA and the sale of the Vorasidenib Royalty Rights to Royalty Pharma is consummated; • the amount of payments, if any, we may receive on account of the Retained Earn-Out Rights; • the costs and timing of our ongoing commercialization activities, including product manufacturing, sales, marketing and distribution for PYRUKYND® for the treatment of hemolytic anemia in adults with PK deficiency in approved jurisdictions; • the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our product candidates; • the costs associated with in-licensing or acquiring assets for pipeline growth, including the amount and timing of future milestone and royalty payments potentially payable to Alnylam pursuant to the license agreement; 25 Table of Contents • the costs, timing and outcome of regulatory review of our product candidates, including with respect to our anticipated regulatory submissions for PYRUKYND® for the treatment of thalassemia; • the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; • the costs and timing of future commercialization activities, including product manufacturing, sales, marketing and distribution, for any of our product candidates for which we may receive marketing approval; • our ability to establish and maintain collaborations on favorable terms, if at all; • our ability to successfully execute on our strategic plans; • operational delays due to public health epidemics, including the COVID-19 pandemic; and • operational delays, disruptions and/or increased costs associated with global economic developments, rising global energy prices or energy shortages or rationing. Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs primarily through cash on hand, the potential Vorasidenib Milestone Payment and Upfront Payment, potential Retained Earn-Out Rights, the actual and potential future sales of PYRUKYND® and, potentially, collaborations, strategic alliances, licensing arrangements and other nondilutive strategic transactions. In addition, we may pursue opportunistic debt offerings, and equity or equity-linked offerings. We do not have any committed external source of funds other than the potential Vorasidenib Milestone Payment, Upfront Payment and Retained Earn-Out Rights. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, selling or licensing our assets, making capital expenditures or declaring dividends. If we raise funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed or on attractive terms, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves. Contractual Obligations During the six months ended June 30, 2024, there were no material changes to our contractual obligations and commitments described under Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023.