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Item 2. Management’s Discussion and Analysis

2024-10-31 compared with 2024-08-01 · 118 added, 106 removed, 216 unchanged (51% of the section changed)

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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.

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 September 30, 2024 and for the three and nine months ended September 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.

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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 September 2024, AG-946 (tebapivat) was granted Orphan Drug Designation by the FDA for the treatment of MDS.

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.

In accordance with the license agreement with Alnylam, in the three months ended September 30, 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

be subject to specified reductions and offsets.

which may 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

Sale of Oncology Business to Servier and Sale of Contingent Payments

On March 31, 2021, we completed the sale of our oncology business to Servier Pharmaceuticals, LLC, or Servier, which represented a discontinued operation.

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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.

net sales of vorasidenib from the first commercial sale of vorasidenib through loss of exclusivity, or the 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 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 agreed to 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.

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 in our consolidated statements of operations for the year ended December 31, 2022.

In August 2024, the FDA approved vorasidenib for adult and pediatric patients 12 years and older with Grade 2 astrocytoma or oligodendroglioma with a susceptible IDH1 or IDH2 mutation, following surgery including biopsy, sub-total resection, or gross total resection.

In September 2024, we received the Vorasidenib Milestone Payment from Servier and recognized income of $200.0 million within the milestone payment from gain on sale of oncology business line item in our consolidated statements of operations for the three and nine months ended September 30, 2024.

The sale was contingent upon FDA approval of vorasidenib and other customary closing conditions.

Upon consummation of the sale in August 2024, Royalty Pharma acquired 100% of the Vorasidenib Royalty Rights payments made by Servier on account of up to $1.0 billion in U.S.

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.

As a result of the sale, we recognized $889.1 million ($905.0 million net of fees of $15.9 million) within the gain on sale of contingent payments line item in our consolidated statements of operations for the three and nine months ended September 30, 2024.

Royalty income related to the Retained Earn-Out Rights will be recognized in the period when realizable.

Financial Operations Overview

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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.

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, 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.

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.

Our net income for the nine months ended September 30, 2024 was $770.2 million and our net loss for the nine months ended September 30, 2023 was $256.1 million.

As of September 30, 2024, we had an accumulated deficit of $52.4 million.

The net income we generated in the nine months ended September 30, 2024 was primarily due to the sale of the Vorasidenib Royalty Rights to Royalty Pharma and our receipt of the Vorasidenib Milestone Payment discussed above in Overview .

We expect to incur significant expenses and net losses until such time we are able to report profitable results.

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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 and expand clinical development of AG-946 (tebapivat), our novel PK activator;

continue to advance AG-181, our PAH stabilizer;

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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.

In the future, we expect to continue to generate revenue from product sales, and we may potentially generate revenue from the Retained Earn-Out Rights.

We may also generate revenue from milestone payments, upfront payments or royalties on product sales from collaborations or licensing agreements that we may enter into in the future.

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.

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 nine months ended September 30, 2024 and 2023 were expensed prior to February 17, 2022, and, therefore, are not included in costs of sales during the three and nine months ended September 30, 2024 and 2023.

The amounts excluded from cost of sales were not significant during the three and nine months ended September 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.

We have not reserved for excess or obsolete inventory during the three and nine months ended September 30, 2024 and 2023.

Research and Development Expenses

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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.

We have worldwide development and commercial rights to PYRUKYND®, subject to the commercialization rights granted to Newbridge in the GCC region pursuant to the Newbridge Agreement, 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.

We have built our commercial infrastructure to support the commercialization 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.

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• 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

in the study, with 130 randomized to PYRUKYND® 100 mg twice-daily, and 64 randomized to matched placebo.

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 in the study, with 130 randomized to PYRUKYND® 100 mg twice-daily, or BID, 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.

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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.

AEs that led to discontinutation in the PYRUKIND® arm were thrombocytopenia, arthralgia, abdominal distension, and 5 concurrent laboratory adverse events (alanine aminotransferase increase, aspartate aminotransferase increase, blood bilirubin increase, blood LDH increase, and international normalized ratio increase), all in one patient each.

We aim to submit an sNDA for PYRUKYND® in thalassemia to the FDA by the end of 2024.

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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.

In June 2023, we announced the phase 2 portion of this trial had achieved its primary endpoint of hemoglobin response in patients in both the 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).

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(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).

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

treatment-emergent adverse events, or TEAEs, in the 50 mg BID, 100 mg BID, and placebo arms, respectively, were:

The most common 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).

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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.

We have completed enrollment and expect to announce topline data for this trial in late 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.

A total of 49 patients were enrolled in the study, with 32 randomized to mitapivat twice-daily and 17 randomized to matched placebo.

30 patients (93.8%) in the mitapivat arm and 16 (94.1%) in the placebo arm completed the 32-week double-blind period of the study.

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.

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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.

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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.

AG-946 (tebapivat) has been granted orphan drug designation for the treatment of MDS by the FDA.

We are evaluating AG-946 (tebapivat) in a phase 1 clinical 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 completed the SCD patient cohort of this phase 1 trial.

We also 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.

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.

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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.

We evaluated the phase 2a trial results and assessed the impact of those results on the phase 2b portion of the protocol, and 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 initiated in the third quarter of 2024.

Other Programs

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.

We initiated a phase 1 clinical 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.

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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.

As of September 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

Three Months Ended June 30, Six Months Ended June 30,

Comparison of the three and nine months ended September 30, 2024 and 2023

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2024 2023 2024 2023

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Total revenue $ 8,964 $ 7,399 $ 25,768 $ 19,720

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 Revenue - Three Months Ended September 30, 2024 vs.

Three Months Ended September 30, 2023 – The increase in total revenue of $1.6 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was due to increased volume associated with PYRUKYND®.

Total Revenue - Nine Months Ended September 30, 2024 vs.

Nine Months Ended September 30, 2023 – The increase in total revenue of $6.0 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was due to increased volume associated with PYRUKYND®.

Total Operating Expenses

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2024 2023 2024 2023

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Total operating expenses $ 111,775 $ 108,296 $ 326,468 $ 304,930

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

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.

Total Operating Expenses - Three Months Ended September 30, 2024 vs.

Three Months Ended September 30, 2023 – The increase in total operating expenses of $3.5 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily due to an increase in selling, general and administrative expenses of $12.7 million, driven by an increase in commercial-related activities as we prepare for the potential approval of PYRUKYND® in thalassemia, partially offset by a decrease in research and development expenses of $9.4 million which is described below under Research and Development Expenses.

Total Operating Expenses - Nine Months Ended September 30, 2024 vs.

Nine Months Ended September 30, 2023 – The increase in total operating expenses of $21.5 million for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily due to an increase in selling, general and administrative expenses of $20.5 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,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2024 2023 2024 2023

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Novel PK activator (AG-946) (tebapivat) 3,768 4,220 10,151 11,817

In-process research and development — 17,500 — 17,500

Other research and platform programs 4,316 1,250 15,271 6,775

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Total research and development expense $ 72,455 $ 81,841 $ 218,476 $ 218,037

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.

Total Research and Development Expenses - Three Months Ended September 30, 2024 vs.

Three Months Ended September 30, 2023 – The decrease in total research and development expenses of $9.4 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily due to a $12.1 million decrease in our direct expenses, partially offset by a $2.7 million increase in our indirect expenses.

The decrease in direct expenses was primarily due to in-process research and development in the three months ended September 30, 2023 as a result of the $17.5 million up-front payment associated with the agreement with Alnylam discussed above under Overview , partially offset by an increase in other research and platform programs as a result of costs associated with the in-licensed siRNA TMPRSS6 program for PV and an increase in PYRUKYND® costs due to increased costs associated with clinical trials for patients with SCD.

The increase in our indirect expenses was primarily due to an increase in compensation and related expenses, driven principally by workforce- related expenses.

Total Research and Development Expenses - Nine Months Ended September 30, 2024 vs.

Nine Months Ended September 30, 2023 – Total research and development expenses for the nine months ended September 30, 2024 were relatively consistent with the total research and development expenses for the nine months ended September 30, 2023.

Included in the decrease in direct expenses in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was the $17.5 million up-front payment in the nine months ended September 30, 2023 associated with the agreement with Alnylam discussed above under Overview , 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 PV.

Other Income and Expense

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2024 2023 2024 2023

Gain on sale of contingent payments $ 889,136 $ — $ 889,136 $ —

Milestone payment from gain on sale of oncology business 200,000 — 200,000 —

Interest income, net 13,059 8,375 30,068 24,720

Other income, net 1,651 1,198 4,864 4,342

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.

Three Months Ended June 30, Six Months Ended June 30,

Other Income and Expense - Three Months Ended September 30, 2024 vs.

Three Months Ended September 30, 2023 – The increase in gain on sale of contingent payments was due to the sale of the Vorasidenib Royalty Rights in the three months ended September 30, 2024 discussed above in Overview .

The increase in milestone payment from gain on sale of oncology business was due to the receipt of the Vorasidenib Milestone Payment in the three months ended September 30, 2024 discussed above in O verview .

The increase in interest income, net in the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily attributable to increased return on our investments.

Other Income and Expense - Nine Months Ended September 30, 2024 vs.

Nine Months Ended September 30, 2023 – The increase in gain on sale of contingent payments was due to the sale of the Vorasidenib Royalty Rights in the nine months ended September 30, 2024 discussed above in Overview .

The increase in milestone payment from gain on sale of oncology business was due to the receipt of the Vorasidenib Milestone Payment in the nine months ended September 30, 2024 discussed above in Overview .

The increase in interest income, net was primarily attributable to increased return on our investments.

Net Income (Loss)

Three Months Ended September 30, Nine Months Ended September 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.

Net income (loss) $ 947,915 $ (91,324) $ 770,248 $ (256,148)

Net Income (Loss) - Three Months Ended September 30, 2024 vs.

Three Months Ended September 30, 2023 – The increase in net income for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 was primarily driven by the sale of the Vorasidenib Royalty Rights in the three months ended September 30, 2024 discussed above in Overview and the receipt of the Vorasidenib Milestone Payment in the three months ended September 30, 2024 discussed above in Overview , partially offset by the increase in income tax expense as a result of the income related to the Vorasidenib Royalty Rights and Vorasidenib Milestone Payment.

Net Income (Loss) - Nine Months Ended September 30, 2024 vs.

Nine Months Ended September 30, 2023 – The increase in net income for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily driven by the sale of the Vorasidenib Royalty Rights in the nine months ended September 30, 2024 discussed above in Overview and the receipt of the Vorasidenib Milestone Payment in the nine months ended September 30, 2024 discussed above in Overview , partially offset by the increase in income tax expense as a result of the income related to the Vorasidenib Royalty Rights and Vorasidenib Milestone Payment.

Liquidity and Capital Resources

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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.

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 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 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 the 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.

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 has agreed to conduct 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.

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.

net sales of TIBSOVO® to Sagard for $131.8 million, but we retained our rights to the Vorasidenib Milestone Payment and Vorasidenib Royalty Rights.

The sale was contingent upon FDA approval of vorasidenib and other customary closing conditions.

Upon consummation of the sale in August 2024, Royalty Pharma acquired 100% of the Vorasidenib Royalty Rights payments made by Servier on account of up to $1.0 billion in U.S.

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

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.

The following table provides information regarding our cash flows for the six months ended June 30, 2024 and 2023:

Six Months Ended June 30,

Our cash, cash equivalents and marketable securities balance was $1.7 billion at September 30, 2024.

The Retained Earn-Out Rights discussed above are our only committed potential external sources of funds.

We cannot predict what success, if any, Servier may have in the United States with respect to the sale of vorasidenib, and consequently, we cannot estimate the amount of payments, if any, we may receive on account of the Retained Earn-Out Rights.

The following table provides information regarding our cash flows for the nine months ended September 30, 2024 and 2023:

Nine Months Ended September 30,

(In thousands) 2024 2023

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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.

Cash used in operating activities of $256.7 million during the nine months ended September 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 product revenues of $28.0 million and i nterest income of $26.3 million.

Cash used in operating activities of $223.6 million during the nine months ended September 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 $23.6 million and product revenues of $22.9 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.

Cash provided by investing activities of $412.6 million during the nine months ended September 30, 2024 was primarily due to the proceeds from the Upfront Payment from Royalty Pharma and the Vorasidenib Milestone Payment from Servier, partially offset by higher purchases of marketable securities than proceeds from maturities and sales of marketable securities as a result of the proceeds from the Upfront Payment and the Vorasidenib Milestone Payment.

Cash provided by investing activities of $144.1 million during the nine months ended September 30, 2023 was primarily due to higher proceeds from maturities and sales of marketable securities than purchases of marketable securities, partially offset by the $17.5 million up-front payment associated with the Alnylam agreement discussed above under Overview .

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.

Cash provided by financing activities of $9.6 million during the nine months ended September 30, 2024, was due to 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 $4.6 million during the nine months ended September 30, 2023 was the result of net proceeds received from stock option exercises and purchases made pursuant to our 2013 ESPP.

Funding requirements

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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.

We expect that our existing cash, cash equivalents and marketable securities as of September 30, 2024, together with anticipated product revenue and interest income, will provide the financial independence to prepare for potential PYRUKYND® launches in thalassemia and SCD, advance existing programs, and 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;

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• our ability to successfully execute on our strategic plans;

• operational delays due to public health epidemics, including the COVID-19 pandemic;

• operational delays due to public health epidemics;

• 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.

Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs primarily through cash on hand, 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.

We do not have any committed external source of funds other than the 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.

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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.

During the nine months ended September 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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis