Agios Files For IPO With Plans to Raise $86M

Xconomy Boston — 

Agios Pharmaceuticals turned heads in 2010 when it reeled in $130 million from Celgene still years away from testing one of its drugs in human beings. Three years later, on the verge of its first clinical trial, Agios hopes to have the same type of impact on public investors.

Cambridge, MA-based Agios filed a Form S-1 with the Securities and Exchange Commission late Monday outlining plans to raise $86 million from investors through an initial public offering. Summit, NJ-based Celgene (NASDAQ: CELG) has also agreed to buy an unspecified additional amount of Agios stock at the IPO price through a private placement.

Agios has yet to set a range for the offering or identify how many shares it plans to sell, but it will trade on the Nasdaq under the symbol “AGIO.”

Agios’ largest shareholders are Third Rock Ventures (23.65 percent stake), Celgene (17.05 percent), Arch Venture Partners (16.41 percent), Flagship Ventures (16.41), and entities associated with Fidelity Management (9.86 percent).

J.P. Morgan Securities, Goldman Sachs, Cowen and Co., and Leerink Swann are underwriting the offering. J.P. Morgan and Goldman Sachs are serving as joint book-running managers.

Agios has raised a whopping $261.2 million since its inception. Celgene alone has poured $178.7 million into Agios, consisting of about $141.2 million in collaboration payments and another $37.5 million in equity, according to the IPO prospectus.

Agios was created in July 2008 with the help of a $33 million Series A round from Third Rock Ventures, Flagship Ventures, and Arch Venture Partners, based on the concept of creating drugs that starve cancer cells by blocking the mutated metabolic enzymes that feed them. The company’s two most advanced drugs, known as AG-120 and AG-221, target enzymes known as IDH1 and IDH2, which researchers say are mutated in a wide range of cancers. Agios’ plan is to identify patients with those specific mutations and treat them.

Agios was co-founded by three of the biggest pioneers in the cancer metabolism field: Harvard Medical School’s Lewis Cantley, the University of Toronto’s Tak Mak, and current Memorial Sloan-Kettering Cancer Center CEO Craig Thompson.

Third Rock partner Kevin Starr was Agios’ original CEO before handing the reins to Genentech’s former head of cancer drug development, David Schenkein, and the company officially put itself on the map in 2010 when it formed a massive partnership with Celgene well before even putting one drug into a clinical trial. In that deal, Celgene poured $130 million into Agios for the exclusive option—for three years—to license and develop any of the company’s cancer drugs (Agios is also eligible to receive an additional $120 million in milestone payments for each drug Celgene chooses to license). Celgene, for example, has an option for worldwide rights to AG-221 and AG-120, though Agios has the option to retain the U.S. rights to the latter drug, according to the IPO prospectus.

Celgene later paid Agios $20 million to expand the relationship to four years. Though the agreement expires in April 2014, Celgene has the option to extend it another two years

With the big check from Celgene and the additional financial help from its venture backers, Agios expanded its breadth into a class of diseases known as inborn errors of metabolism, or IEMs, which are caused by mutations or defects in metabolic genes that cause substances to build up in the body and muck up metabolic functions.

But even with all the big names and big money backing it, Agios has a long way to go and a lot to show to its investors. Its cancer drugs targeting IDH2 and IDH1 haven’t even started early-stage human clinical trials yet: Agios estimates that AG-221 will hit the clinic this year, and AG-120 will follow by early 2014 along with its most advanced drug candidate for IEMs (AG-348). That drug targets a rare form of inherited anemia known as pyruvate kinase deficiency for which there is no effective treatment.

In addition, Agios has plenty of competition. A number of pharmaceutical companies such as AstraZeneca, Eli Lilly, Roche/Genentech, GlaxoSmithKline, and Novartis have drugs in preclinical development that target cellular metabolism to treat cancer and IEMs, according to the prospectus.