Agios Pharmaceuticals, Inc. is set to receive a total of $1.1 billion in milestone payments following the U.S. FDA's approval of vorasidenib for treating Grade 2 astrocytoma or oligodendroglioma with specific IDH1 or IDH2 mutations. This approval marks a significant milestone, being the first for a Grade 2 glioma in over two decades.

The payments consist of $905 million from Royalty Pharma, stemming from a royalty purchase agreement announced in May 2024, and an additional $200 million from Servier, linked to Agios’ divestiture of its oncology business in 2021. Cecilia Jones, Agios' CFO, emphasized the importance of this approval, highlighting the collaboration between Servier and Agios in addressing high unmet medical needs.

Agios sold its oncology business to Servier on March 31, 2021, for $1.8 billion upfront, which included a $200 million milestone payment contingent on the FDA approval of vorasidenib. Additionally, Agios secured 15% royalties on potential U.S. sales of vorasidenib and retained rights to 5% royalties on U.S. sales of Servier’s TIBSOVO, which it sold for $131.8 million in 2022.

In a strategic move, Agios agreed to sell its rights to the 15% royalty on vorasidenib sales to Royalty Pharma on May 28, 2024. This agreement provides Agios with an upfront payment of $905 million upon FDA approval, while Royalty Pharma will receive the full 15% royalty on annual U.S. net sales of vorasidenib up to $1 billion, and a 12% royalty on sales exceeding that threshold. Agios will retain a 3% royalty on any annual U.S. net sales beyond $1 billion.

The financial boost from these payments is expected to enhance Agios' cash position, allowing the company to prepare for potential launches of its drug PYRUKYND (mitapivat) in thalassemia in 2025 and sickle cell disease in 2026, while also advancing its pipeline initiatives. Agios aims to build a multi-billion-dollar franchise through these efforts.