Analyst Conference Summary

Biotechnology

conference date: May 7, 2018 @ 8:00 AM Pacific Time
for quarter ending: March 31, 2018 (Q1, first quarter 2018)

Forward-looking statements

Overview: Pipeline progress while negotiating with potential partners. Spend and losses accelerated.

Basic data (GAAP):

Revenue was $1.6 million, down sequentially from $8.4 million and down from $27.0 million year-earlier.

Net income was negative $54.3 million, down sequentially from negative $35.0 million, and down from negative $17.1 million year-earlier.

Earnings per share (EPS) were negative $0.53, down sequentially from negative $0.35, and down from negative $0.18 year-earlier.

Guidance:

none

Conference Highlights:

CEO Garo Armen stated: "Innovation and speed are the basis of our I-O business model with 5 INDs filed over the past 18 months, 6 INDs on track for this year and 2 additional INDs planned in the 1H of next year. We have treated over 100 patients with our CTLA-4 (AGEN1884) and/or PD-1 (AGEN2034) antibodies with clinical responses in some of the patients with advanced cancers." A substantial number of new discoveries are about to enter the clinic. Newer CTLA-4 and bispecifics are among the planned INDs.

Discussing several licensing deals that might close in the next 2 to 3 months. Believes present collaborations may generate milestone payments this year.

Shingrix is the most effective shingles vaccine; GSK commercial sales projections have nearly tripled from expectations earlier in the year (possibly $600 million in 2018). Agenus licensed GSK QS-21 Stimulon, a component of Shingrix. A $40 million milestone payment to Agenus is possible if the milestone is achieved.

"The increased net loss reflects unfavorable items effecting the current quarter and favorable items effecting the same period last year; including, the loss on the extinguishment of our debt, increased change in the non-cash contingent considerations fair value adjustment as well as reduced revenue due to an accelerated milestone received during the first quarter of 2017 from Incyte."

Agenus continued a Phase 2 combination trial of AGEN1884 with Keytruda for IL NSCLC with over 50% PD-L1 expression. But decided not to pursue NSCLC as a first priority target.

Dose escalation trials for AGEN1884 and AGEN2034 are complete. A Phase 2 trial combining these drugs to treat cervical cancer continued. Some responses have been recorded.

AGEN1884 (CTL-4) presented activity at AACR.

AGEN2034 (PD-1) presented activity at AACR.

A combination trial of 1881 and 2034 completed dose escalation, and launched combination trials with this compounds in 2L cervical cancer. More data on the compounds should be released in 2018.

AutoSynVax vaccine trials are being planned for 2018 in combination with QS-21 and 1884.

GSK's Shingrix vaccine, containing Agenus QS-21 Stimulon, received a U.S. approval on October 20, 2017. 97% efficacy "effectively shuts down any contender in this market." Also approved in Canada. The CDC voted to favor Shingrix over Zostavax.

The first cell therapy, through subsidiary Agentus, could be in the clinic in the first half of 2019. Believes has capabilities to target solid tumors.

Agenus West manufacturing supplied GMP material for clinical programs; preparing for GMP material for registrational program in 1H2018.

Prophage for newly diagnosed GBM (glioblastoma, a brain cancer) program continues.

A next generation CTLA-4 antibody should have an IND filed in 2018. This is designed to delete T-regs and increase priming.

Separately Incyte Q1 reported 4 checkpoint inhibitors from Agenus continue to be advanced in preclinical or clinical trials. "INCAGN1876
(GITR) completed dose escalation; INCAGN1949 (OX40) also completed dose escalation. For both development is expected to focus on combination therapy. INCAGN2390 (TIM-3) and INCAGN2385 (LAG-3) are expected to enter clinical trials in 2018."

A portfolio of undisclosed checkpoint modulators is being advanced in the lab. Neoantigen vaccines continue to be developed. Animal models have shown synergy between CPMs and vaccines. Agenus is identifying mutated proteins from cancers that could serve as a basis for vaccines.

Cost of sales was $0 million. Research and development expense was $29.4 million. General and administrative expense was $10.7 million. Contingent fair-value adjustment of $5.0 million. Leaving operating income at negative $41.7 million. Other expense was: $10.8 million on extinguishment of debt; $2.8 million interest; offset by $1.0 million other income.

Cash and equivalents balance ended at $52.3 million, down $7.9 million sequentially from $60.2 million. During the quarter ended raised $28.1 million with a royalty bond restructuring. Cash used in operations was $40.2 million. No debt, but has received $187 million advances on vaccine royalties, which is a liability.

[WPM: press release information was skimpy, just a "Select Financial Information" section, not assets & liabilities and P&L. I filled in more of the data from the 10-Q for the quarter.]

Q&A:

Cervical cancer timeline? Would be overreach to try to get data before 2020. But there could be some more rapid partial readouts.

Cash runway? We are good at managing cash. But we will need cash going forward. Prospects include partnerships, of which there are a number of active discussions. So we are optimistic about closing a deal. We also have geographic opportunities. We are also talking to potential private investors. Our last resort would be an equity offering.

Disclosure of bispecifics, timeframe? They are in partnering discussions, so we are not disclosing them at this time. We want to protect our IP.

Agenus web site

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