Analyst Conference Summary

conference date: October 27, 2016 @ 8:00 AM Pacific Time
for quarter ending: September 30, 2016 (Q3, third quarter 2016)

Forward-looking statements

Overview: Continues to make progress with pipeline, including moving preclinical therapies into clinical trials. But running through cash pretty quickly.

Basic data (GAAP):

Revenue was $4.4 million, down sequentially from $6.6 million and down from $6.8 million year-earlier.

Net income was negative $40.8 million, down sequentially from negative $28.4 million, and down from negative $13.2 million year-earlier.

Earnings per share (EPS) were negative $0.47, down sequentially from negative $0.33, and down from negative $0.16 year-earlier.

Guidance:

In Q4 there should be a modest reduction in the cash burn rate. In 2017 cash burn will be higher on average than 2016, until efficacy data is generated. New partnerships could also generate some cash in the future.

Conference Highlights:

CEO Garo Armen stated "In the third quarter we advanced our pre-clinical and clinical programs and focused our efforts on our product development plans with an intent to commercialize Agenus' first generation of I-O products in the next five years." Agenus is hoping for rapid clinical efficacy readouts. CTLA-4 and PD-1 are now at the forefront of Agenus's strategy.

$18.7 million in non-cash charges, an unusually large amount, was included in the quarter numbers. But there was a $4.9 million sequential increase in cash used, due to increased checkpoint antibody development.

GlaxoSmithKline (GSK) has filed for FDA approval of its shingles vaccine, Shingrix, which used Agenus QS-21 stimulon. [WPM: But Agenus already raised money against the potential royalties.]

Still plans to work with a third party to advance Prophage for newly diagnosed GBM (glioblastoma, a brain cancer) into a Phase 3 trial. Is in active discussions with more than one potential partner. There is very encouraging long-term survival in a subgroup of patients. Agenus hopes to retain U.S. rights while funding the trial or trials with collaborators. Part of the trial will be in combination with a CPM.

Agenus initiated a Phase 1 clinical trial for AGEN 1884 in April 2016. This is an anti-CTLA-4 antibody being tested on solid tumors. The first cohort of patients completed enrollment. In 2017 will start combination trials with 1884, and has talked to potential partners. Believes this is the third CTLA-4 antagonist developed.

AGEN2041, a distinct CTLA-4 antibody, will start clinical studies in 2017.

A PD-1 (2024) antibody should enter the clinic in the first quarter of 2017.

With partner Incyte (INCY) started a Phase I trial for INCAGN1876, anti-GITR antibody, in June. In April preclinical data was presented at AACR.

Another Incyte partnership, INCAGN1949, an OX40 agonist antibody, also presented positive preclinical data at AACR. Clinical studies should start this year.

In June Merck selected an Agenus CPM antibody product to advance into preclinical studies. Merck will be responsible for all future development expenses. Agenus may receive up to $100 million in milestone payments, plus global royalties on product sales.

AutoSynVax for cancers should initiate a Phase 1 trial in the near term. Plans initiation of Phase I trial of first ASV vaccine product candidate in the next twelve months. The ASV program targets cancer neoantigens with an autologous synthetic vaccine approach. This is based on the PhosImmune acquisition made in December.

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.

As a development stage biotechnology company, Agenus is focused on pipeline development, including QS-21 Stimulon, immunotherapy, and heat shock protein vaccines. Preclinical development continues on a variety of candidates.

Cost of sales was $0 million. Research and development expense was $21.6 million. General and administrative expense was $8.1 million. Contingent fair-value adjustment of $11.0 million. Leaving operating income at negative $36.2 million. Other expense was $4.5 million.

Cash and equivalents balance ended at $95.4 million, down $27.9 million sequentially from $123.3 million. No debt.

Agenus believes it has sufficient cash to fund operations for now. Agenus has no plans to raise cash through equity offerings, for now. Hopes for commercial revenue in the next 5 years. In the meantime is looking for non-dilutive funding.

Two new executive hires were made: Jean-Marie Cuillerot, M.D. appointed Vice President and Global Head of Clinical Development and James Gorman, M.D., Ph.D. appointed Vice President of Strategic Planning and Portfolio Management.

Q&A:

1884, CTLA-4 dosing in Phase 1? [accent too heavy to understand most of answer]. Seems to have doses between 1 and 4 mgs per kg. Will combine 1884 with a commercial PD-1 inhibitor.

Cash burn, deal time? Conservatively should be to have a deal by mid-2017, but believes will have a deal well before that.

AutoSynVax should be in the clinic shortly. PhosphoSynVax would follow, is being validated in animal studies now. We are also talking to potential partners about these approaches.

Prophage, is it a low-risk program, why not do it on your own? We are unlikely to pursue prophage as a monotherapy. It would be available as a vaccine to third parties who want to use it in combination. But we could ourselves combine it with our own checkpoints in our own studies. We have data showing Prophage activity is amplified by checkpoint inhibitors.

Agenus web site

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