Analyst Conference Summary

Biotechnology

conference date: November 7, 2017 @ 8:00 AM Pacific Time
for quarter ending: September 30, 2017 (Q3, third quarter 2017)

Forward-looking statements

Overview: Anticipating data, deals, and other milestones.

Basic data (GAAP):

Revenue was $3.4 million, down sequentially from $4.2 million and down from $4.4 million year-earlier.

Net income was negative $36.9 million, down sequentially from negative $31.8 million, and up from negative $40.8 million year-earlier.

Earnings per share (EPS) were negative $0.37, down sequentially from negative $0.32, and down from negative $0.47 year-earlier.

Guidance:

none

Conference Highlights:

CEO Garo Armen stated: "We are pleased with the substantial progress Agenus has made in the third quarter. We have initiated a combination trial with our anti-CTLA-4 antibody.  Additionally, we are accruing patients with our CTLA-4 and PD-1 programs for trials designed for BLA filing. We are committed to continuing to innovate having generated several first-in-class and best-in-class immuno-oncology agents. Our partnering discussions are maturing on multiple fronts and we expect to close on several business development transactions across our portfolio between now and the end of the first quarter of 2018."

Acquiring capital to advance programs is a top priority, including from potential partners. Rapid development is important in the competitive IO (immuno-oncology) field. Also hopes to have commercially ready manufacturing capabilities by the time of the possible BLA in the second half of 2019.

Potential milestones for Q4 2017: AGEN1884 (anti-CTLA-4) Phase 1 trial to complete dose-escalation and compile safety and pharmacodynamic data; AGEN2034 (anti-PD-1) Phase 1/2 trial to complete dose-escalation for monotherapy, define optimal combination dose, get receptor occupancy data and recruit patients with second line cervical cancer; AGEN1884+AGEN2034 combination trials planned, and preclinical data to be presented; advance cell therapy spin off, AgenTus, funding.

AutoSynVax™ (neoantigen vaccine) immunological readout presented at AACR and CIMT demonstrated immunogenicity and synergy in combination with CTLA-4 and OX-40.

Incyte (INCY) is collaborating with Agenus to develop GITR and OX40 antibodies (they are immune checkpoint modulators). Renamed to INCAGN1876 & INCAGN1949. There could be data released before year end.

AGEN1884 partial data released at ASCO showed a partial response in angiosarcoma, and since then that patient experienced a complete response. The patient had failed 9 prior lines of therapy. This CTLA-4 antibody is differentiated from the AstraZeneca (AZN) one that failed its trial last week. It is meant to be developed in a combination therapy. If successful 1884 would be the second CTLA-4 approved after Yervoy. Agenus plans to initiate a combination trial with a commercially available anti-PD1 agent.

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. Agenus had sold part of the royalties that were due to it from future sales, but this new ruling could generate royalties above those already sold.

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.

Working with Amgen on research collaboration on phosphopeptide program..

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 $25.8 million. General and administrative expense was $8.1 million. Contingent fair-value adjustment of negative $1.2 million. Leaving operating income at negative $31.7 million. Other expense was $5.2 million.

Cash and equivalents balance ended at $70.1 million, down $26.7 million sequentially from $96.8 million. No debt except the $100 million advanced by Oberland against Shingrix royalties.

Q&A:

CTLA-4 potential for sales given stagnating sales for ipilimumab (Yervoy)? It is an important contributor to combinations, particularly PD-1. We are looking at non-small cell lung cancer, but not as a monotherapy. We could combine it with a number of agents besides PD-1.

1884 vs. Yervoy? Ours is an IGG1 format, same as Yervoy. We think that is critically important, versus other formats.

Shingrix economics? We are liable for principle plus interest. Even if no sales, we would only owe about $115 million at the end of 10 years. Royalties paid get deducted from the principle amount of the bond. Excess royalties will come to us. The deal looks better now than when we did it 2 years ago. We could also sell the royalty bond to a third party and receive part of the royalties, or get more capital by foregoing future royalties. We should know in a couple of months.

Cervical second line patients? Those with 6 months of platinum-based regimen will be eligible.

AutoSynvax update? We did report a patient with a clear response. We are moving forward with an improved version of the vaccine in studies in 2018, with CTLA-4. The prior data is being analyzed.

Cash runway? Working on a range of transactions, looking for the best value proposition for Shingrix. But believe will consummate multiple deals that will generate substantial cash that should give us a runway out into 2019.

Shingrix royalty? 2%. At $3 billion per year sales, would be $60 million royalties per year.

Agenus web site

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