Analyst Conference Summary


conference date: 8:00 AM, October 24, 2013
for quarter ending: September 30, 2013 (Q3, third quarter 2013)

Forward-looking statements

Overview: Developmental stage biotechnology company had some recent positive data from a partner's malaria vaccine trial. Revenue under $1.0 million. A risky, small-cap stock.

Basic data (GAAP):

Revenue was $736 thousand, down from $869 thousand in the year-earlier quarter.

Net income was negative $7.4 million, worse than the negative $5.9 million year-earlier.

Earnings per share (EPS) were negative $0.24, flat from negative $0.24 year-earlier.


none given

Conference Highlights:

As a development stage company, Agenus is focused on pipeline development, including QS-21 Stimulon, immunotherapy, and vaccines. Along with partners, Agenus has 23 programs in development. Agenus management believes it has sufficient funds to operate the company through 2014.

In the quarter GlaxoSmithKline's RTS,S malarial vaccine candidate, containing QS-21, showed it protected young children in a Phase III trial for up to 18 months. Regulatory application is expected to be made in 2014.

GSK also initiated a Phase 3 study to evaluate HZ/su, a herpes zoster vaccine, when co-administered with seasonal influenza vaccine GSK2321138A in adults over 50 years of age. HZ/su contains QS-21.

QS-21 was also licensed (non-exclusively) to VaxLogic for vaccine candidates.

Phase 2 newly diagnosed glioblastoma multiforme (GBM) trial using Prophage Series G-100 (HSPPC-96) combined with radiation and temozolomide showed 18 months of progression free survival, a 160% increase over radiation and temozolomide alone. Median overall survival, the primary endpoint, was 23.3 months. Agenus plans to discuss a pivotal Phase 3 trial with the FDA.

However, GSK's Phase 3 MAGE-A3 cancer immunotherapy trial, which includes QS-21, did not reach its first primary endpoint. Despite that, the trial will continue to see if the co-primary endpoint is met. Data is not likely to be available until 2015.

Other trials using QS-21 include four Phase 3 trials by GSK, on Phase 2 trial by Janssen, and three Agenus Phase 2 trials.

Agenus's HerpV vaccine for genital herpes, in Phase 2, used HSP (heat shock protein) antigens as well as QS-21. Data is expected in Q4 2013. If proven to be effective in later stage trials it would have blockbuster potential.

Prophase Series vaccines based on HSP are designed to leave healthy tissue unaffected while attacking cancer cells.

Cost of sales wa $0.1 million. Research and development expense was $3.9 million. General and administrative expense was $3.6 million. Leaving operating income at negative $6.8 million. Other expense was $0.5 million. Net loss was $7.9 million. A loss of $51 thousand was recorded for dividends on Series A convertible preferred stock.

Cash and equivalents balance ended at $30.2 million. This followed raising $10 million by issuing 3.33 million shares of commons stock at $3.00 per share along with 1 million warrants to purchase the stock at $3.75 per share. Another $11.4 million was raised by selling common stock in at-market-price offerings.

Agenus continues to explore possibly working with new licensing partners for QS-21.


Follow up timing on GSK programs? Guidance for gene signature analysis is expected in 2015. For non-small cell lung cancer is first half of 2014. There is a genetic signature for the lung cancer and melanoma trials, and it correlates exceedingly well with immunological activity and outcomes. The co-primary endpoint is based on the genetic market in melanoma, available in 2015, and in lung cancer as well. But the trials are different, with the melanoma patients being much sicker. Hence the lung cancer trial will take longer.

HerpV, what would a meaningful difference in the data? For viral shedding days, the guidance is a 30% to 50% reduction would be clinically important. But the results must be statistically significant, with a secondary outcome of reduction in viral load. We don't know the relevant viral load number. The data will come in two stages, because of the later booster shot.

G100 and G200 expectations? There is historical skepticism about single-arm trials. In GBM experts agree that outcomes of patients are narrower than in most cancers. So it normalizes patient selection in the trials. We can also correct for other variables, like prior surgical reduction of tumors. G100 therapy is on top of standard of care. If we can repeat the results, we think we have a strong chance of regulatory approval. The same for G200 where our therapy is on top of Avastin. So we don't really have a huge hurdle to overcome.

GSK signature, was it prospectively designed? Yes. There has been a lot of criticism, but GSK has been careful to make the analysis and gene signatures prospective rather than retrospective, and this has been vetted by the FDA. In earlier trials the genetic markers showed strong correlation with positive outcomes.

Immunology and progression free survival lack of correlation? That is true in late-stage disease settings, but it is not true in early-stage disease. From Dendreon we know that the immune response may not kick in fast enough to prevent progression, but may still contribute to overall survival.

HerpV, B-cell and T-cell responses? Complex question. Early herpes vaccines were prophylactic. For that B-cell activation is relevant, but those early efforts failed. For our vaccine the response is mainly T-cell. What has been impressive about early results is both CD4 and CD8 activation of T-cells. Heat shock proteins and QS-21 prime the immune system and generate cytokines. So it is possible to get anti-body activation. We have no plans for a prophylactic trial; it would be beyond our current resources. But there is little dought in my mind that if it is effective in the therapeutic setting it would be worth taking to a prophylactic setting, perhaps with a partner.

Malaria vaccine booster component? Guidance from GSK is they have enough to file. It would be surpising if the booster shot did not give additional benefit. But the booster shot may not be needed for filing.

Frequency of zoster + influenza vaccine? Assumption would be the influenza component would be for the season. We don't know if the zoster component just needs to be one-time, then patients would go back to just the influenza.

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Disclaimer: My analyst call summaries may include both our condensations of statements made by company representatives and my own analysis. They are not covered by any warranty. I cannot guarantee anything said by company representatives is true. I try not to make errors, but it is possible. Before making or terminating an investment you should always verify any factual basis of your decision.

Copyright 2013 William P. Meyers