Analyst Conference Summary

Biotechnology

Agenus
AGEN

conference date: March 9, 2017 @ 8:00 AM Pacific Time
for quarter ending: December 31, 2017 (Q4, fourth quarter 2016)


Forward-looking statements

Overview: Continues to make progress with pipeline.

Basic data (GAAP):

Revenue was $5.6 million, up sequentially from $4.4 million and down from $7.6 million year-earlier.

Net income was negative $26.2 million, up sequentially from negative $40.8 million, and down from negative $15.7 million year-earlier.

Earnings per share (EPS) were negative $0.30, up sequentially from negative $0.47, and down from negative $0.18 year-earlier.

Guidance:

none

Conference Highlights:

CEO Garo Armen stated "Actions we took last year put us on a path to register our lead antibodies that target CTLA-4 and PD-1 in the next four years. We also advanced programs directed at novel targets, such as 4-1BB and TIGIT, and upgraded our Berkeley manufacturing facility." Hopes to achieve registration status with CPM candidates in the next four years.

After the quarter ended announced a change in the Agenus deal with Incyte, which took a $60 million equity position at $6 per share and accelerated a $20 million clinical milestone for the GITR and OX40 CPM programs. IF those programs are successfully commercialized Agenus would receive $510 million in milestone payments plus a 15% royalty. Previously these programs were on a 50/50 cost and profit sharing agreement.

In 2017 expects to start the Phase 1 trial for its PD-1 antagonist AGEN2034. A Phase 1b combination study of AGEN1884 (CTLA-4) and AGENT 2034 should begin. A Phase 1 study of AutoSynVax should begin, with immunogenicity data in the second half. A cervical cancer trial for PD-1 monotherapy should also start in the later half of 2017.

Four abstracts of Agenus products were accepted for poster sessions at AACR.

Prophage for newly diagnosed GBM (glioblastoma, a brain cancer) program continues despite the stopping of an independent trial by the National Cancer Institute, in combination with bevacizumab (Avastin). The Data Safety and Monitoring Board concluded that the combination was not likely to lead to better survival than bevacizumab alone.

AGEN 1884, an anti-CTLA-4 antibody being tested on solid tumors.

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,

Another Incyte partnership, INCAGN1949, an OX40 agonist antibody

In June 2016 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.

4-1BB discovery campaign has been completed, has an antibody chosen, is in IND-enabling preclinical studies. CD155 TIGIT therapy also being prepared.

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 $26 million. General and administrative expense was $9 million. Contingent fair-value adjustment of $9 million. Leaving operating income at negative $20 million. Other expense was $6 million.

Cash and equivalents balance ended at $76 million, down $19 million sequentially from $95.4 million. No debt. Received $80 million from Incyte after the year ended, giving a pro-forma cash balance of $156 million.

Cash burn has been reduced, so cash now should last until Q4 2018.

Q&A:

Strategy vs. larger companies on combinations? We validate antibodies against targets, and are the second company behind BMS in getting both compounds to the clinic. There are pockets of opportunity in the field. We have low risk programs getting to registration first, while continuing to advance the earlier programs.

AutoSynVax compared to neoantigen approaches? We have some unique factors like QS21. AutoSynVax has a nice set of properties. It stimulates memory formation. The antigen based products can't generate phosphorylated responses.

2034 program sequence? We know from Keytruda it is a flat dose, so we will not escalate the dose forever. We will use a biomarker approach.

Strategic transactions, which therapies? Some of the enabling compounds can be considered for partnering on a non-exclusive basis. We have seen interest from companies that want ex-U.S. rights. We are looking at all the options and are in active discussions.

4-1BB antibodies, Pfizer and Bristol? Pfizer's is showing some efficacy, Bristol's has some toxicity problems. We believe our candidate may be better overall.

2041 clinical timeline? We have the capacity to take it to the clinic quickly if we have to.

ECB collaboration details? It is confidential. Improves antibody engineering capabilities. No major financial impact.

Agenus web site

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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 2017 William P. Meyers