Analyst Conference Summary


conference date: May 8, 2014 @ 8:00 AM Pacific Time
for quarter ending: March 31, 2014 (Q1, first quarter 2014)

Forward-looking statements

Overview: Pipeline expansion and Merck agreement are promising developments.

Basic data (GAAP):

Revenue was $721 thousand, up sequentially from $393 thousand and down from $1.1 million year-earlier.

Net income was negative $0.4 million , improved sequentially from negative $5.4 million, and up from negative $8.8 million year-earlier.

Earnings per share (EPS) were negative $0.01, improved sequentially from negative $0.16, and improved from negative $0.35 year-earlier.



Conference Highlights:

Agenus announced that three immune checkpoint modulator antibodies acquired with 4-Antibody AG would be advanced into preclinical development, in collaboration with Ludwig Cancer Research. These antibodies (CPMs) may be useful in combination cancer therapies. The acquisition was completed on February 12, 2014, so did not effect Q4 results. The plan is to file at least one IND in 2015, with human trials to begin in 2016.

After the quarter ended entered a collaboration and license agreement with Merck to discover antibodies against two Merck-supplied cancer immune checkpoint targets. Milestone payments could be near $100 million, plus royalties on any sales.

As a development stage biotechnology company, Agenus is focused on pipeline development, including QS-21 Stimulon, immunotherapy, and heat shock protein vaccines. Along with partners, Agenus has 22 programs in clinical development.

Agenus initiated a Phase 2 trial combining Prophage and Yervoy to treat Stage III and IV metastatic melanoma. Prophage vaccines continue to be studied in newly diagnosed and recurrent glioblastoma (GBM, a type of brain cancer). The NCI Phase 2 trial of Prophage plus Avastin for recurrent GBM has had slow enrollment.

The HerpV vaccine for herpes is in a Phase II study. Initial data on viral shedding was reported in Q4 2013. Final data is expected in Q2 2014. Future efforts to partner HerpV will be based on the data.

However, the GlaxoSmithKline (GSK) Phase III NSCLC (non-small cell lung cancer) trial, which included Agenus's QS-21 adjuvant, failed.

Robert B. Stein was appointed to be the Agenus's first Chief Scientific Officer.

Cost of sales was $0 million. Research and development expense was $4.5 million. General and administrative expense was $5.2 million. Leaving operating income at negative $9.8 million. Other income was $9.5 million. Net loss was $0.4 million.

$9.9 million benefit to other income and expense was non-cash and related to the impact of the termination of the NSCLC trial.

Cash and equivalents balance ended at $73.5 million, sequentially from $27.4 million. During the quarter ended Agenus sold stock generating an additional $56 million in cash.

Agenus believes it has sufficient cash to fund operations through mid-2015.

Agenus continues to explore possibly working with new licensing partners for QS-21. It is also in active discussions with potential partners for its checkpoint antibodies program.

Because immunotherapies (CPMs) do not immediately cause cancers to shrink (because they become engorged with white blood cells), new techniques (assays) have been developed to enable researchers to see if the therapies are working in their early stages.


How do other company's trials combining CPMs influence your prioritization of your pipeline? Not answered, rolled into next question.

Agonists to receptors? It is clear from some of the studies that combining agonists with antagonists can have very powerful benefits. It is too early, however, to see that data fully in the clinic. The clinical studies will be built to explore how these things work.

Biomarkers and CPMs? Assays need to be developed for preclinical use. We will do that both in-house and with Merck and Ludwig. For each cancer we would need to characterize its anti-immune defenses and pull out efficacy signals earlier.

GBM (Glioblastoma) enrollment? Within a couple of months we will have a better answer to the enrollment issue. It is a rapidly changing landscape, with biomarkers and data coming out. We need to anticipate the landscape 2 to 4 years down the road. One problem is Avastin is falling out of favor as a standard of care for GBM.

GSK parntership now, with Novartis? Novartis has no direct bearing on the QS-21 deal. But now GSK is emphasizing prophylactic vaccines over cancer therapies. There is some potential to expand the QS-21 program into a more diversified portfolio of vaccines.

Merck values our CPM antibody platform because it has some unique advantages over competing platforms. We have already identified antibodies that are at least as good as any out there for CTLA4 and PD1. Our antibodies are fully human and have high quality from use of B cells.

There is a realistic chance we will have CPM agreements in place by the end of the year.

We incur no costs in the agreement with Merck. Not at liberty to discuss the milestones. Once we deliver the antibodies to them they take over the entire process.

We don't expect much from the gene signature trial by GSK in melanoma because the signature is now questionable. [Listen to the fuller answer for detailed reasoning]

An analyst expressed opinion that company should put sole focus on CPMs, thoughts? Might be a valid point. We believe heat shock protein and GS-21 still have value. But we are looking at options that emphasize the new CPM platform and drive down costs in everything else. We believe our vaccine platform technology is very attractive, but needs to be reconsidered in the context of the other tools. We are considering what would be most effective for us. The checkpoint portfolio has already been given a great deal of emphasis. We have been looking for ways to turbocharge our vaccines, now we may have that with our CPM platform.

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 2014 William P. Meyers