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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
For the quarterly period ended
or
For the transition period from to
Commission File Number:
(exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code:
(
Securities registered or to be registered pursuant to Section 12(b) of the Act.
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Title of each class |
Trading symbol(s) |
Name of each exchange on which registered |
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The
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer |
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☐ |
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☒ |
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Non-accelerated filer |
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☐ |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
☐
No
Number of shares outstanding of the issuer’s Common Stock as of May 5, 2023:
Agenus Inc.
Three Months Ended March 31, 2023
Table of Contents
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Page |
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PART I |
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ITEM 1. |
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2 |
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Condensed Consolidated Balance Sheets as of March 31, 2023 (Unaudited) and December 31, 2022 |
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2 |
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3 |
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4 |
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6 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
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7 |
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ITEM 2. |
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Management's Discussion and Analysis of Financial Condition and Results of Operations |
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16 |
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ITEM 3. |
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20 |
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ITEM 4. |
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21 |
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PART II |
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ITEM 1. |
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22 |
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ITEM 1A. |
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22 |
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ITEM 6. |
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22 |
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23 |
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
AGENUS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDA TED BALANCE SHEETS
(Amounts in thousands, except share and per share amounts)
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March 31, 2023
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December 31, 2022 |
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ASSETS |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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Accounts receivable |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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Property, plant and equipment, net of accumulated amortization and depreciation of
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Operating lease right-of-use assets |
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Goodwill |
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Acquired intangible assets, net of accumulated amortization of $
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Other long-term assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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Current portion, long-term debt |
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$ |
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$ |
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Current portion, liability related to sale of future royalties and milestones |
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Current portion, deferred revenue |
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Current portion, operating lease liabilities |
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Accounts payable |
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Accrued liabilities |
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Other current liabilities |
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Total current liabilities |
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Long-term debt, net of current portion |
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Liability related to sale of future royalties and milestones, net of current portion |
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Deferred revenue, net of current portion |
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Operating lease liabilities, net of current portion |
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Other long-term liabilities |
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STOCKHOLDERS’ DEFICIT |
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Series A-1 convertible preferred stock;
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Common stock, par value $
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
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(
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) |
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(
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Total stockholders’ deficit attributable to Agenus Inc. |
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(
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) |
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(
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Non-controlling interest |
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Total stockholders’ deficit |
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(
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) |
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(
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Total liabilities and stockholders’ deficit |
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$ |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements.
2
AGENUS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS O F OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(Amounts in thousands, except per share amounts)
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Three Months Ended March 31, |
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2023 |
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2022 |
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Revenue: |
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Research and development |
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$ |
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$ |
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Service revenue |
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Non-cash royalty revenue related to the sale of future royalties |
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Total revenues |
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Operating expenses: |
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Cost of service revenue |
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(
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) |
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(
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Research and development |
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(
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(
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General and administrative |
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(
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) |
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(
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Contingent purchase price consideration fair value adjustment |
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Operating loss |
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(
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(
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Other income (expense): |
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Non-operating income |
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Interest expense, net |
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(
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) |
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(
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Net loss |
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(
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) |
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(
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) |
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Dividends on Series A-1 convertible preferred stock |
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(
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) |
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(
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) |
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Less: net loss attributable to non-controlling interest |
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(
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) |
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(
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) |
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Net loss attributable to Agenus Inc. common stockholders |
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$ |
(
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) |
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$ |
(
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) |
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Per common share data: |
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Basic and diluted net loss attributable to Agenus Inc. common stockholders |
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$ |
(
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) |
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$ |
(
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) |
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Weighted average number of Agenus Inc. common shares outstanding: |
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Basic and diluted |
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Other comprehensive loss: |
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Foreign currency translation gain (loss) |
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$ |
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$ |
(
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) |
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Other comprehensive gain (loss) |
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(
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) |
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Comprehensive loss |
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$ |
(
|
) |
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$ |
(
|
) |
See accompanying notes to unaudited condensed consolidated financial statements.
3
AGENUS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
(Amounts in thousands)
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Series A-1 |
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Convertible |
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Preferred Stock |
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Common Stock |
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Treasury Stock |
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Number of
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Par
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Number of
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Par
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Additional
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Number
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Amount |
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Accumulated
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Non-controlling
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Accumulated
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Total |
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Balance at December 31, 2022 |
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$ |
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$ |
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$ |
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— |
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$ |
— |
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$ |
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$ |
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$ |
(
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) |
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$ |
(
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) |
|
Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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(
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) |
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(
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) |
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(
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) |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Share-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Shares sold at the market |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Issuance of director deferred shares |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Issuance of shares for services |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Vesting of nonvested shares |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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|
Exercise of stock options and employee share purchases |
|
|
— |
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— |
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— |
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— |
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— |
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— |
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Issuance of subsidiary shares for employee bonus |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Issuance of shares for employee bonus |
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— |
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— |
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(
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) |
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(
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) |
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— |
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— |
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— |
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Retirement of treasury shares |
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— |
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— |
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(
|
) |
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|
(
|
) |
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— |
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— |
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— |
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— |
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|
Balance at March 31, 2023 |
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$ |
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$ |
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$ |
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— |
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$ |
— |
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$ |
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|
$ |
|
|
|
$ |
(
|
) |
|
$ |
(
|
) |
See accompanying notes to unaudited condensed consolidated financial statements.
4
AGENUS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
(Amounts in thousands)
|
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|
Series A-1 |
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Convertible |
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Preferred Stock |
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Common Stock |
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Treasury Stock |
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Number of
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Par
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Number of
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Par
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Additional
|
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Number
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Amount |
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Accumulated
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Non-controlling
|
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Accumulated
|
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Total |
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|||||||||||
|
Balance at December 31, 2021 |
|
|
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$ |
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$ |
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$ |
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— |
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$ |
— |
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$ |
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$ |
|
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$ |
(
|
) |
|
$ |
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|
|
Net loss |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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|
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— |
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(
|
) |
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|
(
|
) |
|
|
(
|
) |
|
Other comprehensive loss |
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— |
|
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— |
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— |
|
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— |
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— |
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— |
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— |
|
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(
|
) |
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— |
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— |
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|
(
|
) |
|
Share-based compensation |
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|
— |
|
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Shares sold at the market |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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|
Issuance of director deferred shares |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Issuance of shares for services |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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|
Vesting of nonvested shares |
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|
— |
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|
— |
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Exercise of stock options and employee share purchases |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
Issuance of shares for employee bonus |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(
|
) |
|
|
(
|
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
Retirement of treasury shares |
|
|
— |
|
|
|
— |
|
|
|
(
|
) |
|
|
(
|
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
Balance at March 31, 2022 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
|
— |
|
|
$ |
— |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
See accompanying notes to unaudited condensed consolidated financial statements .
5
AGENUS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED S TATEMENTS OF CASH FLOWS
(Unaudited)
(Amounts in thousands, except per share amounts)
|
|
|
Three Months Ended March 31, |
|
|||||
|
|
|
2023 |
|
|
2022 |
|
||
|
Cash flows from operating activities: |
|
|
|
|
|
|
||
|
Net loss |
|
$ |
(
|
) |
|
$ |
(
|
) |
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
||
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
|
|
|
|
|
|
|
Non-cash royalty revenue |
|
|
(
|
) |
|
|
(
|
) |
|
Non-cash interest expense |
|
|
|
|
|
|
|
|
|
Loss on disposal of assets |
|
|
|
|
|
|
|
|
|
Change in fair value of contingent obligations |
|
|
(
|
) |
|
|
(
|
) |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
||
|
Accounts receivable |
|
|
|
|
|
|
|
|
|
Prepaid expenses |
|
|
|
|
|
|
(
|
) |
|
Accounts payable |
|
|
|
|
|
|
(
|
) |
|
Deferred revenue |
|
|
(
|
) |
|
|
(
|
) |
|
Accrued liabilities and other current liabilities |
|
|
|
|
|
|
|
|
|
Other operating assets and liabilities |
|
|
(
|
) |
|
|
|
|
|
Net cash used in operating activities |
|
|
(
|
) |
|
|
(
|
) |
|
Cash flows from investing activities: |
|
|
|
|
|
|
||
|
Purchases of plant and equipment |
|
|
(
|
) |
|
|
(
|
) |
|
Cash paid for business acquisition |
|
|
— |
|
|
|
(
|
) |
|
Purchases of available-for-sale securities |
|
|
(
|
) |
|
|
(
|
) |
|
Proceeds from sale of available-for-sale securities |
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(
|
) |
|
|
(
|
) |
|
Cash flows from financing activities: |
|
|
|
|
|
|
||
|
Net proceeds from sale of equity |
|
|
|
|
|
|
|
|
|
Proceeds from employee stock purchases and option exercises |
|
|
|
|
|
|
|
|
|
Purchase of treasury shares to satisfy tax withholdings |
|
|
(
|
) |
|
|
(
|
) |
|
Payment of finance lease obligation |
|
|
(
|
) |
|
|
(
|
) |
|
Net cash provided by financing activities |
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash |
|
|
(
|
) |
|
|
(
|
) |
|
Net decrease in cash, cash equivalents and restricted cash |
|
|
(
|
) |
|
|
(
|
) |
|
Cash, cash equivalents and restricted cash, beginning of period |
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
|
|
|
$ |
|
|
|
Supplemental cash flow information: |
|
|
|
|
|
|
||
|
Cash paid for interest |
|
$ |
|
|
|
$ |
|
|
|
Supplemental disclosures - non-cash activities: |
|
|
|
|
|
|
||
|
Purchases of plant and equipment in accounts payable and
|
|
$ |
|
|
|
$ |
|
|
|
Issuance of common stock, $
|
|
|
|
|
|
|
|
|
|
Insurance financing agreement |
|
|
|
|
|
|
|
|
|
Issuance of common stock, $
|
|
|
|
|
|
|
|
|
|
Issuance of subsidiary shares for employee bonus |
|
|
|
|
|
|
— |
|
|
Lease right-of-use assets obtained in exchange for new operating lease liabilities |
|
|
|
|
|
|
|
|
|
Lease right-of-use assets obtained in exchange for new finance lease liabilities |
|
|
|
|
|
|
— |
|
See accompanying notes to unaudited condensed consolidated financial statements.
6
AGENUS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CO NSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
Note A - Business, Liquidity and Basis of Presentation
Agenus Inc. (including its subsidiaries, collectively referred to as “Agenus,” the “Company,” “we,” “us,” and “our”) is a clinical-stage company with a pipeline of therapies designed to activate the body’s immune system to fight cancer and infections, including immune-modulatory antibodies, adoptive cell therapies (through our subsidiary MiNK Therapeutics, Inc. (“MiNK”)) and vaccine adjuvants (through our subsidiary SaponiQx, Inc. (“SaponiQx”)). Our business is designed to drive success in Immuno-oncology (“I-O”) through speed, innovation and effective combination therapies. We believe that combination therapies and a deep understanding of each patient’s cancer will drive substantial expansion of the patient population benefiting from current and potential new I-O therapies. In addition to a diverse pipeline, we have assembled fully integrated end-to-end capabilities including novel target discovery, antibody generation, cell line development and current good manufacturing practice (“cGMP”) clinical manufacturing. We believe that these fully integrated capabilities enable us to produce novel candidates on timelines that are shorter than the industry standard. Leveraging our science and capabilities, we have forged important partnerships to advance our innovation.
We are developing a comprehensive I-O portfolio driven by the following platforms and programs, which we intend to utilize individually and in combination:
Our business activities include product research, preclinical and clinical development, intellectual property prosecution, manufacturing, regulatory and clinical affairs, corporate finance and development activities, and support of our collaborations. Our product candidates require successful clinical trials and approvals from regulatory agencies, as well as acceptance in the marketplace. Part of our strategy is to develop and commercialize some of our product candidates by continuing our existing arrangements with academic and corporate collaborators and licensees and by entering into new collaborations.
Our cash, cash equivalents and short-term investments at March 31, 2023 were
$
We have incurred losses since our inception. As of March 31, 2023, we had an accumulated deficit of
$
We have historically financed our operations through income and revenues generated from corporate partnerships, advance royalty sales and equity issuances
. Based on our current plans and projections, we believe our cash resources of $
Management consistently monitors our liquidity position and has the flexibility to adjust spending as necessary to preserve and extend liquidity. We regularly assess the likelihood of success of our programs, and our funding decisions are based on these evaluations. We are prepared to discontinue funding of any activities that do not impact our core priorities and to restrict capital expenditures and/or reduce the scale of our operations. Potential funding sources may include collaborations, out-licensing and/or partnering opportunities for our portfolio programs and product candidates with multiple parties, milestone payments from our existing partnerships, additional third-party agreements, asset sales, project financing, and/or sales of equity securities.
The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete annual
7
consolidated financial statements. In the opinion of our management, the condensed consolidated financial statements include all normal and recurring adjustments considered necessary for a fair presentation of our financial position and operating results. All significant intercompany transactions and accounts have been eliminated in consolidation. Operating results for the three months ended March 31, 2023, are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. For further information, refer to our consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”).
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances. Actual results could differ materially from those estimates.
For our foreign subsidiaries, the local currency is the functional currency. Assets and liabilities of our foreign subsidiaries are translated into U.S. dollars using rates in effect at the balance sheet date while revenues and expenses are translated into U.S. dollars using average exchange rates during the period. The cumulative translation adjustment resulting from changes in exchange rates are included in the consolidated balance sheets as a component of accumulated other comprehensive income in total stockholders’ equity (deficit).
Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding (including common shares issuable under our Amended and Restated Directors’ Deferred Compensation Plan, or “DDCP”). Diluted loss per common share is calculated by dividing loss attributable to common stockholders by the weighted average number of common shares outstanding (including common shares issuable under our DDCP) plus the dilutive effect of outstanding instruments such as warrants, stock options, non-vested shares and convertible preferred stock. Because we reported a net loss attributable to common stockholders for all periods presented, diluted loss per common share is the same as basic loss per common share, as the effect of utilizing the fully diluted share count would have reduced the net loss per common share.
|
|
|
Three Months Ended March 31, |
|
|||||
|
|
|
2023 |
|
|
2022 |
|
||
|
Warrants |
|
|
|
|
|
|
|
|
|
Stock options |
|
|
|
|
|
|
|
|
|
Non-vested shares |
|
|
|
|
|
|
|
|
|
Series A-1 convertible preferred stock |
|
|
|
|
|
|
|
|
Note C - Investments
Cash equivalents and short-term investments consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):
|
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||||||||||
|
|
|
Cost |
|
|
Estimated
|
|
|
Cost |
|
|
Estimated
|
|
||||
|
Institutional money market funds |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
U.S. Treasury Bills |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
As a result of the short-term nature of our investments, there were minimal unrealized holding gains or losses for the three months ended March 31, 2023 and 2022.
Of the investments listed above, $
8
Note D - Goodwill and Acquired Intangible Assets
The following table sets forth the changes in the carrying amount of goodwill for the three months ended March 31, 2023 (in thousands):
|
Balance, December 31, 2022 |
|
$ |
|
|
|
Foreign currency translation adjustment |
|
|
|
|
|
Balance, March 31, 2023 |
|
$ |
|
|
Acquired intangible assets consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):
|
|
|
As of March 31, 2023 |
|
|||||||||||
|
|
|
Amortization
|
|
Gross carrying
|
|
|
Accumulated
|
|
|
Net carrying
|
|
|||
|
Intellectual property |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
Trademarks |
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
In-process research and development |
|
Indefinite |
|
|
|
|
|
|
— |
|
|
|
|
|
|
Total |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
|
|
As of December 31, 2022 |
|
|||||||||||
|
|
|
Amortization
|
|
Gross carrying
|
|
|
Accumulated
|
|
|
Net carrying
|
|
|||
|
Intellectual property |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
|
Trademarks |
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
(
|
) |
|
|
|
|
|
In-process research and development |
|
Indefinite |
|
|
|
|
|
|
— |
|
|
|
|
|
|
Total |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
The weighted average amortization period of our finite-lived intangible assets is
Note E - Debt
|
Debt instrument |
|
Balance at
|
|
|
|
Current Portion: |
|
|
|
|
|
Debentures |
|
$ |
|
|
|
Other |
|
|
|
|
|
Long-term Portion: |
|
|
|
|
|
2015 Subordinated Notes |
|
|
|
|
|
Total |
|
$ |
|
|
|
Debt instrument |
|
Balance at
|
|
|
|
Current Portion: |
|
|
|
|
|
Debentures |
|
$ |
|
|
|
Other |
|
|
|
|
|
Long-term Portion: |
|
|
|
|
|
2015 Subordinated Notes |
|
|
|
|
|
Total |
|
$ |
|
|
As of March 31, 2023 and December 31, 2022, the principal amount of our outstanding debt balance was $
9
Note F – Liability Related to the Sale of Future Royalties and Milestones
The following table shows the activity within the liability account in the three months ended March 31, 2023 (in thousands):
|
|
|
Period from
|
|
|
|
Liability related to sale of future royalties and milestones - beginning balance |
|
$ |
|
|
|
Non-cash royalty revenue |
|
|
(
|
) |
|
Non-cash interest expense recognized |
|
|
|
|
|
Liability related to sale of future royalties and milestones - ending balance |
|
|
|
|
|
Less: unamortized transaction costs |
|
|
(
|
) |
|
Liability related to sale of future royalties and milestones, net |
|
$ |
|
|
Healthcare Royalty Partners
In January 2018, we, through our wholly-owned subsidiary Antigenics, LLC (“Antigenics”), entered into a Royalty Purchase Agreement (the “HCR Royalty Purchase Agreement”) with Healthcare Royalty Partners III, L.P. and certain of its affiliates (collectively, “HCR”). Pursuant to the terms of the HCR Royalty Purchase Agreement, we sold to HCR
During the three months ended March 31, 2023
, we recognized $
As royalties are remitted to HCR from GSK, the balance of the recorded liability will be effectively repaid over the life of the HCR Royalty Purchase Agreement. To determine the amortization of the recorded liability, we are required to estimate the total amount of future royalty payments to be received by HCR. The sum of these amounts less the $190.0 million proceeds we received will be recorded as interest expense over the life of the HCR Royalty Purchase Agreement. Periodically, we assess the estimated royalty payments to be paid to HCR from GSK, and to the extent the amount or timing of the payments is materially different from our original estimates, we will prospectively adjust the amortization of the liability, and the related recognition of interest expense. During the three months ended March 31, 2023
, our estimate of the effective annual interest rate over the life of the agreement decreased to
Note G - Accrued and Other Current Liabilities
Accrued liabilities consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):
|
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
|
Payroll |
|
$ |
|
|
|
$ |
|
|
|
Professional fees |
|
|
|
|
|
|
|
|
|
Contract manufacturing costs |
|
|
|
|
|
|
|
|
|
Research services |
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
10
Other current liabilities consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):
|
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
||
|
Finance lease liabilities |
|
$ |
|
|
|
$ |
|
|
|
Other |
|
|
|
|
|
|
|
|
|
Total |
|
$ |
|
|
|
$ |
|
|
Note H - Fair Value Measurements
We measure our contingent purchase price considerations at fair value. The fair values of our contingent purchase price considerations,
$
Note I - Revenue from Contracts with Customers
Gilead Collaboration Agreement
On December 20, 2018, we entered into a series of agreements with Gilead Sciences, Inc. (“Gilead”) focused on the development and commercialization of up to five novel immuno-oncology therapies. Pursuant to the terms of the license agreement, the option and license agreements and the stock purchase agreement we entered into with Gilead (collectively, the “Gilead Collaboration Agreements”), at the closing of the transaction on January 23, 2019, we received an upfront cash payment from Gilead of $
Collaboration Revenue
For the three months ended March 31, 2023
, we recognized approximately $
We expect to recognize deferred research and development revenue of $
Disaggregation of Revenue
The following table presents revenue (in thousands) for the three months ended March 31, 2023 and 2022, disaggregated by geographic region and revenue type. Revenue by geographic region is allocated based on the domicile of our respective business operations.
11
|
|
|
Three months ended March 31, 2023 |
|
|||||||||
|
|
|
United States |
|
|
Rest of World |
|
|
Total |
|
|||
|
Revenue Type |
|
|
|
|
|
|
|
|
|
|||
|
Research and development services |
|
|
|
|
|
|
— |
|
|
|
|
|
|
Other services |
|
|
— |
|
|
|
|
|
|
|
|
|
|
Recognition of deferred revenue |
|
|
|
|
|
|
— |
|
|
|
|
|
|
Non-cash royalties |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
Three months ended March 31, 2022 |
|
|||||||||
|
Revenue Type |
|
|
|
|
|
|
|
|
|
|||
|
License fees and milestones |
|
$ |
|
|
|
$ |
— |
|
|
$ |
|
|
|
Research and development services |
|
|
|
|
|
|
— |
|
|
|
|
|
|
Other services |
|
|
— |
|
|
|
|
|
|
|
|
|
|
Recognition of deferred revenue |
|
|
|
|
|
|
— |
|
|
|
|
|
|
Non-cash royalties |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Contract Balances
Contract assets primarily relate to our rights to consideration for work completed in relation to our research and development services performed but not billed at the reporting date. The contract assets are transferred to receivables when the rights become unconditional. Currently, we do not have any contract assets which have not transferred to a receivable. We had
The following table provides information about contract liabilities from contracts with customers (in thousands):
|
Three months ended March 31, 2023 |
|
Balance at beginning of period |
|
|
Additions |
|
|
Deductions |
|
|
Balance at end of period |
|
||||
|
Contract liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Deferred revenue |
|
$ |
|
|
|
$ |
|
|
|
$ |
(
|
) |
|
$ |
|
|
The change in contract liabilities is primarily related to the recognition of $
We also recorded a $
During the three months ended March 31, 2023
, we did not recognize any revenue from amounts included in the contract asset or the contract liability balances from performance obligations satisfied in previous periods.
We primarily use the Black-Scholes option pricing model to value stock options granted to employees and non-employees, including stock options granted to members of our Board of Directors. However, the fair value of stock option market-based awards is
12
calculated
based on a Monte Carlo simulation as of the date of issuance. All stock options have
A summary of option activity for the three months ended March 31, 2023 is presented below:
|
|
|
Options |
|
|
Weighted
|
|
|
Weighted
|
|
|
Aggregate
|
|
||||
|
Outstanding at December 31, 2022 |
|
|
|
|
|
$ |
|
|
|
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Granted |
|
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|
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|
|
|
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|
||
|
Exercised |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
||
|
Forfeited |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
||
|
Expired |
|
|
(
|
) |
|
|
|
|
|
|
|
|
|
|
||
|
Outstanding at March 31, 2023 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
— |
|
|
Vested or expected to vest at March 31, 2023 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
— |
|
|
Exercisable at March 31, 2023 |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
$ |
— |
|
The weighted average grant-date fair values of stock options granted during the three months ended March 31, 2023 and 2022
were $
As of March 31, 2023
, there was approximately $
Certain employees and consultants have been granted non-vested stock. The fair value of non-vested market-based awards is calculated based on a Monte Carlo simulation as of the date of issuance. The fair value of other non-vested stock is calculated based on the closing sale price of our common stock on the date of issuance.
A summary of non-vested stock activity for the three months ended March 31, 2023 is presented below:
|
|
|
Non-vested
|
|
|
Weighted
|
|
||
|
Outstanding at December 31, 2022 |
|
|
|
|
|
$ |
|
|
|
Granted |
|
|
|
|
|
|
|
|
|
Vested |
|
|
(
|
) |
|
|
|
|
|
Forfeited |
|
|
— |
|
|
|
— |
|
|
Outstanding at March 31, 2023 |
|
|
|
|
|
$ |
|
|
As of March 31, 2023
, there was approximately $
During the three months ended March 31, 2023
,
The impact on our results of operations from share-based compensation for the three months ended March 31, 2023 and 2022, was as follows (in thousands):
|
|
|
Three Months Ended March 31, |
|
|||||
|
|
|
2023 |
|
|
2022 |
|
||
|
Research and development |
|
$ |
|
|
|
$ |
|
|
|
General and administrative |
|
|
|
|
|
|
|
|
|
Total share-based compensation expense |
|
$ |
|
|
|
$ |
|
|
13
Note K – Restricted Cash
As of both March 31, 2023, and December 31, 2022
, we maintained non-current restricted cash of $
The following table provides a reconciliation of cash, cash equivalents and restricted cash that sums to the total of the same such amounts shown in the condensed consolidated statements of cash flows (in thousands):
|
|
|
Three Months Ended March 31, 2023 |
|
|
Three Months Ended March 31, 2022 |
|
||||||||||
|
|
|
Beginning of Period |
|
|
End of Period |
|
|
Beginning of Period |
|
|
End of Period |
|
||||
|
Cash and cash equivalents |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Restricted cash |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Note L – Equity
At the Market Offerings
On March 1, 2022, we filed a prospectus supplement with the SEC for the potential offer and sale of up to
During the quarter ended March 31, 2023
, we received net proceeds of approximately $
Note M – Related Party Transactions
In 2023, our Audit and Finance Committee approved a contract between Avillion Life Sciences LTD ("Avillion") and Agenus for the performance of up to $
Note N - Recent Accounting Pronouncements
Recently Issued and Adopted
In January 2017, the FASB issued
, Intangibles – Goodwill and Other (Topic 350) that will eliminate the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, an impairment charge will be based on the excess of a reporting unit’s carrying amount over its fair value.
We
No other new accounting pronouncement issued or effective during the three months ended March 31, 2023 had or is expected to have a material impact on our consolidated financial statements or disclosures.
Note O – Subsequent Events
At the Market Offerings
During the period of April 1, 2023 through May 5, 2023, we sold approximately
MiNK Stock Dividend
On
14
On
15
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward Looking Statements
This Quarterly Report on Form 10-Q and other written and oral statements we make from time to time contain certain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). You can identify these forward-looking statements by the fact they use words such as “could,” “expect,” “anticipate,” “estimate,” “target,” “may,” “project,” “guidance,” “intend,” “plan,” “believe,” “will,” “potential,” “opportunity,” “future” and other words and terms of similar meaning and expression in connection with any discussion of future operating or financial performance. You can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes to differ materially from current expectations. These statements relate to, among other things, our business strategy, our research and development, our product development efforts, our ability to commercialize our product candidates, the activities of our licensees, our prospects for initiating partnerships or collaborations, the timing of the introduction of products, the effect of new accounting pronouncements, uncertainty regarding our future operating results and our profitability, anticipated sources of funds as well as our plans, objectives, expectations, and intentions.
More detailed descriptions of these risks and uncertainties and other risks and uncertainties applicable to our business that we believe could cause actual results to differ materially from any forward-looking statements are included in in Part I-Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. We encourage you to read those descriptions carefully. Although we believe we have been prudent in our plans and assumptions, no assurance can be given that any goal or plan set forth in forward-looking statements can be achieved. We caution investors not to place significant reliance on forward-looking statements contained in this document; such statements need to be evaluated in light of all the information contained in this document. Furthermore, the statements speak only as of the date of this document, and we undertake no obligation to update or revise these statements.
ASV®, Agenus™, MiNK™, Prophage™, Retrocyte Display™ and STIMULON are trademarks of Agenus Inc. and its subsidiaries. All rights reserved.
Overview
We are a clinical-stage company with a pipeline of therapies designed to activate the body’s immune system to fight cancer and infections, including immune-modulatory antibodies, adoptive cell therapies (through our subsidiary MiNK Therapeutics, Inc. (“MiNK”)) and vaccine adjuvants (through our subsidiary SaponiQx, Inc. (“SaponiQx”)). Our business is designed to drive success in Immuno-oncology (“I-O”) through speed, innovation and effective combination therapies. We believe that combination therapies and a deep understanding of each patient’s cancer will drive substantial expansion of the patient population benefiting from current and potential new I-O therapies. In addition to a diverse pipeline, we have assembled fully integrated end-to-end capabilities including novel target discovery, antibody generation, cell line development and current good manufacturing practice (“cGMP”) clinical manufacturing. We believe that these fully integrated capabilities enable us to produce novel candidates on timelines that are shorter than the industry standard. Leveraging our science and capabilities, we have forged important partnerships to advance our innovation.
We are developing a comprehensive I-O portfolio driven by the following platforms and programs, which we intend to utilize individually and in combination:
We assess development, commercialization and partnering strategies for each of our product candidates periodically based on several factors, including pre-clinical and clinical trial results, competitive positioning and funding requirements and resources. Our lead program, botensilimab (AGEN1181), is advancing in multiple clinical programs which we have designed to support regulatory
16
pathways for accelerated development with botensilimab as a monotherapy and in combination with balstilimab. We initiated worldwide trials for botensilimab in microsatellite stable colorectal cancer, melanoma and pancreatic cancer in 2022.
We have formed collaborations with companies such as Bristol-Myers Squibb Company (“BMS”), Betta Pharmaceuticals Co., Ltd. (“Betta”), Gilead Sciences, Inc. (“Gilead”), Incyte Corporation (“Incyte”) and Merck Sharpe & Dohme (“Merck”). Through these alliances, as well as our own internal programs, we currently have more than a dozen antibody programs in pre-clinical or clinical development.
Pursuant to our collaboration agreement with Incyte, we have exclusively licensed to Incyte monospecific antibodies targeting GITR, OX40, TIM-3 and LAG-3, which Incyte has been advancing in various clinical trials, as well as an additional undisclosed target that Incyte was advancing in preclinical studies. In October 2022, Incyte notified us of their intent to terminate the OX40 program, effective October 2023, and in May 2023, Incyte notified us of their intent to terminate both the GITR program and the undisclosed program, effective May 2024. On termination the rights to the OX40, GITR and undisclosed programs revert back to us. Under the terms of our agreement, Incyte is responsible for all future development expenses for the remaining programs, and we are eligible to receive up to an additional $315.0 million in potential milestone payments plus royalties on any future sales. Pursuant to our collaboration and license agreement with Merck, we exclusively licensed to Merck a monospecific antibody targeting ILT4, which Merck is advancing in a Phase 2 clinical trial. Under the terms of our agreement, Merck is responsible for all future development expenses, and we are eligible to receive up to an additional $85.0 million in potential milestone payments plus royalties on any future sales. In September 2018, we, through our wholly-owned subsidiary, Agenus Royalty Fund, LLC, entered into a royalty purchase agreement (the “XOMA Royalty Purchase Agreement”) with XOMA (US) LLC (“XOMA”). Pursuant to the terms of the XOMA Royalty Purchase Agreement, XOMA purchased 33% of all future royalties and 10% of all future milestone payments that we are entitled to receive from Incyte and Merck, net of certain of our obligations to a third party. After taking into account our obligations under the XOMA Royalty Purchase Agreement, as of March 31, 2023, we remain eligible to receive up to $283.5 million and $76.5 million in potential development, regulatory and commercial milestones from Incyte and Merck, respectively.
In December 2018, we entered into a series of agreements with Gilead to collaborate on the development and commercialization of up to five novel I-O therapies (the “Gilead Collaboration Agreements”). Pursuant to the Gilead Collaboration Agreements, Gilead received worldwide exclusive rights to our bispecific antibody, AGEN1423, as well as the exclusive option to exclusively license AGEN1223, a bispecific antibody, and AGEN2373, a monospecific antibody. All three assets have entered clinical development. In November 2020, Gilead elected to return AGEN1423 to us and to voluntarily terminate the license agreement effective as of February 4, 2021. In the third quarter of 2021, we ceased development of AGEN1223 and in October 2021 the AGEN1223 option and license agreement was formally terminated. The AGEN2373 option agreement remains in place, and we are responsible for developing the program up to the option decision point, at which time Gilead may acquire exclusive rights to the program on option exercise. We have the right to opt-in to share Gilead’s development and commercialization costs in the United States in exchange for a profit (loss) share on a 50:50 basis and revised milestone payments. In March 2022, we received a $5.0 million clinical milestone under the AGEN2373 option agreement. Pursuant to the terms of the AGEN2373 option agreement, we remain eligible to receive a $50.0 million option exercise fee and, if exercised, up to an additional $520.0 million in aggregate milestone payments, as well as royalties on any future sales.
In June 2020, we entered into a license and collaboration agreement (the “Betta License Agreement”) with Betta, pursuant to which we granted Betta an exclusive license to develop, manufacture and commercialize balstilimab and zalifrelimab in Republic of China, Hong Kong, Macau and Taiwan (“Greater China”). Under the terms of the Betta License Agreement, we received $15.0 million upfront and are eligible to receive up to $100.0 million in milestone payments plus royalties on any future sales in Greater China.
In May 2021, we entered into a License, Development and Commercialization Agreement (“BMS License Agreement”) with BMS to collaborate on the development and commercialization of our pre-clinical proprietary anti-TIGIT bispecific antibody program AGEN1777. Under the BMS License Agreement, we granted BMS an exclusive worldwide license under certain of our intellectual property rights to develop, manufacture and commercialize AGEN1777 and its derivatives in all fields; provided, we retained an option to access the licensed antibodies for use in clinical studies in combination with certain of our other pipeline assets subject to certain restrictions. Pursuant to the BMS License Agreement, we received a non-refundable upfront cash payment of $200.0 million in July 2021 and are eligible to receive up to $1.36 billion in aggregate development, regulatory and commercial milestone payments plus tiered royalties. In exchange, BMS is responsible for all of the development, regulatory approval, manufacturing and commercialization costs with respect to products containing AGEN1777. We have the option, but not the obligation, to co-fund a minority of the global development costs of products containing AGEN1777 or its derivatives, in exchange for increased tiered royalties. Finally, we also have the option to co-promote AGEN1777 in the U.S. In October 2021, we announced that the first patient was dosed in the AGEN1777 Phase 1 clinical trial, triggering the achievement of a $20.0 million milestone.
In September 2021, we announced the launch of SaponiQx to spearhead innovation in novel adjuvant discovery and vaccine design, including in relation to our saponin-based adjuvants. We also announced our partnership with Ginkgo Bioworks, Inc. to
17
develop SaponiQx’s novel saponin products from sustainably sourced raw materials, with a goal to meet the current demands placed on the vaccine industry for pandemic vaccines. Our QS-21 STIMULON adjuvant is partnered with GlaxoSmithKline (“GSK”) and is a key component in multiple GSK vaccine programs. These programs are in various stages, with the most advanced being GSK’s approved shingles vaccine, Shingrix, which was approved in the United States by the FDA in October 2017. In January 2018, we entered into a Royalty Purchase Agreement with Healthcare Royalty Partners III, L.P. and certain of its affiliates (together, “HCR”), pursuant to which HCR purchased 100% of our worldwide rights to receive royalties from GSK on GSK’s sales of vaccines containing our QS-21 STIMULON adjuvant. We do not incur clinical development costs for products partnered with GSK. We were also entitled to receive up to $40.35 million in milestone payments from HCR based on sales of GSK’s vaccines as follows: (i) $15.1 million upon reaching $2.0 billion last-twelve-months net sales any time prior to 2024 (the “First HCR Milestone”) and (ii) $25.25 million upon reaching $2.75 billion last-twelve-months net sales any time prior to 2026 (the “Second HCR Milestone”). We received the First HCR Milestone after GSK’s net sales of Shingrix for the twelve months ended December 31, 2019 exceeded $2.0 billion and the Second HCR Milestone after GSK’s net sales of Shingrix for the twelve months ended June 30, 2022 exceeded $2.75 billion.
Our business activities include product research and preclinical and clinical development, intellectual property prosecution, manufacturing, regulatory and clinical affairs, corporate finance and development activities, and support of our collaborations. Our product candidates require successful clinical trials and approvals from regulatory agencies, as well as acceptance in the marketplace. Part of our strategy is to develop and commercialize some of our product candidates by continuing our existing arrangements with academic and corporate collaborators and licensees and by entering into new collaborations.
MiNK is focused on the development of unmodified iNKT cell therapies for the treatment of cancer and other life-threatening immune-mediated diseases. MiNK’s most advanced product candidate, agenT-797, is an off-the-shelf, allogeneic, native iNKT cell therapy. MiNK has commenced and enrolled a Phase 1 clinical trial for the treatment of solid tumors as a monotherapy and in combination with commercially approved checkpoint inhibitors (KEYTRUDA® and OPDIVO®). MiNK is also evaluating agenT-797 as a variant-agnostic therapy for patients with viral acute respiratory distress syndrome and published top-line data from this Phase 1 clinical trial in the fourth quarter of 2021, reporting a 77% survival rate in older, mechanically ventilated patients with COVID-19 respiratory failure. Pursuant to an assignment and license agreement with Agenus, MiNK owns the INKT technology including the rights to develop and expand a proprietary pipeline of engineered CAR-INKTs, TCRs, and INKT bispecific engagers.
Historical Results of Operations
Three months ended March 31, 2023 compared to the three months ended March 31, 2022
Research and development revenue
We recognized research and development revenue of approximately $2.6 million and $6.7 million during the three months ended March 31, 2023 and 2022, respectively. Research and development revenues in the first quarter of 2023 primarily consisted of $2.3 million related to the recognition of deferred revenue earned under our Gilead Collaboration Agreements. Research and development revenues in the first quarter of 2022 primarily consisted of a $5.0 million milestone and $1.4 million related to the recognition of deferred revenue, both earned under our Gilead Collaboration Agreements.
Non-cash royalty revenue related to the sale of future royalties
In January 2018, we sold 100% of our worldwide rights to receive royalties from GSK on sales of GSK’s vaccines containing our QS-21 STIMULON adjuvant to HCR. As described in Note F to our Condensed Consolidated Financial Statements, this transaction has been recorded as a liability that amortizes over the estimated life of our Royalty Purchase Agreement with HCR. As a result of this liability accounting, even though the royalties are remitted directly to HCR, we record these royalties from GSK as revenue. Non-cash royalty revenue related to our agreement with GSK increased $1.5 million, to approximately $19.1 million for the three months ended March 31, 2023, from $17.6 million for the three months ended March 31, 2022, due to increased net sales of GSK’s vaccines containing our QS-21 STIMULON adjuvant.
Research and development expense
Research and development expense includes the costs associated with our internal research and development activities, including compensation and benefits, occupancy costs, manufacturing costs, costs of consultants, and administrative costs. Research and development expense increased 35% to $57.1 million for the three months ended March 31, 2023 from $42.4 million for the three months ended March 31, 2022. Increased expenses in the three months ended March 31, 2023 primarily relate to a $11.4 million increase in third-party services and other expenses, largely due to the timing of expenses related to the advancement of our antibody programs, a $1.4 million increase in personnel related expenses, primarily due to increased headcount, a $1.4 million increase in expenses attributable to the activities of our subsidiaries and a $0.5 million increase in other research and development expenses.
General and administrative expense
General and administrative expense consists primarily of personnel costs, facility expenses, and professional fees. General and administrative expenses decreased 4% to $18.2 million for the three months ended March 31, 2023 from $19.0 million for the three
18
months ended March 31, 2022. Decreased expenses in the three months ended March 31, 2023 primarily relate to a $1.2 million decrease in professional fees, primarily due to reduced consulting and external legal costs. These decreases were partially offset by a $0.5 million increase in other general and administrative expenses.
Contingent purchase price consideration fair value adjustment
Contingent purchase price consideration fair value adjustment represents the change in the fair value of our purchase price considerations, which resulted from changes in our share price and changes in the credit spread since each reporting period end. The fair value of our contingent purchase price considerations is mainly based on estimates from a Monte Carlo simulation of our share price.
Interest expense, net
Interest expense, net increased to approximately $16.6 million for the three months ended March 31, 2023 from $15.2 million for the three months ended March 31, 2022, mainly due to increased non-cash interest recorded in connection with our Royalty Purchase Agreement with HCR partially offset by increased interest income earned on our cash equivalents and short-term investments.
Research and Development Programs
For the three months ended March 31, 2023, our research and development programs consisted largely of our antibody programs as indicated in the following table (in thousands).
|
|
|
|
|
Three Months Ended March 31, |
|
|
Year Ended December 31, |
|
||||||||||
|
Research and
|
|
Product |
|
2023 |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
||||
|
Antibody programs |
|
Various |
|
$ |
41,835 |
|
|
$ |
133,108 |
|
|
$ |
141,266 |
|
|
$ |
118,200 |
|
|
Vaccine adjuvant |
|
QS-21 STIMULON |
|
|
4,088 |
|
|
|
10,789 |
|
|
|
5,912 |
|
|
|
304 |
|
|
Cell therapies |
|
Various |
|
|
4,326 |
|
|
|
24,300 |
|
|
|
15,507 |
|
|
|
11,022 |
|
|
Other research and development programs |
|
Various |
|
|
6,869 |
|
|
|
18,494 |
|
|
|
15,923 |
|
|
|
13,091 |
|
|
Total research and development expenses |
|
|
|
$ |
57,118 |
|
|
$ |
186,691 |
|
|
$ |
178,608 |
|
|
$ |
142,617 |
|
Research and development program costs include compensation and other direct costs plus an allocation of indirect costs, based on certain assumptions and our review of the status of each program. Our product candidates are in various stages of development and significant additional expenditures will be required if we start new clinical trials, encounter delays in our programs, apply for regulatory approvals, continue development of our technologies, expand our operations, and/or bring our product candidates to market. The total cost of any particular clinical trial is dependent on a number of factors such as trial design, length of the trial, number of clinical sites, number of patients, and trial sponsorship. The process of obtaining and maintaining regulatory approvals for new therapeutic products is lengthy, expensive, and uncertain. Because of the current stage of our product candidates, among other factors, we are unable to reliably estimate the cost of completing our research and development programs or the timing for bringing such programs to various markets or substantial partnering or out-licensing arrangements, and, therefore, when, if ever, material cash inflows are likely to commence.
Liquidity and Capital Resources
We have incurred annual operating losses since inception, and we had an accumulated deficit of $1.8 billion as of March 31, 2023. We expect to incur significant losses over the next several years as we continue development of our technologies and product candidates, manage our regulatory processes, initiate and continue clinical trials, and prepare for potential commercialization of products. To date, we have financed our operations primarily through corporate partnerships, advance royalty sales and the issuance of equity. From our inception through March 31, 2023, we have raised aggregate net proceeds of approximately $1.8 billion through the sale of common and preferred stock, the exercise of stock options and warrants, proceeds from our Employee Stock Purchase Plan, royalty monetization transactions, and the issuance of convertible and other notes.
We maintain an effective registration statement (the “Registration Statement”), covering common stock, preferred stock, warrants, debt securities and units. The Registration Statement includes prospectuses covering the offer, issuance and sale of up to 200 million shares of our common stock from time to time in “at-the-market offerings” pursuant to an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. as our sales agent. We sold approximately 33.8 million and 9.2 million shares of our common stock pursuant to the Sales Agreement during the three months ended March 31, 2023 and the period of
19
April 1, 2023 through May 5, 2023, respectively, for aggregate net proceeds totaling $74.2 million. As of May 5, 2023, approximately 50.0 million shares remained available for sale under the Sales Agreement.
We have funded our operations largely from cash received from partners, royalty financing transactions and equity offerings. We transact at-the-market sales from time to time in order to manage our cash balances to make sure cash balances do not drop below a certain level based on our anticipated uses of cash. We execute at-the-market offerings based on market conditions and our stock price. We do not have in place a program whereby at-the-market offerings are executed automatically based on our trading volume.
As of March 31, 2023, we had debt outstanding of $14.0 million in principal. In November 2022, we amended all of the outstanding 2015 Subordinated Notes, extending the due date by two years to February 2025.
Our cash, cash equivalents and short-term investments at March 31, 2023 were $189.2 million, a decrease of $4.1 million from December 31, 2022. Cash and cash equivalents of our subsidiary, MiNK, at December 31, 2022, were $19.6 million. MiNK cash can only be accessed by Agenus through a declaration of a dividend by the MiNK Board of Directors or through settlement of intercompany balances.
Based on our current plans and projections, we believe our cash resources of $189.2 million as of March 31, 2023, will be sufficient to satisfy our liquidity needs for more than one year from when these financial statements were issued.
Management consistently monitors our liquidity position and has the flexibility to adjust spending as necessary to preserve and extend liquidity. We regularly assess the likelihood of success of our programs, and our funding decisions are based on these evaluations. We are prepared to discontinue funding of any activities that do not impact our core priorities and to restrict capital expenditures and/or reduce the scale of our operations. Potential funding sources may include collaborations, out-licensing and/or partnering opportunities for our portfolio programs and product candidates with multiple parties, milestone payments from our existing partnerships, additional third-party agreements, asset sales, project financing, and/or sales of equity securities.
Our future cash requirements include, but are not limited to, supporting clinical trial and regulatory efforts and continuing our other research and development programs. Since inception, we have entered into various agreements with contract manufacturers, institutions, and clinical research organizations (collectively “third party providers”) to perform pre-clinical activities and to conduct and monitor our clinical studies and trials. Under these agreements, subject to the enrollment of patients and performance by the applicable third-party provider, we have estimated our total payments to be $581.4 million over the term of the related activities. Through March 31, 2023, we have expensed $479.0 million as research and development expenses and $454.2 million has been paid under these agreements. The timing of expense recognition and future payments related to these agreements is subject to the enrollment of patients and performance by the applicable third-party provider. We plan to enter into additional agreements with third party providers and we anticipate significant additional expenditures will be required to initiate and advance our various programs.
Part of our strategy is to develop and commercialize some of our product candidates by continuing our existing collaboration arrangements with academic and collaboration partners and licensees and by entering into new collaborations. As a result of our collaboration agreements, we will not completely control the efforts to attempt to bring those product candidates to market. For example, our collaboration with Incyte for the development, manufacture and commercialization of CPM antibodies against certain targets is managed by a joint steering committee, which is controlled by Incyte.
Net cash used in operating activities for the three months ended March 31, 2023 and 2022 was $58.5 million and $52.4 million, respectively. Our future ability to generate cash from operations will depend on achieving regulatory approval and market acceptance of our product candidates, achieving benchmarks as defined in existing collaboration agreements, and our ability to enter into new collaborations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Forward Looking Statements” in Part I, Item 2 of this Quarterly Report on Form 10-Q and the risks highlighted in Part I, Item 1A "Risk Factors" of our 2022 Form 10-K.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our primary market risk exposure is foreign currency exchange rate risk. International revenues and expenses are generally transacted by our foreign subsidiaries and are denominated in local currency. Approximately 4.1% and 1.7% of our cash used in operations for the three months ended March 31, 2023 and the year ended December 31, 2022, respectively, was from our foreign subsidiaries. We are exposed to foreign currency exchange rate fluctuation risk related to our transactions denominated in foreign currencies. We do not currently employ specific strategies, such as the use of derivative instruments or hedging, to manage these exposures. Our currency exposures vary but are primarily concentrated in the British Pound, Euro, and Swiss Franc, in large part due to our subsidiaries, Agenus UK Limited and AgenTus Therapeutics Limited, both with operations in England, AgenTus Therapeutics SA, a company formerly with operations in Belgium, and Agenus Switzerland a company formerly with operations in Switzerland.
20
We had cash, cash equivalents and short-term investments at March 31, 2023 of $189.2 million, which are exposed to the impact of interest rate changes, and our interest income fluctuates as interest rates change. Additionally, in the normal course of business, we are exposed to fluctuations in interest rates as we seek debt financing and invest excess cash. Due to the short-term nature of our investments in money market funds and U.S. Treasury Bills, our carrying value approximates the fair value of these investments at March 31, 2023.
There has been no material change to our interest rate exposure and our approach toward interest rate and foreign currency exchange rate exposures, as described in our Annual Report on Form 10-K for the year ended December 31, 2022.
We invest our cash and cash equivalents in accordance with our investment policy. The primary objectives of our investment policy are to preserve principal, maintain proper liquidity to meet operating needs, and maximize yields. We review our investment policy annually and amend it as deemed necessary. Currently, the investment policy prohibits investing in any structured investment vehicles and asset-backed commercial paper. Although our investments are subject to credit risk, our investment policy specifies credit quality standards for our investments and limits the amount of credit exposure from any single issue, issuer, or type of investment. We do not invest in derivative financial instruments. Accordingly, we do not believe that there is currently any material market risk exposure with respect to derivatives or other financial instruments that would require disclosure under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Exchange Act. Based on this evaluation, our Principal Executive Officer and our Principal Financial Officer concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective and were designed to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure, and is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. It should be noted that any system of controls is designed to provide reasonable, but not absolute, assurances that the system will achieve its stated goals under all reasonably foreseeable circumstances. Our Principal Executive Officer and Principal Financial Officer have each concluded that our disclosure controls and procedures as of the end of the period covered by this report are effective at a level that provides such reasonable assurances.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1 . Legal Proceedings
We are not party to any material legal proceedings.
Item 1A. Ri sk Factors
Our results of operations and financial condition are subject to numerous risks and uncertainties described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. There have been no material changes to the risk factors described in Part I, Item 1A "Risk Factors" of our 2022 Form 10-K.
Item 6. E xhi bits
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Exhibit No. |
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Description |
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31.1 |
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31.2 |
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32.1 |
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101.INS |
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XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema Document |
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101.CAL |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF |
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Inline XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB |
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Inline XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101) |
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AGENUS INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Date: |
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May 9, 2023 |
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AGENUS INC. |
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/s/ CHRISTINE M. KLASKIN |
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Christine M. Klaskin VP, Finance, Principal Financial Officer, Principal Accounting Officer |
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