Agenus Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Agenus is a clinical-stage immuno-oncology company developing antibody, cell therapy and vaccine programs. Its lead program, botensilimab (AGEN1181), was advancing in clinical studies, including in combination with balstilimab.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Total revenue | $25.9 million | $11.7 million |
| Operating loss | $35.5 million | $41.4 million |
| Net loss | $50.6 million | $54.4 million |
| Net loss attributable to Agenus common stockholders | $48.4 million; $0.19 per share | $53.7 million; $0.27 per share |
| Net cash used in operating activities | $52.4 million | $42.7 million |
- Revenue included $17.6 million of non-cash royalty revenue related to QS-21 royalties sold to HCR, up from $8.5 million. These royalties are remitted to HCR; the revenue reflects the accounting treatment of the royalty-sale liability, not cash received by Agenus.
- Research and development revenue was $6.7 million, including a $5.0 million Gilead milestone and $1.4 million of deferred revenue recognition. R&D expense rose 16% to $42.4 million; general and administrative expense rose 16% to $19.0 million.
- Interest expense was $15.2 million, primarily non-cash interest associated with the HCR agreement. Research and development and G&A expenses were significant relative to revenue; the filing does not provide a meaningful consolidated gross-margin measure.
- Cash, cash equivalents and short-term investments totaled $262.7 million at quarter end, down $44.2 million from December 31, 2021. Current assets were $290.5 million and current liabilities were $163.1 million.
- Debt principal was $14.3 million. The $13.0 million 2015 subordinated notes bear 8% interest and mature in February 2023; the balance sheet classified $14.2 million of debt as current at March 31, 2022.
- The net liability for sold future royalties and milestones was $251.0 million. Stockholders’ equity was $27.7 million, including an accumulated deficit of $1.5 billion.
Material changes and notable items
- Revenue increased by $14.2 million year over year, largely reflecting higher non-cash QS-21 royalty revenue and the $5.0 million Gilead milestone. Despite lower reported net loss, operating cash use increased by $9.6 million.
- R&D spending increased mainly due to antibody-program services, personnel and subsidiary activities. G&A spending increased primarily due to professional fees and subsidiary activities.
- Agenus raised $19.2 million net through at-the-market (ATM) sales of about 7.0 million shares in Q1, at an average price of approximately $2.81. From April 1 through May 6, it raised a further $10.2 million from about 4.1 million shares. Approximately 127.0 million shares remained available under the Sales Agreement as of May 6.
- Common shares issued increased during the quarter; the company also issued shares to pay certain employee bonuses. Common shares outstanding were 270,990,987 as of May 6, 2022.
- In October 2021, Agenus withdrew the balstilimab monotherapy BLA after FDA recommendation following pembrolizumab’s full approval. Agenus said it was no longer pursuing U.S. registration of balstilimab plus zalifrelimab for second-line cervical cancer.
Outlook, risks and contingencies
- Management stated that quarter-end cash resources of $262.7 million were expected to fund liquidity requirements for more than one year from issuance of the financial statements. This is not a profitability forecast: Agenus expects significant future losses and says additional capital will be needed to complete clinical development of current programs.
- Potential funding sources include collaborations, milestone payments, licensing or partnering, asset sales, project financing and equity issuance. Management said it may reduce spending, capital expenditures or program scope to preserve liquidity.
- There was no specific revenue, earnings or cash-burn guidance in the filing. Management noted that program costs and the timing of potential material cash inflows cannot be reliably estimated.
- Key risks include clinical failure or adverse events, trial enrollment and execution delays, regulatory uncertainty, manufacturing scale-up and supply constraints, reliance on collaborators, competition, and the need for additional financing and the resulting potential dilution.
- Agenus filed suit against Recepta on January 24, 2022, alleging breach of the parties’ collaboration agreement concerning development plans and marketing rights in South America. The company said the outcome was too early to predict. It reported no other material legal proceedings.
- Foreign-exchange exposure is a principal market risk; Agenus said it did not use derivatives or hedging to manage that exposure. Management concluded disclosure controls were effective and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether operating cash use remains elevated and how quickly the $262.7 million quarter-end liquidity is consumed.
- ATM share sales after quarter end, remaining sale capacity, and the resulting dilution to shareholders.
- Clinical progress and final, mature data for botensilimab and combination programs; preliminary results may change and may not predict later outcomes.
- Gilead’s AGEN2373 option decision and the timing and likelihood of future collaboration milestones or royalties.
- The impact of the February 2023 maturity of the 2015 subordinated notes and the terms of any refinancing or repayment.
- Developments in the Recepta litigation and any related effects on collaboration rights or expected revenue.