Agenus Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Financial amounts below are in USD millions unless stated otherwise. Agenus is a clinical-stage immuno-oncology company with antibody, vaccine and cell-therapy programs; it had no products approved for commercial sale in the United States.
Financial performance
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Total revenue | $10.7 | $26.9 | $22.4 | $42.1 |
| Operating loss | $(66.4) | $(33.3) | $(107.8) | $(60.7) |
| Net loss | $(84.0) | $(48.2) | $(138.4) | $(93.5) |
| Net loss attributable to Agenus common stockholders | $(83.3) | $(47.5) | $(137.1) | $(92.3) |
| Basic and diluted loss per share | $(0.37) | $(0.28) | $(0.65) | $(0.59) |
- Q2 R&D expense was $45.5 million, up 18% year over year; G&A was $16.7 million, up 17%. Six-month R&D and G&A were $82.2 million and $33.0 million, respectively.
- Q2 included a $14.3 million expense from the fair-value adjustment to contingent purchase-price consideration, versus $6.8 million in Q2 2020. Six-month expense was $13.3 million versus $2.5 million.
- Net interest expense was $16.7 million in Q2 and $32.6 million for the first half, principally reflecting non-cash interest under the HCR royalty-sale arrangement. The company recorded $31.9 million of that non-cash interest in the first half.
- Revenue included non-cash royalty revenue of $7.8 million in Q2 and $16.3 million in the first half, related to royalties sold to HCR and remitted directly to HCR. It did not represent cash received by Agenus in those periods.
Cash, debt and liquidity
- Cash and cash equivalents were $73.5 million at June 30, down $26.3 million from year-end 2020. Including restricted cash, cash, cash equivalents and restricted cash totaled $76.2 million.
- Operating cash use was $98.3 million in the first half, compared with $71.9 million in the prior-year period. Investing cash use was $2.5 million; financing provided $74.8 million, including $70.0 million net proceeds from ATM equity sales.
- Debt principal was $20.0 million: $13.0 million of 2015 subordinated notes, bearing 8% interest and due in February 2023, and approximately $6.2 million of PPP loans, whose forgiveness application remained pending. Balance-sheet debt was $19.8 million.
- Current assets were $92.9 million and current liabilities were $168.8 million. Current liabilities included $62.7 million for the current portion of the liability from sold future royalties and milestones and $28.2 million of deferred revenue. Total liability for sold future royalties and milestones was $249.2 million net of transaction costs.
- Stockholders’ deficit was $255.8 million and accumulated deficit was $1.6 billion at June 30.
- Management said June 30 cash plus the subsequent $200.0 million BMS upfront payment should fund liquidity needs for more than one year from issuance of the financial statements. The payment was received in July 2021. Management noted that additional partnerships or financing could extend resources further, while reserving the ability to reduce spending.
Changes, outlook and material developments
- Revenue fell substantially year over year: Q2 R&D revenue was $1.7 million versus $18.1 million, and first-half R&D revenue was $3.3 million versus $20.0 million. The prior-year periods included $13.9 million of Betta upfront-fee revenue; the 2021 periods primarily reflected recognition of deferred collaboration revenue and research services.
- R&D and G&A costs rose as Agenus advanced antibody programs and increased personnel, share-based compensation and commercial-readiness activity. First-half net loss widened to $138.4 million from $93.5 million.
- In July, Agenus received a $200.0 million upfront payment under its BMS license for AGEN1777, a preclinical anti-TIGIT bispecific program. The agreement provides eligibility for up to $1.36 billion in development, regulatory and commercial milestones and tiered royalties. BMS assumes development, regulatory, manufacturing and commercialization costs; Agenus has an option to co-fund a minority of development costs in exchange for increased royalties.
- The FDA accepted Agenus’s balstilimab monotherapy BLA for priority review, with a target action date of December 16, 2021. Agenus said it expected to determine its balstilimab/zalifrelimab combination filing strategy after further FDA discussion. Approval, confirmatory-trial requirements and commercialization remain uncertain.
- Gilead’s termination of its AGEN1423 license became effective February 4, 2021; the Gilead option and license agreements for other programs remained in effect.
- Two contingent milestones under the 4-AB share exchange agreement resulted in $19.3 million of current liabilities at June 30. One $10.0 million payment was made in July; another $10.0 million milestone was achieved in July.
- Agenus sold approximately 22.3 million shares through ATM offerings in the first half for $70.0 million net proceeds. Common shares issued increased from 196.1 million at year-end to 225.3 million at June 30; 233.1 million shares were outstanding on August 4.
- A July 2021 shareholder derivative complaint challenges December 2020 equity awards and seeks damages and equitable remedies. Agenus intends to seek dismissal; the financial impact is not estimable.
- No specific consolidated revenue or earnings guidance was provided. Agenus expects significant future losses and R&D spending; it said program spending and capital expenditures may be adjusted to preserve liquidity. It also disclosed that its prior auditor’s report included a going-concern explanatory paragraph, while management believed subsequent BMS proceeds supported more than one year of liquidity.
Key investor verification points
- Confirm the BMS upfront payment, contractual milestones, royalty terms and any optional co-funding decisions; distinguish potential milestone amounts from cash already received.
- Track the FDA’s December 16, 2021 target action date for balstilimab, the status and requirements of confirmatory trials, and the FDA strategy for the combination program.
- Assess cash burn against the company’s stated runway, including the timing and availability of future partnering, milestone, royalty or equity proceeds.
- Monitor dilution from ATM sales, outstanding options and convertible preferred stock, and verify subsequent share counts.
- Review the HCR royalty-sale liability and its estimated effective interest rate, the pending PPP loan forgiveness decision, and payments or further changes relating to contingent milestones.
- Follow the shareholder derivative litigation and any disclosure of material developments or estimable financial exposure.