Agenus Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. Financial statement amounts below are in U.S. dollars; rounded to millions unless noted. Agenus is a clinical-stage immuno-oncology company with no products approved for commercial sale in the United States.
Financial performance
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Total revenue | $253.0M | $14.8M | $275.4M | $56.9M |
| Operating income (loss) | $187.5M | $(34.8)M | $79.8M | $(95.5)M |
| Net income (loss) | $177.3M | $(51.6)M | $38.9M | $(145.2)M |
| Net income (loss) attributable to Agenus common stockholders | $178.5M | $(51.2)M | $41.4M | $(143.5)M |
| Basic EPS | $0.76 | $(0.28) | $0.19 | $(0.87) |
| Research and development expense | $42.9M | $32.1M | $125.1M | $107.0M |
| General and administrative expense | $21.4M | $14.4M | $54.4M | $39.2M |
- Q3 research and development revenue was $239.0M, including $220.0M from the BMS AGEN1777 license and milestone and $18.2M of Gilead collaboration revenue. Revenue also included $12.6M of non-cash royalty revenue.
- For the first nine months, research and development revenue was $242.3M, including the same $220.0M BMS amount, $20.6M of Gilead revenue and $28.9M of non-cash royalty revenue.
- Operating cash flow was $33.1M for the nine months, versus cash use of $103.5M a year earlier. Investing activities used $29.9M, including $24.9M for property and equipment; financing provided $153.7M, primarily from equity sales.
- At September 30, cash, cash equivalents and short-term investments totaled $261.5M. Current assets were $308.4M and current liabilities $150.1M. Cash, cash equivalents and restricted cash at period end were $259.2M.
- Debt principal was $13.5M ($13.3M carrying amount); the 2015 subordinated notes bear 8% interest and mature in February 2023. The separate net liability for sold future royalties and milestones was $252.9M. Total stockholders’ equity was $35.6M, compared with a deficit of $211.5M at year-end 2020.
Changes and unusual items
- The BMS agreement provided a $200.0M upfront payment, received in July and recognized as revenue upon license transfer, plus a $20.0M milestone recognized in Q3. The first AGEN1777 Phase 1 patient was dosed in October, triggering that milestone; the $20.0M was recorded as a September 30 receivable. Agenus may also receive up to $1.36B in further milestones and tiered royalties, all contingent on future development and sales.
- The Q3 and nine-month returns to profit were driven primarily by the BMS license revenue. The Q3 also included a $6.2M gain from forgiveness of Paycheck Protection Program loans. These results do not establish recurring product revenue or sustainable profitability.
- Research and development expense rose 34% in Q3 and 17% year to date, mainly from antibody-program services and higher personnel costs. General and administrative expense rose 49% in Q3 and 39% year to date, including increased professional fees, commercial-readiness activity, headcount and share-based compensation.
- Agenus raised $147.4M net through at-the-market share sales in the first nine months and issued about 35.0M shares through that program. Common shares issued increased to 247.5M from 196.1M at December 31, 2020. Subsequent to quarter-end, it raised a further $50.2M net from ATM sales through November 5.
- In October, MiNK Therapeutics completed an IPO and a subsequent overallotment, raising approximately $40.0M gross before the additional shares; Agenus reported owning 78.6% after the IPO. This is a subsequent event, not September-quarter cash.
Outlook, risks and contingencies
- Management said September 30 cash resources were expected to fund liquidity requirements for more than one year from issuance of the statements. Potential extensions depend on partnerships, out-licensing, milestones, asset sales, financing or equity issuance; management also cited flexibility to reduce spending. No specific financial forecast or earnings guidance is provided.
- Agenus voluntarily withdrew its balstilimab monotherapy BLA after FDA discussions following pembrolizumab’s earlier full approval in second-line cervical cancer. The company continued to pursue balstilimab combinations, including with zalifrelimab, and planned further discussions with the FDA.
- Gilead returned AGEN1423 and terminated its license; Agenus ceased AGEN1223 development in Q3, with the option formally terminated in October. The AGEN2373 option remained in place, with a potential $50.0M exercise fee and further contingent milestones.
- Key risks include clinical-trial efficacy, safety, enrollment and timing; regulatory approval; reliance on partners and third-party manufacturers; competition; future financing needs and potential shareholder dilution; and the ability to scale manufacturing. The filing notes historical losses and an accumulated deficit of $1.4B, despite management’s stated cash runway.
- A stockholder derivative lawsuit filed in July challenges December 2020 equity awards and seeks damages and other relief. Defendants moved to dismiss; the potential financial impact was not estimable. The filing reports no off-balance-sheet arrangements and states disclosure controls were effective.
Investor verification points
- Separate the $200.0M BMS upfront and $20.0M milestone revenue, non-cash royalty revenue and other collaboration revenue from recurring operating revenue; verify milestone conditions and timing.
- Assess cash runway against clinical, manufacturing and capital-spending needs, including the distinction between cash balances and restricted cash and the effects of further ATM issuance.
- Track the FDA path and clinical evidence for AGEN1181 and balstilimab combinations, and developments under the remaining Gilead AGEN2373 option.
- Review the terms, carrying costs and repayment obligations of royalty monetization liabilities, as well as the 2023 subordinated-note maturity.
- Monitor dilution from outstanding options, warrants and future equity sales, along with the equity-awards lawsuit and MiNK’s funding and operating progress.