Agenus Inc. — 2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. This is an annual report, with unaudited fourth-quarter results disclosed. Agenus is a clinical-stage immuno-oncology company; it had no products approved for commercial sale and reported no product-sale revenue.
Financial performance
| Metric | 2020 | 2019 |
|---|---|---|
| Total revenue | $88.2 million | $150.0 million |
| Operating loss | $117.2 million | $70.1 million |
| Net loss | $182.9 million | $111.6 million |
| Net loss per share, basic and diluted | $1.05 | $0.80 |
| Research and development expense | $142.6 million | $168.3 million |
| General and administrative expense | $59.2 million | $46.0 million |
| Net cash used in operating activities | $139.1 million | $18.7 million |
Revenue included $47.5 million of non-cash revenue related to royalties Agenus had sold, versus $30.4 million in 2019. The company recorded $60.0 million of non-cash interest expense associated with that royalty-sale liability; total net interest expense was $61.1 million, up from $41.5 million. Revenue also included $13.9 million recognized from the Betta license and a $9.0 million Merck milestone. No operating margin or product-sales margin was reported.
In Q4 2020, revenue was $31.3 million and net loss was $37.7 million, or $0.20 per share. Q4 2019 revenue was $34.5 million and net loss was $30.9 million.
Liquidity, debt and balance sheet
- Cash and cash equivalents were $99.9 million at year-end, up from $61.8 million. The cash-flow statement reports $102.5 million including $2.6 million of restricted cash.
- Current assets were $113.8 million and current liabilities were $129.9 million, a $16.1 million working-capital deficit. Total stockholders’ deficit was $211.5 million.
- Debt principal was $20.0 million, including $13.0 million of 8% subordinated notes due February 2023 and a $6.2 million Paycheck Protection Program loan, whose forgiveness was unresolved. The notes’ maturity extension generated a $2.7 million debt-modification loss.
- The balance sheet also included a $233.6 million net liability for sold future royalties and milestones, and $36.0 million of operating lease liabilities.
- Financing cash flow was $183.9 million, primarily reflecting equity proceeds. Agenus sold about 50.1 million shares through at-the-market offerings in 2020 for $156.4 million net and received $20.0 million from Betta’s stock purchase.
Material changes and business developments
- Total revenue fell 41% from 2019, which included substantial Gilead upfront-license revenue. R&D expense decreased 15%, largely due to lower third-party program costs and subsidiary expenses; G&A expense rose 29%, mainly from professional fees and subsidiary costs.
- Operating loss and net loss widened despite reduced R&D expense. Higher interest expense and lower total revenue were significant factors; cash used in operations also increased sharply.
- Agenus began a rolling BLA submission for balstilimab monotherapy for second-line cervical cancer in September 2020. Management expected to complete the filing in the first half of 2021; a combination filing strategy was to be determined after FDA acceptance of the monotherapy filing.
- Reported interim cervical-cancer response rates were 14% for balstilimab monotherapy and 22% for balstilimab plus zalifrelimab. The filing cautions that interim results may change and may not support approval.
- Betta received Greater China rights to balstilimab and zalifrelimab for a $15.0 million upfront payment, up to $100.0 million in milestones, and royalties. Agenus also sold Betta approximately $20.0 million of common stock.
- Gilead elected to return AGEN1423 and terminate its license, effective February 4, 2021. Options for AGEN1223 and AGEN2373 remained in place, subject to Agenus advancing the programs to option decision points.
Outlook, risks and unusual items
Management said year-end cash, together with anticipated corporate events, was expected to fund operations through the end of 2021 and into 2022. This outlook depends on additional funding, partnerships or other transactions that were not assured. The filing states that substantial doubt exists about Agenus’s ability to continue as a going concern for one year after the filing date. Management cited potential collaborations, out-licensing, asset sales, debt or equity financing, and spending adjustments as possible responses. The company expected losses to continue and did not expect to be profitable in 2021.
- COVID-19 delayed approximately $35.0 million of partner milestone payments expected in 2020; $25.1 million of the anticipated $60.0 million was received. The pandemic could also affect trial enrollment, timelines and operations.
- AGEN1181 was in Phase 1/2 development; agenT-797, an allogeneic iNKT therapy, had entered a COVID-19 pneumonia trial, with hematological-malignancy trials expected to begin in Q2 2021. These programs remained investigational.
- Other key risks include clinical safety or efficacy failures, regulatory delays or rejection, competition, manufacturing and supply challenges, dependence on collaborators, further financing needs and potential shareholder dilution. The company also highlighted uncertainty over PPP loan forgiveness.
- KPMG issued an unqualified opinion on the financial statements and internal controls, but included a going-concern explanatory paragraph. Management reported effective internal control over financial reporting as of year-end.
Important facts for investors to verify
- Current cash runway and the availability, timing and terms of financing or partnering transactions; assess the going-concern disclosure alongside subsequent financing activity.
- FDA status and requirements for the balstilimab BLA, including confirmatory-trial plans, and whether final trial data support the reported interim response rates.
- Whether the PPP loan was forgiven, and the repayment and covenant implications if it was not.
- Gilead’s future decisions on AGEN1223 and AGEN2373, and Agenus’s development and funding obligations following the return of AGEN1423.
- Share issuance and dilution: the company reported substantial ATM capacity and, after year-end through March 12, 2021, sold approximately 9.1 million additional shares for about $31.8 million net.