What changed in this filing

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Item 1. Financial Statements

2023-05-09 compared with 2022-11-08 · 191 added, 357 removed, 434 unchanged (56% of the section changed)

3 unchanged sentences

(Amounts in thousands, except share and per share amounts)

September 30, 2022

March 31, 2023

December 31, 2022

6 unchanged sentences

Property, plant and equipment, net of accumulated amortization and depreciation of

$ 53,158 and $ 50,539 at September 30, 2022 and December 31, 2021, respectively

$ 56,119 and $ 54,075 at March 31, 2023 and December 31, 2022, respectively

Operating lease right-of-use assets

Acquired intangible assets, net of accumulated amortization of $ 16,699 and

$ 13,955 at September 30, 2022 and December 31, 2021, respectively

$ 16,148 at March 31, 2023 and December 31, 2022, respectively

Other long-term assets

LIABILITIES AND STOCKHOLDERS’

(DEFICIT) EQUITY

Current portion, long-term debt

10 unchanged sentences

Operating lease liabilities, net of current portion

Contingent purchase price considerations

Other long-term liabilities

1 unchanged sentence

STOCKHOLDERS’

(DEFICIT) EQUITY

Series A-1 convertible preferred stock;

31,620 shares designated, issued, and

outstanding at September 30, 2022 and December 31, 2021;

outstanding at March 31, 2023 and December 31, 2022;

liquidation value

of $ 33,619 at September 30, 2022

of $ 33,726 at March 31, 2023

Common stock, par value $ 0.01 per share;

800,000,000 and 400,000,000 shares

authorized at September 30, 2022 and December 31, 2021, respectively;

294,948,117 and 256,897,910 shares issued at September 30, 2022

800,000,000 shares authorized;

341,663,183 and 305,573,397 shares issued at March 31, 2023

and December 31, 2022, respectively

3 unchanged sentences

Total stockholders’

(deficit) equity attributable to Agenus Inc.

deficit attributable to Agenus Inc.

Non-controlling interest

Total stockholders’

(deficit) equity

Total liabilities and stockholders’

(deficit) equity

See accompanying notes to unaudited condensed consolidated financial statements.

2 unchanged sentences

(Amounts in thousands, except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Research and development

Royalty sales milestone

Service revenue

Other revenue

Non-cash royalty revenue related to the sale of future royalties

5 unchanged sentences

Contingent purchase price consideration fair value adjustment

Operating (loss) income

Operating loss

Other income (expense):

Gain on extinguishment of debt

Non-operating income

Interest expense, net

Net (loss) income

Dividends on Series A-1 convertible preferred stock

net loss attributable to non-controlling interest

Net (loss) income attributable to Agenus Inc.

Net loss attributable to Agenus Inc.

common stockholders

Per common share data:

Basic net (loss) income attributable to Agenus Inc.

common stockholders

Diluted net (loss) income attributable to Agenus Inc.

Basic and diluted net loss attributable to Agenus Inc.

common stockholders

1 unchanged sentence

common shares outstanding:

Other comprehensive loss:

Foreign currency translation loss

Basic and diluted

Other comprehensive loss:

Comprehensive (loss) income

Foreign currency translation gain (loss)

Other comprehensive gain (loss)

Comprehensive loss

See accompanying notes to unaudited condensed consolidated financial statements.

4 unchanged sentences

Preferred Stock

Treasury Stock

3 unchanged sentences

Balance at December 31, 2022

Other comprehensive loss

Other comprehensive income

Share-based compensation

4 unchanged sentences

Exercise of stock options and employee share purchases

Issuance of shares for employee bonus

Retirement of treasury shares

Balance at March 31, 2022

Other comprehensive income

Share-based compensation

Shares sold at the market

Issuance of shares for milestone achievement

Issuance of shares for services

Exercise of stock options

Issuance of subsidiary shares for employee bonus

1 unchanged sentence

Retirement of treasury shares

Balance at June 30, 2022

Other comprehensive loss

Share-based compensation

Shares sold at the market

Issuance of shares for services

Vesting of nonvested shares

Exercise of stock options and employee share purchases

Balance at September 30, 2022

Balance at March 31, 2023

See accompanying notes to unaudited condensed consolidated financial statements.

4 unchanged sentences

Preferred Stock

Treasury Stock

6 unchanged sentences

Shares sold at the market

Payment of CEO payroll in shares

Issuance of shares for services

Conversion of series C-1 convertible preferred stock

Exercise of stock options and employee share purchases

Balance at March 31, 2021

Other comprehensive income

Share-based compensation

Shares sold at the market

Issuance of warrants

Payment of CEO payroll in shares

Issuance of shares for services

Conversion of series C-1 convertible preferred stock

Exercise of stock options

Issuance of shares for employee bonus

Retirement of treasury shares

Balance at June 30, 2021

Net income (loss)

Other comprehensive loss

Share-based compensation

Shares sold at the market

Issuance of subsidiary shares to noncontrolling interest

Payment of CEO payroll in shares

Issuance of director deferred shares

Issuance of shares for services

Conversion of series C-1 convertible preferred stock

Exercise of stock options and employee share purchases

Vesting of nonvested shares

Exercise of stock options and employee share purchases

Issuance of shares for employee bonus

Retirement of treasury shares

Balance at September 30, 2021

Balance at March 31, 2022

See accompanying notes to unaudited condensed consolidated financial statements .

2 unchanged sentences

(Amounts in thousands, except per share amounts)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

4 unchanged sentences

Non-cash interest expense

(Gain) loss on sale or disposal of assets

Gain on partial forgiveness of liability

Gain on extinguishment of debt

Loss on disposal of assets

Change in fair value of contingent obligations

6 unchanged sentences

Other operating assets and liabilities

Net cash (used in) provided by operating activities

Net cash used in operating activities

Cash flows from investing activities:

Purchases of plant and equipment

Proceeds from sale of property, plant and equipment

Cash paid for business acquisition

6 unchanged sentences

Purchase of treasury shares to satisfy tax withholdings

Payment of contingent purchase price consideration

Repayments of debt

Payment of finance lease obligation

1 unchanged sentence

Effect of exchange rate changes on cash

Net (decrease) increase in cash, cash equivalents and restricted cash

Net decrease in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

6 unchanged sentences

Issuance of common stock, $ 0.01 par value, in connection with payment for services

Conversion of series C-1 convertible preferred stock to common stock, $ 0.01 par value

Insurance financing agreement

Issuance of common stock, $ 0.01 par value, for payment of certain employee bonuses

Issuance of common stock, $ 0.01 par value, for milestone achievement

Issuance of subsidiary shares for employee bonus

Issuance of subsidiary shares to noncontrolling interest

Lease right-of-use assets obtained in exchange for new operating lease liabilities

3 unchanged sentences

NOTES TO UNAUDITED CONDENSED CO NSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

Note A - Business, Liquidity and Basis of Presentation

3 unchanged sentences

“us,”

and “our”) is a clinical-stage immuno-oncology (“I-O”) company advancing an extensive pipeline of immune checkpoint antibodies, adoptive cell therapies, through its subsidiary MiNK Therapeutics, Inc.

(“MiNK”) and neoantigen vaccines, through its subsidiary SaponiQx, Inc.

(“SaponiQx”), to fight cancer and infections.

Our business is designed to drive success in I-O through speed, innovation and effective combination therapies.

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.

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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 multiple antibody discovery platforms, including our proprietary display technologies, designed to drive the discovery of future checkpoint modulator (“CPM”) antibody candidates;

our antibody candidate programs, emanating from our CPM programs, including our lead asset, botensilimab, an Fc-enhanced CTLA-4, for which data was presented at the 2022 ESMO World Congress on Gastrointestinal Cancer demonstrating in combination with balstilimab (PD-1) significant activity in “cold tumors,”

such as microsatellite stable colorectal cancer ("MSS CRC"), and for which we initiated worldwide studies in 2022 in both MSS CRC, in combination with balstilimab, and melanoma and expect to initiate a worldwide trial in pancreatic cancer by the end of 2022;

our saponin-based vaccine adjuvant platform under our subsidiary SaponiQx, principally including our QS-21 STIMULON adjuvant (“QS-21 Stimulon”);

a pipeline of novel allogeneic invariant natural killer T cell (“iNKT”) therapies to treat cancer and other immune-mediated diseases controlled by our subsidiary, MiNK.

our multiple antibody discovery platforms, including our proprietary display technologies, designed to drive the discovery of future antibody candidates;

our antibody candidate programs, including our lead asset, botensilimab, an Fc-enhanced CTLA-4, for which data was presented at the 2023 American Society of Clinical Oncology –

Gastrointestinal Cancers Symposium demonstrating in combination with balstilimab (PD-1) significant activity in "cold tumors," such as microsatellite stable colorectal cancer ("MSS CRC"), and for which we initiated worldwide studies in 2022 in MSS CRC, in combination with balstilimab, melanoma and pancreatic cancer;

our saponin-based vaccine adjuvant platform under SaponiQx, principally including our QS-21 STIMULON adjuvant (“QS-21 STIMULON”);

a pipeline of novel allogeneic invariant natural killer T cell (“iNKT”) therapies to treat cancer and other immune-mediated diseases controlled by MiNK.

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.

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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 September 30, 2022 were $ 218.2 million, a decrease of $ 88.7 million from December 31, 2021.

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.

We have incurred losses since our inception.

As of September 30, 2022, we had an accumulated deficit of $ 1.6 billion.

During the past five years, we have successfully financed our operations through income and revenues generated from corporate partnerships, advance royalty sales and issuance of equity.

Based on our current plans and projections, we believe our quarter end cash resources of $ 218.2 million at September 30, 2022 will be sufficient to satisfy our liquidity requirements for more than one year from when these financial statements were issued.

Management continues to monitor the Company’s liquidity position and has the flexibility to adjust spending as needed in order to preserve and extend liquidity.

We continuously evaluate the likelihood of success of our programs.

As such, our decisions to continue to fund or eliminate funding of each of our programs are predicated on these determinations, on an ongoing basis.

We are prepared to discontinue funding of any activities that do not impact our core priorities if they do not prove to be feasible, and to restrict capital expenditures and/or reduce the scale of our operations.

We expect our potential sources of funding to include:

(1) collaborations, out-licensing and/or partnering opportunities for our portfolio programs and product candidates with multiple parties, (2) milestone payments from our existing partnerships, (3) consummating additional third-party agreements, (4) selling assets, (5) securing project financing and/or (6) selling equity securities.

As of March 31, 2023, we had an accumulated deficit of $ 1.8 billion.

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 $ 189.2 million at 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.

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S.

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All significant intercompany transactions and accounts have been eliminated in consolidation.

Operating results for the nine months ended September 30, 2022, are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.

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, 2021 filed with the Securities and Exchange Commission (“SEC”) on March 1, 2022.

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.

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equity (deficit).

Note B - Net (Loss) Income Per Share

The following table sets forth the computation of basic and diluted net (loss) income per share (in thousands, except for per share data):

Three Months Ended September 30,

Nine Months Ended September 30,

Amounts used for basic and diluted per share calculations:

Net (loss) income attributable to Agenus Inc.

common stockholders

Weighted average number of Agenus Inc.

common shares outstanding - basic

Effect of potentially dilutive securities:

Share based compensation awards

Convertible preferred stock

Weighted average number of Agenus Inc.

common shares outstanding - diluted

Net income (loss) attributable to Agenus Inc.

per common share:

Basic net (loss) income per common share is calculated by dividing the net (loss) income attributable to common stockholders by the weighted average number of common shares outstanding (including common shares issuable under our Amended and Restated Directors’

Note B - Net Loss Per Share

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) income per common share is calculated by dividing (loss) income 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 the periods ended September 30, 2022, 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.

The following securities (listed on an as-if-converted-to-Common-Stock basis) have been excluded from the computation of diluted weighted average shares outstanding as of September 30, 2022 and 2021, as they would be anti-dilutive (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

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.

The following securities (listed on an as-if-converted-to-Common-Stock basis) have been excluded from the computation of diluted weighted average shares outstanding as of March 31, 2023 and 2022, as they would be anti-dilutive (in thousands):

Three Months Ended March 31,

Stock options

2 unchanged sentences

Note C - Investments

Cash equivalents and short-term investments consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022

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

1 unchanged sentence

Treasury Bills

As a result of the short-term nature of our investments, there were minimal unrealized holding gains or losses for the three and nine months ended September 30, 2022 and 2021.

Of the investments listed above, $ 190.1 million and $ 239.9 million were classified as cash equivalents and $ 9.9 million and $ 15.0 million as short-term investments on our condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021, respectively.

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, $ 143.8 million and $ 164.7 million were classified as cash equivalents and $ 24.4 million and $ 14.7 million as short-term investments on our condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022, respectively.

Note D - Goodwill and Acquired Intangible Assets

The following table sets forth the changes in the carrying amount of goodwill for the nine months ended September 30, 2022 (in thousands):

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, September 30, 2022

Acquired intangible assets consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands):

As of September 30, 2022

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

Gross carrying

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The weighted average amortization period of our finite-lived intangible assets is 9 years.

Amortization expense related to acquired intangibles is estimated at $ 0.6 million for the remainder of 2022, $ 1.8 million for the year ending December 31, 2023, $ 0.7 million for the year ending December 31, 2024 and $ 0.6 million for each of the years ending December 31, 2025 and 2026.

Amortization expense related to acquired intangibles is estimated at $ 1.1 million for the remainder of 2023, $ 0.6 million for the each of the years ending December 31, 2024 and 2025, $ 0.5 million for the year ending December 31, 2026 and $ 0.4 million for the year ending December 31, 2027.

Note E - Debt

Debt obligations consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands):

Debt obligations consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):

Debt instrument

September 30,

Current Portion:

Long-term Portion:

2015 Subordinated Notes

3 unchanged sentences

2015 Subordinated Notes

As of September 30, 2022 and December 31, 2021, the principal amount of our outstanding debt balance was $ 13.5 million and $ 13.8 million, respectively.

As of March 31, 2023 and December 31, 2022, the principal amount of our outstanding debt balance was $ 14.0 million and $ 13.6 million, respectively.

Note F –

Liability Related to the Sale of Future Royalties and Milestones

The following table shows the activity within the liability account in the nine months ended September 30, 2022 (in thousands):

The following table shows the activity within the liability account in the three months ended March 31, 2023 (in thousands):

December 31, 2022 to

September 30, 2022

March 31, 2023

Liability related to sale of future royalties and milestones - beginning balance

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The liability is classified between the current and non-current portion of liability related to sale of future royalties and milestones in the condensed consolidated balance sheets based on the estimated royalty payments to be received by HCR in the next 12 months from the financial statement reporting date.

In the second quarter of 2022, the final milestone under the HCR Royalty Purchase Agreement was achieved, as sales of GSK’s vaccines containing our QS-21 Stimulon adjuvant exceeded $ 2.75 billion for the 12 months ended June 30, 2022.

As the $ 25.3 million milestone will be paid through the royalties received from GSK, we recognized revenue (up to the milestone amount) as the underlying royalties are earned.

As such, based on underlying royalties earned in the second and third quarters of 2022, we recorded

royalty sales milestone revenue of $ 17.3 million during the quarter ended June 30, 2022, and a $ 7.9 million receivable and corresponding royalty sales milestone revenue in the quarter ended September 30, 2022.

During the nine months ended September 30, 2022, we recognized $ 27.0 million of non-cash royalty revenue, and we recorded $ 44.5 million of related non-cash interest expense related to the HCR Royalty Purchase Agreement.

During the three months ended March 31, 2023 , we recognized $ 19.1 million of non-cash royalty revenue, and we recorded $ 17.2 million of related non-cash interest expense related to the HCR Royalty Purchase Agreement.

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.

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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 nine months ended September 30, 2022, our estimate of the effective annual interest rate over the life of the agreement decreased to 24.9 %, which results in a life of contract interest rate of 22.4 %.

Note G - Accrued Liabilities

Accrued liabilities consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022

During the three months ended March 31, 2023 , our estimate of the effective annual interest rate over the life of the agreement decreased to 26.7 %, which results in a life of contract interest rate of 22.9 %.

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

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Research services

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

Note H - Fair Value Measurements

We measure our contingent purchase price considerations at fair value.

The fair values of our contingent purchase price considerations, $ 0.7 million, are based on significant inputs not observable in the market, which require them to be reported as Level 3 liabilities within the fair value hierarchy.

The fair values of our contingent purchase price considerations, $ 0.5 million, included in "Other long-term liabilities" in our condensed consolidated balance sheets, are based on significant inputs not observable in the market, which require them to be reported as Level 3 liabilities within the fair value hierarchy.

The valuation of these liabilities use assumptions we believe would be made by a market participant and are mainly based on estimates from a Monte Carlo simulation of our share price, as well as other factors impacting the probability of triggering the milestone payments.

Share price was evolved using a geometric Brownian motion, calculated daily for the life of the contingent purchase price considerations.

The significant unobservable inputs include the anticipated timelines to achieve the contingent purchase milestones and our estimated credit spread, the weighted average values of which (weighted based on the value of each contingent liability), are shown in the table below.

September 30, 2022

December 31, 2021

Period of time to achieve milestones (in years)

Credit spread

Liabilities measured at fair value are summarized below (in thousands):

September 30, 2022

Quoted Prices in

Identical Assets

Contingent purchase price considerations

December 31, 2021

Quoted Prices in

Identical Assets

Contingent purchase price consideration

The following table presents our liabilities measured at fair value using significant unobservable inputs (Level 3), as of September 30, 2022 (in thousands):

Balance, December 31, 2021

Change in fair value of contingent purchase price considerations

during the period

Balance, September 30, 2022

The fair value of our outstanding debt balance at September 30, 2022 and December 31, 2021 was $ 13.4 million and $ 13.6 million, respectively, based on the Level 2 valuation hierarchy of the fair value measurements standard using a present value methodology that was derived by evaluating the nature and terms of each note and considering the prevailing economic and market conditions at the balance sheet date.

The principal amount of our outstanding debt balance at September 30, 2022 and December 31, 2021 was $ 13.5 million and $ 13.8 million, respectively.

The fair value of our outstanding debt balance at March 31, 2023 and December 31, 2022 was $ 13.7 million and $ 13.2 million, respectively, based on the Level 2 valuation hierarchy of the fair value measurements standard using a present value methodology that was derived by evaluating the nature and terms of each note and considering the prevailing economic and market conditions at the balance sheet date.

The principal amount of our outstanding debt balance at March 31, 2023 and December 31, 2022 was $ 14.0 million and $ 13.6 million, respectively.

Note I - Revenue from Contracts with Customers

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Collaboration Revenue

For the three months ended September 30, 2022, and 2021, we recognized approximately $ 4.5 million and $ 18.2 million, respectively, of research and development revenue based on the partial satisfaction of the over time performance obligations as of quarter end.

For the period ended September 30, 2021, the amount also included deferred revenue recognized in connection with the termination of AGEN1223 development.

For the nine months ended September 30, 2022, we recognized research and development revenue of $ 5.0 million related to the achievement of a milestone and $ 7.1 million based on the partial satisfaction of the over time performance obligations as of period

For the nine months ended September 30, 2021, we recognized research and development revenue of $ 20.6 million based on the partial satisfaction of the over time performance obligations as of period end and the termination of AGEN1223 development.

We expect to recognize deferred research and development revenue of $ 7.0 million and $ 7.7 million for the remainder of 2022 and 2023, respectively, related to performance obligations that are unsatisfied or partially unsatisfied as of September 30, 2022.

For the three months ended March 31, 2023 , we recognized approximately $ 2.3 million of research and development revenue based on the partial satisfaction of the over time performance obligations as of quarter end.

For the three months ended March 31, 2022, we recognized research and development revenue of $ 5.0 million related to the achievement of a milestone and $ 1.4 million based on the partial satisfaction of the over time performance obligations as of quarter end.

We expect to recognize deferred research and development revenue of $ 9.9 million for the remainder of 2023 related to performance obligations that are unsatisfied or partially unsatisfied as of March 31, 2023.

Disaggregation of Revenue

The following tables present revenue (in thousands) for the three and nine months ended September 30, 2022 and 2021, disaggregated by geographic region and revenue type.

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.

Three months ended September 30, 2022

United States

Rest of World

Royalty sales milestone

Research and development services

Other services

Recognition of deferred revenue

Non-cash royalties

Three months ended September 30, 2021

License fees and milestones

Clinical product revenue

Research and development services

Other services

Recognition of deferred revenue

Non-cash royalties

Nine months ended September 30, 2022

Three months ended March 31, 2023

United States

Rest of World

License fees and milestones

Royalty sales milestone

Research and development services

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Non-cash royalties

Nine months ended September 30, 2021

Three months ended March 31, 2022

License fees and milestones

Clinical product revenue

Research and development services

1 unchanged sentence

Recognition of deferred revenue

Recognition of deferred grant revenue

Non-cash royalties

3 unchanged sentences

Currently, we do not have any contract assets which have not transferred to a receivable.

We had no asset impairment

charges related to contract assets in the period.

We had no asset impairment charges related to contract assets in the period.

Contract liabilities primarily relate to contracts where we received payments but have not yet satisfied the related performance obligations.

1 unchanged sentence

The following table provides information about contract liabilities from contracts with customers (in thousands):

Nine months ended September 30, 2022

Three months ended March 31, 2023

Balance at beginning of period

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Deferred revenue

The change in contract liabilities is primarily related to the recognition of $ 7.1 million of revenue related to the Gilead Collaboration Agreements during the nine months ended September 30, 2022.

Deferred revenue related to the Gilead Collaboration Agreements of $ 14.7 million as of September 30, 2022, which was comprised of the $ 142.5 million initial transaction price, less $ 127.8 million of license and collaboration revenue recognized from the effective date of the contract, will be recognized as the combined performance obligation is satisfied.

We also recorded a $ 1.2 million receivable as of September 30, 2022, for research and development and other services provided.

During the nine months ended September 30, 2022, 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.

The change in contract liabilities is primarily related to the recognition of $ 2.3 million of revenue related to the Gilead Collaboration Agreements during the three months ended March 31, 2023 .

Deferred revenue related to the Gilead Collaboration Agreements of $ 9.9 million as of March 31, 2023 , which was comprised of the $ 142.5 million initial transaction price, less $ 132.6 million of license and collaboration revenue recognized from the effective date of the contract, will be recognized as the combined performance obligation is satisfied.

We also recorded a $ 1.4 million receivable as of March 31, 2023, for research and development and other services provided.

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.

No ne of the costs to obtain or fulfill a contract were capitalized.

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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 calculated based on a Monte Carlo simulation as of the date of issuance.

However, the fair value of stock option market-based awards is

calculated based on a Monte Carlo simulation as of the date of issuance.

All stock options have 10-year terms and generally vest ratably over a 3 or 4 -year period.

A summary of option activity for the nine months ended September 30, 2022 is presented below:

A summary of option activity for the three months ended March 31, 2023 is presented below:

Outstanding at December 31, 2022

Outstanding at September 30, 2022

Vested or expected to vest at September 30, 2022

Exercisable at September 30, 2022

The weighted average grant-date fair values of stock options granted during the nine months ended September 30, 2022 and 2021 were $ 1.77 and $ 2.83 , respectively.

As of September 30, 2022 , there was approximately $ 33.0 million of total unrecognized share-based compensation expense related to these stock options and stock options granted under a subsidiary plan which, if all milestones are achieved, will be recognized over a weighted average period of 2.2 years.

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 $ 1.53 and $ 1.81 , respectively.

As of March 31, 2023 , there was approximately $ 37.5 million of total unrecognized share-based compensation expense related to these stock options and stock options granted under subsidiary plans which, if all milestones are achieved, will be recognized over a weighted average period of 2.2 years.

Certain employees and consultants have been granted non-vested stock.

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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 nine months ended September 30, 2022 is presented below:

A summary of non-vested stock activity for the three months ended March 31, 2023 is presented below:

Outstanding at December 31, 2022

Outstanding at September 30, 2022

As of September 30, 2022 , there was approximately $ 2.0 million of unrecognized share-based compensation expense related to these non-vested shares and non-vested shares granted under a subsidiary plan which will be recognized over a period of 1.6 years.

During the nine months ended September 30, 2022 , 326,203 shares were issued under the 2019 Employee Stock Purchase Plan, 73,913 shares were issued as a result of stock option exercises and 210,499 shares were issued as a result of the vesting of non-vested stock.

Outstanding at March 31, 2023

As of March 31, 2023 , there was approximately $ 1.7 million of unrecognized share-based compensation expense related to these non-vested shares and non-vested shares granted under subsidiary plans which will be recognized over a period of 2.0 years.

During the three months ended March 31, 2023 , 150,291 shares were issued under the 2019 Employee Stock Purchase Plan, 46,750 shares were issued as a result of stock option exercises and 5,000 shares were issued as a result of the vesting of non-vested stock.

Additionally, 2,716,176 shares were issued as payment for certain employee bonuses, with 995,658 of those shares being withheld to cover taxes, resulting in a net share issuance of 1,720,518 .

The impact on our results of operations from share-based compensation for the three and nine months ended September 30, 2022 and 2021, was as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

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,

Research and development

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Restricted Cash

As of both September 30, 2022, and December 31, 2021, we maintained non-current restricted cash of $ 2.7 million.

As of both March 31, 2023, and December 31, 2022 , we maintained non-current restricted cash of $ 2.7 million.

This amount is included within “Other long-term assets”

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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):

Nine Months Ended September 30, 2022

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2023

Three Months Ended March 31, 2022

Beginning of Period

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At the Market Offerings

On March 1, 2022, we filed a prospectus supplement with the SEC in connection with the potential offer and sale of up to 100,000,000 shares of common stock (the “Placement Shares”) from time to time in “at the market”

On March 1, 2022, we filed a prospectus supplement with the SEC for the potential offer and sale of up to 100,000,000 shares of common stock (the “Placement Shares”) in “at the market”

offerings pursuant to an At Market Issuance Sales Agreement by and between Agenus and B.

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(the “Sales Agent”), dated as of July 22, 2020 (the “Sales Agreement”).

Sales pursuant to the Sales Agreement will be made only upon instructions by us to the Sales Agent, and we cannot provide assurances that we will issue any Placement Shares pursuant to the Sales Agreement.

During the three and nine months ended September 30, 2022, we received net proceeds of approximately $ 27.8 million and $ 75.2 million from the sale of approximately 11.8 million and 34.6 million shares of our common stock at an average price per share of approximately $ 2.44 and $ 2.24 , respectively, in at-the-market offerings under the Sales Agreement.

Authorized Shares

On August 4, 2022, at a special meeting of stockholders, our stockholders approved an amendment to our Amended and Restated Articles of Incorporation, as amended, to increase our authorized shares of common stock from 400,000,000 to 800,000,000 .

The increase in our authorized shares of common stock became effective upon the filing of the amendment to our Articles of Incorporation with the Delaware Secretary of State on August 5, 2022.

Sales pursuant to the Sales Agreement will be made only upon our instruction to the Sales Agent, and we cannot provide assurances that we will issue any Placement Shares pursuant to the Sales Agreement.

During the quarter ended March 31, 2023 , we received net proceeds of approximately $ 60.6 million from the sale of approximately 33.8 million shares of our common stock in at-the-market offerings under the Sales Agreement.

Note M –

Related Party Transactions

During the quarter ended June 30, 2022, our Audit and Finance Committee approved a contract between a wholly-owned subsidiary of Agenus and Protagenic Therapeutics, Inc.

(“Protagenic”), for the performance of clinical trial services totaling approximately $ 1.3 million.

These services are expected to be completed over the next year.

Armen, our Chief Executive Officer, is Executive Chairman of and has a greater than 10 % equity interest in Protagenic.

In 2023, our Audit and Finance Committee approved a contract between Avillion Life Sciences LTD ("Avillion") and Agenus for the performance of up to $ 450,000 of clinical consulting services.

Allison Jeynes, a member of our Board of Directors, is chief executive officer of Avillion.

For the three months ended March 31, 2023, approximately $ 228,000 related to these services is included in “Research and development”

expense in our condensed consolidated statements of operations.

Note N - Recent Accounting Pronouncements

Recently Issued, Not Yet Adopted

Recently Issued and Adopted

In January 2017, the FASB issued ASU 2017-04 , Intangibles –

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Instead, an impairment charge will be based on the excess of a reporting unit’s carrying amount over its fair value.

The guidance is effective for the Company in the first quarter of fiscal 2023.

Early adoption is permitted.

We do not anticipate the adoption of this guidance to have a material impact on our consolidated financial statements, absent any goodwill impairment.

No other new accounting pronouncement issued or effective during the nine months ended September 30, 2022 had or is expected to have a material impact on our consolidated financial statements or disclosures.

We adopted the standard on January 1, 2023 .

The adoption did no t have a material impact on our consolidated financial statements .

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 –

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At the Market Offerings

During the period of October 1, 2022 through November 4, 2022, we received net proceeds of approximately $ 22.3 million from the sale of approximately 9.9 million shares of our common stock under the Sales Agreement.

During the period of April 1, 2023 through May 5, 2023, we sold approximately 9.2 million shares of our common stock under the Sales Agreement, totaling net proceeds of approximately $ 13.6 million.

MiNK Stock Dividend

On March 29, 2023 , our Board of Directors declared a stock dividend (the "Dividend") consisting of an aggregate of 5.0 million shares (the "Dividend Stock") of common stock, par value $ 0.00001 per share, of MiNK held by Agenus to record holders of Agenus' common stock, par value $ 0.01 per share as of the close of business on April 17, 2023 (the "Record Date").

On May 1, 2023 , we paid the Dividend and distributed 0.0146 of a share of the Dividend Stock for each share of Agenus Common Stock outstanding as of the close of business on the Record Date.

No fractional shares were issued in connection with the Dividend and the shareholders of Agenus who were entitled to receive fractional shares of the Dividend Stock received cash (without interest) in lieu of such fractional shares.

Subsequent to the distribution of the Dividend Stock, we owned approximately 62 % of MiNK's common stock and maintained a controlling voting interest in MiNK.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

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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.

We have included 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 in Part II-Item 1A “Risk Factors”

of this Quarterly Report on Form 10-Q.

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.

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We are a clinical-stage immuno-oncology (“I-O”) company advancing an extensive pipeline of immune checkpoint antibodies, adoptive cell therapies (through our subsidiary MiNK) and neoantigen vaccines (through our subsidiary SaponiQx), to fight cancer and infections.

Our business is designed to drive success in 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 I-O therapies.

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.

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.

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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 multiple antibody discovery platforms, including our proprietary display technologies, designed to drive the discovery of future checkpoint modulator (“CPM”) antibody candidates;

our antibody candidate programs, including our CPM programs, such as our lead candidate botensilimab (AGEN1181);

our saponin-based vaccine adjuvant platform under our subsidiary SaponiQx, principally including our QS-21 STIMULON adjuvant (“QS-21 Stimulon”);

our subsidiary, MiNK, which has a pipeline of novel allogeneic invariant natural killer T cell (“iNKT”) therapies to treat cancer and other immune-mediated diseases.

our multiple antibody discovery platforms, including our proprietary display technologies, designed to drive the discovery of future antibody candidates;

our antibody candidate programs, including our lead asset, botensilimab, an Fc-enhanced CTLA-4, for which data was presented at the 2023 American Society of Clinical Oncology –

Gastrointestinal Cancers Symposium demonstrating in combination with balstilimab (PD-1) significant activity in "cold tumors," such as microsatellite stable colorectal cancer ("MSS CRC");

our saponin-based vaccine adjuvant platform under SaponiQx, principally including our QS-21 STIMULON adjuvant (“QS-21 STIMULON”);

a pipeline of novel allogeneic invariant natural killer T cell (“iNKT”) therapies to treat cancer and other immune-mediated diseases controlled by MiNK.

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 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 and melanoma in 2022 and expect to initiate a worldwide trial for botensilimab in pancreatic cancer by the end of 2022.

In October 2021, we announced the withdrawal of our biologics license application (“BLA”) for balstilimab monotherapy to treat second-line cervical cancer.

Our decision came at the recommendation of the United States Food and Drug Administration (“FDA”) following the full approval of pembrolizumab, four months earlier than the FDA goal date.

The BLA submission for balstilimab was accepted for filing and received Fast Track and Priority Review designation from the FDA, with a target action date of December 16, 2021.

As part of the BLA review process, we successfully completed three FDA inspections, with no cited issues, concerns, or Form-483s.

Based on this change to the treatment landscape with another company’s full approval, we are no longer pursuing U.S.

registration for the combination of balstilimab and zalifrelimab in second-line cervical cancer.

We have formed collaborations with multiple companies such as Bristol-Myers Squibb Company (“BMS”), Betta Pharmaceuticals Co., Ltd.

Our lead program, botensilimab (AGEN1181), is advancing in multiple clinical programs which we have designed to support regulatory

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”), Merck Sharpe & Dohme (“Merck”) and Recepta Biopharma SA (“Recepta”).

(“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 is currently advancing in various clinical trials, as well as an additional undisclosed target that Incyte is advancing in preclinical studies.

Under the terms of our agreement, Incyte is responsible for all future development expenses, and we are eligible to receive up to an additional $500.0 million in potential milestone payments plus royalties on any future sales.

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.

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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 September 30, 2022, we remain eligible to receive up to $450.0 million and $76.5 million in potential development, regulatory and commercial milestones from Incyte and Merck, respectively.

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”).

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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 up to $5.0 million in aggregate milestone payments prior to option exercise, 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.

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”).

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We also announced our partnership with Ginkgo Bioworks, Inc.

to 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.

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.

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(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.

The Second HCR Milestone was achieved after GSK’s net sales of Shingrix for the twelve months ended June 30, 2022 exceeded $2.75 billion.

As the milestone will be paid through the royalties received from GSK, recognized revenue (up to the milestone amount) as the underlying royalties were earned.

As such, based on underlying royalties earned in the second and third quarters of 2022, we recorded royalty sales milestone revenue of $17.3 million during the quarter ended June 30, 2022, and a $7.9 million receivable and corresponding royalty sales milestone revenue in the quarter ended September 30, 2022.

The $17.3 million royalty sales milestone receivable recorded in the quarter ended June 30, 2022 was received in the third quarter of 2022.

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.

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MiNK Therapeutics is focused on the development of unmodified iNKT cell therapies for the treatment of cancer and other life-threatening immune-mediated diseases.

There are three active clinical trials evaluating AGENT-797, an allogeneic iNKT therapy, for the treatment of patients with solid tumor cancers with AGENT-797 alone and in combination with KEYTRUDA or OPDIVO, multiple myeloma, and viral Acute Respiratory Distress secondary to COVID-19.

Data readouts are planned by the end of 2022.

In October 2021, MiNK Therapeutics completed an initial public offering of 3,333,334 shares of its common stock, trading on the Nasdaq Capital Market under the ticker symbol “INKT”, at a public offering price of $12.00 per share.

The gross proceeds from the offering, before deducting underwriting discounts and commissions and other offering expenses, were approximately $40.0 million.

Subsequently, the underwriters in the initial public offering exercised their option to acquire an additional 500,000 shares at the public offering price and such shares were delivered on November 3, 2021.

MiNK Therapeutics has exclusively licensed the INKT technology from Agenus and retains the rights to develop and expand a proprietary pipeline of engineered CAR-INKTs, TCRs, and INKT bispecific engagers.

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 September 30, 2022 compared to the three months ended September 30, 2021

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 $4.6 million and $239.0 million during the three months ended September 30, 2022 and 2021, respectively.

Research and development revenues in the third quarter of 2022 primarily consisted of $4.5 million related to the recognition of deferred revenue earned under our Gilead Collaboration Agreements.

Research and development revenues in the third quarter of 2021 primarily consisted of $220.0 million related to an upfront license fee and milestone earned under our BMS License Agreement and $18.2 million related to the recognition of deferred revenue earned under our Gilead Collaboration Agreements.

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

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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 decreased $3.4 million, to approximately $9.2 million for the three months ended September 30, 2022, from $12.6 million for the three months ended September 30, 2021, due to the achievement of the final sales milestone under our Royalty Purchase Agreement with HCR and the recognition of approximately $7.9 million of these royalties as royalty milestone revenue in the three months ended September 30, 2022.

Royalty sales milestone revenue

We recognized royalty sales milestone revenue of approximately $7.9 million during the three months ended September 30, 2022, related to the achievement of the final milestone under our Royalty Purchase Agreement with HCR.

This $25.3 million milestone was achieved when sales of GSK’s vaccines containing our QS-21 Stimulon exceeded $2.75 billion for the 12 months ended June 30, 2022.

As the milestone will be paid through the royalties received from GSK, we recognized revenue (up to the milestone amount) as the underlying royalties were earned.

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 7% to $46.0 million for the three months ended September 30, 2022 from $42.9 million for the three months ended September 30, 2021.

Increased expenses in the three months ended September 30, 2022 primarily relate a $1.0 million increase in personnel related expenses, primarily due to increased headcount, a $5.1 million increase in expenses attributable to the activities of our subsidiaries and a $0.3 million increase in other research and development expenses.

These increases were partially offset by a $3.2 million decrease in third-party services and other expenses, largely due to the timing of expenses related to the advancement of our antibody programs.

General and administrative expense

General and administrative expense consists primarily of personnel costs, facility expenses, and professional fees.

General and administrative expenses decreased 15% to $18.1 million for the three months ended September 30, 2022 from $21.4 million for the three months ended September 30, 2021.

Decreased expenses in the three months ended September 30, 2022 primarily relate to a $4.4 million decrease in professional fees, primarily due to reduced commercial readiness activities, and a $1.2 million decrease in personnel related expenses, primarily due to decreased headcount and decreased share-based compensation expense.

These decreases were partially offset by a $2.1 million increase in expenses attributable to the activities of our subsidiaries and a $0.3 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 mainly 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.

Non-operating income (expense)

Non-operating income (expense) includes our foreign currency translation adjustment and other income or expense.

Non-operating income increased $0.4 million for the three months ended September 30, 2022, from income of $0.1 million for the three months ended September 30, 2021 to income of $0.5 million for the three months ended September 30, 2022, primarily due larger foreign currency exchange gains in the three months ended September 30, 2022 compared the three months ended September 30, 2021.

Interest expense, net

Interest expense, net decreased to approximately $15.6 million for the three months ended September 30, 2022 from $16.6 million for the three months ended September 30, 2021, due to decreased non-cash interest recorded in connection with our Royalty Purchase Agreement with HCR.

Nine months ended September 30, 2022 compared to the nine months ended September 30, 2021

Research and development revenue

We recognized research and development revenue of approximately $13.2 million and $242.3 million during the nine months ended September 30, 2022 and 2021, respectively.

Research and development revenues in the first nine months of 2022 primarily consisted of a $5.0 million milestone and $7.7 million related to the recognition of deferred revenue, both earned under our Gilead Collaboration Agreements.

Research and development revenues in the first nine months of 2021 primarily consisted of $220.0 million related to an upfront license fee and milestone earned under our BMS License Agreement and $20.6 million related to the recognition of deferred revenue 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 will record these royalties from GSK as revenue.

Non-cash royalty revenue related to our agreement with GSK decreased $1.9 million, to approximately $27.0 million for the nine months ended September 30, 2022, from $28.9 million for the nine months ended September 30, 2021, due to the achievement of the final sales milestone under our Royalty Purchase Agreement with HCR and the recognition of approximately $25.3 million of these royalties as royalty milestone revenue in the nine months ended September 30, 2022.

Royalty sales milestone revenue

We recognized royalty sales milestone revenue of approximately $25.3 million during the nine months ended September 30, 2022, related to the achievement of the final milestone under our Royalty Purchase Agreement with HCR.

This $25.3 million milestone was achieved when sales of GSK’s vaccines containing our QS-21 Stimulon exceeded $2.75 billion for the 12 months ended June 30, 2022.

As the milestone will be paid through the royalties received from GSK, we recognized revenue (up to the milestone amount) as the underlying royalties were earned.

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 increased 7% to $133.4 million for the nine months ended September 30, 2022 from $125.1 million for the nine months ended September 30, 2021.

Increased expenses in the nine months ended September 30, 2022 primarily relate to a $5.0 million increase in personnel related expenses, primarily due to increased headcount and increased share based compensation expense, a $11.9 million increase in expenses attributable to the activities of our subsidiaries and a $0.7 million increase in other research and development expenses.

These increases were partially offset by a $9.2 million decrease in third-party services and other expenses, largely due to the timing of expenses related to the advancement of our antibody programs.

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 increased 3% to $56.0 million for the nine months ended September 30, 2022 from $54.4 million for the nine months ended September 30, 2021.

Increased expenses in the nine months ended September 30, 2022 primarily relate to a $6.5 million increase in expenses attributable to the activities of our subsidiaries and a $0.7 million increase in other general and administrative expenses.

These increases were partially offset by a $4.2 million decrease in professional fees, primarily due to reduced commercial readiness activities, and a $1.4 million decrease in personnel related expenses, primarily due to decreased share-based compensation expense.

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

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.

Non-operating income (expense)

Non-operating income (expense) includes our foreign currency translation adjustment and other income or expense.

Non-operating income increased $7.6 million for the nine months ended September 30, 2022, from income of $2.1 million for the nine months ended September 30, 2021 to income of $9.7 million for the nine months ended September 30, 2022, primarily due to the recognition of a $6.6 million gain on the sale of property, plant and equipment and a $2.8 million gain on the partial forgiveness of a liability in the nine months ended September 30, 2022 compared to foreign currency exchange gains in the nine months ended September 30, 2021.

Interest expense, net

Interest expense, net decreased to approximately $44.5 million for the nine months ended September 30, 2022 from $49.1 million for the nine months ended September 30, 2021, due to decreased non-cash interest recorded in connection with our Royalty Purchase Agreement with HCR.

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 nine months ended September 30, 2022, our research and development programs consisted largely of our antibody programs as indicated in the following table (in thousands).

Nine Months Ended September 30,

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,

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Liquidity and Capital Resources

We have incurred annual operating losses since inception, and we had an accumulated deficit of $1.6 billion as of September 30, 2022.

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 September 30, 2022, we have raised aggregate net proceeds of approximately $1.72 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 an unlimited amount of common stock, preferred stock, warrants, debt securities and units.

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”

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as our sales agent.

We sold approximately 34.6 million and 9.9 million shares of our common stock pursuant to the Sales Agreement during the nine months ended September 30, 2022 and the period of October 1, 2022 through November 4, 2022, respectively, and received aggregate net proceeds totaling $97.6 million.

As of November 4, 2022, approximately 93.7 million shares remained available for sale under the Sales Agreement.

In the past 10 years we have funded our operations largely from 1) cash received from partners and royalty financing transactions and 2) equity offerings;

in that order.

We transact ATMs 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 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

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 September 30, 2022, we had debt outstanding of $13.5 million in principal.

In February 2015, we issued senior subordinated promissory notes in the aggregate principal amount of $14.0 million with annual interest at 8% (the “2015 Subordinated Notes”).

In February 2020, we amended $13.5 million of the 2015 Subordinated Notes, extending the due date by three years to February 2023.

The remaining $0.5 million of the 2015 Subordinated Notes were repaid in February 2020.

In April 2020, we repaid an additional $0.5 million of the 2015 Subordinated Notes, leaving $13.0 million outstanding.

Our cash, cash equivalents and short-term investments at September 30, 2022 were $218.2 million, a decrease of $88.7 million from December 31, 2021.

During the past five years, we have successfully financed our operations through income and revenues generated from corporate partnerships, advance royalty sales and issuance of equity.

Based on our current plans and projections, we believe our quarter end cash resources of $218.2 million as of September 30, 2022, will be sufficient to satisfy our liquidity requirements for more than one year from when these financial statements were issued.

Management continues to monitor the Company’s liquidity position and has the flexibility to adjust spending as needed in order to preserve and extend liquidity.

We continuously evaluate the likelihood of success of our programs.

As such, our decisions to continue to fund or eliminate funding of each of our programs are predicated on these determinations, on an ongoing basis.

We expect our potential sources of funding to include:

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.

Our future cash requirements include, but are not limited to, supporting clinical trial and regulatory efforts and continuing our other research and development programs.

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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 September 30, 2022, we have expensed $439.6 million as research and development expenses and $423.2 million has been paid under these agreements.

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.

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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) provided by operating activities for the nine months ended September 30, 2022 and 2021 was ($128.0) million and $33.1 million, respectively.

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, and the risks highlighted under Part II, Item 1A.

“Risk Factors”, of this Quarterly Report on Form 10-Q.

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements