What changed in this filing

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Item 1. Financial Statements

2023-08-08 compared with 2023-05-09 · 304 added, 190 removed, 435 unchanged (53% of the section changed)

3 unchanged sentences

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

March 31, 2023

June 30, 2023

December 31, 2022

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

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

$ 58,489 and $ 54,075 at June 30, 2023 and December 31, 2022, respectively

Operating lease right-of-use assets

Acquired intangible assets, net of accumulated amortization of $ 17,123 and

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

$ 16,148 at June 30, 2023 and December 31, 2022, respectively

Other long-term assets

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31,620 shares designated, issued, and

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

outstanding at June 30, 2023 and December 31, 2022;

liquidation value

of $ 33,726 at March 31, 2023

of $ 33,779 at June 30, 2023

Common stock, par value $ 0.01 per share;

800,000,000 shares authorized;

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

367,491,091 and 305,573,397 shares issued at June 30, 2023

and December 31, 2022, respectively

Additional paid-in capital

Accumulated other comprehensive income

Accumulated other comprehensive income (loss)

Accumulated deficit

8 unchanged sentences

(Amounts in thousands, except per share amounts)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

Royalty sales milestone

Service revenue

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Other income (expense):

Non-operating income

Non-operating income (expense)

Interest expense, net

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Balance at March 31, 2023

Other comprehensive income

Share-based compensation

Shares sold at the market

Vesting of nonvested shares

MiNK stock dividend

MiNK stock purchases

Issuance of subsidiary shares for employee bonus

Issuance of shares for employee bonus

Retirement of treasury shares

Balance at June 30, 2023

See accompanying notes to unaudited condensed consolidated financial statements.

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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

Issuance of shares for employee bonus

Retirement of treasury shares

Balance at June 30, 2022

See accompanying notes to unaudited condensed consolidated financial statements .

2 unchanged sentences

(Amounts in thousands, except per share amounts)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

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Non-cash interest expense

Loss on disposal of assets

Loss (gain) on sale of assets

Gain on partial forgiveness of liability

Change in fair value of contingent obligations

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Purchases of plant and equipment

Proceeds from sale of property, plant and equipment

Purchase of long-term investment

Cash paid for business acquisition

6 unchanged sentences

Purchase of treasury shares to satisfy tax withholdings

Purchase of subsidiary shares

Payment of finance lease obligation

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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

4 unchanged sentences

NOTES TO UNAUDITED CONDENSED CO NSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

June 30, 2023

Note A - Business, Liquidity and Basis of Presentation

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“us,”

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.

and “our”) is a clinical-stage company focused on developing therapies that harness the body’s immune system to combat cancer and infections.

Our pipeline includes 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.

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.

We believe that these fully integrated capabilities enable us to produce novel candidates on timelines that are shorter than the industry standard.

Leveraging our science and capabilities, we have forged important partnerships to advance our innovation.

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 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.

Our product candidates require successful clinical trials and approvals from regulatory agencies, as well as acceptance in the marketplace.

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 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.

Our approach to Immuno-oncology (“I-O”) emphasizes speed, innovation, and effective combination therapies to drive success.

We believe that combination therapies and a deep understanding of each patient’s cancer will significantly expand the patient population benefiting from I-O treatments.

In addition to our diverse pipeline, we have built fully integrated capabilities encompassing novel target discovery, antibody generation, cell line development, and good manufacturing practice clinical manufacturing.

We believe these integrated capabilities enable us to develop novel candidates on accelerated timelines compared to industry standards.

Through strategic partnerships, we leverage our scientific expertise and capabilities to advance innovation in the field.

Our I-O portfolio is driven by several platforms and programs, which we plan to utilize individually and in combination:

Multiple antibody discovery platforms, including proprietary display technologies, to identify future antibody candidates.

Antibody candidate programs, including our lead asset, botensilimab, an Fc-enhanced CTLA-4 antibody.

Data presented at the 2023 ESMO World Congress Gastrointestinal Cancer conference (“ESMO GI”) demonstrated significant activity in microsatellite stable colorectal cancer when combined with balstilimab (PD-1).

In a late-breaking presentation at ESMO GI, the combination of botensilimab/balstilimab showed a median Overall Survival of 20.9 months for patients without active liver metastases, surpassing the recently reported 12.9 month benchmark with standard of care in this population.

In April 2023, the botensilimab/balstilimab combination received Fast Track designation from the United States Food and Drug Administration (“FDA”) for the treatment of non-MSI-H/deficient mismatch repair (dMMR) metastatic colorectal cancer patients without active liver involvement.

Our saponin-based vaccine adjuvant platform, primarily centered around our STIMULON TM cultured plant cell (“cpc”) QS-21 adjuvant (“STIMULON cpc QS-21”).

A pipeline of novel allogeneic invariant natural killer T cell therapies for treating cancer and other immune-mediated diseases, controlled by MiNK.

Our business activities encompass various areas such as product research, preclinical and clinical development, intellectual property prosecution, manufacturing, regulatory and clinical affairs, corporate finance and development activities, and support of collaborations.

Our strategy includes developing and commercializing product candidates through existing and new collaborations.

Our cash, cash equivalents and short-term investments at June 30, 2023 were $ 157.9 million, a decrease of $ 35.5 million from December 31, 2022 .

Cash and cash equivalents of our subsidiary, MiNK, at March 31, 2023, were $ 14.9 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 March 31, 2023, we had an accumulated deficit of $ 1.8 billion.

As of June 30, 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.

Based on our current plans and projections, we believe our cash resources of $ 157.9 million at June 30, 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.

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Accordingly, they do not include all of the information and footnotes required by U.S.

GAAP for complete annual

consolidated financial statements.

In the opinion of our management, the condensed consolidated financial statements include all normal and recurring adjustments considered necessary for a fair presentation of our financial position and operating results.

GAAP for complete annual consolidated financial statements.

In the opinion of our management, the condensed consolidated financial statements include all

normal and recurring adjustments considered necessary for a fair presentation of our financial position and operating results.

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

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.

Operating results for the six months ended June 30, 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”).

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equity (deficit).

During the quarter ended June 30, 2023, we deconsolidated certain foreign subsidiaries and recognized a gain of $ 132,000 , included in "Other income (expense)" on our condensed consolidated statements of operations and comprehensive loss.

Note B - Net Loss Per Share

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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,

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 June 30, 2023 and 2022, as they would be anti-dilutive (in thousands):

Three and Six Months Ended June 30,

Stock options

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Note C - Investments

Cash equivalents and short-term investments consisted of the following as of March 31, 2023 and December 31, 2022 (in thousands):

March 31, 2023

Cash equivalents and short-term investments consisted of the following as of June 30, 2023 and December 31, 2022 (in thousands):

June 30, 2023

December 31, 2022

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Treasury Bills

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.

As a result of the short-term nature of these investments, there were minimal unrealized holding gains or losses for the three and six months ended June 30, 2023 and 2022.

Of the investments listed above, $ 127.0 million and $ 164.7 million were classified as cash equivalents and $ 14.6 million and $ 14.7 million as short-term investments on our condensed consolidated balance sheets as of June 30, 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 three months ended March 31, 2023 (in thousands):

The following table sets forth the changes in the carrying amount of goodwill for the six months ended June 30, 2023 (in thousands):

Balance, December 31, 2022

Foreign currency translation adjustment

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

Balance, June 30, 2023

Acquired intangible assets consisted of the following as of June 30, 2023 and December 31, 2022 (in thousands):

As of June 30, 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 $ 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.

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

Note E - Debt

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

Debt obligations consisted of the following as of June 30, 2023 and December 31, 2022 (in thousands):

Debt instrument

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2015 Subordinated Notes

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.

As of both June 30, 2023 and December 31, 2022, the principal amount of our outstanding debt balance was $ 13.6 million.

Note F –

Liability Related to the Sale of Future Royalties and Milestones

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

The following table shows the activity within the liability account in the six months ended June 30, 2023 (in thousands):

December 31, 2022 to

March 31, 2023

June 30, 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.

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.

During the six months ended June 30, 2023 , we recognized $ 41.2 million of non-cash royalty revenue, and we recorded $ 36.8 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 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 %.

During the six months ended June 30, 2023 , our estimate of the effective annual interest rate over the life of the agreement increased to 30.4 %, which results in a life of contract interest rate of 23.6 %.

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

Accrued liabilities consisted of the following as of June 30, 2023 and December 31, 2022 (in thousands):

June 30, 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

Other current liabilities consisted of the following as of June 30, 2023 and December 31, 2022 (in thousands):

June 30, 2023

December 31, 2022

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Note H - Fair Value Measurements

Assets and liabilities measured at fair value are summarized below (in thousands):

June 30, 2023

Quoted Prices in

Identical Assets

Cash equivalents (Note C)

Short-term investments (Note C)

Long-term investments

Contingent purchase price considerations

December 31, 2022

Quoted Prices in

Identical Assets

Cash equivalents (Note C)

Short-term investments (Note C)

Contingent purchase price consideration

We measure our contingent purchase price considerations at fair value.

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 fair values of our contingent purchase price considerations at June 30, 2023 and December 31, 2022, of $ 0.5 million and $ 0.9 million, respectively, 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 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.

The fair value of our outstanding debt balance at June 30, 2023 and December 31, 2022 was $ 13.3 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 both June 30, 2023 and December 31, 2022 was $ 13.6 million.

Note I - Revenue from Contracts with Customers

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(“Gilead”) focused on the development and commercialization of up to five novel immuno-oncology therapies.

Pursuant to the terms of the license agreement, the option and license agreements and the stock purchase agreement we entered into with Gilead (collectively, the “Gilead Collaboration Agreements”), at the closing of the transaction on January 23, 2019, we received an upfront cash payment from Gilead of $ 120.0 million and Gilead made a $ 30.0 million equity investment in Agenus.

Pursuant to the terms of the license agreement, the option and license agreements and the stock purchase agreement we entered into with Gilead (collectively, the “Gilead

Collaboration Agreements”), at the closing of the transaction on January 23, 2019, we received an upfront cash payment from Gilead of $ 120.0 million and Gilead made a $ 30.0 million equity investment in Agenus.

On November 6, 2020, we received notice from Gilead that it was returning AGEN1423 to us and voluntarily terminating the applicable license agreement.

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Collaboration Revenue

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.

For the three months ended June 30, 2023 and 2022, we recognized approximately $ 2.0 million and $ 1.2 million, respectively, of research and development revenue based on the partial satisfaction of the over time performance obligations as of quarter end.

For the six months ended June 30, 2023, we recognized approximately $ 4.4 million of research and development revenue based on the partial satisfaction of the over time performance obligations as of period end.

For the six months ended June 30, 2022, we recognized research and development revenue of $ 5.0 million related to the achievement of a milestone and $ 2.6 million based on the partial satisfaction of the over time performance obligations as of period end.

We expect to recognize deferred research and development revenue of $ 7.8 million for the remainder of 2023 related to performance obligations that are unsatisfied or partially unsatisfied as of June 30, 2023.

Disaggregation of Revenue

The following table presents revenue (in thousands) for the three months ended March 31, 2023 and 2022, disaggregated by geographic region and revenue type.

The following table presents revenue (in thousands) for the three and six months ended June 30, 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 March 31, 2023

Three months ended June 30, 2023

United States

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Non-cash royalties

Three months ended March 31, 2022

Three months ended June 30, 2022

Royalty sales milestone

Research and development services

Other services

Recognition of deferred revenue

Non-cash royalties

Six months ended June 30, 2023

United States

Rest of World

Research and development services

Other services

Recognition of deferred revenue

Non-cash royalties

Six months ended June 30, 2022

License fees and milestones

Royalty sales milestone

Research and development services

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

Three months ended March 31, 2023

Six months ended June 30, 2023

Balance at beginning of period

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Deferred revenue

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.

The change in contract liabilities is primarily related to the recognition of $ 4.4 million of revenue related to the Gilead Collaboration Agreements during the six months ended June 30, 2023 .

Deferred revenue related to the Gilead Collaboration Agreements of $ 7.8 million as of June 30, 2023 , which was comprised of the $ 142.5 million initial transaction price, less $ 134.7 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 $ 1.3 million receivable as of June 30, 2023, for research and development and other services provided.

During the six months ended June 30, 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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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 three months ended March 31, 2023 is presented below:

A summary of option activity for the six months ended June 30, 2023 is presented below:

Outstanding at December 31, 2022

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.

Outstanding at June 30, 2023

Vested or expected to vest at June 30, 2023

Exercisable at June 30, 2023

The weighted average grant-date fair values of stock options granted during the six months ended June 30, 2023 and 2022 were $ 1.49 and $ 1.76 , respectively.

As of June 30, 2023 , there was approximately $ 32.7 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 2.0 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 three months ended March 31, 2023 is presented below:

A summary of non-vested stock activity for the six months ended June 30, 2023 is presented below:

Outstanding at December 31, 2022

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.

Outstanding at June 30, 2023

As of June 30, 2023 , there was approximately $ 1.2 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 six months ended June 30, 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 21,666 shares were issued as a result of the vesting of non-vested stock.

Additionally, 4,643,808 shares were issued as payment for certain employee bonuses, with 1,668,767 of those shares being withheld to cover taxes, resulting in a net share issuance of 2,975,041 .

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,

The impact on our results of operations from share-based compensation for the three and six months ended June 30, 2023 and 2022, was as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

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Restricted Cash

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

As of both June 30, 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):

Three Months Ended March 31, 2023

Three Months Ended March 31, 2022

Six Months Ended June 30, 2023

Six Months Ended June 30, 2022

Beginning of Period

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Note L –

At the Market Offerings

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”

On June 23, 2023, we filed an Automatic Shelf Registration Statement on Form S-3ASR (file no.

333-272911) (the “Registration Statement”).

The Registration Statement included both a base prospectus that covered the potential offering, issuance and sale from time to time of common stock, preferred stock, warrants, debt securities and units of Agenus and a prospectus supplement for the potential offer and sale of up to 184,638,269 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 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.

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 additional Placement Shares pursuant to the Sales Agreement.

During the three and six months ended June 30, 2023 , we received net proceeds of approximately $ 42.2 million and $ 102.8 million from the sale of approximately 24.6 million and 58.3 million shares of our common stock, respectively, in at-the-market offerings under the Sales Agreement.

Note M –

Non-controlling Interest

Non-controlling interest recorded in our condensed consolidated financial statements as of June 30, 2023 and December 31, 2022, relates to the following approximate interests in certain consolidated subsidiaries, which we do not own.

June 30, 2023

December 31, 2022

MiNK Therapeutics, Inc.

SaponiQx, Inc.

Changes in non-controlling interest for the periods ended June 30, 2023 and December 31, 2022, were as follows (in thousands):

June 30, 2023

December 31, 2022

Beginning balance

Net loss attributable to non-controlling interest

Distribution of subsidiary shares to Agenus stockholders

Purchase of subsidiary shares

Issuance of subsidiary shares for employee bonus

Issuance of subsidiary shares under employee stock purchase plan

Subsidiary share-based compensation

Total other items

Ending balance

Distribution of subsidiary shares to Agenus stockholders

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 maintained a controlling voting interest in MiNK.

Purchase of subsidiary shares

In May 2023, we purchased 195,788 shares of MiNK common stock in multiple open market transactions.

Note N –

Related Party Transactions

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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”

For the three and six months ended June 30, 2023, approximately $ 222,000 and $ 450,000 , respectively, related to these services is included in “Research and development”

expense in our condensed consolidated statements of operations.

Note N - Recent Accounting Pronouncements

Note O - Recent Accounting Pronouncements

Recently Issued and Adopted

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

In January 2017, the Financial Accounting Standards Board issued ASU 2017-04 , Intangibles –

Goodwill and Other (Topic 350) that will eliminate the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge.

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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 –

No other new accounting pronouncement issued or effective during the six months ended June 30, 2023 had or is expected to have a material impact on our consolidated financial statements or disclosures.

Note P –

Subsequent Events

At the Market Offerings

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 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.

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.

During the period of July 1, 2023 through August 4, 2023, we sold approximately 13.2 million shares of our common stock under the Sales Agreement, totaling net proceeds of approximately $ 20.3 million.

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

31 unchanged sentences

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.

We are a clinical-stage company focused on developing therapies that harness the body’s immune system to combat cancer and infections.

Our pipeline includes 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 these fully integrated capabilities enable us to produce novel candidates on timelines that are shorter than the industry standard.

Leveraging our science and capabilities, we have forged important partnerships to advance our innovation.

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 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, melanoma and pancreatic cancer in 2022.

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

Our approach to Immuno-oncology (“I-O”) emphasizes speed, innovation, and effective combination therapies to drive success.

We believe that combination therapies and a deep understanding of each patient’s cancer will significantly expand the patient population benefiting from I-O treatments.

We believe these integrated capabilities enable us to develop novel candidates on accelerated timelines compared to industry standards.

Through strategic partnerships, we leverage our scientific expertise and capabilities to advance innovation in the field.

Our I-O portfolio is driven by several platforms and programs, which we plan to utilize individually and in combination:

Multiple antibody discovery platforms, including proprietary display technologies, to identify future antibody candidates.

Antibody candidate programs, including our lead asset, botensilimab, an Fc-enhanced CTLA-4 antibody.

Our saponin-based vaccine adjuvant platform, primarily centered around our STIMULON cultured plant cell (“cpc”) QS-21 adjuvant (“STIMULON cpc QS-21”).

A pipeline of novel allogeneic invariant natural killer T cell (“iNKT”) therapies for treating cancer and other immune-mediated diseases, controlled by MiNK.

We regularly evaluate development, commercialization, and partnering strategies for each product candidate based on various factors, including pre-clinical and clinical trial results, competitive positioning, funding requirements, and available resources.

Our lead program, botensilimab (AGEN1181), is progressing through multiple clinical programs designed to support accelerated development as a monotherapy and in combination with balstilimab.

In 2022, we initiated global Phase 2 trials for botensilimab in

microsatellite stable colorectal cancer, melanoma, and pancreatic cancer.

We intend to file our first biologics license application for the botensilimab/balstilimab combination in colorectal cancer in 2024.

We have established collaborations with several companies, including Bristol-Myers Squibb Company (“BMS”), Betta Pharmaceuticals Co., Ltd.

(“Betta”), Gilead Sciences, Inc.

(“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 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.

Under the terms of our agreement, Merck is responsible for all future development expenses, and we are eligible to receive up to an additional $85.0 million in potential milestone payments plus royalties on any future sales.

In September 2018, we, through our wholly-owned subsidiary, Agenus Royalty Fund, LLC, entered into a royalty purchase agreement (the “XOMA Royalty Purchase Agreement”) with XOMA (US) LLC (“XOMA”).

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 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”).

Pursuant to the Gilead Collaboration Agreements, Gilead received worldwide exclusive rights to our bispecific antibody, AGEN1423, as well as the exclusive option to exclusively license AGEN1223, a bispecific antibody, and AGEN2373, a monospecific antibody.

All three assets have entered clinical development.

In November 2020, Gilead elected to return AGEN1423 to us and to voluntarily terminate the license agreement effective as of February 4, 2021.

In the third quarter of 2021, we ceased development of AGEN1223 and in October 2021 the AGEN1223 option and license agreement was formally terminated.

The AGEN2373 option agreement remains in place, and we are responsible for developing the program up to the option decision point, at which time Gilead may acquire exclusive rights to the program on option exercise.

We have the right to opt-in to share Gilead’s development and commercialization costs in the United States in exchange for a profit (loss) share on a 50:50 basis and revised milestone payments.

These collaborations, along with our internal programs, have resulted in over a dozen antibody programs currently in pre-clinical or clinical development.

Our collaboration agreement with Incyte grants Incyte exclusive licenses for monospecific antibodies targeting GITR, OX40, TIM-3, LAG-3, and an undisclosed target.

Incyte has been advancing these antibodies in clinical trials.

Incyte has notified us of their intent to terminate the OX40 program, effective October 2023, and both the GITR program and undisclosed program, effective May 2024.

Upon termination, the rights to the OX40, GITR, and undisclosed programs revert back to us.

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, along with royalties on future sales.

Under our collaboration and license agreement with Merck, we have exclusively licensed a monospecific antibody targeting ILT4 to them, which is currently being advanced in a Phase 2 clinical trial.

Merck is responsible for all future development expenses, and we are eligible to receive up to an additional $85.0 million in potential milestone payments, as well as royalties on future sales.

In September 2018, through our subsidiary Agenus Royalty Fund, LLC, we entered into a royalty purchase agreement (the “XOMA Royalty Purchase Agreement”) with XOMA (US) LLC ("XOMA").

Pursuant to the 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, after satisfying our obligations to a third party.

As of June 30, 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, after accounting for our obligations under the XOMA Royalty Purchase Agreement.

In December 2018, we entered into collaboration agreements with Gilead for the development and commercialization of up to five novel I-O therapies (the “Gilead Collaboration Agreements”).

Gilead received worldwide exclusive rights to our bispecific antibody, AGEN1423, and the exclusive option to license AGEN1223, a bispecific antibody, and AGEN2373, a monospecific antibody.

All three assets are currently in clinical development.

Gilead elected to return AGEN1423 to us in November 2020 and terminated the license agreement.

We ceased development of AGEN1223 in the third quarter of 2021, and the option and license agreement for AGEN1223 were formally terminated in October 2021.

The AGEN2373 option agreement remains in place, and we are responsible for developing the program until the option decision point.

If Gilead exercises the option, we may opt-in to share development and commercialization costs in the United States in exchange for a 50:50 profit (loss) share and revised milestone payments.

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 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 up to an additional $520.0 million in aggregate milestone payments, as well as royalties on 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”).

Under the terms of the Betta License Agreement, we received $15.0 million upfront and are eligible to receive up to $100.0 million in milestone payments plus royalties on any future sales in Greater China.

In May 2021, we entered into a License, Development and Commercialization Agreement (“BMS License Agreement”) with BMS to collaborate on the development and commercialization of our pre-clinical proprietary anti-TIGIT bispecific antibody program AGEN1777.

Under the BMS License Agreement, we granted BMS an exclusive worldwide license under certain of our intellectual property rights to develop, manufacture and commercialize AGEN1777 and its derivatives in all fields;

provided, we retained an option to access the licensed antibodies for use in clinical studies in combination with certain of our other pipeline assets subject to certain restrictions.

Pursuant to the BMS License Agreement, we received a non-refundable upfront cash payment of $200.0 million in July 2021 and are eligible to receive up to $1.36 billion in aggregate development, regulatory and commercial milestone payments plus tiered royalties.

In exchange, BMS is responsible for all of the development, regulatory approval, manufacturing and commercialization costs with respect to products containing AGEN1777.

We have the option, but not the obligation, to co-fund a minority of the global development costs of products containing AGEN1777 or its derivatives, in exchange for increased tiered royalties.

Finally, we also have the option to co-promote AGEN1777 in the U.S.

In October 2021, we announced that the first patient was dosed in the AGEN1777 Phase 1 clinical trial, triggering the achievement of a $20.0 million milestone.

In September 2021, we announced the launch of SaponiQx to spearhead innovation in novel adjuvant discovery and vaccine design, including in relation to our saponin-based adjuvants.

We also announced our partnership with Ginkgo Bioworks, Inc.

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.

These programs are in various stages, with the most advanced being GSK’s approved shingles vaccine, Shingrix, which was approved in the United States by the FDA in October 2017.

In May 2021, we entered into a License, Development, and Commercialization Agreement with BMS for our pre-clinical anti-TIGIT bispecific antibody program, AGEN1777.

BMS received an exclusive worldwide license to develop, manufacture, and commercialize AGEN1777 and its derivatives.

We retained an option to access the licensed antibodies for use in clinical studies in combination with certain pipeline assets.

We received a non-refundable upfront cash payment of $200.0 million and are eligible to receive up to $1.36 billion in development, regulatory, and commercial milestone payments, along with tiered royalties.

BMS is responsible for all associated costs, and we have the option to co-fund a minority of global development costs in exchange for increased tiered royalties.

We also have the option to co-promote AGEN1777 in the U.S.

In October 2021, we achieved a $20.0 million milestone upon the dosing of the first patient in the AGEN1777 Phase 1 clinical trial.

In September 2021, we launched SaponiQx to lead innovation in novel adjuvant discovery and vaccine design, focusing on our saponin-based adjuvants.

We are particularly dedicated to the development of the next-generation cultured plant cell QS-21.

To support this initiative, we partnered with Ginkgo Bioworks, Inc.

to develop SaponiQx’s saponin products from sustainably sourced raw materials.

Our goal is to meet the demands of the vaccine industry, especially for pandemic vaccines.

Our bark extract QS-21 adjuvant is partnered with GlaxoSmithKline (“GSK”) and plays a vital role in multiple GSK vaccine programs.

These programs are at various stages, including GSK’s approved shingles vaccine, SHINGRIX, which received FDA approval in the United States in October 2017.

In January 2018, we entered into a Royalty Purchase Agreement with Healthcare Royalty Partners III, L.P.

and certain of its affiliates (together, “HCR”), pursuant to which HCR purchased 100% of our worldwide rights to receive royalties from GSK on GSK’s sales of vaccines containing our QS-21 STIMULON adjuvant.

and its affiliates (“HCR”).

HCR purchased our worldwide rights to receive royalties from GSK on GSK’s sales of vaccines containing our QS-21 adjuvant.

We do not incur clinical development costs for products partnered with GSK.

We were also entitled to receive up to $40.35 million in milestone payments from HCR based on sales of GSK’s vaccines as follows:

(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 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.

Our product candidates require successful clinical trials and approvals from regulatory agencies, as well as acceptance in the marketplace.

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.

Under the agreement with HCR, we were entitled to receive milestone payments based on GSK’s vaccine sales.

These milestones include $15.1 million upon GSK reaching $2.0 billion in last-twelve-months net sales prior to 2024 (the “First HCR Milestone”) and $25.25 million upon GSK reaching $2.75 billion in last-twelve-months net sales 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, and we received the Second HCR Milestone after GSK’s net sales of SHINGRIX for the twelve months ended June 30, 2022, exceeded $2.75 billion.

Our strategy includes developing and commercializing product candidates through existing and new collaborations.

Agenus' subsidiary MiNK completed a successful Initial Public Offering in October 2021 and is publicly traded on Nasdaq under the symbol INKT.

MiNK is a clinical-stage precision oncology company developing unmodified and engineered invariant natural killer T cell therapies for cancer and other immune-mediated diseases.

Their lead product candidate, agenT-797, is an off-the-shelf, allogeneic, native iNKT cell therapy.

A Phase 1 clinical trial for the treatment of solid tumors as a monotherapy and in combination with approved checkpoint inhibitors (KEYTRUDA ® and OPDIVO ® ) has been initiated and enrolled, and data was presented in April at the American Association for Cancer Research Annual Meeting.

The presentation showcased the activity of agenT-797 alone and in combination with anti-PD-1, with a 42% tumor reduction in a patient with metastatic gastric cancer who had no response to prior anti-PD-1 therapy or standard chemotherapy.

Benefit was seen in additional solid tumor types, including durable disease stabilization and biomarker responses in NSCLC, testicular, and appendiceal cancers, that were refractory to anti-PD-1.

MiNK is also evaluating agenT-797 as a variant-agnostic therapy for patients with viral acute respiratory distress syndrome, and top-line data from a Phase 1 clinical trial demonstrated a 77% survival rate in older, mechanically ventilated patients with COVID-19 respiratory failure.

Through an assignment and license agreement with Agenus, MiNK owns the INKT technology and has the rights to develop a proprietary pipeline of engineered CAR-INKTs, TCRs, and INKT bispecific engagers.

Historical Results of Operations

Three months ended March 31, 2023 compared to the three months ended March 31, 2022

Three months ended June 30, 2023 compared to the three months ended June 30, 2022

Research and development revenue

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.

We recognized research and development revenue of approximately $2.5 million and $1.9 million during the three months ended June 30, 2023 and 2022, respectively.

Research and development revenues in the second quarter of 2023 primarily consisted of $2.0 million related to the recognition of deferred revenue earned under our Gilead Collaboration Agreements.

Research and development revenues in the second quarter of 2022 primarily consisted of $1.2 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

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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 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.

Non-cash royalty revenue related to our agreement with GSK increased $22.0 million, to approximately $22.1 million for the three months ended June 30, 2023, from $0.1 million for the three months ended June 30, 2022, mainly due to the achievement of the final sales milestone under the HCR agreement and the recognition of these royalties as royalty milestone revenue in the three months ended June 30, 2022.

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 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.

Research and development expense increased 32% to $59.3 million for the three months ended June 30, 2023 from $45.0 million for the three months ended June 30, 2022.

Increased expenses in the three months ended June 30, 2023 primarily relate to a $10.5 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 $2.1 million increase in personnel related expenses, primarily due to increased headcount, a $1.2 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 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.

General and administrative expenses increased 8% to $20.4 million for the three months ended June 30, 2023 from $18.9 million for the three months ended June 30, 2022.

Increased expenses in the three months ended June 30, 2023 primarily relate to a $2.0 million increase in personnel related expenses, largely due to increased headcount, and a $0.2 million increase in other general and administrative expenses.

These increases were partially offset $0.6 million decrease in expenses attributable to the activities of our subsidiaries.

Non-operating income (expense)

Non-operating expense increased $9.3 million for the three months ended June 30, 2023, from income of $9.1 million for the three months ended June 30, 2022 to expense of $0.2 million for the three months ended June 30, 2023, primarily due to de minimis activity in the three months ended June 30, 2023, compared 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 three months ended June 30, 2022.

Interest expense, net

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.

Interest expense, net increased to approximately $18.5 million for the three months ended June 30, 2023 from $13.7 million for the three months ended June 30, 2022, mainly due to increased non-cash interest recorded in connection with our Royalty Purchase Agreement with HCR and increased interest expense recorded in connection with our finance leases, partially offset by increased interest income earned on our cash equivalents and short-term investments.

Six months ended June 30, 2023 compared to the six months ended June 30, 2022

Research and development revenue

We recognized research and development revenue of approximately $5.1 million and $8.6 million during the six months ended June 30, 2023 and 2022, respectively.

Research and development revenues in the first half of 2023 primarily consisted of $4.4 million related to the recognition of deferred revenue earned under our Gilead Collaboration Agreements.

Research and development revenues in the first half of 2022 primarily consisted of a $5.0 million milestone and $2.6 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

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 record these royalties from GSK as revenue.

Non-cash royalty revenue related to our agreement with GSK increased $23.4 million, to approximately $41.2 million for the six months ended June 30, 2023, from $17.8 million for the six months ended June 30, 2022, due to increased net sales of GSK’s vaccines containing our QS-21 STIMULON adjuvant and the achievement of the final sales milestone under the HCR agreement and the recognition of these royalties as royalty milestone revenue in the six months ended June 30, 2022.

Research and development expense

Research and development expense increased 33% to $116.4 million for the six months ended June 30, 2023 from $87.4 million for the six months ended June 30, 2022.

Increased expenses in the six months ended June 30, 2023 primarily relate to a $21.8 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 $3.5 million increase in personnel related expenses, primarily due to increased headcount, a $2.6 million increase in expenses attributable to the activities of our subsidiaries and a $1.0 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 2% to $38.7 million for the six months ended June 30, 2023 from $37.9 million for the six months ended June 30, 2022.

Increased expenses in the six months ended June 30, 2023 primarily relate to a $2.0 million increase in personnel related expenses, largely due to increased headcount, and a $0.8 million increase in other general and administrative expenses.

These increases were partially offset by a $1.3 million decrease in professional fees, primarily due to reduced consulting and external legal costs, and a $0.7 million decrease in expenses attributable to the activities of our subsidiaries.

Non-operating income (expense)

Non-operating expense increased $9.3 million for the six months ended June 30, 2023, from income of $9.1 million for the six months ended June 30, 2022 to expense of $0.2 million for the six months ended June 30, 2023, primarily due to de minimis activity in the six months ended June 30, 2023, compared 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 six months ended June 30, 2022.

Interest expense, net

Interest expense, net increased to approximately $35.1 million for the six months ended June 30, 2023 from $28.9 million for the six months ended June 30, 2022, mainly due to increased non-cash interest recorded in connection with our Royalty Purchase Agreement with HCR and increased interest expense recorded in connection with our finance leases, partially offset by increased interest income earned on our cash equivalents and short-term investments.

Research and Development Programs

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,

For the six months ended June 30, 2023, our research and development programs consisted largely of our antibody programs as indicated in the following table (in thousands).

Six Months Ended June 30,

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 $1.8 billion as of March 31, 2023.

We have incurred annual operating losses since inception, and we had an accumulated deficit of $1.8 billion as of June 30, 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 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.

From our inception through June 30, 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.

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as our sales agent.

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 sold approximately 58.3 million and 13.2 million shares of our common stock pursuant to the Sales Agreement during the six months ended June 30, 2023 and the period of July 1, 2023 through August 4, 2023, respectively, for aggregate net proceeds totaling $123.1 million.

As of August 4, 2023, approximately 171.4 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 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 March 31, 2023, we had debt outstanding of $14.0 million in principal.

As of June 30, 2023, we had debt outstanding of $13.6 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.

Our cash, cash equivalents and short-term investments at June 30, 2023 were $157.9 million, a decrease of $35.5 million from December 31, 2022.

Cash and cash equivalents of our subsidiary, MiNK, at March 31, 2023, were $14.9 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.

Based on our current plans and projections, we believe our cash resources of $157.9 million as of June 30, 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.

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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 $600.0 million over the term of the related activities.

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.

Through June 30, 2023, we have expensed $500.9 million as research and development expenses and $480.6 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 operating activities for the three months ended March 31, 2023 and 2022 was $58.5 million and $52.4 million, respectively.

Net cash used in operating activities for the six months ended June 30, 2023 and 2022 was $118.6 million and $95.8 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.

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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