What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-05-07 compared with 2023-11-09 · 182 added, 482 removed, 307 unchanged (68% of the section changed)

3 unchanged sentences

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

September 30, 2023

March 31, 2024

December 31, 2023

Cash and cash equivalents

Short-term investments

Accounts receivable

3 unchanged sentences

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

$ 60,750 and $ 54,075 at September 30, 2023 and December 31, 2022, respectively

$ 65,080 and $ 61,943 at March 31, 2024 and December 31, 2023, respectively

Operating lease right-of-use assets

Acquired intangible assets, net of accumulated amortization of $ 17,799 and

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

$ 17,688 at March 31, 2024 and December 31, 2023, respectively

Other long-term assets

LIABILITIES AND STOCKHOLDERS’

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current portion, long-term debt

12 unchanged sentences

Commitments and contingencies

STOCKHOLDERS’

STOCKHOLDERS’ DEFICIT

Series A-1 convertible preferred stock;

31,620 shares designated, issued, and

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

outstanding at March 31, 2024 and December 31, 2023;

liquidation value

of $ 33,833 at September 30, 2023

of $ 33,940 at March 31, 2024

Common stock, par value $ 0.01 per share;

800,000,000 shares authorized;

381,381,803 and 305,573,397 shares issued at September 30, 2023

and December 31, 2022, respectively

20,994,143 and 19,718,662 shares issued and outstanding at

March 31, 2024 and December 31, 2023, respectively

Additional paid-in capital

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

Accumulated deficit

Total stockholders’

deficit attributable to Agenus Inc.

Total stockholders’ deficit attributable to Agenus Inc.

Non-controlling interest

Total stockholders’

Total liabilities and stockholders’

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

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

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Other income (expense):

Non-operating income

Non-operating income (expense)

Interest expense, net

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Basic and diluted

Other comprehensive loss:

Foreign currency translation loss

Other comprehensive loss

Other comprehensive income (loss):

Foreign currency translation income (loss)

Other comprehensive income (loss)

Comprehensive loss

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AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’

EQUITY (DEFICIT)

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(Amounts in thousands)

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Balance at December 31, 2023

Other comprehensive income

Share-based compensation

Shares sold at the market

Issuance of director deferred shares

Issuance of shares for services

Vesting of nonvested shares

Exercise of stock options and employee share purchases

Issuance of subsidiary shares for employee bonus

Issuance of shares for employee bonus

Retirement of treasury shares

Balance at March 31, 2023

Other comprehensive loss

1 unchanged sentence

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

Other comprehensive loss

Share-based compensation

Shares sold at the market

Payment of CEO payroll in shares

MiNK stock purchases

Issuance of shares for services

Vesting of nonvested shares

Employee share purchases

Balance at September 30, 2023

Exercise of stock options and employee share purchases

Balance at March 31, 2024

See accompanying notes to unaudited condensed consolidated financial statements.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’

EQUITY (DEFICIT)

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(Amounts in thousands)

5 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 .

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:

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Non-cash interest expense

Loss (gain) on sale of assets

Gain on partial forgiveness of liability

Change in fair value of contingent obligations

Loss disposal of assets, net

Changes in operating assets and liabilities:

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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

Sale of long-term investment

Purchases of available-for-sale securities

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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

Issuance of subsidiary options for payment of certain employee bonuses

Issuance of subsidiary shares for certain employee bonuses

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

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NOTES TO UNAUDITED CONDENSED CO NSOLIDATED FINANCIAL STATEMENTS

September 30, 2023

March 31, 2024

Note A – Business, Liquidity and Basis of Presentation

(including its subsidiaries, collectively referred to as “Agenus,”

the “Company,”

“we,”

“us,”

and “our”) is a leading clinical-stage biotechnology company developing therapies targeting cancer with a robust pipeline of immunological agents.

(including its subsidiaries, collectively referred to as “Agenus,” the “Company,” “we,” “us,” and “our”) is a leading clinical-stage biotechnology company developing therapies targeting cancer with a robust pipeline of immunological agents.

Our mission is to expand patient populations benefiting from cancer immunotherapy through combination approaches, using a broad repertoire of antibody therapeutics, adoptive cell therapies (through our subsidiary MiNK Therapeutics, Inc.

(“MiNK”)), and vaccine adjuvants (through our subsidiary SaponiQx, Inc.

(“SaponiQx”)).

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

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

(“MiNK”)), and vaccine adjuvants (through our subsidiary SaponiQx, Inc.

(“SaponiQx”)).

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

We believe these integrated capabilities enable us to develop and, if approved, commercialize novel candidates on accelerated timelines compared to industry standards.

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• 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.

At a corporate update at the European Society for Medical Oncology in October 2023, we presented updated data based on a total of 70 efficacy evaluable refractory microsatellite stable metastatic colorectal cancer patients with no active liver metastases from the Phase 1 study.

These patients received the combination of botensilimab (either 1 or 2 mg/kg every 6 weeks) and balstilimab (3 mg/kg every 2 weeks).

The results showed a survival and efficacy benefit compared to what has been reported for standard of care in a comparable patient population.

The 12-month overall survival (“OS”) was 74 % with a median OS not yet reached, after a median follow up of 12.3 months, compared to a median OS of 12.9 months reported for standard of care.

The confirmed overall response rate based on RECIST 1.1 was 24 % compared to 2.8 % reported with standard of care.

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

• Antibody candidate programs, including our lead assets, botensilimab (a multifunctional immune cell activator and human Fc-enhanced cytotoxic T-lymphocyte antigen 4 (CTLA-4) blocking antibody, also known as AGEN1811) and balstilimab (a programmed death receptor-1 (PD-1) blocking antibody).

• Our saponin-based vaccine adjuvant platform, primarily centered around our STIMULON cultured plant cell (“cpc”) QS-21 adjuvant (“STIMULON cpcQS-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 September 30, 2023 were $ 106.3 million, a decrease of $ 87.1 million from December 31, 2022 .

Cash and cash equivalents of our subsidiary, MiNK, at June 30, 2023, were $ 10.6 million.

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 and cash equivalents at March 31, 2024 were $ 52.9 million, a decrease of $ 23.3 million from December 31, 2023 .

Cash and cash equivalents of our subsidiary, MiNK, at December 31, 2023, were $ 3.4 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, 2023, we had an accumulated deficit of $ 1.9 billion.

We have financed our operations through income and revenues generated from corporate partnerships, advance royalty sales and proceeds from equity issuances.

Based on our current plans and projections, we believe that our cash resources of $ 106.3 million at September 30, 2023, plus additional funding we anticipate from the achievement of a milestone under an existing partnership, will be sufficient to satisfy our liquidity requirements for at least one year from when these financial statements were issued.

This milestone will be triggered upon dosing the first patient in a clinical trial which is currently screening patients and is expected to occur by end of 2023.

However, until this event occurs, in accordance with the relevant accounting guidance we are required to disclose that substantial doubt exists about our ability to continue as a going concern for a period of one year after the date of filing of this Quarterly Report on Form 10-Q.

In addition to the expected milestone payment by end of 2023, we are in active discussions to sell two non-strategic assets expected to close in the first half of 2024 with an estimated aggregate value of approximately $ 65.0 million.

These transactions could extend our cash resources well beyond 2024 .

We are also in advanced discussions for a potential structured financing for

botensilimab/balstilimab, as well as a potential corporate collaboration with a large pharma or biotech company.

None of these sources of cash involve equity or debt issuance.

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

In August 2023, we prioritized and focused our resources to accelerate the development, registration, and commercialization of our lead asset postponing all preclinical and other clinical programs and reducing our workforce by approximately 25 %.

As of March 31, 2024, we had an accumulated deficit of $ 2.0 billion and $ 13.0 million of subordinated notes maturing in February 2025 .

Since our founding we have financed our operations principally through income and revenues generated from corporate partnerships, advance royalty sales and proceeds from equity issuances.

Based on our current plans and projections, we believe that our cash resources of $ 52.9 million at March 31, 2024, plus the $75.0 million to be received from Ligand Pharmaceuticals and the exercise at their option of an additional $25.0 million under a Purchase and Sale Agreement (see Note P), plus additional funding we may receive from multiple other sources, including out-licensing and/or partnering opportunities, and the repayment of our subordinated notes, will be sufficient to satisfy our liquidity requirements through the end of the year and into 2025.

Potential partnership and collaboration transactions along with potential accelerated approval of our lead products, botensilimab and balstilimab, and potential commercial revenues from these products, can extend our runway and allow us to be cash flow positive from our operations.

We are also in discussions with several other parties to participate in the Purchase and Sale Agreement for up to an additional $125.0 million under the same structure as the Ligand transaction.

In addition, we are also in discussions with several potential corporate collaborators.

These transactions could also extend our cash resources.

However, because the completion of such transactions is not entirely within our control, in accordance with accounting guidance we are required to disclose that substantial doubt exists about our ability to continue as a going concern for a period of one year after the date of filing of this Quarterly Report on Form 10-Q.

The financial statements have been prepared on a basis that assumes Agenus will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

Management continues to address the Company’s liquidity needs and can exercise its flexibility to adjust spending as needed in order to preserve liquidity.

approximately 25 %.

Garo Armen has elected to receive his base salary and any potential bonus payments in stock rather than cash.

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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 sources of funding to include payments from current collaborations which include milestones and royalty payments from companies, including Bristol-Myers Squibb Company, UroGen Pharma Ltd., Gilead Sciences, Inc., Incyte Corporation, and Merck Sharpe & Dohme;

out-licensing and/or partnering opportunities for our portfolio programs and product candidates with multiple parties;

additional third-party agreements;

royalty monetization;

further royalty monetization;

project financing, and/or sales of equity securities .

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

generally accepted accounting principles (“U.S.

GAAP”) for interim financial information and with the instructions to Article 10 of Regulation S-X.

generally accepted accounting principles (“U.S.

GAAP”) for interim financial information and with the instructions to Article 10 of Regulation S-X.

Accordingly, they do not include all of the information and footnotes required by 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, 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”).

Operating results for the three months ended March 31, 2024, are not necessarily indicative of the results that may be expected for the year ending December 31, 2024.

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, 2023 filed with the Securities and Exchange Commission (“SEC”).

The preparation of consolidated financial statements in conformity with U.S.

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dollars using average exchange rates during the period.

The cumulative translation adjustment resulting from changes in exchange rates are included in the consolidated balance sheets as a component of accumulated other comprehensive income in total stockholders’

equity (deficit).

In 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.

On April 4, 2024, we executed a reverse stock split of our issued and outstanding common stock, par value $ 0.01 , at a ratio of 1-for-20 with a record date of April 12, 2024 (the “Reverse Stock Split”).

All common share, per share and related information included in the accompanying financial statements and footnote disclosures have been adjusted retroactively, where applicable, to reflect the Reverse Stock Split.

See Note P for further details.

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

Three and Nine Months Ended September 30,

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, 2024 and 2023, as they would be anti-dilutive (in thousands):

Three Months Ended March 31,

Stock options

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Note C – Investments

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

September 30, 2023

Cash equivalents and short-term investments consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):

March 31, 2024

December 31, 2023

Institutional money market funds

Treasury Bills

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

Of the investments listed above, all were classified as cash equivalents on our condensed consolidated balance sheets as of September 30, 2023.

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

As a result of the short-term nature of these investments, there were minimal unrealized holding gains or losses for the three months ended March 31, 2024 and 2023.

As of both March 31, 2024 and December 31, 2023, all of the investments listed above were classified as cash equivalents on our condensed consolidated balance sheets.

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, 2023 (in thousands):

The following table sets forth the changes in the carrying amount of goodwill for the three months ended March 31, 2024 (in thousands):

Balance, December 31, 2023

Foreign currency translation adjustment

Balance, September 30, 2023

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

As of September 30, 2023

Effect of foreign currency

Balance, March 31, 2024

Acquired intangible assets consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):

As of March 31, 2024

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 $ 0.1 million for the remainder of 2023, $ 0.5 million for the years ending December 31, 2024, 2025 and 2026 and $ 0.4 million for the year ending December 31, 2027.

Amortization expense related to acquired intangibles is estimated at $ 0.4 million for the remainder of 2024, $ 0.5 million for the years ending December 31, 2025 and 2026, $ 0.4 million for the year ending December 31, 2027 and $ 0.3 million for the year ending December 31, 2028.

Note E – Debt

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

Debt obligations consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):

Debt instrument

September 30,

Current Portion:

Long-term Portion:

2015 Subordinated Notes

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2015 Subordinated Notes

As of September 30, 2023 and December 31, 2022, the principal amount of our outstanding debt balance was $ 13.4 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, 2023 (in thousands):

As of March 31, 2024 and December 31, 2023, the principal amount of our outstanding debt balance was $ 13.8 million and $ 13.1 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 three months ended March 31, 2024 (in thousands):

December 31, 2023 to

September 30, 2023

March 31, 2024

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

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Healthcare Royalty Partners

In January 2018, we, through our wholly-owned subsidiary Antigenics, LLC (“Antigenics”), entered into a Royalty Purchase Agreement (the “HCR Royalty Purchase Agreement”) with Healthcare Royalty Partners III, L.P.

and certain of its affiliates (collectively, “HCR”).

Pursuant to the terms of the HCR Royalty Purchase Agreement, we sold to HCR 100 % of Antigenics’

worldwide rights to receive royalties from GlaxoSmithKline (“GSK”) on sales of GSK’s vaccines containing our QS-21 STIMULON adjuvant.

and certain of its affiliates (collectively, “HCR”).

Pursuant to the terms of the HCR Royalty Purchase Agreement, we sold to HCR 100 % of Antigenics’ worldwide rights to receive royalties from GlaxoSmithKline (“GSK”) on sales of GSK’s vaccines containing our STIMULON QS-21 adjuvant.

At closing, we received gross proceeds of $ 190.0 million from HCR.

Although we sold all of our rights to receive royalties on sales of GSK’s vaccines containing QS-21, as a result of our obligation to HCR, we are required to account for the $ 190.0 million in proceeds from this transaction as a liability on our condensed consolidated balance sheet that will be recognized into revenue in proportion to the royalty payments from GSK to HCR over the estimated life of the HCR Royalty Purchase Agreement.

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 nine months ended September 30, 2023 , we recognized $ 61.5 million of non-cash royalty revenue, and we recorded $ 55.8 million of related non-cash interest expense related to the HCR Royalty Purchase Agreement.

During the three months ended March 31, 2024 , we recognized $ 27.8 million of non-cash royalty revenue, and we recorded $ 29.5 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.

To determine the amortization of the recorded liability, we are required to estimate the total amount of future royalty payments to be received by HCR.

To determine the amortization of the recorded liability, we are required to estimate the total

amount of future royalty payments to be received by HCR.

The sum of these amounts less the $ 190.0 million proceeds we received will be recorded as interest expense over the life of the HCR Royalty Purchase Agreement.

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, 2023 , our estimate of the effective annual interest rate over the life of the agreement increased to 29.4 %, which results in a life of contract interest rate of 23.4 %.

During the three months ended March 31, 2024 , our estimate of the effective annual interest rate over the life of the agreement decreased to 48.0 %, which results in a life of contract interest rate of 26.5 %.

Note G – Accrued and Other Current Liabilities

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

September 30, 2023

Accrued liabilities consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):

March 31, 2024

December 31, 2023

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Research services

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

September 30, 2023

Other current liabilities consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):

March 31, 2024

December 31, 2023

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

September 30, 2023

March 31, 2024

Quoted Prices in

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Cash equivalents (Note C)

Short-term investments (Note C)

Long-term investments

Contingent purchase price consideration

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We measure our contingent purchase price considerations at fair value.

The fair values of our contingent purchase price considerations at September 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 fair values of our contingent purchase price considerations at both March 31, 2024 and December 31, 2023, of $ 0.3 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 fair value of our outstanding debt balance at September 30, 2023 and December 31, 2022 was $ 13.1 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 September 30, 2023 and December 31, 2022 was $ 13.4 million and $ 13.6 million, respectively.

The fair value of our outstanding debt balance at March 31, 2024 and December 31, 2023 was $ 13.6 million and $ 13.0 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, 2024 and December 31, 2023 was $ 13.8 million and $ 13.1 million, respectively.

Note I – Revenue from Contracts with Customers

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On December 20, 2018, we entered into a series of agreements with Gilead Sciences, Inc.

(“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.

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

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 September 30, 2023 and 2022, we recognized approximately $ 2.9 million and $ 4.5 million, respectively, of research and development revenue based on the partial satisfaction of the over time performance obligations as of quarter end.

For the nine months ended September 30, 2023, we recognized approximately $ 7.2 million of research and development revenue based on the partial satisfaction of the over time performance obligations as of period end.

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 end.

We expect to recognize deferred research and development revenue of $ 5.0 million for the remainder of 2023 related to performance obligations that are unsatisfied or partially unsatisfied as of September 30, 2023.

No revenue was recognized for the three months ended March 31, 2024.

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.

Disaggregation of Revenue

The following table presents revenue (in thousands) for the three and nine months ended September 30, 2023 and 2022, disaggregated by geographic region and revenue type.

The following table presents revenue (in thousands) for the three months ended March 31, 2024 and 2023, 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, 2023

United States

Rest of World

Research and development services

Other services

Clinical product revenue

Recognition of deferred revenue

Non-cash royalties

Three months ended September 30, 2022

Royalty sales milestone

Research and development services

Other services

Recognition of deferred revenue

Non-cash royalties

Nine months ended September 30, 2023

Three months ended March 31, 2024

United States

Rest of World

Research and development services

Other services

Clinical product revenue

Recognition of deferred revenue

Non-cash royalties

Nine months ended September 30, 2022

License fees and milestones

Royalty sales milestone

Three months ended March 31, 2023

Research and development services

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

Nine months ended September 30, 2023

Three months ended March 31, 2024

Balance at beginning of period

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Deferred revenue

The change in contract liabilities is primarily related to the recognition of $ 7.2 million of revenue related to the Gilead Collaboration Agreements during the nine months ended September 30, 2023 .

Deferred revenue related to the Gilead Collaboration Agreements of $ 5.0 million as of September 30, 2023 , which was comprised of the $ 142.5 million initial transaction price, less $ 137.5 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 $ 1.0 million receivable as of September 30, 2023, for research and development and other services provided.

During the nine months ended September 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.

We also recorded a $ 0.5 million receivable as of March 31, 2024, for research and development and other services provided.

During the three months ended March 31, 2024 , 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.

3 unchanged sentences

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, 2023 is presented below:

A summary of option activity for the three months ended March 31, 2024 is presented below:

Outstanding at December 31, 2023

Outstanding at September 30, 2023

Vested or expected to vest at September 30, 2023

Exercisable at September 30, 2023

The weighted average grant-date fair values of stock options granted during the nine months ended September 30, 2023 and 2022 were $ 1.44 and $ 1.77 , respectively.

As of September 30, 2023 , there was approximately $ 27.3 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 1.9 years.

Outstanding at March 31, 2024

Vested or expected to vest at March 31, 2024

Exercisable at March 31, 2024

The weighted average grant-date fair values of stock options granted during the three months ended March 31, 2024 and 2023 were $ 8.82 and $ 30.60 , respectively.

As of March 31, 2024 , there was approximately $ 18.6 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 1.7 years.

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

1 unchanged sentence

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, 2023 is presented below:

A summary of non-vested stock activity for the three months ended March 31, 2024 is presented below:

Outstanding at December 31, 2023

Outstanding at September 30, 2023

As of September 30, 2023 , there was approximately $ 1.1 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 2.3 years.

During the nine months ended September 30, 2023 , 449,391 shares were issued under the 2019 Employee Stock Purchase Plan, 46,750 shares were issued as a result of stock option exercises and 84,414 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 and nine months ended September 30, 2023 and 2022, was as follows (in thousands):

Three Months Ended September 30,

Nine Months Ended September 30,

Outstanding at March 31, 2024

As of March 31, 2024 , there was approximately $ 1.3 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 3.5 years.

During the three months ended March 31, 2024 , 11,816 shares were issued under the 2019 Employee Stock Purchase Plan and 7,989 shares were issued as a result of the vesting of non-vested stock.

The impact on our results of operations from share-based compensation for the three months ended March 31, 2024 and 2023, was as follows (in thousands):

Three Months Ended March 31,

Research and development

1 unchanged sentence

Total share-based compensation expense

Note K –

Restricted Cash

As of September 30, 2023, and December 31, 2022 , we maintained non-current restricted cash of $ 3.7 million and $ 2.7 million, respectively.

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

in our condensed consolidated balance sheets and is comprised of letters of credit required under our facility leases.

Note K – Restricted Cash

As of both March 31, 2024, and December 31, 2023 , we maintained non-current restricted cash of $ 3.7 million.

This amount is included within “Other long-term assets” in our condensed consolidated balance sheets and is comprised of deposits under letters of credit required under our facility leases.

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, 2023

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2024

Three Months Ended March 31, 2023

Beginning of Period

5 unchanged sentences

Cash, cash equivalents and restricted cash

Note L –

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.

Note L – Equity

On March 14, 2024, we filed a Post-effective Amendment to an Automatic Shelf Registration Statement on Form POSASR (file no.

333-272911) and a Post-Effective Amendments for Registration Statement on Form POS AM (file no.

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

The Registration Statement included both a base prospectus that covered the potential offering, issuance and sale from time to time of up to $ 300.0 million 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 6,725,642 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.

Riley Securities, Inc.

(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 additional Placement Shares pursuant to the Sales Agreement.

During the three and nine months ended September 30, 2023 , we received net proceeds of approximately $ 20.4 million and $ 123.2 million from the sale of approximately 13.3 million and 71.6 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 September 30, 2023 and December 31, 2022, relates to the following approximate interests in certain consolidated subsidiaries, which we do not own.

September 30, 2023

(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 additional Placement Shares pursuant to the Sales Agreement.

During the three months ended March 31, 2024 , we received net proceeds of approximately $ 17.2 million from the sale of approximately 1.2 million shares of our common stock 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 March 31, 2024 and December 31, 2023, relates to the following approximate interests in certain consolidated subsidiaries, which we do not own.

March 31, 2024

December 31, 2023

1 unchanged sentence

SaponiQx, Inc.

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

September 30, 2023

Changes in non-controlling interest for the periods ended March 31, 2024 and December 31, 2023, were as follows (in thousands):

March 31, 2024

December 31, 2023

4 unchanged sentences

Issuance of subsidiary shares for employee bonus

Issuance of subsidiary shares under employee stock purchase plan

Issuance of subsidiary shares for employee stock purchase plan and exercise of options

Subsidiary share-based compensation

7 unchanged sentences

Purchase of subsidiary shares

During the nine months ended September 30, 2023, we purchased 408,518 shares of MiNK common stock in multiple open market transactions.

Note N –

Related Party Transactions

During the year ended December 31, 2023, we purchased 446,494 shares of MiNK common stock in multiple open market transactions.

Note N – Related Party Transactions

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 nine months ended September 30, 2023, approximately $ 450,000 related to these services is included in “Research and development”

expense in our condensed consolidated statements of operations.

During the nine months ended September 30, 2023, our Audit and Finance Committee approved, and we performed research and development manufacturing services totaling $ 256,000 for Protagenic Therapeutics, Inc ("Protagenic").

We will be reimbursed for these services on an actual time and materials basis.

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

No expenses were incurred in the three months ended March 31, 2024.

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 O – Recent Accounting Pronouncements

Recently Issued and Adopted

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.

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

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 nine months ended September 30, 2023 had or is expected to have a material impact on our consolidated financial statements or disclosures.

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

Forward Looking Statements

This Quarterly Report on Form 10-Q and other written and oral statements we make from time to time contain certain “forward-looking”

statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”).

You can identify these forward-looking statements by the fact they use words such as “could,”

“expect,”

“anticipate,”

“estimate,”

“target,”

“may,”

“project,”

“guidance,”

“intend,”

“plan,”

“believe,”

“will,”

“potential,”

“opportunity,”

“future”

and other words and terms of similar meaning and expression in connection with any discussion of future operating or financial performance.

You can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts.

Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes to differ materially from current expectations.

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.

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 and in Part II-Item 1A within this Form 10-Q.

We encourage you to read those descriptions carefully.

Although we believe we have been prudent in our plans and assumptions, no assurance can be given that any goal or plan set forth in forward-looking statements can be achieved.

We caution investors not to place significant reliance on forward-looking statements contained in this document;

such statements need to be evaluated in light of all the information contained in this document.

Furthermore, the statements speak only as of the date of this document, and we undertake no obligation to update or revise these statements.

ASV ® , Agenus, MiNK, Prophage, Retrocyte Display and STIMULON are trademarks of Agenus Inc.

and its subsidiaries.

We are a leading clinical-stage biotechnology company developing therapies targeting cancer with a robust pipeline of immunological agents.

(“MiNK”)), and vaccine adjuvants (through our subsidiary SaponiQx, Inc.

(“SaponiQx”)).

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

We believe these integrated capabilities enable us to develop and, if approved, commercialize novel candidates on accelerated timelines compared to industry standards.

Through independent development and strategic partnerships, we leverage our scientific expertise and capabilities to drive innovation in the I-O 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.

These patients received the combination of botensilimab (either 1 or 2 mg/kg every 6 weeks) and balstilimab (3 mg/kg every 2 weeks).

The results showed a survival and efficacy benefit compared to what has been reported for standard of care in a comparable patient population.

The 12-month overall survival (“OS”) was 74% with a median OS not yet reached, after a median follow up of 12.3 months, compared to a median OS of 12.9 months reported for standard of care.

The confirmed overall response rate based on RECIST 1.1 was 24% compared to 2.8% reported with standard of care.

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.

In October 2023, we completed enrollment of the Phase 2 microsatellite stable colorectal cancer trial.

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.

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

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

(“Betta”), UroGen Pharma Ltd.

("UroGen"), Gilead Sciences, Inc.

(“Gilead”), Incyte Corporation (“Incyte”), and Merck Sharpe & Dohme (“Merck”).

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 terminated the OX40 program, effective October 2023, and has notified us of their intent to terminate 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 September 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 up to an additional $520.0 million in aggregate milestone payments, as well as royalties on future sales.

In November 2019, we entered into a license agreement with UroGen, granting them an exclusive, worldwide license (not including Argentina, Brazil, Chile, Colombia, Peru, Venezuela and their respective territories and possessions) to develop, manufacture, and commercialize zalifrelimab for the treatment of cancers of the urinary tract via intravesical delivery.

We received an upfront payment of $10.0 million and are eligible to receive up to $200.0 million in 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 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 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.

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 an 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 INKT 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 September 30, 2023 compared to the three months ended September 30, 2022

Research and development revenue

We recognized research and development revenue of approximately $3.4 million and $4.6 million during the three months ended September 30, 2023 and 2022, respectively.

Research and development revenues in the third quarter of 2023 primarily consisted of $2.9 million related to the recognition of deferred revenue earned under our Gilead Collaboration Agreements.

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.

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 $11.1 million, to approximately $20.4 million for the three months ended September 30, 2023, from $9.2 million for the three months ended September 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 $7.9 million of these royalties as royalty milestone revenue in the three months ended September 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 12% to $51.4 million for the three months ended September 30, 2023 from $46.0 million for the three months ended September 30, 2022.

Increased expenses in the three months ended September 30, 2023 primarily relate to a $5.8 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 $1.7 million increase in personnel related expenses, and a $1.4 million increase in other research and development expenses.

These increases were partially offset by a $3.5 million decrease in expenses attributable to the activities of our subsidiaries.

General and administrative expense

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

General and administrative expenses increased 4% to $18.9 million for the three months ended September 30, 2023 from $18.1 million for the three months ended September 30, 2022.

Increased expenses in the three months ended September 30, 2023 primarily relate to a $1.8 million increase in personnel related expenses, and a $0.4 million increase in other general and administrative expenses.

These increases were partially offset by a $0.8 million decrease in professional fees and a $0.7 million decrease in expenses attributable to the activities of our subsidiaries.

Interest expense, net

Interest expense, net increased to approximately $18.6 million for the three months ended September 30, 2023 from $15.6 million for the three months ended September 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.

Nine months ended September 30, 2023 compared to the nine months ended September 30, 2022

Research and development revenue

We recognized research and development revenue of approximately $8.5 million and $13.2 million during the nine months ended September 30, 2023 and 2022, respectively.

Research and development revenues in the first nine months of 2023 primarily consisted of $7.2 million related to the recognition of deferred revenue earned under our Gilead Collaboration Agreements.

Research and development revenues in the first nine months of 2022 primarily consisted of a $5.0 million milestone and $7.1 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 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 $34.5 million, to approximately $61.5 million for the nine months ended September 30, 2023, from $27.0 million for the nine months ended September 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 approximately $25.3 million of these royalties as royalty milestone revenue in the nine months ended September 30, 2022.

Research and development expense

Research and development expense increased 26% to $167.8 million for the nine months ended September 30, 2023 from $133.4 million for the nine months ended September 30, 2022.

Increased expenses in the nine months ended September 30, 2023 primarily relate to a $27.6

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 $5.3 million increase in personnel related expenses, primarily due to increased headcount, and a $2.4 million increase in other research and development expenses.

These increases were partially offset by a $0.9 million decrease in expenses attributable to the activities of our subsidiaries.

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 $57.6 million for the nine months ended September 30, 2023 from $56.0 million for the nine months ended September 30, 2022.

Increased expenses in the nine months ended September 30, 2023 primarily relate to a $3.8 million increase in personnel related expenses, largely due to increased headcount, and a $1.2 million increase in other general and administrative expenses.

These increases were partially offset by a $2.0 million decrease in professional fees, primarily due to reduced consulting and external legal costs, and a $1.5 million decrease in expenses attributable to the activities of our subsidiaries.

Non-operating income (expense)

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

Non-operating income decreased $9.4 million for the nine months ended September 30, 2023, from income of $9.7 million for the nine months ended September 30, 2022 to income of $0.2 million for the nine months ended September 30, 2023, primarily due to de minimis activity in the nine months ended September 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 nine months ended September 30, 2022.

Interest expense, net

Interest expense, net increased to approximately $53.7 million for the nine months ended September 30, 2023 from $44.5 million for the nine months ended September 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 nine months ended September 30, 2023, our research and development programs consisted largely of our antibody programs as indicated in the following table (in thousands).

Nine Months Ended September 30,

Year Ended December 31,

Development Program

Antibody programs

Vaccine adjuvant

STIMULON cpc QS-21

Cell therapies

Other research and development programs

Total research and development expenses

Research and development program costs include compensation and other direct costs plus an allocation of indirect costs, based on certain assumptions and our review of the status of each program.

Our product candidates are in various stages of development and significant additional expenditures will be required if we start new clinical trials, encounter delays in our programs, apply for regulatory approvals, continue development of our technologies, expand our operations, and/or bring our product candidates to market.

The total cost of any particular clinical trial is dependent on a number of factors such as trial design, length of the trial, number of clinical sites, number of patients, and trial sponsorship.

The process of obtaining and maintaining regulatory approvals for new therapeutic products is lengthy, expensive, and uncertain.

Because of the current stage of our product candidates, among other factors, we are unable to reliably estimate the cost of completing our research and development programs or the timing for bringing such programs to various markets or substantial partnering or out-licensing arrangements, and, therefore, when, if ever, material cash inflows are likely to commence.

Liquidity and Capital Resources

We have incurred annual operating losses since inception, and we had an accumulated deficit of $1.9 billion as of September 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 September 30, 2023, we have raised aggregate net proceeds of approximately $1.9 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 184.6 million shares of our common stock from time to time in “at-the-market offerings”

pursuant to an At Market Issuance Sales Agreement (the “Sales Agreement”) with B.

Riley Securities, Inc.

as our sales agent.

We sold approximately 71.6 million shares of our common stock pursuant to the Sales Agreement during the nine months ended September 30, 2023, for aggregate net proceeds totaling $123.2 million.

As of September 30, 2023, approximately 171.3 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, 2023, we had debt outstanding of $13.4 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 September 30, 2023 were $106.3 million, a decrease of $87.1 million from December 31, 2022.

Cash and cash equivalents of our subsidiary, MiNK, at June 30, 2023, were $10.6 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 that our cash resources of $106.3 million as of September 30, 2023, plus additional funding we anticipate from the achievement of a milestone under an existing partnership, will be sufficient to satisfy our liquidity requirements for at least one year from when these financial statements were issued.

This milestone will be triggered upon dosing the first patient in a clinical trial which is currently screening patients and is expected to occur by end of 2023.

These transactions could extend our cash resources well beyond 2024.

We are also in advanced discussions for a potential structured financing for botensilimab/balstilimab, as well as a potential corporate collaboration with a large pharma or biotech company.

None of these sources of cash involve equity or debt issuance.

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

Garo Armen has elected to receive his base salary and any potential bonus payments in stock rather than cash.

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 sources of funding to include payments from current collaborations which include milestones and royalty payments from companies, including BMS, UroGen, Gilead, Incyte, and Merck;

out-licensing and/or partnering opportunities for our portfolio programs and product candidates with multiple parties;

additional third-party agreements;

royalty monetization;

project financing, and/or sales of equity securities.

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

Since inception, we have entered into various agreements with contract manufacturers, institutions, and clinical research organizations (collectively “third party providers”) to perform pre-clinical activities and to conduct and monitor our clinical studies and trials.

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 $601.3 million over the term of the related activities.

Through September 30, 2023, we have expensed $519.8 million as research and development expenses and $500.7 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.

We plan to enter into additional agreements with third party providers and we anticipate significant additional expenditures will be required to initiate and advance our various programs.

Part of our strategy is to develop and commercialize some of our product candidates by continuing our existing collaboration arrangements with academic and collaboration partners and licensees and by entering into new collaborations.

As a result of our collaboration agreements, we will not completely control the efforts to attempt to bring those product candidates to market.

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 nine months ended September 30, 2023 and 2022 was $183.8 million and $128.0 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 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.

Recently Issued, Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

ASU 2023-07 requires incremental annual and quarterly disclosures about segment measures of profit or loss as well as significant segment expenditures.

It also requires public entities with a single reportable segment to provide all segment disclosures required by the amendments and all existing segment disclosures in Topic 280.

ASU 2023-07 is

effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

As we have a single reportable segment, we expect the adoption of this standard to result in increased disclosures in the notes to our consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

ASU 2023-09 requires incremental annual disclosures around income tax rate reconciliations, income taxes paid and other related disclosures.

For public business entities, ASU 2023-09 is effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted for any annual periods for which financial statements have not been issued or made available for issuance.

We are currently evaluating the impact that ASU 2023-09 will have on the notes to our consolidated financial statements.

No other new accounting pronouncement issued or effective during the three months ended March 31, 2024 had or is expected to have a material impact on our consolidated financial statements or disclosures.

Note P – Subsequent Events

Reverse Stock Split

On April 3, 2024, our stockholders approved a proposal to amend our Amended and Restated Certificate of Incorporation, as amended (the “Certificate of Incorporation”), to effect a reverse stock split of our issued and outstanding common stock at a ratio of 1-for-20 (the “Reverse Stock Split”).

On April 4, 2024, we filed a Certificate of Eighth Amendment (the “Certificate of Amendment”) to our Certificate of Incorporation with the Secretary of State of the State of Delaware to effect the Reverse Stock Split.

Pursuant to the Certificate of Amendment, the Reverse Stock Split became effective at 12:01 a.m., Eastern Time, on April 12, 2024.

As of the opening of trading on April 12, 2024, our common stock began trading on a post-split basis under CUSIP number 00847G 804.

Purchase Agreement

On May 6, 2024, we, and certain wholly-owned subsidiaries, entered into a Purchase and Sale Agreement (the “Purchase Agreement”) with Ligand Pharmaceuticals Incorporated (“Ligand”) for the sale to Ligand of (i) 31.875 % of the development, regulatory and commercial milestone payments we are eligible to receive under our agreements with Bristol-Myers Squibb Company, UroGen Pharma Ltd., Gilead Sciences, Inc., Merck Sharpe & Dohme and Incyte Corporation, (the “Covered License Agreements”) (ii) 18.75 % of the royalties the Company receives under the Covered License Agreements;

and (iii) a 2.625 % synthetic royalty on worldwide net sales of botensilimab and balstilimab (collectively the “Purchased Assets”).

The total amounts payable to Ligand are subject to a 50 % reduction in the event total payments to Ligand exceed a specified return hurdle.

The synthetic royalty is subject to a reduction if annual worldwide net sales exceed a specified level, and a cap on annual worldwide net sales if annual worldwide net sales exceed a higher specified level.

The synthetic royalty can increase by 1 % based on the occurrence of certain future events.

In consideration for the sale of the Purchased Assets, we will receive $ 75.0 million, less certain reimbursable expenses, on the closing date.

The Purchase Agreement permits additional sales of the Purchased Assets to third parties on substantially similar terms on a pro rata basis, up to a maximum of $ 200.0 million.

In addition, Ligand has a time-based option to invest an additional $ 25.0 million on a pro rata basis.

The Purchase Agreement contains customary representations, warranties and agreements by us and Ligand, indemnification obligations of the parties and certain other obligations of the parties.

As part of the transaction, we will grant Ligand security over certain assets related to the Purchased Assets pursuant to security agreements, subject to certain customary exceptions.

Closing of the transaction is subject to customary conditions, including execution of customary ancillary documents for a transaction of this type.

The transaction is expected to close in May 2024.

In connection with the sale of the Purchased Assets, we issued to Ligand a warrant (“Warrant”) to purchase 867,052 shares of our common stock, at an exercise price equal to $ 17.30 .

The exercise price of the Warrant and the number of shares issuable upon exercise of the Warrant are subject to adjustments for stock splits, combinations, stock dividends or similar events.

The Warrant is exercisable until May 6, 2029 .

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