AGENUS INC 10-Q

Item 1. Financial Statements AGENUS INC. AND SUBSIDIARIES CONDENSED CONSOLIDA TED BALANCE SHEETS (Amounts in thousands, except share and per share amounts) March 31, 2024 (unaudited) December 31, 2023 ASSETS Cash and cash equivalents $ 52,856 $ 76,110 Accounts receivable 476 25,836 Prepaid expenses 3,895 8,098 Other current assets 3,125 2,372 Total current assets 60,352 112,416 Property, plant and equipment, net of accumulated amortization and depreciation of $ 65,080 and $ 61,943 at March 31, 2024 and December 31, 2023, respectively 130,330 133,421 Operating lease right-of-use assets 29,340 29,606 Goodwill 24,698 24,723 Acquired intangible assets, net of accumulated amortization of $ 17,799 and $ 17,688 at March 31, 2024 and December 31, 2023, respectively 4,230 4,411 Other long-term assets 7,609 9,336 Total assets $ 256,559 $ 313,913 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current portion, long-term debt $ 13,575 $ 146 Current portion, liability related to sale of future royalties and milestones 133,588 132,502 Current portion, deferred revenue 13 18 Current portion, operating lease liabilities 2,811 2,587 Accounts payable 50,693 61,446 Accrued liabilities 41,291 45,283 Other current liabilities 14,031 13,915 Total current liabilities 256,002 255,897 Long-term debt, net of current portion — 12,768 Liability related to sale of future royalties and milestones, net of current portion 125,249 124,556 Deferred revenue, net of current portion 1,143 1,143 Operating lease liabilities, net of current portion 61,756 62,511 Other long-term liabilities 2,732 5,420 Commitments and contingencies STOCKHOLDERS’ DEFICIT Series A-1 convertible preferred stock; 31,620 shares designated, issued, and outstanding at March 31, 2024 and December 31, 2023; liquidation value of $ 33,940 at March 31, 2024 0 0 Common stock, par value $ 0.01 per share; 800,000,000 shares authorized; 20,994,143 and 19,718,662 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively 210 197 Additional paid-in capital 1,816,985 1,796,095 Accumulated other comprehensive loss ( 1,071 ) ( 955 ) Accumulated deficit ( 2,017,554 ) ( 1,955,668 ) Total stockholders’ deficit attributable to Agenus Inc. ( 201,430 ) ( 160,331 ) Non-controlling interest 11,107 11,949 Total stockholders’ deficit ( 190,323 ) ( 148,382 ) Total liabilities and stockholders’ deficit $ 256,559 $ 313,913 See accompanying notes to unaudited condensed consolidated financial statements. 2 AGENUS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS O F OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) (Amounts in thousands, except per share amounts) Three Months Ended March 31, 2024 2023 Revenue: Research and development $ — $ 2,612 Service revenue 238 1,184 Non-cash royalty revenue related to the sale of future royalties 27,767 19,106 Total revenues 28,005 22,902 Operating expenses: Cost of service revenue ( 107 ) ( 2,294 ) Research and development ( 43,925 ) ( 57,118 ) General and administrative ( 16,855 ) ( 18,237 ) Contingent purchase price consideration fair value adjustment — 406 Operating loss ( 32,882 ) ( 54,341 ) Other income (expense): Non-operating income (expense) ( 1,106 ) 40 Interest expense, net ( 29,466 ) ( 16,592 ) Net loss ( 63,454 ) ( 70,893 ) Dividends on Series A-1 convertible preferred stock ( 54 ) ( 53 ) Less: net loss attributable to non-controlling interest ( 1,568 ) ( 2,639 ) Net loss attributable to Agenus Inc. common stockholders $ ( 61,940 ) $ ( 68,307 ) Per common share data: Basic and diluted net loss attributable to Agenus Inc. common stockholders $ ( 3.04 ) $ ( 4.31 ) Weighted average number of Agenus Inc. common shares outstanding: Basic and diluted 20,368 15,855 Other comprehensive income (loss): Foreign currency translation income (loss) $ ( 116 ) $ 2 Other comprehensive income (loss) ( 116 ) 2 Comprehensive loss $ ( 62,056 ) $ ( 68,305 ) See accompanying notes to unaudited condensed consolidated financial statements. 3 AGENUS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT (Unaudited) (Amounts in thousands) Series A-1 Convertible Preferred Stock Common Stock Treasury Stock Number of Shares Par Value Number of Shares Par Value Additional Paid-In Capital Number of Shares Amount Accumulated Other Comprehensive Income (Loss) Non-controlling Interest Accumulated Deficit Total Balance at December 31, 2023 32 $ 0 19,718 $ 197 $ 1,796,095 — $ — $ ( 955 ) $ 11,949 $ ( 1,955,668 ) ( 148,382 ) Net loss — — — — — — — — ( 1,568 ) ( 61,886 ) ( 63,454 ) Other comprehensive loss — — — — — — — ( 116 ) — — ( 116 ) Share-based compensation — — — — 3,477 — — — 719 — 4,196 Shares sold at the market — — 1,249 13 17,158 — — — — — 17,171 Payment of CEO payroll in shares — — 7 — 89 — — — — — 89 Vesting of nonvested shares — — 8 — — — — — — — — Exercise of stock options and employee share purchases — — 12 — 166 — — — 7 — 173 Balance at March 31, 2024 32 $ 0 20,994 $ 210 $ 1,816,985 — $ — $ ( 1,071 ) $ 11,107 $ ( 2,017,554 ) $ ( 190,323 ) See accompanying notes to unaudited condensed consolidated financial statements. 4 AGENUS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT (Unaudited) (Amounts in thousands) Series A-1 Convertible Preferred Stock Common Stock Treasury Stock Number of Shares Par Value Number of Shares Par Value Additional Paid-In Capital Number of Shares Amount Accumulated Other Comprehensive Income (Loss) Non-controlling Interest Accumulated Deficit Total Balance at December 31, 2022 32 $ 0 15,278 $ 153 $ 1,647,561 — $ — $ 915 $ 6,376 $ ( 1,709,907 ) $ ( 54,902 ) Net loss — — — — — — — — ( 2,639 ) ( 68,254 ) ( 70,893 ) Other comprehensive income — — — — — — — 2 — — 2 Share-based compensation — — — — 4,566 — — — 919 — 5,485 Shares sold at the market — — 1,689 17 60,566 — — — — — 60,583 Issuance of director deferred shares — — 13 1 982 — — — — — 983 Issuance of shares for services — — 7 — 318 — — — — — 318 Vesting of nonvested shares — — — — — — — — — — — Exercise of stock options and employee share purchases — — 10 — 329 — — — 45 — 374 Issuance of subsidiary shares for employee bonus — — — — — — — — 726 — 726 Issuance of shares for employee bonus — — 136 1 4,224 ( 1 ) ( 2,429 ) — — — 1,796 Retirement of treasury shares — — ( 50 ) ( 1 ) ( 9 ) 1 2,429 — — — 2,419 Balance at March 31, 2023 32 $ 0 17,083 $ 171 $ 1,718,537 — $ — $ 917 $ 5,427 $ ( 1,778,161 ) $ ( 53,109 ) See accompanying notes to unaudited condensed consolidated financial statements . 5 AGENUS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED S TATEMENTS OF CASH FLOWS (Unaudited) (Amounts in thousands, except per share amounts) Three Months Ended March 31, 2024 2023 Cash flows from operating activities: Net loss $ ( 63,454 ) $ ( 70,893 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 3,374 2,562 Share-based compensation 4,152 5,485 Non-cash royalty revenue ( 27,767 ) ( 19,106 ) Non-cash interest expense 29,595 17,273 Loss disposal of assets, net 9 21 Other, net 1,125 ( 406 ) Changes in operating assets and liabilities: Accounts receivable 25,341 1,291 Prepaid expenses 4,202 2,965 Accounts payable ( 10,733 ) 2,032 Deferred revenue ( 4 ) ( 2,382 ) Accrued liabilities and other current liabilities ( 3,622 ) 5,158 Other operating assets and liabilities ( 409 ) ( 2,526 ) Net cash used in operating activities ( 38,191 ) ( 58,526 ) Cash flows from investing activities: Purchases of plant and equipment ( 35 ) ( 1,842 ) Sale of long-term investment 264 — Purchases of available-for-sale securities — ( 14,647 ) Proceeds from sale of available-for-sale securities — 5,000 Net cash provided by (used in) investing activities 229 ( 11,489 ) Cash flows from financing activities: Net proceeds from sale of equity 17,171 60,583 Proceeds from employee stock purchases and option exercises 173 374 Purchase of treasury shares to satisfy tax withholdings — ( 2,819 ) Payment of finance lease obligation ( 2,514 ) ( 1,888 ) Net cash provided by financing activities 14,830 56,250 Effect of exchange rate changes on cash ( 122 ) ( 90 ) Net decrease in cash, cash equivalents and restricted cash ( 23,254 ) ( 13,855 ) Cash, cash equivalents and restricted cash, beginning of period 79,779 181,343 Cash, cash equivalents and restricted cash, end of period $ 56,525 $ 167,488 Supplemental cash flow information: Cash paid for interest $ 667 $ 830 Supplemental disclosures - non-cash activities: Purchases of plant and equipment in accounts payable and accrued liabilities $ — $ 3,893 Issuance of common stock, $ 0.01 par value, in connection with payment for services — 318 Insurance financing agreement 612 707 Issuance of common stock, $ 0.01 par value, for payment of certain employee bonuses — 4,215 Issuance of subsidiary options for payment of certain employee bonuses 133 — Issuance of subsidiary shares for certain employee bonuses — 726 Lease right-of-use assets obtained in exchange for new operating lease liabilities 105 250 Lease right-of-use assets obtained in exchange for new finance lease liabilities 122 3,630 See accompanying notes to unaudited condensed consolidated financial statements. 6 AGENUS INC. AND SUBSIDIARIES NOTES TO UNAUDITED CONDENSED CO NSOLIDATED FINANCIAL STATEMENTS March 31, 2024 Note A – Business, Liquidity and Basis of Presentation Agenus Inc. (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 current good manufacturing practice ("cGMP") manufacturing. 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 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 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. 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. 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 7 approximately 25 %. Our CEO, Dr. 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 Bristol-Myers Squibb Company, UroGen Pharma Ltd., Gilead Sciences, Inc., Merck Sharpe & Dohme and Incyte Corporation; out-licensing and/or partnering opportunities for our portfolio programs and product candidates with multiple parties; additional third-party agreements; asset sales; 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. 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. All significant intercompany transactions and accounts have been eliminated in consolidation. 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. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances. Actual results could differ materially from those estimates. For our foreign subsidiaries, the local currency is the functional currency. Assets and liabilities of our foreign subsidiaries are translated into U.S. dollars using rates in effect at the balance sheet date while revenues and expenses are translated into U.S. 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 (loss) in total stockholders’ deficit. 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 March 31, 2024 and 2023, as they would be anti-dilutive (in thousands): Three Months Ended March 31, 2024 2023 Warrants 99 99 Stock options 2,205 2,184 Non-vested shares 26 127 Series A-1 convertible preferred stock 17 17 8 Note C – Investments 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 Cost Estimated Fair Value Cost Estimated Fair Value Institutional money market funds $ 49,220 $ 49,220 $ 70,485 $ 70,485 Total $ 49,220 $ 49,220 $ 70,485 $ 70,485 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 three months ended March 31, 2024 (in thousands): Balance, December 31, 2023 $ 24,723 Effect of foreign currency ( 25 ) Balance, March 31, 2024 $ 24,698 Acquired intangible assets consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands): As of March 31, 2024 Amortization period (years) Gross carrying amount Accumulated amortization Net carrying amount Intellectual property 7 - 15 years $ 16,841 $ ( 15,268 ) $ 1,573 Trademarks 4 - 4.5 years 1,199 ( 1,193 ) 6 Other 2 - 7 years 1,932 ( 1,338 ) 594 In-process research and development Indefinite 2,057 — 2,057 Total $ 22,029 $ ( 17,799 ) $ 4,230 As of December 31, 2023 Amortization period (years) Gross carrying amount Accumulated amortization Net carrying amount Intellectual property 7 - 15 years $ 16,841 $ ( 15,184 ) $ 1,657 Trademarks 4 - 4.5 years 1,213 ( 1,185 ) 28 Other 2 - 7 years 1,988 ( 1,319 ) 669 In-process research and development Indefinite 2,057 — 2,057 Total $ 22,099 $ ( 17,688 ) $ 4,411 The weighted average amortization period of our finite-lived intangible assets is 9 years. 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. 9 Note E – Debt Debt obligations consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands): Debt instrument Balance at March 31, 2024 Current Portion: Debentures $ 146 2015 Subordinated Notes 12,817 Other 612 Total $ 13,575 Debt instrument Balance at December 31, 2023 Current Portion: Debentures $ 146 Long-term Portion: 2015 Subordinated Notes 12,768 Total $ 12,914 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): Period from December 31, 2023 to March 31, 2024 Liability related to sale of future royalties and milestones - beginning balance $ 257,296 Non-cash royalty revenue ( 27,767 ) Non-cash interest expense recognized 29,531 Liability related to sale of future royalties and milestones - ending balance 259,060 Less: unamortized transaction costs ( 223 ) Liability related to sale of future royalties and milestones, net $ 258,837 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 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 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 10 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 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 March 31, 2024 and December 31, 2023 (in thousands): March 31, 2024 December 31, 2023 Payroll $ 18,514 $ 14,512 Professional fees 6,195 7,101 Contract manufacturing costs 5,334 7,613 Research services 6,274 10,807 Other 4,974 5,250 Total $ 41,291 $ 45,283 Other current liabilities consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands): March 31, 2024 December 31, 2023 Finance lease liabilities $ 10,738 $ 10,457 Other 3,293 3,458 Total $ 14,031 $ 13,915 Note H – Fair Value Measurements Assets and liabilities measured at fair value are summarized below (in thousands): Description March 31, 2024 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash equivalents (Note C) $ 49,220 $ 49,220 $ — $ — Long-term investments 1,834 1,834 — — Total $ 51,054 $ 51,054 $ — $ — Liabilities: Contingent purchase price considerations $ 318 $ — $ — $ 318 Total $ 318 $ — $ — $ 318 Description December 31, 2023 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Cash equivalents (Note C) $ 70,485 $ 70,485 $ — $ — Long-term investments 3,222 3,222 — — Total $ 73,707 $ 73,707 $ — $ — Liabilities: Contingent purchase price consideration $ 318 $ — $ — $ 318 Total $ 318 $ — $ — $ 318 11 Long-term investments are included in "Other long-term assets" in our condensed consolidated balance sheets. We measure our contingent purchase price considerations at fair value. 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 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 Gilead Collaboration Agreement 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. On November 6, 2020, we received notice from Gilead that it was returning AGEN1423 to us and voluntarily terminating the applicable license agreement. The termination was 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 and license agreement and the stock purchase agreement remain in full force and effect. We remain eligible to receive a $ 50.0 million exercise fee and, if exercised, up to $ 520.0 million in aggregate potential milestones. Collaboration Revenue 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 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 March 31, 2024 United States Rest of World Total Revenue Type Other services $ — $ 238 $ 238 Non-cash royalties 27,767 — 27,767 $ 27,767 $ 238 $ 28,005 Three months ended March 31, 2023 Revenue Type Research and development services 267 — 267 Other services — 1,184 1,184 Recognition of deferred revenue 2,345 — 2,345 Non-cash royalties 19,106 — 19,106 $ 21,718 $ 1,184 $ 22,902 Contract Balances 12 Contract assets primarily relate to our rights to consideration for work completed in relation to our research and development services performed but not billed at the reporting date. The contract assets are transferred to receivables when the rights become unconditional. Currently, we do not have any contract assets which have not transferred to a receivable. We had no asset impairment charges related to contract assets in the period. Contract liabilities primarily relate to contracts where we received payments but have not yet satisfied the related performance obligations. The advance consideration received from customers for research and development services or licenses bundled with other promises is a contract liability until the underlying performance obligations are transferred to the customer. The following table provides information about contract liabilities from contracts with customers (in thousands): Three months ended March 31, 2024 Balance at beginning of period Additions Deductions Balance at end of period Contract liabilities: Deferred revenue $ 1,161 $ 5 $ ( 10 ) $ 1,156 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. Note J – Share-based Compensation Plans We primarily use the Black-Scholes option pricing model to value stock options granted to employees and non-employees, including stock options granted to members of our Board of Directors. However, the fair value of stock option market-based awards is calculated based on a Monte Carlo simulation as of the date of issuance. 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, 2024 is presented below: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Outstanding at December 31, 2023 2,141,360 $ 65.00 Granted 164,506 17.44 Exercised — — Forfeited ( 11,982 ) 48.61 Expired ( 88,971 ) 63.66 Outstanding at March 31, 2024 2,204,913 $ 61.55 6.61 $ — Vested or expected to vest at March 31, 2024 2,204,913 $ 61.55 6.61 $ — Exercisable at March 31, 2024 1,558,872 $ 69.34 5.88 $ — 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. The fair value of non-vested market-based awards is calculated based on a Monte Carlo simulation as of the date of issuance. 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. 13 A summary of non-vested stock activity for the three months ended March 31, 2024 is presented below: Non-vested Shares Weighted Average Grant Date Fair Value Outstanding at December 31, 2023 27,163 $ 37.20 Granted 10,406 12.16 Vested ( 7,989 ) 31.08 Forfeited ( 4,000 ) 41.72 Outstanding at March 31, 2024 25,580 $ 28.21 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, 2024 2023 Research and development $ 1,314 $ 1,733 General and administrative 2,882 3,752 Total share-based compensation expense $ 4,196 $ 5,485 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): Three Months Ended March 31, 2024 Three Months Ended March 31, 2023 Beginning of Period End of Period Beginning of Period End of Period Cash and cash equivalents $ 76,110 $ 52,856 $ 178,674 $ 164,819 Restricted cash 3,669 3,669 2,669 2,669 Cash, cash equivalents and restricted cash $ 79,779 $ 56,525 $ 181,343 $ 167,488 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 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 14 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 MiNK Therapeutics, Inc. 37 % 37 % SaponiQx, Inc. 30 % 30 % 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 Beginning balance $ 11,949 $ 6,376 Net loss attributable to non-controlling interest ( 1,568 ) ( 11,676 ) Other items: Distribution of subsidiary shares to Agenus stockholders — 14,888 Purchase of subsidiary shares — ( 2,546 ) Issuance of subsidiary shares for employee bonus — 1,011 Issuance of subsidiary shares for employee stock purchase plan and exercise of options 7 71 Subsidiary share-based compensation 719 3,825 Total other items 726 17,249 Ending balance $ 11,107 $ 11,949 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 0.292 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 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. 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, 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 15 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. 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. 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 . 16