What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-07 · 77 added, 42 removed, 142 unchanged (46% of the section changed)

6 unchanged sentences

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, 2023.

We encourage you to read those descriptions carefully.

26 unchanged sentences

We completed enrollment of patients with refractory MSS mCRC non-active liver metastases ("NLM") in a Phase 1 trial (n~150) and randomized Phase 2 trial (n~230) in October 2023.

We are pursuing a global regulatory strategy and aim to initiate submission of a biologics license application ("BLA") to the FDA for a potential accelerated approval by the end of 2024, followed by a planned submission to the European Medicines Agency.

We are exploring all potential accelerated approval pathways and intend to initiate a Phase 3 study with plans to ensure continued funding via partnering activities.

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

5 unchanged sentences

Under the terms of our agreement, Incyte is responsible for all future development expenses, and we are eligible to receive up to an additional $315.0 million in potential milestone payments plus royalties on any future sales.

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 has terminated the OX40 program, effective October 2023, and both the GITR program and undisclosed program, effective May 2024.

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

On July 30, 2024, Incyte announced that it would discontinue further development of the LAG-3 and TIM-3 monoclonal antibodies.

Pursuant to our collaboration and license agreement with Merck, we exclusively licensed to Merck a monospecific antibody targeting ILT4 (MK-4830), which Merck advanced in a Phase 2 clinical trial.

3 unchanged sentences

Pursuant to the terms of the XOMA Royalty Purchase Agreement, XOMA purchased 33% of all future royalties and 10% of all future milestone payments that we are entitled to receive from Incyte and Merck, net of certain of our obligations to a third party.

After taking into account our obligations under the XOMA Royalty Purchase Agreement, as of March 31, 2024, we remain eligible to receive up to $283.5 million and $76.5 million in potential development, regulatory, and commercial milestones from Incyte and Merck, respectively.

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

5 unchanged sentences

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.

Pursuant to the terms of the AGEN2373 option agreement, as of June 30, 2024, we remained 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.

On August 5, 2024, Gilead elected not to exercise the option to license AGEN2373 and the option and license agreement was formally terminated.

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.

3 unchanged sentences

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.

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, as of March 31, 2024, are eligible to receive up to $1.32 billion in development, regulatory, and commercial milestone payments, along with tiered royalties.

We received a non-refundable upfront cash payment of $200.0 million and, as of June 30, 2024, were eligible to receive up to $1.32 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.

2 unchanged sentences

We received this milestone in January 2024.

On July 30, 2024, we received notice from BMS that it is returning AGEN1777 back to Agenus and voluntarily terminating the BMS License Agreement, effective as of January 26, 2025.

In May 2024, we, and certain wholly-owned subsidiaries, entered into a Purchase and Sale Agreement (the “Ligand 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 BMS, UroGen, Gilead, Merck and Incyte, (the “Covered License Agreements”) (ii) 18.75% of the royalties we receive 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.

After taking into account our obligations under the Ligand Purchase Agreement, XOMA Royalty Purchase Agreement and the recent status of our collaboration agreements, we remain eligible to receive up to approximately $136.3 million, $49.4 million and $183.1 million in potential development, regulatory, and commercial milestones from UroGen, Merck and Incyte, respectively.

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

18 unchanged sentences

MiNK’s most advanced product candidate, agenT-797, is an off-the-shelf, allogeneic, native iNKT cell therapy.

Expansion of clinical programs is currently underway, notably a Phase 2 clinical trial in 2L gastric cancer at Memorial Sloan Kettering Cancer Center.

MiNK is also evaluating agenT-797 as a variant-agnostic therapy for patients with viral acute respiratory distress syndrome (“ARDS”).

In addition to its lead clinical program, MiNK announced a collaboration with ImmunoScape, Inc.

("ImmunoScape") to discover and develop next-generation T-cell receptor therapies against novel targets in solid tumors.

MiNK will combine its unique, proprietary library of T cell antigens with ImmunoScape’s platform for rapid discovery of novel T cell receptor.

MiNK is currently expanding its clinical programs, with a notable externally funded Phase 2 trial in second-line gastric cancer actively enrolling at Memorial Sloan Kettering Cancer Center.

Additionally, MiNK is evaluating agenT-797 as a variant-agnostic therapy for patients with viral acute respiratory distress syndrome (“ARDS”) in planning for a randomized phase 2 study through a predominantly externally financed program.

Recently, MiNK secured a $5.8 million private placement financing at a 25% premium, led by GKCC, LLC.

This funding will propel the clinical development of MiNK-215, its leading allogeneic CAR-iNKT cell therapy targeting fibroblast activation protein (“FAP”) in solid tumors, which is scheduled to enter clinical trials in early 2025.

In addition to its lead clinical program, MiNK has announced a collaboration with

ImmunoScape, Inc.

(“ImmunoScape”) to discover and develop next-generation T-cell receptor therapies targeting novel solid tumor antigens.

This partnership leverages MiNK's proprietary library of T cell antigens and ImmunoScape’s platform for rapid discovery of novel T cell receptors.

Historical Results of Operations

Three months ended March 31, 2024 compared to the three months ended March 31, 2023

Three months ended June 30, 2024 compared to the three months ended June 30, 2023

Research and development revenue

We did not recognize any research and development revenue in the three months ended March 31, 2024, but recognized research and development revenue of approximately $2.6 million during the three months ended March 31, 2023.

Research and development revenues in the first quarter of 2023 primarily consisted of $2.3 million related to the recognition of deferred revenue earned under our Gilead Collaboration Agreements

We recognized research and development revenue of approximately $0.3 and $2.5 million during the three months ended June 30, 2024 and 2023, respectively.

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

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

2 unchanged sentences

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 $8.7 million, to approximately $27.8 million for the three months ended March 31, 2024, from $19.1 million for the three months ended March 31, 2023, due to increased net sales of GSK’s vaccines containing our STIMULON QS-21 adjuvant, including net sales of AREXVY, that GSK launched in the third quarter of 2023.

Non-cash royalty revenue related to our agreement with GSK increased $0.5 million, to approximately $22.6 million for the three months ended June 30, 2024, from $22.1 million for the three months ended June 30, 2023, due to increased net sales of GSK’s vaccines containing our STIMULON QS-21 adjuvant, including net sales of AREXVY, that GSK launched in the third quarter of 2023.

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 decreased 23% to $43.9 million for the three months ended March 31, 2024 from $57.1 million for the three months ended March 31, 2023.

Decreased expenses in the three months ended March 31, 2024 primarily relate to a $7.4 million decrease in third-party services and other expenses, largely due to the timing of expenses related to the advancement of our antibody programs, a $2.1 million decrease in personnel related expenses, mainly due to a decrease in headcount, and a $4.4 million decrease in expenses attributable to the activities of our subsidiaries.

Research and development expense decreased 38% to $36.8 million for the three months ended June 30, 2024 from $59.3 million for the three months ended June 30, 2023.

Decreased expenses in the three months ended June 30, 2024 primarily relate to a $14.3 million decrease in third-party services and other expenses, largely due to the timing of expenses related to the advancement of our antibody programs, a $3.8 million decrease in personnel related expenses, mainly due to a decrease in headcount, and a $6.1 million decrease in expenses attributable to the activities of our subsidiaries.

These decreases were partially offset by a $1.8 million increase in other research and development expenses.

1 unchanged sentence

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

General and administrative expenses decreased 8% to $16.9 million for the three months ended March 31, 2024 from $18.2 million for the three months ended March 31, 2023.

Decreased expenses in the three months ended March 31, 2024 primarily relate to $0.1 million decrease in professional fees and a $1.5 million decrease in expenses attributable to the activities of our subsidiaries.

These decreases were partially offset by a $0.1 million increase in personnel related expenses, and a $0.2 million increase in other general and administrative expenses.

General and administrative expenses decreased 18% to $16.8 million for the three months ended June 30, 2024 from $20.4 million for the three months ended June 30, 2023.

Decreased expenses in the three months ended June 30, 2024 primarily relate to a $2.3 million decrease in personnel related expenses, mainly due to decreased share based compensation expense, a $0.5 million decrease in professional fees and a $0.9 million decrease in expenses attributable to the activities of our subsidiaries.

These decreases were partially offset by a $0.1 million increase in other general and administrative expenses.

Non-operating income (expense)

Non-operating income increased $7.4 million for the three months ended June 30, 2024, from expense of $0.2 million for the three months ended June 30, 2023 to income of $7.1 million for the three months ended June 30, 2024, primarily due to the recognition of a $5.5 million gain on the early termination of two operating leases and the recognition of R&D tax credits in the UK in the three months ended June 30, 2024, compared to de minimis activity in the three months ended June 30, 2023.

Interest expense, net

Interest expense, net increased to approximately $29.5 million for the three months ended March 31, 2024 from $16.6 million for the three months ended March 31, 2023, mainly due to increased non-cash interest recorded in connection with our Royalty Purchase Agreement with HCR.

Interest expense, net increased to approximately $31.7 million for the three months ended June 30, 2024 from $18.5 million for the three months ended June 30, 2023, mainly due to increased non-cash interest recorded in connection with our Royalty Purchase Agreement with HCR and the addition of non-cash interest expense recorded in connection with our Ligand Purchase Agreement.

Six months ended June 30, 2024 compared to the six months ended June 30, 2023

Research and development revenue

We recognized research and development revenue of approximately $0.3 million and $5.1 million during the six months ended June 30, 2024 and 2023, respectively.

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

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 STIMULON QS-21 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 $9.2 million, to approximately $50.3 million for the six months ended June 30, 2024, from $41.2 million for the six months ended June 30, 2023, due to increased net sales of GSK’s vaccines containing our STIMULON QS-21 adjuvant, including net sales of AREXVY, that GSK launched in the third quarter of 2023.

Research and development expense

Research and development expense decreased 31% to $80.7 million for the six months ended June 30, 2024 from $116.4 million for the six months ended June 30, 2023.

Decreased expenses in the six months ended June 30, 2024 primarily relate to a $21.7 million decrease in third-party services and other expenses, largely due to the timing of expenses related to the advancement of our antibody programs, a $5.9 million decrease in personnel related expenses, mainly due to a decrease in headcount, and a $10.5 million decrease in expenses attributable to the activities of our subsidiaries.

These decreases were partially offset by a $2.5 million increase in other research and development expenses.

General and administrative expense

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

General and administrative expenses decreased 13% to $33.7 million for the six months ended June 30, 2024 from $38.7 million for the six months ended June 30, 2023.

Decreased expenses in the six months ended June 30, 2024 primarily relate to a $2.3 million decrease in personnel related expenses, mainly due to decreased share based compensation expense, a $0.8 million decrease in professional fees and a $2.4 million decrease in expenses attributable to the activities of our subsidiaries.

These decreases were partially offset by a $0.4 million increase in other general and administrative expenses.

Non-operating income (expense)

Non-operating income increased $6.2 million for the six months ended June 30, 2024, from expense of $0.2 million for the six months ended June 30, 2023 to income of $6.0 million for the six months ended June 30, 2024, primarily due to the recognition of a $5.5 million gain on the early termination of two operating leases and the recognition of R&D tax credits in the UK in the six months ended June 30, 2024, compared to de minimis activity in the six months ended June 30, 2023.

Interest expense, net

Interest expense, net increased to approximately $61.2 million for the six months ended June 30, 2024 from $35.1 million for the six months ended June 30, 2023, mainly due to increased non-cash interest recorded in connection with our Royalty Purchase Agreement with HCR and the addition of non-cash interest expense recorded in connection with our Ligand Purchase Agreement.

Research and Development Programs

For the three months ended March 31, 2024, our research and development programs consisted largely of our antibody programs as indicated in the following table (in thousands).

Three Months Ended March 31,

For the six months ended June 30, 2024, our research and development programs consisted largely of our antibody programs as indicated in the following table (in thousands).

Six Months Ended June 30,

Year Ended December 31,

7 unchanged sentences

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.

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.

2 unchanged sentences

Liquidity and Capital Resources

We have incurred annual operating losses since inception, and we had an accumulated deficit of $2.0 billion as of March 31, 2024.

We have incurred annual operating losses since inception, and we had an accumulated deficit of $2.1 billion as of June 30, 2024.

We expect to incur significant losses over the next several years as we continue development of our technologies and product candidates, manage our regulatory processes, initiate and continue clinical trials, and prepare for potential commercialization of products.

To date, we have financed our operations primarily through corporate partnerships, advance royalty sales and the issuance of equity.

From our inception through March 31, 2024, 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.

From our inception through June 30, 2024, we have raised aggregate net proceeds of approximately $2.0 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 up to $300.0 million of common stock, preferred stock, warrants, debt securities and units.

2 unchanged sentences

as our sales agent.

During the three months ended March 31, 2024, we sold approximately 1.2 million shares of our common stock pursuant to the Sales Agreement, for aggregate net proceeds of $17.2 million.

As of March 31, 2024, approximately 6.7 million shares remained available for sale under the Sales Agreement.

We sold approximately 1.4 million and 405,000 shares of our common stock pursuant to the Sales Agreement during the six months ended June 30, 2024 and the period of July 1, 2024 through August 5, 2024, respectively, and received aggregate net proceeds totaling $25.3 million.

As of August 5, 2024, approximately 6.2 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.

2 unchanged sentences

We do not have in place a program whereby at-the-market offerings are executed automatically based on our trading volume.

As of March 31, 2024, we had debt outstanding of $13.8 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 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.

As of June 30, 2024, we had debt outstanding of $13.6 million in principal due February 2025.

Our cash and cash equivalents at June 30, 2024 were $93.7 million, an increase of $17.6 million from December 31, 2023.

Cash and cash equivalents of our subsidiary, MiNK, at March 31, 2024, were $5.8 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.

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 as of 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 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.

Based on our current plans and projections, we believe that our cash resources of $93.7 million as of June 30, 2024, plus additional funding we may receive from multiple other sources, including out-licensing and/or partnering opportunities, will be sufficient to satisfy our liquidity requirements through the end of the year and into 2025.

We are also in discussions with other parties to participate in the Purchase and Sale Agreement (see Note F) for up to an additional $125.0 million under the same terms as the Ligand transaction.

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

These transactions could also extend our cash resources.

6 unchanged sentences

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;

We expect our sources of funding to include payments from current collaborations which include out-licensing and/or partnering opportunities for our portfolio programs and product candidates with multiple parties;

additional third-party agreements;

4 unchanged sentences

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 $663.4 million over the term of the related activities.

Through March 31, 2024, we have expensed $574.5 million as research and development expenses and $533.4 million has been paid under these agreements.

Through June 30, 2024, we have expensed $582.9 million as research and development expenses and $541.9 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.

2 unchanged sentences

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

Net cash used in operating activities for the three months ended March 31, 2024 and 2023 was $38.2 million and $58.5 million, respectively.

Net cash used in operating activities for the six months ended June 30, 2024 and 2023 was $76.4 million and $118.6 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.

1 unchanged sentence

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 2. Management’s Discussion and Analysis