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Agenus (AGEN) Remains Focused on Drug Development Programs

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We issued an updated research report on Agenus Inc. (AGEN - Free Report) on Sep 26, 2017.

Notably, Agenus is an immuno-oncology company focused on the discovery and development of checkpoint modulators, vaccines and adjuvants for the treatment of cancer.

In fact, the company has collaboration agreements with a number of companies, which not only provide it with funds in the form of upfront and milestone payments and future royalties but also validate the company’s proprietary product platform. Agenus has formed collaborations with Merck & Co., Inc. (MRK - Free Report) and Incyte Corporation (INCY - Free Report) to discover and develop multiple checkpoint antibodies.

In February 2017, Agneus and Incyte amended the agreement. The amended agreement converts the ongoing GITR and OX40 antibody programs from co-funded development and profit-sharing arrangements to royalty-bearing programs.

Per the agreement, Incyte will be responsible for funding and conducting global development and commercialization. When any of the two candidates from either of these two programs are approved, Agenus would be entitled to receive 15% royalties on global net sales of each approved product.

Following the amended agreement, Agenus received accelerated milestone payments of $20 million from Incyte related to the clinical development of INCAGN1876 (anti-GITR agonist) and INCAGN1949 (anti-OX40 agonist). Across all programs in the collaboration, Agenus will be eligible to receive up to a total of $510 million for future potential development, regulatory and commercial milestones.

The company’s collaboration agreements with players like Incyte and Merck not only validate its technology platforms but also provide the company with funds.

In fact, we note that the company’s QS-21 Stimulon adjuvant is partnered with GlaxoSmithKline (GSK - Free Report) and is a key component in multiple GSK vaccine programs that target prophylactic or therapeutic impact in a variety of infectious diseases and cancer.

Moreover, Agenus’ efforts in developing Prophage vaccine for glioblastoma multiforme are encouraging. It is also exploring different options to advance the Prophage vaccine into a phase III study in newly-diagnosed GBM either alone or in collaboration with a third party. Also, the company is looking for partners to fund studies with plans of retaining commercialization rights in the United States.

The company announced its strategic decision to spin off its cell therapy businesses as a separate unit. Also, it has made this decision so that it can make smaller teams that can entirely focus on getting the products approved. We expect the combined value of the separate companies will far exceed the perceived value under one roof, going forward.  

However, Agenus has no approved product in its portfolio. With only a few candidates in mid-stages of development, including Prophage Series vaccine and a number of QS-21 Stimulon-containing vaccine candidates, the company is still a few years away from bringing a product to market. Any hiccup in the development process of these candidates may weigh heavily on the stock. Agenus is highly dependent on its partners for the development of its candidates.

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