Agenus: Getting The Tough Decisions Right With Catalysts Ahead

Agenus Inc (NASDAQ:AGEN) is a biotech based in Lexington, Massachusetts, with an exciting immuno-oncology pipeline. AGEN recently postponed development of its pipeline outside of two antibodies, botensilimab and balstilimab, which will thus be the focus of this article.

Botensilimab: A better Yervoy?

Bristol Myers Squibb's (BMY) Yervoy (ipilimumab), an immuno-oncology agent, brought in $1.09M in revenues in the first six months of 2023. Yervoy is a monoclonal antibody ((mAb)) that binds CTLA-4 (a receptor found on T-cells) and prevents its activation. Preventing the activation of CTLA-4 is beneficial in aiding the immune system's fight against cancer, where cancer cells can otherwise activate CTLA-4 to suppress the immune response against cancer. Yervoy isn't a new drug, while the use of the drug has grown since its initial approval in 2011, AGEN apparently sees room for improvement with a next-generation anti-CTLA-4 mAb. That next generation mAb is botensilimab, which has an engineered Fc region (the tail of the antibody), but still binds CTLA-4.

Yervoy is often used in combination with another immuno-oncology agent, Opdivo (nivolumab) BMY's anti-PD-1 mAb. In the same way, AGEN has been running trials with botensilimab (its anti-CTLA-4 mAb) with balstilimab (its anti PD-1 antibody). AGEN's corporate presentation notes balstilimab offers "safety and efficacy analogous to approved anti-PD-1 mAbs." Botensilimab is the really special drug and it has has already produced impressive data in a range of cancer types.

For example, a June 30 update of data from the company's phase 1b trial of botensilimab/balstilimab combination in advanced colorectal cancer noted a 20.9 month median overall survival in the subgroup of patients without liver metastases (of 101 enrolled patients, 87 were evaluated, 69 of those had no active liver metastases). This compared favorably to the 12.9 month overall survival that would normally be expected in such a group with the current standard of care.

A potential competitor?

AGEN has some potential competition from Xilio Therapeutics (XLO) who are also developing an Fc-enhanced anti-CTLA4 antibody, called XTX101, like AGEN's botensilimab. There are some differences, notably XLO's XTX101 is tumor-activated, so wouldn't function outside of the tumor microenvironment. XLO has a clinical trial collaboration with Roche (OTCQX:RHHBY) to trial XTX101 in combination with atezolizumab (Tecentriq, an anti-PD-L1 antibody). That collaboration will test the combination of XTX101 and atezolizumab in microsatellite stable (MSS) colorectal cancer.

XTX101 has already shown single agent activity in non-small cell lung cancer (NSCLC), but of course that doesn't guarantee that the agent will be effective in MSS-CRC. If AGEN's results with botensilimab and balstilimab are anything to go by however, XLO might be able to produce something in cold tumors as well, and so AGEN will have some competition.

Financial Overview

AGEN had cash, cash equivalents and short-term investments of $157.6M as of June 30, 2023. The company recognized revenue of $25.3M during Q2'23, G&A expenses were $20.4M during Q2'23 and R&D expenses were $59.3M. Net loss for Q2'23 was $73.4M, although the company notes that their net loss includes $28.9M of non-cash expenses. Further, when the company reported earnings on August 8, it had already raised $20.3M using its at the market facility since the end of Q2'23. As such we could consider AGEN's pro forma cash to be $178M.

On August 23, 2023, AGEN announced it was halting its preclinical and clinical programs other than botensilimab/balstilimab. It also announced a 25% workforce reduction. The changes to strategy and workforce cut are set to bring in savings of ~$40M through the end of 2023. Further, while the company has halted non-botensilimab/balstilimab work in its own pipeline, its partner funded work can carry on, leaving other catalysts on the calendar and potential milestones. Based on AGEN's Q2'23 numbers, we might expect the company to have just a few quarters of cash left, but the cuts to workforce and new strategy could help them eek out a year of operations from that cash. The company had 379,572,187 shares outstanding as of August 4, and a market cap of $394.75M ($1.04 per share). With the market cap at nearly $400M, AGEN doesn't need to dilute too heavily to raise a bit more cash. Notably, the company might already have raised more funds using the at market facility since it reported earnings on August 8.

Conclusions and risks

The plan to focus on botensilimab/balstilimab, and working towards a regulatory filing in 2024 (that could see market approval in 2025) is a smart one. AGEN is obviously aware of the value of botensilimab and expediting the move towards a regulatory filing, such as a Biologics License Application (BLA) with the US FDA, is a smart move. Certainly given that other Fc-enhanced anti-CTLA-4 antibodies exist out there, such as XLO's XTX101, it makes sense to get out there and capture the market first.

In terms of catalysts, AGEN is hosting a botensilimab/balstilimab program update on October 22, 2023. An October 5 press release of this news notes that the company is including updates from its clinical program in neoadjuvant colorectal cancer and pancreatic cancer.

I rate AGEN a buy based on the strength of botensilimab's data, the company's focus on getting it to market (as demonstrated by the halt of other programs to focus resources on botensilimab), upcoming additional data in colorectal cancer and pancreatic cancer, where the drug has already impressed, and the passable financial position. I would want the company to have a stronger cash position to rate it a strong buy. Nonetheless the company has shown it can raise using the at the market facility, which means it doesn't have to raise at prices well below the prevailing price. Further, taking steps to cut expenses will help existing cash go further, and the ~$400M market cap gives the company room to raise another $50-$100M without diluting current shareholders in half. As such, the company's cash position isn't dire, even if it stops me from rating the name a strong buy.

On the risks side, if the company can't make progress in a timely fashion towards a 2024 regulatory filing, and has to run more studies, the stock is going to fall. Further, if the company engages in more aggressive fundraising activities than using the at the market facility from time to time, the share price would suffer. Lastly, competitors making progress or even producing particularly competitive data could cause AGEN to fall.

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