2024-01-18 09:24:32 ET
Summary
- Agenus is a beaten-down immuno-oncology biotech stock that has not participated in the recent biotech rally despite a promising pipeline and multiple partnerships.
- The company's lead asset, botensilimab (+/- balstilimab), has shown promising results in various advanced solid tumors (colorectal, pancreatic, melanoma, NSCLC, sarcomas, ovarian).
- A BLA is planned in mid-2024 for accelerated approval in metastatic colorectal cancer with potential for subsequent label expansion to earlier lines. Potential new partnerships are also being evaluated.
- Cash runway is a concern but planned transactions (sale of 2 assets and monetization of milestones/royalties from partnered programs) in 1H 2024 are expected to considerably extend cash runway. Considering AGEN's track record I am confident about these transactions.
Thesis overview
Agenus (AGEN) is a beaten down immuno-oncology (I/O)-focused biotech stock that hasn't yet participated in the recent biotech rally. AGEN has multiple ongoing partnerships and has successfully raised >$800M non-dilutive cash from these partnerships since 2014. Its wholly-owned lead candidate, botensilimab (Fc-enhanced anti-CTLA-4) +/- Balstilimab (anti-PD-1) (BOT +/- BAL), has become the priority for AGEN. AGEN plans a BLA submission in mid-2024 for accelerated approval in advanced metastatic, microsatellite-stable colorectal cancer with no active liver metastases ("MSS CRC NLV"), with potential subsequent label expansion to 1st-line (1L) CRC and the neoadjuvant setting, as well as other solid tumor types, including pancreatic cancer, melanoma and non-small cell lung cancer (NSCLC). Based on currently available cash, AGEN has a runway to Q4 2024, which is beyond expected catalysts (BLA submission and multiple readouts from ongoing studies of BOT/BAL). Furthermore, AGEN plans several transactions (sale of 2 assets and monetization of future milestone/royalties) expected to close in 1H 2024, that will considerably extend runway.
Considering multiple anticipated catalysts and AGEN's track record with regards to forming partnerships and raising non-dilutive cash I am bullish about AGEN in 2024. Major risks to the thesis is regulatory delays, suboptimal updated readouts from ongoing clinical trials and need for cash.
BOT+BAL short- and long-term potential (AGEN company presentation)
Quick overview of the history of Agenus
Agenus (originally Antigenics) has a long history . It was founded in 1994 and IPOed in 2000. AGEN's CEO and co-founder Garo Armen has personal motivation in this endeavor, having lost his mother at the age of 47 from cancer. Notably, as he has stated in an interview in 2019 he has "zero financial incentive" and has "injected far in excess of $12 million in the company out of pocket" (I also recommend watching this interview of the CEO, which is not strictly relevant to Agenus).
At first glance, AGEN seems like a failure so far. Stock price is >99% down since IPO in 2000 and none of its candidate I/O therapies have reached commercialization yet. Interestingly, AGEN has been only through one reverse stock split during that time (1:6 in 2011). AGEN originally developed personalized cancer vaccines and embarked in 2000 with a lengthy (planned duration 7 years) trial against renal cell carcinoma. The trial failed for practical reasons , and company went "from 2006 to 2014, in search of additional helpers that would make cancer vaccines more effective". It was not until 2014, when "the company started a complete transformation with a series of acquisitions". The new focus of Agenus was to become an "one-stop shop" for I/O therapeutics. Agenus understood that a combination of I/O therapeutics targeting various mechanisms that allow immune escape by tumors would be necessary for broad and more effective application of I/O therapeutics in solid tumors. Additionally, a single company offering various I/O therapies would allow personalized combination therapy at a more affordable price.
Indeed, AGEN has multiple clinical stage I/O assets, and has forged multiple partnership that have been the source of >$800M non-dilutive cash. Therefore, assessing the progress of AGEN depends on when you start counting. Starting from 2014 AGEN has progressed considerably and appears to be finally nearing approval in a major indication, CRC, with considerable label expansion potential.
Agenus by the numbers (AGEN January 2024 corporate presentation) Partnerships track record (AGEN January 2024 corporate presentation) Overview of clinical stage pipeline. * AGEN1423 and AGEN1876 are advancing in externally funded investigator sponsored studies (AGEN Jan 2024 corporate presentation)
Quick overview of lead candidate; BOT±BAL
As highlighted by the CEO in ESMO 2023, BOT is not just a next-generation anti-CTLA-4, but a multifunctional immune activator. BOT aims to overcome one of the major on hurdles for I/O therapies in solid tumors, by converting "cold" tumors (= poorly immunogenic and able to evade the immune system) to "hot" tumors (i.e. amenable to killing/control by the immune system). BAL is AGEN's version of a highly active anti-PD1.
Currently, the lead indication for BOT±BAL is CRC. However, multiple trials (some of which are investigator-sponsored) are ongoing in additional targets, including pancreatic cancer, NSCLC, sarcoma and melanoma.
BOT mechanism of action (AGEN January 2024 corporate presentation)
Clinical data in 2L/3L+ MSS CRC NLV
AGEN has completed a ph1b single-arm study, as well as a randomized phase 2 study in 2L/3L+ MSS CRC. Based on a preliminary readout of n=70 evaluable patients without active liver metastases from the phase 1b study (originally presented at ASCO GI 2023 and updated in ESMO 2023), BOT/BAL has demonstrated considerable improvement over standard of care (SOC) with an objective response rate (ORR) of 24% (vs 3%) and >21 months (median not reached yet) median overall survival ((OS)) (vs 12.9 months). Efficacy data for standard of care are "coming from the ARCAD database of over 18,000 patient". Notably, the phase 1b study enrolled heavily pre-treated patients, with a median of 4 prior lines of therapy. Therefore, BOT/BAL working in these patients is very promising for efficacy in earlier lines of therapy.
Preliminary readout from the phase 1b study. Note that patients with active liver metastases (0% ORR) are not shown here. (AGEN's January 2024 corporate presentation) Enhanced overall survival compared to standard of care (AGEN's January 2024 corporate presentation)
Ongoing phase 2 study has completed enrolment in October 2024. Among the aims of the study are the comparison of BOT monotherapy vs BOT/BAL combination therapy, as well as comparison of two BOT dosing regiments (1 vs 2 mg/kg). Additionally, the study contains a SOC treatment arm (regorafenib or trifluridine/tipiracil) which will allow direct comparison with BOT±BAL (rather than basing the comparison to historical data which is less acceptable). This study, in combination with the ph1b study, will be used for BLA submission for accelerated approval. A readout is expected in 2H 2024.
Summary of the design and goals of the randomized phase 2 study (AGEN's January 2024 corporate presentation)
Potential label expansion into earlier line CRC
What is exciting about durable responses in heavily pre-treated, poorly immunogenic tumors, is the potential for label expansion in earlier-line patients. I/O therapies typically work better in less advanced disease. Therefore, if treatment works in advanced patients there is little reason to believe it won't work in earlier-line patients. With regards to CRC there are two ongoing investigator-sponsored studies, one in 1L patients (readout expected in Q1 2024) and one in the neoadjuvant setting (update expected in Q2 2024).
Of interest is that, as discussed in the ESMO corporate event, durable responses have been demonstrated even after cessation of treatment for a number of patients with advanced malignancies, suggesting immunological memory. This is particularly important for the neoadjuvant (= before surgery) setting in CRC. Treatment with BOT/BAL before surgery represents a "window of opportunity" to train the immune system against the cancer. This can prevent recurrences from micro-metastatic disease after surgery and/or eliminate need for chemotherapy. It also has the potential to minimize or eliminate radical surgery (and associated morbidities like colostomy or sexual dysfunction). Early data from n=12 patients show very promising responses (see image below). Notably, the "inside-out" (serosa-to-mucosa) histological pattern of cancer cell killing is suggestive of progressive killing by infiltrating immune cells (I refer interested readers to a recent publication in Oncogene ).
Preliminary data from BOT/BAL in the neoadjuvant setting. Note that these response were on average within 4 weeks of therapy (ESMO 2023 corporate event) AGEN's vision for BOT+BAL in CRC (ESMO 2023 corporate event)
Beyond CRC
Beyond CRC, responses better than expected based on historical SOC cohorts have been shown in a variety of advanced malignancies, including 2L pancreatic cancer relapsed/refractory after FOLFIRINOX (potential BLA in 2025), 2L+ melanoma relapsed/refractory after anti-PD1/CTLA-4 (potential BLA in 2025) and 2L+ NSCC (data update anticipated in mid-2024). A summary of results and total target market are depicted in the images below. These early data come from very few patients (n=6 for pancreatic cancer, n=10 for melanoma, n=9 for NSCLC) but are promising in that responses have been shown in refractory/relapse tumors, including after prior treatment with anti-PD1 / CTLA-4. Notably, responses were shown in melanoma even with BOT monotherapy.
Efficacy of BOT/BAL compared to SOC in various indications (ESMO 2023 company event) Planned BLA fillings for the next 2-3 years and target market (ESMO 2023 corporate event)
Beyond above-discussed tumors BOT±BAL has shown promising responses in other advanced tumors including sarcomas and platinum-resistant ovarian cancer. Additional tumor types have also been targeted through partnered programs. For a more detailed overview of the totality of the data I refer interested readers to the recent ESMO presentation , the latest company presentation, as well as AGEN's publications and ongoing clinical trials . Of note, according to ClinicalTrials.gov the melanoma trial has been recently paused "as a business decision".
Evaluating chances of accelerated approval in CRC
In April 2023 AGEN announced receipt of Fast Track Designation for BOT/BAL "for patients with non-microsatellite instability-high (MSI-H)/deficient mismatch repair (dMMR) metastatic colorectal cancer with no active liver involvement" that "are resistant or intolerant to a fluoropyrimidine, oxaliplatin, and irinotecan, and who have also received a VEGF inhibitor, an EGFR inhibitor and/or a BRAF inhibitor, if indicated". According to UpToDate authors, SOC treatment options for these patients include lonserf, regirafenib and fluquintinib. However, prognosis is very poor with these treatments; ORR 1-6% and median OS 6.4-7.4 months (of note these numbers do not exclude patients with liver metastases who generally have worse prognosis). According to AGEN and based on ARCAD database, the expected ORR from SOC even in patients with no liver metastases is only 2.8% with a median survival of 12.6 months. Therefore, there is definitely an urgent unmet need for these patients.
Considering Fast Track Designation, unmet need and convincing evidence (hopefully with confirmation from ongoing phase 2) of considerable improvement in outcomes over SOC, AGEN is pursuing an accelerated approval pathway.
An updated draft guidance for accelerated approval in oncology has been recently published by the FDA. Although a randomized trial is strongly preferred, accelerated approval is possible even with single-arm trials. The typical endpoints used for accelerated approval in oncology are ORR and duration of response ((DOR)). Stable disease is not currently considered an acceptable endpoint for accelerated approval. Notably, based on prior FDA guidance , "in settings where there is no available therapy and where major tumor regressions can be presumed to be attributed to the tested drug, the FDA has sometimes accepted ORR and response duration observed in single-arm studies as substantial evidence supporting accelerated approval". Based on above discussed data BOT/BAT considerably outperformed SOC, not only in terms of ORR and DOR, but even in terms of OS.
So far comparison of BOT/BAL with SOC is based on historical data. FDI guides that historical cohorts to which results are being compared should be pre-specified, but it is not clear to me if this is the case with BOT/BAL phase1b. Nevertheless, ongoing randomized phase 2 has a SOC treatment arm which will allow direct comparison of BOT/BAL with SOC.
FDA also requires a "sufficiently sized" study so that efficacy can be determined with adequate precision. Notably, even from just the first 70 reported patients from the phase 1b, the 95% confidence interval ((CI)) for ORR was 15-36%, which is beyond statistical doubt better that the reported 3% for SOC. Similarly, the lower end of the 95% CI for median OS was 16.5 months (upper end not reached), convincingly higher that the median OS 12.6 months for SOC. Therefore, precision seems sufficient even from just the first 70 patients, and will be even better with the totality of the data from the phase 1 and 2 studies. As explained in the latest quarterly call "the time of submission is not a moment in time that's frozen because we will be required to provide updates on safety and efficacy during agency review. And that will allow time for additional maturation of the data set." Assuming there will be no surprises with pending readouts (which I don't expect) these data should be more than enough for accelerated approval in my opinion. For comparison, tucanitib+trastuzumab was recently (January 2023) granted accelerated approval for advanced HER-2 positive metastatic CRC with efficacy based on just 86 patients.
Next step after accelerated approval is a confirmatory phase 3 trial. AGEN has two options for this; conducting a confirmatory phase 3 in the same setting (2L/3L CRC) or conducting a confirmatory phase 3 in 1L patients. Both options are acceptable according to FDA guidance. The latter option has the advantage of both serving as a confirmatory trial as well as allowing label expansion to earlier line therapies. The risk is that showing benefit in the 1st-line setting may be more difficult, necessitating a larger and longer study (considering better prognosis with SOC in 1L than in subsequent lines of therapy). An additional risk in 1L is adverse events associated with concurrent standard 1st-line chemotherapy regimens (BOT/BAL is to be used as add-on to SOC in 1L). AGEN is awaiting data (expected in Q1 2023) from an ongoing investigator sponsored study in 1L patients to make a decision on what patients to target in the confirmatory phase 3.
Overall, considering dismal prognosis of targeted indication with current SOC, available efficacy data, as well as above FDA guidance, I believe there is a high probability of a successful BLA submission. However, I do have a concern about the timeline of a BLA submission for accelerated approval. FDA strongly recommends that the confirmatory trial should be "well underway, if not fully enrolled, by the time of the accelerated approval action". The rationale is that after approval enrolling patients in a confirmatory trial may be challenging. However, if AGEN elects to conduct a confirmatory trial in 1L patients enrolment shouldn't be a problem (as accelerated approval would be only for late-line patients).
AGEN's planned regulatory pathway for 2L-3L+ CRC (ESMO 2023 corporate event)
Rest of I/O pipeline and collaborations
As discussed above, AGEN's goal is to become an "one-stop shop" for I/O therapeutics. AGEN already has multiple clinical stage I/O assets (either through past acquisitions or through its discovery platform), including checkpoint inhibitors, immune activators and tumor microenvironment conditioning agents; botensilimab (discussed above), balstilimab (anti-PD1), zalifrelimab (1st gen anti-CTLA-4), UGN-301 (intravesical zalifrelimab formulation), AGEN2373 (anti-CD137), AGEN1423 (CD73/TGF? TRAP bifunctional antibody), AGEN1571 (anti-ILT2), MK-4830 (anti-ILT-4), INCAGN1876 (anti-GITR), INCAGN2390 (anti-TIM-3), INCAGN2385 (anti-LAG-3), BMS-986442/AGEN1777 (TIGIT bispecific). Notable is the end-to-end capability of AGEN, from discovery through manufacturing, which reduces cost and increases speed and efficiency.
Of note, due to resource constraints and to extend cash runway AGEN has decided to focus on BOT/BAL pipeline and temporarily postpone all other programs. Programs funded by partnerships are not affected and still ongoing. Currently, my bullish thesis on AGEN is based on just BOT/BAL potential hence the focus of this article. Nevertheless, partnered programs will likely continue to be a significant source of non-dilutive funding for AGEN. Successful development of BOT/BAL in the next couple of years will allow AGEN to raise more funds to further develop additional I/O therapeutics and achieve its goal of becoming an "one-stop shop" for I/O. Ongoing partnered programs and pending milestones and royalties are summarized in the 3rd and 4th image of the article. Of note is the synergy potential of partnered assets with BOT/BAL.
AGEN subsidiaries
Beyond above-discussed I/O pipeline AGEN is also developing adoptive cell therapies (through MiNK Therapeutics subsidiary) and vaccine adjuvants (through SaponiQx subsidiary). These are currently not considered important for my thesis on AGEN but could prove to be a source of further upside long-term.
Of note, SaponiQx's QS21 STIMULON adjuvant is part of blockbuster GSK vaccines Shingrix (herpes zoster) and Arexvy (RSV), although AGEN has sold all relevant royalties. SaponiQx is developing next-generation saponin-based adjuvants, but these are still in the pre-clinical stage. SaponiQx's has also developed a manufacturing method that allows potential pandemic quantity production of its adjuvant. I don't expect any short/medium-term upside in AGEN stock based on its SaponiQx subsidiary.
MiNK Therapeutics (INKT) is developing invariant natural killer T (iNKT) cell therapies for cancer. iNKT cells have theoretical advantages over other cell therapies (like NK cells, T cells, ?? T cells) including; "off-the-self" availability, no need for lymphodepletion prior to administration (a major advantage as lymphodepletion itself is associated with severe side effects), persistence independent of HLA matching, both direct tumor killing as well as innate and adaptive immune modulation. Furthermore, natural iNKT can be engineered to improve tumor killing (currently in the preclinical stage). Beyond cancer, MiNK is also using the same platform to target acute respiratory distress syndrome associated with viral infections. The problem with MiNK is that it is still very early-stage and will need a lot of cash. Nevertheless, the platform is quite promising long-term with potential synergy with AGEN's I/O assets.
Catalysts in 2024
There are numerous catalysts to be expected by AGEN in 2024;
- BLA submission for accelerated approval of BOT/BAL in advanced MSS CRC NLV (expected in mid 2024).
- Completion of transactions (sale of 2 assets and monetization of future milestones/royalties) that will significantly extend cash runway and avoid need of dilutive cash raise (expected in 1H 2024).
- Multiple readouts for ongoing trials in CRC, pancreatic cancer and NSCLC (see image below).
- Potential news on a BOT/BAL partnership.
Achievements in 2023 and catalysts in 2024-2025 (AGEN January 2024 corporate presentation)
Financials
AGEN reported cash and cash equivalents of $106.3M as of Sep 30, 2023. Subsequently, AGEN announced pending receipt of a $25M milestone payment from BMS. Notable in the balance sheet are the very high liabilities. However, vast majority of liabilities are related to prior sale of royalties and milestones (mostly from the sale of royalties for QS-21 Stimulon adjuvant). Total operating expenses in Q3 were $70.3M (R&D $51.4M, G&A $18.9M). At this rate available cash resources are enough for only part of Q1 2024. Nevertheless, AGEN has recently announced prioritization of resources towards BOT/BAL and the upcoming BLA submission. Notably, "CEO, Dr. Garo Armen has elected to receive his base salary and any potential bonus payments in stock rather than cash". CEO's guidance for Q4 cash burn is $40M and AGEN believes that based on planned operations available cash resources "will be sufficient to satisfy our liquidity requirements for at least one year". Furthermore, AGEN is "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". Additionally, AGEN plans "the partial sale of other milestones and royalties" from partnered programs. AGEN estimates total proceeds of $200M from these transactions, expected during 1H 2024. Finally, AGEN reported being "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".
Considering AGEN's track record in forming partnerships and raising capital non-dilutively I am confident about above transaction and a cash runway through important catalysts.
Risks
There are major risks associated with the thesis;
- Despite very promising results from the phase 1b single-arm study in 2L/3L+ MSS CRC NLM, the readout from the ongoing randomized phase 2 may not confirm earlier findings. Nevertheless, as discussed above I believe there is a high probability of success.
- Despite strong evidence supporting accelerated approval there is risk of regulatory delays (discussed in a prior section).
- AGEN may fail to close planned transactions (non-dilutive cash raise) or find a partner for BOT/BAL. Even if AGEN successfully delivers promised transactions, there is the risk that gross proceeds may be lower than anticipated. This will increase the risk of dilution.
- Considering a bid price <$1, AGEN has already received a notice by the Nasdaq Stock Market's Listing Qualifications Department. AGEN has been granted a 180-day period (up to June 3, 2024) and will then be eligible for an additional 180-day period to comply. This should be enough for AGEN to achieve the minimum bid price requirement considering pending catalysts.
- Oncology in general, and immuno-oncology specifically, are very competitive fields. AGEN faces competition not only from approved I/O therapies (including approved anti-CTLA and anti-PD1) but also from multiple candidates being developed for the same targets/indications (see latest 10-K ) and the rapidly changing treatment landscape in oncology.
Conclusions
Overall, although I acknowledge many risks, I suggest investing in AGEN considering; (1) Multiple pending catalysts in 2024, and (2) Prior track record of successfully raising cash non-dilutively from partnerships and monetization of royalties and milestone payments. Therefore, despite current cash runway of less than a year, I expect that AGEN will successfully raise non-dilutive cash that will considerably extend runway. Furthermore, I am confident AGEN will be successful in forming another partnership for BOT/BAL. Notably, BOT/BAL has shown durable responses in multiple advanced tumor types, including tumors that have failed prior anti-PD1/CTLA-4 treatment, suggesting significant expansion potential in solid tumors beyond CRC, with promising data so far in pancreatic, melanoma, sarcoma, ovarian and NSCLC.
Your feedback is appreciated
Please comment below if you have any feedback (positive or negative), if you spot any mistakes, or if you believe I missed something important in my analysis.
Also I suggest tracking comments if you are interested in following the stock as I may post updates there.
For further details see:
Agenus: 2024 May Finally Be The Year For A Major Turnaround