Agenus - Q2 2024

Executive Summary

• Q2 2024 delivered $23.509M in total revenue and a net loss of $54.8M (EPS $(2.52)), with cash used in operations of $38.2M; revenue declined sequentially on lower R&D revenue, while losses improved versus Q2 2023 on reduced operating expenses.
• Clinical execution remained the key highlight: RECIST‑confirmed ORR of 19.4% and 6‑month OS of 90% in the randomized Phase 2 BOT/BAL arm (75mg BOT/240mg BAL), broadly consistent with Phase 1 (ORR 23%, mOS 21.2 months).
• Regulatory trajectory mixed: FDA discouraged Accelerated Approval on interim ORR data, but Agenus gained alignment on Phase 3 dosing and initiated EMA and ex‑US regulatory engagements; management targets Phase 3 start “as early as the next 4 months,” with fast enrollment expected.
• Financing actions and dilution risk in focus: first tranche of $75M royalty financing with Ligand closed; ATM program expanded with prospectus supplement for up to 13.8M shares, indicating readiness for at‑the‑market issuance despite no near‑term plans at current prices.
• Stock reaction catalyst: following the 7/18 FDA EOP2 disclosure, AGEN fell ~58.8% to $7.30; near‑term narrative depends on maturing Phase 2 data, Phase 3 initiation, and EMA guidance.

What Went Well and What Went Wrong

What Went Well

• Confirmatory efficacy: Phase 2 BOT/BAL arm showed RECIST‑confirmed ORR 19.4% and 6‑month OS 90%, aligning with Phase 1 and reinforcing differentiation versus historical SOC in r/r MSS CRC NLM.
• Neoadjuvant momentum: NEST‑2 cohort in MSS CRC achieved 78% pathologic responses ≥50% and 56% cPRs; no surgery delays due to AEs, supporting a compelling early‑line signal.
• Regulatory and clinical clarity: FDA alignment on Phase 3 design and dose; EMA engagement underway with subsequent meetings planned, and global registration pathways explored (UK, Canada, Australia, Israel, Brazil).
  • Quote: “We’ve started engaging with regulatory bodies outside of the U.S… to explore rapid approval pathways… In Europe, this could mean conditional approval…” — Garo Armen.

What Went Wrong

• Accelerated Approval (AA) setback: FDA advised against submitting interim ORR data for AA, citing uncertain translation to survival benefit, tempering near‑term US approval expectations.
• Dilution overhang: Filed prospectus supplement for up to 13.8M shares under ATM; management noted readiness to issue, and minor H1 sales at ~$15/share — a potential overhang if capital needs rise.
• Estimate comparison unavailable: S&P Global consensus metrics were not retrievable in this session; therefore, beats/misses versus Street are indeterminable at this time (see Estimates Context).

Transcript

Operator (participant)

Good morning, and welcome to Agenus' second quarter 2024 conference call and webcast. All participants will be in a listen-only mode until the question and answer session. Please note, this event is being recorded. If anyone has any objections, you may disconnect at this time. I would now like to turn the conference over to Zack Armen, Head of Investor Relations at Agenus. Zack, please go ahead.

Zack Armen (Head of Investor Relations)

Thank you, Leonardo, and thank you all for joining us today. Today's call is being webcast and will be available on our website for replay. I'd like to remind you that this call will include forward-looking statements, including statements regarding our clinical development, regulatory and commercial plans and timelines, as well as timelines for data release and partnership opportunities, among other updates. These statements are subject to risks and uncertainties, and we, we refer you to our SEC filings available on our website for more details on these risks. Joining me today are Dr. Garo Armen, Chairman and Chief Executive Officer, Dr. Steven O'Day, Chief Medical Officer, and Christine Klaskin, Vice President of Finance. Dr. Robin Taylor, Chief Commercial Officer, will be participating in the Q&A session. Now, I'd like to turn the call over to Garo to highlight our progress in the second quarter. Garo?

Garo Armen (Chairman and CEO)

Good morning, everyone, and thank you for joining us today. On the merits of our circumstances and on matters within our control, with a strong emphasis on impacting patient lives, we have made significant progress in the development of botensilimab, which we call BOT, and balstilimab, which we call BAL. These are for the treatment of colorectal cancer, even though the combination has been used for many other cancers. Recently, Agenus disclosed top-line data from its global phase II trial, evaluating the BOT/BAL combination in patients with relapsed refractory microsatellite stable, which is called MSS colorectal cancer. These patients constitute about 95% of the diagnosed colorectal cancer patients globally, and as you know, colorectal cancer has been on a significant rise as of late.

Christine Klaskin (VP)

The results from our second trial, the phase II trial, are consistent with those observed in our phase I trial, demonstrating a confirmed overall response rate of approximately 20% in the cohort receiving 75 milligrams of BOT plus 240 milligrams of BAL combination. This dosage has been identified as the active dose during a recent meeting with the U.S. FDA, allowing Agenus to proceed with further development, including our planned confirmatory phase III trial. BOT/BAL is demonstrating unprecedented activity in treating challenging cancers across various stages, both as a chemotherapy-free IO-IO-only combination, as well as in combination with standard chemotherapy in first-line metastatic patients where chemotherapy is the standard of care.

It is important to recognize that key opinion leaders and clinical investigators globally, including significant numbers in the U.S., who have seen our data and/or have experienced the outcomes in their patients, strongly advocate making BOT/BAL available to their patients. In our trials of significant numbers of patients, totaling more than 350 in colorectal cancer and over 1,000 patients across 10 different cancer types, we are seeing deep, durable responses in patients who otherwise face grim prognosis with current standard treatments. We believe, along with the experts in the field, that these durable responses translate to long-term patient benefit. While the FDA has not yet concurred with this view and the urgency to make BOT/BAL widely available to patients and their treating physicians, we are optimistic that our mature data will influence their thinking.

On the other hand, we're very encouraged with the initial feedback from other regulatory agencies, which has been notably much more positive thus far. On this note, we've started engaging with regulatory bodies outside of the U.S., including the European Agency, in order to explore rapid approval pathways for BOT/BAL. In Europe, this could mean conditional approval to bring these potentially life-saving agents to patients as soon as possible. Separately from all of this, we are very excited to share that important and very exciting data from a multi-cancer neoadjuvant study, which is being conducted at a major European cancer center, will be presented at a major cancer conference in upcoming months. Our clinical data, as you know, has generated strong support from medical and scientific communities.

Recent publications in Nature Medicine and Cancer Discovery, along with a peer-reviewed journal article that came out from Dana-Farber Cancer Institute here in Boston, emphasized the importance of bringing BOT/BAL to patients with MSS colorectal cancer. By the way, MSS colorectal cancer is one of the most difficult cancers to treat, not just within the colorectal realm, but across the board. We've also seen an unprecedented number of compassionate use requests, driven by the deep and durable responses in a cancer where patients have no acceptable options among many approved drugs, highlighting the urgent demand for BOT/BAL in the colorectal cancer community. Dr. O'Day will describe this reality in more detail during our call. On the business side, we're actively exploring global partnership for BOT/BAL and other assets in our pipeline.

We've regained full rights to AGEN1777 and AGEN2373 from BMS and Gilead, respectively, and are evaluating new partnerships for these programs among the biopharma industry players. As you know, many companies out there are scrambling to cut costs, and I'm talking about large companies, medium-sized companies, and small companies, but there are still pockets of brilliance among them. Interestingly, we've been having increased interest from some of these innovative companies following our announcement about the FDA guidance discouraging accelerated filing. We've strengthened our cash position in the second quarter with the first tranche of the $75 million royalty financing led by Ligand Pharmaceuticals, and we're in talks with investors for a second closing. We're encouraged by the fact that we have received inquiries to potentially invest at premium prices to our current stock price.

Additionally, I'd like to let you know ahead of time, because the filing will be this afternoon, that we will be expanding our ATM facility to be in a state of readiness, in spite of the fact that we have no current plans to issuing stock at these prices. You will see in this filing that we've done some minor sales in the first half of the year, but the prior average price has been approximately $15 a share. Given the uniquely active nature of our agents, our commitment to advancing BOT/BAL is stronger than ever before. We're dedicated to ensuring that patients get access to these life-saving therapies as quickly as possible, and you will hear about some of the plans that we're contemplating on putting into place as soon as possible from my colleague, later on. Before we hear from Dr.

O'Day about more details on our patient-centric, exciting, and life-altering outcomes, I'm delighted to announce that Tom Harrison has joined our board of directors. A few words about Tom before I introduce him. Tom is one of the true transformative leaders in the healthcare industry, having grown diversified agency services into Omnicom Group's largest division with over 5,000 clients and annual revenues exceeding $6 billion. His deep experience in healthcare, communications, and branding, combined with a strong scientific background from his early days at Pfizer, makes him very uniquely equipped to guide Agenus in our next phase of growth. Tom's innovative approach in merging high science with creative marketing will be key in our ability to educate the global community about the critical benefits of our therapies. I want to emphasize educating.

His strategic vision and operational experience is key in our efforts to bring groundbreaking cancer treatments to patients worldwide, not just the U.S. Please join me in welcoming Tom Harrison to say a few words on this call. Tom?

Tom Harrison (Director)

Thank you so much for that most, most kind introduction. Hopefully, I'm worthy of those wonderful words. I'm truly honored to join the board of directors of Agenus, a company that is at the forefront of innovation in the field of immuno-oncology. Work that is being done here at Agenus is not only groundbreaking, but it's also life-changing for patients battling some of the most challenging cancers that Garo has already outlined on the call. As someone who has spent a significant portion of my career in healthcare advertising and strategic advising of CEOs across the healthcare industry, I'm excited to bring my experience to Agenus.... The opportunity to help elevate the awareness of our innovative pipeline and to communicate the significant advances that we are making in cancer treatment, is something that I am really deeply passionate about.

Christine Klaskin (VP)

My career, as Garo said, has always been driven by a commitment to excellence and innovation, founded on a basis of science. From co-founding Harrison Star Business Group to my current role as Senior Operating Partner at Merida Capital Partners, I have been fortunate to work throughout my career with very talented teams, such as the one here at Agenus, and to drive growth and deliver impactful results. I see a similar spirit of innovation and dedication here at Agenus, and I am eager to contribute to our shared mission. One of my key priorities, as Garo said, will be to enhance our strategic communications efforts, to ensure that our scientific advancements and our therapeutic potential are clearly understood by healthcare providers, by patients, by investors, and regulatory bodies around the world.

By doing so, we can not only elevate the visibility and reputation of Agenus, but also help accelerate the delivery of our life-saving therapies to those who are in dire need. I am particularly excited about the progress we are making with our BOT/BAL program, and the potential it holds to address unmet medical needs across multiple cancer indications. The robust data that we have generated, coupled with our active engagements with global regulatory authorities, position us, positions us well, pardon me, to bring these innovative treatments to market. I look forward to working closely with Garo, with the full board of directors, and the entire senior Agenus team to drive our mission forward. Together, we will continue to push our boundaries of what is possible in cancer immunotherapy and improve patient outcomes.

Thank you again, Garo, for the warm welcome, and everyone for the warm welcome with whom I've spoken, and I'm excited about the journey that we have ahead. So now I'm going to turn the call over to Stephen to go over our update, of our clinical progress to date.

Steven O’Day (CMO)

Thank you, Tom and Garo. I am pleased to provide an update on our clinical progress across the BOT/BAL program. Now, as Garo said, spanning over 1,100 patients treated in refractory advanced cancers, as well as earlier stages of metastatic disease, and most recently in the neoadjuvant setting. BOT/BAL is demonstrating remarkable activity with a manageable safety profile in patients with relapsed, refractory, MSS-stable colorectal cancer and non-active liver metastatic disease. Our data remains consistent between the phase I expanded cohort and our phase II randomized trials, particularly in terms of RECIST-confirmed overall response rates, duration of response, and importantly, overall survival.

Christine Klaskin (VP)

Our stable colorectal cancer patient population of 23% in the phase I trial, and now 19.4% in the phase II trial, is roughly 3x the low single-digit overall response rate of any available standard of care therapy in this setting. Our median overall survival for the phase I trial of 21.2 months, with a remarkable 18-month estimated overall survival of 63%, stands in marked contrast to approximately, at best, 12 months with the best standard of care therapies. While survival with the phase II data set is early and maturing, we see consistency in the 6-month survival rate of 90% in our selected combination BOT/BAL arm in the phase II trial, as compared with the 88% in the phase I BOT/BAL arms, and this is very reassuring to us.

We plan to submit the phase II data after a later maturity data cut later this year to a major medical congress in the early part of 2025. We are confident that as these data mature, they will continue to demonstrate differentiation in overall response, duration of response, and survival compared to standard of care therapies in this late-line refractory MSS-stable colorectal cancer. In addition, we are seeing remarkable activity of BOT/BAL in earlier stages of CRC treatment lines, which is highlighted by our data in the NEST neoadjuvant trial, which was updated with an oral presentation at ESMO GI in Munich in this past June. This trial evaluated one dose of BOT with two to four doses of BAL before surgery.

In the updated NEST two cohort, which provided longer time between the first dose of BOT/BAL and surgery of up to eight weeks, remarkably, seven of nine MSS-stable colorectal patients, or 78%, achieved at least a 50% tumor regression at the time of surgery. With five out of nine, or 56%, achieving complete pathologic regressions of their tumors. Importantly, no surgeries were delayed due to adverse events. This data stands in stark contrast to historical data, with attempts at neoadjuvant IO therapy in poorly immunogenic MSS-stable colorectal cancer, where pathologic response rates have been poor. We plan to continue to build on these groundbreaking data in the neoadjuvant setting with additional studies, and as Garo alluded to, and additional IST studies are ongoing.

Data in our phase II BOT/BAL melanoma and pancreas trials continue to mature, and we look forward to updating these data in the coming months. Finally, we will be presenting updated data with BOT/BAL in a relapsed refractory sarcoma population in an oral presentation at the ESMO conference in Barcelona in September. Now I'll turn the call over to Christine to review our financials.

Thank you, Stephen. We ended the second quarter 2024 with a consolidated cash balance of $93.7 million, compared to $76.1 million on December 31, 2023. For the three and six months ended June 30, 2024, we recognized revenue, which includes of $23.5 million and $51.5 million, respectively. This compares to $25.3 million and $48.2 million for the same periods in 2023. Our cash used in operations for the first half of 2024 was $76.4 million, a reduction from $118.6 million for the first half of 2023. Our net loss for the three and six months ended June 30, 2024, is $54.8 million and $118.3 million.

These include non-cash operating expenses of $33.5 million and $71.8 million, respectively. I will now turn the call back for closing remarks.

Garo Armen (Chairman and CEO)

Thank you very much, Tom, Stephen, and Christine. I'd like to extend my gratitude to everyone for joining us today to review our second quarter progress. Our unwavering focus remains on delivering BOT/BAL to individuals living with advanced MSS colorectal cancer and many other cancers where we have shown activity. We are steadfastly exploring innovative and expedited methods to make these treatment options available worldwide. Remember, amongst the importance of these treatment options is that they represent IO-IO. That is immune oncology, immune oncology combo treatments without chemotherapy, with an extended life, life extension, potential. This is very important for patients that have absolutely no options, going forward with limited benefit and horrible toxicity.

Patients are counting on us, and we are deeply committed to fulfilling our mission to provide therapies with curative intent, not only for colorectal cancer, but as I said, for many other cancer types, where we have seen some profound activity. Thank you very much for your continued support and trust in Agenus. I will now turn the call back to the operator to facilitate any questions you may have. Operator.

Operator (participant)

Thank you. We will now begin the question and answer session. At this time, I would like to remind everyone in order to ask a question, press the star and then the number one on your telephone keypad. If you are called upon to ask your question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. We do request for today's session, that you please limit to one question and one follow-up only. We will pause for a moment to compile the question and answer roster. Again, if you would like to ask a question, press the star one on your telephone keypad. The first question comes from the line of Emily Bodner of H.C. Wainwright. Please go ahead.

Emily Bodnar (Biotech Equity Research Analyst)

Continuing the questions. My first one is if you can discuss the FDA's guidance for the phase III design in terms of the number of patients that you might need per arm, including the standard of care arm, and specific endpoints that you plan to look at. And then maybe if you can give any guidance to how soon you believe you could initiate a phase III study, and whether you believe the resources you have, financially could support you running one alone? Thanks.

Garo Armen (Chairman and CEO)

So, Emily, among the options that we're considering right now is a phase III trial that can commence as early as the next four months and enroll inside of a year. And the reason I say enroll inside of a year is because there is such outcry or patient demand out there that we're getting, and this has been at an increasing pace before the FDA guidance was issued, which we announced a couple of weeks ago, and particularly after the FDA guidance, because now patients are very concerned that they're not going to be able to get this drug in a commercial setting. And so there is a huge interest of patients coming to us for drug globally. So that's why we believe that once we initiate a phase III trial, we'll be able to enroll very rapidly.

Christine Klaskin (VP)

That's why I feel confident that enrolling patients inside of a year post-commencement is something that is highly possible. Now, among the options that we are considering for phase III trials, we've been approached by certain groups that have significant subsidies offered to bring innovative medicines to patients as soon as possible. Among these groups is an outfit that has proposed to do a randomized phase III trial that will satisfy the needs of regulatory agencies globally, not just the FDA, for as little as $10 million. So that's what we're exploring now, amongst other options. And stay tuned, the decision will be made in the next couple of months.

Emily Bodnar (Biotech Equity Research Analyst)

Okay, great. Thank you. I believe you mentioned that you're expecting to have data in pancreatic and melanoma cancers in the coming months. Could you just confirm if that's expected for this year? And if so, how much data should we be expecting? Thanks.

Garo Armen (Chairman and CEO)

So we are expecting maturing data to be disclosed in pancreatic cancer, in melanoma, in lung cancer, and neoadjuvant cancer patients of all comers, which is a trial that I spoke about, which is being conducted at a major cancer center in Europe by a very, very visible investigator who has had experience with other neoadjuvant trials. So these are amongst the most important data outputs that you will see in coming months.

Emily Bodnar (Biotech Equity Research Analyst)

Okay. Thanks for taking the question.

Operator (participant)

Your next question comes from the line of Kelly Shi of Jefferies. Please go ahead.

Speaker 9

Hi, good morning. This is Claire on for Kelly. Thanks for taking our question. So-

Garo Armen (Chairman and CEO)

It's very difficult to hear you. Very difficult to hear you.

Speaker 9

Oh, can you hear me now?

Garo Armen (Chairman and CEO)

Yes, better.

Speaker 9

Okay, great. This is Claire on for Kelly. Thanks for taking our question. So wondering if you could provide more color on the initial meeting you had with the European agency. Like, what kind of data did you show them, and whether that's the same data package as what you provided to FDA? And for the subsequent meetings, could you let us know what would be the key discussion points with them? Thank you.

Garo Armen (Chairman and CEO)

Okay. So we're not going to disclose much details other than the following. The reason we're not going to disclose much details is because we do not want background efforts to basically stop another agency from doing what they think is the right thing to do. If you can read between the lines in what I'm saying, I think it will be very clear in the future to know that all these interactions are confidential. We've had the very initial interaction with one of the agencies, major agencies, and I will tell you their stance on this is diametrically opposite to the U.S. FDA. Diametrically opposite. What do I mean by that? They have done their homework, they understand the data.

Christine Klaskin (VP)

They have had more, slightly more mature data than what we had presented with to the FDA, because as you know, the FDA has very strict rules on not considering data post-submission of the package, and between the submission of the package and a meeting could be several months. So we even though we had more matured, mature data, by the time we had the actual meeting, this data wasn't being formally considered in their consideration of their guidance to us. But the European agency has seen this more mature data, and their guidance to us is very simple, that they have, they have indicated several pointers that will be helpful to us in making sure that we meet all the requirements.

But they've also said to us that they hope that these requirements, which are box checking, important box checking elements, will not get in the way of our rapid exploration of submission.

Speaker 9

Okay, got it. Thank you.

Operator (participant)

Your next question comes from the line of Madison El-Saadi of B. Riley Financial. Please go ahead.

Madison El-Saadi (Research Analyst)

... Hey, guys. Thanks for taking our questions. A couple from me. Just as we look at this November data cut, kind of just wondering what the expectations on survival and durability are. If we're looking, if you're looking to just kind of maintain that 19.5%-20% ORR. And then could you also confirm, and sorry if I missed it, but could you confirm that the two patients that had not had their confirmatory scan, if they did have those scans? And then lastly, on the phase III design, just wondering, thoughts on the control arm, if it'll look like the phase II, or if it could be different things?

Garo Armen (Chairman and CEO)

Okay. So, number 1, all of the data that we reported are strictly confirmed ORR, okay? which means that there is still some upside to that, but there is no downside to it. In other words, we will not have any downside revisions to what we have already reported as overall response rates in the second trial, the phase II trial, multi-arm phase II trial. Now, of course, from the phase I trial, we almost have 24 months of follow-up. And as we said earlier, the follow-up in the phase II trial will be at a point of about 12 months maturity. And the trends that we're seeing in the phase II trial are almost identical to the trends that we've seen in our phase I trial. And so with all of that, we are confident about the integrity of our data.

Christine Klaskin (VP)

We're confident about the patient selection. In other words, there's no cheating here. All patients that are enrolled in this trial fall into the category of either third or fourth line patients in the metastatic setting. So that has been confirmed, and of course, that adds to the validity of the data. And as Dr. O'Day would say, "Deep, underlining deep and durable, underlining durable responses." In immuno-oncology trials that are particularly mediated with a CTLA-4 binding antibody, as you know, but doesn't just bind to CTLA-4, it is a multifunctional antibody, but one of the things that it does is bind to CTLA-4. We are confident that in an immuno-oncology treatment setting, any trial that is an IO-IO trial, that binds to CTLA-4 and shows significant overall response rates, always translates to survival benefit.

I think this is a point that certain agencies understand, and other agencies, like the FDA, I think, need to be schooled in this phenomenon. And it is frankly, our responsibility, not the FDA's responsibility, for us to present the data to convince them of the reality of the power of immuno-oncology with IO-IO agents that are mediated with CTLA-4 binding in addition to PD-1. Next question.

Operator (participant)

Your next question comes from the line of Madeline Stone of William Blair. Please go ahead.

Madeleine Stone (Biotech Equity Research Associate)

Great. Hi, this is Madeline on for Matt Phipps. Thanks for taking our question. So, for future discussions planned with the FDA, how much additional follow-up from the phase II trial will you need in that more mature data set?

Garo Armen (Chairman and CEO)

Approximately six more months of follow-up versus what we had presented to them in a submitted document.

Madeleine Stone (Biotech Equity Research Associate)

Great. Thank you.

Operator (participant)

That concludes our question and answer session. I will now turn the conference back over to Garo Armen for closing remarks.

Garo Armen (Chairman and CEO)

Thank you very much, Bernardo, and once again, thank you for your attention. I appreciate the questions that we've gotten, and the basic conclusion that I had is that I know we made reference to the fact that we will be having more follow-up on patients before we engage with regulatory agencies, including the FDA.

Christine Klaskin (VP)

But I'd like to further indicate to you that we feel confident in the follow-up data from this trial because we have the data by and large, and it will be only a question of cleaning up the data and presenting it in a format with the appropriate arguments that will hopefully align our way of thinking, our KOL's way of thinking, our investigators who have significant experience in the field with our agents, their way of thinking with the regulatory. So this is what we hope to accomplish in the next few months, and stay tuned, and we always welcome your engagement in the form of offline additional questions that you may have. Thank you again.

Operator (participant)

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.