Agenus - Earnings Call - Q4 2018

Transcript

Speaker 0

Good morning, ladies and gentlemen. Thank you for standing by, and welcome to the Agenus Fourth Quarter twenty eighteen Conference Call. At this time, all participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions.

To ask a question, you may press star then one on your touch tone phone. Please note today's event is being recorded. I would now like to turn the conference over to Doctor. Jennifer Buell, Chief Operating Officer of Agenus. Doctor.

Buell, please go ahead.

Speaker 1

Thank you, operator, and good morning. Before market opened today, Agenus issued a press release to provide a corporate update and financial results for the fourth quarter and full year ending December 3138. Today's call is being webcast and will be available on our website for replay. Before we provide an update, I'd like to remind you that this call will include forward looking statements, including statements regarding our clinical development plans and timelines, partnership opportunities and timelines, and our financial position. These statements are subject to risks and uncertainties, and we refer you to our SEC filings for more details on these risks.

As a reminder, this call is being recorded for audio broadcast. Joining me today are Doctor. Garo Armen, Chairman and Chief Executive Officer Doctor. Anna Viatek, Head of Clinical Development and Christine Klaskin, our Vice President of Finance. Today, we will review our 2018 accomplishments and outline our plans for 2019.

We had set ambitious goals for 2018. We accomplished our key objectives and, in the process, we made important contributions to science, to patients, and for our partners. In 2018, our discovery efforts yielded six IND filings. We also concluded an important collaboration with Gilead, which resulted in an upfront cash infusion of $150,000,000 followed by the receipt of another near term milestone of $7,500,000 which we announced yesterday. We expect to achieve other near term milestones this year, which would trigger additional payments from Gilead and our other partners.

Regarding our plans to become a commercial company in the coming years, we have advanced our lead CTLA-four and PD-one antibodies into trials designed to meet accelerated approval pathways by the U. S. FDA. We ended the year with over $200,000,000 of pro form a cash, including the cash payment we received from Gilead earlier this year. We also announced the launch of a product specific financing mechanism designed to provide funding for the expanded development, commercialization, and distribution of our anti PD-one antibody, AGEN2034.

Garo will expand on these developments in just a bit. Looking forward in 2019, we expect to continue on the momentum we have built during 2018. More specifically, we expect to file additional INDs for novel agents. We expect to commence clinical trials with several novel IO agents that are designed to address mechanisms currently not addressed available therapies. We expect to generate clinical data, and we also expect additional partnership transactions.

Most importantly, we expect to make substantial progress with our clinical trial enrollment in preparation for an FDA filing for product approval. One of our marquee programs is our potentially best in class next generation anti CTLA-four molecule. This is AGEN1181. AGEN1181 is an antibody with a very unique attribute, we believe, can be breakthrough IO treatment for patients with cancer.

Speaker 0

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Speaker 1

addition, AGEN1181 can potentially be a best in class combination agent to substantially expand the commercial potential of our PD-one antibody. I will now turn the call over to Garo to provide additional details on our accomplishments and our plans for 2019.

Speaker 2

Thank you, Jen, and thank you all for joining us this morning. As Jen mentioned, we had a year of important advances. These include, we continue to innovate and discover novel agents, which have been the key catalysts for our internal development programs, as well as our partnered programs. We have advanced our agents into and through the clinic. We are enrolling patients in our PD-one and PD-one plus CTLA-four trials, designed for accelerated approval by the US FDA.

We have reached important partnership milestones and received payments from our existing partners. And very importantly, we have entered into a partnership with Gilead, which as Jen said, resulted in a cash infusion of $150,000,000 followed by an additional payment for a near term milestone, which we announced yesterday. In addition, we made progress with our AgenTus cell therapy programs. Presently, we are on track to file our first cell therapy IND later this year. We also expect to complete our first round of financing for AgenTus, and we are in early partnership discussions.

It is also important to note that one of our innovations, QS-twenty one has been a key driver for the successful launch of GSK's shingles vaccine, Shingrix, with its first year revenue in 2018 exceeding US1 billion dollars We have designed our pipeline of innovative and next generation immuno oncology agents to deliver substantial benefit to patients with cancer. Hence, our strategy is to pursue smaller trials to achieve clinical proof of principle with high response rates and cures, specifically targeting patients who are not being effectively served by today's first generation immuno oncology agents. What this means is that if we deliver on these objectives, clinical trials required for approval will enroll fewer patients and be quicker to achieve results. We're entering the period in the biopharmaceutical industry where success is being increasingly driven by speed and innovation. This is akin to the present day drivers of the technology sector.

Our in house capabilities from novel target discovery, all the way to GMP manufacturing, have made it possible for us to be able to file 13 INDs for Agenus discoveries of novel agents in about a three year time span, including some of the filings contemplated for this year. In a new world in which obsolescence rates may be rising, such capabilities to innovate in a speedily advanced programs, we believe will be key among the key requirements for success. Our speed and innovation have also been key to our ability to enter into important partnerships with Gilead, with Insight, with Merck, and with GSK. We expect additional partnership transactions to be an important part of our strategy going forward. However, given the productivity of our discovery engine, we also expect our pipeline of innovation to be driving our own commercial ambitions and strategy.

Our broad portfolio of antibodies, vaccines, and cell therapy provide us with the ability to devise optimal combination treatments for patients. In our experience, we know that cancer is a very complex disease, and a one size fits all solutions have not been and will not work. Therefore, our strategy has been to design and use all available tools in our portfolio in our efforts to conquer cancer. I will now summarize some of the specifics of our 2018 accomplishments. We ended 2018 with a cash balance of $53,000,000 subsequent to which we received $150,000,000 from the Gilead transaction.

And again, we announced another $7,500,000 in payments from a milestone we achieved a few days ago. Data from our most advanced clinical trials involving CTLA-four and PD-one continue to demonstrate clinical benefit in the majority of patients treated. We confirmed, as Jen mentioned with the FDA, that our lead clinical trials are designed for accelerated path to our first BLA filing. We will expand our market opportunity for PD-one by pursuing expanded cancer indications using combination strategies with our own internal immuno oncology molecules. We advanced our best in class molecule with IND filings.

These molecules include our next generation CTLA-four, which is AGEN1181, and first in class bispecific molecule AGEN1223, both of which I will review in more detail in a bit. Recently, we disclosed our plans to launch a novel financing mechanisms, which we call BEST. This offering is being done under a Reg D in compliance with the SEC rules. The purpose of BEST is to provide project specific financing. We're planning to deploy the proceeds from BEST later on this year and early next year to expand the development and commercial upside of our PD-one antibody AGEN2034 beyond our cervical cancer programs.

We have the ability to use our first or second generation CTLA-four antibodies in combination with our PD-one antibody, thus enhancing our competitive advantage and enhancing the market potential of our own PD-one. Now, I will provide the details on our partnerships with Gilead, and its implications for us, and perhaps for them as well. The Gilead transaction marked an important strategic and financial milestone for us. Gilead's commitment to immune oncology and their choice of agendas for a collaboration speaks to the capabilities we have built over the past years. We believe that having Gilead as a partner to advance several of our best in class molecules will help accelerate their development, and potentially bring breakthrough therapies to patients faster.

As I mentioned, our collaboration with Gilead provided us with an upfront cash of 150,000,000 and potential milestone payments of an additional 1,700,000,000.0. Yesterday's announcement of an additional 7,500,000.0 in milestone payments, represents the first of several near term milestones we expect to receive. Through our collaboration, Gilead received exclusive rights to AGEN1423, a first in class bispecific antibody designed to block two powerful resistance mechanisms in the tumor microenvironment. The IND for this molecule was recently accepted by the FDA, which means it can now proceed to clinical. Gilead also received the exclusive option to license AGEN1223, a first in class bispecific design to eliminate Tregs from tumor microenvironment, and AGEN2373, a CD137 agonist.

Gilead may acquire rights to these two programs following early proof of mechanism demonstration with an option trigger of $50,000,000 for each program. In our existing partnerships with Insight and Merck, we received several milestone payments last year for the clinical advancement of LAG-three, TIM-three and ILT-four. These molecules were discovered at Agenus and continue to advance successfully. Last year, we met with the FDA to discuss the approval path for our lead CTLA-four and PD-one programs. We concluded that we are positioned for accelerated pathways for approval with relatively small numbers of patients, and surrogate short term endpoints.

We anticipate filings for accelerated approval by as early as 2020. To that end, our accrual in these trials for both PD-one monotherapy and combination studies with our CTLA-four antibody, has been steadily progressing and tracking to be complete by approximately year end. It is heartening to see the benefits of our CTLA-four and PD-one antibody. In our trials, patients in several different tumors types are showing responses, including some with long lasting durable, and even potentially curable responses. Finally, as Jen mentioned, at the opening of the call, while there are more than a dozen active clinical trials with first generation molecules discovered at Agenus, our next generation pipeline comprised of first and best in class molecules is now entering the clinic.

These include our enhanced CTLA-four molecule AGEN1181, and our first in class bispecific molecule AGEN1223. For the purposes of this call, I will focus on AGEN1181 with just a few points. We made a discovery that revealed we could significantly enhance functionality and antitumor immunity with antibody engineering. Our experts went to work and engineered this enhancement into AGEN1181, our next generation anti CTLA-four antibody. Based on preclinical data, we believe this molecule represents an important breakthrough in the field.

Data on this molecule shows that it has enhanced immune activation and tumor fighting activities. It was designed to specifically boost cancer killing immune cells, and very importantly, to defeat cells that block the immune system's ability to kill cancer. AGEN1181 has the potential to be effective in a wider patient population than the first generation molecules, and importantly, AGEN1181 may significantly expand the commercial potential of our own anti PD-one antibody when used in combination. This could differentiate the Agenus IO portfolio from others, including some of our leading competitors. In fact, AGEN1181 has generated considerable excitement among key opinion leaders, and we expect to dose our first patient in the next several weeks.

Now, I will turn the call over to Christine to provide financial highlights, and I will be back to sum up the call.

Speaker 3

Thank you, Garo. As Garo mentioned, we closed 2018 with a cash balance of $53,000,000 followed by the $150,000,000 received from Gilead earlier this year, thus heading into 2019 with approximately $200,000,000 At the end of 2017, our cash balance was 60,000,000 and at the end of the 2018, it was $46,000,000 For the fourth quarter ended December 3138, we reported a net loss of $49,000,000 or $0.40 per share compared to the net loss for the same period in 2017 of $35,000,000 or $0.35 per share. In the fourth quarter, we recognized revenue of $6,500,000 which includes non cash royalties earned. For the year ended December 3138, we reported a net loss of $162,000,000 or $1.44 per share compared to a net loss for the year ended 2017 of $121,000,000 or $1.23 per share. The increased net loss reflects reduced revenue during 2018 due to an accelerated milestone received during 2017 from Incyte, the 2018 loss on our early extinguishment of debt and increased non cash interest on our liability related to the sale of future royalties.

I now turn the call back to Garo for his closing remarks.

Speaker 2

Thank you, Christine. In closing, we expect the following key catalysts for 2019. One, completing accrual of our PD-one and CTLA-four lead programs by year end to deliver our BLA as early as 2020. Two, to expand the commercial market access of our lead molecule in indications beyond cervical cancer, fueled by our best mediated capital initiatives. Three, initiate first in class combinations with our next generation CTLA-four, our proprietary PD-one molecule.

Four, advance additional breakthrough discoveries and file at least three additional INDs this year. Five, advance our next generation best in class molecules into the clinic, eleven eighty one, and the selective Treg depleting bispecific agent twelve twenty three. And lastly, advance our cell therapy program and have AgenTus funded independently in anticipation of a public offering later this year or next. Lastly, we continue with our enhanced communication strategy through our own participation at major oncology conferences, with high profile publications, and through the publication of our Agenus newsletter. Agenus News is published every other Monday, and reports on Agenus advances, as well as provides the necessary education to help enhance the readers understanding of this exciting field.

As you're aware, we have also increased and continue to increase our presence on social media. We are committed to our mission of delivering for our patients and for all our stakeholders. Our efforts and staying power over the last twenty five years speaks to this commitment. We thank you for your staying the course and joining us on this journey. Now we would be happy to entertain your questions.

Speaker 0

We will now begin the question and answer session. And our first question will come from Matt Phipps of William Blair. Please go ahead.

Speaker 4

Good morning. Three questions for me. I was wondering if you have any kind of update on the size of the token offering. I think it might be closing tomorrow, so we might have to wait for that closing before you can provide that info. But if any updates on the token offering?

Two, when do we get more details on exactly how the additional upfront capital will allow you to expand the total market opportunity for agent 2,034 As far as new indications, you know, it does kind of seem like to really be beneficial to Agenus shareholders. We need to see how additional indications can be reached with this upfront capital. And then lastly, any clinical data presentations that we can look for this year with either wholly owned or partnered programs?

Speaker 2

Certainly, Matt. Let me tackle the first two questions and then I'll turn it over to Jen and Anna to address the third one. So with regard to BEST, as you rightfully pointed out, this is going to be consummated in three different tranches. So the first tranche is closing this week. And because of the uniqueness of this instrument, the paperwork is somewhat complicated.

And so, we're trying to facilitate that. And while we will end the pricing of the first tranche this week, the closing will probably take a bit longer. And as soon as we have the closing, we will announce the closing of the first tranche and initiate the second tranche. Now, you might also remember that when we announced this very unique financing mechanism, we got a lot of attention from a number of bankers, as well as other companies. So bear with us, this is not, this is a discretionary financing mechanism for us.

And as I said earlier, the capital from this financing mechanism will not be deployed until the end of this year or early next year. So it's not something that we need to address immediately, while we would like to expedite it as much as possible. The second question of how do we deploy the capital we received upfront in terms of getting our own agenda advancing with our own portfolio, if that is correct question that I'm reframing. As I said earlier, we are concentrating on clinical trials and combination of clinical trials and indications, where we will be reading out clinical proof of principle in small numbers of patients. So while we have a lot of programs, it is important to note that a number of these programs are partnered, so we don't bear all of the burden of advancing them, such as for example, Merck, Gilead, and the INSIGHT programs.

And we believe that we will have enough cash and put into place the resources we need over the next months and years to advance our own agenda. It's also noteworthy to recall that it's been almost four years since we did our last marketed equity offering. So we have been quite mindful of financing our future using partnership and other novel mechanisms, and we'll continue to do that. Jen, would you like to address the presentations that we may have in upcoming conferences?

Speaker 1

Certainly, and as much as I can. So Matt, thanks for questions. As Garo mentioned during the call, our studies to explore PD-one monotherapy in patients with second line cervical cancer, as well as our PD-one plus CTLA-four in second line cervical cancer are advancing. And last year we met with the FDA, we confirmed the requirements for what would be necessary to pursue accelerated approval pathways. And we also confirmed that our trials are designed and on track to meet those accelerated approval requirements.

We are moving our programs quite aggressively and continue to meet our targets and expectations for accrual, which does give us the opportunity to present data at upcoming conferences, much of which we haven't specified yet or publicly disclosed when we're going to be presenting this. Now, because of the sensitivity of these data and the criticality of these programs to our BLA filing, we will be very thoughtful in where and how we present data. And so we'll issue upcoming guidance as to when you might see some. Now there are some major conferences upcoming in the impending months where we will be present at, and I believe that as those abstracts get to release, we'll be more vocal and visible about where we're presenting data. In addition to our PD-one and CTLA-four in second line cervical cancer, we have an active program also accruing for patients who are refractory to PD-one, and they're treated with our CTLA-four in a very strategic manner and we have the opportunity to present some of that data at upcoming conferences as well.

With respect to partnered programs, unfortunately we're not at liberty to disclose where those data may be presented, but we know that based on guidance from the INSIGHT programs, what they have shared is that those programs are advancing. They're based on publicly available data. GITR and OX40 are advanced past monotherapy. They're now in combinations in doublets and triplet combinations advancing in the clinic. And so we'll defer our call participants to the INSIGHT guidance as to when those programs may be disclosed at conferences.

We lastly have our novel programs, which we've launched, and that includes AGEN1181, our next generation CTLA-four. It also includes our first in class bispecific molecule. Those molecules are advancing in the clinic, and we will be issuing guidance as to when clinical data may be available, but we have not formally disclosed. So as we have done in the past, we have a number of different advances both on the research side as well as on the clinical side, and we're aggressive in getting data out, and we'll be thoughtful in doing so. So, you can expect to see some data from us, and we'll provide more clear guidance as we go through the course of the year.

Speaker 4

Thanks,

Speaker 0

Again, if you'd like to ask a question, please press star, then 1. This concludes our question and answer session. I would like to turn the conference back over to Doctor. Garo Armen for any closing remarks.

Speaker 2

Thank you very much, everybody. I think we have summed up the call nicely. There have been some questions asked from time to time about our near term, medium term, and longer term strategy of partnering versus developing our own products. And let me address that in closing by saying that as you know, we are advancing our own first generation CTLA-four and PD-one products. And we expect that we will be commercializing those products ourselves, at least in North America.

In addition to that, a number of the discoveries from our portfolio are likely to be pursued commercially by us in America, in North America, and we plan on selectively licensing out ex US rights to third party. So with that, I would like to thank you once again, and this call will be reported, and if you have additional questions, we welcome entertaining them offline. Thank you very much.

Speaker 0

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.