Agenus - Earnings Call - Q4 2024

Executive Summary

• Q4 2024 revenue was $26.8M and net loss was $46.8M ($2.04 loss per share), with an operational cash burn of $28.7M; revenue was primarily non‑cash royalty revenue.
• Management accelerated cost actions and guided to reduce annualized burn rate to approximately $50M by mid‑2025, prioritizing BOT/BAL and externalizing costs; this is a step‑down from prior ~$100M FY25 burn plans announced in late 2024.
• Clinical momentum for BOT/BAL in MSS colorectal cancer was reinforced by ASCO‑GI 2025 presentations (Phase 2 and neoadjuvant data), supporting durability and potential chemo‑/surgery‑sparing approaches, and ongoing investigator‑sponsored trials (ISTs).
• The company is actively monetizing West Coast manufacturing and real estate assets (Berkeley, Emeryville, Vacaville) and continues to pursue partnerships to fund BOT/BAL registration; a $20M net mortgage was secured in November 2024.
• Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable at time of request; estimate comparisons cannot be assessed (S&P Global data not retrieved due to rate limits).

What Went Well and What Went Wrong

What Went Well

• Material cash burn reduction with Q4 operational cash burn of $28.7M; management reiterated plans to reach ~$50M annualized burn by mid‑2025 through externalizing BOT/BAL costs, CMC monetization, and OpEx cuts.
• Strong external validation and data continuity for BOT/BAL across refractory and neoadjuvant MSS CRC; Phase 2 showed 19% ORR and durable disease control, while neoadjuvant studies showed high pathological responses, underpinning potential paradigm shift.
• Management emphasized resource focus on BOT/BAL, citing “groundbreaking potential” and confidence from leading oncology centers conducting ISTs that bring cost efficiencies and independent validation.

Quote: “We anticipate further reducing our annual burn to an annualized rate of approximately $50 million by mid‑2025…” — Garo Armen, CEO.
Quote: “BOT/BAL continues to demonstrate unprecedented clinical activity… durable responses and prolonged survival in refractory MSS colorectal cancer.” — Garo Armen.

What Went Wrong

• Revenue declined meaningfully YoY versus Q4 2023 ($26.8M vs $83.8M), and the company posted a substantial net loss ($46.8M) and continued dependence on non‑cash royalty revenue.
• Liquidity tightened: year‑end 2024 cash fell to $40.4M from $76.1M at year‑end 2023; management acknowledged a “tighter” financial position and is relying on asset monetization and partnerships to bolster cash.
• Regulatory uncertainty persists in the U.S., with management noting divergent stances across agencies; a registrational path hinges on maturing survival data and external funding, creating timeline risk.

Transcript

Operator (participant)

Good morning and welcome to Agenus Inc.'s fourth quarter and year-end 2024 earnings conference call. Currently, all participants are in a listen-only mode. A question-and-answer session will follow the formal remarks. As a reminder, this conference is being recorded. I will now turn the call over to Zack Armen, Head of Investor Relations.

Zack Armen (Head of Investor Relations)

Thank you, Regina. Good morning, everyone, and welcome to Agenus's fourth quarter and year-end 2024 financial results and corporate update call. Earlier today, we issued a press release detailing our financial results and key corporate developments. A copy of the press release is available on our website at www.investors.agenusbio.com. Before we begin, I'd like to remind everyone that today's discussion will include forward-looking statements.

These statements are subject to risks and uncertainties, which may cause actual results to differ materially from expectations. Please refer to our SEC filings for further detail. Joining me today are Garo Armen, Chairman and CEO; Steven O'Day, Chief Medical Officer; Robin Taylor, Chief Commercial Officer; Christine Klaskin, VP Finance and Principal Financial and Accounting Officer. Now, I'll turn the call over to Garo.

Garo Armen (Chairman and CEO)

A very good morning once again from a delightful day in Lexington, Massachusetts. Thank you very much for joining us. First, let me start by saying we are, as a company, pleased to report that we delivered on our commitment to significantly reduce Agenus's operational burn. By the end of 2024, we had reduced our annualized burn rate to the level that we had guided everyone.

We are executing on our next phase of strategic cost reductions with an annualized burn to approximate $50 million by the middle of this year. We are very much on track for that number. Our objective is to direct every available resource towards what truly matters to our stakeholders, and patients particularly, to make sure that our groundbreaking potential of BOT/BAL is realized and patients have access to it as soon as possible. BOT/BAL continues to demonstrate unprecedented clinical activity.

Recently, we presented at major oncology forums such as AACR Immuno-oncology for the first year that AACR organized the Immuno-oncology Division of its annual conference. ASCO GI in January, SITC in the fall, ESMO and ESMO GI, and we detailed the most influential peer-reviewed journals, including Nature Medicine, JCO, Journal of Clinical Oncology, and Cancer Discovery. All these were accomplished in the last 12 months or less. We are witnessing transformative clinical outcomes in colorectal cancer and other tumors that have been historically unresponsive to immunotherapy.

This is based on the opinion of some of the most prestigious experts in the field. In a matter of example, Botensilimab has demonstrated durable, and I want to underline durable responses, and prolonged survival in refractory microsatellite stable colorectal cancer. Now, this particular kind of colorectal cancer, meaning MSS, is accounting for these days over 90% of CRCs.

We've seen encouraging activity with the addition of BOT/BAL to FOLFOX, which is a standard of care, including Bevacizumab, in first-line MSS CRCs. These are early indications of activity, but in terms of both efficacy and tolerability, these early signals are very encouraging. We have also either seen complete or near-complete pathological responses, very importantly in neoadjuvant MSS as well as MSI CRC. Even though the trade likes to break these into two categories, we believe, based on the results that we have seen, our agents are active in both categories of colorectal cancer.

This has transformative potential to enable chemo, radiation, and possibly surgery-free options for patients because, in some cases like rectal cancer, surgery, along with the other standards of care, can be debilitating for patients, particularly the fact that CRC and rectal cancer have now been seen more and more frequently in younger patients.

I'd say these results, based on the opinion of our experts, are beyond promising. They are potentially revolutionary. Also importantly, these outcomes aren't just our internal assessment. Leading global oncology centers and experts are independently conducting investigator-sponsored trials. In some cases, all we need to do is just provide product for them, and we incur no cost. This independent validation by some of the most respected oncologists and oncology centers, who are pivotal in securing approval in our breakthrough therapies, significantly amplifies our confidence in BOT/BAL and their potential for patients.

Several of these trials, particularly in the neoadjuvant setting, are expected to rapidly enroll in potentially organ-sparing trials with BOT/BAL. These trials have gotten underway. In fact, we have a new trial that's gotten underway this week with inquiries that have come in from patients ahead of the official opening of the trial.

Additionally, we've strategically continued monitoring and monetizing the potential of our non-core assets. Our high-value biologics manufacturing facility in Emeryville and Berkeley, our land in Vacaville to fortify our balance sheet currently, are high-priority projects.

We're engaged in also late-stage partnership discussions to secure funding for BOT/BAL and BOT/BAL development and registration, with an emphasis on neoadjuvant treatment of early-stage colon—I shouldn't say early-stage, but intermediate-stage colon and rectal cancers, where these are clear opportunities for BOT/BAL to provide significant benefit to patients. With that, I'll turn it over to Christine for a quick review of our financials. Christine?

Christine Klaskin (VP Finance, Principal Financial, and Accounting Officer)

Thank you, Garo. We ended the year 2024 with a consolidated cash balance of $40.4 million. This compares to a balance of $76.1 million at December 31, 2023. Cash used in operations for the year ended December 31, 2024, was $168 million. This is reduced from $224 million for the prior year.

For the year ended December 31, 2024, we recognized revenue of $103.5 million and incurred a net loss of $232.3 million or $10.59 per share. For the fourth quarter ended December 31, 2024, we recognized revenue of $26.8 million and incurred a net loss of $46.8 million or $2.04 per share. Our revenue primarily consists of non-cash royalty revenue. I'll now turn the call back to Garo.

Garo Armen (Chairman and CEO)

Thank you, Christine. In summary, while we recognize that our financial position is not reflective of the high potential and the promise of our product, and it's a bit tighter than ideal, we are taking decisive actions to continue to—and we will continue to take very decisive actions to bolster our cash position as well as to contain costs. Now, we're very heartened by the fact that we've had significant external validation through numerous selected high-quality centers that are doing trials, such as ISTs for us, and robust clinical activity that we have seen in BOT/BAL. These, of course, position us to advance our lead programs in 2025 and beyond. We remain committed and strategically aligned to deliver groundbreaking treatments for patients.

This is very important because having treated now well over 1,000 patients across nine different cancers, with a heavy concentration on colon cancer, and seen the benefit to patients, it's very heartening that we have kept our eye on developing BOT/BAL as a high priority for us. With that, I will end my call, and I think we welcome questions that you may have.

Operator (participant)

At this time, if you would like to ask a question, press star, then the number one on your telephone keypad. We kindly ask that you please limit your questions to one and one follow-up. Our first question will come from the line of Emily Bodnar with H.C. Wainwright. Please go ahead.

Emily Bodnar (Biotech Equity Research Analyst)

Hi, good morning. Thanks for taking the question. Maybe for the first one, if you can kind of help frame the cost reductions for us, particularly which programs are being impacted the most, particularly on the R&D side, and especially into mid-2025 as you're guiding to additional cost cuts, which programs might be impacted there. If you can kind of walk us through expected catalysts for 2025 and any new data updates or regulatory updates that we should be looking out for. Thank you.

Garo Armen (Chairman and CEO)

Okay. The cost reductions really center around headcount reductions that are non-essential, meaning that given our priority being BOT/BAL development and registration, we have defined exactly which experts we need internally and externally, and we have significantly cut down on external advisors. We have limited external advisors to those that will benefit us the most in terms of advancing BOT/BAL to a line of registration. Most of the registration work that we were undertaking under accelerated approval is already completed. Should there be a window for us, and we believe there will be, we will utilize a lot of the work that has been completed to seek potentially registration globally. In terms of our pipeline products, we have not killed them. We have simply shelved them for the time being.

We have done it in a way that we can reignite them because, as you know, we got a significant number of products back from our partners after they had spent in excess of $800 million collectively on those products, not because of any product performance issues, but strictly because of the fact that IO for the time being is out of fashion, not because we believe our products are implicated in it being out of fashion. In the pharmaceutical industry, things go hot and cold. Right now, IO is cold, and that does not mean that it will remain cold three to six months from now. We have put them on hold with an intent to reignite them quickly. In terms of catalysts for 2025, on the regulatory updates, stay tuned.

Emily Bodnar (Biotech Equity Research Analyst)

Okay. Great. Thank you.

Operator (participant)

Again, to ask a question, simply press star one on your telephone keypad. Our next question comes from the line of Mayank Mamtani with B. Riley Securities. Please go ahead.

Mayank Mamtani (Senior Managing Director, Group Head of Healthcare Research, Senior Biotechnology Analyst)

Good morning, team. Thanks for taking our questions, and I appreciate the detailed update here. Maybe just a similar question as asked before on the process of monetization of non-core assets. Garo, if you could comment how further along you are and what sort of economics you could derive from that. I have a follow-up.

Garo Armen (Chairman and CEO)

Sure, Mayank. Thank you for that. If you recall, and I'm sure that you recall, in general, the first stage of monetization of our West Coast assets, namely Vacaville, our Berkeley facility, came in the form of a mortgage that we obtained back in November. If you remember, prior to that, prior to the elections, it was almost impossible for us to obtain any mortgage. Impossible. We got a $20 million mortgage at a record time of in approximately two weeks. That was the first stage of monetization. In addition to that, for those of you who have been to our Emeryville facility, you know that Emeryville is a highly desired state-of-the-art manufacturing facility that is soup to nuts. It starts with cell lines, and it finishes with packaging, filling, finishing, and packaging of products.

Now, given the fact that there has been significant shifts in U.S. manufacturing interest, we have seen a similar level of interest. We are in discussions, including contract discussions, with parties for the potential consummation of monetization of our West Coast manufacturing and real estate assets.

Mayank Mamtani (Senior Managing Director, Group Head of Healthcare Research, Senior Biotechnology Analyst)

Okay. No, that's helpful. Are you able to share your latest and greatest thoughts on what a registrational program could look like? Obviously, ASCO GI data recently showed a number of different directions you could go in: late line, front line, obviously neoadjuvant. Any thoughts in each of those buckets that could be helpful for folks to understand the path to market here, Garo?

Garo Armen (Chairman and CEO)

Sure. First off, we have amassed an enormous amount of data in the late-stage setting. There is no ambiguity about our ability to rescue patients with MSSCRC, who have exhausted all other options. These patients are now living longer, even though we have not done a randomized trial in late-stage yet. There is no ambiguity about the fact that these patients are living much longer, orders of magnitude longer than patients who have had standard of care. We have more than doubled the response rates in these patients. We have an extension of their lifespan that is, based on our current data, essentially double what you would see with standard of care. That magnitude, of course, is of great interest to the experts in the field and patients. In fact, we have patients who are going on disease-free now, pushing three years, which is almost unprecedented.

Now, that's one area where, with more mature data, we will make an effort to get the interest of regulators around the world. Secondly, the data from the neoadjuvant setting is unambiguous because when I say unambiguous, it's really black and white. These patients are treated only with BOT/BAL. No chemo, no radiation. What we're seeing is complete pathological responses in more than half the patients so far. There was some concern that the data was from a single center, Cornell. Now the data corroborates the Cornell data in 11 centers from Europe and in four times the patients. That's very encouraging. Because of the black and white nature of the outcomes in MSSCRC and MSI high, we believe that there is a clear path for potential approval, particularly in a setting that will be organ-sparing.

For example, if a patient has MSS rectal cancer, their options are chemo, radiation, and surgery. For these patients, rectal surgery is the ability. We believe that if we can show that our products are organ-sparing, that will be a significant benefit to patients. Dr. O'Day, would you like to add to that?

Steven O'Day (CMO)

Yes, Mark, thank you for the question. I would just elaborate on what Garo said. In the refractory setting now, between our phase I and our phase II trial, we have approximately 350 patients whose data is maturing. Those trials have closed, and the data is maturing. We look forward to really watching this durability of response and treatment-free interval mature and then obviously interact further with regulatory bodies around this data. I think what Garo said in the neoadjuvant setting is really remarkable in terms of its ability to change paradigms in both the MS stable and obviously the MS high colorectal setting. Rectal cancer is within our sights as a primary first neoadjuvant sort of regulatory approach.

Mayank Mamtani (Senior Managing Director, Group Head of Healthcare Research, Senior Biotechnology Analyst)

Very helpful. Thank you, team. Looking to some of these updates in the coming months.

Garo Armen (Chairman and CEO)

By the way, we have Robin Taylor here as well, who is one of the foremost commercial and beyond commercial experts in CRC. Would you like to add your?

Robin Taylor (Chief Commercial Officer)

Certainly. I'll go ahead and point it out. It's good to hear from you again. I think the context has been explained certainly in terms of rectal cancer, but I would also point out that both rectal and colon cancer have a significant opportunity because we're looking at not only rectal cancer's potential for chemosparing, sparing radiation, and also sparing and debilitating surgery because if we improve the clinical complete response rate, those patients basically will not go on to surgery. They'll wait. The evidence that we've seen so far with early use of immunotherapy, particularly CTLA-4, translates into a prolonged recurrence-free survival. That's a clear benefit. Across all those measures, we expect we're going to be able to improve in rectal cancer. Similarly, in colon cancer, there is that opportunity to be able to improve the event-free survival, overall survival in the long run.

A real question about being able to reduce the amount of chemotherapy the patients are receiving, particularly on oxaliplatin, which has the potential for permanent neuropathy in the long run. These patients who have adjuvant chemotherapy may end up with this kind of permanent neuropathy that could be avoided. That, coupled with the ability to improve on event-free survival and overall survival, really makes colon cancer a real significant opportunity as well. Finally, just to note that there is an investigator-sponsored trial that has just initiated Memorial Sloan Kettering with Andrea Cercek, phase II in rectal cancer that they are very excited about and patients are very excited about, which should be kicking off very shortly. Thank you.

Operator (participant)

That will conclude our question and answer session. I'll hand the call back over to Garo Armen for any closing remarks.

Garo Armen (Chairman and CEO)

Once again, thank you very much for joining us. It's always a pleasure to have you and your questions. We're very excited about the prospects of our lead programs. There is more reason to be excited now with the longevity of data than even six months ago. We are grateful to our investigators and patients for participating in these trials to demonstrate the kind of results that we've come up with so far. We look forward to data maturing and our trials expanding. Thank you very much.

Operator (participant)

That will conclude today's conference call. Thank you all for joining. You may now disconnect.