Agenus(AGEN) - 2023 Q1 - Quarterly Report

PART I - FINANCIAL INFORMATION This section presents the company's financial performance, condition, and related disclosures for the reporting period Item 1. Financial Statements The financial statements for the three months ended March 31, 2023, show a net loss of $70.9 million, an increase from the $50.6 million loss in the same period of 2022. Total assets remained stable at approximately $412.9 million. The company ended the quarter with $164.8 million in cash and cash equivalents, down from $178.7 million at the end of 2022, with cash used in operations totaling $58.5 million Condensed Consolidated Balance Sheets The condensed consolidated balance sheets provide a snapshot of the company's financial position at specific reporting dates Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 (Unaudited) | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $164,819 | $178,674 | | Total current assets | $205,689 | $213,122 | | Total assets | $412,854 | $413,556 | | Total current liabilities | $190,898 | $188,952 | | Liability related to sale of future royalties and milestones | $269,386 | $271,263 | | Total liabilities | $465,963 | $468,458 | | Total stockholders' deficit | ($53,109) | ($54,902) | Condensed Consolidated Statements of Operations and Comprehensive Loss This statement outlines the company's revenues, expenses, and resulting net loss for the three-month periods Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Total revenues | $22,902 | $25,941 | | Research and development expense | ($57,118) | ($42,442) | | General and administrative expense | ($18,237) | ($18,953) | | Operating loss | ($54,341) | ($35,461) | | Net loss | ($70,893) | ($50,604) | | Net loss per share (Basic & Diluted) | ($0.22) | ($0.19) | Condensed Consolidated Statements of Cash Flows This statement details the cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary (in thousands) | Activity | Three Months Ended Mar 31, 2023 | Three Months Ended Mar 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($58,526) | ($52,391) | | Net cash used in investing activities | ($11,489) | ($7,533) | | Net cash provided by financing activities | $56,250 | $16,038 | | Net decrease in cash | ($13,855) | ($44,222) | | Cash at end of period | $167,488 | $250,378 | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail the company's business as a clinical-stage immuno-oncology firm, its liquidity position, which management deems sufficient for over a year, and key accounting policies. Significant items include revenue recognition from collaborations like Gilead, the accounting for the HCR royalty sale which generated $19.1 million in non-cash revenue, proceeds from 'at-the-market' equity offerings, and subsequent events including further equity sales and a stock dividend of its subsidiary MiNK - The company is a clinical-stage immuno-oncology firm focused on antibodies, adoptive cell therapies (via MiNK), and vaccine adjuvants (via SaponiQx)[17] - As of March 31, 2023, the company had cash, cash equivalents, and short-term investments of $189.2 million. Management believes these resources are sufficient to fund operations for more than one year[19][20] - In Q1 2023, the company recognized $19.1 million in non-cash royalty revenue and $17.2 million in non-cash interest expense related to the 2018 sale of future royalties to Healthcare Royalty Partners (HCR)[33][34] - During Q1 2023, the company raised approximately $60.6 million in net proceeds from the sale of 33.8 million shares through its 'at-the-market' (ATM) offering[59] - Subsequent to the quarter's end, from April 1 to May 5, 2023, an additional $13.6 million was raised through the sale of 9.2 million shares via the ATM agreement. The company also paid a stock dividend of 5.0 million shares of its subsidiary MiNK to Agenus stockholders[63][64][65] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's focus on immuno-oncology, highlighting its lead asset botensilimab and key collaborations. For Q1 2023, R&D expenses increased by 35% to $57.1 million due to advancing antibody programs, while G&A expenses decreased by 4%. The company's liquidity is supported by $189.2 million in cash and equivalents as of March 31, 2023, and ongoing 'at-the-market' equity sales, which management believes is sufficient to fund operations for over a year Overview This section provides a high-level summary of the company's strategic focus and key therapeutic programs - Agenus is a clinical-stage immuno-oncology company developing antibodies, adoptive cell therapies (via MiNK), and vaccine adjuvants (via SaponiQx)[69] - The lead program, botensilimab (AGEN1181), is advancing in multiple clinical trials for cancers such as colorectal, melanoma, and pancreatic cancer[70][71] - The company maintains strategic collaborations with major pharmaceutical companies including Bristol-Myers Squibb (BMS), Gilead, Incyte, and Merck, which provide milestone payments and potential royalties[72][73][74] Results of Operations This section analyzes the company's financial performance, detailing revenue streams and expense trends for the period Revenue and Expense Comparison (in millions) | Item | Q1 2023 | Q1 2022 | Change Driver | | :--- | :--- | :--- | :--- | | R&D Revenue | $2.6 | $6.7 | Decrease due to a $5.0M milestone from Gilead in Q1 2022 not recurring | | Non-cash Royalty Revenue | $19.1 | $17.6 | Increase due to higher net sales of GSK's vaccines containing QS-21 STIMULON | | R&D Expense | $57.1 | $42.4 | 35% increase due to advancement of antibody programs | | G&A Expense | $18.2 | $19.0 | 4% decrease due to reduced professional fees | R&D Program Expenses (in thousands) | Program | Three Months Ended March 31, 2023 | | :--- | :--- | | Antibody programs | $41,835 | | Vaccine adjuvant | $4,088 | | Cell therapies | $4,326 | | Other R&D programs | $6,869 | | Total R&D expenses | $57,118 | Liquidity and Capital Resources This section details the company's cash position, funding strategies, and ability to meet its financial obligations - The company had an accumulated deficit of $1.8 billion as of March 31, 2023, and has historically financed operations through partnerships, royalty sales, and equity issuances[90] - Cash, cash equivalents, and short-term investments were $189.2 million at March 31, 2023. Management believes this is sufficient to satisfy liquidity needs for more than one year[95][96] - The company actively uses an 'at-the-market' (ATM) sales agreement, raising a total of $74.2 million in net proceeds from January 1 through May 5, 2023[91][92] - Net cash used in operating activities was $58.5 million for the three months ended March 31, 2023, compared to $52.4 million for the same period in 2022[100] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risks are foreign currency exchange rate fluctuations, due to its international subsidiaries, and interest rate changes impacting its investment income. Agenus does not currently use derivative instruments for hedging. Its investment policy prioritizes principal preservation and liquidity, with investments primarily in money market funds and U.S. Treasury Bills - Primary market risk exposures are identified as foreign currency exchange rate risk and interest rate risk[101] - Foreign currency exposure is mainly concentrated in the British Pound, Euro, and Swiss Franc due to foreign subsidiaries. The company does not currently use hedging strategies[101] - The company's cash and investments of $189.2 million are exposed to interest rate changes. Due to the short-term nature of these investments (money market funds, U.S. Treasury Bills), the carrying value approximates fair value[102] Item 4. Controls and Procedures Management, including the Principal Executive Officer and Principal Financial Officer, evaluated the company's disclosure controls and procedures and concluded they were effective as of March 31, 2023. There were no material changes to the company's internal control over financial reporting during the quarter - Based on an evaluation, the Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[105] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[106] PART II - OTHER INFORMATION This section provides disclosures on legal proceedings, updated risk factors, and a list of filed exhibits Item 1. Legal Proceedings The company states that it is not a party to any material legal proceedings - Agenus reports that it is not party to any material legal proceedings[108] Item 1A. Risk Factors The company reports no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2022 - There have been no material changes to the risk factors described in the company's 2022 Form 10-K[109] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including officer certifications (Exhibits 31.1, 31.2, 32.1) and XBRL data files - The report lists certifications from the Principal Executive Officer and Principal Financial Officer, as well as Inline XBRL documents, as exhibits[110]