Agenus(AGEN) - 2023 Q2 - Quarterly Report

Part I - Financial Information Financial Statements This section presents the unaudited condensed consolidated financial statements for Agenus Inc. as of June 30, 2023, and for the three and six-month periods then ended, including Balance Sheets, Statements of Operations, Statements of Stockholders' Equity (Deficit), Statements of Cash Flows, and accompanying notes Condensed Consolidated Balance Sheets As of June 30, 2023, Agenus reported a decrease in total assets driven by reduced cash, an increase in total liabilities, and a widened stockholders' deficit reflecting the period's net loss Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 (unaudited) | December 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $143,205 | $178,674 | | Total current assets | $170,735 | $213,122 | | Total assets | $383,593 | $413,556 | | Liabilities & Stockholders' Deficit | | | | Total current liabilities | $204,068 | $188,952 | | Liability related to sale of future royalties and milestones, net | $266,920 | $271,263 | | Total liabilities | $460,354 | $468,458 | | Total stockholders' deficit | ($76,761) | ($54,902) | Condensed Consolidated Statements of Operations and Comprehensive Loss For Q2 and H1 2023, Agenus reported increased total revenues but a widened net loss compared to 2022, primarily driven by higher research and development expenses Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $25,296 | $20,926 | $48,198 | $46,867 | | Research and development expense | ($59,285) | ($44,960) | ($116,402) | ($87,404) | | General and administrative expense | ($20,415) | ($18,914) | ($38,653) | ($37,866) | | Operating loss | ($54,666) | ($44,565) | ($109,007) | ($80,027) | | Net loss | ($73,430) | ($49,235) | ($144,323) | ($99,839) | | Net loss per share (basic & diluted) | ($0.20) | ($0.17) | ($0.41) | ($0.35) | Condensed Consolidated Statements of Cash Flows For H1 2023, net cash used in operating activities increased, while financing activities provided substantial cash, primarily from equity sales, resulting in an overall net decrease in cash Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($118,569) | ($95,844) | | Net cash used in investing activities | ($10,972) | ($11,591) | | Net cash provided by financing activities | $94,513 | $43,834 | | Net decrease in cash | ($35,469) | ($63,546) | Notes to Unaudited Condensed Consolidated Financial Statements The notes provide detailed information on the company's business, liquidity, accounting policies, and financial statement line items, including its immuno-oncology focus, liquidity assessment, royalty liability, and equity offering proceeds - The company is a clinical-stage company focused on immuno-oncology, with key assets including botensilimab (an Fc-enhanced CTLA-4 antibody), which received FDA Fast Track designation for non-MSI-H metastatic colorectal cancer[18][24] - Management believes its cash resources of $157.9 million as of June 30, 2023, are sufficient to fund operations for more than one year from the financial statement issuance date[22] - The company recognized $41.2 million in non-cash royalty revenue and $36.8 million in non-cash interest expense in H1 2023 related to the HCR Royalty Purchase Agreement[37] - During H1 2023, the company received net proceeds of approximately $102.8 million from the sale of 58.3 million shares of common stock through at-the-market offerings[67] - Subsequent to the quarter end, from July 1 to August 4, 2023, the company sold an additional 13.2 million shares for net proceeds of approximately $20.3 million[76] Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, covering business overview, operational results, R&D expenses, liquidity, and future funding plans Overview Agenus is a clinical-stage immuno-oncology company with a pipeline of antibodies, cell therapies, and vaccine adjuvants, with its lead program botensilimab in Phase 2 trials and a planned BLA filing in 2024, supported by strategic partnerships - The company's lead asset is botensilimab, an Fc-enhanced CTLA-4 antibody, which in combination with balstilimab (PD-1) showed a median Overall Survival of 20.9 months in a subset of colorectal cancer patients[83] - Agenus plans to file its first Biologics License Application (BLA) for the botensilimab/balstilimab combination in colorectal cancer in 2024[84] - Incyte has notified Agenus of its intent to terminate the OX40, GITR, and an undisclosed target program, with rights reverting to Agenus upon termination in October 2023 and May 2024[86] Results of Operations The analysis of operations highlights a significant increase in R&D expenses for both the three and six-month periods ended June 30, 2023, driven by the advancement of antibody programs, alongside a substantial rise in non-cash royalty revenue Comparison of Results for the Three Months Ended June 30 (in millions) | Item | 2023 | 2022 | Change | Reason | | :--- | :--- | :--- | :--- | :--- | | R&D Expense | $59.3 | $45.0 | +32% | Increased third-party services for antibody programs and higher headcount. | | G&A Expense | $20.4 | $18.9 | +8% | Increased personnel-related expenses due to higher headcount. | | Non-cash royalty revenue | $22.1 | $0.1 | +$22.0M | Achievement of final sales milestone under HCR agreement. | Comparison of Results for the Six Months Ended June 30 (in millions) | Item | 2023 | 2022 | Change | Reason | | :--- | :--- | :--- | :--- | :--- | | R&D Revenue | $5.1 | $8.6 | -41% | 2022 included a $5.0M milestone from Gilead. | | R&D Expense | $116.4 | $87.4 | +33% | Increased third-party services for antibody programs and higher headcount. | | G&A Expense | $38.7 | $37.9 | +2% | Increased personnel costs, partially offset by lower professional fees. | | Non-cash royalty revenue | $41.2 | $17.8 | +131% | Increased net sales of GSK's vaccines containing QS-21 adjuvant. | Research and Development Programs For the first six months of 2023, Agenus's R&D expenses primarily focused on antibody programs, with significant allocations also to cell therapies, vaccine adjuvants, and other research initiatives R&D Expenses by Program for Six Months Ended June 30, 2023 (in thousands) | Research and Development Program | Expense | | :--- | :--- | | Antibody programs | $82,402 | | Cell therapies | $9,292 | | Vaccine adjuvant (QS-21 STIMULON) | $7,816 | | Other research and development programs | $16,892 | | Total R&D Expenses | $116,402 | Liquidity and Capital Resources As of June 30, 2023, Agenus maintained substantial cash resources despite a history of operating losses, primarily funding operations through partnerships, royalty sales, and equity issuances, with management assessing current liquidity as sufficient for over one year - The company had cash, cash equivalents, and short-term investments of $157.9 million at June 30, 2023[117] - Agenus raised $123.1 million in net proceeds from its at-the-market (ATM) equity offering program between January 1, 2023, and August 4, 2023[114] - Management has concluded that current cash resources are sufficient to satisfy liquidity needs for more than one year from the report's issuance date[118] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposures are foreign currency exchange rate and interest rate fluctuations, which are not currently managed with derivative instruments or hedging - Primary market risks are foreign currency exchange rate fluctuations (mainly British Pound, Euro, Swiss Franc) and interest rate changes on its $157.9 million cash and investment portfolio[123][124] - The company does not currently employ derivative instruments or hedging strategies to manage market risk exposures[123][126] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2023, with no material changes in internal control over financial reporting during the quarter - Management concluded that as of June 30, 2023, the company's disclosure controls and procedures were effective[127] - No changes occurred during the quarter that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[128] Part II - Other Information Legal Proceedings The company reports that it is not currently a party to any material legal proceedings - Agenus is not party to any material legal proceedings[131] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 - No material changes have been made to the risk factors described in the 2022 Form 10-K[132] Other Information During the second quarter of 2023, none of the company's directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or executive officers adopted or terminated a Rule 10b5-1 trading plan during the quarter ended June 30, 2023[133] Exhibits This section lists the exhibits filed with the Form 10-Q, including officer certifications pursuant to the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002, as well as Inline XBRL documents