Agenus Inc.
Q4 2015 Earnings Call Transcript

Published: 3 Mar 2016

[Operator:]

Good day, ladies and gentlemen, and welcome to Agenus Fourth Quarter and Year End 2015 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I’d like to introduce your host for today’s conference, Michelle Linn. Ma’am, please begin.

[Michelle Linn:]

Thank you. Welcome to the Agenus fourth quarter and full year 2015 conference call. Before I continue, I’d like to remind you that this conference call will contain forward-looking statements, including statements regarding the company’s potential income stream, research and development, and clinical trial activities, the publication of data and potential application of the company’s technologies, and product candidates toward the prevention and treatment of diseases. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Reference to these risks and uncertainties is made in today’s press release and they are disclosed in more detail in our most recent filings with the U.S. Securities and Exchange Commission. These statements speak only as of the date of this call and Agenus undertakes no obligation to update or revise statements. All forward-looking statements are expressly qualified in their entirety by this cautionary statement. When evaluating Agenus’ business and securities, investors should give careful consideration to these risks and uncertainties. As a reminder, this call is being recorded for audio broadcast. With me today are Dr. Garo Armen, Chairman and Chief Executive Officer; Dr. Robert Stein, President of R&D; and Evan Ballantyne, our Chief Financial Officer. During this call, Garo will provide a corporate update, Bob will provide an R&D update, and then Evan will review our financial results. We’ll then open up the call for questions. With that, let me turn the call over to Garo.

[Garo Armen:]

Thank you, Michelle, and thank you all for joining us this morning. In 2015, we reached a number of important milestones in pursuit of our mission of curing cancer with immuno-oncology treatments. We started the year entering into a global oncology collaboration with Incyte Corporation. We extended our existing oncology collaboration with Merck. We made several strategic acquisitions, advanced our pre-clinical programs, leading up to the successful filings of two INDs for checkpoint modulator programs; make progress with our lead clinical vaccine program, and also very importantly, substantially strengthened our balance sheet closing the year with $172 million in cash. In 2015, we made a series of strategic acquisitions that helped us build a vertically integrated company with an internal engine that enables us to rapidly discover and optimize antibody candidates, develop best-in-class cell line and to manufacture our own immunotherapies faster, more cost effectively and under GMP conditions. Our greatest asset, however, is our intellectual capital, comprised of an exceptional team of immunologist, molecular biologist, translational biologist, computational chemists, and structural chemists. We believe a multi-disciplinary approach is critical because the future of cancer therapy will be based on the ability to identify subpopulations of patients that are likely to best respond to specific immuno-oncology agents or combinations of agents. This will also require a wider use of biomarkers to determine the best combinations of immuno-oncology treatments including antibodies, vaccines, and adjuvants, as well as cell therapy. At Agenus, we believe that we are uniquely positioned in the immuno-oncology landscape by having assembled the critical parts for what we would consider the future of the immuno-oncology ecosystem. I’m now going to briefly expand on several of our corporate achievements during the quarter and the year. And then Dr. Robert Stein, our President of R&D, will provide an update on our clinical and pre-clinical development activity. As I mentioned earlier, we began last year with an alliance with Incyte Corporation to discover and develop novel antibodies using Agenus’s state-of-the-art discovery platforms. The alliance focuses initially on the development of checkpoint modulator antibodies directed against four key immune checkpoint targets

[Robert Stein:]

Thank you, Garo. As mentioned, last year, we achieved very important milestone with filing of INDs for two checkpoint modulator antibodies both identified as development candidates after our acquisition of four antibodies in January of 2014. Both of these INDs were cleared by the FDA 30 days after their submission, which enables us and also our partner Incyte to move forward into Phase 1 clinical studies with these two checkpoint modulator antibodies. The first is to progress through Agenus’s pipeline. We’ll soon be initiating a Phase 1 study of AGEN1884, which binds to the immune checkpoint target CTLA-4. We believe our CTLA-4 blocker will be the third CTLA-4 antagonist antibody in clinical development. CTLA-4 blockers are emerging as central components of effective combination immunotherapeutic regimens for cancer. We will keep you a glance of our clinical development plans regarding this exciting candidate to the extent that we can in the very competitive arena. Moving on to our Incyte partnered programs; under our collaboration, Incyte will initiate a Phase 1 study of INCAGN01876, which target to GITR, another critical immune checkpoint target molecule. This program is partnered 50

[Evan Ballantyne:]

Thank you, Bob. And now, I’d like to review the fourth quarter and full-year 2015 financial results. For the fourth quarter ended December 31, 2015, Agenus reported a net loss attributable to common stockholders of $15.7 million, or $0.18 per share basic and diluted, compared with a net loss attributable to common stockholders for the fourth quarter ended December 31, 2014 of $26 million, or $0.41 per share basic and diluted. The decrease in net loss attributable to common stockholders for the fourth quarter ended December 31, 2015, compared to a net loss attributable to common stockholders for the same period in 2014 and was primarily due to $14.8 million decrease in non-cash charges related to our contingent, obligations, as well as increased revenues of $6 million related to our Incyte collaboration, partially offset by increased expenses related to our CPM programs. This compares to non-cash income of $623,000 related to the contingent purchase price consideration for the fourth quarter ended December 31, 2015. For the year ended December 31, 2015, the company reported a net loss attributable to common stockholders of $88.1 million, or $1.13 per share basic and diluted, compared with a net loss attributable to common stockholders of $42.7 million, or $0.71 per share basic and diluted, for the year ended December 31, 2014. The increase in net loss attributable to common stockholders for the year ended December 31, 2015, compared to the net loss attributable to common stockholders for the same period in 2014, and was primarily due to the advancement of our checkpoint modulator programs partially offset by increased revenues of $17.8 million related to our in Incyte collaboration. And $13.2 million charge for the acquisition of the SECANT yeast display platform and other license and technology transfer arrangements. We also recorded a total of $13.6 million in non-cash expense for the fair value adjustment to our contingent obligations. During the same period in 2014, we reported non-cash expense of $6.7 million due to the fair value adjustment of the contingent purchase price consideration and non-cash income of $2.1 million related primarily to our various GSK vaccine trial results containing QS-21 Stimulon and its impact on the contingent royalty obligation. For the year ended December 31, 2015, we recorded revenue of $24.8 million, cash and cash equivalents and short-term investments were $171.7 million as of December 31, 2015. Michelle? I’m sorry, Garo.

[Garo Armen:]

Thank you. Thank you very much, Evan. As I said earlier, we successfully advanced the transformation of Agenus into a vertically integrated leading immuno-oncology company with unique portfolio checkpoint modulators, a diversified vaccine platform and clinically validated vaccine adjuvants. 2016 is looking to a very and even more exciting year for us as we built on our momentum, advance on our programs, and some of the key anticipated milestones for the year includes the start of Phase 1 trials for CTLA-4 and GITR checkpoint modulator programs. Filing of one or more additional INDs for CPM programs, filing our first IND for an AutoSynVax vaccine candidate, while advancing our phosphopeptide based vaccine efforts, advancing our lead vaccine program Prophage into randomized trials including those in combination with checkpoint modulators, and very importantly securing additional strategic alliances and partnerships. With that, I would like to thank you for joining us on this call today. We hope that you’ll found this update informative and we look forward to providing you with additional updates. With that, I will turn the call back to Michelle.

[Michelle Linn:]

Thank you, Garo. Operator, you can now open the call for questions.

[Operator:]

Thank you. [Operator Instructions] And our first question comes from the line of Mike King from JMP Securities. Your line is open.

[Mike King:]

Good morning, guys. Thanks for taking my questions. I just wanted to see if we could understand a little bit better about we have ABSTRACT titles out for AACR that talk about, CTLA-4, GITR, and OX40 antibodies and without giving away the data prior to the ABSTRACT. I’m just wondering if you could tell us a little bit more about what kind of data will be in there, will these be in cellular assays, will they be in animals, any other color you can give on – give us on those contain within those ABSTRACTs will be helpful?

[Garo Armen:]

As you know, Mike, we have to be very careful on how much information we release on the subject. So with that caveat, I will ask Dr. Stein to address the question in a way that that not jeopardize any presentation. Bob?

[Robert Stein:]

Hi, Mike. Thank you, Garo. The ABSTRACTs do give some further biochemical and cellular characterization of our antibodies moving forward. There is some description of ways in which they’re perhaps superior to some of the competitive compounds. We don’t have animal data with our actual compounds because they’re not cross reactive with the rouging targets, but the details we’ll have to await the AACR presentations.

[Mike King:]

Okay, that’s helpful. And then just in regard to the combination regimens that you’re talking about with both Prophage as well as AutoSynVax and your phosphopeptide. Garo you had said that [indiscernible] milestones for this year will be data with Prophage plus checkpoint modulators. And would that be your checkpoint modulators or would that be with someone else’s and I guess the same question would be true about AutoSynVax and the phosphopeptide technology. Thank you.

[Garo Armen:]

So I just want to – I want to make one correction. So, we – I think it would be premature for us to anticipate data from such trials this year, but we will initiate these trials. And the answer to your question is both will be our strategy, meaning doing it both with existing marketed products as well as our own checkpoint modulators.

[Robert Stein:]

Okay. And then in conjunction with proved CPMs, would that entail some kind of formal collaboration with the sponsors of those agents or would you just be schedule especially using them in patients who already have approval for therapy with CPMs.

[Garo Armen:]

So if we were to do it with an existing CPM, it would be a formal collaboration. Thank you.

[Mike King:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of Swayampakula from H C Wainwright. Your line is open.

[Swayampakula Ramakanth:]

Good morning, gentlemen. Thank you for taking the questions. This is on the Phase 3 Prophage study that you’re planning to initiate later this year. So is this a study protocol, has it been decided through the FDA as to whether this will be a registration study or because they’re talking about adding CPMs and combination could potentially be those that have been up throughout our doors that are your own, which means they’re not going through any clinical study yet. So how should we think of this late stage clinical study?

[Garo Armen:]

So a couple of data points for you. As you know, the first time a CPM plus a vaccine clinical study, which was disclosed a little over a year ago, suggested that the combination of CTLA-4 with the Bavarian Nordic vaccine for prostate cancer showed much better outcomes than either agent alone and we have generated pre-clinical data suggesting the same with a CTLA-4 antibody. So having said that we have a preliminary evidence to be enthusiastic about combinations and known combinations as I just mentioned. Now with regard to our plans for a randomized study for Prophage. The outcomes of a randomized trial in terms of how robust the outcomes are and how promising the results are of such a study will determine whether or not that study will be registration. However, have we gotten I think the implicit question that you may have meant was have we gotten an SPA with the FDA, the answer is no, and we don’t intend on seeking an SPA.

[Swayampakula Ramakanth:]

Thanks for clarifying that. And then – this is – more questions for Bob, the next couple of questions. I think we all came to know on Monday that [indiscernible] CTLA-4 did not get through in as monotherapy in mesothelioma. So how does your anti-CTLA-4 differ from that? And in the same way, we know Yervoy does okay in cellular cancers, but certainly has quite a bit of a safety issue that it may need to deal with. So do you think that the anti-CTLA-4 from Agenus could be better or does it have a better profile compared to these two molecules at least at the pre-clinical stage?

[Robert Stein:]

So, there are two aspects of that. Our first molecule, 1884, has a FC segment similar to that of Yervoy and we think it would perform as well or better than Yervoy. Our second molecule has IgG2 FC, which makes it more or like tremelimumab, which is the AstraZeneca compound for CTLA-4. And what we believe is that the 1884 may have better efficacy as a single agent, but as you pointed out the combination of CTLA-4 blockade with PD-1 blockade actually has pretty laid more side effects. And it's our belief that the tremelimumab like pharmacology that is characteristic of our second candidate may well turn out to be more suitable in combination regimens. So my belief is that CTLA-4 blockade is an important part of the foundational regimen for good immuno-oncologic interventions that the 1884 maybe even powerful as a single agent and 2041 maybe more well tolerated injunction with PD-1 blockade.

[Swayampakula Ramakanth:]

Okay. And then next question is on anti-GITR. As far as I know, it’s your anti-GITR would probably be the second one coming to the clinic after what Merck has put out there. Obviously, there is quite a bit of expectations as to what kind of data could show up at ASCO from the Merck’s molecule. I am not sure how much intelligence you have, but what do you think about Agenus molecule and how much of different profile could be expect from Agenus molecule?

[Robert Stein:]

Well, first I'd like to think I have some intelligence that we all have. What I would say is this. Our molecule is actually likely to be the third molecule in because GITR Inc has been molecule that was just first created by ToleRx, TRX518, and then behind that comes Merck’s, GITR agonist, and behind that comes ours. Look out giving details, we have compared ours to versions of the competitor compounds and we believe we have some distinctions that should play out those advantages clinically. And the lead TRX518 has been in the clinic for very long time without any data having emerged, so we don’t know exactly how that’s going to stack up, but Merck obviously has developed a certain level of enthusiasm around the target because they put a second molecule targeted [indiscernible] pipeline as well. We’re very, very excited about ours. We think it's going to have a various performance characteristics.

[Swayampakula Ramakanth:]

Okay. And the last question is on the financials side effect. When GSK just to file Stimulon in the second half, does Indian will get a milestone payment and they invest, if it is true, if it is that accounted for within your financial guidance of cashes that goes into the first half of 2017?

[Evan Ballantyne:]

Right, so those milestone payments – any payment up fill the returns are satisfied with Oberland.

[Swayampakula Ramakanth:]

Okay.

[Evan Ballantyne:]

Yes. So, the answer is yes. We have factored all of that into our forecasts for the year.

[Swayampakula Ramakanth:]

Okay, thank you

[Operator:]

Thank you. Our next question comes from the line of Biren Amin from Jefferies. Your line is open.

[Biren Amin:]

Yes, thanks for taking my questions, guys. Just maybe a question on the CEACAM1 molecule that you’re developing. It’s seems that the Merck competitors on IgG4, how would yours differ from the Merck compound, which is currently in Phase I trial?

[Garo Armen:]

Bob, if you could answer that question.

[Robert Stein:]

You’re correct. And ours we expect to have a similar mechanism of action. Basically, you need to disrupt the homodimeric interaction between a short form of CEACAM1 on tumors and a long form on T cells because that’s an inhibitory interaction. You want to block the interaction between those two ways the molecules expressed and presented and that prevents the tumor from shutting down the T-cells as they come to attack. And we believe that we will have at least similar performance characteristics to the Merck’s CM024.

[Biren Amin:]

Okay. And it seems Merck is going after I think six different solid tumor types, none of which are uveal melanoma, which you consider uveal melanoma as an orphan indication given CEACAM was over expressed?

[Robert Stein:]

I think it’s an interesting potential orphan indication that there is a setting where there is less of a mutational burden than there is in dermal melanomas. And so, it may be a little bit harder to get really good immunologic responses against it, but it is an interesting possible target. There are other more common cancers. There are melanoma tissues as you know. And you can tell which tumors may respond because you can measure and say CEACAM1 expression on the tumor as a marker of potential responsibility.

[Biren Amin:]

And when should we expect IND filing for this candidate?

[Robert Stein:]

We’re not making any specific date at this point on that.

[Biren Amin:]

Great, thanks.

[Robert Stein:]

Sure.

[Operator:]

Thank you. Our next question comes from the line of Chris Marai from Oppenheimer. Your line is open.

[Chris Marai:]

Hi. Good morning, guys. Thanks for taking the questions. First, you know, just on 1881, when we might we start to see some of the first given data? Is it too far fetch to think something like set via this year or are you thinking closer to something like mid next year? And then number two, I was wondering maybe Bob if you could speak to potential competition from – for your LAG-3, TIM-3 programs from maybe biospecifics and interrogate multiple targets such as PD-1 and TIM-3 or LAG-3, which are sort of known to be co-expressed? Thanks.

[Garo Armen:]

Let me just address the first question and Bob will address the second one. So, we are not providing any guidance on the timing of that, Chris. It’s too early, although there are definitive plans to and dates to dose the first patient. I think it’s a trial structure which will depend on obviously the interim data from the dose escalation and we will wait to provide more guidance on that later on.

[Chris Marai:]

Bob, if you could address this…

[Robert Stein:]

Yes, sure. So it’s true that both TIM-3 and LAG-3 probably will be most effective, when blocked in conjunction with blocking PD-1. And there is a possibility of doing that with biospecifics. However, it would be somewhat challenging to get the affinities and historically [indiscernible] matched up, because there may not be a matched level of LAG-3 target in PD-1 or TIM-3 target in PD-1. And so in most cases, having separate control of the two levers turns out to be a superior therapeutic intervention. And there will of course be some challenges with regard to pricing and it may be possible to price advice specific like one therapy and you may have to do something to knowledge the pricing issues, when you combine two interventions. But, in general, it’s not like you’re using your biospecific to target a certain subpopulation, you’re really trying to get double pharmacology at a single agent. And so, my belief is that it is still probably be superior to have this single agents compared with PD-1.

[Chris Marai:]

Got it, thanks.

[Robert Stein:]

Sure. Thanks for your question, Chris.

[Operator:]

Thank you. Our next final question comes from the line of Jason McCarthy from Maxim Group. Your line is open.

[Jason McCarthy:]

Hi, guys. It sounds like things are progressing. I just have a question for Bob and I want to just go back to the LAG-3. GSK and Novartis are excited about their LAG-3 antibodies for very different indications. And I was wondering if pre-clinically if you have in-house data, where you might have a LAG-3 that’s depleting antibody that would be relevant for auto-immune diseases and maybe branch off into that sector or you’re going to have an antagonist LAG-3 that would be useful for oncology area. Are you thinking about both sides when it comes to LAG-3?

[Robert Stein:]

That’s a very good question, Jason, because for all these interventions or many of them were one type of pharmacologic effect activates the immune system and is suitable for immuno-oncology and maybe for infectious disease. The flipside pharmacology may well dampen down the immune response and could be used in the context of either autoimmunity or transplants. We’re very aware of that. We have some programs where that’s already been a result of the intense activity and produce their targets. I don’t want to say too much more about it specifically, but it is a very interesting aspect of working in these areas as that there are some of the agents we generate may well be suitable for other medical uses with the opposite desire or else to tune down immune function.

[Jason McCarthy:]

Okay, great. Thank you.

[Robert Stein:]

Thanks, Jason.

[Operator:]

At this time, I’m showing no further questions. I would like to turn the call back over to management for any closing remarks.

[Michelle Linn:]

Thank you, operator. I’d like to remind listeners that a replay of the call will be available approximately two hours after the call and the call will also be accessible from the company’s website at www.agenusbio.com. On behalf of the management team at Agenus, I would like to thank everyone for joining us on today’s call. We are available to receive any further inquiries following the call. With that operator, please conclude.

[Operator:]

Ladies and gentleman, thank you for participating in today’s conference. This concludes the program. You may now disconnect. Everyone have a great day.