A Conversation with Agenus Leadership

Recently I had the opportunity to talk with Robert Stein, CSO and CMO, and Garo Armen, Chairman and CEO of Agenus Inc. (NASDAQ: AGEN). Agenus, formerly Antigenics, broke into the public eye earlier this year with their acquisition of 4-Antibody AG (4-Ab), a privately held European biotech. This week they announced a two-target deal with Merck, using the 4-Ab platform for the generation of novel antibodies to two undisclosed Merck checkpoint targets. These targets are in addition to the six internal checkpoint modulator programs, a quite positive development. This alone makes the company worth a look.

On the other hand a large Phase 3 trial of GSK’s MAGE-A3 vaccine in lung cancer failed, and this vaccine uses AGEN’s saponin-based adjuvant. That was certainly seen as a negative, although there are still 20 clinical programs using AGEN’s saponin-based adjuvant at GSK, Pfizer, and J&J, including GSK’s malaria vaccine that is heading toward Regulatory filing this year. While the company has its fans and detractors among stock analysts, our focus is on the science; so let’s see where that leads us. My conversation with AGEN leadership was wide-ranging but focused on the future of the company, particularly goals and near-term milestones.

I’ll start with the 4-Ab deal, which was touted in February for its transformational potential (adding checkpoint modulators to a vaccine company), and also financials, featuring a modest upfront with most of the value back-ended. The deal brought multiple immune checkpoint programs into AGEN- 6 programs in total. That’s quite a haul. Less well appreciated I think was the 4-Ab antibody platform, branded Retrocyte Display. The technology is interesting. According to the 4-Antibody website, Retrocyte (Retroviral B lymphocyte Display) is a “high throughput cellular antibody expression platform … to allow expression and screening of full-length immunoglobulin antibody libraries in mammalian B-lineage cells … Libraries of full length immunoglobulin heavy and light chains are encoded by separate retroviral expression vectors within B-lineage cells to yield efficiently and stably expressed fully human monoclonal antibodies on the surface of the B-lineage cells in the form of B-cell receptors. Retrocyte Display can be used to directly screen combinations of antibody heavy and light chain libraries for antigen-specific binders.”

This is the platform Merck sought to generate antibodies for two of their targets. Importantly the deal financially supports the R&D work that will be ongoing at AGEN to carry out their end of the collaboration. This is in addition to a potential $100 million in milestone payments and royalties on product sales. Considering that Merck brought proprietary checkpoint targets to the collaboration, participating in the upside is somewhat atypical. This deal makes a statement regarding how much Merck valued accessing the platform and of course it also sets the stage for future platform deals.

Back to those assets, Dr Armen stated quite clearly that the company will internally develop the first tier of antibodies acquired in the 4-Ab acquisition, with a stated goal of moving development candidates targeting CTLA4 and PD-1 and selected additional immune checkpoint modulator programs to IND filings with a target date of approximately 2 years. One of the uses of least some of the immune checkpoint modulators might be to “turbo-charge” the company’s long-standing tumor vaccine programs. These have certainly struggled to gain traction, as have nearly all vaccine plays in oncology, for reasons we now understand well – active immune suppression mediated by the highly adaptable tumor for its survival. Prophage is a personalized cancer vaccine based on patient-specific antigens isolated from each patient’s tumor, bound to heat shock proteins to drive the activation of anti-cancer T-lymphocytes. The company has been exploring the use of Prophage in patients with Glioblastoma Multiforme (GBM), influenced in part by the decision of the NCI to fund the ongoing Phase 2 trial. Over the years the company had conducted Phase 3 trials in melanoma, renal cell carcinoma, and earlier phase trials in multiple other cancers. AGEN is no longer advancing Prophage programs in these tumor types however they are participating in an investigator-sponsored clinical study of Prophage plus the checkpoint inhibitor Yervoy (the anti-CTLA-4 antibody ipilimumab from Bristol-Myers Squibb) in patients with advanced melanoma. Additional work could be done with their internal checkpoint modulator pipeline in the future. It is certainly true to say (although harder to predict) that positive results from the GBM trial would transform the company. I suspect that a failure here would lead the company to drop the platform.

It’s important not to confuse the Prophage tumor vaccine effort with the QS-21 Stimulon adjuvant programs. This is the adjuvant that GSK has licensed for use in much of their vaccine work. GSK’s MAGE-A3 vaccine failure is one of the few settings in which QS-21 was used as a tumor vaccine adjuvant. The company expects approvals for use in a malaria vaccine this year, with 20 advanced trials underway at GSK and J&J. GSK’s renewed emphasis on its prophylactic vaccine business might help AGEN even more going forward.  AGEN receives a milestone payment when the first QS-21 containing vaccine is registered by GSK and also royalties on both prophylactic and therapeutic vaccines.

If AGEN seems difficult to get one’s arms around, it may be because of this three-platform business model. On the other hand, these three platforms address three critical components of immune modulation, with immunotherapy programs a few years away from the clinic, a very long-standing vaccine effort, and an adjuvant program that is not well appreciated outside the company. Valuing this collection of technologies has been difficult, and certainly progress in any or all three will be important catalysts going forward.

Dr Armen and Dr Stein are well aware of the fuzzy picture that the outside world, and investors in particular I suppose, have had of the company. The refocus on immune checkpoint modulators was very well received allowing AGEN to raise $56M from  investors in February.  AGEN has articulated specific goals to drive the company forward:

  • Execute on the 4-Ab programs internally and through partnerships. This includes IND filings for two or more programs within 2 years, developing appropriate strategic partnerships, and further advancing other checkpoint inhibitors that were acquired with 4-Ab, but have not been disclosed.
  • Leverage the value of the 4-Ab platform, as has just been done in the Merck deal
  • Reboot the Prophage program via combination use with immune checkpoint modulators as results warrant. One cautionary note – this will require additional translational research efforts that are just now getting underway.
  • Design personalized therapeutic interventions utilizing the vaccine platform and an understanding of the basis for immune suppression in individual patients. AGEN leadership envisions that this will be done by a combination of internal efforts and through strategic partnerships with centers of excellence in translation medicine.
  • Acquire a later stage asset in the immune-oncology space that would complement the evolving immunotherapy portfolio. That could be a good use of capital.

It’s a full dance card. We’ll keep an eye on AGEN as they execute on these critical goals, especially in the immunotherapy space.

Disclosure: I own no stock in AGEN and have no opinion as to the value of the stock or its’ future performance.