Agenus: Making Another Effort With The FDA (NASDAQ:AGEN)

Since I covered Agenus (AGEN) in November, the stock is down 40% despite there being no major bad news. Indeed, lack of good news barring an update on AGEN1181 coupled with sector-wide correction is responsible for the poor show. In my previous article, I said how the FDA’s actions in hurriedly giving full approval to Merck’s (NYSE:MRK) KEYTRUDA for 2nd line cervical cancer smelled fishy, yet it was a blessing in disguise because Agenus pulled the plug on the expensive BRAVA trial, which saved them the meaningless expense of running in a small, divided market. So that should have been ultimately good news for Agenus, and yet the stock is down.

In the earnings call that followed my article, the company said that the withdrawal of the BLA for balstilimab in 2nd line cervical cancer had nothing to do with its performance:

Now, of note is the fact that this BLA withdrawal was not related to balstilimab’s performance. In fact, our agent met and exceeded predefined clinical milestones for this indication, for this trial.

The company has iterated multiple times – and especially after the BLA withdrawal – that zalifrelimab and balstilimab are its peripheral programs, with the principal focus being on 1181. AGEN1181 is a new generation CTLA-4 inhibitor. It is an Fc-enhanced CTLA-4 inhibitor. Fc enhancement allows for broader coverage of the molecule, increasing by 40% the targeted patients, as well as increasing benefits for existing patients. Some of the benefits are T cell priming, Treg depletion, and T cell memory formation as well as improved safety.

The company, in November, announced data at SITC of a dose-escalation study in more than 100 patients. In this trial, AGEN1181 was used both as a monotherapy and as a combo therapy. The trial showed that AGEN1181 is the first reported molecule in its class to demonstrate clinical activity in 9 cold or treatment-resistant tumors as monotherapy and in combination with balstilimab.

The molecule and the combo have shown durable clinical activity against colorectal, endometrial, pancreatic cancers, and in various treatment-resistant settings, such as PD-1 relapsed and refractory melanoma, non-small-cell lung cancer, and cervical cancer. The safety profile is also much better compared to first-generation CTLA-4 molecules. There were no observed cases of hypophysitis, pneumonitis, or high-grade hepatitis, which are toxicities associated with first-generation CTLA-4-based therapies.

The company has noted that the patient population was heavily pretreated, with half of the patients receiving at least three prior lines of therapy, which makes their response to AGEN1181 even more interesting.

The following is the data from the trial:

As of the abstract cutoff date of July 16, 2021, there were 4 confirmed responses to single-agent AGEN1181. As the table above shows, these were a complete response in a patient with microsatellite stable endometrial cancer, a partial response in pancreatic cancer, and a partial response in cervical cancer in a patient who failed anti-PD-1 therapy. The company says that they are not aware of any other report of response to CTLA-4 monotherapy in these specific disease settings.

The company provided further granular data on the clinical activity:

Our fourth response was in a patient with melanoma with failed prior anti PD-1 therapy. We also observed significant benefit of the combination of AGEN1181 with balstilimab across multiple cold poorly immunogenic tumors. Among 17 evaluable MS stable colorectal patients treated with at least 1 milligram per kilo of AGEN1181, we observed four partial responses and 7 cases of stable disease or disease control rate of 65%.

These results are interesting because multiple trials have failed to demonstrate strong anti-PD-1 activity in combination with first-generation anti-CTLA-4 in MS stable colorectal cancer.

Further:

Among 6 evaluable ovarian cancer patients receiving at least 1 milligram of AGEN1181, we observed two partial responses and three cases of meaningful stable disease. We also observed clinical activity in other GYN tumors with the combination, including partial responses to both of our MS stable endometrial cancer patients who were treated with combination therapy.

Finally, additional combination responders, including one partial response in non-small-cell lung cancer patient who had failed prior PD-1 therapy and two partial responses in visceral angiosarcoma, a subtype of angiosarcoma historically resistant to checkpoint inhibition therapy. The majority of these responses are durable and ongoing.

These data have given the company the inputs it needed to start phase 2 and 2/3 trials across multiple indications for AGEN1181, both as monotherapy and combination therapy.

“AGEN1181 as monotherapy and in combination with balstilimab has shown durable responses in heavily pre-treated, poorly immunogenic ‘cold’ cancers, as well as those who have failed to respond to prior PD-1 inhibition,” said Steven O’Day, MD, Chief Medical Officer of Agenus. “This regimen is well tolerated, with no hypophysitis, pneumonitis, or high-grade hepatitis observed to date. The clinical performance of AGEN1181 is consistent with its Fc-enhanced design, safely expanding the benefit of immunotherapy to a broader patient population.”

Armed with this data, Agenus now has a second shot at getting through the FDA regulatory process. Interestingly, CEO Garo Armen, who has been highly critical of the FDA after its BLA was pulled, said the following:

The second question that gets asked is because of what has happened with the FDA having requested us to withdraw the BLA, a question such as, are we blacklisted by the FDA now, that’s going to make our lives difficult going forward? Well, we certainly don’t think so. And we certainly hope that that’s not the case…we do not expect that our honorable agency will blacklist us.

I have to say, that’s a very strange thing to say in an earnings call.

Financials

AGEN has a market cap of $703mn and a cash balance of $262mn as of the September quarter. The company also recognized revenue of $275mn in that quarter, “which includes revenue related to upfront license fees received and milestones earned, non-cash royalties, and revenue recognized under our collaboration agreements.” R&D expenses were $42mn for the quarter, and G&A was $21mn. The company stopped the BRAVA trial, which they say will save them over $100mn in the next couple years. Given the expenses, they have cash for about 4-5 quarters.

Another angle for Agenus is its spinoff called MiNK Therapeutics (NASDAQ:INKT), which just did an IPO and raised over $40 million at a valuation of $400 million. This company is advancing clinical development of allogeneic iNKT cell therapies in cancer and immune-mediated diseases.

Bottom line

AGEN has been beaten down by regulatory actions and not superlative data from the balstilimab asset. The market is yet to start focusing on the new data it generated from AGEN1181, hence – and also because of the sector-wide correction – the stock has been trading sideways and downwards. I will continue to watch AGEN for a more derisked entry point.