Christine Klaskin - VP of Finance Garo Armen - Chairman and CEO Robert Stein - Chief Scientific Officer.

Robert LeBoyer - Maxim Group Reni Benjamin - H.C. Wainwright George Zavoico - Jones Trading.

Good day, ladies and gentlemen. And welcome to the Agenus Q4 Earnings Conference Call. As a reminder, today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Christine Klaskin, Vice President of Finance. Please go ahead Ms. Klaskin..

Thank you. Welcome to the Agenus conference call to discuss our fourth quarter and year end 2014 financial results.

Before I continue, I would 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 activity, the publication of data and potential application of the company's technologies and product candidates and the prevention and treatment of diseases.

These forward-looking statements are subjects 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 these 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 remainder, this call is being recorded for audio broadcast. With me today are Dr. Garo Armen, Chairman and Chief Executive Officer; and Dr. Robert Stein, Chief Scientific Officer.

During this call, we will review our financial results, as well as provide a corporate update. We will then open up the call for questions. With that, I will now review our fourth quarter and year end 2014 financial results. Cash, cash equivalents and short-term investments were $40.2 million as of December 31, 2014.

Subsequent to year-end, the company received an additional $60 million from its global alliance with Incyte. For the fourth quarter, Agenus reported a net loss attributable to common stockholders of $26 million which includes $14.3 million of non-cash charges bringing our quarterly cash burn to approximately $11 million.

This represents a net loss of $0.41 per share basic and diluted, compared with a net loss attributable to common stockholders for the fourth quarter of 2014 of $5.8 million or $0.16 per share basic and diluted.

For the year ended December 31 2014, the company incurred a net loss attributable to common stockholders of $42.7 million or $0.71 per share basic and diluted, compared to a net loss attributable to common stockholders of $33.2 million or $1.12 per share, basic and diluted for the comparable period in 2013.

The increase in the net loss attributable to common stockholders for the year-ended December 31 2014, compared to the net loss attributable to common stockholders for the same period in 2013, was primarily due to our acquisition of 4-Antibody in February this year.

In addition to increased operating expenses, we recorded non-cash expense of $6.7 million due to the fair value adjustment of the contingent purchase price consideration and non-cash income of $3.1 million related to the results of various trials of QS-21 Stimulon containing vaccines at GlaxoSmithKline.

During the same period in 2013, the company's preferred stock restructuring resulted in a non-cash deemed dividend of $2.9 million, and the retirement of its then outstanding $39 million 8% senior secured convertible notes due August 2014 resulted in a non-cash expense of $3.3 million.

The increased net loss attributable to common stockholders for the quarter ended December 31, 2014, compared to the net loss attributable to common stockholders for the same period in 2013, was as well due to increased expenses related to our acquisition of 4-Anitbody.

We also recorded non-cash expenses for the quarter ended December 31, 2014 of $6.6 million, due to the fair value adjustment of the contingent purchase price consideration, and $7.7 million related to the fair value adjustment of our contingent royalty obligation. With that, I will turn the call over to Dr. Garo Armen..

Thank you, Christine. Thank you all for joining us this morning. 2014 was a transformative year for Agenus. With our acquisition of 4-Anitbody last February, Agenus today has a broad portfolio of Novel Immuno-Oncology focused on checkpoints. In addition, we have a very powerful platform to discover antibodies to other novel agents.

And a combination of strategic alliances with leading partners. We have also positive data from Phase 2 studies involving our autologous cancer vaccine and Dr. Robert Stein will tell you more about the details of that.

As you'll hear more from this time, these initiatives are now supported by a world-class R&D organization with expertise in immuno-oncology, antibody generation, Bioinformatics and translational biology, that will help us discover and develop the next generational paradigm shift in treatments for cancer patients.

To summarize the key highlights, one year ago we acquired 4-Antibody with its portfolio check point modulator programs and the Retrocyte Display Technology platform for the discovery of antibodies.

And since then, we have successfully advanced development candidates into IND enabling studies and leveraged this acquisition into two strategic alliances with leading partners in immuno-oncology. One with Incyte and the other with Merck, both leaders in the field.

In addition, our partner GSK reported remarkably positive Phase 3 results from their shingles vaccine candidate containing QS-21 Stimulon adjuvant, providing an opportunities for Agenus to receive potentially significant royalty payments.

GSK also filed into malaria vaccine candidate with the EMA which could potentially lead to regulatory approval of the first ever malaria vaccine this year.

While royalties from this product are expected to be modest, it is a very significant advanced in the fight against this deadly disease with the potential to save hundreds of thousands of lives annually.

We also reported promising Phase 2 study results from our Prophage personalize vaccine program for the treatment of newly diagnosed glioblastoma multiforme or GBM which is as you know the most common primary adult form of brain cancer and we are valuating various options for advancing the promising treatment into Phase 3 studies.

Let me now spend a few minutes on very recent development, as well as goals for 2015. We began 2015 with a global immuno-oncology alliance with Incyte that combines Incyte's proven track record of success in drug discovery, development and commercialization with our expertise in immuno-oncology biologics, specifically checkpoint modulator antibodies.

This partnership with Incyte is initially focused on advancing checkpoint modulating antibodies against four key immune checkpoint targets, GITR, OX40, TIM-3, and LAG-3.

For the GITR and OX40 antibody programs, we will co-fund product development equally and share profits 50, 50 with Incyte with potential for us to receive additional payments based on achievement of specific milestones. The TIM-3 and LAG-3 programs are royalty bearing programs.

They will be funded entirely by Incyte with the potential for milestone payments for up to 155 million per product and cleared royalties and product net sales where it's ranging from mid-single digits to low double digits.

We also have the option to co-fund these programs to the extent of 30% of the total expenditures, and this will be an exchange for enhanced royalties. In addition to initial four target programs in the alliance, both parties will have the option to jointly nominate and pursue additional targets within the frame work of this multi-year collaboration.

As Christine mentioned, we received both an upfront payment and an equity investment from Incyte totaling 60 million strengthening our financial position. The Incyte partnership is the second corporate collaboration that was established around CPMs in the past year.

During the second quarter of 2014, we announced our first pharma CPM collaboration for two Novo undisclosed CPM targets which are proprietary to Merck. As you know Merck is a recognized leader in the field with FDA approved PD-1 blocker KEYTRUDA.

As we previously noted, success in this collaboration could provide Agenus approximately 100 million in milestone payments, as well as royalties on world-wide product sales. As I mentioned earlier in the fourth quarter, our partner GSK reported positive results from a Phase 3 study for the shingles vaccine containing our proprietary adjuvant.

This 16,700 patient Phase 3 study showed a remarkable 97% reduction in the risk of shingles for adults ages 50 and over compared to placebo. This unprecedented outcome further validate our QS-21 adjuvant which is also a component of GSKs RTS,S malaria vaccine as I mentioned earlier.

The GSK QS-21 containing malaria vaccine is the very first malaria vaccine to show efficacy in a Phase 3 study. It is currently under review by EMA for regulatory approval and we expect a decision from EMA as early as this year. As you may know GSK is now the number one ranked vaccine company in the world in terms of revenues.

These two late stage vaccine programs could provide us with annual royalty payments that could be as significant source non-diluted funds for advancing our internal programs. In addition to these two programs, there are additional clinical stage QS-21 containing vaccine programs under development by our partners.

As you’ve heard 2014 was a very productive year for us and we were off to a great start this year. We look forward to keeping you updated on our continued progress. With that, I’d like to turn the call now over to Dr. Stein, our Chief Scientific Officer for additional comments and details.

Bob?.

Thank you, Garo. I too have very pleased with our progress that Genesis, Insight joined in the January 2014. As Garo mentioned, we started this year by launching a major global oncology alliance with Insight, built on our checkpoint modulating antibody programs.

As many of you know checkpoints are a system of regulatory receptors of ligands expressed on various cells of the immune system and some times on tumor cells.

Checkpoint processes function as a kind of thermostat for the immune system, stimulating rapid generation of immunity that combat in infectious organisms but also down regulating the immune response, when appropriate in order to limit the possible damage to otherwise normal tissues.

In the last five years, major advances in cancer therapy have risen from a growing appreciation of the roles of checkpoints in the bodies responses to cancer.

Antibodies targeting checkpoint receptors or their ligands, checkpoint modulators or CPMs for short such as Bristol-Myers Squibb's anti CTLA-4 for antibody Yervoy are merged recently approved anti PD-1 antibody KEYTRUDA, allow oncologists to unleash the power of the immune system to seek out and destroy cancer cells.

In some settings, the benefit to patients of the use CPMs to treat cancer have been truly spectacular such as in the treatment of Metastatic melanoma’s with CPMs to block CTLA-4 and PD-1. We are learning that combining CPMs can produce compelling efficacy but also configure significant immune mediated side effects.

The key to the best future treatments were likely be the use of various CPMs such as those in the Genesis portfolio and optimized combinations that are tailored the needs of each patient, with our broad portfolio checkpoint modulators we’ve the opportunity to systematically test rational model CPM combinations.

A key advantage to the alliance with Insight is that the for -- as the opportunity to combine our checkpoint modulator antibodies with small molecule immune modulators than Insight portfolio such as there IDL1 inhibitor Insight 360.

There is also the potential for combining CPMs with immune educating vaccines like a Genesis prophage, which can potentially improve outcomes by safely directing the patient’s immune system more specifically to the tumor and with less collateral damage to normal tissues as a result.

We’ve made significant progress over the past year and moving our CPM programs towards IND filings. We expect to file the first two IND’s this year followed by two or more additional IND’s next year.

We’ve also made significant progress in our Merck collaboration towards our collaborative goal of discovering antibodies against two undisclosed Merck checkpoint targets, which are distinct from our own checkpoint modulating programs.

Beyond these two collaborations, we continued to leverage our Retrocyte Display platform to generate more antibodies against new checkpoint targets for further development. Next, I would like to provide you with the brief update on prophage.

In July 2014 we reported encouraging results from a single arm open label Phase II study of our cancer vaccine prophage and patients with newly diagnosed glioblastoma multiforme. Prophage is an autologous cancer vaccine prepared from each patients own surgically resected tumor.

Therefore it is a highly individualized patient’s specific form of treatment recognizing at each patients tumor has its own unique set of mutations and potential figure for immune recognition and disruption.

In this study Prophage treated patients with GBM demonstrated median overall survival of approximately 24-months compared with a historical expected survival about 16 months in comparable patients.

In addition vaccine treated patients had median progression-free survival of nearly 18 months, approximately 2 to 3 times longer than patients historically treated with the standard of care, which is surgical resection radiation and Temozolomide.

At the time that the study was reported, an impressive 22% of the patients remained alive and progression-free at two years. We anticipate submitting the full data from the study for publication and a peer-reviewed journal.

As previously stated, we’ve completed in end of Phase II meeting with FDA and we are exploring options to advance prophage into a registration study. Last summer, we also reported positive data for Phase II study testing HerpV and example of our HSP70 or heat shock protein 70 -based peptide vaccines, in the treatment of adult genital herpes.

We believe this trial shows that our heat shock protein 70 synthetic peptide vaccine platform can safely produce good cellular and humoral immune responses and supports this potential promise for additional uses in cancer and infectious diseases.

Finally as Garo mentioned our partnered GSK a global leader in vaccines announced last summer that their RTS, S malaria vaccine was under regulatory review by the EMA. This vaccine candidate contains our proprietary adjuvant QS-21 Stimulon and we expect regulatory decision later this year.

As Garo mentioned this is the first malaria vaccine candidate ever to have produce positive Phase III results and have been submitted for regulatory review.

In December 2014, GSK announced that there Prophylactic shingle vaccine has achieved an unprecedented 97% rate of protection of roughly four years in a Phase III trial involving over 16,000 adults aged 50 and older. This vaccine also contains Genesis QS-21 Stimulon adjuvant.

We believe that this vaccine has the potential to substantially expand the market opportunity in shingles. Beyond its unprecedented 97% efficacy rate which dramatically exceeds the reported 50% to 70% protection rate of one year of the only shingles vaccine currently on the market.

Other potential advantages include the fact at GSK’s vaccine is a subunit vaccine and not live attenuated viral vaccine and can be shift at refrigerated rather than frozen temperatures.

Genesis eligible to receive single digit royalties as well as undisclosed milestone payments from any future product sales of these vaccines, containing our proprietary QS-21 Stimulon adjuvant. Thank you for your attention. I’d now like to turn the discussion back to over Garo..

Thank you, Bob. We look forward to providing you with continued updates on our progress on the advancement of our CPM programs and vaccine pipeline and our ongoing collaboration with Insights, Merck and GSK.

We remain committed to developing the next generation of immunological therapies for the treatment of cancer and we thank you for your continued support. And with that I will now once again turn the call back to Christine..

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

[Operator Instructions] And we'll move to our first question from Robert LeBoyer of Maxim Group. Please go ahead..

Good morning and congratulations on a nice quarter. My question has to do with the European regulatory action on the malaria vaccine. And is there any better timeframe other than just this year or can you let us just remind us as to when the filing was made? Thanks..

The filing was accepted, filing was made in July but it was accepted in late July, early August, I believe for review. And typically the agency should take the prescribed amount of time for the review, which should be about a year give and take. Now given the high profile nature of this vaccine, which as Dr.

Stein alluded to could save hundreds of, thousands of lives of children in Africa we would expect expeditious action. Now once the European agency approves the product, then the product needs to go through the individual country bureaucracies in Africa for commercialization.

And the timelines for that will be a little bit longer beyond this year but we hope that based on the preferences of these individual countries and the sense of urgency provided by not just GlaxoSmithKline, by the World Health Organization, as well as the Gates Foundation, our hope is that this vaccine will get to the children in Africa as quickly as possible.

Bob, would you like to add anything to that?.

Just one thing for perspective. There are almost 900,000 deaths a year from malaria in Africa and 70% of those are in kids under the age of five years. And this vaccine is reduces the incidence of the malarial infection by 50%. So there is over 2,000 kids dying everyday from malaria in Africa and this could prevent 1,000 deaths a day.

So its important question about when it will get approved and when it will get distributed..

Okay. Thank you..

Thank you. And we will move to our next question from Reni Benjamin of H.C. Wainwright. Please go ahead..

Good morning guys and thanks for taking the questions. I guess just starting off with the vaccine, the shingles vaccine, I probably heard it wrong, I thought you’d mentioned that its under review at the EMA but that’s probably the malaria vaccine.

Can you just give us an update, when will see the filings for the shingles vaccine take place and when you think it could, be on the market..

Well, as you know this is GlaxoSmithKline’s vaccine and we’re not at liberty to make disclosures on their plan, so however within constant contact with them and the moment as they make the proclamation as to when the product will be filed, which would hope to be in an expatiated timeline given the high level of efficacy.

We will let you know but at this point we don’t know the answer to that question and if we did, we would still have to wait for their public disclosure about the timeline Ren.

So fact that to say, there are not there is only one vaccine available right now, that’s by Merck and the efficacy differential between this vaccine, which is 97.2% nearly a 100% versus the other vaccine which is in the range of 50% to 70% depending on the age group and depending on how many years after the vaccination were would looking at protection.

We believe not only will the GlaxoSmithKline vaccine will it’s much higher efficacy rate would be the standard but we also believe that it will have the opportunity to expand the market very significantly..

And can you talk, I know Bob, kind of touched upon some of the other competitive advantages including this being a subunit vaccine but can you talk a little bit about, what sort of sales Zostavax already seen and any other comparative advantages outside of efficacy that you believe, might be important in marketing the product..

Sure.

Bob?.

Yeah, so Zostavax is a very significant product, it does a reasonable protection that if you are between 50 and 59 after a for the first year after vaccination about 70% reduced chance and getting shingles but out of four years its only 50% in that range and if you’re above 60 and for one year point its only 50% protection.

So this GSK vaccine at 3.5 to 4 years gave 97% or greater protection, 97.2% protection.

And the other piece of it is, that it is not live attenuated virus the way the Zostavax is, so Zostavax has an issue in it, if your immuno compromised that can disseminate, if you get neat immuno component then become immuno compromised that can be activate and actually produce its own formed shingles, it can be transmitted from a vaccinated person to immuno compromised contact and it’s not a good thing to have around if you pregnant.

And despite of that it is a $750 million year product; the amazing thing about the GSK vaccine that was given in conjunction with QS-21 Stimulon is that with the single subunit like a protein E, they have been able to achieve very powerful and lasting protection.

Now shingles itself is a painful experience and there is no fun but lot of us when they getting it if we are vaccinated but even that happens about one in four to five people will get – to be 80 years old, that the other pieces this that about 30 of those people get lets called Postherpetic neuralgia which is a terribly painful chronic condition in the region where your shingles had occurred.

And so the advantages that the subunit vaccine has none of the concerns about immuno compromise reactivation or transmission and it’s also easier to shift and distribute because you’re not be live attenuated virus you have to keep viable.

So my belief is that, as soon as this vaccine becomes approved, I’m going to go out and get it being over 50 right and I think it’s a very significant future product of course that’s my opinion and doesn’t reflect anything that GSK would say officially but I think that is a very powerful advance..

Got it, just switching gears now to that the CPM programs, one having to do with the timing of the recognition of the upfront, is – are you expecting I guess from a housekeeping perspective, the entire upfront to be recognized in the first quarter, I think by March 1 is when you suppose to get it but I just want to know if there is something that gets amortized over, the life of the collaboration or you will see that lump sum in the income statement..

Yeah, so we have received the cash since year end that was the $60 million mentioned in the opening remarks and it will be amortized over the period of the agreement. .

Which is about how many years?.

Yeah, it will be amortized in the range about 3 to 5 years..

Excellent, okay and then regarding the two IND’s that would be submitted this year and the two IND’s next year, can you give us any more color as to which particular targets are might be and how that development is coming along or they are all in IND enabling studies or seem to be..

Everything that we have described is in IND enabling studies, we are very conscientious about pushing those forward aggressively and appropriately we have all the programs are moving forward on track and we will make those filings on time but we aren’t going to disclose it at this point which of our products are going what order its impart, because its our own information that has some competitive positioning aspects and also because now some of that’s with our partner insight, so we have a concerted communication policy there..

Fair enough, is the Merck undisclosed targets, in IND enabling studies as well?.

That is for Merck to disclose a usually pretty close about things like that but that program is going a long run..

Very nice. And just one last question that the QS-21, call a platform, what’s the latest count as to the number of partners that are on board, evaluating QS-21 and what’s the latest number of call it most advanced clinical trials that are currently ongoing..

The most advanced programs are obviously in the hands of GSK, and we as you know we also have a clinical program with J&J in phase II.

Most of the, rest of QS-21 varying programs are with academic centers, there are a significant number of programs around the country and around the world in the hands of academicians that advance their own trials and they’re owned on basically but so far as to say as Bob as alluded to, this is an adjuvant that is extensively studied in well over 50,000 patients right now.

And so there safety is not a consideration any more obviously particularly given the fact that it is not a subject of a vaccine to be used in children including infants. And we believe it is our belief that QS-21 is one of the major drivers of efficacy and the two vaccine candidates that are right now in advanced stages of development and review.

So that's I think sums it up..

Terrific. Thanks very much, good luck in 2015..

Thank you. And we will move to our next question from George Zavoico of Jones Trading. Please go ahead..

Christine, couple of questions first one about the Retrocyte Display Technology and your ability to rapidly discover and optimize antibody candidates, its question is wrong but its been implied mainly just to your candidates, how would you intend to leverage that given the commodity that antibody discovery now is concerning that [indiscernible] process and antibody discovered platforms as well, how do you intend to leverage that into partnerships or collaborations..

One thing that before Bob goes into the deals of this, as you know we’ve disclosed some information about our Retrocyte Display platform and just to correct what you said, it is in just for our antibodies for example Merck came to us with their own target and this is the source of discovery for antibodies for that.

There is a lot of confidential developments within our company advancements that we don’t want to specifically elaborate on but I think Bob could give you a little sense of direction to field is going at and what our competitive advantage will be?.

I think it’s a good question George and you’re right that to some extent antibody discovery is practice in a variety of different ways some of other competing technologies produce very reasonable antibodies and sometimes they have snagged and being develop above because of levels of expression or other pharmaceutical properties that are less attractive.

Our technology is very nice and that it doesn’t require immunization but it doesn’t lead as -- bunch of blind alleys, we get antibodies out of it that already well expressed on the surface of malignant B lymphocytes and therefore are pretty well behaved, when we take them forward as potential development candidates.

We have since the acquisition for antibody continue to improve on the platform and were in the midst of building out, what I think will be a world class development and discovery organization focused on producing top quality antibodies.

We’re leveraging that with our Insight partnership right now, its not only that the programs that we have but additional future programs that we’re contemplating with our partner.

And as we move forward, if we have additional bandwidth we may elect to the partner more broadly for other targets outside of immuno-oncology related to flip side Pharmacodynamics in the checkpoint space and there are number of other opportunities that we’re discussing with outside parties that I guess the best I can say as stay tuned..

And George just to make one correction even though, the perception is of antibody discovery platforms being a commodity that’s a perception. There are very important unique nuances that not only are as Bob said our platform has but that we are advancing our platforms capabilities to drive that will even make us more unique.

Now there is clearly a reason, why Merck came to us as suppose to go into others for the discovery of antibodies for their target and that’s fixed to I think the some of the unique attributes or what we have..

Yeah, Bob, like commodity I didn’t mean that every platform was the same each one clearly has certain damages and probably some cost advantages do so Bob thank you for eliminating the, the advantages of the Retrocyte Display.

And I will stay tuned, I expect this, mostly likely be leveraged into some new announcements this year, not this year then next year but for the meanwhile between Merck and Insights it seems to goes pretty busy with optimizing it and getting into work for your first two partnership collaborations in that regard..

That’s one of that point, we do – have use Retrocyte Display and we think it has great characteristics, it however is a tool not a religion and were opened to and do employee whatever its going to work the best in every particular setting, so we’re looking at the emerged approaches from different perspectives for making best in class antibodies cost effectively and quickly..

Okay, great. And second question is you mentioned Bob all the options you have for combining your CPMs and optimized combos, not only between certain differentiated CPMs or different CPMs, you mentioned either one of the Insights and with your vaccines.

There is a lot of choices, here lot of options and you could do dozens of studies and lot of is going to be personalized, I mentioned it would have to be regarding which checkpoints are expressed by which cancers in which patients.

And so in that regard do you have Biomarker in every platform or you working with anybody in that regard to trying narrow down and includes the different criteria and which combinations to go forward with?.

I think, you are making a very important point and part of the way the entire field is moving is to understand that their optimized treatment.

They want to have better appreciation of the detailed pathobiology in each patient, which will required not so much the type of biomarker when you measure one thing as a sophisticated immuno monitoring capability both for patient stratification and for deciding.

What the implications are about potential therapeutic interventions to track whether those interventions are having Pharmacodynamics effect to intend them to have and then to make better predications about whether, they changes the observed indicates of the patients on the way to benefit or not and we have build out in the increasingly high quality, our translational capabilities.

The companies you can imagine has been in the immuno-oncology space and vaccine space and working to understand the interaction between the immune system in cancer for two decades of this has been a really deep focus of the company and that’s one of the thing I think that advantages are in the movement into the checkpoint space there is long and deep appreciation of the underlying pathobiology.

So I think its going to be absolute proof show and we will certainly use that to help design and focus our early development explorations on the things where we think have the best chance of matching up the patients needs with our interventions and combinations. .

That's great. And exceedingly important given Obama's recent initiative, I don’t know if you saw in New York Times today, they had a story about going into personalized cancer medicine in couple of examples, so its getting a lot of lot more press more broadly into the lay public. So that's great that you’re going in that direction.

Okay, thank you very much..

Thank you for the questions George..

Thank you. There are no further questions at this time. Please continue..

Thank you, Valerie. I would like to remind listeners that our replay of this call will be available approximately two hours after the call and that 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 will be available to receive any further inquiries following the conclusion of this call. With that Valerie, please conclude the call..

Thank you. Ladies and gentleman, this does conclude your conference call for today. We thank you for your participation. You may now disconnect your lines and have a great day..