Good morning, ladies and gentlemen. Thank you for standing by. And welcome to the Agenus Fourth Quarter and Full Year 2019 Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions].

Please note this event is being recorded. I would now like to turn the conference over to Dr. Jennifer Buell, President and Chief Operating Officer of Agenus. Dr. Buell, please go ahead..

Thanks very much, Rocco. Today's call is being webcast and will be available on our Web site with our accompanying slide material for replay.

Before we start, we’d like to remind you that this call will include forward-looking statements, including statements regarding our clinical development and regulatory plans and timelines, as well as timelines for data release and cash projection.

These statements are subject to risks and uncertainties, and we refer you to our SEC filings for more details on these risks. As a reminder, this call is being recorded for audio broadcast. I’m Jennifer Buell, President and Chief Operating Officer of Agenus and joining me today are Dr.

Garo Armen, Chairman and Chief Executive Officer; and Christine Klaskin, our Vice President of Finance. To start, I will present new response data from our AGEN1181 trial. You may remember that AGEN1181 is a multifunctional T cell antibody which also binds the CTLA-4. This molecule is advancing in a Phase 1 dose escalation trial.

In the past two weeks, we have seen additional clinical responses in this trial. At our Analyst Day in February, we have reported one complete response at a dose of 1 milligram per kilogram. This is monotherapy 1 milligram per kilogram, which is considered a low dose.

This complete response in a patient with endometrial cancer who had relapsed after treatment with Keytruda plus an experimental TKI inhibitor. While it is unusual to see a complete response in a patient with very advanced disease in a dose escalation trial, this was an N-of-One.

Today, we are very pleased to share that in the past two weeks we have received reports of additional responses on this trial. This is very exciting for us and for patients, especially to have this level of response at this stage of development, very promising.

Also, in the past two weeks we have had additional follow-up data from our cervical cancer trial with the combination of balstilimab and zalifrelimab in second-line cervical cancer. Response rates seem to be improving. At the earlier data cutoff, we reported response rates close to about 20% -- over 20%.

Following additional eight months of follow up in the same patient population, the response rates are now above 26%.

What is also impressive is the durability of these responses and the fact that some patients with this stable disease are becoming partial responses and some patients with partial responses are converting to complete responses over time. Also, the confidence intervals are getting tighter.

The data from these trials continue to support that the combination of anti-CTLA-4 and anti-PD-1 in relapsed/refractory cervical cancer patients may be the best available treatment option for women with metastatic disease.

To this end, today, we announced this morning that the FDA granted Fast Track designation for the investigation of balstilimab and zalifrelimab in patients with relapsed/refractory metastatic cervical cancer. These findings to us are not surprising.

As a matter of fact, on Slide 5 in the deck we have, you can see in a number of different tumor types the addition of CTLA-4 to PD-1 expands the response rates, and in some cases doubles or triples response rates. And the addition of CTLA-4 also expands the durability of response.

As Agenus’ combination is potentially the second combination to market, this gives us a very exciting development opportunity and market opportunity. Now to summarize our operational progress in 2019. This was a year of substantial advances across multiple programs and products.

I’m referring to products in the clinic as well as to our preclinical research and discovery programs. Overall, the highlights of 2019 include; one, we concluded two business development transactions and generated $183 million in cash.

As a reminder, in the past five years we have generated over $540 million in payments from partnerships and royalty transactions and milestones.

Two, we completed target accrual and the preplanned interim analysis of two pivotal trials to support the registration of balstilimab, our PD-1 antibody and zalifrelimab, our CTLA-4 antibody in second-line cervical cancer.

Three, we launched four clinical programs with our first-in-class/best-in-class discoveries including AGEN1181, AGEN1223, AGEN2373, and GS-1423 which is now licensed to Gilead. Four, we generated clinical data on three of our clinical programs. Five, we advanced our programs towards additional INDs which we are on track to file this year.

These INDs include our allogeneic cell therapy program and two additional antibodies which we have not disclosed publicly. Importantly, we have also advanced our proprietary anti-TIGIT antibody program with a differentiated Fc enhanced TIGIT molecule. We published data on this molecule and cancer cell. And that brings us to this year.

This year, we plan to; one, we will file two BLAs and continue with our pre-commercial activities for the launch of balstilimab and zalifrelimab in second-line cervical cancer. In fact, just today we announced the Fast Track designation from the FDA and we expect our launch approach to be highly innovative.

Secondly, we plan to file three INDs that include new discoveries addressing myeloid and macrophage biology. These are very important components to anti-tumor immunity. We also are on track to file our IND for allogeneic iNKT cell therapy. Thirdly, we will generate clinical data readouts from six clinical programs.

And as a matter of fact, just as of today, we have already shared data from three of these programs. Fourthly, we expect to generate a minimum of $60 million from existing partnership milestones. And importantly, we expect to execute additional partnerships and collaborations.

Before turning the call over to Garo, I want to go over a couple of other items. Our mission is to have cancer patients live longer and better lives. The way we see it, this will be achieved in two ways. One, more discoveries; and two, combination treatments that are accessible and affordable.

At Agenus we’ve created a platform that can deliver both of these objectives, accessible and affordable. Our highly efficient research engine and in-house manufacturing capabilities have delivered more I-O discoveries to patients than any other company.

Today, 13 Agenus discoveries are in the clinic and we will have clinical data on six programs reading out this year. We have presented the most updated data on three of those programs today. We are targeting our zalifrelimab and balstilimab’s CTLA-4 and PD-1 antibodies to take a share of the over $30 billion I-O market.

And our approach to penetrate and expand this market includes combining our next generation novel multi-T cell engager AGEN1181 with our PD-1 balstilimab. This molecule is designed to extend the benefits of anti-CTLA-4 to more than 60% of patients from the current 20% of patients responding to a first generation anti-CTLA-4.

This molecule has the potential as a superior monotherapy but importantly a superior combination partner for our anti-PD-1 antibody. This will position Agenus to take advantage of the most profitable and growing market in oncology expected to reach over $50 billion by 2025.

This could be transformative for Agenus and for the field of cancer and most importantly for how patients will be treated. This is a very exciting time for us and for patients. We look forward to providing you more detailed data at an upcoming major medical conference. Now, I will turn the call over to Garo..

Thank you, Jen. It is indeed a very exciting time for us. Our company of 300 employees has developed a pipeline of more than 22 discoveries, 13 of which are in the clinic by us and our collaborators. As Jen mentioned, we are preparing for the commercial launch of our first two antibodies which target the validated immune checkpoints CTLA-4 and PD-1.

Today’s market for these targets represents $30 billion in annual revenues. The revenues for the first two anti-PD-1 antibodies alone will exceed $20 billion this year. The overall immuno-oncology market is expected to grow to 50 billion in annual revenues in the next five years.

The recent explosive growth of the first two anti-PD-1 antibodies, Keytruda and Opdivo, has come from either combinations with chemotherapy, that’s in the case of Keytruda, or in combinations with CTLA-4, which is the case with Opdivo.

We believe we will be able to take a slice of this existing market with our balstilimab, which for your easy reference I will call bali, and zalifrelimab, which I will call – that’s the PD-1 – I’m sorry, that’s the CTLA-4 which for your easy reference I’ll call zali. I’m deviating from convention here, but so be it.

We believe we’ll be able to take, as I said, a slice of this existing market with our bali and zali combinations. While there are a lot of PD-1 antibodies out there, we expect to be the second PD-1 plus CTLA-4 combination in the market.

But most importantly, if our AGEN1181 is what we believe it could be, AGEN1181 plus our bali, that’s PD-1, combination has the potential to provide superior benefit to patients, then the combinations offered by today’s market leaders, Keytruda and Opdivo, to us and our shareholders as well as patients, this represents a significant potential opportunity.

So what we know today. We know, as Jen mentioned, that when you add CTLA-4 to PD-1 you expand response rate and durability of responses pretty much across a multitude of solid tumors. This is outlined again for your reference in Slide 5. In 14 different tumor types, this trend has become clear.

And all of the 18 PD-1 approved indications, CTLA-4 combination with PD-1 is approved in eight of those and we expect this list to grow. Yesterday, for example, Yervoy received another approval in combination with Opdivo. Now imagine a more active combination partner for our PD-1 bali in the form of our AGEN1181.

We believe this molecule can advance the registration as monotherapy but can also substantially differentiate our PD-1 antibody bali from the existing PD-1s. As Jen mentioned, we designed this molecule to benefit a much larger patient population than the patients who respond to first generation CTLA-4 targeting antibodies.

Given the prevalence of this particular polymorphism which AGEN1181 addresses and it’s designed to benefit as a result, 60% more of the patients compared to 20% addressable with first generation CTLA-4. This, by the way, we believe a major event.

As you heard before, the clinical data coming in from our Phase 1 trial is in line with our expectations so far for the activity of this molecule as both monotherapy as well as in combination with our own PD-1 targeting antibody bali. We are currently under CDA for discussions with several major companies for principally ex-U.S.

partnerships and plan to retain much of the economics for AGEN1181 in the United States for ourselves. Let me step back and reflect on something unusual. As you know, the world is in a state of crisis. I’ll give you a brief update on how we are managing the coronavirus crisis.

Before coronavirus outbreak took place in the United States, our executive team – that’s by the way two weeks ago, our executive team took proactive and aggressive measures to protect our employees, our families and our business.

We implemented bans on travel and conference attendance, instituted aggressive decontamination measures during and in between work hours, equipped our employees with protective supplies and continued to have an open and transparent dialogue regarding exposures and measures as we gather more data.

We have also implemented a three-week quarantine period for employees who maybe at any kind of risk due to potential exposure and what have you as well as risk factors, but those affected by quarantine are a tiny handful today and we hope that because of our protective measures we’ll keep these numbers tiny going forward.

I also want to make it clear that none of our employees have been diagnosed with coronavirus. In the event of the need to implement more stringent measures, we are fully geared for seamless work from home for most who can perform their duties remotely. We’re not there yet.

Finally, I will quickly summarize a few of the points Jen highlighted and give you financial guidance for the year. We’ve had an outstanding 2019 and we’re looking forward to an even more outstanding 2020. As Jen mentioned in the past four and a half years, we have raised $540 million in partnerships and royalty transactions.

We continue to benefit from the monetization and the performance of Shingrix containing our proprietary QS-21. This is a blockbuster product and GSK realized 2.3 billion in sales in its second year after launch.

In addition to the announcement we made this week of a $15 million payment, we are eligible to receive an additional $25 million in sales milestones which we expect to come this year.

And to the delight of our long-term shareholders, as a consequence of all of these non-dilutive transactions, as I said, we have not had to make a marketed stock offering in the past five years.

Based on the progress of our programs, we expect to continue to finance our operations largely from cash milestones from existing collaborations and royalty payments which are expected to reach about 60 million this year, but most importantly we expect to enter into new collaborations this year which can result in significant cash infusion into the company.

Additionally, from time to time we may engage in transactions for additional capital infusion without a marketed offering. We ended 2019 with a cash balance of 61.8 million. We expect to trigger, as I said, approximately $60 million in milestone payments this year.

But so far, based on transactions in the first quarter of this year, we expect to close the first quarter with approximately $110 million in cash. That is quite a bit higher than our year-end cash position. This does not include additional milestones for the balance of the year or partnership transactions we expect to happen this year.

So with that, I will turn this over to Christine and later we will take questions.

Christine?.

Thank you, Garo. As Garo just mentioned, we ended 2019 with a cash balance of $62 million. This compares to a $53 million balance at the end of 2018. Cash used in operations for the quarter ended December 2019 was $30 million compared to $36 million for the same period in 2018.

Cash used in operations for the year ended December 2019 was $17 million as compared to cash used in operations of $131 million for the same period in 2018. For the fourth quarter ended December 31, 2019, we reported a net loss of $31 million or $0.22 per share compared to a net loss for the same period last year of $49 million, or $0.40 per share.

For the year ended 2019, we reported a net loss of $111 million or $0.80 per share compared to a net loss for the same period in 2018 of $162 million or $1.44 per share. During the year ended 2019, we recognized revenue of $150 million which includes revenue from our transaction with Gilead, non-cash royalties earned and a royalty sales milestone.

This compares to revenue of $37 million for the year ended December 2018. For the year ended 2019, we also recorded $42 million of non-cash interest expense due to our transaction with HCR related to the sale of future royalties. I’ll now turn the call back to Garo..

Thank you very much, Christine. I think, Rocco, we’re ready to take questions..

Thank you, sir. We will now begin the question-and-answer session. [Operator Instructions]. Today’s first question comes from Mayank Mamtani of B. Riley FBR. Please go ahead..

Thanks for taking my question and congrats to you on a very productive 2019. So first on bali-zali combination and thanks Garo for making it easy. It seems like you had a little more dialogue possibly that may have enabled this Fast Track designation.

Could you just clarify what further you might be needing from a data standpoint to complete a rolling BLA filing, including if anything from the rapid Phase 2 study?.

Sure. I think Jen will be happy to address that question..

Hi, Mayank. We have a number of interactions with the agency that we have a very clear set of deliverables. And as we mentioned we’ll be conducting a rolling submission and we are in a wonderful position with respect to our commercial product readiness, our product is available and ready.

And we also have now, as you can see, much more mature clinical data. So we have completed our target accrual and met the requirements that we needed to have to support our submission. We are now in the process of course doing some of the mechanics for data cleaning and readying for submission.

So with respect to the deliverables that we need to achieve to check the box in order to meet our submission, we have all of what we need for our manufacturing and for our clinical data incoming, the clinical patients that are incoming. So now it’s just a matter of cleaning the data and getting it ready for the publishing..

And we’ll be hoping in the next few months a series of meetings with the FDA to make sure that we’re aligned for this submission..

Okay.

Any color you could provide from the Phase 2 rapid study, how that could play a role if at all?.

Phase 2 --.

The rapid study. So this is a study that we launched in collaboration with the gynecologic oncology group. It’s an important study.

And the role that it will play for us of course is not only to continue to contribute data to the data base and continue to enable access to our therapies for women with cervical cancer, but also it is additional safety data for our data base and can support full approval..

Got it. Thank you. And then on zali and as you think about 1181 also, it seems like the longer-term zali exposure and also potentially the value of maybe going higher dose there could get you more active adhesive.

When you think about expanding to more tumor types beyond cervical cancer and then think about LCM, what are your latest thoughts in how the two molecules could coexist in your portfolio and obviously to your broader strategy to have many more tumor types?.

Okay. Just a comment and then I’ll ask Jen to finish it up. First of all, higher doses of CTLA-4, zali, is a misnomer. The field is moving away from high doses. And whatever tells you that higher is better, don’t believe it.

In fact, there was a wonderful poster at ASCO last year that compared different dosing intervals and different dosing levels and this poster demonstrated that the lowest dose of CTLA-4 antibody tested and less frequent administration was just as effective, if not better, than more frequent administration and higher doses.

And I think – I know there was a lot of concern after the Analyst Day – misplaced concern I might add by an unqualified experts, so to speak, that are not in the medical field directly and the suggestion was why wouldn’t we have higher doses tested? And as you’ve seen from Jen’s data, as the data is matured at our low dose, our responses and the durability responses have gotten better.

So we would like to put this sort of misperception to rest.

With that, would you like to add anything to that, Jen?.

Sure. And I will just say that the safety data we presented to you should also reveal the acceptable tolerability profile with few to no patients coming off due to immune-related toxicity, which is a real breakthrough to have a dose and a dose frequency that allows us to tolerability and effectively put CTLA-4 and PD-1 together.

Now we have in our – and our slide deck presented all of the opportunities and tumor types in which the addition of CTLA-4 to PD-1 expands response rates and durability of responses. Some of those tumors do not get their labels.

And as the second combination to market, we have the opportunity to take advantage of these advancing our programs, our first generation programs into some of these indications. Now with respect to AGEN1181, now very importantly our zali and AGEN1181 do something very specific and that is that they active T cells. That’s a very important component.

AGEN1181 was designed to go beyond that in which it also primes and it is designed to deplete regulatory T cells. Both are real breakthroughs in I-O.

The last feature of AGEN1181 which we presented to you during our Investor Day is that what we have noticed – we and others have noticed is that when patients don’t respond to first generation CTLA-4, it appears that those patients generally exhibit this genetic biomarker or polymorphism in a specific allele.

They have what we have shown through our data is that AGEN1181 may actually expand the benefit of the 20% of patients who respond to a first generation to an additional 40% of patients, so that being about 60% of patients who respond to AGEN1181.

40% of the population that’s been studied exhibits this polymorphism and those patients do not respond to a first gen and appear to be responding to next gen CTLA-4 which is AGEN1181.

We presented one complete response that patients exhibited a low infinity allele, that genetic polymorphism, and that is not the only patients who were getting this kind of signal in our study. So that gives us some distinct opportunities for development.

And we’ve also shown pre-clinically that AGEN1181 demonstrates superiority as a monotherapy to a first generation CTLA-4 with respect to T cell priming, activation as well as superiority in combination with PD-1; our PD-1 and any PD-1. That gives us a lot of flexibility in how we want to develop these molecules..

That’s helpful color. If I could, maybe I missed this clarification.

Did you say the incremental partial responses that you saw in 1181 with – I know you had endometrial in the – that was the CR that you talked about at the Analyst Day, but what are some of the new CRs that you’re seeing?.

Mayank, we have not yet disclosed this data. We anticipate doing so at a major medical conference, so you’ll see more of the data coming out soon. But it is beyond endometrial cancer we’ll say, but also including endometrial cancer..

Understood. And my last question, you said six readouts this year of which three you have disclosed, three assets.

So could you maybe talk to whether these three maybe which ones are these? And then does that include wholly owned or also the partnered one, including the Gilead molecule, could you just be more specific? And then if you can tie that to the milestone payment, I think you said about 40 million you can recognize this from the Shingrix collaboration, but any color on the incremental 20 million this year that could come from these collaborations?.

So we have not specifically disclosed the breakdown of the 60 million in total milestones other than the fact that 15 million which we have received already and 25 million from QS-21 which we expect to receive. There are additional three milestones, sort of smaller milestones, which we have not disclosed.

But suffice it to say that those three milestones are very conservative assumptions based on readily achievable or already achieved milestones, if you will. So some of them will happen in the first half of the year and others will happen in the second half of the year.

Now, as I’ve said, this is not taking into account what we think are collaborations – additional new collaborations that are in our pipeline. So that’s what’s exciting to us because these new collaborations can result in significant cash infusion into the company as well.

But just to be clear, our cash management practices are not dependent on new collaborations. So basically we’re not going and praying that new collaborations will happen and hence managing our expenditures accordingly. That’s not happening..

Mayank, to go through your question about the clinical data readout, so what we’ve presented now publicly were a preplanned interim analysis and more mature data from that interim analysis for our first generation balstilimab, our PD-1 antibody as well as the combination of balstilimab and zalifrelimab in second-line cervical cancer.

So those were the first two programs that we’ve presented. We’ve also presented some of the data from our AGEN1181 clinical trial.

Now we talk about the number of programs we have in the clinic, those are independent of programs that are in the clinic from our discoveries that are currently with Incyte and those include TIM-3 and LAG-3, GITR, OX40 and the combinations they’re in.

And we also haven’t spoken about the discovery that we made here at Agenus which is an ILT4 monoclonal antibody which is being developed by Merck. But the other programs that we have that are advancing in the clinic that we anticipate data readouts in different capacities would be AGEN1223.

This is a very selective and specific intratumoral Treg-depleting bispecific. So this molecule is designed to target co-expressing proteins on regulatory T cells within the tumor microenvironment. That molecule is in the clinic and is advancing with planned combinations. We also have AGEN2373. This is a differentiated CD137 agonist.

This molecule is designed to advance the kind of agonistic or immunogenic profile associated with CD137 without the liver toxicity that has hampered the development of Bristol-Myers Squibb’s Urelumab. That molecule is in dose escalation and expansion trials at this time as well.

And finally, an Agenus discovery that has now been disclosed – the targets have now been disclosed by Gilead, this is GS-1423. This is a molecule that our scientists have created which is a bi-functional antibody. It targets CD73 as well as TGF-beta molecule.

So that molecule is so important because the adenosine pathway as well as the TGF-beta pathway are important tumor escape mechanisms and GS-1423 was designed to address both of these mechanisms in a single molecule. That molecule is also in the clinic and advancing..

Great. A lot going on, so my best wishes for another good [indiscernible]. Thanks for taking my questions..

Thanks very much, Mayank..

Thanks..

[Operator Instructions]. Today’s next question comes from Matt Phipps of William Blair. Please go ahead..

Good morning, guys. This is Rob Andrew on for Matt Phipps here. Thanks for taking the questions. So just to confirm, I think you mentioned that you’ve seen some deepening of responses in the balstilimab/zalifrelimab combination, so from PR to CR and from stable disease to PR.

So can we assume here that you’ve got one conversion from PR to CR and then two new PRs in the program there and any additional details on when you’ll consider updates from that program maybe in terms of duration or anything like that? And then I think you said in your prepared remarks on 1181 additional responses.

In the press release, it highlights one new response.

Can you just clarify where you’re at in terms of responses in the whole program there? Is it two in that program so far or more than that?.

Thanks. So let me tell you a little bit of a background. As you know, as Jen mentioned, this is a dose escalation study. So we tested four patients – this is 1181 we’re talking about now. We tested four patients at the lowest dose, 0.1 milligram per kilogram. Then we went up to 0.3 milligrams per kilogram and then we went up to 1 milligram per kilogram.

And once we went to 1 milligram per kilogram and cleared that dose, we started combination trials at the lowest dose again, at 0.1 milligram per kilogram plus balstilimab, our PD-1. So the data is coming in continuously. And we will let you – we’ll keep you abreast of what is happening.

But the most important thing here is that as of the Analyst Day event, we had at that time only one complete response at 1.10 milligram per kilogram and that was as monotherapy. So that was a complete response at 1 mg per kg as monotherapy. Now people say, well, that’s great but it’s only one patient.

How could we be sure that this is a real trend? And hence when the developments came in, in the last two weeks and we had two additional responses and now the combination at 0.1 mg per kg with balstilimab, we decided to disclose that today so that this concern of only one patient will no longer be a concern.

Now we think that this trend is a very positive one because the denominator is still very small. Okay. Now obviously we have the ambitions of making a big splash with this at a medical conference. And so as more data comes in, we have to evaluate as to whether or not we dribble it out week by week or do we keep some for a medical conference.

And so we will let you know of the plans accordingly. Does that clarify? Matt, you sounded different for some reason..

It’s Rob on for Matt and that’s why..

I know..

Yes, no that’s great. Thank you..

Ladies and gentlemen, our next question comes from [indiscernible] at Jefferies. Please go ahead..

Hi, guys. This is Jeet [ph] on for Biren. Just a quick one from me. As you guys think about the launch for your second-line cervical indication, Jen, I think you had said that you’re looking for a highly innovative approach to your market launch. So I was just hoping you could perhaps provide a little bit of color on that? Thanks..

Well, I think that’s something we’re not willing to do right now. But suffice it to say that we are having very, very collaborative discussions with payers, payer providers as well as outside groups to help us with the kind of launch that we are envisioning it.

Imagine the industry standard way of doing things and I assure you this will not be an industry standard way of doing it. Now of course there are risks associated with it, but we believe that initial ramp up associated with our strategy, this innovative launch will offset the risks..

Got it, that’s helpful. And then perhaps just another one from me. I think at your Analyst Day, you had said that perhaps you’d had a poster or a little bit of a data update on 1181 at AACR. Now that that’s been postponed, you guys perhaps have a little bit more of a tighter guidance on when we could perhaps see another update on 1181.

Would this be perhaps towards a year-end conference or perhaps something sooner? Thanks..

I think it’s fair to say that in this new world order, we have to be innovative in the way we also disclose data. So you can expect us to go through a process whereby we have our data peer reviewed and perhaps we will disclose it in a format that does – is not dependent on AACR or even ASCO for that matter..

Got it. Thank you. That’s all my questions..

And ladies and gentlemen, this includes our question-and-answer session. I’d like to turn the conference back over to Dr. Armen for any final remarks..

Thank you very much, Rocco. We will look forward to the next time. Thank you very much for everybody’s attendance. And if you have any other questions, please contact us and we will discuss them offline..

Thank you, sir. Today’s conference has now concluded and we thank you all for attending today’s presentation. You may now disconnect your lines and have a wonderful day..