Agenus Inc. (AGEN) Earnings Call Transcript & Summary

Welcome, everyone, to the Agenus fireside chat, and welcome to Garo Armen, CEO of Agenus; and Robin Taylor, Chief Commercial Officer. My name is Rob Huston. I'm part of our Goldman Sachs Investment Banking team. Welcome, gentlemen.

Thank you very much, Rob. It's great to be here with you, unfortunately, because of weather, we couldn't make it in person.

Thank you for Zoom and the magic of virtual presentations. Maybe, I guess, starting first with just an overview of Agenus, your current pipeline, overall approach and general strategy before we get into more detail.

Thank you. Thank you for that. As you know, we're one of the very old immuno-oncology companies. In fact, we came into existence before determining in oncology was invented. And 30 years ago, the company got started with the mission that the immune system would be the holy grail to curing cancer, of course, curing is always an aspiration. And so we started with a single technology at the time that was a personalized vaccine technology, very state-of-the-art at a time when nobody really embraced personalized vaccines, but fast forwarding about 20 years beyond that, in 2014, we made a pivotal acquisition of a company called 4-Antibody, which was the spin-out of the Roche Research Institute in Basel, Switzerland. And that formed the basis for us to make a very substantial number of discoveries to sort of round up the armamentarium that you need in your fight against cancer. And since 2014, we've taken 15 antibodies, all our discoveries, NSL therapy to the clinic, and we have licensed out about half of our portfolio for a total sum of about $900 million upfront and milestone payments that have already been had. And the most exciting part, of course, is the portfolio of crown jewels that are unencumbered led by BOT/BAL, which has been in the clinic for the last several years, having 1,000-plus people, patients exposed to it. And that is our lead product, and we'll talk about that.

Wonderful. We're going to get into a little bit of detail in terms of near-term catalysts and longer-term strategy in a little bit, but I thought it would be helpful for the group to start with potential differentiation of BOT. Despite the blockbuster sales, I think it's fair to say, haven't quite achieved admittedly very high expectations for its broad-based use pre-approval. Can you provide your views on BOT source of differentiation and specifically against not only ipi, but other next-gen CTLA-4s?

We won't get into too much science, but tell you a little bit broadly. The men to my left, Robin Taylor. Dr. Robin Taylor joined us about a year ago because of 2 things, really, his conviction and he is a veteran of the industry, including colorectal cancer for many years because of his views of the mechanistic differentiation, but very importantly, that differentiation translating to clinical results. So if you could, Robin, tell us a little bit more about that.

Thanks, Garo. Yes. As Garo said, I came to Agenus a year ago, and I joined the company actually because of the data that I saw with BOT and BAL in colorectal cancer in the relapsed/refractory setting. And based on my experience, so I had been at Genentech for about 18 years, early on, actually about 20 years ago, launched Avastin in the U.S. And so I was very familiar with the colorectal cancer landscape. And in fact, when you look at the progress over the last 2 decades, really, there have not been any really significant improvements in either the first or second line setting. Most of the improvements have really come in this late-line setting in the third line. And so the standard of care right now in relapsed/refractory are Lonsurf, which is a chemotherapy, Stivarga or regorafenib and frequitinib or FRUZAQLA and when you look at the history of immunotherapies in this space, the last 4 years that I was at Genentech, Roche, I led the immuno-oncology franchise. And although we tried very hard to find immunotherapies that were active in cold tumors, it was really very difficult. And microsatellite stable colorectal cancer, which is about 95% of colorectal cancer is a classic cold tumor. It has been resistant to immunotherapy. There are no approved immunotherapies for microsatellite stable colorectal cancer. And so seeing the data with BOT and BAL with the response rate exceeding 20% and durable responses translating to overall survival, it was really clear that this was different than what we had seen previously and different indeed than the first generation of CTLA-4. And so the reason for that made me dig into why was this antibody different? There's something that you see here that you didn't expect to see. And the reason is because of the engineering of the antibody. When you look at the antibody, it binds to CTLA-4. So it's inhibiting CTLA-4, which is allowing T cells to be active, but the back end of the molecule, the Fc portion is where the magic is really happening because the Fc portion is where you see 2-point mutations that enhance the binding of the antibody to antigen presenting cells and to NK cells. And those are 2 different functions. The binding to the antigen presenting cells is a stronger synapse that's allowing the T cell to be better educated against the antigens in colorectal cancer and that's allowing T cells to actually see these tumors that previously immunotherapy has not been able to detect. Secondly, the binding to NK cells is activating NK cells to deplete Tregs. And so there's this dual function of the Fc point mutations that are engineered into the antibody and then a third mutation in the complement binding region actually reduces some of the longer-term immune-mediated events that one sees with the first generation of CTLA-4 antibodies. So it's really -- it's a remarkable feat of engineering, and it's translating to what we see in the clinic.

Great. I guess, given the potential you just mentioned, I guess, before we dig into some of the specific data, can you talk a little bit about overall development strategy, how you're prioritizing tumor types and overall setting?

Sure. I'll give you that crack first, and then I think Robin could expand on it. So if you look at the overall landscape of cancer, we classified tumors, as Robin said, from cold to hot. And hot tumors have been tackled reasonably well. When I say reasonably well, I think even oncology treatments have made a dent in the treatment of hot tumors. They, of course, on top of the list is melanoma. And whereas melanoma in Stage IV was a deadly disease in the last 15 years, both targeting CTLA-4 and PD-1 is likely curing about half of the Stage IV melanoma patients who would have died otherwise. And so that end of it is reasonably well addressed. And of course, when I say reasonably well addressed, there's still patients that die with Stage IV melanoma. And in fact, our development strategy includes also that indication and particularly in the relapsed/refractory setting. And whereas the hot tumors are, as Robin said, untouched, completely untouched with immunotherapy. And even with traditional treatments, including chemotherapy and target therapy, these tumors are not very well served. And that's where the opportunity is to start with, but we're rapidly expanding into sort of so-called warm tumors such as lung cancer, and you're going to see some very exciting data from us on lung cancer by the end of the year and there's a development strategy that we're actively pursuing, which is biomarker-driven development strategy. And that, of course, makes clinical development potentially shorter and much more targeted and cheaper as well as looking at the earlier stage setting, perhaps, Robin, you can touch upon what we're doing in the earlier stage setting.

Yes. This is very exciting. So what Garo is referring to is the data that we've seen in neoadjuvant colon and rectal cancer. And you noticed that we had a presentation at ASCO GI, Pashtoon Kasi is running a study looking at one dose of BOT and currently 2 doses of BAL in the data that he presented in January. And this is a setting where if you look at the current treatment, the FOxTROT study, for example, showed a major response rate of about 8%. This is the use of neoadjuvant FOLFOX. But we do see the power of neoadjuvant. If you look at the plenary session from ASCO this year, Dr. Blank presented data of neoadjuvant ipi/nivo versus adjuvant nivolumab in Stage III melanoma. And here, in that setting, that translated to a 1-year event-free survival of 84% for nivo plus ipi versus 57% for adjuvant nivolumab. And so you can see that there's a significant power to the use of immunotherapy in the neoadjuvant setting. Now the results that we saw with the neoadjuvant application of BOT and BAL in the neoadjuvant setting, were in 12 patients, 3 of whom were MSI-high. Those patients had major or complete pathologic response and then 9 patients microsatellite stable. And it's the microsatellite stable patients whom you don't expect to see a significant response. Those are the patients that have the 8% response with neoadjuvant FOLFOX. Here in that setting, we saw 6 out of 9 major responses with BOT and BAL and 2 complete responses in that setting. And so that's really different than what you've seen previously with the application of neoadjuvant therapy in colorectal setting and it's what's got us excited not only about colon cancer, but also about potential across other tumor types.

Great. Maybe digging into a little bit of detail now. So obviously, of promising data across different treatment settings within MSS CRC with the upcoming Phase II meeting, what does the regulatory path look like from here? And maybe, Robin, if you could speak to the commercial opportunity you see?

So with regard to regulatory path, Rob, thankfully, there is a pathway called accelerated approval pathway. And of course, that pathway is driven by several things. If you can demonstrate a major unmet need and that is easy to do in metastatic colon cancer because in metastatic colon cancer, after the first and the second line treatment that has been the subject of our targeting patients, meaning so far, we've treated third-line and fourth-line patients. Available options are of course showing some benefit to patients, but one would really zero in on what is the extent of benefit and Robin knows this better than anybody because he's lived it in his previous lives. And that benefit is small. Of course, for dying patients, any benefit count. So even a little benefit matters. Now -- but unfortunately, all of these patients will succumb to their disease and die within a reasonably short period of time, typically a year, 18 months. Now in our case, what's really very, very exciting for us is that in the earlier trials, we saw that we were getting response rates that were multiples of what the current response rates are with the standard of care. And so given that kind of a delta in response rates and given the fact that typically response rates, particularly with CTLA-4 targeting antibodies, translate to longer-term survival benefit, we were very encouraged. So we started tracking these patients, not just for response rates, but also overall survival even though we were in a single-arm trial. You could still track overall survival and see what the tail of the curve is, [indiscernible] curve. So the results were very exciting. And we hence expanded our cohorts from the original 77 patients to additional patients. And then to meet the FDA requirements, we did a randomized trial that has completed enrollment. Of course, we have the initial readout from that trial. That is a 5-arm trial including the standard of care, but it is a dose-finding trial as well as a trial to demonstrate the contribution of the illness. So with this package, we're very encouraged that we have put together a very compelling dossier to go to the FDA later in July and explore the opportunity on many fronts including the potential pathway for accelerated approval. So the initial effort will be to file for accelerated approval to bring the product to patients as soon as possible because patients need these products. And in fact, we've had an unprecedented number of compassionate use requests, including sadly children as young as 8 years old who are stricken with metastatic colorectal cancer. So that's a very sad reality. And if you cannot help these patients in a meaningful way with an intent to cure, intent to cure. Of course, the word cure is [ frowned ] upon because it's very difficult to demonstrate cures in the near term. But we [ then intended ] to cure with some chance of being able to cure that would be a major, major benefit. So with that, I think, Robin, you can talk about the commercial opportunity that you and your team have been gearing up lately.

Thank you, Garo. Yes. We've been, as you would expect, we've been preparing to launch next year. I built out the commercial leadership team, 3 very strong leaders leading our marketing and sales, Ken Barnes, actually who came to us from [ C-Gen ] and whom I also worked with about 20 years ago when we launched Avastin in the U.S. and Ken, when he was at C-Gen was the franchise head for [ Kaiser ]. And recently, of course, launched in the colorectal cancer market. So it is very familiar with the space with tucatinib. Secondly, [indiscernible], who joined us from Zymeworks and has experienced also a Gilead and many other companies. And then finally, Brian Greenblatt, who joined us from Exelixis all very strong leaders, and they've all really dug in quite quickly in terms of our launch preparation. One of the things we've been doing, of course, is understanding the market and doing market research, advisory boards, both in the U.S. and in Europe. The feedback we've received in terms of the data we have currently with BOT and BAL makes it very clear that this is a differentiated product, differentiated in 2 ways. It's differentiated from other immunotherapies and the expectations of what physicians expect to see in the microsatellite stable colorectal cancer, but also clearly differentiated against the current standards of care in the third-line setting and immediately physicians picked up on the much higher response rate that you observed with BOT and BAL. The durability of those responses and significantly the survival that we're seeing with our data certainly in the Phase I, and that's something that I think physicians are anticipating eagerly to be able to bring BOT and BAL to the market. In terms of the market potential, in the relapsed/refractory setting, we anticipate that in the U.S., sales have potential to exceed $1 billion annually. And globally, the sales may exceed $3 billion. So a very significant opportunity in this setting.

You mentioned the neoadjuvant setting a little bit ago. Can you talk about the regulatory pathway there that you see and then the potential for the product as well?

So that's a little bit challenging, and I'm going to, of course, ask Robin to elaborate on potential, I say, abbreviated pathways, but the regulatory guidance on this is it needs to evolve for us to be able to pursue these potential [ visions ] for the pathways. Now what's really exciting about neoadjuvant settings, let me clarify. These are patients that come in newly diagnosed with locally advanced disease. And they typically are candidates for surgery within a few weeks, and they can be treated subsequent to surgery with chemotherapy and radiation, which -- all of which is a reality for them with a fair amount of morbidity. So in this particular case, a couple of years ago, there was a trial done by Myriam Chalabi and her colleagues, very exciting trial. She got a standing ovation for this at an ASCO presentation. Why did she get a standing ovation, very clear because 98% of the patients that were treated in the neoadjuvant setting were MSI-high, and these are patients that constitute about 5% for colon cancer, only 5%. But in that 5% when they treated patients with immunotherapies, currently available immunotherapies, you saw a 98% significant major response. That's why she got the standing ovation. However, in MSS, which is 95% of colon cancer, nothing happened with these drugs. And in our case, we started this trial. It's an IST trial, Institutional Sponsored Trial at Cornell and showed for the first time ever that we're seeing major responses, including complete responses, when patients are treated with 1 dose of BOT immediately after [indiscernible] and 2 doses of BAL. Within 4 weeks, you're seeing these major responses. And of course, this is exciting, particularly for patients with rectal cancer. And I will ask Robin to elaborate why that is exciting in that cohort.

So I mean, as I mentioned earlier, there really is no standard neoadjuvant treatment in colon or rectal cancer right now, particularly for the microsatellite stable population. In the FOxTROT study, neoadjuvant, FOLFOX achieved about an 8% major response rate. So very minimal. And because of that, there's no standard neoadjuvant use of chemotherapy in this setting. So as Garo said, there's really actually 2 populations you need to look at. One is colon and the other is rectal and both really are an opportunity for the application of BOT and BAL. In the colon setting, of course, we're trying to reduce the tumor and ideally get a complete response, patients who have a complete response may or may not go on to adjuvant chemotherapy. And adjuvant chemotherapy does have potentially long-term effect. The neuropathy from FOLFOX can be very debilitating. And so the ability to avoid adjuvant chemotherapy actually is something that patients and physicians are anticipating might be a positive outcome, but also more importantly than that is the potential for longer event-free survival and potentially never recurring. I mean, that's significantly important. In the rectal cancer setting, organ preservation, the ability to not have debilitating surgery that requires a patient to go on to an ostomy bag is really quite important. And so both of those settings obviously require further study. The question is, is there a faster endpoint? Is there a faster way to get to market? This is -- there are a couple of different ways that might be approached. One is really looking at what's the impact of a complete response in terms of event-free survival. And the second is whether circulating tumor DNA may be a marker that could be used for an earlier approval with confirmation on event-free survival long term. And then thinking about the market potential here. This is obviously a large population of Stage II and III colon and rectal cancer patients. And we view the market opportunity globally in excess of $5 billion annual revenues there.

I have a few more questions, but before doing so, let me check with the group to see any questions from the group. Great. Maybe shifting gears a little bit. You recently completed a royalty agreement with Ligand. Can you talk about that agreement a little bit, including the impact on development of BOT/BAL, cash runway and overall approach.

Certainly. So this was a very innovative transaction. As you know, Ligand is a very, very sophisticated company that I might add they did more digging, more due diligence than we've seen anyone do so far. And so we are ratified with that effort. And the result was for us to do a transaction that I think is very beneficial to them because the returns from that transaction could be quite substantial for their initial $75 million investment. And for us, it was to access money that was much cheaper than what we would be able to do through equity issuance. And so it was the best of all worlds for both companies, Ligand will get 2.625% royalty on botensilimab sales. And those sales, with Robin's projections, can translate to a very significant return on investment for them. And of course, the portfolio that they have exposure to is somewhat diversified because it includes the products that we've licensed or I should say, agents that we've licensed to companies like Merck, Incyte, Bristol-Myers and so on. And for those, they get higher royalty rates and exposure to milestones. And so this is an, I think, instrument available to companies like ours or closer to market, presumably, and the proof of principle -- clinical principle for the product is well demonstrated. After all, there's no dispute about the fact that BOT/BAL is clinically active and in some cases, BOT alone is clinically active. And so the transaction is based on having the risk that clinical activity and in terms of the safety of the molecule, the safety is consistent with what I -- what we see with other immunotherapies. And what's most important about the safety of these molecules is that any toxicity is transient. In other words, Robin made reference to, for example, some of the chemotherapies that are toxic and a patient would feel that toxicity for the rest of their lives, including neuropathy, for example. Whereas any toxicity or I should say, 99% of the toxicity that's demonstrated what -- experienced with immunotherapies are transient. They go away after a short period of time, and you don't really feel that you ever had that toxicity.

Maybe taking a little bit of a step back. Longer-term vision for Agenus, call it the next 5 to 10 years, how do you plan to expand pipeline market presence and where do you see yourselves going forward?

Sure. I'll take a short crack at it and ask Robin to expand on it because that's within his commercial domain. In the last 10 years, we have built a formidable portfolio of agents because to win the war against cancer is not a simple thing. It can't be done with a single agent necessarily. It's one of the reasons, for example, we need BOT and BAL, not just BOT, but beyond BOT and BAL, we have a portfolio that ensures the sustainability of the immune response. So the intelligence of the immune response. And so we -- all in all, we have several agents that are in the clinic and many others that will enter the clinic, but our aim is to win the war against cancer. And thankfully, we have the portfolio and importantly, we have the people to do that with. But, Robin?

Well, it's a tough question to answer in a couple of minutes, but we have the potential just BOT and BAL, to expand into other cold tumors and actually also into the warm tumors. And so the life cycle for BOT and BAL is very broad. So I'm excited about that. But I'm also excited about the innovation at Agenus and the ability to bring in some of our pipeline agents to be able to combine with BOT and BAL in the future. Really BOT is a cornerstone of future immunotherapy combinations, not only with the products within the Agenus portfolio, but also many other potential combination partners from other companies, other innovators. The future is incredibly broad and the potential to be able to bring significant improvements to patients in the future. I think is the reason that we're all here at Agenus.

Very well said.

Maybe just the last one in closing. Anything you wanted to highlight to investors in terms of your overall value proposition or how you differentiate yourselves that we haven't covered already.

In terms of the value proposition for investors as Robin alluded to, if you look at the entire landscape of cancer, cold tumors to hot tumors, early stage to late stage, I believe with immunotherapy, we just have started to scratch the surface of that with existing products. And of course, existing products today constitute a global market of well over $60 billion in revenues. So we're just scratching the surface with over $50 billion in revenues with that scratching of the surface, whereas with our portfolio, we think that we can command penetration potentially of the rest of that market. So the potential is significant. That's one of the reasons we brought in the best of the best commercial team to pursue that with. And our aim commercially is really to educate the world, patients, doctors and other health care providers so that they understand the merits, the benefits of the immunotherapy agents in our portfolio, and they can make appropriate decisions. As you know, the pharma industry is known for its promotions, but while we may do some of that we're going to concentrate on educating the world.

Great. Can check one more time to see any questions from the audience. There are none. Garo and Robin, thank you so much for your time and spending it with us today.

You did a great job, young man. Thank you.