Agenus Trades Away Future Royalties on Sales of GlaxoSmithKline Drug for $115 Million

Published: Sep 09, 2015

Agenus Trades Away Future Royalties on Sales of GlaxoSmithKline Drug for $115 Million
September 9, 2015
By Alex Keown, BioSpace.com Breaking News Staff

LEXINGTON, Mass.-- Agenus Inc. has mortgaged revenue from some of its vaccines in exchange for $115 million in funding to advance its immuno-oncology programs, the company announced today.

The funds were part of a non-dilutive royalty transaction led by Oberland Capital Management, LLC. According to the financing terms, in return for $100 million, Oberland Capital will receive 100 percent of Agenus’ QS-21 royalties on sales combined with GlaxoSmithKline ’s shingles (HZ/su) and malaria (RTS,S) vaccine products. At its option, Agenus will receive an additional $15 million in cash if the U.S. Food and Drug Administration (FDA) approves of HZ/su. In order to receive the additional funding, the FDA must not approve the drug later than June 30, 2018. Also at its option, Agenus has the right to buy back the loan at any time under pre-specified terms.

“This is an innovative financing structure that strengthens Agenus’ balance sheet considerably. With these additional funds we are well positioned to advance our robust pipeline,” C. Evan Ballantyne, Agenus’ chief financial officer, said in a statement.

The funding includes an annual interest rate of 13.5 percent. Principal and interest payments will only be made from the royalties paid by GSK on the HZ/su and RTS,S vaccines, the company said. If and when all principal and interest on the notes have been repaid, 100 percent of the remaining GSK royalty payments will revert back to Agenus.

“This financing allows us to monetize a significant share of the value of our QS-21 platform while allowing us to retain any upside remaining after the loan terms are satisfied. This transaction will provide non-dilutive funding towards executing on our strategic and operational goals,” Garo Armen, chairman and chief executive officer of Agenus said in a statement.

As of June 30, 2015, Agenus reported $139.6 million in cash, cash equivalents and short-term investments. Agenus’ stock was down this morning, hitting a low of $6.88 per share. The stock opened at $7.33 per share.

In July, Agenus spent $44 million to acquire antibodies targeting Carcinoembryonic Antigen Cell Adhesion Molecule 1 (CEACAM1), a glycoprotein expressed on T cell and NK cell lymphocytes from Diatheva s.r.l., an Italian biotech company. CEACAM1 is overexpressed in melanoma, bladder, lung, colon, pancreas, and gastric cancers and has been shown to modulate innate and adaptive immune suppression in preclinical studies. Antibodies targeting CEACAM1 are thought to have the potential to effectively treat cancer alone or in combination with other checkpoint modulator antibodies, including those in Agenus’ development pipeline.

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