agen-10q_20190930.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number: 000-29089

Agenus Inc.

(exact name of registrant as specified in its charter)

 

 

Delaware

 

06-1562417

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

3 Forbes Road, Lexington, Massachusetts 02421

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code:

(781) 674-4400

 

Securities registered or to be registered pursuant to Section 12(b) of the Act.

 

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01

AGEN

The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

  

  

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

 

Number of shares outstanding of the issuer’s Common Stock as of November 1, 2019: 137,361,477 shares

 

 


Agenus Inc.

Nine Months Ended September 30, 2019

Table of Contents

 

 

 

 

 

Page

PART I

 

 

ITEM 1.

 

Financial Statements:

 

2

 

 

Condensed Consolidated Balance Sheets as of September 30, 2019 (Unaudited) and December 31, 2018

 

2

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2019 and 2018 (Unaudited)

 

4

 

 

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit for the three and nine months ended September 30, 2019 and 2018 (Unaudited)

 

5

 

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 (Unaudited)

 

7

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

8

ITEM 2.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

23

ITEM 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

29

ITEM 4.

 

Controls and Procedures

 

29

 

 

 

PART II

 

 

ITEM 1A.

 

Risk Factors

 

30

ITEM 6.

 

Exhibits

 

54

 

 

Signatures

 

55

 

 

 

 


PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements

AGENUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share amounts)

 

 

 

September 30, 2019

(unaudited)

 

 

December 31, 2018

 

 

ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

93,274

 

 

$

53,054

 

Inventories

 

 

55

 

 

 

55

 

Accounts receivable

 

 

2,328

 

 

 

938

 

Prepaid expenses

 

 

10,441

 

 

 

19,265

 

Other current assets

 

 

1,088

 

 

 

1,496

 

Total current assets

 

 

107,186

 

 

 

74,808

 

Property, plant and equipment, net of accumulated amortization and depreciation of

   $41,566 and $38,068 at September 30, 2019 and December 31, 2018, respectively

 

 

25,029

 

 

 

25,116

 

Operating lease right-of-use assets

 

 

7,684

 

 

 

 

Goodwill

 

 

22,757

 

 

 

22,925

 

Acquired intangible assets, net of accumulated amortization of $8,878 and

   $7,472 at September 30, 2019 and December 31, 2018, respectively

 

 

10,853

 

 

 

12,338

 

Other long-term assets

 

 

1,298

 

 

 

1,214

 

Total assets

 

$

174,807

 

 

$

136,401

 

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

Current portion, long-term debt

 

$

13,847

 

 

$

146

 

Current portion, liability related to sale of future royalties and milestones

 

 

38,125

 

 

 

27,443

 

Current portion, deferred revenue

 

 

34,230

 

 

 

1,814

 

Current portion, operating lease liabilities

 

 

1,311

 

 

 

 

Accounts payable

 

 

16,424

 

 

 

13,624

 

Accrued liabilities

 

 

28,744

 

 

 

24,551

 

Other current liabilities

 

 

267

 

 

 

484

 

Total current liabilities

 

 

132,948

 

 

 

68,062

 

Long-term debt, net of current portion

 

 

 

 

 

13,212

 

Liability related to sale of future royalties and milestones, net of current portion

 

 

171,973

 

 

 

182,817

 

Deferred revenue, net of current portion

 

 

31,290

 

 

 

1,165

 

Operating lease liabilities, net of current portion

 

 

8,245

 

 

 

 

Contingent purchase price considerations

 

 

4,218

 

 

 

3,038

 

Other long-term liabilities

 

 

4,088

 

 

 

2,773

 

Commitments and contingencies

 

 

 

 

 

 

 

 

CONVERTIBLE PREFERRED STOCK

 

 

 

 

 

 

 

 

Preferred stock, par value $0.01 per share; 5,000,000 shares authorized:

 

 

 

 

 

 

 

 

Series C-1 convertible preferred stock; 12,459 shares and 18,459 shares

   designated, issued, and outstanding at September 30, 2019 and December 31, 2018,

   respectively

 

 

26,917

 

 

 

39,879

 

STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

Series A-1 convertible preferred stock; 31,620 shares designated, issued, and

   outstanding at September 30, 2019 and December 31, 2018; liquidation value

   of $32,988 at September 30, 2019

 

 

0

 

 

 

0

 

2

 


Common stock, par value $0.01 per share; 400,000,000 and 240,000,000 shares authorized

   at September 30, 2019 and December 31, 2018, respectively; 137,357,407 and 119,996,331

   shares issued at September 30, 2019 and December 31, 2018, respectively

 

 

1,374

 

 

 

1,200

 

Additional paid-in capital

 

 

1,055,159

 

 

 

1,005,183

 

Accumulated other comprehensive loss

 

 

(1,282

)

 

 

(1,539

)

Accumulated deficit

 

 

(1,254,938

)

 

 

(1,177,311

)

Total stockholders’ deficit attributable to Agenus Inc.

 

 

(199,687

)

 

 

(172,467

)

Non-controlling interest

 

 

(5,185

)

 

 

(2,078

)

Total stockholders’ deficit

 

 

(204,872

)

 

 

(174,545

)

Total liabilities, convertible preferred stock and stockholders’ deficit

 

$

174,807

 

 

$

136,401

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

3

 


AGENUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(Amounts in thousands, except per share amounts)

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

5,751

 

 

$

6,276

 

 

$

81,022

 

 

$

18,385

 

Other revenue

 

 

1,985

 

 

 

 

 

 

4,453

 

 

 

 

Non-cash royalty revenue related to the sale of future royalties

 

 

12,204

 

 

 

6,526

 

 

 

30,073

 

 

 

11,948

 

Total revenues

 

 

19,940

 

 

 

12,802

 

 

 

115,548

 

 

 

30,333

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

(46,132

)

 

 

(29,854

)

 

 

(131,506

)

 

 

(88,569

)

General and administrative

 

 

(11,512

)

 

 

(9,203

)

 

 

(33,723

)

 

 

(27,616

)

Contingent purchase price consideration fair value adjustment

 

 

1,781

 

 

 

180

 

 

 

(1,180

)

 

 

1,456

 

Operating loss

 

 

(35,923

)

 

 

(26,075

)

 

 

(50,861

)

 

 

(84,396

)

Other expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on early extinguishment of debt

 

 

 

 

 

 

 

 

 

 

 

(10,767

)

Non-operating (expense) income

 

 

304

 

 

 

(117

)

 

 

(250

)

 

 

(1,490

)

Interest expense, net

 

 

(10,658

)

 

 

(7,538

)

 

 

(29,598

)

 

 

(16,543

)

Net loss

 

 

(46,277

)

 

 

(33,730

)

 

 

(80,709

)

 

 

(113,196

)

Dividends on Series A-1 convertible preferred stock

 

 

(52

)

 

 

(52

)

 

 

(156

)

 

 

(155

)

Less: net loss attributable to non-controlling interest

 

 

(803

)

 

 

(605

)

 

 

(3,107

)

 

 

(1,258

)

Net loss attributable to Agenus Inc. common stockholders

 

$

(45,526

)

 

$

(33,177

)

 

$

(77,758

)

 

$

(112,093

)

Per common share data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net loss attributable to Agenus Inc. common stockholders

 

$

(0.33

)

 

$

(0.29

)

 

$

(0.58

)

 

$

(1.04

)

Weighted average number of Agenus Inc. common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

137,619

 

 

 

114,977

 

 

 

134,014

 

 

 

107,601

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation (loss) gain

 

$

(204

)

 

$

(38

)

 

$

257

 

 

$

553

 

Other comprehensive (loss) income

 

 

(204

)

 

 

(38

)

 

 

257

 

 

 

553

 

Comprehensive loss

 

$

(45,730

)

 

$

(33,215

)

 

$

(77,501

)

 

$

(111,540

)

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 


 

4

 


AGENUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(Unaudited)

(Amounts in thousands)

 

 

 

 

Series C-1

 

 

 

Series A-1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible

 

 

 

Convertible

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock

 

 

 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

Shares

 

 

Amount

 

 

 

Number of

Shares

 

 

Par

Value

 

 

Number of

Shares

 

 

Par

Value

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Non-controlling

Interest

 

 

Accumulated

Deficit

 

 

Total

 

Balance at December 31, 2018

 

 

18

 

 

$

39,879

 

 

 

 

32

 

 

$

0

 

 

 

119,996

 

 

$

1,200

 

 

$

1,005,183

 

 

$

(1,539

)

 

$

(2,078

)

 

$

(1,177,311

)

 

$

(174,545

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,071

)

 

 

18,506

 

 

 

17,435

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(682

)

 

 

 

 

 

 

 

 

(682

)

Adoption of ASC 842

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25

)

 

 

(25

)

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,843

 

 

 

 

 

 

 

 

 

 

 

 

1,843

 

Shares sold under stock purchase agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,111

 

 

 

111

 

 

 

29,889

 

 

 

 

 

 

 

 

 

 

 

 

30,000

 

Conversion of Series C-1 convertible preferred stock

 

 

(3

)

 

 

(6,481

)

 

 

 

 

 

 

 

 

 

3,000

 

 

 

30

 

 

 

6,451

 

 

 

 

 

 

 

 

 

 

 

 

6,481

 

Payment of consultant in shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

0

 

 

 

37

 

 

 

 

 

 

 

 

 

 

 

 

37

 

Exercise of stock options and employee share purchases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

85

 

 

 

1

 

 

 

172

 

 

 

 

 

 

 

 

 

 

 

 

173

 

Balance at March 31, 2019

 

 

15

 

 

$

33,398

 

 

 

 

32

 

 

$

0

 

 

 

134,206

 

 

$

1,342

 

 

$

1,043,575

 

 

$

(2,221

)

 

$

(3,149

)

 

$

(1,158,830

)

 

$

(119,283

)

Net loss

 

 

 

 

$

 

 

 

 

 

 

$

 

 

 

 

 

$

 

 

$

 

 

$

 

 

$

(1,233

)

 

$

(50,634

)

 

 

(51,867

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,143

 

 

 

 

 

 

 

 

 

1,143

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,917

 

 

 

 

 

 

 

 

 

 

 

 

1,917

 

Conversion of Series C-1 convertible preferred stock

 

 

(3

)

 

 

(6,481

)

 

 

 

 

 

 

 

 

 

3,000

 

 

 

30

 

 

 

6,451

 

 

 

 

 

 

 

 

 

 

 

 

6,481

 

Vesting of nonvested shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

53

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at June 30, 2019

 

 

12

 

 

$

26,917

 

 

 

 

32

 

 

$

0

 

 

 

137,259

 

 

$

1,373

 

 

$

1,051,942

 

 

$

(1,078

)

 

$

(4,382

)

 

$

(1,209,464

)

 

$

(161,609

)

Net loss

 

 

 

 

$

 

 

 

 

 

 

$

 

 

 

 

 

$

 

 

$

 

 

$

 

 

$

(803

)

 

$

(45,474

)

 

 

(46,277

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(204

)

 

 

 

 

 

 

 

 

(204

)

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,084

 

 

 

 

 

 

 

 

 

 

 

 

3,084

 

Payment of consultant in shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

 

 

 

0

 

 

 

19

 

 

 

 

 

 

 

 

 

 

 

 

19

 

Exercise of stock options and employee share purchases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

44

 

 

 

0

 

 

 

115

 

 

 

 

 

 

 

 

 

 

 

 

115

 

Vesting of nonvested shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

48

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

Balance at September 30, 2019

 

 

12

 

 

$

26,917

 

 

 

 

32

 

 

$

0

 

 

 

137,358

 

 

$

1,374

 

 

$

1,055,159

 

 

$

(1,282

)

 

$

(5,185

)

 

$

(1,254,938

)

 

$

(204,872

)

 

 


5

 


AGENUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(Unaudited)

(Amounts in thousands)

 

 

 

 

 

Series C-1

 

 

 

Series A-1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible

 

 

 

Convertible

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock

 

 

 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

Shares

 

 

Amount

 

 

 

Number of

Shares

 

 

Par

Value

 

 

Number of

Shares

 

 

Par

Value

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Non-controlling

Interest

 

 

Accumulated

Deficit

 

 

Total

 

Balance at December 31, 2017

 

 

 

 

$

 

 

 

 

32

 

 

$

0

 

 

 

101,706

 

 

$

1,017

 

 

$

951,812

 

 

$

(2,169

)

 

$

 

 

$

(1,026,476

)

 

$

(75,816

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(121

)

 

 

(54,141

)

 

$

(54,262

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(537

)

 

 

 

 

 

 

 

$

(537

)

Adoption of ASC 606

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,856

 

 

$

8,856

 

AgenTus share distribution

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

274

 

 

 

 

 

$

274

 

Share-based compensation