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Edited Transcript of AGEN earnings conference call or presentation 7-Nov-17 4:00pm GMT

Thomson Reuters StreetEvents

Q3 2017 Agenus Inc Earnings Call

LEXINGTON Nov 7, 2017 (Thomson StreetEvents) -- Edited Transcript of Agenus Inc earnings conference call or presentation Tuesday, November 7, 2017 at 4:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Alex Duncan

* Christine M. Klaskin

Agenus Inc. - VP of Finance

* Garo H. Armen

Agenus Inc. - Founder, Executive Chairman & CEO

* Jean-Marie

* Jennifer Buell

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Conference Call Participants

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* Biren N. Amin

Jefferies LLC, Research Division - MD and Senior Equity Research Analyst

* Frank Simmons

* Matthew Christopher Phipps

William Blair & Company L.L.C., Research Division - Analyst

* Michael George King

JMP Securities LLC, Research Division - MD and Senior Research Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Agenus Third Quarter 2017 Earnings Conference Call. As a reminder, today's conference is being recorded. Now I would like to turn the conference over to Jennifer Buell, Head of Communications and External Affairs at Agenus. Please go ahead, Dr. Buell.

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Jennifer Buell, [2]

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Thank you. Welcome to the Agenus Third Quarter 2017 Conference Call. Before I continue, I'd like to remind you that this conference call will contain forward-looking statements, including without limitation, statements regarding the company's potential income stream, research and development and clinical trial and manufacturing plans and activities, the publication of data, the potential application of the company's technologies and product candidates towards the prevention and treatment of diseases and the company's plans to pursue its cell therapy portfolio through a separate business entity. These forward-looking statements are subject 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 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 except to the extent required by law. 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 reminder, this call is being recorded for audio broadcast. Joining me today are Dr. Garo Armen, Chairman and Chief Executive Officer; Dr. Jean-Marie Cuillerot; our Chief Medical Officer; Dr. Alex Duncan, our Chief Technology Officer and Head of Research and Christine Klaskin, our Vice President of Finance. During this call Garo will provide a corporate update, Jean-Marie will review our clinical plans and deliverables, Alex will provide an update on manufacturing readiness for commercialization and Christine will provide a financial review. We will then open the call for questions.

With that, let me turn the call over to Garo.

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Garo H. Armen, Agenus Inc. - Founder, Executive Chairman & CEO [3]

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Good morning and thank you for joining us for our quarterly update. Innovation and speed continue to be the key hallmarks of Agenus. In less than 2 years, we have advanced 5 programs rapidly into and through the clinic. Our flexibility to combine checkpoint antibodies, vaccines, adjuvants and cell therapy provide us with unique competitive advantages in the field of immuno-oncology. Of course additional capital acquisition to advance our extensive portfolio of exciting products is amongst our highest priorities. In the past 3 years, we have accomplished this primarily from corporate partnerships and other non-dilutive transactions. These types of transactions remain our focus going forward. The breadth of our portfolio is a key value driver for us as we believe that combinations of I-O agents will be required for disruptive innovation to cure substantially more cancer patients than is the case today.

In the past 3 years we have created a broad portfolio of checkpoint antibodies, including antibodies for CTLA-4 and PD-1, the only clinically validated target and foundations of immuno-oncology today. Also and importantly, our pipeline includes an extensive selection of best-in-class and first-in-class compounds. In addition to advancing our innovative programs, we have successfully built end-to-end capabilities from discovery to cell line development to manufacturing, all of which are regarded as critical for speedy cost effective product development in a field where development timelines have shrunk significantly. Taken altogether, our position in antibodies, cancer vaccines and immunoadjuvants as well as the very exciting and differentiated cell therapy programs along with our end-to-end capabilities allow us the unique flexibility in delivering combination treatments, which we believe will represent the next phase of I-O breakthroughs.

We have experienced firsthand that GMP manufacturing is paramount to advancing quality programs quickly. With our upgrade of our Agenus West facility, we can manufacture for our clinical needs and very importantly have built the capabilities to manage the supply of commercial grade material. With all these, we are gearing to be commercial ready with our first BLA filing potentially in the second half of 2019. You will hear more details about this from Jean-Marie and Alex. Jean-Marie, our CMO, has already delivered on the fastest development of a checkpoint from first man to commercial with the anti-PD-L1 antibody, Bavencio. At Agenus, Jean-Marie is now executing cutting edge clinical trial design strategies targeted to deliver BLAs I mentioned as early as the second half of 2019. We plan to register and launch our CTLA-4 and PD-1 in the U.S. in the next 2 to 3 years respectively.

We are also exploring partnership discussions for potential commercializations in the rest of the world. CTLA-4 and PD-1 are critical backbone components of an immuno-oncology portfolio and have consistently delivered clinical benefit. Our anti-CTLA-4 antibody has the functional attributes of the only approved CTLA-4. Earlier this year at ASCO we reported on the first clinical readout for our anti-CTLA-4 antibody, AGEN1884, which showed safety and pharmacological activity. Also worth noting that AGEN1884 is now the most advanced CTLA-4 antibody in the clinic with the potential to be the second to market. This week on Thursday, we will present data on preclinical and clinical pharmacology of our anti-CTLA-4 and PD-1 programs and at the SITC Conference, the data -- this data that will be presented further reinforces functional activity of these molecules.

Turning now to our strategic transactions. Collaborations are core to our strategy and will allow us to maximize the value of our extensive portfolio and platform technologies. To that end, we continue to deliver on successful partnerships with GSK, Incyte, Merck and UCB. We are in multiple discussions with a variety of potential partners across our portfolio and continued corporate development transactions will strengthen our balance sheet and fund -- help fund our future innovations. In addition to our broader partnership discussions, we have recently established a partnering model that would offer non-exclusive access to our lead antibodies in return for upfront cash to Agenus. We have multiple such discussions ongoing with the aim of closing several of these transactions before or within the first quarter of 2018.

We recently announced the establishment of separate business entity to advance our cell therapy program designed to be self-funded. Our cell therapy company, AgenTus, will help enhance business focus, speed and efficiency towards the realization of breakthrough immuno- oncology what we call living drugs designed to cure patients with advanced cancers. Bruno Lucidi, the CEO of AgenTus, has more than 28 years of drug development and business success including helping build companies that have realized over $10 billion in transaction value. We believe AgenTus has the potential to provide additional substantial value for our shareholders by advancing a pipeline of highly differentiated cell therapies and partnership opportunities. Before I turn this call to Jean-Marie, let me also highlight an important recent milestone with the U.S. FDA and Health Canada approvals of the Shingrix vaccine containing our QS- 21.

Shingrix has shown a whopping efficacy of over 90% as compared to the only other approved product's efficacy of around 50%. While we have sold part of the royalties that are due to us from the sales of Shingrix, last week's CDC recommendation of Shingrix as the preferred vaccine for prevention of shingles yielded significantly increased market potential with an immediately eligible target population of approximately 62 million adults. This provides us with the potential for additional monetization above and beyond what we have consummated already or immediate royalty realization opportunities for which we are also in discussions with several parties.

With this, I will now turn it over to Jean-Marie, who will expand on our clinical development plans. Jean-Marie?

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Jean-Marie [4]

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Thank you, Garo. As Garo mentioned, we have made significant progress regarding the clinical development of clinically regulated checkpoint antibodies, CTLA-4 and PD-1, and we have accelerated the development of this further in combination. At ASCO this year, we presented the first clinical data with our anti-CTLA-4. The data showed an acceptable safety and a tolerability profile response in a patient with sarcoma. Additional data collection on safety PK and PD are ongoing. We are on track for Phase I accrual completion by H1 2018. Importantly, we have already generated enough data to start combination with our anti-CTLA-4, which I will expand on. Lastly, in our plans for worldwide commercialization, we have expanded our programs to trial that could be registrational both in the U.S. and outside the U.S. Let us now turn to anti PD-1. We began our Phase I trial with AGEN2034, our anti-PD-1 antibody, earlier this year.

Our program has progressed quickly and we are in our final evaluation cohort as of last week. Our PD-1 antibody AGEN2034 has a desired preclinical and clinical pharmacological effect. These data are the subject of an upcoming presentation at SITC. We're excited to report that to date we have not observed any adverse event that will not have expected additions with adverse or [inaudible] and anti-PD1 and this is very important given the recent data reported at ASCO. Despite the many PD-1 development, ASCO data will show that not all PD-1 antibodies achieve the design outcomes. In fact some early stage PD-1 antibodies have some lack of activity or demonstrated unexpected adverse events. Our anti-PD1 on the other hand has shown functional variation to that. Furthermore, as you've heard from Garo, we are entering a state of commercial readiness in the coming months with GMP material to support our programs with our PD-1.

Based on the data that we have accumulated as well as recent regulatory interactions, we expect the following will occur. This week we expect to initiate potentially pivotal trial in second line cervical cancer. Second line cervical cancer is an unmet medical need where the activity of PD-1 blocking agent has been established. We believe that the administration of anti-PD1 to patients with advanced cervical cancer will result in a clinical benefit that will support BLA in this indication. In parallel, we will initiate a trial with our anti-PD1 in patients with cutaneous squamous cell carcinoma. Recent data have established that this disease is responsible for the death of thousands of patients per year in the U.S. alone, but is also prevalent in Europe and Japan. At ASCO 2017, we have learned that PD-1 blockade is very active in that setting with response rates around 40%. In addition, there is no approved therapy for this patient population.

In summary, this week we are launching 2 clinical programs designed as potential pivotal trials in indication where we believe that there is a high likelihood of clinical success. While there is indeed some competition in these indications, we believe that our programs will present a variable commercial opportunity for Agenus. While competitors are ahead of us, we see a clear path to end our trials rapidly and support variable commercial opportunity for anti-PD1. In addition, we believe that we have a third opportunity where we can be first to market and which will present significant commercial opportunity for the combination of our anti-CTLA-4 and our anti-PD-1 antibodies in the selected population in first line non-small cell lung cancer. This subset of patient, which represent as much of 20% of a very large population, may have a response rate as high as 90%. We believe we are the only as a company positioned to combine these products in this type of program and file within 2 years.

To factor on this opportunity, we have already initiated a study with our anti-CTLA-4 in combination with another PD-1, Keytruda, in patients who are eligible to receive Keytruda as a first line -- as a treatment for first line non-small cell lung cancer. We have leveraged the specimen data to an inaudible patient mostly like to have a high response rate. This will accelerate our timelines and reduce our cost of development all while providing us with a significant commercial opportunity as potentially first to market with this label.

I would now like to turn this over to Alex, who will speak to you about our CMC activities.

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Alex Duncan, [5]

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Thank you, Jean-Marie. I'm very pleased to have this opportunity to share with you an update of our manufacturing progress and specifically to showcase updates on our recent milestones that support our clinical development plans and partnering objectives. Nearly 2 years ago, Agenus acquired a pilot manufacturing facility in Berkeley, California. In that time, we have added to a highly experienced core team with an exemplary track record with further analytical capabilities to ensure efficient and expedited technology transfer to commercial supply partners. The team and facility have also successfully undergone regulatory audits. Jean-Marie has outlined an exciting set of clinical development opportunities for us. To match this ambition, we have made strategic investments to expand our manufacturing capacity and to enhance our capabilities to support commercial readiness of our programs and those of collaborators.

Further, we have built cell line capabilities in-house to improve timelines and titers of manufacturing cell lines. In addition to increasing manufacturing, productivity and efficiency; we have already this year completed 5 GMP batches at scale at Agenus West generating significant quantity of clinical grade material to supply our AGEN1884 CTLA-4 and AGEN2034 PD-1 programs. Garo and Jean-Marie have shared data presented at ASCO and AACR. This week we are presenting data on our CTLA-4 and PD-1 antibodies at the SITC Conference, the Society for Immunotherapy of Cancer. We will share data on the pharmacological and toxicological characterization of our human ICT1 anti-CTLA-4 antagonist antibody AGEN1884. These data demonstrate that AGEN1884 totally enhanced T cell responsiveness and furthermore combined effectively with other immune modulatory antibodies targeting either co-inhibitory or co-stimulatory receptors on T cells including PD-1, LAG-3 and CD137.

The combination of anti-CTLA-4 and anti-PD-1 agents result in strong T cell proliferation and is supported by pharmacodynamic data Jean-Marie has accumulated from clinical samples. Taken together, our preclinical and clinical findings support the biomarker driven validation of our CTLA-4 combination with the commercially available anti-PD-1 agent. As Jean-Marie mentioned, our programs are advancing quickly in the clinic. Importantly, our teams at Agenus West have now rapidly and successfully completed the tech transfer of these agents to a commercial manufacturing organization. Site demonstration runs, transfer of bioanalytical and biological assays have been concluded and we are delighted that the first registrational GMP batch has now been completed. In summary, we are positioned to supply our most advanced programs with clinical and registrational material. In addition, for partners seeking a rapid path to commercialization with combination anti-CTLA-4 or anti-PD-1, we are also positioned to supply to these programs.

I will now turn it over to Christine Klaskin to review our financial results.

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Christine M. Klaskin, Agenus Inc. - VP of Finance [6]

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Thank you, Alex. Our cash, cash equivalents and short-term investments were $70.1 million at September 30, 2017 compared to $76.4 million as of December 31, 2016. On November 2, we exercised our option to issue additional notes under our existing note agreement, which will add $15 million of cash proceeds. Cash used in operating activities for the 3 months ended September 30, 2017 was $26.2 million compared to $23.8 million for the same period in 2016. For the third quarter ended September 30, 2017 Agenus reported a net loss of $36.8 million or $0.37 per share compared with a net loss for the third quarter of 2016 of $40.8 million or $0.47 per share. The decrease in net loss for the 3 months ended September 30, 2017 compared to the net loss for the same period in 2016 was due to the decrease in the value of our contingent considerations offset by an increase in our research and development expenses.

For the 9 months ended September 30, 2017 Agenus reported a net loss of $85.7 million or $0.88 per share compared with a net loss for the same period in 2016 of $101 million or $1.16 per share. The decrease in the net loss for the 9 months ended September 30, 2017 compared to the net loss for the same period in 2016 was primarily due to the accelerated milestone payment we received from Incyte during the first quarter of 2017.

Our operating expenses increased $3.5 million over the same period in 2016. Cash used in operating activities for the 9 months ended September 30, 2017 was $68.4 million compared to $63.8 million for the same period in 2016.

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Garo H. Armen, Agenus Inc. - Founder, Executive Chairman & CEO [7]

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Thank you, Christine. Once again in summary, we expect to achieve significant research and clinical milestones during the fourth quarter of this year and 2018 and these are in preparation for, as we mentioned before, potential BLA filings in 2019 and beyond.

Now with that, I'd like to turn it back to the operator to begin questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from Mike King with JMP.

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Michael George King, JMP Securities LLC, Research Division - MD and Senior Research Analyst [2]

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I wanted to ask actually about 2 things. First is just if you could comment about the commercial opportunity for CTLA-4 in light of what would appear to be sort of stagnating sales for Ipilimumab and whether the community is still excited about CTLA-4 agonism as they've been in the past? So, maybe we'll start with that question.

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Garo H. Armen, Agenus Inc. - Founder, Executive Chairman & CEO [3]

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Certainly I will make a few statements and then turn it to Jean-Marie. As you know, Mike, CTLA-4 has been a very important contributor to combinations, particularly in combination with PD-1. And as Jean-Marie was alluding to earlier, 1 of our registrational trial strategies is targeting a patient population that is highly responsive to the combination of CTLA-4 and PD-1 in non-small cell lung cancer. And with that, I'll turn it to Jean-Marie to further elaborate.

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Jean-Marie [4]

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We have no plan to develop out anti-CTLA-4 as a monotherapy. Our plan is to use that agent in combination. We have started to develop that agent in combination with anti-PD-1 and as I mentioned, we expect a dramatical effect based on available data. So, that will completely revolutionize the use of anti-CTLA-4 with anti-PD-1. In addition to our plans for combination with anti-PD-1, we have of course a number of assets where the combination with agent X and anti-CTLA-4 will also increase the activity of the agent as a monotherapy and invariable for further success. I will just mention our data with our vaccine platform and anti-CTLA-4 in animal models. It's clear that there is a wealth of development of mortalities with vaccine anti-CTLA-4 to only quote 1 or 2.

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Michael George King, JMP Securities LLC, Research Division - MD and Senior Research Analyst [5]

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Okay. Not to engage in a biology lesson on the call here, but I just wonder if there is anything that you can say that's been publicly disclosed about 1884 and/or your next gen candidate that would suggest that there would be a better or improved safety tolerability profile for your CLTA-4 versus Ipi.

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Garo H. Armen, Agenus Inc. - Founder, Executive Chairman & CEO [6]

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So, 1 statement on that. As you know, our CTLA-4 is in IgG1 format, which is essentially the same backbone as Yervoy and that we think is critically important in the functional equivalency of our CTLA-4 versus, for example, other versions -- other formats. But Jean-Marie, if you'd like to elaborate on this as well.

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Jean-Marie [7]

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So, our anti-CTLA-4 is a functional equivalent of Ipilimumab. So, the only way we can differentiate and it's going to be a very important is to play with the dosing schedule combination in targeted population. That's exactly what we have in the non-small cell lung cancer first line opportunity that I've described and in that certification, available data suggest that the efficacy will largely justify the incremental toxicity in the combination of 2 immuno-oncology drugs. Does it address your question?

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Michael George King, JMP Securities LLC, Research Division - MD and Senior Research Analyst [8]

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Okay. Yes, it does. That's helpful. Garo, switching gears, if I may, to Shingrix. I think it would be useful to be -- if you would remind us about the downstream aspects of the royalty agreement that you put in place, I think when I speak to investors, I think a lot of people think that all of the future economics of Shingrix have been hypothecated away, but I know that's not the case. So, maybe a quick refresher on that would be useful.

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Garo H. Armen, Agenus Inc. - Founder, Executive Chairman & CEO [9]

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There are 2 elements I think that are worth mentioning. One is even though we call this royalty bonds, there's confusion about the fact that we're liable for principal plus a compounding 13.5% quarterly interest. There's confusion about that and the reality is that even if the product did not accrue any sales, which obviously is essentially impossible unless there is a force majeure of some sort, we would owe $100 million or $100 million plus the $15 million that we are receiving at the end of 10 years from now. So, we have no interest exposure over that period of time. So, that's 1 important differentiator. And our maximum exposure is as the royalties are paid on a quarterly basis is deducted from the principal amount. So for example if the total royalties -- aggregate royalties received by the bondholder is $100 million and we've already drawn $115 million, we would only owe that differential at the end of the period. So, that's 1 I think element that is worth considering. The second piece is the following. When we structured this royalty bond as we call it technically speaking, we made sure that any excess royalty will come to us above and beyond the return requirement of the bondholder. So what that means is that once the return requirement is met and the quicker the product accelerates in revenues, the quicker that will be, the rest comes to us. However, given the attractive potential of this product right now versus when we did the deal 2 years ago, we have been contacted and we have also solicited third parties who may be willing to purchase the existing royalty bond, which we have the right to do at any time and structure it in a way that allows us to potentially receive royalties from the beginning; part of the royalties of course not the entire amount, but that part of the royalties may come to us from the beginning. And a third piece of this potential transaction is that we may receive additional capital depending on what type of a transaction we pursue right upfront and forgo future royalties. So, these are the options that we are evaluating and working with several advisors and we will let you know what the outcomes are appropriately when these things mature and we expect them to mature in the next couple of months or less.

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Operator [10]

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Our next question comes from Matt Phipps with William Blair.

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Matthew Christopher Phipps, William Blair & Company L.L.C., Research Division - Analyst [11]

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And it seems like you guys are continuing to make a lot of progress here so nice work. The first one is in the cervical setting, you mentioned second line patients, is that just for patients who get platinum therapy in the advanced setting or will it also be for patients who kind of have recurrent disease after adjuvant chemotherapy?

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Garo H. Armen, Agenus Inc. - Founder, Executive Chairman & CEO [12]

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Jean-Marie?

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Jean-Marie [13]

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Very good question, very good technical question. Actually they are considered as patients who have 6 months of the platinum based regimen and still with regular therapy will be eligible for a second line trial.

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Matthew Christopher Phipps, William Blair & Company L.L.C., Research Division - Analyst [14]

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Okay. And then it sounds like -- and I'm sorry if I missed this, but it sounds like you guys are thinking about PD-1 plus CTLA-4 in that 50% PDL-1 expression first line non-small cell lung cancer. I think that does make sense with the rapid development path of high response rates. But are you also looking at tumor mutational burden? That's something that it's hard to get through a Bristol or Merck call these days without hearing about.

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Jean-Marie [15]

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You're aware that we are completing that third population because of the outstanding effect of the combination of PD-1 and anti-CTLA-4. For people who want to have a first approval, it would be much more complex to follow the path of the tumor burden option. Here we have a product, which has a particular label for the population that we are targeting. It's on the market, it's approved, we just have to leverage that knowledge in that indication to get out product approved.

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Matthew Christopher Phipps, William Blair & Company L.L.C., Research Division - Analyst [16]

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I see. That makes sense having a comparator on there. And then lastly, any updates on AutoSynVax? I think you guys still said you'd have some kind of initial immune response data later this year. Is there a venue that you're targeting?

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Jean-Marie [17]

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We do have or we did report a patient who had a very clear T cell response [inaudible]. This patient entered -- this patient received ASV as part of the commercialization program. We are moving now forward with ASV with better reaction of the vaccine and we plan to open studies with that in core reaction of the vaccine as a monotherapy and in combination with anti-CTLA-4 in the first half of 2018. Are you answered?

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Matthew Christopher Phipps, William Blair & Company L.L.C., Research Division - Analyst [18]

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Yes. I'm sorry, I thought there would be like 6 patients or so that you might have some additional data on from the monotherapy.

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Jean-Marie [19]

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We have treated only 5 patient and then we are close to 4 because we are moving now with the second ASV vaccine. The data now is being analyzed and we have -- we expect to have result to communicate most likely in the next -- in the future SITC conference.

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Operator [20]

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Our next question comes from Biren Amin with Jefferies.

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Biren N. Amin, Jefferies LLC, Research Division - MD and Senior Equity Research Analyst [21]

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Garo, maybe just on the financial situation, you've got I think $85 million in cash currently with the $15 million tranche. How much do you think you can generate from the restructuring of the Shingrix royalty that would allow you to have a runway to complete some of these clinical trials?

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Garo H. Armen, Agenus Inc. - Founder, Executive Chairman & CEO [22]

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So, let me answer that question in 2 ways, Biren. So, we're working on transactions that range in structure from one that allows us to receive royalties essentially immediately versus capital acquisition right upfront. But I'll tell you that capital acquisition will be a relatively modest amount. So, we received right now $15 million additional and so any capital acquisition amount will probably be somewhere around perhaps twice that additionally. But we're not necessarily biting on upfront capital depending on the value proposition that we will be facing based on several different transactions that we're contemplating right now. However, to answer your question more pointedly, we believe between now and the end of the first quarter not necessarily waiting for the end of the first quarter, but in this period; we will be able to consummate multiple business development transactions with meaningful cash that will certainly see us through the end of next year into the following year. So, that is the objective. Including potential broad transactions that could bring in a significant amount of cash above what I signaled. So, those are things that are on our plate right now. Very active business development program being pursued by our business development professionals and the rest of the management. We have I'd say at least 4 companies with whom we're having active discussions. Some of these transactions have graduated from term sheet to agreement stage. And so we have to obviously balance these transactions at any given moment with our own business objectives, which is largely to keep at least an important slice of our products for ability to market in North America.

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Operator [23]

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Our next question comes from Frank Simmons with Majestic.

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Frank Simmons, [24]

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Can you please be specific in telling us how the current shareholders are going to benefit from the spin-off of AgenTus?

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Garo H. Armen, Agenus Inc. - Founder, Executive Chairman & CEO [25]

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So, this will be done in steps. As we may have said earlier, the first step with AgenTus is the formation of the company and I know that there is impatience out there to get things done in 1 day, but unfortunately things do not get done in 1 day. But we're diligently working on -- having structured this as a separate business entity, now working on business development transactions as well as grant possibilities for us to establish a presence in areas of the business that we're not necessarily present right now, for example manufacturing which is a critical component of cell therapy. This will be followed by I would say at least a partial spin-off of these shares to our existing shareholders.

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Frank Simmons, [26]

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Just one last question. Just regarding the royalties for the Shingrix. Can you specify what the royalty rate that agent is entitled to?

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Garo H. Armen, Agenus Inc. - Founder, Executive Chairman & CEO [27]

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That is public, it's 2%. And so in essence just in terms of a reference point, if it's a multi-billion dollar product which we expect it to be, at $3 billion revenue level, this will be $60 million a year annually in royalty payments. And our original model with the royalty bondholder was based on peak revenues of approximately half that amount. So, you can imagine that there is cushion here for us to restructure this in a way that allows us to receive some of the upside either upfront or annually going forward.

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Frank Simmons, [28]

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Perfect. And one last quick question is do we know when GSK intends to initiate the sales of Shingrix in the United States and Canada?

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Garo H. Armen, Agenus Inc. - Founder, Executive Chairman & CEO [29]

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I think it would be inappropriate for me to answer that question. But the medical community and the public at large is impatiently waiting for this product. In fact I know a number of very, very prominent physicians who are holding back on administering the old vaccine in the hope that this will be available in the next couple of months or so.

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Operator [30]

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We would now like to conclude the question-and-answer session. With that, I'd like to turn the call back over to Dr. Garo Armen for any closing remarks.

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Garo H. Armen, Agenus Inc. - Founder, Executive Chairman & CEO [31]

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Thank you very much. I think I'd like to thank you for your patience to be with us for the long haul. As you know, we are one of the very original pure plays if not the only one in the field of immuno- oncology having established the company 23 years ago and having never wavered from our resolve that immuno- oncology would be the way forward for cancer patients being cured. And that resolve has strengthened over the last 3.5 years with our acquisition of our antibody and subsequent transactions that my colleagues talked about, including our manufacturing facilities, but additional technology platforms that have allowed us along with internal inventions to be bring the company to where it is right now. And so I'm delighted with where we are and I'm also very honored and privileged to have colleagues that can take the journey with us, qualified colleagues -- highly qualified colleagues I might add. And so, we look forward to the progress that we'll make and reporting that to you over the next 6 to 9 months.

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Operator [32]

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The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.