Agenus Inc.’s (AGEN) shares jumped 28.7% immediately after the company announced that it entered into a global license, development and commercialization agreement with Incyte Corp. (INCY). The agreement focuses on the development of immuno-therapeutics utilizing Agenus’ proprietary Retrocyte Display antibody discovery platform and Incyte’s expertise in small molecule discovery.
Terms of the Agreement
Initially, the deal will focus on the development of checkpoint modulator antibodies directed against GITR, OX40, LAG-3 and TIM-3. Both companies will equally share all costs and profits for GITR and OX40 with Agenus eligible for potential milestones. Meanwhile, Incyte will fund royalty-bearing programs, TIM-3 and LAG-3, with Agenus eligible for milestones and royalties. The first studies are expected to commence in 2016.
As for the financial terms, Incyte will make upfront payments totaling $25 million to Agenus and invest $35 million in the company by purchasing approximately 7.76 million newly issued shares. Apart from the initial four target programs in the multi-year agreement, the parties have an option to jointly nominate and pursue additional targets within the framework.
In the royalty-bearing framework, Agenus will be eligible to receive milestone payments of up to $155 million depending on the achievement of certain development, regulatory and commercialization milestones and tiered mid-single to low double-digits royalties. In addition to this, Agenus has the option to co-fund 30% of the development costs in exchange for increased royalties.
Moreover, for products from any additional programs that the companies choose to bring into the collaboration, Agenus may opt to designate them as profit-share products. In the profit-sharing framework, Agenus will be eligible to receive up to $20 million in development milestones.
We are positive on the Incyte deal. Early last year, Agenus had inked an agreement with Merck (MRK) for the discovery and development of therapeutic antibodies to immune checkpoints for the treatment of cancer.
While Agenus is a Zacks Rank #3 (Hold) stock, Incyte carries a Zacks Rank #2 (Buy). A better-ranked stock in the health care sector is AMAG Pharmaceuticals, Inc. (AMAG) carrying a Zacks Rank #1 (Strong Buy).
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