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Last week, Pfizer (NYSE:PFE) agreed to a deal with privately held biopharma company OncoImmune. It could be worth up to $250 million in up-front and milestone payments if the monoclonal antibody at the center of the licensing agreement succeeds. While investors in this industry should hardly be surprised by speculative R&D deals, such agreements can provide clues as to which disease targets larger pharma companies are interested in before they go mainstream (see: CAR-T, CRISPR, etc).

In this case, Pfizer's latest deal hints that investors may want to keep a closer eye on Agenus (NASDAQ:AGEN). Here's why things could heat up for the $630 million company.

What's the deal?

The Pfizer-OncoImmune entanglement will investigate a single immunotherapy that targets CTLA-4, a protein secreted by cancer cells that blocks the activation of T cells. Related mechanisms have demonstrated potent anti-tumor activity in several small studies and even larger trials. Blockbuster melanoma drug Yervoy from Bristol-Myers Squibb, for example, is a first-in-class CTLA-4 antagonist.

If this newly acquired immunotherapy is successful in the early going, then Pfizer has the option to secure rights to other CTLA-4 antibodies in OncoImmune's pipeline. What's funny is that Pfizer actually owned an immunotherapy candidate in the same class years ago, but it licensed most of the rights to AstraZeneca. Oops.

The renewed interest in targeting CTLA-4 could be great news for Agenus, whose lead lead drug candidate is a CTLA-4 antagonist in phase 1 trials. Better yet for investors, the drug candidate is currently unpartnered -- an oddity, given that the company's active pipeline of 10 trials includes six partnered programs with Incyte and Merck. 

And Agenus may have even more to offer a potential partner.

Although the company was due to receive royalties from sales of two GlaxoSmithKline vaccines that contained adjuvants it developed, Agenus opted to sell rights to the royalties to a capital firm for an up-front infusion of $115 million in cash. It was a clear signal that management is going all in on its most valuable asset -- an antibody discovery platform that was integral to grabbing the attention of Incyte and Merck, and to finding the CTLA-4 antagonist in the first place.

Executing currently partnered programs and bringing in new deals will be the deciding factor in Agenus' existence. A few past pivots have left it with an unenviable balance sheet. While it has about five quarters' worth of cash remaining, the early-stage pipeline necessitates bringing in additional capital.

Perhaps partnering its prized anti-CTLA-4 immunotherapy candidate could provide some relief. Then again, if the company could push the drug candidate through phase 2 trials before partnering, then it would be able to get even sweeter financial terms. Given the company's cash position, it may be best not to take that route, but it's too early to tell.

What does it mean for investors?

After selling its own CTLA-4 antagonist to AstraZeneca five years ago, Pfizer decided that it wanted back in on the potentially lucrative immunotherapy class of drugs. The deal with OncoImmune could signal renewed interest in the drug target, which could put Agenus in an advantageous position if other pharma leaders go on the prowl. Investors should definitely keep an eye on the company and its antibody discovery platform. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.