What happened

Shares of the small-cap immunotherapy company Agenus (AGEN -5.98%) were exceedingly volatile over the whole of 2021. Turning to the specifics, Agenus' stock first gained a healthy 55% during the first month of the year, before giving back all of these gains plus another 10%, according to data provided by S&P Global Market Intelligence .

In May 2021, Agenus' stock went on a second major rally, with the drugmaker's shares more than doubling in value from their intra-year lows. Thanks to a key regulatory setback in the fourth quarter, however, Agenus' stock crashed toward the end of the year, ending down a whopping 51% from its 52-week high. 

AGEN Chart

AGEN data by YCharts

So what

At the request of the Food and Drug Administration, Agenus withdrew its biologics license application for the cervical cancer drug candidate balstilimab in October 2021. The move was reportedly in response to the earlier-than-expected full approval of Merck's (MRK -1.70%) Keytruda for the same indication. 

Picture of a roller coaster.

Image source: Getty Images.

Agenus' stock initially rose in anticipation of a favorable regulatory outcome for balstilimab in treatment of advanced cervical cancer for two reasons. First and foremost, Wall Street expected the drug to achieve peak sales of around $143 million for this indication by about 2026. While that amount pales in comparison to the commercial prowess of Merck's rival checkpoint inhibitor or similar drugs from several top biopharmas, $143 million per year would have been materially significant for a company of Agenus' size. Underscoring this point, Agenus started 2021 off with a market cap of less than $700 million.

Secondly, a regulatory approval for balstilimab would have gone a long way toward validating the biotech's investment in the field of checkpoint inhibitors. When Agenus first set out on this pathway, after all, Wall Street was doubtful the company could ever carve out a profitable niche in this highly competitive space. 

Now what

Is Agenus' stock worth buying after this tumultuous year? It all depends on your investing timeline. The bottom line is that Agenus is now some years away from filing for another major regulatory approval for its checkpoint inhibitor platform. While Wall Street is more optimistic than ever that Agenus will ultimately get one of these drugs across the finish line, patience will definitely be required on the part of shareholders. So, in all, this biotech stock is only worth buying if you are willing to wait for at least two years for a worthwhile return.