What: Shares of Agenus (NASDAQ:AGEN), a small-cap biopharmaceutical company intent on unleashing patients' own immune systems to fight cancer, rocketed 43% higher in March, according to data from S&P Global Market Intelligence.
So what: Much of the gain can be attributed to the general biotech sell-off that hammered smaller biotechs without discrepancy earlier in the year. During a few days in February, cash on the company's books at the end of September equaled roughly three-quarters of the company's market cap. A glowing fourth-quarter earnings report provided a much-needed reminder that not all biotechs are cut from the same cloth.
I'd rate Agenus' cloth at parachute-grade. It ended 2015 with over $171 million in cash on its books. Potential collaboration revenue in the quarters ahead cloud its cash-burn rate, but management expects it won't require additional funding until the second half of next year at the earliest.
Now what: Its adjuvant -- a fancy immunology term for "booster" -- used in GlaxoSmithKline vaccines will provide a small revenue stream in the years ahead. Agenus wisely capitalized the first $100 million of that stream to end the year on solid financial footing.
Small but steady revenues from Glaxo-partnered vaccines are partially funding an ambitious slate of no less than half a dozen clinical-stage trials this year. A large part of Agenus' ambitions involve an expansive partnership with Incyte (NASDAQ:INCY) to discover, develop, and commercialize immunotherapies aimed at four disclosed targets and three new top-secret targets.
For such a small company, it has a lot to look forward to -- or worry about, depending on your point of view. After many years of raising equity, it has just one commercial-stage product -- the adjuvant in Glaxo's malaria vaccine.
However, The seven programs sprouting from the Incyte collaboration come in two flavors that could help Agenus stretch its available resources a bit further. Four are equal profit-loss shares, and three are entirely Incyte-funded, costing Agenus practically nothing up front but potentially leading to less reward should they succeed.
Granted, Incyte's pockets hardly seem deep enough at present to push all its Agenus-partnered programs through costly regulatory hoops. However, Incyte has a rapidly growing revenue stream from Jakafi, which recently won an important label expansion that's helped its annual revenue more than double over the past two years to above $754 million. A promising rheumatoid arthritis pill, currently under FDA review, could further pave the way for Incyte to speed Agenus-partnered programs along.
A more immediate catalyst, Agenus' wholly owned Prophage vaccine, is aimed at one of the deadliest malignancies -- glioblastoma. Two-year survival rates for this form of brain cancer are less than 25%, and the standard chemotherapy isn't terribly helpful.
Agenus' Prophage program involves creating an individualized vaccine from patients' surgically resected tumors. In open-label studies it's beaten the standard of care tremendously, especially in patients with less elevated levels of a specific protein. The company plans on beginning its first controlled, randomized study with Prophage in these patients later this year.
Surprising placebo-group performances have ruined many phase 3 studies. If Agenus' Prophage program can avoid a similar fate, this stock is set to soar even further than it did in March.
Cory Renauer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.