Good morning and welcome to the Agenus Biotech Electronic Security Token Conference Call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.
I would now like to turn the conference over to Doctor. Garo Arman, Chairman and CEO of Agenus Bank. Please go ahead.
Thank you very much, Nicole, and thank you everybody for joining us this morning. Please note that today's presentation will include forward looking statements that are subject to risks and uncertainties, including the risk factors described in our SEC filings that made available on our website. When evaluating a Genesis business and prospects and the best offering, careful consideration should be given to these risks and uncertainties. This presentation and the information contained do not constitute an offer or solicitation of an offer for sale of any security. Best are being offered by Agenus solely to institutional and other qualified accredited investors pursuant to a private placement memorandum.
Our disclosure today represents a material development for our company. None of these comments are an invitation to purchase interest or otherwise consider a solicitation. The company will react to investment interest only after investors have been reviewed the private placement material, and have been qualified as institutional or other accredited investors. So now I will provide you with a brief overview of this particular instrument that we're offering, or announcing the offering of, as well as a little background on our company. To start with, Agenus is a biotech company at the forefront of cancer therapy.
Our portfolio consists of agents that turn the body's immune system into a weapon to fight a patient's own cancer. The field is coined immuno oncology, short IO, which I will make references to throughout this presentation. Today IO, that is immuno oncology, represents the most promising approach for cancer patients, because it is providing cures for some of these patients for the first time. This year marks Agenus' twenty fifth year. We were the first company to pioneer individualized IO treatments for patients with cancer.
Since 2014, Agenus has been transformed by our acquisitions that have led to internal discoveries of a broad range of immuno oncology or IO agents. Our current portfolio includes the backbone of today's IO treatment, along with next generation agents, which we believe will transform and propel the IO field by making cancer a chronic or curable disease over time. Agenus has built a deep pipeline of complementary products. Over the past four years, we have outpaced large pharma in delivering novel agents to clinical development. These include first in class and best in class therapy.
We and our collaborators are advancing these innovations to expand treatment options available to patients. This past December, we announced an important partnership with Gilead, which included an initial payment of $150,000,000 to Agenus. This was the largest upfront consideration for preclinical assets in oncology for all transactions in 2018. We have made strides in scientific innovation, yet to realize the full potential of our therapeutic agents, we believe it is essential to make changes in the way these product candidates are financed. Our new approach, which we're going to talk about today, is efficient, inclusive, and timely in this regard.
Many of you are familiar with blockchain technology. It is being explored in every corner of every industry. New blockchain based products are being created rapidly to address business and operational inefficiencies. Some of the initial applications have been in supply chain management, financial sector, real estate, and insurance and a number of industries are continuing to grow. Today, we are launching the world's first biotech token.
These tokens are named BEST, which stands for biotech electronic security token. It describes it, quite accurately actually. These allow investors the opportunity to participate in the future revenues of our most advanced late stage drug candidate, if approved by the FDA. These digital securities are designed to enable hyper focused investment with complete transparency inherent in the blockchain technology. The approach should improve the efficiency of capital allocation in biotech, thus permitting a more targeted and versatile investment paradigm, increased liquidity and less equity dilution to Agenus shareholders.
Such an instrument has not existed until now, and will be made available to institutional and qualified accredited investors. Let me now outline the mechanics of this novel financing instrument in just a bit. But first, I will describe our most advanced clinical candidate chosen for this initial best offering. The first candidate we've chosen is AGEN2034, an antibody targeting an immune receptor called PD-one. This target represents the most significant breakthrough in the treatment of cancer to date, enabling responses and potential cures in otherwise untreatable cancers.
The antibodies on the market today that target the PD-one receptor have grown from zero to approximately $15,000,000,000 in annual revenues in just about four years. Our PD-one antibody underlying this token is currently in human clinical trials for patients with cervical cancer. Our development strategy has been discussed with the FDA, and is designed to support approval of AGEN2034, both as monotherapy, that means being used by itself, and in combination with one of our other compounds, AGEN1884, which is our own CTLA-four antibody. Our PD-one antibody also stands to benefit from our ability to combine it with other assets in our pipeline. This ability, we believe, could significantly expand the commercial opportunity for AGEN2034.
Part of the proceeds from the sale of these security tokens will be used to expand clinical trials into other indications beyond the current cervical cancer trials. Putting AGEN2034 in combination with other immuno oncology treatments, including our own next generation agents. Now let me talk a little bit about the instrument itself. The tokens in this initial best offering, entitled token holders to a portion of future US sales of AGEN2034. Token holders will receive proceeds from U.
S. Net sales of AGEN 2034 up to a defined return. As monies come in from U. S. Sales of AGEN 02/1934, the first portion of net sales will be allocated to BEST holders who will be eligible to receive up to $7.5 per token.
Once all BEST holders have received their full payout, all additional revenues will go to Agenus. Holders of these tokens will be eligible to trade their tokens after the SEC mandated lockup period. There will be additional de risking features embedded in the terms of the offering whereby tokens may be converted into Agenus stock or cash if AGEN2034 is not yet approved by the FDA by the 2031. I'm sorry, 2021. 2021.
So that's not 2031, it's 2021. So it's three years from now or two years from now. Today, we are launching the first tranche of our token offering, which is to be on a first come and first serve basis to institutional and other accredited investors at the initial price of $1 per token. This is intended to be at a discount to the issue price of 1.67 per token. We will limit the participation in this first tranche.
We believe the biotech industry will benefit greatly from this financing mechanism. With its unique risk reward profile, the time has come for an instrument that can help advance biotech assets with greater speed and efficiency. BEST are engineered to have this precision. Tradability returns to investors want. BEST will allow specific product candidates to be properly project financed, while addressing any dilution concerns of existing or future shareholders of a company's stock.
Currently, the only instruments which offer similar product financing specificity are royalty financings. However, these royalty financing arrangements have limitations. To start, they are controlled by one party. Biotech financing tends to be ruled by a handful of players and is typically driven by large institutional players. The results are deals that are often are one-sided.
BEST will open the opportunity to own a portion of the revenue stream of a product to accredited investors for the first time. Today, we present this as a financing mechanism. Tomorrow, we believe this tool will catalyze the emergence of a new market for investments in novel therapies, and eventually transform pharmaceutical development and commerce. This instrument should be accessible and should offer investors specific exposure to a more advanced product like PD-one. BEST plays into today's ecosystem of innovation.
Its key features enable targeted investment into targeted therapies. In this way, BEST represents the intrinsic democratization of drug development, hopefully changing a game that transcends pharmaceutical financing. This also represents an advancement in the applicability of blockchain, bringing an elegant and robust technology solution to the forefront of healthcare industry, facilitating the delivery of treatments to those in need, best empowers the individual investor and patient and helps biotech companies like Agenus be able to do more. So that concludes my formal remarks, and I believe now we are open to any questions.
Thank you. We will now begin the question and answer session. To a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press Our first question comes from Biren Amin of Jefferies.
Please go ahead.
Yes, hi guys. Thanks for taking my questions. So Goro, did I hear you correctly that each purchaser of a token may be able to exchange the token for $7 or would be payable up to $7.5 Can you just explain how you would get to that value if $18.84 dollars were approved and on the market? Just talk about how the sales would tie into the payout. Thank you.
Okay. So there are a couple of things, Baron, that, one needs to be cognizant of. One is the potential payout that is up to $7.50 based on the sales of $20.34. So that is initially a, a substantial portion of the sales will be allocated to token holders up to a certain return. And and these are described in more detail in the offering memorandum.
And after that initial hurdle is reached, and the sales are in excess of a certain amount, payout of up to a cumulative $7.5 is the target. Now that is apart from the exchangeability that we talked about. So in the event that 2034 doesn't have approval by the FDA by the end of the year 2021, then BEST holders will be eligible to exchange their holdings for either Agenus stock or cash. But the value of that will not be $7.50. So this exchangeability offers a certain buffer.
It allows them to have some sort of a protection, but it does not provide them the full potential upside that is inherent, when the product performs.
Got it. And I guess if in the event that 2034 was not approved by 2021 and the investors wanted to exchange for cash, do you believe that the company would have sufficient cash to enable the exchange? Or would that create some sort of a liquidity event in that situation?
Okay. So this is again, those details are described in the offering memorandum. However, this exchange is at the option of the company, whether it is exchanged for equity or for cash is at the option of Agenus. Now, one other thing that you should remember, is I think if I read your question properly, the question is then what is the extent of dilution in terms of our shareholdings? So the extent of dilution is then limited to one share of Agenus for every 10 tokens, not to exceed a dollar value of $10.
So every 10 tokens could be exchanged for $10 worth of Agenus stock, should Agenus stock value be at 10 or higher, or one share of Agenus stock if the stock is below $10 a share. So that provides significantly less dilution to Agenus shareholders than if we were to raise the targeted amount right now by issuing equity at these prices.
Alright. Great. Thanks for taking my questions.
Once again, if you have a question, please press Our next question comes from Matt Phipps of William Blair. Go ahead.
Hi. Thanks for taking my question. Carol, this might be in the memorandum, but what is the maximum number of tokens that can be sold under this tranche and maybe in total?
We have not disclosed that number, Matt. But in the first tranche, it will be a limited number of tokens sold. And because it's at a discounted price, we will limit the number of tokens to be issued in the initial tranche. And that the upside had not yet been disclosed. Okay.
And then since there is potential for an exchange for cash, if, you know, no approval by 2021 and then realize that the company's option, is that carried as a liability in any sort since it could potentially be exchanged for some cash value?
No. Actually, this instrument on our balance sheet is not going to be recorded as a debt, okay, or a cash obligation. But it is a liability in the same way that our royalty sales were recorded a few years back. And and the reason for that is that you need to have an offset. As revenues come in, you need to have an offset, and that's one of the reasons it's recorded as a non debt liability.
So there's no cash recourse associated with this liability.
Got it. Okay. Thank you.
Once again, if you have a question, please press star then 1. Again, we will pause momentarily. Again, that's star then 1. Our next question comes from Frank Simmons of Majestic. Please go ahead.
Hey, good morning. Thanks for taking my call. So do you anticipate providing, data updates for, AGEN2034, to potential, BEST investors and to shareholders in the very near future?
Yes. Of course. As you know, we are a public company and have been a public company since February, early two thousand. So, we'd like to think that our disclosures are pristine and timely. As a public company, not only do we disclose material information such as this particular development, when it occurs, but we also have our quarterly calls, and we disclose all details.
But any material information will be disclosed as we will meet Reg D requirements. All of this is required by an Under Reg D. And it's also required as a public company. So all of these details will be disclosed at a very timely meeting.
Alright. Thank you.
And, again, it is star then one to ask a question. A star then one. As we have no further questions at this time, this concludes our question and answer session. I would like to turn the conference back over to Doctor. Armen for any closing remarks.
Thank you very much, Nicole. As I alluded to earlier, this is an exciting development for us, and we believe that it has the potential to be an exciting development for our industry in the form of providing a means of financing specific products, and offering investors exposure to specific products which did not exist before as I mentioned, other than royalty financings that are a very close club of investors if you will. That is not available to the average accredited investor. So we hope that this will allow us and others a means of expediting product development worthy of advancement. So with that, I will conclude my remarks, and I believe the recording of this available subsequently, so there's a recorded version of this call that will be available in to the wider audience shortly.
Thank you very much for your time, and we look forward to updating you as things advance.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.