Good day, ladies and gentlemen, welcome to the Agenus analyst call. As a reminder, today's conference is being recorded. Now I would like to turn the conference over to Dr. Jennifer Buell, Chief Operating Officer of Agenus. Please go ahead.
Thanks. Thank you, Drew, thank you all for joining us today. I'm here with Dr. Garo Armen, Chairman and Chief Executive Officer of Agenus. Before we begin, I'd like to remind you that this call will include forward-looking statements, including statements regarding our recently announced partnership with Gilead, clinical plans and timelines, and our financial position. These statements are subject to risks and uncertainties, including that our transaction with Gilead is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act. We refer you to our SEC filings for more details on these risks. As a reminder, this call is being recorded for audio broadcast. Today, we announce an important development regarding a partnership with Gilead. Garo will share the details of this collaboration, first, I'd like to summarize the progress we have made this year.
We set out with aggressive goals for 2018, as we conclude this year, I am so pleased to report that we have delivered on all of our key targets and milestones that we set out to accomplish. Through our accomplishments, we have made important contributions to science, to patients, and for our partners. We have delivered five new discoveries to filing INDs, our sixth IND will be filed before the close of the year. For our CTLA-4 and PD-1 lead programs, we met with the FDA, we defined our path to BLA as early as 2020. Importantly, our scientists published a key discovery that we believe can improve the tumor-killing potential of antibodies, such as those targeting CTLA-4. We have applied this discovery in our next-generation CTLA-4 antibody, which is now ready to enter the clinic.
We have also met or exceeded all of our research, IND filing, and commercialization milestones in our partnerships with Incyte, Merck, and GSK. Through these partnerships, we've delivered new Agenus discoveries to the clinic and underscored the efficacy of GSK's commercial SHINGRIX vaccine, containing our proprietary immune-boosting QS-21 Stimulon adjuvant. Finally, with this morning's announcement, we delivered on our strategy to expand our corporate partnerships, we executed an important partnership with Gilead. I will now turn the call over to Garo to discuss this transaction.
Thank you, Jen, and thank you for joining us this morning. Today, we are pleased to announce our partnership with Gilead. Under the terms of this transaction, Agenus will receive $150 million upon closing. This includes $120 million in cash and $30 million equity investment at a premium. We are also entitled to receive a potential $37.5 million in near-term milestones and an additional $1.7 billion in potential future fees and milestones. In exchange, Gilead will receive worldwide exclusive rights to AGEN1423, a first-in-class bifunctional molecule which conditions the tumor microenvironment and combats two prominent resistance pathways for cancer immunotherapy. These pathways are present across many tumor types and are associated with poor responses to checkpoint blockade and other treatments. The IND for AGEN1423 is scheduled to be filed by the end of this year.
In addition, Gilead will also receive an exclusive option to license two additional programs, AGEN1223 and AGEN2373. AGEN1223 is designed to selectively deplete immunosuppressive T-regulatory cells from the tumor microenvironment. This agent takes advantage of co-expression of target antigens, specifically on tumor-infiltrating T-regulatory cells. In contrast to other strategies targeting T-regulatory cells, AGEN1223 is expected to spare important immune regulatory peripheral Tregs in cancer-fighting effector T cells. The second optionable product, AGEN2373, is a fully human monoclonal antibody that boosts the immune response to cancer cells by enhancing CD137 costimulatory signaling. This signaling is relevant in activated immune cells, which include both adaptive T cells and cells of the innate system, more specifically NK cells. The potential to duly target innate and adaptive immunity makes CD137 a highly attractive target for cancer immunotherapy.
Additionally, the unique binding properties of AGEN2373 are expected to limit its activity outside of tumor site and mitigate toxicities that may be associated with systemic activation of CD137 in humans. As part of this collaboration with Gilead, Agenus will be responsible for developing the option programs up to the option decision point, at which time Gilead may acquire exclusive rights to the programs on option exercise. We will also have the right to opt in to shared development and commercialization in the U.S. with respect to one option program. Beyond its option rights to two molecules, Gilead will also receive rights of first negotiation for two additional undisclosed programs. We regard Gilead as a serious and compatible partner.
They have embraced innovation and demonstrated success in developing and commercializing breakthrough treatments in many important diseases such as AIDS, liver disease, and so on, that were once considered incurable or untreatable. Their commitment to be a contender in IO, immune oncology, is compatible with our objective of discovering, developing, and commercializing breakthrough treatments to expand the reach of immune oncology beyond the current group of patients who benefit from these new class of immune-based modalities. We also share an understanding of the importance of broad portfolio designed to address immune escape mechanisms to achieve the next generation breakthrough treatment in immune oncology. We believe this collaboration will provide improved efficiencies in our efforts to provide greater numbers of patients with effective immune-based treatments.
Through this transaction, Agenus will have greater resources and reduced expenditures to advance our pipeline of first-in-class antibodies, neoantigen vaccines, and cell therapy programs, the latter through our own AgenTus subsidiary. Gilead will have access to some of the most promising breakthroughs in the field of immune oncology. In closing, we're excited to work with Gilead because we have a shared vision and greater resources to deliver potentially curative immune oncology therapies to patients. Let me now quickly review our 2019 plans and objectives, which include, one, advancing our molecules which are already in the clinic with the aim to file for regulatory approval starting in 2020. Two, advancing additional preclinical molecules and cell therapies into the clinic. As Jen said, so far our track record in this has been stellar. Three, entering into additional collaborations with respect to select unpartnered programs.
Four, making additional breakthrough discoveries through our research efforts. Lastly, advancing our commercial-ready infrastructure. Now I'm happy to open the session to questions.
We will now begin the question-and-answer session. To ask 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. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Matt Phipps of William Blair. Please go ahead.
Thanks and congrats, Garo. Obviously, a pretty impressive upfront amount for exciting but preclinical asset ready to go into clinics. One question I have is in regards to, especially I think the opt-in programs and maybe the undisclosed programs, what is your ability to do combination studies with some of your own assets and those programs? Are you restricted from that, or is that something you have to talk about with Gilead?
Matt, I think these are very good questions. I just wanted to make sure that our audience also knows while these are preclinical programs, a number of them are ready to enter the clinic, so we expect them to enter the clinic in the coming months. Also very importantly, a number of these assets can be breakthrough products in our opinion, and have very significant potential, commercial potential. With regard to your question, the first product that is outright licensed to Gilead, that is 1423, the bifunctional molecule. Gilead will take over essentially immediately. Any combinations that we do from that point onwards with our own portfolio of molecules will have to be done in collaboration with them. We have a very good working relationship as we have been in discussions with them for a little over a year now.
Our discussions have been very fruitful. With regard to the optionable programs, we can do at our discretion any combinations up to the point of option exercise. Beyond that point, those products will be in the same category as the licensed product that is in collaboration with them. We can advance combination clinical trials. With regard to the ROFR programs, the right of first refusal programs, we can do as we see appropriate in combinations. Does that answer your question?
Yeah, that does. Thanks, Garo. I guess a second question, obviously now with a significant greater capital resources, how do you think about moving both your CTLA-4 PD-1 combination forward? Is this now you can expand into maybe some additional indications? I guess what most excites you in your pipeline of wholly owned assets now?
This is a very good question. Thank you. As you suggested, Matt, both CTLA-4 and PD-1, as well as the combination of those two agents, which are gaining more and more momentum in the clinic in terms of interest from clinicians. As you know, CTLA-4 got off to a slow start, but its value is becoming clearer as additional data on combinations come out. That combination and both PD-1 as a single agent as well as the combination is the highest priority for us in terms of moving into commercial launch. Will we do additional indications? Perhaps we will. We are looking at a number of other indications beyond cervical right now, but our focus is to make sure that we enroll the number of patients in the next six to nine months that we have targeted and gain regulatory approval.
Beyond that, I think the path would be quite interesting in terms of our ability to expand the opportunity for these two products. With regard to other programs in our portfolio, I will have Jen answer that question. I'm not dodging that question. I think Jen knows quite a bit about our plans and the depth of these programs. Without identifying confidential programs that we have ongoing, we'll give you some color in terms of what our priorities are. Suffice it to say that based on the number of IND filings and what we've discussed before in terms of what we expect the number of programs in the clinic to be, we have a very substantial portfolio in addition to those that have been the subject of our partnership with Gilead. Jen?
Thanks, Matt, for your questions. Thanks, Garo. Matt, let me just take a quick moment to boast, because I have to say, given what you have now seen, we have filed, by the first half of 2019, we will have filed 13 INDs. As you might recall, we brought in the technology, the antibody discovery technology, essentially in 2014. Our productivity is really extraordinary. Beyond our ability to identify new targets and to develop antibodies targeting those, both monospecific and multispecific or bispecific programs as well, we also have the internal GMP manufacturing capabilities to produce at-scale manufacturing for these monospecifics as well as bispecifics. We've been able to do so at setting records, essentially. The fastest time from essentially a research cell bank to at-scale manufacturing, fastest time known in the industry.
That allows us, when you looked at our pipeline of the assets that we have, and those that we have now are in part of this collaboration, you can envision that we have a number of assets behind that, and those are both monospecific and bispecific. Some of which are most advanced are our next generation CTLA-4. Our next generation CTLA-4 published data in Cancer Cell earlier this year. We've shown that we can take a molecule that has quite a bit of activity in IgG1, CTLA-4. We're seeing the clinical activity currently with our own lead compound, and we can engineer it to enhance or optimize its features. With that, we believe that we can have a couple of different approaches for that, both potentially as a monotherapy as well as in combination. That's a molecule that we are all incredibly excited about.
We've cleared the FDA to move to the clinic, and we're doing so quite actively now. Following that, we have a few other undisclosed bispecifics that now go beyond just T cell targeting to some of the other escape mechanisms that are known to us, some of which we've been able to elucidate from the clinical data that we've accumulated. We've been able to generate some very interesting novel bispecific, multi-specific antibodies that we will be disclosing as appropriate as we move them forward towards the clinic. We also have our neoantigen vaccine. Agenus is the only company who has the internal capabilities to partner our CTLA-4 and a PD-1, or both, in combination with neoantigen vaccines. As you know, we have our individualized approach, which is in the clinic and will be in combinations in 2019. We also have an off-the-shelf common antigen approach.
Targeting very specific antigens that are exposed both within a certain pathology, but also we've identified common antigens that we see across a number of different tumor types. That allows us to target both via vaccines as well as through cell therapy on tumors, specific antigens that may be common across tumors. More of an MSI-high-like approach you can think about with our common antigen approach. We have quite a bit to look forward to, but as Garo mentioned, our eyes are focused on delivering our BLA, and we're advancing those programs very aggressively, and we've previously disclosed that we formally engaged the Gynecologic Oncology Group and their support and footprint in helping us to meet our accrual timelines very aggressively. I hope that addresses your questions.
Yeah. Thanks, Jen. One follow-up there. The AGEN1181, the next-gen CTLA-4, definitely interesting preclinical paper and excited to see that moving to clinics. What do you think is the main thing you're going to be looking for clinically to give you confidence in moving that thing forward? Is it better safety? Is it seeing it maybe a little bit better monotherapy response rates? Anything you're really looking for from that first set of clinical data?
Matt, I'll tell you, maybe both, but we're really focused on efficacy, and I'll just highlight why for a moment and a little bit about what our findings showed. An important part in our learnings over the years have demonstrated that the amount of time that a T cell is educated and how it can get educated is by the amount of time it's interacting with antigen-presenting cells. That could be very important in getting that T cell to be able to find the antigens that it needs to seek out and destroy to have a successful cancer therapy. What we've been able to engineer into our antibody is a mechanism by which we can increase that time, that interaction time or that dwell time, as we refer to it, to allow the antigen-presenting cell to educate that T cell so that we can see its enhanced immunogenicity.
In addition to the standard properties of a CTLA-4, which we know can convey benefit to patients with cancer, we're also able to recognize an enhanced feature that we believe might be able to increase efficacy and increase it early. We're hoping to see early efficacy with these programs, and we may see it in patients who are refractory to PD-1 as well as in combination with a PD-1 agent.
Great. Thanks so much. Congrats again. Merry Christmas, happy holidays.
Thank you very much.
The next question comes from Biren Amin of Jefferies. Please go ahead.
Hi, guys. Thanks for taking my questions and congratulations on the Gilead deal. Garo, a couple questions. I think you had mentioned that there's some near-term milestones of $37.5 million. Is that in association with this deal, or is that in association with some of your other collaboration?
No, that's specifically in association with this deal. That is in addition to the $150 that we've received up front.
When you say near term, is that something that we should anticipate in 2019, and is that, I think, in relation to the IND filing for 1423?
We expect the majority of that to be in 2019.
Got it. Okay. Then I guess as it relates to the options for 2373 and 1223, are there any economics associated with that if Gilead decides to exercise options? Can you maybe go through, are there any patients, or what are the drivers that would allow them to make a decision on those programs?
In terms of is there additional consideration. The answer is of course, but we're not at liberty to disclose that. We may be, actually. At the moment, I prefer to defer to Gilead's discretion to disclose any of these details. The same thing is true with milestone triggers. Suffice it to say, milestone triggers will be relatively early clinical readouts rather than phase III completion or phase III or something like that.
Got it. I think on your last call, you had mentioned that the company was working on two near-term partnerships. Clearly, this suffices as one of the two. Can you just give us an update on that second potential partnership?
Well, let me put it this way. We anticipate a number of partnerships during the course of 2019. Because of the timelines associated with the rest of the year, it's unlikely that we will announce another partnership by the end of the year. Having said that, we're looking at a number of regional partnership opportunities and have had ongoing discussions, some of which are quite advanced.
Great. Thanks, and congrats again.
Thank you very much.
If you would like to ask a question, you may press star then one on a touch-tone phone. The next question comes from Madhu Kumar of R.W. Baird. Please go ahead.
Hey, good morning, guys. Thanks for taking my questions. Kind of following up on some of the earlier, what do you think about the place of the follow-on CTLA-4 versus 1884 in terms of product development and how you utilize the 1181 versus 1884?
I will make one comment, and then Jen could address the rest of this question. One comment is that we are, of course, aware of other next-generation CTLA-4 molecules. One of the reasons we have advanced our own next-generation molecule to where it is right now, which, as you know, we have filed an IND on this molecule already, and we expect to be in the clinic in the next few weeks to months, is because we believe, based on science, not just conjecture, that our molecule has substantial advantages over other next-gen CTLA-4 molecules. We're going into the clinic with that mindset, and I'll ask Jen if she would like to expand on it.
Thanks, Garo. Thanks, Madhu. Nice to speak with you. I'll say just a couple of things. While we certainly are quite enthusiastic about CTLA-4, our first gen is advancing very quickly, and our next gen is now moving into the clinic. I think we're not the only ones enthusiastic. Of course, this target was the subject of a Nobel Prize. What we had seen, as Garo mentioned earlier, that CTLA-4 and the mechanism had gotten off to a slow start, but our most recent engagements with key opinion leaders show a very significant interest. We see so much value in the molecule and the mechanism. The ability to not only enhance response rates but also durability of response. We know that there's a place for a first-generation CTLA-4. We've demonstrated clinical activity. There are some agents approved for different indications.
With a CTLA-4 agent, we believe that there may be an opportunity to improve the responses that are observed with the first generation, potentially in some indications. We also see the opportunity to develop it independently in indications that may not currently be responsive to a first-generation CTLA-4. We have not disclosed our programs, our clinical development plans as of yet, of course, due to competitive reasons. In due time, we will be, and I think we'll be ready to talk in more detail about what our full path for those programs will look like.
Okay, great. Thinking about 2373, what are the kind of features of 2373 that differentiate it from some of the earlier 4-1BB agonists? Obviously, it has a somewhat checkered history in terms of tox signals, particularly liver toxic.
What I can say, we haven't disclosed too much beyond the target, this is a very sophisticated molecule. What we have seen with some of the preceding molecules is we've seen some hepatic toxicity generally associated with some off-target binding. As Garo mentioned when he described 2373, he noted not only does this molecule have the potential to duly target both innate and adaptive immunity, but we've engineered it to circumvent some of the liver tox that we see. Based on some cyno data that we have experienced, we believe that our molecule is behaving as we had intended it to. Essentially, I think that probably is as much as I should say about the molecule at this point.
Okay, finally, kind of big picture, how does this partnership change downstream development strategy in terms of how far you carry things on your own? Because one could argue that now you have the cash flow to kind of feel a fair number of downstream assets similar to a more advanced state than you would have before today. How do you think of this on a strategy perspective, how far you guys carry things within Agenus before you partner things out today versus yesterday?
That would be a function of a few things. For example, we have a clear strategy with regard to our CTLA-4 and PD-1 molecules to commercialize those in North America ourselves. We're already exploring some very, very unique business models to do that with which we will be disclosing in coming months. With respect to other molecules in our pipeline that are not encumbered, and that's the majority of our pipeline and discovery programs right now. There'll be additional programs that may be outside of our sweet spot, so to speak, and they're more likely to be partnered than pursued by us. We haven't disclosed what they are, but we're having active partnership discussions on these programs as we speak.
There are also other molecules in our pipeline, some of the molecules that may have been highlighted in our conversations that we believe have specific advantages and are likely to read out positive clinical data early on. Depending on the magnitude of the positivity of that data, it's likely that we will pursue a number of those molecules on our own. Particularly when it comes to combinations. Because of the breadth of our pipeline and capabilities, we are in a very, very advantageous position to combine some of the lead molecules in development with other development agents in our pipeline. That will give us an advantage of not just pursuing monotherapy, but combination therapy, which we believe, by the way will be the future of IO. It's not a question of will combinations be the future of IO, but the key is what combinations in what setting.
Jen alluded to some of the elements of these in terms of biomarkers, we have a significant effort with biomarkers internally to pursue those programs.
Okay. Thank you very much, and congratulations on the deal.
Thank you.
This concludes our question-and-answer session. I would like to turn the conference back over to Dr. Garo Armen for any closing remarks.
Thank you very much, Drew. Thank you and thank you all for listening. In terms of summing up some of the implications of all of what you've seen with this collaboration, as you know historically we have disclosed very little in terms of some of the developments in our pipeline specificity of which some of these molecules target and so on. It is worthy to mention that there was essentially very little or no disclosure on the targets that were licensed to Gilead. That's one very important consideration. Similarly, there are others in our pipeline that fall into the same bucket. Secondly, as we said earlier it's also important to note that we are focusing on commercializing our lead molecules more specifically in North America, certainly.
One of the advantages we have as a company to do that, which many small companies in our industry do not have, is that we're fully integrated. What that means is that we've taken these molecules from discovery all the way to the clinic. Not only that, we have a full functioning CMC effort. We can manufacture our products or alternatively, we can manage the manufacturing process when we choose a CMO. These are important considerations that give us an advantage to be able to take a molecule all the way through development into commercialization.
Thirdly, as I said earlier it's also important to note that because there are so many lead molecules and programs that are unencumbered still after the partnerships that we've already consummated, including Gilead, there are still quite a few left, and we expect to have a very active exploration of other partnerships in the next 12 months.
The conference is now—
I think that concludes my—y es.
Thank you, sir. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.