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Where cardiovascular conditions and cancer are credited with the most of the deaths from disease in the United States, curable diseases such as malaria still haunt the less developed regions of the world such as South America, Africa and Asia. In 2012, almost 627,000 deaths were caused by malaria, the vast majority of which were among African children.
As deadly as malaria is, sadly, very few companies are pursuing a cure for it, because as heartless as it sounds, there is little money in it. However, one company, Agenus (AGEN), is pursuing it nonetheless, though indirectly. Agenus' weapon of choice is QS-21 Stimulon, a vaccine adjuvant that enhances the body's immune system and revs it up to make vaccines more effective. QS-21 is an adjuvant extracted from Quillaja saponaria, or the "soap bark tree," which exists in abundance in Chile. It is taxonomically very closely related to root beer.
If there is little money in malaria, and Agenus as a trial stage biotech does not have time to experiment around with treatments with small returns, why is it involved? Because, as you'll read in most articles on Agenus, QS-21 is an extremely versatile compound being employed in 21 different disease indications by partners. Agenus does not actively fund these trials. In the case of malaria, Agenus' partner is GlaxoSmithKline (GSK). While many have mentioned QS-21 as an interesting partnering aside for a company pursuing much higher profile vaccines like genital herpes and glioblastoma on its own, few have gone into what some of these more important QS-21 trials even are and the huge variety of diseases QS-21 is being tested on. Though admittedly QS-21 is less crucial financially to Agenus, it is nevertheless important for those considering Agenus to know the basics of QS-21 and some of the more pivotal diseases it is being tested on. This article will attempt to do just that.
The most recent breakthrough, as mentioned above, came when GlaxoSmithKline (GSK) disclosed that its RTS,S/AS01 malaria vaccine candidate, containing QS-21 Stimulon, was presented at a Multilateral Initiative on Malaria Pan African Conference in Durban, South Africa. The efficacy of RTS,S/AS01 candidate depicted remarkable results in the new Phase 3 data and is already being regarded as the most advanced malaria vaccine candidate in the world. The latest data showed that RTS,S prevented young children from contracting clinical malaria for up to 18 months after vaccination. QS-21 has proved to be the key ingredient as RTS,S/AS01 is the first vaccine in the world that depicted such effectiveness in clinical trials, showing that it can prevent malaria in infants and young children living in extreme malaria-endemic regions.
The story of QS-21 does not end with malaria. Other diseases both past and present include Alzheimer's, Breast Cancer, Prostate Cancer, HIV, Lung Cancer, Herpes, Melanoma, B-Cell Lymphoma, Neuroblastoma, Leukemia and Malaria etc. A partial list of clinical trials that have been conducted and are being conducted with QS-21 can be found here. Since not every file record that employs QS-21 contains the term "QS-21," this list is only partial, but it will give you a general idea of the versatility of this adjuvant and the willingness of institutions both industry and non-industry to use it in their trials.
Agenus has performed extensive research on QS-21 in its clinical trials in which almost 50,000 patients have been tested with vaccines containing the adjuvant. The company has been consistently developing and trying the adjuvant with vaccines related to other diseases for the last decade plus. It has been part of more than 120 clinical trials in its history. Below is a short list of some of the major testing candidates.
Pfizer Inc (PFE), in collaboration with JANSSEN Alzheimer Immunotherapy Research & Development LLC, started a clinical trial to assess the safety and tolerability of ACC-001 and QS-21 adjuvant in reduction of brain amyloid load in Alzheimer's disease. It is still in progress. The study is phase 2 with 63 patients all enrolled, all with early stage Alzheimer's. ACC-001 serves to activate the immune system against amyloid buildup in the brain, and QS-21 is added to enhance the effect. It is scheduled for completion in February according to trial records.
A clinical trial in collaboration with The National Cancer Institute has been in progress since May 2007. The trial focuses on vaccine therapy with QS-21 which would eventually enhance immune response to fight tumor cells more effectively. The side effects are also under review for the vaccine combined with QS-21 for the treatment of breast cancer.
Herpes Zoster AKA Shingles
This one is in phase III, partnering with Glaxo, with enrollment at 1,474 patients and topline data due late 2014. The vaccine is a prophylactic, with the primary endpoint being confirmed shingles cases in an autologous cell transplant population. This is perhaps the most important and consequential of all of the QS-21 candidates, as the shingles population is very large and it is at the near end of the pipeline.
MAGE A-3 Lung Cancer
While Glaxo's MAGE A-3 QS-21 melanoma vaccine failed its first primary endpoint back in September, there is still hope for its non-small cell lung cancer vaccine. This is a phase 3 trial with enrollment completed at 2,278, and data due any time now, this month according to the trial record. Along with malaria and shingles, this is the most near term catalyst and will have a big impact on the stock going forward, as it is almost at the end of the clinical pipeline.
Ovarian/Fallopian Tube Cancer
A 24-patient phase 1 trial is currently enrolling at Sloan Kettering. It is scheduled for completion in about a year, and is designed for women in their first remission to see if, after removal of their cancer, the immune system can be trained to prevent any relapses.
Sloan Kettering is also conducting this trial of a bivalent vaccine (meaning two antigens) against neuroblastoma containing QS-21 and other adjuvants. It is a 45-patient phase 1/2 scheduled for completion in May. The importance of these smaller non-industry sponsored trials is their potential of being picked up by industry if Sloan Kettering has any success in the earlier stages. If they do get picked up by a partner, there will be more royalty chances for Agenus going forward, even though institutions like Sloan Kettering will have little direct effect on the stock as of now.
Who stands to benefit? The primary beneficiary is, of course, the developer and manufacturer of the vaccine in question. This being said however, markets like the malaria market also promise benefit to Agenus. According to statistics, almost 219 million malaria cases are reported each year globally. Half of the world's population, approximately 3.5 billion, remains under the constant threat of malaria. The World Health Organization recognizes RTS,S/AS01 which contains QS-21 as the most advanced vaccine for malaria. If the vaccine is successfully introduced to the market, Agenus is entitled to milestone payments and royalties for 10 years after its commercial launch, though they will be small, around the 1% mark.
Further, malaria is not the only large market that could potentially benefit Agenus. Shingles, which affects 4 per 1,000 in the US, translates to 1.26M people. The money is not huge for QS-21, but the patient populations are respectably large. What QS-21 success in any of these cases can do for the company is give it a small boost, positive press, and a stock bump as it trudges forward with its main candidates, Prophage for glioblastoma and HerpV for genital herpes. It is important to keep an eye on the timelines for these trials especially if you are a short term trader, as any success or failure will rock the stock in either direction, even though financially, it only has secondary importance.
Agenus reported a substantial increase in its revenue for the year ending December 31, 2012. The company reported an increase of more than 450 percent in revenue to $15.96 million for the year as compared to sales of $2.75 million for the year ending December 31, 2011. This was due to increased milestone payments, and helped cut its loss in half compared to 2011. Operating loss during the period was $6.74 million, resulting mainly from R&D expenses of $10.56 million.
More importantly Agenus has $30M in cash and a quarterly burn rate of $7.4M this past year. This gives it one year of cash before it has to refinance again, which will get it through the next developments with the HerpV phase 2 which should be coming in the next few months.
QS-21 shows potential and is being tried for development of vaccines for number of diseases. Out of these, however, to date only one has shown positive results, the RTS,S/AS01 malaria vaccine candidate. This does not say much about QS-21 itself, but about the vaccines being used with it. What QS-21 needs is a good partner, and hopefully shingles and/or MAGE A-3 lung cancer, the two most important and consequential indications being tested, will finally vindicate it.
WHO recognizes RTS,S/AS01 as the most advanced vaccine for the treatment of malaria, but actual commercialization of the product is still a long way away. According to WHO, final results for the candidate are expected in late 2014 and a decision as to whether the respective vaccine should be added to the malaria control toolbox is expected in late 2015. Again these time frames are not final, and delay in decision or final results should are possible.
While it is still early, Agenus has positioned itself in a number of potentially huge markets with QS-21. Investors considering Agenus, however, should not make their decisions based on QS-21 alone. QS-21 is only interesting financially insofar as how developments with it can help pull the company through its trials with HerpV and Prophage.
Nevertheless, both shingles and malaria are huge markets and, while only benefiting through minor royalties, penetration of these two alone could catalyze a huge move in AGEN. It is now hitting its 52 week lows, probably thanks to Immunocellular's (IMUC) recent failure with its glioblastoma vaccine, which is pulling down other companies like Agenus involved in the same space.