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Agenus/Bristol Myers Squibb Deal Makes For A Strong Buy

May 26, 2021 3:42 AM ETAgenus Inc. (AGEN) StockBMY34 Comments
William Meyers profile picture
William Meyers


  • Agenus announced a licensing deal with Bristol Myers Squibb.
  • Balstilimab latest data is positive and the BLA is filed with the FDA.
  • With likely approvals and milestone payments, Agenus is on path to become a pharma powerhouse.

digital illustration antibodies
Photo by Svisio/iStock via Getty Images

Agenus (NASDAQ:AGEN) is a small cap pharmaceutical company with a potential drug pipeline that resembles that of much larger companies. Two recent developments have helped the stock price, but it is still far below

This article was written by

William Meyers profile picture
I provided stock and bond research and analysis to a small cap specialist investor, Lloyd Miller, from 2002 until his death in January 2018. For my own account I invest mainly in technology and biotechnology stocks. My technology and investment web site is openicon.com, where readers can view the notes I take to make decisions and to write articles for Seeking Alpha.

Analyst’s Disclosure: I am/we are long AGEN, GILD, INCY, BMY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (34)

sbrncra profile picture
Mergers are more expensive than licensing “future” potentials…decreasing risk…
while premiums for 1 potential blockbuster drug can demand higher upfront cost…securing rights ahead approval

In the second quarter, Bristol Myers announced two deals with biotechs Agenus Inc and Eisai Co to develop and market new cancer drugs and it expects to do additional deals to build out its portfolio of medicines, Elkins said.
Boston Biotech Investors profile picture
@William Meyers

This morning AGEN announced it is spinning off its iNKT subsidiary via IPO. We do not have any data around valuation but we do know there are high expectations from a clinical profile. Proceeds from the IPO will, more or less, offsett AGEN's cash burn.

Our analysis concludes there has never been a better time to invest in AGEN. The use of the ATM has ceased and no investor has materially shorted AGEN since 7/1/2021. We know this because AGEN short trading volumes 7/1/-7/15 more or less equal the net change in shorts.

Investors are encouraged to do their own due diligence quickly.
@Boston Biotech Investor just curious as to what is your take on how they would price the IPO and what would that meen in terms of distribution of shares to AGEN share holders? Currently we all know that AGEN is the majority share holder of greater than 90 percent in MINK and if the market cap post IPO of MINK is around 50% if market cap of AGEN then do you think that AGEN share holders would get a 2 for 1 Mink shares? How does that math work?
Boston Biotech Investors profile picture
@27432183 That's a great question and perhaps most important near-term for AGEN shareholders (perhaps excluding 1181 data). Any answer is also clearly going to depend on whether AGEN has new iNKT data to share or not. If AGEN has updated data (especially in COVID), it could dramatically increase MiNK's valuation.

First here are some recent valuation based data points for cell based cancer therapies like MiNK:

1 Century Therapuetics (IPSC): Raised $240MM (rounded) via IPO last month. Market cap now = $1.5Billion. IPSC hopes to make NK based cancer therapies.

2. Wugen (a private St. Louis based start-up) raised $172MM last month via Series B Financing. IPSC also uses NK cells to treat cancer. Market cap unknown since private.

3. Celularity (CELU). Using placenta cells to treat cancer. Raised $138MM via SPAC 2 weeks ago.. Market cap today = $1.1Billion.

Unfortunately I have no idea how they will structure the IPO except it does not appear to be via SPAC. I'd also remind you AGEN has to do what is in the best interest of AGEN shareholders. Based on these recent peers/comps that all hope to use cells to treat large cancer patient populations, it is our opinion MINK should be valued for at least $1Billion (if MINK is not valued consistent with peers then AGEN should not spin it off). I understand it is generally considered prudent to sell 15% to 20% in an IPO. Hence at a $1Billion valuation, MINK (not AGEN) should net $150MM to $200MM for its coffers. Proceeds go to MiNK and not AGEN. Obviously any cash burn associated with MiNK operations can be financed via proceeds from the IPO.

Assuming AGEN spins off 20%, then AGEN owns 80%. AGEN will therefore, most likely, still have to consolidate MINK's financials into AGEN's financial statements. This is quite common.

We will then have a market driven valuation for MINK. If MINK is valued at $1Billion & AGEN retains 80% then we know MINK is worth $800MM to AGEN (that simple as I suspect you understand). At $5/share AGEN's market cap is $1.1Billion with $300MM cash (enterprise value of $800MM). I am rounding. Once MiNK is public we will therefore know how much the market values the rest of AGEN's assets.

FYI this should be a very good thing for AGEN shareholders in the long-run. Any issues investors have with AGEN management's financial/Wall Street savvy should be reminded AGEN's BOD is quite competent on these matters.

If you or anyone is interested in AGEN, we find the AGEN conversation section on Yahoo Finance informative (we cannot say that for any other biotech we follow). We can also attest comments from "Peter" & "Kevin" on Yahoo MB are more authoritative than any others (at least on AGEN product's clinical attributes). They both provide mature & well thought out insight. Do what you will otherwise.
@Boston Biotech Investor Thank you for a good clarity on the valuations . Appreciate your inputs. Hope this IPO materializes soon and AGEN cash burn will reduce.
sbrncra profile picture
Agenus building in vacaville

Agenus will be located next to Kaiser Permanente and also Genentech. The timeline for construction, as well as the number of employees, have not yet been determined, Burrus said.
sbrncra profile picture
Investors this is no small biotech…you are seeing, i believe, the potential growth of a upcoming star.
Can anyone guess the number of employees?
You might be surprised!
gjackoh profile picture
@sbrncra About 350 at the end of 2020.
Check out BCRX, another good company!
William Meyers profile picture
June 17: Balstilimab accepted for priority review, PDUFA December 16, 2021. Some risk ahead, but another box checked.

@William Meyers thank you for your great insight in to AGEN. With recent news, stock has done much better movement, what is your opinion on stock performance going forward.
lshiang profile picture
It is not in my radar screen yet and might drop back to 3-4 range for my entry point. Thanks!
@lshiang I think you have not studied it enough . Next week the FDA decision will be known on their application for Bal. If they accept under fast track then this will shoot up. If they do not accept then only there is a chance for drop. All the comments which I have seen so far indicates that the acceptance is very very likely. This is a highly undevalued stock and they have lots of other drug candidates in advanced stage of evaluation. Best wishes
lshiang profile picture
@27432183 I acquired a position a few days before based on your guide. Thank you!
@lshiang Study the stock well and you may also find that this is probably the most undervalued stock in Biotech. There are plenty of triggers in next 12 to 18 months and if all ducks are aligned this could a 10 bagger. I specially like their partnerships and the potential of 1181 which they have not filed yet with FDA. Also keep a watch on their partnership with a Chinese company Bretta which has the potential to make fast progress in China as the FDA equivalent in China has just approved their trial. Normally Chinese trials progress fast and licensing revenue could be substantial for AGEN.
EagleFirst profile picture
Nice sp move today, thank you @william Meyers, and keep up excellent analysis!
NAMAKAN profile picture
Thank you for your persistent positive views on Agenus.
The week leading up to 5/21 when my many $3 and $4 call strikes were due was quite lucrative. It was a big day as I also owned Annovis Bio which tripled and my sons college graduation was at the opening bell!

You were certainly part of the due diligence I used that convinced me not to sell and keep buying the dip!
Still suffering with KPTI and OPTN. But hopefully the pain will stop!

EagleFirst profile picture
@William Meyers Just want to say, Thank You!
a very balanced article and agree the time required to get into commercialization and potential failure points at many steps are the biggest challenges. If FDA accepts the BLA under fast track then this stock would jump for sure and with any more deals of the possible 8 deals Garo mentioned would further derisk the company. Stock can accelerate once either Bal or Zal gets green light as the company seems to have good amount of this in stock.
Kirban profile picture
Endgame is here. Long AGEN
BMS deal has definitely made this stock a strong buy. Worrying about past performance and remaining on sideline will not make you money. Past stock performance doesn’t mean that it will continue to be that way. Stock is definitely at suppressed price which can reverse anytime.
Too many unknowns that are depended upon future outcomes which are risky in of themselves especially with FDA approvals on the clinical testing results. It could go either way but time is a discouraging factor in this business, it takes a long time to get a drug approved for efficacy and safety, for public safety reasons. Cash burning is another concern since they will have to raise the money by diluting the shares eventually, even though they are receiving some payments from bigger companies. One item not discussed is the compensation paid to the executives how much of it is hitting the bottom line.
It's at over 900M market cap.Mosy of the news is already baked into this stock.
Company is good, stock price does not reflect the risks.
As smart investors already know, it may get a 20 to 30% cut and its better to wait before jumping in.
Strike profile picture
@Sande traderal What smart investor waits for a 20 - 30 % cut and risks missing the 1000 % run-up during this decade? I am long AGEN, and never bothered about trying to out-fool the market, Same with AFMD, FATE, ARWR, where I placed market orders the second I felt these were long term multi-baggers. Some DID initially decline, but are now 200 - 300 % up from where I bought them. I don't care if AGEN declines short term.
I agree with you and the author. I have positions in many drug stock including AGEN and ARWR I would not be surprised to see a takeover before the end of the year at $40
@Sande traderal That's a 900 MIL, with an "M". market cap.
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