Add Agenus, Inc. (AGEN) to the growing list of small biotech companies that are quickly becoming prime buyout candidates.
Agenus announced on Monday, in conjunction with releasing its fourth quarter earnings report, that GlaxoSmithKline (GSK) has upped the ante in its partnership with Agenus for the vaccine adjuvant QS-21, an additive that prolongs the life of the standard vaccine. Glaxo is using QS-21, also known as Stimulon, in multiple of its late stage vaccine candidates, including in a malaria vaccine that gained a large amount of international coverage for both AGEN and GSK late last year after proving to be effective in late stage study results.
Under the terms of the amended agreement, as outlined in a Monday press release, "GSK will pay Agenus a non-refundable payment of $9 million, of which $2.5 million is creditable against future manufacturing technology transfer royalty payments. The agreement also includes royalty payments for an undisclosed indication upon commercialization of a vaccine product."
The money and potential for future revenue security from a big player such as GSK is always a boost for a much smaller company like Agenus, and there's still more to the story than just the monetary factors. In the deal Glaxo was granted a 'first right of refusal' to "to negotiate for the purchase of Agenus or certain of its assets."
The 'first right' will expire in five years, but this language will fuel speculation that the initial discussion have already taken place in regards to an outright buyout.
While Stimulon could be the main target for Glaxo, it may end up being just icing on the cake for Glaxo, should a deal take place.
Agenus is developing its own immunotherapeutic cancer vaccine, Prophage, for the treatment of multiple indications, including glioma. Although still only in Phase II trials, the big players in the industry are more willing than ever to jump in early on new product candidates, as evidences by Pfizer's heavy investment in Lpath, Inc. (LPTN.OB).
It could be that Glaxo is waiting on some trial results before finalizing any deal with Agenus, as a successful Phase II changes both the current valuation of the company and its future potential.
Shares of Agenus were relatively unmoved on Monday, although volume was a bit more than double the daily norm, but someone took notice on Tuesday afternoon as the share price spiked by nearly twenty percent with volume for the day more than four times the daily average.
After laying dormant for quite some time while enduring a reverse stock split and a name change, Agenus is back in action and created some new buzz.
Along with the new found buyout speculation, keep the Phase II glioma results on the radar.
Disclosure: Long AGEN.