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EX-32.1 - EX-32.1 - AGENUS INCagen-ex321_7.htm
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EX-10.1 - EX-10.1 - AGENUS INCagen-ex101_162.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File Number: 000-29089

Agenus Inc.

(exact name of registrant as specified in its charter)

 

 

Delaware

 

06-1562417

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

3 Forbes Road, Lexington, Massachusetts 02421

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code:

(781) 674-4400

 

Securities registered or to be registered pursuant to Section 12(b) of the Act.

 

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01

AGEN

The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

  

Accelerated filer

 

Non-accelerated filer

 

  

  

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

 

Number of shares outstanding of the issuer’s Common Stock as of May 7, 2020: 169,776,816 shares

 

 


Agenus Inc.

Three Months Ended March 31, 2020

Table of Contents

 

 

 

 

 

Page

PART I

 

 

ITEM 1.

 

Financial Statements:

 

2

 

 

Condensed Consolidated Balance Sheets as of March 31, 2020 (Unaudited) and December 31, 2019

 

2

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2020 and 2019 (Unaudited)

 

4

 

 

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit for the three months ended March 31, 2020 and 2019 (Unaudited)

 

5

 

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019 (Unaudited)

 

7

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

8

ITEM 2.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

20

ITEM 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

24

ITEM 4.

 

Controls and Procedures

 

25

 

 

 

PART II

 

 

ITEM 1A.

 

Risk Factors

 

26

ITEM 5.

 

Other Information

 

80

ITEM 6.

 

Exhibits

 

81

 

 

Signatures

 

82

 

 

 

 


PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements

AGENUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except share and per share amounts)

 

 

 

March 31, 2020

(unaudited)

 

 

December 31, 2019

 

ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

92,284

 

 

$

61,808

 

Accounts receivable

 

 

2,643

 

 

 

16,293

 

Prepaid expenses

 

 

6,929

 

 

 

7,420

 

Other current assets

 

 

918

 

 

 

1,015

 

Total current assets

 

 

102,774

 

 

 

86,536

 

Property, plant and equipment, net of accumulated amortization and depreciation of

   $43,889 and $42,861 at March 31, 2020 and December 31, 2019, respectively

 

 

28,211

 

 

 

26,326

 

Operating lease right-of-use assets

 

 

14,319

 

 

 

7,364

 

Goodwill

 

 

23,264

 

 

 

23,188

 

Acquired intangible assets, net of accumulated amortization of $9,923 and

   $9,431 at March 31, 2020 and December 31, 2019, respectively

 

 

10,047

 

 

 

10,504

 

Other long-term assets

 

 

1,440

 

 

 

1,417

 

Total assets

 

$

180,055

 

 

$

155,335

 

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

Current portion, long-term debt

 

$

646

 

 

$

646

 

Current portion, liability related to sale of future royalties and milestones

 

 

52,671

 

 

 

45,961

 

Current portion, deferred revenue

 

 

34,222

 

 

 

29,174

 

Current portion, operating lease liabilities

 

 

1,506

 

 

 

1,347

 

Accounts payable

 

 

14,752

 

 

 

13,564

 

Accrued liabilities

 

 

22,775

 

 

 

31,332

 

Other current liabilities

 

 

770

 

 

 

185

 

Total current liabilities

 

 

127,342

 

 

 

122,209

 

Long-term debt, net of current portion

 

 

12,584

 

 

 

13,380

 

Liability related to sale of future royalties and milestones, net of current portion

 

 

169,256

 

 

 

175,408

 

Deferred revenue, net of current portion

 

 

20,779

 

 

 

27,705

 

Operating lease liabilities, net of current portion

 

 

14,722

 

 

 

8,020

 

Contingent purchase price considerations

 

 

4,459

 

 

 

8,843

 

Other long-term liabilities

 

 

6,496

 

 

 

4,190

 

Commitments and contingencies

 

 

 

 

 

 

 

 

CONVERTIBLE PREFERRED STOCK

 

 

 

 

 

 

 

 

Preferred stock, par value $0.01 per share; 5,000,000 shares authorized:

 

 

 

 

 

 

 

 

Series C-1 convertible preferred stock; 12,459 shares designated, issued,

   and outstanding at March 31, 2020 and December 31, 2019

 

 

26,917

 

 

 

26,917

 

STOCKHOLDERS’ DEFICIT

 

 

 

 

 

 

 

 

Series A-1 convertible preferred stock; 31,620 shares designated, issued, and

   outstanding at March 31, 2020 and December 31, 2019; liquidation value

   of $33,092 at March 31, 2020

 

 

0

 

 

 

0

 

Common stock, par value $0.01 per share; 400,000,000 shares authorized;

   163,304,257 and 137,818,068 shares issued at March 31, 2020 and

   December 31, 2019, respectively

 

 

1,633

 

 

 

1,378

 

Additional paid-in capital

 

 

1,132,209

 

 

 

1,059,583

 

Accumulated other comprehensive loss

 

 

(97

)

 

 

(1,324

)

Accumulated deficit

 

 

(1,329,667

)

 

 

(1,284,993

)

2

 


Total stockholders’ deficit attributable to Agenus Inc.

 

 

(195,922

)

 

 

(225,356

)

Non-controlling interest

 

 

(6,578

)

 

 

(5,981

)

Total stockholders’ deficit

 

 

(202,500

)

 

 

(231,337

)

Total liabilities, convertible preferred stock and stockholders’ deficit

 

$

180,055

 

 

$

155,335

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

3

 


AGENUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(Amounts in thousands, except per share amounts)

 

 

 

 

Three Months Ended March 30,

 

 

 

2020

 

 

2019

 

Revenue:

 

 

 

 

 

 

 

 

Research and development

 

$

1,928

 

 

$

70,871

 

Other revenue

 

 

44

 

 

 

415

 

Non-cash royalty revenue related to the sale of future royalties

 

 

13,156

 

 

 

8,605

 

Total revenues

 

 

15,128

 

 

 

79,891

 

Operating expenses:

 

 

 

 

 

 

 

 

Research and development

 

 

(36,363

)

 

 

(40,130

)

General and administrative

 

 

(10,613

)

 

 

(10,805

)

Contingent purchase price consideration fair value adjustment

 

 

4,384

 

 

 

(2,748

)

Operating (loss) income

 

 

(27,464

)

 

 

26,208

 

Other expense:

 

 

 

 

 

 

 

 

Loss on modification of debt

 

 

(2,720

)

 

 

 

Non-operating (expense) income

 

 

(1,052

)

 

 

370

 

Interest expense, net

 

 

(14,035

)

 

 

(9,143

)

Net (loss) income

 

 

(45,271

)

 

 

17,435

 

Dividends on Series A-1 convertible preferred stock

 

 

(52

)

 

 

(52

)

Less: net loss attributable to non-controlling interest

 

 

(597

)

 

 

(1,071

)

Net (loss) income attributable to Agenus Inc. common stockholders

 

$

(44,726

)

 

$

18,454

 

Per common share data:

 

 

 

 

 

 

 

 

Basic net (loss) income attributable to Agenus Inc. common stockholders

 

$

(0.31

)

 

$

0.14

 

Diluted net (loss) income attributable to Agenus Inc. common stockholders

 

 

(0.31

)

 

 

0.12

 

Weighted average number of Agenus Inc. common shares outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

145,061

 

 

 

129,700

 

Diluted

 

 

145,061

 

 

 

148,590

 

 

 

 

 

 

 

 

 

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

Foreign currency translation (loss) gain

 

$

1,227

 

 

$

(682

)

Other comprehensive (loss) income

 

 

1,227

 

 

 

(682

)

Comprehensive (loss) income

 

$

(43,499

)

 

$

17,772

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

 


 

4

 


AGENUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(Unaudited)

(Amounts in thousands)

 

 

 

 

Series C-1

 

 

 

Series A-1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible

 

 

 

Convertible

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock

 

 

 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

Shares

 

 

Amount

 

 

 

Number of

Shares

 

 

Par

Value

 

 

Number of

Shares

 

 

Par

Value

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Non-controlling

Interest

 

 

Accumulated

Deficit

 

 

Total

 

Balance at December 31, 2019

 

 

12

 

 

$

26,917

 

 

 

 

32

 

 

$

0

 

 

 

137,819

 

 

$

1,378

 

 

$

1,059,583

 

 

$

(1,324

)

 

$

(5,981

)

 

$

(1,284,993

)

 

$

(231,337

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(597

)

 

 

(44,674

)

 

 

(45,271

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,227

 

 

 

 

 

 

 

 

 

1,227

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,397

 

 

 

 

 

 

 

 

 

 

 

 

2,397

 

Shares sold at the market

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,716

 

 

 

247

 

 

 

64,876

 

 

 

 

 

 

 

 

 

 

 

 

65,123

 

Amendment of 2015 warrants and issuance of 2020 warrants

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,145

 

 

 

 

 

 

 

 

 

 

 

 

3,145

 

Payment of consultant in shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

 

 

 

0

 

 

 

12

 

 

 

 

 

 

 

 

 

 

 

 

12

 

Exercise of stock options and employee share purchases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

765

 

 

 

8

 

 

 

2,196

 

 

 

 

 

 

 

 

 

 

 

 

2,204

 

Balance at March 31, 2020

 

 

12

 

 

$

26,917

 

 

 

 

32

 

 

$

0

 

 

 

163,304

 

 

$

1,633

 

 

$

1,132,209

 

 

$

(97

)

 

$

(6,578

)

 

$

(1,329,667

)

 

$

(202,500

)

 

 


5

 


AGENUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(Unaudited)

(Amounts in thousands)

 

 

 

 

 

Series C-1

 

 

 

Series A-1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible

 

 

 

Convertible

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred Stock

 

 

 

Preferred Stock

 

 

Common Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of

Shares

 

 

Amount

 

 

 

Number of

Shares

 

 

Par

Value

 

 

Number of

Shares

 

 

Par

Value

 

 

Additional

Paid-In

Capital

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Non-controlling

Interest

 

 

Accumulated

Deficit

 

 

Total

 

Balance at December 31, 2018

 

 

18

 

 

$

39,879

 

 

 

 

32

 

 

$

0

 

 

 

119,996

 

 

$

1,200

 

 

$

1,005,183

 

 

$

(1,539

)

 

$

(2,078

)

 

$

(1,177,311

)

 

$

(174,545

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,071

)

 

 

18,506

 

 

 

17,435

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(682

)

 

 

 

 

 

 

 

 

(682

)

Adoption of ASC 842

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25

)

 

 

(25

)

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,843

 

 

 

 

 

 

 

 

 

 

 

 

1,843

 

Shares sold under stock purchase agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11,111

 

 

 

111

 

 

 

29,889

 

 

 

 

 

 

 

 

 

 

 

 

30,000

 

Conversion of Series C-1 convertible preferred stock

 

 

(3

)

 

 

(6,481

)

 

 

 

 

 

 

 

 

 

3,000

 

 

 

30

 

 

 

6,451

 

 

 

 

 

 

 

 

 

 

 

 

6,481

 

Payment of consultant in shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

0

 

 

 

37

 

 

 

 

 

 

 

 

 

 

 

 

37

 

Exercise of stock options and employee share purchases

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

85

 

 

 

1

 

 

 

172

 

 

 

 

 

 

 

 

 

 

 

 

173

 

Balance at March 31, 2019

 

 

15

 

 

$

33,398

 

 

 

 

32

 

 

$

0

 

 

 

134,206

 

 

$

1,342

 

 

$

1,043,575

 

 

$

(2,221

)

 

$

(3,149

)

 

$

(1,158,830

)

 

$

(119,283

)

 

See accompanying notes to unaudited condensed consolidated financial statements.

 

6

 


AGENUS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Amounts in thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net (loss) income

 

$

(45,271

)

 

$

17,435

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,700

 

 

 

1,640

 

Share-based compensation

 

 

2,397

 

 

 

1,843

 

Non-cash royalty revenue

 

 

(13,156

)

 

 

(8,605

)

Non-cash interest expense

 

 

13,844

 

 

 

9,428

 

Change in fair value of contingent obligations

 

 

(4,384

)

 

 

2,748

 

Loss on modification of debt

 

 

2,720

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

13,649

 

 

 

142

 

Prepaid expenses

 

 

465

 

 

 

1,141

 

Accounts payable

 

 

1,190

 

 

 

(860

)

Deferred revenue

 

 

(1,875

)

 

 

56,628

 

Accrued liabilities and other current liabilities

 

 

(8,471

)

 

 

(2,605

)

Other operating assets and liabilities

 

 

2,687

 

 

 

(2,348

)

Net cash (used in) provided by operating activities

 

 

(34,505

)

 

 

76,587

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of plant and equipment

 

 

(644

)

 

 

(1,501

)

Net cash used in investing activities

 

 

(644

)

 

 

(1,501

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Net proceeds from sale of equity

 

 

65,123

 

 

 

30,000

 

Proceeds from employee stock purchases and option exercises

 

 

2,204

 

 

 

172

 

Repayments of debt

 

 

(500

)

 

 

 

Payment of finance lease obligation

 

 

(1,214

)

 

 

(75

)

Net cash provided by financing activities

 

 

65,613

 

 

 

30,097

 

Effect of exchange rate changes on cash

 

 

12

 

 

 

69

 

Net increase (decrease) in cash and cash equivalents

 

 

30,476

 

 

 

105,252

 

Cash and cash equivalents, beginning of period

 

 

61,808

 

 

 

53,054

 

Cash and cash equivalents, end of period

 

$

92,284

 

 

$

158,306

 

Supplemental cash flow information:

 

 

 

 

 

 

 

 

Cash paid for interest

 

$

204

 

 

$

312

 

Supplemental disclosures - non-cash activities:

 

 

 

 

 

 

 

 

Purchases of plant and equipment in accounts payable and

   accrued liabilities

 

$

246

 

 

$

173

 

Issuance of common stock, $0.01 par value, in connection with payment to consultant

 

 

12

 

 

 

38

 

Lease right-of-use assets obtained in exchange for new operating lease liabilities

 

 

7,467

 

 

 

 

Lease right-of-use assets obtained in exchange for new finance lease liabilities

 

 

2,434

 

 

 

 

 

See accompanying notes to unaudited condensed consolidated financial statements.

7

 


AGENUS INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2020

 

Note A - Business, Liquidity and Basis of Presentation

Agenus Inc. (including its subsidiaries, collectively referred to as “Agenus,” the “Company,” “we,” “us,” and “our”) is a clinical-stage immuno-oncology (“I-O”) company advancing an extensive pipeline of immune checkpoint antibodies, adoptive cell therapies and neoantigen vaccines, to fight cancer. Our business is designed to drive success in I-O through speed, innovation and effective combination therapies. We believe that combination therapies and a deep understanding of each patient’s cancer will drive substantial expansion of the patient population benefiting from current I-O therapies. In addition to a diverse pipeline, we have assembled fully integrated end-to-end capabilities including novel target discovery, antibody generation, cell line development and good manufacturing practice (“GMP”) manufacturing. We believe that these fully integrated capabilities enable us to produce novel candidates on timelines that are shorter than the industry standard. Leveraging our science and capabilities, we have forged important partnerships to advance our innovation.

We are developing a comprehensive I-O portfolio driven by the following platforms and programs, which we intend to utilize individually and in combination:

 

our multiple antibody discovery platforms, including our proprietary display technologies, designed to drive the discovery of future CPM antibody candidates;

 

our antibody candidate programs, including our CPM programs;

 

our vaccine programs, including Prophage™, AutoSynVax™ and PhosPhoSynVax ™;  

 

our saponin-based vaccine adjuvants, principally our QS-21 Stimulon™ adjuvant, or QS-21 Stimulon; and

 

our cell therapy subsidiary, AgenTus Therapeutics, Inc., which is designed to drive the discovery of future adoptive cell therapy, or “living drugs” (Activated, CAR-T and TCR) programs.

Our business activities include product research and development, intellectual property prosecution, manufacturing, regulatory and clinical affairs, corporate finance and development activities, and support of our collaborations. Our product candidates require clinical trials and approvals from regulatory agencies, as well as acceptance in the marketplace. Part of our strategy is to develop and commercialize some of our product candidates by continuing our existing arrangements with academic and corporate collaborators and licensees and by entering into new collaborations. As a result of the COVID-19 pandemic, we recently streamlined our operations and repurposed certain of our R&D efforts to advance product candidates for the potential treatment of COVID-19, including certain agents from our existing clinical portfolio.

Our cash and cash equivalents at March 31, 2020 were $92.3 million, an increase of $30.5 million from December 31, 2019.

          We have incurred significant losses since our inception. As of March 31, 2020, we had an accumulated deficit of $1.3 billion. Although we plan to launch our first commercial product in 2021, we do not expect to be profitable in 2021.

During the past five years, we have financed our operations primarily through funding from corporate partnerships and novel financing mechanisms. Based on our current plans and projections, we believe that our cash resources of $92.3 million as of March 31, 2020, combined with proceeds from financing transactions already completed in the second quarter of 2020, will be sufficient to satisfy our liquidity requirements through the fourth quarter of 2020; we are presently in multiple partnership and out licensing discussions which, if consummated, could extend our cash resources into and beyond next year. Until we are successful in our efforts for capital infusion through these transactions or other financing options, and because the completion of such transactions is not entirely within our control, in accordance with accounting guidance we are required to disclose that substantial doubt exists about our ability to continue as a going concern for a period of one year after the date of filing of this Quarterly Report on Form 10-Q.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Accordingly, the financial statements have been prepared on a basis that assumes we will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.

Management continues to address the Company’s liquidity position and will adjust spending as needed in order to preserve liquidity. Most recently, in response to the COVID-19 pandemic, we streamlined our organization, which included a headcount reduction and the slowing down of several non-priority programs. Our CEO, Dr. Armen, also elected to receive his base salary in stock rather than cash for the balance of 2020. We also continue to monitor the likelihood of success of our key initiatives and have a

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plan to discontinue funding of such activities if they do not prove to be successful, or, if by the end of the second quarter of 2020 additional cash resources are not put into place, further restrict funding of non-core programs, restrict capital expenditures and/or reduce the scale of our operations as necessary to ensure sufficient cash resources through the fourth quarter of 2020. Our future liquidity needs will be determined primarily by the success of our operations with respect to the progression of our product candidates and key development and regulatory events in the future. Potential sources of additional funding include: (1) pursuing collaboration, out-licensing and/or partnering opportunities for our portfolio programs and product candidates with one or more third parties, (2) renegotiating third party agreements, (3) selling assets, (4) securing additional debt financing and/or (5) selling equity securities.

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and with the instructions to Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete annual consolidated financial statements. In the opinion of our management, the condensed consolidated financial statements include all normal and recurring adjustments considered necessary for a fair presentation of our financial position and operating results. All significant intercompany transactions and accounts have been eliminated in consolidation. Operating results for the three months ended March 31, 2020, are not necessarily indicative of the results that may be expected for the year ending December 31, 2020. For further information, refer to our consolidated financial statements and footnotes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the Securities and Exchange Commission on March 16, 2020.

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances. Actual results could differ materially from those estimates.

For our foreign subsidiaries, the local currency is the functional currency. Assets and liabilities of our foreign subsidiaries are translated into U.S. dollars using rates in effect at the balance sheet date while revenues and expenses are translated into U.S. dollars using average exchange rates during the period. The cumulative translation adjustment resulting from changes in exchange rates are included in the consolidated balance sheets as a component of accumulated other comprehensive loss in total stockholders’ deficit.

 

 

Note B - Net Loss Per Share

The following table sets forth the computation of basic and diluted net (loss) income per share (in thousands, except for per share data):

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Amounts used for basic and diluted per share calculations:

 

 

 

 

 

 

 

 

Net (loss) income attributable to Agenus Inc. common stockholders

 

$

(44,726

)

 

$

18,454

 

 

 

 

 

 

 

 

 

 

Weighted average number of Agenus Inc. common shares outstanding - basic

 

 

145,061

 

 

 

129,700

 

 

 

 

 

 

 

 

 

 

Effect of potentially dilutive securities:

 

 

 

 

 

 

 

 

    Share based compensation awards

 

 

 

 

 

1,498

 

    Series C-1 convertible preferred stock

 

 

 

 

 

17,392

 

Weighted average number of Agenus Inc. common shares outstanding - diluted

 

 

145,061

 

 

 

148,590

 

 

 

 

 

 

 

 

 

 

Net (loss) income attributable to Agenus Inc. per common share:

 

 

 

 

 

 

 

 

    Basic

 

$

(0.31

)

 

$

0.14

 

    Diluted

 

$

(0.31

)

 

$

0.12

 

 

Basic net (loss) and income per common share is calculated by dividing the net (loss) income attributable to common stockholders by the weighted average number of common shares outstanding (including common shares issuable under our Directors’ Deferred Compensation Plan, or “DDCP”). Diluted net (loss) income per common share is calculated by dividing net (loss) income

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attributable to common stockholders by the weighted average number of common shares outstanding (including common shares issuable under our DDCP) plus the dilutive effect of outstanding instruments such as warrants, stock options, non-vested shares and convertible preferred stock. Because we reported a net loss attributable to common stockholders for the quarter ended March 31, 2020, diluted loss per common share is the same as basic loss per common share, as the effect of utilizing the fully diluted share count would have reduced the net loss per common share. The following securities (listed on an as-if-converted-to-Common-Stock basis) have been excluded from the computation of diluted weighted average shares outstanding as of March 31, 2020 and 2019, as they would be anti-dilutive (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2020

 

 

2019

 

Warrants

 

 

2,025

 

 

 

1,900

 

Stock options

 

 

27,707

 

 

 

18,139

 

Non-vested shares

 

 

888

 

 

 

505

 

Series A-1 convertible preferred stock

 

 

333

 

 

 

333

 

Series C-1 convertible preferred stock

 

 

12,459