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Agenus shares climb on "best-in-class" phase 3 shingles vaccine study, says H.C. Wainwright

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Agenus (NASDAQ:AGEN) shares jumped in early trading Friday after the biotech company and its partner GlaxoSmithKline announced yesterday positive phase 3 data from the HZ/su shingles vaccine program, reducing the risk of shingles by 97.2 percent.

H.C. Wainwright reiterated its buy rating and 12-month price target of $6 on the company.

"We view these results as excellent news for investors, as the shingles vaccine program could potentially yield worldwide revenues surpassing $750 MM, based on the performance of Merck’s approved zoster vaccine (Zostavax)," wrote HCW analyst Reni Benjamin in a note released to investors Friday morning.

"We believe this could translate to a steady stream of royalty revenue for Agenus, potentially peaking between $10 to $20 million per year if HZ/su is approved."

HCW highlighted that the shingles vaccine is just one of 17 ongoing partnered programs involving QS-21, and that HZ/su is the second vaccine to demonstrate efficacy in a randomized phase 3 trial after the RTS,S malaria vaccine.

"In our opinion, potential royalties from multiple QS-21 programs could ultimately offset a significant portion of costs associated with development of Agenus' immuno-oncology pipeline, which currently includes eight fully human antibodies against a variety of checkpoint molecules."

In the phase 3 shingles study, 16,136 adults older than 50 were enrolled in the study, with results showing a 97.2 reduction in risk of contracting shingles in patients receiving the HZ/su vaccine, compared to placebo. The vaccine is based on the gE protein from varicella-zoster virus, formulated with the QS-21 adjuvant.

HCW said the results so far point to "best-in-class efficacy", as Merck's Zostavax vaccine demonstrated a 69.8 percent vaccine efficacy in a phase 3 trial that enrolled 22,439 patients.

Full results from Agenus' trial are expected next year, potentially supporting a BLA application, HCW said, and triggering a milestone payment to Agenus.

"Given its high relative efficacy, we believe HZ/su could be able to match or exceed Zostavax’s peak sales if approved," HCW's Benjamin said.

Agenus has about $46.4 million in cash, and with the potential to secure new partnerships, HCW said it believes Agenus "represents an undervalued player in the immuno-oncology space."

The NYC, NY-based company is focused on the development and commercialization of technologies to treat cancers and infectious diseases. Its shares rose 4.7 percent to US$4.11 in New York as of 10:05am ET, extending year-to-date gains to over 54 percent.

Quick facts: Agenus Inc

Price: 5.18 USD

NASDAQ:AGEN
Market: NASDAQ
Market Cap: $950.23 m
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