Agenus (NYSE:AGEN) has had its Buy rating reiterated by HCWainwright, which set a target price of US$14.00 for the company after GlaxoSmithKline announced that its anti-malaria vaccine RTS, S or Mosquirix was by the European Medicines Agency’s (EMA) Committee for Medical Products for Human Use (CHMP) last Friday.
Mosquirix contains Agenus’ QS-21 vaccine adjuvant and after Mosquirix is approved by the World Health Organization (WHO), as is expected, later this year to treat children in sub-Saharan Africa starting in 2016, Agenus is scheduled to receive a milestone payment upon regulatory approval and a low single-digit percentage royalty on net sales.
“We currently project the royalty revenue to reach $10M by 2025. Furthermore, we believe this positive opinion is a strong validation of the safety and efficacy of QS-21 as a vaccine adjuvant, which reaffirms our belief that GSK’s QS-21-containing shingles vaccine, Shingrix, could be approved in the US and EU in 2017,” said analyst Swayampakula Ramakanth, Ph.D.
But QS-21 is also slated to benefit from GSK’s Shingrix candidate as a vaccine for shingles. The analyst notes that GSK published the results of the Phase 3 Shingrix study in April 2015, demonstrating a 97% efficacy across all age groups and comparing very favorably with the only marketed shingles vaccine, Merck’s Zostavax, which has an efficacy of 38-64% depending on age.
Ramakanth said that while Merck reported worldwide Zostavax sales of US$765 million in 2014, “Shingrix could achieve a much higher market penetration due to its superior efficacy, reaching sales of $3.6B by 2025”. GSK, added the analyst, is expected to file Shingrix for regulatory approval in both the US and EU in early 2016. Upon approval, Agenus could receive milestone payments and royalties on net sales.
The analyst predicts risk-adjusted royalty revenue to grow to US$48 million a year by 2025. In addition, “according to the 2012 agreement, GSK holds a right of first refusal on negotiations for the purchase of Agenus or certain of its assets until March 2017. We believe, since the company’s focus is on oncology, management would be open to negotiations for the sale of the asset or the royalty rights in order to hasten the development of the Prophage and/or CPM programs.”
Agenus, which reported revenues of $6.4 million for the second quarter, beating HCWainwright’s estimate of US$4.1 million, but with a net loss of US$0.53 per share, higher than the estimated US$0.14 per share, reiterated plans to advance its Prophage program into a Phase 3 study in newly-diagnosed glioblastoma multiforme (GBM) in collaboration with a development partner.
The company also plans to publish the detailed results of the Phase 2 study of Prophage for the treatment of newly-diagnosed GBM in 2H15. The analyst expects Prophage to reach the market in 2020 and generate risk-adjusted revenues of US$177 million by 2025.