Today European drug giant GlaxoSmithKline (NYSE: GSK) announced that the prestigious New England Journal of Medicine published results from a late-stage trial of its malaria vaccine, which showed that the vaccine provided significant protection against the disease in young African children. The results were announced in Seattle at a forum hosted by the Bill & Melinda Gates Foundation.
More than 3,000 miles away, the 60 employees of Lexington, MA-based Agenus (NASDAQ: AGEN) celebrated the experimental vaccine. Why? Because the vaccine, called RTS,S, is made with an immune-system-boosting plant extract that Glaxo licenses from Agenus.
Agenus is providing the extract, called QS-21 Stimulon adjuvant, for four GSK products that are in late-stage development. As those programs advance, Agenus will receive milestone payments and, for each product that makes it to market, it will receive royalties for 10 years after launch. The financial specifics haven’t been disclosed, but Agenus CEO Garo Armen says, “Our financial gain a few years out, if all these are successful, would be very very substantial.”
Indeed, QS-21 could be a savior for a company that has had its share of near-death experiences. Armen co-founded Agenus in 1994 with the goal of developing therapeutic vaccines containing “heat shock proteins,” which are designed to activate the immune system’s T-cells to fight diseases such as cancer. But the company, which was originally called Antigenics, has struggled to get the FDA on board with its experimental products, and so far has only one cancer vaccine approved in one country—Russia.
As the disappointments mounted, Agenus’ stock fell below $1, forcing the company to do a reverse stock split on September 30 to avoid getting delisted by NASDAQ. “We needed to get out of the penalty box. Being delisteddoesn’t serve anybody well,” Armen says. It worked: With the stock trading at about $2.70, Agenus learned yesterday that it was back in compliance with NASDAQ’s listing requirements.
Armen hopes the news about Glaxo’s malaria vaccine will help the company regain investors’ confidence. Agenus acquired QS-21 in 2000, when it bought a Framingham, MA company called Aquila Biopharmaceuticals for $40 million. QS-21 is a chemical extracted from the soap bark tree, an evergreen native to Chile. About 15 drugs containing Agenus’ QS-21 product are in late-stage trials, including a Glaxo cancer vaccine and an Alzheimer’s treatment being developed by Johnson & Johnson. In addition, Agenus is developing a herpes vaccine that contains QS-21.
But the opportunity presented by Glaxo’s malaria vaccine is particularly large. Malaria kills 800,000 people a year, mostly in Africa. There is no effective vaccine on the market, and Glaxo—which has been working on RTS,S since 1987—is ahead of the pack in its development program. The trial announced today showed that RTS,S reduced the risk of severe malaria by 47 percent for 12 months following vaccination. Glaxo plans to report further results next year, as well as data on long-term protection in 2014. The World Health Organization has said it could make a policy recommendation for vaccination with RTS,S as early as 2015.
RTS,S works by preventing the malaria parasite from infecting and then multiplying in the liver, and from infecting red blood cells. Glaxo scientists created it by fusing two proteins, one of which is used in the company’s hepatitis B vaccine. Then it used a proprietary technology to further enhance the immune response—a technology platform that includes Agenus’ QS-21.
In the short term, Agenus is still facing some significant challenges. In the first six months of the year, Agenus lost $12 million on $1.5 million in sales. The company’s experimental cancer vaccine, vitespen (Prophage) has shown promise in mid-stage trials in patients with glioma and melanoma, Armen says, but the company will have to secure partnerships to help finance all the trials necessary to gain FDA approval.
And it could be facing competition on QS-21. Other companies are developing vaccine adjuvants, including New York-based Adjuvance Technologies, which is in mid-stage trials of a synthetic version of QS-21—a product that can be made in a lab rather than extracted from the soap bark tree.
Armen is the first to admit that the onus is on him to prove Agenus is on the right track. But his faith in the company he has nursed along for nearly two decades is unwavering. “I’m one of the few CEOs in the industry who has spent over $13 million net of my compensation to finance this company personally,” he says. “It’s not funny money—it’s real money.”
Most recently, in August, Armen picked up 2.1 million shares of his company at an average price of $0.51 a piece.
The Glaxo announcement, Armen contends, “is an indication that if you do not give up, if you have perseverance after many failures, you can have a success story.”