HCW downgrades Agenus to neutral

H.C. Wainwright downgraded Agenus (NASDAQ:AGEN) to “neutral” from “buy” and slashed its price target to $5 from $10. The stock closed at $4.33 on Thursday.

Analyst Swayampakula Ramakanth writes that during Agenus’ third quarter earnings call, the company announced development of CTLA-4 and PD-1 checkpoint modulators (CPMs) as the focus of the company’s cancer immunotherapy pipeline.

In addition to the ongoing Phase 1 study of AGN1884, an anti-CTLA-4 antibody, the company is planning to initiate Phase 1 studies using AGN2034, an anti-PD-1 antibody, as well as a second, unnamed anti-CTLA-4 product in 2017.

“While we continue to believe that Agenus’ broad immunotherapy portfolio, which includes over a dozen CPM candidates as well as three cancer vaccine platforms, has great potential, we find it puzzling that management did not choose a product candidate targeting next generation checkpoint targets such as TIM-3 or CEACAM1, where the company could become a market leader, as the lead product,” Mr. Ramakanth said.

“We believe the focus on CTLA-4 and PD-1 significantly increases the risk of any future commercialization plans due to the presence of proven and well-established competitor products in the market,” he added.

In addition, he cited a lack of clarity regarding the company’s cancer vaccine development programs in terms of potential targets, partners and timelines.

As a result, the only expected near-term events for the company are the initiations of Phase 1 clinical studies, which “we believe are unlikely to drive the stock price, and any significant clinical results are at least 12-to-18 months away,” Mr. Ramakanth said.

“At this point, we are stepping to the sidelines until we gain clarity regarding the timelines of the more lucrative programs and better visibility on meaningful catalysts,” he added.