Beset with setbacks, a once cash-poor Agenus had something to cheer late last year when behemoth Gilead signed on as a partner on up to five of its immuno-oncology programs. On Tuesday, the biotech offered investors an intriguing proposal: fund the development of a single drug, while preserving shareholder equity.
In perhaps the first instance of a biopharma company conducting such a ‘digital security’ offering, Agenus said it was launching a token designed to enable qualified investors to directly invest in a single biotech product – in this case, the tokens issued will represent a portion of potential future US sales of AGEN2034, Agenus’ late-stage anti-PD-1 antibody.
“I have never seen this type of arrangement. I think there may be limitations in terms of participation from institutional investors who may not be able to participate,” Jefferies’ Biren Amin, who covers Agenus $AGEN, told Endpoints News.
The Agenus token is powered by blockchain technology, which was was invented by an unidentified developer in 2008 to power Bitcoin, but is now used across a number of applications. Essentially, it is a sequence of blocks or groups of transactions that are chained together and distributed among users, mapping an unalterable record of transactions that are not dependent on an external authority to validate data.
Investors will be eligible to purchase the Agenus’ tokens under preferred terms in the initial stage of the offering, which is slated for mid-February. The Lexington, MA-based company expects to raise up to $100 million to develop and sell AGEN2034.
“Agenus anticipates the industry will adopt this financing model as an attractive means of obtaining capital in coming years. BEST (Agenus’ token) is expected to lead to the emergence of a new marketplace for asset-specific securities providing investors with unique funding alternatives and options for managing risk,” the cancer drug developer said in a statement on Tuesday.
Brad Loncar, chief executive of Loncar Investments which runs the Loncar Cancer Immunotherapy ETF, suggested a number of people in the industry were working on such funding arrangements.
“Setting aside the specifics of this Agenus PD-1, I do think the concept has potential. It would allow companies to raise funds for single assets within their pipelines and for investors to back individual projects. It’s a very unique and appealing concept.”
But the fresh approach to funding comes with fresh questions. For instance, governance. “These would all be individual securities so how do you ensure there is appropriate investor education and transparency throughout the drugs’ development?,” Loncar said.
Then there is the question about liquidity. “These are likely to be small projects so it remains to be seen if these will be liquid assets that are priced efficiently,” Loncar noted, adding that if investors elect to sell tokens they will presumably do so on the secondary market like any other token.
There are a laundry list of other hypotheticals to ponder: since each token will represent a slice of future US sales of AGEN2034, what happens if the drug is rejected? In contrast, if the drug is approved, what impact does this strategy have on any potential partnerships Agenus may want to ink in order to commercialize?
Endpoints has contacted Agenus for comment.
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