Form 8-K AGENUS INC For: Sep 04
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 4, 2015
AGENUS INC.
(Exact name of registrant as specified in its charter)
| DELAWARE | 000-29089 | 06-1562417 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 3 Forbes Road Lexington, MA |
02421 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: 781-674-4400
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 Entry into a Material Definitive Agreement.
On September 4, 2015, Agenus Inc. (“Agenus”) and its wholly-owned subsidiaries, Antigenics LLC (“Antigenics”) and Aronex Pharmaceuticals, Inc. (“Aronex”), entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with Oberland Capital SA Zermatt LLC, as collateral agent (“Oberland”), an affiliate of Oberland as the lead purchaser and other purchasers. Pursuant to the terms of the Note Purchase Agreement, on September 8, 2015 (the “Closing Date”), Antigenics issued $100 million aggregate principal amount of limited recourse notes (the “Notes”) to the purchasers. Antigenics has the option to issue an additional $15 million aggregate principal amount of Notes (the “Additional Notes”) to the purchasers within 15 days after approval of GlaxoSmithKline’s (“GSK”) shingles vaccine, HZ/su, by the Food and Drug Administration, provided such approval occurs on or before June 30, 2018.
The Notes accrue interest at a rate of 13.5% per annum, compounded quarterly, from and after the Closing Date computed on the basis of a 360-day year and the actual number of days elapsed. Principal and interest payments are due on each of March 15, June 15, September 15 and December 15, and shall be made solely from the royalties paid from GSK to Antigenics on sales of GSK’s shingles and malaria vaccines. The Notes are limited recourse and secured solely by a first priority security interest in the royalties and accounts and payment intangibles relating thereto plus various rights of Antigenics related to the royalties under its contracts with GSK (the “Collateral”). GSK will send all royalty payments to a segregated bank account, and to the extent there are insufficient royalties deposited into the account to fund a quarterly payment of principal and interest, the interest will be capitalized and added to the aggregate principal balance of the loan. The final legal maturity date of the Notes is the earlier of (i) the 10th anniversary of the first commercial sale of GSK’s shingles or malaria vaccines and (ii) September 8, 2030 (the “Maturity Date”). Antigenics’s obligation to repay all principal and accrued and unpaid interest by the Maturity Date is secured only by the Collateral.
Antigenics may redeem all, but not less than all, of the Notes at any time prior to the Maturity Date at its option. The redemption price is equal to the outstanding principal amount of the Notes, plus all accrued and unpaid interest thereon, plus a premium payment that would yield an aggregate internal rate of return (“IRR”) for the purchasers as follows: (i) an IRR of 20% if the redemption occurs within 24 months of the Closing Date, (ii) an IRR of 17.5% if the redemption occurs after 24 months but within 48 months of the Closing Date, and (iii) an IRR of 15% if the redemption occurs more than 48 months after the Closing Date (the “Redemption Payment”).
On September 8, 2018, each purchaser has the option to require Antigenics to repurchase up to 15% of the Notes issued to such purchaser on the Closing Date (the “Put Notes”) at a purchase price equal to the principal amount thereof plus accrued and unpaid interest thereon (the “Put Payment”). Antigenics is required to complete any such repurchase within 90 days after September 8, 2018.
On the earlier of (i) September 8, 2027 and (ii) the Maturity Date, Antigenics is required to pay the Purchasers an amount equal to the following (the “Make-Whole Payment”): $100 million (or $115 million if the Additional Notes are sold) minus the aggregate amount of all payments made in respect of the Notes (regardless of whether characterized as principal or interest at the time of payment), including the original principal amount of any repaid Put Notes.
The Note Purchase Agreement contains certain representations and warranties regarding Agenus and Antigenics’ rights and obligations with respect to GSK and the potential commercialization of GSK’s shingles and malaria vaccines, as well as customary representations and warranties regarding Agenus and its subsidiaries generally. The Note Purchase Agreement also contains certain covenants around Agenus and Antigenics’ rights and obligations with respect to GSK and the potential commercialization of GSK’s shingles and malaria vaccines, as well as customary covenants, including covenants that limit or restrict Antigenics’ ability to incur indebtedness or liens or otherwise merge, consolidate or acquire assets or securities. The Note Purchase Agreement does not restrict Agenus’ ability to incur indebtedness or require it to maintain any financial ratios or specific levels of net worth, revenues, income cash flow or liquidity. The Note Purchase Agreement specifies a number of events of default (some of which are subject to applicable cure periods), including (i) failure to cause royalty payments to be deposited into the segregated bank account, (ii) payment defaults, (iii) breaches of representations and warranties made at the time the Notes were issued, (iv) covenant defaults, (v) a final and unappealable judgment against Antigenics for the payment of money in excess of $1.0 million, (vi) bankruptcy or insolvency defaults, (vii) the failure to maintain a first-priority perfected security interest in the Collateral in favor of the collateral agent and (viii) the occurrence of a change of control of Agenus. Upon the occurrence of an event of default, subject to cure periods in certain circumstance and some limited exceptions, the collateral agent may declare the Notes immediately due and payable, in which case Antigenics would owe a payment equal to the Redemption Payment (the “Accelerated Default Payment”). Upon the occurrence and during the continuance of any event of default, interest on the Notes also increases by 2.5%.
Agenus and Aronex (together, the “Guarantors”), are parties to the Note Purchase Agreement as guarantors of Antigenics. The Guarantors generally guarantee the Put Payment, the Make-Whole Payment, the Redemption Payment and the Accelerated Default Payment.
The foregoing descriptions of the Note Purchase Agreement and the Notes do not purport to be complete and are qualified in their entirety by reference to the text of the Note Purchase Agreement and the Notes, which will be filed as exhibits to a subsequent filing made by Agenus under the Securities Exchange Act of 1934.
On September 9, 2015, Agenus issued a press release relating to the Note Purchase Agreement. A copy of this press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 1.02 Termination of a Material Definitive Agreement.
On September 4, 2015, Agenus and Antigenics also entered into a Revenue Interest Assignment and Termination Agreement (the “Assignment and Termination Agreement”) with Ingalls & Snyder Value Partners, L.P. and Arthur Koenig (together, “Ingalls”). The parties previously entered into a Revenue Interest Assignment Agreement on April 15, 2013 (the “Original Ingalls Agreement”), pursuant to which Agenus and Antigenics sold to Ingalls 20% of all the royalties Antigenics was entitled to receive from GSK and Janssen Sciences Ireland Uc on products associated with Agenus’s QS-21 Stimulon® adjuvant (collectively, the “Assigned Interests”). Pursuant to the Assignment and Termination Agreement, the parties terminated the Original Ingalls Agreement, and Agenus and Antigenics repurchased the Assigned Interests from Ingalls in exchange for (i) $20.0 million in cash and (ii) 300,000 shares of Agenus common stock. The closing under the Assignment and Termination Agreement took place on September 8, 2015 immediately prior to the closing under the Note Purchase Agreement. On September 8, 2015, the last reported sale price of Agenus’s common stock on The NASDAQ Capital Market was $7.14 per share.
The foregoing description of the Assignment and Termination Agreement does not purport to be complete and is qualified in its entirety by reference to the text of the Assignment and Termination Agreement, which will be filed as an exhibit to a subsequent filing made by Agenus under the Securities Exchange Act of 1934.
Item 2.01 Completion of Acquisition or Disposition of Assets.
The information provided above in this Current Report on Form 8-K is hereby incorporated by reference into this Item 2.01.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information provided above in this Current Report on Form 8-K is hereby incorporated by reference into this Item 2.03.
Item 3.02 Unregistered Sales of Equity Securities.
The information provided above in this Current Report on Form 8-K is hereby incorporated by reference into this Item 3.02.
The Notes issued to the purchasers under the Note Purchase Agreement and the shares issued to Ingalls under the Assignment and Termination Agreement were issued in reliance upon an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D promulgated thereunder, as the transactions did not involve any public offering. Each of the purchasers, Ingalls & Snyder Value Partners, L.P. and Arthur Koenig has represented that it is an “accredited investor” within the meaning of Regulation D.
Item 8.01 Other Events.
As previously disclosed, GSK has been conducting a Phase 3 randomized, blinded, placebo-controlled clinical trial of a cancer immunotherapeutic vaccine containing Agenus’ QS-21 Stimulon adjuvant. On March 20, 2014, Agenus announced that this trial did not meet its first co-primary endpoint in melanoma patients but that, in line with the Independent Data Monitoring Committee’s unanimous recommendation, GSK would continue the study until the second co-primary endpoint was assessed. On September 8, 2015, GSK informed Agenus that GSK has completed this assessment and that the trial failed to demonstrate a statistically significant improvement for this second co-primary endpoint or any subgroup analysis.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit |
Description of Exhibit | |
| 99.1 | Press Release dated September 9, 2015. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: September 9, 2015 | AGENUS INC. | |||||
| By: | /s/ C. Evan Ballantyne | |||||
| C. Evan Ballantyne | ||||||
| CFO | ||||||
EXHIBIT INDEX
| Exhibit |
Description of Exhibit | |
| 99.1 | Press Release dated September 9, 2015. | |
Exhibit 99.1
Agenus Inc. Completes $115 Million Non-Dilutive Royalty Transaction with Oberland Capital
LEXINGTON, MA – September 9, 2015 — Agenus Inc. (NASDAQ: AGEN), an immunology company discovering and developing innovative treatments for cancers and other diseases, today announced a $115 million non-dilutive royalty transaction pursuant to a Note Purchase Agreement with an investor group led by Oberland Capital Management, LLC (Oberland Capital). Agenus intends to use the proceeds from this transaction to advance its immuno-oncology programs.
In return for $100 million at closing to Agenus, Oberland Capital will have the right to receive 100% of Agenus’ rights to the worldwide royalties on sales of GlaxoSmithKline’s (GSK) shingles (HZ/su) and malaria (RTS,S) prophylactic vaccine products that contain QS-21 adjuvant until all principal and interest on the loan has been paid.
At its option, Agenus will receive an additional $15 million in cash after approval of HZ/su by the Food and Drug Administration (FDA), provided such approval does not occur later than June 30, 2018. Also at its option, Agenus has the right to buy back the loan at any time under pre-specified terms.
“This financing allows us to monetize a significant share of the value of our QS-21 platform while allowing us to retain any upside remaining after the loan terms are satisfied. This transaction will provide non-dilutive funding towards executing on our strategic and operational goals,” said Dr. Garo Armen, Ph.D., Chairman and Chief Executive Officer of Agenus.
C. Evan Ballantyne, Chief Financial Officer of Agenus, stated, “This is an innovative financing structure that strengthens Agenus’ balance sheet considerably. With these additional funds we are well positioned to advance our robust pipeline.”
The notes issued under the Note Purchase Agreement will accrue interest at a rate of 13.5% per annum, compounded quarterly. Principal and interest payments will only be made from the royalties paid by GSK on the HZ/su and RTS,S vaccines. If the royalty payments made by the earlier of (i) the end of the 12th year or (ii) ten years after the first commercial sale in a major market (the make whole date) are less than the initial principal amount of the notes, Agenus will owe a “make whole” payment equal to the difference between the principal amount and any such royalty payments made through the make whole date. The loan is generally limited recourse and secured only by the future royalties on the HZ/su and RTS,S vaccines. If and when all principal and interest on the notes have been repaid, 100% of the remaining GSK royalty payments will revert back to Agenus.
Immediately prior to executing the Note Purchase Agreement with Oberland Capital, Agenus re-purchased from Ingalls & Snyder Value Partners L.P. and Arthur Koenig (Ingalls) their rights to receive 20% of all of the GSK royalties for $20 million in cash, plus 300,000 shares of Agenus common stock. Ingalls has no further interest in any royalties associated with products containing QS-21.
The initial $100 million cash payment is expected to yield net cash proceeds of approximately $78 million to Agenus, inclusive of the $20 million payment to Ingalls. As of June 30, 2015, Agenus reported $139.6 million in cash, cash equivalents and short-term investments.
Exigo Capital Corp. and the Kratos Group, LLC acted as financial advisors to Agenus in connection with the transaction. Goodwin Procter LLP acted as special counsel to Agenus, and Cooley LLP acted as legal counsel to Oberland Capital.
About Oberland Capital
Oberland Capital is an investment firm focused on the healthcare industry specializing in flexible, non-dilutive investment structures customized to meet the specific capital requirements and strategic objectives of transaction partners globally. The firm offers a broad suite of financing solutions including the monetization of royalty streams, acquisition of future product revenues, creation of project-based financing structures, and investment in debt and equity securities. The firm was founded by Jean-Pierre Naegeli and Andrew Rubinstein. For more information, please visit oberlandcapital.com.
About Agenus
Agenus is an immunology company engaged in the discovery and development of novel checkpoint modulators, vaccines and adjuvants to treat cancer and other diseases. Using its proprietary platforms Retrocyte Display™ and SECANT®, the Company is discovering and developing novel antibodies to target GITR, OX40, CTLA-4, LAG-3, TIM-3, PD-1, CEACAM1 and other undisclosed checkpoints in partnered and internal programs. Agenus’ heat shock protein vaccine, Prophage, has successfully completed Phase 2 studies in newly diagnosed glioblastoma multiforme. The Company’s QS-21 Stimulon® adjuvant is partnered with GlaxoSmithKline and Janssen Sciences Ireland UC. For more information, please visit www.agenusbio.com, or follow the company on Twitter @Agenus_Bio; information that may be important to investors will be routinely posted in these locations.
Forward-Looking Statements
This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the federal securities laws, including statements regarding the terms of the Note Purchase Agreement, including the Company’s ability to receive an additional $15.0 million if and when GSK’s shingles vaccine is approved by the FDA, if ever, the potential obligation of the Company to make a “make whole” payment, the Company’s intended use of proceeds from the transaction, the potential for the royalty stream to revert back to the Company, and the Company’s anticipated net proceeds from the transaction. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include, among others, the risk that the shingles (HZ/su) or malaria (RTS,S) vaccines may not receive marketing approval such that royalties could be payable by GSK or that, even if either or both of the shingles (HZ/su) and malaria (RTS,S) vaccines are approved, GSK will successfully generate sales thereof, as well as other factors described under the Risk Factors section of Agenus’ Form 10-Q filed with the Securities and Exchange Commission on August 3, 2015. Agenus cautions investors not to place considerable reliance on the forward-looking statements contained in this release. These statements speak only as of the date of this press release, and Agenus undertakes no obligation to update or revise the statements, other than to the extent required by law. All forward-looking statements are expressly qualified in their entirety by this cautionary statement.
Contacts:
Media:
Brad Miles
BMC Communications
646-513-3125
Investors:
Andrea Rabney/Jamie Maarten
Argot Partners
212-600-1902
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