Agenus Inc. Completes $115M Non-Dilutive Royalty Transaction with Oberland Capital

Agenus Inc.

, 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.