Antigenics (AGEN)

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Selcuk Arkun

Antigenics (AGEN) is a biotechnology company focusing on the development of cancer vaccines and autoimmune disorders. Its main product, a renal cancer vaccine, Oncophage showed promise in clinical trials before failing to gain FDA approval. After this setback Antigenics decided to move its product overseas. After sucessful trials in Russia it was granted approval by the Russian governmet. This may lead to future developments overeas, both for Antigenics and other pharmaceutical comanies seeking product approval.^[1] Immediatly after gaining approval for Oncophage in Russia, Antigenics raised $21 Million in a private placement.^[2] Besides its actions in the cancer vaccine market, Antigenics produces products to treat autoimmune disorders and viruses such as genital herpes. With products for these disease in clinical trials and its corporate partnerships with the likes of GlaxoSmithKline (GSK) Antigenics hopes to raise enough funds to fuel its company and future research and development costs.

Business Overview

The biotechnology industry is one with fierce competition and high costs. Companies must go through rigorous FDA clinical trials before they can release a product in the U.S. These trials can take years to complete and cost companies millions of dollars, with no guarantee that the product will make it to market. Founded in 1994, Antigenics has experienced mixed results with its products. It's current productline (including those still in clinical trials) is made up of Oncophage, a cancer vaccine being tested for a range of cancers; Aroplatin, a chemotherapeuticdrug; AG-707, a vaccine for the treatment of genital herpes; and QS-21, a vaccine adjuvant which is licensed by Antigenics to a number of companies.^[3]

Business & Financial Metrics^[4]

In 2009, AGEN incurred a net loss of $40.4 million on revenues of $3.3 million. This represents a 4.0% reduction in net loss and a 25.8% increase in total revenues from 2008, when the company lost $31.6 million on $2.7 million in revenue.

Product Portfolio

Oncophage

Oncophage is Antigenics' most promising product. ^[5]Oncophage is a cancer treatment vaccine that is made specifically for each patient. It has shown very promising results in clinical trials but was rejected by the FDA during stage 3 clinical trials ^[6]. This prompted Antigenics to take its product overseas. After months of trials in Russia it received approval to be used in the treatment of nonmetastatic kidney cancer, making it the "first personalized cancer vaccine that will be available in any major country." ^[7]

QS-21

QS-21 is a vaccine adjuvant. It is added to a vaccines that are designed to strengthen the body's immune response to the vaccine's antigen, thus making it more effective.^[8] QS-21 generates most of its revenue for Antigenics through corporate parnerships with companies like GlaxoSmithKline (GSK), Elan, and Acambis. ^[9]

AG-707

AG-707 has the potential to Antigenics' first product using its heat shock protein technology. Antigenics' aims to treat genital herpes with this vaccine, which is currently in Phase 1 clinical trials in the U.S.

Aroplatin

Aroplatin is a chemotherapeutic drug targeting colorectal cancer, which is similar to Sanofi Aventis' Eloxatin.^[10] The drug is currently in Phase 2 clinical trials and has shown a 50% increase in survival rate in control animals.^[11]

Trends and Forces

Research and Development Has High Costs and Low Success Rates

In order to release a drug or vaccine in the U.S. a company must undergo clinical trials by the FDA. The process consist of four main phases; Pre-clinical, Stage 1, Stage 2, Stage 3..^[12] These trials may also cost upwards of $500 million. A typical trial may last several years and the success rate is only 8% for experimental cancer treatments.^[13] If Antigenics is not able to obtain approval for its drugs, it will not be able to enter the U.S. market.

^[14]

Success of Certain Products Depends on 3rd Party Agreements

Antigenics relies on 3rd party agreements with companies like GlaxoSmithKline (GSK) , Elan (ELN) and Acambis for revenue from QS-21. The amount of revenue generated by QS-21 thus depends on the success or failure of these companies' products.

Oncophage's Emergence in Russia May Promote Competition

With Oncophage being approved in Russia, companies with similar treatments may decide to release drugs in Europe or Russia before applying for FDA approval. This may cause an increase in competition for Antigenics' products, decreasing sales and revenue.

"Big Pharma" Companies Are Looking into Cancer Vaccines

Big Pharma companies such as GSK, Merck, and Sanovi-aventis that were not previously interested in cancer vaccine research have begun to buy the rights to cancer vaccines that have been developed by smaller companies. This may lead to more competition for Antigenics or the acquirement of its products by a larger company.^[15]

Competition

The main competition for Antigencs in the cancer vaccines market are the companies, Dendreon (DNDN),Cell Genesys (CEGE) , Geron (GERN), Vical (VICL), and Favrille (FVRL). With a varying range of product offerings these companies are all competing for market share in the U.S. With the approval of Oncophage in Russia there is a chance that these companies may also pursue markets abroad. ^{[16] [17] [18] [19] [20]}

References

1. ↑ Antigenics Press Release April 8, 2008
2. ↑ Antigenics Press Release April 9, 2008
3. ↑ Company Fact Sheet
4. ↑ AGEN 2009 10-K pg. 41  
5. ↑ AGEN 2007 10-K, Product Portfolio p5
6. ↑ "Cancer's Cruel Economics" Business Week May 21, 2008 Catherine Arnst.
7. ↑ Antigenics Press Release April 8, 2008.
8. ↑ AGEN 2007 10-K, Product Portfolio p10
9. ↑ AGEN 2007 10-K, Product Portfolio p11
10. ↑ AGEN 2007 10-K, Product Portfolio p12
11. ↑ ibid
12. ↑ Clinical Trial Process
13. ↑ "Cancer's Cruel Economics" Business Week May 21, 2008 Catherine Arnst.
14. ↑ FDA Approval Process
15. ↑ Big Phara Tkes an Interest in Cancer Vaccines Maureen Martino September 19, 2007. Fierce Biotech
16. ↑ Cell Genesys Product Pipeline
17. ↑ Geron Product Pipeline
18. ↑ Vical Product Pipeline
19. ↑ Favrille Product Pipeline
20. ↑ Dendreon Product Pipeline