Agenus Inc: Form 10-Q for the period ended Sep 30, 2023

Forward Looking Statements

This Quarterly Report on Form 10-Q and other written and oral statements we make from time to time contain certain “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). You can identify these forward-looking statements by the fact they use words such as “could,” “expect,” “anticipate,” “estimate,” “target,” “may,” “project,” “guidance,” “intend,” “plan,” “believe,” “will,” “potential,” “opportunity,” “future” and other words and terms of similar meaning and expression in connection with any discussion of future operating or financial performance. You can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements are based on current expectations and involve inherent risks and uncertainties, including factors that could delay, divert or change any of them, and could cause actual outcomes to differ materially from current expectations. These statements relate to, among other things, our business strategy, our research and development, our product development efforts, our ability to commercialize our product candidates, the activities of our licensees, our prospects for initiating partnerships or collaborations, the timing of the introduction of products, the effect of new accounting pronouncements, uncertainty regarding our future operating results and our profitability, anticipated sources of funds as well as our plans, objectives, expectations, and intentions.

More detailed descriptions of these risks and uncertainties and other risks and uncertainties applicable to our business that we believe could cause actual results to differ materially from any forward-looking statements are included in in Part I-Item 1A “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 and in Part II-Item 1A within this Form 10-Q. We encourage you to read those descriptions carefully. Although we believe we have been prudent in our plans and assumptions, no assurance can be given that any goal or plan set forth in forward-looking statements can be achieved. We caution investors not to place significant reliance on forward-looking statements contained in this document; such statements need to be evaluated in light of all the information contained in this document. Furthermore, the statements speak only as of the date of this document, and we undertake no obligation to update or revise these statements.

ASV®, Agenus™, MiNK™, Prophage™, Retrocyte Display™ and STIMULON™ are trademarks of Agenus Inc. and its subsidiaries. All rights reserved.

Overview

We are a leading clinical-stage biotechnology company developing therapies targeting cancer with a robust pipeline of immunological agents. Our mission is to expand patient populations benefiting from cancer immunotherapy through combination approaches, using a broad repertoire of antibody therapeutics, adoptive cell therapies (through our subsidiary MiNK Therapeutics, Inc. (“MiNK”)), and vaccine adjuvants (through our subsidiary SaponiQx, Inc. (“SaponiQx”)). We believe that combination therapies and a deep understanding of each patient’s cancer will significantly expand the patient population benefiting from immuno-oncology (“I-O”) treatments.

In addition to our diverse pipeline, we have established fully integrated capabilities encompassing novel target discovery, antibody generation, cell line development, and good manufacturing practice (GMP) manufacturing. We believe these integrated capabilities enable us to develop and, if approved, commercialize novel candidates on accelerated timelines compared to industry standards. Through independent development and strategic partnerships, we leverage our scientific expertise and capabilities to drive innovation in the I-O field.

Our I-O portfolio is driven by several platforms and programs, which we plan to utilize individually and in combination:

• Multiple antibody discovery platforms, including proprietary display technologies, to identify future antibody candidates.
• Antibody candidate programs, including our lead asset, botensilimab, an Fc-enhanced CTLA-4 antibody. At a corporate update at the European Society for Medical Oncology in October 2023, we presented updated data based on a total of 70 efficacy evaluable refractory microsatellite stable metastatic colorectal cancer patients with no active liver metastases from the Phase 1 study. These patients received the combination of botensilimab (either 1 or 2 mg/kg every 6 weeks) and balstilimab (3 mg/kg every 2 weeks). The results showed a survival and efficacy benefit compared to what has been reported for standard of care in a comparable patient population. The 12-month overall survival (“OS”) was 74% with a median OS not yet reached, after a median follow up of 12.3 months, compared to a median OS of 12.9 months reported for standard of care. The confirmed overall response rate based on RECIST 1.1 was 24% compared to 2.8% reported with standard of care.
• Our saponin-based vaccine adjuvant platform, primarily centered around our STIMULON cultured plant cell (“cpc”) QS-21 adjuvant (“STIMULON cpc QS-21”).
• A pipeline of novel allogeneic invariant natural killer T cell (“iNKT”) therapies for treating cancer and other immune-mediated diseases, controlled by MiNK.

We regularly evaluate development, commercialization, and partnering strategies for each product candidate based on various factors, including pre-clinical and clinical trial results, competitive positioning, funding requirements, and available resources. Our lead program, botensilimab (AGEN1181), is progressing through multiple clinical programs designed to support accelerated development as a monotherapy and in combination with balstilimab. In 2022, we initiated global Phase 2 trials for botensilimab in microsatellite stable colorectal cancer, melanoma, and pancreatic cancer. In October 2023, we completed enrollment of the Phase 2 microsatellite stable colorectal cancer trial. In April 2023, the botensilimab/balstilimab combination received Fast Track designation from the United States Food and Drug Administration (“FDA”) for the treatment of non-MSI-H/deficient mismatch repair (dMMR) metastatic colorectal cancer patients without active liver involvement. We intend to file our first biologics license application for the botensilimab/balstilimab combination in colorectal cancer in midyear 2024.

We have established collaborations with several companies, including Bristol-Myers Squibb Company (“BMS”), Betta Pharmaceuticals Co., Ltd. (“Betta”), UroGen Pharma Ltd. ("UroGen"), Gilead Sciences, Inc. (“Gilead”), Incyte Corporation (“Incyte”), and Merck Sharpe & Dohme (“Merck”). These collaborations, along with our internal programs, have resulted in over a dozen antibody programs currently in pre-clinical or clinical development.

Our collaboration agreement with Incyte grants Incyte exclusive licenses for monospecific antibodies targeting GITR, OX40, TIM-3, LAG-3, and an undisclosed target. Incyte has been advancing these antibodies in clinical trials. Incyte has terminated the OX40 program, effective October 2023, and has notified us of their intent to terminate both the GITR program and undisclosed program, effective May 2024. Upon termination, the rights to the OX40, GITR, and undisclosed programs revert back to us. Incyte is responsible for all future development expenses for the remaining programs, and we are eligible to receive up to an additional $315.0 million in potential milestone payments, along with royalties on future sales.

Under our collaboration and license agreement with Merck, we have exclusively licensed a monospecific antibody targeting ILT4 to them, which is currently being advanced in a Phase 2 clinical trial. Merck is responsible for all future development expenses, and we are eligible to receive up to an additional $85.0 million in potential milestone payments, as well as royalties on future sales.

In September 2018, through our subsidiary Agenus Royalty Fund, LLC, we entered into a royalty purchase agreement (the “XOMA Royalty Purchase Agreement”) with XOMA (US) LLC ("XOMA"). Pursuant to the agreement, XOMA purchased 33% of all future royalties and 10% of all future milestone payments that we are entitled to receive from Incyte and Merck, after satisfying our obligations to a third party. As of September 30, 2023, we remain eligible to receive up to $283.5 million and $76.5 million in potential development, regulatory, and commercial milestones from Incyte and Merck, respectively, after accounting for our obligations under the XOMA Royalty Purchase Agreement.

In December 2018, we entered into collaboration agreements with Gilead for the development and commercialization of up to five novel I-O therapies (the “Gilead Collaboration Agreements”). Gilead received worldwide exclusive rights to our bispecific antibody, AGEN1423, and the exclusive option to license AGEN1223, a bispecific antibody, and AGEN2373, a monospecific antibody. All three assets are currently in clinical development. Gilead elected to return AGEN1423 to us in November 2020 and terminated the license agreement. We ceased development of AGEN1223 in the third quarter of 2021, and the option and license agreement for AGEN1223 were formally terminated in October 2021. The AGEN2373 option agreement remains in place, and we are responsible for developing the program until the option decision point. If Gilead exercises the option, we may opt-in to share development and commercialization costs in the United States in exchange for a 50:50 profit (loss) share and revised milestone payments. In March 2022, we received a $5.0 million clinical milestone under the AGEN2373 option agreement. Pursuant to the terms of the AGEN2373 option agreement, we remain eligible to receive a $50.0 million option exercise fee and up to an additional $520.0 million in aggregate milestone payments, as well as royalties on future sales.

In November 2019, we entered into a license agreement with UroGen, granting them an exclusive, worldwide license (not including Argentina, Brazil, Chile, Colombia, Peru, Venezuela and their respective territories and possessions) to develop, manufacture, and commercialize zalifrelimab for the treatment of cancers of the urinary tract via intravesical delivery. We received an upfront payment of $10.0 million and are eligible to receive up to $200.0 million in milestone payments, as well as royalties on future sales.

In June 2020, we entered into a license and collaboration agreement (the “Betta License Agreement”) with Betta, pursuant to which we granted Betta an exclusive license to develop, manufacture and commercialize balstilimab and zalifrelimab in Republic of China, Hong Kong, Macau and Taiwan (“Greater China”). Under the terms of the Betta License Agreement, we received $15.0 million upfront and are eligible to receive up to $100.0 million in milestone payments plus royalties on any future sales in Greater China.

In May 2021, we entered into a License, Development, and Commercialization Agreement with BMS for our pre-clinical anti-TIGIT bispecific antibody program, AGEN1777. BMS received an exclusive worldwide license to develop, manufacture, and commercialize AGEN1777 and its derivatives. We retained an option to access the licensed antibodies for use in clinical studies in combination with certain pipeline assets. We received a non-refundable upfront cash payment of $200.0 million and are eligible to receive up to $1.36 billion in development, regulatory, and commercial milestone payments, along with tiered royalties. BMS is responsible for all associated costs, and we have the option to co-fund a minority of global development costs in exchange for increased tiered royalties. We also have the option to co-promote AGEN1777 in the U.S. In October 2021, we achieved a $20.0 million milestone upon the dosing of the first patient in the AGEN1777 Phase 1 clinical trial.

In September 2021, we launched SaponiQx to lead innovation in novel adjuvant discovery and vaccine design, focusing on our saponin-based adjuvants. We are particularly dedicated to the development of the next-generation cultured plant cell QS-21. To support this initiative, we partnered with Ginkgo Bioworks, Inc. to develop SaponiQx’s saponin products from sustainably sourced raw materials. Our goal is to meet the demands of the vaccine industry, especially for pandemic vaccines.

Our bark extract QS-21 adjuvant is partnered with GlaxoSmithKline (“GSK”) and plays a vital role in multiple GSK vaccine programs. These programs are at various stages, including GSK’s approved shingles vaccine, SHINGRIX, which received FDA approval in the United States in October 2017.

In January 2018, we entered into a Royalty Purchase Agreement with Healthcare Royalty Partners III, L.P. and its affiliates (“HCR”). HCR purchased our worldwide rights to receive royalties from GSK on GSK’s sales of vaccines containing our QS-21 adjuvant. We do not incur clinical development costs for products partnered with GSK.

Under the agreement with HCR, we were entitled to receive milestone payments based on GSK’s vaccine sales. These milestones include $15.1 million upon GSK reaching $2.0 billion in last-twelve-months net sales prior to 2024 (the “First HCR Milestone”) and $25.25 million upon GSK reaching $2.75 billion in last-twelve-months net sales prior to 2026 (the “Second HCR Milestone”). We received the First HCR Milestone after GSK’s net sales of SHINGRIX for the twelve months ended December 31, 2019, exceeded $2.0 billion, and we received the Second HCR Milestone after GSK’s net sales of SHINGRIX for the twelve months ended June 30, 2022, exceeded $2.75 billion.

Our business activities encompass various areas such as product research, preclinical and clinical development, intellectual property prosecution, manufacturing, regulatory and clinical affairs, corporate finance and development activities, and support of collaborations. Our strategy includes developing and commercializing product candidates through existing and new collaborations.

Agenus' subsidiary MiNK completed an initial public offering in October 2021 and is publicly traded on Nasdaq under the symbol INKT. MiNK is a clinical-stage precision oncology company developing unmodified and engineered INKT cell therapies for cancer and other immune-mediated diseases. Their lead product candidate, agenT-797, is an off-the-shelf, allogeneic, native iNKT cell therapy. A Phase 1 clinical trial for the treatment of solid tumors as a monotherapy and in combination with approved checkpoint inhibitors (KEYTRUDA® and OPDIVO®) has been initiated and enrolled, and data was presented in April at the American Association for Cancer Research Annual Meeting. The presentation showcased the activity of agenT-797 alone and in combination with anti-PD-1, with a 42% tumor reduction in a patient with metastatic gastric cancer who had no response to prior anti-PD-1 therapy or standard chemotherapy. Benefit was seen in additional solid tumor types, including durable disease stabilization and biomarker responses in NSCLC, testicular, and appendiceal cancers, that were refractory to anti-PD-1. MiNK is also evaluating agenT-797 as a variant-agnostic therapy for patients with viral acute respiratory distress syndrome, and top-line data from a Phase 1 clinical trial demonstrated a 77% survival rate in older, mechanically ventilated patients with COVID-19 respiratory failure. Through an assignment and license agreement with Agenus, MiNK owns the INKT technology and has the rights to develop a proprietary pipeline of engineered CAR-INKTs, TCRs, and INKT bispecific engagers.

Historical Results of Operations

Three months ended September 30, 2023 compared to the three months ended September 30, 2022

Research and development revenue

We recognized research and development revenue of approximately $3.4 million and $4.6 million during the three months ended September 30, 2023 and 2022, respectively. Research and development revenues in the third quarter of 2023 primarily consisted of $2.9 million related to the recognition of deferred revenue earned under our Gilead Collaboration Agreements. Research and development revenues in the third quarter of 2022 primarily consisted of $4.5 million related to the recognition of deferred revenue earned under our Gilead Collaboration Agreements.

Non-cash royalty revenue related to the sale of future royalties

In January 2018, we sold 100% of our worldwide rights to receive royalties from GSK on sales of GSK’s vaccines containing our QS-21 STIMULON adjuvant to HCR. As described in Note F to our Condensed Consolidated Financial Statements, this transaction has been recorded as a liability that amortizes over the estimated life of our Royalty Purchase Agreement with HCR. As a result of this liability accounting, even though the royalties are remitted directly to HCR, we record these royalties from GSK as revenue. Non-cash royalty revenue related to our agreement with GSK increased $11.1 million, to approximately $20.4 million for the three months ended September 30, 2023, from $9.2 million for the three months ended September 30, 2022, due to increased net sales of GSK’s vaccines containing our QS-21 STIMULON adjuvant and the achievement of the final sales milestone under the HCR agreement and the recognition of $7.9 million of these royalties as royalty milestone revenue in the three months ended September 30, 2022.

Research and development expense

Research and development expense includes the costs associated with our internal research and development activities, including compensation and benefits, occupancy costs, manufacturing costs, costs of consultants, and administrative costs. Research and development expense increased 12% to $51.4 million for the three months ended September 30, 2023 from $46.0 million for the three months ended September 30, 2022. Increased expenses in the three months ended September 30, 2023 primarily relate to a $5.8 million increase in third-party services and other expenses, largely due to the timing of expenses related to the advancement of our antibody programs, a $1.7 million increase in personnel related expenses, and a $1.4 million increase in other research and development expenses. These increases were partially offset by a $3.5 million decrease in expenses attributable to the activities of our subsidiaries.

General and administrative expense

General and administrative expense consists primarily of personnel costs, facility expenses, and professional fees. General and administrative expenses increased 4% to $18.9 million for the three months ended September 30, 2023 from $18.1 million for the three months ended September 30, 2022. Increased expenses in the three months ended September 30, 2023 primarily relate to a $1.8 million increase in personnel related expenses, and a $0.4 million increase in other general and administrative expenses. These increases were partially offset by a $0.8 million decrease in professional fees and a $0.7 million decrease in expenses attributable to the activities of our subsidiaries.

Interest expense, net

Interest expense, net increased to approximately $18.6 million for the three months ended September 30, 2023 from $15.6 million for the three months ended September 30, 2022, mainly due to increased non-cash interest recorded in connection with our Royalty Purchase Agreement with HCR and increased interest expense recorded in connection with our finance leases, partially offset by increased interest income earned on our cash equivalents and short-term investments.

Nine months ended September 30, 2023 compared to the nine months ended September 30, 2022

Research and development revenue

We recognized research and development revenue of approximately $8.5 million and $13.2 million during the nine months ended September 30, 2023 and 2022, respectively. Research and development revenues in the first nine months of 2023 primarily consisted of $7.2 million related to the recognition of deferred revenue earned under our Gilead Collaboration Agreements. Research and development revenues in the first nine months of 2022 primarily consisted of a $5.0 million milestone and $7.1 million related to the recognition of deferred revenue, both earned under our Gilead Collaboration Agreements.

Non-cash royalty revenue related to the sale of future royalties

In January 2018, we sold 100% of our worldwide rights to receive royalties from GSK on sales of GSK’s vaccines containing our QS-21 STIMULON adjuvant to HCR. As described in Note F to our Condensed Consolidated Financial Statements, this transaction has been recorded as a liability that amortizes over the estimated life of our Royalty Purchase Agreement with HCR. As a result of this liability accounting, even though the royalties are remitted directly to HCR, we record these royalties from GSK as revenue. Non-cash royalty revenue related to our agreement with GSK increased $34.5 million, to approximately $61.5 million for the nine months ended September 30, 2023, from $27.0 million for the nine months ended September 30, 2022, due to increased net sales of GSK’s vaccines containing our QS-21 STIMULON adjuvant and the achievement of the final sales milestone under the HCR agreement and the recognition of approximately $25.3 million of these royalties as royalty milestone revenue in the nine months ended September 30, 2022.

Research and development expense

Research and development expense includes the costs associated with our internal research and development activities, including compensation and benefits, occupancy costs, manufacturing costs, costs of consultants, and administrative costs. Research and development expense increased 26% to $167.8 million for the nine months ended September 30, 2023 from $133.4 million for the nine months ended September 30, 2022. Increased expenses in the nine months ended September 30, 2023 primarily relate to a $27.6 million increase in third-party services and other expenses, largely due to the timing of expenses related to the advancement of our antibody programs, a $5.3 million increase in personnel related expenses, primarily due to increased headcount, and a $2.4 million increase in other research and development expenses. These increases were partially offset by a $0.9 million decrease in expenses attributable to the activities of our subsidiaries.

General and administrative expense

General and administrative expense consists primarily of personnel costs, facility expenses, and professional fees. General and administrative expenses increased 3% to $57.6 million for the nine months ended September 30, 2023 from $56.0 million for the nine months ended September 30, 2022. Increased expenses in the nine months ended September 30, 2023 primarily relate to a $3.8 million increase in personnel related expenses, largely due to increased headcount, and a $1.2 million increase in other general and administrative expenses. These increases were partially offset by a $2.0 million decrease in professional fees, primarily due to reduced consulting and external legal costs, and a $1.5 million decrease in expenses attributable to the activities of our subsidiaries.

Non-operating income (expense)

Non-operating income (expense) includes our foreign currency translation adjustment and other income or expense. Non-operating income decreased $9.4 million for the nine months ended September 30, 2023, from income of $9.7 million for the nine months ended September 30, 2022 to income of $0.2 million for the nine months ended September 30, 2023, primarily due to de minimis activity in the nine months ended September 30, 2023, compared to the recognition of a $6.6 million gain on the sale of property, plant and equipment and a $2.8 million gain on the partial forgiveness of a liability in the nine months ended September 30, 2022.

Interest expense, net

Interest expense, net increased to approximately $53.7 million for the nine months ended September 30, 2023 from $44.5 million for the nine months ended September 30, 2022, mainly due to increased non-cash interest recorded in connection with our Royalty Purchase Agreement with HCR and increased interest expense recorded in connection with our finance leases, partially offset by increased interest income earned on our cash equivalents and short-term investments.

Research and Development Programs

For the nine months ended September 30, 2023, our research and development programs consisted largely of our antibody programs as indicated in the following table (in thousands).

Research and development program costs include compensation and other direct costs plus an allocation of indirect costs, based on certain assumptions and our review of the status of each program. Our product candidates are in various stages of development and significant additional expenditures will be required if we start new clinical trials, encounter delays in our programs, apply for regulatory approvals, continue development of our technologies, expand our operations, and/or bring our product candidates to market. The total cost of any particular clinical trial is dependent on a number of factors such as trial design, length of the trial, number of clinical sites, number of patients, and trial sponsorship. The process of obtaining and maintaining regulatory approvals for new therapeutic products is lengthy, expensive, and uncertain. Because of the current stage of our product candidates, among other factors, we are unable to reliably estimate the cost of completing our research and development programs or the timing for bringing such programs to various markets or substantial partnering or out-licensing arrangements, and, therefore, when, if ever, material cash inflows are likely to commence.

Liquidity and Capital Resources

We have incurred annual operating losses since inception, and we had an accumulated deficit of $1.9 billion as of September 30, 2023. We expect to incur significant losses over the next several years as we continue development of our technologies and product candidates, manage our regulatory processes, initiate and continue clinical trials, and prepare for potential commercialization of products. To date, we have financed our operations primarily through corporate partnerships, advance royalty sales and the issuance of equity. From our inception through September 30, 2023, we have raised aggregate net proceeds of approximately $1.9 billion through the sale of common and preferred stock, the exercise of stock options and warrants, proceeds from our Employee Stock Purchase Plan, royalty monetization transactions, and the issuance of convertible and other notes.

We maintain an effective registration statement (the “Registration Statement”), covering common stock, preferred stock, warrants, debt securities and units. The Registration Statement includes prospectuses covering the offer, issuance and sale of up to 184.6 million shares of our common stock from time to time in “at-the-market offerings” pursuant to an At Market Issuance Sales Agreement (the “Sales Agreement”) with B. Riley Securities, Inc. as our sales agent. We sold approximately 71.6 million shares of our common stock pursuant to the Sales Agreement during the nine months ended September 30, 2023, for aggregate net proceeds totaling $123.2 million. As of September 30, 2023, approximately 171.3 million shares remained available for sale under the Sales Agreement.

We have funded our operations largely from cash received from partners, royalty financing transactions and equity offerings. We transact at-the-market sales from time to time in order to manage our cash balances to make sure cash balances do not drop below a certain level based on our anticipated uses of cash. We execute at-the-market offerings based on market conditions and our stock price. We do not have in place a program whereby at-the-market offerings are executed automatically based on our trading volume.

As of September 30, 2023, we had debt outstanding of $13.4 million in principal. In November 2022, we amended all of the outstanding 2015 Subordinated Notes, extending the due date by two years to February 2025.

Our cash, cash equivalents and short-term investments at September 30, 2023 were $106.3 million, a decrease of $87.1 million from December 31, 2022. Cash and cash equivalents of our subsidiary, MiNK, at June 30, 2023, were $10.6 million. MiNK cash can only be accessed by Agenus through a declaration of a dividend by the MiNK Board of Directors or through settlement of intercompany balances.

Based on our current plans and projections, we believe that our cash resources of $106.3 million as of September 30, 2023, plus additional funding we anticipate from the achievement of a milestone under an existing partnership, will be sufficient to satisfy our liquidity requirements for at least one year from when these financial statements were issued. This milestone will be triggered upon dosing the first patient in a clinical trial which is currently screening patients and is expected to occur by end of 2023. However, until this event occurs, in accordance with the relevant accounting guidance we are required to disclose that substantial doubt exists about our ability to continue as a going concern for a period of one year after the date of filing of this Quarterly Report on Form 10-Q.

In addition to the expected milestone payment by end of 2023, we are in active discussions to sell two non-strategic assets expected to close in the first half of 2024 with an estimated aggregate value of approximately $65.0 million. These transactions could extend our cash resources well beyond 2024. We are also in advanced discussions for a potential structured financing for botensilimab/balstilimab, as well as a potential corporate collaboration with a large pharma or biotech company. None of these sources of cash involve equity or debt issuance.

Management continues to address the Company’s liquidity position and has the flexibility to adjust spending as needed in order to preserve liquidity. In August 2023, we prioritized and focused our resources to accelerate the development, registration, and commercialization of our lead asset postponing all preclinical and other clinical programs and reducing our workforce by approximately 25%. Our CEO, Dr. Garo Armen has elected to receive his base salary and any potential bonus payments in stock rather than cash. We continuously evaluate the likelihood of success of our programs. As such, our decisions to continue to fund or eliminate funding of each of our programs are predicated on these determinations, on an ongoing basis. We expect our sources of funding to include payments from current collaborations which include milestones and royalty payments from companies, including BMS, UroGen, Gilead, Incyte, and Merck; out-licensing and/or partnering opportunities for our portfolio programs and product candidates with multiple parties; additional third-party agreements; asset sales; royalty monetization; project financing, and/or sales of equity securities.

Our future cash requirements include, but are not limited to, supporting clinical trial and regulatory efforts and continuing our other research and development programs. Since inception, we have entered into various agreements with contract manufacturers, institutions, and clinical research organizations (collectively “third party providers”) to perform pre-clinical activities and to conduct and monitor our clinical studies and trials. Under these agreements, subject to the enrollment of patients and performance by the applicable third-party provider, we have estimated our total payments to be $601.3 million over the term of the related activities. Through September 30, 2023, we have expensed $519.8 million as research and development expenses and $500.7 million has been paid under these agreements. The timing of expense recognition and future payments related to these agreements is subject to the enrollment of patients and performance by the applicable third-party provider. We plan to enter into additional agreements with third party providers and we anticipate significant additional expenditures will be required to initiate and advance our various programs.

Part of our strategy is to develop and commercialize some of our product candidates by continuing our existing collaboration arrangements with academic and collaboration partners and licensees and by entering into new collaborations. As a result of our collaboration agreements, we will not completely control the efforts to attempt to bring those product candidates to market. For example, our collaboration with Incyte for the development, manufacture and commercialization of CPM antibodies against certain targets is managed by a joint steering committee, which is controlled by Incyte.

Net cash used in operating activities for the nine months ended September 30, 2023 and 2022 was $183.8 million and $128.0 million, respectively. Our future ability to generate cash from operations will depend on achieving regulatory approval and market acceptance of our product candidates, achieving benchmarks as defined in existing collaboration agreements, and our ability to enter into new collaborations. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Forward Looking Statements” in Part I, Item 2 of this Quarterly Report on Form 10-Q and the risks highlighted in Part I, Item 1A "Risk Factors" of our 2022 Form 10-K.

Our primary market risk exposure is foreign currency exchange rate risk. International revenues and expenses are generally transacted by our foreign subsidiaries and are denominated in local currency. Approximately 0.9% and 1.7% of our cash used in operations for the nine months ended September 30, 2023 and the year ended December 31, 2022, respectively, was from our foreign subsidiaries. We are exposed to foreign currency exchange rate fluctuation risk related to our transactions denominated in foreign currencies. We do not currently employ specific strategies, such as the use of derivative instruments or hedging, to manage these exposures. Our currency exposures vary but are primarily concentrated in the British Pound, Euro, and Swiss Franc, in large part due to our subsidiaries, Agenus UK Limited and AgenTus Therapeutics Limited, both with operations in England, AgenTus Therapeutics SA, a company formerly with operations in Belgium, and Agenus Switzerland a company formerly with operations in Switzerland.

We had cash, cash equivalents and short-term investments at September 30, 2023 of $106.3 million, which are exposed to the impact of interest rate changes, and our interest income fluctuates as interest rates change. Additionally, in the normal course of business, we are exposed to fluctuations in interest rates as we seek debt financing and invest excess cash. Due to the short-term nature of our investments in money market funds and U.S. Treasury Bills, our carrying value approximates the fair value of these investments at September 30, 2023.

There has been no material change to our interest rate exposure and our approach toward interest rate and foreign currency exchange rate exposures, as described in our Annual Report on Form 10-K for the year ended December 31, 2022.

We invest our cash and cash equivalents in accordance with our investment policy. The primary objectives of our investment policy are to preserve principal, maintain proper liquidity to meet operating needs, and maximize yields. We review our investment policy periodically and amend it as deemed necessary. Currently, the investment policy prohibits investing in any structured investment vehicles and asset-backed commercial paper. Although our investments are subject to credit risk, our investment policy specifies credit quality standards for our investments and limits the amount of credit exposure from any single issue, issuer, or type of investment. We do not invest in derivative financial instruments. Accordingly, we do not believe that there is currently any material market risk exposure with respect to derivatives or other financial instruments that would require disclosure under this item.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Exchange Act. Based on this evaluation, our Principal Executive Officer and our Principal Financial Officer concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective and were designed to ensure that information we are required to disclose in the reports that we file or submit under the Exchange Act is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure, and is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. It should be noted that any system of controls is designed to provide reasonable, but not absolute, assurances that the system will achieve its stated goals under all reasonably foreseeable circumstances. Our Principal Executive Officer and Principal Financial Officer have each concluded that our disclosure controls and procedures as of the end of the period covered by this report are effective at a level that provides such reasonable assurances.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the three months ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Our results of operations and financial condition are subject to numerous risks and uncertainties described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. In addition to the risk factors described in Part I, Item 1A "Risk Factors" of our 2022 Form 10-K, please note the additional Risk Factor included below.

Substantial doubt exists as to our ability to continue as a going concern

We have financed our operations through income and revenues generated from corporate partnerships, advance royalty sales and proceeds from equity issuances. Based on our current plans and projections, we believe that our cash resources of $106.3 million at September 30, 2023, plus additional funding we anticipate from the achievement of a milestone under an existing partnership, will be sufficient to satisfy our liquidity requirements for at least one year from when these financial statements were issued. This milestone will be triggered upon dosing the first patient in a clinical trial which is currently screening patients and is expected to occur by end of 2023. However, until this event occurs, in accordance with relevant accounting guidance we are required to disclose that substantial doubt exists about our ability to continue as a going concern for a period of one year after the date of filing of this Quarterly Report on Form 10-Q.

In addition to the expected milestone payment by end of 2023, we are in active discussions to sell two non-strategic assets expected to close in the first half of 2024 with an estimated aggregate value of approximately $65.0 million. These transactions could extend our cash resources well beyond 2024. We are also in advanced discussions for a potential structured financing for botensilimab/balstilimab, as well as a potential corporate collaboration with a large pharma or biotech company. None of these sources of cash involve equity or debt issuance.

Management continues to address the Company’s liquidity position and has the flexibility to adjust spending as needed in order to preserve liquidity. In August 2023, we prioritized and focused our resources to accelerate the development, registration, and commercialization of our lead asset postponing all preclinical and other clinical programs and reducing our workforce by approximately 25%. Our CEO, Dr. Garo Armen has elected to receive his base salary and any potential bonus payments in stock rather than cash. We continuously evaluate the likelihood of success of our programs. As such, our decisions to continue to fund or eliminate funding of each of our programs are predicated on these determinations, on an ongoing basis. We expect our sources of funding to include payments from current collaborations which include milestones and royalty payments from companies, including Bristol-Myers Squibb Company, UroGen Pharma Ltd., Gilead Sciences, Inc., Incyte Corporation, and Merck Sharpe & Dohme; out-licensing and/or partnering opportunities for our portfolio programs and product candidates with multiple parties; additional third-party agreements; asset sales; royalty monetization; project financing, and/or sales of equity securities.