A local biotech company laid off a quarter of its staff earlier this year. Yet analysts are seemingly cheerier than ever.
Agenus, Inc., headquartered in Lexington since 1995, says it is preparing for phase three trials of a “groundbreaking” cancer drug, moving its botensilimab/balstilimab program closer to regulatory approval.
The drug, if proven effective, would harness the body’s own immune system to attack cancer cells. It is being tested on patients with colorectal cancer – the strain with the second-highest mortality rate in the U.S. – with the potential to be used for different cancers “across the board.”
That’s enough for investors to ignore the 91 layoffs that the company announced in August. At the time, that announcement sent alarm bells ringing: SeekingAlpha, an online investors forum, changed its stock rating to “sell.”
““We didn’t want to do it, but we had to do it to be financially prudent because the biotech market is in a compromised state right now,” said Garo H. Armen, the company’s founder and CEO, in an interview with the Observer.
The life sciences sector tends to be financially turbulent, Armen said, in part due to the “irrational exuberance” of companies promising more than they can deliver. He likened it to an “industry virus.”
“When the industry is compromised, most investors… cannot differentiate between the good, the bad, and the ugly. You go through a [shift] of everybody looking good, to everybody looking bad.”
That’s what he suggests happened – unfairly – to Agenus.
Agenus reported a workforce of 533 employees in an annual 10K filing on March 1, of whom 108 were PhDs and 32 were medical doctors. That number is now closer to 300, executives said, of which over half are based in Lexington.
Nevertheless, analysts now don’t seem all that worried about the course of the company.
“Drug development is not for the faint-hearted,” said Mayank Mamtani, a stock analyst at B. Riley Securities who follows the biotech industry. “You have to raise a lot of capital, and you have to go through the kind of stock gyrations that you’re seeing with Agenus right now.”
Mamtani noted that the company has streamlined its operations to prioritize its botensilimab research. Agenus has already completed its phase two trial for colorectal cancer patients, and received “Fast Track” designation from the FDA.
“They’ve decided to prioritize – at least in the near future – [the fields] where investors want them to be focused on,” he said. “They’ve put some of the other programs on hold.”
The drug’s unique promise is what has investors bullish on the company’s future, Mamtani said, and what makes them more willing to ignore the financial struggles earlier in the year.
“The data… is looking very different than what we’ve seen – in a good way – from previous generations [of drugs],” he said. “Very low doses are creating these very durable responses, almost cures.”
He added that, as the regulatory process ramps up, it’s likely that Agenus will begin hiring again – though likely in the marketing and administrative fields, rather than just research.
“These are the kinds of programs that drive a lot of job creation in [the life sciences] sector,” Mamtani said.
Despite the layoffs, SEC filings show that the company’s personnel related expenses increased by $3.8 million in the nine months that ended September 30, 2023 – primarily relating to an “increased headcount.”
The impact of the layoffs on the Lexington community is unclear. But Sandhya Iyer, director of economic planning for the Town of Lexington, said that her office doesn’t see the layoffs as cause for concern.
“Attrition within life sciences companies happens all the time,” she said.
Iyer said that, while the town does not work with Agenus or its employees directly, it does regularly organize life sciences forums that employees — past and present — may use for networking.
That’s one of the unique advantages that Lexington has, she added. Because there are dozens of therapeutics and biotech companies with operations in town, researchers laid off from one company don’t necessarily have to relocate to find another job.
Iyer acknowledged that workforce development is “a big thing” that needs to be addressed. “Not just within the town, but within the Commonwealth, because we want to keep our workers in Massachusetts.
But her priority is making sure that the town remains attractive, both for new companies looking to move in, and for existing ones like Agenus that may be expanding their operations in the future.
“We need to reduce any vacancies that are out there, making sure we keep filling all these spaces,” she said. “There’s so much demand for talent in the industry, that there’s always this cyclical thing that happens with life science companies. It’s beyond anyone else’s control.”
Agenus says that botensilimab promises to bring a “paradigm shift” to cancer treatment, according to spokesperson Stephanie Fagan.
“The commercial opportunity is certainly important for economic development and growth, and we certainly see the company growing in the future,” she said. “But it really has a unique opportunity to become the backbone therapy of colorectal cancer, helping patients who are late-stage, all the way up to when they’re first diagnosed.”
Armen said that he sees Lexington as “the heart of the world” – particularly because of his conviction in Agenus’ work.
“Today, we are curing patients,” he said. “We’re not curing every single patient we touch, but we are curing patients that would be otherwise incurable, by using the body’s own immune system.”
“When this becomes common knowledge, accepted knowledge, then Lexington will start beating at a pace that the world will pay attention to it. Because we are here.”
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