Analyst Upgrades Agenus As Zydus Deal Alleviates Cash Overhang

On Tuesday, Zydus Lifesciences Ltd. announced its entry into the global biologics contract development and manufacturing organization (CDMO) business through its plan to acquire Agenus Inc.’s (NASDAQ:AGEN) U.S.-based biologics CMC facilities.

The acquisition marks Zydus’ strategic investment in U.S.-based biologics manufacturing, thereby adding a sustainable growth driver for the group.

Agenus is a clinical-stage immuno-oncology company.

Zydus will acquire two biologics manufacturing facilities from Agenus in Emeryville and Berkeley, California, for an upfront consideration of $75 million and a contingent payment of $50 million to be paid over three years subject to the achievement of certain revenue milestones.

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This acquisition provides Zydus with immediate access to advanced biologics manufacturing capabilities and establishes a key presence in California.

As part of the transaction, Zydus will become an exclusive contract manufacturer for Agenus and will provide manufacturing services for the clinical and commercial supply of two identified Phase-3-ready immuno-oncology products, Botensilimab (BOT) and Balstilimab (BAL).

Zydus will also have the first right of negotiation to manufacture any of the future pipeline products developed by Agenus. Zydus intends to further expand the team.

The company presented new translational data for BOT/BAL at the 2025 American Society of Clinical Oncology (ASCO) Annual Meeting.

The study demonstrated that botensilimab-based therapy induces a robust and persistent T cell immune response in microsatellite stable (MSS), or mismatch repair proficient (pMMR), metastatic colorectal cancer (mCRC).

HC Wainwright analyst Emily Bodnar wrote on Wednesday, “We are unsurprised by the manufacturing facilities’ sale and outlicensing of bot/bal as these decisions were consistent with remarks previously made by management.”

During its first-quarter earnings, Agenus said it is on track to reduce its annualized operating cash burn below $50 million starting in the second half of 2025, supported by recent cost optimization measures enabling the company to direct resources toward realizing the potential of BOT/BAL.

The company also mentioned it is in the final stages of an important collaboration, which will result in a substantial cash infusion.

Agenus ended the first quarter of 2025 with a consolidated cash balance of $18.5 million.

The analyst says the company has sufficient funding to advance bot/bal through a Phase 3 trial, which is expected to be initiated in the second half of 2025.

Bodnar upgraded the stock from Neutral to Buy, with a price target of $25.

The analyst estimates bot/bal approval in the U.S. and EU in 2028 and 2029, respectively, with peak market penetrations of 30% in the U.S. by 2034 and 15% in the EU by 2035.

HC Wainwright estimates peak sales for bot/bal in third-line MSS-CRC of ~$929 million by 2038.

Baird maintains Agenus with a Neutral, raising the price target from $4 to $6.

Price Action: AGEN stock is up 17% at $5.86 at the last check on Wednesday.

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