The alliance will initially focus on four different checkpoint modulator targets directed against GITR, OX40, LAG-3 and TIM-3.
The two parties will share all costs and profits for the GITR and OX40 antibody programs evenly, according to a joint statement released earlier today. TIM-3 and LAG-3 are royalty-bearing programs which will be funded by Incyte.
Agenus will receive $60 million upfront, with the potential for $350 million in milestones tied to the development and commercialization of the antibodies against the four targets.
The development program will use Agenus' proprietary Retrocyte Display antibody discovery platform, which was acquired by the company last year. First clinical trials are expected to begin next year.
H.C. Wainwright analyst Reni Benjamin reiterated the capital markets firm's buy rating on Agenus' stock and 12-month price target of $6. Shares surged 30.7 percent to US$5.37 in New York on Friday, stretching gains over the past year to more than 76 percent.
"In our opinion, the partnership is excellent news for investors as it represents a second major validation for the company's investment in Agenus' platform technology, which has already attracted a collaboration with Merck," Benjamin wrote in his research note released this afternoon.
"Given the resources at Incyte, we believe the new agreement should accelerate the clinical development of new checkpoint antibodies, as well as provide considerable financial flexibility, leaving Agenus free to pursue additional opportunities surrounding the unpartnered PD-1 and CTLA-4 programs."
HCW said that with about $106.4 million in cash, the potential to secure new partnerships and a "highly versatile" platform, it believes Agenus remains an undervalued player in the immuno-oncology space.
The HCW analyst also noted that the collaboration also leaves room for joint development of additional checkpoint modulators. Benjamin calculates that if Agenus chooses a profit-sharing route for future targets, it could receive up to $20 million in milestones per program.
"Given Incyte's experience with successful development of ruxolitinib, we are particularly excited about the potential synergy that could be achieved by deploying new checkpoint modulators in combination with Incyte's small molecule portfolio," said Benjamin.