Wednesday, June 10, 2009

VFC's Wrap-Up of the Antigenics (AGEN) Shareholder Meeting

Investors of Antigenics AGEN) expecting big news from Wednesday's shareholder meeting were mostly disappointed with the fact that the conference call was just a rehash of recent events and was not the stage for a significant announcement. However, those who were disappointed by the lack of significant news were most likely just day and swing traders potentially looking to make a quick buck. For the long term shareholder, CEO Garo Armen provided some encouraging updates.

The regulatory process for Oncophge in Europe is moving along smoothly. Mr. Armen stated that, although the EMEA has come back to the company with various questions, nothing up to this point has indicated that Oncophage would be denied approval. Antigencis, as well as shareholders, will be anxiously awaiting news of an EMEA decision.

The launch of Oncophage in Russia is close, with only some administrative matters needing to be resolved before sales commence. Mr. Garo expects to see a revenue stream from those sales in short time. Additionally, Oncophage will participate in a named patient program that will reach various countries around the world, adding to the possibility of an additional imminent revenue stream.

Garo also noted that QS-21 is "very profitable" for Antigenics because, due to it's licensing agreement with GlaxoSmithKline (GSK), it costs the company "very little" to progress through the pipeline. Garo was also quick to note that GlaxoSmithKline is the world leader regarding vaccines. His statement was in the context of QS-21, but it immediately sparked my curiousity and re-ignited my own speculation that GSK and Antigenics, with an already existing partnership, would make a for a perfect marriage right now. If GSK is king of the vaccine world now, imagine if they added the world's first approved cancer vaccine, Oncohphage, to their repertoire.

Antigenics has given no indications that they are looking for a buyer or that they are in advanced negotiations with a prospective partner for Oncohophage, but one could only assume that, behind the scenes, things are happening.

Especially when the company has been able to reduce it's debt load from $50 million down to about $12 million, as Garo noted, by issuing shares for nearly a buck higher than the price for which they were trading on the open market. There's no way that those debtors take that deal unless they have extreme confidence that will be able to make some serious money in return.

In my opinion, the speed and precision with which Antigenics has wiped out most of it's debt means that the company is looking at a buyout. That's purely speculation on my part, but there is something in the works that has debtors taking on shares for over $3.00 when they could have bought them for just over $2. It could be that a prospective buyer/partner is waiting on an EMEA decision before jumping in, but that's a risky proposition because an approval in Europe will significantly boost the value of Oncophage and adding tens of millions dollars, if not more, to any potential deal.

Thursday's trading could be choppy as the short term speculator had nothing to gain by Wednesday's conference call and will exit their positions in AGEN and look for the next swing move, but the long term investor should feel as confident as ever about this company and should take advantage of any dip in stock price, especially if it drops below two again.

If you bought in under a buck, HOLD longer, and add on dips if you're not satisfied with your position. If you bought in after the news presented at ASCO, BUY all you can for around $2.

When/if AGEN blows, it'll be quick (see: Dendreon(DNDN)) and you might not get another chance.

Disclosure: VFC is long AGEN and has no position in GSK.

Forzieri.com / Firenze Seta srl

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