Shares in volatile small-cap Agenus (AGEN) leapt on Monday following news that the company had reached a deal with Merck (MRK) to partner in the “discovery and development of therapeutic antibodies to immune checkpoints for the treatment of cancer.” The deal includes some $100 million in milestone payments to Agenus and prompted a spike of nearly 20 percent in the company’s stock.
"We are delighted to be working with Merck, who is a leader in the rapidly developing immuno-oncology space," said Chief Scientific Officer Bob Stein, MD, PhD. "We believe our Retrocyte Display technology has significant advantages for creation of high quality antibody development candidates. This collaboration broadens our efforts in immuno-oncology beyond our previously disclosed checkpoint programs with a world-class research and development partner."
Shares in the small-cap company gapped up 5.5 percent at the opening bell to $2.70 a share and seemed to continue gaining momentum from there. A surge just before 11:30 am ET took shares from about $2.85 apiece to just under $3.10 and, after a brief pullback, they surged again just after 3 pm ET to hit the intraday high of $3.12. Volume was extremely heavy and spiked during the initial buying surge at 11:30 am. More than 3.5 million shares changed hands by the closing bell, well ahead of an average daily volume of just over 850,000. The stock closed the day at $3.06 a share, good for a gain of 19.53 percent.
The deal should prove a major boon for the company that has shown very little revenue in the last few years, as well as supplying Merck with an opportunity to develop novel new therapies.
“This collaboration with Agenus complements our active immuno-oncology discovery programs,” said Merck’s vice president of clinical oncology, Dr. Eric Rubin. “We look forward to working to advance these programs with the potential to address the unmet medical needs of people with cancer.”
The deal also shows Agenus reaping the benefits of its acquisition of 4-Antibody AG, a private European company, earlier this year. That acquisition included the Retrocyte® Display technology platform which, according to the press release, “enables rapid discovery and optimization of fully human antibodies against a wide array of molecular targets.“
The spike for Agenus comes during an already volatile year. Following the announcement of the acquisition in mid-February, Agenus rapidly spiked in value to touch a 52-week high on February 26 at $5.40 a share. However, it was in retreat beginning in early March, eventually falling all the way back to the $2.70 a share level it was at prior to the big rise.
However, certain technical factors may be benefitting the stock today as well as the news about the deal with Merck. The sell-off that carried on throughout March ultimately pushed the stock into what would typically be viewed as oversold territory. The 14-day RSI for the stock remained below 30.0 for the entire month of April prior to the week prior, and even then remained below 40.0. What’s more, the MACD line crossed the signal line from below on the 22nd, a classic buy signal.
Add to these factors that Agenus has become a favorite of analysts and institutional buyers alike, with institutional transactions showing a more-than 175 percent increase in ownership over the last three months and analysts from Maxim and MLV & Co issuing a “buy” rating for the company, and Agenus appears to have the potential to keep gaining ground provided good news keeps coming in.
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