A biotechnology company is adopting a new way to finance development of its immunotherapy drug candidate: a token offering.

Lexington, Massachusetts-based Agenus said Tuesday that it would launch in mid-February what it called the first digital security offering in healthcare, Biotech Electronic Security Token, or BEST. BEST will be tied to its PD-1 checkpoint inhibitor, AGEN2034, currently in registration studies. Each token will be tied to a portion of potential future US sales of the drug, with the tokens redeemable once sales of the drug begin. The company said investments into BEST of up to $100 million will accelerate the drug’s development, commercialization, distribution and also growing the number of indications it can treat.

ClinicalTrials.gov currently lists two Phase I/II trials of AGEN2034. One is enrolling up to 75 patients and includes a Phase I portion in metastatic or locally advanced solid tumors, followed by a Phase II expansion in advanced cervical cancer. The other is enrolling 60 patients with advanced solid tumors, including cervical cancer, and includes AGEN2034 and AGEN1884, a CTLA-4 inhibitor.

Sanofi and Regeneron’s Libtayo (cemiplimab), Bristol-Myers Squibb’s Opdivo (nivolumab) and Merck & Co.’s Keytruda (pembrolizumab) are the three PD-1 inhibitors with Food and Drug Administration approval. In addition, there are several PD-L1 inhibitors also on the market: AstraZeneca’s Imfinzi (durvalumab); Pfizer and Merck & Co.’s Bavencio (avelumab); and Roche’s Tecentriq (atezolizumab). Of those six drugs, only Keytruda is approved for recurrent or metastatic cervical cancer.

“Today, by announcing the first-of-its-kind, asset-backed digital security offering in healthcare, we open the doors for a transformative financing vehicle,” Agenus CEO Garo Armen said in a statement. “We believe this unique structure will pave the way for allowing targeted investment by qualified investors in the development of therapeutic products. This instrument, powered by blockchain technology, enables us to revolutionize the financing of drug development.”

The company said it expects others in the industry to adopt the same model for financing and obtaining capital.

The Securities and Exchange Commission has noted that initial coin offerings can be considered securities offerings and as such would fall under the agency’s jurisdiction and require registration. Agenus is offering its tokens under Regulation D of the Securities Act of 1933. The company is also publicly traded on the Nasdaq. The company’s shares were up 2.36 percent in mid-morning trading Tuesday.

Photo: ismagilov, Getty Images

CORRECTION: An earlier version of this article referred to Agenus’s offering as an initial coin offering. However, in a subsequent phone interview, CEO Garo Armen said it is a token offering, which differs from an ICO in that it is a security rather than a cryptocurrency.



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