Agenus
Annual Report 2017

Plain-text annual report

Morningstar® Document Research℠ FORM 10-KAGENUS INC - AGENFiled: March 16, 2018 (period: December 31, 2017)Annual report with a comprehensive overview of the companyThe information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The userassumes all risks for any damages or losses arising from any use of this information, except to the extent such damages or losses cannot belimited or excluded by applicable law. Past financial performance is no guarantee of future results. UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 Form 10-K ☑ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2017or☐☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from toCommission File Number: 000-29089 Agenus Inc.(exact name of registrant as specified in its charter) Delaware 06-1562417(State or other jurisdiction of (I.R.S. Employerincorporation or organization) Identification No.)3 Forbes Road, Lexington, Massachusetts 02421(Address of principal executive offices, including zip code)Registrant’s telephone number, including area code:(781) 674-4400Securities registered pursuant to Section 12(b) of the Act: Common Stock, $.01 Par Value The NASDAQ Capital Market(Title of each class) (Name of each exchange on which registered)Securities registered pursuant to Section 12(g) of the Act:None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90days. Yes ☑ No ☐Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submittedand posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submitand post such files). ☑Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not becontained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to thisForm 10-K. ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growthcompany. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer☐ Accelerated filer☑Non-accelerated filer☐(Do not check if a smaller reporting company)Smaller reporting company☐Emerging growth company☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revisedfinancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑The aggregate market value of voting stock held by non-affiliates of the registrant as of June 30, 2017 was: $306.4 million. There were 102,556,797 shares of theregistrant’s Common Stock outstanding as of February 28, 2018.DOCUMENTS INCORPORATED BY REFERENCENone. Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.TABLE OF CONTENTS PagePART I ITEM 1.BUSINESS 3 Our Business 3 Intellectual Property Portfolio 8 Regulatory Compliance 10 Competition 10 Employees 12 Corporate History 12 Availability of Periodic SEC Reports 12ITEM 1A.RISK FACTORS 12ITEM 1B.UNRESOLVED STAFF COMMENTS 35ITEM 2.PROPERTIES 35ITEM 3.LEGAL PROCEEDINGS 35ITEM 4.MINE SAFETY DISCLOSURES 35 PART II ITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OFEQUITY SECURITIES 36ITEM 6.SELECTED FINANCIAL DATA 37ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 39ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 48ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 49ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 85ITEM 9A.CONTROLS AND PROCEDURES 85ITEM 9B.OTHER INFORMATION 87 PART III ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE 88ITEM 11.EXECUTIVE COMPENSATION 88ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERS 88ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 88ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES 88 PART IV ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 89ITEM 16FORM 10-K SUMMARY 95 Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Note Regarding Forward-Looking StatementsThis Annual Report on Form 10-K and other written and oral statements the Company makes from time to time contain forward-looking statements.You can identify these forward-looking statements by the fact they use words such as “could,” “expect,” “anticipate,” “estimate,” “target,” “may,” “project,”“guidance,” “intend,” “plan,” “believe,” “will,” “potential,” “opportunity,” “future” and other words and terms of similar meaning. Forward-lookingstatements include discussion of future operating or financial performance. You also can identify forward-looking statements by the fact that they do notrelate strictly to historical or current facts. Forward-looking statements involve risks and uncertainties that could delay, divert or change any of them, andcould cause actual outcomes to differ materially. These statements relate to, among other things, our business strategy, our research and development, ourproduct development efforts, our ability to commercialize our product candidates, the activities of our licensees, our prospects for initiating partnerships orcollaborations, the timing of the introduction of products, the effect of new accounting pronouncements, our future operating results and our potentialprofitability, availability of additional capital as well as our plans, objectives, expectations, and intentions.Although we believe we have been prudent in our plans and assumptions, no assurance can be given that any goal or plan set forth in forward-lookingstatements can be achieved, and readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this report. Weundertake no obligation to release publicly any revisions to forward-looking statements as a result of new information, future events or otherwise.The risks identified in this Annual Report on Form 10-K, including, without limitation, the risks set forth in Part I-Item 1A. “Risk Factors,” could causeactual results to differ materially from forward-looking statements contained in this Annual Report on Form 10-K. We encourage you to read thosedescriptions carefully. Such statements should be evaluated in light of all the information contained in this document.AIM TM, ASV TM, AgenTus TM, Agenus TM, AutoSynVax TM, Oncophage®, PSV TM, PhosphoSynVax TM, ProphageTM, Retrocyte DisplayTM,SECANT® and Stimulon® are trademarks of Agenus Inc. and its subsidiaries. All rights reserved. 2Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.PART I Item 1.BusinessOur BusinessWe are a clinical-stage immuno-oncology (“I-O”) company dedicated to becoming a leader in the discovery and development of innovativecombination therapies and committed to bringing effective medicines to patients with cancer. Our business is designed to drive success in I-O through speed,innovation, and effective combination therapies. We have assembled fully integrated capabilities from novel target discovery, antibody generation, cell linedevelopment, and good manufacturing practice (“GMP”) manufacturing together with a comprehensive portfolio consisting of antibody-based therapeutics,adjuvants and cancer vaccine platforms. We leverage our immune biology platforms to identify effective combination therapies for development and havedeveloped productive partnerships to advance our innovation. We believe the next generation of cancer treatment will build on clinically validated antibodies targeting CTLA-4 and PD-1 combined with novelimmuno-modulatory agents designed to address underlying tumor immune-escape mechanisms. Our pipeline of immuno-modulatory antibodies target important nodes of immune regulation, including our proprietary lead antibodies, anti-CTLA-4and anti-PD-1. We are aiming to develop, register, and launch these products with a first potential biologics license application (“BLA”) filing as early as thesecond-half of 2019. We will then endeavor to expand on these agents with combinations of novel compounds designed to address tumor escapemechanisms, such as intratumoral Treg and tumor microenvironment conditioning. In addition, for tumors not yet visible to the immune system, we are leveraging our immune educating neoantigen vaccine platform, designed to targetmutationally based and biochemically based (phosphorylated) neoantigens (AutoSynVax and PhosPhoSynVax) to prime the immune system to attacktumors. These vaccines may be applicable for patients where checkpoint modulating (“CPM”) antibodies alone are not sufficient to bring about tumorcontrol. Advances in our understanding of the interactions between cancers, the tumor microenvironment, and the immune system have led to powerful newapproaches to treat cancer. We recently formed a new subsidiary, AgenTus Therapeutics, to bring innovative living drugs to cancer patients. AgenTus isemploying an integrated platform to discover and develop novel living drugs to treat a broad range of cancers.To succeed in I-O, innovation and speed are paramount. We are a vertically integrated biotechnology company equipped with a suite of technologyplatforms to advance from novel target identification (Retrocyte Display, SECANT, Agenus Immunogenic Platform (“AIM”), functional genomics andligandomics) through manufacturing for clinical trials of antibodies and vaccines.Our common stock is currently listed on The Nasdaq Capital Market under the symbol “AGEN.” Our VisionWe believe that harnessing innovation and speed with combinations of drugs are key to bringing effective treatments to patients with certain cancers.We have assembled fully integrated capabilities in novel target discovery, antibody generation, cell line development, and GMP manufacturing, togetherwith a comprehensive portfolio consisting of antibody-based therapeutics, adjuvants and cancer vaccines. We believe that a balanced pipeline of productcandidates should focus on both validated targets as well as novel targets designed to address tumor escape mechanisms. CTLA-4 and PD-1 antagonists arerecognized as the first clinically validated immunotherapy combination. These, in combination with innovative immuno-modulatory antibodies or immuneeducation vaccines, could be a focal point of the next generation of I-O combinations. Therefore, we plan to develop, register, and launch, our proprietary PD-1 and CTLA-4 antibody programs aggressively through the clinic and expand with novel combination therapies designed to improve the clinical responseand durability response of existing therapies.Our StrategyOur strategy is to combine our antibodies, vaccines, and adjuvants to develop effective combinations designed to yield best-in-class treatments forpatients with cancer. We are pursuing a tiered risk profile and targeting compressed timelines for regulatory filings. We are executing on a clinicaldevelopment plan with our anti-CTLA-4 (AGEN1884) and anti-PD-1 (AGEN2034) in definable patient populations. In addition, we plan to pursue selectindications to further expedite market entry.Our combination clinical trial of AGEN1884 with Keytruda in patients with first line non-small cell lung cancer (“1L NSCLC”) with high PD-L1expression is targeting a definable population indicated for Keytruda monotherapy where combination with our CTLA-4 could potentially expand theclinical benefit beyond Keytruda on its own. Second line cervical cancer is also an indication that is responsive to PD-1 blockade and where combinationwith CTLA-4 could potentially expand clinical benefit, present a differentiated development path, and potentially provide a niche opportunity in certainmarkets. Some of our additional programs may pose moderate regulatory risk and will entail: 1) pursuit of effective I-O antibody and vaccine combinationswith CTLA-4 and/or PD-3Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.1 targeted antibodies as the backbone; and 2) advancement of our differentiated antibody programs such as our first-in-class bispecific programs, a nextgeneration anti-CTLA-4, and a differentiated CD137 and TIGIT.Part of our strategy is to develop and commercialize some of our product candidates by continuing our existing arrangements with collaborators andlicensees and by entering into new collaborations.Our AssetsOur I-O assets include antibody-based therapeutics, cancer vaccine platforms, and adjuvants. Our proprietary CTLA-4 and PD-1 antagonists are inclinical development; we are one of the few companies to have a proprietary anti-CTLA-4 and anti-PD-1 in clinical combinations. To complement our portfolio of foundational CPMs, we have pre-clinical antibodies targeting novel immune-mechanisms. These include next-generation anti-CTLA-4, CD137 and anti-TIGIT antibodies, as well as undisclosed multi-specific antibodies.We have proprietary cancer vaccine platforms which are designed to be autologous (Prophage) and individualized (AutoSynVax (“ASV”);PhosphoSynVax (“PSV”)). Our Prophage and synthetic ASV and PSV vaccine candidates are protein complexes that consist of heat shock proteins (“HSPs”)and peptides that are either tumor-derived or tailor-made based on the unique genomic fingerprint of a patient’s tumor, respectively. Our vaccine programsare being developed for intended combinations with CPMs.Our QS-21 Stimulon adjuvant is partnered with GlaxoSmithKline plc. (“GSK”) and is a key component in multiple GSK vaccine programs. GSK'sShingrix vaccine, which contains our QS-21 Stimulon® adjuvant, is approved by the US Food and Drug Administration (“FDA”) and Health Canada andrecently received the Committee for Medicinal Products for Human Use recommendation for approval.Our Antibody Discovery Platforms and CPM ProgramsCheckpoint antibodies regulate immune response against pathogens that invade the body and are achieving positive outcomes in a number of cancersthat were untreatable only a few years ago. Two classes of checkpoint targets include:1.inhibitory checkpoints that help suppress an immune response in order to prevent excessive immune reaction resulting inundesired inflammation and/or auto-immunity, and2.stimulatory checkpoints that can enhance or amplify an antigen-specific immune response.We possess a suite of antibody discovery platforms that are designed to drive the discovery of future CPM antibody candidates. We are planning toemploy a variety of techniques to identify and optimize mono-specific and multi-specific antibody candidates, internally.We have presented clinical data on our lead antibody, AGEN1884, at the American Society of Clinical Oncology (“ASCO”) in June 2017. We havealso presented pre-clinical and clinical data on our anti-CTLA-4 (AGEN1884), anti-PD-1 (AGEN2034), and ASV programs as well as our partnered programsGITR (INCAGN1876) and OX-40 (INCAGN1949) at the American Association for Cancer Research (“AACR”) April 2017, Society for Immunotherapy ofCancer (“SITC”) November 2017, the International Cancer Immunotherapy Conference (“CIMT”) May 2017, and CRI-CIMT-EATI-AACR InternationalCancer Immunotherapy Conference in September 2017. The presentations covered pre-clinical pharmacology for our antibodies and demonstrated thatAGEN1884 binds to CTLA-4 expressed on T cells and potently blocks engagement of CD80 and CD86, leading to enhanced T cell responsiveness. We alsoreported: •data that AGEN1884 augmented vaccine response in primates; •clinical data on safety and preliminary efficacy of AGEN1884, which supported our expectations of the safety profile; •that we observed a complete response in a compassionate use setting in a patient with advanced angiosarcoma, who was unresponsive to priortherapies; •data demonstrating that AGEN2034, a novel human IgG4 anti-PD-1 antagonist antibody, inhibits PD-1 binding to PD-L1 and PD-L2, resulting inenhanced T cell responsiveness in vitro as well as in a non-human primate model; •that AGEN2034 combined effectively with AGEN1884, a human IgG1 anti-CTLA-4 antibody, anti-TIGIT or anti-LAG-3 to further enhance T cellresponsiveness; •that AIM can predict immunogenic peptides containing neoantigens and tumor specific phosphopeptides to develop immunogenic vaccines;and •clinical data demonstrating ASV can effectively deliver antigens and induce an anti-tumor immunogenic response and pre-clinical data revealingthat these vaccinogenic responses are optimized with combination checkpoint modulating antibodies.We are developing our anti-CTLA-4 antibody in combination with Keytruda in a definable cohort of patients in 1L NSCLC with high PD-L1 (>50%)expression, where Keytruda is approved for use as a monotherapy with <50% response rates. We also plan to develop our proprietary anti-CTLA-4 antibodyin combination with our proprietary anti-PD-1 antibody in second line cervical cancer. Chemoradiation therapy is the current standard of care for earlier linesof treatment. In distant metastatic patients, platinum-based chemotherapy, with or without bevacizumab, is the current standard of care. However, there are noestablished therapies for second4Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.line cervical cancer and the five-year survival rate of recurrent/metastatic cervical cancer is 16.8%. Cervical cancer is a malignancy that is driven by thepersistent infection by certain types of human papilloma virus (“HPV”). Anti PD-1/PD-L1 have shown to be active in virally induced disease and,specifically, HPV induced squamous cell cancer of the head and neck. In these tumors, anti PD-1 blockade might induce objective responses as well asprolongation of survival.In addition to pursuing validated targets, our discovery pipeline includes next generation molecules to known targets (such as TIGIT and CD137) aswell as potential first-in-class bispecific antibodies designed to go beyond T cell targeting to address tumor escape mechanisms within the tumor micro-environment. The most advanced of our discovery pipeline is our next generation CTLA-4, an IgG1 anti-CTLA-4 antagonist. This molecule is advancingthrough Investigational New Drug (“IND”) enablement.Partnered CPM ProgramsIn January 2015, we entered into a broad, global alliance with Incyte Corporation (“Incyte”) to discover, develop and commercialize novel immuno-therapeutics using our antibody platforms. The collaboration was initially focused on four CPM programs targeting GITR, OX40, TIM-3 and LAG-3, and inNovember 2015, we expanded the alliance by adding three novel undisclosed CPM targets. Pursuant to the terms of the original agreement, Incyte made non-creditable, non-refundable upfront payments to us totaling $25.0 million. Targets under the collaboration were designated as either profit-share programs,where the parties shared all costs and profits equally, or royalty-bearing programs, where Incyte funded all costs, and we were eligible to receive milestonesand royalties. Under the original collaboration agreement, programs targeting GITR, OX40 and two of the undisclosed targets were designated as profit-shareprograms, while the other targets were royalty-bearing programs. For each profit-share product, we were eligible to receive up to $20.0 million in futurecontingent development milestones. For each royalty-bearing product, we were eligible to receive (i) up to $155.0 million in future contingent development,regulatory, and commercialization milestones and (ii) tiered royalties on global net sales at rates generally ranging from 6%-12%. Concurrent with theexecution of the original collaboration agreement, we and Incyte also entered into a stock purchase agreement pursuant to which Incyte purchasedapproximately 7.76 million shares of our common stock for an aggregate purchase price of $35.0 million, or approximately $4.51 per share. In February 2017,we and Incyte amended the terms of the original collaboration agreement to, among other things, convert the GITR and OX40 programs from profit-share toroyalty-bearing programs with royalties on global net sales at a flat 15% rate for each. In addition, the profit-share programs relating to two undisclosedtargets were removed from the collaboration, with one reverting to Incyte and one to Agenus (the latter being our TIGIT antibody program), each withroyalties on global net sales at a flat 15% rate. The remaining three royalty-bearing programs in the collaboration targeting TIM-3, LAG-3 and oneundisclosed target remain unchanged, and there are no more profit-share programs under the collaboration. Pursuant to the amended agreement, we receivedaccelerated milestone payments of $20.0 million from Incyte related to the clinical development of INCAGN1876 (anti-GITR agonist) and INCAGN1949(anti-OX40 agonist). Across all programs in the collaboration, we are now eligible to receive up to a total of $510.0 million in future potential development,regulatory and commercial milestones. Concurrent with the execution of the amendment agreement, we and Incyte entered into a separate stock purchaseagreement whereby Incyte purchased an additional 10 million shares of Agenus common stock at $6.00 per share. Immediately following the transaction,Incyte owned approximately 18.1% of our outstanding common stock.At the April 2016 AACR conference, we presented data for two antibody candidates under the Incyte collaboration: INCAGN1949 (anti-OX40agonist) and INCAGN1876 (anti-GITR agonist). The presentations covered pre-clinical pharmacology for each antibody, including optimized features. AtAACR 2017, we presented additional pre-clinical data for both INCAGN1949 and INCAGN1876 which further characterized these antibody candidates. InJune 2016, we announced that the first patient was dosed in a Phase 1/2 clinical trial of INCAGN1876. The Phase 1/2 trial is exploring the safety, tolerability,and efficacy of INCAGN1876 combined with immune therapies, ipilimumab and nivolumab, in advanced or metastatic malignancies such as advanced ormetastatic endometrial cancer, gastric cancer (including stomach, esophageal, and gastroesophageal junction), and squamous cell carcinoma of the head andneck. In addition, in November 2016 we announced the commencement of a Phase 1/2 clinical trial of INCAGN1949. The Phase 1/2 trial is exploring thesafety, tolerability, and efficacy of INCAGN1949 combined with immune therapies, ipilimumab and nivolumab, in advanced or metastatic malignancies suchas advanced or metastatic urothelial carcinoma or RCC. In addition, in April 2014, we entered into a collaboration and license agreement with Merck to discover and optimize fully-human antibodies againsttwo undisclosed CPM targets. Merck selected a lead product candidate against one of the undisclosed Merck targets to advance into preclinical studies,leading to a $2.0 million milestone payment that we received in May 2016. In November 2017, we announced we had received a $4.0 million payment forthe advancement of the undisclosed antibody under our license and research collaboration agreement with Merck. Under the terms of the agreement, Merck isresponsible for all future product development expenses for the selected antibody candidate. We are eligible to receive up to an additional $99.0 million inmilestone payments, in addition to royalties on any worldwide product sales.In 2017, we also formalized a research collaboration with UCB Biopharma SPRL (“UCB”). The collaboration leverages the antibody engineeringcapabilities of UCB and Agenus in novel bispecific antibody discovery. In addition, we have a collaboration agreement with Recepta Biopharma SA on thedevelopment of our antibodies targeting CTLA-4 and PD-1, which gives Recepta certain rights to South American countries. We expect to continueexploring additional future collaborations.Vaccine Platforms5Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Our current vaccine platforms for the treatment of cancer, and potentially other indications, include our HSP based Prophage vaccine candidates, andour fully synthetic, neoantigen vaccine candidates, ASV and PSV.HSPs are a group of proteins present at high levels in most mammalian cells. Their expression is increased when cells are exposed to elevatedtemperatures or other stresses. A potential role for HSPs in regulating immune responses was revealed when it was first discovered that HSP complexespurified from cancer cells produced immunity to cancer, whereas HSP complexes purified from normal tissue did not. This discovery led to the understandingthat HSPs bind to and carry a broad sampling of the protein environment within cells, including mutant proteins that might arise from genetic mutationswithin cancer cells. It was further shown that immunization with HSP complexes purified from tumors generate both CD4 and CD8 positive T-cell immuneresponses. These activated T-cells target the cancer cells of the tumor, from which the HSP complexes were derived, for destruction. Thus, HSP complexesisolated from cancer cells may be particularly helpful in mediating successful immunization. Since HSPs are expressed in all tumor cells, the approach ofimmunizing with the HSP complexes isolated from a particular tumor may be broadly applicable to a variety of cancer types. We believe that we pioneeredthe use of gp96, an HSP, purified from a patient’s own tumor tissue, as a way to make I-O vaccine candidates. Prophage Vaccine CandidatesOur Prophage cancer vaccine candidate, HSPPC-96, is an autologous cancer vaccine therapy derived from cancer tissues that are surgically removedfrom an individual patient. As a result, a Prophage vaccine contains a broad sampling of potentially antigenic mutant proteins from each patient’s own tumor.Prophage vaccines are designed to program the body’s immune system to target only the specific cells that express those mutant antigens, thereby reducingthe risk that the body’s immune response against the tumor after vaccination will also affect healthy tissue. Enhancing immune response using personalizedvaccines, particularly in combination with CPMs, could be useful in cancers where a low number of mutant proteins leads to weakened immunogenicity.To date, more than 1,000 patients have been treated with Prophage vaccines in clinical trials internationally, covering a broad range of cancer types,and no serious immune-mediated side effects have been observed. The results of these trials have been published and/or presented at scientific conferences.These results indicate observable clinical and/or immunological activity across many types of cancer.In January 2017, we announced a clinical trial collaboration with the National Cancer Institute (“NCI”). The double-blind, randomized controlledPhase 2 trial is evaluating the effect of Prophage in combination with pembrolizumab (Keytruda®) in patients with ndGBM. The trial is being conducted bythe Brain Tumor Trials Collaborative (“BTTC”), a consortium of top academic centers led by Dr. Mark Gilbert, Chief of the Neuro-Oncology Branch at theNCI Center for Cancer Research. The trial consists of two-arms with one arm receiving pembrolizumab as a monotherapy and a second arm receiving bothProphage and pembrolizumab in combination. Forty-five patients are being randomly assigned to each arm. Under this collaboration, we are supplyingProphage, Merck is supplying pembrolizumab (Keytruda®) and NCI and BTTC member sites are recruiting patients and conducting the trial. Neoantigen Vaccine PlatformsMutation-based neo-epitopes, which will form the basis for the immunogens used in ASV, appear to be almost always particular to a given patient.Therefore, ASV is a largely individualized vaccine product candidate. With a small amount of a patient’s tumor as a sample, our ASV program is designed toutilize next generation sequencing technologies coupled with complex bioinformatics algorithms to identify mutations in a tumor’s DNA and RNA. Oncethese mutations have been identified, we plan to manufacture synthetic peptides encoding these neoepitopes, load these peptides on to our recombinantHSP70 and deliver a fully synthetic polyvalent vaccine to the patient. This program is based on the hypothesis that the HSP70 platform would shuttle themutated peptides to sites where they could be recognized by the immune system and elicit a cytotoxic and helper T cell response in patients with cancer.Biochemically based neoantigens, such as those arising from dysregulated phosphorylation of various proteins in malignant cells, can serve as a tumorfingerprint across a broad histology of tumors. Through the acquisition of PhosImmune, we have a portfolio of proprietary phosphorylated antigenic targetsthat can be used for therapeutic development. PSV is a vaccine candidate designed to induce immunity against this novel class of tumor specific neoepitopes.PSV is intended to induce cellular immunity to abnormal phosphopeptide neoepitopes that are characteristic of these various forms of cancer.Phosphopeptides (or phosphopeptide analogues) can be synthesized and complexed with HSP70, using an approach analogous to that used in the generationof our previous HerpV vaccine candidate. HerpV demonstrated good cellular and humoral responses to synthetic peptide immunogens complexed withHSP70 in a placebo-controlled Phase 2 study. We believe that similar responses could be obtained to phosphopeptide or phosphopeptide analogues bound toHSP70 when used as vaccines. Phosphorylation-based neoepitopes can apparently be found on specific types of cancer in many patients. Studies to optimizethe immunogens to be used in PSV are ongoing. QS-21 Stimulon AdjuvantQS-21 Stimulon is an adjuvant, which is a substance added to a vaccine or other immunotherapy that is intended to enhance an immune response tothe target antigens. QS-21 Stimulon is a natural product, a triterpene glycoside, or saponin, purified from the bark of the Chilean soapbark tree, Quillajasaponaria. QS-21 Stimulon has the ability to stimulate an antibody-mediated immune response and has also been shown to activate cellular immunity. It hasbecome a key component in the development of investigational6Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.preventive vaccine formulations across a wide variety of diseases. These studies have been carried out by academic institutions and pharmaceuticalcompanies in the United States and internationally. A number of these studies have shown QS-21 Stimulon to be significantly more effective in stimulatingimmune responses than aluminum hydroxide or aluminum phosphate, the adjuvants most commonly used in approved vaccines in the United States today.Partnered QS-21 Stimulon ProgramsIn July 2006, we entered into a license agreement and a supply agreement with GSK for the use of QS-21 Stimulon (the “GSK License Agreement” andthe “GSK Supply Agreement,” respectively). In January 2009, we entered into an Amended and Restated Manufacturing Technology Transfer and SupplyAgreement (the “Amended GSK Supply Agreement”) under which GSK has the right to manufacture all of its requirements of commercial grade QS-21Stimulon. GSK is obligated to supply us, or our affiliates, licensees, or customers, certain quantities of commercial grade QS-21 Stimulon for a stated periodof time. In March 2012, we entered into a First Right to Negotiate and Amendment Agreement amending the GSK License Agreement and the Amended GSKSupply Agreement to clarify and include additional rights for the use of QS-21 Stimulon (the “GSK First Right to Negotiate Agreement”). In addition, wegranted GSK the first right to negotiate for the purchase of Agenus or certain of our assets, which expired in March 2017. As consideration for entering intothe GSK First Right to Negotiate Agreement, GSK paid us an upfront, non-refundable payment of $9.0 million, $2.5 million of which is creditable towardfuture royalty payments. We refer to the GSK License Agreement, the Amended GSK Supply Agreement and the GSK First Right to Negotiate Agreementcollectively as the GSK Agreements. In 2017, we received a final milestone payment of $1.0 million from GSK and are no longer entitled to any additionalmilestone payments under the GSK Agreements. Under the terms of the Agreement, we are generally entitled to receive 2% royalties on net sales ofprophylactic vaccines for a period of 10 years after the first commercial sale of a resulting GSK product, with some exceptions; however, we have already soldthis potential royalty stream in its entirety as discussed in more detail below. The GSK License and Amended GSK Supply Agreements may be terminated byeither party upon a material breach if the breach is not cured within the time specified in the respective agreement. The termination or expiration of the GSKLicense Agreement does not relieve either party from any obligation which accrued prior to the termination or expiration. Among other provisions, thelicense rights granted to GSK survive expiration of the GSK License Agreement. The license rights and payment obligations of GSK under the Amended GSKSupply Agreement survive termination or expiration, except that GSK's license rights and future royalty obligations do not survive if we terminate due toGSK's material breach unless we elect otherwise.QS-21 Stimulon is a key component included in certain of GSK's proprietary adjuvant systems, and we believe that a number of GSK's vaccinecandidates currently in development are formulated using adjuvant systems containing QS-21 Stimulon, including its shingles vaccine that was approved bythe FDA and Health Canada in 2017. We do not incur clinical development costs for products partnered with GSK.In September 2015, we monetized a portion of the royalties associated with the GSK License Agreement to an investor group led by Oberland CapitalManagement for up to $115.0 million in the form of a non-dilutive royalty transaction. Under the terms of a Note Purchase Agreement with the investor group(the “Note Purchase Agreement”) we received $100.0 million at closing for which the investors had the right to receive 100% of our worldwide royaltiesunder the GSK License Agreement on sales of GSK’s shingles (HZ/su) and malaria (RTS,S) prophylactic vaccine products that contain our QS-21 Stimulonadjuvant to pay down principle and interest. In November 2017 and pursuant to the Note Purchase Agreement, we received an additional $15.0 million incash from the investors based on the approval of HZ/su by the FDA. Pursuant to the terms of this transaction, we retained the right to receive all royalties fromGSK after all principal, interest and other obligations were satisfied under the Note Purchase Agreement. The Note Purchase Agreement also allowed us tobuy back the loan and extinguish the notes early under pre-specified terms.In January 2018, we sold 100% of all royalties we were entitled to receive from GSK to Healthcare Royalty Partners III, L.P. and certain of its affiliates(collectively, “HCR”) and used the proceeds to extinguish the debt under the Note Purchase Agreement. HCR paid approximately $190.0 million at closingfor the royalty rights, of which approximately $161.9 was used to extinguish the prior notes, yielding us approximately $28.0 million in net proceeds. We arealso entitled to receive up to $40.35 million in milestone payments from HCR based on sales of GSK’s vaccines as follows: (i) $15.1 million upon reaching$2.0 billion last-twelve-months net sales any time prior to 2024 and (ii) $25.25 million upon reaching $2.75 billion last-twelve-months net sales any timeprior to 2026. We would owe a reverse milestone payment of approximately $25.9 million to HCR in 2021 if neither of the following sales milestones areachieved: (i) 2019 sales of the GSK vaccines exceed $1.0 billion or (ii) 2020 sales of the GSK vaccines exceed $1.75 billion (the “Rebate Payment”). As partof the transaction, we provided a guaranty for the potential Rebate Payment and secured the obligation with substantially all of our assets pursuant to asecurity agreement, subject to certain customary exceptions and excluding all assets necessary for AgenTus Therapeutics, Inc.ManufacturingManufacturing CPM AntibodiesIn December 2015, Agenus acquired an antibody manufacturing pilot plant in Berkeley, CA from XOMA Corporation (“XOMA”), which we refer to as“Agenus West.” A team of former XOMA employees with valuable chemistry, manufacturing and controls experience joined us and continue to operate thefacility. In addition, in February 2017, we amended our collaboration with7Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Incyte, transferring manufacturing responsibilities for all antibodies under the collaboration to them. This includes antibodies targeting GITR, OX40, TIM-3,LAG-3 and one undisclosed target. We have transferred the manufacturing know how to Incyte to support these endeavors and allow Agenus to focus on themanufacture of antibodies for some of our own CPM programs and those of existing and potential third-party collaborators. Since the acquisition of AgenusWest, we have made significant improvements in the plant, and added additional headcount increasing both scale and capacity. The plant is currentlyproviding antibody production for our lead programs. We aim to utilize our Agenus West pilot plant capabilities to accelerate antibody delivery, improvequality and increase product yield while providing us with greater manufacturing flexibility, all at reduced costs.Manufacturing Cancer VaccinesWe manufacture our cancer vaccine candidates in our Lexington, MA facility.Each Prophage vaccine is manufactured using a patient’s own tumor. After the patient undergoes surgery to remove cancerous tumor tissue, the tumoris shipped frozen in a specially designed kit provided by us to our Lexington, Massachusetts facility. Each Prophage vaccine is produced to a specificstandard, in a process taking approximately ten hours, after which it undergoes extensive quality testing for approximately two weeks. The turnaround timefrom the date of surgery to delivery of vaccine is approximately three to four weeks, which generally fits well with the patient’s recovery time from surgery.Once we release the vaccine, it is shipped frozen overnight to the hospital pharmacy or clinician. Prophage vaccines are given as a simple intradermalinjection.ASV and PSV vaccine candidates are manufactured using HSP70 loaded with synthetic peptide synthesized by approved manufacturers. The sequenceof the peptides is determined by sequencing and analysis of patient and tumor DNA and RNA and run through complex algorithms by our bioinformaticsgroup who have specialized knowledge of the attributes required to elicit immune responsiveness. This process takes several weeks, after which themanufactured vaccine undergoes extensive quality testing, including sterility testing, which takes a further two weeks.We have established, within a single facility, well-defined, cost efficient vaccine manufacturing under GMPs, including bioanalytical, quality controland quality assurance, logistics, distribution and supply chain management. After manufacturing, Prophage and ASV vaccine candidates are tested andreleased by our analytical and quality systems staff. The quality control organization performs a series of release assays designed to ensure that the productmeets all applicable specifications. Our quality assurance staff also reviews manufacturing and quality control records prior to batch release in an effort toassure conformance with current GMP (“cGMP”) as mandated by the FDA and foreign regulatory agencies.Our manufacturing staff is trained and routinely evaluated for conformance to rigorous manufacturing procedures and quality standards. Thisoversight is intended to ensure compliance with FDA and foreign regulations and to provide consistent vaccine output. Our quality control and qualityassurance staff is similarly trained and evaluated as part of our effort to ensure consistency in the testing and release of the product, as well as consistency inmaterials, equipment and facilities.QS-21 StimulonExcept in the case of GSK, we have retained worldwide manufacturing rights for QS-21 Stimulon, and we have the right to subcontract manufacturingfor QS-21 Stimulon. In addition, under the terms of our agreement with GSK, upon request by us, GSK is committed to supply certain quantities ofcommercial grade QS-21 Stimulon to us and our licensees for a fixed period of time.Intellectual Property PortfolioWe seek to protect our technologies through a combination of patents, trade secrets and know-how, and we currently own, co-own or have exclusiverights to approximately 35 issued United States patents and approximately 120 issued foreign patents. We also own, co-own or have exclusive rights toapproximately 30 pending United States patent applications and approximately 125 pending foreign patent applications. We may not have rights in allterritories where we may pursue regulatory approval for our product candidates. Through various acquisitions, we own, co-own, or have exclusive rights to a number of patents and patent applications directed to various methodsand compositions, including methods for identifying therapeutic antibodies and product candidates arising out of such entities’ technology platforms. Inparticular, we own patents and patent applications relating to our Retrocyte Display technology platform, a high throughput antibody expression platform forthe identification of fully-human and humanized monoclonal antibodies. This patent family is projected to expire between 2029 and 2031. We own, co-own,or have exclusive rights to patents and patent applications directed to various methods and compositions, including a patent directed to methods foridentifying phosphorylated proteins using mass spectrometry. This patent is projected to expire in 2023. We also own patents and patent applicationsrelating to the SECANT® platform, a platform used for the generation of novel monoclonal antibodies. This patent family is projected to expire between2028 and 2029. In addition, as we advance our research and development efforts with our institutional and corporate collaborators, we are seeking patentprotection for certain newly identified therapeutic antibodies and product candidates. We can provide no assurance that any of our patents, including thepatents that we acquired or in-licensed, will have commercial value, or that any of our existing or future patent applications, including the patentapplications that were acquired or in-licensed, will result in the issuance of valid and enforceable patents. Our issued patents covering Prophage vaccine andmethods of use thereof, alone or in combination with other agents, expired or will expire at various dates between 2015 and 2024. In particular, our issuedU.S. patents8Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.covering Prophage composition of matter expired in 2015. In addition, our issued patents covering QS-21 Stimulon composition of matter expired in 2008.We continue to explore means of extending the life cycle of our patent portfolio.Various patents and patent applications have been exclusively licensed to us by the following entities:University of VirginiaIn connection with our acquisition of PhosImmune in December 2015, we obtained exclusive rights to a portfolio of patent applications and oneissued patent relating to PTTs under a patent license agreement with the University of Virginia (“UVA”). The UVA license gives us exclusive rights todevelop and commercialize the PTT technology and an exclusive option to license any further PTT technology arising from ongoing research at UVA untilDecember 2018. Under the license agreement, we will pay low to mid-single digit running royalties on net sales of PTT products, and a modest flatpercentage of sublicensing income. In addition, we may be obligated to make milestone payments of up to $2.7 million for each indication of a licensed PTTproduct to complete clinical trials and achieve certain sales thresholds. The term of the UVA license agreement ends when the last of the licensed patentsexpires or becomes no longer valid. The UVA license agreement may be terminated as follows: (i) by UVA in connection with our bankruptcy or cessation ofbusiness relating to the licensed technology, (ii) by UVA if we commit a material, uncured breach or (iii) by us for our convenience on 180 days writtennotice.Ludwig Institute for Cancer ResearchOn December 5, 2014, our wholly-owned subsidiary, Agenus Switzerland Inc. (formerly known as 4-Antibody AG)(“4-AB”), entered into a licenseagreement with the Ludwig Institute for Cancer Research Ltd. (“Ludwig”), which replaced and superseded a prior agreement entered into between the partiesin May 2011. Pursuant to the terms of the license agreement, Ludwig granted 4-AB an exclusive, worldwide license under certain intellectual property rightsof Ludwig and Memorial Sloan Kettering Cancer Center arising from the prior agreement to further develop and commercialize GITR, OX40 and TIM-3antibodies. On January 25, 2016, we and 4-AB entered into a second license agreement with Ludwig, on substantially similar terms, to develop CTLA-4 andPD-1 antibodies. Pursuant to the December 2014 license agreement, 4-AB made an upfront payment of $1.0 million to Ludwig. The December 2014 licenseagreement also obligates 4-AB to make potential milestone payments of up to $20.0 million for events prior to regulatory approval of licensed GITR, OX40and TIM-3 products, and potential milestone payments in excess of $80.0 million if such licensed products are approved in multiple jurisdictions, in morethan one indication, and certain sales milestones are achieved. Under the January 2016 license agreement, we are obligated to make potential milestonepayments of up to $12.0 million for events prior to regulatory approval of CTLA-4 and PD-1 licensed products, and potential milestone payments of up to$32.0 million if certain sales milestones are achieved. Under each of these license agreements, we and/or 4-AB will also be obligated to pay low to mid-singledigit royalties on all net sales of licensed products during the royalty period, and to pay Ludwig a percentage of any sublicensing income, ranging from a lowto mid-double digit percentage depending on various factors. During the year ended December 31, 2017, we paid a percentage of sublicensing incometotaling $2.0 million to Ludwig under the license agreements. The license agreements may each be terminated as follows: (i) by either party if the other partycommits a material, uncured breach; (ii) by either party if the other party initiates bankruptcy, liquidation or similar proceedings; or (iii) by 4-AB or us (asapplicable) for convenience upon 90 days’ prior written notice. The license agreements also contain customary representations and warranties, mutualindemnification, confidentiality and arbitration provisions.University of Connecticut Health CenterIn May 2001, we entered into a license agreement with the University of Connecticut Health Center (“UConn”) which was amended in March 2003and June 2009. Through the license agreement, we obtained an exclusive, worldwide license to patent rights resulting from inventions discovered under aresearch agreement that was effective from February 1998 until December 2006. The term of the license agreement ends when the last of the licensed patentsexpires in 2028 or becomes no longer valid. UConn may terminate the agreement: (1) if, after 30 days written notice for breach, we continue to fail to makeany payments due under the license agreement, or (2) we cease to carry on our business related to the patent rights or if we initiate or conduct actions in orderto declare bankruptcy. We may terminate the agreement upon 90 days written notice. We are required to make royalty payments on any obligations createdprior to the effective date of termination of the license agreement. Upon expiration or termination of the license agreement due to breach, we have the right tocontinue to manufacture and sell products covered under the license agreement which are considered to be works in progress for a period of six months. Thelicense agreement contains aggregate milestone payments of approximately $1.2 million for each product we develop covered by the licensed patent rights.These milestone payments are contingent upon regulatory filings, regulatory approvals, and commercial sales of products. We have also agreed to payUConn a royalty on the net sales of products covered by the license agreement as well as annual license maintenance fees beginning in May 2006. Royaltiesotherwise due on the net sales of products covered by the license agreement may be credited against the annual license maintenance fee obligations. Underthe March 2003 amendment, we agreed to pay UConn an upfront payment and to make future payments for each patent or patent application with respect towhich we exercised our option under the research agreement. As of December 31, 2017, we had paid approximately $900,000 to UConn under the licenseagreement. The license agreement gives us complete discretion over the commercialization of products covered by the licensed patent rights but also requiresus to use commercially reasonable diligent efforts to introduce commercial products within and outside the United States. If we fail to meet these diligencerequirements, UConn may be able to terminate the license agreement.9Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Regulatory ComplianceGovernmental authorities in the United States and other countries extensively regulate the pre-clinical and clinical testing, manufacturing, labeling,storage, record keeping, advertising, promotion, export, marketing and distribution, among other things, of our investigational product candidates. In theUnited States, the FDA under the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act and other federal statutes and regulations, subjectpharmaceutical products to rigorous review.In order to obtain approval of a new product from the FDA, we must, among other requirements, submit proof of safety and efficacy as well as detailedinformation on the manufacture and composition of the product. In most cases, this proof entails extensive pre-clinical, clinical, and laboratory tests. Beforeapproving a new drug or marketing application, the FDA may also conduct pre-licensing inspections of the company, its contract research organizationsand/or its clinical trial sites to ensure that clinical, safety, quality control, and other regulated activities are compliant with Good Clinical Practices (“GCP”),or Good Laboratory Practices (“GLP”), for specific non-clinical toxicology studies. The FDA may also require confirmatory trials, post-marketing testing, andextra surveillance to monitor the effects of approved products, or place conditions on any approvals that could restrict the commercial applications of theseproducts. Once approved, the labeling, advertising, promotion, marketing, and distribution of a drug or biologic product must be in compliance with FDAregulatory requirements.In Phase 1 clinical trials, the sponsor tests the product in a small number of patients or healthy volunteers, primarily for safety at one or more doses.Phase 1 trials in cancer are often conducted with patients who have end-stage or metastatic cancer. In Phase 2, in addition to safety, the sponsor evaluates theefficacy of the product in a patient population somewhat larger than Phase 1 trials. Phase 3 trials typically involve additional testing for safety and clinicalefficacy in an expanded population at geographically dispersed test sites. The FDA may order the temporary or permanent discontinuation of a clinical trialat any time.The sponsor must submit to the FDA the results of pre-clinical and clinical testing, together with, among other things, detailed information on themanufacture and composition of the product, in the form of a new drug application (“NDA”), or in the case of biologics, a BLA. In a process that can take ayear or more, the FDA reviews this application and, when and if it decides that adequate data are available to show that the new compound is both safe andeffective for a particular indication and that other applicable requirements have been met, approves the drug or biologic for marketing.Whether or not we have obtained FDA approval, we must generally obtain approval of a product by comparable regulatory authorities of internationaljurisdictions prior to the commencement of marketing the product in those jurisdictions. We are also subject to cGMP, GCP, and GLP compliance obligationsand are subject to inspection by international regulatory authorities. International requirements may in some circumstances be more rigorous than U.S.requirements and may require additional investment in manufacturing process development, non-clinical studies, clinical studies, and record-keeping that arenot required for U.S. regulatory compliance or approval. The time required to obtain this approval may be longer or shorter than that required for FDAapproval and can also require significant resources in time, money and labor.Under the laws of the United States, the countries of the European Union and other nations, we and the institutions where we sponsor research aresubject to obligations to ensure the protection of personal information of human subjects participating in our clinical trials. We have instituted proceduresthat we believe will enable us to comply with these requirements and the contractual requirements of our data sources. The laws and regulations in this areaare evolving, and further regulation, if adopted, could affect the timing and the cost of future clinical development activities.We are also subject to regulation under the Occupational Safety and Health Act, the Toxic Substances Control Act, the Resource Conservation andRecovery Act, and other current and potential future federal, state, or local regulations. Our research and development activities involve the controlled use ofhazardous materials, chemicals, biological materials, various radioactive compounds, and for some experiments we use recombinant DNA. We believe thatour procedures comply with the standards prescribed by local, state, and federal regulations; however, the risk of injury or accidental contamination cannotbe completely eliminated. We conduct our activities in compliance with the National Institutes of Health Guidelines for Recombinant DNA Research.Additionally, the U.S. Foreign Corrupt Practices Act (“FCPA”), prohibits U.S. corporations and their representatives from offering, promising,authorizing or making payments to any foreign government official, government staff member, political party or political candidate in an attempt to obtain orretain business abroad. The scope of the FCPA includes interactions with certain healthcare professionals in many countries. Other countries have enactedsimilar anti-corruption laws and/or regulations.CompetitionCompetition in the pharmaceutical and biotechnology industries is intense. Many pharmaceutical or biotechnology companies have products on themarket and are actively engaged in the research and development of products for the treatment of cancer.Many competitors have substantially greater financial, manufacturing, marketing, sales, distribution, and technical resources, and more experience inresearch and development, clinical trials, and regulatory matters, than we do. Competing companies developing or acquiring rights to more efficacioustherapeutic products for the same diseases we are targeting, or which offer significantly lower costs of treatment, could render our products noncompetitive orobsolete. See Part I-Item 1A. “Risk Factors-Risks10Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Related to our Business-Our competitors may have superior products, manufacturing capability, selling and marketing expertise and/or financial and otherresources.”Academic institutions, governmental agencies, and other public and private research institutions conduct significant amounts of research inbiotechnology, medicinal chemistry and pharmacology. These entities have become increasingly active in seeking patent protection and licensing revenuesfor their research results. They also compete with us in recruiting and retaining skilled scientific talent.The CPM landscape is crowded with several competitors developing assets against a number of targets. Development plans are spread out acrossvarious indications and lines of therapy, either alone or in combination with other assets. Competitors range from small cap to large cap companies, withassets in pre-clinical or clinical stages of development. Therefore, the landscape is dynamic and constantly evolving. We and our partners have CPMantibody programs currently in clinical stage development targeting PD-1, CTLA-4, GITR and OX40. We are aware of many companies that have antibody-based products on the market or in clinical development that are directed to the same biological targets as these programs, including, without limitation, thefollowing: (1) Bristol-Myers Squibb (“BMS”) markets ipilimumab, an anti-CTLA-4 antibody, and nivolumab, an anti-PD-1 antibody, and is developingagonists to GITR and OX-40, (2) Merck has an approved anti-PD-1 antibody in the United States, as well as an anti-CTLA-4 antagonist and an anti-GITRagonist in clinical development, (3) Ono Pharmaceuticals has an approved anti-PD-1 antibody in Japan, (4) AstraZeneca has an approved anti PD-L1antibody, as well as anti-CTLA-4, PD-1, GITR and OX40 targeting antibodies in development, (5) Pfizer has an approved anti-PD-L1 (with Merck KgaA) aswell as anti-PD-1, and anti-OX40 antibodies in clinical development, (6) Novartis has anti-PD-1, anti-PD-L1 and anti-GITR antibodies in clinical trials, and(7) Roche/Genentech has an approved anti-PD-L1 antibody. We are also aware of other competitors with PD-1/PD-L1 antibodies in clinical development,including AbbVie, Arcus Biosciences, Boehringer Ingelheim, Tesaro, Beigene, Regeneron, Eli Lilly, Jiangsu HengRui Medicine, Shanghai Junshi,Macrogenics, CytomX, Janssen, CBT Pharmaceuticals, Checkpoint Therapeutics, CStone Pharmaceuticals, Livzon MabPharm Inc and Suzhou Alphamab. Weare also aware of competitors with pre-clinical antibodies against these targets. In addition, we are also aware of competitors with clinical stage antibodiesagainst targets in our earlier stage programs such as TIM-3, LAG-3, CD137, TIGIT and other undisclosed targets. These include, but are not limited to, BMS,Pfizer, Novartis, Merck, Roche, Tesaro, Eli Lilly, OncoMed, Boehringer Ingelheim, Astellas and Regeneron. Additionally, we are also aware of competitorswith assets against these targets that are in pre-clinical development. There is no guarantee that our antibody product candidates will be able to compete withour competitors’ antibody products and product candidates.We are planning to advance combinations of our anti-CTLA-4 antibody, AGEN1884, with Keytruda in 1L NSCLC, where Keytruda is currentlyapproved. Specifically, we will be evaluating efficacy within a subset of patients who express ≥50% PD-L1 protein biomarker levels. We are aware ofcompetitors who have approved immunotherapy products in this indication, including having a label specifically directed at this patient subset, such asMerck (anti-PD-1 monotherapy). We are also aware of industry sponsored clinical trials, including exploratory studies, that are directed at this specific patientpopulation. These include, but are not restricted to, Incyte/Merck (anti-IDO + anti-PD-1), Merck (anti-PD-1 + anti-CTLA-4), Regeneron (anti-PD-1), Roche(anti-PD-L1), Merck KgaA / Pfizer (anti-PD-L1), and Tesaro (anti-PARP + anti-PD-1). We are also aware of competitors who have approved immunotherapiesor have published positive Phase 3 data for immunotherapies in 1L NSCLC. These include, and are not restricted to, Merck, BMS, and Roche. Additionalcompetitors have ongoing clinical trials for immunotherapies in the 1L NSCLC setting, across PD-L1 expression levels.We are planning to develop our anti PD-1 antibody in second line cervical cancer. We are aware of industry sponsored clinical trials, includingexploratory studies that are underway in cervical cancer. Our competitors include, but are not restricted to, Regeneron (anti-PD-1), Merck (anti-PD-1), OnoPharmaceuticals and BMS (anti-PD-1 alone or in combination with anti-CTLA-4 or anti-LAG-3 or anti-IDO), Advaxis (HPV targeting vaccine alone or incombination with AstraZeneca’s anti-PD-L1 antibody or BMS’ anti-PD-1 antibody) and Lion Biotechnologies (autologous TILs). We are also aware thatAdvaxis has submitted a conditional Marketing Authorization Application (“MAA”) for its HPV targeting vaccine in the European Union. Additionally, weare also aware of other early stage clinical trials testing alternate CPM targets in cervical cancer patients. These include, but are not restricted to, OX40 +/-CD137 agonists (Pfizer) and anti-PD-1 + anti-ICOS (GSK/Merck).We have autologous vaccine programs in development including our Prophage vaccine in clinical development for GBM and our neo-antigen basedAutoSynVax vaccine in clinical development. We are aware of many companies pursuing personalized cancer vaccines in pre-clinical or clinicaldevelopment, including, without limitation, the following: Aduro Biotech, Neon Therapeutics, Gritstone Oncology, Advaxis/Amgen, BioNTech,Moderna/Merck, Genocea Biosciences, Argos Therapeutics, EpiVax Inc. Nouscom, Immatics, EpiVax Inc., Achilles Therapeutics and BrightPathBiotherapeutics.Several companies have products that utilize similar technologies and/or patient-specific medicine techniques that compete with our HSP basedvaccines. Schering Corporation, a subsidiary of Merck, markets temozolomide for treatment of patients with ndGBM and refractory astrocytoma. Othercompanies are developing vaccines for the treatment of patients with ndGBM, including but not limited to Northwest Biotherapeutics (DC-Vax), MimivaxInc. (SurVaxM) and Annias Immunotherapeutics (CMV Vaccine). Other companies may begin development programs as well.11Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.To the extent we develop our vaccines in other indications or in combination with other product candidates, such as available standard of care agents(Avastin®), or with CPMs, they could face additional competition in those indications or in those combinations. In addition, and prior to regulatory approval,if ever, our vaccines and our other product candidates may compete for access to patients with other products in clinical development, with productsapproved for use in the indications we are studying, or with off-label use of products in the indications we are studying. We anticipate that we will faceincreased competition in the future as new companies enter markets we seek to address and scientific developments surrounding immunotherapy and othertraditional cancer and infectious disease therapies continue to accelerate.We are aware of compounds that claim to be comparable to QS-21 Stimulon that are being used in clinical trials. Several other vaccine adjuvants are indevelopment and could compete with QS-21 Stimulon for inclusion in vaccines in development. These adjuvants include, but are not limited to,(1) oligonucleotides, under development by Pfizer, Idera, and Dynavax, (2) MF59, under development by Novartis, (3) IC31, under development by Intercell(now part of Valneva), and (4) MPL, under development by GSK. In the past, we have provided QS-21 Stimulon to other entities under materials transferarrangements. In at least one instance, it is possible that this material was used unlawfully to develop synthetic formulations and/or derivatives of QS-21. Inaddition, companies such as Adjuvance Technologies, Inc., CSL Limited, and Novavax, Inc., as well as academic institutions and manufacturers of saponinextracts, are developing saponin adjuvants, including derivatives and synthetic formulations. These sources may be competitive to our ability to executefuture partnering and licensing arrangements involving QS-21 Stimulon. The existence of products developed by these and other competitors, or otherproducts of which we are not aware, or which other companies may develop in the future, may adversely affect the marketability of products developed orsold using QS-21 Stimulon.We are also aware of a third party that manufactures pre-clinical material purporting to be comparable to QS-21 Stimulon. The claims being made bythis third party may create marketplace confusion and have an adverse effect on the goodwill generated by us and our partners with respect to QS-21Stimulon. Any diminution of this goodwill may have an adverse effect on our ability to commercialize future products, if any, incorporating this technology,either alone or with a third party.EmployeesAs of February 28, 2018, we had 255 employees, of whom 81 were PhDs and one was an MD. None of our employees are subject to a collectivebargaining agreement. We believe that we have good relations with our employees.Corporate HistoryAntigenics L.L.C. was formed as a Delaware limited liability company in 1994 and was converted to Antigenics Inc., a Delaware corporation, inFebruary 2000 in conjunction with our initial public offering of common stock. On January 6, 2011, we changed our name from Antigenics Inc. to AgenusInc.Availability of Periodic SEC ReportsOur Internet website address is www.agenusbio.com. We make available free of charge through our website our annual reports on Form 10-K, quarterlyreports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the SecuritiesExchange Act of 1934, as amended (“Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish suchmaterial to, the Securities and Exchange Commission (the “SEC”). The contents of our website are not part of, or incorporated into, this document. Inaddition, we regularly use our website to post information regarding our business, product development programs and governance, and we encourageinvestors to use our website, particularly the information in the sections entitled “Financial” and “News,” as sources of information about us.The public may read and copy any materials filed by Agenus with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Room 1580,Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SECmaintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with theSEC at www.sec.gov.The contents of the websites referred to above are not incorporated into this filing. Further, our references to the URLs for these websites are intendedto be inactive textual references only. Item 1A.Risk FactorsOur future operating results could differ materially from the results described in this Annual Report on Form 10-K due to the risks and uncertaintiesdescribed below. You should consider carefully the following information about risks below in evaluating our business. If any of the following risks actuallyoccur, our business, financial conditions, results of operations and future growth prospects would likely be materially and adversely affected. In thesecircumstances, the market price of our common stock would likely decline.We cannot assure investors that our assumptions and expectations will prove to be correct. Important factors could cause our12Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.actual results to differ materially from those indicated or implied by forward-looking statements. See “Note Regarding Forward-Looking Statements” in thisAnnual Report on Form 10-K. Factors that could cause or contribute to such differences include those factors discussed below.Risks Related to our BusinessIf we incur operating losses for longer than we expect, or we are not able to raise additional capital, we may be unable to continue our operations, orwe may become insolvent.Our net losses for the years ended December 31, 2017, 2016, and 2015, were $120.7 million, $127.0 million, and $87.9 million, respectively. Weexpect to incur additional losses over the next several years as we continue to research and develop our technologies and pursue partnering opportunities,regulatory strategies, commercialization, and related activities. Furthermore, our ability to generate cash from operations is dependent on the success of ourlicensees and collaboration partners, as well as the likelihood and timing of new strategic licensing and partnering relationships and/or successfuldevelopment and commercialization of product candidates, including through our antibody programs and platforms, our vaccine programs, and our saponin-based vaccine adjuvants.On December 31, 2017, we had $60.2 million in cash and cash equivalents and short-term investments. We believe that, based on our current plansand activities, including additional funding we anticipate from multiple sources between now and the end of the second quarter of 2018, including out-licensing and/or partnering opportunities, our working capital resources at December 31, 2017, along with the net proceeds of approximately $28.0 millionreceived from HCR in January 2018 in connection with our royalty transaction, will be sufficient to satisfy our liquidity requirements through the first quarterof 2019. We also continue to monitor the likelihood of success of our key initiatives and can discontinue funding of such activities if they do not prove to besuccessful, restrict capital expenditures and/or reduce the scale of our operations if necessary.To date, we have financed our operations primarily through the sale of equity and debt securities. In order to finance future operations, we will berequired to raise additional funds in the capital markets, through arrangements with collaboration partners or from other sources. Additional financing maynot be available on favorable terms, or at all. If we are unable to raise additional funds when we need them or if we incur operating losses for longer than weexpect, we may not be able to continue some or all of our operations, or we may become insolvent. We also may be forced to license or sell technologies toothers under agreements that are on unfavorable terms or allocate to third parties substantial portions of the potential value of these technologies.There are a number of factors that will influence our future capital requirements, including, without limitation, the following: •the number and characteristics of the product candidates we and our partners pursue; •our and our partners’ ability to successfully develop, manufacture, and commercialize product candidates; •the scope, progress, results and costs of researching and developing our future product candidates and conducting pre-clinical and clinicaltrials; •the timing of, and the costs involved in, obtaining regulatory approvals for our and our licensees’ product candidates; •the cost of manufacturing; •our ability to establish and maintain strategic partnerships, licensing or other arrangements and the financial terms of such arrangements; •the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing our intellectual property rights; •the costs associated with any successful commercial operations; and •the timing, receipt and amount of sales of, or royalties on, our future products and those of our partners, if any.General economic conditions in the United States economy and abroad may have a material adverse effect on our liquidity and financial condition,particularly if our ability to raise additional funds is impaired. The ability of potential patients and/or health care payers to pay for our future products, if any,could also be adversely impacted, thereby limiting our potential revenue. In addition, any negative impacts from any deterioration in the credit markets onour collaboration partners could limit potential revenue from our product candidates.Our obligations to HCR and the holders of our 2015 Subordinated Notes could materially and adversely affect our liquidity.In January 2018, we and our wholly-owned subsidiary, Antigenics LLC (“Antigenics”), entered into a Royalty Purchase Agreement (“RPA”) HCR,pursuant to which HCR purchased 100% of Antigenics’ worldwide rights to receive royalties from GSK on sales of GSK’s vaccines containing our QS-21Stimulon adjuvant. As consideration for the purchase of the royalty rights, HCR paid $190.0 million at closing, less certain transaction expenses. Of theclosing proceeds, approximately $161.9 million was used to redeem13Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Antigenics’ $115.0 million principal amount of notes issued pursuant to the Note Purchase Agreement with Oberland Capital SA Zermatt LLC, and weretained approximately $28.0 million of net proceeds. Antigenics is also entitled to receive up to $40.35 million in milestone payments based on sales ofGSK’s vaccines as follows: (i) $15.1 million upon reaching $2.0 billion last-twelve-months net sales any time prior to 2024 and (ii) $25.25 million uponreaching $2.75 billion last-twelve-months net sales any time prior to 2026. Antigenics will owe approximately $25.9 million to HCR in 2021 if neither of thefollowing sales milestones are achieved: (i) 2019 sales of GSK’s vaccines exceed $1.0 billion or (ii) 2020 sales GSK’s vaccines exceed $1.75 billion (the“Rebate Payment”). As part of the transaction, we provided a guaranty for the potential Rebate Payment and secured the obligation with substantially all ofour assets pursuant to a security agreement. If GSK’s sales do not achieve either of the relevant milestones and we are obligated to make the Rebate Payment,our liquidity could be materially and adversely affected.In February 2015, we exchanged senior subordinated promissory notes that we issued in 2013 for new senior subordinated promissory notes in theaggregate principal amount of $5.0 million with annual interest at 8%, and we issued an additional $9.0 million principal amount of such notes (the “2015Subordinated Notes”). The 2015 Subordinated Notes were originally due February 2018, and in March 2017, we amended the 2015 Subordinate Notes toextend the maturity date to February 2020. The 2015 Subordinated Notes include default provisions that allow for the acceleration of the principal paymentof the 2015 Subordinated Notes in the event we become involved in certain bankruptcy proceedings, become insolvent, fail to make a payment of principalor (after a grace period) interest on the 2015 Subordinated Notes, default on other indebtedness with an aggregate principal balance of $13.5 million or moreif such default has the effect of accelerating the maturity of such indebtedness, or become subject to a legal judgment or similar order for the payment ofmoney in an amount greater than $13.5 million if such amount will not be covered by third-party insurance. If we default on the 2015 Subordinated Notesand the repayment of such indebtedness is accelerated, our liquidity could be materially and adversely affected.If we do not have sufficient cash on hand to pay the Rebate Payment when due, or to otherwise service our 2015 Subordinated Notes, we may berequired, among other things, to: •seek additional financing in the debt or equity markets; •refinance or restructure all or a portion of our indebtedness; •sell, out-license, or otherwise dispose of assets; and/or •reduce or delay planned expenditures on research and development and/or commercialization activities.Such measures might not be sufficient to enable us to make principal and interest payments. In addition, any such financing, refinancing, or sale ofassets might not be available on favorable terms, if at all.We are dependent upon our collaboration with Incyte to further develop, manufacture and commercialize antibodies against certain targets. If we orIncyte fail to perform as expected, the potential for us to generate future revenues under the collaboration could be significantly reduced, the developmentand/or commercialization of these antibodies may be terminated or substantially delayed, and our business could be adversely affected.In February 2017, we amended the terms of our collaboration agreement with Incyte to, among other things, convert the GITR and OX40 programsfrom profit-share programs, where we and Incyte shared all costs and profits on a 50:50 basis, to royalty-bearing programs, where Incyte funds 100% of thecosts and we are eligible for potential milestones and royalties. In addition, the profit-share programs relating to TIGIT and one undisclosed target wereremoved from the collaboration, with TIGIT reverting to Agenus and the undisclosed target reverting to Incyte, each with a potential 15% royalty to the otherparty on any global net sales. The remaining three royalty-bearing programs in the collaboration targeting TIM-3, LAG-3 and one undisclosed target remainunchanged, and there are no more profit-share programs under the collaboration. For each program in the collaboration, we serve as the lead for pre-clinicaldevelopment activities through the filing of an IND, and Incyte has exclusive rights and all decision-making authority for manufacturing, clinicaldevelopment and commercialization. Accordingly, the timely and successful completion by Incyte of clinical development and commercialization activitieswill significantly affect the timing and amount of any royalties or milestones we may receive under the collaboration agreement. In addition, in March 2017we transferred manufacturing responsibilities to Incyte for antibodies under that collaboration. Any delays or weaknesses in the ability of Incyte tosuccessfully manufacture could have an adverse impact on those programs. Incyte’s activities will be influenced by, among other things, the efforts andallocation of resources by Incyte, which we cannot control. If Incyte does not perform in the manner we expect or fulfill its responsibilities in a timelymanner, or at all, the clinical development, manufacturing, regulatory approval, and commercialization efforts related to antibodies under the collaborationcould be delayed or terminated. There can be no assurance that any of the development, regulatory or sales milestones will be achieved, or that we willreceive any future milestone or royalty payments under the collaboration agreement. 14Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.In addition, our collaboration with Incyte may be unsuccessful due to other factors, including, without limitation, the following: •Incyte may terminate the agreement or any individual program for convenience upon 12 months’ notice; •Incyte has control over the development of assets in the collaboration; •Incyte may change the focus of its development and commercialization efforts or prioritize other programs more highly and, accordingly,reduce the efforts and resources allocated to our collaboration; •Incyte may choose not to develop and commercialize antibody products, if any, in all relevant markets or for one or more indications, if at all;and •If Incyte is acquired during the term of our collaboration, the acquirer may have competing programs or different strategic priorities that couldcause it to reduce its commitment to our collaboration.If Incyte terminates our collaboration agreement, we may need to raise additional capital and may need to identify and come to agreement withanother collaboration partner to advance certain of our antibody programs. Even if we are able to find another partner, this effort could cause delays in ourtimelines and/or additional expenses, which could adversely affect our business prospects and the future of our antibody product candidates under thecollaboration.Our antibody programs are in early stage development, and there is no guarantee that we or our partners will be successful in advancing antibodyproduct candidates into and through clinical development.Our antibody programs are currently in early stage development, and many of our antibody programs are pre-clinical. Even if our pre-clinical studiesor our and/or our partners’ clinical trials produce positive results, they may not necessarily be predictive of the results of future clinical trials. Manycompanies in the pharmaceutical, biopharmaceutical and biotechnology industries have suffered significant setbacks in clinical trials after achievingpositive results in pre-clinical development or earlier clinical trials, and we cannot be certain that we will not face similar setbacks. These setbacks have beencaused by, among other things, pre-clinical findings made while clinical trials were underway or safety or efficacy observations made in clinical trials,including adverse events. Moreover, pre-clinical and clinical data are often susceptible to varying interpretations and analyses, and many companies thatbelieved their product candidates performed satisfactorily in pre-clinical studies and clinical trials nonetheless failed to obtain regulatory approval. If we andour partners fail to produce positive results in clinical trials of antibodies, our business and financial prospects would be materially adversely affected.Although we are targeting to file our first BLA as early as the second half of 2019 and becoming a commercial organization in 2020, there is noguarantee that we will be able to do so on that timeline or at all. Our stated timelines are aggressive and subject to various factors outside of our control,including patient accrual rates for our clinical trials. If our trials are unable to accrue patients at the rate we expect, we are unlikely to hit our anticipatedtimelines and our business and financial prospects could be materially adversely affected.Similarly, although we are striving to file numerous INDs to advance novel antibodies and cell therapy candidates into the clinic in the next 12-18months, there is no guarantee that we will be able to do so on that timeline, if at all. Our stated timelines are aggressive and subject to various risks, includingresource constraints. If we are unable to advance novel candidates into the clinic as planned due to resource constraints or otherwise, our business andpartnering prospects could be materially adversely affected.We have undergone significant growth across multiple locations over the past few years, and are focusing on further enhancing core areas andcapabilities as we move toward commercialization. In addition, we have consolidated certain sites while expanding others to focus on our core prioritiesand future needs. We may encounter difficulties in managing these growth and/or consolidation efforts, either of which could disrupt our operations.Since our acquisition of Agenus Switzerland Inc., formerly known as 4-Antibody AG (“4-AB”) in January 2014, we have more than tripled ourheadcount, in part through various acquisitions and the expansion of our research and development activities both nationally and internationally. While wehave restructured our organization over the past two years, we expect to continue increasing our headcount in certain core areas as we continue to build ourdevelopment, manufacturing and commercialization capabilities and integrate our acquired technology platforms. To manage these organizational changes,we must continue to implement and improve our managerial, operational and financial systems and continue to recruit, train and retain qualified personnel. Ifour management is unable to effectively manage our growth, our expenses may increase more than expected, our ability to generate revenue could bereduced, and we may not be able to implement our business strategy.As part of our efforts to optimize efficiency across our organization, we closed our Jena office in 2016 and consolidated these operations in the UnitedKingdom and Switzerland. In 2017, we completed a reduction in force in our Lexington, MA facility, which included certain members of our management, inline with our prioritization efforts, and we closed our office in Basel, Switzerland and transferred our research and development assets and capabilities there tothe United Kingdom. If these transition efforts prove to15Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.be unsuccessful, or if we identify management or operational gaps in connection with our changes, it could cause delays in discovery timelines and increasedcosts for certain of our internal and partnered programs, which also could have an adverse effect on our business, financial condition and results of operations.Our synthetic Heat Shock Protein (“HSP”) peptide-based platform is in early stage development, and there is no guarantee that a product candidatewill progress from this platform.In June 2014, we reported positive results from a Phase 2 trial with HerpVTM, a vaccine candidate for genital herpes from our synthetic HSP peptide-basedplatform. While the HerpV Phase 2 trial met its formal endpoints, subjects were not followed long enough to determine whether the magnitude of the effect onviral load would be sufficient to significantly reduce the incidence, severity, or duration of herpetic lesions or reduce the risk of viral transmission. Althoughwe have not advanced this program into a Phase 3 trial, we initiated our ASV synthetic cancer vaccine program based on our prior findings with this platform.We initiated our first clinical trial for our first AutoSynVax product candidate in 2017; however, there is no guarantee that results of this trial or any potentialfuture clinical trials will be positive. Although we are targeting to initiate a combination trial with ASV and one or more of our antibodies in 2018, there is noguarantee that we will be able to do so on that timeline or at all. Furthermore, it is possible that research and discoveries by others will render any productcandidate from this platform as obsolete or noncompetitive.We may not be able to advance clinical development or commercialize our cancer vaccine candidates or realize any benefits from these programs.The probability of future clinical development efforts leading to marketing approval and commercialization of Prophage vaccines is highly uncertain.Prophage vaccines have been in clinical development for over 16 years, including multiple Phase 1 and 2 trials in eight different tumor types as well asrandomized Phase 3 trials in metastatic melanoma and adjuvant renal cell carcinoma. To date, none of our clinical trials with Prophage vaccines have resultedin a marketing approval, except in Russia where commercialization of the approved product was unsuccessful. All of our currently planned trials involvingProphage are intended to be sponsored by third parties, and there is no guarantee that they will occur at all. In addition, while we believe Prophage vaccinesmay provide clinical benefit to some patients as a monotherapy and in combination with other therapies, there is no guarantee that, if completed, subsequentProphage trials would yield useful translational and/or efficacy data.Our current clinical trial plans with Prophage vaccines entails one government sponsored IND in which we provide support and product supply. Forthird-party sponsored trials, we lack the ability to control trial design, timelines, tumor tissue procurement and data availability. For example, in January2017, we announced a clinical trial collaboration with the National Cancer Institute (“NCI”), whereby the NCI is conducting a double-blind, randomizedcontrolled Phase 2 trial to evaluate the effect of Prophage vaccine in conjunction with Merck’s pembrolizumab on the overall survival rate of patients withnewly diagnosed glioblastoma (“ndGBM”). In addition, the Phase 2 trial of Prophage vaccine in combination with bevacizumab in patients with surgicallyresectable recurrent glioma that was being conducted under the sponsorship of the Alliance for Clinical Trials in Oncology, a cooperative group of the NCI,has been closed. In addition, our other cancer vaccine programs (ASV and PSV) are in Phase 1 and pre-clinical development, respectively, and there is noguarantee that they will successfully advance in and through the clinic. ASV also utilizes QS-21 Stimulon, and any inability or delay in securing adequatesupplies of the adjuvant could have an adverse impact on the program or otherwise delay timelines. Current and future studies may eventually be terminateddue to, among other things, slow enrollment, lack of probability that they will yield useful translational and/or efficacy data, lengthy timelines, or theunlikelihood that results will support timely or successful regulatory filings.Changes in our manufacturing strategies, manufacturing problems, or increased demand may cause delays, unanticipated costs, or loss of revenuestreams within or across our programs.Our antibody programs will require substantial manufacturing development and investment to progress. We are currently progressing a portfolio ofantibody programs that are at different stages of development. If these efforts are delayed or do not produce the desired outcomes, this will cause delays indevelopment timelines and increased costs, which may cause us to limit the size and scope of our efforts and studies. In December 2015, we secured our ownantibody manufacturing capabilities with the purchase of a manufacturing pilot plant from XOMA Corporation (“XOMA”), and we expect this facility tosupply us with antibody drug substance requirements through clinical proof-of-concept studies. We will also need to develop or secure later phase and/orcommercial manufacturing capabilities for larger, registrational studies or any commercial supply requirements. For the programs for which we will produceour own drug substance, we will continue to rely on third parties for fill-finish services and other parts of the manufacturing process. These services includethe storage and maintenance of our drug substance during all stages of the manufacturing process. While we maintain insurance to cover certain potentiallosses, there is no guarantee that our insurance coverage will be adequate. Furthermore, we currently rely on contract manufacturing organizations (“CMOs”)and contract research organizations (“CROs”) to support some of our existing antibody programs. Our dependence on external CMOs for the manufacture ofcertain antibodies results in intrinsic risks to our performance, timelines, and costs of our accelerated development plans, and which16Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.could divert resources away from our antibody programs and/or lead to delays in the development of our product candidates. In the event that our antibodyprograms require progressively larger production capabilities, our options for qualified CMOs may become more limited.The long-term success of the antibody pilot plant manufacturing facility and capabilities that we acquired from XOMA will depend, in part, on ourability to realize the anticipated synergies, business opportunities and growth prospects from combining our manufacturing facilities in Lexington, MA withthe antibody pilot plant manufacturing facility in Berkeley, CA. We may never realize these anticipated synergies, business opportunities and growthprospects. Assumptions underlying estimates of expected cost savings as a result of the acquisition of the antibody pilot plant manufacturing facility may beinaccurate. If any of these factors limit our ability to successfully manufacture antibodies to support our current and future clinical trials, the expectations offuture results of operations, including certain cost savings and synergies expected to result from the acquisition of XOMA’s antibody pilot plantmanufacturing facility, might not be met. We currently manufacture our Prophage vaccines in our Lexington, MA facility. Manufacturing of the Prophage vaccines is complex, and variousfactors could cause delays or an inability to supply the vaccine. Deviations in the processes controlling manufacture or deficiencies in size or quality ofsource material could result in production failures. Specific vulnerabilities in the process may exist in tumor types in which quality or quantity of tissue islimited. In addition, regulatory bodies may require us to make our manufacturing facility a single product facility. In such an instance, we would no longerhave the ability to manufacture Prophage vaccines in addition to other product candidates in our current facility.We have given our corporate QS-21 Stimulon licensee, GSK, manufacturing rights for QS-21 Stimulon for use in their product programs. We haveretained the right to manufacture QS-21 for ourselves and third parties, although no other such programs are anticipated to bring us substantial revenues inthe near future, if ever. Although we have the right to secure certain quantities of QS-21 from GSK and we have some internal supply in-house, we currentlydo not have an alternative long term supply partner for this adjuvant.Our ability to efficiently manufacture our product candidates is contingent, in part, upon our own, and our CMOs’, ability to ramp up production in atimely manner without the benefit of years of experience and familiarity with the processes, which we may not be able to adequately transfer. We currentlyrely upon and expect to continue to rely upon third parties, potentially including our collaborators or licensees, to produce materials required to support ourproduct candidates, pre-clinical studies, clinical trials, and any future commercial efforts. A number of factors could cause production interruptions at eitherour manufacturing facility or the facilities of our CMOs or suppliers, including equipment malfunctions, labor or employment retention problems, naturaldisasters, power outages, terrorist activities, or disruptions in the operations of our suppliers. Alternatively, there is the possibility we may have excessmanufacturing capacity if product candidates do not progress as planned.As mentioned above, reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured all of our productcandidates ourselves, including reliance on the third party for regulatory compliance, the possibility of breach of the manufacturing agreement by the thirdparty because of factors beyond our control, and the possibility of termination or non-renewal of the agreement by the third party, based on its own businesspriorities, at a time that is costly or inconvenient for us.Biopharmaceutical manufacturing is also subject to extensive government regulation. Components of a finished therapeutic product approved forcommercial sale or used in late-stage clinical trials must be manufactured in accordance with current good manufacturing practices. These regulations governmanufacturing processes and procedures (including record-keeping) and the implementation and operation of quality systems to control and assure thequality of investigational products and products approved for sale. Our facilities and quality systems and the facilities and quality systems of some or all ofour third-party contractors must pass a pre-approval inspection for compliance with the applicable regulations as a condition of regulatory approval of aproduct candidate. In addition, facilities are subject to on-going inspections and routine audits, and minor changes in manufacturing processes may requireadditional regulatory approvals and audits, either of which could cause us to incur significant additional costs, set-backs or delays and eventual loss ofrevenue.Risks associated with doing business internationally could negatively affect our business.We currently have research and development operations in the United Kingdom, and we expect to pursue pathways to develop and commercialize ourproduct candidates in both U.S. and non-U.S. jurisdictions. Various risks associated with foreign operations may impact our success. Possible risks of foreignoperations include fluctuations in the value of foreign and domestic currencies requirements to comply with various jurisdictional requirements such as dataprivacy regulations, disruptions in the import, export, and transportation of patient tumors and our products or product candidates, the product and serviceneeds of foreign customers, difficulties in building and managing foreign relationships, the performance of our licensees or collaborators, geopoliticalinstability, unexpected regulatory, economic, or political changes in foreign and domestic markets, including without limitation any resulting17Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.from the United Kingdom’s withdrawal from the European Union or our current political regime, and limitations on the flexibility of our operations and costsimposed by local labor laws. Our competitors may have superior products, manufacturing capability, selling and marketing expertise and/or financial and other resources.Our product candidates and the product candidates in development by our collaboration partners may fail because of competition from majorpharmaceutical companies and specialized biotechnology companies that market products, or that are engaged in the development of product candidates andfor the treatment cancer. Many of our competitors, including large pharmaceutical companies, have greater financial and human resources and moreexperience than we do. Our competitors may: •develop safer or more effective therapeutic drugs or therapeutic vaccines and other products; •establish superior intellectual property positions; •discover technologies that may result in medical insights or breakthroughs, which render our drugs or vaccines obsolete, possibly before theygenerate any revenue, if ever; •adversely affect our ability to recruit patients for our clinical trials; •solidify partnerships or strategic acquisitions that may increase the competitive landscape; •develop or commercialize their product candidates sooner than we commercialize our own, if ever; or •implement more effective approaches to sales and marketing and capture some of our potential market share.There is no guarantee that our product candidates will be able to compete with potential future products being developed by our competitors.The CPM landscape is crowded with several competitors developing assets against a number of targets. Development plans are spread out acrossvarious indications and lines of therapy, either alone or in combination with other assets. Competitors range from small cap to large cap companies, withassets in pre-clinical or clinical stages of development. Therefore, the landscape is dynamic and constantly evolving. We and our partners have CPMantibody programs currently in clinical stage development targeting PD-1, CTLA-4, GITR and OX40. We are aware of many companies that have antibody-based products on the market or in clinical development that are directed to the same biological targets as these programs, including, without limitation, thefollowing: (1) BMS markets ipilimumab, an anti-CTLA-4 antibody, and nivolumab, an anti-PD-1 antibody, and is developing agonists to GITR and OX-40,(2) Merck has an approved anti-PD-1 antibody in the United States, as well as an anti-CTLA-4 antagonist and an anti-GITR agonist in clinical development,(3) Ono Pharmaceuticals has an approved anti-PD-1 antibody in Japan, (4) AstraZeneca has an approved anti PD-L1 antibody, as well as anti-CTLA-4, PD-1,GITR and OX40 targeting antibodies in development, (5) Pfizer has an approved anti-PD-L1 (with Merck KgaA) as well as anti-PD-1, and anti-OX40antibodies in clinical development, (6) Novartis has anti-PD-1, anti-PD-L1 and anti-GITR antibodies in clinical trials, and (7) Roche/Genentech has anapproved anti-PD-L1 antibody. We are also aware of other competitors with PD-1/PD-L1 antibodies in clinical development, including AbbVie, ArcusBiosciences, Boehringer Ingelheim, Tesaro, Beigene, Regeneron, Eli Lilly, Jiangsu HengRui Medicine, Shanghai Junshi, Macrogenics, CytomX, Janssen,CBT Pharmaceuticals, Checkpoint Therapeutics, CStone Pharmaceuticals, Livzon MabPharm Inc and Suzhou Alphamab. We are also aware of competitorswith pre-clinical antibodies against these targets. In addition, we are aware of competitors with clinical stage antibodies against targets in our earlier stageprograms such as TIM-3, LAG-3, CD137, TIGIT and other undisclosed targets. These include, but are not limited to, BMS, Pfizer, Novartis, Merck, Roche,Tesaro, Eli Lilly, OncoMed, Boehringer Ingelheim, Astellas and Regeneron. Additionally, we are aware of competitors with assets against these targets thatare in pre-clinical development. There is no guarantee that our antibody product candidates will be able to compete with our competitors’ antibody productsand product candidates.We are planning to advance combinations of our anti-CTLA-4 antibody, AGEN1884, with Keytruda in 1L NSCLC, where Keytruda is currentlyapproved. Specifically, we will be evaluating efficacy within a subset of patients who express ≥50% PD-L1 protein biomarker levels. We are aware ofcompetitors who have approved immunotherapy products in this indication, including having a label specifically directed at this patient subset, such asMerck (anti-PD-1 monotherapy). We are also aware of industry sponsored clinical trials, including exploratory studies, that are directed at this specific patientpopulation. These include, but are not limited to, Incyte/Merck (anti-IDO + anti-PD-1), Merck (anti-PD-1 + anti-CTLA-4), Regeneron (anti-PD-1), Roche(anti-PD-L1), Merck KgaA / Pfizer (anti-PD-L1), and Tesaro (anti-PARP + anti-PD-1). We are also aware of competitors who have approved immunotherapiesor have published positive Phase 3 data for immunotherapies in 1L NSCLC. These include, and are not limited to, Merck, BMS, and Roche. Additionalcompetitors have ongoing clinical trials for immunotherapies in the 1L NSCLC setting, across PD-L1 expression levels.We are also conducting activities in second line cervical cancer. We are aware of industry sponsored clinical trials, including exploratory studies, thatare underway in cervical cancer. Our competitors include, but are not limited to, Regeneron (anti-PD-1), Merck (anti-PD-1), Ono Pharmaceuticals and BMS(anti-PD-1 alone or in combination with anti-CTLA-4 or anti-LAG-3 or anti-IDO),18Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Advaxis (HPV targeting vaccine alone or in combination with AstraZeneca’s anti-PD-L1 antibody or BMS’ anti-PD-1 antibody) and Lion Biotechnologies(autologous TILs). We are also aware that Advaxis has submitted a conditional Marketing Authorization Application (MAA) for its HPV targeting vaccine inthe European Union. Additionally, we are aware of other early stage clinical trials testing alternate CPM targets in cervical cancer patients. These include, butare not limited to, OX40 +/- CD137 agonists (Pfizer) and anti-PD-1 + anti-ICOS (GSK/Merck).We have autologous vaccine programs in development including our Prophage vaccine in clinical development for GBM and our neo-antigen basedAutoSynVax vaccine in clinical development. We are aware of many companies pursuing personalized cancer vaccines in pre-clinical or clinicaldevelopment, including, without limitation, the following: Aduro Biotech, Neon Therapeutics, Gritstone Oncology, Advaxis/Amgen, BioNTech,Moderna/Merck, Genocea Biosciences, Argos Therapeutics, EpiVax Inc. Nouscom, Immatics, EpiVax Inc., Achilles Therapeutics and BrightPathBiotherapeutics.Several companies have products that utilize similar technologies and/or patient-specific medicine techniques that compete with our HSP basedvaccines. Schering Corporation, a subsidiary of Merck, markets temozolomide for treatment of patients with ndGBM and refractory astrocytoma. Othercompanies are developing vaccines for the treatment of patients with ndGBM, including, but not limited to, Northwest Biotherapeutics (DC-Vax), MimivaxInc. (SurVaxM) and Annias Immunotherapeutics (CMV Vaccine). Other companies may begin development programs as well.To the extent we develop our vaccines in other indications or in combination with other product candidates, such as available standard of care agents(Avastin®), or with CPMs, they could face additional competition in those indications or in those combinations. In addition, and prior to regulatoryapproval, if ever, our vaccines and our other product candidates may compete for access to patients with other products in clinical development, withproducts approved for use in the indications we are studying, or with off-label use of products in the indications we are studying. We anticipate that we willface increased competition in the future as new companies enter markets we seek to address and scientific developments surrounding immunotherapy andother traditional cancer and infectious disease therapies continue to accelerate.We are aware of compounds that claim to be comparable to QS-21 Stimulon that are being used in clinical trials. Several other vaccine adjuvants are indevelopment and could compete with QS-21 Stimulon for inclusion in vaccines in development. These adjuvants include, but are not limited to,(1) oligonucleotides, under development by Pfizer, Idera, and Dynavax, (2) MF59, under development by Novartis, (3) IC31, under development by Intercell(now part of Valneva), and (4) MPL, under development by GSK. In the past, we have provided QS-21 Stimulon to other entities under materials transferarrangements. In at least one instance, it is possible that this material was used unlawfully to develop synthetic formulations and/or derivatives of QS-21. Inaddition, companies such as Adjuvance Technologies, Inc., CSL Limited, and Novavax, Inc., as well as academic institutions and manufacturers of saponinextracts, are developing saponin adjuvants, including derivatives and synthetic formulations. These sources may be competitive to our ability to executefuture partnering and licensing arrangements involving QS-21 Stimulon. The existence of products developed by these and other competitors, or otherproducts of which we are not aware or which other companies may develop in the future, may adversely affect the marketability of products developed or soldusing QS-21 Stimulon.We are also aware of a third party that manufactures pre-clinical material purporting to be comparable to QS-21 Stimulon. The claims being made bythis third party may create marketplace confusion and have an adverse effect on the goodwill generated by us and our partners with respect to QS-21Stimulon. Any diminution of this goodwill may have an adverse effect on our ability to commercialize future products, if any, incorporating this technology,either alone or with a third party.Failure to realize the anticipated benefits of our strategic acquisitions and licensing transactions could adversely affect our business, operations andfinancial condition.An important part of our business strategy has been to identify and advance a pipeline of product candidates by acquiring and in-licensing productcandidates, technologies and businesses that we believe are a strategic fit with our existing business. Since we acquired 4-AB), in February 2014, we havecompleted numerous additional strategic acquisitions and licensing transactions. The ultimate success of these strategic transactions entails numerousoperational and financial risks, including: •higher than expected development and integration costs; •difficulty in combining the technologies, operations and personnel of acquired businesses with our technologies, operations and personnel; •exposure to unknown liabilities; •difficulty or inability to form a unified corporate culture across multiple office sites both nationally and internationally; •inability to retain key employees of acquired businesses; •disruption of our business and diversion of our management’s time and attention; and •difficulty or inability to secure financing to fund development activities for such acquired or in-licensed product candidates, technologies orbusinesses.19Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.We have limited resources to integrate acquired and in-licensed product candidates, technologies and businesses into our current infrastructure, andwe may fail to realize the anticipated benefits of our strategic transactions. Any such failure could have an adverse effect on our business, operations andfinancial condition.Failure to enter into and/or maintain significant licensing, distribution and/or collaboration agreements on favorable terms to us may hinder or causeus to cease our efforts to develop and commercialize our product candidates, increase our development timelines, and/or increase our need to rely onpartnering or financing mechanisms, such as sales of debt or equity securities, to fund our operations and continue our current and anticipated programs.As previously noted, our ability to advance our antibody programs depends in part on collaboration agreements such as our collaboration with Incyte.See “Risk Factors—Risks Related to Our Business—We are dependent upon our collaboration with Incyte to further develop, manufacture andcommercialize antibodies against certain targets. If we or Incyte fail to perform as expected, the potential for us to generate future revenues under thecollaboration could be significantly reduced, the development and/or commercialization of these antibodies may be terminated or substantially delayed, andour business could be adversely affected.” In addition, from time to time we engage in efforts to enter into licensing, distribution and/or collaborationagreements with one or more pharmaceutical or biotechnology companies to assist us with development and/or commercialization of our other productcandidates. If we are successful in entering into such agreements, we may not be able to negotiate agreements with economic terms similar to those negotiatedby other companies. We may not, for example, obtain significant upfront payments, substantial royalty rates or milestones. If we fail to enter into any suchagreements, our efforts to develop and/or commercialize our product candidates may be undermined. In addition, if we do not raise funds through any suchagreements, we will need to rely on other financing mechanisms, such as sales of debt or equity securities, to fund our operations. Such financingmechanisms, if available, may not be sufficient or timely enough to advance our programs forward in a meaningful way in the short-term.Because we rely on collaborators and licensees for the development and commercialization of certain of our product candidate programs, theseprograms may not prove successful, and/or we may not receive significant payments from such parties.Part of our strategy is to develop and commercialize many of our product candidates by continuing or entering into arrangements with academic,government, or corporate collaborators and licensees. Our success depends on our ability to negotiate such agreements on favorable terms and on the successof the other parties in performing research, pre-clinical and clinical testing, completing regulatory applications, and commercializing product candidates. Ourresearch, development, and commercialization efforts with respect to antibody candidates from our technology platforms are, in part, contingent upon theparticipation of institutional and corporate collaborators. For example, in February 2015, we began a broad collaboration with Incyte to pursue the discoveryand development of antibodies. See “Risk Factors-Risks Related to our Business—We are dependent upon our collaboration with Incyte to further develop,manufacture and commercialize antibodies against certain targets. If we or Incyte fail to perform as expected, the potential for us to generate future revenuesunder the collaboration could be significantly reduced, the development and/or commercialization of these antibodies may be terminated or substantiallydelayed, and our business could be adversely affected.” Furthermore, we have a collaboration arrangement with Recepta for CTLA-4 and PD-1, givingRecepta rights to certain South American countries and requiring us to agree upon development plans for these candidates. Disagreements or the failure ofeither party to perform satisfactorily could have an adverse impact on these programs.The Brain Tumor Trials Collaborative is sponsoring a Phase 2 clinical trial of our Prophage vaccine candidate in combination with Merck’spembrolizumab in patients with glioma. When our licensees or third-party collaborators sponsor clinical trials using our product candidates, we cannotcontrol the timing of enrollment, data readout, or quality of such trials or related activities. Development activities for our collaboration programs may fail to produce marketable products due to unsuccessful results or abandonment of theseprograms, failure to enter into future collaborations or license agreements, or the inability to manufacture product supply requirements for our collaboratorsand licensees. Several of our agreements also require us to transfer important rights and regulatory compliance responsibilities to our collaborators andlicensees. As a result of these collaboration agreements, we will not control the nature, timing, or cost of bringing these product candidates to market. Ourcollaborators and licensees could choose not to, or be unable to, devote resources to these arrangements or adhere to required timelines, or, under certaincircumstances, may terminate these arrangements early. They may cease pursuing product candidates or elect to collaborate with different companies. Inaddition, these collaborators and licensees, outside of their arrangements with us, may develop technologies or products that are competitive with those thatwe are developing. From time to time, we may also become involved in disputes with our collaborators or licensees. Such disputes could result in theincurrence of significant expense, or the termination of collaborations. We may be unable to fulfill all of our obligations to our collaborators, which mayresult in the termination of collaborations. As a result of these factors, our strategic collaborations may not yield revenue. Furthermore, we may not be able toenter into new collaborations on favorable terms or at all. Failure to generate significant revenue from collaborations could increase our need to fund ouroperations through sales of debt or equity securities and would negatively affect our business prospects.20Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Our internal computer systems, or those of our third-party CROs, CMOs, licensees, collaborators or other contractors or consultants, may fail or suffersecurity breaches, which could result in a material disruption in our business and operations or could subject us to sanctions and penalties that could havea material adverse effect on our reputation or financial condition.Despite the implementation of security measures, our internal computer systems and those of our current and future CROs, CMOs, licensees,collaborators and other contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war andtelecommunication and electrical failures. While we are not aware of any such material system failure, accident or security breach to date, if such an eventwere to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations. Forexample, the loss of clinical trial data from completed, on-going or future clinical trials could result in delays in our regulatory approval efforts andsignificant costs to recover or reproduce the data. Likewise, we rely on third parties to manufacture certain of our drug candidates and conduct clinical trials,and similar events relating to their computer systems could also have a material adverse effect on our business. To the extent that any disruption or securitybreach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incurliabilities and the further development and commercialization of our product candidates could be delayed.We use and store customer, vendor, employee and business partner and, in certain instances patient, personally identifiable information in the ordinarycourse of our business. We are subject to various domestic and international privacy and security regulations, including but not limited to the HealthInsurance Portability and Accountability Act of 1996 (“HIPAA”), which mandates, among other things, the adoption of uniform standards for the electronicexchange of information in common healthcare transactions, as well as standards relating to the privacy and security of individually identifiable healthinformation, which require the adoption of administrative, physical and technical safeguards to protect such information. In addition, many states haveenacted comparable laws addressing the privacy and security of health information, some of which are more stringent than HIPAA. Failure to comply withthese standards, or a computer security breach or cyber-attack that affects our systems or results in the unauthorized release of proprietary or personallyidentifiable information, could subject us to criminal penalties and civil sanctions, and our reputation could be materially damaged, and our operations couldbe impaired. We may also be exposed to a risk of loss or litigation and potential liability, which could have a material adverse effect on our business, resultsof operations and financial condition.We are highly reliant on certain members of our management team. In addition, we have limited internal resources and if we fail to recruit and/orretain the services of key employees and external consultants as needed, we may not be able to achieve our strategic and operational objectives.Garo H. Armen, Ph.D., the Chairman of our Board of Directors and our Chief Executive Officer who co-founded the Company in 1994, is integral tobuilding our company and developing our technology. If Dr. Armen is unable or unwilling to continue his relationship with Agenus, our business may beadversely impacted. We have an employment agreement with Dr. Armen, and he plays an important role in our day-to-day activities. We do not carry a keyemployee insurance policy for Dr. Armen or any other employee.Our future growth success depends to a significant extent on the skills, experience and efforts of our executive officers and key members of our clinicaland scientific staff. We face intense competition for qualified individuals from other pharmaceutical, biopharmaceutical and biotechnology companies, aswell as academic and other research institutions. We may be unable to retain our current personnel or attract or assimilate other highly qualified managementand clinical personnel in the future on acceptable terms. The loss of any or all of these individuals could harm our business and could impair our ability tosupport our collaboration partners or our growth generally. If our management is unable to effectively manage our growth, our expenses may increase morethan expected, our ability to generate revenue could be reduced and we may not be able to implement our business strategy. Moreover, in connection withour 2017 restructuring activities, certain positions on our management team were eliminated and Dr. Robert Stein retired from his role as President of R&D tobecome a senior R&D advisor to the Company. Any key capability gaps identified following this restructuring could have a material adverse effect on ourbusiness, financial condition and results of operations.We intend to advance our cell therapy business through our new subsidiary, AgenTus Therapeutics, eventually with separate funding. Movingintellectual property assets into AgenTus Therapeutics in foreign jurisdictions could have adverse tax consequences, and there is no guarantee that we willbe able to attract external funding. Moreover, even if the business is funded, there is no guarantee that it will be successful.We are currently in the process of pursuing external funding and partnership opportunities to advance AgenTus Therapeutics, but Agenus is currentlyfunding such operations. There is no guarantee that external funding will be available. If funding is available, there is no guarantee that it will be onattractive or acceptable terms, or that it will be adequate to advance the business to an inflection point for additional funding. Similarly, there is no guaranteethat partnership opportunities will be available on attractive terms, if at all. If external funding is not available, we may be forced to either retire theseprograms or use internal resources to advance them. In addition, our cell therapy assets are pre-clinical. Even if adequate funding and partnershipopportunities are available, there is no guarantee that we will be successful in advancing one or more product candidates into and through clinicaldevelopment. In addition,21Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.most of the efforts being made on behalf of AgenTus Therapeutics are being led by a separate AgenTus chief executive officer, utilizing Agenus’management team and internal resources. The current structure could distract management and divert Agenus resources from Agenus’ own core pipeline andprograms.The cell therapy assets necessary to enable AgenTus Therapeutics are currently owned or controlled by Agenus in the United States and Switzerland.In connection with capitalizing AgenTus Therapeutics, these assets will be transferred or licensed to new legal entities within the United States and Europe.Transferring these assets or licensing them on an exclusive basis would require that taxes be paid based on the fair market value of the assets. While weexpect to have adequate net operating losses to offset any tax liabilities, there is no guarantee that this will be the case in all relevant jurisdictions. Moreover,we have previously disclosed our interest in potentially issuing a tax-free dividend to Agenus’ stockholders in the form of stock of AgenTus Therapeutics.There is no guarantee that any such dividend will be tax-free or that it will be issued at all, or the timing thereof. If we issue a dividend in the form of stock,there could be adverse tax consequences for certain of our stockholders.Calamities, power shortages or power interruptions could disrupt our business and materially adversely affect our operations.If a natural disaster, power outage or other event occurred that prevented us from using all or a significant portion of our facilities, that damagedcritical infrastructure (such as our manufacturing facility) or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us tocontinue certain activities, such as for example our manufacturing capabilities, for a substantial period of time. We own an antibody pilot plantmanufacturing facility and lease additional office space in Berkeley, CA. This location is in an area of seismic activity near active earthquake faults. Anyearthquake, terrorist attack, fire, power shortage or other calamity affecting our facilities or those of third parties upon whom we depend may disrupt ourbusiness and could have a material adverse effect on our business, results of operations, financial condition and prospects. The disaster recovery and businesscontinuity plans we have in place currently are limited and are unlikely to prove adequate in the event of a serious disaster or similar event. We may incursubstantial expenses and delays as a result of the limited nature of our disaster recovery and business continuity plans, which could have a material adverseeffect on our business. Comprehensive tax reform legislation could adversely affect our business and financial condition.On December 22, 2017, President Trump signed into law the “Tax Cuts and Jobs Act” (the “TJCA”) that significantly reforms the Internal RevenueCode of 1986, as amended (the “Code”). The TCJA, among other things, includes changes to U.S. federal tax rates, imposes significant additional limitationson the deductibility of interest and net operating loss carryforwards, allows for the expensing of capital expenditures, and puts into effect the migration froma “worldwide” system of taxation to a territorial system. Our net deferred tax assets and liabilities will be revalued at the newly enacted U.S. corporate rate.We do not expect to recognize any tax expense in the year of enactment as our net deferred tax assets have a full valuation allowance recorded. We continueto examine the impact this tax reform legislation may have on our business. The impact of this tax reform is uncertain and could be adverse.Risks Related to Regulation of the Biopharmaceutical IndustryThe drug development and approval process is uncertain, time-consuming, and expensive.Drug development, including non-clinical testing and clinical development, and the process of obtaining regulatory approvals for new therapeuticproducts, is lengthy, expensive, and uncertain. For example, as of December 31, 2017, we had spent more than 20 years and $684.6 million on our researchand development programs. The development and regulatory approval processes also can vary substantially based on the therapeutic area, type, complexity,and novelty of the product. We must provide regulatory authorities with manufacturing, product characterization, and pre-clinical and clinical datademonstrating that our product candidates are safe and effective before they can be approved for commercial sale. It may take us many years to complete ourtesting, and failure can occur at any stage. Results of pre-clinical studies do not necessarily predict clinical results, and promising results in early clinicalstudies might not be confirmed in later studies. Any pre-clinical or clinical test may fail to produce results satisfactory to regulatory authorities for manyreasons, including but not limited to emerging manufacturing or control issues, limitations of pre-clinical assessments, difficulties to enroll a sufficientnumber of patients, changing therapeutic landscape or failure to prospectively identify the benefit/risk profile of the new product. Pre-clinical and clinicaldata can be interpreted in different ways, which could delay, limit, or prevent regulatory approval. Negative or inconclusive results from a pre-clinical studyor clinical trial, adverse medical events during a clinical trial, or safety issues emerging with products of the same class of drug could require additionalstudies or cause a program to be terminated, even if other studies or trials relating to the program are successful. We or the FDA, other regulatory agencies, oran institutional review board may suspend or terminate human clinical trials at any time on various grounds.The timing and success of a clinical trial is dependent on obtaining and maintaining sufficient cash resources, successful production of clinical trialmaterial, enrolling sufficient patients in a timely manner, avoiding or mitigating serious or significant adverse patient reactions, and demonstrating efficacyof the product candidate in order to support a favorable risk versus benefit profile, among other considerations. The timing and success of our clinical trials,in particular, are also dependent on clinical sites and22Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.regulatory authorities accepting each trial’s protocol, statistical analysis plan, product characterization tests, and final clinical results. In addition, regulatoryauthorities may request additional information or data that is not readily available. Delays in our ability to respond to such requests would delay, and failureto adequately address concerns would prevent, our commercialization efforts. We have encountered in the past, and may encounter in the future, delays ininitiating trial sites and enrolling patients into our clinical trials. Future enrollment delays will postpone the dates by which we expect to complete theimpacted trials and the potential receipt of regulatory approval. There is no guarantee we will successfully initiate and/or complete our clinical trials.Delays or difficulties in obtaining regulatory approvals or clearances for our product candidates may: •adversely affect the marketing of any products we or our licensees or collaborators develop; •impose significant additional costs on us or our licensees or collaborators; •diminish any competitive advantages that we or our licensees or collaborators may attain; •limit our ability to receive royalties and generate revenue and profits; and •adversely affect our business prospects and ability to obtain financing.Delays or failures in our receiving regulatory approval for our product candidates in a timely manner may result in us having to incur additionaldevelopment expense and subject us to having to secure additional financing. As a result, we may not be able to commercialize them in the time frameanticipated, and our business will suffer.Even if we or our partners receive marketing approval for our product candidates, such product approvals could be subject to restrictions orwithdrawals. Regulatory requirements are subject to change. Further, even if we or our partners receive marketing approval, we may not receive sufficientcoverage and adequate reimbursement for our products.Regulatory authorities generally approve products for particular indications. If an approval is for a limited indication, this limitation reduces the sizeof the potential market for that product. Product approvals, once granted, are subject to continual review and periodic inspections by regulatory authorities.Our operations and practices are subject to regulation and scrutiny by the United States government, as well as governments of any other countries in whichwe do business or conduct activities. Later discovery of previously unknown problems or safety issues, and/or failure to comply with domestic or foreignlaws, knowingly or unknowingly, can result in various adverse consequences, including, among other things, possible delay in approval or refusal to approvea product, warning letters, fines, injunctions, civil penalties, recalls or seizures of products, total or partial suspension of production, refusal of thegovernment to renew marketing applications, complete withdrawal of a marketing application, corrective action requirements, and/or criminal prosecution,withdrawal of an approved product from the market, and/or exclusion from government health care programs. Such regulatory enforcement could have adirect and negative impact on the product for which approval is granted and could have a negative impact on the approval of any pending applications formarketing approval of new drugs or supplements to approved applications.Because we operate in a highly regulated industry, regulatory authorities could take enforcement action against us in connection with our licensees’or collaborators’, and/or our business and marketing activities for various reasons. For example, the Foreign Corrupt Practices Act prohibits U.S. companiesand their representatives from offering, promising, authorizing, or making payments to foreign governmental officials for the purpose of obtaining orretaining business abroad.From time to time, new legislation is passed into law that could significantly change the statutory provisions governing the approval, manufacturing,and marketing of products regulated by the FDA and other foreign health authorities. Additionally, regulations and guidance are often revised orreinterpreted by health agencies in ways that may significantly affect our business and our products. It is impossible to predict whether further legislativechanges will be enacted, or whether regulations, guidance, or interpretations will change, and what the impact of such changes, if any, may be. For example,the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act of 2010 (collectively the “ACA”),enacted in March 2010, substantially changed the way healthcare is financed by both governmental and private insurers, and significantly impacted thepharmaceutical industry. With regard to pharmaceutical products, among other things, ACA is expected to expand, increase, and change the methodologyregarding industry rebates for drugs covered under Medicaid programs; impose an annual, nondeductible fee on any entity that manufactures or importsspecific branded prescription drugs and biologic agents, apportioned among those entities according to market share in certain government healthcareprograms; expand eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to certain individuals withincome at or below 133% of the federal poverty level; expand the entities eligible for discounts under the Public Health Service pharmaceutical pricingprogram; create a new Patient Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectivenessresearch, along with funding for such research; and make changes to the coverage requirements under the Medicare D program. Significant legislativechanges to the ACA also appear possible in the 115th U.S. Congress under the Trump Administration.We expect both government and private health plans to continue to require healthcare providers, including healthcare providers23Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.that may one day purchase our products, to contain costs and demonstrate the value of the therapies they provide. Even if our product candidates areapproved, the commercial success of our products will depend substantially on the extent to which they are covered by third-party payors, includinggovernment health authorities and private health insurers. In the United States, no uniform policy of coverage and reimbursement for products exists amongthird-party payors, and coverage and reimbursement for products can differ significantly from payor to payor. If coverage and reimbursement are notavailable, or reimbursement is available only to limited levels, we or our collaborators may not be able to successfully commercialize our product candidates.New data from our research and development activities, and/or resource considerations could modify our strategy and result in the need to adjust ourprojections of timelines and costs of programs.Because we are focused on novel technologies, our research and development activities, including our nonclinical studies and clinical trials, involvethe ongoing discovery of new facts and the generation of new data, based on which we determine next steps for a relevant program. These developments canoccur with varying frequency and constitute the basis on which our business is conducted. We make determinations on an ongoing basis as to which of thesefacts or data will influence timelines and costs of programs. We may not always be able to make such judgments accurately, which may increase the costs weincur attempting to commercialize our product candidates. We monitor the likelihood of success of our initiatives and we may need to discontinue funding ofsuch activities if they do not prove to be commercially feasible, due to our limited resources.We may need to successfully address a number of technological challenges in order to complete development of our product candidates. Moreover,these product candidates may not be effective in treating any disease or may prove to have undesirable or unintended side effects, toxicities, or othercharacteristics that may preclude our obtaining regulatory approvals or prevent or limit commercial use.Risks Related to Intellectual Property RightsIf we are unable to obtain and enforce patent protection for our product candidates and related technology, our business could be materially harmed.We rely upon a combination of patents, trade secret protection and confidentiality agreements to protect the intellectual property related to ourproduct candidates and technology. Any disclosure to or misappropriation by third parties of our confidential proprietary information could enablecompetitors to duplicate or surpass our technological achievements, eroding our competitive position in the market. Our patent applications may not result inissued patents, and, even if issued, the patents may be challenged and invalidated. Moreover, our patents and patent applications may not be sufficientlybroad to prevent others from practicing our technologies or developing competing products. We also face the risk that others may independently developsimilar or alternative technologies or may design around our proprietary property.Issued patents may be challenged, narrowed, invalidated or circumvented. In addition, court decisions may introduce uncertainty in the enforceabilityor scope of patents owned by biotechnology companies. The legal systems of certain countries do not favor the aggressive enforcement of patents, and thelaws of foreign countries may not allow us to protect our inventions with patents to the same extent as the laws of the United States. Because patentapplications in the United States and many foreign jurisdictions are typically not published until 18 months after filing, or in some cases not at all, andbecause publications of discoveries in scientific literature lag behind actual discoveries, we cannot be certain that we were the first to make the inventionsclaimed in our issued patents or pending patent applications, or that we were the first to file for protection of the inventions set forth in our patents or patentapplications. As a result, we may not be able to obtain or maintain protection for certain inventions. Therefore, the enforceability and scope of our patents inthe United States and in foreign countries cannot be predicted with certainty and, as a result, any patents that we own, or license may not provide sufficientprotection against competitors. We may not be able to obtain or maintain patent protection from our pending patent applications, from those we may file inthe future, or from those we may license from third parties. Moreover, even if we are able to obtain patent protection, such patent protection may be ofinsufficient scope to achieve our business objectives.Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time. Patents have a limitedlifespan. In the United States, the natural expiration of a patent is generally 20 years after its effective filing date. Various extensions may be available;however, the life of a patent, and the protection it affords, is limited. Without patent protection for our product candidates, we may be open to competitionfrom biosimilar or generic versions of our product candidates. Furthermore, the product development timeline for biotechnology products is lengthy and it ispossible that our issued patents covering our product candidates in the United States and other jurisdictions may expire prior to commercial launch. Forexample, if we encounter delays in our development efforts, including our clinical trials, the period of time during which we could market our productcandidates under patent protection could be reduced.Our strategy depends on our ability to identify and seek patent protection for our discoveries. This process is expensive and time consuming, and weand our current or future licensors or licensees may not be able to file and prosecute all necessary or desirable24Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.patent applications at a reasonable cost or in a timely manner or in all jurisdictions where protection may be commercially advantageous. It is also possiblethat we or our current licensors or licensees, or any future licensors or licensees, may not identify patentable aspects of inventions made in the course ofdevelopment and commercialization activities in time to obtain patent protection on them. Therefore, these and any of our patents and applications may notbe prosecuted and enforced in a manner consistent with the best interests of our business. Defects of form in the preparation or filing of our patents or patentapplications may exist, or may arise in the future, for example with respect to proper priority claims, inventorship, etc. If we or our current licensors orlicensees, or any future licensors or licensees, fail to establish, maintain or protect such patents and other intellectual property rights, such rights may bereduced or eliminated. If our current licensors or licensees, or any future licensors or licensees, are not fully cooperative or disagree with us as to theprosecution, maintenance or enforcement of any patent rights, such patent rights could be compromised. If there are material defects in the form orpreparation of our patents or patent applications, such patents or applications may be invalid and unenforceable. Despite our efforts to protect our proprietaryrights, unauthorized parties may be able to obtain and use information that we regard as proprietary. The issuance of a patent does not ensure that it is valid orenforceable, so even if we obtain patents, they may not be valid or enforceable against third parties. In addition, the issuance of a patent does not give us theright to practice the patented invention. Third parties may have blocking patents that could prevent us from marketing our own patented product andpracticing our own patented technology. Any of these outcomes could impair our ability to prevent competition from third parties, which may have anadverse impact on our business.The patent landscape in the field of therapeutic antibody development, manufacture and commercialization is crowded. For example, we are aware ofthird party patents directed to methods for identifying and producing therapeutic antibodies. We are also aware of third party patents directed to antibodies tonumerous targets for which we also seek to identify, develop, and commercialize antibodies. For example, some patents claim antibodies based oncompetitive binding with existing antibodies, some claim antibodies based on specifying sequence or other structural information, and some claim variousmethods of discovery, production, or use of such antibodies.These or other third-party patents could impact our freedom to operate in relation to our technology platforms, as well as in relation to developmentand commercialization of antibodies identified by us as therapeutic candidates. As we discover and develop our candidate antibodies, we will continue toconduct analyses of these third-party patents to determine whether we believe we might infringe them, and if so, whether they would be likely to be deemedvalid and enforceable if challenged. If we determine that a license for a given patent or family of patents is necessary or desirable, there can be no guaranteethat a license would be available on favorable terms, or at all. Inability to obtain a license on favorable terms, should such a license be determined to benecessary or desirable, could, without limitation, result in increased costs to design around the third-party patents, delay product launch, or result incancellation of the affected program or cessation of use of the affected technology.Third parties may also seek to market biosimilar versions of any approved products. Alternatively, third parties may seek approval to market their ownproducts similar to or otherwise competitive with our products. In these circumstances, we may need to defend and/or assert our patents, including by filinglawsuits alleging patent infringement. In any of these types of proceedings, a court or agency with jurisdiction may find our patents invalid and/orunenforceable. Even if we have valid and enforceable patents, these patents still may not provide protection against competing products or processessufficient to achieve our business objectives.We own, co-own or have exclusive rights to approximately 35 issued United States patents and approximately 120 issued foreign patents. We alsoown, co-own or have exclusive rights to approximately 30 pending United States patent applications and approximately 125 pending foreign patentapplications. However, our patents may not protect us against our competitors. Our patent positions, and those of other biopharmaceutical, pharmaceuticaland biotechnology companies, are generally uncertain and involve complex legal, scientific, and factual questions. The standards which the United StatesPatent and Trademark Office (“USPTO”) uses to grant patents, and the standards which courts use to interpret patents, are not always applied predictably oruniformly and can change, particularly as new technologies develop. Consequently, the level of protection, if any, that will be provided by our patents if weattempt to enforce them and they are challenged, is uncertain. In addition, the type and extent of patent claims that will be issued to us in the future isuncertain. Any patents that are issued may not contain claims that permit us to stop competitors from using similar technology.Through our acquisitions of 4-AB, PhosImmune and certain assets of Celexion, we own, co-own, or have exclusive rights to a number of patents andpatent applications directed to various methods and compositions, including methods for identifying therapeutic antibodies and product candidates arisingout of such entities’ technology platforms. In particular, we own patents and patent applications relating to our Retrocyte DisplayTM technology platform, ahigh throughput antibody expression platform for the identification of fully-human and humanized monoclonal antibodies. This patent family is projected toexpire between 2029 and 2031. Through our acquisition of PhosImmune, we own, co-own, or have exclusive rights to patents and patent applicationsdirected to various methods and compositions, including a patent directed to methods for identifying phosphorylated proteins using mass spectrometry. Thispatent is projected to expire in 2023. We also own patents and patent applications relating to the SECANT® platform, a platform used for the generation ofnovel monoclonal antibodies. This patent family is projected to expire between 2028 and 2029. In addition, as we advance our research and developmentefforts with our institutional and corporate collaborators, we are25Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.seeking patent protection for newly identified therapeutic antibodies and product candidates. We can provide no assurance that any of our patents, includingthe patents that we acquired or in-licensed in connection with our acquisitions of 4-AB, PhosImmune and certain assets of Celexion, will have commercialvalue, or that any of our existing or future patent applications, including the patent applications that we acquired or in-licensed in connection with ouracquisitions of 4-AB, PhosImmune and certain assets of Celexion, will result in the issuance of valid and enforceable patents.Our issued patents covering Prophage vaccine and methods of use thereof, alone or in combination with other agents, expired or will expire at variousdates between 2015 and 2024. In particular, our issued U.S. patents covering Prophage composition of matter expired in 2015. In addition, our issued patentscovering QS-21 Stimulon composition of matter expired in 2008. We continue to explore means of extending the life cycle of our patent portfolio.The patent position of biopharmaceutical, pharmaceutical or biotechnology companies, including ours, is generally uncertain and involves complexlegal and factual considerations. The standards which the USPTO and its foreign counterparts use to grant patents are not always applied predictably oruniformly and can change. There is also no uniform, worldwide policy regarding the subject matter and scope of claims granted or allowable inbiopharmaceutical, pharmaceutical or biotechnology patents. The laws of some foreign countries do not protect proprietary information to the same extent asthe laws of the United States, and many companies have encountered significant problems and costs in protecting their proprietary information in theseforeign countries. Outside the United States, patent protection must be sought in individual jurisdictions, further adding to the cost and uncertainty ofobtaining adequate patent protection outside of the United States. Accordingly, we cannot predict whether additional patents protecting our technology willissue in the United States or in foreign jurisdictions, or whether any patents that do issue will have claims of adequate scope to provide competitiveadvantage. Moreover, we cannot predict whether third parties will be able to successfully obtain claims or the breadth of such claims. The allowance ofbroader claims may increase the incidence and cost of patent interference proceedings, opposition proceedings, post-grant review, inter partes review, and/orreexamination proceedings, the risk of infringement litigation, and the vulnerability of the claims to challenge. On the other hand, the allowance of narrowerclaims does not eliminate the potential for adversarial proceedings and may fail to provide a competitive advantage. Our issued patents may not containclaims sufficiently broad to protect us against third parties with similar technologies or products or provide us with any competitive advantage.We may become involved in lawsuits to protect or enforce our patents, which could be expensive, time consuming and unsuccessful.Third parties may infringe or misappropriate our intellectual property, including our existing patents, patents that may issue to us in the future, or thepatents of our licensors or licensees to which we have a license. As a result, we may be required to file infringement claims to stop third-party infringement orunauthorized use. Further, we may not be able to prevent, alone or with our licensors or licensees, misappropriation of our intellectual property rights,particularly in countries where the laws may not protect those rights as fully as in the United States.If we or one of our licensors or licensees were to initiate legal proceedings against a third party to enforce a patent covering our product candidates,the defendant could counterclaim that the patent covering our product candidates is invalid and/or unenforceable. In patent litigation in the United States,defendant counterclaims alleging invalidity and/or unenforceability are commonplace, and there are numerous grounds upon which a third party can assertinvalidity or unenforceability of a patent.In addition, within and outside of the United States, there has been a substantial amount of litigation and administrative proceedings, includinginterference and reexamination proceedings before the USPTO or oppositions and other comparable proceedings in various foreign jurisdictions, regardingpatent and other intellectual property rights in the biopharmaceutical industry. Recently, the AIA introduced new procedures, including inter partes reviewand post grant review. These procedures may be used by competitors to challenge the scope and/or validity of our patents, including those that patentsperceived by our competitors as blocking entry into the market for their products, and the outcome of such challenges.Even after they have been issued, our patents and any patents which we license may be challenged, narrowed, invalidated or circumvented. If ourpatents are invalidated or otherwise limited or will expire prior to the commercialization of our product candidates, other companies may be better able todevelop products that compete with ours, which could adversely affect our competitive business position, business prospects and financial condition.The following are non-exclusive examples of litigation and other adversarial proceedings or disputes that we could become a party to involving ourpatents or patents licensed to us: •we or our collaborators may initiate litigation or other proceedings against third parties to enforce our patent rights; •third parties may initiate litigation or other proceedings seeking to invalidate patents owned by or licensed to us or to obtain a declaratoryjudgment that their product or technology does not infringe our patents or patents licensed to us;26Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. •third parties may initiate opposition proceedings, post-grant review, inter partes review, or reexamination proceedings challenging the validityor scope of our patent rights, requiring us or our collaborators and/or licensors or licensees to participate in such proceedings to defend thevalidity and scope of our patents; •there may be a challenge or dispute regarding inventorship or ownership of patents currently identified as being owned by or licensed to us; •the USPTO may initiate an interference or derivation proceeding between patents or patent applications owned by or licensed to us and thoseof our competitors, requiring us or our collaborators and/or licensors or licensees to participate in an interference or derivation proceeding todetermine the priority of invention, which could jeopardize our patent rights; or •third parties may seek approval to market biosimilar versions of our future approved products prior to expiration of relevant patents owned byor licensed to us, requiring us to defend our patents, including by filing lawsuits alleging patent infringement.These lawsuits and proceedings would be costly and could affect our results of operations and divert the attention of our managerial and scientificpersonnel. There is a risk that a court or administrative body could decide that our patents are invalid or not infringed by a third party’s activities, or that thescope of certain issued claims must be further limited. An adverse outcome in a litigation or proceeding involving our own patents could limit our ability toassert our patents against these or other competitors, affect our ability to receive royalties or other licensing consideration from our licensees, and may curtailor preclude our ability to exclude third parties from making, using and selling similar or competitive products. An adverse outcome may also put our pendingpatent applications at risk of not issuing, or issuing with limited and potentially inadequate scope to cover our product candidates. The outcome followinglegal assertions of invalidity and unenforceability is unpredictable. With respect to the validity question, for example, we cannot be certain that there is noinvalidating prior art, of which we and the patent examiner were unaware during prosecution. Additionally, it is also possible that prior art of which we areaware, but which we do not believe affects the validity or enforceability of a claim, may, nonetheless, ultimately be found by a court of law or anadministrative panel to affect the validity or enforceability of a claim, for example, if a priority claim is found to be improper. If a defendant were to prevailon a legal assertion of invalidity and/or unenforceability, we could lose at least part, and perhaps all, of the patent protection on our relevant productcandidates. Such a loss of patent protection could have a material adverse impact on our business.Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation or administrativeproceedings, there is a risk that some of our confidential information could be compromised by disclosure. In addition, during the course of litigation oradministrative proceedings, there could be public announcements of the results of hearings, motions or other interim proceedings or developments or publicaccess to related documents. If investors perceive these results to be negative, the market price for our common stock could be significantly harmed. Any ofthese occurrences could adversely affect our competitive business position, business prospects, and financial condition.Intellectual property rights do not necessarily address all potential threats to our competitive advantage. The degree of future protection for ourproprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep ourcompetitive advantage. For example: •others may be able to develop a platform that is similar to, or better than, ours in a way that is not covered by the claims of our patents; •others may be able to make compounds that are similar to our product candidates but that are not covered by the claims of our patents; •we might not have been the first to make the inventions covered by patents or pending patent applications; •we might not have been the first to file patent applications for these inventions; •any patents that we obtain may not provide us with any competitive advantages or may ultimately be found invalid or unenforceable; or •we may not develop additional proprietary technologies that are patentable.Our commercial success depends significantly on our ability to operate without infringing the patents and other proprietary rights of third parties.Our success will depend in part on our ability to operate without infringing the proprietary rights of third parties. Other entities may have or obtainpatents or proprietary rights that could limit our ability to make, use, sell, offer for sale or import our future approved products or impair our competitiveposition. In particular the patent landscape around the discovery, development, manufacture and commercial use of our pre-clinical CPM antibody programsand therapeutic antibodies is crowded.27Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Third parties may have or obtain valid and enforceable patents or proprietary rights that could block us from developing product candidates using ourtechnology. Our failure to obtain a license to any technology that we require may materially harm our business, financial condition and results of operations.Moreover, our failure to maintain a license to any technology that we require may also materially harm our business, financial condition, and results ofoperations. Furthermore, we would be exposed to a threat of litigation.In the biopharmaceutical industry, significant litigation and other proceedings regarding patents, patent applications, trademarks and otherintellectual property rights have become commonplace. The types of situations in which we may become a party to such litigation or proceedings include: •we or our collaborators may initiate litigation or other proceedings against third parties seeking to invalidate the patents held by those thirdparties or to obtain a judgment that our products or processes do not infringe those third parties’ patents; •if our competitors file patent applications that claim technology also claimed by us or our licensors or licensees, we or our licensors or licenseesmay be required to participate in interference, derivation or other proceedings to determine the priority of invention, which could jeopardizeour patent rights and potentially provide a third party with a dominant patent position; •if third parties initiate litigation claiming that our processes or products infringe their patent or other intellectual property rights, we and ourcollaborators will need to defend against such proceedings; and •if a license to necessary technology is terminated, the licensor may initiate litigation claiming that our processes or products infringe ormisappropriate their patent or other intellectual property rights and/or that we breached our obligations under the license agreement, and weand our collaborators would need to defend against such proceedings.These lawsuits would be costly and could affect our results of operations and divert the attention of our management and scientific personnel. There isa risk that a court would decide that we or our collaborators are infringing the third party’s patents and would order us or our collaborators to stop theactivities covered by the patents. In that event, we or our collaborators may not have a viable alternative to the technology protected by the patent and mayneed to halt work on the affected product candidate or cease commercialization of an approved product. In addition, there is a risk that a court will order us orour collaborators to pay the other party damages. An adverse outcome in any litigation or other proceeding could subject us to significant liabilities to thirdparties and require us to cease using the technology that is at issue or to license the technology from third parties. We may not be able to obtain any requiredlicenses on commercially acceptable terms or at all. Any of these outcomes could have a material adverse effect on our business.The biopharmaceutical industry has produced a significant number of patents, and it may not always be clear to industry participants, including us,which patents cover various types of products or methods of use. The coverage of patents is subject to interpretation by the courts, and the interpretation isnot always uniform or predictable. If we are sued for patent infringement, we would need to demonstrate that our products or methods either do not infringethe patent claims of the relevant patent or that the patent claims are invalid, and we may not be able to do this. Proving invalidity is difficult. For example, inthe United States, proving invalidity requires a showing of clear and convincing evidence to overcome the presumption of validity enjoyed by issuedpatents. Even if we are successful in these proceedings, we may incur substantial costs and divert management’s time and attention in pursuing theseproceedings, which could have a material adverse effect on us. If we are unable to avoid infringing the patent rights of others, we may be required to seek alicense, defend an infringement action or challenge the validity of the patents in court. Patent litigation is costly and time consuming. We may not havesufficient resources to bring these actions to a successful conclusion. In addition, if we do not obtain a license, develop or obtain non-infringing technology,fail to defend an infringement action successfully or have infringed patents declared invalid, we may incur substantial monetary damages, encountersignificant delays in bringing our product candidates to market and be precluded from manufacturing or selling our product candidates.The cost of any patent litigation or other proceeding, even if resolved in our favor, could be substantial. Some of our competitors may be able tosustain the cost of such litigation and proceedings more effectively than we can because of their substantially greater resources. Uncertainties resulting fromthe initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our ability to compete in the marketplace.Patent litigation and other proceedings may also absorb significant management time. If we fail to comply with our obligations under our intellectual property licenses with third parties, we could lose license rights that are important toour business.We are currently party to various intellectual property license agreements. These license agreements impose, and we expect that future licenseagreements may impose, various diligence, milestone payment, royalty, insurance and other obligations on us. These licenses typically include an obligationto pay an upfront payment, yearly maintenance payments and royalties on sales. If we fail to comply with our obligations under the licenses, the licensorsmay have the right to terminate their respective license agreements, in28Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.which event we might not be able to market any product that is covered by the agreements. Termination of the license agreements or reduction or eliminationof our licensed rights may result in our having to negotiate new or reinstated licenses with less favorable terms, which could adversely affect our competitivebusiness position and harm our business.If we are unable to protect the confidentiality of our proprietary information, the value of our technology and products could be adversely affected.In addition to patent protection, we also rely on other proprietary rights, including protection of trade secrets, and other proprietary information. Tomaintain the confidentiality of trade secrets and proprietary information, we enter into confidentiality agreements with our employees, consultants,collaborators and others upon the commencement of their relationships with us. These agreements require that all confidential information developed by theindividual or made known to the individual by us during the course of the individual’s relationship with us be kept confidential and not disclosed to thirdparties. Our agreements with employees and our personnel policies also provide that any inventions conceived by the individual in the course of renderingservices to us shall be our exclusive property. However, we may not obtain these agreements in all circumstances, and individuals with whom we have theseagreements may not comply with their terms. Thus, despite such agreement, such inventions may become assigned to third parties. In the event ofunauthorized use or disclosure of our trade secrets or proprietary information, these agreements, even if obtained, may not provide meaningful protection,particularly for our trade secrets or other confidential information. To the extent that our employees, consultants or contractors use technology or know-howowned by third parties in their work for us, disputes may arise between us and those third parties as to the rights in related inventions. To the extent that anindividual who is not obligated to assign rights in intellectual property to us is rightfully an inventor of intellectual property, we may need to obtain anassignment or a license to that intellectual property from that individual, or a third party or from that individual’s assignee. Such assignment or license maynot be available on commercially reasonable terms or at all.Adequate remedies may not exist in the event of unauthorized use or disclosure of our proprietary information. The disclosure of our trade secretswould impair our competitive position and may materially harm our business, financial condition and results of operations. Costly and time-consuminglitigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to maintain trade secret protection could adverselyaffect our competitive business position. In addition, others may independently discover or develop our trade secrets and proprietary information, and theexistence of our own trade secrets affords no protection against such independent discovery.As is common in the biopharmaceutical industry, we employ individuals who were previously or concurrently employed at research institutionsand/or other biopharmaceutical, biotechnology or pharmaceutical companies, including our competitors or potential competitors. We may be subject toclaims that these employees, or we, have inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers,or that patents and applications we have filed to protect inventions of these employees, even those related to one or more of our product candidates, arerightfully owned by their former or concurrent employer. Litigation may be necessary to defend against these claims. Even if we are successful in defendingagainst these claims, litigation could result in substantial costs and be a distraction to management.Obtaining and maintaining our patent protection depends on compliance with various procedural, documentary, fee payment and other requirementsimposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to the USPTOand various foreign patent offices at various points over the lifetime of our patents and/or applications. We have systems in place to remind us to pay thesefees, and we rely on our outside counsel or service providers to pay these fees when due. Additionally, the USPTO and various foreign patent offices requirecompliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. We employ reputablelaw firms and other professionals to help us comply, and in many cases, an inadvertent lapse can be cured by payment of a late fee or by other means inaccordance with rules applicable to the particular jurisdiction. However, there are situations in which noncompliance can result in abandonment or lapse ofthe patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. If such an event were to occur, it could havea material adverse effect on our business. In addition, we are responsible for the payment of patent fees for patent rights that we have licensed from otherparties.If any licensor of these patents does not itself elect to make these payments, and we fail to do so, we may be liable to the licensor for any costs andconsequences of any resulting loss of patent rights.Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our product candidates.Obtaining and enforcing patents in the biopharmaceutical industry involves both technological and legal complexity, and29Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.therefore, is costly, time-consuming and inherently uncertain. In addition, the United States has recently enacted and is currently implementing wide-rangingpatent reform legislation. Further, recent U.S. Supreme Court rulings have either narrowed the scope of patent protection available in certain circumstances orweakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, thiscombination of events has created uncertainty with respect to the value of patents, once obtained.For our U.S. patent applications containing a claim not entitled to priority before March 16, 2013, there is a greater level of uncertainty in the patentlaw. In September 2011, the Leahy-Smith America Invents Act, or the American Invents Act (“AIA”), was signed into law. The AIA includes a number ofsignificant changes to U.S. patent law, including provisions that affect the way patent applications will be prosecuted and may also affect patent litigation.The USPTO is currently developing regulations and procedures to govern administration of the AIA, and many of the substantive changes to patent lawassociated with the AIA. It is not clear what other, if any, impact the AIA will have on the operation of our business. Moreover, the AIA and itsimplementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of ourissued patents, all of which could have a material adverse effect on our business and financial condition.An important change introduced by the AIA is that, as of March 16, 2013, the United States transitioned to a “first-inventor-to- file” system fordeciding which party should be granted a patent when two or more patent applications are filed by different parties claiming the same invention. A thirdparty that files a patent application in the USPTO after that date but before us could therefore be awarded a patent covering an invention of ours even if wehad made the invention before it was made by the third party. This will require us to be cognizant going forward of the time from invention to filing of apatent application. Furthermore, our ability to obtain and maintain valid and enforceable patents depends on whether the differences between our technologyand the prior art allow our technology to be patentable over the prior art. Since patent applications in the United States and most other countries areconfidential for a period of time after filing, we cannot be certain that we were the first to either (i) file any patent application related to our productcandidates or (ii) invent any of the inventions claimed in our patents or patent applications.Among some of the other changes introduced by the AIA are changes that limit where a patentee may file a patent infringement suit and providingopportunities for third parties to challenge any issued patent in the USPTO. This applies to all of our U.S. patents, even those issued before March 16, 2013.Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal court necessary to invalidate apatent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the sameevidence would be insufficient to invalidate the claim if first presented in a district court action. Accordingly, a third party may attempt to use the USPTOprocedures to invalidate our patent claims that would not have been invalidated if first challenged by the third party as a defendant in a district court action.We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information ofthird parties.We may have received confidential and proprietary information from third parties. In addition, we employ individuals who were previously employedat other biopharmaceutical, biotechnology or pharmaceutical companies. We may be subject to claims that we or our employees, consultants or independentcontractors have inadvertently or otherwise improperly used or disclosed confidential information of these third parties or our employees’ former employers.Further, we may be subject to ownership disputes in the future arising, for example, from conflicting obligations of consultants or others who are involved indeveloping our product candidates. We may also be subject to claims that former employees, consultants, independent contractors, collaborators or otherthird parties have an ownership interest in our patents or other intellectual property. Litigation may be necessary to defend against these and other claimschallenging our right to and use of confidential and proprietary information. If we fail in defending any such claims, in addition to paying monetarydamages, we may lose our rights therein. Such an outcome could have a material adverse effect on our business. Even if we are successful in defendingagainst these claims, litigation could result in substantial cost and be a distraction to our management and employees.We may not be able to protect our intellectual property rights throughout the world.Filing, prosecuting and defending patents on our product candidates in all countries throughout the world would be prohibitively expensive. Therequirements for patentability may differ in certain countries, particularly developing countries. For example, China has a heightened requirement forpatentability, and specifically requires a detailed description of medical uses of a claimed drug. In addition, the laws of some foreign countries do not protectintellectual property rights to the same extent as laws in the United States. Consequently, we may not be able to prevent third parties from practicing ourinventions in all countries outside the United States. Competitors may use our technologies in jurisdictions where we have not obtained patent protection todevelop their own products and, further, may export otherwise infringing products to territories where we have patent protection, but enforcement oninfringing activities is inadequate. These products may compete with our product candidates, and our patents or other intellectual property rights may not beeffective or sufficient to prevent them from competing.30Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legalsystems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection,particularly those relating to biopharmaceuticals, which could make it difficult for us to stop the infringement of our patents or marketing of competingproducts in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs anddivert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patentapplications at risk of not issuing, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and thedamages or other remedies awarded, if any, may not be commercially meaningful. In addition, certain countries in Europe and certain developing countries,including India and China, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In thosecountries, we may have limited remedies if our patents are infringed or if we are compelled to grant a license to our patents to a third party, which couldmaterially diminish the value of those patents. This could limit our potential revenue opportunities. Accordingly, our efforts to enforce our intellectualproperty rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we own or license.Finally, our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual propertylaws.Risks Related to LitigationWe may face litigation or regulatory investigations that could result in substantial damages and may divert management’s time and attention from ourbusiness.From time to time we may become a party to legal proceedings, claims and investigations that arise in the ordinary course of business such as, but notlimited to, patent, employment, securities, commercial and environmental matters. While we currently believe that the ultimate outcome of any of theseproceedings will not have a material adverse effect on our financial position, results of operations, or liquidity, litigation is subject to inherent uncertainty.Furthermore, litigation and regulatory investigations consume both cash and management attention.We maintain property and general commercial insurance coverage as well as errors and omissions and directors and officers insurance policies. Thisinsurance coverage may not be sufficient to cover us for future claims.If we or our employees fail to comply with laws or regulations, it could adversely impact our reputation, business and stock price.We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional and/or negligent failures tocomply with FDA regulations, to provide accurate information to the FDA, to comply with manufacturing standards we have established, to comply withfederal and state health care fraud and abuse, transparency, and/or data privacy and security laws and regulations, to report financial information or dataaccurately or to disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject toextensive laws and regulations intended to prevent fraud, kickbacks, self-dealing and other abusive practices; to promote transparency; and to protect theprivacy and security of patient data. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, salescommission, customer incentive programs and other business arrangements.While we have adopted a corporate compliance program, we may not be able to protect against all potential issues of noncompliance. Efforts to ensurethat our business complies with all applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities willconclude that our business practices may not comply with current or future statutes, regulations, or case law involving applicable laws and regulations.Employee misconduct could also involve the improper use or disclosure of information obtained in the course of clinical trials, which could result inregulatory sanctions and serious harm to our reputation. In addition, during the course of our operations, our directors, executives and employees may haveaccess to material, nonpublic information regarding our business, our results of operations or potential transactions we are considering. We may not be able toprevent a director, executive or employee from trading in our common stock on the basis of, or while having access to, material, nonpublic information. If adirector, executive or employee was to be investigated, or an action was to be brought against a director, executive or employee for insider trading, it couldhave a negative impact on our reputation and our stock price. Such a claim, with or without merit, could also result in substantial expenditures of time andmoney, and divert attention of our management team.Product liability and other claims against us may reduce demand for our products and/or result in substantial damages.We face an inherent risk of product liability exposure related to testing our product candidates in human clinical trials and manufacturing antibodiesin our Berkeley, CA facility and may face even greater risks if we ever sell products commercially. An31Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.individual may bring a product liability claim against us if one of our product candidates causes, or merely appears to have caused, an injury. Productliability claims may result in: •regulatory investigations; •injury to our reputation; •withdrawal of clinical trial volunteers; •costs of related litigation; and •substantial monetary awards to plaintiffs; and •decreased demand for any future products.We manufacture the Prophage vaccines from a patient’s cancer cells, and medical professionals must inject the vaccines into the same patient fromwhich they were manufactured. A patient may sue us if a hospital, a shipping company, or we fail to receive the removed cancer tissue or deliver that patient’svaccine. We do not have any other insurance that covers loss of or damage to the Prophage vaccines or tumor material, and we do not know whether suchinsurance will be available to us at a reasonable price or at all. We have limited product liability coverage for use of our product candidates. Our productliability policy provides $10.0 million aggregate coverage and $10.0 million per occurrence coverage. This limited insurance coverage may be insufficientto fully cover us for future claims.We are also subject to laws generally applicable to businesses, including but not limited to, federal, state and local wage and hour, employeeclassification, mandatory healthcare benefits, unlawful workplace discrimination and whistle-blowing. Any actual or alleged failure to comply with anyregulation applicable to our business or any whistle-blowing claim, even if without merit, could result in costly litigation, regulatory action or otherwiseharm our business, results of operations, financial condition, cash flow and future prospects.If we do not comply with environmental laws and regulations, we may incur significant costs and potential disruption to our business.We use or may use hazardous, infectious, and radioactive materials, and recombinant DNA in our operations, which have the potential of beingharmful to human health and safety or the environment. We store these hazardous (flammable, corrosive, toxic), infectious, and radioactive materials, andvarious wastes resulting from their use, at our facilities pending use and ultimate disposal. We are subject to a variety of federal, state, and local laws andregulations governing use, generation, storage, handling, and disposal of these materials. We may incur significant costs complying with both current andfuture environmental health and safety laws and regulations. In particular, we are subject to regulation by the Occupational Safety and Health Administration,the Environmental Protection Agency, the Drug Enforcement Agency, the Department of Transportation, the Centers for Disease Control and Prevention, theNational Institutes of Health, the International Air Transportation Association, and various state and local agencies. At any time, one or more of theaforementioned agencies could adopt regulations that may affect our operations. We are also subject to regulation under the Toxic Substances Control Actand the Resource Conservation Development programs.Although we believe that our current procedures and programs for handling, storage, and disposal of these materials comply with federal, state, andlocal laws and regulations, we cannot eliminate the risk of accidents involving contamination from these materials. Although we have a workers’compensation liability policy, we could be held liable for resulting damages in the event of an accident or accidental release, and such damages could besubstantially in excess of any available insurance coverage and could substantially disrupt our business.Risks Related to our Common StockProvisions in our organizational documents could prevent or frustrate attempts by stockholders to replace our current management.Our certificate of incorporation and bylaws contain provisions that could make it more difficult for a third party to acquire us without the consent ofour Board of Directors. Our certificate of incorporation provides for a staggered board and removal of directors only for cause. Accordingly, stockholders mayelect only a minority of our Board at any annual meeting, which may have the effect of delaying or preventing changes in management. In addition, underour certificate of incorporation, our Board of Directors may issue additional shares of preferred stock and determine the terms of those shares of stock withoutany further action by our stockholders. Our issuance of additional preferred stock could make it more difficult for a third party to acquire a majority of ouroutstanding voting stock and thereby effect a change in the composition of our Board of Directors. Our certificate of incorporation also provides that ourstockholders may not take action by written consent. Our bylaws require advance notice of stockholder proposals and director nominations and permit onlyour president or a majority of the Board of Directors to call a special stockholder meeting. These32Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.provisions may have the effect of preventing or hindering attempts by our stockholders to replace our current management. In addition, Delaware lawprohibits a corporation from engaging in a business combination with any holder of 15% or more of its capital stock until the holder has held the stock forthree years unless, among other possibilities, the board of directors approves the transaction. Our Board of Directors may use this provision to preventchanges in our management. Also, under applicable Delaware law, our Board of Directors may adopt additional anti-takeover measures in the future.Our stock has historically had low trading volume, and its public trading price has been volatile.During the period from our initial public offering on February 4, 2000 to December 31, 2017, and the year ended December 31, 2017, the closing priceof our common stock has fluctuated between $1.80 (or $0.30 pre-reverse stock split) and $315.78 (or $52.63 pre-reverse stock split) per share and $3.24 and$5.37 per share, respectively. The average daily trading volume for the year ended December 31, 2017 was approximately 1,174,002 shares, while theaverage daily trading volume for the year ended December 31, 2016 was approximately 1,207,067. The market may experience significant price and volumefluctuations that are often unrelated to the operating performance of individual companies. In addition to general market volatility, many factors may have asignificant adverse effect on the market price of our stock, including: •continuing operating losses, which we expect over the next several years as we continue our development activities; •announcements of decisions made by public officials or delays in any such announcements; •results of our pre-clinical studies and clinical trials or delays in anticipated timing; •delays in our regulatory filings or those of our partners; •announcements of new collaboration agreements with strategic partners or developments by our existing collaboration partners; •announcements of acquisitions; •announcements of technological innovations, new commercial products, failures of products, or progress toward commercialization by ourcompetitors or peers; •failure to realize the anticipated benefits of acquisitions; •developments concerning proprietary rights, including patent and litigation matters; •publicity regarding actual or potential results with respect to product candidates under development; •quarterly fluctuations in our financial results, including our average monthly cash used in operating activities; •variations in the level of expenses related to any of our product candidates or clinical development programs; •additions or departures of key management or scientific personnel; •conditions or trends in the biopharmaceutical, biotechnology and pharmaceutical industries generally; •other events or factors, including those resulting from war, incidents of terrorism, natural disasters or responses to these events; •changes in accounting principles; •general economic and market conditions and other factors that may be unrelated to our operating performance or the operating performance ofour competitors, including changes in market valuations of similar companies; and •sales of common stock by us or our stockholders in the future, as well as the overall trading volume of our common stock.In the past, securities class action litigation has often been brought against a company following a significant decline in the market price of itssecurities. This risk is especially relevant for us because many biopharmaceutical, biotechnology and pharmaceutical companies experience significant stockprice volatility.The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or ourbusiness. If one or more of the analysts who covers us downgrades our stock, or publishes inaccurate or unfavorable research about our business, our stockprice would likely decline. If one or more of these analysts ceases coverage of us or fails to publish reports on us regularly, demand for our stock coulddecrease, which could cause our stock price and trading volume to decline.33Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The sale of a significant number of shares could cause the market price of our stock to decline.The sale by us or the resale by stockholders of a significant number of shares of our common stock could cause the market price of our common stockto decline. As of February 28, 2018, we had 102,556,797 shares of common stock outstanding. All of these shares are eligible for sale on Nasdaq, althoughcertain of the shares are subject to sales volume and other limitations. We have filed registration statements to permit the sale of approximately 22,200,000shares of common stock under our equity incentive plans, and to permit the sale of 1,500,000 shares of common stock under our 2015 Inducement EquityPlan. We have also filed registration statements to permit the sale of approximately 167,000 shares of common stock under our Employee Stock PurchasePlan, to permit the sale of 325,000 shares of common stock under our Directors’ Deferred Compensation Plan, to permit the sale of approximately 31,100,319shares of common stock pursuant to various private placement agreements and to permit the sale of up to 15,000,000 shares of our common stock pursuant toour Controlled Equity OfferingSM Sales Agreement. As of the date of filing, an aggregate of approximately 34,000,000 of these shares remained available forsale. In connection with our acquisition of 4-AB in February 2014, we are obligated to make contingent milestone payments to the former shareholders of 4-AB, payable in cash or shares of our common stock at our option, as follows (i) $10.0 million upon our market capitalization exceeding $750.0 million for 30consecutive trading days prior to the earliest of (a) February 12, 2024 (b) the sale of 4-AB or (c) the sale of Agenus and (ii) $10.0 million upon our marketcapitalization exceeding $1.0 billion for 30 consecutive trading days prior to the earliest of (a) February 12, 2024, (b) the sale of 4-AB or (c) the sale ofAgenus. In connection with our acquisition of PhosImmune in December 2015, we issued 1,631,521 shares of our common stock to the shareholders ofPhosImmune and other third parties having a fair market value of approximately $7.4 million at closing. In addition, we may be obligated in the future to paycertain contingent milestones payments, payable at our election in cash or shares of our common stock of up to $35.0 million in the aggregate. We are alsoobligated to file registration statements covering any additional shares that may be issued to XOMA or the former shareholders of PhosImmune in the futurepursuant to the terms of our agreements with XOMA and PhosImmune, respectively. The market price of our common stock may decrease based on theexpectation of such sales. The market price of our common stock may decrease based on the expectation of such sales.As of December 31, 2017, warrants to purchase approximately 4,351,450 shares of our common stock with a weighted average exercise price per shareof $9.01 were outstanding.As of December 31, 2017, options to purchase 14,366,787 shares of our common stock with a weighted average exercise price per share of $4.22 wereoutstanding. These options are subject to vesting that occurs over a period of up to four years following the date of grant. As of December 31, 2017, we had8,164,576 vested options and 1,313,550 non-vested shares outstanding.As of December 31, 2017, our outstanding shares of Series A-1 Convertible Preferred Stock were convertible into 333,333 shares of our common stock.We may issue additional common stock, preferred stock, restricted stock units, or securities convertible into or exchangeable for our common stock.Furthermore, substantially all shares of common stock for which our outstanding stock options or warrants are exercisable are, once they have beenpurchased, eligible for immediate sale in the public market. The issuance of additional common stock, preferred stock, restricted stock units, or securitiesconvertible into or exchangeable for our common stock or the exercise of stock options or warrants would dilute existing investors and could adversely affectthe price of our securities. In addition, such securities may have rights senior to the rights of securities held by existing investors.We do not intend to pay cash dividends on our common stock and, consequently your ability to obtain a return on your investment will depend onappreciation in the price of our common stock.We have never declared or paid any cash dividend on our common stock and do not intend to do so in the foreseeable future. We currently anticipatethat we will retain future earnings for the development, operation and expansion of our business. Therefore, the success of an investment in shares of ourcommon stock will depend upon any future appreciation in their value. There is no guarantee that shares of our common stock will appreciate in value ormaintain their current value.Our independent auditor’s report for the fiscal year ended December 31, 2017 includes an explanatory paragraph regarding substantial doubt aboutour ability to continue as a going concern.In its report accompanying our audited consolidated financial statements for the year ended December 31, 2017, our independent registered publicaccounting firm included an explanatory paragraph regarding concerns about our ability to continue as a going concern. The inclusion of a goingconcern explanatory paragraph may negatively impact the trading price of our common stock and make it more difficult, time consuming or expensive toobtain necessary financing. In the event we are unable to continue our operations, we may have to liquidate our assets and it is likely that investors will loseall or a part of their investment.34Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act of 2002 and to comply with changingregulation of corporate governance and public disclosure could have a material adverse effect on our operating results and the price of our common stock.The Sarbanes-Oxley Act of 2002 and rules adopted by the SEC and Nasdaq have resulted in significant costs to us. In particular, our efforts to complywith Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations regarding the required assessment of our internal control over financial reporting,and our independent registered public accounting firm’s audit of internal control over financial reporting, have required commitments of significantmanagement time. We expect these commitments to continue.Our internal control over financial reporting (as defined in Rules 13a-15 of the Exchange Act) is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with U.S.GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect all deficiencies or weaknesses in our financialreporting. While our management has concluded that there were no material weaknesses in our internal control over financial reporting as of December 31,2017, our procedures are subject to the risk that our controls may become inadequate because of changes in conditions or as a result of a deterioration incompliance with such procedures. No assurance is given that our procedures and processes for detecting weaknesses in our internal control over financialreporting will be effective.Changing laws, regulations and standards relating to corporate governance and public disclosure, are creating uncertainty for companies. Laws,regulations and standards are subject to varying interpretations in some cases due to their lack of specificity, and as a result, their application in practice mayevolve over time as new guidance is provided, which could result in continuing uncertainty regarding compliance matters and higher costs caused byongoing revisions to disclosure and governance practices. If we fail to comply with these laws, regulations and standards, our reputation may be harmed, andwe might be subject to sanctions or investigation by regulatory authorities, such as the SEC. Any such action could adversely affect our operating results andthe market price of our common stock. Item 1B.Unresolved Staff CommentsNone. Item 2.PropertiesWe lease our manufacturing, research and development, and corporate offices in Lexington, Massachusetts occupying approximately 82,000 squarefeet. This lease agreement terminates in August 2023 with an option to renew for one additional ten-year period.During December 2012 we entered into a commercial lease for approximately 5,600 square feet of office space in New York, New York for use ascorporate offices that terminates in May 2020.We also lease research and office facilities in Cambridge, United Kingdom. This lease terminates in November 2025. In 2017, we closed our offices inBasel, Switzerland, terminating the lease and consolidating these operations in the United Kingdom and United States.In December 2015, we acquired a manufacturing facility with approximately 24,000 square feet in Berkeley, California to be used in the productionand manufacture of antibody product candidates. In December 2015, we also entered into a commercial lease in Berkeley, California for approximately10,900 square feet to be used for corporate offices which expires in December 2020. We also have a sublease in Berkeley, California for parking that expiresin May 2020.We believe substantially all of our property and equipment is in good condition and that we have sufficient capacity to meet our current operationalneeds. We do not anticipate experiencing significant difficulty in retaining occupancy of any of our manufacturing or office facilities and will do so throughlease renewals prior to expiration or through replacing them with equivalent facilities. Item 3.Legal ProceedingsWe are not party to any material legal proceedings. Item 4.Mine Safety DisclosuresNot applicable. 35Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.PART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesOur common stock is currently listed on The Nasdaq Capital Market under the symbol “AGEN.”The following table sets forth, for the periods indicated, the high and low sale prices per share of our common stock. High Low 2016 First Quarter $4.63 $2.61 Second Quarter 4.82 2.97 Third Quarter 7.31 4.04 Fourth Quarter 7.49 3.71 2017 First Quarter 4.54 3.69 Second Quarter 4.08 3.24 Third Quarter 5.37 3.48 Fourth Quarter 4.78 3.26 As of February 28, 2018, there were 402 holders of record and 27,634 beneficial holders of our common stock.We have never paid cash dividends on our common stock, and we do not anticipate paying any cash dividends in the foreseeable future. We currentlyintend to retain future earnings, if any, for the future operation and expansion of our business. Any future payment of dividends on our common stock will beat the discretion of our Board of Directors and will depend upon, among other things, our earnings, financial condition, capital requirements, level ofindebtedness, and other factors that our Board of Directors deem relevant.36Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Stock PerformanceThe following graph shows the cumulative total stockholder return on our common stock over the period spanning December 31, 2012 to December31, 2017, as compared with that of the Nasdaq Stock Market (U.S. Companies) Index and the Nasdaq Biotechnology Index, based on an initial investment of$100 in each on December 31, 2012. Total stockholder return is measured by dividing share price change plus dividends, if any, for each period by the shareprice at the beginning of the respective period and assumes reinvestment of dividends.This stock performance graph shall not be deemed “filed” with the SEC or subject to Section 18 of the Exchange Act, nor shall it be deemedincorporated by reference in any of our filings under the Securities Act of 1933, as amended (the “Securities Act”).COMPARISON OF CUMULATIVE TOTAL RETURN OF AGENUS INC.,NASDAQ STOCK MARKET (U.S. COMPANIES) INDEXAND NASDAQ BIOTECHNOLOGY INDEX 12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 12/31/2017 Agenus Inc. 100.00 64.39 96.83 110.73 100.49 79.51 NASDAQ Stock Market (U.S. Companies) Index 100.00 138.32 156.85 165.84 178.28 228.63 NASDAQ Biotechnology Index 100.00 165.61 217.88 247.44 193.79 234.60 Item 6.Selected Financial DataWe have derived the condensed consolidated balance sheet data set forth below as of December 31, 2017 and 2016, and the condensed consolidatedstatement of operations data for each of the years in the three-year period ended December 31, 2017, from our audited consolidated financial statementsincluded elsewhere in this Annual Report on Form 10-K.You should read the selected condensed consolidated financial data in conjunction with “Management’s Discussion and Analysis of FinancialCondition and Results of Operations,” our consolidated financial statements, and the notes to our consolidated financial statements included elsewhere inthis Annual Report on Form 10-K.37Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Changes in cash, cash equivalents, and short-term investments, total current assets, total assets, total current liabilities, long-term debt andstockholders’ (deficit) equity in the periods presented below include the effects of the receipt of net proceeds from our debt offerings, equity offerings, theexercise of stock options, and employee stock purchases that totaled approximately $81.5 million, $3.4 million, $220.4 million, $57.0 million, and $36.6million in the years ended December 31, 2017, 2016, 2015, 2014, and 2013, respectively. For the Year Ended December 31, 2017 2016 2015 2014 2013 (in thousands except per share data) Condensed Consolidated Statement of Operations Data: Revenue $42,877 $22,573 $24,817 $6,977 $3,045 Operating expenses: Cost of goods sold — — — - (536)Research and development (116,125) (94,971) (70,444) (22,349) (13,005)General and administrative (33,741) (33,126) (28,370) (21,250) (14,484)Contingent purchase price consideration fair value adjustment 3,188 (1,953) (6,704) (6,699) — Operating loss (103,801) (107,477) (80,701) (43,321) (24,980)Non-operating income (expense) 1,977 (2,202) (5,968) 2,096 (2,673)Interest expense, net (18,868) (17,316) (6,599) (1,261) (2,420)Loss before taxes (120,692) (126,995) (93,268) (42,486) (30,073)Income tax benefit (1) — — 5,387 — — Net loss (120,692) (126,995) (87,881) (42,486) (30,073)Dividends on Series A-1 convertible preferred stock (206) (204) (203) (204) (3,159)Net loss attributable to common stockholders $(120,898) $(127,199) $(88,084) $(42,690) $(33,232)Net loss attributable to common stockholders per common share, basic and diluted $(1.23) $(1.46) $(1.13) $(0.71) $(1.12)Weighted average number of common shares outstanding, basic and diluted 98,415 87,070 78,212 59,754 29,766 As of December 31, 2017 2016 2015 2014 2013 (in thousands) Condensed Consolidated Balance Sheet Data: Cash, cash equivalents and short-term investments $60,187 $76,437 $171,668 $40,224 $27,352 Total current assets 73,554 91,312 184,095 42,670 28,175 Total assets 138,402 156,986 242,228 74,527 34,835 Total current liabilities 56,438 40,851 28,934 9,229 10,296 Long-term debt, less current portion 142,385 130,542 114,326 4,769 5,384 Stockholders' (deficit) equity (75,816) (39,126) 70,728 23,018 (4,481) (1)Given our history of incurring operating losses, no income tax benefit has been recognized in our consolidated statements of operations for the yearsended December 31, 2017, 2016, 2014, and 2013 because of the loss before income taxes, and the need to recognize a valuation allowance on theportion of our deferred tax assets which will not be offset by the reversal of deferred tax liabilities. For the year ended December 31, 2015, werecognized an income tax benefit as a result of the deferred tax liabilities recognized in connection with the PhosImmune and XOMA antibodymanufacturing facility acquisitions. 38Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Item 7.Management’s Discussion and Analysis of Financial Condition and Results of OperationsOverviewWe are a clinical-stage immuno-oncology (“I-O”) company dedicated to becoming a leader in the discovery and development of innovativecombination therapies and committed to bringing effective medicines to patients with cancer. Our business is designed to drive success in I-O through speed,innovation, and effective combination therapies. We have assembled fully integrated capabilities from novel target discovery, antibody generation, cell linedevelopment, and good manufacturing practice (“GMP”) manufacturing together with a comprehensive portfolio consisting of antibody-based therapeutics,adjuvants and cancer vaccine platforms. We leverage our immune biology platforms to identify effective combination therapies for development and havedeveloped productive partnerships to advance our innovation.We are developing a comprehensive I-O portfolio driven by the following platforms and programs, which we intend to utilize individually and incombination: •our antibody discovery platforms, including our Retrocyte Display™, SECANT® yeast display, and phage display technologies designed todrive the discovery of future CPM antibody candidates; •our antibody candidate programs, including our CPM programs; •our vaccine programs, including Prophage™, AutoSynVax™ and PhosPhoSynVaxTM; and •our saponin-based vaccine adjuvants, principally our QS-21 Stimulon® adjuvant, or QS-21 Stimulon.We assess development, commercialization and partnering strategies for each of our product candidates periodically based on several factors,including pre-clinical and clinical trial results, competitive positioning and funding requirements and resources. We have formed collaborations withcompanies such as Incyte Corporation (“Incyte”), Merck Sharpe & Dohme and Recepta Biopharma SA (“Recepta”). Through these alliances, as well as ourown internal programs, we currently have more than a dozen antibody programs in pre-clinical or early phase development, including our anti-CTLA-4 andanti-PD-1 antibody programs (both partnered with Recepta for certain South America territories) and anti-GITR and anti-OX40 antibody programs (bothpartnered with Incyte). In February 2017, we amended our collaboration agreement with Incyte to, among other things, convert the GITR and OX40 programsfrom profit-share to royalty-bearing programs. We are now eligible to receive royalties on global net sales at a flat 15% rate for each of these programs. Thereare no longer any profit-share programs remaining under the collaboration, and we are eligible to receive up to a total of $510.0 million in future potentialdevelopment, regulatory and commercial milestones across all programs in the collaboration. Pursuant to the amended agreement, we received acceleratedmilestone payments of $20.0 million from Incyte related to the clinical development of INCAGN1876 (anti-GITR agonist) and INCAGN1949 (anti-OX40agonist). Concurrent with the execution of the amendment, we and Incyte also entered into the Stock Purchase Agreement whereby Incyte purchased anadditional 10 million shares of our common stock at $6.00 per share, resulting in additional proceeds of $60.0 million to us.In addition to our antibody platforms and CPM programs, we are also advancing a series of vaccine programs to treat cancer. In January 2017, weannounced a clinical trial collaboration with the National Cancer Institute (“NCI”), which is a double-blind, randomized controlled Phase 2 trial that isevaluating the effect of our autologous vaccine candidate, Prophage, in combination with pembrolizumab (Keytruda®, Merck & Co., Inc. (“Merck”)) inpatients with ndGBM. Under this collaboration, we are supplying Prophage, Merck is supplying pembrolizumab and the NCI and Brain Tumor TrialsCollaborative member sites are recruiting patients and conducting the trial.Our QS-21 Stimulon adjuvant is also partnered with GlaxoSmithKline (“GSK”) and is a key component in multiple GSK vaccine programs. Theseprograms are in various stages, with the most advanced being GSK’s shingles program. In 2015, we monetized a portion of the future royalties we werecontractually entitled to receive from GSK from sales of its shingles and malaria vaccines through a Note Purchase Agreement (“NPA”) and received netproceeds of approximately $78 million. In October 2017, GSK’s shingles vaccine was approved in the United States by the FDA and granted marketingauthorization in Canada by Health Canada and in November 2017, we exercised our option to issue the $15.0 million in additional notes in accordance withthe terms of the NPA. In January 2018, we entered into a Royalty Purchase Agreement with Healthcare Royalty Partners III, L.P. and certain of its affiliates(together, “HCR”), pursuant to which HCR purchased 100% of our worldwide rights to receive royalties from GSK on GSK’s sales of vaccines containing ourQS-21 Stimulon adjuvant. We used a portion of the upfront proceeds from HCR to redeem all of the notes issued pursuant to the Note Purchase Agreement,resulting in net proceeds to us of approximately $28.0 million at closing. We do not incur clinical development costs for products partnered with GSK. Our business activities include product research and development, intellectual property prosecution, manufacturing, regulatory and clinical affairs,corporate finance and development activities, and support of our collaborations. Our product candidates require clinical trials and approvals from regulatoryagencies, as well as acceptance in the marketplace. Part of our strategy is to develop and39Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.commercialize some of our product candidates by continuing our existing arrangements with academic and corporate collaborators and licensees and byentering into new collaborations.In October 2017, we announced the launch of a subsidiary that is advancing our cell therapy business, AgenTus Therapeutics. The subsidiary isfocused on the discovery, development, and commercialization of breakthrough “living drugs” to advance cures for cancer patients. AgenTus licensesintellectual property assets from Agenus, and has its own management and governance.Our common stock is currently listed on The Nasdaq Capital Market under the symbol “AGEN.”Our research and development expenses for the years ended December 31, 2017, 2016, and 2015, were $116.1 million, $95.0 million, and $70.4million, respectively. We have incurred significant losses since our inception. As of December 31, 2017, we had an accumulated deficit of $1,026.5 million.To date, we have financed our operations primarily through the sale of equity and debt securities. We believe that, based on our current plans andactivities, including additional funding we anticipate from multiple sources between now and the end of the second quarter of 2018, including out-licensingand/or partnering opportunities, our working capital resources at December 31, 2017, along with the net proceeds of approximately $28.0 million receivedfrom HCR in January 2018 in connection with our royalty transaction, will be sufficient to satisfy our liquidity requirements through the first quarter of 2019.We may attempt to raise additional funds by: (1) pursuing collaboration, out-licensing and/or partnering opportunities for our portfolio programs and productcandidates with one or more third parties, (2) renegotiating third party agreements, (3) selling assets, (4) securing additional debt financing and/or (5) sellingequity securities. Satisfying long-term liquidity needs may require the successful commercialization and/or substantial out-licensing or partneringarrangements for our antibody discovery platforms, CPM antibody programs, and HSP-based vaccines. Our long-term success will also be dependent on thesuccessful identification, development and commercialization of potential other product candidates, each of which will require additional capital with nocertainty of timing or probability of success. If we incur operating losses for longer than we expect and/or we are unable to raise additional capital, we maybecome insolvent and be unable to continue our operations.Historical Results of OperationsYear Ended December 31, 2017 Compared to the Year Ended December 31, 2016Revenue: We generated revenue of $42.9 million and $22.6 million during the years ended December 31, 2017 and 2016, respectively. Revenueprimarily includes fees earned under our license agreements, including approximately $14.6 million and $16.2 million, respectively for the years endedDecember 31, 2017, and 2016, related to reimbursement of development costs under our Collaboration Agreement with Incyte. The increase in total revenuefor the year ended December 31, 2017 is primarily attributable to the $20.0 million in accelerated milestones, recognized as revenue during the twelvemonths ended December 31, 2017, related to the antibody candidates targeting GITR and OX40 received in connection with the February 14, 2017amendment to our License, Development and Commercialization Agreement with Incyte. During the years ended December 31, 2017 and 2016, we recordedrevenue of $3.1 million and $3.5 million, respectively, from the amortization of deferred revenue.Research and Development: Research and development expenses include the costs associated with our internal research and development activities,including compensation and benefits, occupancy costs, clinical manufacturing costs, contract research organization costs, costs of consultants, and relatedadministrative costs. Research and development expense increased 22% to $116.1 million for the year ended December 31, 2017 from $95.0 million for theyear ended December 31, 2016. Increased expenses in 2017 primarily relate to a $17.6 million increase in third-party services and other expenses relatinglargely to the advancement of our CPM antibody programs, a $3.3 million increase in payroll related costs primarily due to increased headcount, and a $0.6million increase in depreciation expense, offset by a $0.4 million decrease in expense for our foreign subsidiaries due to the closure of our facility in Basel,Switzerland, which decrease was partially offset by increased expenses attributable to Agenus UK.General and Administrative: General and administrative expenses consist primarily of personnel costs, facility expenses, and professional fees.General and administrative expenses increased 2% to $33.7 million for the year ended December 31, 2017 from $33.1 million for the year ended December31, 2016. Increased general and administrative expenses in 2017 primarily relate to a $1.8 million increase in payroll related costs primarily due to increasedheadcount offset by a $0.6 million decrease in professional fees due to the reduced use of consultants and a $0.6 million decrease in expense for our foreignsubsidiaries due to the closure of our facility in Basel, Switzerland, which decrease was partially offset by increased expenses attributable to Agenus UK.Contingent purchase price consideration fair value adjustment: Contingent purchase price consideration fair value adjustment represents the changein the fair value of our contingent purchase price consideration during the year ended December 31, 2017, which resulted from changes in our marketcapitalization and share price and changes in the credit spread since the prior year end. The fair40Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.value of our contingent purchase price consideration is based on estimates from a Monte Carlo simulation of our market capitalization and share price.Non-operating income (expense): Non-operating income increased by $4.2 million for the year ended December 31, 2017, from an expense of $2.2million for the year ended December 31, 2016, to income of $2.0 million for the year ended December 31, 2017, primarily due to our increased foreigncurrency exchange gains in 2017 compared to losses in 2016.Interest Expense, net: Interest expense, net increased to $18.9 million for the year ended December 31, 2017 from $17.3 million for the year endedDecember 31, 2016 due to the compounding of interest on our debt under our Note Purchase Agreement and the issuance of additional notes under our NPAin November 2017. Year Ended December 31, 2016 Compared to the Year Ended December 31, 2015Revenue: We generated revenue of $22.6 million and $24.8 million during the years ended December 31, 2016 and 2015, respectively. Revenueprimarily includes fees earned under our license agreements, including approximately $16.2 million and $14.5 million, for the years ended December 31,2016, and 2015, respectively, related to reimbursement of development costs under our Collaboration Agreement with Incyte. The decrease in revenue for theyear ended December 31, 2016 is primarily attributable to decreased amortization of deferred revenue, offset by increased reimbursement of developmentcosts under our Collaboration Agreement with Incyte. During the years ended December 31, 2016 and 2015, we recorded revenue of $3.5 million and $9.2million, respectively, from the amortization of deferred revenue.Research and development: Research and development expense increased 35% to $95.0 million for the year ended December 31, 2016 from $70.4million for the year ended December 31, 2015. Increased expenses in 2016 primarily include the $18.3 million increase in third-party services and otherexpenses relating largely to the advancement of our CPM antibody programs, a $17.0 million increase in payroll related costs and share-based compensationdue to increased headcount, and $3.1 million increase in depreciation expense, offset by a $13.2 million decrease in in-process research and developmentrelated to a 2015 asset acquisition.General and administrative: General and administrative expenses increased 17% to $33.1 million for the year ended December 31, 2016 from $28.4million for the year ended December 31, 2015. Increased general and administrative expenses in 2016 primarily relate to a $2.0 million increase in payrollrelated expenses due to increased headcount and a $1.9 million increase in share-based compensation.Contingent purchase price consideration fair value adjustment: Contingent purchase price consideration fair value adjustment represents the changein the fair value of our contingent purchase price consideration during the year ended December 31, 2016, which resulted from changes in our marketcapitalization and share price and changes in the credit spread since the prior year end. The fair value of our contingent purchase price consideration is basedon estimates from a Monte Carlo simulation of our market capitalization and share price.Non-operating income (expense): Non-operating expense increased by $3.8 million for the year ended December 31, 2016 which primarily representsour increased foreign currency exchange loss of $1.7 million, offset by the absence of the prior year change in the fair value of our contingent royaltyobligation of $6.9 million, loss on extinguishment of our senior subordinated promissory notes issued in April 2013, and corresponding offset by the $1.5million gain on the purchase related to the antibody manufacturing facility acquisition from XOMA Corporation in December 2015.Interest expense, net: Interest expense net increased to $17.3 million for the year ended December 31, 2016 from $6.6 million for the year endedDecember 31, 2015 due to the outstanding 2015 Subordinated Notes, issued in February 2015 and the Notes under our NPA, executed in September 2015.Income tax benefit: For the year ended December 31, 2015, an income tax benefit arose from deferred tax liabilities recognized in connection with ourPhosImmune and XOMA acquisitions during the year and relates to the resulting release of our existing valuation allowance on our deferred tax assets. Therewas no similar benefit for the year ended December 31, 2016.InflationWe believe that inflation has not had a material adverse effect on our business, results of operations, or financial condition to date.41Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Research and Development Programs For the year ended December 31, 2017, our research and development programs consisted largely of our CPM antibody programs as indicated in thefollowing table (in thousands). For the Year Ended December 31, Research andDevelopment Program Product 2017 2016 2015 Prior to2015 Total Heat shock proteins for cancer Prophageand ASV $12,499 $8,202 $5,508 $309,681 $335,890 Antibody programs* Various 95,656 83,919 63,290 13,422 256,287 Vaccine adjuvant QS-21Stimulon 222 77 142 13,657 14,098 Other research and development programs 7,748 2,772 1,504 66,318 78,342 Total research and development expenses $116,125 $94,970 $70,444 $403,078 684,617 *Prior to 2014, costs were incurred by 4-AB, which we acquired in February 2014.Research and development program costs include compensation and other direct costs plus an allocation of indirect costs, based on certainassumptions and our review of the status of each program. Our product candidates are in various stages of development and significant additionalexpenditures will be required if we start new clinical trials, encounter delays in our programs, apply for regulatory approvals, continue development of ourtechnologies, expand our operations, and/or bring our product candidates to market. The total cost of any particular clinical trial is dependent on a number offactors such as trial design, length of the trial, number of clinical sites, number of patients, and trial sponsorship. The process of obtaining and maintainingregulatory approvals for new therapeutic products is lengthy, expensive, and uncertain. Because our CPM antibody programs are early stage, and becausefurther development of HSP-based vaccines is dependent on clinical trial results, among other factors, we are unable to reliably estimate the cost ofcompleting our research and development programs or the timing for bringing such programs to various markets or substantial partnering or out-licensingarrangements, and, therefore, when, if ever, material cash inflows are likely to commence. Active programs involving QS-21 Stimulon depend on our licenseesuccessfully completing clinical trials, successfully manufacturing QS-21 Stimulon to meet demand, obtaining regulatory approvals and successfullycommercializing product candidates containing QS-21 Stimulon. Product Development PortfolioAntibody Discovery Platforms and CPM ProgramsCheckpoint antibodies regulate immune response against pathogens that invade the body and are achieving positive outcomes in a number of cancersthat were untreatable only a few years ago. Two classes of checkpoint targets include:1.inhibitory checkpoints that help suppress an immune response in order to prevent excessive immune reaction resulting inundesired inflammation and/or auto-immunity, and2.stimulatory checkpoints that can enhance or amplify an antigen-specific immune response.We possess a suite of antibody discovery platforms that are designed to drive the discovery of future CPM antibody candidates. We are planning toemploy a variety of techniques to identify and optimize mono-specific and multi-specific antibody candidates, internally. We and our partners currently have more than a dozen antibody programs in pre-clinical or early phase development, including our anti-CTLA-4 andanti-PD-1 antibody programs (both partnered with Recepta for certain South America territories) and anti-GITR and anti-OX40 antibody programs (bothpartnered with Incyte). For additional information regarding our antibody discovery platforms and checkpoint antibody program, please read Part I-Item 1.“Business” of this Annual Report on Form 10-K.Prophage Vaccine CandidatesOur Prophage cancer vaccine candidate, HSPPC-96, is an autologous cancer vaccine therapy derived from cancer tissues that are surgically removedfrom an individual patient. As a result, a Prophage vaccine contains a broad sampling of potentially antigenic mutant proteins from each patient’s own tumor.Prophage vaccines are designed to program the body’s immune system to target only the specific cells that express those mutant antigens, thereby reducingthe risk that the body’s immune response against the tumor after42Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.vaccination will also affect healthy tissue. Enhancing immune response using personalized vaccines, particularly in combination with CPMs, could be usefulin cancers where a low number of mutant proteins leads to weakened immunogenicity.To date, more than 1,000 patients have been treated with Prophage vaccines in clinical trials internationally, covering a broad range of cancer types,and no serious immune-mediated side effects have been observed. The results of these trials have been published and/or presented at scientific conferences.These results indicate observable clinical and/or immunological activity across many types of cancer.In January 2017, we announced a clinical trial collaboration with the National Cancer Institute (“NCI”). The double-blind, randomized controlledPhase 2 trial is evaluating the effect of Prophage in combination with pembrolizumab (Keytruda®) in patients with ndGBM. The trial is being conducted bythe Brain Tumor Trials Collaborative (“BTTC”), a consortium of top academic centers led by Dr. Mark Gilbert, Chief of the Neuro-Oncology Branch at theNCI Center for Cancer Research. The trial consists of two-arms with one arm receiving pembrolizumab as a monotherapy and a second arm receiving bothProphage and pembrolizumab in combination. Forty-five patients are being randomly assigned to each arm. Under this collaboration, we are supplyingProphage, Merck is supplying pembrolizumab (Keytruda®) and NCI and BTTC member sites are recruiting patients and conducting the trial. For additionalinformation regarding regulatory risks and uncertainties, please read the risks identified under Part I-Item 1A. “Risk Factors” of this Annual Report on Form10-K.Neoantigen Vaccine PlatformsMutation-based neo-epitopes, which will form the basis for the immunogens used in ASV, appear to be almost always particular to a given patient.Therefore, ASV is a largely individualized vaccine product candidate. With a small amount of a patient’s tumor as a sample, our ASV program is designed toutilize next generation sequencing technologies coupled with complex bioinformatics algorithms to identify mutations in a tumor’s DNA and RNA. Oncethese mutations have been identified, we plan to manufacture synthetic peptides encoding these neoepitopes, load these peptides on to our recombinantHSP70 and deliver a fully synthetic polyvalent vaccine to the patient. This program is based on the hypothesis that the HSP70 platform would shuttle themutated peptides to sites where they could be recognized by the immune system and elicit a cytotoxic and helper T cell response in patients with cancer.Biochemically based neoantigens, such as those arising from dysregulated phosphorylation of various proteins in malignant cells, can serve as a tumorfingerprint across a broad histology of tumors. Through the acquisition of PhosImmune, we have a portfolio of proprietary phosphorylated antigenic targetsthat can be used for therapeutic development. PSV is a vaccine candidate designed to induce immunity against this novel class of tumor specific neoepitopes.PSV is intended to induce cellular immunity to abnormal phosphopeptide neoepitopes that are characteristic of these various forms of cancer.Phosphopeptides (or phosphopeptide analogues) can be synthesized and complexed with HSP70, using an approach analogous to that used in the generationof our previous HerpV vaccine candidate. HerpV demonstrated good cellular and humoral responses to synthetic peptide immunogens complexed withHSP70 in a placebo-controlled Phase 2 study. We believe that similar responses could be obtained to phosphopeptide or phosphopeptide analogues bound toHSP70 when used as vaccines. Phosphorylation-based neoepitopes can apparently be found on specific types of cancer in many patients. Studies to optimizethe immunogens to be used in PSV are ongoing. For additional information regarding our Neoantigen Vaccine Platforms, please read Part I-Item 1. “Business”of this Annual Report on Form 10-K.QS-21 Stimulon AdjuvantQS-21 Stimulon is an adjuvant, which is a substance added to a vaccine or other immunotherapy that is intended to enhance an immune response tothe target antigens. QS-21 Stimulon is a natural product, a triterpene glycoside, or saponin, purified from the bark of the Chilean soapbark tree, Quillajasaponaria. QS-21 Stimulon has the ability to stimulate an antibody-mediated immune response and has also been shown to activate cellular immunity. It hasbecome a key component in the development of investigational preventive vaccine formulations across a wide variety of diseases. These studies have beencarried out by academic institutions and pharmaceutical companies in the United States and internationally. A number of these studies have shown QS-21Stimulon to be significantly more effective in stimulating immune responses than aluminum hydroxide or aluminum phosphate, the adjuvants mostcommonly used in approved vaccines in the United States today. For additional information regarding QS-21 Stimulon, please read Part I-Item 1. “Business”of this Annual Report on Form 10-K.Liquidity and Capital ResourcesWe have incurred annual operating losses since inception, and we had an accumulated deficit of $1,026.5 million as of December 31, 2017. We expectto incur significant losses over the next several years as we continue development of our technologies and product candidates, manage our regulatoryprocesses, initiate and continue clinical trials, and prepare for potential commercialization of products. To date, we have financed our operations primarilythrough the sale of equity and debt securities, and43Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.interest income earned on cash, cash equivalents, and short-term investment balances. From our inception through December 31, 2017, we have raisedaggregate net proceeds of approximately $923.9 million through the sale of common and preferred stock, the exercise of stock options and warrants, proceedsfrom our Employee Stock Purchase Plan, and the issuance of convertible and other notes.In October 2017, we filed, and the Securities and Exchange Commission declared effective a Registration Statement on Form S-3 (file no. 333-221008) (the “2017 Registration Statement”), covering the offering of up to $250 million of common stock, preferred stock, warrants, debt securities andunits. The 2017 Registration Statement included a prospectus covering the offering, issuance and sale of up to 15 million shares of our common stock fromtime to time in “at-the-market offerings” pursuant to a Controlled Equity OfferingSM sales agreement (the “Sales Agreement”) entered into with CantorFitzgerald & Co. (the “Sales Agent”). As of December 31, 2017, we had 15 million shares available for sale under the Sales Agreement. In January 2018, wereceived net proceeds of approximately $2.5 million from the sale of approximately 635,000 shares of our common stock in at-the-market offerings under theSales Agreement.In October 2017, we also exercised our right under that certain At Market Issuance Sales Agreement by and between us and MLV & Co. LLC dated asof October 10, 2014 (the “2014 ATM Program”) to terminate the 2014 ATM Program, which termination became effective upon effectiveness of the 2017Registration Statement. We sold approximately 1.3 million shares of our common stock pursuant to the 2014 ATM Program during the year ended December31, 2017 and received aggregate net proceeds of $5.6 million.As of December 31, 2017, we had debt outstanding of $129.1 million in principal, and $36.8 million in accrued interest. In February 2015, we issuedsubordinated notes in the aggregate principal amount of $14.0 million with annual interest at 8% (the “2015 Subordinated Notes”). The 2015 SubordinatedNotes are due in February 2020. In September 2015, we and our wholly-owned subsidiary Antigenics LLC (“Antigenics”) entered into the Note PurchaseAgreement (“NPA”) with certain purchasers pursuant to which Antigenics issued, and we guaranteed, limited recourse notes in the aggregate principalamount of $100.0 million, with an option to issue an additional $15.0 million principal amount of limited recourse notes, which was exercised in November2017. In January 2018, we entered into a Royalty Purchase Agreement with HCR whereby we received proceeds of $190.0 million. We used $161.9 millionof these proceeds to redeem all of the notes issued pursuant to the Note Purchase Agreement. See Note 22 for additional information.Our cash, cash equivalents, and short-term investments at December 31, 2017 were $60.2 million, a decrease of $16.3 million from December 31, 2016,principally as a result cash used in operations. We believe that, based on our current plans and activities, including additional funding we anticipate frommultiple sources between now and the end of the second quarter of 2018, including out-licensing and/or partnering opportunities, our working capitalresources at December 31, 2017, along with the net proceeds of approximately $28.0 million received from HCR in January 2018 in connection with ourroyalty transaction, will be sufficient to satisfy our liquidity requirements through the first quarter of 2019. We continue to monitor the likelihood of successof our key initiatives and are prepared to discontinue funding of such activities if they do not prove to be feasible, restrict capital expenditures and/or reducethe scale of our operations.Our future liquidity needs will be determined primarily by the success of our operations with respect to the progression of our product candidates andkey development and regulatory events in the future. Potential sources of additional funding include: (1) pursuing collaboration, out-licensing and/orpartnering opportunities for our portfolio programs and product candidates with one or more third parties, (2) renegotiating third party agreements, (3) sellingassets, (4) securing additional debt financing and/or (5) selling equity securities. Satisfying long-term liquidity needs may require the successfulcommercialization and/or substantial out-licensing or partnering arrangements for our antibody discovery platforms, CPM antibody programs, and HSP-based vaccines. Our long-term success will also be dependent on the successful identification, development and commercialization of potential other productcandidates, each of which will require additional capital with no certainty of timing or probability of success. If we incur operating losses for longer than weexpect, and/or we are unable to raise additional capital, we may become insolvent and be unable to continue our operations.Our future cash requirements include, but are not limited to, supporting clinical trial and regulatory efforts and continuing our other research anddevelopment programs. Since inception, we have entered into various agreements with contract manufacturers, institutions, and clinical researchorganizations (collectively "third party providers") to perform pre-clinical activities and to conduct and monitor our clinical studies. Under these agreements,subject to the enrollment of patients and performance by the applicable third-party provider, we have estimated our total payments to be $182.1 million overthe term of the related activities. Through December 31, 2017, we have expensed $130.2 million as research and development expenses and $124.1 millionhas been paid under these agreements. The timing of expense recognition and future payments related to these agreements is subject to the enrollment ofpatients and performance by the applicable third-party provider. We have also entered into sponsored research agreements related to our product candidatesthat required payments of $9.3 million, $8.1 million of which have been paid as of December 31, 2017. We44Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.plan to enter into additional agreements with third party providers as well as sponsored research agreements, and we anticipate significant additionalexpenditures will be required to initiate and advance our various programs.Part of our strategy is to develop and commercialize some of our product candidates by continuing our existing collaboration arrangements withacademic and collaboration partners and licensees and by entering into new collaborations. As a result of our collaboration agreements, we will notcompletely control the efforts to attempt to bring those product candidates to market. For example, our collaboration with Incyte for the development,manufacture and commercialization of CPM antibodies against certain targets is managed by a joint steering committee, which is controlled by Incyte. Net cash used in operating activities for the years ended December 31, 2017 and 2016 was $94.2 million and $80.0 million, respectively. The firstproduct containing QS-21 Stimulon was launched in the fourth quarter of 2017. We are generally entitled to royalties on sales by GSK of vaccines using QS-21 Stimulon for at least ten years after commercial launch, with some exceptions. In September 2015, we entered into the NPA and partially monetized thepotential royalties we are entitled to receive from GSK. In January 2018 we entered into a Royalty Purchase Agreement with HCR, pursuant to which HCRpurchased 100% of our worldwide rights to receive royalties from GSK on GSK’s sales of vaccines containing our QS-21 Stimulon adjuvant. We used aportion of the upfront proceeds from HCR to redeem all of the notes issued pursuant to the NPA. Our future ability to generate cash from operations willdepend on achieving regulatory approval and market acceptance of our product candidates, achieving benchmarks as defined in existing collaborationagreements, and our ability to enter into new collaborations. Please see the “Note Regarding Forward-Looking Statements” of this Annual Report on Form10-K and the risks highlighted under Part I-Item 1A. “Risk Factors” of this Annual Report on Form 10-K.The table below summarizes our contractual obligations as of December 31, 2017 (in thousands). Payments by Period Total Less than1 Year 1-3 Years 3-5 Years More than5 Years Long-term debt (1) $131,595 $16,322 $15,273 $— $100,000 Operating leases (2) 14,212 3,179 4,718 3,846 2,469 Capital lease 720 288 432 — — Total $146,527 $19,789 $20,423 $3,846 $102,469 (1)Includes fixed interest payments. Under the terms of the NPA, interest accrues as 13.5%, compounded quarterly and may vary based on the timing ofthe royalty stream under our contract with GSK and therefore the table above excludes such interest which was approximately $36.8 million as ofDecember 31, 2017. In January 2018, we entered into a Royalty Purchase Agreement with HCR. We used a portion of the upfront proceeds from HCRto redeem all of the notes issued pursuant to the Note Purchase Agreement. See Note 22 for additional information.(2)The leases and subleases for our properties expire at various times between 2018 and 2025.Off-Balance Sheet ArrangementsAt December 31, 2017, we had no off-balance sheet arrangements.Critical Accounting Policies and EstimatesThe SEC defines “critical accounting policies” as those that require the application of management’s most difficult, subjective, or complex judgments,often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods.The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimatesand assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during the reporting period. We base those estimates on historical experience and on variousassumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.The following listing is not intended to be a comprehensive list of all of our accounting policies. Our significant accounting policies are described inNote 2 of the notes to our consolidated financial statements contained elsewhere in this Annual Report on Form 10-K. In many cases, the accountingtreatment of a particular transaction is dictated by U.S. generally accepted accounting principles, with no need for our judgment in its application. There arealso areas in which our judgment in selecting an available alternative would not produce a materially different result. We have identified the following as ourcritical accounting policies.45Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Share-Based CompensationWe recognize share-based compensation expense in accordance with the fair value recognition provisions of the Financial Accounting StandardsBoard (“FASB”) Accounting Standards Codification (“ASC”) 718, Compensation—Stock Compensation. Compensation expense is recognized on a straight-line basis over the requisite service period of the award. Forfeitures are recognized as they occur.Share-based awards granted to certain non-employees have been accounted for based on the fair value method of accounting in accordance with ASC505-50, Equity- Equity-Based Payments to Non-Employees. As a result, the non-cash charge to operations for non-employee awards with vesting or otherperformance criteria is affected each reporting period by changes in the fair value of our common stock. Under the provisions of ASC 505-50, the change infair value of vested awards issued to non-employees is reflected in the statement of operations each reporting period, until the options are exercised or expire.Determining the appropriate fair value model and calculating the fair value of share-based awards requires the use of highly subjective assumptions,including the expected life of the share-based awards and stock price volatility. The assumptions used in calculating the fair value of share-based awardsrepresent management’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factorschange and we use different assumptions, our share-based compensation expense could be materially different in the future. For performance conditionawards, we estimate the probability that the performance condition will be met. See Note 11 of the notes to our consolidated financial statements containedelsewhere in this Annual Report on Form 10-K for a further discussion on share-based compensation.Revenue RecognitionRevenue recognized from collaborative agreements is based upon the provisions of ASC 605-25, Revenue Recognition—Multiple ElementArrangements, as amended by Accounting Standards Update 2009-13. License fees and royalties are recognized as they are earned. Non-refundable milestonepayments that represent the completion of a separate earnings process are recognized as revenue when earned. Revenue for services under research anddevelopment contracts are recognized as the services are performed, or as clinical trial materials are provided.Fair Value MeasurementsIn accordance with ASC 820, Fair Value Measurements and Disclosures, we measure fair value based on a hierarchy for inputs used in measuring fairvalue that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available.The fair value hierarchy is broken down into three levels based on the source of inputs.We measure our contingent purchase price considerations at fair value in accordance with ASC 825, Financial Instruments. The fair value contingentpurchase price considerations are based on significant inputs not observable in the market, which require them to be reported as a Level 3 liability within thefair value hierarchy. The fair values of our 4-AB and PhosImmune contingent purchase price considerations are based on estimates from a Monte Carlosimulation of our market capitalization and share price, respectively. Market capitalization and share price were evolved using a geometric brownian motion,calculated daily for the life of the contingent purchase price consideration. Business CombinationsIn February 2014 and December 2015, we acquired all of the outstanding capital stock of 4-AB and PhosImmune, respectively in businesscombination transactions. In December 2015, we also acquired an antibody manufacturing pilot facility from XOMA Corporation which under the applicableaccounting guidance is being accounted for as a business combination. The acquisition method of accounting requires that the assets acquired and liabilitiesassumed be recorded as of the date of the merger or acquisition at their respective fair values with limited exceptions. Assets acquired and liabilities assumedin a business combination that arise from contingencies are recognized at fair value if fair value can reasonably be estimated. If the acquisition date fair valueof an asset acquired or liability assumed that arises from a contingency cannot be determined, the asset or liability is recognized if probable and reasonablyestimable; if these criteria are not met, no asset or liability is recognized. Fair value is defined as the exchange price that would be received for an asset orpaid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between marketparticipants on the measurement date. Accordingly, we may be required to value assets at fair value measures that do not reflect our intended use of thoseassets. Any excess of the purchase price (consideration transferred) over the estimated fair values of net assets acquired is recorded as goodwill. In the eventthe value of the net assets acquired exceeds the purchase price consideration, then a bargain purchase has occurred. The resulting bargain purchase on thetransaction will be recognized as a gain in the period in which the acquisition was executed. The operating results of the acquired businesses are reflected inour consolidated financial statements after the date of the merger or acquisition. If we determine the assets acquired do not meet the definition of a businessunder the acquisition method of accounting, the transaction will be accounted for as46Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.an acquisition of assets rather than a business combination and, therefore, no goodwill will be recorded. The fair values of intangible assets, includingacquired in-process research and development (“IPR&D”), are determined utilizing information available near the merger or acquisition date based onexpectations and assumptions that are deemed reasonable by management. The judgments made in determining estimated fair values assigned to assetsacquired and liabilities assumed in a business combination, as well as asset lives, can materially affect the Company’s results of operations.Acquired Intangible Assets, including IPR&DIPR&D acquired in a business combination represents the fair value assigned to research and development assets that have not reached technologicalfeasibility. The value assigned to acquired IPR&D is determined by estimating the costs to develop the acquired technology into commercially viableproducts, estimating the resulting revenue from the projects, and discounting the net cash flows to present value. The revenue and costs projections used tovalue acquired IPR&D are, as applicable, reduced based on the probability of success of developing a new drug. Additionally, the projections consider therelevant market sizes and growth factors, expected trends in technology, and the nature and expected timing of new product introductions by us and ourcompetitors. The rates utilized to discount the net cash flows to their present value are commensurate with the stage of development of the projects anduncertainties in the economic estimates used in the projections. Upon the acquisition of IPR&D, we complete an assessment of whether our acquisitionconstitutes the purchase of a single asset or a group of assets. We consider multiple factors in this assessment, including the nature of the technologyacquired, the presence or absence of separate cash flows, the development process and stage of completion, quantitative significance and our rationale forentering into the transaction.We review amounts capitalized as acquired IPR&D for impairment at least annually, as of October 31, and whenever events or changes incircumstances indicate that the carrying value of the assets might not be recoverable. When performing our impairment assessment, we have the option to firstassess qualitative factors to determine whether it is necessary to recalculate the fair value of our acquired IPR&D. If we elect this option and believe, as aresult of the qualitative assessment, that it is more-likely-than-not that the fair value of our acquired IPR&D is less than its carrying amount, we calculate thefair value using the same methodology as described above. If the carrying value of our acquired IPR&D exceeds its fair value, then the intangible asset iswritten-down to its fair value. Alternatively, we may elect to bypass the qualitative assessment and immediately recalculate the fair value of our acquiredIPR&D.Finite-lived intangible asset are amortized over their useful life. We review finite-lived intangible assets for impairment whenever events or changes incircumstances indicate that the carrying value of the assets might not be recoverable.GoodwillGoodwill is tested at least annually for impairment on a reporting unit basis. We have concluded that we consist of a single operating segment and onereporting unit. We assess goodwill for impairment by performing a quantitative analysis to determine whether the fair value of our single reporting unitexceeds its carrying value. We perform our annual impairment test as of October 31 of each year and the first step of our impairment analysis compares the fairvalue to our net book value to determine if there is an indicator of impairment. Fair value is based on the quoted market price of our common stock to derivethe market capitalization as of the date of the impairment test.Recent Accounting PronouncementsRefer to Note 2 to our consolidated financial statements included within Item 8 of this Annual Report on Form 10-K for a description of recentaccounting pronouncements applicable to our business. 47Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Item 7A.Quantitative and Qualitative Disclosures About Market RiskOur primary market risk exposure is foreign currency exchange rate risk. International revenues and expenses are generally transacted by our foreignsubsidiary and are denominated in local currency. Approximately 18% and 39% of our cash used in operations for the years ended December 31, 2017 and2016, respectively, was from a foreign subsidiary. Additionally, in the normal course of business, we are exposed to fluctuations in interest rates as we seekdebt financing and invest excess cash. We are also exposed to foreign currency exchange rate fluctuation risk related to our transactions denominated inforeign currencies. We do not currently employ specific strategies, such as the use of derivative instruments or hedging, to manage these exposures. Ourcurrency exposures vary, but are primarily concentrated in the Euro, pound sterling, and Swiss Franc, in large part due to our wholly-owned subsidiaries, 4-AB, a company with operations in Switzerland, and Agenus UK Limited, a company with operations in the United Kingdom. During the year endedDecember 31, 2017, there has been no material change with respect to our approach toward those exposures.We had cash, cash equivalents and short-term investments at December 31, 2017 of $60.2 million, which are exposed to the impact of interest andforeign currency exchange rate changes, and our interest income fluctuates as interest rates change. Due to the short-term nature of our investments in moneymarket funds, our carrying value approximates the fair value of these investments at December 31, 2017, however, we are subject to investment risk.We invest our cash and cash equivalents in accordance with our investment policy. The primary objectives of our investment policy are to preserveprincipal, maintain proper liquidity to meet operating needs, and maximize yields. We review our investment policy annually and amend it as deemednecessary. Currently, the investment policy prohibits investing in any structured investment vehicles and asset-backed commercial paper. Although ourinvestments are subject to credit risk, our investment policy specifies credit quality standards for our investments and limits the amount of credit exposurefrom any single issue, issuer, or type of investment. We do not invest in derivative financial instruments. Accordingly, we do not believe that there iscurrently any material market risk exposure with respect to derivatives or other financial instruments that would require disclosure under this item. 48Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Item 8.Financial Statements and Supplementary Data INDEX TO FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm 50Consolidated Balance Sheets 51Consolidated Statements of Operations and Comprehensive Loss 52Consolidated Statements of Stockholders’ (Deficit) Equity 53Consolidated Statements of Cash Flows 56Notes to Consolidated Financial Statements 58 49Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Report of Independent Registered Public Accounting Firm To the Stockholders and Board of DirectorsAgenus Inc.:Opinion on the Consolidated Financial StatementsWe have audited the accompanying consolidated balance sheets of Agenus Inc. and subsidiaries (the Company) as of December 31, 2017 and 2016, therelated consolidated statements of operations and comprehensive loss, stockholders’ (deficit) equity, and cash flows for each of the years in the three‑yearperiod ended December 31, 2017, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financialstatements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operationsand its cash flows for each of the years in the three‑year period ended December 31, 2017, in conformity with U.S. generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’sinternal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control – Integrated Framework (2013) issued bythe Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 16, 2018 expressed an unqualified opinion on theeffectiveness of the Company’s internal control over financial reporting.Going ConcernThe accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note1 to the consolidated financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantialdoubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financialstatements do not include any adjustments that might result from the outcome of this uncertainty.Basis for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on theseconsolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent withrespect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and ExchangeCommission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performingprocedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures thatrespond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financialstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating theoverall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion./s/ KPMG LLPWe have served as the Company’s auditor since 1997.Boston, MassachusettsMarch 16, 2018 50Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.AGENUS INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS December 31, 2017 December 31, 2016 ASSETS Cash and cash equivalents $60,186,617 $71,448,016 Short-term investments - 4,988,751 Inventories 79,491 88,200 Accounts Receivable 1,134,493 11,352,022 Prepaid expenses 11,070,960 2,596,675 Other current assets 1,081,993 838,538 Total current assets 73,553,554 91,312,202 Property, plant and equipment, net of accumulated amortization and depreciation of $34,029,085 and $31,243,967 at December 31, 2017 and 2016, respectively 26,178,622 25,633,985 Goodwill 23,048,804 22,392,411 Acquired intangible assets, net of accumulated amortization of $5,461,834 and $3,193,092 at December 31, 2017 and 2016, respectively 14,406,650 16,364,726 Other long-term assets 1,214,394 1,282,662 Total assets $138,402,024 $156,985,986 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current portion, long-term debt $20,639,735 $146,061 Current portion, deferred revenue 4,484,882 2,610,719 Accounts payable 8,086,992 5,428,452 Accrued liabilities 21,569,449 27,874,703 Other current liabilities 1,657,063 4,791,265 Total current liabilities 56,438,121 40,851,200 Long-term debt 142,385,024 130,542,424 Deferred revenue 7,748,284 12,344,782 Contingent purchase price consideration 4,373,000 7,561,000 Other long-term liabilities 3,273,387 4,812,846 Commitments and contingencies (Notes 15 and 18) STOCKHOLDERS’ DEFICIT Preferred stock, par value $0.01 per share; 5,000,000 shares authorized: Series A-1 convertible preferred stock; 31,620 shares designated, issued, and outstanding at December 31, 2017 and 2016; liquidation value of $32,625,220, and $32,419,678 at December 31, 2017, and 2016, respectively 316 316 Common stock, par value $0.01 per share; 240,000,000 shares authorized; 101,706,117 shares and 87,794,933 shares issued at December 31, 2017 and 2016, respectively 1,017,061 877,949 Additional paid-in capital 951,811,958 866,854,348 Accumulated other comprehensive loss (2,169,354) (1,529,559)Accumulated deficit (1,026,475,773) (905,329,320)Total stockholders’ deficit (75,815,792) (39,126,266)Total liabilities and stockholders’ deficit $138,402,024 $156,985,986 See accompanying notes to consolidated financial statements. 51Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.AGENUS INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSSFor the Years Ended December 31, 2017, 2016, and 2015 2017 2016 2015 Revenue: Grant revenue $168,051 $32,404 $24,118 Service revenue — 147,456 — Research and development 42,709,035 22,393,443 24,792,907 Total revenues 42,877,086 22,573,303 24,817,025 Operating expenses: Research and development (116,125,299) (94,971,379) (70,444,259)General and administrative (33,741,183) (33,125,690) (28,370,001)Contingent purchase price consideration fair value adjustment 3,188,000 (1,953,000) (6,703,700)Operating loss (103,801,396) (107,476,766) (80,700,936)Other income (expense): Non-operating income (expense) 1,977,398 (2,202,336) (5,968,170)Interest expense, net (18,868,494) (17,316,073) (6,599,083)Loss before taxes (120,692,492) (126,995,175) (93,268,188)Income tax benefit — — 5,387,067 Net loss (120,692,492) (126,995,175) (87,881,121)Dividends on Series A-1 convertible preferred stock (205,541) (204,246) (202,960)Net loss attributable to common stockholders $(120,898,033) $(127,199,421) $(88,084,081)Per common share data: Basic and diluted net loss attributable to common stockholders $(1.23) $(1.46) $(1.13)Weighted average number of common shares outstanding: Basic and diluted 98,415,414 87,070,189 78,212,094 Other comprehensive (loss) income: Foreign currency translation (loss) gain $(615,213) $677,536 $164,150 Unrealized loss on investments — — (1,690)Pension liability (24,582) (153,952) (245,183)Other comprehensive (loss) income (639,795) 523,584 (82,723)Comprehensive loss $(121,537,828) $(126,675,837) $(88,166,804) See accompanying notes to consolidated financial statements. 52Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.AGENUS INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITYFor the Years Ended December 31, 2017, 2016, and 2015 Series A-1 Convertible Preferred Stock Common Stock Treasury Stock Number ofShares ParValue Number ofShares ParValue AdditionalPaid-InCapital Numberof Shares Amount AccumulatedOtherComprehensiveLoss AccumulatedDeficit Total Balance at December 31, 2014 31,620 $316 62,720,065 $627,201 $715,667,633 - $- $(1,970,420) $(691,306,343) $23,018,387 Net loss (87,881,121) (87,881,121)Other comprehensive loss — — — — — — — (82,723) — (82,723)Shares sold in underwritten public offering — — 12,650,000 126,500 74,543,480 — — — — 74,669,980 Share-based compensation — — — — 8,098,650 — — — — 8,098,650 Reclassification of liability classified option grants — — — — (495,742) — — — — (495,742)Vesting of nonvested shares — — 35,332 353 (353) — — — — — Issuance of stock for acquisition of SECANT yeast displaytechnology — — 574,140 5,741 2,994,259 — — — — 3,000,000 Shares sold under Stock Purchase Agreement — — 7,763,968 77,640 34,922,361 — — — — 35,000,001 Issuance of shares related tomilestone achievement — — 80,493 805 343,736 — — — — 344,541 Issuance of warrants — — — — 3,038,438 3,038,438 Issuance of stock in connectionwith XOMA antibody manufacturing facility acquisition — — 109,211 1,092 498,908 — — — — 500,000 Issuance of stock in connectionwith PhosImmune acquisition — — 1,631,521 16,315 7,383,685 — — — — 7,400,000 Issuance of stock for settlement of contingent royalty obligation — — 300,000 3,000 2,139,000 — — — — 2,142,000 Exercise of stock options andemployee share purchases — — 525,967 5,260 1,969,879 — — — — 1,975,139 Balance at December 31, 2015 31,620 $316 86,390,697 $863,907 $851,103,934 — $— $(2,053,143) $(779,187,464) $70,727,550 See accompanying notes to consolidated financial statements.53Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.AGENUS INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY(Continued)For the Years Ended December 31, 2017, 2016, and 2015 Series A-1 Convertible Preferred Stock Common Stock Treasury Stock Number ofShares ParValue Number ofShares ParValue AdditionalPaid-InCapital Numberof Shares Amount AccumulatedOtherComprehensiveLoss AccumulatedDeficit Total Net loss (126,995,175) (126,995,175)Other comprehensive income — — — — — — — 523,584 — 523,584 Share-based compensation — — — — 13,323,616 — — — — 13,323,616 Reclassification of liability classified option grants — — — — (318,677) — — — — (318,677)Vesting of nonvested shares — — 570,037 5,701 (5,701) (185,117) (768,236) — — (768,236)Shares sold at the market — — 496,520 4,965 2,162,105 — — — — 2,167,070 Issuance of director shares forcompensation — — 23,110 231 161,332 — — — — 161,563 Retirement of treasury shares — — (188,184) (1,882) (1,632,554) 188,184 781,117 — 853,319 - Issuance of shares for milestones — — 157,513 1,575 885,223 — — — — 886,798 Exercise of stock options andemployee share purchases — — 345,240 3,452 1,175,070 (3,067) (12,881) — — 1,165,641 Balance at December 31, 2016 31,620 $316 87,794,933 $877,949 $866,854,348 — $— $(1,529,559) $(905,329,320) $(39,126,266) See accompanying notes to consolidated financial statements.54Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.AGENUS INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY(Continued)For the Years Ended December 31, 2017, 2016, and 2015 Series A-1 Convertible Preferred Stock Common Stock Treasury Stock Number ofShares ParValue Number ofShares ParValue AdditionalPaid-InCapital Numberof Shares Amount AccumulatedOtherComprehensiveIncome (Loss) AccumulatedDeficit Total Net loss (120,692,492) (120,692,492)Other comprehensive loss — — — — — — — (639,795) — (639,795)Impact of accounting change — — — — 1,210,916 — — — (1,292,230) (81,314)Shares sold under StockPurchase Agreement 10,000,000 100,000 59,900,000 — — — — 60,000,000 Share-based compensation — — — — 10,924,122 — — — — 10,924,122 Reclassification of liability classified option grants — — — — 2,015,974 — — — — 2,015,974 Vesting of nonvested shares — — 1,097,243 10,972 (10,972) (155,523) (527,223) — — (527,223)Shares sold at the market — — 1,315,288 13,153 5,546,553 — — — — 5,559,706 Amendment to 2013warrants — — — — 731,498 — — — — 731,498 Retirement of treasury shares — — (155,523) (1,555) (1,363,937) 155,523 527,223 — 838,269 — Issuance of shares formilestones — — 373,351 3,734 1,482,203 — — — — 1,485,937 Issuance of stock foracquisition of SECANT yeastdisplay technology — — 999,317 9,993 3,537,582 — — — — 3,547,575 Exercise of stock options andemployee share purchases — — 281,508 2,815 983,671 — — — — 986,486 Balance at December 31,2017 31,620 $316 101,706,117 $1,017,061 $951,811,958 — $— $(2,169,354) $(1,026,475,773) $(75,815,792) See accompanying notes to consolidated financial statements. 55Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.AGENUS INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFor the Years Ended December 31, 2017, 2016, and 2015 2017 2016 2015 Cash flows from operating activities: Net loss $(120,692,492) $(126,995,175) $(87,881,121)Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 6,006,299 4,947,787 1,957,591 Share-based compensation 12,428,655 13,188,364 7,438,308 Non-cash interest expense 18,242,299 16,530,437 5,626,918 Loss on disposal of assets 23,558 14,733 — Change in fair value of contingent obligations (3,188,000) 1,953,000 13,567,000 Gain on issuance of milestone payment in stock (566,488) — — In-process research and development purchase — — 12,245,231 Loss on extinguishment of debt — — 154,117 Bargain purchase — — (1,522,377)Deferred tax benefit — — (5,387,067)Changes in operating assets and liabilities: Accounts receivable 10,217,529 (1,549,798) (9,331,622)Inventories 8,709 - 7,500 Prepaid expenses (8,453,082) (650,824) (703,424)Accounts payable 1,647,430 419,708 2,668,064 Deferred revenue (2,722,020) (3,939,619) 15,957,820 Accrued liabilities and other current liabilities (4,848,372) 18,275,940 9,565,639 Other operating assets and liabilities (2,329,168) (2,155,364) (11,538,019)Net cash used in operating activities (94,225,143) (79,960,811) (47,175,441)Cash flows from investing activities: Cash paid for acquisitions — — (7,182,069)Proceeds from sale of plant and equipment 120,000 — — Purchases of plant and equipment (3,120,357) (12,519,738) (3,591,335)Purchases of available-for-sale securities (14,936,047) (54,884,101) (34,993,100)Proceeds from sale of available-for-sale securities 20,000,000 85,000,000 14,534,486 Net cash provided by (used in) investing activities 2,063,596 17,596,161 (31,232,018)Cash flows from financing activities: Net proceeds from sale of equity 65,559,706 2,167,070 109,669,980 Proceeds from employee stock purchases and option exercises 986,486 1,183,598 1,975,139 Purchase of treasury shares to satisfy tax withholdings (527,223) (667,050) — Proceeds from issuance of long-term debt 15,000,000 — 109,000,000 Debt issuance costs (150,000) — (1,774,323)Payments of debt — — (1,111,111)Payment of contingent purchase price consideration — — (8,180,000)Payment under a purchase agreement for in-process research and development — (5,000,000) — Payment of contingent royalty obligation — — (20,000,000)Payment of capital lease obligation (330,744) (144,658) — Net cash provided by (used in) financing activities 80,538,225 (2,461,040) 189,579,685 Effect of exchange rate changes on cash 361,923 (429,167) (183,873)Net (decrease) increase in cash and cash equivalents (11,261,399) (65,254,857) 110,988,354 Cash and cash equivalents, beginning of period 71,448,016 136,702,873 25,714,519 Cash and cash equivalents, end of period $60,186,617 $71,448,016 $136,702,873 Supplemental cash flow information: Cash paid for interest $1,120,000 $1,120,000 $1,053,447 Supplemental disclosures - non-cash activities: Purchases of plant and equipment in accounts payable and accrued liabilities $968,400 $695,466 $105,245 56Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Issuance of common stock, $0.01 par value, issued in connection with the settlement ofmilestone obligation 1,485,937 886,798 — Issuance of common stock, $0.01 par value, issued to directors as compensation — 161,332 — Issuance of common stock, $0.01 par value, in connection with the acquisition of theSECANT yeast display technology 3,547,575 — 3,000,000 Issuance of common stock, $0.01 par value, in connection with acquisition ofPhosImmune — — 7,400,000 Issuance of common stock, $0.01 par value, in connection with the acquisition theXOMA antibody manufacturing facility — — 500,000 Issuance of common stock, $0.01 par value, issued in connection with the settlement ofthe contingent royalty obligation — — 2,142,000 Issuance of common stock, $.01 par value, in connection with payment of thecontingent purchase price obligation — — 344,541 Contingent purchase price consideration in connection with the acquisition ofPhosImmune — — 2,484,000See accompanying notes to consolidated financial statements. 57Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.AGENUS INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Description of BusinessAgenus Inc. (including its subsidiaries, collectively referred to as “Agenus,” the “Company,” “we,” “us,” and “our”) is a clinical-stage immuno-oncology (“I-O”) company dedicated to becoming a leader in the discovery and development of innovative combination therapies and committed tobringing effective medicines to patients with cancer. Our business is designed to drive success in I-O through speed, innovation, and effective combinationtherapies. We have assembled fully integrated capabilities from novel target discovery, antibody generation, cell line development, and good manufacturingpractices (“GMP”) manufacturing together with a comprehensive portfolio consisting of antibody-based therapeutics, adjuvants and cancer vaccineplatforms. We leverage our immune biology platforms to identify effective combination therapies for development and have developed productivepartnerships to advance our innovation.We are developing a comprehensive I-O portfolio driven by the following platforms and programs, which we intend to utilize individually and incombination: •our antibody discovery platforms, including our Retrocyte Display™, SECANT® yeast display, and phage display technologies designed todrive the discovery of future CPM antibody candidates; •our antibody candidate programs, including our CPM programs; •our vaccine programs, including Prophage™, AutoSynVax™ and PhosPhoSynVaxTM; and •our saponin-based vaccine adjuvants, principally our QS-21 Stimulon® adjuvant, or QS-21 Stimulon.Our business activities include product research and development, intellectual property prosecution, manufacturing, regulatory and clinical affairs,corporate finance and development activities, and support of our collaborations. Our product candidates require clinical trials and approvals from regulatoryagencies, as well as acceptance in the marketplace. Part of our strategy is to develop and commercialize some of our product candidates by continuing ourexisting arrangements with academic and corporate collaborators and licensees and by entering into new collaborations.Our cash, cash equivalents, and short-term investments at December 31, 2017 were $60.2 million, a decrease of $16.3 million from December 31, 2016. (Unaudited) Quarter Ended Month Ended March 31,2017 June 30,2017 September 30,2017 December 31,2017 January 31,2018 Cash, cash equivalents and short-term investments $123.8 $96.8 $70.1 $60.2 $86.8 Increase (decrease) in cash, cash equivalents and short-terminvestments $47.4 $(27.0) $(26.7) $(9.9) $26.6 Cash used in operating activities $(14.8) $(27.4) $(26.2) $(25.8) Reported net loss $(17.1) $(31.7) $(36.8) $(35.0) We have incurred significant losses since our inception. As of December 31, 2017, we had an accumulated deficit of $1,026.5 million. Since ourinception, we have financed our operations primarily through the sale of equity and convertible and other notes, and interest income earned on cash, cashequivalents, and short-term investment balances. We believe that, based on our current plans and activities, including additional funding we anticipate frommultiple sources between now and the end of the second quarter of 2018, including out-licensing and/or partnering opportunities, our working capitalresources at December 31, 2017, along with the net proceeds of approximately $28.0 million received from HCR in January 2018 in connection with ourroyalty transaction, will be sufficient to satisfy our liquidity requirements for more than one year from when these financial statements were issued. Wecontinue to monitor the likelihood of success of our key initiatives and are prepared to discontinue funding of such activities if they do not prove to befeasible, restrict capital expenditures and/or reduce the scale of our operations. However, in spite of these anticipated sources of funding and our ability tocontrol our cash burn, in accordance with the requirements of ASU 2014-15, we are required to disclose the existence of a substantial doubt regarding ourability to continue as a going concern for twelve months from when these financial statements were issued.Our future liquidity needs will be determined primarily by the success of our operations with respect to the progression of our product candidates andkey development and regulatory events in the future. Potential sources of additional funding include: (1) pursuing collaboration, out-licensing and/orpartnering opportunities for our portfolio programs and product candidates with one or more third parties, (2) renegotiating third party agreements, (3) sellingassets, (4) securing additional debt financing and/or (5) selling equity securities. We believe the execution of one or more of these transactions will enable usto fund our planned operations for at58Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.least one year from when these financial statements were issued. Our ability to address our liquidity needs will largely be determined by the success of ourproduct candidates and key development and regulatory events and our decisions in the future as well as the execution of one or more of the aforementionedcontemplated transactions.Research and development program costs include compensation and other direct costs plus an allocation of indirect costs, based on certainassumptions, and our review of the status of each program. Our product candidates are in various stages of development and significant additionalexpenditures will be required if we start new trials, encounter delays in our programs, apply for regulatory approvals, continue development of ourtechnologies, expand our operations, and/or bring our product candidates to market. The eventual total cost of each clinical trial is dependent on a number offactors such as trial design, length of the trial, number of clinical sites, and number of patients. The process of obtaining and maintaining regulatoryapprovals for new therapeutic products is lengthy, expensive, and uncertain. Because our antibody and neoantigen vaccine programs are early stage, andbecause any further development of HSP-based vaccines is dependent on clinical trial results, among other factors, we are unable to reliably estimate the costof completing our research and development programs or the timing for bringing such programs to various markets or substantial partnering or out-licensingarrangements, and, therefore, when, if ever, material cash inflows are likely to commence. We will continue to adjust our spending as needed in order topreserve liquidity. (2) Summary of Significant Accounting Policies(a) Basis of Presentation and Principles of ConsolidationThe consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and include the accountsof Agenus and our wholly-owned subsidiaries. All significant intercompany transactions and accounts have been eliminated in consolidation.(b) Segment InformationWe are managed and operated as one business segment. The entire business is managed by a single executive operating committee that reports to thechief executive officer. We do not operate separate lines of business with respect to any of our product candidates or geographic locations. Accordingly, wedo not prepare discrete financial information with respect to separate product areas or by location and do not have separately reportable segments as definedby Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 280, Segment Reporting.(c) Use of EstimatesThe preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires us to make estimatesand assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidatedfinancial statements and the reported amounts of revenues and expenses during the reporting period. We base those estimates on historical experience and onvarious assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.(d) Cash and Cash EquivalentsWe consider all highly liquid investments purchased with maturities at acquisition of three months or less to be cash equivalents. Cash equivalentsconsist primarily of money market funds and U.S. Treasury Bills.(e) InvestmentsWe classify investments in marketable securities at the time of purchase. At December 31, 2017 and 2016, all marketable securities are classified asavailable for sale and as such, the investments are recorded at fair value. Gains and losses on the sale of marketable securities are recognized in operationsbased on the specific identification method. At December 31, 2017, we had no holdings classified as investments, and at December 31, 2016, our investmentsconsisted of U.S. Treasury Bills.(f) Concentrations of Credit RiskFinancial instruments that potentially subject us to concentrations of credit risk are primarily cash equivalents, investments, and accounts receivable.We invest our cash, cash equivalents and short-term investments in accordance with our investment policy, which specifies high credit quality standards andlimits the amount of credit exposure from any single issue, issuer, or type of investment. We carry balances in excess of federally insured levels, however, wehave not experienced any losses to date from this practice.59Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(g) InventoriesInventories are stated at the lower of cost or market. Cost has been determined using standard costs that approximate the first-in, first-out method.Inventory as of December 31, 2017 and 2016 consisted solely of finished goods.(h) Accounts ReceivableAccounts receivable are primarily amounts due from our collaboration partner as a result of research and development services provided andreimbursements under co-funded research and development programs. We considered the need for an allowance for doubtful accounts and have concludedthat no allowance was needed as of December 31, 2017 and 2016, as the estimated risk of loss on our accounts receivable was determined to be minimal.(i) Property, Plant and EquipmentProperty, plant and equipment, including software developed for internal use, are carried at cost. Depreciation is computed using the straight-linemethod over the estimated useful lives of the assets. Amortization of leasehold improvements is computed over the shorter of the lease term or estimateduseful life of the asset. Additions and improvements are capitalized, while repairs and maintenance are charged to expense as incurred. Amortization anddepreciation of plant and equipment was $3.8 million, $2.7 million, and $1.4 million, for the years ended December 31, 2017, 2016, and 2015, respectively.(j) Fair Value of Financial InstrumentsThe estimated fair values of all our financial instruments, excluding debt, approximate their carrying amounts in the consolidated balance sheets. Thefair value of our outstanding debt is based on a present value methodology. The outstanding principal amount of our debt, including the current portion, was$129.1 million and $114.1 million at December 31, 2017 and 2016, respectively.(k) Revenue RecognitionRevenue for services under research and development contracts are recognized as the services are performed, or as clinical trial materials are provided.Non-refundable milestone payments that represent the completion of a separate earnings process are recognized as revenue when earned. License fees androyalties are recognized as they are earned. Grant revenue is recognized when the related expense is recorded. Revenue recognized from collaborativeagreements is based upon the provisions of ASC 605-25, Revenue Recognition – Multiple-Element Arrangements, as amended by Accounting StandardsUpdate (“ASU”) 2009-13 (“Topic 605”). For the years ended December 31, 2017 and 2016, 87% of our revenue was earned from one collaboration partner.For the year ended December 31, 2015, 95% of our revenue was earned from one collaboration partner.(l) Foreign Currency TransactionsGains and losses from our foreign currency based accounts and transactions, such as those resulting from the translation and settlement of receivablesand payables denominated in foreign currencies, are included in the consolidated statements of operations within other (expense) income. We do notcurrently use derivative financial instruments to manage the risks associated with foreign currency fluctuations. We recorded a foreign currency gain of $1.9million for the year ended December 31, 2017 and foreign currency losses of $2.1 million, and $866,000, for the years ended December 31, 2016 and 2015,respectively.(m) Research and DevelopmentResearch and development expenses include the costs associated with our internal research and development activities, including salaries andbenefits, share-based compensation, occupancy costs, clinical manufacturing costs, related administrative costs, and research and development conducted forus by outside advisors, such as sponsored university-based research partners and clinical study partners. We account for our clinical study costs by estimatingthe total cost to treat a patient in each clinical trial and recognizing this cost based on estimates of when the patient receives treatment, beginning when thepatient enrolls in the trial. Research and development expenses also include the cost of clinical trial materials shipped to our research partners. Research anddevelopment costs are expensed as incurred.(n) Share-Based CompensationWe account for share-based compensation in accordance with the provisions of ASC 718, Compensation—Stock Compensation and ASC 505-50,Equity-Based Payments to Non-Employees. Share-based compensation expense is recognized based on the estimated grant date fair value. Compensation costis recognized on a straight-line basis over the requisite service period of the award.60Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Forfeitures are recognized as they occur. The non-cash charge to operations for non-employee awards with vesting or other performance criteria is affectedeach reporting period by changes in the fair value of our common stock. Under the provisions of ASC 505-50, the change in fair value of vested optionsissued to non-employees is reflected in the statement of operations each reporting period, until the options are exercised or expire. See Note 11 for a furtherdiscussion on share-based compensation.(o) Income TaxesIncome taxes are accounted for under the asset and liability method with deferred tax assets and liabilities recognized for the future tax consequencesattributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis and net operatingloss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years inwhich such items are expected to be reversed or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in theconsolidated statement of operations in the period that includes the enactment date. Deferred tax assets are recognized when they are more likely than notexpected to be realized.The Tax Cuts and Jobs Act (“the Act”) was enacted on December 22, 2017. The Act reduces the US federal corporate tax rate from 34% to 21%,requires companies to pay a one-time transition tax on earnings of certain foreign subsidiaries that were previously tax deferred and creates new taxes oncertain foreign sourced earnings. On December 22, 2017, the Securities and Exchange Commission issued guidance under Staff Accounting Bulletin No.118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”) directing taxpayers to consider the impact of the U.S. legislation as“provisional” when it does not have the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete itsaccounting for the change in tax law.At December 31, 2017, we have completed our accounting for the tax effects of enactment of the Act, as described below.The impacts of the Act relate to the reduction in the U.S. corporate income tax rate to 21 percent, which resulted in re-measuring our deferred tax assetsand liabilities using the new 21 percent federal tax rate. This did not result in any net tax expense or benefit as there were corresponding and offsettingimpacts to our deferred tax asset valuation allowance. For the year ended December 31, 2017, we have recognized no transition tax in the current year andexpect no income tax effect in future periods as a result of our accumulated losses since inception of our foreign subsidiaries, beginning in 2002. Other significant provisions that are not yet effective but may impact income taxes in future years include: an exemption from U.S. tax on dividends offuture foreign earnings, limitation on the current deductibility of net interest expense in excess of 30 percent of adjusted taxable income, a limitation of netoperating losses generated after fiscal 2018 to 80 percent of taxable income, an incremental tax (base erosion anti-abuse tax or “BEAT”) on excessiveamounts paid to foreign related parties, and a minimum tax on certain foreign earnings in excess of 10 percent of the foreign subsidiaries tangible assets (i.e.,global intangible low-taxed income or “GILTI”). We are still evaluating whether to make a policy election to treat the GILTI tax as a period cost to provideU.S. deferred taxes on foreign temporary differences that are expected to generate GILTI income when they reverse in future years. In all cases, we willcontinue to make and refine our calculations as additional analysis is completed. In addition, our estimates may also be affected as we gain a more thoroughunderstanding of the tax law.(p) Net Loss Per ShareBasic income and loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted average numberof common shares outstanding (including common shares issuable under our Directors’ Deferred Compensation Plan). Diluted income per common share iscalculated by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding (including commonshares issuable under our Directors’ Deferred Compensation Plan) plus the dilutive effect of outstanding instruments such as warrants, stock options, non-vested shares, convertible preferred stock, and convertible notes. Because we reported a net loss attributable to common stockholders for all periodspresented, diluted loss per common share is the same as basic loss per common share, as the effect of utilizing the fully diluted share count would havereduced the net loss per common share. Therefore, the following potentially dilutive securities have been excluded from the computation of diluted weightedaverage shares outstanding as of December 31, 2017, 2016, and 2015, as they would be anti-dilutive: Year Ended 2017 2016 2015 Warrants 4,351,450 4,351,450 4,351,450 Stock options 14,366,787 11,693,400 8,345,835 Nonvested shares 1,313,550 1,942,476 1,730,604 Convertible preferred stock 333,333 333,333 333,333 61Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(q) GoodwillGoodwill represents the excess of cost over the fair value of net assets of businesses acquired. Goodwill is not amortized, but instead tested forimpairment at least annually. Annually we assess whether there is an indication that goodwill is impaired, or more frequently if events and circumstancesindicate that the asset might be impaired during the year. We perform our annual impairment test as of October 31 of each year. The first step of ourimpairment analysis compares our fair value to our net book value to determine if there is an indicator of impairment. We operate as a single operatingsegment and single reporting unit and our fair value is based on the quoted market price of our common stock to derive the market capitalization as of thedate of the impairment test. ASC 350, Intangibles, Goodwill and Other states that if the carrying value of the reporting unit is negative, the second step of theimpairment test shall be performed to measure the amount of impairment loss, if any, if qualitative factors indicate that it is more likely than not that agoodwill impairment exists. No goodwill impairment has been recognized for the periods presented.(r) In-process Research and DevelopmentAcquired in-process research and development (“IPR&D”) represents the fair value assigned to research and development assets that have not reachedtechnological feasibility. The value assigned to acquired IPR&D is determined by estimating the costs to develop the acquired technology into commerciallyviable products, estimating the resulting revenue from the projects, and discounting the net cash flows to present value. The revenue and cost projectionsused to value acquired IPR&D are, as applicable, reduced based on the probability of success of developing a new drug. Additionally, the projectionsconsider the relevant market sizes and growth factors, expected trends in technology, and the nature and expected timing of new product introductions by usand our competitors. The rates utilized to discount the net cash flows to their present value are commensurate with the stage of development of the projectsand uncertainties in the economic estimates used in the projections. Upon the acquisition of IPR&D, we complete an assessment of whether our acquisitionconstitutes the purchase of a single asset or a group of assets. We consider multiple factors in this assessment, including the nature of the technologyacquired, the presence or absence of separate cash flows, the development process and stage of completion, quantitative significance and our rationale forentering into the transaction.If we acquire an asset or group of assets that do not meet the definition of a business under applicable accounting standards, then the acquired IPR&Dis expensed on its acquisition date. Future costs to develop these assets are recorded to research and development expense as they are incurred.We review amounts capitalized as acquired IPR&D for impairment at least annually, as of October 31, or whenever events or changes in circumstancesindicate that the carrying value of the assets might not be recoverable. When performing our impairment assessment, we have the option to first assessqualitative factors to determine whether it is necessary to estimate the fair value of our acquired IPR&D. If we elect this option and believe, as a result of thequalitative assessment, that it is more-likely-than-not that the fair value of our acquired IPR&D is less than its carrying amount, we estimate the fair valueusing the same methodology as described above. If the carrying value of our acquired IPR&D exceeds its fair value, then the intangible asset is written-downto its fair value. Alternatively, we may elect to not first assess qualitative factors and immediately estimate the fair value of our acquired IPR&D. No IPR&Dimpairments were recognized for the years presented.(s) Accounting for Asset Retirement ObligationsWe record the fair value of an asset retirement obligation as a liability in the period in which we incur a legal obligation associated with the retirementof tangible long-lived assets that result from the acquisition, construction, development, and/or normal use of the assets. A legal obligation is a liability that aparty is required to settle as a result of an existing or enacted law, statute, ordinance, or contract. We are also required to record a corresponding asset that isdepreciated over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation will be adjusted at the end ofeach period to reflect the passage of time (accretion) and changes in the estimated future cash flows underlying the obligation. Changes in the liability due toaccretion are charged to the consolidated statement of operations, whereas changes due to the timing or amount of cash flows are an adjustment to thecarrying amount of the related asset. Our asset retirement obligations primarily relate to the expiration of our facility lease and anticipated costs to beincurred based on our lease terms.(t) Long-lived AssetsIf required based on certain events and circumstances, recoverability of assets to be held and used, other than goodwill and intangible assets not beingamortized, is measured by a comparison of the carrying amount of an asset to the undiscounted future net cash flows expected to be generated by the asset orasset group. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment charge is recognized for the amount bywhich the carrying amount of the asset exceeds the fair value of the asset. Authoritative guidance requires companies to separately report discontinuedoperations and extends that reporting to a component of an entity that either has been disposed of (by sale, abandonment, or in a distribution to owners) or isclassified as held for sale. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.62Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(u) Recent Accounting PronouncementsIn May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, ("ASU 2014-09"). ASU 2014-09 amends revenuerecognition principles and provides a single set of criteria for revenue recognition among all industries. This new standard provides a five-step frameworkwhereby revenue is recognized when promised goods or services are transferred to a customer at an amount that reflects the consideration to which the entityexpects to be entitled in exchange for those goods or services. The standard also requires enhanced disclosures pertaining to revenue recognition in bothinterim and annual periods. In March 2016, the FASB issued an amendment to the standard, ASU 2016-8, Revenue from Contracts with Customers (Topic606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”), which clarifies the implementation guidance onprincipal versus agent considerations. In April 2016, the FASB issued an additional amendment to the standard, ASU 2016-10, Revenue from Contracts withCustomers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”), which clarifies the guidance on identifying performanceobligations and the implementation guidance on licensing. In August 2015, the FASB issued ASU No. 2015-14, which defers the effective date by one yearto December 15, 2017 for annual reporting periods beginning after that date, including interim periods within those periods. The FASB also approvedpermitting early adoption of the standard, but not before the original effective date of December 15, 2016. ASU 2014-09 is effective for interim and annualperiods beginning after December 15, 2017. Two adoption methods are permitted: retrospectively to all prior reporting periods presented, with certainpractical expedients permitted; or retrospectively with the cumulative effect of initially adopting the ASU recognized at the date of initial application. Weadopted the new standard effective January 1, 2018 under the modified retrospective method.Under ASC 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects theconsideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entitydetermines are within the scope of ASC 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify theperformance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract;and (v) recognize revenue when (or as) the entity satisfies a performance obligation.To date, our sources of collaboration and other revenue have primarily been collaboration, license and research agreements. The most significantdifferences between Topic 606 and previous guidance for license and collaboration revenue are: (i) allocating consideration to performance obligations; and(ii) estimating and determining the timing of recognition of variable consideration received from licensees, contingent milestones and royalties. Revenuesfrom contingent milestone payments may be recognized earlier under Topic 606 than under Topic 605, based on an assessment of the probability of asignificant reversal of such milestone revenue at each reporting date. This assessment may result in recognizing milestone revenue before the milestoneevent has been achieved. Under previous guidance, milestone revenue was typically recognized when the milestone event was achieved.We are in the process of completing our assessment of the impact that the new standard will have on our consolidated financial statements. Currently,we anticipate a potential impact from the allocation of the transaction price to performance obligations, and the related timing of revenue recognition for theidentified performance obligations. Our collaboration, license and research agreements, which are discussed further in Notes 12 and 13, are our sole sources ofrevenue and therefore the only arrangements impacted by the adoption of the new standard.ASC 606 also requires more robust disclosures than required by previous guidance, including disclosures related to disaggregation of revenue intoappropriate categories, performance obligations, the judgments made in revenue recognition determinations, adjustments to revenue which relate to activitiesfrom previous quarters or years, any significant reversals of revenue, and costs to obtain or fulfill contracts. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”) which supersedes Topic 840, Leases. ASU 2016-02 requireslessees to recognize a right-of-use asset and a lease liability on their balance sheets for all leases with terms greater than twelve months. Based on certaincriteria, leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. Forleases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assetsand lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term.ASU 2016-2 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years, with early adoption permitted. Intransition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospectiveapproach. The modified retrospective approach includes a number of optional practical expedients primarily focused on leases that commenced before theeffective date of Topic 842, including continuing to account for leases that commence before the effective date in accordance with previous guidance, unlessthe lease is modified. Note 15 provides details on our current lease arrangements. While we continue to evaluate the provisions of ASU 2016-02 to determinehow it will be affected, the primary effect of adopting the new standard will be to record assets and obligations for current operating leases. Upon adoption,based on leases in place as of December 31, 2017, we expect to recognize assets and liabilities of approximately $8.2 million related to our operating leases.The adoption of ASU 2016-02 is not expected to have a material impact on our results of operations or cash flows.63Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based PaymentAccounting, (“ASU 2016-09”). ASU 2016-09 provides for the simplification of the accounting for share-based payment transactions, including the incometax consequences, an option to recognize gross stock-based compensation expense with actual forfeitures recognized as they occur, classification of awardsas either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 applies to all entities and is effective for the annual effective forannual periods beginning after December 15, 2016, and interim periods within those annual periods. We adopted ASU 2016-09 on January 1, 2017 andrecorded a cumulative adjustment of $1.2 million in retained earnings to reflect the retrospective change in awards expected to vest.64Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business (“ASU 2017-01”), whichprovides guidance regarding the definition of a business, with the objective of adding guidance to assist entities with evaluating whether transactions shouldbe accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 is effective for the Company in the first quarter of 2018, with earlyadoption permitted, and prospective application required. In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350) (“ASU 2017-04”) that will eliminate the requirementto calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, any impairment charge will be based on the excess of areporting unit’s carrying amount over its fair value. The guidance is effective for the Company in the first quarter of 2020. Early adoption is permitted. We donot anticipate the adoption of this guidance to have a material impact on our consolidated financial statements, absent any goodwill impairment. In May 2017, the FASB issued ASU No. 2017-09, Compensation – Stock Compensation (Topic 718) Scope of Modification Accounting (“ASU 2017-09”). The amendments in ASU 2017-09 provide guidance about which changes to the terms or conditions of a share-based payment award require an entity toapply modification accounting in Topic 718. The adoption of ASU 2017-09, which will become effective for annual periods beginning after December 15,2017 and for interim periods within those annual periods, is not expected to have any impact on our financial statement presentation or disclosures. (3) Business Acquisitions 4-AntibodyOn January 10, 2014, we entered into a Share Exchange Agreement (the “Share Exchange Agreement”) providing for our acquisition of all of theoutstanding capital stock of Agenus Switzerland Inc. (formerly known as 4-Antibody AG) (“4-AB”), from the shareholders of 4-AB (the “4-ABShareholders”). The transaction closed on February 12, 2014 (the “Closing Date”). In exchange for their shares, the 4-AB Shareholders received an aggregateof 3,334,079 shares of our common stock paid upon closing and valued at $10.1 million. Contingent milestone payments of up to $40.0 million (the“contingent purchase price consideration”), payable in cash or shares of our common stock at our option, are due to the 4-AB Shareholders as follows: (i)$20.0 million upon our market capitalization exceeding $300.0 million for 10 consecutive trading days prior to the earliest of (a) the fifth anniversary of theClosing Date (b) the sale of the 4-AB or (c) the sale of Agenus; (ii) $10.0 million upon our market capitalization exceeding $750.0 million for 30 consecutivetrading days prior to the earliest of (a) the tenth anniversary of the Closing Date (b) the sale of 4-AB, or (c) the sale of Agenus, and (iii) $10.0 million upon ourmarket capitalization exceeding $1.0 billion for 30 consecutive trading days prior to the earliest of (a) the tenth anniversary of the Closing Date, (b) the saleof 4-AB, or (c) the sale of Agenus. We assigned an acquisition date fair value of $9.7 million to the contingent purchase price consideration. During January2015, the first milestone noted above was achieved. This acquisition provided us with the Retrocyte Display technology platform for the rapid discovery andoptimization of fully-human and humanized monoclonal antibodies against a wide array of molecular targets and a portfolio of CPM antibodies. PhosImmune Inc. On December 23, 2015 (the “PhosImmune Closing Date”), we entered into a Purchase Agreement with PhosImmune Inc., a privately-held Virginiacorporation (“PhosImmune”), the securityholders of PhosImmune (the “PhosImmune Securityholders”) and Fanelli Haag PLLC, as representative of thePhosImmune Securityholders providing for the acquisition of all outstanding securities of PhosImmune. On the PhosImmune Closing Date, in exchange fortheir shares, the PhosImmune Securityholders received $2.5 million in cash and an aggregate of 1,631,521 of our common stock paid upon closing andvalued at $7.4 million. Contingent milestone payments up to $35.0 million payable in cash and/or stock at our option are due as follows: (i) $5.0 millionupon the closing trading price of our common stock equals or exceeds $8.00 for 60 consecutive trading days prior to the earlier of (a) the fifth anniversary ofthe PhosImmune Closing Date or (b) the sale of Agenus; (ii) $15.0 million if the closing trading price of our common stock equals or exceeds $13.00 for 60consecutive trading days prior to the earlier of (a) the tenth anniversary of the PhosImmune Closing Date or (b) the sale of Agenus; and (iii) $15.0 million ifthe closing trading price of our common stock equals or exceeds $19.00 for 60 consecutive trading days prior to the earlier of (a) the tenth anniversary of thePhosImmune Closing Date or (b) the sale of Agenus. We assigned an acquisition date fair value of $2.5 million to the contingent purchase priceconsideration. This acquisition expands our I-O pipeline and strengthens our neoantigen capabilities to enable the development of best-in-class cancervaccines and other novel therapies. Antibody Manufacturing Facility On November 5, 2015, we entered into Asset Purchase Agreement (the “Asset Purchase Agreement”) providing for our acquisition of an antibodymanufacturing pilot plant and related capabilities from XOMA Corporation (“XOMA”). The transaction closed on December 31, 2015. As consideration forthe purchased assets, we paid XOMA $4.7 million in cash and issued XOMA65Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.109,211 shares of our common stock valued at $500,000. XOMA is entitled to receive an additional 109,211 shares of our common stock subject to thesatisfaction of conditions set forth in the Asset Purchase Agreement. We do not believe it is probable that XOMA will satisfy these conditions and thereforehave not ascribed a value to the contingent consideration. The transaction with XOMA provides us with an antibody pilot manufacturing facility enablingthe production and manufacture of CPM antibodies under our programs and those of our collaborations. In accordance with the guidance of ASC 805 Business Combinations, when the fair value of the assets acquired exceed the total purchaseconsideration, a bargain purchase has occurred and the resulting gain is to be recognized in earning as of the date of the transaction. In July 2015, XOMAexperienced a set-back in a late-stage clinical trial and as a result of the setback, began the immediate divestiture of their antibody body productioncapabilities at values less than the prevailing market rates for the assets. For the year ended December 31, 2015, we recorded a bargain purchase gain ofapproximately $1.5 million on the acquisition of the antibody manufacturing pilot facility and related capabilities in non-operating (expense) income in ourconsolidated statements of operations and comprehensive loss. (4) Asset Purchase Agreements Celexion, LLCOn April 7, 2015 (the “Celexion Closing Date”), we entered into an Asset Purchase Agreement (the “Celexion Purchase Agreement”) with Celexion,LLC (“Celexion”) and each of the members of Celexion, pursuant to which, we acquired Celexion’s SECANT yeast display antibody discovery platform, itsfull-length IgG antibody library, its technology for the discovery of molecules targeting cell membrane-associated antigens, and certain other relatedintellectual property assets (collectively, the “Purchased Assets”). As consideration for the Purchased Assets, on the Celexion Closing Date we paid Celexion$1.0 million in cash and issued Celexion 574,140 shares of our common stock valued at approximately $5.23 per share. As additional consideration for thePurchased Assets, we agreed under the Celexion Purchase Agreement to pay to Celexion (i) $1.0 million in cash payable on each of the 9-month and 18-month anniversaries of the Celexion Closing Date and (ii) $4.0 million on each of the 12-month and 24-month anniversaries of the Celexion Closing Datepayable at our discretion in cash, shares of our common stock, or any combination thereof. If we elect to pay any of the additional consideration in shares ofour common stock, such shares will be issued at a price per share equal to the simple average of the daily closing volume weighted average price over the 20trading days preceding the date of issuance. We agreed to file one or more registration statements under the Securities Act to cover the resale of all sharesissued as consideration under the Celexion Purchase Agreement. In May 2015, we filed a registration statement covering the resale of the 574,140 sharesissued to Celexion on the Celexion Closing Date, and the SEC declared the registration statement effective in June 2015. This transaction was accounted foras an asset acquisition in accordance with ASC 805 Business Combinations. In accordance with ASC 730 Research and Development, the purchase price ofapproximately $13.2 million was recorded as research and development expense in our consolidated statement of operations and comprehensive loss for theyear December 31, 2015 as the IPR&D was deemed to have no future alternative use.On November 9, 2017 we made the final payment under the Celexion Purchase Agreement. We issued to Celexion 999,317 shares of our commonstock based on the preceding 20 trading day average of approximately $4.10 per share. The closing price of our common stock on November 9, 2017 was$3.55 per share. As such, we recorded a gain of approximately $550,000 at issuance. Also on November 9, 2017, we filed a registration statement covering thesale of the 999,317 shares issued to Celexion. The SEC declared the registration statement effective in January 2018. (5) Goodwill and Acquired Intangible AssetsThe following table sets forth the changes in the carrying amount of goodwill for year ended December 31, 2017 (in thousands): Balance, December 31, 2016 $22,392 Effect of foreign currency 657 Balance, December 31, 2017 $23,049 66Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Acquired intangible assets consisted of the following at December 31, 2017 and 2016 (in thousands): As of December 31, 2017 Amortizationperiod(years) Gross carryingamount Accumulatedamortization Net carryingamount Intellectual Property 7-15 years $16,545 $(4,290) $12,255 Trademarks 4.5 years 826 (711) 115 Other 2-6 years 570 (461) 109 In-process research and development Indefinite 1,928 — 1,928 Total $19,869 $(5,462) $14,407 As of December 31, 2016 Amortizationperiod(years) Gross carryingamount Accumulatedamortization Net carryingamount Intellectual Property 7-15 years $16,358 $(2,385) $13,973 Trademarks 4.5 years 791 (505) 286 Other 2-6 years 563 (303) 260 In-process research and development Indefinite 1,846 — 1,846 Total $19,558 $(3,193) $16,365The weighted average amortization period of our finite-lived intangible assets is approximately 9 years. Amortization expense for the years endedDecember 31, 2017, 2016, and 2015 was $2.3 million, $2.2 million, and $525,000, respectively. Amortization expense related to acquired intangibles isestimated at $2.0 million for 2018, and $1.9 million for each of 2019, 2020, 2021, and 2022.The acquired IPR&D asset relates to the six pre-clinical antibody programs acquired in the Agenus Switzerland transaction. IPR&D acquired in abusiness combination is capitalized at fair value until the underlying project is completed and is subject to impairment testing. Once the project iscompleted, the carrying value of IPR&D is amortized over the estimated useful life of the asset. Post-acquisition research and development expenses relatedto the acquired IPR&D are expensed as incurred. (6) InvestmentsCash Equivalents and Short-term InvestmentsCash equivalents and short-term investments consisted of the following as of December 31, 2017 and 2016 (in thousands): December 31, 2017 December 31, 2016 Cost EstimatedFair Value Cost EstimatedFair Value Institutional Money Market Funds $57,036 $57,036 $38,913 $38,913 U.S. Treasury Bills — — 14,978 14,978 Total $57,036 $57,036 $53,891 $53,891 We received proceeds of approximately $20.0 million, $85.0 million, and $14.5 from the maturity of U.S. Treasury Bills classified as short-terminvestments for the years ended December 31, 2017, 2015, and 2014, respectively. No securities were sold before their maturity in 2017. As a result of theshort-term nature of our investments, there were minimal unrealized holding gains or losses as of December 31, 2017 and 2016, and 2015.Of the investments listed above, $57.0 million and $48.9 million have been classified as cash equivalents on our consolidated balance sheet as ofDecember 31, 2017 and 2016, respectively. Approximately $5.0 million was classified as short-term investments as of December 31, 2016. 67Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(7) Property, Plant and EquipmentProperty, plant and equipment, net as of December 31, 2017 and 2016 consist of the following (in thousands): 2017 2016 EstimatedDepreciableLivesLand $2,230 $2,230 IndefiniteBuilding and building improvements 4,682 4,605 35 yearsFurniture, Fixtures, and other 5,409 3,993 3 to 10 yearsLaboratory and manufacturing equipment 17,438 16,107 4 to 10 yearsLeasehold improvements 23,415 23,154 2 to 12 yearsSoftware and computer equipment 7,034 6,789 3 years 60,208 56,878 Less accumulated depreciation and amortization (34,029) (31,244) Total $26,179 $25,634 (8) Income TaxesWe are subject to taxation in the U.S. and in various state, local, and foreign jurisdictions. We remain subject to examination by U.S. Federal, state,local, and foreign tax authorities for tax years 2014 through 2017. With a few exceptions, we are no longer subject to U.S. Federal, state, local, and foreignexaminations by tax authorities for the tax year 2013 and prior. However, net operating losses from the tax year 2013 and prior would be subject toexamination if and when used in a future tax return to offset taxable income. Our policy is to recognize income tax related penalties and interest, if any, in ourprovision for income taxes and, to the extent applicable, in the corresponding income tax assets and liabilities, including any amounts for uncertain taxpositions.As of December 31, 2017, we had available net operating loss carryforwards of $809.1 million and $279.3 million for Federal and state income taxpurposes, respectively, which are available to offset future Federal and state taxable income, if any, and expire between 2018 and 2037. The Companyadopted ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, on January 1, 2017, upon which the net operating loss carryforwarddeferred tax assets were increased by the excess tax benefits of $0.3 million (tax-effected) with a corresponding increase to the Company’s valuationallowance. Our ability to use these net operating losses is limited by change of control provisions under Internal Revenue Code Section 382 and may expireunused. In addition, we have $8.9 million and $13.4 million of Federal and state research and development credits, respectively, available to offset futuretaxable income. These Federal and state research and development credits expire between 2018 and 2036 and 2018 and 2032, respectively. Additionally, wehave $0.2 million of state investment tax credits, available to offset future taxable income and expire between 2018 and 2020. We also have foreign incometax net operating loss carryforwards of approximately $54.6 million which are available to offset future foreign taxable income, if any, and expire between2018 and 2024. The potential impacts of such provisions are among the items considered and reflected in management’s assessment of our valuationallowance requirements.The tax effect of temporary differences and net operating loss and tax credit carryforwards that give rise to significant portions of the deferred taxassets and deferred tax liabilities as of December 31, 2017 and 2016 are presented below (in thousands). 2017 2016 Deferred tax assets: U.S. Federal and State net operating loss carryforwards $185,535 $241,572 Foreign net operating loss carryforwards 16,209 13,075 Research and development tax credits 19,597 17,723 Share-based compensation 8,249 13,165 Other 6,221 15,513 Total deferred tax assets 235,811 301,048 Less: valuation allowance (232,443) (295,502)Net deferred tax assets 3,368 5,546 Deferred tax liabilities (3,960) (6,197)Net deferred tax liability $(592) $(651) In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets willnot be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which the netoperating loss and tax credit carryforwards can be utilized or the temporary differences become deductible. We consider projected future taxable income andtax planning strategies in making this assessment. In68Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.order to fully realize the deferred tax asset, we will need to generate future taxable income sufficient to utilize net operating losses prior to their expiration.Based upon our history of not generating taxable income due to our business activities focused on product development, we believe that it is more likelythan not that deferred tax assets will not be realized through future earnings. Accordingly, a valuation allowance has been established for deferred tax assetswhich will not be offset by the reversal of deferred tax liabilities. The valuation allowance on the deferred tax assets decreased by $63.1 million during theyear ended December 31, 2017, which primarily related to the “Tax Cuts and Jobs Act”, which reduced the federal tax rate from 34% to 21%, and thevaluation allowance increased by $35.3 during the year ended December 31, 2016.Income tax benefit was nil for the years ended December 31, 2017 and 2016, and $5.4 million for the year ended December 31, 2015. The income taxbenefit of $5.4 million for the year ended December 31, 2015 was entirely related to a deferred tax benefit recognized as a result of deferred tax liabilitiesrecorded in connection with our acquisitions of PhosImmune and certain assets from XOMA. Income taxes recorded differed from the amounts computed byapplying the U.S. Federal income tax rate of 34% to loss before income taxes as a result of the following (in thousands). 2017 2016 2015 Computed “expected” Federal tax benefit $(41,035) $(42,781) $(31,669)(Increase) reduction in income taxes benefit resulting from: Change in valuation allowance (63,868) 35,471 25,908 (Decrease) increase due to uncertain tax positions — (203) 203 State and local income benefit, net of Federal income tax benefit (4,561) (3,452) (3,869)Change in federal tax rate 104,764 — — Foreign rate differential 2,084 4,398 (314)Other, net 2,616 6,567 4,354 Income tax benefit $— $— $(5,387) A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (in thousands): 2017 2016 2015 Balance, January 1 $5,278 $5,481 $5,778 Increase related to current year positions — — 203 Decrease related to previously recognizedpositions — (203) (500)Decrease related to change in federal tax rate (929) — — Balance, December 31 $4,349 $5,278 $5,481 These unrecognized tax benefits would all impact the effective tax rate if recognized. There are no positions which we anticipate could change withinthe next twelve months. (9) Accrued and Other Current LiabilitiesAccrued liabilities consist of the following as of December 31, 2017 and 2016 (in thousands): December 31,2017 December 31,2016 Payroll $7,790 $6,504 Professional fees 2,021 2,373 Contract manufacturing costs 5,528 10,492 Research services 4,663 5,639 Leasehold improvements — 1,280 Other 1,567 1,587 Total $21,569 $27,875 69Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Other current liabilities consisted of the following as of December 31, 2017 and 2016 (in thousands): December 31,2017 December 31,2016 Current portion of deferred purchase price (Note 4) $— $3,948 Other 1,657 843 Total $1,657 $4,791 (10) EquityEffective June 14, 2016, our certificate of incorporation was amended to increase the number of authorized shares of common stock from 140,000,000to 240,000,000.Under the terms and conditions of the Certificate of Designation creating the Series A-1 Preferred Stock, this stock is convertible by the holder at anytime into our common stock, is non-voting, has an initial conversion price of $94.86 per common share, subject to adjustment, and is redeemable by us at itsface amount ($31.6 million), plus any accrued and unpaid dividends, on or after September 24, 2013. The Certificate of Designation does not contemplate asinking fund. The Series A-1 Preferred Stock ranks senior to our common stock. In a liquidation, dissolution, or winding up of the Company, the Series A-1Preferred Stock’s liquidation preference must be fully satisfied before any distribution could be made to the holders of the common stock. Other than in sucha liquidation, no terms of the Series A-1 Preferred Stock affect our ability to declare or pay dividends on our common stock as long as the Series A-1 PreferredStock’s dividends are accruing. The liquidation value of this Series A-1 Preferred stock is equal to $1,000 per share outstanding plus any accrued unpaiddividends. Dividends in arrears with respect to the Series A-1 Preferred Stock were approximately $1.0 million or $31.79 per share, and $800,000, or $25.29per share, at December 31, 2017 and 2016, respectively.In January 2008, we entered into a private placement agreement (the “January 2008 private placement”) pursuant to which we sold 1,451,450 shares ofcommon stock for $18.00 for each share sold. Investors also received (i) 10-year warrants to purchase, at an exercise price of $18.00 per share, up to 1,451,450shares of common stock and (ii) unit warrants to purchase, at an exercise price of $18.00 per unit, contingent upon a triggering event as defined in the January2008 private placement documents, (a) up to 1,451,450 shares of common stock and (b) additional 10-year warrants to purchase, at an exercise price of$18.00 per share, up to 1,451,450 additional shares of common stock. In accordance with the terms of the January 2008 private placement, the 10-yearwarrants became exercisable for a period of 9.5 years as of July 9, 2008. Our private placement in April 2008 qualified as a triggering event, and therefore theunit warrants became exercisable for a period of eighteen months as of July 9, 2008. The unit warrants expired unexercised in January 2010. In February2008, we filed, and the Securities and Exchange Commission (the “SEC”) declared effective, the required registration statement covering the resale of the1,451,450 shares of common stock issued and the 1,451,450 shares issuable upon the exercise of the 10-year warrants issued in the January 2008 privateplacement. In connection with the January 2008 private placement, of the 1,451,450 warrants issued, 284,785 of the warrants were issued to Garo Armen, ourCEO. These 10-year warrants expired unexercised in January 2018.During September 2013, we sold approximately 3,333,000 shares of our common stock and warrants to purchase 1,000,000 shares of our commonstock in a registered direct public offering raising net proceeds of approximately $9.5 million, after deducting offering expenses. The common stock andwarrants were sold in units, with each unit consisting of one share of common stock and a warrant to purchase 0.3 of a share of common stock. Subject tocertain ownership limitations, the warrants became exercisable beginning 6 months following issuance and will expire five years from the date they becomeexercisable, at an exercise price of $3.75 per share. The number of shares issuable upon exercise of the warrants and the exercise price of the warrants areadjustable in the event of stock splits, stock dividends, combinations of shares and similar recapitalization transactions. As of the year ended December 31,2017 all warrants remain unexercised.In October 2014, we filed, and the SEC declared effective, a Registration Statement on Form S-3 (the “2014 Registration Statement”), covering theoffering of up to $150.0 million of common stock, preferred stock, warrants, debt securities and units. The 2014 Registration Statement included a prospectuscovering the offering, issuance and sale of up to 10 million shares of our common stock from time to time in “at the market offerings” pursuant to an AtMarket Sales Issuance Agreement entered into with MLV on October 10, 2014 (the “2014 ATM Program”). During the year ended December 31, 2017 wesold an aggregate of 1,315,000 shares of our common stock in at the market offerings under the 2014 ATM Program and received net proceeds of $5.6 millionafter deducting offering costs of approximately $172,000.On January 9, 2015, in connection with the execution of the Collaboration Agreement, we also entered into the Stock Purchase Agreement (the “StockPurchase Agreement”) with Incyte Corporation, pursuant to which Incyte purchased approximately 7.76 million shares of our common stock (the “Shares”) inFebruary 2015 for an aggregate purchase price of $35.0 million, or approximately $4.51 per share. Under the Stock Purchase Agreement, we agreed to registerthe Shares for resale under the Securities Act of 1933, as amended (the "Securities Act"). Subsequently, we filed, and the SEC declared effective, a registrationstatement70Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.covering the resale of the 7,760,000 shares of our common stock issued. On February 14, 2017, we entered into an additional Stock Purchase Agreement (the“Additional Stock Purchase Agreement”) with Incyte, pursuant to which Incyte purchased 10 million shares of our common stock (the “Additional Shares”) ata purchase price of $6.00 per share. Immediately following the transaction, Incyte owned approximately 18.1% of our outstanding shares. Under theAdditional Stock Purchase Agreement, Incyte agreed not to dispose of any of the Additional Shares for a period of 12 months and to vote the AdditionalShares in accordance with the recommendations of the Company’s board of directors in connection with certain equity incentive plan or compensationmatters for a period of 18 months, and we agreed to certain registration rights with respect to the Additional Shares. The parties also revised the existingstandstill provision to permit Incyte’s acquisition of the Additional Shares, but Incyte is precluded from acquiring any additional shares of our voting stockuntil December 31, 2019.In connection with the January 2015 achievement of the first contingent milestone, pursuant to the Agenus Switzerland Share Exchange Agreement,we issued a total of 80,493 shares of our common stock valued at approximately $345,000 as payment of a portion of our obligation.In May 2015, we issued and sold 12,650,000 shares of our common stock in an underwritten public offering. Net proceeds after deducting offeringexpenses were approximately $75.0 million.In September 2015, in accordance with the terms of the Assignment and Termination Agreement detailed in Note 16, we issued 300,000 shares of ourcommon stock to Ingalls valued at $2.1 million.In September 2016, in accordance with the terms of the Technology Transfer and License Agreement with Iontas Limited (“Iontas”), we issued157,513 shares of our common stock to Iontas valued at approximately $887,000. In March 2017, we issued an additional 373,351 shares of our commonstock, valued at approximately $1.5 million, to Iontas in accordance with the terms of the Technology Transfer and License Agreement. Subsequently, wefiled, and the SEC declared effective, a registration statement covering the resale of the 530,864 shares of our common stock issued.In October 2017, we filed, and the SEC declared effective, a Registration Statement on Form S-3 (the “2017 Registration Statement”), covering theoffering of up to $250 million of common stock, preferred stock, warrants, debt securities and units. The 2017 Registration Statement included a prospectuscovering the offering, issuance and sale of up to 15 million shares of our common stock from time to time in “at-the-market offerings” pursuant to aControlled Equity OfferingSM sales agreement (the “Sales Agreement”) entered into with Cantor Fitzgerald & Co. (the “Sales Agent”) on October 30, 2017.Pursuant to the Sales Agreement, sales will be made only upon instructions by us to the Sales Agent, and we cannot provide any assurances that it will issueany shares pursuant to the Sales Agreement. On October 18, 2017, we exercised our right under that certain At Market Issuance Sales Agreement by andbetween us and MLV & Co. LLC, dated as of October 10, 2014 (the “2014 ATM Program”) to terminate the 2014 ATM Program, which termination tookeffect upon the effectiveness of the 2017 Registration Statement. During the year ended December 31, 2017, we sold no shares of our common stock in at-the-market offerings under the Sales Agreement. (11) Share-based Compensation PlansOur 1999 Equity Incentive Plan, as amended (the “1999 EIP”) authorized awards of incentive stock options within the meaning of Section 422 of theInternal Revenue Code (the “Code”), non-qualified stock options, non-vested (restricted) stock, and unrestricted stock for up to 2.0 million shares of commonstock (subject to adjustment for stock splits and similar capital changes and exclusive of options exchanged at the consummation of mergers) to employeesand, in the case of non-qualified stock options, non-vested (restricted) stock, and unrestricted stock, to consultants and directors as defined in the 1999 EIP.The plan terminated on November 15, 2009. On March 12, 2009, our Board of Directors adopted, and on June 10, 2009, our stockholders approved, our 2009Equity Incentive Plan (the “2009 EIP”). The 2009 EIP provides for the grant of incentive stock options intended to qualify under Section 422 of the Code,nonstatutory stock options, restricted stock, unrestricted stock and other equity-based awards, such as stock appreciation rights, phantom stock awards, andrestricted stock units, which we refer to collectively as Awards, for up to 20.2 million shares of our common stock (subject to adjustment in the event of stocksplits and other similar events). The Board of Directors appointed the Compensation Committee to administer the 1999 EIP and the 2009 EIP. No awards willbe granted under the 2009 EIP after June 10, 2019.On March 12, 2009, our Board of Directors adopted, and on June 10, 2009, our stockholders approved, the 2009 Employee Stock Purchase Plan (the“2009 ESPP”) to provide eligible employees the opportunity to acquire our common stock in a program designed to comply with Section 423 of the Code.There are currently 166,666 shares of common stock reserved for issuance under the 2009 ESPP. Rights to purchase common stock under the 2009 ESPP aregranted at the discretion of the Compensation Committee, which determines the frequency and duration of individual offerings under the plan and the dateswhen stock may be purchased. Eligible employees participate voluntarily and may withdraw from any offering at any time before the stock is purchased.71Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Participation terminates automatically upon termination of employment. The purchase price per share of common stock in an offering is 85% of the lesser ofits fair value at the beginning of the offering period or on the applicable exercise date and may be paid through payroll deductions, periodic lump sumpayments, the delivery of our common stock, or a combination thereof. Unless otherwise permitted by the Board of Directors, no participant may acquiremore than 3,333 shares of stock in any offering period. No participant is allowed to purchase shares under the 2009 ESPP if such employee would own orwould be deemed to own stock possessing 5% or more of the total combined voting power or value of the Company. No offerings will be made under the2009 ESPP after June 10, 2019.Our Director’s Deferred Compensation Plan, as amended, permits each outside director to defer all, or a portion of, their cash compensation until theirservice as a director ends or until a specified date into a cash account or a stock account. There are 325,000 shares of our common stock reserved for issuanceunder this plan. As of December 31, 2017, 72,081 shares had been issued. Amounts deferred to a cash account will earn interest at the rate paid on one-yearTreasury bills with interest added to the account annually. Amounts deferred to a stock account will be converted on a quarterly basis into a number of unitsrepresenting shares of our common stock equal to the amount of compensation which the participant has elected to defer to the stock account divided by theapplicable price for our common stock. The applicable price for our common stock has been defined as the average of the closing price of our common stockfor all trading days during the calendar quarter preceding the conversion date as reported by The Nasdaq Capital Market. Pursuant to this plan, a total of287,868 units, each representing a share of our common stock at a weighted average common stock price of $5.24, had been credited to participants’ stockaccounts as of December 31, 2017. The compensation charges for this plan were immaterial for all periods presented.On November 4, 2015, our Board of Directors adopted and approved our 2015 Inducement Equity Plan (the “2015 IEP”) in compliance with and inreliance on NASDAQ Listing Rule 5635(c)(4), which exempts inducement grants from the general requirement of the NASDAQ Listing Rules that equity-based compensation plans and arrangements be approved by stockholders. There are 1,500,000 shares of our common stock reserved for issuance under the2015 IEP. We primarily use the Black-Scholes option pricing model to value options granted to employees and non-employees, as well as options granted tomembers of our Board of Directors. All stock option grants have 10-year terms and generally vest ratably over a 3 or 4-year period. The non-cash charge tooperations for the non-employee options with vesting or other performance criteria is affected each reporting period, until the non-employee options vest, bychanges in the fair value of our common stock.The fair value of each option granted during the periods was estimated on the date of grant using the following weighted average assumptions: 2017 2016 2015 Expected volatility 65% 65% 77%Expected term in years 4 4 6 Risk-free interest rate 1.7% 1.0% 1.6%Dividend yield 0% 0% 0% Expected volatility is based exclusively on historical volatility data of our common stock. The expected term of stock options granted is based onhistorical data and other factors and represents the period of time that stock options are expected to be outstanding prior to exercise. The risk-free interestrate is based on U.S. Treasury strips with maturities that match the expected term on the date of grant.A summary of option activity for 2017 is presented below: Options WeightedAverageExercisePrice WeightedAverageRemainingContractualTerm(in years) AggregateIntrinsicValue Outstanding at December 31, 2016 11,693,400 $4.51 Granted 4,499,342 3.81 Exercised (160,325) 3.47 Forfeited (1,164,758) 4.29 Expired (500,872) 7.42 Outstanding at December 31, 2017 14,366,787 $4.22 7.24 $707,661 Vested or expected to vest at December 31, 2017 14,366,787 $4.22 7.24 $707,661 Exercisable at December 31, 2017 8,164,576 $4.37 6.03 $699,06172Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. The weighted average grant-date fair values of options granted during the years ended December 31, 2017, 2016, and 2015, was $1.97, $4.65, and$3.55, respectively.The aggregate intrinsic value in the table above represents the difference between our closing stock price on the last trading day of fiscal 2017 and theexercise price, multiplied by the number of in-the-money options that would have been received by the option holders had all option holders exercised theiroptions on December 31, 2017 (the intrinsic value is considered to be zero if the exercise price is greater than the closing stock price). This amount changesbased on the fair market value of our stock. The total intrinsic value of options exercised during the years ended December 31, 2017, 2016, and 2015,determined on the dates of exercise, was $132,000, $445,000, and $1.2 million, respectively. During 2017, 2016, and 2015, all options were granted with exercise prices equal to the market value of the underlying shares of common stock on thegrant date other than certain awards dated March 31, 2016. In March 2016, our Board of Directors approved certain awards subject to forfeiture in the eventshareholder approval was not obtained to increase the shares available under our 2009 EIP. This approval was obtained in June 2016. Accordingly, theseawards have a grant date of June 2016 with an exercise price as of the date the Board of Director's approved the awards in March 2016.As of December 31, 2017, there was $10.6 million of total unrecognized compensation cost related to stock options granted to employees anddirectors expected to be recognized over a weighted average period of 2.5 years.As of December 31, 2017, unrecognized expense for options granted to outside advisors for which performance (vesting) has not yet been completedbut the exercise price of the option was known was approximately $650,000. Such amount is subject to change each reporting period based upon changes inthe fair value of our common stock, expected volatility, and the risk-free interest rate, until the outside advisor completes his or her performance under theoption agreement.Certain employees and consultants have been granted non-vested stock. The fair value of non-vested market based awards is calculated based on aMonte Carlo simulation as of the date of issuance. The fair value of other non-vested stock is calculated based on the closing sale price of our common stockon the date of issuance.A summary of non-vested stock activity for 2017 is presented below: NonvestedShares WeightedAverageGrant DateFair Value Outstanding at December 31, 2016 1,942,476 $6.45 Granted 711,300 1.84 Vested (1,097,243) 7.75 Forfeited (242,983) 6.21 Outstanding at December 31, 2017 1,313,550 $2.91 As of December 31, 2017, there was $1.8 million of unrecognized share-based compensation expense related to these non-vested shares for which, ifall milestones are achieved, will be recognized over a period of 2.7 years. The total intrinsic value of shares vested during the years ended December 31,2017, 2016, and 2015, was $3.8 million, $2.4 million, and $140,000, respectively.Cash received from option exercises and purchases under our 2009 ESPP for the years ended December 31, 2017, 2016, and 2015, was $1.0 million,$1.2 million, and $2.0 million, respectively. We issue new shares upon option exercises, purchases under our 2009 ESPP, vesting of non-vested stock, andunder the Director’s Deferred Compensation Plan. During the years ended December 31, 2017, 2016, and 2015, 121,183 shares, 121,228 shares, and 63,539shares, were issued under the 2009 ESPP, respectively. During the years ended December 31, 2017, 2016, and 2015, 1.1 million shares, 570,037 shares, and35,332 shares, respectively, were issued as a result of the vesting of non-vested stock.73Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.The impact on our results of operations from share-based compensation for the years ended December 31, 2017, 2016, and 2015, was as follows (inthousands). Year Ended 2017 2016 2015 Research and development $6,159 $6,507 $2,654 General and administrative 6,270 6,681 4,784 Total share-based compensation expense $12,429 $13,188 $7,438 (12) License, Research, and Other AgreementsIn May 2001, we entered into a license agreement with the University of Connecticut Health Center (“UConn”), which was amended in March 2003and June 2009. Through the license agreement, we obtained an exclusive license to patent rights resulting from inventions discovered under a researchagreement that was effective from February 1998 until December 2006. The term of the license agreement ends when the last of the licensed patents expires(2024) or becomes no longer valid. UConn may terminate the agreement: (1) if, after 30 days written notice for breach, we continue to fail to make anypayments due under the license agreement, or (2) we cease to carry on our business related to the patent rights or if we initiate or conduct actions in order todeclare bankruptcy. We may terminate the agreement upon 90 days written notice. We are still required to make royalty payments on any obligations createdprior to the effective date of termination of the license agreement. Upon expiration or termination of the license agreement due to breach, we have the right tocontinue to manufacture and sell products covered under the license agreement which are considered to be works in progress for a period of 6 months. Thelicense agreement contains aggregate milestone payments of $1.2 million for each product we develop covered by the licensed patent rights. These milestonepayments are contingent upon regulatory filings, regulatory approvals and commercial sales of products. We have also agreed to pay UConn a royalty on thenet sales of products covered by the license agreement as well as annual license maintenance fees beginning in May 2006. Royalties otherwise due on the netsales of products covered by the license agreement may be credited against the annual license maintenance fee obligations. As of December 31, 2017, we hadpaid approximately $900,000 to UConn under the license agreement. The license agreement gives us complete discretion over the commercialization ofproducts covered by the licensed patent rights, but also requires us to use commercially reasonable diligent efforts to introduce commercial products withinand outside the United States. If we fail to meet these diligence requirements, UConn may be able to terminate the license agreement.In March 2003, we entered into an amendment agreement that amended certain provisions of the license agreement with UConn. The amendmentagreement granted us a license to additional patent rights. In consideration for execution of the amendment agreement, we agreed to pay UConn an upfrontpayment and to make future payments for licensed patents or patent applications. Through December 31, 2017, we have paid approximately $100,000 toUConn under the license agreement, as amended.On December 5, 2014, Agenus Switzerland, entered into a license agreement with the Ludwig Institute for Cancer Research Ltd., or Ludwig, whichreplaced and superseded a prior agreement entered into between the parties in May 2011. Pursuant to the terms of the license agreement, Ludwig grantedAgenus Switzerland an exclusive, worldwide license under certain intellectual property rights of Ludwig and Memorial Sloan Kettering Cancer Centerarising from the prior agreement to further develop and commercialize GITR, OX40 and TIM-3 antibodies. On January 25, 2016, we and Agenus Switzerlandentered into a second license agreement with Ludwig, on substantially similar terms, to develop CTLA-4 and PD-1 antibodies. Pursuant to the December2014 license agreement, Agenus Switzerland made an upfront payment of $1.0 million to Ludwig. The December 2014 license agreement also obligatesAgenus Switzerland to make potential milestone payments of up to $20.0 million for events prior to regulatory approval of licensed GITR, OX40 and TIM-3products, and potential milestone payments in excess of $80.0 million if such licensed products are approved in multiple jurisdictions, in more than oneindication, and certain sales milestones are achieved. Under the January 2016 license agreement, we are obligated to make potential milestone payments ofup to $12.0 million for events prior to regulatory approval of CTLA-4 and PD-1 licensed products, and potential milestone payments of up to $32.0 million ifcertain sales milestones are achieved. Under each of these license agreements, we and/or Agenus Switzerland will also be obligated to pay low to mid-singledigit royalties on all net sales of licensed products during the royalty period, and to pay Ludwig a percentage of any sublicensing income, ranging from a lowto mid-double digit percentage depending on various factors. During the year ended December 31, 2017, we paid a percentage of sublicensing incometotaling $2.0 million to Ludwig under the license agreements. The license agreements may each be terminated as follows: (i) by either party if the other partycommits a material, uncured breach; (ii) by either party if the other party initiates bankruptcy, liquidation or similar proceedings; or (iii) by AgenusSwitzerland or us (as applicable) for convenience upon 90 days’ prior written notice. The license agreements also contain customary representations andwarranties, mutual indemnification, confidentiality and arbitration provisions.In connection with the December 2015 acquisition of PhosImmune, we obtained exclusive rights to a portfolio of patent applications and one issuedpatent relating to phosphopeptide tumor targets (PTTs) under a patent license agreement with the University of Virginia (“UVA”). The UVA license gives usexclusive rights to develop and commercialize the PTT technology and an74Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.exclusive option to license any further PTT technology arising from ongoing research at UVA until December 2018. Under the license agreement, we will paylow to mid-single digit running royalties on net sales of PTT products, and a modest flat percentage of sublicensing income. In addition, we may be obligatedto make milestone payments of up to $2.7 million for each indication of a licensed PTT product to complete clinical trials and achieve certain salesthresholds. If we fail to meet certain diligence milestones, we may also be required to pay penalties in excess of $150,000. The term of the UVA licenseagreement ends when the last of the licensed patents expires or becomes no longer valid. The term of the UVA license agreement ends when the last of thelicensed patents expires or becomes no longer valid. The UVA license agreement may be terminated as follows: (i) by UVA in connection with ourbankruptcy or cessation of business relating to the licensed technology, (ii) by UVA if we commit a material, uncured breach or (iii) by us for ourconvenience on 180 days written notice.We have entered into various agreements with contract manufacturers, institutions, and clinical research organizations (collectively "third partyproviders") to perform pre-clinical activities and to conduct and monitor our clinical studies. Under these agreements, subject to the enrollment of patientsand performance by the applicable third-party provider, we have estimated our total payments to be $182.1 million over the term of the studies. For the yearsended December 31, 2017, 2016, and 2015, $35.8 million, $23.1 million, and $19.9 million, respectively, have been expensed in the accompanyingconsolidated statements of operations related to these third-party providers. Through December 31, 2017, we have expensed $130.2 million as research anddevelopment expenses and $124.1 million of this amount has been paid. The timing of expense recognition and future payments related to these agreementsis subject to the enrollment of patients and performance by the applicable third-party provider. In July 2006, we entered into a license agreement and a supply agreement with GlaxoSmithKline (“GSK”) for the use of QS-21 Stimulon (the “GSKLicense Agreement” and the “GSK Supply Agreement”, respectively). In January 2009, we entered into an Amended and Restated ManufacturingTechnology Transfer and Supply Agreement (the “Amended GSK Supply Agreement”) under which GSK has the right to manufacture all of its requirementsof commercial grade QS-21 Stimulon. GSK is obligated to supply us (or our affiliates, licensees, or customers) certain quantities of commercial grade QS-21Stimulon for a stated period of time. In March 2012 we entered into a First Right to Negotiate and Amendment Agreement amending the GSK LicenseAgreement and the Amended GSK Supply Agreement to clarify and include additional rights for the use of QS-21 Stimulon (the “GSK First Right toNegotiate Agreement”). In addition, we granted GSK the first right to negotiate for the purchase of the Company or certain of our assets, which expired inMarch 2017. As consideration for entering into the GSK First Right to Negotiate Agreement, GSK paid us an upfront, non-refundable payment of $9.0million, $2.5 million of which is creditable toward future royalty payments. We sometimes refer to the GSK License Agreement, the Amended GSK SupplyAgreement and the GSK First Right to Negotiate Agreement, the “GSK Agreements”. As of December 31, 2017, we had received all of the potential $24.3million in upfront and milestone payments related to the GSK Agreements. We are generally entitled to receive 2% royalties on net sales of prophylacticvaccines for a period of 10 years after the first commercial sale of a resulting GSK product, with some exceptions. The GSK License and Amended GSKSupply Agreements may be terminated by either party upon a material breach if the breach is not cured within the time specified in the respective agreement.The termination or expiration of the GSK License Agreement does not relieve either party from any obligation which accrued prior to the termination orexpiration. Among other provisions, the license rights granted to GSK survive expiration of the GSK License Agreement. The license rights and paymentobligations of GSK under the Amended GSK Supply Agreement survive termination or expiration, except that GSK's license rights and future royaltyobligations do not survive if we terminate due to GSK's material breach unless we elect otherwise.In January 2018, we entered into a Royalty Purchase Agreement with Healthcare Royalty Partners III, L.P. and certain of its affiliates (together,“HCR”). Pursuant to the terms of the Royalty Purchase Agreement, HCR purchased 100% of our worldwide rights to receive royalties from GSK on sales ofGSK’s vaccines containing our QS-21 Stimulon adjuvant. See Note 22 for additional information.For the year ended December 31, 2017, we recognized revenue of $1.0 million related to payments received under our GSK License and AmendedGSK Supply Agreements. For the years ended December 31, 2016 and 2015, no revenue was recognized under our GSK License and Amended GSK SupplyAgreements. Deferred revenue of $2.5 million related to the GSK Agreements is included in the current portion of deferred revenue on our consolidatedbalance sheet as of December 31, 2017. (13) Collaboration AgreementIncyte CorporationOn January 9, 2015 and effective February 19, 2015, we entered into a global license, development and commercialization agreement (the“Collaboration Agreement”) with Incyte Corporation pursuant to which the parties plan to develop and commercialize novel immuno-therapeutics using ourantibody discovery platforms. The Collaboration Agreement was initially focused on four checkpoint modulator programs directed at GITR, OX40, LAG-3and TIM-3. In addition to the four identified antibody programs, the parties have an option to jointly nominate and pursue the development andcommercialization of antibodies against additional targets during a five year discovery period which, upon mutual agreement of the parties for no additionalconsideration, can be extended for75Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.an additional three years. In November 2015, we and Incyte jointly nominated and agreed to pursue the development and commercialization of threeadditional undisclosed CPM targets. In February 2017, we amended the Collaboration Agreement by entering into a First Amendment to License,Development and Commercialization Agreement (the “Amendment”). See “Amendment” section below.On January 9, 2015, we also entered into the Stock Purchase Agreement with Incyte Corporation whereby, for an aggregate purchase price of $35.0million, Incyte purchased approximately 7.76 million shares of our common stock. See Note 10 for more details.Agreement StructureUnder the terms of the Collaboration Agreement, we received non-creditable, nonrefundable upfront payments totaling $25.0 million. In addition,until the amendment, the parties shared all costs and profits for the GITR, OX40 and two of the additional antibody programs on a 50:50 basis (profit-shareproducts), and we were eligible to receive up to $20.0 million in future contingent development milestones under these programs. Incyte is obligated toreimburse us for all development costs that we incur in connection with the TIM-3, LAG-3 and one of the additional antibody programs (royalty-bearingproducts) and we are eligible to receive (i) up to $155.0 million in future contingent development, regulatory, and commercialization milestone paymentsand (ii) tiered royalties on global net sales at rates generally ranging from 6% to 12%. For each royalty-bearing product, we will also have the right to elect toco-fund 30% of development costs incurred following initiation of pivotal clinical trials in return for an increase in royalty rates. Additionally, we had theoption to retain co-promotion participation rights in the United States on any profit-share product. Through the direction of a joint steering committee, theparties anticipate that, for each program, we will serve as the lead for pre-clinical development activities through IND application filing, and Incyte will serveas the lead for clinical development activities. The parties initiated the first clinical trials of antibodies arising from these programs in 2016. For eachadditional program beyond GITR, OX40, TIM-3 and LAG-3 that the parties elect to bring into the collaboration, we will have the option to designate it as aprofit-share product or a royalty-bearing product.The Collaboration Agreement will continue as long as (i) any product is being developed or commercialized or (ii) the discovery period remains ineffect. After the first anniversary of the effective date of the Collaboration Agreement, Incyte may terminate the Collaboration Agreement or any individualprogram for convenience upon 12 months’ notice. The Collaboration Agreement may also be terminated by either party upon the occurrence of an uncuredmaterial breach of the other party or by us if Incyte challenges patent rights controlled by us. In addition, either party may terminate the CollaborationAgreement as to any program if the other party is acquired and the acquiring party controls a competing program.AmendmentPursuant to the terms of the Amendment, the GITR and OX40 programs immediately converted from profit-share programs to royalty-bearing programsand we became eligible to receive a flat 15% royalty on global net sales should any candidates from either of these two programs be approved. Incyte is nowresponsible for global development and commercialization and all associated costs for these programs. In addition, the profit-share programs relating toTIGIT and one undisclosed target were removed from the collaboration, with the undisclosed target reverting to Incyte and TIGIT to us. Should any of thoseprograms be successfully developed by a party, the other party will be eligible to receive the same milestone payments as the royalty-bearing programs androyalties at a 15% rate on global net sales. The terms for the remaining three royalty-bearing programs targeting TIM-3, LAG-3 and one undisclosed targetremain unchanged, with Incyte being responsible for global development and commercialization and all associated costs. The Amendment gives Incyteexclusive rights and all decision-making authority for manufacturing, development, and commercialization with respect to all royalty-bearing programs.In connection with the Amendment, Incyte paid us $20.0 million in accelerated milestones related to the clinical development of the antibodycandidates targeting GITR and OX40. We are now eligible to receive up to an additional $510.0 million in future potential development, regulatory andcommercial milestones across all programs in the collaboration. We recognized the $20.0 million received as revenue during the year ended December 31,2017.In February 2017, we also entered into a Stock Purchase Agreement with Incyte, pursuant to which Incyte purchased 10 million shares of our commonstock at a purchase price of $6.00 per share. See Note 10 for more details.Collaboration RevenueFor the years ended December 31, 2017, 2016, and 2015 we recognized revenue of approximately $37.3 million, $19.7 million, and $23.5 million,respectively, under the Collaboration Agreement, of which, $2.7 million, $3.5 million, and $9.1 million, respectively, was related to the amortization of the$25.0 million non-creditable, nonrefundable upfront payment. As of December 31, 2017, we had deferred revenue remaining under the CollaborationAgreement of approximately $9.7 million, of which approximately76Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.$2.0 million and $7.7 million are classified as current and long-term, respectively, on our consolidated balance sheet. As of December 31, 2016, we haddeferred revenue remaining under the Collaboration Agreement of approximately $12.4 million, of which approximately $2.6 million and $9.8 million areclassified as current and long-term, respectively, on our consolidated balance sheet. (14) Related Party TransactionsEffective February 12, 2014, in connection with our acquisition of the capital stock of 4-AB and pursuant to the Share Exchange Agreement, ourBoard of Directors elected Shahzad Malik, M.D. as a director. Dr. Malik is a General Partner of Advent Venture Partners LLP (“Advent”). Advent, through itsaffiliated entities, was Agenus Switzerland’s largest shareholder prior to the completion of the acquisition. Upon completion of the acquisition, Advent andits affiliates received 996,088 shares of our common stock, having a value of approximately $3.0 million. In connection with the achievement of the firstmilestone in January 2015 under the Share Exchange Agreement, Advent and its affiliates received consideration of approximately $6.2 million. The abovelisted consideration was received by Advent and its affiliated entities, not Dr. Malik in his individual capacity. In May 2015, we issued and sold shares of ourcommon stock in an underwritten public offering for net proceeds of approximately $75.0 million. Of the 12,650,000 shares of our common stock issued andsold, 1,587,302 of these shares of common stock were issued and sold to Advent. As of June 2017, Dr. Malik is no longer a member of our Board of Directors.Our Audit and Finance Committee approved a charitable contribution to the Children of Armenia Fund (“COAF”) totaling $125,000 for 2017.Dr. Garo H. Armen, our CEO, is the founder and chairman of COAF. The 2017 charitable contribution was comprised of a cash component and a non-cashcomponent. The cash component was $75,000, which we paid in quarterly installments. The non-cash component was $50,000, which was the estimatedvalue of a portion of office space made available to COAF employees.We also consider our transactions with Incyte, as disclosed in Note 13, to be related party transactions. (15) LeasesWe lease manufacturing, research and development, and office facilities under various lease arrangements. Rent expense (before sublease income) was$2.6 million, $3.3 million, and $2.3 million, for the years ended December 31, 2017, 2016, and 2015, respectively.We lease a facility in Lexington, Massachusetts for our manufacturing, research and development, and corporate offices. During December 2012 weentered into a commercial lease for approximately 5,600 square feet of office space in New York, New York for use as corporate offices. Through ouracquisition of Agenus Switzerland, we leased facilities in Basel, Switzerland for manufacturing, research and development and corporate offices. During theyear ended December 31, 2017 we terminated the lease of the facilities in Basel, Switzerland.In December 2015, in connection with the XOMA antibody manufacturing facility asset acquisition, we executed lease agreements in Berkeley,California for manufacturing and corporate offices. In December 2015, we additionally executed a lease for research and development, and corporate officesin Cambridge, United Kingdom.In February 2016, we executed a lease agreement in Charlottesville, Virginia for research and development and corporate offices.The future minimum rental payments under our facility lease agreements, which expire at various times between 2018 and 2025, are as follows (inthousands): Year ending December 31, 2018 $3,179 2019 2,445 2020 2,273 2021 1,902 2022 1,944 Thereafter 2,469 Total $14,212 77Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.In connection with the Lexington facility, we maintain a fully collateralized letter of credit of $1.0 million. No amounts had been drawn on the letterof credit as of December 31, 2017. In addition, for our properties, we are required to have an aggregate deposit of approximately $200,000 with the landlordsas interest-bearing security deposits pursuant to our obligation under the leases.We sublet a portion of our facilities and received rental payments of $562,000, $733,000, and $780,000 for the years ended December 31, 2017, 2016,and 2015, respectively. During 2016, we entered into an agreement which is classified as a capital lease for a piece of laboratory equipment. It is included in our property andequipment as follows (in thousands): 2017 2016 EstimatedDepreciableLivesLaboratory and manufacturing equipment $1,021 $1,021 4 yearsLess accumulated depreciation and amortization (153) (51) Total $868 $970 Under the terms of the capital lease agreement, we will remit payments to the lessor of $288,000 for each of the years 2018 and 2019 and $144,000 forthe year ending December 31, 2020. (16) DebtDebt obligations consisted of the following as of December 31, 2017 and 2016 (in thousands): Debt instrument Principal atDecember 31,2017 Non-cashInterest UnamortizedDebt IssuanceCosts UnamortizedDebt Discount Balance atDecember 31,2017 Current Portion: Debentures $146 $— $— $— $146 Note Purchase Agreement 15,000 5,494 20,494 Total current 15,146 5,494 — — 20,640 Long-term Portion: 2015 Subordinated Notes 14,000 — — (1,375) 12,625 Note Purchase Agreement 100,000 31,323 (1,362) (201) 129,760 Total long-term 114,000 31,323 (1,362) (1,576) 142,385 Total $129,146 $36,816 $(1,362) $(1,576) $163,025 Debt instrument Principal atDecember 31,2016 Non-cashInterest UnamortizedDebt IssuanceCosts UnamortizedDebt Discount Balance atDecember 31,2016 Current Portion: Debentures $146 $— $— $— $146 Long-term Portion: 2015 Subordinated Notes 14,000 — — (1,311) 12,689 Note Purchase Agreement 100,000 19,421 (1,345) (222) 117,853 Total long-term 114,000 19,421 (1,345) (1,533) 130,542 Total $114,146 $19,421 $(1,345) $(1,533) $130,688 Subordinated NotesOn February 20, 2015, we, certain existing investors and certain additional investors entered into an Amended and Restated Note Purchase Agreement,pursuant to which we (i) canceled our senior subordinated promissory notes issued in April 2013 (the “2013 Notes”) in exchange for new senior subordinatedpromissory notes (the “2015 Subordinated Notes”) in the aggregate principal amount of $5.0 million, (ii) issued additional 2015 Subordinated Notes in theaggregate principal amount of $9.0 million and (iii) issued five year warrants (the “2013 Warrants”) to purchase 1,400,000 shares of our common stock at anexercise price of $5.10 per share.The 2015 Subordinated Notes bear interest at a rate of 8% per annum, payable in cash on the first day of each month in arrears. Among other defaultand acceleration terms customary for indebtedness of this type, the 2015 Subordinated Notes include default78Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.provisions which allow for the noteholders to accelerate the principal payment of the 2015 Subordinated Notes in the event we become involved in certainbankruptcy proceedings, become insolvent, fail to make a payment of principal or (after a grace period) interest on the 2015 Subordinated Notes, default onother indebtedness with an aggregate principal balance of $13.5 million or more if such default has the effect of accelerating the maturity of suchindebtedness, or become subject to a legal judgment or similar order for the payment of money in an amount greater than $13.5 million if such amount willnot be covered by third-party insurance. The 2015 Subordinated Notes are not convertible into shares of our common stock and will mature on February 20,2020, at which point we must repay the outstanding balance in cash. The Company may prepay the 2015 Subordinated Notes at any time, in part or in full,without premium or penalty.The exchange of the 2013 Notes for the 2015 Subordinated Notes was accounted for as a debt extinguishment under the guidance of ASC 470 Debt.For the year ended December 31, 2015, we recorded a loss on debt extinguishment of approximately $154,000 in non-operating (expense) income in ourconsolidated statements of operations and comprehensive loss. The debt discount of approximately $3.0 million, which relates to the warrants issued inconnection with the 2015 Subordinated Notes, is being amortized using the effective interest method over three years, the expected life of the 2015Subordinated Notes.The warrants to purchase 500,000 shares of the Company’s common stock issued in connection with the 2013 Notes (the “2013 Warrants”) have anexercise price of $4.41 per share; and are scheduled to expire on April 15, 2019.In March 2017, we and the holders of the 2015 Subordinated Notes entered into an Amendment to Notes and Warrants, pursuant to which we (i)extended the term of the 2013 Warrants by two years from April 15, 2017 to April 15, 2019 and (ii) extended the maturity date of the 2015 Notes by two yearsfrom February 20, 2018 to February 20, 2020. This resulted in an additional debt discount of $0.7 million, which will be amortized using the effectiveinterest method over three years, the expected life of the 2015 Subordinated Notes. The 2013 Warrants and 2015 Notes are otherwise unchanged. TheAmendment to Notes and Warrants was accounted for as a debt modification.Note Purchase Agreement Related to Future RoyaltiesOn September 4, 2015, we and our wholly-owned subsidiaries, Antigenics and Aronex Pharmaceuticals, Inc. (“Aronex”), entered into a NPA withOberland Capital SA Zermatt LLC, as collateral agent (“Oberland”), an affiliate of Oberland as the lead purchaser and other purchasers. Pursuant to the termsof the NPA, on September 8, 2015 (the “Closing Date”), Antigenics issued $100.0 million aggregate principal amount of limited recourse notes (the “Notes”)to the purchasers. Antigenics has the option to issue an additional $15.0 million aggregate principal amount of Notes (the “Additional Notes”) to thepurchasers within 15 days after approval of GSK’s shingles vaccine, HZ/su, by the U.S. Food and Drug Administration (the “FDA”), provided such approvaloccurs on or before June 30, 2018. On November 2, 2017, following the October 20, 2017 approval of GSK’s shingles vaccine by the FDA, we exercised ouroption to issue the Additional Notes. On December 31, 2017 the outstanding aggregate principal amount of the Notes was $115.0 million.The Notes accrue interest at a rate of 13.5% per annum, compounded quarterly, from and after the Closing Date computed on the basis of a 360-dayyear and the actual number of days elapsed. Principal and interest payments are due on each of March 15, June 15, September 15 and December 15, and shallbe made solely from the royalties paid from GSK to Antigenics on sales of GSK’s shingles and malaria vaccines. The Notes are limited recourse and securedsolely by a first priority security interest in the royalties and accounts and payment intangibles relating thereto plus various rights of Antigenics related to theroyalties under its contracts with GSK (the “Collateral”). GSK will send all royalty payments to a segregated bank account, and to the extent there areinsufficient royalties deposited into the account to fund a quarterly interest payment, the interest will be capitalized and added to the aggregate principalbalance of the loan. As of December 31, 2017 we have capitalized interest of $36.8 million. The final legal maturity date of the Notes is the earlier of (i) the10th anniversary of the first commercial sale of GSK’s shingles or malaria vaccines and (ii) September 8, 2030 (the “Maturity Date”). Antigenics’ obligationto repay all principal and accrued and unpaid interest by the Maturity Date is secured only by the Collateral.At our option, we may redeem all, but not less than all, of the Notes at any time prior to the Maturity Date. The redemption price is equal to theoutstanding principal amount of the Notes, plus all accrued and unpaid interest thereon, plus a premium payment that would yield an aggregate internal rateof return (“IRR”) for the purchasers as follows: (i) an IRR of 20% if the redemption occurs within 24 months of the Closing Date, (ii) an IRR of 17.5% if theredemption occurs after 24 months but within 48 months of the Closing Date, and (iii) an IRR of 15% if the redemption occurs more than 48 months after theClosing Date (the “Redemption Payment”).On September 8, 2018, each purchaser has the option to require Antigenics to repurchase up to 15% of the Notes issued to such purchaser on theClosing Date (the “Put Notes”) at a purchase price equal to the principal amount thereof plus accrued and unpaid interest thereon (the “Put Payment”).Antigenics is required to complete any such repurchase within 90 days after September 8, 2018. Accordingly, the portion of the principal and interestattributable to the Put Notes is classified as short-term debt.79Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.On the earlier of (i) September 8, 2027 and (ii) the Maturity Date, Antigenics is required to pay the purchasers an amount equal to the following (the“Make-Whole Payment”): $100.0 million (or $115.0 million if the Additional Notes are sold) minus the aggregate amount of all payments made in respect ofthe Notes (regardless of whether characterized as principal or interest at the time of payment), including the original principal amount of any repaid PutNotes.The NPA specifies a number of events of default (some of which are subject to applicable cure periods), including (i) failure to cause royalty paymentsto be deposited into the segregated bank account, (ii) payment defaults, (iii) breaches of representations and warranties made at the time the Notes wereissued, (iv) covenant defaults, (v) a final and unappealable judgment against Antigenics for the payment of money in excess of $1.0 million, (vi) bankruptcyor insolvency defaults, (vii) the failure to maintain a first-priority perfected security interest in the Collateral in favor of the collateral agent and (viii) theoccurrence of a change of control of Agenus. Upon the occurrence of an event of default, subject to cure periods in certain circumstance and some limitedexceptions, Oberland may declare the Notes immediately due and payable, in which case Antigenics would owe a payment equal to the Redemption Payment(the “Accelerated Default Payment”). Upon the occurrence and during the continuance of any event of default, interest on the Notes also increases by 2.5%per annum.Agenus and Aronex (together, the “Guarantors”), are parties to the NPA as guarantors of certain of Antigenics’ obligations under the NPA. TheGuarantors generally guarantee the Put Payment, the Make-Whole Payment, the Redemption Payment and the Accelerated Default Payment.In accordance with the guidance of ASC 470 Debt, we determined the NPA represents a debt transaction and does not purport to be a sale; the balanceof the outstanding notes and interest will be repaid over the estimated term of the NPA.We will periodically assess the expected royalties using a combination of historical results, internal projections and forecasts from external sources. Tothe extent such payments are greater or less than our initial estimates or the timing of such payments is materially different than our original estimates, wewill prospectively adjust the estimated time period over which the debt and interest will be repaid. There are a number of factors that could materially affectthe amount and timing of royalty payments from GSK, all of which are not within our control. Such factors include, but are not limited to, changing standardsof care, the introduction of competing products, manufacturing or other delays, biosimilar competition, patent protection, adverse events that result ingovernmental health authority imposed restrictions on the use of the drug products, significant changes in foreign exchange rates, and other events orcircumstances that could result in reduced royalty payments from GSK, all of which would result in a reduction of royalty revenues and the interest expenseover the life of the NPA.As royalties are remitted to the purchasers, we will record non-cash royalty revenues and non-cash interest expense within our consolidated statementsof operations and comprehensive loss over the term of the NPA as interest accrues and royalties are generated. We have not recognized any royalty revenue todate and recorded $17.4 million and $15.1 million in non-cash interest expense for the years ended December 31, 2017 and 2016, respectively, within ourconsolidated statement of operations and comprehensive loss.In connection with the execution of the NPA, we reimbursed the purchasers for legal fees of $250,000 and incurred debt issuance costs ofapproximately $1.5 million. Under the relevant accounting guidance, legal fees and debt issuance costs have been recorded as a reduction to the grossproceeds. These amounts are being amortized over 12 years, the expected term of the Notes, using the effective interest rate method. In connection with theissuance of the Additional Notes, we incurred debt issuance cost of approximately $150,000. As with the costs incurred in connection with the execution ofthe NPA, these additional debt issuance costs have been recorded as a reduction to the gross proceeds and are being amortized over the remaining expectedterm of the Notes using the effective interest rate method.In January 2018, we entered into a Royalty Purchase Agreement with HCR. We used a portion of the upfront proceeds from HCR to redeem all of thenotes issued pursuant to the NPA. See Note 22 for additional information.OtherIn June 2016, we executed a capital lease agreement that expires in June 2020 for equipment with a carrying value of approximately $1.0 million,which is included in property, plant and equipment, net on our consolidated balance sheets as of December 31, 2017. As of December 31, 2017, ourremaining obligations under the capital lease agreement are approximately $623,000, of which $289,000 and $334,000 are classified as other current andother long-term liabilities, respectively, on our condensed consolidated balance sheets.At December 31, 2017, approximately $146,000 of debentures we assumed in our merger with Aquila Biopharmaceuticals are outstanding. Thesedebentures carry interest at 7% and are callable by the holders. Accordingly, they are classified as short-term debt.80Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Revenue Interest Assignment TerminationOn April 15, 2013, we and Antigenics entered into a Revenue Interests Assignment Agreement (the “Original Agreement”) with Ingalls & SnyderValue Partners, L.P. and Arthur Koenig (together, “Ingalls”), pursuant to which we and Antigenics sold to Ingalls 20% of all the royalties Antigenics wasentitled to receive from GSK and Janssen Sciences Ireland Uc on products associated with Agenus’s QS-21 Stimulon (collectively, the “Assigned Interests”).On September 4, 2015, we and Antigenics entered into a Revenue Interest Assignment and Termination Agreement (the “Assignment and TerminationAgreement”) with Ingalls, pursuant to which we terminated the Original Agreement and repurchased the Assigned Interests in exchange for (i) $20.0 millionin cash and (ii) 300,000 shares of Agenus common stock for total consideration of approximately $22.1 million. The closing under the Assignment andTermination Agreement took place on September 8, 2015 immediately prior to the closing under the NPA. Effective September 8, 2015, we have no furtherobligations under the Original Agreement.During the year ended December 31, 2015, we recorded a fair value adjustment of approximately $6.9 million recorded within non-operating(expense) income in our consolidated statement of operations and comprehensive loss. (17) Fair Value MeasurementsWe measure our cash equivalents and short-term investments and contingent purchase price considerations at fair value. For the year ended December31, 2016, our cash equivalents and short-term investments were comprised solely of U.S. Treasury Bills that were valued using quoted market prices with novaluation adjustments applied. Accordingly, these securities were categorized as Level 1 assets.81Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.We measure our contingent purchase price consideration at fair value. The fair values of our Agenus Switzerland and PhosImmune contingentpurchase price consideration, $2.7 million and $1.7 million, respectively, are based on significant inputs not observable in the market, which require them tobe reported as Level 3 liabilities within the fair value hierarchy. The valuation of the liabilities uses assumptions we believe would be made by a marketparticipant. The fair value of our Agenus Switzerland and PhosImmune contingent purchase price consideration is based on estimates from a Monte Carlosimulation of our market capitalization and share price, respectively, and other factors impacting the probability of triggering the milestone payments.Market capitalization and share price were evolved using a geometric brownian motion, calculated daily for the life of the contingent purchase priceconsideration.Assets and liabilities measured at fair value are summarized below (in thousands): Description December 31,2017 Quoted Prices inActiveMarkets forIdentical Assets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) Assets: Cash equivalents $— $— $— $— Short-term investments — — — — Total $— $— $— $— Liabilities: Contingent purchase price consideration 4,373 — — 4,373 Total $4,373 $— $— $4,373 Description December 31,2016 Quoted Prices inActiveMarkets forIdentical Assets(Level 1) SignificantOtherObservableInputs(Level 2) SignificantUnobservableInputs(Level 3) Assets: Cash equivalents $9,990 $9,990 Short-term investments 4,988 4,988 — — Total $14,978 $14,978 $— $— Liabilities: Contingent purchase price consideration 7,561 — — 7,561 Total $7,561 $— $— $7,561 The following table presents our liabilities measured at fair value using significant unobservable inputs (Level 3), as of December 31, 2017 (amountsin thousands): Balance, December 31, 2016 $7,561 Change in fair value of contingent purchase price consideration during the period (3,188)Balance, December 31, 2017 $4,373 There were no changes in the valuation techniques during the period and there were no transfers into or out of Levels 1 and 2.The fair value of our outstanding debt balance at December 31, 2017 and 2016 was $205.9 million and $129.2 million, respectively, based on theLevel 2 valuation hierarchy of the fair value measurements standard using a present value methodology which was derived by evaluating the nature andterms of each note and considering the prevailing economic and market conditions at the balance sheet date. The principal amount of our outstanding debtbalance at December 31, 2017 and 2016 was $129.1 million and $114.1, respectively. (18) ContingenciesWe may currently be, or may become, a party to legal proceedings. While we currently believe that the ultimate outcome of any of these proceedingswill not have a material adverse effect on our financial position, results of operations, or liquidity, litigation is subject to inherent uncertainty. Furthermore,litigation consumes both cash and management attention.82Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. (19) Benefit PlansWe sponsor a defined contribution 401(k) Savings Plan in the US and, beginning in 2016, a defined contribution Group Personal Pension Plan in theUK (the “Plans”) for all eligible employees, as defined in the Plans. Participants may contribute a portion of their compensation, subject to a maximumannual amount, as established by the applicable taxing authority. Each participant is fully vested in his or her contributions and related earnings and losses.During the years ended December 31, 2017, 2016, and 2015 we made discretionary contributions to the Plans of $487,000, $334,000, and $307,000,respectively. For the years ended December 31, 2017, 2016, and 2015, we expensed $487,000, $334,000, and $307,000, respectively, related to thediscretionary contribution to the Plans.We also participated in a multiple employer benefit plan that covers certain international employees. During the year ended December 31, 2017, inconnection with the closure of our facility in Basel, Switzerland, we ended our participation in the plan. When an employee terminates employment prior toretirement, the amounts invested in the plan are withdrawn and invested in the plan of the employee’s new employer.The annual measurement date for our multiple employer benefit plan is December 31. Benefits are based upon years of service and compensation. Weare required to recognize the funded status (the difference between the fair value of plan assets and the projected benefit obligations) of our multipleemployer plan in our consolidated balance sheets which, for the years ended December 31, 2017, and 2016 amounted to a liability of approximately nil and$1.2 million, respectively, with a corresponding adjustment to accumulated other comprehensive loss of $25,000 and $154,000 for the years ended December31, 2017 and 2016, respectively. During the years ended December 31, 2017, and 2016, we contributed approximately $127,000 and $153,000, respectively,to our multiple employer benefit plan. In connection with the termination of our multiple employer benefit plan we recognized a settlement gain ofapproximately $1.5 million within operating expense for the year ended December 31, 2017. No future contributions are expected. As of December 31, 2017,our participation in the multiple employer benefit plan has ended, as such no future benefits are expected to be paid under the plan. (20) Geographic InformationThe following is geographical information regarding our revenues for the years ended December 31, 2017, 2016 and 2015 and our long-lived assets asof December 31, 2017 and 2016 (in thousands): 2017 2016 2015 Revenue: United States $38,883 $20,332 $23,668 Europe 3,994 2,242 1,149 $42,877 $22,573 $24,817 Revenue by geographic region is allocated based on the domicile of our respective business operations. 2017 2016 Long-lived Assets: United States $22,993 $22,360 Europe 4,400 4,557 Total $27,393 $26,917 Long-lived assets include “Property, plant and equipment, net” and “Other long-term assets” from the consolidated balance sheets, by the geographiclocation where the asset resides. 83Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.(21) Quarterly Financial Data (Unaudited) Quarter Ended March 31, June 30, September 30, December 31, 2017 Revenue $26,956 $4,208 $3,359 $8,354 Net loss (17,103) (31,713) (36,842) (35,035)Net loss attributable to common shareholders (17,154) (31,764) (36,893) (35,087)Per common share, basic and diluted: Basic and diluted net loss attributable to common stockholders (0.18) (0.32) (0.37) (0.35)2016 Revenue $5,959 $6,592 $4,446 $5,576 Net loss (31,779) (28,320) (40,774) (26,122)Net loss attributable to common shareholders (31,829) (28,371) (40,825) (26,174)Per common share, basic and diluted: Basic and diluted net loss attributable to common stockholders (0.37) (0.33) (0.47) (0.30) Net loss attributable to common stockholders per share is calculated independently for each of the quarters presented. Therefore, the sum of thequarterly net loss per share amounts will not necessarily equal the total for the full fiscal year. (22) Subsequent Events Royalty Purchase AgreementOn January 6, 2018, we, through our wholly-owned subsidiary, Antigenics, entered into a Royalty Purchase Agreement (the “Royalty PurchaseAgreement”) with HCR. The closing under the Royalty Purchase Agreement occurred on January 19, 2018 (the “Closing”). Pursuant to the terms of theRoyalty Purchase Agreement, HCR purchased 100% of Antigenics’ worldwide rights to receive royalties from GSK on sales of GSK’s vaccines containing ourQS-21 Stimulon® adjuvant. As consideration for the purchase of the royalty rights, HCR paid $190.0 million at Closing, less certain transaction expenses.Antigenics is also entitled to receive up to $40.35 million in milestone payments based on sales of GSK’s vaccines as follows: (i) $15.1 million uponreaching $2.0 billion last-twelve-months net sales any time prior to 2024 and (ii) $25.25 million upon reaching $2.75 billion last-twelve-months net salesany time prior to 2026. Antigenics would owe approximately $25.9 million to HCR in 2021 (the “Rebate Payment”) if neither of the following salesmilestones are achieved: (i) 2019 sales of the GSK vaccines exceed $1.0 billion or (ii) 2020 sales of the GSK vaccines exceed $1.75 billion. As part of thetransaction, we provided a guaranty for the potential Rebate Payment and secured the obligation with substantially all of our assets pursuant to a securityagreement, subject to certain customary exceptions and excluding all assets necessary for AgenTus Therapeutics, Inc. At the Closing, approximately $161.9 million of the proceeds were used to redeem Antigenics’ $115.0 million principal amount of notes issuedpursuant to the Note Purchase Agreement dated September 4, 2015 with Oberland Capital SA Zermatt LLC and the purchasers named therein (the “NotePurchase Agreement”), as well as the associated accrued and unpaid interest, and the Note Purchase Agreement and the notes issued thereunder have beenredeemed in full and terminated. The Royalty Purchase Agreement contains certain representations and warranties regarding Antigenics’ rights and obligations with respect to GSK andthe commercialization of GSK’s vaccines, as well as customary representations and warranties regarding Antigenics generally. The Royalty PurchaseAgreement also contains certain covenants around Antigenics’ rights and obligations with respect to GSK and the commercialization of GSK’s vaccines, aswell as customary covenants, including covenants that limit or restrict Antigenics’ ability to incur indebtedness or liens or otherwise merge, consolidate oracquire assets or securities. This transaction will be reflected as a liability in the consolidated financial statements. At the Market OfferingsIn January 2018, we received net proceeds of approximately $2.5 million from the sale of approximately 635,000 shares of our common stock in at-the-market offerings under our Controlled Equity OfferingSM sales agreement with Cantor Fitzgerald & Co. 84Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Item 9.Changes in and Disagreements With Accountants on Accounting and Financial DisclosureNot applicable. Item 9A.Controls and ProceduresConclusion Regarding the Effectiveness of Disclosure Controls and ProceduresUnder the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer, weconducted an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under theExchange Act. Based on this evaluation, our Chief Executive Officer and our Principal Financial Officer concluded that our disclosure controls andprocedures were functioning effectively as of the end of the period covered by this Annual Report on Form 10-K to provide reasonable assurance that theCompany can meet its disclosure obligations.Management’s Annual Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined inExchange Act Rule 13a-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and PrincipalFinancial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under theframework, our management concluded that our internal control over financial reporting was effective as of December 31, 2017.KPMG LLP, our independent registered public accounting firm, has issued their report, included herein, on the effectiveness of our internal controlover financial reporting.Changes in Internal Control Over Financial ReportingThere was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) thatoccurred during the fourth quarter 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financialreporting. 85Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Report of Independent Registered Public Accounting Firm To the Stockholders and Board of DirectorsAgenus Inc.:Opinion on Internal Control Over Financial ReportingWe have audited Agenus Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 31, 2017, based on criteria establishedin Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, theCompany maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established inInternal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidatedbalance sheets of the Company as of December 31, 2017 and 2016, the related consolidated statements of operations and comprehensive loss, stockholders’(deficit) equity, and cash flows for each of the years in the three-year period ended December 31, 2017, and the related notes (collectively, the consolidatedfinancial statements), and our report dated March 16, 2018 expressed an unqualified opinion on those consolidated financial statements. Our report containsan explanatory paragraph that states that the Company has suffered recurring losses from operations and has a net capital deficiency, that raise substantialdoubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from theoutcome of that uncertainty.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Ourresponsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and theapplicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financialreporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing andevaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures aswe considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ KPMG LLPBoston, MassachusettsMarch 16, 2018 86Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Item 9B.Other InformationNone. 87Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.PART III Item 10.Directors, Executive Officers and Corporate GovernanceInformation regarding our executive officers is incorporated herein by reference to the information contained in Part I of this Annual Report on Form10-K under the heading “Executive Officers of the Registrant.” The balance of the information required by this Item is incorporated herein by reference to theinformation that will be contained in our proxy statement related to the 2018 Annual Meeting of Stockholders, which we intend to file with the Securitiesand Exchange Commission within 120 days of the end of our fiscal year pursuant to General Instruction G(3) of Form 10-K.Item 11.Executive CompensationThe information required by this Item is incorporated herein by reference to the information that will be contained in our proxy statement related tothe 2018 Annual Meeting of Stockholders, which we intend to file with the Securities and Exchange Commission within 120 days of the end of our fiscalyear pursuant to General Instruction G(3) of Form 10-K.Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by this Item is incorporated herein by reference to the information that will be contained in our proxy statement related tothe 2018 Annual Meeting of Stockholders, which we intend to file with the Securities and Exchange Commission within 120 days of the end of our fiscalyear pursuant to General Instruction G(3) of Form 10-K.Item 13.Certain Relationships and Related Transactions, and Director IndependenceThe information required by this Item is incorporated herein by reference to the information that will be contained in our proxy statement related tothe 2018 Annual Meeting of Stockholders, which we intend to file with the Securities and Exchange Commission within 120 days of the end of our fiscalyear pursuant to General Instruction G(3) of Form 10-K.Item 14.Principal Accounting Fees and ServicesThe information required by this Item is incorporated herein by reference to the information that will be contained in our proxy statement related tothe 2018 Annual Meeting of Stockholders, which we intend to file with the Securities and Exchange Commission within 120 days of the end of our fiscalyear pursuant to General Instruction G(3) of Form 10-K. 88Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.PART IV Item 15.Exhibits and Financial Statement Schedules(a) 1. Consolidated Financial StatementsThe consolidated financial statements are listed under Item 8 of this Annual Report on Form 10-K.2. Financial Statement SchedulesThe financial statement schedules required under this Item and Item 8 are omitted because they are not applicable, or the required information isshown in the consolidated financial statements or the footnotes thereto.3. ExhibitsThe exhibits are listed below under Part IV Item 15(b).(b) Exhibits Exhibit No. Description 3.1 Amended and Restated Certificate of Incorporation of Antigenics Inc. Filed as Exhibit 3.1 to our Current Report on Form 8-K (File No. 0-29089) filed on June 10, 2002 and incorporated herein by reference. 3.1.1 Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Antigenics Inc. Filed as Exhibit 3.1 to our CurrentReport on Form 8-K (File No. 0-29089) filed on June 11, 2007 and incorporated herein by reference. 3.1.2 Certificate of Ownership and Merger changing the name of the corporation to Agenus Inc. Filed as Exhibit 3.1 to our Current Report onForm 8-K (File No. 0-29089) filed on January 6, 2011 and incorporated herein by reference. 3.1.3 Certificate of Second Amendment to the Amended and Restated Certificate of Incorporation of Agenus Inc. Filed as Exhibit 3.1 to ourCurrent Report on Form 8-K (File No. 0-29089) filed on September 30, 2011 and incorporated herein by reference. 3.1.4 Certificate of Third Amendment to the Amended and Restated Certificate of Incorporation of Agenus Inc. Filed as Exhibit 3.1.4 to ourQuarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended June 30, 2012 and incorporated herein by reference. 3.1.5 Certificate of Fourth Amendment to the Amended and Restated Certificate of Incorporation of Agenus Inc. Filed as Exhibit 3.1 to ourCurrent Report on Form 8-K (File No. 0-29089) filed on April 25, 2014 and incorporated herein by reference. 3.1.6 Certificate of Fifth Amendment to the Amended and Restated Certificate of Incorporation of Agenus Inc. Filed as Exhibit 3.1 to ourCurrent Report on Form 8-K (File No. 0-29089) filed on June 16, 2016 and incorporated herein by reference. 3.3 Certificate of Designation, Preferences and Rights of the Series A Convertible Preferred Stock of Agenus Inc. filed with the Secretary ofState of the State of Delaware on September 24, 2003. Filed as Exhibit 3.1 to our Current Report on Form 8-K (File No. 0-29089) filed onSeptember 25, 2003 and incorporated herein by reference. 3.4 Certificate of Designations, Preferences and Rights of the Class B Convertible Preferred Stock of Agenus Inc. Filed as Exhibit 3.1 to ourCurrent Report on Form 8-K (File No. 0-29089) filed on September 5, 2007 and incorporated herein by reference. 3.5 Certificate of Designations, Preferences and Rights of the Series A-1 Convertible Preferred Stock of Agenus Inc. Filed as Exhibit 3.1 to ourCurrent Report on Form 8-K (File No. 0-29089) filed on February 5. 2013 and incorporated herein by reference. 4.1 Form of Common Stock Certificate. Filed as Exhibit 4.1 to our Current Report on Form 8-K (File No. 0-29089) filed on January 6, 2011and incorporated herein by reference. 4.2 Form of Amended and Restated Note under the Securities Purchase Agreement dated as of October 30, 2006 (as amended), by and amongAgenus Inc., a Delaware corporation and the investors listed on the Schedule of Buyers thereto. Filed as Exhibit 4.4 to our Annual Reporton Form 10-K (File No. 0-29089) for the year ended December 31, 2010 and incorporated herein by reference.89Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit No. Description 4.3 Form of Warrant under the Securities Purchase Agreement dated January 9, 2008. Filed as Exhibit 4.1 to our Current Report on Form 8-K(File No. 0-29089) filed on January 11, 2008 and incorporated herein by reference. 4.4 Purchase Agreement dated August 31, 2007 by and between Agenus Inc. and Fletcher International. Filed as Exhibit 99.1 to our CurrentReport on Form 8-K (File No. 0-29089) filed on September 5, 2007 and incorporated herein by reference. 4.5 Securities Purchase Agreement dated April 8, 2008. Filed as Exhibit 10.1 to our Current Report on Form 8-K (File No. 0-29089) filed onApril 10, 2008 and incorporated herein by reference. 4.6 Form of Warrant to purchase common stock dated April 9, 2008. Filed as Exhibit 4.1 to our Current Report on Form 8-K (File No. 0-29089)filed on April 10, 2008 and incorporated herein by reference. 4.7 Securities Purchase Agreement by and between Agenus Inc. and the investors identified on Schedule I attached to the agreement, datedJanuary 9, 2008. Filed as Exhibit 10.1 to our Current Report on Form 8-K (File No. 0-29089) filed on January 11, 2008 and incorporatedherein by reference. 4.8 Form of 4 Year Warrant under the Securities Purchase Agreement dated July 30, 2009. Filed as Exhibit 4.2 to our Current Report on Form8-K (File No. 0-29089) filed on August 3, 2009 and incorporated herein by reference. 4.9 Form of 4 Year Warrant under the Securities Purchase Agreement dated August 3, 2009. Filed as Exhibit 4.2 to our Current Report on Form8-K (File No. 0-29089) filed on August 5, 2009 and incorporated herein by reference. 4.10 Securities Purchase Agreement dated as of July 30, 2009 by and among Agenus Inc. and the investors listed on the Schedule of Buyersthereto. Filed as Exhibit 10.1 to our Current Report on Form 8-K (File No. 0-29089) filed on August 3, 2009 and incorporated herein byreference. 4.11 Securities Exchange Agreement dated as of February 4, 2013 by and between Agenus Inc., and Mr. Brad Kelley. Filed as Exhibit 10.1 toour Current Report on Form 8-K (File No. 0-29089) filed on February 5, 2013 and incorporated herein by reference. 4.12 Note Purchase Agreement dated as of April 15, 2013 by and between Agenus Inc., and the Purchasers listed on Schedule 1.1 thereto. Filedas Exhibit 4.1 to our Quarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended March 31, 2013 and incorporated herein byreference. 4.13 Form of Senior Subordinated Note under the Note Purchase Agreement dated as of April 15, 2013 by and between Agenus Inc., and thePurchasers listed on Schedule 1.1 thereto. Filed as Exhibit 4.2 to our Quarterly Report on Form 10-Q (File No. 0-29089) for the quarterended March 31, 2013 and incorporated herein by reference. 4.14 Form of Warrant under the Note Purchase Agreement dated as of April 15, 2013 by and between Agenus Inc., and the Purchasers listed onSchedule 1.1 thereto. Filed as Exhibit 4.3 to our Quarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended March 31, 2013and incorporated herein by reference. 4.15 Securities Purchase Agreement, dated September 18, 2013, as amended, by and between Agenus Inc. and the investors party thereto. Filedas Exhibit 10.1 to our Current Report on Form 8-K (File No. 0-29089) filed on September 19, 2013 and incorporated herein by reference. 4.16 Form of Warrant under the Securities Purchase Agreement, dated September 18, 2013, as amended, by and between Agenus Inc. and theinvestors party thereto. Filed as Exhibit 4.1 to our Current Report on Form 8-K (File No. 0-29089) filed on September 19, 2013 andincorporated herein by reference. 4.17 Share Exchange Agreement, dated January 10, 2014, by and among Agenus Inc., 4-Antibody AG, certain shareholders of 4-Antibody AGand Vischer AG. Filed as Exhibit 2.1 to our Current Report on Form 8-K (File No. 0-29089) filed on January 13, 2014 and incorporatedherein by reference. 4.18 Securities Purchase Agreement dated as of August 3, 2009 by and among Agenus Inc. and the investors listed on the Schedule of Buyersthereto. Filed as Exhibit 10.1 to our Current Report on Form 8-K (File No. 0-29089) filed on August 5, 2009 and incorporated herein byreference. 4.19 Stock Purchase Agreement dated as of January 9, 2015, by and between Agenus Inc. and Incyte Corporation. Filed as Exhibit 4.21 to ourAnnual Report on Form 10-K (File No. 0-29089) for the year ended December 31, 2014 and incorporated herein by reference. 90Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit No. Description 4.20(1) Amended and Restated Note Purchase Agreement dated as of February 20, 2015, as amended, by and between Agenus Inc. andthe Purchasers listed on Schedule 1.1 thereto. Filed as Exhibit 4.2 to our Quarterly Report on Form 10-Q (File No. 0-29089) for thequarter ended March 31, 2015 and incorporated herein by reference. 4.21 Form of Senior Subordinated Note under the Amended and Restated Note Purchase Agreement dated as of February 20, 2015,as amended, by and between Agenus Inc. and the Purchasers listed on Schedule 1.1 thereto. Filed as Exhibit 4.3 to our QuarterlyReport on Form 10-Q (File No. 0-29089) for the quarter ended March 31, 2015 and incorporated herein by reference. 4.22 Form of Warrant under the Amended and Restated Note Purchase Agreement dated as of February 20, 2015, as amended, byand between Agenus Inc. and the Purchasers listed on Schedule 1.1 thereto. Filed as Exhibit 4.4 to our Quarterly Report on Form10-Q (File No. 0-29089) for the quarter ended March 31, 2015 and incorporated herein by reference. 4.23 Amendment to Notes and Warrants dated as of March 15, 2017 by and among Agenus Inc. and the Investors listed therein. Filed asExhibit 4.27 to our Annual Report on Form 10-K (File No. 0-29089) for the year ended December 31, 2016 and incorporated herein byreference. 4.24(1) Note Purchase Agreement, by and among Antigenics LLC, the guarantors named therein, Oberland Capital SA Zermatt LLC, as collateralagent (“Oberland”), an affiliate of Oberland as the lead purchaser and the other purchasers, dated September 4, 2015. Filed as Exhibit 4.1to our Current Report on Form 8-K/A (File No. 0-29089) filed on September 11, 2015 and incorporated herein by reference. 4.25 Form of Limited Recourse Note under the Note Purchase Agreement, by and among Antigenics LLC, the guarantors named therein,Oberland Capital SA Zermatt LLC, as collateral agent (“Oberland”), an affiliate of Oberland as the lead purchaser and the other purchasers,dated September 4, 2015. Filed as Exhibit 4.2 to our Current Report on Form 8-K/A (File No. 0-29089) filed on September 11, 2015 andincorporated herein by reference. 4.26 Revenue Interest Assignment and Termination Agreement, by and among Agenus Inc., Antigenics LLC, Ingalls & Snyder Value Partners,L.P. and Arthur Koenig, dated September 4, 2015. Filed as Exhibit 4.3 to our Current Report on Form 8-K/A (File No. 0-29089) filed onSeptember 11, 2015 and incorporated herein by reference. 4.27 Stock Purchase Agreement dated as of February 14, 2017, by and between Agenus Inc. and Incyte Corporation. Filed as Exhibit 4.1 to ourQuarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended March 31, 2017 and incorporated herein by reference. 4.28 Form of Indenture. Filed as Exhibit 4.1 to our Registration Statement on Form S-3 (File No. 333-221008) and incorporated herein byreference. Employment Agreements and Compensation Plans 10.1* 1999 Equity Incentive Plan, as amended. Filed as Exhibit 10.1 to our Annual Report on Form10-K (File No. 0-29089) for the year ended December 31, 2008 and incorporated herein by reference. 10.1.1* Form of Non-Statutory Stock Option. Filed as Exhibit 10.1 to our Current Report on Form 8-K (File No. 0-29089) filed on December 15,2004 and incorporated herein by reference. 10.1.2* Form of 2007 Restricted Stock Award Agreement. Filed as Exhibit 10.1.5 to our Annual Report on Form 10-K (File No. 0-29089) for theyear ended December 31, 2007 and incorporated herein by reference. 10.1.3* Form of 2008 Restricted Stock Award Agreement. Filed as Exhibit 10.1 to our Current Report on Form 8-K (File No. 0-29089) filed onMarch 11, 2008 and incorporated herein by reference. 10.1.4* Sixth Amendment to the Agenus Inc. 1999 Equity Incentive Plan. Filed as Appendix D to our Definitive Proxy Statement on Schedule 14Afiled on April 27, 2009 and incorporated herein by reference. 10.2* Agenus Inc. Amended and Restated 2009 Equity Incentive Plan. Filed as Exhibit 10.1 to our Current Report on Form 8-K (File No. 0-29089) filed on June 16, 2016 and incorporated herein by reference. 10.2.1* Form of Restricted Stock Award Agreement for the Agenus Inc. Amended and Restated 2009 Equity Incentive Plan. Filed as Exhibit 10.2to our Current Report on Form 8-K (File No. 0-29089) filed on June 15, 2009 and incorporated herein by reference. 91Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit No. Description 10.2.2* Form of Stock Option Agreement for the Agenus Inc. Amended and Restated 2009 Equity Incentive Plan. Filed asExhibit 10.3 to our Current Report on Form 8-K (File No. 0-29089) filed on June 15, 2009 and incorporated herein by reference. 10.3* Agenus Inc. 2009 Employee Stock Purchase Plan. Filed as Appendix B to our Definitive Proxy Statement on Schedule 14A filed on April27, 2009 and incorporated herein by reference. 10.4 Agenus Inc. Directors' Deferred Compensation Plan, as amended to date. Filed as Exhibit 10.4 to our Annual Report on Form 10-K (FileNo. 0-29089) for the year ended December 31, 2012 and incorporated herein by reference. 10.4.1 Seventh Amendment to Agenus Directors' Deferred Compensation Plan. Filed as Appendix C to our Definitive Proxy Statementon Schedule 14A filed on April 30, 2015 and incorporated herein by reference. 10.5* Amended and Restated Executive Change-in-Control Plan applicable to Christine M. Klaskin. Filed as Exhibit 10.1 to our Current Reporton Form 8-K (File No. 0-29089) filed on November 3, 2010 and incorporated herein by reference. 10.5.1* Modification of Rights in the Event of a Change of Control, dated as of June 14, 2012, by and between Agenus Inc. and ChristineKlaskin. Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended June 30, 2012 andincorporated herein by reference. 10.6* 2004 Executive Incentive Plan, as amended. Filed as Exhibit 10.1 to our Current Report on Form 8-K (File No. 0-29089) filed on January27, 2011 and incorporated herein by reference. 10.6.1 Agenus Inc. 2016 Executive Incentive Plan. Filed as Exhibit 10.2 to our Current Report on Form 8-K (File No. 0-29089) filed on June 16,2016 and incorporated herein by reference. 10.8* Employment Agreement dated December 1, 2005 between Agenus Inc. and Garo Armen. Filed as Exhibit 10.1 to our Current Report onForm 8-K (File No. 0-29089) filed on December 7, 2005 and incorporated herein by reference. 10.8.1* First Amendment to Employment Agreement dated July 2, 2009 between Agenus Inc. and Garo Armen. Filed as Exhibit 10.1 to ourQuarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended September 30, 2009 and incorporated herein by reference. 10.8.2* Second Amendment to Employment Agreement dated December 15, 2010 between Agenus Inc. and Garo Armen. Filed as Exhibit 10.12.2to our Annual Report on Form 10-K (File No. 0-29089) for the year ended December 31, 2010 and incorporated herein by reference. 10.9* Employment Agreement dated September 16, 2008 between Agenus Inc. and Karen Valentine. Filed as Exhibit 10.1 to our Current Reporton Form 8-K (File No. 0-29089) filed on September 19, 2008 and incorporated herein by reference. 10.9.1* First Amendment to Employment Agreement dated July 2, 2009 between Agenus Inc. and Karen Valentine. Filed as Exhibit 10.3 to ourQuarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended September 30, 2009 and incorporated herein by reference. 10.9.2* Second Amendment to Employment Agreement dated December 15, 2010 between Agenus Inc. and Karen Valentine. Filed as Exhibit10.20.2 to our Annual Report on Form 10-K (File No. 0-29089) for the year ended December 31, 2010 and incorporated herein byreference. 10.10* Agenus Inc. 2015 Inducement Equity Plan. Filed as Exhibit 4.14 to our Registration Statement on Form S-8 (File No. 333-209074) filed onJanuary 21, 2016 and incorporated herein by reference. 10.10.1* Form of Stock Option Agreement for the Agenus Inc. 2015 Inducement Equity Plan. Filed as Exhibit 4.15 to our Registration Statement onForm S-8 (File No. 333-209074) filed on January 21, 2016 and incorporated herein by reference. 10.10.2* Form of Restricted Stock Award Agreement for the Agenus Inc. 2015 Inducement Equity Plan. Filed as Exhibit 4.16 to our RegistrationStatement on Form S-8 (File No. 333-209074) filed on January 21, 2016 and incorporated herein by reference. 10.10.3* Form of Restricted Stock Unit Agreement for the Agenus Inc. 2015 Inducement Equity Plan. Filed as Exhibit 4.17 to our RegistrationStatement on Form S-8 (File No. 333-209074) filed on January 21, 2016 and incorporated herein by reference. 10.11* Employment Agreement dated June 30, 2015 between Agenus Inc. and Dr. Robert Stein. Filed as Exhibit 10.1 to our CurrentReport on Form 8-K (File No. 0-29089) filed on June 30, 2015 and incorporated herein by reference.92Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit No. Description 10.12* Separation Agreement dated as of April 1, 2017 by and between Agenus Inc. and Dr. Robert Stein. Filed as Exhibit 10.3 to ourQuarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended March 31, 2017 and incorporated herein by reference. 10.13* Consulting Agreement dated as of April 1, 2017 by and between Agenus Inc. and Dr. Robert Stein. Filed as Exhibit 10.4 to ourQuarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended March 31, 2017 and incorporated herein by reference. 10.14* Form of Restricted Stock Unit Agreement for the Agenus Inc. Amended and Restated 2009 Equity Incentive Plan. Filed asExhibit 10.2 to our Current Report on Form 8-K (File No. 0-29089) filed on June 30, 2015 and incorporated herein by reference. 10.15* Employment Agreement dated March 10, 2017 between Agenus Inc. and Dr. Jean-Marie Cuillerot. Filed as Exhibit 10.16 to ourAnnual Report on Form 10-K (File No. 0-29089) for the year ended December 31, 2016 and incorporated herein by reference. License and Collaboration Agreements 10.16(1) Patent License Agreement between Agenus Inc. and Mount Sinai School of Medicine dated November 1, 1994, as amended on June 5,1995. Filed as Exhibit 10.8 to our registration statement on Form S-1 (File No. 333-91747) and incorporated herein by reference. 10.17(1) License Agreement between the University of Connecticut Health Center and Agenus Inc. dated May 25, 2001, as amended on March 18,2003. Filed as Exhibit 10.2 to the Amendment No. 1 to our Quarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended March31, 2003 and incorporated herein by reference. 10.17.1(1) Letter Agreement by and between Agenus Inc. and The University of Connecticut Health Center dated May 11, 2009. Filed as Exhibit 10.5to our Quarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended June 30, 2009 and incorporated herein by reference. 10.17.2(1) Amendment Number Two to License Agreement by and between Agenus Inc. and The University of Connecticut Health Center dated June5, 2009. Filed as Exhibit 10.6 to our Quarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended June 30, 2009 andincorporated herein by reference. 10.18(1) License Agreement by and between Agenus Inc. and GlaxoSmithKline Biologicals SA dated July 6, 2006. Filed as Exhibit 10.1 to ourQuarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended June 30, 2006 and incorporated herein by reference. 10.19(1) Amended and Restated Manufacturing Technology Transfer and Supply Agreement by and between Agenus Inc. and GlaxoSmithKlineBiologicals SA dated January 19, 2009. Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q (File No. 0-29089) for the quarterended March 31, 2009 and incorporated herein by reference. 10.20(1) First Right to Negotiate and Amendment Agreement between Agenus Inc., Antigenics LLC and GlaxoSmithKline Biologicals SA, datedMarch 2, 2012. Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended March 31, 2012 andincorporated herein by reference. 10.21(1) Revenue Interests Assignment Agreement dated as of April 15, 2013 by and among Agenus Inc., Ingalls & Snyder Value Partners L.P.,Arthur Koenig and Antigenics LLC. Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q (File No. 0-029089) for the quarter endedMarch 31, 2013 and incorporated herein by reference. 10.22(1) License Agreement dated as of December 5, 2014 by and between 4-Antibody AG, a limited liability company organized under the laws ofSwitzerland (and wholly-owned subsidiary of Agenus Inc.) and Ludwig Institute for Cancer Research Ltd. Filed as Exhibit 10.21 to ourAnnual Report on Form 10-K (File No. 0-29089) for the year ended December 31, 2014 and incorporated herein by reference. 10.23.1(1) License, Development and Commercialization Agreement dated as of January 9, 2015 by and among Agenus Inc., 4-Antibody AG, alimited liability company organized under the laws of Switzerland (and wholly-owned subsidiary of Agenus Inc.), Incyte Corporation andIncyte Europe Sarl, a Swiss limited liability company (and wholly-owned subsidiary of Incyte Corporation). Filed as Exhibit 10.22 to ourAnnual Report on Form 10-K (File No. 0-29089) for the year ended December 31, 2014 and incorporated herein by reference. 93Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit No. Description 10.23.2(1) First Amendment to License, Development and Commercialization Agreement dated as of February 14, 2017 by and among Agenus Inc.,Agenus Switzerland Inc. (f/k/a 4-Antibody AG) and Incyte Europe Sarl. Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q (FileNo. 0-29089) for the quarter ended March 31, 2017 and incorporated herein by reference. 10.24(1) License Agreement dated March 19, 2013, as amended, by and between the University of Virginia Patent Foundation d/b/a University ofVirginia Licensing and Ventures Group and Agenus Inc. (as successor by merger to PhosImmune Inc.). Filed as Exhibit 10.24 to our AnnualReport on Form 10-K (File No. 0-29089) for the year ended December 31, 2015 and incorporated herein by reference. 10.25(1) License Agreement dated as of January 25, 2016 by and among Agenus Inc., 4-Antibody AG, a limited liability company organized underthe laws of Switzerland (and wholly-owned subsidiary of Agenus Inc.), and Ludwig Institute for Cancer Research Ltd. Filed as Exhibit10.25 to our Annual Report on Form 10-K (File No. 0-29089) for the year ended December 31, 2015 and incorporated herein by reference. 10.26(1) Development and Manufacturing Services Agreement dated April 14, 2017 by and between Agenus Inc. and CMC ICOS Biologics, Inc.Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended June 30, 2017 and incorporated hereinby reference. Real Estate Leases 10.27 Lease of Premises at 3 Forbes Road, Lexington, Massachusetts dated as of December 6, 2002 from BHX, LLC, as Trustee of 3 Forbes RealtyTrust, to Agenus Inc. Filed as Exhibit 10.1 to our Current Report on Form 8-K (File No. 0-29089) filed on January 8, 2003 and incorporatedherein by reference. 10.27.1 First Amendment of Lease dated as of August 15, 2003 from BHX, LLC, as trustee of 3 Forbes Road Realty, to Agenus Inc. Filed as Exhibit10.1 to our Quarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended March 31, 2004 and incorporated herein by reference. 10.27.2 Second Amendment of Lease dated as of March 7, 2007 from BHX, LLC as trustee of 3 Forbes Road Realty, to Agenus Inc. Filed as Exhibit10.1 to our Quarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended March 31, 2007 and incorporated herein by reference. 10.27.3 Third Amendment to Lease dated April 23, 2008 between TBCI, LLC, as successor to BHX, LLC, as Trustee of 3 Forbes Road Realty Trust,and Agenus Inc. Filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended June 30, 2008 andincorporated herein by reference. 10.27.4 Fourth Amendment to Lease dated September 30, 2008 between TBCI, LLC, as successor to BHX, LLC, as Trustee of 3 Forbes Road RealtyTrust, and Agenus Inc. Filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended September 30,2008 and incorporated herein by reference. 10.27.5 Fifth Amendment to Lease dated April 11, 2011 between TBCI, LLC, as successor to BHX, LLC, as Trustee of 3 Forbes Road Realty Trust,and Agenus Inc. Filed as Exhibit 10.3 to our Quarterly Report on Form 10-Q (File No. 0-29089) for the quarter ended March 31, 2011 andincorporated herein by reference. 10.28 Standard Form of Office Lease dated December 13, 2012 between 149 Fifth Ave. Corp. and Agenus Inc. Filed as Exhibit 10.22 to ourAnnual Report on Form 10-K (File No. 0-29089) for the year ended December 31, 2012 and incorporated herein by reference. Sales Agreement 10.29 Form of Controlled Equity OfferingSM Sales Agreement by and between Agenus Inc. and Cantor Fitzgerald & Co. Filed as Exhibit 1.2 toour Registration Statement on Form S-3 (File No. 333-221008) and incorporated herein by reference. 21.1 Subsidiaries of Agenus Inc. Filed herewith. 23.1 Consent of KPMG LLP, independent registered public accounting firm. Filed herewith. 31.1 Certification of Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, asamended. Filed herewith. 31.2 Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, asamended. Filed herewith. 94Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Exhibit No. Description 32.1 Certification of Chief Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section906 of the Sarbanes-Oxley Act of 2002. Submitted herewith. 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Calculation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document 101.LAB XBRL Label Linkbase Document 101.PRE XBRL Taxonomy Presentation Linkbase Document *Indicates a management contract or compensatory plan.(1)Certain confidential material contained in the document has been omitted and filed separately with the Securities and Exchange Commission pursuantto Rule 406 of the Securities Act or Rule 24b-2 of the Securities Exchange Act. Item 16.Form 10-K Summary None. 95Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed onits behalf by the undersigned, thereunto duly authorized. AGENUS INC. By: /s/ GARO H. ARMEN, PH.D. Garo H. Armen, Ph.D. Chief Executive Officer and Chairman of the Board Dated: March 16, 2018Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated. Signature Title Date /S/ GARO H. ARMEN, PH.D. Chief Executive Officer and Chairman of the March 16, 2018Garo H. Armen, Ph.D. Board of Directors (Principal Executive Officer) /S/ CHRISTINE M. KLASKIN Vice President Finance March 16, 2018Christine M. Klaskin (Principal Financial and Accounting Officer) /S/ ULF WIINBERG Director March 16, 2018Ulf Wiinberg /S/ BRIAN CORVESE Director March 16, 2018Brian Corvese /S/ WADIH JORDAN Director March 16, 2018Wadih Jordan /S/ SHALINI SHARP Director March 16, 2018Shalini Sharp /S/ TIMOTHY R. WRIGHT Director March 16, 2018Timothy R. Wright 96Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. EXHIBIT 21.1SUBSIDIARIES OF AGENUS INC.Antigenics LLC., a Delaware limited liability company and a wholly-owned subsidiary of Agenus Inc.Aronex Pharmaceuticals, Inc., a Delaware corporation and a wholly-owned subsidiary of Agenus Inc.Antigenics Therapeutics Limited, a company organized under the laws of Ireland and a wholly-owned subsidiary of Agenus Inc.Agenus Switzerland Inc., a joint stock company organized under the laws of Switzerland formerly known as 4-Antibody AG, and a wholly-ownedsubsidiary of Agenus Inc.Agenus West, LLC, a Delaware limited liability company and a wholly-owned subsidiary of Agenus Inc.Agenus UK Limited, a private limited company organized under the laws of England and Wales and a wholly-owned subsidiary of Agenus Inc.AgenTus Therapeutics, Inc., a Delaware corporation and a wholly-owned subsidiary of Agenus Inc.AgenTus Therapeutics Limited, a private limited company organized under the laws of England and Wales and a wholly-owned subsidiary ofAgenTus Therapeutics, Inc. Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 23.1Consent of Independent Registered Public Accounting FirmThe Board of DirectorsAgenus Inc.: We consent to the incorporation by reference in the registration statements (Nos. 333-40440, 333-40442, 333-50434, 333-69580, 333-106072, 333-115984,333-143807, 333-143808, 333-151745, 333-160084, 333-160087, 333-160088, 333-176609, 333-183066, 333-183067, 333-189926, 333-195851, 333-209074, and 333-212889) on Form S-8 and (Nos. 333-161277, 333-163221, 333-189534, 333-195852, 333-203807, 333-206513, 333-208135, 333-208890,333-209749, 333-209941, 333-215640, 333-221008, 333-221465, and 333-222670) on Form S-3 of Agenus Inc. of our reports dated March 16, 2018, withrespect to the consolidated balance sheets of Agenus Inc. and subsidiaries as of December 31, 2017 and 2016, and the related consolidated statements ofoperations and comprehensive loss, stockholders’ (deficit) equity, and cash flows for each of the years in the three-year period ended December 31, 2017, andthe related notes (collectively, the consolidated financial statements), and the effectiveness of internal control over financial reporting as of December 31,2017, which reports appear in the December 31, 2017 Annual Report on Form 10-K of Agenus Inc. The audit report of KPMG LLP on the aforementioned consolidated financial statements contains an explanatory paragraph that states that the Company’srecurring losses from operations and net capital deficiency raise substantial doubt about the entity’s ability to continue as a going concern. The consolidatedfinancial statements do not include any adjustments that might result from the outcome of that uncertainty./s/ KPMG LLPBoston, MassachusettsMarch 16, 2018 Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 31.1Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amendedI, Garo H. Armen, certify that: 1.I have reviewed this Annual Report on Form 10-K of Agenus Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period coveredby this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; 4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)) for the Registrant and have: a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known tous by others within those entities, particularly during the period in which this report is being prepared; b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with U.S. generally accepted accounting principles; c.evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and d.disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’smost recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the Registrant’s internal control over financial reporting; and 5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalentfunction): a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and b.any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’sinternal control over financial reporting. Date:March 16, 2018 /s/ GARO H. ARMEN, PH.D. Garo H. Armen, Ph.D. Chief Executive Officer and Principal Executive Officer Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 31.2Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as amendedI, Christine M. Klaskin, certify that: 1.I have reviewed this Annual Report on Form 10-K of Agenus Inc.; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period coveredby this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all materialrespects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; 4.The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)and 15d-15(f)) for the Registrant and have: a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known tous by others within those entities, particularly during the period in which this report is being prepared; b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with U.S. generally accepted accounting principles; c.evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions aboutthe effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on suchevaluation; and d.disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’smost recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the Registrant’s internal control over financial reporting; and 5.The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalentfunction): a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and b.any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’sinternal control over financial reporting. Date:March 16, 2018 /s/ CHRISTINE M. KLASKIN Christine M. Klaskin VP, Finance and Principal Financial Officer Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results. Exhibit 32.1CertificationPursuant to 18 U.S.C. Section 1350,As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002In connection with the Annual Report on Form 10-K of Agenus Inc. (the “Company”) for the year ended December 31, 2017 as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), each of the undersigned to his/her knowledge hereby certifies, pursuant to 18 U.S.C.Section 1350, that: (i)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (ii)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. /s/ GARO H. ARMEN, PH.D. Garo H. Armen, Ph.D. Chief Executive Officer and Principal Executive Officer /s/ CHRISTINE M. KLASKIN Christine M. Klaskin VP, Finance and Principal Financial OfficerDate: March 16, 2018A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company andfurnished to the Securities and Exchange Commission or its staff upon request.The foregoing certification is being furnished to the Securities and Exchange Commission as an exhibit to the Annual Report on Form 10-K for theyear ended December 31, 2017 and should not be considered filed as part of the Annual Report on Form 10-K. Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.Source: AGENUS INC, 10-K, March 16, 2018Powered by Morningstar® Document Research℠The information contained herein may not be copied, adapted or distributed and is not warranted to be accurate, complete or timely. The user assumes all risks for any damages or losses arising from any use of this information,except to the extent such damages or losses cannot be limited or excluded by applicable law. Past financial performance is no guarantee of future results.

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