Argos Therapeutics (ARGS), a clinical research stage biotech company focusing on the personalized treatment of various cancers based on rallying the individual’s own immune system through its proprietary Arcelis platform, released interim test results this morning on the company’s ongoing Phase 3 ADAPT trial of its AGS-003 compound which met the goals of its interim data review. The ADAPT trial focuses on treatment of metastatic kidney cancer via AGS-003 in combination with targeted therapy and follows a successful Phase 2 trial.

The ADAPT trial has enrolled 462 patients and the end goal is overall survival.  Argus notes that it has reached “more than half of the targeted number of events for our survival endpoint” and expects to have met its trial data goals by early 2017.  This is a significant development for several reasons listed in the press release:  “The positive outcome from the IDMC’s review of the ADAPT trial data triggers the second tranche of the financing under the Company’s previously announced March 2016 securities purchase agreement. Upon the closing of the second tranche, which is expected to occur within 30 days, the Company will receive a total of $29,824,520 from the sale of a total of 5,478,672 shares of common stock and warrants to purchase a total of 4,109,005 shares of common stock.”

Argus is now focusing on trial execution to ensure study data quality, and has “initiated cross functional activities to begin building the AGS-003 Biologics License Application (BLA),” a key step in moving toward FDA approval of AGS-003. This is essentially the news we were expecting, and most likely explains the 30% increase in ARGS share price over the past two weeks leading up to this announcement.

In addition, this morning Argos also announced that Alexey Vinogradov resigned from its Board of Directors. The company’s press release noted, “There were no disagreements between Dr. Vinogradov and the Company or any officer or director of the Company which led to Dr. Viogradov’s resignation.” In his place the Board elected Igor Krol as a director of the place to fill the vacancy created by Dr. Vinogradov’s departure.

Shares of ARGS were down more than 15% this morning on the news, presumably on speculation that Dr. Vinogradov’s departure should be construed as indicative of his dissatisfaction with the future direction of the company. However, it should be pointed out that his replacement, Mr. Krol, “is affiliated with Pharmstandard International S.A., one of the company’s principal stockholders” that is part of the investor consortium referenced above. Now that this group has sunk nearly $30 million into Argos over the past three months, a more reasonable inference is that it wants a stronger voice in how that money will be spent so we feel this morning’s price action is unwarranted.

ARGS is a highly speculative special situation Breakthrough Tech Profits stock pick. We recommend that investors diversify shares of ARGS by also owning shares of Ziopharma (ZIOP) and Juno Therapeutics (JUNO). 

Dr. Duarte owns shares in ARGS.