Item 1. Unaudited Financial Statements
CELLDEX THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share
amounts)
|
|
June 30,
2020
|
|
|
December 31,
2019
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
|
$
|
68,027
|
|
|
$
|
11,232
|
|
Marketable Securities
|
|
|
138,888
|
|
|
|
53,151
|
|
Accounts and Other Receivables
|
|
|
329
|
|
|
|
1,015
|
|
Prepaid and Other Current Assets
|
|
|
1,748
|
|
|
|
1,300
|
|
Total Current Assets
|
|
|
208,992
|
|
|
|
66,698
|
|
Property and Equipment, Net
|
|
|
4,044
|
|
|
|
4,031
|
|
Operating Lease Right-of-Use Assets, Net
|
|
|
3,134
|
|
|
|
3,473
|
|
Intangible Assets, Net
|
|
|
45,190
|
|
|
|
48,690
|
|
Other Assets
|
|
|
41
|
|
|
|
41
|
|
Total Assets
|
|
$
|
261,401
|
|
|
$
|
122,933
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
|
|
Accounts Payable
|
|
$
|
950
|
|
|
$
|
1,174
|
|
Accrued Expenses
|
|
|
6,467
|
|
|
|
6,499
|
|
Current Portion of Operating Lease Liabilities
|
|
|
1,320
|
|
|
|
1,944
|
|
Current Portion of Other Long-Term Liabilities
|
|
|
2,104
|
|
|
|
2,026
|
|
Total Current Liabilities
|
|
|
10,841
|
|
|
|
11,643
|
|
Long-Term Portion of Operating Lease Liabilities
|
|
|
1,720
|
|
|
|
1,713
|
|
Other Long-Term Liabilities
|
|
|
10,396
|
|
|
|
15,551
|
|
Total Liabilities
|
|
|
22,957
|
|
|
|
28,907
|
|
Commitments and Contingent Liabilities
|
|
|
|
|
|
|
|
|
Stockholders’ Equity:
|
|
|
|
|
|
|
|
|
Convertible Preferred Stock, $.01 Par Value; 3,000,000 Shares Authorized; No Shares Issued and Outstanding at June 30, 2020 and December 31, 2019
|
|
|
—
|
|
|
|
—
|
|
Common Stock, $.001 Par Value; 297,000,000 Shares Authorized; 39,093,868 and 16,972,077 Shares Issued and Outstanding at June 30, 2020 and December 31, 2019, Respectively
|
|
|
39
|
|
|
|
17
|
|
Additional Paid-In Capital
|
|
|
1,272,783
|
|
|
|
1,104,706
|
|
Accumulated Other Comprehensive Income
|
|
|
2,594
|
|
|
|
2,619
|
|
Accumulated Deficit
|
|
|
(1,036,972
|
)
|
|
|
(1,013,316
|
)
|
Total Stockholders’ Equity
|
|
|
238,444
|
|
|
|
94,026
|
|
Total Liabilities and Stockholders’ Equity
|
|
$
|
261,401
|
|
|
$
|
122,933
|
|
See accompanying notes to unaudited condensed
consolidated financial statements
CELLDEX THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except per share amounts)
|
|
|
Three Months
Ended
June 30, 2020
|
|
|
|
Three Months
Ended
June 30, 2019
|
|
|
|
Six Months
Ended
June 30, 2020
|
|
|
|
Six Months
Ended
June 30, 2019
|
|
REVENUES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product Development and Licensing Agreements
|
|
$
|
—
|
|
|
$
|
195
|
|
|
$
|
2,285
|
|
|
$
|
325
|
|
Contracts and Grants
|
|
|
236
|
|
|
|
520
|
|
|
|
680
|
|
|
|
1,815
|
|
Total Revenues
|
|
|
236
|
|
|
|
715
|
|
|
|
2,965
|
|
|
|
2,140
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and Development
|
|
|
9,705
|
|
|
|
10,081
|
|
|
|
21,400
|
|
|
|
21,232
|
|
General and Administrative
|
|
|
3,528
|
|
|
|
3,908
|
|
|
|
7,194
|
|
|
|
8,804
|
|
Intangible Asset Impairment
|
|
|
3,500
|
|
|
|
—
|
|
|
|
3,500
|
|
|
|
—
|
|
Other Asset Impairment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,800
|
|
(Gain) Loss on Fair Value Remeasurement of Contingent Consideration
|
|
|
(5,132
|
)
|
|
|
(1,017
|
)
|
|
|
(4,898
|
)
|
|
|
502
|
|
Total Operating Expenses
|
|
|
11,601
|
|
|
|
12,972
|
|
|
|
27,196
|
|
|
|
32,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Loss
|
|
|
(11,365
|
)
|
|
|
(12,257
|
)
|
|
|
(24,231
|
)
|
|
|
(30,198
|
)
|
Investment and Other Income, Net
|
|
|
106
|
|
|
|
478
|
|
|
|
347
|
|
|
|
1,180
|
|
Net Loss Before Income Tax Benefit
|
|
|
(11,259
|
)
|
|
|
(11,779
|
)
|
|
|
(23,884
|
)
|
|
|
(29,018
|
)
|
Income Tax Benefit
|
|
|
228
|
|
|
|
—
|
|
|
|
228
|
|
|
|
—
|
|
Net Loss
|
|
$
|
(11,031
|
)
|
|
$
|
(11,779
|
)
|
|
$
|
(23,656
|
)
|
|
$
|
(29,018
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Net Loss Per Common Share
|
|
$
|
(0.50
|
)
|
|
$
|
(0.84
|
)
|
|
$
|
(1.20
|
)
|
|
$
|
(2.21
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares Used in Calculating Basic and Diluted Net Loss Per Share
|
|
|
22,082
|
|
|
|
13,952
|
|
|
|
19,744
|
|
|
|
13,129
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE LOSS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(11,031
|
)
|
|
$
|
(11,779
|
)
|
|
$
|
(23,656
|
)
|
|
$
|
(29,018
|
)
|
Other Comprehensive Income (Loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized (Loss) Gain on Marketable Securities
|
|
|
(3
|
)
|
|
|
36
|
|
|
|
(25
|
)
|
|
|
55
|
|
Comprehensive Loss
|
|
$
|
(11,034
|
)
|
|
$
|
(11,743
|
)
|
|
$
|
(23,681
|
)
|
|
$
|
(28,963
|
)
|
See accompanying notes to unaudited condensed
consolidated financial statements
CELLDEX THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOW
(Unaudited)
(In thousands)
|
|
Six Months
Ended
June 30, 2020
|
|
|
Six Months
Ended
June 30, 2019
|
|
Cash Flows From Operating Activities:
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(23,656
|
)
|
|
$
|
(29,018
|
)
|
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
|
|
|
|
|
|
|
|
|
Depreciation and Amortization
|
|
|
2,313
|
|
|
|
2,505
|
|
Amortization and Premium of Marketable Securities, Net
|
|
|
(335
|
)
|
|
|
(652
|
)
|
(Gain) Loss on Sale or Disposal of Assets
|
|
|
(20
|
)
|
|
|
7
|
|
Intangible Asset Impairment
|
|
|
3,500
|
|
|
|
—
|
|
Other Asset Impairment
|
|
|
—
|
|
|
|
1,800
|
|
(Gain) Loss on Fair Value Remeasurement of Contingent Consideration
|
|
|
(4,898
|
)
|
|
|
502
|
|
Non-Cash Income Tax Benefit
|
|
|
(228
|
)
|
|
|
—
|
|
Stock-Based Compensation Expense
|
|
|
1,408
|
|
|
|
3,157
|
|
Changes in Operating Assets and Liabilities:
|
|
|
|
|
|
|
|
|
Accounts and Other Receivables
|
|
|
686
|
|
|
|
1,992
|
|
Prepaid and Other Current Assets
|
|
|
(436
|
)
|
|
|
(137
|
)
|
Accounts Payable and Accrued Expenses
|
|
|
(254
|
)
|
|
|
(1,598
|
)
|
Other Liabilities
|
|
|
(1,412
|
)
|
|
|
(2,833
|
)
|
Net Cash Used in Operating Activities
|
|
|
(23,332
|
)
|
|
|
(24,275
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows From Investing Activities:
|
|
|
|
|
|
|
|
|
Sales and Maturities of Marketable Securities
|
|
|
47,000
|
|
|
|
67,386
|
|
Purchases of Marketable Securities
|
|
|
(132,439
|
)
|
|
|
(58,565
|
)
|
Acquisition of Property and Equipment
|
|
|
(1,145
|
)
|
|
|
(484
|
)
|
Proceeds from Sale or Disposal of Assets
|
|
|
20
|
|
|
|
—
|
|
Net Cash (Used in) Provided by Investing Activities
|
|
|
(86,564
|
)
|
|
|
8,337
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From Financing Activities:
|
|
|
|
|
|
|
|
|
Net Proceeds from Stock Issuances
|
|
|
166,667
|
|
|
|
11,363
|
|
Proceeds from Issuance of Stock from Employee Benefit Plans
|
|
|
24
|
|
|
|
9
|
|
Issuance of Term Loan
|
|
|
2,962
|
|
|
|
—
|
|
Payment of Term Loan
|
|
|
(2,962
|
)
|
|
|
—
|
|
Net Cash Provided by Financing Activities
|
|
|
166,691
|
|
|
|
11,372
|
|
|
|
|
|
|
|
|
|
|
Net Increase (Decrease) in Cash and Cash Equivalents
|
|
|
56,795
|
|
|
|
(4,566
|
)
|
Cash and Cash Equivalents at Beginning of Period
|
|
|
11,232
|
|
|
|
24,310
|
|
Cash and Cash Equivalents at End of Period
|
|
$
|
68,027
|
|
|
$
|
19,744
|
|
|
|
|
|
|
|
|
|
|
Non-cash Investing Activities
|
|
|
|
|
|
|
|
|
Accrued construction in progress
|
|
$
|
22
|
|
|
$
|
55
|
|
See accompanying notes to unaudited condensed
consolidated financial statements
CELLDEX THERAPEUTICS, INC.
Notes to Unaudited Condensed Consolidated
Financial Statements
June 30, 2020
(1) Basis of Presentation
The accompanying unaudited condensed consolidated
financial statements have been prepared by Celldex Therapeutics, Inc. (the “Company” or “Celldex”)
in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and reflect
the operations of the Company and its wholly-owned subsidiary. All intercompany balances and transactions have been eliminated
in consolidation.
These interim financial statements do not
include all the information and footnotes required by U.S. GAAP for annual financial statements and should be read in conjunction
with the audited financial statements for the year ended December 31, 2019, which are included in the Company’s Annual
Report on Form 10-K filed with the Securities and Exchange Commission on March 26, 2020. In the opinion of management,
the interim financial statements reflect all normal recurring adjustments necessary to fairly state the Company’s financial
position and results of operations for the interim periods presented. The year-end condensed balance sheet data presented for comparative
purposes was derived from audited financial statements but does not include all disclosures required by U.S. GAAP.
The results of operations for the interim
periods are not necessarily indicative of the results of operations to be expected for any future interim period or the fiscal
year ending December 31, 2020.
At June 30, 2020, the Company had cash,
cash equivalents and marketable securities of $206.9 million. The Company has had recurring losses and incurred a loss of
$23.7 million for the six months ended June 30, 2020. Net cash used in operations for the six months ended June 30, 2020 was
$23.3 million. The Company believes that the cash, cash equivalents and marketable securities at August 6, 2020 will be sufficient
to meet estimated working capital requirements and fund planned operations for at least the next twelve months from the date of
issuance of these financial statements.
During the next twelve months and beyond,
the Company may take further steps to raise additional capital to meet its long-term liquidity needs including, but may not be
limited to, one or more of the following: the licensing of drug candidates with existing or new collaborative partners, possible
business combinations, issuance of debt, or the issuance of common stock or other securities via private placements or public offerings.
Although the Company has been successful in raising capital in the past, there can be no assurance that additional financing will
be available on acceptable terms, if at all, and the Company’s negotiating position in capital-raising efforts may worsen
as existing resources are used. There is also no assurance that the Company will be able to enter into further collaborative relationships.
Additional equity financings may be dilutive to the Company’s stockholders; debt financing, if available, may involve significant
cash payment obligations and covenants that restrict the Company’s ability to operate as a business; and licensing or strategic
collaborations may result in royalties or other terms which reduce the Company’s economic potential from products under development.
The Company’s ability to continue funding its planned operations into and beyond twelve months from the issuance date is
also dependent on the timing and manner of payment of contingent milestones from the Kolltan acquisition, in the event that the
Company achieves the drug candidate milestones related to those payments. The Company, at its option, may decide to pay those milestone
payments in cash, shares of its common stock or a combination thereof.
In December 2019, a novel strain of coronavirus,
now referred to as COVID-19, surfaced in Wuhan, China. The virus continues to spread globally, has been declared a pandemic by
the World Health Organization and has spread to hundreds of countries, including the United States. The impact of this pandemic
has been and will likely continue to be extensive in many aspects of society, which has resulted in and will likely continue to
result in significant disruptions to the global economy, as well as businesses and capital markets around the world. In an effort
to halt the outbreak of COVID-19, various states, including New Jersey, Massachusetts and Connecticut, where the Company has office,
research and manufacturing facilities, have placed significant restrictions on travel and many businesses have announced extended
closures which could adversely impact our operations. To date, the Company has not experienced significant delays or disruptions
in planned and ongoing preclinical and clinical trials, manufacturing or shipping. Potential impacts to our business include delays
in planned and ongoing preclinical and clinical trials including enrollment of patients, disruptions in time and resources provided
by independent clinical investigators, contract research organizations, other third-party service providers, temporary closures
of our facilities, disruptions or restrictions on our employees’ ability to travel, and delays in manufacturing and/or shipments
to and from third party suppliers and contract manufacturers for APIs and drug product. Any prolonged negative impacts to our business
could materially impact our operating results and could lead to impairments of our Intangible (IPR&D) assets with a carrying
value of $45.2 million at June 30, 2020.
(2) Significant Accounting Policies
The significant accounting policies used
in preparation of these condensed consolidated financial statements on Form 10-Q for the three and six months ended June 30,
2020 are consistent with those discussed in Note 2 to the financial statements in our Annual Report on Form 10-K for the year
ended December 31, 2019, except as it relates to the adoption of new accounting standards during the first six months of 2020
as discussed below.
Newly Adopted Accounting Pronouncements
On January 1, 2020, the Company adopted
a new accounting standard that modifies certain disclosure requirements for fair value measurements. For instance, the Company
is required to disclose weighted average information for significant unobservable inputs for all Level 3 fair value measurements.
The adoption of this new guidance did not have a material impact on the Company’s consolidated financial statements and related
disclosures. Refer to Note 3 for the disclosures related to the Company’s level 3 fair value measurements.
On January 1, 2020, the Company adopted
a new accounting standard that clarifies the interaction between the accounting guidance for collaborative arrangements and revenue
from contracts with customers. The amendments clarify that certain transactions between collaborative arrangement participants
should be accounted for as revenue under ASC 606, when the collaborative arrangement participant is a customer in the context of
a unit of account. The adoption of this standard did not have a material impact on our consolidated financial statements, as we
have no arrangements within the scope of ASC 808.
Recent Accounting Pronouncements
From time to time, new accounting pronouncements
are issued by the FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless
otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have
a material impact on the Company’s consolidated financial statements upon adoption.
In June 2016, the FASB issued guidance on
the Measurement of Credit Losses on Financial Instruments. The guidance requires that credit losses be reported using an expected
losses model rather than the incurred losses model that is currently used, and establishes additional disclosures related to credit
risks. For available-for-sale debt securities with unrealized losses, the standard now requires allowances to be recorded instead
of reducing the amortized cost of the investment. This standard will be effective for the Company on January 1, 2023. We are
currently evaluating the potential impact that this standard may have on the Company’s consolidated financial statements
and related disclosures.
(3) Fair Value Measurements
The following tables set forth the Company’s
financial assets and liabilities subject to fair value measurements:
|
|
As of
June 30, 2020
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
(In thousands)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds and cash equivalents
|
|
$
|
54,597
|
|
|
|
—
|
|
|
$
|
54,597
|
|
|
|
—
|
|
Marketable securities
|
|
|
138,888
|
|
|
|
—
|
|
|
|
138,888
|
|
|
|
—
|
|
|
|
$
|
193,485
|
|
|
|
—
|
|
|
$
|
193,485
|
|
|
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kolltan acquisition contingent consideration
|
|
$
|
7,587
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
7,587
|
|
|
|
$
|
7,587
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
7,587
|
|
|
|
As of
December 31, 2019
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
(In thousands)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds and cash equivalents
|
|
$
|
4,024
|
|
|
|
—
|
|
|
$
|
4,024
|
|
|
|
—
|
|
Marketable securities
|
|
|
53,151
|
|
|
|
—
|
|
|
|
53,151
|
|
|
|
—
|
|
|
|
$
|
57,175
|
|
|
|
—
|
|
|
$
|
57,175
|
|
|
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kolltan acquisition contingent consideration
|
|
$
|
12,485
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
12,485
|
|
|
|
$
|
12,485
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
12,485
|
|
The Company’s financial assets consist
mainly of money market funds, cash equivalents and marketable securities and are classified as Level 2 within the valuation hierarchy.
The Company values its marketable securities utilizing independent pricing services which normally derive security prices from
recently reported trades for identical or similar securities, making adjustments based on significant observable transactions.
At each balance sheet date, observable market inputs may include trade information, broker or dealer quotes, bids, offers or a
combination of these data sources.
The following table reflects the activity
for the Company’s contingent consideration liabilities measured at fair value using Level 3 inputs for the six months ended
June 30, 2020 (in thousands):
|
|
Other Liabilities:
Contingent
Consideration
|
|
Balance at December 31, 2019
|
|
$
|
12,485
|
|
Fair value adjustments included in operating expenses
|
|
|
(4,898
|
)
|
Balance at June 30, 2020
|
|
$
|
7,587
|
|
The valuation technique used to measure
fair value of the Company’s Level 3 liabilities, which consist of contingent consideration related to the acquisition of
Kolltan in 2016, was primarily an income approach. The significant unobservable inputs used in the fair value measurement of the
contingent consideration are estimates including probability of success, discount rates and amount of time until the conditions
of the milestone payments are met. As of June 30, 2020, the weighted average discount rate used in calculating the fair value of
contingent consideration was 11.6% (with a range of 11.5% to 12.2%) and the weighted average amount of time until the conditions
of the milestone payments are met was 3 years.
During
the three and six months ended June 30, 2020, the Company recorded a $5.1 million and $4.9 million gain on fair value remeasurement
of contingent consideration, respectively, primarily due to updated assumptions for CDX-3379 related milestones due to the discontinuation
of the CDX-3379 program and the passage of time. During the three and six months ended June 30, 2019, the Company recorded
a $1.0 million gain and $0.5 million loss on fair value remeasurement of contingent consideration, respectively, primarily due
to changes in discount rates and the passage of time. The assumptions related to determining the fair value of contingent consideration
include a significant amount of judgment, and any changes in the underlying estimates could have a material impact on the amount
of contingent consideration adjustment recorded in any given period.
The Company did not have any transfers in
or out of Level 3 assets or liabilities during the six months ended June 30, 2020.
(4) Marketable Securities
The following is a summary of marketable
debt securities, classified as available-for-sale:
|
|
Gross Unrealized
|
|
|
|
Amortized
Cost
|
|
|
Gains
|
|
|
Losses
|
|
|
Fair
Value
|
|
|
|
(In thousands)
|
|
June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and municipal obligations (maturing in one year or less)
|
|
$
|
79,937
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
79,937
|
|
Corporate debt securities (maturing in one year or less)
|
|
|
58,954
|
|
|
|
10
|
|
|
|
(13
|
)
|
|
|
58,951
|
|
Total Marketable Securities
|
|
$
|
138,891
|
|
|
$
|
10
|
|
|
$
|
(13
|
)
|
|
$
|
138,888
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and municipal obligations (maturing in one year or less)
|
|
$
|
18,509
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
18,522
|
|
Corporate debt securities (maturing in one year or less)
|
|
|
34,619
|
|
|
|
13
|
|
|
|
(3
|
)
|
|
|
34,629
|
|
Total Marketable Securities
|
|
$
|
53,128
|
|
|
$
|
26
|
|
|
$
|
(3
|
)
|
|
$
|
53,151
|
|
The Company holds investment-grade marketable
securities, and none were in a continuous unrealized loss position for more than twelve months as of June 30, 2020 and December 31,
2019. The unrealized losses are attributable to changes in interest rates and the Company does not believe any unrealized losses
represent other-than-temporary impairments. Marketable securities include $0.2 million in accrued interest at June 30, 2020 and
December 31, 2019.
(5) Intangible Assets
At June 30, 2020 and December 31, 2019,
the Company recorded indefinite-lived intangible assets of $45.2 million and $48.7 million, respectively. Indefinite-lived intangible
assets consist of acquired in-process research and development (“IPR&D”) related to the development of CDX-3379,
the anti-KIT program (including CDX-0159) and the TAM program. The Company evaluated the CDX-3379 IPR&D asset for potential
impairment as a result of the discontinuation of the CDX-3379 program. The Company concluded that the CDX-3379 IPR&D asset
was fully impaired, and a non-cash impairment charge of $3.5 million was recorded for the three months ended June 30, 2020. CDX-0159
is in Phase 1 development and the TAM program is in preclinical development. As of June 30, 2020, none of the Company’s IPR&D
assets had reached technological feasibility nor did any have alternative future uses.
The Company performs an impairment test
on IPR&D assets at least annually, or more frequently if events or changes in circumstances indicate that IPR&D assets
may be impaired. Due to the nature of IPR&D projects, the Company may experience future delays or failures to obtain regulatory
approvals to conduct clinical trials, failures of such clinical trials or other failures to achieve a commercially viable product,
and as a result, may recognize further impairment losses in the future.
(6) Other Assets
In 2016, the Company entered into a research
and collaboration agreement with an undisclosed private company to access novel technologies and paid $3.5 million to support research
activities and make an investment in the private company. The Company recorded $1.8 million to other assets related to this investment
and $1.7 million was recorded to research and development expense over the term of the research activities. The stock of the private
company does not have a readily determinable fair value, and therefore it is measured at cost less impairment, if any. Based on
information received in April 2019, it was determined that there was a deterioration of the private company’s financial
condition due to a working capital deficiency and an inability to secure additional funding as of March 31, 2019. Therefore,
the Company concluded that the investment was impaired, and a non-cash impairment charge of $1.8 million was recorded during the
first quarter of 2019. The Company assesses the private company’s financial condition on a quarterly basis. There was no
change in the value of the investment during the six months ended June 30, 2020.
(7) Other Long-Term Liabilities
Other long-term liabilities include the
following:
|
|
June 30,
2020
|
|
|
December 31,
2019
|
|
|
|
(In thousands)
|
|
Net Deferred Tax Liabilities Related to IPR&D (Note 12)
|
|
$
|
2,779
|
|
|
$
|
3,007
|
|
Deferred Income From Sale of Tax Benefits
|
|
|
1,831
|
|
|
|
1,831
|
|
Contingent Milestones (Note 3)
|
|
|
7,587
|
|
|
|
12,485
|
|
Deferred Revenue (Note 11)
|
|
|
303
|
|
|
|
254
|
|
Total
|
|
|
12,500
|
|
|
|
17,577
|
|
Less Current Portion
|
|
|
(2,104
|
)
|
|
|
(2,026
|
)
|
Long-Term Portion
|
|
$
|
10,396
|
|
|
$
|
15,551
|
|
In November 2015, the Company received
approval from the New Jersey Economic Development Authority and agreed to sell New Jersey tax benefits of $9.8 million to
an independent third party for $9.2 million. Under the agreement, the Company must maintain a base of operations in New Jersey
for five years or the tax benefits must be paid back on a pro-rata basis based on the number of years completed. The Company recognized
$0.0 million in other income related to the sale of these tax benefits during the three and six months ended June 30, 2020 and
$0.0 million and $0.2 million during the three and six months ended June 30, 2019, respectively.
(8) Stockholders’ Equity
In May 2016, the Company entered into
a controlled equity offering sales agreement (the “Cantor Agreement”) with Cantor Fitzgerald & Co. (“Cantor”)
to allow the Company to issue and sell shares of its common stock from time to time through Cantor, acting as agent. During the
six months ended June 30, 2020, the Company issued 6.7 million shares of common stock pursuant to the Cantor Agreement resulting
in net proceeds of $25.3 million after deducting commission and offering expenses. At June 30, 2020, the Company had $18.3 million
remaining in aggregate gross offering price available under a prospectus supplement filed pursuant to the agreement.
During the three months ended June 30, 2020,
the Company issued 15,384,614 shares of its common stock in an underwritten public offering resulting in net proceeds to the Company
of $141.4 million, after deducting underwriting fees and offering expenses.
The changes in Stockholders’ Equity
during the three and six months ended June 30, 2020 and 2019 are summarized below:
|
|
Common
Stock
Shares
|
|
|
Common
Stock Par
Value
|
|
|
Additional
Paid-In
Capital
|
|
|
Accumulated
Other
Comprehensive
Income
|
|
|
Accumulated
Deficit
|
|
|
Total
Stockholders’
Equity
|
|
|
|
(In thousands, except share amounts)
|
|
Consolidated Balance at December 31, 2019
|
|
|
16,972,077
|
|
|
$
|
17
|
|
|
$
|
1,104,706
|
|
|
$
|
2,619
|
|
|
$
|
(1,013,316
|
)
|
|
$
|
94,026
|
|
Shares Issued under Stock Option and Employee Stock Purchase Plans
|
|
|
12,573
|
|
|
|
—
|
|
|
|
24
|
|
|
|
—
|
|
|
|
—
|
|
|
|
24
|
|
Shares Issued in Connection with Cantor Agreement
|
|
|
746,152
|
|
|
|
1
|
|
|
|
1,613
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,614
|
|
Share-Based Compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
686
|
|
|
|
—
|
|
|
|
—
|
|
|
|
686
|
|
Unrealized Loss on Marketable Securities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(22
|
)
|
|
|
—
|
|
|
|
(22
|
)
|
Net Loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(12,625
|
)
|
|
|
(12,625
|
)
|
Consolidated Balance at March 31, 2020
|
|
|
17,730,802
|
|
|
$
|
18
|
|
|
$
|
1,107,029
|
|
|
$
|
2,597
|
|
|
$
|
(1,025,941
|
)
|
|
$
|
83,703
|
|
Shares Issued in Connection with Cantor Agreement
|
|
|
5,978,452
|
|
|
|
6
|
|
|
|
23,686
|
|
|
|
—
|
|
|
|
—
|
|
|
|
23,692
|
|
Shares Issued in Underwritten Offering
|
|
|
15,384,614
|
|
|
|
15
|
|
|
|
141,346
|
|
|
|
—
|
|
|
|
—
|
|
|
|
141,361
|
|
Share-Based Compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
722
|
|
|
|
—
|
|
|
|
—
|
|
|
|
722
|
|
Unrealized Loss on Marketable Securities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(3
|
)
|
|
|
—
|
|
|
|
(3
|
)
|
Net Loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(11,031
|
)
|
|
|
(11,031
|
)
|
Consolidated Balance at June 30, 2020
|
|
|
39,093,868
|
|
|
$
|
39
|
|
|
$
|
1,272,783
|
|
|
$
|
2,594
|
|
|
$
|
(1,036,972
|
)
|
|
$
|
238,444
|
|
|
|
Common
Stock
Shares
|
|
|
Common
Stock Par
Value
|
|
|
Additional
Paid-In
Capital
|
|
|
Accumulated
Other
Comprehensive
Income
|
|
|
Accumulated
Deficit
|
|
|
Total
Stockholders’
Equity
|
|
|
|
(In thousands, except share amounts)
|
|
Consolidated Balance at December 31, 2018
|
|
|
11,957,635
|
|
|
$
|
12
|
|
|
$
|
1,083,903
|
|
|
$
|
2,583
|
|
|
$
|
(962,438
|
)
|
|
$
|
124,060
|
|
Shares Issued under Stock Option and Employee Stock Purchase Plans
|
|
|
3,507
|
|
|
|
—
|
|
|
|
9
|
|
|
|
—
|
|
|
|
—
|
|
|
|
9
|
|
Shares Issued in Connection with Cantor Agreement
|
|
|
883,569
|
|
|
|
1
|
|
|
|
4,150
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,151
|
|
Share-Based Compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
1,693
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,693
|
|
Unrealized Gain on Marketable Securities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
19
|
|
|
|
—
|
|
|
|
19
|
|
Net Loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(17,239
|
)
|
|
|
(17,239
|
)
|
Consolidated Balance at March 31, 2019
|
|
|
12,844,711
|
|
|
$
|
13
|
|
|
$
|
1,089,755
|
|
|
$
|
2,602
|
|
|
$
|
(979,677
|
)
|
|
$
|
112,693
|
|
Shares Cancelled under Stock Option and Employee Stock Purchase Plans
|
|
|
(222
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Shares Issued in Connection with Cantor Agreement
|
|
|
1,972,428
|
|
|
|
2
|
|
|
|
7,210
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,212
|
|
Share-Based Compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
1,464
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,464
|
|
Unrealized Gain on Marketable Securities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
36
|
|
|
|
—
|
|
|
|
36
|
|
Net Loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(11,779
|
)
|
|
|
(11,779
|
)
|
Consolidated Balance at June 30, 2019
|
|
|
14,816,917
|
|
|
$
|
15
|
|
|
$
|
1,098,429
|
|
|
$
|
2,638
|
|
|
$
|
(991,456
|
)
|
|
$
|
109,626
|
|
(9) Stock-Based Compensation
A summary of stock option activity for the
six months ended June 30, 2020 is as follows:
|
|
Shares
|
|
|
Weighted
Average
Exercise
Price
Per Share
|
|
|
Weighted
Average
Remaining
Contractual
Term (In Years)
|
|
Options Outstanding at December 31, 2019
|
|
|
1,699,202
|
|
|
$
|
44.87
|
|
|
|
8.0
|
|
Granted
|
|
|
1,439,175
|
|
|
$
|
10.36
|
|
|
|
|
|
Exercised
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
Canceled
|
|
|
(53,090
|
)
|
|
$
|
46.03
|
|
|
|
|
|
Options Outstanding at June 30, 2020
|
|
|
3,085,287
|
|
|
$
|
28.76
|
|
|
|
8.69
|
|
Options Vested and Expected to Vest at June 30, 2020
|
|
|
2,875,684
|
|
|
$
|
30.23
|
|
|
|
8.62
|
|
Options Exercisable at June 30, 2020
|
|
|
821,537
|
|
|
$
|
84.93
|
|
|
|
6.39
|
|
Shares Available for Grant Under the 2008 Plan
|
|
|
938,178
|
|
|
|
|
|
|
|
|
|
The weighted average grant-date fair value
of stock options granted during the three and six month period ended June 30, 2020 was $7.96 and $7.95, respectively. Stock-based
compensation expense for the three and six months ended June 30, 2020 and 2019 was recorded as follows:
|
|
Three months ended June 30,
|
|
|
Six months ended June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
(In thousands)
|
|
|
(In thousands)
|
|
Research and development
|
|
$
|
342
|
|
|
$
|
654
|
|
|
$
|
652
|
|
|
$
|
1,410
|
|
General and administrative
|
|
|
380
|
|
|
|
810
|
|
|
|
756
|
|
|
|
1,747
|
|
Total stock-based compensation expense
|
|
$
|
722
|
|
|
$
|
1,464
|
|
|
$
|
1,408
|
|
|
$
|
3,157
|
|
The fair values of employee and director
stock options granted during the three and six months ended June 30, 2020 and 2019 were valued using the Black-Scholes option pricing
model with the following assumptions:
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Expected stock price volatility
|
|
97%
|
|
91%
|
|
91 – 97%
|
|
91%
|
Expected option term
|
|
6.0 Years
|
|
6.0 Years
|
|
6.0 Years
|
|
6.0 Years
|
Risk-free interest rate
|
|
0.5%
|
|
1.9 – 2.4%
|
|
0.5 – 0.6%
|
|
1.9 – 2.5%
|
Expected dividend yield
|
|
None
|
|
None
|
|
None
|
|
None
|
(10) Accumulated Other Comprehensive Income
The changes in accumulated other comprehensive
income, which is reported as a component of stockholders’ equity, for the six months ended June 30, 2020 are summarized below:
|
|
Unrealized
Gain/(Loss) on
Marketable
Securities
|
|
|
Foreign
Currency Items
|
|
|
Total
|
|
|
|
(In thousands)
|
|
Balance at December 31, 2019
|
|
$
|
23
|
|
|
$
|
2,596
|
|
|
$
|
2,619
|
|
Other comprehensive loss
|
|
|
(25
|
)
|
|
|
—
|
|
|
|
(25
|
)
|
Balance at June 30, 2020
|
|
$
|
(2
|
)
|
|
$
|
2,596
|
|
|
$
|
2,594
|
|
No amounts were reclassified out of accumulated
other comprehensive income during the six months ended June 30, 2020.
(11) Revenue
Product Development and Licensing Revenue
The Company entered into an agreement with
Rockefeller University in September 2013, as amended, (the “Rockefeller Agreement”) pursuant to which the Company performs
manufacturing and development services for Rockefeller University for their portfolio of antibodies against HIV. This portfolio
was licensed to Gilead Sciences in January 2020 from Rockefeller University (“Rockefeller Transaction”). Pursuant to
the Rockefeller Agreement, the Company received an upfront payment of $1.8 million as a result of the Rockefeller Transaction which
was recorded to revenue during the first quarter of 2020. The Company is eligible to receive additional payments from Rockefeller
University if this portfolio progresses through clinical and commercial development.
Contract and Grants Revenue
The
Company has entered into the Rockefeller Agreement and an agreement with Duke University pursuant to which the Company performs
manufacturing and research and development services on a time-and-materials basis or
at a negotiated fixed-price. The Company recognized $0.2 million and $0.5 million in revenue under these agreements during
the three and six months ended June 30, 2020, respectively, and $0.4 million and $1.5 million during the three and six months ended
June 30, 2019, respectively.
Contract Assets and Liabilities
At December 31, 2019 and June 30, 2020,
the Company’s right to consideration under all contracts was considered unconditional, and as such, there were no recorded
contract assets. At December 31, 2019 and June 30, 2020, the Company had $0.3 million in contract liabilities recorded. Revenue
recognized from contract liabilities as of December 31, 2019 during the three and six months ended June 30, 2020 was $0.0
million and $0.1 million, respectively.
(12) Income Taxes
The Company has evaluated the positive and
negative evidence bearing upon the realizability of its net deferred tax assets and considered its history of losses, ultimately
concluding that it is “more likely than not” that the Company will not recognize the benefits of federal, state and
foreign deferred tax assets and, as such, has maintained a full valuation allowance on its deferred tax assets as of June 30, 2020
and December 31, 2019.
The net deferred tax liability of $2.8 million
and $3.0 million at June 30, 2020 and December 31, 2019, respectively, relates to the temporary differences associated
with the IPR&D intangible assets acquired in previous business combinations and is not deductible for tax purposes. During
the quarter ended June 30, 2020, a $0.2 million non-cash income tax benefit was recorded related to the impairment of the CDX-3379
IPR&D asset.
Massachusetts, New Jersey, New York and
Connecticut are the jurisdictions in which the Company primarily operates or has operated and has income tax nexus. The Company
is not currently under examination by these or any other jurisdictions for any tax year.
(13) Net Loss Per Share
Basic net loss per common share is based
upon the weighted-average number of common shares outstanding during the period, excluding restricted stock that has been issued
but is not yet vested. Diluted net loss per common share is based upon the weighted-average number of common shares outstanding
during the period plus additional weighted-average potentially dilutive common shares outstanding during the period when the effect
is dilutive. In periods in which the Company reports a net loss, there is no difference between basic and diluted net loss per
share because dilutive shares of common stock are not assumed to have been issued as their effect is anti-dilutive. The potentially
dilutive common shares that have not been included in the net loss per common share calculations because the effect would have
been anti-dilutive are as follows:
|
|
Six Months Ended June 30,
|
|
|
|
2020
|
|
|
2019
|
|
Stock Options
|
|
|
3,085,287
|
|
|
|
1,690,074
|
|
Restricted Stock
|
|
|
—
|
|
|
|
1,110
|
|
|
|
|
3,085,287
|
|
|
|
1,691,184
|
|
(14) Kolltan Acquisition
On November 29, 2016, the Company acquired
all of the share and debt interests of Kolltan Pharmaceuticals, Inc. (“Kolltan”), a clinical-stage biopharmaceutical
company, in exchange for 1,217,200 shares of the Company’s common stock plus contingent consideration in the form of development,
regulatory approval and sales-based milestones (“Kolltan Milestones”) of up to $172.5 million. The Kolltan Milestone
payments, if any, may be made, at Celldex’s sole election, in cash, in shares of Celldex’s common stock or a combination
of both, subject to provisions of the Merger Agreement. Certain Kolltan Milestones have been abandoned consistent with the provisions
of the Merger Agreement and, because of this, as of June 30, 2020, the Company believes that the adjusted amount we may be required
to pay for future consideration is up to $107.5 million contingent upon the achievement of the Kolltan Milestones.
In October 2019, the Company received a
letter from the representative of Kolltan’s former stockholders notifying the Company that it objected to the Company’s
abandonment of certain Kolltan Milestones relating to development, regulatory approval and sales-based milestones. The Company
disagrees with their objection and believes their objection to be without merit. The Company is continuting to discuss with the
representative of Kolltan’s former stockholders potential amendments to the Merger Agreement with respect to the Kolltan
Milestones. There can be no assurances that an amendment to the Merger Agreement will be completed on terms acceptable to the Company
or at all. At this time, the Company is unable to reasonably assess the ultimate outcome of the Company’s disagreement with
the representative of Kolltan’s former stockholders over its objection to the Company’s abandonment of certain Kolltan
Milestones or determine an estimate of potential losses, if any.
Item 2. Management’s Discussion and Analysis of
Financial Condition and Results of Operations
Safe
Harbor Statement under the Private Securities Litigation Reform Act of 1995: This report on Form 10-Q contains
forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995
under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations,
anticipations, assumptions, estimates, intentions and future performance, and involve known and unknown risks, uncertainties and
other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially
different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements
other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking
statements through our use of words such as “may,” “will,” “can,” “anticipate,”
“assume,” “should,” “indicate,” “would,” “believe,” “contemplate,”
“expect,” “seek,” “estimate,” “continue,” “plan,” “point to,”
“project,” “predict,” “could,” “intend,” “target,” “potential”
and other similar words and expressions of the future.
There are a number of important factors
that could cause the actual results to differ materially from those expressed in any forward-looking statement made by us. These
factors include, but are not limited to:
|
·
|
our dependence on product candidates, which are still in an early development stage;
|
|
·
|
our ability to successfully complete research and further development, including animal, preclinical and clinical studies, and, if we obtain regulatory approval, commercialization of our drug candidates and the growth of the markets for those drug candidates;
|
|
·
|
our anticipated timing for preclinical development, regulatory submissions, commencement and completion of clinical trials and product approvals;
|
|
·
|
The impact of the recent outbreak of a novel strain of coronavirus on our business or on the economy generally;
|
|
·
|
Whether the recent coronavirus outbreak will affect the timing of the completion of our planned and/or currently ongoing preclinical/clinical trials;
|
|
·
|
our ability to negotiate strategic partnerships, where appropriate, for our drug candidates;
|
|
·
|
our ability to manage multiple clinical trials for a variety of drug candidates at different stages of development;
|
|
·
|
the cost, timing, scope and results of ongoing preclinical and clinical testing;
|
|
·
|
our expectations of the attributes of our product and development candidates, including pharmaceutical properties, efficacy, safety and dosing regimens;
|
|
·
|
the cost, timing and uncertainty of obtaining regulatory approvals for our drug candidates;
|
|
·
|
the availability, cost, delivery and quality of clinical management services provided by our clinical research organization partners;
|
|
·
|
the availability, cost, delivery and quality of clinical and commercial-grade materials produced by our own manufacturing facility or supplied by contract manufacturers, suppliers and partners;
|
|
·
|
our ability to develop and commercialize products before competitors that are superior to the alternatives developed by such competitors;
|
|
·
|
our ability to develop technological capabilities, including identification of novel and clinically important targets, exploiting our existing technology platforms to develop new drug candidates and expand our focus to broader markets for our existing targeted immunotherapeutics;
|
|
·
|
the cost of paying development, regulatory approval and sales-based milestones under the merger agreement by which we acquired Kolltan, including under any future amendment to that agreement;
|
|
·
|
our ability to realize the anticipated benefits from the acquisition of Kolltan;
|
|
·
|
our ability to raise sufficient capital to fund our animal, preclinical and clinical studies and to meet our liquidity needs, on terms acceptable to us, or at all. If we are unable to raise the funds necessary to meet our liquidity needs, we may have to delay or discontinue the development of one or more programs, discontinue or delay ongoing or anticipated clinical trials, license out programs earlier than expected, raise funds at significant discount or on other unfavorable terms, if at all, or sell all or part of our business;
|
|
·
|
our ability to protect our intellectual property rights and our ability to avoid intellectual property litigation, which can be costly and divert management time and attention;
|
|
·
|
our ability to develop and commercialize products without infringing the intellectual property rights of third parties; and
|
|
·
|
the risk factors set forth elsewhere in this quarterly report on Form 10-Q and the factors listed under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s annual report on Form 10-K for the year ended December 31, 2019 and other reports that we file with the Securities and Exchange Commission.
|
All forward-looking statements are expressly
qualified in their entirety by this cautionary notice. You are cautioned not to place undue reliance on any forward-looking statements,
which speak only as of the date of this report or the date of the document incorporated by reference into this report. We have
no obligation, and expressly disclaim any obligation, to update, revise or correct any of the forward-looking statements, whether
as a result of new information, future events or otherwise. We have expressed our expectations, beliefs and projections in good
faith, and we believe they have a reasonable basis. However, we cannot assure you that our expectations, beliefs or projections
will result or be achieved or accomplished.
OVERVIEW
We are a biopharmaceutical company focused
on the development and commercialization of immunotherapies and other targeted biologics. Our drug candidates are derived from
a broad set of human and bispecific antibodies which have the ability to engage the human immune system and/or directly inhibit
tumors to treat specific types of cancer or other diseases. They are aimed at addressing market opportunities for which we believe
current therapies are inadequate or non-existent.
We are focusing our efforts and resources
on the continued research and development of:
|
•
|
CDX-0159, a monoclonal antibody that
specifically binds the KIT receptor and potently inhibits its activity, which recently completed a Phase 1a study in
healthy subjects. We plan to study CDX-0159 in mast cell driven diseases, including, initially, initiating Phase 1b studies
in chronic spontaneous urticaria (CSU) and chronic inducible urticarias (CIndUs) this fall; and,
|
|
•
|
CDX-1140, an agonist monoclonal antibody targeted to CD40, a key activator of immune response, currently being studied as a single-agent and in combination with CDX-301, a dendritic cell growth factor. Dose escalation was completed in a Phase 1 study in solid tumors and lymphoma and the recommended dose for further study was determined to be 1.5 mg/kg for both CDX-1140 monotherapy and in combination with CDX-301. Celldex has initiated multiple expansion cohorts within the study, including a combination cohort with KEYTRUDA® (pembrolizumab) in patients refractory to PD1/PDL1 treatment and plans to initiate a combination cohort with standard of care chemotherapy in patients with untreated metastatic pancreatic cancer later this year. The Company is exploring additional combination cohorts with mechanisms that we believe could be complementary or synergistic with CDX-1140;
|
|
•
|
CDX-527, a bispecific antibody that uses our proprietary highly active anti-PD-L1 and CD27 human antibodies to couple CD27 co-stimulation with blockade of the PD-L1/PD-1 pathway, for which we plan to initiate a Phase 1 study in advanced solid tumors later this year.
|
We are discontinuing development of CDX-3379,
an ErbB3 inhibitor, and directing the resources allocated to this program to expanded development of CDX-0159 and other assets
in our pipeline. CDX-3379 was in an exploratory study designed to evaluate of the utility of biomarkers for patient selection in
the treatment of cetuximab-refractory head and neck squamous cell carcinoma.
We routinely work with external parties
to collaboratively advance our drug candidates. In addition to Celldex-led studies, we also have an Investigator Initiated Research
(IIR) program with multiple studies ongoing with our drug candidates.
Our goal is to build a fully integrated,
commercial-stage biopharmaceutical company that develops important therapies for patients with unmet medical needs. We believe
our program assets provide us with the strategic options to either retain full economic rights to our innovative therapies or seek
favorable economic terms through advantageous commercial partnerships. This approach allows us to maximize the overall value of
our technology and product portfolio while best ensuring the expeditious development of each individual product. Currently, all
programs are fully owned by Celldex.
The expenditures that will be necessary
to execute our business plan are subject to numerous uncertainties. Completion of clinical trials may take several years or more,
and the length of time generally varies substantially according to the type, complexity, novelty and intended use of a drug candidate.
It is not unusual for the clinical development of these types of drug candidates to each take five years or more, and for total
development costs to exceed $100 million for each drug candidate. We estimate that clinical trials of the type we generally
conduct are typically completed over the following timelines:
Clinical Phase
|
|
Estimated
Completion
Period
|
Phase 1
|
|
1 - 2 Years
|
Phase 2
|
|
1 - 5 Years
|
Phase 3
|
|
1 - 5 Years
|
The duration and the cost of clinical trials
may vary significantly over the life of a project as a result of differences arising during the clinical trial protocol, including,
among others, the following:
|
·
|
the number of patients that ultimately participate in the trial;
|
|
·
|
the duration of patient follow-up that seems appropriate in view of results;
|
|
·
|
the number of clinical sites included in the trials;
|
|
·
|
the length of time required to enroll suitable patient subjects; and
|
|
·
|
the efficacy and safety profile of the drug candidate.
|
We test potential drug candidates in numerous
preclinical studies for safety, toxicology and immunogenicity. We may then conduct multiple clinical trials for each drug candidate.
As we obtain results from trials, we may elect to discontinue or delay clinical trials for certain drug candidates in order to
focus our resources on more promising drug candidates.
An element of our business strategy is to
pursue the discovery, research and development of a broad portfolio of drug candidates. This is intended to allow us to diversify
the risks associated with our research and development expenditures. To the extent we are unable to maintain a broad range of drug
candidates, our dependence on the success of one or a few drug candidates increases.
Regulatory approval is required before we
can market our drug candidates as therapeutic products. In order to proceed to subsequent clinical trial stages and to ultimately
achieve regulatory approval, the regulatory agency must conclude that our clinical data demonstrate that our product candidates
are safe and effective. Historically, the results from preclinical testing and early clinical trials (through Phase 2) have
often not been predictive of results obtained in later clinical trials. A number of new drugs and biologics have shown promising
results in early clinical trials but subsequently failed to establish sufficient safety and efficacy data to obtain necessary regulatory
approvals.
Furthermore, our business strategy includes
the option of entering into collaborative arrangements with third parties to complete the development and commercialization of
our drug candidates. In the event that third parties take over the clinical trial process for one of our drug candidates, the estimated
completion date would largely be under control of that third party rather than us. We cannot forecast with any degree of certainty
which proprietary products, if any, will be subject to future collaborative arrangements, in whole or in part, and how such arrangements
would affect our development plan or capital requirements. Our programs may also benefit from subsidies, grants, contracts or government
or agency-sponsored studies that could reduce our development costs.
As a result of the uncertainties discussed
above, among others, it is difficult to accurately estimate the duration and completion costs of our research and development projects
or when, if ever, and to what extent we will receive cash inflows from the commercialization and sale of a product. Our inability
to complete our research and development projects in a timely manner or our failure to enter into collaborative agreements, when
appropriate, could significantly increase our capital requirements and could adversely impact our liquidity. These uncertainties
could force us to seek additional, external sources of financing from time to time in order to continue with our business strategy.
Our inability to raise additional capital, or to do so on terms reasonably acceptable to us, would jeopardize the future success
of our business.
During the past five years through December 31,
2019, we incurred an aggregate of $408.2 million in research and development expenses. The following table indicates the amount
incurred for each of our significant research programs and for other identified research and development activities during the
six months ended June 30, 2020 and 2019. The amounts disclosed in the following table reflect direct research and development costs,
license fees associated with the underlying technology and an allocation of indirect research and development costs to each program.
|
|
Six Months Ended
June 30, 2020
|
|
|
Six Months Ended
June 30, 2019
|
|
|
|
(In thousands)
|
|
CDX-0159/Anti-KIT Program
|
|
$
|
2,896
|
|
|
$
|
1,974
|
|
CDX-1140
|
|
|
5,069
|
|
|
|
3,195
|
|
CDX-527
|
|
|
5,891
|
|
|
|
3,412
|
|
TAM Program
|
|
|
1,192
|
|
|
|
2,571
|
|
Other Programs
|
|
|
6,352
|
|
|
|
10,080
|
|
Total R&D Expense
|
|
$
|
21,400
|
|
|
$
|
21,232
|
|
Clinical Development Programs
CDX-0159
CDX-0159 is a humanized monoclonal antibody
that specifically binds the receptor tyrosine kinase KIT and potently inhibits its activity. KIT is expressed in a variety of cells,
including mast cells, and its activation by its ligand SCF regulates mast cell growth, differentiation, survival, chemotaxis and
degranulation. In certain inflammatory diseases, such as chronic spontaneous urticaria (CSU), also known as chronic idiopathic
urticaria (CIU) and chronic inducible urticarias (CIndUs), mast cell degranulation plays a central role in the onset and progression
of the disease.
CDX-0159 is designed to block KIT activation
by disrupting both SCF binding and KIT dimerization. Celldex believes that by targeting KIT, CDX-0159 may be able to inhibit mast
cell activity and decrease mast cell numbers to provide potential clinical benefit in mast cell related diseases.
We recently completed a randomized,
double-blind, placebo-controlled, single ascending dose escalation Phase 1a study of CDX-0159 in healthy subjects (n=32; 8
subjects per cohort, 6 CDX-0159; 2 placebo). Subjects received a single intravenous infusion of CDX-0159 at 0.3, 1.0, 3.0, or 9.0
mg/kg or placebo. The objectives of the study included safety and tolerability, pharmacokinetics (PK) and pharmacodynamics (tryptase
and stem cell factor) and immunogenicity. Tryptase is an enzyme synthesized and secreted almost exclusively by mast cells and decreases
in plasma tryptase levels are believed to reflect a systemic reduction in mast cell burden in both healthy volunteers and in disease.
Data from the study were featured in a late breaking presentation at the European Academy of Allergy and Clinical Immunology (EAACI)
Annual Congress 2020 in June. CDX-0159 demonstrated a favorable safety profile as well as profound and durable reductions of plasma
tryptase, consistent with systemic mast cell suppression.
|
·
|
Most common adverse events were mild infusion-related reactions, all of which spontaneously resolved without intervention.
Mild and asymptomatic decreases in neutrophil and white blood cell count were observed in laboratory testing.
|
|
·
|
A single dose of CDX-0159 suppressed plasma tryptase levels in a dose-dependent manner, indicative of systemic mast cell suppression.
Tryptase suppression below the level of detection was observed after a single 1.0 mg/kg dose and was maintained for more than 2
months at single doses of both 3.0 and 9.0 mg/kg of CDX-0159. A subset of subjects from the 3mg/kg and 9 mg/kg cohorts agreed to
continued follow up for tryptase suppression which remained below the level of detection for over 3 months (14 weeks) in 50% of
subjects and over 4 months (18 weeks) in all subjects, respectively.
|
|
·
|
Dose dependent increases in plasma stem cell factor mirror decreases in tryptase, consistent with allosteric blockade of stem
cell factor to KIT and demonstrate complete target engagement in vivo.
|
|
·
|
Long serum half-life and non-immunogenic profile support a convenient dosing schedule.
|
|
·
|
Enhanced PK profile and durable tryptase suppression at low doses support re-formulation for sub-cutaneous administration.
|
These data support expansion of the
CDX-0159 program into mast cell driven diseases, including initially studies in forms of chronic urticaria (CU) given the
central role mast cells are known to play in the etiology of CU. Celldex plans to initiate Phase 1b studies of CDX-0159 this
fall in patients with chronic spontaneous urticaria (CSU) and chronic inducible urticaria (CIndU), diseases where mast cell
degranulation plays a central role in the onset and progression of the disease. The prevalence of CSU and CIndU is
approximately 0.5-1% of the total population or up to 1 to 3 million patients in the United States alone (Weller et al. 2010.
Hautarzt. 61(8), Bartlett et al. 2018. DermNet. Org). CSU presents as itchy hives, angioedema or both for at least six weeks
without a specific trigger; multiple episodes can play out over years or even decades. About 50% of patients with CSU achieve
symptomatic control with antihistamines or leukotriene receptor antagonists. Omalizumab, an IgE inhibitor, provides relief
for roughly half of the remaining antihistamine/leukotriene refractory patients. Consequently, there is a need for additional
therapies. CIndUs are forms of urticaria that have an attributable cause or trigger associated with them, typically resulting
in hives or wheals. Celldex is exploring cold-induced and dermographism (scratch-induced) urticarias. Celldex is also
exploring additional mast cell driven diseases for future development.
CDX-1140
CDX-1140 is a fully human agonist monoclonal
antibody targeted to CD40, a key activator of immune response, which is found on dendritic cells, macrophages and B cells and is
also expressed on many cancer cells. Potent CD40 agonist antibodies have shown encouraging results in early clinical studies; however,
systemic toxicity associated with broad CD40 activation has limited their dosing. CDX-1140 has unique properties relative to other
CD40 agonist antibodies: potent agonist activity is independent of Fc receptor interaction, contributing to more consistent, controlled
immune activation; CD40L binding is not blocked, leading to potential synergistic effects of agonist activity near activated T
cells in lymph nodes and tumors; and the antibody does not promote cytokine production in whole blood assays. CDX-1140 has shown
direct anti-tumor activity in preclinical models of lymphoma. Preclinical studies of CDX-1140 clearly demonstrate strong immune
activation effects and low systemic toxicity and support the design of the Phase 1 study to identify the dose for characterizing
single-agent and combination activity.
We initiated a Phase 1 study of CDX-1140
in November 2017. This study is expected to enroll up to approximately 220 patients with recurrent, locally advanced or metastatic
solid tumors and B cell lymphomas. The study is designed to determine the maximum tolerated dose, or MTD, during a dose-escalation
phase (0.01 to 3.0 mg/kg once every four weeks until confirmed progression or intolerance) and to recommend a dose level for further
study in a subsequent expansion phase. The expansion is designed to further evaluate the tolerability and biologic effects of selected
dose(s) of CDX-1140 in specific tumor types. Secondary objectives include assessments of safety and tolerability, pharmacodynamics,
pharmacokinetics, immunogenicity and additional measures of anti-tumor activity, including clinical benefit rate. We believe that
the potential for CDX-1140 will be best defined in combination studies with other immunotherapies or conventional cancer treatments.
In support of this, the Phase 1 study
protocol also allows for the exploration of CDX-1140 in combination with CDX-301 at a fixed dose of CDX-301 and escalating doses
of CDX-1140. Dendritic cells, which express CD40, are often rare or missing from the tumor microenvironment and are critical for
initiating anti-tumor immunity. CDX-301, a recombinant FMS-like tyrosine kinase 3 ligand, or Flt3L, is a hematopoietic cytokine
that uniquely expands dendritic cells and hematopoietic stem cells, and in combination with other agents may potentiate anti-tumor
responses. CDX-301 is being utilized as a priming agent in this study to increase the number of dendritic cells in blood and tissue
available for CDX-1140 activation. CDX-1140 should, in turn, activate and mature the dendritic cells, an important step for enhancing
anti-tumor immune responses.
Interim data from this ongoing study were
presented at the Society for Immunotherapy of Cancer’s (SITC) 34th Annual Meeting in November 2019. CDX-1140 monotherapy
dose escalation in the study is complete and the maximum tolerated dose and recommended Phase 2 dose was defined as 1.5 mg/kg
every four weeks. CDX-1140 monotherapy and combination with CDX-301 was generally well tolerated, with mostly grade 1 or grade
2 drug related adverse events reported. Two patients out of six experienced pneumonitis as dose limiting toxicities (DLTs) in the
CDX-1140 3.0 mg/kg monotherapy cohort. There were no DLTs observed in the CDX-301 combination cohorts up to 0.72 mg/kg CDX-1140.
A cohort of CDX-1140 at 1.5 mg/kg plus CDX-301, which was ongoing at the time of data release, has subsequently completed dose
escalation with no DLTs observed; therefore, the recommended dose of CDX-1140 in combination with CDX-301 is 1.5mg/kg.
As of the cut-off date for data reporting
for SITC, 62 patients with advanced refractory solid tumors or lymphoma were enrolled and 38 patients had pre- and post-treatment
scans available. Patients were heavily pretreated (median of 4 prior therapies) and per protocol were required to have received
all standard of care treatments prior to study entry. CDX-1140 demonstrated clinical and biological activity in the study.
|
•
|
Two of five patients with head and neck squamous cell carcinoma (HNSCC) treated with CDX-1140 doses of 0.72 mg/kg or higher experienced clinical activity. The first patient experienced dramatic shrinkage of a large, protruding neck mass on physical exam after two doses of CDX-1140 at 1.5 mg/kg with documented evidence of tumor necrosis/cavitation on CT scan. This patient also reported decreased tumor pain. A second patient experienced cavitation of greater than 50% of lung metastases on CT scan after one dose of CDX-1140 3 mg/kg.
|
|
•
|
A patient with gastroesophageal carcinoma experienced a RECIST response after two cycles of CDX-1140 0.36 mg/kg plus CDX-301 that included 41% shrinkage of liver and lymph node target lesions, with near complete resolution of the liver lesion. This response was durable for four months.
|
|
•
|
Six patients experienced stable disease (n=4 CDX-1140 monotherapy; n=2 CDX-1140/CDX-301 combination) with a duration of 1.8 months to 5.4 months.
|
|
•
|
One patient experienced immune unconfirmed progressive disease on their first scan and continued on treatment for 10+ months without confirmation of progressive disease at CDX-1140 0.09 mg/kg plus CDX-301.
|
Potent pharmacological effects associated
with immune activation were also observed, including transient induction of inflammatory cytokines and chemokines associated with
dendritic cell and T cell activation at higher dose levels. Similar activation was observed with each cycle of therapy. Peripheral
blood immune cells had upregulated immune activation markers and CDX-301 markedly increased the number of dendritic cells and was
associated with higher IL-12p40 induction, a key molecule for inducing anti-tumor T cell responses.
CDX-1140 monotherapy expansion cohorts in
HNSCC, renal cell carcinoma and gastroesophageal adenocarcinoma have been added to the study, along with a combination cohort of
CDX-1140 and CDX-301 in HNSCC. In addition, we have prioritized a cohort to evaluate CDX-1140 in combination with KEYTRUDA®
(pembrolizumab), Merck’s anti-PD-1 therapy, under a clinical trial collaboration agreement with Merck (known as MSD outside
of the U.S. and Canada). The cohort is designed to characterize the safety, pharmacodynamics and activity of CDX-1140 in combination
with pembrolizumab in patients refractory to PD1/PDL1 treatment. Enrollment is ongoing. We also plan to initiate a cohort in combination
with standard of care chemotherapy in patients with previously untreated metastatic pancreatic cancer later this year. The Company
is exploring additional combination cohorts with mechanisms that we believe could be complementary or synergistic with CDX-1140.
CDX-527
CDX-527 is the first candidate from Celldex’s
bispecific antibody platform. Bispecifics provide opportunities to engage two independent pathways involved in controlling immune
responses to tumors. CDX-527 uses Celldex’s proprietary highly active anti-PD-L1 and CD27 human antibodies to couple CD27
co-stimulation with blockade of the PD-L1/PD-1 pathway to help prime and activate anti-tumor T cell responses through CD27 costimulation,
while preventing PD-1 inhibitory signals that subvert the immune response.
Celldex’s prior clinical experience
with combining CD27 activation and PD-1 blockade provide the rationale for linking these two pathways into one molecule. Preclinical
data presented at the SITC 34th Annual Meeting in November 2019 demonstrated that CDX-527 is more potent at T cell activation
and anti-tumor immunity than the combination of parental monoclonal antibodies.
Later this year, Celldex plans to initiate
a Phase 1 dose-escalation study in up to ~90 patients with advanced or metastatic solid tumors that have progressed during
or after standard of care therapy to be followed by tumor-specific expansion cohorts. The study is designed to determine the maximum
tolerated dose, or MTD, during a dose-escalation phase and to recommend a dose level for further study in the subsequent expansion
phase. The expansion is designed to further evaluate the tolerability, biologic and anti-tumor effects of selected dose level(s)
of CDX-527 in specific tumor types.
CDX-3379
CDX-3379 is a human monoclonal antibody
with half-life extension designed to block the activity of ErbB3 (HER3). We believe ErbB3 may be an important receptor regulating
cancer cell growth and survival as well as resistance to targeted therapies. ErbB3 is expressed in many cancers, including head
and neck, thyroid, breast, lung and gastric cancers, as well as melanoma. CDX-3379 was recently evaluated in a Phase 2 open-label
exploratory study in combination with Erbitux in patients with human papillomavirus (HPV) negative, Erbitux-resistant, advanced
HNSCC who have previously been treated with an anti-PD1 checkpoint inhibitor, a population with limited options and a particularly
poor prognosis.
The study was initially designed as a Simon
two-stage design with an interim futility analysis following enrollment of the first 13 patients. According to the study design,
if at least one patient achieved an objective response in the first stage, enrollment could progress to the second stage. The primary
endpoint of the study was objective response rate (ORR). Secondary endpoints included assessments of clinical benefit response
(CBR), duration of response (DOR), progression-free survival (PFS), overall survival (OS), and safety and pharmacokinetics associated
with the combination. Enrollment to the first stage of the Phase 2 study (n=15) was completed and interim data were presented
at the 2019 ASCO Annual Meeting in June. A durable confirmed complete response (11+ months) and an unconfirmed partial response
(uPR) in a patient that had not received cetuximab were observed; 7 patients experienced stable disease (47%; includes uPR). CDX-3379
in combination with cetuximab was generally associated with target-mediated adverse events of diarrhea and rash and dose reductions
and/or delays to the combination therapy in the majority of patients were contemplated to have potentially impacted the magnitude
of anti-tumor activity in the study. The analysis presented at ASCO also suggested that observed antitumor activity with CDX-3379
across the Phase 1 and Phase 2 studies might be associated with somatic mutations in the FAT1 and NOTCH1-3 genes—genes associated
with tumor suppression.
Based on these biomarker observations and
the clinical activity observed in the Phase 2 study, the study was amended and expanded to add an additional 30 patients to allow
for an evaluation of the utility of biomarkers for patient selection. Enrollment of the first 15 patients in this expansion cohort
was recently completed. One patient experienced an ongoing objective response (7%) and 5 (33%) patients experienced stable disease
on at least one tumor assessment. Consistent with the first cohort, the combination of CDX-3379 and cetuximab appears to result
in synergistic toxicity with target mediated adverse events of diarrhea and rash. While diarrhea prophylaxis implemented in second
cohort appeared to have been effective in ameliorating severity of symptoms it did not decrease the frequency and the incidence
of severe rash increased, resulting in dose reductions and/or delays to the combination therapy in the majority of patients. When
considered together, the emerging clinical activity data is not adequate to justify the significant toxicity of the combination
and the results do not support continued development of the combination, regardless of pending biomarker data. As a result, Celldex
is discontinuing development of CDX-3379 and the resources allocated to this program will be focused on expanded development of
CDX-0159 and additional assets in our pipeline.
CRITICAL ACCOUNTING POLICIES
See Note 2 to the unaudited condensed consolidated
financial statements included elsewhere in this Quarterly Report on Form 10-Q for information regarding newly adopted and
recent accounting pronouncements. See also Note 2 to our financial statements included in our Annual Report on Form 10-K for
the year ended December 31, 2019 for a discussion of our critical accounting policies. There have been no material changes
to such critical accounting policies. We believe our most critical accounting policies include accounting for contingent consideration,
revenue recognition, intangible and long-lived assets, research and development expenses and stock-based compensation expense.
RESULTS OF OPERATIONS
Three Months Ended June 30, 2020 Compared with Three Months
Ended June 30, 2019
|
|
Three Months Ended
June 30,
|
|
|
Increase/
(Decrease)
|
|
|
Increase/
(Decrease)
|
|
|
|
2020
|
|
|
2019
|
|
|
$
|
|
|
%
|
|
|
|
(In thousands)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product Development and Licensing Agreements
|
|
$
|
—
|
|
|
$
|
195
|
|
|
$
|
(195
|
)
|
|
|
(100
|
)%
|
Contracts and Grants
|
|
|
236
|
|
|
|
520
|
|
|
|
(284
|
)
|
|
|
(55
|
)%
|
Total Revenue
|
|
$
|
236
|
|
|
$
|
715
|
|
|
$
|
(479
|
)
|
|
|
(67
|
)%
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and Development
|
|
|
9,705
|
|
|
|
10,081
|
|
|
|
(376
|
)
|
|
|
(4
|
)%
|
General and Administrative
|
|
|
3,528
|
|
|
|
3,908
|
|
|
|
(380
|
)
|
|
|
(10
|
)%
|
Intangible Asset Impairment
|
|
|
3,500
|
|
|
|
—
|
|
|
|
3,500
|
|
|
|
n/a
|
|
Gain on Fair Value Remeasurement of Contingent Consideration
|
|
|
(5,132
|
)
|
|
|
(1,017
|
)
|
|
|
4,115
|
|
|
|
405
|
%
|
Total Operating Expense
|
|
|
11,601
|
|
|
|
12,972
|
|
|
|
(1,371
|
)
|
|
|
(11
|
)%
|
Operating Loss
|
|
|
(11,365
|
)
|
|
|
(12,257
|
)
|
|
|
(892
|
)
|
|
|
(7
|
)%
|
Investment and Other Income, Net
|
|
|
106
|
|
|
|
478
|
|
|
|
(372
|
)
|
|
|
(78
|
)%
|
Net Loss Before Income Tax Benefit
|
|
|
(11,259
|
)
|
|
|
(11,779
|
)
|
|
|
(520
|
)
|
|
|
(4
|
)%
|
Income Tax Benefit
|
|
|
228
|
|
|
|
—
|
|
|
|
228
|
|
|
|
n/a
|
|
Net Loss
|
|
$
|
(11,031
|
)
|
|
$
|
(11,779
|
)
|
|
$
|
(748
|
)
|
|
|
(6
|
)%
|
Net Loss
The $0.7 million decrease in net loss for
the three months ended June 30, 2020, as compared to the three months ended June 30, 2019, was primarily the result of an increase
in the gain on fair value remeasurement of contingent consideration, partially offset by the increase in non-cash intangible asset
impairment expense.
Revenue
The $0.2 million decrease in product development
and licensing agreements revenue for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019,
was primarily due to a decrease in revenue under the Rockefeller Agreement. The $0.3 million decrease in contracts and grants revenue
for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019, was primarily related to a decrease
in services performed under our manufacturing and research and development agreement with Duke University. We expect revenue to
remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.
Research and Development Expense
Research and development expenses consist
primarily of (i) personnel expenses, (ii) laboratory supply expenses relating to the development of our technology, (iii) facility
expenses and (iv) product development expenses associated with our drug candidates as follows:
|
|
Three Months Ended
June 30
|
|
|
Increase/
(Decrease)
|
|
|
|
2020
|
|
|
2019
|
|
|
$
|
|
|
%
|
|
|
|
(In thousands)
|
|
Personnel
|
|
$
|
5,216
|
|
|
$
|
5,408
|
|
|
$
|
(192
|
)
|
|
|
(4
|
)%
|
Laboratory Supplies
|
|
|
775
|
|
|
|
1,257
|
|
|
|
(482
|
)
|
|
|
(38
|
)%
|
Facility
|
|
|
1,758
|
|
|
|
1,558
|
|
|
|
200
|
|
|
|
13
|
%
|
Product Development
|
|
|
1,023
|
|
|
|
827
|
|
|
|
196
|
|
|
|
24
|
%
|
Personnel expenses primarily include salary,
benefits, stock-based compensation and payroll taxes. The $0.2 million decrease in personnel expenses for the three months ended
June 30, 2020, as compared to the three months ended June 30, 2019, was primarily due to lower stock-based compensation expense.
We expect personnel expenses to remain relatively consistent over the next twelve months, although there may be fluctuations on
a quarterly basis.
Laboratory supplies expenses include laboratory
materials and supplies, services, and other related expenses incurred in the development of our technology. The $0.5 million decrease
in laboratory supply expenses for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019, was
primarily due to lower laboratory materials and supplies purchases. We expect laboratory supplies expenses to remain relatively
consistent over the next twelve months, although there may be fluctuations on a quarterly basis.
Facility expenses include depreciation,
amortization, utilities, rent, maintenance and other related expenses incurred at our facilities. The $0.2 million increase in
facility expenses for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019, was primarily
due to higher variable lease expense, including common area maintenance and utilities, in the second quarter of 2020. We expect
facility expenses to decrease over the next twelve months as a result of the consolidation our Massachusetts lab and manufacturing
facilities in the second quarter of 2020. In July 2020, we extended the term of its Fall River lease through July 2023.
Product development expenses include clinical
investigator site fees, external trial monitoring costs, data accumulation costs, contracted research and outside clinical drug
product manufacturing. The $0.2 million increase in product development expenses for the three months ended June 30, 2020,
as compared to the three months ended June 30, 2019, was primarily due to an increase in contract manufacturing and clinical trial
expenses of $0.4 million, partially offset by a decrease in contract research expenses of $0.2 million. We expect product development
expenses to increase over the next twelve months, although there may be fluctuations on a quarterly basis.
General and Administrative Expense
The $0.4 million decrease in general and
administrative expenses for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019, was primarily
due to lower stock-based compensation expense. We expect general and administrative expenses to remain relatively consistent over
the next twelve months, although there may be fluctuations on a quarterly basis.
Intangible Asset Impairment
We evaluated the CDX-3379 IPR&D asset
for potential impairment as a result of the discontinuation of the CDX-3379 program. We concluded that the CDX-3379 IPR&D asset
was fully impaired, and a non-cash impairment charge of $3.5 million was recorded for the three months ended June 30, 2020.
Gain on Fair Value Remeasurement of Contingent Consideration
The $5.1 million gain on fair value remeasurement
of contingent consideration for the three months ended June 30, 2020 was primarily due to updated assumptions for CDX-3379 related
milestones due to the discontinuation of the CDX-3379 program. The $1.0 million gain on fair value remeasurement of contingent
consideration for the three months ended June 30, 2019 was primarily due to changes in discount rates and the passage of time.
Investment and Other Income, Net
The $0.4 million decrease in investment
and other income, net for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019, was primarily
due to lower levels of cash and investment balances. We anticipate investment income to increase over the next twelve months due
to higher levels of cash and investment balances and higher other income related to our sale of New Jersey tax benefits.
Income Tax Benefit
During the quarter ended June 30, 2020,
a $0.2 million non-cash income tax benefit was recorded related to the impairment of the CDX-3379 IPR&D asset.
Six Months Ended June 30, 2020 Compared with
Six Months Ended June 30, 2019
|
|
Six Months Ended
June 30,
|
|
|
Increase/
(Decrease)
|
|
|
Increase/
(Decrease)
|
|
|
|
2020
|
|
|
2019
|
|
|
$
|
|
|
%
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product Development and Licensing Agreements
|
|
$
|
2,285
|
|
|
$
|
325
|
|
|
$
|
1,960
|
|
|
|
603
|
%
|
Contracts and Grants
|
|
|
680
|
|
|
|
1,815
|
|
|
|
(1,135
|
)
|
|
|
(63
|
)%
|
Total Revenue
|
|
$
|
2,965
|
|
|
$
|
2,140
|
|
|
$
|
825
|
|
|
|
39
|
%
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and Development
|
|
|
21,400
|
|
|
|
21,232
|
|
|
|
168
|
|
|
|
1
|
%
|
General and Administrative
|
|
|
7,194
|
|
|
|
8,804
|
|
|
|
(1,610
|
)
|
|
|
(18
|
)%
|
Intangible Asset Impairment
|
|
|
3,500
|
|
|
|
—
|
|
|
|
3,500
|
|
|
|
n/a
|
|
Other Asset Impairment
|
|
|
—
|
|
|
|
1,800
|
|
|
|
(1,800
|
)
|
|
|
(100
|
)%
|
(Gain) Loss on Fair Value Remeasurement of Contingent Consideration
|
|
|
(4,898
|
)
|
|
|
502
|
|
|
|
5,400
|
|
|
|
1,076
|
%
|
Total Operating Expense
|
|
|
27,196
|
|
|
|
32,338
|
|
|
|
(5,142
|
)
|
|
|
(16
|
)%
|
Operating Loss
|
|
|
(24,231
|
)
|
|
|
(30,198
|
)
|
|
|
(5,967
|
)
|
|
|
(20
|
)%
|
Investment and Other Income, Net
|
|
|
347
|
|
|
|
1,180
|
|
|
|
(833
|
)
|
|
|
(71
|
)%
|
Net Loss Before Income Tax Benefit
|
|
|
(23,884
|
)
|
|
|
(29,018
|
)
|
|
|
(5,134
|
)
|
|
|
(18
|
)%
|
Income Tax Benefit
|
|
|
228
|
|
|
|
—
|
|
|
|
228
|
|
|
|
n/a
|
|
Net Loss
|
|
$
|
(23,656
|
)
|
|
$
|
(29,018
|
)
|
|
$
|
(5,362
|
)
|
|
|
(18
|
)%
|
Net Loss
The $5.4 million decrease in net loss for
the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, was primarily the result of an
increase in the gain on fair value remeasurement of contingent consideration and a decrease in non-cash other asset impairment
expense, partially offset by an increase in intangible asset impairment expense.
Revenue
The $2.0 million increase in product development
and licensing agreements revenue for the six months ended June 30, 2020, as compared to the six months ended June 30,
2019, was primarily due to the $1.8 million received from the Rockefeller Transaction. The $1.1 million decrease in contracts and
grants revenue for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, was primarily
related to a decrease in services performed under our manufacturing and research and development agreement with Duke University.
Research and Development Expense
Research and development expenses consist
primarily of (i) personnel expenses, (ii) laboratory supply expenses relating to the development of our technology, (iii) facility
expenses and (iv) product development expenses associated with our drug candidates as follows:
|
|
Six Months Ended
June 30,
|
|
|
Increase/
(Decrease)
|
|
|
|
2020
|
|
|
2019
|
|
|
$
|
|
|
%
|
|
|
|
|
|
|
(In thousands)
|
|
|
|
|
Personnel
|
|
$
|
10,832
|
|
|
$
|
11,162
|
|
|
$
|
(330
|
)
|
|
|
(3
|
)%
|
Laboratory Supplies
|
|
|
2,235
|
|
|
|
2,053
|
|
|
|
182
|
|
|
|
9
|
%
|
Facility
|
|
|
3,487
|
|
|
|
3,454
|
|
|
|
33
|
|
|
|
1
|
%
|
Product Development
|
|
|
2,829
|
|
|
|
2,522
|
|
|
|
307
|
|
|
|
12
|
%
|
Personnel expenses primarily include salary,
benefits, stock-based compensation and payroll taxes. The $0.3 million decrease in personnel expenses for the six months ended
June 30, 2020, as compared to the six months ended June 30, 2019, was primarily due to lower stock-based compensation
expense.
Laboratory supplies expenses include laboratory
materials and supplies, services, and other related expenses incurred in the development of our technology. The $0.2 million
increase in laboratory supply expenses for the six months ended June 30, 2020, as compared to the six months ended June 30,
2019, was primarily due to higher laboratory materials and supplies purchases.
Facility expenses include depreciation,
amortization, utilities, rent, maintenance and other related expenses incurred at our facilities. Facility expenses for the six
months ended June 30, 2020 were consistent with the six months ended June 30, 2019.
Product development expenses include clinical
investigator site fees, external trial monitoring costs, data accumulation costs, contracted research and outside clinical drug
product manufacturing. The $0.3 million increase in product development expenses for the six months ended June 30, 2020,
as compared to the six months ended June 30, 2019, was primarily due to an increase in clinical trial and contract manufacturing
expenses of $0.9 million, partially offset by a decrease in contract research expenses of $0.6 million.
General and Administrative Expense
The $1.6 million decrease in general and
administrative expenses for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, was
primarily due to lower stock-based compensation expense.
Intangible Asset Impairment
We evaluated the CDX-3379 IPR&D asset
for potential impairment as a result of the discontinuation of the CDX-3379 program. We concluded that the CDX-3379 IPR&D asset
was fully impaired, and a non-cash impairment charge of $3.5 million was recorded for the three months ended June 30, 2020.
Other Asset Impairment
We concluded that the Company’s investment
in an undisclosed private company was impaired as a result of a deterioration in the private company’s financial condition
and recorded a non-cash impairment charge of $1.8 million during the first quarter of 2019.
Gain on Fair Value Remeasurement of Contingent Consideration
The
$4.9 million gain on fair value remeasurement of contingent consideration for the six months ended June 30, 2020 was primarily
due to updated assumptions for CDX-3379 related milestones due to the discontinuation of the CDX-3379 program and the passage of
time. The $0.5 million loss on fair value remeasurement of contingent consideration for the six months ended June 30,
2019 was primarily due to changes in discount rates and the passage of time.
Investment and Other Income, Net
The $0.8 million decrease in investment and other income, net
for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, was primarily due to lower
levels of cash and investment balances and lower other income related to our sale of New Jersey tax benefits.
Income Tax Benefit
During the quarter ended June 30, 2020,
a $0.2 million non-cash income tax benefit was recorded related to the impairment of the CDX-3379 IPR&D asset.
LIQUIDITY AND CAPITAL RESOURCES
Our cash equivalents are highly liquid investments
with a maturity of three months or less at the date of purchase and consist primarily of investments in money market mutual funds
with commercial banks and financial institutions. We maintain cash balances with financial institutions in excess of insured limits.
We do not anticipate any losses with respect to such cash balances. We invest our excess cash balances in marketable securities,
including municipal bond securities, U.S. government agency securities and high-grade corporate bonds that meet high credit quality
standards, as specified in our investment policy. Our investment policy seeks to manage these assets to achieve our goals of preserving
principal and maintaining adequate liquidity.
The use of our cash flows for operations
has primarily consisted of salaries and wages for our employees; facility and facility-related costs for our offices, laboratories
and manufacturing facility; fees paid in connection with preclinical studies, clinical studies, contract manufacturing, laboratory
supplies and services; and consulting, legal and other professional fees. To date, the primary sources of cash flows from operations
have been payments received from our collaborative partners and from government entities and payments received for contract manufacturing
and research and development services provided by us. The timing of any new contract manufacturing and research and development
agreements, collaboration agreements, government contracts or grants and any payments under these agreements, contracts or grants
cannot be easily predicted and may vary significantly from quarter to quarter.
At June 30, 2020, our principal sources
of liquidity consisted of cash, cash equivalents and marketable securities of $206.9 million. We have had recurring losses and
incurred a loss of $23.7 million for the six months ended June 30, 2020. Net cash used in operations for the six months ended June
30, 2020 was $23.3 million. We believe that the cash, cash equivalents and marketable securities at June 30, 2020 are sufficient
to meet estimated working capital requirements and fund planned operations through 2023. This could be impacted if we elected to
pay Kolltan contingent milestones, if any, in cash.
During the next twelve months, we may take
further steps to raise additional capital to meet our long-term liquidity needs including, but may not be limited to, one or more
of the following: the licensing of drug candidates with existing or new collaborative partners, possible business combinations,
issuance of debt, or the issuance of common stock or other securities via private placements or public offerings. Although we have
been successful in raising capital in the past, there can be no assurance that additional financing will be available on acceptable
terms, if at all, and our negotiating position in capital raising efforts may worsen as existing resources are used. There is also
no assurance that we will be able to enter into further collaborative relationships. Additional equity financings may be dilutive
to our stockholders; debt financing, if available, may involve significant cash payment obligations and covenants that restrict
our ability to operate as a business; and licensing or strategic collaborations may result in royalties or other terms which reduce
our economic potential from products under development. Our ability to continue funding our planned operations into and beyond
twelve months from the issuance date is also dependent on the timing and manner of payment of future contingent milestones from
the Kolltan acquisition, in the event that we achieve the drug candidate milestones related to those payments. We may decide to
pay those milestone payments in cash, shares of our common stock or a combination thereof. If we are unable to raise the funds
necessary to meet our long-term liquidity needs, we may have to delay or discontinue the development of one or more programs, discontinue
or delay ongoing or anticipated clinical trials, license out programs earlier than expected, raise funds at a significant discount
or on other unfavorable terms, if at all, or sell all or a part of our business.
Operating Activities
Net cash used in operating activities was
$23.3 million for the six months ended June 30, 2020 as compared to $24.3 million for the six months ended June 30, 2019. The decrease
in net cash used in operating activities was primarily due to a decrease in general and administrative expenses and an increase
in cash received related to product development and licensing agreements. We expect that cash used in operating activities will
remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.
We have incurred and will continue to incur
significant costs in the area of research and development, including preclinical studies and clinical trials, as our drug candidates
are developed. We plan to spend significant amounts to progress our current drug candidates through the clinical trial and commercialization
process as well as to develop additional drug candidates. As our drug candidates progress through the clinical trial process, we
may be obligated to make significant milestone payments.
Investing Activities
Net cash used in investing activities was
$86.6 million for the six months ended June 30, 2020 as compared to net cash provided by investing activities of $8.3 million for
the six months ended June 30, 2019. The increase in net cash used in investing activities was primarily due to net purchases of
marketable securities for the six months ended June 30, 2020 of $85.4 million as compared to net sales and maturities of marketable
securities of $8.8 million for the six months ended June 30, 2019.
Financing Activities
Net cash provided by financing activities
was $166.7 million for the six months ended June 30, 2020 as compared to $11.4 million for the six months ended June 30, 2019.
During the six months ended June 30, 2020,
we issued 6.7 million shares of common stock under our Cantor Agreement resulting in net proceeds of $25.3 million after deducting
commission and offering expenses. At June 30, 2020, we had $18.3 million remaining in aggregate gross offering price available
under the agreement.
During the three months ended June 30, 2020,
the Company issued 15,384,614 shares of its common stock in an underwritten public offering resulting in net proceeds to the Company
of $141.4 million, after deducting underwriting fees and offering expenses.
Aggregate Contractual Obligations
The disclosures relating to our contractual
obligations reported in our Annual Report on Form 10-K for the year ended December 31, 2019 which was filed with the
SEC on March 26, 2020 have not materially changed since we filed that report.
OFF-BALANCE SHEET ARRANGEMENTS
We did not have during the periods presented,
and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.