Celldex Therapeutics, Inc. (NASDAQ:CLDX) Q4 2018 Results Earnings Conference Call March 7, 2019 4:30 PM ET Company Participants Sarah Cavanaugh - Senior Vice President, Corporate Affairs and Administration Anthony Marucci - Co-Founder, President, Chief Executive Officer Tibor Keler - Co-Founder, Executive Vice President, and Chief Scientific Officer Sam Martin - Senior Vice President and Chief Financial Officer Conference Call Participants Joe Pantginis - H.C. Wainwright Operator Good day, ladies and gentle ...

PART I [Item 1. Business](index=6&type=section&id=Item%201.%20Business) Celldex Therapeutics develops immunotherapies and targeted biologics for cancer, advancing four key drug candidates [Overview](index=6&type=section&id=Overview) Celldex Therapeutics develops cancer immunotherapies, focusing on four drug candidates after discontinuing others - Celldex Therapeutics, Inc. is a biopharmaceutical company developing and commercializing immunotherapies and targeted biologics for cancer and other diseases[13](index=13&type=chunk) - Current pipeline focus includes **CDX-1140, CDX-3379, CDX-301, and Varlilumab**[14](index=14&type=chunk) - Discontinued development of glembatumumab vedotin, CDX-014, and CDX-1401 in Q2 2018 following the failure of the Phase 2b METRIC Study of glembatumumab vedotin[16](index=16&type=chunk) [Clinical Development Programs](index=7&type=section&id=Clinical%20Development%20Programs) This section details the clinical development status of Celldex's key drug candidates [CDX-1140](index=7&type=section&id=CDX-1140) CDX-1140, a CD40 agonist antibody, is in Phase 1 development, showing dose-dependent immune activation - CDX-1140 is a fully human agonist monoclonal antibody targeting CD40, a key activator of immune response, found on immune cells and many cancer cells[19](index=19&type=chunk) - A Phase 1 study initiated in November 2017 is enrolling up to **180 patients** with solid tumors and B cell lymphomas to determine the maximum tolerated dose (MTD) and evaluate tolerability and biologic effects[20](index=20&type=chunk) - Interim Phase 1 data (November 2018) showed dose-dependent immune activation, good tolerability, and no MTD reached, with preliminary evidence of enhanced immune activation in combination with CDX-301[22](index=22&type=chunk) [CDX-3379](index=8&type=section&id=CDX-3379) CDX-3379, an ErbB3 blocking antibody, is in Phase 2 for head and neck cancer after showing responses in earlier studies - CDX-3379 is a human monoclonal antibody designed to block ErbB3 (HER3) activity, a receptor regulating cancer cell growth and resistance to therapies[25](index=25&type=chunk) - A Phase 1a/1b study showed objective responses in combination with Erbitux (one durable complete response in head and neck cancer) and Zelboraf (two partial responses in lung cancer)[26](index=26&type=chunk) - An ongoing Phase 2 study combines CDX-3379 with Erbitux in HPV-negative, Erbitux-resistant, advanced head and neck squamous cell carcinoma patients previously treated with anti-PD1 checkpoint inhibitors, with one confirmed complete response documented in the first stage (n=13) enrollment[30](index=30&type=chunk) [Varlilumab](index=9&type=section&id=Varlilumab) Varlilumab, a CD27 agonist antibody, showed an acceptable safety profile and immunologic activity in Phase 1, with Phase 2 data showing promising results in ovarian cancer and GBM - Varlilumab is a fully human agonist monoclonal antibody activating CD27, a co-stimulatory molecule, to stimulate T cells and enhance immune response against cancer[31](index=31&type=chunk) - A Phase 1 single-agent study in **90 patients** with solid or hematologic cancers showed an acceptable safety profile and immunologic activity, with durable multi-year clinical benefit in select patients[32](index=32&type=chunk) - A Phase 1/2 combination study with Opdivo completed Phase 2 enrollment in January 2018 across various solid tumors, with ovarian cancer cohorts showing a **14% ORR** and GBM cohort data (November 2018) showing **OS12 of 50%** in unmethylated MGMT promoter patients[33](index=33&type=chunk)[35](index=35&type=chunk)[38](index=38&type=chunk) [CDX-301](index=10&type=section&id=CDX-301) CDX-301, a recombinant Flt3L, expands dendritic and hematopoietic stem cells, used as a priming agent in combination therapies - CDX-301 is a recombinant Flt3L, a hematopoietic cytokine that expands dendritic cells and hematopoietic stem cells, potentially potentiating anti-tumor responses in combination therapies[39](index=39&type=chunk) - A Phase 1 study demonstrated an acceptable safety profile and mobilization of dendritic and hematopoietic stem cells in healthy volunteers[41](index=41&type=chunk) - CDX-301 is currently used as a priming agent in the ongoing Phase 1 trial of CDX-1140 to increase cells available for CDX-1140 activation[42](index=42&type=chunk) [Development Strategy](index=11&type=section&id=Development%20Strategy) Celldex aims to develop effective immunotherapy regimens through combination therapies and seeks alliances for funding and commercialization - Celldex aims to leverage its understanding of the immune system to develop effective immunotherapy regimens through combinations of therapeutic agents[43](index=43&type=chunk) - The company seeks governmental and corporate alliances for funding and intends to commercialize products through direct selling or corporate partners to maximize portfolio value and expedite development[44](index=44&type=chunk) [Partnerships](index=11&type=section&id=Partnerships) Celldex may enter co-development and commercialization partnerships, which carry risks including termination or pursuit of competing technologies by partners - Celldex may enter co-development and commercialization partnerships to provide financial and other resources, including research, development, manufacturing, and sales/marketing capabilities[45](index=45&type=chunk) - Partnership agreements carry risks, including termination if products are not fully developed, failure to meet obligations, or partners pursuing competing technologies, which could delay or prevent commercialization[46](index=46&type=chunk)[48](index=48&type=chunk) [Research Collaboration and License Agreements](index=12&type=section&id=Research%20Collaboration%20and%20License%20Agreements) Celldex holds various license agreements for technology and patents, requiring royalty, maintenance, and milestone payments - Celldex has license agreements for technology, patents, and applications, requiring royalty payments, annual maintenance fees, patent prosecution costs, and potential future milestone payments[49](index=49&type=chunk) - Key agreements include licenses with Medarex (for varlilumab, low-to-mid single-digit royalties), University of Southampton (for CD27 antibodies, up to **$1.0 million** milestones, low single-digit royalties), Amgen (for CDX-301 and CD40L, up to **$0.9 million** milestones, low single-digit royalties), Yale University (for RTK products including CDX-3379, **$3.0 million** one-time payment, low single-digit royalties), and MedImmune (for CDX-3379, up to **$45.0 million** regulatory/development milestones, up to **$125.0 million** sales milestones, tiered high single-digit to low teens royalties)[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk)[55](index=55&type=chunk) [Competition](index=13&type=section&id=Competition) The biotechnology and pharmaceutical industry is highly competitive, with Celldex facing rivals possessing greater resources and faster development capabilities - The biotechnology and pharmaceutical industry is highly competitive and subject to rapid technological change[56](index=56&type=chunk) - Celldex faces competition from large pharmaceutical companies, universities, and research institutions with substantially greater financial, technical, and human resources[56](index=56&type=chunk) - Competitors may develop products more rapidly, obtain regulatory approvals faster, or acquire/license advantageous technologies, potentially hindering Celldex's market position[57](index=57&type=chunk)[58](index=58&type=chunk) [Manufacturing](index=14&type=section&id=Manufacturing) Celldex relies on Contract Manufacturing Organizations (CMOs) for large-scale production and operates its own facility for early-stage clinical trial drug substance - Celldex has limited commercial manufacturing experience and relies on Contract Manufacturing Organizations (CMOs) for large-scale production of drug candidates for late-stage clinical trials and commercialization[61](index=61&type=chunk) - The company operates its own cGMP manufacturing facility in Fall River, Massachusetts, for early-stage clinical trial drug substance (CDX-1140, CDX-301, CDX-0159)[62](index=62&type=chunk) - Reliance on third-party manufacturers limits control and ability to monitor processes, potentially leading to delays and additional costs if manufacturing needs are not met[65](index=65&type=chunk) [Commercial Organization](index=15&type=section&id=Commercial%20Organization) Celldex has limited commercial experience and plans to expand its team or pursue strategic partnerships for product commercialization - Celldex has limited commercial experience in marketing, sales, distribution, and product reimbursement[66](index=66&type=chunk) - The company may expand its commercial team to retain marketing rights and commercialize products directly or pursue strategic partnerships for development, sales, marketing, and distribution[66](index=66&type=chunk) [Patents, Licenses and Proprietary Rights](index=15&type=section&id=Patents,%20Licenses%20and%20Proprietary%20Rights) Celldex protects its intellectual property through patents, licenses, and trade secrets, but faces risks of challenges and enforcement difficulties [Patents](index=15&type=section&id=Patents) Celldex's patent strategy involves filing applications and acquiring exclusive rights, but patent enforceability and commercial benefit are not assured - Celldex's intellectual property strategy involves filing patent applications and obtaining patent rights in the U.S. and internationally, as well as acquiring exclusive rights through licenses[67](index=67&type=chunk) - The company owns or licenses over **200 granted patents and applications**, including those for CDX-1140 (expiry 2037), CDX-3379 (expiry 2032), CDX-301 (U.S. patent expiry 2020), and varlilumab (U.S. patent expiry 2034, European patent revoked but under appeal)[69](index=69&type=chunk)[7