Celldex Therapeutics(CLDX) - 2021 Q2 - Quarterly Report

Part I — Financial Information Item 1. Unaudited Financial Statements The company presents its unaudited condensed consolidated financial statements for the period ended June 30, 2021 Condensed Consolidated Balance Sheets Total assets decreased to $204.6 million, driven by a reduction in cash and marketable securities Condensed Consolidated Balance Sheets (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $43,446 | $43,836 | | Marketable securities | $120,591 | $150,586 | | Total current assets | $167,606 | $197,843 | | Total assets | $204,551 | $235,838 | | Liabilities & Equity | | | | Total current liabilities | $14,488 | $14,206 | | Total liabilities | $22,269 | $26,481 | | Total stockholders' equity | $182,282 | $209,357 | Condensed Consolidated Statements of Operations and Comprehensive Loss The company's net loss widened to $29.9 million for the six-month period due to higher R&D expenses Statement of Operations Highlights (in thousands, except per share data) | Metric | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Total revenues | $4,165 | $2,965 | | Research and development | $25,076 | $21,400 | | General and administrative | $8,426 | $7,194 | | Intangible asset impairment | $0 | $3,500 | | Operating loss | $(30,078) | $(24,231) | | Net loss | $(29,911) | $(23,656) | | Net loss per share | $(0.76) | $(1.20) | Condensed Consolidated Statements of Cash Flow Net cash used in operations was $30.0 million, while investing activities provided cash from sales of securities Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(30,014) | $(23,332) | | Net cash provided by (used in) investing activities | $29,575 | $(86,564) | | Net cash provided by financing activities | $49 | $166,691 | | Net (decrease) increase in cash | $(390) | $56,795 | | Cash at end of period | $43,446 | $68,027 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail liquidity, accounting policies, a subsequent equity raise, and an ongoing legal dispute - The company believes its cash, cash equivalents, and marketable securities as of the filing date are sufficient to fund planned operations for at least the next twelve months[18] - In July 2021, subsequent to the quarter's end, the company raised approximately $270.0 million in net proceeds from an underwritten public offering of common stock[37] - The company is in a legal dispute with Shareholder Representative Services (SRS) over contingent milestone payments related to the Kolltan acquisition, with a trial scheduled for June 2022[57][58][59] - Indefinite-lived intangible assets of $30.7 million consist of acquired In-Process Research and Development (IPR&D) related to the anti-KIT program (CDX-0159) and the TAM program[33] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the clinical pipeline, operational results, financial condition, and liquidity Overview and Clinical Development Programs The company is advancing its key clinical programs, including CDX-0159, CDX-1140, and CDX-527 - CDX-0159 (anti-KIT): Reported positive interim data from a Phase 1b study in chronic inducible urticaria (CIndU), with 95% of patients experiencing a complete response[65][84][90] - CDX-1140 (anti-CD40): The recommended dose for further study was determined to be 1.5 mg/kg, with expansion cohorts ongoing[66][94][95] - CDX-527 (bispecific PD-L1xCD27): A Phase 1 study in advanced solid tumors is ongoing, with dose escalation completed[66][98][99] R&D Expense by Program (Six Months Ended June 30, in thousands) | Program | 2021 | 2020 | | :--- | :--- | :--- | | CDX-0159/Anti-KIT Program | $10,973 | $2,896 | | CDX-1140 and CDX-301 | $2,845 | $5,586 | | CDX-527 | $2,328 | $5,891 | | Other Programs | $8,930 | $7,027 | | Total R&D Expense | $25,076 | $21,400 | Results of Operations Net loss increased for the three and six-month periods due to higher R&D expenses and contingent consideration Comparison of Three Months Ended June 30 (in thousands) | Metric | 2021 | 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $3,480 | $236 | $3,244 | 1,375% | | R&D Expense | $12,356 | $9,705 | $2,651 | 27% | | G&A Expense | $4,306 | $3,528 | $778 | 22% | | Net loss | $(13,373) | $(11,031) | $(2,342) | 21% | Comparison of Six Months Ended June 30 (in thousands) | Metric | 2021 | 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $4,165 | $2,965 | $1,200 | 40% | | R&D Expense | $25,076 | $21,400 | $3,676 | 17% | | G&A Expense | $8,426 | $7,194 | $1,232 | 17% | | Net loss | $(29,911) | $(23,656) | $(6,255) | 26% | - The increase in R&D expenses for the six-month period was primarily due to higher clinical trial and contract research costs, particularly for the expanded development of CDX-0159[111][122] - The loss on fair value remeasurement of contingent consideration was $0.7 million for the first six months of 2021, compared to a $4.9 million gain in the same period of 2020[123] Liquidity and Capital Resources The company secured significant funding through a public offering, ensuring liquidity through 2025 - At June 30, 2021, principal sources of liquidity consisted of cash, cash equivalents and marketable securities of $164.0 million[128] - The company raised approximately $270.0 million in net proceeds from a July 2021 underwritten public offering[128][134] - Management believes that current cash, combined with the July 2021 offering proceeds, is sufficient to fund planned operations through 2025[128] - Net cash used in operating activities increased to $30.0 million for the six months ended June 30, 2021, from $23.3 million in the prior-year period, due to higher R&D and G&A expenses[130] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's investment portfolio has no material exposure to market risk due to its short-term nature - The company invests excess cash in high-grade, short-term securities and does not believe it has material exposure to market risk[136] - The company does not use derivative financial instruments[137] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2021[139] - No material changes were made to the internal control over financial reporting during the quarter[140] Part II — Other Information Item 1. Legal Proceedings The company is in an ongoing legal dispute over milestone payments related to the Kolltan acquisition - Celldex is in a legal dispute with SRS, the representative for former Kolltan stockholders, over contingent milestone payments from the 2016 merger[142] - The dispute centers on whether milestone payments for the discontinued CDX-0158 program are owed, with SRS arguing that the current CDX-0159 program is effectively an extension of CDX-0158[143] - Mediation in May 2021 did not resolve the dispute, and the case is scheduled for trial in June 2022[143] Item 1A. Risk Factors No material changes to previously disclosed risk factors were reported for the period - There were no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K filed on March 29, 2021[144] Item 6. Exhibits This section lists all exhibits filed with the quarterly report, including plans and certifications - Lists various exhibits filed with the Form 10-Q, including the 2021 Omnibus Equity Incentive Plan, various award and employment agreements, and CEO/CFO certifications[147]