Celldex Therapeutics(CLDX) - 2022 Q3 - Quarterly Report

Part I — Financial Information Unaudited Financial Statements The unaudited financial statements reflect a decline in total assets and a significant increase in net loss for the period Condensed Consolidated Balance Sheets The balance sheets show a decrease in total assets, primarily in cash and marketable securities, from year-end 2021 to September 2022 | Balance Sheet Highlights (In thousands) | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $18,583 | $39,143 | | Marketable securities | $304,888 | $369,107 | | Total current assets | $334,599 | $410,839 | | Total assets | $369,226 | $444,654 | | Liabilities & Equity | | | | Total current liabilities | $16,287 | $16,528 | | Total liabilities | $23,810 | $25,178 | | Total stockholders' equity | $345,416 | $419,476 | Condensed Consolidated Statements of Operations and Comprehensive Loss The statements of operations indicate a significant increase in net loss for both the quarter and nine-month periods, driven by higher expenses | Income Statement (In thousands, except per share) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $407 | $153 | $744 | $4,317 | | Research and development | $21,572 | $13,557 | $59,359 | $38,633 | | General and administrative | $6,531 | $5,821 | $20,596 | $14,247 | | Litigation settlement related loss | $0 | $0 | $15,000 | $0 | | Operating loss | $(27,696) | $(20,824) | $(87,349) | $(50,903) | | Net loss | $(26,784) | $(20,452) | $(85,838) | $(50,363) | | Basic and diluted net loss per common share | $(0.57) | $(0.45) | $(1.83) | $(1.21) | Condensed Consolidated Statements of Cash Flows Cash flow statements show a substantial increase in cash used in operating activities and a net decrease in cash for the nine-month period | Cash Flow Summary (In thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(81,970) | $(46,386) | | Net cash provided by (used in) investing activities | $58,729 | $(197,212) | | Net cash provided by financing activities | $2,681 | $271,946 | | Net (decrease) increase in cash | $(20,560) | $28,348 | | Cash and cash equivalents at end of period | $18,583 | $72,184 | Notes to Unaudited Condensed Consolidated Financial Statements The notes provide details on liquidity, contingent consideration adjustments, intangible assets, and a significant litigation settlement - As of September 30, 2022, the company had cash, cash equivalents, and marketable securities of $323.5 million, which management believes are sufficient to fund planned operations for at least the next twelve months[19] - The company recorded a $6.9 million gain on fair value remeasurement of contingent consideration for the nine months ended September 30, 2022, primarily due to the decision to deprioritize the CDX-1140 program, reducing the liability to zero[29][30] - The carrying value of indefinite-lived intangible assets, consisting of acquired IPR&D for the anti-KIT program (barzolvolimab), was $27.2 million as of September 30, 2022[36] - On July 15, 2022, the company executed a definitive settlement agreement with SRS regarding the Kolltan acquisition, replacing up to $172.5 million in original milestone payments with a new structure, including an initial $15.0 million payment[60] - The new settlement terms include a $15.0 million payment upon successful completion of a Phase 2 trial for CDX-0159 and $52.5 million upon the first regulatory approval of a Surviving Company Product[61][62] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's biopharmaceutical focus, clinical pipeline progress, increased operating expenses, and liquidity position Overview The overview highlights the company's biopharmaceutical focus on therapeutic antibodies for inflammatory diseases and cancer, particularly Barzolvolimab - The company is a biopharmaceutical firm developing therapeutic monoclonal and bispecific antibodies for inflammatory diseases and cancer[69] - Key focus is on the research and development of Barzolvolimab (CDX-0159), a monoclonal antibody targeting the KIT receptor for mast cell-driven diseases[69] - The company is also advancing its next-generation bispecific antibody platform for inflammatory diseases and oncology[70] Clinical Development Programs This section details the progress of key clinical programs, including Barzolvolimab's Phase 2 studies and the discontinuation of other programs - Barzolvolimab (CDX-0159): Phase 2 studies in chronic spontaneous urticaria (CSU) and chronic inducible urticaria (CIndU) were initiated in June/July 2022[83][86] - Positive interim data from the Phase 1b CSU study showed a 75.1% mean reduction in urticaria activity score (UAS7) at week 8 in the 3.0 mg/kg dose group[98][101] - A Phase 1b study in prurigo nodularis (PN) began in December 2021, and a Phase 2 study in eosinophilic esophagitis (EoE) is planned for H1 2023[98][101] - CDX-527: The clinical study for this bispecific antibody in ovarian cancer was closed and the program discontinued due to slow enrollment and a challenging development environment[106] - CDX-1140: The company is not progressing further company-sponsored studies for this CD40 agonist, citing pipeline priorities, and is exploring options for third-party sponsored studies[107] - CDX-585: This bispecific antibody combining PD-1 and ILT4 blockade is completing IND-enabling activities and is expected to enter the clinic in 2023[103] Results of Operations Operating results show increased net losses for both the quarter and nine-month periods, driven by higher R&D and litigation expenses | Comparison (In thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $407 | $153 | $254 | 166% | | R&D Expense | $21,572 | $13,557 | $8,015 | 59% | | G&A Expense | $6,531 | $5,821 | $710 | 12% | | Net loss | $(26,784) | $(20,452) | $(6,332) | 31% | - The increase in net loss for Q3 2022 was primarily due to an $8.0 million increase in R&D expenses, mainly from higher barzolvolimab clinical trial and manufacturing costs[112][118] | Comparison (In thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $744 | $4,317 | $(3,573) | -83% | | R&D Expense | $59,359 | $38,633 | $20,726 | 54% | | G&A Expense | $20,596 | $14,247 | $6,349 | 45% | | Litigation settlement loss | $15,000 | $0 | $15,000 | N/A | | Net loss | $(85,838) | $(50,363) | $(35,475) | 70% | - The $35.5 million increase in net loss for the nine-month period was driven by a $15.0 million litigation settlement loss, a $20.7 million increase in R&D expenses, and a $6.3 million increase in G&A expenses[123] Liquidity and Capital Resources The company maintains a strong cash position, projected to fund operations through 2025, despite increased cash usage in operating activities - As of September 30, 2022, the company had $323.5 million in cash, cash equivalents, and marketable securities[135] - Management believes the current cash position is sufficient to fund planned operations through 2025[135] - Net cash used in operating activities was $82.0 million for the nine months ended September 30, 2022, a significant increase from $46.4 million in the prior year period, primarily due to higher R&D/G&A expenses and the $15.0 million litigation settlement payment[137] - Net cash from financing activities decreased to $2.7 million in the first nine months of 2022, compared to $271.9 million in the same period of 2021, which had included $269.9 million in net proceeds from a public stock offering[140] Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposure is minimal, with investments focused on preserving principal and maintaining liquidity through short-term, high-grade instruments - The company's investment policy focuses on preserving principal and maintaining liquidity by investing excess cash in money market funds and high-grade, short-term marketable securities[141] - Due to the short-term nature of its investments, management does not believe the company has material exposure to market risk from changes in interest rates[141] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2022[144] - No changes occurred during the quarter ended September 30, 2022, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[145] Part II — Other Information Risk Factors No material changes to previously disclosed risk factors were reported, directing investors to the Annual Report on Form 10-K for comprehensive details - The company states there were no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K filed on February 28, 2022[146] Other Information The Board of Directors approved amended By-Laws, introducing a majority vote standard, enhanced stockholder proposal requirements, and exclusive forum designation - On November 3, 2022, the company's Board of Directors amended and restated its By-Laws[147] - Key changes to the By-Laws include adopting a 'majority of votes cast' standard for most matters, enhancing advance notice requirements for stockholder proposals, designating the Court of Chancery of the State of Delaware as the exclusive forum for most internal corporate claims, and clarifying indemnification provisions for directors and officers[147][148] Exhibits This section lists the exhibits filed with the quarterly report, including amended By-Laws, a license agreement, and officer certifications - The exhibits filed with the Form 10-Q are listed, including the Second Amended and Restated By-Laws, an amended license agreement, and certifications by the CEO and CFO[151][152]