UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

Amendment No. 1

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): November 29, 2016

CELLDEX THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

Registrant’s telephone number, including area code: (908) 200-7500

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01              Completion of Acquisition or Disposition of Assets.

On November 29, 2016, Celldex Therapeutics, Inc., a Delaware corporation (“Celldex”), filed a Current Report on Form 8-K (the “Original Form 8-K”) with the Securities and Exchange Commission (the “Commission”) to report that it consummated the transactions contemplated by that certain Agreement and Plan of Merger dated as of November 1, 2016 (the “Merger Agreement”) by and among Celldex, Kolltan Pharmaceuticals, Inc., a Delaware corporation (“Kolltan”), Connemara Merger Sub 1 Inc. a Delaware corporation and a wholly-owned subsidiary of Celldex (“Merger Sub 1”) and Connemara Merger Sub 2 LLC., a Delaware limited liability company and a wholly-owned subsidiary of Celldex (“Merger Sub 2” and together with Merger Sub 1, the “Merger Subsidiaries”).   This Current Report on Form 8-K/A amends the Original Form 8-K to include the required financial statements and pro forma financial information.

Item 9.01.  Financial Statements and Exhibits.

(a) Financial statements of business acquired

The audited consolidated balance sheets of Kolltan as of December 31, 2015 and 2014 and the audited consolidated statements of operations and comprehensive loss, of changes in convertible preferred stock and stockholders’ deficit and of cash flows of Kolltan for the years ended December 31, 2015 and 2014, and the notes related thereto, are filed as Exhibit 99.1 to this Current Report on Form 8-K/A and incorporated herein by reference.

The unaudited condensed balance sheets of Kolltan as of September 30, 2016 and December 31, 2015 and the unaudited condensed statements of operations for the nine month periods ended September 30, 2016 and 2015 and unaudited condensed statements of cash flows of Kolltan for the nine-month periods ended September 30, 2016 and 2015, and the notes related thereto, are filed as Exhibit 99.2 to this Current Report on Form 8-K/A and incorporated herein by reference.

(b) Pro Forma Financial Information

The Company’s unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2016 and for the fiscal year ended December 31, 2015, the unaudited pro forma condensed combined balance sheet as of September 30, 2016, and the notes related thereto, are filed as Exhibit 99.3 to this Current Report on Form 8-K/A and incorporated herein by reference.

2

* The schedules and exhibits to the Agreement and Plan of Merger have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K under the Securities Act of 1933, as amended. Celldex agrees to furnish as a supplement a copy of any omitted schedules or exhibits to the Agreement and Plan of Merger to the Securities and Exchange Commission upon request, provided that Celldex may request confidential treatment for any schedule or exhibit so furnished.

3

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: February 7, 2017

4

Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration Statement on Forms S-8 (No. 333-117602, 333-151728, 333-189336  and 333-205694) and Registration Statement on Forms S-3 (No. 333-192640, 333-214882  and 333-215747)  of Celldex Therapeutics, Inc. of our report dated April 27, 2016 relating to the financial statements of Kolltan Pharmaceuticals, Inc., which appears in this Current Report on Form 8-K/A of Celldex Therapeutics, Inc.

Exhibit 99.1

Kolltan Pharmaceuticals, Inc.

Consolidated Financial Statements

December 31, 2014 and 2015

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors of

Kolltan Pharmaceuticals, Inc.

We have audited the accompanying consolidated financial statements of Kolltan Pharmaceuticals, Inc. and its subsidiaries (the “Company”), which comprise the consolidated balance sheets as of December 31, 2014 and 2015 and the related consolidated statements of operations and comprehensive loss, of changes in convertible preferred stock and stockholders’ deficit and of cash flows for the years then ended.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to error or fraud.

Auditor’s Responsibility

Our responsibility is to express an opinion on the consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on effectiveness of the Company’s internal controls. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Kolltan Pharmaceuticals, Inc. and its subsidiaries as of December 31, 2014 and 2015, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has incurred recurring losses from operations, has an accumulated deficit and will require additional financing to fund future operations.  These circumstances raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.

1

KOLLTAN PHARMACEUTICALS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

The accompanying notes are an integral part of these consolidated financial statements.

2

KOLLTAN PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share data)

The accompanying notes are an integral part of these consolidated financial statements.

3

KOLLTAN PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS’ DEFICIT

(In thousands, except share data)

The accompanying notes are an integral part of these consolidated financial statements.

4

KOLLTAN PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

The accompanying notes are an integral part of these consolidated financial statements.

5

KOLLTAN PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

1.  Nature of Business and Basis of Presentation

Kolltan Pharmaceuticals, Inc. (the “Company,” “we,” “our” or “us”) was incorporated under the laws of the State of Delaware in November 2007 and commenced research operations in July 2008. We are a clinical-stage biopharmaceutical company focused on the discovery and development of novel antibody-based drugs targeting receptor tyrosine kinases (“RTKs”) for use in oncology and immunology. We are a leader in understanding the mechanism of action and the biomedical roles of RTKs and their signaling pathways. We are employing a systematic investigation of RTKs and applying our insights with the goal of developing important new medicines with novel mechanisms of action.

We have prepared our consolidated financial statements on a basis which assumes that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As of December 31, 2015, we have experienced recurring losses and had an accumulated deficit of $133,019. We anticipate that we will continue to incur negative cash flows from operations in the foreseeable future, driven by continued investment in advancing our product candidate programs in clinical trials, developing a robust research pipeline, business development activities, and general business operations. As of December 31, 2015, we had cash and cash equivalents of $12,439 and marketable securities of $5,249. As of April 27, 2016, we expect that our cash, cash equivalents and marketable securities of $17,688 as of December 31, 2015 will be sufficient to fund our operations through at least June 2016. Our future viability beyond that point is dependent on our ability to raise additional capital to finance our operations. Although we have been successful in raising capital in the past, there is no assurance that we will be successful in obtaining such additional financing on acceptable terms to us, or at all. These circumstances raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

We expect to seek additional funding through debt or equity financings and/or collaboration agreements. Our failure to do so would have a material adverse impact on our prospects and financial condition. There can be no assurance that any contemplated additional debt or equity financing or collaboration will be available on terms acceptable to us, if at all. The terms of any financing may adversely affect the holdings or rights of our stockholders. If we are unable to obtain funding, we could be required to delay, reduce or eliminate research and development programs or future commercialization efforts, which could adversely affect our business prospects.

In June 2013, we established a wholly owned subsidiary, Bulldog Pharmaceuticals, Inc., a British Virgin Islands corporation, to hold the license of our lead product candidate, KTN3379. In August 2014, we acquired Xetrios Therapeutics, Inc. (“Xetrios”), which then became a wholly owned subsidiary. In November 2014, we established a wholly owned subsidiary, Eltam Pharmaceuticals, Inc., as a British Virgin Islands corporation, to hold the intellectual property and licenses related to TAM RTKs that we obtained through our acquisition of Xetrios. In October 2015, we established a wholly owned subsidiary, Abigail Pharmaceuticals, Inc., as a British Virgin Islands corporation, to hold certain intellectual property related to our product candidate, KTN0158. The accompanying consolidated financial statements include the accounts of Kolltan Pharmaceuticals, Inc. and its wholly owned subsidiaries, after the elimination of all significant intercompany accounts and transactions.

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

We have made revisions on the accompanying consolidated statement of operations and comprehensive loss and in Note 11 to correct immaterial errors in the reported amounts of net loss attributable to common stockholders and net loss per share attributable to common stockholders for the year ended December 31, 2014. These revisions increased the net loss attributable to common stockholders from $35,093 to $38,024 due to the inclusion of $2,931 of accruing dividends on convertible preferred stock and increased the corresponding net loss per share attributable to common stockholders, basic and diluted, from $1.63 to $1.77. Based upon our evaluation of relevant factors, we concluded that the revisions to the consolidated statements of operations and comprehensive loss noted above

6

KOLLTAN PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

represent errors that are not material, individually or in the aggregate, to our previously issued consolidated financial statements.

2.  Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the accrual of research and development expenses and the valuation of common stock and stock-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results could differ from our estimates.

Research and Development Expenses

All research and development costs are expensed as incurred. These costs include the following:

·                  salaries and other related costs, including stock-based compensation expense, for personnel in research and development functions;

·                  expenses incurred under agreements with third parties, including contract research organizations, contract manufacturing organizations, academic institutions and consultants, that conduct preclinical studies and clinical trials;

·                  costs associated with preclinical and clinical activities and regulatory operations;

·                  costs of acquiring, developing and manufacturing clinical trial materials;

·                  expenses related to the in-license of certain technologies and early-stage drug compounds; and

·                  allocated depreciation and other facility-related and overhead expenses.

We record payments made for research and development services prior to the services being rendered as prepaid expenses on our consolidated balance sheet and expense them as those services are provided.

Stock-Based Compensation

We measure all stock-based awards issued to employees and directors at the fair value of the award on the date of grant using the Black-Scholes option-pricing model. We recognize the fair value of the awards as expense, net of estimated forfeitures, over the requisite service period of the award, which is generally the vesting period of the respective award. The straight-line method of expense recognition is applied to all awards with service-only conditions.

For stock-based awards granted to nonemployee consultants, we recognize compensation expense based on the fair value of the award on the date on which the related service is complete. Compensation expense is recognized over the period during which services are rendered by such nonemployee consultants until completed. At the end of each financial reporting period prior to completion of service, the fair value of these awards is remeasured using the then-current fair value of our common stock and updated assumption inputs in the Black-Scholes option-pricing model.

We classify stock-based compensation expense in our consolidated statement of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.

7

KOLLTAN PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

We recognize compensation expense for only the portion of awards that are expected to vest. In developing a forfeiture rate estimate, we have considered our historical experience to estimate pre-vesting forfeitures for service-based awards. The impact of a forfeiture rate adjustment will be recognized in full in the period of adjustment, and if the actual forfeiture rate is materially different from our estimate, we may be required to record adjustments to stock-based compensation expense in future periods.

We estimate the fair value of each stock option grant on the date of grant using the Black-Scholes option-pricing model. Because we are a private company and lack company-specific historical and implied volatility information, we estimate our expected stock volatility based on the historical volatility of a publicly traded group of peer companies, and we expect to continue to do so until such time as we have adequate historical data regarding the volatility of our own traded stock price. The expected term of our stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to nonemployees is equal to the contractual term of the option award. We determine the risk-free interest rate by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Our expected dividend yield is based on the fact that we have never paid cash dividends and do not expect to pay any cash dividends in the foreseeable future.

Patent Costs

We record all patent-related costs incurred in connection with filing and prosecuting patent applications as general and administrative expenses as incurred, as recoverability of such expenditures is uncertain.

Income Taxes

We account for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in our tax returns. Deferred taxes are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. We assess the likelihood that our deferred tax assets will be recovered from future taxable income and, to the extent we believe, based upon the weight of available evidence, that it is more likely than not that all or a portion of deferred tax assets will not be realized, we establish a valuation allowance through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies.

We account for uncertainty in income taxes recognized in the financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more likely than not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate as well as the related net interest and penalties.

Comprehensive Loss

Comprehensive loss includes net loss as well as other changes in stockholders’ equity (deficit) that result from transactions and economic events other than those with stockholders. Our only element of other comprehensive income (loss) in all periods presented was unrealized gains (losses) on available-for-sale marketable securities.

8

KOLLTAN PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

Basic and Diluted Net Income (Loss) per Common Share

We compute net income (loss) per share using the two-class method, as we have issued various series of preferred stock that meet the definition of participating securities. The two-class method determines net income (loss) per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period has been distributed.

Basic net income (loss) per share attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding during the period. All participating securities are excluded from basic weighted average common shares outstanding. Diluted net income (loss) attributable to common stockholders is computed by adjusting income (loss) attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities, including outstanding stock options. Diluted net income (loss) per share attributable to common stockholders is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of outstanding stock options.

Our convertible preferred stock contractually entitles the holders of such shares to participate in dividends declared on shares of our common stock but does not contractually require the holders of such shares to participate in losses. Accordingly, in periods in which we report a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is antidilutive. We reported a net loss attributable to common stockholders for the years ended December 31, 2014 and 2015.

Cash and Cash Equivalents

We classify highly liquid investments with original maturities at the time of purchase of 90 days or less as cash equivalents. We invest excess cash primarily in money market funds, U.S. government and government agency debt securities, corporate debt securities and commercial paper. Cash equivalents, which consist of money market funds, corporate debt securities and commercial paper, are stated at fair value.

Marketable Securities

Marketable securities with original maturities of greater than 90 days and remaining maturities of less than one year from the balance sheet date are classified as short term. Marketable securities with remaining maturities of greater than one year from the balance sheet date are classified as long term.

We classify all of our investments as available-for-sale securities. Our marketable securities are measured and reported at fair value using quoted market prices in active markets and quoted prices in inactive markets or other observable inputs. Unrealized gains and losses are reported as a separate component of stockholders’ equity (deficit). The cost of securities sold is determined on a specific identification basis, and realized gains and losses are included in other income (expense) within our consolidated statement of operations and comprehensive loss. If any adjustment to fair value reflects a decline in the value of the investment, we consider available evidence to evaluate the extent to which the decline is “other than temporary” and reduce the investment to fair value through a charge to the consolidated statement of operations and comprehensive loss. No such adjustments were necessary during the years ended December 31, 2014 and 2015.

9

KOLLTAN PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

Fair Value Measurements

We are often required to measure certain assets and liabilities at fair value, either upon initial recognition or for subsequent accounting or reporting. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

·                  Level 1—Quoted prices in active markets for identical assets or liabilities.

·                  Level 2—Observable inputs (other than Level 1 quoted prices) such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

·                  Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

We utilize the hierarchy of the three input levels noted above to measure the fair value of our cash equivalents and short-term marketable securities. The carrying amounts for accounts payable and for accrued expenses and other current liabilities approximate fair value due to the short-term nature of these liabilities.

Concentration of Credit Risk and Significant Suppliers

Financial instruments that potentially expose us to concentration of credit risk consist primarily of cash and cash equivalents and our short-term marketable securities. We generally invest our cash in money market funds, U.S. government securities, corporate debt securities, commercial paper and certificates of deposit at several high quality financial institutions. We do not believe we are subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

We are completely dependent on third-party manufacturers and product suppliers for preclinical research activities and clinical study activities. In particular, we rely on one manufacturer to purchase from third-party suppliers the materials necessary to produce our lead product candidate for clinical trials, and we rely on a different manufacturer for our second product candidate. We are in discussion with additional potential manufacturers. Our research programs would be adversely affected by a significant interruption in the supply of active pharmaceutical ingredients or drug product.

Deferred Offering Costs

We capitalize certain legal, accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs (long term) until such financings are consummated. After consummation of the equity financing, these costs are recorded in stockholders’ equity (deficit) as a reduction of additional paid-in capital generated as a result of the offering. Should the equity financing no longer be considered probable of being consummated, the deferred offering costs would be expensed immediately as a charge to operating expenses in the consolidated statement of operations.

As of December 31, 2014, we recorded a general and administrative expense of $2,018 related to the write-off of deferred offering costs we had capitalized in 2014 in connection with a proposed initial public offering of our common stock (“IPO”), due to our board of directors’ determination in January 2015 to not pursue an IPO at that time. We had no deferred offering costs remaining capitalized as of December 31, 2014 or 2015.

10

KOLLTAN PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Additions and improvements are capitalized, while maintenance and repairs are expensed as incurred. Asset and accumulated depreciation accounts are relieved for dispositions, with resulting gains or losses reflected in our consolidated statement of operations and comprehensive loss.

Depreciation of property and equipment is provided using the straight-line method over the estimated useful lives of the respective assets, or for leasehold improvements, over the remaining term of the lease, if shorter. The estimated useful lives for each major asset classification are as follows:

Impairment of Long-Lived Assets

Long-lived assets consist of property and equipment. We review the carrying values of our long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be recoverable. Factors that we consider in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends, and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset for recoverability, we compare forecasts of undiscounted cash flows expected to result from the use and ultimate disposition of the long-lived asset to its carrying value. An impairment loss would be recognized when estimated undiscounted future cash flows expected to result from the use of an asset are less than its carrying amount. The impairment loss would be based on the excess of the carrying value of the impairment asset over its fair value, determined based on discounted cash flows. Useful lives are periodically evaluated to determine whether events or circumstances have occurred which indicate the need for revision. To date, we have not recorded any impairment losses on long-lived assets.

Research Contract Costs and Accruals

We have entered into various research and development contracts with research institutions and other companies, both inside and outside of the United States. These agreements are generally cancelable, and related payments are recorded as research and development expenses as incurred. We record accruals for estimated ongoing research costs. When evaluating the adequacy of the accrued liabilities, we analyze progress of the studies, including the phase or completion of events, invoices received and contracted costs. We make significant judgments and estimates in determining the accrued balances at the end of any reporting period. Actual results could differ from our estimates. To date, our historical accrual estimates have not been materially different from the actual costs.

Segment Data

We manage our operations as a single operating segment for purposes of assessing performance and making operating decisions. We are focused on the discovery and development of novel antibody-based drugs targeting RTKs for use in oncology and immunology. No revenue has been generated since our inception, and all of our tangible assets are held in the United States.

11

KOLLTAN PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

Recently Issued and Adopted Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”). In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delays the effective date of ASU 2014-09. The standard will eliminate the transaction- and industry-specific revenue recognition guidance and replace it with a principle-based approach for determining revenue recognition. This guidance is effective for entities other than public business entities for annual reporting periods beginning after December 15, 2018. Early adoption is permitted for annual reporting periods beginning after December 15, 2016. We are currently evaluating the impact that the adoption of this standard will have on our consolidated financial statements

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendments in this update will explicitly require a company’s management to assess an entity’s ability to continue as a going concern, and to provide related footnote disclosures in certain circumstances. The new standard will be effective for other than public business entities in the first annual reporting period ending after December 15, 2017. Early adoption is permitted. We are currently evaluating the potential impact of the adoption of this standard, but believe its adoption will have no impact on our financial position, results of operations or cash flows, but may impact our disclosures.

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). The standard requires that deferred tax assets and liabilities, along with any related valuation allowances, be classified as noncurrent on the balance sheet rather than being separated into current and noncurrent. This guidance is effective for entities other than public business entities for annual reporting periods beginning after December 15, 2017. Early adoption is permitted. The amendment may be applied either prospectively or retrospectively to all periods presented. We early adopted ASU 2015-17 as of December 31, 2015 on a prospective basis. As a result, all deferred tax assets and related valuation allowances as of December 31, 2015 are classified as noncurrent in our consolidated balance sheet, while prior periods remain as previously reported.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (‘‘ASU 2016-02’’). ASU 2016-02 was issued to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This guidance is effective for entities other than public business entities for annual reporting periods beginning after December 15, 2019. Early adoption is permitted. This standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. We are currently evaluating the impact that the adoption of this standard will have on our consolidated financial statements.

In March 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation—Stock Compensation (Topic 718) (‘‘ASU 2016-09’’). ASU 2016-09 identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, and certain classifications on the statement of cash flows This guidance is effective for entities other than public business entities for annual reporting periods beginning after December 15, 2017. Early adoption is permitted. We are currently evaluating the impact that the adoption of this standard will have on our consolidated financial statements.

12

KOLLTAN PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

3.  Fair Value of Financial Instruments

The following tables present information as of December 31, 2014 and 2015 about our assets that are measured at fair value on a recurring basis and indicate the level of the fair value hierarchy we utilized to determine such fair values:

As of December 31, 2014 and 2015, our cash equivalents that were invested in money market funds, corporate debt securities and commercial paper were valued based on Level 2 inputs. In determining the fair value of our marketable securities valued using Level 2 inputs, we primarily rely on quoted prices for identical securities in markets that are not active. During the years ended December 31, 2014 and 2015, there were no transfers between Level 1, Level 2 and Level 3.

As of December 31, 2014 and 2015, marketable securities had a maximum remaining maturity of approximately twelve months and three months, respectively.

As of December 31, 2014 and 2015, the fair value of our available-for-sale marketable securities by type of security was as follows:

13

KOLLTAN PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

4.  Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following as of December 31, 2014 and 2015:

5.  Property and Equipment

Property and equipment consisted of the following as of December 31, 2014 and 2015:

Depreciation and amortization expense was $622 and $723 for the years ended December 31, 2014 and 2015, respectively.

6.  Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following as of December 31, 2014 and 2015:

During the year ended December 31, 2014, we recognized severance expense of $1,392, including stock-based compensation of $434, in connection with the termination of certain executive-level employees.

14

KOLLTAN PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

7.  Commitments and Contingencies

Operating Leases

In January 2009, we entered into a lease for office and laboratory space in New Haven, Connecticut. We have amended the lease several times to add additional space. The lease in effect as of December 31, 2015 expires in April 2016 and has two renewal options, the first for an additional three-year term and the second for an additional two-year term. The terms of the lease provide for rental payments on a monthly basis and on a graduated scale. The lease also requires us to pay additional amounts for operating and maintenance expenses. We recognize rent expense on a straight-line basis over the lease period and record deferred rent for rent expense incurred but not paid. As of December 31, 2014 and 2015, deferred rent totaled $203 and $182, respectively, of which $42 and $35, respectively, was included in accrued expenses and other current liabilities and $160 and $147, respectively, was included in long-term liabilities. Rent expense under the operating lease for our facilities was $596 and $627 for the years ended December 31, 2014 and 2015, respectively. As of December 31, 2015, future minimum lease payments due under the operating lease were $212, all of which is due in 2016.

Subsequent to December 31, 2015, we exercised a renewal option on our current office lease (see Note 16).

Indemnification Agreements

In the ordinary course of business, we may provide indemnification of varying scope and terms to vendors, lessors, business partners, and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, we have entered into indemnification agreements with certain members of our board of directors that will require us, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors or officers. The maximum potential amount of future payments we could be required to make under these indemnification agreements is, in many cases, unlimited. To date, we have not incurred any material costs as a result of such indemnifications. We do not believe that the outcome of any claims under indemnification arrangements will have a material effect on our financial position, results of operations or cash flows, and we have not accrued any liabilities related to such obligations in our consolidated financial statements as of December 31, 2014 or 2015.

License and Research Agreements

We have entered into license and research agreements with various parties under which we are obligated to make contingent and non-contingent payments (see Note 14).

Litigation

We may periodically become subject to legal proceedings and claims arising in connection with ongoing business activities, including claims or disputes related to patents that have been issued or that are pending in the field of research on which we are focused. As of December 31, 2015, we had no legal proceedings to which we, or our subsidiaries, were a party or to which our property is subject.

8.  Convertible Preferred Stock

As of December 31, 2015 our certificate of incorporation, as amended and restated (the “Certificate of Incorporation”), authorizes us to issue 160,000,000 shares of $0.001 par value preferred stock. We have issued Series A, Series B, Series C and Series D convertible preferred stock (collectively, the “Convertible Preferred Stock”). We classify the Convertible Preferred Stock outside of stockholders’ equity (deficit) because the holders of Convertible Preferred Stock have liquidation rights in the event of a deemed liquidation that, in certain situations, is not solely within our control.

15

KOLLTAN PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

In March 2014, we issued 60,000,000 shares of Series D convertible preferred stock at an issuance price of $1.00 per share and received gross proceeds of $60,000. In connection with this financing, we paid total issuance costs of $385.

The following tables summarize our Convertible Preferred Stock as of December 31, 2014 and 2015:

Dividends

Dividends accrue on shares of Series B and Series C convertible preferred stock at the rate of $0.044 per annum, provided, however, that such accruing dividends shall be limited to a maximum amount of $0.22 per share of Series B and Series C convertible preferred stock. Dividends accrue on shares of Series D convertible preferred stock at the rate of $0.04 per annum, provided, however, that such accruing dividends shall be limited to a maximum amount of $0.20 per share of Series D convertible preferred stock. Such dividends are cumulative and accrue whether or not declared by our board of directors; however, such dividends are payable only when, as, and if declared by our board of directors or upon a Liquidation Event (as defined below). Such dividends have not been accreted to the carrying value of the Series B, Series C and Series D convertible preferred stock as a Liquidation Event is not yet probable and the holders of the Convertible Preferred Stock have no redemption rights. No dividends have been declared. Dividends do not accrue on shares of Series A convertible preferred stock.

For the computation of net loss per share attributable common to stockholders (see Note 11), accruing undeclared dividends on Series B, Series C and Series D convertible preferred stock increased the net loss attributable to common stockholders for the years ended December 31, 2014 and 2015 by $2,931 and $3,115, respectively.

Liquidation Rights

In the event of our liquidation, dissolution, or winding-up, either voluntary or involuntary, or upon our insolvency, acquisition or a transfer of all or substantially all of our assets (each a “Liquidation Event”), the holders of Series D convertible preferred stock are entitled to receive, prior to and in preference to the holders of Series A, Series B and Series C convertible preferred stock and common stock, from our assets available for distribution an

16

KOLLTAN PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

amount per share equal to the greater of (i) $1.00 plus any accrued but unpaid dividends, whether or not declared, together with any other declared but unpaid dividends, or (ii) such amount per share as would have been payable had all shares of Series D convertible preferred stock been converted into common stock immediately prior to such Liquidation Event. The holders of Series D convertible preferred stock do not have participation rights after distribution of the liquidation preference.

After payments have been made in full to the holders of the Series D convertible preferred stock, then, to the extent available, holders of Series A, Series B and Series C convertible preferred stock are entitled to receive, on a pari passu basis, prior to any distribution to the holders of common stock:

·                  with respect to the Series A convertible preferred stock, an amount equal to $1.00 per share plus any accrued but unpaid dividends, whether or not declared, together with any other declared but unpaid dividends;

·                  with respect to the Series B convertible preferred stock, an amount equal to the greater of (i) $1.10 per share plus any accrued but unpaid dividends, whether or not declared, together with any other declared but unpaid dividends, or (ii) such amount per share as would have been payable had all shares of Series B convertible preferred stock been converted into common stock immediately prior to such Liquidation Event; and

·                  with respect to the Series C convertible preferred stock, an amount equal to the greater of (i) $2.00 per share plus any accrued but unpaid dividends, whether or not declared, together with any other declared but unpaid dividends, or (ii) such amount per share as would have been payable had all shares of Series C convertible preferred stock been converted into common stock immediately prior to such Liquidation Event.

After payments have been made in full to the holders of the Series A, Series B, Series C and Series D convertible preferred stock as described above, the holders of the Series A convertible preferred stock are entitled to participate with the holders of common stock in the distribution of any remaining assets, pro rata based on the number of shares of common stock held by each (on an as-converted to common stock basis). The holders of Series B and Series C convertible preferred stock do not have participation rights after distribution of the liquidation preferences described above.

Conversion

At the option of the holders of the Convertible Preferred Stock, shares may be converted to common stock at a rate equal to the original issuance price of each series of stock divided by the respective conversion price of each series of stock (initially, the original issuance price), subject to adjustment as set forth in our Certificate of Incorporation. According to those terms, the conversion price of each series of convertible preferred stock is to be (i) increased or decreased proportionally upon any stock split, subdivision or reclassification of our common stock and (ii) decreased on a weighted average-basis if, subsequent to the issuance date of each series of convertible preferred stock, we issue shares of common stock or common stock equivalents at a price per share less than the conversion price then in effect for each series of convertible preferred stock. As of December 31, 2014 and 2015, the conversion ratio was 1.00 share of common stock for each share of Series A convertible preferred stock, 1.034979 shares of common stock for each share of Series B convertible preferred stock, 1.228325 shares of common stock for each share Series C convertible preferred stock, and 1.00 share of common stock for each share of Series D convertible preferred stock. In connection with our issuance of Series D convertible preferred stock in March 2014, the conversion prices of our Series B and Series C convertible preferred stock were adjusted downward in accordance with the weighted average antidilution provisions specified in our Certificate of Incorporation, as described above.

The Convertible Preferred Stock automatically converts into shares of common stock upon the closing of an initial public offering of our common stock with a listing on the NYSE or NASDAQ and with gross proceeds to us of at least $40,000; there is no minimum price per share requirement.

17

KOLLTAN PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

Voting and Other Rights

The holders of the Convertible Preferred Stock are entitled to vote, together with the holders of common stock, on all matters submitted to our stockholders for a vote, other than the election of members of our board of directors. Holders of each series of Convertible Preferred Stock are entitled to cast a number of votes equal to the number of shares of common stock into which each such series of Convertible Preferred Stock could be converted. So long as at least 25% of the total number of shares of Convertible Preferred Stock originally issued remain outstanding, the holders of Convertible Preferred Stock, voting together as a single class on an as-converted into common stock basis, shall be entitled to elect, from time to time, one of our directors only and shall not be entitled to vote in the election of any other director.

9.  Common Stock

As of December 31, 2014 and 2015, we had authorized the issuance of 202,500,000 shares of $0.001 par value common stock. Each share of our common stock entitles the holder to one vote on all matters submitted to a vote of all of our stockholders. Common stockholders are not entitled to receive dividends unless declared by our board of directors. Any such dividends would be subject to the preferential dividend rights of the holders of convertible preferred stock.

10.  Stock-Based Awards

2008 Equity Incentive Plan

Our 2008 Equity Incentive Plan (the “2008 Plan”), adopted in July 2008 and as amended and restated through October 2015, provides for the granting of various awards to our officers, directors and employees and to nonemployees (consultants). As of December 31, 2015, the 2008 Plan authorized the issuance of up to 33,000,000 shares of common stock covering several different types of stock-based awards, including stock options and restricted common stock. The 2008 Plan provides that options may be granted at an exercise price of 100% of fair market value of our common stock as determined by our board of directors on the date of grant, may be exercised in full or in installments at the discretion of our board of directors or its compensation committee, and have a maximum contractual term of ten years from date of grant. Stock options we have granted under the 2008 plan generally vest over four years.

As of December 31, 2014 and 2015, there were 58,906 shares and 3,889,329 shares, respectively, of common stock remaining available for future issuance under the 2008 Plan.

Stock Option Valuation

We used the following assumptions to determine the fair value of the stock options granted to employees and directors, presented on a weighted average basis:

Stock Options

The following table summarizes stock option activity for the years ended December 31, 2014 and 2015:

18

KOLLTAN PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

The weighted average fair value of options granted during the years ended December 31, 2014 and 2015 was $0.46 and $0.55, respectively.

As of December 31, 2014, the weighted average remaining contractual term of stock options outstanding was 7.3 years, of stock options exercisable was 5.6 years, and of stock options vested and expected to vest was 7.3 years. As of December 31, 2015, the weighted average remaining contractual term of stock options outstanding was 6.5 years, of stock options exercisable was 5.4 years, and of stock options vested and expected to vest was 6.5 years.

As of December 31, 2014, the total intrinsic value of stock options outstanding was $11,534, of stock options exercisable was $7,354, and of stock options vested and expected to vest was $11,516. As of December 31, 2015, the total intrinsic value of stock options outstanding was $12,016, of stock options exercisable was $9,449, and of stock options vested and expected to vest was $11,879. The intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of our stock for those stock options that had exercise prices lower than the fair value of our common stock.

The total fair value of options vested during the years ended December 31, 2014 and 2015 was $1,527 and $2,153, respectively.

The total intrinsic value for stock options exercised during the years ended December 31, 2014 and 2015 was $80 and $73, respectively. We do not expect to realize any tax benefits from future disqualifying dispositions, if any, because we currently have a full valuation allowance recorded against our deferred tax assets.

Stock-Based Compensation Expense

The following table summarizes the classification of stock-based compensation expenses recognized in our consolidated statements of operations and comprehensive loss:

In May 2014, in connection with the termination of two executive-level employees, our board of directors approved the extension of the post-termination exercise period with respect to their existing vested options and the immediate vesting of unvested options as of their separation dates. During the year ended December 31, 2014, we recognized stock-based compensation expense of $434 with respect to these stock option modifications, of which

19

KOLLTAN PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

$212 was classified as research and development expense and $222 was classified as general and administrative expense.

In August 2014, in connection with the resignation of a member of our board of directors, a director designated by Yale University (“Yale”), we transferred his existing vested and unvested stock options to Yale. During the year ended December 31, 2014, we recognized stock-based compensation expense of $216 for this option modification, which was classified as general and administrative expense.

As of December 31, 2015, unrecognized stock-based compensation expense related to stock options was $4,571 and was expected to be recognized over a weighted average period of 2.6 years.

11.  Net Loss per Share

Net Loss per Share

Basic and diluted net loss per share attributable to common stockholders for the years ended December 31, 2014 and 2015 was calculated as follows:

Our potential dilutive securities, which include stock options and convertible preferred stock, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. We excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect:

12.  Income Taxes

During the years ended December 31, 2014 and 2015, we recorded no income tax benefits for the net operating losses incurred or tax credits earned in each year due to the uncertainty of realizing a benefit from those items.

The reconciliation of the effective U.S. federal statutory income tax rate to our effective tax rate is as follows:

20

KOLLTAN PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share data)

The State of Connecticut assesses corporate tax based on the higher of a tax based on income or on capital. We do not expect to pay state income tax for the foreseeable future based on the status of our product development pipeline and, therefore, the expected Connecticut state income tax rate is zero.