UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
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(
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Title of each class |
| Trading Symbol(s) |
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Non-accelerated filer ☐ | Smaller reporting company | |
Emerging growth company |
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As of October 27, 2023,
CELLDEX THERAPEUTICS, INC.
FORM 10-Q
For the Quarterly Period Ended September 30, 2023
Table of Contents
2
PART I — FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements
CELLDEX THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)
September 30, | December 31, | |||||
| 2023 |
| 2022 | |||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | | $ | | ||
Marketable securities |
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Accounts and other receivables |
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Prepaid and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets, net | | | ||||
Intangible assets |
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Other assets |
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Total assets | $ | | $ | | ||
Liabilities and stockholders’ equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | | $ | | ||
Accrued expenses |
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Current portion of operating lease liabilities | | | ||||
Current portion of other long-term liabilities |
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Total current liabilities |
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Long-term portion of operating lease liabilities | | | ||||
Other long-term liabilities |
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Total liabilities |
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Commitments and contingent liabilities | ||||||
Stockholders’ equity: | ||||||
Convertible preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
| ( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity | $ | | $ | | ||
See accompanying notes to unaudited condensed consolidated financial statements
3
CELLDEX THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except per share amounts)
Three Months | Three Months | Nine Months | Nine Months | |||||||||
| September 30, 2023 |
| September 30, 2022 |
| September 30, 2023 |
| September 30, 2022 | |||||
Revenues: | ||||||||||||
Product development and licensing agreements | $ | | $ | — | $ | | $ | | ||||
Contracts and grants |
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Total revenues |
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Operating expenses: |
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Research and development |
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General and administrative |
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Gain on fair value remeasurement of contingent consideration | — | — | — | ( | ||||||||
Litigation settlement related loss | — | — | — | | ||||||||
Total operating expenses |
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Operating loss |
| ( |
| ( |
| ( |
| ( | ||||
Investment and other income, net |
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Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Basic and diluted net loss per common share | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Shares used in calculating basic and diluted net loss per share |
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Comprehensive loss: | ||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
Other comprehensive income (loss): | ||||||||||||
Unrealized gain (loss) on marketable securities |
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| ( | ||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
See accompanying notes to unaudited condensed consolidated financial statements
4
CELLDEX THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(In thousands)
Nine Months | Nine Months | |||||
| September 30, 2023 |
| September 30, 2022 | |||
Cash flows from operating activities: | ||||||
Net loss | $ | ( | $ | ( | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
Depreciation and amortization |
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Amortization and premium of marketable securities, net |
| ( |
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Loss on sale or disposal of assets | — | | ||||
Gain on fair value remeasurement of contingent consideration | — | ( | ||||
Stock-based compensation expense |
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Changes in operating assets and liabilities: | ||||||
Accounts and other receivables |
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Prepaid and other current assets |
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Other assets | ( | — | ||||
Accounts payable and accrued expenses |
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Other liabilities |
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Net cash used in operating activities |
| ( |
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Cash flows from investing activities: | ||||||
Sales and maturities of marketable securities |
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Purchases of marketable securities |
| ( |
| ( | ||
Acquisition of property and equipment | ( | ( | ||||
Proceeds from sale or disposal of assets | — | | ||||
Net cash provided by investing activities |
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Cash flows from financing activities: | ||||||
Proceeds from issuance of stock from employee benefit plans |
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Net cash provided by financing activities |
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Net decrease in cash and cash equivalents |
| ( |
| ( | ||
Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period | $ | | $ | | ||
Non-cash investing activities | ||||||
Accrued construction in progress | $ | | $ | | ||
See accompanying notes to unaudited condensed consolidated financial statements
5
CELLDEX THERAPEUTICS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
September 30, 2023
(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, 2022, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 28, 2023. 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, 2023.
At September 30, 2023, the Company had cash, cash equivalents and marketable securities of $
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 not 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 beyond twelve months from the issuance date is also dependent on the timing and manner of payment of amounts due under the Settlement Agreement (defined below) with Shareholder Representative Services LLC (“SRS”) (refer to Note 13), in the event that the Company achieves the 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. If the Company is unable to raise the funds necessary to meet its long-term liquidity needs, it 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 the Company.
(2) Significant Accounting Policies
The significant accounting policies used in preparation of these condensed consolidated financial statements on this Quarterly Report on Form 10-Q for the three and nine months ended September 30, 2023 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, 2022, except as it relates to the adoption of new accounting standards during the first nine months of 2023 as discussed below.
6
Newly Adopted Accounting Pronouncements
On January 1, 2023, the Company adopted ASU 2016-13: Financial Instruments - Credit Losses (Topic 326): 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 and establishes additional disclosure requirements related to credit risks. For available-for-sale debt securities with unrealized losses, the standard requires allowances to be recorded instead of reducing the amortized cost of the investment. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements and related disclosures.
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. The Company has reviewed recently issued accounting pronouncements and concluded they are either not applicable to the business or not expected to have a material impact on the Company’s consolidated financial statements as a result of future adoption.
(3) Fair Value Measurements
The following tables set forth the Company’s financial assets and liabilities subject to fair value measurements:
As of | ||||||||||||
| September 30, 2023 |
| Level 1 |
| Level 2 |
| Level 3 | |||||
(In thousands) | ||||||||||||
Assets: | ||||||||||||
Money market funds and cash equivalents | $ | | — | $ | | — | ||||||
Marketable securities | | — | | — | ||||||||
$ | | — | $ | | — | |||||||
As of | ||||||||||||
| December 31, 2022 |
| Level 1 |
| Level 2 |
| Level 3 | |||||
(In thousands) | ||||||||||||
Assets: | ||||||||||||
Money market funds and cash equivalents | $ | | — | $ | | — | ||||||
Marketable securities | | — | | — | ||||||||
$ | | — | $ | | — | |||||||
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.
Contingent consideration liabilities measured at fair value using Level 3 inputs were $
During the three and nine months ended September 30, 2023, there was
7
The Company did not have any transfers in or out of Level 3 or the nine months ended September 30, 2023.
(4) Marketable Securities
The following is a summary of marketable debt securities, classified as available-for-sale:
Amortized | Gross Unrealized | Gross Unrealized | Fair | |||||||||
| Cost |
| Gains |
| Losses |
| Value | |||||
(In thousands) | ||||||||||||
September 30, 2023 | ||||||||||||
Marketable securities | ||||||||||||
U.S. government and municipal obligations | ||||||||||||
Maturing in one year or less | $ | | $ | — | $ | ( | $ | | ||||
Maturing after one year through three years | | — | ( | | ||||||||
Total U.S. government and municipal obligations | $ | | $ | — | $ | ( | $ | | ||||
Corporate debt securities | ||||||||||||
Maturing in one year or less | $ | | $ | | $ | ( | $ | | ||||
Maturing after one year through three years | | — | ( | | ||||||||
Total corporate debt securities | $ | | $ | | $ | ( | $ | | ||||
Total marketable securities | $ | | $ | | $ | ( | $ | | ||||
Amortized | Gross Unrealized | Gross Unrealized | Fair | |||||||||
| Cost |
| Gains |
| Losses |
| Value | |||||
(In thousands) | ||||||||||||
December 31, 2022 | ||||||||||||
Marketable securities | ||||||||||||
U.S. government and municipal obligations | ||||||||||||
Maturing in one year or less | $ | | $ | | $ | ( | $ | | ||||
Maturing after one year through three years | — | | — | — | ||||||||
Total U.S. government and municipal obligations | $ | | $ | | $ | ( | $ | | ||||
Corporate debt securities | ||||||||||||
Maturing in one year or less | $ | | $ | | $ | ( | $ | | ||||
Maturing after one year through three years | — | | — | — | ||||||||
Total corporate debt securities | $ | | $ | | $ | ( | $ | | ||||
Total marketable securities | $ | | $ | | $ | ( | $ | | ||||
The Company holds investment-grade marketable securities, and
Marketable securities include $
(5) Intangible Assets
At September 30, 2023 and December 31, 2022, the carrying value of the Company’s indefinite-lived intangible assets was $
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
8
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 Long-Term Liabilities
Other long-term liabilities include the following:
| September 30, |
| December 31, | |||
2023 | 2022 | |||||
(In thousands) | ||||||
Net deferred tax liabilities related to IPR&D (Note 11) | $ | | $ | | ||
Deferred Income From Sale of Tax Benefits |
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Deferred revenue (Note 10) |
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Total |
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| | ||
Less current portion |
| ( |
| ( | ||
Long-term portion | $ | | $ | | ||
In March 2022, the Company received approval from the New Jersey Economic Development Authority and agreed to sell New Jersey tax benefits of $
(7) 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. At September 30, 2023, the Company had $
9
The changes in Stockholders’ Equity during the three and nine months ended September 30, 2023 and 2022 are summarized below:
|
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| Accumulated |
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Common | Common | Additional | Other | Total | |||||||||||||
Stock | Stock Par | Paid-In | Comprehensive | Accumulated | Stockholders’ | ||||||||||||
| Shares |
| Value |
| Capital |
| Income |
| Deficit |
| Equity | ||||||
(In thousands, except share amounts) | |||||||||||||||||
Consolidated balance at December 31, 2022 |
| |
| $ | |
| $ | |
| $ | |
| $ | ( |
| $ | |
Shares issued under stock option and employee stock purchase plans |
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| — |
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| — |
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| — |
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Stock-based compensation |
| — |
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| — |
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| — |
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| — |
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Unrealized gain on marketable securities |
| — |
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| — |
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| — |
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| — |
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Net loss |
| — |
|
| — |
|
| — |
|
| — |
|
| ( |
|
| ( |
Consolidated balance at March 31, 2023 |
| |
| $ | |
| $ | |
| $ | |
| $ | ( |
| $ | |
Shares issued under stock option and employee stock purchase plans | | — | | — | — | | |||||||||||
Stock-based compensation | — | — | | — | — | | |||||||||||
Unrealized loss on marketable securities | — | — | — | ( | — | ( | |||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||
Consolidated balance at June 30, 2023 | | $ | | $ | | $ | | $ | ( | $ | | ||||||
Shares issued under stock option and employee stock purchase plans | | — | | — | — | | |||||||||||
Stock-based compensation | — | — | | — | — | | |||||||||||
Unrealized gain on marketable securities | — | — | — | | — | | |||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||
Consolidated balance at September 30, 2023 | | $ | | $ | | $ | | $ | ( | $ | | ||||||
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| Accumulated |
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Common | Common | Additional | Other | Total | |||||||||||||
Stock | Stock Par | Paid-In | Comprehensive | Accumulated | Stockholders’ | ||||||||||||
Shares | Value | Capital | Income | Deficit | Equity | ||||||||||||
(In thousands, except share amounts) | |||||||||||||||||
Consolidated balance at December 31, 2021 |
| | $ | | $ | | $ | | $ | ( | $ | | |||||
Shares issued under stock option and employee stock purchase plans |
| |
| — |
| |
| — |
| — |
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Stock-based compensation |
| — |
| — |
| |
| — |
| — |
| | |||||
Unrealized loss on marketable securities |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||
Net loss |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||
Consolidated balance at March 31, 2022 |
| | $ | | $ | | $ | | $ | ( | $ | | |||||
Shares issued under stock option and employee stock purchase plans |
| |
| — |
| |
| — |
| — |
| | |||||
Stock-based compensation |
| — |
| — |
| |
| — |
| — |
| | |||||
Unrealized loss on marketable securities |
| — |
| — |
| — |
| ( |
| — |
| ( | |||||
Net loss |
| — |
| — |
| — |
| — |
| ( |
| ( | |||||
Consolidated balance at June 30, 2022 |
| | $ | | $ | | $ | ( | $ | ( | $ | | |||||
Shares issued under stock option and employee stock purchase plans | | — | | — | — | | |||||||||||
Stock-based compensation | — | — | | — | — | | |||||||||||
Unrealized gain on marketable securities | — | — | — | | — | | |||||||||||
Net loss | — | — | — | — | ( | ( | |||||||||||
Consolidated balance at September 30, 2022 | | $ | | $ | | $ | ( | $ | ( | $ | | ||||||
10
(8) Stock-Based Compensation
A summary of stock option activity for the nine months ended September 30, 2023 is as follows:
Weighted | Weighted | ||||||
Average | Average | ||||||
Exercise | Remaining | ||||||
Price | Contractual | ||||||
| Shares |
| Per Share |
| Term (In Years) | ||
Options outstanding at December 31, 2022 |
| | $ | | |||
Granted |
| | $ | | |||
Exercised |
| ( | $ | | |||
Canceled |
| ( | $ | | |||
Options outstanding at September 30, 2023 |
| | $ | | |||
Options vested and expected to vest at September 30, 2023 |
| | $ | | |||
Options exercisable at September 30, 2023 |
| | $ | | |||
Shares available for grant under the 2021 Plan |
| | |||||
The weighted average grant-date fair value of stock options granted during the three and nine months ended September 30, 2023 was $
The aggregate intrinsic value of stock options vested and expected to vest at September 30, 2023 was $
Stock-based compensation expense for the three and nine months ended September 30, 2023 and 2022 was recorded as follows:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
| 2023 |
| 2022 |
| 2023 |
| 2022 | |||||
(In thousands) | (In thousands) | |||||||||||
Research and development | $ | | $ | | $ | | $ | | ||||
General and administrative |
| |
| |
| |
| | ||||
Total stock-based compensation expense | $ | | $ | | $ | | $ | | ||||
The fair values of employee, consultant and non-employee director stock options granted during the three and nine months ended September 30, 2023 and 2022 were valued using the Black-Scholes option pricing model with the following assumptions:
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
|
| 2023 |
| 2022 |
| 2023 |
| 2022 |
Expected stock price volatility |
| |||||||
Expected option term |
| |||||||
Risk-free interest rate |
| |||||||
Expected dividend yield |
| |||||||
11
(9) Accumulated Other Comprehensive Income
The changes in accumulated other comprehensive income, which is reported as a component of stockholders’ equity, for the nine months ended September 30, 2023 are summarized below:
Unrealized | |||||||||
Loss on | |||||||||
Marketable | Foreign | ||||||||
| Securities |
| Currency Items |
| Total | ||||
(In thousands) | |||||||||
Balance at December 31, 2022 | $ | ( | $ | | $ | | |||
Other comprehensive gain |
| |
| |
| | |||
Balance at September 30, 2023 | $ | ( | $ | | $ | | |||
(10) Revenue
Contract and Grants Revenue
The Company has entered into agreements with Rockefeller University (“Rockefeller”) 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 $
Contract Assets and Liabilities
At September 30, 2023 and December 31, 2022, the Company’s right to consideration under all contracts was considered unconditional, and as such, there were
(11) 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 September 30, 2023 and December 31, 2022.
The net deferred tax liability of $
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.
12
(12) 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:
Nine Months Ended September 30, | ||||
| 2023 |
| 2022 | |
Stock Options |
| |
| |
Restricted Stock |
| — |
| — |
| |
| | |
(13) Kolltan Acquisition
On November 29, 2016, the Company acquired all of the share and debt interests of Kolltan, a clinical-stage biopharmaceutical company, in exchange for
In October 2019, the Company received a letter from SRS, the hired representative of the former stockholders of Kolltan, notifying the Company that it objected to the Company’s characterization of the development, regulatory approval and sales-based Kolltan Milestones relating to CDX-0158 as having been abandoned and contending instead that the related milestone payments are due from Celldex to the Kolltan stockholder.
On August 18, 2020, Celldex filed a Verified Complaint in the Court of Chancery of the State of Delaware against SRS (acting in its capacity as the representative of the former stockholders of Kolltan pursuant to the Merger Agreement) seeking declaratory relief with respect to the rights and obligations of the parties relating to certain contingent milestone payments under the Merger Agreement relating to the discontinued CDX-0158 program (the “Litigation”).
On June 20, 2022, the Company entered into a binding settlement term sheet (the “Term Sheet”) with SRS, related to the Litigation, which, upon execution of a definitive settlement agreement and the payment of the Initial Payment (as defined below), would result in the joint dismissal, with prejudice, of all claims and counterclaims in the Litigation. The definitive settlement agreement between the Company and SRS was executed on July 15, 2022 (the “Settlement Agreement”) and the Company and SRS jointly filed a Stipulation of Dismissal with prejudice relating to the Litigation on July 19, 2022.
Pursuant to the terms of the Term Sheet and the Settlement Agreement, all milestone payments provided for by the Merger Agreement are replaced in their entirety with the following payments, each of which is payable only once:
| (i) | The Company paid $ |
| (ii) | The Company shall pay $ |
| (iii) | The Company shall pay $ |
13
The above payment obligations replace, in their entirety, the contingent consideration in the form of development, regulatory approval and sales-based milestones of up to $
Under the Settlement Agreement, each of the Company and SRS provided broad mutual releases of all claims relating to or arising out of the Merger Agreement, including without limitation, all claims brought in the Litigation or that could have been brought in the Litigation.
The Company paid the Initial Payment in cash during the three months ended September 30, 2022. Any future milestone payments related to the CDX-0159 program, which was subject to the Litigation, will be recorded when and if payment becomes probable and reasonably estimable in accordance with the loss contingency model under ASC 450. Milestones related to the remaining Surviving Company Products are measured at fair value (refer to Note 3). When and if any of the remaining payments described above become due, they shall be payable, at the Company’s sole election, in either cash or stock (as set forth in the Merger Agreement) or a combination thereof.
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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 Quarterly 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 that are still in an early development stage; |
| ● | our ability to successfully complete research and further development, including preclinical and clinical studies; |
| ● | our anticipated timing for preclinical development, regulatory submissions, commencement and completion of clinical trials and product approvals; |
| ● | 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 commercialize our drug candidates and the growth of the markets for those drug candidates; |
| ● | 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 therapeutics; |
| ● | the cost of paying development, regulatory approval and sales-based milestones under the merger agreement by which we acquired Kolltan Pharmaceuticals, Inc. (“Kolltan”) and our related settlement agreement with Kolltan; |
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| ● | our ability to raise sufficient capital to fund our preclinical and clinical studies and to meet our long-term liquidity needs, on terms acceptable to us, or at all. 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, discontinue or delay our commercial manufacturing efforts, discontinue or delay our efforts to expand into additional indications for our drug product candidates, 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; |
| ● | the impact of the COVID-19 pandemic on our business or on the economy generally; 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 our Annual Report on Form 10-K for the year ended December 31, 2022 and other reports that we file with the SEC. |
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 dedicated to developing therapeutic monoclonal and bispecific antibodies that address diseases for which available treatments are inadequate. Our drug candidates include antibody-based therapeutics which have the ability to engage the human immune system and/or directly affect critical pathways to improve the lives of patients with inflammatory diseases and many forms of cancer.
We are focusing our efforts and resources on the continued research and development of
| ● | Barzolvolimab (also referred to as CDX-0159), a monoclonal antibody that specifically binds the KIT receptor and potently inhibits its activity, which is currently being studied across multiple mast cell driven diseases including |
| - | Chronic Urticarias: In June and July 2022 respectively, we announced that enrollment had opened and the first patients had been dosed in Phase 2 studies in chronic spontaneous urticaria (CSU) and chronic inducible urticaria (CIndU); completion of enrollment to the Phase 2 CSU study was announced in July 2023 and we anticipate reporting topline data from this study in late 2023. Data from the Phase 1b study in CSU were reported in February and June 2023. Positive interim data from the Phase 1b study in CIndU were reported in July and September 2021 and in December 2022 in patients with cold urticaria and symptomatic dermographism. Data from the cholinergic cohort included in the CIndU study were presented in June 2023; |
| - | Prurigo Nodularis (PN): In December 2021 we announced that the first patient had been dosed in a Phase 1b study in PN; enrollment was closed in February 2023 and we plan to present data from the study in November 2023; |
| - | Eosinophilic Esophagitis (EoE): A Phase 2 study in EoE was initiated in June 2023 and the first patient was dosed late that month. |
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| ● | Our next generation bispecific antibody platform to support pipeline expansion with additional candidates for inflammatory diseases and oncology. Targets are being selected based on new science as well as their compatibility to be used in bispecific antibody formats with our existing antibody programs. Development is focused on emerging, important pathways controlling inflammatory diseases or immunity to tumors. |
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.
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 total development costs could exceed hundreds of millions of dollars for each drug candidate. We estimate that clinical trials of the type we generally conduct are typically completed over the following timelines:
| Estimated | |
| Completion | |
Clinical Phase |
| 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 agencies 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.
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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, 2022, we incurred an aggregate of $287.2 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 nine months ended September 30, 2023 and 2022. 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.
Nine Months | Nine Months | |||||
Ended | Ended | |||||
| September 30, 2023 |
| September 30, 2022 | |||
| (In thousands) | |||||
Barzolvolimab/Anti-KIT Program | $ | 59,009 | $ | 35,519 | ||
CDX‑585 |
| 5,499 |
| 8,638 | ||
Other Programs |
| 23,077 |
| 15,202 | ||
Total R&D Expense | $ | 87,585 | $ | 59,359 | ||
Clinical Development Programs
Barzolvolimab (also referred to as CDX-0159)
Barzolvolimab 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. Barzolvolimab is designed to block KIT activation by disrupting both SCF binding and KIT dimerization. We believe that by targeting KIT, barzolvolimab may be able to inhibit mast cell activity and decrease mast cell numbers to provide potential clinical benefit in mast cell related diseases.
In certain inflammatory diseases, such as chronic spontaneous urticaria (CSU), also known as chronic idiopathic urticaria (CIU), and chronic inducible urticaria (CIndU), mast cell degranulation plays a central role in the onset and progression of the disease. In June 2020, we completed a randomized, double-blind, placebo-controlled, single ascending dose escalation Phase 1a study of barzolvolimab in healthy subjects (n = 32; 8 subjects per cohort, 6 barzolvolimab; 2 placebo). Subjects received a single intravenous infusion of barzolvolimab 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. Barzolvolimab demonstrated a favorable safety profile as well as profound and durable reductions of plasma tryptase, consistent with systemic mast cell suppression.
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These data supported expansion of the barzolvolimab program into mast cell driven diseases, including initially in CSU and CIndU, diseases where mast cell degranulation plays a central role in the onset and progression of the disease. Phase 1 studies in CSU and CIndU are complete and Phase 2 studies are ongoing. We continue to assess potential opportunities for barzolvolimab in other diseases where mast cells play an important role, such as dermatologic, respiratory, allergic, gastrointestinal and ophthalmic conditions. To this end, we are currently conducting an ongoing Phase 2 study in eosinophilic esophagitis and, after recently completing the Phase 1b study in PN, are planning for the initiation of a Phase 2 subcutaneous study in PN in early 2024. Phase 1 studies of barzolvolimab have been conducted with an intravenous formulation; a subcutaneous formulation has been successfully developed and is being used in Phase 2 studies.
Chronic Spontaneous Urticaria (CSU)
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. CSU is one of the most frequent dermatologic diseases with a prevalence of 0.5-1.0% of the total population or up to approximately 1 to 3 million patients in the United States (Weller et al. 2010. Hautarzt. 61(8), Bartlett et al. 2018. DermNet. Org). Approximately 50% of patients with CSU achieve symptomatic control with antihistamines. Omalizumab, an IgE inhibitor, provides relief for roughly half of the remaining antihistamine refractory patients. Consequently, there is a need for additional therapies.
In October 2020, we announced that enrollment had opened and the first patient had been dosed in a Phase 1b multi-center study of barzolvolimab in CSU. This study is a randomized, double-blind, placebo-controlled clinical trial designed to assess the safety of multiple ascending doses of barzolvolimab in up to 40 patients with CSU who remain symptomatic despite treatment with antihistamines. Secondary and exploratory objectives include pharmacokinetic and pharmacodynamic assessments, including measurement of tryptase and stem cell factor levels and clinical activity outcomes (impact on urticaria symptoms, disease control, clinical response) as well as quality of life assessments. Barzolvolimab is administered intravenously (0.5, 1.5, 3 and 4.5 mg/kg at varying dosing schedules) as add on treatment to H1-antihistamines, either alone or in combination with H2-antihistamines and/or leukotriene receptor agonists.
In February 2023 at the American Academy of Allergy, Asthma & Immunology (AAAAI) Annual Meeting and in June 2023 at the European Academy of Allergy and Clinical Immunology (EAACI) Annual Congress, we reported positive data from the CSU study at 12- and 24-weeks, respectively. The study is now complete with 45 patients with moderate to severe CSU refractory to antihistamines enrolled and treated [35 barzolvolimab (n=9 in 0.5 mg/kg; n=8 in 1.5 mg/kg; n=9 in 3.0 mg/kg; n=9 in 4.5 mg/kg) and 10 placebo]. Activity data for the saturating doses (1.5 mg/kg and higher) are outlined below. Two patients did not receive all doses of study treatment [4.5 mg/kg (1), placebo (1)].
| ● | Barzolvolimab resulted in rapid, marked and durable responses in patients with moderate to severe CSU refractory to antihistamines. Patients with prior omalizumab therapy also had similar symptom improvement as all patients. The 1.5 mg/kg, 3.0 mg/kg and 4.5 mg/kg dose groups showed similar markedly improved urticaria symptoms, including rapid onset of responses (as early as 1 week after the first dose) and prolonged disease control with sustained durability up to 24 weeks. |
| ● | Mean reduction from baseline in urticaria activity (UAS7) at week 12 was 67% in the 1.5 mg/kg dose group (n=8), 67% in the 3.0 mg/kg dose group (n=9) and 82% in the 4.5 mg/kg dose group (n=9). Mean reduction from baseline in urticaria activity (UAS7) at week 24 was 80% in the 1.5 mg/kg dose group (n=7), 70% in the 3.0 mg/kg dose group (n=6) and 77% in the 4.5 mg/kg dose group (n=7). |
| ● | Complete response (UAS7=0) at week 12 was 57% in the 1.5 mg/kg dose group, 44% in the 3.0 mg/kg dose group and 67% in the 4.5 mg/kg dose group. Complete response (UAS7=0) at week 24 was 57% in the 1.5 mg/kg dose group, 67% in the 3.0 mg/kg dose group and 43% in the 4.5 mg/kg dose group. |
| ● | Well-controlled disease (UCT≥ 12) at week 12 was 75% in the 1.5 mg/kg dose group, 63% in the 3.0 mg/kg dose group and 89% in the 4.5 mg/kg dose group. Well-controlled disease (UCT≥ 12) at week 24 was 75% in the 1.5 mg/kg dose group, 67% in the 3.0 mg/kg dose group and 67% in the 4.5 mg/kg dose group. |
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| ● | During post-treatment follow up, 71% (10 of 14) of patients who had been treated with doses greater than or equal to 1.5 mg/kg and had a complete response (UAS7=0) at week 12, remained urticaria free at week 24 (patients received last dose of barzolvolimab at week 8). |
| ● | Profound and durable improvement in angioedema symptoms as measured through the angioedema activity score over 7 days (AAS7) was achieved across all dose levels evaluated with sustained activity observed with the 1.5 mg/kg and greater dose levels. |
| o | 31 patients on study (n=26 barzolvolimab; 5=placebo) reported angioedema activity at baseline when enrolling in the study. 86% of the barzolvolimab treated patients at 1.5 mg/kg or greater were angioedema free at week 12 and 83% were angioedema free at week 24. |
| ● | Tryptase suppression, indicative of mast cell depletion, paralleled symptom improvement, demonstrating the impact of mast cell depletion on CSU disease activity. |
| ● | Barzolvolimab was well tolerated with a favorable safety profile; effects of multiple dose administration were consistent with observations in single dose studies. Most AEs were mild or moderate in severity and resolved while on study. The most common treatment emergent adverse events were hair color changes, COVID-19, headache, neutropenia and urinary tract infections (UTIs). UTIs and COVID-19 were reported as unrelated to treatment. There was one serious adverse event of salmonella gastroenteritis which was also not related to study therapy. Changes in hematologic parameters were consistent with observations in single dose studies, with no pattern of further decreases with multiple doses; hematologic values generally remained within the normal range and returned to baseline levels during the follow up period. Five patients had decreases in neutrophil counts reported as AEs. The pattern observed in the neutrophil changes for these patients was similar to the pattern seen in patients across the barzolvolimab program to date— generally transient, asymptomatic, and mild and typically occurring in patients with screening and baseline neutrophil counts at the lower end of the normal range on study initiation. |
In October 2023, we presented data on quality of life outcomes from this study at the European Academy of Dermatology & Venereology (EADV) Congress as assessed by the Dermatology Life Quality Index (DLQI). The DLQI survey assesses patients' perceptions of the impact of their disease across different aspects of their health-related quality of life and includes questions on symptoms and feelings, daily activities, leisure, work and school performance, personal relationships and treatment. A rapid improvement in the DLQI was noted within 4 weeks in all barzolvolimab treated patients. DLQI improvement was sustained at doses ≥1.5 mg/kg. Physician Global Assessment (PhysGA) for the treated cohorts also improved by week 1 and was sustained through Week 24. DLQI and PhysGA trended closely with the dose-dependent improvement in UAS7 and UCT, tryptase suppression, and increases in SCF.
In June 2022, we announced that the first patient had been dosed in a Phase 2 study in patients with CSU who remained symptomatic despite antihistamine therapy; in July 2023, we announced that enrollment had been completed to the study. The study is being conducted at approximately 75 sites across 9 countries. The study is a randomized, double-blind, placebo-controlled, parallel group Phase 2 study evaluating the efficacy and safety profile of multiple dose regimens of barzolvolimab to determine the optimal dosing strategy. 208 patients have been randomly assigned on a 1:1:1:1 ratio to receive subcutaneous injections of barzolvolimab at 75 mg every 4 weeks, 150 mg every 4 weeks, 300 mg every 8 weeks or placebo during a 16-week placebo-controlled treatment phase. Patients will then enter a 36-week active treatment phase, in which patients not already randomized to barzolvolimab at 150 mg every 4 weeks or 300 mg every 8 weeks will be randomized 1:1 to receive one of these two dose regimens; patients already randomized to these treatment arms will remain on the same regimen as during the placebo-controlled treatment phase. Following the treatment period, patients will enter a 24-week follow up phase. The primary endpoint of the study is mean change in baseline to week 12 in UAS7 (Urticaria Activity Score over 7 days). Secondary endpoints inclu