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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

OR

   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-15006

CELLDEX THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

Delaware

    

No. 13-3191702

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

Perryville III Building, 53 Frontage Road, Suite 220, Hampton, New Jersey 08827

(Address of principal executive offices) (Zip Code)

(908) 200-7500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading Symbol(s)

    

Name of each exchange on which registered

Common Stock, par value $.001

CLDX

Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer 

    

Accelerated filer 

Non-accelerated filer 

Smaller reporting company

Emerging growth company 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

As of October 27, 2023, 47,264,197 shares of common stock, $.001 par value per share, were outstanding.

Table of Contents

CELLDEX THERAPEUTICS, INC.

FORM 10-Q

For the Quarterly Period Ended September 30, 2023

Table of Contents

 

    

Page

Part I — Financial Information

Item 1. Unaudited Financial Statements

3

Condensed Consolidated Balance Sheets at September 30, 2023 and December 31, 2022

3

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2023 and 2022

4

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022

5

Notes to Unaudited Condensed Consolidated Financial Statements

6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3. Quantitative and Qualitative Disclosures About Market Risk

30

Item 4. Controls and Procedures

30

Item 5. Other Information

31

Part II — Other Information

Item 1A. Risk Factors

31

Item 6. Exhibits

32

Exhibit Index

32

Signatures

33

2

Table of Contents

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

$

21,134

$

29,429

Marketable securities

 

214,214

 

275,523

Accounts and other receivables

 

252

 

347

Prepaid and other current assets

 

10,333

 

12,394

Total current assets

 

245,933

 

317,693

Property and equipment, net

 

4,162

 

3,747

Operating lease right-of-use assets, net

2,864

4,001

Intangible assets

 

27,190

 

27,190

Other assets

 

107

 

104

Total assets

$

280,256

$

352,735

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

3,586

$

3,340

Accrued expenses

 

18,471

 

12,835

Current portion of operating lease liabilities

1,547

1,445

Current portion of other long-term liabilities

 

4,232

 

990

Total current liabilities

 

27,836

 

18,610

Long-term portion of operating lease liabilities

1,299

2,588

Other long-term liabilities

 

4,403

 

5,333

Total liabilities

 

33,538

 

26,531

Commitments and contingent liabilities

Stockholders’ equity:

Convertible preferred stock, $.01 par value; 3,000,000 shares authorized; no shares issued and outstanding at September 30, 2023 and December 31, 2022

 

 

Common stock, $.001 par value; 297,000,000 shares authorized; 47,264,197 and 47,200,695 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

47

 

47

Additional paid-in capital

 

1,598,591

 

1,580,829

Accumulated other comprehensive income

 

2,135

 

1,260

Accumulated deficit

 

(1,354,055)

 

(1,255,932)

Total stockholders’ equity

 

246,718

 

326,204

Total liabilities and stockholders’ equity

$

280,256

$

352,735

See accompanying notes to unaudited condensed consolidated financial statements

3

Table of Contents

CELLDEX THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except per share amounts)

Three Months
Ended

Three Months
Ended

Nine Months
Ended

Nine Months
Ended

    

September 30, 2023

    

September 30, 2022

    

September 30, 2023

    

September 30, 2022

Revenues:

Product development and licensing agreements

$

2

$

$

19

$

30

Contracts and grants

 

1,515

 

407

 

2,733

 

714

Total revenues

 

1,517

 

407

 

2,752

 

744

Operating expenses:

Research and development

 

34,535

 

21,572

 

87,585

 

59,359

General and administrative

 

8,221

 

6,531

 

22,082

 

20,596

Gain on fair value remeasurement of contingent consideration

(6,862)

Litigation settlement related loss

15,000

Total operating expenses

 

42,756

 

28,103

 

109,667

 

88,093

Operating loss

 

(41,239)

 

(27,696)

 

(106,915)

 

(87,349)

Investment and other income, net

 

2,979

 

912

 

8,792

 

1,511

Net loss

$

(38,260)

$

(26,784)

$

(98,123)

$

(85,838)

Basic and diluted net loss per common share

$

(0.81)

$

(0.57)

$

(2.08)

$

(1.83)

Shares used in calculating basic and diluted net loss per share

 

47,261

 

46,916

 

47,243

 

46,806

Comprehensive loss:

Net loss

$

(38,260)

$

(26,784)

$

(98,123)

$

(85,838)

Other comprehensive income (loss):

Unrealized gain (loss) on marketable securities

 

63

 

305

 

875

 

(2,006)

Comprehensive loss

$

(38,197)

$

(26,479)

$

(97,248)

$

(87,844)

See accompanying notes to unaudited condensed consolidated financial statements

4

Table of Contents

CELLDEX THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

(In thousands)

Nine Months
Ended

Nine Months
Ended

    

September 30, 2023

    

September 30, 2022

Cash flows from operating activities:

Net loss

$

(98,123)

$

(85,838)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

 

2,249

 

2,223

Amortization and premium of marketable securities, net

 

(4,043)

 

1,366

Loss on sale or disposal of assets

1

Gain on fair value remeasurement of contingent consideration

(6,862)

Stock-based compensation expense

 

16,678

 

11,103

Changes in operating assets and liabilities:

Accounts and other receivables

 

95

 

(17)

Prepaid and other current assets

 

1,757

 

(7,928)

Other assets

(3)

Accounts payable and accrued expenses

 

5,507

 

720

Other liabilities

 

1,125

 

3,262

Net cash used in operating activities

 

(74,758)

 

(81,970)

Cash flows from investing activities:

Sales and maturities of marketable securities

 

249,703

 

192,866

Purchases of marketable securities

 

(183,172)

 

(132,613)

Acquisition of property and equipment

(1,152)

(1,593)

Proceeds from sale or disposal of assets

69

Net cash provided by investing activities

 

65,379

 

58,729

Cash flows from financing activities:

Proceeds from issuance of stock from employee benefit plans

 

1,084

 

2,681

Net cash provided by financing activities

 

1,084

 

2,681

Net decrease in cash and cash equivalents

 

(8,295)

 

(20,560)

Cash and cash equivalents at beginning of period

 

29,429

 

39,143

Cash and cash equivalents at end of period

$

21,134

$

18,583

Non-cash investing activities

Accrued construction in progress

$

488

$

38

See accompanying notes to unaudited condensed consolidated financial statements

5

Table of Contents

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 $235.3 million. The Company has had recurring losses and incurred a loss of $98.1 million for the nine months ended September 30, 2023. Net cash used in operations for the nine months ended September 30, 2023 was $74.8 million. The Company believes that the cash, cash equivalents and marketable securities at the filing date of this Quarterly Report on Form 10-Q will be sufficient to meet estimated working capital requirements and fund planned operations for at least the next twelve months from the date of issuance of these financial statements.

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

Table of Contents

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

$

10,979

$

10,979

Marketable securities

214,214

214,214

$

225,193

$

225,193

As of

    

December 31, 2022

    

Level 1

    

Level 2

    

Level 3

(In thousands)

Assets:

Money market funds and cash equivalents

$

16,813

$

16,813

Marketable securities

275,523

275,523

$

292,336

$

292,336

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 $0.0 million as of September 30, 2023 and December 31, 2022. The valuation technique used to measure fair value of the Company’s Level 3 liabilities, which consist of contingent consideration related to the acquisition of Kolltan Pharmaceuticals, Inc. (“Kolltan”) in 2016, is primarily an income approach. The significant unobservable inputs used in the fair value measurement of the contingent consideration are estimates including probability of success, discount rates and amount of time until the conditions of the milestone payments are met.

During the three and nine months ended September 30, 2023, there was no gain or loss on fair value remeasurement of contingent consideration. During the three and nine months ended September 30, 2022, the Company recorded a $0.0 million and $6.9 million gain on fair value remeasurement of contingent consideration, respectively, primarily due to the Company’s decision to deprioritize the CDX-1140 program. The assumptions related to determining the fair value of contingent consideration include a significant amount of judgment, and any changes in the underlying estimates could have a material impact on the amount of contingent consideration adjustment recorded in any given period.

7

Table of Contents

The Company did not have any transfers in or out of Level 3 assets or liabilities during 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

$

89,878

$

$

(186)

$

89,692

Maturing after one year through three years

7,880

(44)

7,836

Total U.S. government and municipal obligations

$

97,758

$

$

(230)

$

97,528

Corporate debt securities

Maturing in one year or less

$

86,866

$

2

$

(96)

$

86,772

Maturing after one year through three years

30,052

(138)

29,914

Total corporate debt securities

$

116,918

$

2

$

(234)

$

116,686

Total marketable securities

$

214,676

$

2

$

(464)

$

214,214

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

$

97,246

$

5

$

(369)

$

96,882

Maturing after one year through three years

Total U.S. government and municipal obligations

$

97,246

$

5

$

(369)

$

96,882

Corporate debt securities

Maturing in one year or less

$

179,613

$

$

(972)

$

178,641

Maturing after one year through three years

Total corporate debt securities

$

179,613

$

$

(972)

$

178,641

Total marketable securities

$

276,859

$

5

$

(1,341)

$

275,523

The Company holds investment-grade marketable securities, and none were in a continuous unrealized loss position for more than twelve months as of September 30, 2023 and December 31, 2022. The unrealized losses are attributable to changes in interest rates and the Company does not believe any unrealized losses represent other-than-temporary impairments. The Company has the intent and ability to hold such marketable securities until recovery and has determined that there has been no material change to their credit risk. As a result, the Company determined it did not hold any investments with a credit loss at September 30, 2023.

Marketable securities include $1.2 million and $0.8 million in accrued interest at September 30, 2023 and December 31, 2022, respectively.

(5)  Intangible Assets

At September 30, 2023 and December 31, 2022, the carrying value of the Company’s indefinite-lived intangible assets was $27.2 million. Indefinite-lived intangible assets consist of acquired in-process research and development ("IPR&D") related to the development of the anti-KIT program, including barzolvolimab (also referred to as CDX-0159), which was recorded in connection with the Kolltan acquisition. Barzolvolimab is in Phase 2 development. As of September 30, 2023, the IPR&D asset related to the anti-KIT program had not reached technological feasibility nor did the asset have alternative future uses.

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

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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)

$

1,613

$

1,613

Deferred Income From Sale of Tax Benefits

 

3,720

 

4,650

Deferred revenue (Note 10)

 

3,302

 

60

Total

 

8,635

 

6,323

Less current portion

 

(4,232)

 

(990)

Long-term portion

$

4,403

$

5,333

In March 2022, the Company received approval from the New Jersey Economic Development Authority and agreed to sell New Jersey tax benefits of $5.0 million to an independent third party for $4.7 million. Under the agreement, the Company must maintain a base of operations in New Jersey for five years or the tax benefits must be paid back on a pro-rata basis based on the number of years completed. The Company recognized $0.0 million and $0.9 million in other income related to the sale of these tax benefits during the three and nine months ended September 30, 2023.

(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 $50.0 million remaining in aggregate gross offering price available under the Company’s November 2020 prospectus.

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The changes in Stockholders’ Equity during the three and nine months ended September 30, 2023 and 2022 are summarized below:

    

    

    

    

Accumulated

    

    

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

 

47,200,695

 

$

47

 

$

1,580,829

 

$

1,260

 

$

(1,255,932)

 

$

326,204

Shares issued under stock option and employee stock purchase plans

 

43,986

 

 

 

 

694

 

 

 

 

 

 

694

Stock-based compensation

 

 

 

 

 

4,340

 

 

 

 

 

 

4,340

Unrealized gain on marketable securities

 

 

 

 

 

 

 

863

 

 

 

 

863

Net loss

 

 

 

 

 

 

 

 

 

(29,361)

 

(29,361)

Consolidated balance at March 31, 2023

 

47,244,681

 

$

47

 

$

1,585,863

 

$

2,123

 

$

(1,285,293)

 

$

302,740

Shares issued under stock option and employee stock purchase plans

9,132

133

133

Stock-based compensation

5,217

5,217

Unrealized loss on marketable securities

(51)

(51)

Net loss

(30,502)

(30,502)

Consolidated balance at June 30, 2023

47,253,813

$

47

$

1,591,213

$

2,072

$

(1,315,795)

$

277,537

Shares issued under stock option and employee stock purchase plans

10,384

257

257

Stock-based compensation

7,121

7,121

Unrealized gain on marketable securities

63

63

Net loss

(38,260)

(38,260)

Consolidated balance at September 30, 2023

47,264,197

$

47

$

1,598,591

$

2,135

$

(1,354,055)

$

246,718

    

    

    

    

Accumulated

    

    

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

 

46,730,198

$

47

$

1,561,142

$

1,894

$

(1,143,607)

$

419,476

Shares issued under stock option and employee stock purchase plans

 

24,150

 

 

304

 

 

 

304

Stock-based compensation

 

 

 

3,153

 

 

 

3,153

Unrealized loss on marketable securities

 

 

 

 

(1,782)

 

 

(1,782)

Net loss

 

 

 

 

 

(23,050)

 

(23,050)

Consolidated balance at March 31, 2022

 

46,754,348

$

47

$

1,564,599

$

112

$

(1,166,657)

$

398,101

Shares issued under stock option and employee stock purchase plans

 

10,355

 

 

71

 

 

 

71

Stock-based compensation

 

 

 

3,454

 

 

 

3,454

Unrealized loss on marketable securities

 

 

 

 

(529)

 

 

(529)

Net loss

 

 

 

 

 

(36,004)

 

(36,004)

Consolidated balance at June 30, 2022

 

46,764,703

$

47

$

1,568,124

$

(417)

$

(1,202,661)

$

365,093

Shares issued under stock option and employee stock purchase plans

331,360

2,306

2,306

Stock-based compensation

4,496

4,496

Unrealized gain on marketable securities

305

305

Net loss

(26,784)

(26,784)

Consolidated balance at September 30, 2022

47,096,063

$

47

$

1,574,926

$

(112)

$

(1,229,445)

$

345,416

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(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

 

5,085,662

$

29.26

7.9

Granted

 

1,553,275

$

36.88

Exercised

 

(50,773)

$

15.89

Canceled

 

(180,580)

$

87.57

Options outstanding at September 30, 2023

 

6,407,584

$

29.57

7.8

Options vested and expected to vest at September 30, 2023

 

6,271,198

$

29.54

7.7

Options exercisable at September 30, 2023

 

3,088,826

$

29.58

6.6

Shares available for grant under the 2021 Plan

 

1,065,273

The weighted average grant-date fair value of stock options granted during the three and nine months ended September 30, 2023 was $25.80 and $28.38, respectively.

The aggregate intrinsic value of stock options vested and expected to vest at September 30, 2023 was $41.2 million. The aggregate intrinsic value of stock options exercisable at September 30, 2023 was $32.6 million. As of September 30, 2023, total compensation cost related to non-vested employee, consultant and non-employee director stock options not yet recognized was approximately $67.6 million, net of estimated forfeitures, which is expected to be recognized as expense over a weighted average period of 2.7 years.

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

$

3,618

$

2,342

$

8,269

$

5,754

General and administrative

 

3,503

 

2,154

 

8,409

 

5,349

Total stock-based compensation expense

$

7,121

$

4,496

$

16,678

$

11,103

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

 

92%

91%

92%

9097%

Expected option term

 

6.0 Years

6.0 Years

6.0 Years

6.0 Years

Risk-free interest rate

 

4.1%

2.93.5%

3.54.1%

1.73.6%

Expected dividend yield

 

None

None

None

None

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(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

$

(1,336)

$

2,596

$

1,260

Other comprehensive gain

 

875

 

 

875

Balance at September 30, 2023

$

(461)

$

2,596

$

2,135

No amounts were reclassified out of accumulated other comprehensive income during the nine months ended 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 $1.5 million and $2.7 million in revenue under the agreements with Rockefeller during the three and nine months ended September 30, 2023, respectively, and $0.0 million and $0.2 million during the three and nine months ended September 30, 2022, respectively.

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 no recorded contract assets. At September 30, 2023, the Company had $3.3 million in contract liabilities recorded, which is expected to be recognized during the next 12 months as manufacturing and research and development services are performed. At December 31, 2022, the Company had $0.1 million in contract liabilities recorded. Revenue recognized from contract liabilities as of December 31, 2022 during the three and nine months ended September 30, 2023 was less than $0.1 million.

(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 $1.6 million at September 30, 2023 and December 31, 2022 relates to the temporary differences associated with the IPR&D intangible assets acquired in previous business combinations and is not deductible for tax purposes.

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.

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(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

 

6,407,584

 

5,189,971

Restricted Stock

 

 

 

6,407,584

 

5,189,971

(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 1,217,200 shares of the Company’s common stock plus contingent consideration in the form of development, regulatory approval and sales-based milestones (“Kolltan Milestones”) of up to $172.5 million payable in cash, in shares of Celldex’s common stock or a combination of both, in the sole discretion of Celldex and subject to provisions of the Agreement and Plan of Merger, dated November 1, 2016 (the “Merger Agreement”).

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 $15.0 million upon execution of the Settlement Agreement (the “Initial Payment”).

(ii)The Company shall pay $15.0 million upon the Successful Completion (as defined in the Term Sheet) of a Phase 2 Clinical Trial (as defined in the Merger Agreement) of CDX-0159, subject to the $2.5 million contractual credit as set forth in the Merger Agreement.
(iii)The Company shall pay $52.5 million upon the first United States Food and Drug Administration or European Medicines Agency, or, in each case, any successor organization, regulatory approval of a Surviving Company Product (as defined the Term Sheet).

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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 $172.5 million contained in the Merger Agreement.

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.

o31 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, pa