UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
OR
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading Symbol(s) |
| Name of each exchange on which registered |
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Non-accelerated filer ☐ | Smaller reporting company | |
Emerging growth company |
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As of July 31, 2024,
CELLDEX THERAPEUTICS, INC.
FORM 10-Q
For the Quarterly Period Ended June 30, 2024
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)
June 30, | December 31, | |||||
| 2024 |
| 2023 | |||
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 |
| ( |
| ( | ||
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 | Six Months | Six Months | |||||||||
| June 30, 2024 |
| June 30, 2023 |
| June 30, 2024 |
| June 30, 2023 | |||||
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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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 (loss) gain on marketable securities |
| ( |
| ( |
| ( |
| | ||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( | ||||
See accompanying notes to unaudited condensed consolidated financial statements
4
CELLDEX THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)
(In thousands)
Six Months | Six Months | |||||
| June 30, 2024 |
| June 30, 2023 | |||
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 |
| ( |
| ( | ||
Loss on sale or disposal of assets | | — | ||||
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 |
| ( |
| ( | ||
Other assets | — | ( | ||||
Accounts payable and accrued expenses |
| ( |
| ( | ||
Other liabilities |
| ( |
| ( | ||
Net cash used in operating activities |
| ( |
| ( | ||
Cash flows from investing activities: | ||||||
Sales and maturities of marketable securities |
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Purchases of marketable securities |
| ( |
| ( | ||
Acquisition of property and equipment | ( | ( | ||||
Net cash (used in) provided by investing activities |
| ( |
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Cash flows from financing activities: | ||||||
Net proceeds from stock issuances | | — | ||||
Proceeds from issuance of stock from employee benefit plans |
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Net cash provided by financing activities |
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Net increase (decrease) in cash and cash equivalents |
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| ( | ||
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
June 30, 2024
(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, 2023, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 26, 2024. 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, 2024.
At June 30, 2024, 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 financings, 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 the future milestone under the Settlement Agreement (defined below) with Shareholder Representative Services LLC (“SRS”) (refer to Note 13), in the event that the Company achieves the milestone related to that payment. The Company, at its option, may decide to pay that milestone payment 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 six months ended June 30, 2024 are consistent with those discussed in Note 2 to the financial statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.
6
Recent Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s consolidated financial statements upon adoption.
In November 2023, the FASB issued ASU 2023-07 Segment Reporting - Improvements to Reportable Segment Disclosures, which improves reportable segment disclosure requirements, primarily through enhanced disclosure of significant segment expenses. The amendments in ASU 2023-07 apply to public entities, including those with a single reportable segment, and are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities to disclose specific categories in the effective tax rate reconciliation, as well as additional information for reconciling items that exceed a quantitative threshold. ASU 2023-09 also requires all entities to disclose income taxes paid disaggregated by federal, state and foreign taxes, and further disaggregated for specific jurisdictions that exceed 5% of total income taxes paid, among other expanded disclosures. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU 2023-09 may have on its consolidated financial statements and related disclosures.
In March 2024, the SEC adopted final rules requiring public entities to provide certain climate-related information in their registration statements and annual reports. The rules require disclosure of, among other things: material climate-related risks; activities to mitigate or adapt to such risks; governance and management of such risks; and material greenhouse gas (GHG) emissions from operations owned or controlled (Scope 1) and/or indirect emissions from purchased energy consumed in operations (Scope 2). Additionally, the rules require disclosure in the notes to the financial statements of the effects of severe weather events and other natural conditions, subject to certain materiality thresholds. In April 2024, the SEC voluntarily stayed the new rules as a result of pending legal challenges. Absent the result of pending legal challenges, and the removal of the stay, the rules were to become effective on a phased-in timeline, with the first requirements to be adopted for the Company’s fiscal year beginning in 2025. The Company is assessing the effect of the new rules on its consolidated financial statements and related disclosures.
(3) Fair Value Measurements
The following tables set forth the Company’s financial assets and liabilities subject to fair value measurements:
As of | ||||||||||||
| June 30, 2024 |
| Level 1 |
| Level 2 |
| Level 3 | |||||
(In thousands) | ||||||||||||
Assets: | ||||||||||||
Money market funds and cash equivalents | $ | | — | $ | | — | ||||||
Marketable securities | | — | | — | ||||||||
$ | | — | $ | | — | |||||||
As of | ||||||||||||
| December 31, 2023 |
| Level 1 |
| Level 2 |
| Level 3 | |||||
(In thousands) | ||||||||||||
Assets: | ||||||||||||
Money market funds and cash equivalents | $ | | — | $ | | — | ||||||
Marketable securities | | — | | — | ||||||||
$ | | — | $ | | — | |||||||
7
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 $
There was
The Company did not have any transfers in or out of Level 3 or the six months ended June 30, 2024.
(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) | ||||||||||||
June 30, 2024 | ||||||||||||
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, 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 | $ | | $ | | $ | ( | $ | | ||||
8
The Company holds investment-grade marketable securities. Unrealized losses are generally attributable to changes in interest rates. The aggregate fair value of marketable securities held by the Company in an unrealized loss position as of June 30, 2024 and December 31, 2023 was $
Marketable securities include $
(5) Intangible Assets
At June 30, 2024 and December 31, 2023, 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 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:
| June 30, |
| December 31, | |||
2024 | 2023 | |||||
(In thousands) | ||||||
Net deferred tax liabilities related to IPR&D (Note 11) | $ | | $ | | ||
Deferred income from sale of tax benefits |
| | | |||
Deferred revenue (Note 10) |
| | | |||
Total |
| | | |||
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 November 2023, the Company filed an automatic shelf registration statement with the SEC to register for sale any combination of the types of securities described in the shelf registration statement, including shares of its common stock. Also in November 2023, the Company issued
On February 26, 2024, the Company entered into a controlled equity offering sales agreement (“ATM 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. Also on February 26, 2024, the Company terminated its pre-existing controlled equity offering sale agreement dated May 19, 2016 with Cantor. At June 30, 2024, the Company had registered $
9
In March 2024, the Company issued
The changes in Stockholders’ Equity during the three and six months ended June 30, 2024 and 2023 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, 2023 |
| |
| $ | |
| $ | |
| $ | |
| $ | ( |
| $ | |
Shares issued under stock option and employee stock purchase plans |
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| — |
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| — |
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Shares issued in underwritten offering, net |
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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 loss on marketable securities |
| — |
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| — |
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| — |
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| ( |
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| — |
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| ( |
Net loss |
| — |
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| — |
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| — |
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| — |
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| ( |
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| ( |
Consolidated balance at March 31, 2024 |
| |
| $ | |
| $ | |
| $ | | $ | ( |
| $ | | |
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, 2024 | | $ | | $ | | $ | | $ | ( | $ | | ||||||
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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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Stock-based compensation |
| — |
| — |
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| — |
| — |
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Unrealized gain on marketable securities |
| — |
| — |
| — |
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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 |
| | $ | | $ | | $ | | $ | ( | $ | | |||||
10
(8) Stock-Based Compensation
A summary of stock option activity for the six months ended June 30, 2024 is as follows:
Weighted | Weighted | ||||||
Average | Average | ||||||
Exercise | Remaining | ||||||
Price | Contractual | ||||||
| Shares |
| Per Share |
| Term (In Years) | ||
Options outstanding at December 31, 2023 |
| | $ | | |||
Granted |
| | $ | | |||
Exercised |
| ( | $ | | |||
Canceled |
| ( | $ | | |||
Options outstanding at June 30, 2024 |
| | $ | | |||
Options vested and expected to vest at June 30, 2024 |
| | $ | | |||
Options exercisable at June 30, 2024 |
| | $ | | |||
Shares available for grant under the Celldex Therapeutics, Inc. 2021 Omnibus Equity Incentive Plan (as amended, effective as of June 13, 2024) |
| | |||||
The weighted average grant-date fair value of stock options granted during the three and six months ended June 30, 2024 was $
The aggregate intrinsic value of stock options vested and expected to vest at June 30, 2024 was $
Stock-based compensation expense for the three and six months ended June 30, 2024 and 2023 was recorded as follows:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
(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 six months ended June 30, 2024 and 2023 were valued using the Black-Scholes option pricing model with the following assumptions:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||
|
| 2024 |
| 2023 |
| 2024 |
| 2023 |
Expected stock price volatility |
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| ||||||
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 six months ended June 30, 2024 are summarized below:
Unrealized | |||||||||
Gain (Loss) on | |||||||||
Marketable | Foreign | ||||||||
| Securities |
| Currency Items |
| Total | ||||
(In thousands) | |||||||||
Balance at December 31, 2023 | $ | | $ | | $ | | |||
Other comprehensive loss |
| ( |
| |
| ( | |||
Balance at June 30, 2024 | $ | ( | $ | | $ | | |||
(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 June 30, 2024 and December 31, 2023, 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 June 30, 2024 and December 31, 2023.
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:
Six Months Ended June 30, | ||||
| 2024 |
| 2023 | |
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 July 15, 2022, the Company entered into a definitive settlement agreement between the Company and SRS (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 Settlement Agreement, all milestone payments provided for by the Merger Agreement were replaced in their entirety with the following payments, each of which is payable only once:
| (i) | The Company paid $ |
| (ii) | The Company paid $ |
| (iii) | The Company shall pay $ |
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 $
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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 in July 2022. The Company paid the second milestone for “successful completion” of a Phase 2 Clinical Trial of barzolvolimab in cash in November 2023.
A future milestone payment related to the barzolvolimab 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. A future milestone payment related to the remaining Surviving Company Products is measured at fair value (refer to Note 3). When and if the remaining payment described above becomes due, it 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 development stages; |
| ● | 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 the regulatory approval milestone under the merger agreement by which we acquired 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; 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, 2023 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 exploring the science of mast cell biology and developing therapeutic antibodies which have the ability to engage the human immune system and/or directly affect critical pathways to improve the lives of patients with severe inflammatory, allergic, autoimmune and other devastating diseases. Our drug candidates include monoclonal and bispecific antibodies designed to address mast cell mediated diseases for which available treatments are inadequate.
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: We initiated Phase 3 studies in chronic spontaneous urticaria (CSU) in July 2024. In November 2023, we announced that our Phase 2 study in CSU achieved the primary efficacy endpoint (statistically significant mean change from baseline to week 12 of urticaria activity score compared to placebo) and was well tolerated. The study is ongoing and patients will continue to receive barzolvolimab for 52 weeks of treatment. In July 2024, we announced that our Phase 2 study in chronic inducible urticaria (CIndU) achieved the primary efficacy endpoint, (statistically significant difference between the percent of patients with a negative provocation test compared to placebo at week 12) and was well tolerated. The study is ongoing and patients will continue to receive barzolvolimab for 20 weeks of treatment. We plan to report topline 52 week data from the CSU study and full 12 week primary endpoint data from the CIndU study in the second half of 2024; |
| - | Prurigo Nodularis (PN): In April 2024, we initiated a Phase 2 study in PN and enrollment is ongoing; positive data from a Phase 1b study in PN was reported in November 2023; |
| - | Eosinophilic Esophagitis (EoE): A Phase 2 study in EoE was initiated in June 2023 and enrollment is ongoing; and |
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| - | Atopic Dermatitis (AD): Atopic dermatitis has been selected as the next indication for the study of barzolvolimab. We are currently planning the design of a Phase 2 study in this indication, including in patients who received prior biologics, and plan to initiate this study by year end 2024. |
| ● | 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. |
More detail on these programs is provided in the Clinical Development Programs section.
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, 2023, we incurred an aggregate of $338.8 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 six months ended June 30, 2024 and 2023. 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.
Six Months | Six Months | |||||
Ended | Ended | |||||
| June 30, 2024 |
| June 30, 2023 | |||
| (In thousands) | |||||
Barzolvolimab/Anti-KIT Program | $ | 54,250 | $ | 34,841 | ||
CDX‑585 |
| 1,586 |
| 4,569 | ||
CDX‑622 | 6,547 | 7,152 | ||||
Other Programs |
| 8,965 |
| 6,487 | ||
Total R&D Expense | $ | 71,348 | $ | 53,049 | ||
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. By targeting KIT, barzolvolimab has been shown to inhibit mast cell activity and decrease mast cell numbers, which we believe could provide potential clinical benefit in mast cell related diseases.
Barzolvolimab was initially studied in chronic spontaneous urticaria (CSU) and chronic inducible urticaria (CIndU), diseases where mast cell degranulation plays a central role in the onset and progression of the disease. In July 2024, we initiated two Phase 3 studies in CSU. Phase 1 studies in CSU and CIndU were successfully completed and Phase 2 studies are ongoing. In July 2023, we announced that enrollment was complete in the ongoing Phase 2 CSU study. In November 2023, we reported that barzolvolimab achieved the primary efficacy endpoint in this study, with a statistically significant mean change from baseline to week 12 of UAS7 (weekly urticaria activity score) compared to placebo and was well tolerated. In April 2024, we announced enrollment was complete in the ongoing Phase 2 CIndU study. In July 2024, we reported that barzolvolimab achieved the primary efficacy endpoint in this study with a statistically significant difference between the percent of patients with a negative provocation test compared to placebo at week 12 and was well tolerated. We plan to report topline 52 week data from the CSU study and full 12 week primary endpoint data from the CIndU study in the second half of 2024.
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Based on the positive results reported in urticaria, we expanded development of barzolvolimab into additional indications where mast cells are believed to play an important role. We are conducting an ongoing Phase 2 study in eosinophilic esophagitis (EoE) and initiated a Phase 2 study in prurigo nodularis (PN) in April 2024 after reporting positive data from a Phase 1b study in PN in late 2023. We have selected atopic dermatitis as the next indication for the study of barzolvolimab and are currently planning the design of a Phase 2 study in this indication, including in patients who received prior biologics, and plan to initiate this study by year end 2024. 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.
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. It 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.
We have completed a Phase 1b randomized, double-blind, placebo-controlled multi-center study of barzolvolimab in CSU. The study was designed to assess the safety of multiple ascending doses of barzolvolimab in patients with CSU who remain symptomatic despite treatment with antihistamines. Secondary and exploratory objectives included pharmacokinetic and pharmacodynamic assessments, clinical activity outcomes and quality of life assessments. Barzolvolimab was administered intravenously as add on treatment to H1-antihistamines, either alone or in combination with H2-antihistamines and/or leukotriene receptor agonists. 45 patients with moderate to severe CSU refractory to antihistamines were 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].
At saturating doses (1.5 mg/kg and higher), barzolvolimab resulted in rapid, marked and durable responses in patients with moderate to severe CSU refractory to antihistamines. 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. Patients with prior omalizumab therapy also had similar symptom improvement as all patients.
| ● | Mean reduction from baseline in weekly urticaria activity score (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 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. |
| ● | 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 weekly angioedema activity score (AAS7) was achieved across all dose levels evaluated with sustained activity observed with the 1.5 mg/kg and greater dose levels. |
| ● | Patients also reported improvements in quality of life outcomes as assessed by the Dermatology Life Quality Index (DLQI) which surveys patients’ perceptions of symptoms and feelings, daily activities, leisure, work and school performance, personal relationships and treatment. |
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| ● | 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. Most adverse events 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. Generally transient, asymptomatic and mild changes in hematologic parameters were observed, consistent with observations from prior studies. No pattern of further decrease was observed with multiple dose administration. |
Data from this study were reported across multiple medical meetings, including the American Academy of Allergy, Asthma & Immunology (AAAAI) Annual Meeting in February 2023, the European Academy of Allergy and Clinical Immunology (EAACI) Annual Congress in June 2023 and the European Academy of Dermatology & Venereology (EADV) Congress in October 2023.
In June 2022, we initiated dosing in a Phase 2 study in patients with CSU who remained symptomatic despite antihistamine therapy; in July 2023, we announced that enrollment was complete. 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. After 16 weeks, patients then enter a 36-week active treatment period, in which patients receiving placebo or the 75 mg dose are randomized to receive barzolvolimab 150 mg every 4 weeks or 300 mg every 8 weeks; patients already randomized to the 150 mg and 300 mg treatment arms remain on the same regimen as during the placebo-controlled treatment period. After 52 weeks, patients then enter a follow-up period for an additional 24 weeks. The primary endpoint of the study is mean change in baseline to week 12 in UAS7 (weekly urticaria activity score). Secondary endpoints include safety and other assessments of clinical activity including ISS7 (weekly itch severity score), HSS7 (weekly hive severity score) and AAS7 (weekly angioedema activity score).
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Topline data from this study were presented in November of 2023 and 12 week treatment results were presented at the American Academy of Allergy, Asthma & Immunology (AAAAI) Annual Meeting in February 2024. Data from the 208 patients randomized in the study showed that barzolvolimab achieved the primary efficacy endpoint, with a statistically significant mean change from baseline to week 12 in UAS7 compared to placebo at all dose levels. Secondary and exploratory endpoints in the study were also achieved at week 12 and strongly support the primary endpoint results, including changes in ISS7 and HSS7 and responder analyses. Importantly, barzolvolimab demonstrated rapid, durable and clinically meaningful responses in patients with moderate to severe CSU refractory to antihistamines, including patients with prior omalizumab treatment. Demographics and baseline disease characteristics were well balanced across treatment groups. The majority of patients on study had severe disease (UAS7≥28).
Summary of Clinical Activity Assessments at Week 12 | ||||
300 mg Q8W | 150 mg Q4W | 75 mg Q4W | Placebo | |
UAS7 Changes | ||||
Baseline UAS7 (mean) | 31.33 | 30.75 | 30.30 | 30.09 |
LS Mean change at Week 12 | -23.87 | -23.02 | -17.06 | -10.47 |
LS Mean difference from placebo (Confidence Interval, p value) | -13.41 | -12.55 | -6.60 | |
HSS7 Changes | ||||
Baseline HSS7 (mean) | 14.92 | 15.05 | 14.86 | 14.47 |
LS Mean change at Week 12 | -12.19 | -11.19 | -8.25 | -4.95 |
LS Mean difference from placebo (Confidence Interval, p value) | -7.24 | -6.24 | -3.31 | |
ISS7 Changes | ||||
Baseline ISS7 (mean) | 16.42 | 15.70 | 15.44 | 15.61 |
LS Mean change at Week 12 | -11.79 | -11.68 | -8.62 | -5.47 |
LS Mean difference from placebo (Confidence Interval, p value) | -6.32 | -6.21 | -3.16 | |
Responder Analyses/Clinical Responses | ||||
UAS7=0 (Complete Control) | 37.5% | 51.1% | 22.9% | 6.4% |
UAS7≤6 (Well-controlled) | 62.5% | 59.6% | 41.7% | 12.8% |
UAS7, HSS7 and ISS7 data were analyzed using ANCOVA model and multiple imputation.
Barzolvolimab demonstrated strong improvement in UAS7 independent of omalizumab status at week 12. Approximately 20% (n=41) of enrolled patients received prior treatment with omalizumab and more than half of these patients had omalizumab-refractory disease. These patients experienced a similar clinical benefit as the overall treated population within their individual dosing groups consistent with the barzolvolimab mechanism of action.
Barzolvolimab was well tolerated with a favorable safety profile. Most adverse events were mild to moderate in severity; through 12 weeks, the most common treatment emergent adverse events in barzolvolimab treated patients were urticaria/CSU (10%), hair color changes (9%), and neutropenia/ANC decrease (8%). The rate of infections was similar between barzolvolimab treated patients and placebo with no association between neutropenia and infections.
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In June 2024, data on a secondary endpoint from the study, angioedema activity, and additional measures of angioedema control, were presented at the EAACI 2024 Congress. Approximately 72% of patients on study had angioedema at baseline. Barzolvolimab demonstrated significant improvements in AAS7 in patients with angioedema across all doses at week 12. This improvement was rapid (within 2 weeks) and durable (continued through 12 weeks). Barzolvolimab demonstrated strong improvement in AAS7 independent of omalizumab status at Week 12. Patients on barzolvolimab experienced a > 8 point improvement in AAS7 (considered a clinically meaningful result) across all doses compared to placebo (p<0.05). Barzolvolimab increased angioedema free days compared to placebo through 12 weeks. Patients in the 300 mg cohort were angioedema free 77% of the time over the 12 week period.
Patients on study will continue to receive barzolvolimab for 52 weeks and we plan to report 52 week data in the second half of 2024. We believe these results strongly support the further development of barzolvolimab in CSU.
In July 2024, we initiated two Phase 3 studies of barzolvolimab in CSU. The studies, EMBARQ-CSU1 and EMBARQ-CSU2, are designed to establish the efficacy and safety of barzolvolimab in adult patients with CSU who remain symptomatic despite H1 antihistamine treatment. Both Phase 3 trials are randomized, double-blind, placebo-controlled, parallel group, global studies ( approximately 40 countries; 250 sites per study) where approximately 915 patients per trial will be randomized evenly to barzolvolimab 150 mg every 4 weeks (following 300 mg loading dose), barzolvolimab 300 mg every 8 weeks (following 450 mg loading dose) or placebo for 52 weeks. At 24 weeks, patients on placebo will be re-randomized to active treatment across both dosing groups. The primary endpoint of the studies will evaluate the clinical effect of barzolvolimab in reducing urticaria activity (weekly urticaria activity score; UAS7) at week 12. The studies are designed to detect a clinically meaningful difference between each of the active arms versus placebo in the overall population as well as in the subpopulation of omalizumab refractory participants. Enrollment is ongoing.
Chronic Inducible Urticaria (CIndU)
CIndUs are forms of urticaria that have an attributable cause or trigger associated with them, typically resulting in hives or wheals. The prevalence of CIndU is estimated at 0.5% of the total population and is reported to overlap in up to 36% of CSU patients (Weller et al. 2010. Hautarzt. 61(8), Bartlett et al. 2018. DermNet.Org). There are currently no approved therapies for chronic inducible urticarias other than antihistamines and patients attempt to manage symptoms associated with their disease through avoidance of triggers. We are currently exploring cold-induced and dermographism (scratch-induced) urticarias in an ongoing Phase 2 study.
We completed a Phase 1b open label clinical trial in patients with CIndU refractory to antihistamines, conducted in Germany. This study was designed to evaluate the safety of a single intravenous dose (3 mg/kg) of barzolvolimab in patients with cold urticaria (ColdU) or symptomatic dermographism (SD). The study was expanded to include a cohort (single dose, 3 mg/kg) in patients with cholinergic urticaria (“CholU”) and a cohort at a lower dose (single dose, 1.5 mg/kg) in ColdU. Patient’s symptoms were induced via provocation testing that resembles real life triggering situations. Secondary and exploratory objectives included pharmacokinetic and pharmacodynamic assessments, including changes from baseline provocation thresholds, measurement of tryptase and stem cell factor levels, clinical activity outcomes, quality of life assessments and measurement of tissue mast cells through skin biopsies.
Generally patients on study had high disease activity at baseline that was poorly controlled and marked impairment in quality of life. At 3 mg/kg in the ColdU and SD cohorts, safety results were reported for 21 patients and activity results were reported for the 20 patients who received a full dose of barzolvolimab. At 1.5 mg/kg in the ColdU cohort, safety results were reported for 10 patients and activity results were reported for the 9 patients who received a full dose of barzolvolimab. At 3 mg/kg in the cholinergic cohort, safety results were reported for 21 patients and activity results were reported for the 20 patients who received a full dose of barzolvolimab.
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Rapid (as early as 1 week) and durable responses were observed in patients as assessed by provocation testing.
| ● | A complete response was achieved in 95% (n=19/20) of patients with ColdU and SD treated with a single dose at 3 mg/kg (n=10/10 ColdU; n=9/10 SD), including 3 patients who experienced insufficient response to prior omalizumab treatment. The median duration (range) of complete response through the 12-week observation period was 77+ days (29–86; n=10) for patients with ColdU and 57+ days (16–70; n=9) for patients with SD. A UCT score of ≥12 (well controlled) was achieved by 80% (n=16/20) of the patients within week 4 post-treatment. By week 8, all patients (100%; n=20/20) achieved well-controlled urticaria, which was sustained to week 12 post-dose by 80% (n=16/20) of patients. Complete urticaria control (UCT=16) was achieved by 35% (n=7/20), 65% (n=13/20), and 40% (n=8/20) at weeks 4, 8, and 12, respectively. |
| ● | A complete response was achieved in 100% (n=9 of 9) patients with ColdU treated with a single dose at 1.5 mg/kg, including 4 patients with disease refractory to omalizumab. The median duration of complete response through the 12-week observation period was 51+ days (7+ weeks). Following barzolvolimab administration, all patients achieved well controlled disease (UCT>12) with 7 of 9 achieving complete control (UCT=16). |
| ● | A complete response was achieved in 56% (n=5 of 9) patients with cholinergic urticaria treated with a single dose at 3 mg/kg. Most responses remained durable through to week 12. 63% (5/8) patients reported well controlled disease (UCT ≥12) at week 8 and 50% (4/8) at week 12, respectively. |
| ● | Patients also reported improvements in quality of life outcomes as assessed by the Dermatology Life Quality Index (DLQI) which surveys patients’ perceptions of symptoms and feelings, daily activities, leisure, work and school performance, personal relationships and treatment. |
| ● | A single dose of barzolvolimab led to marked decreases in tryptase and in skin mast cells. The kinetics correlated with improvements in provocation testing and clinical activity, consistent with a central role for mast cells in the pathogenesis of ColdU and SD. This confirmed that serum tryptase level is a robust pharmacodynamic biomarker for assessing mast cell burden and clinical activity in inducible urticaria and potentially in other diseases with mast cell driven involvement. |
| ● | Barzolvolimab was well tolerated across all cohorts. In the 3 mg/kg ColdU and SD cohorts, most adverse events were mild, and the most common (≥3 patients) were hair color changes (76%; n=16/21), infusion reactions (43%; n=9/21), taste changes (38%; n=8/21), nasopharyngitis (24%; n=5/21), malaise (24%; n=5/21), and headache (19%; n=4/21). Hair color changes (generally small areas of hair color lightening) and taste disorders (generally partial changes of ability to taste salt or umami) are consistent with inhibiting KIT signaling in other cell types and completely resolved over time during follow-up. One patient with a history of fainting experienced loss of consciousness during infusion. The patient rapidly recovered. Importantly, no evidence of mast cell activation as measured by serum tryptase monitoring was observed in this patient. Barzolvolimab was also generally well tolerated by patients in the 1.5 mg/kg ColdU cohort and the 3.0 mg/kg cholinergic cohort with a similar safety profile to that reported previously. Across the Phase 1b inducible urticaria study, mean hematology parameters generally remained within the normal ranges—an important finding for a KIT inhibitor. Mild, transient, and asymptomatic decreases in hemoglobin and white blood cell parameters occurred for some patients. |
| ● | Long term follow up data was collected from the 3.0 mg/kg cohorts in cold urticaria and symptomatic dermographism. 14 patients consented to the optional evaluation (6 cold, 8 symptomatic dermographism); 10 of the 14 still had complete control of their disease as assessed by provocation testing at week 12. Data were collected at one or more timepoints beyond week 12 through week 36. Most patients had return of symptoms and/or loss of urticaria control between 12 and 36 weeks. Remarkably, two patients remained provocation negative at 36 weeks, and four had well controlled disease (UCT ≥12) 36 weeks post dosing. Serum tryptase exhibits a similar rate of recovery as clinical symptoms, while skin mast cells return at a slower rate. Tissue KIT signaling, as approximated by SCF levels, was rapidly inhibited after dose administration and fully reactivated approximately 18 weeks after dosing. Tryptase levels return to pretreatment levels during follow up, while mast cells continue to recover. Drug related adverse events noted during the study all resolved. |
Data from this study were reported in Allergy (Nov 2022) and across multiple medical meetings, including the GA²LEN Global Urticaria Forum (GUF) in December and the European Academy of Allergy and Clinical Immunology (EAACI) Annual Congress in June 2022.
23
In July 2022, we announced that the first patient had been dosed in a Phase 2 study in patients with CIndU who remain symptomatic despite antihistamine therapy; in April 2024, we announced that enrollment was complete. The study is being conducted at approximately 85 sites across approximately 12 countries. The randomized, double-blind, placebo-controlled, parallel group Phase 2 study is evaluating the efficacy and safety profile of multiple dose regimens of barzolvolimab in patients with CIndU to determine the optimal dosing strategy. 196 patients in 2 cohorts (differentiated by CIndU subtype) including 97 patients with cold urticaria and 99 patients with symptomatic dermographism were randomly assigned on a 1:1:1 ratio to receive subcutaneous injections of barzolvolimab at 150 mg every 4 weeks, 300 mg every 8 weeks or placebo during a 20-week treatment phase. Patients then enter a follow-up phase for an additional 24 weeks. In addition, the study includes the option for patients who have symptoms following the treatment phase, including patients who were on placebo, to enroll in an open label extension where all patients receive 300 mg of barzolvolimab every 8 weeks. The primary endpoint of the study is the percentage of patients with a negative provocation test at week 12. Secondary endpoints include safety and other assessments of clinical activity including CTT (Critical Temperature Threshold), CFT (Critical Friction Threshold) and WI-NRS (Worst itch numeric rating scale). Topline primary endpoint data from this study were reported in July 2024 and showed that barzolvolimab achieved the primary efficacy endpoint, a statistically significant difference between the percent of patients with a negative provocation test compared to placebo at week 12 as assessed by the TempTest® in ColdU and the FricTest® in SD. Importantly, barzolvolimab demonstrated rapid, durable and clinically meaningful responses in patients with CIndU refractory to antihistamines. Demographics and baseline disease characteristics were well balanced across treatment groups.
Summary of Clinical Assessments at Week 12 | |||||||
Cold Urticaria |
| Symptomatic Dermographism | |||||
150 mg | 300 mg | Placebo | 150 mg | 300 mg | Placebo | ||
% of patients with negative | 46.9% | 53.1% | 12.5% | 57.6% | 42.4% | 3.2% | |
Barzolvolimab was well tolerated with a favorable safety profile consistent with prior studies. Most adverse events were mild to moderate in severity; through 12 weeks, the most common treatment emergent adverse events in barzolvolimab treated patients were hair color changes (13%) and neutropenia (11%). The rate of infections was similar between barzolvolimab-treated patients and placebo with no association between neutropenia and infections.
Patients on study will continue to receive barzolvolimab for 20 weeks and we plan to report full 12 week primary endpoint data from this study in the fourth quarter of 2024. We believe these results strongly support the further development of barzolvolimab in CIndU and plan to advance CIndU into Phase 3 registrational development.
Prurigo Nodularis (PN)
We have expanded clinical development of barzolvolimab into prurigo nodularis (PN). PN is a chronic skin disease characterized by the development of hard, intensely itchy (pruritic) nodules on the skin. Mast cells through their interactions with sensory neurons and other immune cells are believed to play an important role in amplifying chronic itch and neuroinflammation, both of which are a hallmark of PN. There is currently only one FDA approved therapy for PN, representing an area of significant unmet need. Industry sources estimate there are approximately 154,000 patients in the United States with PN who have undergone treatment within the last 12 months and, of these, approximately 75,000 would be biologic-eligible.
24
We have completed a Phase 1b multi-center, randomized, double-blind, placebo-controlled intravenous study in PN. Data from the study, including 24 weeks of follow-up, were presented at the 12th World Congress on Itch (WCI) held in November 2023. 24 adults (evaluable: n=23 safety; n=22 efficacy) with moderate to severe PN were randomized across three arms: (1) barzolvolimab 3.0 mg/kg (n=9), barzolvolimab 1.5 mg/kg (n=7) and placebo (n=8). The primary endpoint of the study was safety; key secondary endpoints include changes from baseline in Worst Itch-Numerical Rating Scale (WI-NRS) & Investigator Global Assessment (IGA). The primary timepoint for evaluation of clinical activity was 8 weeks; patients were followed for safety and efficacy endpoints to 24 weeks. Patients on study generally had moderate to severe disease with mean baselines scores across all arms of 8.6 for WI-NRS and 3.3 for IGA.
A single IV dose of 3.0 mg/kg barzolvolimab resulted in rapid and durable reductions in itch and healing of skin lesions in patients with moderate to severe PN and that barzolvolimab was generally well tolerated.
| ● | At week 8, the percentage of patients with ≥4-point decrease in WI-NRS was 57% and 43% for the single dose 3.0 or 1.5 mg/kg barzolvolimab arms, respectively, and 25% for the placebo arm; this level of response generally persisted out to week 16. In the 3.0 mg/kg arm, a ≥4-point decrease in WI-NRS reduction was seen as early as the first week and reached a high of 71% of patients at week six which was distinct from both the 1.5 mg/kg barzolvolimab and placebo arms. |
% of Subjects with ≥4-point decrease in WI-NRS | ||||||||
Dose | Week 1 | Week 2 | Week 3 | Week 4 | Week 5 | Week 6 | Week 7 | Week 8 |
1.5 mg/kg | 0 | 14 | 29 | 14 | 29 | 29 | 29 | 43 |
3.0 mg/kg | 14 | 29 | 29 | 29 | 57 | 71 | 57 | 57 |
placebo | 0 | 0 | 13 | 13 | 25 | 38 | 38 | 25 |
| ● | At week 8, 29% of patients achieved clear or almost clear skin according to IGA following a single dose of barzolvolimab 3.0 mg/kg. This effect was noted as early as week 2 (the first clinic visit) and was maintained out to week 12/16. No patients treated at 1.5 mg/kg barzolvolimab or placebo achieved clear or almost clear skin according to IGA through week 8. 2 additional patients in the 1.5 mg/kg arm, 2 additional patients in the 3.0 mg/kg arm and 1 patient on placebo had IGA 0/1 at timepoints between weeks 8 and 24. |
% of Subjects with IGA 0/1 | ||||
Dose | Baseline | Week 2 | Week 4 | Week 8 |
1.5 mg/kg | 0 | 0 | 0 | 0 |
3.0 mg/kg | 0 | 14 | 14 | 29 |
Placebo | 0 | 0 | 0 | 0 |
| ● | Clinical activity was associated with profound serum tryptase reduction. At the 3.0 mg/kg dose, tryptase was profoundly reduced to, or below, the level of quantification and this level of reduction was maintained at least through 8 weeks. Tryptase reduction was observed in the 1.5 mg/kg arm but to a lesser extent. |
| ● | Adverse Events were generally mild to moderate in intensity and considered unrelated to treatment. During the initial 8 week observation period in the 3.0 mg/kg dosing arm, an anaphylactic reaction occurred in a complicated patient with multiple comorbidities; the event fully resolved without sequelae. Generally, adverse events seen during the 24-week follow-up period were consistent with comorbidities commonly observed in the PN population. |
25
In April 2024, we initiated a Phase 2 subcutaneous study in PN. This randomized, double-blind, placebo-controlled, parallel group study is evaluating the efficacy and safety profile of 2 dose levels of barzolvolimab compared to placebo in approximately 120 patients with moderate to severe PN who had inadequate response to prescription topical medications, or for whom topical medications are medically inadvisable (such as concerns for safety). Patients are randomly assigned on a 1:1:1 ratio to receive barzolvolimab injections of 150 mg Q4W after an initial loading dose of 450 mg, 300 mg Q4W after an initial loading dose of 450 mg, or placebo during a 24‑week Treatment Phase. Participants then enter a follow-up phase with no study treatment for an additional 16 weeks through week 40. The primary objective of this study is to evaluate the clinical effect of barzolvolimab, compared to placebo, on itch response as measured by the proportion of participants with ≥ 4-point improvement in the worst intensity itch per a numeric rating scale (WI-NRS). Secondary objectives include but are not limited to additional measures of itch response from baseline compared to different timepoints, the assessment of skin lesions as measured by the Investigator Global Assessment (IGA), QoL outcomes and safety. The study will include approximately 50 clinical trial centers worldwide, including the United States. Enrollment is ongoing.
Eosinophilic Esophagitis (EoE)
In July of 2023, we announced that the first patient had been dosed in a Phase 2 study of eosinophilic esophagitis (EoE). EoE, the most common type of eosinophilic gastrointestinal disease, is a chronic inflammatory disease of the esophagus characterized by the infiltration of eosinophils. This chronic inflammation can result in trouble swallowing, chest pain, vomiting and impaction of food in the esophagus, a medical emergency. Several studies have suggested that mast cells may be an important driver in the disease, demonstrating that the number and activation state of mast cells are greatly increased in EoE biopsies and that mast cell signatures correlate with markers of inflammation, fibrosis, pain and disease severity. Currently, there is only one FDA approved therapy for EoE, representing an area of significant unmet need. Industry sources estimate there are approximately 160,000 patients in the United States with EoE who have undergone treatment within the last 12 months and, of these, approximately 48,000 would be biologic-eligible. Given the lack of effective therapies for EoE and barzolvolimab’s potential as a mast cell depleting agent, we believe EoE is an important indication for future study.
The randomized, double-blind, placebo-controlled, parallel group Phase 2 study is evaluating the efficacy and safety profile of subcutaneous barzolvolimab in patients with active EoE. To optimize potential efficacy signal in this difficult to treat indication, we have recently amended the protocol to dose 300 mg every 4 weeks rather than 8 weeks. Approximately 75 patients will be enrolled in total. In the revised protocol, patients will be randomly assigned on a 1:1 ratio to receive subcutaneous injections of barzolvolimab at 300 mg every 4 weeks or placebo during a 16-week placebo-controlled treatment phase. Patients then enter a 12-week active treatment phase, in which all patients will receive barzolvolimab 300 mg every 4 weeks. Patients then enter a follow-up phase for an additional 16 weeks. The primary endpoint of the study is reducing esophageal intraepithelial infiltration of mast cells as assessed by peak esophageal intraepithelial mast cell count. Secondary endpoints include the reduction of symptoms of dysphagia and esophageal intraepithelial infiltration of eosinophils and safety. The study includes approximately 60 clinical trial centers across 8 countries, including the United States. Enrollment is ongoing.
Additional Barzolvolimab Development Activities
In 2023, we completed the transfer of our current barzolvolimab manufacturing process to a CMO and successfully scaled up the drug substance manufacturing process to produce larger cGMP batches in support of late-stage trials and to prepare for potential commercialization. Drug product manufacturing into 1 mL pre-filled syringes has been completed in support of Phase 3 trials. We are in the process of scaling up our drug product manufacturing. We believe that barzolvolimab can be scaled up to permit drug product manufacturing in commercial quantities.
In February 2022, we reported interim data after completing the in-life dosing portion of our six-month chronic toxicology study in non-human primates. The only clinically adverse finding at the completion of dosing was a profound impact on spermatogenesis, an expected and well understood effect of KIT inhibition. As a standard part of toxicology studies, some animals from each group continued to be observed through a recovery period to understand the reversibility of any adverse findings. Due to the very high concentrations of barzolvolimab at the end of dosing, the recovery period was approximately one year. As we expected, and consistent with previous findings with KIT blocking antibodies, we were pleased to report in December 2022, that during this recovery period spermatogenesis fully recovered in all male animals as measured by both sperm count and motility. The final histologic analysis and study report were completed in early 2023 and were consistent with previously reported results. We are encouraged with these findings and believe these data strongly support continued development of barzolvolimab.
26
Bispecific Platform
Our next generation bispecific antibody platform is supporting the expansion of our pipeline 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.
CDX-585
CDX-585 combines our proprietary highly active PD-1 blockade and anti-ILT4 blockade to overcome immunosuppressive signals in T cells and myeloid cells, respectively. ILT4 is emerging as an important immune checkpoint on myeloid cells and is thought to contribute to resistance to PD-1 blockade. Interactions of PD-1 and ILT4 with their ligands are known to deliver immune suppressive signals that can attenuate anti-tumor immune responses. The concept behind CDX-585 is to simultaneously inhibit both T cell and myeloid suppressive signals to potentiate the anti-tumor activity of both cell types, and potentially overcome PD-1 resistance. In preclinical studies, CDX-585 was demonstrated to be a potent inhibitor of PD-1 signaling in comparison to the approved PD-1 antibody, nivolumab. In addition, CDX-585 activated and promoted a strong inflammatory phenotype in human macrophage and dendritic cell cultures. Together these activities of CDX-585 enhanced the response in a mixed lymphocyte reaction assay above that observed for either parental mAb or the combination of the PD-1 and ILT4 mAbs. The in vivo efficacy of CDX-585 was also demonstrated in a melanoma humanized mouse model. CDX-585 has successfully completed GMP manufacturing and IND-enabling studies to support clinical development. CDX-585 will initially be developed for the treatment of solid tumors either as monotherapy or in combination with other oncologic treatments.
In late May 2023, we announced that the first patient had been dosed in the Phase 1 study of CDX-585. This open-label, multi-center, intravenous study of CDX-585 is being evaluated in patients with advanced or metastatic solid tumors that have progressed during or after standard of care therapy. The dose-escalation phase of the study (n=~30 patients) is designed to determine a maximum tolerated dose (MTD) and to select CDX-585 dose(s) for future evaluation in tumor specific expansion cohorts. In the first phase, increasing doses of CDX-585 will be administered intravenously (0.03 mg/kg up to 10.0 mg/kg) every 2 weeks until confirmed disease progression, intolerance, or for a maximum of 2 years. In the second phase, potential expansion cohorts will evaluate the safety, tolerability and biologic effects, including anti-tumor activity, of selected dose level(s) of CDX-585 in specific tumor types. Enrollment is ongoing.
CDX-622
CDX-622 is a bispecific antibody that targets two complementary pathways that drive chronic inflammation, potently neutralizing the alarmin thymic stromal lymphopoietin (TSLP) and depleting mast cells via stem cell factor (SCF) starvation. TSLP has been directly implicated in several respiratory and dermatological disorders, such as asthma, chronic obstructive pulmonary disease (COPD), eosinophilic esophagitis, atopic dermatitis and chronic spontaneous urticaria, and in fibrotic diseases such as systemic sclerosis and idiopathic pulmonary fibrosis. In these disorders, TSLP is often upregulated and associated with disease severity. Similarly, mast cells drive or contribute to the pathophysiology of allergic, inflammatory, autoimmune and fibrotic disorders and CDX-622 contains a unique SCF neutralizing function that is expected to inhibit and deplete mast cells. Combined neutralization of SCF and TSLP with CDX-622 is expected to simultaneously reduce tissue mast cells and inhibit Type 2 inflammatory responses to potentially offer enhanced therapeutic benefit in inflammatory and fibrotic disorders. In preclinical studies, CDX-622 inhibits TSLP and SCF with similar potency to both its respective parental mAbs and comparator mAbs in vitro. CDX-622 was well tolerated in a multi-dose 8 week toxicology study in non-human primates. The No Adverse Event Level (NOAEL) was established to be 75 mg/kg, the highest dose tested. We have completed manufacturing and IND-enabling activities and plan to initiate a Phase 1 study of CDX-622 in healthy volunteers by the end of 2024.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
See Note 2 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for information regarding newly adopted and recent accounting pronouncements. See also Note 2 to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 for a discussion of our critical accounting policies and estimates. There have been no material changes to such critical accounting policies or estimates. We believe our most critical accounting policies include accounting for contingent consideration, revenue recognition, intangible and long-lived assets, research and development expenses and stock-based compensation expense.
27
RESULTS OF OPERATIONS
Three Months Ended June 30, 2024 Compared with Three Months Ended June 30, 2023
Three Months Ended | Increase/ | Increase/ |
| |||||||||
June 30, | (Decrease) | (Decrease) |
| |||||||||
| 2024 |
| 2023 |
| $ |
| % |
| ||||
| (In thousands) | |||||||||||
Revenues: | ||||||||||||
Product development and licensing agreements | $ | — |
| $ | 16 | $ | (16) | (100) | % | |||
Contracts and grants |
| 2,498 |
|
| 252 |
| 2,246 | 891 | % | |||
Total revenues | $ | 2,498 |
| $ | 268 | $ | 2,230 | 832 | % | |||
Operating expenses: |
|
|
|
|
| |||||||
Research and development |
| 39,687 |
|
| 26,252 |
| 13,435 | 51 | % | |||
General and administrative |
| 9,128 |
|
| 7,221 |
| 1,907 | 26 | % | |||
Total operating expenses |
| 48,815 |
|
| 33,473 |
| 15,342 | 46 | % | |||
Operating loss |
| (46,317) |
| (33,205) |
| 13,112 | 39 | % | ||||
Investment and other income, net |
| 10,475 |
|
| 2,703 |
| 7,772 | 288 | % | |||
Net loss | $ | (35,842) | $ | (30,502) | $ | 5,340 | 18 | % | ||||
Net Loss
The $5.3 million increase in net loss for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily due to an increase in research and development expenses, partially offset by an increase in investment and other income, net.
Revenue
Revenue from product development and licensing agreements for the three months ended June 30, 2024 was relatively consistent with the three months ended June 30, 2023. The $2.2 million increase in contracts and grants revenue for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily due to an increase in revenue from our contract manufacturing and research and development agreements with Rockefeller University. We expect revenue to decrease over the next twelve months primarily due to a decrease in services expected to be performed under our contract manufacturing and research and development agreements with Rockefeller University.
Research and Development Expense
Research and development expenses consist primarily of (i) personnel expenses, (ii) laboratory supply expenses relating to the development of our technology, (iii) facility expenses and (iv) product development expenses associated with our drug candidates as follows:
Three Months Ended | Increase/ |
| ||||||||||
June 30, | (Decrease) |
| ||||||||||
| 2024 |
| 2023 |
| $ |
| % |
| ||||
| (In thousands) | |||||||||||
Personnel | $ | 11,881 | $ | 9,004 | $ | 2,877 | 32 | % | ||||
Laboratory supplies |
| 1,615 |
| 1,510 |
| 105 | 7 | % | ||||
Facility |
| 1,250 |
| 1,208 |
| 42 | 3 | % | ||||
Product development |
| 22,667 |
| 12,596 |
| 10,071 | 80 | % | ||||
Personnel expenses primarily include salary, benefits, stock-based compensation and payroll taxes. The $2.9 million increase in personnel expenses for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily due to higher stock-based compensation expense and an increase in employee headcount. We expect personnel expenses to increase over the next twelve months as a result of additional headcount to support the expanded development of barzolvolimab.
28
Laboratory supplies expenses include laboratory materials and supplies, services, and other related expenses incurred in the development of our technology. Laboratory supply expenses for the three months ended June 30, 2024 were relatively consistent with the three months ended June 30, 2023. We expect laboratory supplies expenses to remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.
Facility expenses include depreciation, amortization, utilities, rent, maintenance and other related expenses incurred at our facilities. Facility expenses for the three months ended June 30, 2024 were relatively consistent with the three months ended June 30, 2023. We expect facility expenses to remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.
Product development expenses include clinical investigator site fees, external trial monitoring costs, data accumulation costs, contracted research and outside clinical drug product manufacturing. The $10.1 million increase in product development expenses for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily due to an increase in barzolvolimab clinical trial expenses. We expect product development expenses to increase over the next twelve months as a result of the expanded development of barzolvolimab, although there may be fluctuations on a quarterly basis.
General and Administrative Expense
The $1.9 million increase in general and administrative expenses for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily due to higher stock-based compensation and barzolvolimab commercial planning expenses. We expect general and administrative expenses to increase over the next twelve months as a result of the expanded development of barzolvolimab and an increase in commercial planning efforts, although there may be fluctuations on a quarterly basis.
Investment and Other Income, Net
The $7.8 million increase in investment and other income, net for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, was primarily due to higher levels of cash as a result of our November 2023 and March 2024 underwritten public offerings. We expect investment and other income to remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.
Six Months Ended June 30, 2024 Compared with Six Months Ended June 30, 2023
Six Months Ended | Increase/ | Increase/ |
| |||||||||
June 30, | (Decrease) | (Decrease) |
| |||||||||
| 2024 |
| 2023 |
| $ | % |
| |||||
| (In thousands) | |||||||||||
Revenues: |
| |||||||||||
Product development and licensing agreements | $ | 2 |
| $ | 16 | $ | (14) | (88) | % | |||
Contracts and grants |
| 2,652 |
|
| 1,218 |
| 1,434 | 118 | % | |||
Total revenues | $ | 2,654 |
| $ | 1,234 | $ | 1,420 | 115 | % | |||
Operating expenses: |
|
|
|
|
| |||||||
Research and development |
| 71,348 |
|
| 53,049 |
| 18,299 | 34 | % | |||
General and administrative |
| 18,231 |
|
| 13,861 |
| 4,370 | 32 | % | |||
Total operating expenses |
| 89,579 |
| 66,910 |
| 22,669 | 34 | % | ||||
Operating loss |
| (86,925) |
|
| (65,676) |
| 21,249 | 32 | % | |||
Investment and other income, net | 18,275 | 5,813 | 12,462 | 214 | % | |||||||
Net loss | $ | (68,650) | $ | (59,863) | $ | 8,787 | 15 | % | ||||
Net Loss
The $8.8 million increase in net loss for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to increases in research and development and general and administrative expenses, partially offset by an increase in investment and other income, net.
29
Revenue
Revenue from product development and licensing agreements for the six months ended June 30, 2024 was relatively consistent with the six months ended June 30, 2023. The $1.4 million increase in contracts and grants revenue for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to an increase in revenue from our contract manufacturing and research and development agreements with Rockefeller University.
Research and Development Expense
Research and development expenses consist primarily of (i) personnel expenses, (ii) laboratory supply expenses relating to the development of our technology, (iii) facility expenses and (iv) product development expenses associated with our drug candidates as follows:
Six Months Ended | Increase/ |
| ||||||||||
June 30, | (Decrease) |
| ||||||||||
| 2024 |
| 2023 |
| $ | % |
| |||||
| (In thousands) | |||||||||||
Personnel | $ | 23,321 | $ | 18,027 | $ | 5,294 | 29 | % | ||||
Laboratory supplies |
| 2,923 | 2,918 | 5 | — | % | ||||||
Facility |
| 2,536 | 2,417 | 119 | 5 | % | ||||||
Product development |
| 38,192 | 25,891 | 12,301 | 48 | % | ||||||
Personnel expenses primarily include salary, benefits, stock-based compensation and payroll taxes. The $5.3 million increase in personnel expenses for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to higher stock-based compensation expense and an increase in employee headcount.
Laboratory supplies expenses include laboratory materials and supplies, services, and other related expenses incurred in the development of our technology. Laboratory supply expenses for the six months ended June 30, 2024 were relatively consistent with the six months ended June 30, 2023.
Facility expenses include depreciation, amortization, utilities, rent, maintenance and other related expenses incurred at our facilities. Facility expenses for the six months ended June 30, 2024 were relatively consistent with the six months ended June 30, 2023.
Product development expenses include clinical investigator site fees, external trial monitoring costs, data accumulation costs, contracted research and outside clinical drug product manufacturing. The $12.3 million increase in product development expenses for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to an increase in barzolvolimab clinical trial expenses, partially offset by a decrease in barzolvolimab contract manufacturing expenses.
General and Administrative Expense
The $4.4 million increase in general and administrative expenses for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to higher stock-based compensation and barzolvolimab commercial planning expenses.
Investment and Other Income, Net
The $12.5 million increase in investment and other income, net for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to higher levels of cash as a result of our November 2023 and March 2024 underwritten public offerings.
30
LIQUIDITY AND CAPITAL RESOURCES
Our cash equivalents are highly liquid investments with a maturity of three months or less at the date of purchase and consist primarily of investments in money market mutual funds with commercial banks and financial institutions. We maintain cash balances with financial institutions in excess of insured limits. We do not anticipate any losses with respect to such cash balances. We invest our excess cash balances in marketable securities, including municipal bond securities, U.S. government agency securities and high-grade corporate bonds that meet high credit quality standards, as specified in our investment policy. Our investment policy seeks to manage these assets to achieve our goals of preserving principal and maintaining adequate liquidity.
The use of our cash flows for operations has primarily consisted of salaries and wages for our employees; facility and facility-related costs for our offices, laboratories and manufacturing facility; fees paid in connection with preclinical studies, clinical studies, contract manufacturing, laboratory supplies and services; and consulting, legal and other professional fees. We anticipate that our cash flows from operations will continue to be focused in these areas as we progress our current drug candidates through the clinical trial process and develop additional drug candidates. To date, the primary sources of cash flows from operations have been payments received from our collaborative partners and from government entities and payments received for contract manufacturing and research and development services provided by us. The timing of any new contract manufacturing and research and development agreements, collaboration agreements, government contracts or grants and any payments under these agreements, contracts or grants cannot be easily predicted and may vary significantly from quarter to quarter.
At June 30, 2024, our principal sources of liquidity consisted of cash, cash equivalents and marketable securities of $802.3 million. We have had recurring losses and incurred a loss of $68.7 million for the six months ended June 30, 2024. Net cash used in operations for the six months ended June 30, 2024 was $70.0 million. We believe that the cash, cash equivalents and marketable securities at June 30, 2024 are sufficient to meet estimated working capital requirements and fund current planned operations through 2027. This could be impacted if we elect to pay the future milestone under the Settlement Agreement with SRS in cash, in the event that we achieve the milestone related to that payment.
During the next twelve months, we may take further steps to raise additional capital to meet our 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 we have 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 our negotiating position in capital raising efforts may worsen as existing resources are used. There is also no assurance that we will be able to enter into further collaborative relationships. Additional equity financings may be dilutive to our stockholders; debt financings, if available, may involve significant cash payment obligations and covenants that restrict our ability to operate as a business; and licensing or strategic collaborations may result in royalties or other terms which reduce our economic potential from products under development. Our ability to continue funding our planned operations into and beyond twelve months from the issuance date is also dependent on the timing and manner of payment of the future milestone under the Settlement Agreement with SRS, in the event that we achieve the milestone related to that payment. We may decide to pay that milestone payment in cash, shares of our common stock or a combination thereof. 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, 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 our business.
Operating Activities
Net cash used in operating activities was $70.0 million for the six months ended June 30, 2024 as compared to $55.8 million for the six months ended June 30, 2023. The increase in net cash used in operating activities was primarily due to increases in research and development and general and administrative expenses, partially offset by an increase in investment income as a result of higher levels of cash. We expect that cash used in operating activities will increase over the next twelve months as a result of the expanded development of barzolvolimab.
We have incurred and will continue to incur significant costs in the area of research and development, including preclinical and clinical trials and clinical drug product manufacturing as our drug candidates are developed. We plan to spend significant amounts to progress our current drug candidates through the clinical trial process as well as to develop additional drug candidates. As our drug candidates progress through the clinical trial process, we may be obligated to make significant milestone payments, pursuant to our existing arrangements and arrangements we may enter in the future.
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Investing Activities
Net cash used in investing activities was $361.9 million for the six months ended June 30, 2024 compared to net cash provided by investing activities of $53.7 million for the six months ended June 30, 2023. The increase in net cash used in investing activities was primarily due to net purchases of marketable securities of $361.3 million for the six months ended June 30, 2024 as compared to net sales and maturities of marketable securities of $54.7 million for the six months ended June 30, 2023.
Financing Activities
Net cash provided by financing activities was $439.8 million for the six months ended June 30, 2024 as compared to $0.8 million for the six months ended June 30, 2023. The increase in net cash provided by financing activities was primarily due to an increase in net proceeds from stock issuances.
In March 2024, we issued 9,798,000 shares of common stock in an underwritten public offering, resulting in net proceeds of $ 432.3 million, after deducting underwriting fees and offering expenses.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We own financial instruments that are sensitive to market risk as part of our investment portfolio. Our investment portfolio is used to preserve our capital until it is used to fund operations, including our research and development activities. None of these market-risk sensitive instruments are held for trading purposes. We invest our cash primarily in money market mutual funds. These investments are evaluated quarterly to determine the fair value of the portfolio. From time to time, we invest our excess cash balances in marketable securities including municipal bond securities, U.S. government agency securities and high-grade corporate bonds that meet high credit quality standards, as specified in our investment policy. Our investment policy seeks to manage these assets to achieve our goals of preserving principal and maintaining adequate liquidity. Because of the short-term nature of these investments, we do not believe we have material exposure due to market risk. The impact to our financial position and results of operations from likely changes in interest rates is not material.
We do not utilize derivative financial instruments. The carrying amounts reflected in the consolidated balance sheet of cash and cash equivalents, accounts receivables and accounts payable approximate fair value at June 30, 2024 due to the short-term maturities of these instruments.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures.
As of June 30, 2024, we evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2024. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within time periods specified by the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting.
There were no changes in our internal control over financial reporting during the quarter ended June 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K may not be the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
There were no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K filed with the SEC on February 26, 2024.
Item 5. Other Information
During the period covered by this Quarterly Report on Form 10-Q, no director or officer of the Company
Item 6. Exhibits
The exhibits filed as part of this Quarterly Report on Form 10-Q are listed in the exhibit index included herewith and are incorporated by reference herein.
EXHIBIT INDEX
Exhibit |
| Description |
†10.1 | ||
*31.1 | ||
*31.2 | Certification of Senior Vice President and Chief Financial Officer. | |
**32.1 | ||
*101.INS | Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
*101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
*101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
*101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
*101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
*101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101). |
* | Filed herewith. |
** | Furnished herewith. |
† | Indicates a management contract or compensation plan, contract or arrangement. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| CELLDEX THERAPEUTICS, INC. |
|
|
| BY: |
|
|
| /s/ ANTHONY S. MARUCCI |
Dated: August 8, 2024 | Anthony S. Marucci |
| President and Chief Executive Officer |
| (Principal Executive Officer) |
|
|
| /s/ SAM MARTIN |
Dated: August 8, 2024 | Sam Martin |
| Senior Vice President and Chief Financial Officer |
| (Principal Financial and Accounting Officer) |
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Exhibit 31.1
CERTIFICATION
I, Anthony S. Marucci, certify that:
1. | I have reviewed this report on Form 10-Q of Celldex Therapeutics, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 8, 2024 | By: | /s/ ANTHONY S. MARUCCI |
| Name: | Anthony S. Marucci |
| Title: | President and Chief Executive Officer |
Exhibit 31.2
CERTIFICATION
I, Sam Martin, certify that:
1. | I have reviewed this report on Form 10-Q of Celldex Therapeutics, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 8, 2024 | By: | /s/ SAM MARTIN |
| Name: | Sam Martin |
| Title: | Senior Vice President and Chief Financial Officer |
| | |
Exhibit 32.1
SECTION 1350 CERTIFICATIONS
Pursuant to 18 U.S.C. §1350 as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, the undersigned officers of Celldex Therapeutics, Inc. (the “Company”) hereby certify that to their knowledge and in their respective capacities that the Company’s quarterly report on Form 10-Q to which this certification is attached (the “Report”), fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 8, 2024 | By: | /s/ ANTHONY S. MARUCCI |
| Name: | Anthony S. Marucci |
| Title: | President and Chief Executive Officer |
Date: August 8, 2024 | By: | /s/ SAM MARTIN |
| Name: | Sam Martin |
| Title: | Senior Vice President and Chief Financial Officer |
This certification shall not be deemed “filed” for any purpose, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act. A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Celldex Therapeutics, Inc. and will be retained by Celldex Therapeutics, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.