UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2010
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-15006
CELLDEX THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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No. 13-3191702 |
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(State or other jurisdiction of incorporation or |
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(I.R.S. Employer Identification No.) |
119 Fourth Avenue, Needham, Massachusetts 02494
(Address of principal executive offices) (Zip Code)
(781) 433-0771
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer o |
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Accelerated filer x |
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Non-accelerated filer o |
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
As of August 2, 2010, 31,886,930 shares of common stock, $.001 par value per share, were outstanding.
CELLDEX THERAPEUTICS, INC.
FORM 10-Q
Quarter Ended June 30, 2010
Item 1. Unaudited Financial Statements
CELLDEX THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except share and per share amounts)
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June 30, 2010 |
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December 31, 2009 |
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||
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ASSETS |
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|
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||
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Current Assets: |
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|
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|
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||
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Cash and Cash Equivalents |
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$ |
15,158 |
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$ |
57,002 |
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Marketable Securities |
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50,674 |
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25,451 |
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||
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Accounts and Other Receivables |
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738 |
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544 |
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Prepaid and Other Current Assets |
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1,681 |
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979 |
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Total Current Assets |
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68,251 |
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83,976 |
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Property and Equipment, Net |
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10,972 |
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11,489 |
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Intangible Assets, Net |
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27,801 |
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29,979 |
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Other Assets |
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5,582 |
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5,955 |
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Goodwill |
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8,965 |
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8,965 |
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Total Assets |
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$ |
121,571 |
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$ |
140,364 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current Liabilities: |
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Accounts Payable |
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$ |
1,073 |
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$ |
1,445 |
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Accrued Expenses |
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4,134 |
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5,615 |
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Current Portion of Deferred Revenue |
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5,285 |
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5,191 |
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Current Portion of Long-Term Liabilities |
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1,174 |
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2,156 |
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Convertible Subordinated Debt |
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12,048 |
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— |
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Total Current Liabilities |
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23,714 |
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14,407 |
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Deferred Revenue |
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32,057 |
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34,191 |
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Convertible Subordinated Debt |
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— |
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11,684 |
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Other Long-Term Liabilities |
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5,798 |
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6,315 |
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Total Liabilities |
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61,569 |
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66,597 |
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Commitments and Contingent Liabilities |
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Stockholders’ Equity: |
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Convertible Preferred Stock, $.01 Par Value; 3,000,000 Shares Authorized; No Shares Issued and Outstanding at June 30, 2010 and December 31, 2009 |
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— |
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— |
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Common Stock, $.001 Par Value; 297,000,000 Shares Authorized; 31,886,930 and 31,685,061 Shares Issued and Outstanding at June 30, 2010 and December 31, 2009, respectively |
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32 |
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32 |
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Additional Paid-In Capital |
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231,093 |
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228,863 |
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Accumulated Other Comprehensive Income |
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2,658 |
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2,546 |
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Accumulated Deficit |
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(173,781 |
) |
(157,674 |
) |
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Total Stockholders’ Equity |
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60,002 |
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73,767 |
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Total Liabilities and Stockholders’ Equity |
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$ |
121,571 |
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$ |
140,364 |
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See accompanying notes to unaudited condensed consolidated financial statements
CELLDEX THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share amounts)
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Three Months Ended |
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Six Months Ended |
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||||||||
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June 30, 2010 |
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June 30, 2009 |
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June 30, 2010 |
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June 30, 2009 |
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REVENUE: |
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Product Development and Licensing Agreements |
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$ |
1,399 |
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$ |
1,497 |
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$ |
2,746 |
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$ |
2,999 |
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Contracts and Grants |
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— |
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— |
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220 |
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139 |
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Product Royalties |
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1,552 |
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1,188 |
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3,698 |
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3,279 |
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Total Revenue |
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2,951 |
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2,685 |
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6,664 |
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6,417 |
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OPERATING EXPENSE: |
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Research and Development |
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7,256 |
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6,433 |
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13,694 |
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12,890 |
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Royalty |
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1,732 |
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1,369 |
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4,059 |
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3,598 |
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General and Administrative |
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2,591 |
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3,511 |
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5,426 |
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6,851 |
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Gain on Sale of Assets |
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— |
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— |
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— |
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(604 |
) |
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Amortization of Acquired Intangible Assets |
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658 |
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95 |
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2,178 |
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191 |
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Total Operating Expense |
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12,237 |
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11,408 |
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25,357 |
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22,926 |
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Operating Loss |
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(9,286 |
) |
(8,723 |
) |
(18,693 |
) |
(16,509 |
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Investment and Other Income, Net |
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95 |
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55 |
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3,257 |
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179 |
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Interest Expense |
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(334 |
) |
(37 |
) |
(671 |
) |
(78 |
) |
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Net Loss |
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$ |
(9,525 |
) |
$ |
(8,705 |
) |
$ |
(16,107 |
) |
$ |
(16,408 |
) |
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Basic and Diluted Net Loss Per Common Share (Note 4) |
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$ |
(0.30 |
) |
$ |
(0.55 |
) |
$ |
(0.51 |
) |
$ |
(1.04 |
) |
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Shares Used in Calculating Basic and Diluted Net Loss per Share (Note 4) |
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31,815 |
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15,834 |
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31,755 |
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15,826 |
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See accompanying notes to unaudited condensed consolidated financial statements
CELLDEX THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
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Six Months Ended |
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June 30, 2010 |
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June 30, 2009 |
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Cash Flows from Operating Activities: |
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Net Loss |
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$ |
(16,107 |
) |
$ |
(16,408 |
) |
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Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: |
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Depreciation and Amortization |
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1,608 |
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1,336 |
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Amortization of Intangible Assets |
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2,178 |
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191 |
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Amortization and Accretion of Marketable Securities |
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(520 |
) |
— |
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Loss on Sales and Maturities of Marketable Securities |
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31 |
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— |
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(Gain) loss on Sale or Disposal of Assets |
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38 |
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(599 |
) |
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Stock-Based Compensation Expense |
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1,614 |
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1,864 |
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Non-Cash Interest Expense |
|
364 |
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— |
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Changes in Operating Assets and Liabilities: |
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Accounts and Other Receivables |
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(194 |
) |
814 |
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Prepaid and Other Current Assets |
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(702 |
) |
129 |
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||
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Other Assets |
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373 |
|
361 |
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Accounts Payable and Accrued Expenses |
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(1,853 |
) |
(1,346 |
) |
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Deferred Revenue |
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(2,040 |
) |
86 |
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Other Long-Term Liabilities |
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(1,405 |
) |
50 |
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Net Cash Used in Operating Activities |
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(16,615 |
) |
(13,522 |
) |
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Cash Flows from Investing Activities: |
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Sales and Maturities of Marketable Securities |
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19,252 |
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— |
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Purchases of Marketable Securities |
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(43,875 |
) |
— |
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Acquisition of Property and Equipment |
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(1,129 |
) |
(325 |
) |
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Proceeds from Sale or Disposal of Assets |
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— |
|
850 |
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Net Cash (Used in) Provided by Investing Activities |
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(25,752 |
) |
525 |
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Cash Flows from Financing Activities: |
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|
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|
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Net Proceeds from Stock Issuances |
|
616 |
|
478 |
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Payments of Other Long-Term Liabilities |
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(94 |
) |
(90 |
) |
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Net Cash Provided by Financing Activities |
|
522 |
|
388 |
|
||
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|
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Effect of Exchange Rate Changes on Cash and Cash Equivalents |
|
1 |
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(15 |
) |
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Net Decrease in Cash and Cash Equivalents |
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(41,844 |
) |
(12,624 |
) |
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Cash and Cash Equivalents at Beginning of Period |
|
57,002 |
|
44,257 |
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Cash and Cash Equivalents at End of Period |
|
$ |
15,158 |
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$ |
31,633 |
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|
|
|
|
|
|
|
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Supplemental Disclosure of Non-Cash Flow Information |
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Shares Issued to Executive Officers |
|
$ |
— |
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$ |
250 |
|
See accompanying notes to unaudited condensed consolidated financial statements
CELLDEX THERAPEUTICS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
June 30, 2010
(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 subsidiaries. All intercompany 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, 2009, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 12, 2010. 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 consolidated 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, 2010.
AVANT Merger
On March 7, 2008, the Company (formerly known as AVANT Immunotherapeutics, Inc.) (“AVANT”) merged with Celldex Research Corporation (formerly known as Celldex Therapeutics, Inc.) (“Celldex Research”), a privately-held company, (the “AVANT Merger”). Effective October 1, 2008, the Company changed its name from AVANT Immunotherapeutics, Inc. to Celldex Therapeutics, Inc. The AVANT Merger was accounted for using the former purchase method of accounting and was treated as an acquisition by Celldex Research of AVANT, with Celldex Research being considered the accounting acquirer even though AVANT was the issuer of common stock and the surviving legal entity in the transaction.
Acquisition of CuraGen Corporation (“CuraGen”)
As more fully discussed in Note 12, on October 1, 2009, CuraGen, a former publicly-traded company, merged with a wholly-owned subsidiary (“Merger Sub”) of the Company (the “CuraGen Merger”). Following the CuraGen Merger, the financial statements reflect the financial position, results of operation and cash flows of the combined companies. On December 31, 2009, the Company completed the merger of the Merger Sub with and into Celldex pursuant to a short-form merger effected under Delaware law. As a result, the separate corporate existence of CuraGen has ceased and the Company has succeeded to all rights, privileges, powers and franchises of CuraGen.
(2) Significant Accounting Policies
The significant accounting policies used in preparation of these condensed consolidated financial statements for the six months ended June 30, 2010 are consistent with those discussed in Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2009, except for the adoption of new accounting standards during the first six months of 2010 as discussed below.
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 financial position or results of operations upon adoption.
In January 2010, the Company adopted a new U.S. GAAP accounting standard which requires additional disclosure about the amounts of and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements. This standard also clarifies existing disclosure requirements related to the level of disaggregation of fair value measurements for each class of assets and liabilities and disclosures about inputs and valuation techniques used to measure fair value for both recurring and nonrecurring Level 2 and Level 3 measurements. As this newly issued accounting standard only requires enhanced disclosure, the adoption of this standard did not impact the Company’s financial position or results of operations. In addition, effective for interim and annual periods beginning January 1, 2011, this standard will require additional disclosure and require an entity to present disaggregated information about activity in Level 3 fair value measurements on a gross basis, rather than as one net amount.
In January 2010, the Company adopted a new U.S. GAAP accounting standard which amends existing revenue recognition accounting guidance to provide accounting principles and application guidance on whether multiple deliverables exist, how the arrangement should be separated, and the consideration allocated. This new guidance eliminates the requirement to establish objective evidence of fair value of undelivered products and services and instead provides for separate revenue recognition based upon management’s estimate of the selling price for an undelivered item when there is no other means to determine the fair value of that undelivered item. The old guidance previously required that the fair value of the undelivered item be the price of the item either sold in a separate transaction between unrelated third parties or the price charged for each item when the item is sold separately by the vendor. This was difficult to determine when the product was not individually sold because of its unique features. Under the old guidance, if the fair value of all of the undelivered elements in the arrangement was not determinable, then revenue was deferred until all of the items were delivered or fair value was determined. The adoption of the new standard was done on a prospective basis and did not impact the Company’s financial position or results of operations. This standard may impact the Company in the event it completes future transactions or modifies existing collaborative relationships.
(3) Comprehensive Loss
For the three and six months ended June 30, 2010 and 2009, comprehensive loss was as follows:
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Three months ended June 30, |
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Six months ended June 30, |
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||||||||
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|
|
2010 |
|
2009 |
|
2010 |
|
2009 |
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||||
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(In thousands) |
|
||||||||||
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Net loss |
|
$ |
(9,525 |
) |
$ |
(8,705 |
) |
$ |
(16,107 |
) |
$ |
(16,408 |
) |
|
Other comprehensive loss: |
|
|
|
|
|
|
|
|
|
||||
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Unrealized (loss) gain on marketable securities |
|
(7 |
) |
— |
|
111 |
|
— |
|
||||
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Unrealized foreign exchange translation gain (loss) |
|
2 |
|
(3 |
) |
1 |
|
(15 |
) |
||||
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Total other comprehensive (loss) gain |
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(5 |
) |
(3 |
) |
112 |
|
(15 |
) |
||||
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Total comprehensive loss |
|
$ |
(9,530 |
) |
$ |
(8,708 |
) |
$ |
(15,995 |
) |
$ |
(16,423 |
) |
(4) 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.
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, |
|
||
|
|
|
2010 |
|
2009 |
|
|
|
|
|
|
|
|
|
Stock options |
|
4,176,328 |
|
2,719,983 |
|
|
Convertible debt |
|
353,563 |
|
— |
|
|
Restricted stock |
|
8,000 |
|
— |
|
|
|
|
4,537,891 |
|
2,719,983 |
|
(5) Fair Value Measurements
The fair value of the Company’s assets and liabilities reflects the Company’s estimate of the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. Market participants are buyers and sellers in the principal market that are (i) independent, (ii) knowledgeable, (iii) able to transact, and (iv) willing to transact.
In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from sources independent from the Company) and to minimize the use of unobservable inputs (the Company’s assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
|
Level 1: |
|
Observable inputs such as quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
|
Level 2: |
|
Observable inputs other than Level 1 prices, such as quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
|
Level 3: |
|
Unobservable inputs based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability. |
The following tables set forth the Company’s financial assets subject to fair value measurements:
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|
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As of |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
|||
|
|
|
(In thousands) |
|
|||||||||
|
Cash equivalents |
|
$ |
13,710 |
|
$ |
13,710 |
|
— |
|
— |
|
|
|
Marketable securities |
|
50,674 |
|
— |
|
$ |
50,674 |
|
— |
|
||
|
|
|
$ |
64,384 |
|
$ |
13,710 |
|
$ |
50,674 |
|
— |
|
|
|
|
As of |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
|||
|
|
|
(In thousands) |
|
|||||||||
|
Cash equivalents |
|
$ |
53,780 |
|
$ |
53,780 |
|
— |
|
— |
|
|
|
Marketable securities |
|
25,451 |
|
— |
|
$ |
25,451 |
|
— |
|
||
|
|
|
$ |
79,231 |
|
$ |
53,780 |
|
$ |
25,451 |
|
— |
|
There have been no transfers of assets or liabilities between the fair value measurement classifications. The Company’s financial instruments consist mainly of cash and cash equivalents, marketable securities, short-term accounts receivable, accounts payable and debt obligations. Marketable securities have been valued by a third party pricing service at each balance sheet date, using observable market inputs that may include trade information, broker or dealer quotes, bids, offers or a combination of these data sources. Short-term accounts receivable and accounts payable are reflected in the accompanying consolidated financial statements at cost, which approximates fair value due to the short-term nature of these instruments. Based on current market interest rates available to the Company for long-term liabilities with similar terms and maturities, the Company believes the fair value of the loan payable and note payable approximates its carrying value at June 30, 2010.
At June 30, 2010, the estimated fair value of the Company’s outstanding $12.5 million in CuraGen Debt was approximately $11.3 million based on quoted market prices.
(6) Marketable Securities
A summary of cash, cash equivalents and marketable securities is shown below:
|
June 30, 2010 |
|
Amortized |
|
Gross |
|
Gross |
|
Fair Value |
|
||||
|
|
|
(In thousands) |
|
||||||||||
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
||||
|
Cash and money market funds |
|
$ |
15,158 |
|
$ |
— |
|
$ |
— |
|
$ |
15,158 |
|
|
Total cash and cash equivalents |
|
$ |
15,158 |
|
$ |
— |
|
$ |
— |
|
$ |
15,158 |
|
|
Marketable securities |
|
|
|
|
|
|
|
|
|
||||
|
U.S. government obligations |
|
|
|
|
|
|
|
|
|
||||
|
Maturing in one year or less |
|
$ |
15,860 |
|
$ |
23 |
|
$ |
— |
|
$ |
15,883 |
|
|
Maturing after one year through two years |
|
13,546 |
|
113 |
|
— |
|
13,659 |
|
||||
|
Total U.S. government obligations |
|
$ |
29,406 |
|
$ |
136 |
|
$ |
— |
|
$ |
29,542 |
|
|
Corporate debt securities |
|
|
|
|
|
|
|
|
|
||||
|
Maturing in one year or less |
|
$ |
14,277 |
|
$ |
— |
|
$ |
(34 |
) |
$ |
14,243 |
|
|
Maturing after one year through two years |
|
6,928 |
|
29 |
|
(68 |
) |
6,889 |
|
||||
|
Total corporate debt securities |
|
$ |
21,205 |
|
$ |
29 |
|
$ |
(102 |
) |
$ |
21,132 |
|
|
Total marketable securities |
|
$ |
50,611 |
|
$ |
165 |
|
$ |
(102 |
) |
$ |
50,674 |
|
|
Total cash, cash equivalents and marketable securities |
|
$ |
65,769 |
|
$ |
165 |
|
$ |
(102 |
) |
$ |
65,832 |
|
|
December 31, 2009 |
|
Amortized |
|
Gross |
|
Gross |
|
Fair Value |
|
||||
|
|
|
(In thousands) |
|
||||||||||
|
Cash and cash equivalents |
|
|
|
|
|
|
|
|
|
||||
|
Cash and money market funds |
|
$ |
57,002 |
|
$ |
— |
|
$ |
— |
|
$ |
57,002 |
|
|
Total cash and cash equivalents |
|
$ |
57,002 |
|
$ |
— |
|
$ |
— |
|
$ |
57,002 |
|
|
Marketable securities |
|
|
|
|
|
|
|
|
|
||||
|
U.S. government obligations |
|
|
|
|
|
|
|
|
|
||||
|
Maturing in one year or less |
|
$ |
9,698 |
|
$ |
5 |
|
$ |
— |
|
$ |
9,703 |
|
|
Maturing after one year through two years |
|
7,129 |
|
6 |
|
(22 |
) |
7,113 |
|
||||
|
Total U.S. government obligations |
|
$ |
16,827 |
|
$ |
11 |
|
$ |
(22 |
) |
$ |
16,816 |
|
|
Corporate debt securities |
|
|
|
|
|
|
|
|
|
||||
|
Maturing in one year or less |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
$ |
— |
|
|
Maturing after one year through two years |
|
8,672 |
|
— |
|
(37 |
) |
8,635 |
|
||||
|
Total corporate debt securities |
|
$ |
8,672 |
|
$ |
— |
|
$ |
(37 |
) |
$ |
8,635 |
|
|
Total marketable securities |
|
$ |
25,499 |
|
$ |
11 |
|
$ |
(59 |
) |
$ |
25,451 |
|
|
Total cash, cash equivalents and marketable securities |
|
$ |
82,501 |
|
$ |
11 |
|
$ |
(59 |
) |
$ |
82,453 |
|
As of June 30, 2010, unrealized losses in the portfolio were primarily due to increases in interest rates. The marketable securities held by the Company were high investment grade and the Company did not consider any investments to be other-than-temporarily impaired as of June 30, 2010.
(7) Stock-Based Compensation
At June 30, 2010, the Company had two stock-based compensation plans: the 2004 Employee Stock Purchase Plan (the “2004 ESPP Plan”) and the 2008 Stock Option and Incentive Plan (the “2008 Plan”).
Employee Stock Purchase Plan
At June 30, 2010, a total of 62,500 shares of common stock are reserved for issuance under the 2004 ESPP Plan. Under the 2004 ESPP Plan, each participating employee may purchase up to 250 shares of common stock per year, through payroll deductions, at a purchase price equal to 85% of the lower of the fair market value of the common stock at either the beginning of the offering period or the applicable exercise date. During the six months ended June 30, 2010 and 2009, the Company issued 4,753 and 1,497 shares under the 2004 ESPP Plan, respectively. At June 30, 2010, 52,153 shares were available for issuance under the 2004 ESPP Plan.
Employee Stock Option and Incentive Plan
The 2008 Plan permits the granting of incentive stock options (intended to qualify as such under Section 422A of the Internal Revenue Code of 1986, as amended), non-qualified stock options, stock appreciation rights, performance share units, restricted stock and other awards of restricted stock in lieu of cash bonuses to employees, consultants and outside directors.
At June 30, 2010, the 2008 Plan allowed for a maximum of 3,900,000 shares of common stock to be issued prior to October 19, 2017. The Company’s board of directors determines the term of each option, option price, and number of shares for which each option is granted and the rate at which each option vests. Options generally vest over a period not to exceed four years. The term of each option cannot exceed ten years (five years for options granted to holders of more than 10% of the voting stock of the Company) and the exercise price of stock options cannot be less than the fair market value of the common stock at the date of grant (110% of fair market value for incentive stock options granted to holders of more than 10% of the voting stock of the Company). Vesting of all employee and non-employee director stock option awards is accelerated upon a change in control as defined in the 2008 Plan.
In connection with the CuraGen Merger, the Company assumed the obligations of CuraGen under CuraGen’s 2007 Stock Plan (the “CuraGen 2007 Plan”) and each outstanding option to purchase CuraGen common stock (a “CuraGen Stock Option”) granted under the CuraGen 2007 Plan. Each CuraGen Stock Option assumed by the Company is deemed to constitute an option to acquire, on the same terms and conditions as were applicable under the CuraGen 2007 Plan, shares of the Company’s common stock that have been adjusted consistent with the ratio at which the Company’s common stock was issued in exchange for CuraGen’s common stock in the CuraGen Merger. As of October 1, 2009, the Company assumed options to acquire 931,315 shares of its common stock with a weighted average exercise price of $3.17. As of October 1, 2009, all of the CuraGen Stock Options were fully vested except for 8,993 shares which generally vest over a two year period. No additional awards will be issued under the CuraGen 2007 Plan. The fair value of the CuraGen Stock Options that were attributed to precombination service was included in the CuraGen Merger consideration.
A summary of stock option activity for the six months ended June 30, 2010 is as follows:
|
|
|
Shares |
|
Weighted |
|
Weighted |
|
|
|
Options Outstanding at December 31, 2009 |
|
3,576,159 |
|
$ |
7.10 |
|
6.6 |
|
|
Granted |
|
805,000 |
|
4.54 |
|
|
|
|
|
Exercised |
|
(197,116 |
) |
3.03 |
|
|
|
|
|
Canceled/forfeited |
|
(1,500 |
) |
5.84 |
|
|
|
|
|
Expired |
|
(6,215 |
) |
2.57 |
|
|
|
|
|
Options Outstanding at June 30, 2010 |
|
4,176,328 |
|
$ |
6.81 |
|
7.0 |
|
|
Options Vested and Expected to Vest at June 30, 2010 |
|
4,115,409 |
|
$ |
6.82 |
|
|
|
|
Options Exercisable at June 30, 2010 |
|
2,646,291 |
|
$ |
7.13 |
|
|
|
|
Shares Available for Grant under the 2008 Plan |
|
1,691,147 |
|
|
|
|
|
|
The total intrinsic value of stock options exercised during the six months ended June 30, 2010 and 2009 was $0.8 million and $0.1 million, respectively. The weighted average grant-date fair value of stock options granted during the six months ended June 30, 2010 and 2009 was $2.81 and $5.33, respectively. The total fair value of stock options that vested during the six months ended June 30, 2010 and 2009 was $1.9 million.
The aggregate intrinsic value of stock options outstanding at June 30, 2010 was $1.1 million. The aggregate intrinsic value of stock options vested and expected to vest at June 30, 2010 was $1.1 million. As of June 30, 2010, total compensation cost related to non-vested employee and non-employee director stock options not yet recognized was approximately $4.9 million, net of estimated forfeitures, which is expected to be recognized as expense over a weighted average period of 2.9 years.
Restricted Stock
A summary of restricted stock activity under the 2008 Plan for the six months ended June 30, 2010 is as follows:
|
|
|
Shares |
|
Weighted |
|
|
|
Outstanding and unvested at December 31, 2009 |
|
16,000 |
|
$ |
4.48 |
|
|
Granted |
|
— |
|
— |
|
|
|
Vested |
|
(8,000 |
) |
4.48 |
|
|
|
Canceled |
|
— |
|
— |
|
|
|
Outstanding and unvested at June 30, 2010 |
|
8,000 |
|
$ |
4.48 |
|
Valuation and Expenses Information
Stock-based compensation expense related to employee and non-employee stock options, restricted stock and employee stock purchases for the three and six months ended June 30, 2010 and 2009 was recorded as follows:
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
||||||||
|
|
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
||||
|
|
|
(In thousands) |
|
||||||||||
|
Research and development |
|
$ |
393 |
|
$ |
421 |
|
$ |
909 |
|
$ |
821 |
|
|
General and administrative |
|
251 |
|
330 |
|
705 |
|
1,043 |
|
||||
|
Total stock-based compensation expense |
|
$ |
644 |
|
$ |
751 |
|
$ |
1,614 |
|
$ |
1,864 |
|
The fair values of employee and non-employee director stock options and employee stock purchases granted during the three and six months ended June 30, 2010 and 2009 were valued using the Black-Scholes option-pricing model with the following assumptions:
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
||||
|
|
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
|
Expected stock price volatility (options) |
|
66 |
% |
68 |
% |
65-66 |
% |
68 |
% |
|
Expected stock price volatility (2004 ESPP) |
|
— |
|
— |
|
51 |
% |
98 |
% |
|
Expected option term (options) |
|
6.2 years |
|
6.1 years |
|
6.2 years |
|
6.1-6.3 years |
|
|
Expected option term (2004 ESPP) |
|
— |
|
— |
|
0.5 years |
|
0.5 years |
|
|
Risk-free interest rate (options) |
|
2.9 |
% |
2.8 |
% |
2.9-3.2 |
% |
1.9-2.8 |
% |
|
Risk-free interest rate (2004 ESPP) |
|
— |
|
— |
|
0.2 |
% |
0.3 |
% |
|
Expected dividend yield |
|
None |
|
None |
|
None |
|
None |
|
Prior to January 1, 2010, the Company used the simplified method of estimating the expected term for share-based compensation. Starting January 1, 2010, the Company ceased using the simplified method, and now uses the average of expected terms for industry peers. Due to the AVANT Merger and the CuraGen Merger, historical exercise patterns do not provide a reasonable basis to estimate expected term of current option grants. Industry peers consist of several public companies that are similar in size in the biopharmaceutical industry. The Company uses its historical stock price volatility consistent with the expected term of grant as the basis for its expected volatility assumption. The risk-free interest rate is based upon the yield of U.S. Treasury securities consistent with the expected term of the option. The dividend yield assumption is based on the Company’s history of zero dividend payouts and expectation that no dividends will be paid in the foreseeable future.
(8) Intangible Assets and Goodwill
Intangible assets, net of accumulated amortization, and goodwill are as follows:
|
|
|
|
|
June 30, 2010 |
|
December 31, 2009 |
|
||||||||||||||
|
|
|
Estimated |
|
Cost |
|
Accumulated |
|
Net |
|
Cost |
|
Accumulated |
|
Net |
|
||||||
|
|
|
|
|
(In thousands) |
|
||||||||||||||||
|
Intangible Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
IPR&D |
|
Indefinite |
|
$ |
11,800 |
|
— |
|
$ |
11,800 |
|
$ |
11,800 |
|
— |
|
$ |
11,800 |
|
||
|
Amgen Amendment |
|
16 years |
|
14,500 |
|
$ |
(673 |
) |
13,827 |
|
14,500 |
|
$ |
(224 |
) |
14,276 |
|
||||
|
TopoTarget Agreement |
|
1.75 years |
|
2,400 |
|
(1,714 |
) |
686 |
|
2,400 |
|
(343 |
) |
2,057 |
|
||||||
|
Core Technology |
|
4.5-11 years |
|
1,948 |
|
(905 |
) |
1,043 |
|
2,193 |
|
(832 |
) |
1,361 |
|
||||||
|
Strategic Partner Agreement |
|
8 years |
|
630 |
|
(185 |
) |
445 |
|
630 |
|
(145 |
) |
485 |
|
||||||
|
Total Intangible Assets |
|
|
|
$ |
31,278 |
|
$ |
(3,477 |
) |
$ |
27,801 |
|
$ |
31,523 |
|
$ |
(1,544 |
) |
$ |
29,979 |
|
|
Goodwill |
|
Indefinite |
|
$ |
8,965 |
|
— |
|
$ |
8,965 |
|
$ |
8,965 |
|
— |
|
$ |
8,965 |
|
||
In January 2009, the Company entered into a purchase agreement (the “LAHI Agreement”) with Lohmann Animal Health International (“LAHI”) to sell its poultry vaccines assets to LAHI. Under the LAHI Agreement, LAHI paid an upfront fee of $0.8 million and agreed to pay potential milestone payments. The Company recorded a gain of $0.6 million during the three months ended March 31, 2009 related to the LAHI Agreement based on the upfront fee less the net book value of the related asset.
The estimated fair value attributed to the April 2008 agreement (“TopoTarget Agreement”) between the Company (as a successor to CuraGen) and TopoTarget A/S (“TopoTarget”) relates to the Company’s rights under the TopoTarget Agreement to receive up to $6 million in either potential commercial milestone payments related to future net sales of Belinostat or 10% of any sublicense income received by TopoTarget (“TopoTarget Payments”). In February 2010, TopoTarget entered into a co-development and commercialization agreement for Belinostat with Spectrum Pharmaceuticals, Inc. which resulted in the Company’s receipt of $3 million of the TopoTarget Payments. The Company recorded this cash receipt as Other Income for the three months ended March 31, 2010 and recorded amortization expense related to the TopoTarget Agreement of $0.2 million and $1.4 million for the three and six months ended June 30, 2010, respectively.
During the three months ended June 30, 2010, the Company wrote-off $0.2 million in Core Technology to amortization of intangible asset expense.
(9) Income Taxes
Massachusetts, New Jersey and Connecticut are the three states in which the Company primarily operates or has operated and has income tax nexus. The Company is currently under examination for sales and use taxes by the State of Connecticut for CuraGen’s operations for the period from July 1, 2006 through June 30, 2009 and by the Internal Revenue Service with respect to 2008. The Company is not currently under examination by any other jurisdictions for any tax year.
The Company has evaluated the positive and negative evidence bearing upon the realizability of its net deferred tax assets, which are comprised principally of net operating loss carryforwards, capitalized R&D expenditures and R&D tax credit carryforwards. The Company has determined that it is more likely than not that it will not recognize the benefits of federal and state deferred tax assets and, as a result, a full valuation allowance was maintained at June 30, 2010 and December 31, 2009 against the Company’s net deferred tax assets.
(10) Significant Revenue Arrangements
A summary of the Company’s significant revenue contracts and arrangements follows:
GlaxoSmithKline plc (“Glaxo”) and Paul Royalty Fund II, L.P. (“PRF”)
In 1997, the Company entered into an agreement with Glaxo to collaborate on the development and commercialization of the Company’s oral rotavirus strain and Glaxo assumed responsibility for all subsequent clinical trials and all other development activities. The Company licensed-in the rotavirus strain that was used to develop Glaxo’s Rotarix® rotavirus vaccine in 1995 and owes a license fee of 30% to Cincinnati Children’s Hospital Medical Center (“CCH”) on net royalties received from Glaxo. The Company is obligated to maintain a license with CCH with respect to the Glaxo agreement. The term of the Glaxo agreement is through the expiration of the last of the relevant patents covered by the agreement, although Glaxo may terminate the agreement upon 90 days prior written notice.
In May 2005, the Company entered into an agreement whereby an affiliate of PRF purchased an interest in the net royalties the Company will receive on worldwide sales of Rotarix®. The Company’s retained interests in Rotarix® net royalties which were not sold to PRF are recorded as product royalty revenue and a corresponding amount that is payable to CCH is recorded as royalty expense. Product royalty revenue and royalty expense related to the Company’s retained interest in Rotarix® was $1.6 million and $1.2 million for the three months ended June 30, 2010 and 2009 and $3.7 million and $3.2 million for the six months ended June 30, 2010 and 2009, respectively.
Royalty rates on Rotarix® escalate from 7% to 10% based on net product sales in countries that have valid patent protection. These royalty rates are discounted by 30% for “non-patent” countries (primarily international markets). In September 2006, the Company received notice from Glaxo that Glaxo would begin paying royalties on sales of Rotarix® at the lower of the two royalty rates under their 1997 license agreement. Glaxo’s decision to pay the lower royalty rate (which is 70% of the full rate) is based upon Glaxo’s assertion that Rotarix® is not covered by the patents Glaxo licensed from the Company in Australia and certain European countries. If Glaxo’s position stands, the royalties to which PRF is entitled will no longer be limited by a $27.5 million annual threshold, which the Company projected may have been reached in later years as sales of Rotarix® increased. Irrespective of Glaxo’s position, the Company will still retain approximately 65% of the royalties on worldwide sales of Rotarix® once PRF receives 2.45 times the aggregate cash payments of $60 million it made to the Company, though the potential amount of such residual royalties will be lower if Glaxo’s position stands. The Company has received $60 million in total milestone payments under the PRF agreement. No additional milestone payments are due from PRF under the agreement. In late March 2010, the FDA temporarily suspended the use of Rotarix® in the United States as a precautionary measure following the discovery of PCV-1 DNA material in the vaccine. In May 2010, the FDA determined that healthcare practitioners could resume the use of Rotarix®.
Pfizer Inc. (“Pfizer”) License and Development Agreement
On April 16, 2008, the Company and Pfizer entered into a License and Development Agreement (the “Pfizer Agreement”) under which Pfizer was granted an exclusive worldwide license to a therapeutic cancer vaccine candidate, Rindopepimut (PF-04948568) (formerly CDX-110), in Phase 2 development for the treatment of glioblastoma multiforme. The Pfizer Agreement also gives Pfizer exclusive rights to the use of EGFRvIII vaccines in other potential indications. Under the Pfizer Agreement, Pfizer made an upfront payment to the Company of $40 million and made a $10 million equity investment in the Company. Pfizer will fund all development costs for these programs. The Company is also eligible to receive potential milestone payments exceeding $390 million for the successful development and commercialization of Rindopepimut and additional EGFRvIII vaccine products, as well as royalties on any product sales. The Pfizer Agreement became effective after clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as amended) on May 19, 2008.
On May 27, 2008, the Company received $10 million from Pfizer in exchange for 781,250 shares of the Company’s common stock having a fair value of $10.9 million, or $13.91 per share, on that date. The $0.9 million over the amount received from Pfizer was recorded as a reduction to deferred revenue of the $40 million upfront payment received from Pfizer on June 18, 2008.
The Company has determined that its performance obligations under this collaboration should be accounted for as a single unit of accounting. The Company’s deliverables under this collaboration primarily include an exclusive license to its Rindopepimut product candidate and its EGFRvIII technologies, research and development services as required under the collaboration and participation in the joint clinical development committee. The Company has estimated that its performance period under the collaboration will be 9.5 years based on an assessment of the period over which the Company will have met its performance obligations under the collaboration. Revenue, including research and development reimbursements, is being recognized on a straight-line basis over this period using the Contingency Adjusted Performance Model (“CAPM”). The $40 million up-front payment, less the $0.9 million in excess fair value for the Company’s common stock discussed above, was recorded as deferred revenue and is being amortized over the 9.5-year performance period at a rate of $1.0 million per quarter.
The Pfizer Agreement also provides for reimbursement by Pfizer of all costs incurred by the Company in connection with the collaboration since the effective date. The Company invoices Pfizer monthly for its reimbursable costs and records the invoiced amount as deferred revenue. These deferred revenue amounts are amortized to revenue over the estimated 9.5-year performance period on a straight-line basis using the CAPM model. The Company incurred and invoiced Pfizer reimbursable costs related to the Pfizer collaboration of $0.3 million and $1.1 million for the three months ended June 30, 2010 and 2009, respectively, and $0.5 million and $2.6 million for the six months ended June 30, 2010 and 2009, respectively.
The Company recorded product development and licensing agreements revenue under the Pfizer Agreement as follows:
|
|
|
Three months ended June 30, |
|
Six months ended June 30, |
|
||||||||
|
|
|
2010 |
|
2009 |
|
2010 |
|
2009 |
|
||||
|
|
|
(In thousands) |
|
||||||||||
|
Up-front portion |
|
$ |
1,030 |
|
$ |
1,030 |
|
$ |
2,060 |
|
$ |
2,060 |
|
|
Reimbursable costs portion |
|
276 |
|
297 |
|
542 |
|
569 |
|
||||
|
|
|
$ |
1,306 |
|
$ |
1,327 |
|
$ |
2,602 |
|
$ |
2,629 |
|
At June 30, 2010, the Company had total deferred revenue of $37.1 million related to the Pfizer Agreement.
In connection with the Pfizer Agreement, the Company paid a total of $6.9 million in sublicense fees to Duke University and Thomas Jefferson University. The Company recorded these deferred sublicense fees to other assets in the consolidated balance sheets and is amortizing them to royalty expense over the 9.5-year performance period at a rate of $0.2 million per quarter. At June 30, 2010 and December 31, 2009, the unamortized balance of deferred costs was $5.3 million and $5.7 million, respectively.
Rockefeller University (“Rockefeller”)
The Company is providing research and development support to Rockefeller on the development of their vaccine, DCVax-001, which the Company refers to as CDX-2401, aimed at providing protection from infection with HIV, the virus known to cause AIDS. This program is in a Bill & Melinda Gates Foundation funded partnership called the Grand Challenges initiative. Preclinical studies and manufacturing development are in progress and payments to the Company are made on a time and materials basis. The Company recorded grant revenue from Rockefeller of $0.2 million and $0.1 million for the six months ended June 30, 2010 and 2009, respectively, and no grant revenue for the three months ended June 30, 2010 and 2009.
(11) Other Long-Term Liabilities
Other long-term liabilities include the following:
|
|
|
June 30, 2010 |
|
December 31, 2009 |
|
||
|
|
|
(In thousands) |
|
||||
|
Deferred Rent |
|
$ |
435 |
|
$ |
377 |
|
|
CuraGen Merger Severance |
|
1,160 |
|
2,623 |
|
||
|
Deferred Tax Liabilities |
|
4,661 |
|
4,661 |
|
||
|
Loan Payable |
|
606 |
|
632 |
|
||
|
Note Payable |
|
110 |
|
178 |
|
||
|
Total |
|
6,972 |
|
8,471 |
|
||
|
Less Current Portion |
|
(1,174 |
) |
(2,156 |
) |
||
|
Long-Term Portion |
|
$ |
5,798 |
|
$ |
6,315 |
|
(12) CuraGen Acquisition
In connection with the CuraGen Merger, effective October 1, 2009, the Company (i) issued 15,722,713 shares of common stock of the Company, or 0.2739 shares, in exchange for each share of outstanding CuraGen common stock, plus cash in lieu of fractional shares (the “CuraGen Exchange Ratio”), (ii) assumed all of the CuraGen Stock Options and (iii) assumed the CuraGen Debt. The Company acquired CuraGen to gain access to a pipeline of oncology-focused antibody-drug conjugates, including CDX-011 currently in Phase 2 clinical development for the treatment of breast cancer and melanoma, and cash, cash equivalents and marketable securities of $70.3 million.
The transaction was accounted for under the acquisition method of accounting. All of the assets acquired and liabilities assumed in the transaction are recognized at their acquisition-date fair values, while transaction costs associated with the transaction are expensed as incurred.
Purchase Price
The purchase price for CuraGen was based on the acquisition-date fair value of the consideration transferred, which was calculated based on the closing price of the Company’s common stock of $5.43 per share on October 1, 2009. The acquisition-date fair value of the consideration transferred consisted of the following (in thousands):
|
Fair value of common stock issued |
|
$ |
85,374 |
|
|
Fair value of CuraGen Stock Options |
|
2,868 |
|
|
|
Total consideration transferred |
|
$ |
88,242 |
|
U.S. GAAP requires that the fair value of replacement awards attributable to precombination service be included in the consideration transferred. Of the CuraGen Stock Options assumed, all but 1%, were immediately vested upon closing in accordance with the terms of the stock option agreements and employment agreements. The fair value of the CuraGen Stock Options that has been attributed to precombination service was included in the consideration transferred.
Allocations of Assets and Liabilities
The Company allocated the consideration transferred for CuraGen to net tangible assets, intangible assets, goodwill and a severance obligation. The difference between the aggregate consideration transferred and the fair value of assets acquired and liabilities assumed was allocated to goodwill. This goodwill relates to the potential synergies from the CuraGen Merger and a deferred tax liability related to acquired IPR&D intangible assets. None of the goodwill is expected to be deductible for income tax purposes. The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands):
|
Cash and cash equivalents |
|
$ |
51,654 |
|
|
Marketable securities |
|
18,638 |
|
|
|
Identifiable intangible assets: |
|
|
|
|
|
IPR&D |
|
11,800 |
|
|
|
Amgen Amendment |
|
14,500 |
|
|
|
TopoTarget Agreement |
|
2,400 |
|
|
|
Other current and long-term assets |
|
756 |
|
|
|
Goodwill |
|
8,965 |
|
|
|
CuraGen Debt |
|
(11,503 |
) |
|
|
Deferred tax liabilities, net |
|
(5,190 |
) |
|
|
Other assumed liabilities |
|
(3,778 |
) |
|
|
Total |
|
$ |
88,242 |
|
(13) Stockholders’ Equity
In April 2010, the Company filed a shelf registration statement with the Securities and Exchange Commission to register for sale any combination of the types of securities described in the filing up to a dollar amount of $150 million. The shelf registration went effective on April 22, 2010. No securities have been sold by the Company from this shelf registration.
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 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 ability to successfully complete product research and further development, including animal, preclinical and clinical studies, and commercialization of Rindopepimut, CDX-011, CDX-1307, CDX-1401, CDX-1135, and other products and the growth of the markets for those product candidates;
· our ability to raise sufficient additional capital on terms acceptable to us, or at all;
· the cost, timing, scope and results of ongoing safety and efficacy trials of Rindopepimut, CDX-011, CDX-1307, CDX-1401, CDX-1135, and other preclinical and clinical testing;
· our ability to adapt our APC Targeting Technology™ to develop new, safe and effective vaccines against oncology and infectious disease indications;
· the ability to negotiate strategic partnerships or other disposition transactions for our non-core programs;
· our ability to manage multiple clinical trials for a variety of product candidates at different stages of development;
· the strategies and business plans of our partners, such as Pfizer’s plans for Rindopepimut, GlaxoSmithKline’s plans with respect to Rotarix® and Vaccine Technologies’ plans concerning the CholeraGarde® (Peru-15) and ETEC E. coli vaccines, which are not within our control, and our ability to maintain strong, mutually beneficial relationships with those partners;
· our ability to develop technological capabilities and expand our focus to broader markets for vaccines;
· the availability, cost, delivery and quality of clinical and commercial grade materials produced by our own manufacturing facility or supplied by contract manufacturers and partners;
· the timing, cost and uncertainty of obtaining regulatory approvals for product candidates;
· our ability to develop and commercialize products before competitors that are superior to the alternatives developed by such competitors;
· the validity of our patents and our ability to avoid intellectual property litigation, which can be costly and divert management time and attention; and
· the factors listed under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s annual report on Form 10-K for the year ended December 31, 2009 and other reports that Celldex files with the Securities and Exchange Commission.
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 an integrated biopharmaceutical company that applies our comprehensive Precision Targeted Immunotherapy Platform to generate a pipeline of candidates to treat cancer and other difficult-to-treat diseases. Our immunotherapy platform includes a complementary portfolio of monoclonal antibodies, antibody-targeted vaccines, antibody-drug conjugates and immunomodulators to create novel disease-specific drug candidates.
Our strategy is to develop and demonstrate proof-of-concept for our product candidates before leveraging their value through partnerships or, in appropriate situations, continuing late stage development through commercialization ourselves. Demonstrating proof-of-concept for a product candidate generally involves bringing it through Phase 1 clinical trials and one or more Phase 2 clinical trials so that we are able to demonstrate, based on human trials, good safety data for the product candidate and some data indicating its effectiveness. We thus leverage the value of our technology portfolio through corporate, governmental and non-governmental 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.
Our current collaborations include the commercialization of an oral human rotavirus vaccine and the development of oncology vaccines. Our product candidates address market opportunities for which we believe current therapies are inadequate or non-existent.
Acquisition of CuraGen
In connection with the CuraGen Merger, effective October 1, 2009, we (i) issued 15,722,713 shares of our common stock, or 0.2739 shares, in exchange for each share of outstanding CuraGen common stock, plus cash in lieu of fractional shares (the “CuraGen Exchange Ratio”), (ii) assumed all of the CuraGen Stock Options and (iii) assumed the CuraGen Debt. We acquired CuraGen to gain access to a pipeline of oncology-focused antibody-drug conjugates, including CDX-011 (formerly CR011) currently in Phase 2 clinical development for the treatment of breast cancer and melanoma, and cash, cash equivalents and marketable securities of $70.3 million.
The transaction was accounted for under the acquisition method of accounting. All of the assets acquired and liabilities assumed in the transaction are recognized at their acquisition-date fair values, while transaction costs associated with the transaction are expensed as incurred.
CURRENT PROGRAMS AND PARTNERSHIPS
Our products are derived from a broad set of complementary technologies which have the ability to utilize the human immune system and enable the creation of preventative and therapeutic agents. We are using these technologies to develop targeted immunotherapeutics comprised of antibodies, adjuvants and monotherapies and antibody-drug conjugates that prevent or treat cancer and other diseases that modify undesirable activity by the body’s own proteins or cells. A number of our immunotherapeutic and antibody-drug conjugate product candidates are in various stages of clinical trials. We expect that a large percentage of our research and development expenses will be incurred in support of our current and future clinical trial programs.
The following table includes the programs that we currently believe are material to our business:
|
Product |
|
Indication/Field |
|
Partner |
|
Status |
|
CLINICAL |
|
|
|
|
|
|
|
Rindopepimut (formerly CDX-110) |
|
Glioblastoma multiforme |
|
Pfizer (PF-04948568) |
|
Phase 2b |
|
CDX-011 (glembatumumab vedotin) |
|
Metastatic melanoma and breast cancer |
|
— |
|
Phase 2 |
|
CDX-1307 |
|
Invasive bladder cancer |
|
— |
|
Phase 2 |
|
CDX-1401 |
|
Multiple solid tumors |
|
— |
|
Phase 1/2 |
|
CDX-1135 |
|
Renal disease |
|
— |
|
Pilot Study |
|
PRECLINICAL |
|
|
|
|
|
|
|
CDX-301 |
|
Cancer, autoimmune disease and transplant |
|
— |
|
Preclinical |
|
CDX-1127 |
|
Immuno-modulation, multiple tumors |
|
— |
|
Preclinical |
|
CDX-014 |
|
Renal and ovarian cancer |
|
— |
|
Preclinical |
|
CDX-1189 |
|
Renal disease |
|
— |
|
Preclinical |
|
MARKETED PRODUCTS |
|
|
|
|
|
|
|
Rotarix® |
|
Rotavirus infection |
|
GlaxoSmithKline |
|
Marketed |
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 product candidate. It is not unusual for the clinical development of these types of product candidates to each take five years or more, and for total development costs to exceed $100 million for each product candidate. Our estimates that clinical trials of the type we generally conduct are typically completed over the following timelines:
|
Clinical Phase |
|
Estimated |
|
|
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 product candidate.
We test potential product candidates in numerous preclinical studies for safety, toxicology and immunogenicity. We may then conduct multiple clinical trials for each product candidate. As we obtain results from trials, we may elect to discontinue or delay clinical trials for certain product candidates in order to focus our resources on more promising product candidates.
An element of our business strategy is to pursue the research and development of a broad portfolio of product candidates within our therapeutic categories and consistent with our technology and capabilities. This is intended to allow us to diversify the risks associated with our research and development expenditures. As a result, we believe our future capital requirements and our future financial success are not substantially dependent on any
one product candidate. To the extent we are unable to maintain a broad range of product candidates, our dependence on the success of one or a few product candidates increases.
Regulatory approval is required before we can market our product candidates as immunotherapeutics. In order to proceed to subsequent clinical trial stages and to ultimately achieve regulatory approval, the regulatory agency must conclude that our product candidate is 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, biologics and immunotherapeutics have shown promising results in early clinical trials, but subsequently failed to establish sufficient safety and efficacy data to obtain necessary regulatory approvals.
Furthermore, our business strategy includes the option of entering into collaborative arrangements with third parties to complete the development and commercialization of our product candidates. In the event that third parties take over the clinical trial process for one of our product 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, we are unable to 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, 2009, we incurred an aggregate of $73.5 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, 2010 and 2009. 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. Prior to 2008, the privately-held Celldex Research did not maintain records that allowed for quantification of research and development expenses by project.
|
|
|
Six Months Ended June 30, |
|
||||
|
|
|
2010 |
|
2009 |
|
||
|
|
|
(In thousands) |
|
||||
|
CLINICAL |
|
|
|
|
|
||
|
Rindopepimut |
|
$ |
598 |
|
$ |
2,546 |
|
|
CDX-011 |
|
2,221 |
|
— |
|
||
|
CDX-1307 |
|
2,285 |
|
3,949 |
|
||
|
CDX-1401 |
|
1,451 |
|
3,056 |
|
||
|
CDX-1135 |
|
416 |
|
234 |
|
||
|
PRECLINICAL |
|
|
|
|
|
||
|
CDX-301 |
|
2,964 |
|
300 |
|
||
|
CDX-1127 |
|
1,357 |
|
339 |
|
||
|
CDX-014 |
|
24 |
|
— |
|
||
|
CDX-1189 |
|
42 |
|
207 |
|
||
|
OTHER |
|
|
|
|
|
||
|
CDX-2401 |
|
510 |
|
829 |
|
||
|
Other Programs |
|
1,826 |
|
1,430 |
|
||
|
Total R&D Expense |
|
$ |
13,694 |
|
$ |
12,890 |
|
Clinical Development Programs
Rindopepimut (PF-04948568) (formerly CDX-110)
Our lead clinical development program, Rindopepimut, is a peptide-based immunotherapy that targets the tumor specific molecule called EGFRvIII, a functional variant of the naturally expressed epidermal growth factor receptor (“EGFR”), a protein which has been well validated as a target for cancer therapy. Unlike EGFR, EGFRvIII is not present in normal tissues, and has been shown to be a transforming oncogene that can directly contribute to the cancer cell growth. EGFRvIII is commonly present in glioblastoma multiforme, or GBM, the most common and aggressive form of brain cancer, and has also been observed in various other cancers such as breast, ovarian, prostate, colorectal, and head & neck cancer.
In April 2008, we and Pfizer Inc. (“Pfizer”) entered into a License and Development Agreement (the “Pfizer Agreement”) under which Pfizer was granted an exclusive worldwide license to Rindopepimut. The Pfizer Agreement also gives Pfizer exclusive rights to the use of EGFRvIII vaccines in other potential indications. Pfizer funds all development costs for these programs. We and Pfizer are currently pursuing the development of Rindopepimut for GBM therapy. The FDA has granted orphan drug designation for Rindopepimut for the treatment of EGFRvIII expressing GBM as well as fast track designation.
Initial clinical development of EGFRvIII immunotherapy was led by collaborating investigators at the Brain Center at Duke Comprehensive Cancer Center in Durham, North Carolina and at M.D. Anderson Cancer Center in Houston, Texas. The results from the Phase 1 (VICTORI) and Phase 2a (ACTIVATE) studies, which enrolled 14 and 18 evaluable patients, respectively, have demonstrated a significant increase in the time to disease progression (“TTP”) and overall survival (“OS”) rates. In ACTIVATE, improvements in TTP and OS were approximately 125% and 73%, respectively, relative to appropriately matched historical controls. An extension of the Phase 2a program (ACT II) at the same two institutions has evaluated 22 additional GBM patients treated in combination with maintenance temozolomide (the current standard of care). Preliminary results from ACT II estimate median overall survival to be 23.6 months, although the median has not yet been reached, while the survival of a matched historical control group was 15.0 months (p value = 0.0194). Overall TTP in the ACT II study was 15.2 months compared with 6.3 months for the historical control group (p value = 0.0237).
We initiated a Phase 2b/3 randomized study (ACT III) of Rindopepimut combined with standard of care, temozolomide, versus standard of care alone in patients with GBM in over 30 sites throughout the United States. In December 2008, we announced an amendment to convert the ACT III study to a single-arm Phase 2 clinical trial in which all patients will receive Rindopepimut in combination with temozolomide. The decision, which followed the recommendation of the Independent Data Monitoring Committee, was based on the observation that the majority of patients randomized to the control (standard of care) arm withdrew from this open-label study after being randomized to the control arm. Patients participating on the control arm of the study were offered the option to receive treatment with Rindopepimut. Under this amendment, the ACT III study provided for a multi-center, non-randomized dataset for Rindopepimut in patients with newly diagnosed GBM.
In June 2010, we announced interim data for the first 40 of the total 65 patients enrolled in the ACT III study. The interim data showed that 28 of 40 patients (70%) were progression-free at 5.5 months after entry into the study. Taking into account the 3 to 3.5 months required to complete pre-study chemoradiation and enter into the study, the 5.5 month time point in ACT III corresponds to approximately 8.5 months after diagnosis. The ACTIVATE and ACT II trials, which were conducted in just two leading centers, reported progression-free rates at 8.5 months after diagnosis of 70% and 80%, respectively, whereas similar results were seen in the ACT III trial, which enrolled patients in over 25 centers in the United States. These data will provide important additional information that can be used to better design the future development of Rindopepimut.
CDX-011
CDX-011 (formerly CR011-vcMMAE) is an antibody-drug conjugate (ADC) that consists of a fully-human monoclonal antibody, CR011, linked to a potent cell-killing drug, monomethyl-auristatin E (MMAE). The CR011 antibody specifically targets glycoprotein NMB or (GPNMB) that is expressed in a variety of human cancers
including breast cancer and melanoma. The ADC technology, comprised of MMAE and a stable linker system for attaching it to CR011, was licensed from Seattle Genetics, Inc. The ADC is designed to be stable in the bloodstream. Following intravenous administration, CDX-011 targets and binds to GPNMB and upon internalization into the targeted cell, CDX-011 is designed to release MMAE from CR011 to produce a cell-killing effect. We acquired the rights to CDX-011 in connection with the CuraGen Merger.
Treatment of Breast Cancer: In June 2008, an open-label, multi-center Phase 1/2 study was initiated of CDX-011 administered intravenously once every three weeks to patients with locally advanced or metastatic breast cancer who have received prior therapy (median of seven prior regimens). The study began with a bridging phase to confirm the maximum tolerated dose (“MTD”) and then expanded into a Phase 2 open-label, multi-center study.
The study confirmed the safety of CDX-011 at the pre-defined maximum dose level (1.88 mg/kg) in 6 patients. An additional 28 patients were enrolled as an expanded Phase 2 cohort (for a total of 34 treated patients at 1.88 mg/kg, the Phase 2 dose) to evaluate the progression-free survival (“PFS”) rate at 12 weeks. As previously seen in melanoma patients, the 1.88 mg/kg dose was well tolerated in this patient population with the most common adverse events of rash, alopecia, and fatigue. The primary activity endpoint, which called for at least 5 of 25 (20%) patients in the Phase 2 study portion to be progression-free at twelve weeks, has been met as 9 of 26 (35%) evaluable patients were progression-free at twelve weeks.
For all patients treated at the maximum dose level, tumor shrinkage was seen in 62% (16/26) and PFS was 9.1 weeks. A subset of 10 patients had “triple negative disease,” a more aggressive breast cancer subtype that carries a high risk of relapse and reduced survival as well as limited therapeutic options due to lack of over-expression of HER2/neu, estrogen and progesterone receptors. In these patients, 78% (7/9) had any tumor shrinkage, 12-week PFS rate was 70% (7/10), and median PFS was 17.9 weeks. Tumor samples from a subset of patients across all dose groups were analyzed for GPNMB expression using a newly developed, centralized assay intended for use in Phase 2 studies of CDX-011 and outcomes were examined for patients with significant stromal and tumor cell expression of GPNMB. In the small subset of patients with significant stromal or tumor cell expression of GPNMB, overall response rate was 22%, median PFS was 17.3 weeks, and the 12-week PFS rate was 67%. The most common treatment-related toxicities were fatigue, rash, nausea, alopecia (hair loss), neutropenia and vomiting.
In May 2010, the FDA granted Fast Track designation to CDX-011 for the treatment of advanced, refractory/resistant GPNMB-expressing breast cancer. We expect to initiate a randomized Phase 2 controlled study in patients with advanced breast cancer that express GPNMB in the third quarter of 2010.
Treatment of Metastatic Melanoma: In June 2006, a Phase 1/2 open-label, multi-center, dose escalation study was initiated to evaluate the safety, tolerability and pharmacokinetics of CDX-011 for patients with un-resectable Stage III or Stage IV melanoma who have failed no more than one prior line of cytotoxic therapy. A total of 117 patients were enrolled in this trial. The trial initially evaluated doses of CDX-011 between 0.03 mg/kg to 2.63 mg/kg given once every three weeks. CDX-011 was generally well tolerated, with rash and neutropenia emerging at higher doses. The MTD was determined to be 1.88 mg/kg administered intravenously (IV) once every three weeks.
The study achieved its primary activity objective with an overall response rate (ORR) in the phase II cohort of 15% (5/34). Median progression free survival (PFS) was 3.9 months. CDX-011 was found to be active in advanced melanoma patients in the study. The most frequent treatment-related adverse events included rash, fatigue, alopecia (hair loss), pruritus, diarrhea and neuropathy.
More frequent dosing schedules of CDX-011 were also evaluated, including a weekly and a two out of every three-week regimen, to explore if more frequent administration can provide additional activity in patients with metastatic melanoma. Doses of 1.0 mg/kg given once every week and 1.5mg/kg given for two out of three weeks were identified as the MTD in each schedule. The response rate was observed to be 20% and 33%, respectively. This increased activity was accompanied by increased toxicity.
In the subset of patients with tumor biopsies, high levels of tumor expression of GPNMB appeared to correlate with favorable outcome. In the seven patients whose tumors were found to express high amounts of GPNMB, and who were treated at the maximum tolerated doses across all dosing schedules, median PFS was 4.9
months. The development of rash, which may be associated with the presence of GPNMB in the skin also seemed to correlate with greater PFS.
CDX-1307
Our lead APC Targeting Technology™ product candidate, CDX-1307, is in development for the treatment of epithelial tumors such as colorectal, pancreatic, bladder, ovarian and breast cancers. CDX-1307 targets the beta chain of human chorionic gonadotropin, known as hCG-Beta, which is an antigen often found in epithelial tumors. The presence of hCG-Beta in these cancers correlates with a poor clinical outcome, suggesting that this molecule may contribute to tumor growth. Normal adult tissues have minimal expression of hCG-Beta; therefore, targeted immune responses are not expected to generate significant side effects.
Enrollment is complete in our two Phase 1 studies at multiple centers designed to explore safety and dose/effect relationships via two administration routes—intradermal (ID), a traditional vaccine route that allows efficient access to local dermal dendritic cells and intravenous (IV), a novel systemic approach to vaccination that might target a much larger population of dendritic cells. The Phase 1 studies investigated the safety and immunogenicity of CDX-1307 alone and in combination with adjuvants, including GM-CSF (known to increase mannose receptor expression on dendritic cells) and Toll-Like Receptor (“TLR”) agonists (poly-ICLC or Hiltonol™ and R848 or resiquimod). Patients with an assortment of different tumor types that are known to express hCG-Beta were enrolled with retrospective analysis for hCG-Beta expression. A regimen of every two week dosing for four doses was utilized with the possibility of retreatment if patients demonstrate tumor regression or stable disease.
The Phase 1 studies enrolled over 80 patients with heavily pretreated, advanced-stage colorectal, breast, pancreatic, bladder/ureteral, ovarian and testicular cancer. All patient cohorts demonstrated a favorable safety profile with no dose limiting toxicity. The combination of CDX-1307 with TLR agonists significantly enhanced immune responses against hCG-Beta. Immune responses occurred even in the presence of high circulating levels of hCG-Beta, suggesting that the CDX-1307 can overcome antigen tolerance in advanced and heavily pretreated cancers. Nine patients in the studies experienced disease stabilization from 2.3 months to 16 months following the initiation of CDX-1307 vaccination. These data provide the basis for advancing CDX-1307 into a front-line patient population selected for hCG-Beta-expressing cancers.
In May 2010, we initiated a 60 patient randomized (1:1) Phase 2 controlled study to evaluate the CDX-1307 regimen in both neoadjuvant and adjuvant settings in patients with newly diagnosed muscle-invasive bladder cancers that express hCG-beta. We expect preliminary data by year-end 2011.
CDX-1401
CDX-1401 is a fusion protein consisting of a fully human monoclonal antibody with specificity for the dendritic cell receptor, DEC-205, linked to the NY-ESO-1 tumor antigen. In humans, NY-ESO-1 is one of the most immunogenic tumor antigens and has been detected in 20 - 30% of cancers, thus representing a broad opportunity. This product is intended to selectively deliver the NY-ESO-1 antigen to APCs for generating robust immune responses against cancer cells expressing NY-ESO-1. Unlike CDX-1307, which targets the mannose receptor expressing dendritic cells, CDX-1401 is the first APC product targeting DEC-205 expressing dendritic cells. We are developing CDX-1401 for the treatment of malignant melanoma and a variety of solid tumors which express the proprietary cancer antigen NY-ESO-1, which we licensed from the Ludwig Institute for Cancer Research in 2006. We believe that preclinical studies have shown that CDX-1401 is effective for activation of human T-cell responses against NY-ESO-1.
In September 2009, we initiated enrollment in a dose-escalating Phase 1/2 clinical trial aimed at determining the optimal dose for further development based on the safety, tolerability, and immunogenicity of the CDX-1401 vaccine. The trial will evaluate three different doses of the vaccine in combination with TLR agonists poly-ICLC or Hiltonol™ and/or R848 or resiquimod. We expect to enroll approximately 48 patients with solid tumor cancers at multiple clinical sites in the United States. We expect to present preliminary data from this study during the fourth quarter of 2010.
CDX-1135
CDX-1135 is a molecule that inhibits a part of the immune system called the complement system. The complement system is a series of proteins that are important initiators of the body’s acute inflammatory response against disease, infection and injury. Excessive complement activation also plays a role in some persistent inflammatory conditions. CDX-1135 is a soluble form of naturally occurring Complement Receptor 1 that inhibits the activation of the complement cascade in animal models and in human clinical trials. We believe that regulating the complement system could have therapeutic and prophylactic applications in several acute and chronic conditions, including organ transplantation, multiple sclerosis, rheumatoid arthritis, age-related macular degeneration (“AMD”), atypical Hemolytic Uremic Syndrome (“aHUS”), Paroxysmal Nocturnal Hemaglobinuria (“PNH”), Dense Deposit Disease (“DDD”) in kidneys, and myasthenia gravis. We are currently defining the most appropriate clinical development path for CDX-1135 and are focusing on rare disease conditions of unregulated complement activation as the fastest route to FDA approval.
Preclinical Development Programs
CDX-301
CDX-301 is a FMS-like tyrosine kinase 3 ligand (Flt3L) that we licensed from Amgen in March 2009. CDX-301 is a growth factor for stem cells and immune cells called dendritic cells. Based on previous experience with this molecule, we believe that CDX-301 has considerable opportunity in various transplant settings as a stem cell mobilizing agent. In addition, CDX-301 is an immune modulating molecule that increases the numbers and activity of specific types of immune cells. We believe CDX-301 has significant opportunity for synergistic development in combination with proprietary molecules in our portfolio. We expect to initiate a Phase 1 trial in healthy subjects with CDX-301 during the fourth quarter of 2010.
CDX-1127
We have entered into a License Agreement with the University of Southampton, UK, to develop human antibodies to CD27, a potentially important target for immunotherapy of various cancers. In preclinical models, antibodies to CD27 alone have been shown to mediate anti-tumor effects, and may be particularly effective in combination with other immunotherapy. CD27 is a critical molecule in the activation pathway of lymphocytes. It is downstream from CD40, and may provide a novel way to regulate the immune responses. Engaging CD27 with the appropriate monoclonal antibody has proven highly effective at promoting anti-cancer immunity in mouse models. We are evaluating new human monoclonal antibodies in preclinical models.
CDX-014
CDX-014 (formerly CR014-vcMMAE) is a fully-human monoclonal ADC that targets TIM-1, an immunomudulatory protein that appears to down regulate immune response to tumors. The antibody, CDX-014, is linked to a potent chemotherapeutic, monomethyl auristatin E (MMAE), using Seattle Genetics’ proprietary technology. The ADC is designed to be stable in the bloodstream, but to release MMAE upon internalization into TIM-1-expressing tumor cells, resulting in a targeted cell-killing effect. CDX-014 has shown potent activity in preclinical models of ovarian and renal cancer. We acquired the rights to CDX-014 in connection with the CuraGen Merger.
CDX-1189
We are developing therapeutic human antibodies to a signaling molecule known as CD89 or Fca receptor type I (FcaRI). CD89 is expressed by some white blood cells and leukemic cell lines, and has been shown to be important in controlling inflammation and tumor growth in animal models. We have proprietary, fully human antibodies to CD89 in preclinical development. Depending upon the specific antibody used, anti-CD89 antibodies can either be activating and thus stimulate immune responses, or down-regulating and act as an anti-inflammatory agent.
Marketed Products
Rotavirus Vaccine
Rotavirus is a major cause of diarrhea and vomiting in infants and children. In 1997, we licensed our oral rotavirus strain to Glaxo and Glaxo assumed responsibility for all subsequent clinical trials and all other development activities. Glaxo gained approval for its rotavirus vaccine, Rotarix®, in Mexico in July 2004, which represented the first in a series of worldwide approvals and commercial launches for the product leading up to the approval in Europe in 2006 and in the U.S. in 2008. We licensed-in our rotavirus strain in 1995 and owe a license fee of 30% to Cincinnati Children’s Hospital Medical Center (“CCH”) on net royalties received from Glaxo. We are obligated to maintain a license with CCH with respect to the Glaxo agreement. The term of the Glaxo agreement is through the expiration of the last of the relevant patents covered by the agreement, although Glaxo may terminate the agreement upon 90 days prior written notice.
In May 2005, we entered into an agreement whereby an affiliate of PRF purchased an interest in the milestone payments and net royalties that we will receive on the development and worldwide sales of Rotarix®. We have received a total of $60 million in milestone payments under the PRF agreement. No additional milestone payments are due from PRF under the agreement.
Royalty rates on Rotarix® escalate from 7% to 10% based on net product sales in countries that have valid patent protection. These royalty rates are discounted by 30% for “non-patent” countries (primarily international markets). In September 2006, we received notice from Glaxo that Glaxo would begin paying royalties on sales of Rotarix® vaccine at the lower of the two royalty rates under their 1997 license agreement. Glaxo’s decision to pay the lower royalty rate (which is 70% of the full rate) is based upon Glaxo’s assertion that Rotarix® is not covered by the patents Glaxo licensed from us in Australia and certain European countries. We are currently evaluating the basis for Glaxo’s action and our potential remedies. If Glaxo’s position stands, the royalties to which PRF is entitled will no longer be limited by a $27.5 million annual threshold, which we projected may have been reached in later years as sales of Rotarix® increased. Irrespective of Glaxo’s position, we will still retain approximately 65% of the royalties on worldwide sales of Rotarix® once PRF receives 2.45 times the aggregate cash payments of $60 million it made to us, though the potential amount of such residual royalties will be lower if Glaxo’s position stands.
In late March 2010, the FDA temporarily suspended the use of Rotarix® in the United States as a precautionary measure following the discovery of PCV-1 DNA material in the vaccine. In May 2010, the FDA determined that healthcare practitioners could resume the use of Rotarix®. We believe our royalties from sales of Rotarix® will be negatively impacted during the three months ended September 30, 2010 by the FDA’s decision to temporarily suspend the use of Rotarix® from March 2010 through May 2010 and that negative impact from the temporary suspension may extend to future quarters as well. However, if our royalty revenue from Rotarix® is negatively impacted by the FDA’s decision, our royalty expense for Rotarix® would be similarly impacted and therefore our net loss or cash position will not be impacted as a result of the FDA’s decision.
CRITICAL ACCOUNTING POLICIES
Our critical accounting policies are more fully described in Note 2 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2009 and there have been no material changes to such critical accounting policies. We believe our most critical accounting policies include accounting for business combinations, revenue recognition, property and equipment, impairment of long-lived assets, marketable securities, research and development expenses and stock-based compensation expense.
RESULTS OF OPERATIONS
Our financial statements prior to the CuraGen Merger reflect the financial position, results of operations and cash flows of Celldex. Following the CuraGen Merger, our financial statements reflect the financial position, results of operation and cash flows of Celldex and CuraGen.
Three Months Ended June 30, 2010 compared with Three Months Ended June 30, 2009
|
|
|
Three Months Ended |
|
Increase/ |
|
Increase/ |
|
|||||
|
|
|
2010 |
|
2009 |
|
$ |
|
% |
|
|||
|
|
|
(In thousands) |
|
|||||||||
|
Revenue: |
|
|
|
|
|
|
|
|
|
|||
|
Product Development and Licensing Agreements |
|
$ |
1,399 |
|
$ |
1,497 |
|
$ |
(98 |
) |
(7 |
)% |
|
Product Royalties |
|
1,552 |
|
1,188 |
|
364 |
|
31 |
% |
|||
|
Total Revenue |
|
$ |
2,951 |
|
$ |
2,685 |
|
$ |
266 |
|
10 |
% |
|
Operating Expense: |
|
|
|
|
|
|
|
|
|
|||
|
Research and Development |
|
7,256 |
|
6,433 |
|
823 |
|
13 |
% |
|||
|
Royalty |
|
1,732 |
|
1,369 |
|
363 |
|
27 |
% |
|||
|
General and Administrative |
|
2,591 |
|
3,511 |
|
(920 |
) |
(26 |
)% |
|||
|
Amortization of Acquired Intangible Assets |
|
658 |
|
95 |
|
563 |
|
593 |
% |
|||
|
Total Operating Expense |
|
12,237 |
|
11,408 |
|
829 |
|
7 |
% |
|||
|
Operating Loss |
|
(9,286 |
) |
(8,723 |
) |
563 |
|
6 |
% |
|||
|
Investment and Other Income, Net |
|
95 |
|
55 |
|
40 |
|
73 |
% |
|||
|
Interest Expense |
|
(334 |
) |
(37 |
) |
297 |
|
803 |
% |
|||
|
Net Loss |
|
$ |
(9,525 |
) |
$ |
(8,705 |
) |
$ |
820 |
|
9 |
% |
Net Loss
The $0.8 million increase in net loss for the three months ended June 30, 2010 was primarily due to an increase in research and development and amortization of acquired intangible asset expense, partially offset by a decrease in general and administrative expense.
Revenue
The $0.1 million decrease in product development and licensing agreement revenue for the three months ended June 30, 2010 was primarily due to $0.1 million in revenue recorded for the three months ended June 30, 2009 related to the Corixa termination agreement. The $0.4 million increase in product royalty revenue for the three months ended June 30, 2010 was primarily related to our retained interests in Rotarix® net royalties which were not sold to PRF and which is equal to the amount payable to CCH and recognized in royalty expense by us.
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 product candidates as follows:
|
|
|
Three Months Ended |
|
Increase/ |
|
Increase/ |
|
|||||
|
|
|
2010 |
|
2009 |
|
$ |
|
% |
|
|||
|
|
|
(In thousands) |
|
|||||||||
|
Personnel |
|
$ |
2,991 |
|
$ |
2,515 |
|
$ |
476 |
|
19 |
% |
|
Laboratory Supplies |
|
207 |
|
640 |
|
(433 |
) |
(68 |
)% |
|||
|
Facility |
|
1,243 |
|
1,125 |
|
118 |
|
10 |
% |
|||
|
Product Development |
|
1,884 |
|
1,748 |
|
136 |
|
8 |
% |
|||
Personnel expenses primarily include salary, benefits, stock-based compensation and payroll taxes. The $0.5 million increase in personnel expenses for the three months ended June 30, 2010 was primarily due to higher headcount. We expect personnel expenses to increase over the next twelve months as we plan to continue to increase our headcount.
Laboratory supply expenses include laboratory materials and supplies, services, and other related expenses incurred in the development of our technology. The $0.4 million decrease in laboratory supply expense for the three months ended June 30, 2010 was primarily due to the renovation of our Fall River manufacturing facility during which manufacturing activities ceased for the three months ended June 30, 2010. We expect supply expenses to increase over the next twelve months as a result of increased research and development activities, 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. The $0.1 million increase in facility expenses for the three months ended June 30, 2010 was primarily due to higher depreciation and amortization expenses. We expect facility expenses to increase over the next twelve months as a result of continued capital expansion, 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 $0.1 million increase in product development expenses for the three months ended June 30, 2010 was primarily due to an increase in contract manufacturing expense. We expect product development expenses to increase over the next twelve months due to the increase in clinical trial expenses related to our CDX-011, CDX-1307, and CDX-1401 programs, although there may be fluctuations on a quarterly basis.
Royalty Expense
Royalty expenses include product royalty and sublicense royalty fees on our out-licensed programs. The $0.4 million increase in royalty expenses for the three months ended June 30, 2010 was due to an increase in Rotarix® related royalty fees. Our retained interests in Rotarix® net royalties which were not sold to PRF are recorded as product royalty revenue and a corresponding amount that is payable to CCH is recorded as royalty expense.
General and Administrative Expense
The $0.9 million decrease in general and administrative expenses for the three months ended June 30, 2010 was primarily due to a decrease of $0.8 million in consultant and legal expense primarily related to the CuraGen Merger. We expect general and administrative expense to remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.
Amortization Expense
The $0.6 million increase in amortization expenses for the three months ended June 30, 2010 was primarily due to intangible assets acquired in connection with the CuraGen Merger. We expect amortization expense of acquired intangible assets to remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.
Investment and Other Income, Net
Investment and other income, net for the three months ended June 30, 2010 was relatively consistent as compared to the three months ended June 30, 2009. We anticipate investment income to decrease over the next twelve months due to lower cash and investment balances caused by the utilization of cash and investment balances in the normal course of operations.
Interest Expense
The $0.3 million increase in interest expense for the three months ended June 30, 2010 was primarily due to the CuraGen Debt we assumed in connection with the CuraGen Merger. We anticipate interest expense to remain relatively consistent over the next twelve months until the CuraGen Debt matures in February 2011.
Six Months Ended June 30, 2010 compared with Six Months Ended June 30, 2009
|
|
|
Six Months Ended |
|
Increase/ |
|
Increase/ |
|
|||||
|
|
|
2010 |
|
2009 |
|
$ |
|
% |
|
|||
|
|
|
(In thousands) |
|
|||||||||
|
Revenue: |
|
|
|
|
|
|
|
|
|
|||
|
Product Development and Licensing Agreements |
|
$ |
2,746 |
|
$ |
2,999 |
|
$ |
(253 |
) |
(8 |
)% |
|
Contracts and Grants |
|
220 |
|
139 |
|
81 |
|
58 |
% |
|||
|
Product Royalties |
|
3,698 |
|
3,279 |
|
419 |
|
13 |
% |
|||
|
Total Revenue |
|
$ |
6,664 |
|
$ |
6,417 |
|
$ |
247 |
|
4 |
% |
|
Operating Expense: |
|
|
|
|
|
|
|
|
|
|||
|
Research and Development |
|
13,694 |
|
12,890 |
|
804 |
|
6 |
% |
|||
|
Royalty |
|
4,059 |
|
3,598 |
|
461 |
|
13 |
% |
|||
|
General and Administrative |
|
5,426 |
|
6,851 |
|
(1,425 |
) |
(21 |
)% |
|||
|
Gain on Sale of Assets |
|
— |
|
(604 |
) |
604 |
|
100 |
% |
|||
|
Amortization of Acquired Intangible Assets |
|
2,178 |
|
191 |
|
1,987 |
|
1,040 |
% |
|||
|
Total Operating Expense |
|
25,357 |
|
22,926 |
|
2,431 |
|
11 |
% |
|||
|
Operating Loss |
|
(18,693 |
) |
(16,509 |
) |
2,184 |
|
13 |
% |
|||
|
Investment and Other Income, Net |
|
3,257 |
|
179 |
|
3,078 |
|
1,720 |
% |
|||
|
Interest Expense |
|
(671 |
) |
(78 |
) |
593 |
|
760 |
% |
|||
|
Net Loss |
|
$ |
(16,107 |
) |
$ |
(16,408 |
) |
$ |
(301 |
) |
(2 |
)% |
Net Loss
The $0.3 million decrease in net loss for the six months ended June 30, 2010 was primarily due to an increase in other income and a decrease in general and administrative expenses, partially offset by increases in research and development, interest, royalty and amortization of acquired intangible asset expense.
Revenue
The $0.3 million decrease in product development and licensing agreement revenue for the six months ended June 30, 2010 was primarily due to $0.2 million in revenue recorded for the six months ended June 30, 2009 related to the Corixa termination agreement. The $0.1 million increase in contract and grant revenue for the six months ended June 30, 2010 was due to an increase in revenue related to our vaccine development work on Rockefeller’s CDX-2401 program. The $0.4 million increase in product royalty revenue for the six months ended June 30, 2010 was primarily related to our retained interests in Rotarix® net royalties which were not sold to PRF and which is equal to the amount payable to CCH and recognized in royalty expense by us.
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 product candidates as follows:
|
|
|
Six Months Ended |
|
Increase/ |
|
Increase/ |
|
|||||
|
|
|
2010 |
|
2009 |
|
$ |
|
% |
|
|||
|
|
|
(In thousands) |
|
|||||||||
|
Personnel |
|
$ |
6,150 |
|
$ |
5,057 |
|
$ |
1,093 |
|
22 |
% |
|
Laboratory Supplies |
|
743 |
|
1,236 |
|
(493 |
) |
(40 |
)% |
|||
|
Facility |
|
2,735 |
|
2,373 |
|
362 |
|
15 |
% |
|||
|
Product Development |
|
2,674 |
|
3,225 |
|
(551 |
) |
(17 |
)% |
|||
The $1.1 million increase in personnel expenses for the six months ended June 30, 2010 was primarily due to higher headcount.
The $0.5 million decrease in laboratory supply expense for the six months ended June 30, 2010 was primarily due to the renovation of our Fall River manufacturing facility during which manufacturing activities ceased for the three months ended June 30, 2010.
The $0.4 million increase in facility expenses for the six months ended June 30, 2010 was primarily due to higher depreciation and amortization expenses.
The $0.6 million decrease in product development expenses for the six months ended June 30, 2010 was primarily due to a decrease in clinical expenses largely due to the transfer of clinical management of our Rindopepimut program to Pfizer in 2009.
Royalty Expense
The $0.5 million increase in royalty expenses for the six months ended June 30, 2010 was due to an increase in Rotarix® related royalty fees.
General and Administrative Expense
The $1.4 million decrease in general and administrative expenses for the six months ended June 30, 2010 was primarily due to a decrease of $1.0 million in consultant and legal expense primarily related to the CuraGen Merger and $0.7 million in severance expense, including related non-cash stock-based compensation expense, incurred during the three months ended March 31, 2009 related to the departure of our former SVP, Business Development. The effect of these decreases was partially offset by $0.2 million in higher personnel expense during the six months ended June 30, 2010, primarily related to higher headcount.
Amortization Expense
The $2.0 million increase in amortization expenses for the six months ended June 30, 2010 was primarily due to intangible assets acquired in connection with the CuraGen Merger including the TopoTarget Agreement. In February 2010, TopoTarget entered into a co-development and commercialization agreement for Belinostat with Spectrum Pharmaceuticals, Inc. which resulted in our receipt of $3.0 million which we recorded as Other Income for the six months ended June 30, 2010 and we recorded amortization expense related to the TopoTarget Agreement of $1.4 million for the six months ended June 30, 2010.
Investment and Other Income, Net
The $3.1 million increase in investment and other income, net for the six months ended June 30, 2010 was primarily due to $3.0 million received in connection with the TopoTarget Agreement.
Interest Expense
The $0.6 million increase in interest expense for the six months ended June 30, 2010 was primarily due to the CuraGen Debt we assumed in connection with the CuraGen Merger.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2010, our principal sources of liquidity consisted of cash, cash equivalents and marketable securities of $65.8 million. Our working capital at June 30, 2010 was $44.5 million. At June 30, 2010, we had 4% convertible subordinated debt due in February 2011 of $12.5 million. We incurred a loss of $16.1 million for the six months ended June 30, 2010. Net cash used in operations for the six months ended June 30, 2010 was $16.6 million. We believe that the cash inflows from existing collaborations, interest income on invested funds and our current cash, cash equivalents and marketable securities at June 30, 2010 are sufficient to meet estimated working capital requirements and fund planned operations for at least the next twelve months.
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, consulting, legal and other professional fees. To date, and for the foreseeable future, the primary sources of cash flows from operations have been payments received from our collaborative partners and from government entities. The timing of any new 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.
During the next twelve to twenty-four months, we may take further steps to raise additional capital to meet our long-term liquidity needs including, but not limited to, the licensing of technology programs with existing or new collaborative partners, possible business combinations, or the issuance of common stock or other securities via private placements or public offerings. While we may continue to seek capital through a number of means, there can be no assurance that additional financing will be available on acceptable terms, if at all, particularly in light of the recent disruptions in the financial markets 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 financing may be dilutive to our stockholders; debt financing, 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. 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, license out programs earlier than expected, raise funds at significant discount or on other unfavorable terms, or sell all or part of us.
Operating Activities
Net cash used in operating activities was $16.6 million for the six months ended June 30, 2010 compared to $13.5 million for the six months ended June 30, 2009. The increase in net cash used in operating activities was primarily due to decreases of $2.0 million in deferred revenue and $1.4 million in other long-term liabilities for the six months ended June 30, 2010 as compared to increases of $0.1 million in both deferred revenue and other long-term liabilities for the six months ended June 30, 2009. The decrease in other long-term liabilities was primarily due to severance payments made related to the CuraGen Merger. We expect that cash used in operations will continue to increase in over the next twelve months primarily related to the continued development of our therapeutic product pipeline, including bringing forward new product candidates into clinical development.
We have incurred and will continue to incur significant costs in the area of research and development, including preclinical and clinical trials, as our product candidates are developed. We plan to spend significant amounts to progress our current product candidates through the clinical trial and commercialization process as well as to develop additional product candidates. As our product candidates progress through the clinical trial process, we may be obligated to make significant milestone payments.
Investing Activities
Net cash used in investing activities was $25.8 million for the six months ended June 30, 2010 compared to net cash provided by investing activities of $0.5 million for the six months ended June 30, 2009. The increase in net cash used in investing activities was primarily due to net purchases of marketable securities for the six months ended June 30, 2010 of $24.6 million. We expect to incur future facility cost as a result of continued capital expansion, renovation and replacements. Our investment in capital equipment is discretionary and there may be significant fluctuations on a quarterly basis.
Financing Activities
Net cash provided by financing activities was $0.5 million for the six months ended June 30, 2010 compared to $0.4 million for the six months ended June 30, 2009. The increase in net cash provided by financing activities was primarily due to an increase in proceeds from stock option exercises.
Other Liquidity Matters
Under the Pfizer Agreement, Pfizer made an upfront payment $40 million, an equity investment of $10.0 million and will fund all development costs for the licensed programs. We are also eligible to receive potential milestone payments exceeding $390.0 million for the successful development and commercialization of Rindopepimut and additional EGFRvIII vaccine products, as well as royalties on any product sales.
AGGREGATE CONTRACTUAL OBLIGATIONS
Except as set forth below, the disclosures relating to our contractual obligations reported in our Annual Report on Form 10-K for the year ended December 31, 2009 which was filed with the SEC on March 12, 2010 have not materially changed since we filed that report.
In June 2010, we amended our lease with MassDevelopment for our manufacturing facility in Fall River, Massachusetts. The initial term under the amended lease expires in December 2017 and includes two renewal options of five years each.
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 approximates fair value at June 30, 2010 due to the short-term maturities of these instruments.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures.
As of June 30, 2010, 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, 2010. 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 six months ended June 30, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
None.
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, 2009, 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 the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s 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 Securities and Exchange Commission on March 12, 2010.
|
2.1 |
|
Agreement and Plan of Merger, dated as of May 28, 2009, by and among Celldex Therapeutics, Inc., CuraGen Corporation and Cottrell Merger Sub, Inc. incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed May 29, 2009 with the Securities and Exchange Commission. |
|
3.1 |
|
Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form S-4 (Reg. No. 333-59215), filed July 16, 1998 with the Securities and Exchange Commission. |
|
3.2 |
|
Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form S-4 (Reg. No. 333-59215), filed July 16, 1998 with the Securities and Exchange Commission. |
|
3.3 |
|
Second Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form S-4 (Reg. No. 333-59215), filed July 16, 1998 with the Securities and Exchange Commission. |
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3.4 |
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Third Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q, filed May 10, 2002 with the Securities and Exchange Commission. |
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3.5 |
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Fourth Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K, filed on March 11, 2008 with the Securities and Exchange Commission. |
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3.6 |
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Fifth Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K, filed on March 11, 2008 with the Securities and Exchange Commission. |
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3.7 |
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Sixth Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.7 of the Company’s Quarterly Report on Form 10-Q, filed November 10, 2008 with the Securities and Exchange Commission. |
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4.3 |
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Amendment No. 2 to Shareholder Rights Agreement dated November 5, 2004, between the Company and Computershare Trust Company, N.A. (formerly EquiServe Trust Company, N.A.), as Rights Agent, incorporated by reference to Exhibit 10.1 of the Company’s Registration Statement on Form 8-A1G/A, filed on March 7, 2008 with the Securities and Exchange Commission. |
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*10.1 |
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Seventh Amendment to Lease by and between the Company and the Massachusetts Development Finance Agency dated as of June 22, 2010 |
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*31.1 |
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Certification of President and Chief Executive Officer |
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*31.2 |
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Certification of Senior Vice President and Chief Financial Officer |
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**32.1 |
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Section 1350 Certifications |
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* |
Filed herewith. |
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** |
Furnished herewith. |
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.
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CELLDEX THERAPEUTICS, INC. |
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BY: |
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/s/ ANTHONY S. MARUCCI |
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Dated: August 5, 2010 |
Anthony S. Marucci |
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President and Chief Executive Officer |
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(Principal Executive Officer) |
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/s/ AVERY W. CATLIN |
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Dated: August 5, 2010 |
Avery W. Catlin |
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Senior Vice President, Treasurer and Chief Financial Officer |
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(Principal Financial and Accounting Officer) |
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Exhibit |
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Description |
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2.1 |
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Agreement and Plan of Merger, dated as of May 28, 2009, by and among Celldex Therapeutics, Inc., CuraGen Corporation and Cottrell Merger Sub, Inc. incorporated by reference to Exhibit 2.1 of the Company’s Current Report on Form 8-K filed May 29, 2009 with the Securities and Exchange Commission. |
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3.1 |
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Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form S-4 (Reg. No. 333-59215), filed July 16, 1998 with the Securities and Exchange Commission. |
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3.2 |
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Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form S-4 (Reg. No. 333-59215), filed July 16, 1998 with the Securities and Exchange Commission. |
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3.3 |
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Second Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form S-4 (Reg. No. 333-59215), filed July 16, 1998 with the Securities and Exchange Commission. |
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3.4 |
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Third Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q, filed May 10, 2002 with the Securities and Exchange Commission. |
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3.5 |
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Fourth Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K, filed on March 11, 2008 with the Securities and Exchange Commission. |
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3.6 |
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Fifth Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K, filed on March 11, 2008 with the Securities and Exchange Commission. |
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3.7 |
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Sixth Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.7 of the Company’s Quarterly Report on Form 10-Q, filed November 10, 2008 with the Securities and Exchange Commission. |
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4.3 |
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Amendment No. 2 to Shareholder Rights Agreement dated November 5, 2004, between the Company and Computershare Trust Company, N.A. (formerly EquiServe Trust Company, N.A.) as Rights Agent, incorporated by reference to Exhibit 10.1 of the Company’s Registration Statement on Form 8-A1G/A, filed on March 7, 2008 with the Securities and Exchange Commission. |
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*10.1 |
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Seventh Amendment to Lease by and between the Company and the Massachusetts Development Finance Agency dated as of June 22, 2010 |
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*31.1 |
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Certification of President and Chief Executive Officer |
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*31.2 |
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Certification of Senior Vice President and Chief Financial Officer |
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**32.1 |
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Section 1350 Certifications |
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* |
Filed herewith. |
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** |
Furnished herewith. |
Exhibit 10.1
SEVENTH AMENDMENT TO LEASE
This SEVENTH AMENDMENT TO LEASE (this “Amendment”) is made as of the 22nd day of June, 2010, (the “Effective Date”) by and between MASSACHUSETTS DEVELOPMENT FINANCE AGENCY, a body politic and corporate and a public instrumentality of the Commonwealth of Massachusetts pursuant to Massachusetts General Laws, Chapter 23G, with an address of 160 Federal Street, Boston, Massachusetts 02110 (“Landlord”) and CELLDEX THERAPEUTICS, INC. (formerly AVANT Immunotherapeutics, Inc.), a Delaware corporation, with an address of 119 Fourth Avenue, Needham, Massachusetts (“Tenant”).
RECITALS
WHEREAS, Landlord and Tenant entered into a certain Lease dated effective December 22, 2003, as amended by that certain First Amendment to Lease dated as of March 17, 2005 (the “First Amendment”), that certain Second Amendment to Lease dated as of November 4, 2005 (the “Second Amendment”), that certain Third Amendment To Lease dated as of December 20, 2006 (the “Third Amendment”), that certain Fourth Amendment to Lease dated as of July 18, 2008 (the “Fourth Amendment”), that certain Fifth Amendment to Lease dated as of October 3, 2008 (the “Fifth Amendment”) and by that certain Sixth Amendment to Lease dated as of August 20, 2009 (the “Sixth Amendment”) of certain premises consisting of approximately 23,413 rentable square feet of space (the “Premises”) in the building (the “Building”) located at 151 Martine Street, Fall River, Massachusetts (the “Property”) in the South Coast Research & Technology Park (the “Park”);
WHEREAS, the Premises is comprised of: (i) the original premises demised by the Lease, as amended through the Third Amendment, being 11,756 rentable square feet on the second (2nd) floor of the Building, (ii) the Additional Space (as defined in the First Amendment) demised by the First Amendment, being 71 rentable square feet on the first (1st) floor of the Building, (iii) the Expansion Premises (as defined in the Second Amendment), being 2,487 rentable square feet on the second (2nd) floor of the Building; (iv) the Second Expansion Premises (as defined in the Third Amendment), being 1,853 rentable square feet on the second (2nd) floor of the Building; (v) the Substitute Third Expansion Premises (as defined in the Fifth Amendment), being 4,864 rentable square feet of space on the second floor of the Building (referred to therein as the “Third Expansion Premises”); and (vi) the Fourth Expansion Premises (as defined in the Sixth Amendment), being 2,382 rentable square feet on the second (2nd) floor of the Building.
WHEREAS, Landlord and Tenant have agreed to enter into this Seventh Amendment to Lease to renew the term of the Lease and to amended certain additional provisions to the Lease.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby mutually acknowledged, Landlord and Tenant agree as follows:
6. Capitalized Terms. Unless otherwise defined herein, all capitalized terms used in this Amendment shall have the meanings ascribed to them in the Lease, and all references in the Lease to the “Lease” or “this Lease” or “herein” or “hereunder” or similar terms or to any section thereof shall, after the Effective Date, mean the Lease, or such section thereof, as amended by this Amendment.
2. Premises Square Footage. Section 1.1 of this Lease is hereby amended by amending the term “Premises Square Footage” as follows:
Premises Square Footage 23,413 rentable square feet
3. Term Commencement Date. Section 1.1 of this Lease is hereby amended by providing that as of January 1, 2011, the term “Original Term Commencement Date” shall be deleted and replaced with the term the “Term Commencement Date” throughout this Lease.
4. Section 2.2. Term. Section 2.2 of the Lease shall be amended as of January 1, 2011 to read as follows:
Section 2.2 Term. TO HAVE AND TO HOLD for a term (the “Term”) beginning on the Term Commencement Date which shall be January 1, 2011 and expiring on December 31, 2017 (the “Term Expiration Date”), unless earlier terminated as provided for in Section 2.4.
5. Section 2.3 Renewal Term. Section 2.3 of the Lease is hereby deleted in its entirety and replaced with the following provision.
Section 2.3. Option to Extend Term for Extension Terms. Tenant shall have two (2) separate options to extend the Lease Term for an additional five (5) year period (i.e., for a total, if both such options are exercised as provided herein, of ten (10) successive years beyond the Term) beyond the Term or the first Extension Term, as the case may be (each five year period being referred to herein as an “Extension Term”), provided (i) Tenant shall give notice to Landlord of its exercise of such option not less than twelve (12) months prior to the expiration of the Term or the first Extension Term, as the case may be, (ii) no default beyond any applicable grace period in the obligations of Tenant under this Lease shall exist at the time each such notice is given, and (iii) at the time each such option is exercised, the original Tenant hereunder, a permitted assignee of the Tenant under Section 10.14 or any “Approved Entity” (as such term is defined in Section 10.14) shall be in occupancy of at least 50% of the entire Premises then demised hereunder. All of the terms and provisions of this Lease, as amended, shall be applicable to each Extension Term except that Tenant shall have no option to extend the Lease Term beyond the second Extension Term.
6. Premises and Term. Section 2 of the Lease is hereby amended by adding the following provision:
Section 2.4. Early Termination Option. Tenant shall have one option (“Early Termination Option”) to terminate the Lease as of December 31, 2015 (the “Early Termination Date”) upon prior written notice to Landlord provided no later than December 31, 2014 (the “Early Termination Notice”) and upon payment of a termination payment of Twenty-six Thousand Six Hundred Seventy-six and 57/100 Dollars ($26,676.57) (the “Termination Payment”), which payment shall be delivered with the Early Termination Notice. In the event that Tenant shall fail to pay the Termination Payment with its Early Termination Notice, the Early Termination Option shall be null and void and the Tenant’s obligations under this Lease shall continue for the remainder of the Term.
7. Annual Fixed Rental Rate. Section 1.1 of the Lease is amended by deleting the provisions regarding the “Annual Fixed Rental Rate” and inserting the following language:
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Annual Fixed Rental Rate: |
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As of January 1, 2011 and through December 31, 2012: $379,307.50 per annum. |
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(ii) As of January 1, 2013 and annually thereafter, (the “Adjustment Date”) the Annual Fixed Rental Rate shall be calculated for the immediately following twelve (12) month period that begins with the applicable Adjustment Date as follows: An annual amount equal to the product of the Annual Fixed Rental Rate payable for the then preceding twelve (12) month period multiplied by the Increase Factor. |
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For purposes of this Lease, the “Increase Factor” shall mean a fraction, the numerator of which shall be the “Index” (defined below) as issued for the month of November that immediately precedes the applicable Adjustment Date and the denominator of which shall be the Index as issued for the month of November in the year immediately prior to the month of November that immediately precedes the applicable Adjustment Date. Notwithstanding the foregoing, if the numerator is less than the denominator, then the Increase Factor shall be one (1). |
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Index shall mean the Consumer Price Index for Urban Wage Earners and Clerical Workers, Boston – Brockton – Nashua, MA – NH – ME – CT. All Items – Series A (1982 – 84 = 100) issued by the Bureau of Labor Statistics of the United States Department of Labor. In the event that the Index shall hereafter be converted to a different standard of reference base or otherwise revised, the determination of the Increase Factor shall be made with the use of such conversion factor, formula, or table for converting the Index as may be published by the Bureau of Labor Statistics or, if said Bureau shall not publish the same, then with the use of such conversion factor, formula, or table as may be published by Prentice Hall, Inc., or failing such publication, by any other nationally recognized publisher of similar statistical information. In the event that the Index shall cease to be published, then, for the purposes of determining the Increase Factor, there shall be substituted for the Index such other Index as Landlord and Tenant shall agree upon, and, if they are unable to agree within ninety (90) days after the Index ceases to be published, such matter shall be determined in Boston by arbitration in accordance with the Rules of the American Arbitration Association. |
8. Tenant Improvement Allowance. Section 4 of the Lease is hereby amended by adding the following new provision:
Section 4.4. Tenant Improvement Allowance. Landlord shall provide Tenant with an allowance, subject to the provisions of Section 10.4 below, up to the aggregate amount of $93,368 (“Tenant Improvement Allowance”) which monies shall be disbursed to Tenant not more than once monthly for its costs of non-structural improvements to the Premises including carpet and paint, but excluding furniture and equipment. A maximum of fifteen percent (15%) of the Tenant Improvements Allowance may be applied to soft costs. The applicable portion of the Tenant Improvement Allowance shall be disbursed to Tenant thirty (30) days after Tenant’s presentation to Landlord of (i) detailed invoices supporting improvement costs which invoices shall reasonably itemize such costs on a line item basis, (ii) evidence of such improvement, (iii) lien waivers from contractors installing such improvements and (iv) other supporting documentation reasonably requested by the Landlord. All disbursement requests must be made prior to
December 31, 2011. The unused portions of the Tenant Improvement Allowance may not be used for any other purpose, including the payment of Rent.
9. Section 10.4 Tenant Work. The first paragraph of Section 10.4 is hereby amended by deleting such paragraph in its entirety and inserting the following language:
Section 10.4. Tenant’s Work. Except as otherwise described in this Section 10.4, Tenant shall not make any installations, alterations, additions or improvements in or to the Premises, including, without limitation, any apertures in the walls, partitions, ceilings or floors, without on each occasion obtaining the prior written consent of Landlord (i) which consent, as to installations, alterations, additions or improvements that do not affect the Building systems or the structure of the Premises or Building, shall not be unreasonably withheld or delayed and (ii) which consent shall not be necessary as to cosmetic improvements (i.e., painting and carpeting) that does not cost more than $150,000 in any one instance. Any such work so approved by Landlord shall be performed only in accordance with plans and specifications (except for cosmetic improvements) and a construction schedule therefor reasonably approved in advance by Landlord. Tenant shall procure, at Tenant’s sole expense, all necessary permits and licenses before undertaking any work on the Premises and shall perform all such work in a good and workmanlike manner employing materials of good quality and so as to conform with all applicable zoning, building, fire, health and other codes, regulations, ordinances and laws and with all applicable insurance requirements. Prior to commencing any work at the Premises, Tenant shall provide Landlord with a copy of the executed contract with the general contractor for such work. If requested by Landlord, Tenant shall furnish to Landlord prior to the commencement of any such work a bond or other security acceptable to Landlord assuring that any work by Tenant will be completed in accordance with the approved plans and specifications. Tenant shall keep the Premises at all times free of liens for labor and materials. Tenant shall employ for such work only contractors approved by Landlord, which approval shall not be unreasonably withheld, and shall require all contractors employed by Tenant to carry worker’s compensation insurance in accordance with statutory requirements and commercial public liability insurance covering such contractors on or about the Premises in amounts that at least equal the limit of $2,000,000 and to submit certificates evidencing such coverage to Landlord prior to the commencement of such work. Tenant shall save Landlord harmless and indemnified from all injury, loss, claims or damage to any person or property occasioned by or growing out of such work. Subject to compliance with the terms of Section 10.6 of this Lease, Landlord may inspect the work of Tenant at reasonable times and give notice of observed defects.
10. Section 10.14 Assignment and Subletting. Section 10.14 of the Lease is hereby amended by deleting the fifth paragraph in its entirety and replacing it with the following provision:
If for any Transfer, Tenant shall receive rent or other consideration, either initially or over the term of the assignment of sublease, in excess of rent (or in the case of the sublease of part, in excess of such rent allocable to the part) after appropriate adjustments to assure that all other payments called for hereunder are taken into account and after deducting Tenant’s reasonable legal, brokerage and leasehold improvement cots, all amortized ratably over the tern of the sublease or assignment, incurred for such sublease or assignment, Tenant shall pay to Landlord, as Additional Rent, fifty percent (50%) of such excess of such payment of rent or other consideration received by Tenant, promptly after its receipt.
11. Broker. Section 1.1 of the Lease is hereby amended by amending the definition of Broker therein by deleting “Whelan Associates, LLC” and replacing with “Jones Lang LaSalle”.
12. Section 14.7 Brokerage. Section 14.7 of the Lease is hereby amended by adding the following second paragraph:
The total commission due to the Broker for the extension of the Term shall be One Hundred Six Thousand Two Hundred Six and 00/100 Dollars ($106,206) and shall be payable as follows:
(i) Upon execution of this Amendment by both parties, Landlord shall pay to Broker Seventy-five Thousand, Eight Hundred Sixty-one and 50/100 Dollars ($75,861.50) which is an amount equal to four percent (4%) of the rent to be paid for the first 5 years of the Extension Term.
(ii) On the first day of the sixth lease year of the Extension Term, Landlord shall pay to Broker Thirty Thousand, Three Hundred Forty-four and 50/100 Dollars ($30,344.50); provided that Tenant has not exercised its termination option under Section 2.4 of the Lease as amended hereby.
13. Right of First Offer. Section 3 of the Lease is hereby amended by adding the following provision.
Section 3.3. Right of First Offer. During the Term and the first Extension Term, Tenant shall have a right of first offer on any space that becomes available in the Building subject to existing leasing agreements (the “First Offer Space”).
“Available” space includes, without limitation, space that Landlord intends, in its sole discretion, to recapture from an existing tenant (whether by an earlier termination of an existing lease or pursuant to applicable sublease recapture provisions therein). Before entering into a lease for the First Offer Space with a third party (other than any existing tenant or occupant of such space), Landlord shall notify Tenant of the economic terms of the effective rent and any other material terms or conditions (such as the actual recapture of space from an existing tenant, if applicable, as set forth above) on which Landlord intends to lease the space (“Landlord’s Notice”). Within ten (10) business days after receipt of the Landlord’s Notice, Tenant may, by written notice delivered to Landlord (i) reject Landlord’s Notice, or (ii) reject Landlord’s Notice but offer to lease such space from Landlord on different economic terms, or (iii) accept the terms set forth in Landlord’s Notice (the failure by Tenant timely to respond as aforesaid being deemed Tenant’s rejection of Landlord’s Notice). Any notice given under clause (ii) or (iii) shall confirm that Tenant will use the First Offer Space for its own use.
If Landlord’s Notice is rejected under clause (i) above (or deemed rejected by Tenant’s failure to timely respond), then Landlord may enter into any lease for such space within a one-year period after such rejection or deemed rejection, unless Tenant makes a timely counteroffer under the next grammatical paragraph.
If Tenant timely offers to lease the space on alternative terms as set forth in clause (ii) above, then Landlord shall, by written notice delivered within thirty (30) days of receipt thereof, either accept or decline such offer (the failure to so respond being deemed Landlord’s election to decline Tenant’s offer). If such offer under clause (ii) is declined (or deemed declined), then, for a period of one year after Landlord’s receipt of Tenant’s offer, Landlord may enter into any lease for such space at an effective rent (taking into account any tenant improvement allowance, free rent, or other tenant concessions) greater than that set forth in Tenant’s offer. If, during such one year period, Landlord desires to enter into a third-party lease at an effective rent less than or equal to the effective rent set forth in Tenant’s offer, Landlord shall deliver to Tenant a new Landlord’s Notice. If Landlord does not enter into any lease within such one-year period, Landlord shall re-commence the process under this Section before entering into a lease for the space.
If Tenant timely accepts the terms in Landlord’s Notice under clause (iii) above or if Landlord timely accepts an offer by Tenant under clause (ii) above, the space shall, subject to the following paragraph below and without further action by the parties, be leased by Tenant on the accepted terms and otherwise on all of the terms of the Lease in effect immediately prior to such expansion, provided that, at the request of either party, Landlord and Tenant shall promptly execute and deliver an agreement confirming such expansion of the Premises and the estimated date the Premises are to be expanded pursuant to this Section with a
provision for establishing the effective date of such expansion based on the actual delivery.
Notwithstanding any provision of this Section to the contrary, Tenant’s Expansion Option shall be void, at Landlord’s election, if (i) Tenant is in material default under the Lease, after any applicable notice and cure periods have expired, at the time prior to the time Tenant makes any election with respect to the First Offer Space under this Section, or (ii) except for Permitted Transfers, Tenant has assigned the Lease or subleased more than twenty percent (20%) of Premises Square Footage. Nothing in this Section shall be construed to grant to Tenant any rights or interest in any particular space in the Building, and any claims by Tenant alleging a failure of the Landlord to comply herewith shall be limited to claims for monetary damages. Tenant may not assert any rights in any space nor file any lis pendens or similar notice with respect thereto. To be effective, the exercise of Tenant’s rights under this Section (and notice thereof) shall be unconditional; if Tenant purports to condition the exercise of such rights or to vary its terms in any manner, then the rights granted shall be void and the purported exercise shall be ineffective.
14. Ratification. Except as expressly modified by this Amendment, the Lease shall remain in full force and effect, and as further modified by this Amendment, is expressly ratified and confirmed by the parties hereto. This Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, subject to the provisions of the Lease regarding assignment and subletting.
15. Governing Law; Interpretation; and Partial Invalidity. This Amendment shall be governed and construed in accordance with the laws of the Commonwealth of Massachusetts. If any term of this Amendment, or the application thereof to any person or circumstances, shall to any extent be invalid or unenforceable, the remainder of this Amendment, or the application of such term to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term of this Amendment shall be valid and enforceable to the fullest extent permitted by law. The titles for the paragraphs are for convenience only and not to be considered in construing this Amendment. This Amendment contains all of the agreements of the parties with respect to the subject matter hereof, and supersedes all prior
dealings between them with respect to such subject matter. No delay or omission on the part of either party to this Amendment in requiring performance by the other party or exercising any right hereunder shall operate as a waiver of any provision hereof or any rights hereunder, and no waiver, omission or delay in requiring performance or exercising any right hereunder on any one occasion shall be construed as a bar to or waiver of such performance or right on any future occasion.
16. Counterparts and Authority. This Amendment may be executed in multiple counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same document. Landlord and Tenant each warrant to the other that the person or persons executing this Amendment on its behalf has or have authority to do so and that such execution has fully obligated and bound such party to all terms and provisions of this Amendment.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK. THE
NEXT PAGE IS THE SIGNATURE PAGE.]
IN WITNESS WHEREOF, the undersigned executed this Amendment under seal as of the date and year first written above.
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LANDLORD: |
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MASSACHUSETTS DEVELOPMENT FINANCE AGENCY |
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By: |
/S/ Richard Henderson |
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Name: Richard Henderson |
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Title: Executive Vice President, Real Estate |
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APPROVED AS TO FORM |
[ILLEGIBLE] |
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Agency Counsel |
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TENANT: |
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CELLDEX THERAPEUTICS, INC. |
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By: |
/S/ Anthony S. Marucci |
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Name: |
Anthony S. Marucci |
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Title: |
President and CEO |
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Exhibit 31.1
CERTIFICATION
I, Anthony S. Marucci, certify that:
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I have reviewed this report on Form 10-Q of Celldex Therapeutics, Inc.; |
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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; |
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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; |
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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: |
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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; |
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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; |
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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 |
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(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 |
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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): |
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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 |
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(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. |
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Date: August 5, 2010 |
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By |
/s/ ANTHONY S. MARUCCI |
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Name: |
Anthony S. Marucci |
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Title: |
President and Chief Executive Officer |
Exhibit 31.2
CERTIFICATION
I, Avery W. Catlin, certify that:
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I have reviewed this report on Form 10-Q of Celldex Therapeutics, Inc.; |
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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; |
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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; |
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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: |
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(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; |
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(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; |
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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 |
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(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 |
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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): |
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(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 |
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(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. |
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Date: August 5, 2010 |
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By: |
/s/ AVERY W. CATLIN |
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Name: |
Avery W. Catlin |
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Title: |
Senior Vice President and |
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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.
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Date: August 5, 2010 |
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By: |
/s/ ANTHONY S. MARUCCI |
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Name: |
Anthony S. Marucci |
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Title: |
President and Chief Executive Officer |
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Date: August 5, 2010 |
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By: |
/s/ AVERY W. CATLIN |
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Name: |
Avery W. Catlin |
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Title: |
Senior Vice President and |
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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.