Celldex Therapeutics, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Celldex is a clinical-stage biopharmaceutical company developing antibody-based therapies. The interim financial statements are unaudited.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 or prior balance-sheet date |
|---|---|---|
| Revenue | $0.2 million | $0.7 million |
| Research and development expense | $17.1 million | $12.7 million |
| General and administrative expense | $6.9 million | $4.1 million |
| Operating loss | $23.3 million | $16.6 million |
| Net loss / loss per share | $23.1 million / $0.49 | $16.5 million / $0.42 |
| Net cash used in operating activities | $24.5 million | $18.1 million |
| Cash, cash equivalents and marketable securities | $380.5 million | $408.3 million at Dec. 31, 2021 |
| Total assets / total liabilities | $424.0 million / $25.9 million | $444.7 million / $25.2 million at Dec. 31, 2021 |
Revenue was immaterial relative to operating costs; the filing reports no product sales or meaningful operating margin. Revenue declined mainly because fewer services were performed under manufacturing and R&D agreements. R&D expense rose 34%, primarily from higher personnel and clinical/product-development costs; G&A rose 68%, including higher personnel, legal and commercial-planning expenses. Stock-based compensation increased to $3.2 million from $1.3 million. Net loss widened by $6.5 million.
Cash and cash equivalents were $25.3 million, with $355.2 million of marketable securities at quarter-end. Cash used in operations increased year over year; investing activities provided $10.4 million, mainly reflecting net sales and maturities of securities, and financing activities provided $0.3 million. No borrowings or financial debt are reported; liabilities principally include accrued expenses, lease obligations and contingent milestone obligations.
Material changes, outlook and management commentary
- Management stated that available liquidity was sufficient to fund planned operations through 2025, while the notes also state it should cover at least the next 12 months. Management cautioned that cash-funded Kolltan milestones could affect the runway.
- Celldex expects operating cash use, personnel costs, product-development costs and G&A to increase over the next 12 months, particularly as barzolvolimab development expands. Revenue is expected to remain relatively consistent, with quarterly fluctuations.
- Barzolvolimab: the company reported prior positive interim Phase 1b data in cold urticaria and symptomatic dermographism and favorable tolerability and pharmacokinetic/pharmacodynamic findings for the subcutaneous formulation. It anticipated Phase 2 multi-dose urticaria studies later in 2022, planned to expand development into eosinophilic esophagitis, and continued development in prurigo nodularis. These are forward-looking plans, not guaranteed outcomes.
- CDX-1140: enrollment in its Phase 1 study closed in late March 2022; enrolled patients were to continue treatment and follow-up. The company was exploring alternative pancreatic-cancer combination strategies after commentary that simultaneous chemotherapy and CD40 activation might not be optimal.
- CDX-527: dose escalation was complete and an ovarian-cancer expansion cohort was enrolling.
- Marketable securities had $2.5 million of gross unrealized losses at March 31, 2022, which management attributed to interest-rate changes and did not consider other-than-temporary impairments. The quarter included a $1.8 million unrealized securities loss in other comprehensive income.
Risks, contingencies and unusual items
- Celldex has recurring losses and depends on external financing, collaborations or licensing for longer-term funding. Equity financing could dilute shareholders; debt could impose payment obligations and restrictive covenants. If funding is inadequate, the company may delay or discontinue programs or trials, license assets earlier, or pursue other unfavorable alternatives.
- Kolltan acquisition milestones could total up to $107.5 million, contingent on milestone achievement; the recorded fair value was $6.3 million. A dispute with the former stockholder representative over abandoned CDX-0158 milestones and whether barzolvolimab triggers payments remained unresolved. Trial was scheduled for June 2022; the company could not estimate the outcome.
- COVID-19 had not significantly disrupted planned or ongoing trials, manufacturing or shipping to date, but the company warned of potential future delays, including patient enrollment and supply-chain disruption.
- The barzolvolimab non-human-primate toxicology study reported an impact on spermatogenesis, which the company said it expected to be fully reversible after the antibody cleared. Earlier inducible-urticaria studies reported hair-color changes, taste changes and infusion reactions, including one brief severe infusion reaction.
- The company’s $27.2 million anti-KIT in-process R&D intangible asset is subject to impairment risk if development, clinical or regulatory setbacks occur. Management reported no material changes to previously disclosed risk factors.
Important facts for investors to verify
- Whether the stated runway through 2025 remains achievable as development spending rises, and how milestone payments would affect liquidity.
- Clinical progress, safety and timing for barzolvolimab Phase 2 studies and planned indication expansions.
- The outcome of the Kolltan milestone litigation and any resulting payment obligation.
- Quarterly operating cash use, clinical-development spending and any new financing, licensing or collaboration arrangements.
- Whether interest-rate movements, trial delays, manufacturing constraints or other risks affect the portfolio or the carrying value of the anti-KIT IPR&D asset.