Celldex Therapeutics, Inc. — Q2 2015 Form 10-Q
Reporting period: Three and six months ended June 30, 2015. Celldex is a clinical-stage biopharmaceutical company developing immunotherapies, including Rintega, glembatumumab vedotin and varlilumab. The filing was signed August 10, 2015.
Financial results and liquidity
Amounts below are in millions of dollars, except per-share data.
| Metric | Q2 2015 | Q2 2014 | First half 2015 | First half 2014 |
|---|---|---|---|---|
| Revenue | $2.18 | $0.59 | $2.66 | $1.01 |
| Research and development expense | $26.49 | $24.10 | $51.62 | $51.17 |
| General and administrative expense | $8.18 | $4.79 | $14.27 | $9.37 |
| Operating loss | $(32.75) | $(28.55) | $(63.73) | $(60.04) |
| Net loss | $(32.36) | $(28.27) | $(62.53) | $(58.18) |
| Net loss per share, basic and diluted | $(0.33) | $(0.32) | $(0.65) | $(0.65) |
| Net cash used in operating activities | Not provided by quarter | $(57.35) | $(52.73) |
- At June 30, cash and cash equivalents were $81.6 million and marketable securities were $252.4 million, totaling approximately $334.0 million. Total current assets were $339.5 million and total assets were $383.2 million.
- Total liabilities were $37.3 million, including $26.7 million current liabilities. The filing does not report borrowings or conventional debt; liabilities include deferred revenue, deferred rent and other obligations.
- Stockholders’ equity was $345.9 million. In March 2015, Celldex issued 8.34 million shares in a public offering, receiving $188.8 million net proceeds. Shares outstanding rose to 98.55 million from 89.59 million at year-end 2014.
- Cash, cash equivalents and marketable securities increased from $201.0 million at December 31, 2014 to $334.0 million at June 30, 2015, primarily reflecting the offering proceeds. Investing cash use included net purchases of marketable securities and $3.1 million of property and equipment.
- Profitability and operating margins were negative; the filing presents operating and net losses rather than positive margins.
Changes versus comparable periods
- Q2 revenue rose $1.59 million year over year, primarily from Rockefeller University research services and, to a lesser extent, the BMS collaboration. First-half revenue increased $1.66 million on similar drivers.
- Q2 net loss widened by $4.09 million; first-half net loss widened by $4.36 million. Higher R&D and G&A costs were the main pressures, partly offset by higher revenue.
- First-half R&D expense was nearly flat overall, as lower product-development and license-fee costs offset higher personnel and laboratory expenses. G&A increased 52% for the half, principally due to commercial-readiness personnel and planning for potential Rintega and glembatumumab vedotin launches.
- First-half operating cash use increased $4.62 million from the prior year. Cash provided by financing was $192.1 million, versus $0.9 million, largely because of the public offering.
Business, outlook and key risks
- Rintega: The pivotal Phase 3 ACT IV trial completed enrollment in December 2014. Its first interim analysis occurred in June 2015, and the independent monitoring board recommended continuing the study. A second interim analysis was expected in late 2015 or early 2016, with final data expected by the end of 2016, subject to event rates. FDA Breakthrough Therapy Designation was granted in February 2015. In the ReACT Phase 2 study, reported overall-survival results favored Rintega; however, the six-month progression-free survival comparison was 28% versus 16% in the intent-to-treat population (p=0.1163) and 30% versus 12% in the per-protocol population (p=0.0310).
- Glembatumumab vedotin: The randomized METRIC Phase 2b breast-cancer trial had a planned enrollment of 300; management projected enrollment completion in the second half of 2016. The filing also describes ongoing melanoma development and planned studies in squamous cell lung cancer, uveal melanoma and pediatric osteosarcoma.
- Varlilumab: Combination studies with checkpoint inhibitors and other agents were underway or planned, including collaborations with BMS, Oncothyreon and Roche. Roche’s study was expected to begin in the second half of 2015.
- Runway and funding: Management said available funds were sufficient for planned operations through 2017, while the financial-statement note stated they would fund estimated working-capital needs and planned operations for at least the next twelve months. Management cautioned that clinical results and commercial-manufacturing or launch decisions could affect cash needs. It may seek additional capital through partnerships, licensing, debt or equity; availability and terms are uncertain, and equity could dilute shareholders.
- Principal risks: Clinical-trial outcomes, timing, costs and regulatory approvals are uncertain; early results may not predict later-stage success. Other risks include the ability to finance and manage multiple trials, manufacturing and supplier availability, competition, commercialization execution, collaboration terms and intellectual-property challenges. The company reported no material changes to the risk factors in its 2014 Form 10-K.
- Management expected operating cash use and commercial-planning costs to increase over the next twelve months. R&D costs could fluctuate with trial activity; no specific revenue or earnings guidance was provided.
Important facts for investors to verify
- Subsequent ACT IV interim and final results, and whether trial timing or outcome changes the planned development and commercial investment in Rintega.
- METRIC enrollment progress, trial costs and eventual efficacy and safety results for glembatumumab vedotin.
- Actual cash burn and whether the stated runway through 2017 remains achievable, particularly if launch preparation or clinical programs expand.
- Potential dilution or other financing needs, including the terms of any future equity, debt or collaboration transactions.
- Whether the ReACT findings are confirmed in further follow-up and how the differing intent-to-treat and per-protocol PFS results are interpreted.