Celldex Therapeutics, Inc. — FY2015 Form 10-K
Reporting period: Fiscal year ended December 31, 2015; filed February 25, 2016. Celldex is a clinical-stage biopharmaceutical company developing immunotherapies, primarily for cancer. It had no revenue from product sales.
Financial results and position
| Metric | FY2015 | FY2014 |
|---|---|---|
| Total revenue | $5.5 million | $3.6 million |
| Research and development expense | $100.2 million | $104.4 million |
| General and administrative expense | $33.8 million | $20.6 million |
| Operating loss | $129.5 million | $122.4 million |
| Net loss | $127.2 million | $118.1 million |
| Net loss per share | $1.31 | $1.32 |
| Net cash used in operations | $98.9 million | $101.5 million |
- Fourth-quarter 2015 revenue was $1.8 million, net loss was $32.7 million, and loss per share was $0.33.
- At year-end, cash, cash equivalents and marketable securities totaled $289.9 million; working capital was $264.7 million. Management estimated these resources could fund planned operations through 2017, subject to clinical results and the pace of commercial preparation. The financial-statement note also states resources would cover at least the next 12 months.
- Total liabilities were $47.5 million, including $17.2 million of long-term liabilities; the filing reports no outstanding term loan, which was repaid in 2013. Operating lease obligations totaled $13.2 million.
- Celldex raised $188.8 million net through a 2015 public stock offering. Shares issued and outstanding rose to 98.7 million from 89.6 million at year-end 2014. No dividend was paid or expected.
- Margins are not a meaningful operating measure for this pre-commercial company: revenue was primarily from collaboration, development, contract and grant arrangements, not product sales.
Changes versus the prior year
- Revenue increased 53% to $5.5 million, chiefly from Rockefeller research services and recognition of the BMS collaboration payment and cost reimbursements. No product royalties were recorded, versus $2.3 million in 2013.
- R&D expense fell 4%, largely because ACT IV and contract manufacturing costs declined; G&A expense rose 64%, including higher staffing, stock compensation and $6.5 million more commercial-planning costs.
- Operating loss widened by $7.1 million and net loss by $9.1 million. Lower investment and other income, including the absence of $3.0 million of TopoTarget milestone income recognized in 2014, also contributed to the larger net loss.
- Operating cash use decreased modestly, while the year-end cash and securities balance increased substantially, primarily following the equity offering.
Pipeline, outlook and key risks
- Rintega (rindopepimut): The pivotal Phase 3 ACT IV trial in newly diagnosed EGFRvIII-positive glioblastoma completed enrollment. The first interim review in June 2015 recommended continuing as planned; a second interim analysis was expected in March 2016 and final data were expected by year-end 2016, subject to event rates. In the Phase 2 ReACT recurrent-disease study, the primary PFS-at-six-months endpoint was met, but the reported difference was not statistically significant (28% versus 16%; p=0.1163). Overall survival favored Rintega (HR 0.53; p=0.0137). These are company-reported clinical results, not approval evidence.
- Glembatumumab vedotin: The randomized Phase 2b METRIC study in triple-negative breast cancer was designed to enroll 300 patients; enrollment completion was projected for the second half of 2016. A Phase 2 melanoma study was projected to complete enrollment in Q2 2016.
- Other programs: Varlilumab combination studies with BMS’s Opdivo and Roche’s atezolizumab, among others, were underway; the Opdivo Phase 2 expansion was expected to open in Q2 2016. Celldex expected to begin a Phase 1 renal-cell-cancer study of CDX-014 in 2016.
- Management expected operating losses and cash use to continue in 2016, with higher clinical and manufacturing costs and continued commercial build-out. It may seek additional capital through partnerships, licensing, debt or equity; availability and terms are uncertain, and equity financing could dilute shareholders.
- Principal risks include clinical-trial failure or delay, regulatory and companion-diagnostic approval, funding needs, commercialization and reimbursement uncertainty, reliance on contract manufacturers and sole-source materials, competition, and patent challenges. Two European oppositions to a Southampton patent supporting varlilumab were pending. The company reported no material legal proceedings.
Important facts for investors to verify
- ACT IV interim and final results, including endpoint definitions, analyzed populations, statistical significance and timing.
- Whether ReACT’s Phase 2 survival findings are confirmed in larger, controlled studies and how to interpret the non-significant PFS6 comparison.
- METRIC enrollment, trial execution and results, including whether the study supports regulatory submissions in the U.S. and Europe.
- Cash burn, spending plans and the assumptions behind management’s stated runway through 2017; monitor any financing and dilution.
- Companion-diagnostic readiness, manufacturing capacity and supply continuity, and the status of relevant patent challenges.