Celldex Therapeutics, Inc. — Q3 2023 Form 10-Q
Business context and reporting period. This unaudited quarterly report covers the three and nine months ended September 30, 2023. Celldex is a clinical-stage biopharmaceutical company developing antibody therapies, with resources focused on barzolvolimab (CDX-0159) and its bispecific antibody platform. The company reported no commercial product revenue; reported revenue was primarily from contract services and grants.
Financial performance and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Total revenue | $1.5 million | $0.4 million | $2.8 million | $0.7 million |
| Research and development expense | $34.5 million | $21.6 million | $87.6 million | $59.4 million |
| General and administrative expense | $8.2 million | $6.5 million | $22.1 million | $20.6 million |
| Operating loss | $41.2 million | $27.7 million | $106.9 million | $87.3 million |
| Net loss | $38.3 million | $26.8 million | $98.1 million | $85.8 million |
| Basic and diluted loss per share | $0.81 | $0.57 | $2.08 | $1.83 |
Cash flow and balance sheet. For the first nine months of 2023, operating cash use was $74.8 million, versus $82.0 million in the comparable 2022 period. Investing activities provided $65.4 million, mainly reflecting net sales and maturities of marketable securities; financing activities provided $1.1 million. Cash and cash equivalents declined to $21.1 million from $29.4 million at December 31, 2022. Cash, cash equivalents and marketable securities totaled $235.3 million at September 30, 2023.
Total assets were $280.3 million and total liabilities were $33.5 million at September 30, 2023. The balance sheet reports no borrowing or debt balance; liabilities include lease obligations and other liabilities. Current assets were $245.9 million against current liabilities of $27.8 million. No gross margin measure is presented; revenue is small relative to operating expenses, and the company remains loss-making.
Material changes versus the prior comparable period
- Q3 revenue increased $1.1 million, mainly from increased manufacturing and R&D services for Rockefeller University. Nine-month revenue increased $2.0 million for the same reason.
- Q3 R&D expense rose 60%, mainly due to higher barzolvolimab clinical-trial and contract-manufacturing costs. Nine-month R&D increased 48%; barzolvolimab/anti-KIT program spending was $59.0 million versus $35.5 million.
- Q3 net loss widened by $11.5 million. For the first nine months, net loss widened by $12.3 million despite higher investment income and the absence of the 2022 settlement charge.
- Investment and other income increased to $8.8 million for nine months from $1.5 million, primarily because of higher interest rates on fixed-income investments and increased income associated with New Jersey tax benefits.
- Prior-year nine-month results included a $15.0 million litigation-settlement loss and a $6.9 million gain from remeasuring contingent consideration; neither item recurred in 2023.
Outlook, management commentary and risks
- Management stated that available cash and securities were sufficient to fund planned operations through 2025, including ongoing and planned Phase 2 studies in chronic spontaneous urticaria (CSU), chronic inducible urticaria (CIndU), eosinophilic esophagitis (EoE) and prurigo nodularis (PN). The estimate may be affected by any cash payment of future settlement milestones.
- At the time of the filing, management expected topline data from the completed Phase 2 CSU study late in 2023; PN Phase 1b data were expected in November 2023, and a Phase 2 subcutaneous PN study was planned for early 2024. These are forward-looking expectations, not reported outcomes.
- Management expected R&D and personnel costs to increase over the next twelve months as barzolvolimab development expands. It also expected Rockefeller service revenue to increase. Cash used in operations was expected to remain relatively consistent, with possible quarterly fluctuations.
- The company has recurring losses and no product sales reported. Clinical development, trial results, regulatory approval, manufacturing, competition and the need for future capital are material uncertainties. Management said it may seek funding through partnerships, licensing, debt or equity; financing may be unavailable or unfavorable, and equity issuance may dilute shareholders.
- Under the Kolltan settlement, potential future payments include $15.0 million upon successful completion of a Phase 2 trial of CDX-0159, subject to a $2.5 million contractual credit, and $52.5 million upon the first qualifying U.S. FDA or European Medicines Agency approval. Payments may be made in cash, stock or a combination at Celldex’s election. The filing says payment depends on achievement of the relevant milestones.
- Marketable securities were investment grade; unrealized losses were attributed to interest-rate movements, and the company reported no material credit-loss allowance. Management did not consider its interest-rate market-risk exposure material.
Most important facts for investors to verify
- Subsequent clinical updates and outcomes for the CSU, CIndU, PN and EoE programs, including whether stated timelines were met.
- Quarterly operating cash use and whether the reported liquidity continues to support planned operations through 2025 as development spending changes.
- Progress toward the CDX-0159 settlement milestones, their likelihood and timing, and whether any resulting payment would be made in cash or shares.
- Future R&D spending, revenue from service agreements, and any capital raising, collaboration or licensing activity.
- Clinical safety and efficacy findings, including the significance and management of reported hair-color changes, infusion reactions and blood-count changes in barzolvolimab studies.