Celldex Therapeutics, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Celldex is a clinical-stage biopharmaceutical company developing antibody therapies for inflammatory diseases and cancer. Its lead programs included CDX-0159, CDX-1140 and CDX-527; the company reported no marketed product revenue.
Financial performance and position
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $3.48 million | $0.24 million | $4.17 million | $2.97 million |
| Research and development expense | $12.36 million | $9.71 million | $25.08 million | $21.40 million |
| General and administrative expense | $4.31 million | $3.53 million | $8.43 million | $7.19 million |
| Operating loss | $13.44 million | $11.37 million | $30.08 million | $24.23 million |
| Net loss | $13.37 million | $11.03 million | $29.91 million | $23.66 million |
| Basic and diluted loss per share | $0.34 | $0.50 | $0.76 | $1.20 |
Revenue was mainly contract manufacturing and research services for Rockefeller University and Gilead Sciences, plus grant revenue. No product sales or gross-margin measure is reported. For the six-month period, operating cash outflow was $30.0 million, compared with $23.3 million a year earlier. Investing activities provided $29.6 million, primarily reflecting net marketable-security sales and maturities; financing activities provided $0.05 million.
At June 30, cash and cash equivalents were $43.4 million and marketable securities were $120.6 million, totaling $164.0 million. Total assets were $204.6 million, total liabilities $22.3 million and stockholders’ equity $182.3 million. The filing reports no conventional debt balance; liabilities included operating leases and $9.0 million of Kolltan contingent consideration. In July, after quarter-end, Celldex raised approximately $270 million net from a public offering.
Changes versus prior period
- Q2 revenue increased by $3.2 million year over year, primarily from increased contract services. Six-month revenue rose 40%, although product-development and licensing revenue fell following a $1.8 million Rockefeller-related payment recognized in Q1 2020.
- Six-month R&D expense increased 17%, driven principally by higher product-development, laboratory and personnel costs; CDX-0159 program expense rose to $11.0 million from $2.9 million.
- Six-month net loss widened by $6.3 million. The comparison was affected by a $4.9 million contingent-consideration gain in 2020 versus a $0.7 million loss in 2021, and by the absence of the 2020 $3.5 million CDX-3379 impairment charge.
- Cash and marketable securities declined from $194.4 million at December 31, 2020 to $164.0 million at June 30, 2021, before the July financing.
Outlook, developments and risks
- Management said June-end liquidity, together with July’s offering proceeds, was expected to fund planned operations through 2025. It also stated that future capital needs could require additional financing and that runway could be affected by any cash payment of Kolltan milestones.
- Celldex expected contract-services revenue to decrease over the next 12 months. It anticipated higher personnel and product-development spending as CDX-0159 development expands; no formal revenue or earnings guidance was provided.
- After quarter-end, Celldex reported positive interim Phase 1b CDX-0159 results in cold urticaria and symptomatic dermographism: all 19 patients with activity data had a clinical response by provocation testing. The small, early-stage study results are not definitive evidence of efficacy or approval prospects. The company planned a prurigo nodularis study in Q4 2021 and a healthy-volunteer study of a subcutaneous formulation in Q3 2021.
- CDX-1140’s recommended dose was 1.5 mg/kg; combination cohorts were underway. CDX-527 dose escalation was completed, with expansion cohorts being planned. These candidates remain investigational.
- A dispute with former Kolltan stockholders over abandoned CDX-0158-related milestones remained unresolved, with trial scheduled for June 2022. The company said it could not estimate the outcome. Potential future milestone consideration was stated as up to $107.5 million, subject to achievement of milestones.
- Management reported no significant COVID-19-related trial or manufacturing disruptions to date, while warning that future delays could affect operations and the $30.7 million carrying value of in-process R&D assets. Clinical-development, financing, milestone, regulatory and impairment risks remain material.
Most important facts for investors to verify
- Whether the July offering proceeds and stated runway through 2025 are sufficient under the company’s evolving clinical-spending plans.
- Progress, safety, durability and confirmation of CDX-0159 findings in larger or later-stage studies, including planned studies and formulation development.
- Enrollment, data and next steps for CDX-1140 and CDX-527, and the cost implications of advancing multiple programs.
- Outcome and potential financial exposure of the Kolltan milestone litigation and any milestone payments.
- Timing and scale of the expected decline in contract-services revenue, and whether spending or cash burn departs from management’s expectations.