Celldex Therapeutics, Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. Unaudited financial statements are presented on a consolidated basis. Celldex is a clinical-stage biopharmaceutical company developing antibody therapeutics; it reported no product sales and remains dependent on financing, collaborations, grants and service revenue.
Financial results and liquidity
| Metric | Three months ended Sep. 30, 2021 | Three months ended Sep. 30, 2020 | Nine months ended Sep. 30, 2021 | Nine months ended Sep. 30, 2020 |
|---|---|---|---|---|
| Revenue | $0.2 million | $0.7 million | $4.3 million | $3.6 million |
| Research and development expense | $13.6 million | $10.7 million | $38.6 million | $32.1 million |
| General and administrative expense | $5.8 million | $3.6 million | $14.2 million | $10.8 million |
| Operating loss | $20.8 million | $14.3 million | $50.9 million | $38.6 million |
| Net loss | $20.5 million | $14.2 million | $50.4 million | $37.9 million |
| Net loss per share | $0.45 | $0.36 | $1.21 | $1.44 |
At September 30, 2021, cash and cash equivalents were $72.2 million and marketable securities were $350.9 million, for combined liquidity of $423.1 million. Total assets were $460.2 million, total liabilities $23.5 million and stockholders’ equity $436.7 million. The filing reports no outstanding term loan or other conventional borrowings; liabilities include lease obligations and contingent Kolltan milestones. Current assets were $426.6 million versus current liabilities of $14.2 million.
For the first nine months, operating cash use was $46.4 million, investing cash use was $197.2 million (primarily net purchases of marketable securities), and financing provided $271.9 million. Financing included $269.9 million net proceeds from a July 2021 stock offering. Cash and cash equivalents increased by $28.3 million to $72.2 million. Operating margins remained substantially negative; the filing does not present a meaningful positive margin measure for this development-stage business.
Changes versus the prior comparable periods
- Third-quarter revenue declined 77% to $0.2 million, while nine-month revenue increased 19% to $4.3 million. The year-to-date comparison reflects higher contract and grant revenue, partly offset by the absence of a $1.8 million Rockefeller-related licensing payment recorded in 2020.
- R&D expense increased 27% for the quarter and 20% year to date, driven by personnel, laboratory supplies and clinical/product-development costs. CDX-0159 was the largest named program expense: $18.3 million for the first nine months, versus $5.2 million in 2020.
- G&A expense rose 60% for the quarter and 32% year to date, primarily due to higher personnel and legal expenses. Net loss increased 44% for the quarter and 33% year to date.
- Celldex raised $269.9 million net in its July offering, increasing shares outstanding to 46.7 million at September 30 from 39.6 million at year-end 2020. The offering strengthened liquidity but diluted existing shareholders.
Outlook, programs, risks and unusual items
- Management stated that September 30 liquidity was sufficient to fund planned operations through 2025, subject to possible cash payments for Kolltan milestones. The financial-statement note separately says resources at the filing date were expected to cover at least the next 12 months. Management expected operating cash use, R&D personnel and product-development expenses, and G&A expenses to increase over the next 12 months, particularly with expanded CDX-0159 development. Revenue was expected to remain relatively consistent, with quarterly variation.
- Celldex’s principal programs included CDX-0159, in Phase 1b studies for mast-cell-driven diseases; CDX-1140, a CD40 agonist in Phase 1; and CDX-527, a bispecific antibody in Phase 1. The filing reported positive interim CDX-0159 results in cold urticaria and symptomatic dermographism. These are early-stage findings and do not establish efficacy or approval.
- A $3.5 million non-cash impairment charge fully wrote down the TAM program intangible asset after Celldex reported limited third-party licensing interest. The remaining IPR&D asset carrying value was $27.2 million, principally related to CDX-0159. Further impairments are possible if development or commercial prospects weaken.
- The company reported recurring losses and stated that future financing may be needed for long-term liquidity. Additional equity could dilute shareholders; debt could bring repayment obligations and restrictive covenants; licensing or collaboration arrangements could reduce the company’s economic participation. If funding is unavailable, Celldex may delay or discontinue programs or trials, license programs earlier, or pursue other alternatives.
- A dispute with the former Kolltan stockholder representative concerns whether milestone payments are due in connection with discontinued CDX-0158 and the relationship of CDX-0159 to that program. Mediation did not resolve the matter; trial was scheduled for June 2022. Celldex said it could not predict the outcome. Up to $107.5 million of adjusted future Kolltan consideration was described as contingent on milestones, and the company could elect to pay in cash, shares or a combination.
- COVID-19 had not caused significant impact to planned trials, manufacturing or shipping to date, but potential risks included enrollment delays, third-party disruptions, workforce and supply-chain issues. Management also noted the possibility of future operational and asset-impairment effects.
Most important facts for investors to verify
- Whether clinical progress and subsequent trial data support the early CDX-0159, CDX-1140 and CDX-527 findings.
- Actual cash burn and whether the stated runway through 2025 remains achievable as clinical programs expand.
- The outcome and potential financial consequences of the Kolltan milestone litigation, including any payments and their form.
- Whether Celldex secures collaborations or additional financing, and the resulting dilution or economic terms.
- Whether further IPR&D impairments, trial delays or COVID-related disruptions affect programs or liquidity.