Celldex Therapeutics, Inc. (NASDAQ: CLDX) today reported financial results for the third quarter and nine-month period ended September 30, 2009. Celldex reported a net loss of $7.2 million, or $0.45 per share, for the third quarter of 2009 compared to a net loss of $7.7 million, or $0.49 per share, for the third quarter of 2008.
For the nine months ended September 30, 2009, Celldex reported a net loss of $23.6 million, or $1.49 per share, compared to a net loss of $40.0 million, or $2.92 per share, for the nine months ended September 30, 2008. At September 30, 2009, Celldex reported cash and cash equivalents of $26.0 million. At September 30, 2009, CuraGen Corporation, which Celldex acquired on October 1, 2009, had cash and investments of $70.3 million and 4% convertible subordinated debt of $12.5 million, due in February 2011.
“Celldex has made tremendous progress on key strategic initiatives in 2009,” said Anthony S. Marucci, President and Chief Executive Officer. “With the successful completion of the CuraGen acquisition, we added an exciting portfolio of oncology-focused antibodies to our pipeline and significantly strengthened our balance sheet. In the clinic, we have accrued the required 60 patients to the ACT III study for CDX-110 [PF-04948569] and we have further strengthened our pipeline—reporting positive data from Phase 1 studies of CDX-1307 in difficult to treat epithelial cancers and initiating a Phase 1/2 study of CDX-1401 in patients with malignant solid tumors. Both of these candidates originated from our Precision Targeted Immunotherapy Platform and utilize our novel antibody-based vaccine technology to deliver vaccine directly to cancer-associated targets in the body. Looking forward, we will continue the momentum, advancing ongoing studies and initiating a Phase 2 study of CDX-1307 in bladder cancer in the first quarter of 2010.”
Third quarter and recent highlights:
- Completed the acquisition of CuraGen which provides a pipeline of oncology-focused antibodies, as well as a cash balance of approximately $70.3 million ($57.8 million net of CuraGen’s convertible debt of $12.5 million).
- Initiated a dose-escalating Phase 1/2 clinical trial of CDX-1401 aimed at determining the optimal dose for further development based on the safety, tolerability, and immunogenicity of the vaccine. The trial will evaluate three different doses of the vaccine in combination with resiquimod, an activator of toll-like receptors 7 and 8. The study will accrue approximately 36 patients with solid tumor cancers expressing the NY-ESO-1 antigen and will follow each subject for six months post-treatment.
- Announced positive results from Phase 1 studies of CDX-1307, the first candidate from Celldex’s Precision Targeted Immunotherapy Platform, in patients with advanced epithelial cancers, including breast, colon and pancreatic cancer at the 24th Annual Meeting of the International Society for Biological Therapy of Cancer (iSBTc) in Washington, D.C. last week.
- CDX-1307, in combination with select TLR agonists, significantly enhanced immune responses against hCG- β, providing strong humoral responses in 88% of patients and cellular immune responses in 57% of patients. Immune responses occurred even in the presence of high circulating levels of hCG-β, suggesting that CDX-1307 can overcome antigen tolerance in the most advanced, heavily pretreated cancers
- Nine patients in the studies experienced stable disease from 2.3 months to 11.4 plus months following the initiation of CDX-1307 vaccination
- Data provide the basis for advancing CDX-1307 into a Phase 2 study in patients with newly diagnosed bladder cancer which frequently expresses hCG-β and represents a clear unmet medical need
- Continued to advance, in partnership with Pfizer, the development of lead candidate CDX-110 in Phase 2 studies in glioblastoma multiforme. CDX-110 is an immunotherapy that targets the tumor specific molecule called EGFRvIII, a functional variant of the epidermal growth factor receptor (EGFR).
CuraGen Acquisition Financial Details
On October 1, 2009, CuraGen Corporation (“CuraGen”), a former publicly-traded company, merged with a wholly-owned subsidiary of Celldex (the “CuraGen Merger”) in accordance with a definitive merger agreement dated May 28, 2009 (the “CuraGen Merger Agreement”) and as approved at special meetings of Celldex’s and CuraGen’s shareholders on September 30, 2009. In connection with the CuraGen Merger, Celldex (i) issued 0.2739 shares of Celldex in exchange for each share of outstanding CuraGen common stock, plus cash in lieu of fractional shares (the “CuraGen Exchange Ratio”) (Celldex issued a total of 15,722,713 shares of Celldex common stock to the former stockholders of CuraGen), (ii) assumed all of the CuraGen stock options outstanding under the CuraGen 2007 Stock Plan, or options exercisable into 931,315 shares of Celldex common stock, and (iii) CuraGen, as a wholly-owned subsidiary of Celldex, retained its obligation for the $12.5 million in CuraGen 4% convertible subordinated debt due in February 2011. Accordingly, the results of operations of CuraGen will be included in the results of operations of Celldex beginning October 1, 2009.
Further Financial Highlights
The net loss of $7.2 million for the third quarter of 2009 represents a decrease of $0.5 million when compared to the net loss for the same period in 2008 and is primarily due to an increase in revenue, partially offset by an increase in operating expense and a decrease in investment income. R&D expense in the third quarter of 2009 increased by $0.6 million compared to R&D expense in 2008 due primarily to increased personnel-related expenses, laboratory materials and services, and royalty expense and license fees. G&A expenses in the third quarter of 2009 decreased by $0.3 million to $3.9 million as compared to $4.2 million in 2008, primarily due to a decrease in personnel-related expenses in 2009. G&A expenses for this quarter included approximately $2.3 million, or $0.15 per share, of transaction expenses recorded in connection with the CuraGen acquisition. The decrease in cash and cash equivalents of $5.6 million from June 30, 2009 includes one-time cash payments of $0.8 million for CuraGen merger-related costs.
The net loss of $23.6 million for the first nine months of 2009 represents an improvement of $16.4 million when compared to the net loss for the same period in 2008, primarily due to the non-cash charge of $14.8 million for purchased in-process R&D recorded in 2008. R&D expense in the first nine months of 2009 increased by $5.0 million compared to R&D expense in 2008 due primarily to the combined operations of AVANT and Celldex for the full nine-month period in 2009, including increased personnel-related expenses, royalty and license fee expenses, clinical trials costs for CDX-110 and CDX-1307 and facility-related costs. G&A expenses decreased by $1.1 million to $10.7 million in 2009 as compared to G&A expense of $11.8 million in the first nine months of 2008, primarily due to reduced personnel-related expenses.
Revenues for the first nine months of 2009 increased by $6.0 million compared with revenues for 2008. The increase in product development and licensing revenue in 2009 primarily reflects recognition of $3.9 million in Pfizer deferred revenue related to CDX-110 in 2009. The increase in contracts and grants revenue in 2009 compared to 2008 primarily reflects revenues for work performed for Rockefeller University. In 2009, Celldex also recognized $5.1 million in product royalty revenue related to offsetting royalty expense payable to Cincinnati Children’s Hospital.
As of September 30, 2009, which was prior to the closing of the CuraGen Merger, Celldex had approximately 15.9 million shares outstanding.
Important Information Related to Celldex’s Financial Results
On March 7, 2008, privately-held Celldex Therapeutics, Inc. completed its merger with a wholly-owned subsidiary of AVANT Immunotherapeutics, Inc. and, effective October 1, 2008, AVANT changed its name to Celldex Therapeutics, Inc. In connection with the AVANT/Celldex merger, the Company implemented a 1-for-12 reverse stock split of its common stock on March 7, 2008. The merger was accounted for using the purchase method of accounting and was treated as an acquisition by Celldex of AVANT, with Celldex being considered the accounting acquirer even though AVANT was the issuer of common stock and surviving legal entity in the transaction. Because Celldex was determined to be the acquirer for accounting purposes, the historical financial statements of Celldex became the historical financial statements of the Company. Accordingly, the financial statements of the Company prior to the merger reflect the financial position, results of operations and cash flows of pre-merger, privately-held Celldex only.
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