Celldex Therapeutics reports net loss of $13.5M for fourth-quarter of 2009

Celldex Therapeutics, Inc.Mar 4 2010

Celldex Therapeutics, Inc. (NASDAQ: CLDX) today reported financial results for the fourth quarter and year ended December 31, 2009. Celldex reported a net loss of $13.5 million, or $0.43 per share, for the fourth quarter of 2009 compared to a net loss of $7.5 million, or $0.47 per share, for the fourth quarter of 2008. The net loss for the fourth quarter of 2009 included one-time expenses of $4.8 million, or $0.15 per share, incurred in connection with the acquisition of CuraGen Corporation (“CuraGen”). For the twelve months ended December 31, 2009, Celldex reported a net loss of $37.1 million, or $1.87 per share, compared to a net loss of $47.5 million, or $3.34 per share, for the twelve months ended December 31, 2008. The net loss for 2009 included one-time expenses of $7.1 million, or $0.36 per share, sustained as a result of the CuraGen acquisition. At December 31, 2009, Celldex reported cash, cash equivalents and marketable securities of $82.5 million, which the Company believes will be sufficient to meet estimated working capital requirements and fund operations into 2012.

“In 2009, Celldex leveraged the power of our Precision Targeted Immunotherapy Platform to expand and advance a promising pipeline of clinical-stage therapeutic programs, and it is gratifying to see this effort yield meaningful progress in the development of novel treatments for patients. In addition, we enhanced our cash position and thereby, strengthened the capital structure of the Company,” said Anthony S. Marucci, President and Chief Executive Officer. “We begin 2010 with four product candidates in clinical development and a fifth positioned to enter clinical studies later this year. These programs will drive a number of potential value enhancing key events over the course of the year and we look forward to updating shareholders on our continued progress and overall strategic initiatives.”

Fourth Quarter and Recent Highlights

• Completed the acquisition of CuraGen, which enhanced our pipeline of oncology-focused antibodies and increased our cash balance by approximately $70.3 million ($57.8 million net of CuraGen’s convertible debt of $12.5 million).
• Announced positive results from a Phase 1/2 study of CDX-011(formerly CR011-vcMMAE), in patients with heavily pre-treated, locally advanced or metastatic breast cancers. As presented at the 32nd Annual CTRC-AACR San Antonio Breast Cancer Symposium in December 2009, the primary efficacy endpoint for the study was met with significant antitumor activity in patients whose tumors express the target GPNMB. In addition, encouraging results were seen in patients with “triple-negative disease” where treatment options are relatively limited due to lack of hormone receptor or HER2-neu expression. CDX-011 utilizes fully human monoclonal antibodies to deliver the potent cellular toxin, MMAE, directly to tumor cells by targeting GPNMB. GPNMB is a glycoprotein associated with cancer progression and recurrence.
• Received a sublicense income payment of $3 million in February 2010 from TopoTarget A/S (NASDAQ-OMX: TOPO.CO) as a result of the recent co-development and commercialization agreement between TopoTarget and Spectrum Pharmaceuticals, Inc. (NASDAQ: SPPI) for Belinostat, a novel histone deacetylase (HDAC) inhibitor for the treatment of cancer.
• 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).

Key 2010 Objectives

In 2010, we plan to:

• Report final Phase 1/2 data from a clinical study of CDX-011 in patients with advanced melanoma at the American Society of Clinical Oncology (ASCO) conference in June.
• Report additional results from the Phase 1 clinical study of CDX-1307 in patients with advanced epithelial cancers, including breast, colon and pancreatic cancer at the ASCO conference in June.
• Report preliminary data from the Phase 1/2 clinical study of CDX-1401 in patients with malignant solid tumors that express NY-ESO-1.
• Initiate a randomized Phase 2b clinical study of CDX-1307 in combination with immune modulators in patients with muscle-invasive bladder cancer expressing hCG-beta.
• Initiate an expanded Phase 2b clinical study of CDX-011 in patients with GPNMB-expressing breast cancer including triple negative disease.

Further Financial Highlights

The net loss of $13.5 million for the fourth quarter of 2009 represents an increase of $6.0 million when compared to the net loss for the same period in 2008 and is primarily due to an increase in operating expense as a result of the CuraGen acquisition, an increase in interest expense and a decrease in investment income, partially offset by an increase in revenue. R&D expense in the fourth quarter of 2009 increased by $2.0 million compared to R&D expense in 2008 due primarily to increased personnel-related expenses and laboratory materials and services. G&A expenses in the fourth quarter of 2009 increased by $3.5 million to $6.4 million as compared to $2.9 million in 2008, primarily due to an increase in personnel-related expenses and professional services fees in 2009. G&A expenses for this quarter included approximately $3.8 million, or $0.12 per share, of transaction, severance and integration expenses recorded in connection with the CuraGen acquisition. The increase in cash, cash equivalents and marketable securities of $56.5 million from September 30, 2009 includes approximately $70.3 million received in connection with the CuraGen acquisition, partially offset by fourth quarter net loss of $13.5 million.

The net loss of $37.1 million for 2009 represents an improvement of $10.4 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 2009 increased by $3.5 million compared to R&D expense in 2008. This was primarily a result of combining operations of AVANT and Celldex for the full 2009 year and CuraGen related R&D expense of $2.3 million in the fourth quarter 2009, including severance expense of $0.9 million. R&D expenses included increased personnel-related expenses, clinical trials costs related to CDX-011, CDX-1307 and CDX-1401, preclinical costs and facility-related costs. G&A expenses increased by $2.4 million to $17.1 million in 2009 as compared to G&A expense of $14.7 million in 2008, primarily due to severance expense of $3.3 million in 2009 as a result of the CuraGen acquisition.

Revenues for 2009 increased by $7.7 million compared with revenues for 2008. The increase in product development and licensing revenue in 2009 primarily reflects an increase of $2.3 million in revenue from Pfizer related to CDX-110 in 2009. The increase in contracts and grants revenue in 2009 compared to 2008 primarily reflects increased revenues of $1.4 million for work performed for Rockefeller University. In 2009, Celldex also recognized $7.7 million in product royalty revenue related to offsetting royalty expense payable to Cincinnati Children’s Hospital compared to $3.0 million in 2008.

As of December 31, 2009 Celldex had approximately 31.7 million shares outstanding.

Important Information Related to Celldex’s Financial Results

CuraGen Acquisition Financial Details

On October 1, 2009, CuraGen Corporation, formerly a publicly-traded company, merged with a wholly-owned subsidiary of Celldex (the “CuraGen Merger”). In connection with the CuraGen Merger, Celldex issued a total of 15,722,713 shares of Celldex common stock, assumed stock options exercisable into 931,315 shares of Celldex common stock and assumed the obligation for the $12.5 million in CuraGen 4% convertible subordinated debt due in February 2011. Accordingly, the results of operations of CuraGen were included in the results of operations of Celldex beginning October 1, 2009. CuraGen was then merged into Celldex on December 31, 2009. The Company is currently in the process of finalizing its purchase price accounting, including the assets and liabilities related to the acquisition of CuraGen. As a result, the financial statements presented within this release are subject to change.

AVANT/Celldex Merger Financial Details

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.