Celldex second quarter net loss increases to $10.2 million

Celldex Therapeutics, Inc. (NASDAQ: CLDX) today reported financial results for the second quarter ended June 30, 2011. Celldex reported a net loss of $10.2 million, or $0.27 per share, for the second quarter of 2011 compared to a net loss of $9.5 million, or $0.30 per share, for the second quarter of 2010. For the six months ended June 30, 2011, Celldex reported a net loss of $20.3 million, or $0.58 per share, compared to a net loss of $16.1 million, or $0.51 per share, for the six months ended June 30, 2010.

“Celldex achieved critical milestones across multiple corporate objectives”

At June 30, 2011, Celldex reported cash, cash equivalents and marketable securities of $71.2 million, an increase of $26.9 million from March 30, 2011. The increase is due primarily to completion of an underwritten public offering in May, which resulted in net proceeds to Celldex of $33.7 million. The increase was partially offset by operational expenses during the quarter. Celldex believes that interest income on invested funds and current cash, cash equivalents and marketable securities as of June 30, 2011 are sufficient to meet estimated working capital requirements and fund planned operations into 2013.

"Celldex achieved critical milestones across multiple corporate objectives," said Anthony S. Marucci, President and Chief Executive Officer of Celldex. "Most importantly, after consultation with both US and EU regulatory authorities, we have finalized the protocol for the Phase 3 study of rindopepimut in glioblastoma, which will be called ACT IV, and expect to begin enrollment by year-end 2011. In addition, we also secured the financial means to support the initiation of ACT IV while maintaining the forward momentum of our other pipeline programs, netting a total of $33.7 million in an over-subscribed public offering. The significant progress made in the first half of 2011 will support a number of important events over the next 18 months."

Second quarter and recent highlights:

  • Finalized the protocol for the ACT IV Phase 3 randomized, KLH-controlled, double-blind study of rindopepimut. KLH is a biologically active compound that is being utilized to mimic the overt signs of injection site reaction associated with rindopepimut. The primary endpoint of the study will be overall survival. The study is expected to enroll up to 374 patients with newly-diagnosed, resected, EGFRvIII expressing glioblastoma multiforme (GBM) at over 150 clinical sites internationally. Enrollment is expected to begin in the second half of 2011.
  • Continued brisk enrollment of the 120 patient, randomized Phase 2b study of CDX-011 in patients with glycoprotein NMB (GPNMB)-expressing advanced, refractory breast cancer, including triple negative disease. This study is on track to fully accrue by year-end 2011.
  • Completed an underwritten public offering in May of 11.5 million shares of common stock, which netted proceeds to Celldex of approximately $33.7 million, after deducting underwriting discounts, commissions and other estimated offering expenses payable by Celldex. The over-allotment was fully exercised.
  • Hired Ronald A. Pepin, Ph.D., as Senior Vice President and Chief Business Officer, who formerly served as Vice President at Shire and previous as Senior Vice President, Business Development at Medarex, where he completed more than 40 major transactions.

Based on Celldex's ongoing commitment to prioritize the allocation of resources and to focus on its lead programs, the Company has determined that the best path forward for CDX-1307 is to make the candidate available for collaborative development. As such, Celldex has discontinued the Company-sponsored Phase 2 study of CDX-1307 in newly diagnosed muscle-invasive bladder cancer.

Upcoming events:

  • The Company expects to present final median overall survival data from the rindopepimut ACT III study at the Annual Meeting of the Society for Neuro-Oncology to be held November 17-20, 2011 in Orange County, CA.
  • Celldex expects to initiate four new clinical trials by year-end 2011:
    • Phase 3 randomized, KLH-controlled, double-blind study of rindopepimut in patients with newly-diagnosed, resected GBM that express EGFRvIII. The ACT IV study is expected to enroll up to 374 patients at over 150 clinical sites internationally.
    • Phase 2 randomized study of rindopepimut alone or in combination with Avastin® in recurrent or refractory GBM patients.
    • Phase 1 study of CDX-1127, Celldex's first therapeutic antibody program, in patients with solid tumors or hematologic cancers. CDX-1127 is a fully human monoclonal antibody targeting CD27.
    • Phase 1 trial of CDX-301, an immune and stem cell growth factor, in healthy subjects in collaboration with a leading academic institution. Celldex's first priority is to develop this molecule for hematopoietic stem cell transplant, where it has demonstrated improvement of immune cell reconstitution in preclinical in vivo models.

Further Financial Highlights:

Second Quarter Results

The net loss of $10.2 million for the second quarter of 2011 represents an increase of $0.7 million when compared to the net loss for the same period in 2010, primarily due to decreases in revenues and increases in interest expense, partially offset by decreases in research and development (R&D), amortization and general and administrative (G&A) expenses.

Revenues for the second quarter of 2011 decreased when compared to the second quarter of 2010 due primarily to $1.3 million in Pfizer non-cash deferred revenue related to rindopepimut recognized in 2010.

R&D expenses in the second quarter of 2011 and 2010 were $7.2 million and $7.3 million, respectively. Changes in R&D expenses between 2011 and 2010 primarily reflect higher costs related to personnel, the ACT III and ACT IV rindopepimut clinical trials (2010 costs for ACT III were funded by Pfizer), and laboratory supplies and services in 2011, offset by lower contracted research and contract manufacturing expenses as well as lower license/milestone payments to licensors in 2011.

Royalty expense includes product royalty and sublicense royalty fees on the Company's out-licensed programs. The $0.2 million increase in royalty expenses in 2011 primarily reflects an increase in Rotarix®-related royalty fees. Retained interests in Rotarix® net royalties, which were not sold to Paul Royalty Fund, are recorded as product royalty revenue and a corresponding amount that is payable to Cincinnati Children's Hospital (CCH) is recorded as royalty expense.

G&A expenses decreased by $0.4 million to $2.2 million in the second quarter of 2011 as compared to G&A expense of $2.6 million in the second quarter of 2010 primarily due to lower stock-based compensation, patent and other professional services expenses recorded during the three months ended June 30, 2011.

Six Month Results

The net loss of $20.3 million for the first six months of 2011 represents an increased loss of $4.2 million when compared to the net loss of $16.1 million for the same period in 2010. The increased loss resulted from lower revenues and other income amounts, partially offset by lower operating expenses in 2011.

Revenues for the first six months of 2011 decreased by $2.2 million when compared to the first six months of 2010 due primarily to $2.6 million in Pfizer non-cash deferred revenue related to rindopepimut recognized in 2010.

R&D expense in the first six months of 2011 was $14.0 million, an increase of $0.3 million compared to $13.7 million in 2010. Increases in costs related to personnel, the ACT III and ACT IV rindopepimut clinical trials (2010 costs for ACT III were funded by Pfizer), and laboratory supplies and services in 2011 were offset in part by decreases in contracted research and contract manufacturing expenses, facility-related costs and license/milestone payments in 2011. Royalty expenses for 2011 increased by $0.4 million due to increased royalty expense to CCH.

G&A expense decreased by $0.8 million to $4.6 million in 2011 as compared to G&A expense of $5.4 million in the first six months of 2010, primarily due to reduced stock-based compensation, patent and other professional services expenses incurred in 2011.

The $1.2 million decrease in amortization expense for the six months ended June 30, 2011 was primarily due to the amortization in 2010 of intangible assets acquired in connection with the CuraGen acquisition.

The $3.3 million decrease in investment, other income and interest expense, net in 2011 is primarily due to other income of $3.0 million recorded for the TopoTarget sublicense income payment received in 2010.

As of June 30, 2011, Celldex had approximately 44.1 million shares outstanding.

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