~~Table of Contents~~CELLDEX THERAPEUTICS, INC.

~~CELLDEX THERAPEUTICS, INC.~~FORM 10-Q

~~FORM 10-Q~~

For the Quarterly Period Ended ~~September~~June 30, ~~2017~~2020

Table of Contents

		Page
Part I — Financial Information

Item 1. Unaudited Financial Statements		3

Condensed Consolidated Balance Sheets at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016~~2019		3

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019		4

Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019		5

Notes to Unaudited Condensed Consolidated Financial Statements		6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	16	15

Item 3. Quantitative and Qualitative Disclosures About Market Risk	32	29

Item 4. Controls and Procedures	32	29

Part II — Other Information

Item 1A. Risk Factors	33	30

Item 5. Other Information	33	30

Item 6. Exhibits	33	30

~~Signatures~~Exhibit Index	35	30

~~Exhibit Index~~Signatures	34	31

PART I — FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements

CELLDEX THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share amounts)

	September 30, 2017			December 31, 2016			June 30, 2020			December 31, 2019
ASSETS
Current Assets:
Cash and Cash Equivalents	$	54,735		$	42,461		$	68,027		$	11,232
Marketable Securities	85,795			147,315				138,888			53,151
Accounts and Other Receivables	3,013			1,784				329			1,015
Prepaid and Other Current Assets	3,774			4,009				1,748			1,300
Total Current Assets	147,317			195,569				208,992			66,698
Property and Equipment, Net	11,308			13,192				4,044			4,031
Operating Lease Right-of-Use Assets, Net								3,134			3,473
Intangible Assets, Net	67,815			81,487				45,190			48,690
Other Assets	2,002			2,134				41			41
Goodwill	90,976			90,976
Total Assets	$	319,418		$	383,358		$	261,401		$	122,933

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable	$	1,278		$	1,740		$	950		$	1,174
Accrued Expenses	17,845			28,657				6,467			6,499
Current Portion of Long-Term Liabilities	5,792			4,826
Current Portion of Operating Lease Liabilities								1,320			1,944
Current Portion of Other Long-Term Liabilities								2,104			2,026
Total Current Liabilities	24,915			35,223				10,841			11,643
Long-Term Portion of Operating Lease Liabilities								1,720			1,713
Other Long-Term Liabilities	75,351			82,704				10,396			15,551
Total Liabilities	100,266			117,927				22,957			28,907

Commitments and Contingent Liabilities

Stockholders’ Equity:
Convertible Preferred Stock, $.01 Par Value; 3,000,000 Shares Authorized; No Shares Issued and Outstanding at September 30, 2017 and December 31, 2016	—			—
Common Stock, $.001 Par Value; 297,000,000 Shares Authorized; 132,108,478 and 120,516,654 Shares Issued and Outstanding at September 30, 2017 and December 31, 2016, respectively	132			121
Convertible Preferred Stock, $.01 Par Value; 3,000,000 Shares Authorized; No Shares Issued and Outstanding at June 30, 2020 and December 31, 2019								—			—
Common Stock, $.001 Par Value; 297,000,000 Shares Authorized; 39,093,868 and 16,972,077 Shares Issued and Outstanding at June 30, 2020 and December 31, 2019, Respectively								39			17
Additional Paid-In Capital	1,025,108			982,255				1,272,783			1,104,706
Accumulated Other Comprehensive Income	2,588			2,541				2,594			2,619
Accumulated Deficit	(808,676		)	(719,486		)		(1,036,972	)		(1,013,316	)
Total Stockholders’ Equity	219,152			265,431				238,444			94,026
Total Liabilities and Stockholders’ Equity	$	319,418		$	383,358		$	261,401		$	122,933

See accompanying notes to unaudited condensed consolidated financial statements

3
CELLDEX THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)

(In thousands, except per share amounts)

Three Months
Ended
September 30, 2017

Three Months
Ended
September 30, 2016

Nine Months
Ended
September 30, 2017

Nine Months
Ended
September 30, 2016

Three Months
Ended
June 30, 2020 Three Months
Ended
June 30, 2019 Six Months
Ended
June 30, 2020 Six Months
Ended
June 30, 2019
REVENUES:

Product Development and Licensing Agreements

$
1,238

$
493

$
2,488

$
1,551

$ — $ 195 $ 2,285 $ 325
Contracts and Grants

2,686

1,727

6,799

3,362

236 520 680 1,815
Total Revenues

3,924

2,220

9,287

4,913

236 715 2,965 2,140

OPERATING EXPENSES:

Research and Development

21,915

25,009

72,707

78,168

9,705 10,081 21,400 21,232
General and Administrative

5,346

6,950

19,109

24,049

3,528 3,908 7,194 8,804
In-Process Research and Development Impairment

13,000

—

13,000

—

Gain on Fair Value Remeasurement of Contingent Consideration

(4,600
)
—

(200
)
—

Amortization of Acquired Intangible Assets

224

254

672

760

Intangible Asset Impairment 3,500 — 3,500 —
Other Asset Impairment — — — 1,800
(Gain) Loss on Fair Value Remeasurement of Contingent Consideration (5,132 ) (1,017 ) (4,898 ) 502
Total Operating Expenses

35,885

32,213

105,288

102,977

11,601 12,972 27,196 32,338

Operating Loss

(31,961
)
(29,993
)
(96,001
)
(98,064
)
(11,365 ) (12,257 ) (24,231 ) (30,198 )
Investment and Other Income, Net

398

395

1,611

1,841

106 478 347 1,180
Net Loss Before Income Tax Benefit

(31,563
)
(29,598
)
(94,390
)
(96,223
)
(11,259 ) (11,779 ) (23,884 ) (29,018 )
Income Tax Benefit

5,200

—

5,200

—

228 — 228 —
Net Loss

$
(26,363
)
$
(29,598
)
$
(89,190
)
$
(96,223
)
$ (11,031 ) $ (11,779 ) $ (23,656 ) $ (29,018 )

Basic and Diluted Net Loss Per Common Share

$
(0.20
)
$
(0.29
)
$
(0.71
)
$
(0.97
)
$ (0.50 ) $ (0.84 ) $ (1.20 ) $ (2.21 )

Shares Used in Calculating Basic and Diluted Net Loss per Share

129,640

100,672

125,856

99,398

Shares Used in Calculating Basic and Diluted Net Loss Per Share 22,082 13,952 19,744 13,129

COMPREHENSIVE LOSS:

Net Loss

$
(26,363
)
$
(29,598
)
$
(89,190
)
$
(96,223
)
$ (11,031 ) $ (11,779 ) $ (23,656 ) $ (29,018 )
Other Comprehensive Income:

Unrealized Gain (Loss) on Marketable Securities

11

(113
)
47

303

Other Comprehensive Income (Loss):
Unrealized (Loss) Gain on Marketable Securities (3 ) 36 (25 ) 55
Comprehensive Loss

$
(26,352
)
$
(29,711
)
$
(89,143
)
$
(95,920
)
$ (11,034 ) $ (11,743 ) $ (23,681 ) $ (28,963 )

See accompanying notes to unaudited condensed consolidated financial statements
4
CELLDEX THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(Unaudited)

(In thousands)

Nine Months
Ended
September 30, 2017

Nine Months
Ended
September 30, 2016

Six Months
Ended
June 30, 2020 Six Months
Ended
June 30, 2019
Cash Flows from Operating Activities:

Cash Flows From Operating Activities:
Net Loss

$
(89,190
)
$
(96,223
)
$ (23,656 ) $ (29,018 )
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:

Depreciation and Amortization

3,392

2,135

2,313 2,505
Amortization of Intangible Assets

672

760

Amortization and Premium of Marketable Securities, Net

(171
)
768

(335 ) (652 )
Loss on Sale or Disposal of Assets

6

74

In-Process Research and Development Impairment

13,000

—

Gain on Fair Value Remeasurement of Contingent Consideration

(200
)
—

Income Tax Benefit

(5,200
)
—

(Gain) Loss on Sale or Disposal of Assets (20 ) 7
Intangible Asset Impairment 3,500 —
Other Asset Impairment — 1,800
(Gain) Loss on Fair Value Remeasurement of Contingent Consideration (4,898 ) 502
Non-Cash Income Tax Benefit (228 ) —
Stock-Based Compensation Expense

9,728

11,709

1,408 3,157
Non-Cash Expense

—

1,638

Changes in Operating Assets and Liabilities:

Accounts and Other Receivables

(1,229
)
(609
)
686 1,992
Prepaid and Other Current Assets

525

(325
)
(436 ) (137 )
Other Assets

132

—

Accounts Payable and Accrued Expenses

(10,888
)
(11,560
)
(254 ) (1,598 )
Other Liabilities

(987
)
(1,054
)
(1,412 ) (2,833 )
Net Cash Used in Operating Activities

(80,410
)
(92,687
)
(23,332 ) (24,275 )

Cash Flows from Investing Activities:

Cash Flows From Investing Activities:
Sales and Maturities of Marketable Securities

183,683

194,915

47,000 67,386
Purchases of Marketable Securities

(122,235
)
(149,877
)
(132,439 ) (58,565 )
Investment in Other

—

(1,801
)
Acquisition of Property and Equipment

(1,598
)
(2,113
)
(1,145 ) (484 )
Net Cash Provided by Investing Activities

59,850

41,124

Proceeds from Sale or Disposal of Assets 20 —
Net Cash (Used in) Provided by Investing Activities (86,564 ) 8,337

Cash Flows from Financing Activities:

Cash Flows From Financing Activities:
Net Proceeds from Stock Issuances

32,642

10,666

166,667 11,363
Proceeds from Issuance of Stock from Employee Benefit Plans

192

532

24 9
Issuance of Term Loan 2,962 —
Payment of Term Loan (2,962 ) —
Net Cash Provided by Financing Activities

32,834

11,198

166,691 11,372

Net Increase (Decrease) in Cash and Cash Equivalents

12,274

(40,365
)
56,795 (4,566 )
Cash and Cash Equivalents at Beginning of Period

42,461

72,108

11,232 24,310
Cash and Cash Equivalents at End of Period

$
54,735

$
31,743

$ 68,027 $ 19,744

Non-cash Investing Activities

Acquisition of Property and Equipment Included in Accounts Payable and Accrued Expenses

$
75

$
65

Non-cash Supplemental Disclosure

Shares Issued to Former Kolltan Executive for Settlement of Severance

$
302

$
—

Accrued construction in progress $ 22 $ 55

See accompanying notes to unaudited condensed consolidated financial statements
5
CELLDEX THERAPEUTICS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
~~September~~June 30, ~~2017~~2020

(1) Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by Celldex Therapeutics, Inc. (the “Company” or “Celldex”) in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and reflect the operations of the Company and its wholly-owned subsidiary.~~In June 2017, the Company liquidated its wholly-owned subsidiary, Celldex Therapeutics Europe GmbH.~~ All intercompany balances and transactions have been eliminated in consolidation.

These interim financial statements do not include all the information and footnotes required by U.S. GAAP for annual financial statements and should be read in conjunction with the audited financial statements for the year ended December 31, ~~2016,~~2019, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March ~~14, 2017.~~26, 2020. In the opinion of management, the interim financial statements reflect all normal recurring adjustments necessary to fairly state the Company’s financial position and results of operations for the interim periods presented. The year-end condensed balance sheet data presented for comparative purposes was derived from audited financial statements but does not include all disclosures required by U.S. GAAP.

The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for any future interim period or the fiscal year ending December 31, ~~2017.~~2020.

At ~~September~~June 30, ~~2017,~~2020, the Company had cash, cash equivalents and marketable securities of ~~$140.5~~$206.9 million. The Company has had recurring losses and incurred a loss of ~~$89.2~~$23.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2020. Net cash used in operations for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 was ~~$80.4~~$23.3 million. The Company believes that the cash, cash equivalents and marketable securities at ~~November 7, 2017~~August 6, 2020 will be sufficient to meet estimated working capital requirements and fund planned operations for at least the next twelve months from the date of issuance of these financial statements.

During the next twelve months and beyond, the Company ~~will~~may take further steps to raise additional capital to meet its long-term liquidity ~~needs. These capital raising activities may include,~~needs including, but may not be limited to, one or more of the following: the licensing of drug candidates with existing or new collaborative partners, possible business combinations, issuance of debt, or the issuance of common stock or other securities via private placements or public offerings. ~~While~~Although the Company ~~may seek~~has been successful in raising capital ~~through a number of means,~~in the past, there can be no assurance that additional financing will be available on acceptable terms, if at all, and the Company’s negotiating position in capital-raising efforts may worsen as existing resources are used. There is also no assurance that the Company will be able to enter into further collaborative relationships. Additional equity financings may be dilutive to the Company’s stockholders; debt financing, if available, may involve significant cash payment obligations and covenants that restrict the Company’s ability to operate as a business; and licensing or strategic collaborations may result in royalties or other terms which reduce the Company’s economic potential from products under development. The Company’s ability to continue funding its planned operations into and beyond twelve months from the issuance date is also dependent on the timing and manner of payment of ~~future~~ contingent milestones from the Kolltan acquisition, in the event that the Company achieves the drug candidate milestones related to those payments. The Company, at its option, may decide to pay those milestone payments in cash, shares of its common stock or a combination thereof. If
6
In December 2019, a novel strain of coronavirus, now referred to as COVID-19, surfaced in Wuhan, China. The virus continues to spread globally, has been declared a pandemic by the World Health Organization and has spread to hundreds of countries, including the United States. The impact of this pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world. In an effort to halt the outbreak of COVID-19, various states, including New Jersey, Massachusetts and Connecticut, where the Company ~~is unable to raise~~has office, research and manufacturing facilities, have placed significant restrictions on travel and many businesses have announced extended closures which could adversely impact our operations. To date, the ~~funds necessary to meet its liquidity needs, it may have to delay~~Company has not experienced significant delays or ~~discontinue the development of one or more programs, discontinue or delay~~disruptions in planned and ongoing ~~or anticipated~~preclinical and clinical trials, ~~license out programs earlier than expected, raise funds~~manufacturing or shipping. Potential impacts to our business include delays in planned and ongoing preclinical and clinical trials including enrollment of patients, disruptions in time and resources provided by independent clinical investigators, contract research organizations, other third-party service providers, temporary closures of our facilities, disruptions or restrictions on our employees’ ability to travel, and delays in manufacturing and/or shipments to and from third party suppliers and contract manufacturers for APIs and drug product. Any prolonged negative impacts to our business could materially impact our operating results and could lead to impairments of our Intangible (IPR&D) assets with a carrying value of $45.2 million at ~~a significant discount or on other unfavorable terms, if at all, or sell all or a part of the Company.~~June 30, 2020.

(2) Significant Accounting Policies

The significant accounting policies used in preparation of these condensed consolidated financial statements on Form 10-Q for the ~~quarterly period~~three and six months ended ~~September~~June 30, ~~2017~~2020 are consistent with those discussed in Note 2 to the financial statements in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2019, except ~~for~~as it relates to the adoption of new accounting standards during the first ~~nine~~six months of ~~2017~~2020 as discussed below.

~~Newly-Adopted~~Newly Adopted Accounting Pronouncements

On January 1, ~~2017,~~2020, the Company adopted a new ~~U.S. GAAP~~ accounting standard ~~which involves several aspects~~that modifies certain disclosure requirements for fair value measurements. For instance, the Company is required to disclose weighted average information for significant unobservable inputs for all Level 3 fair value measurements. The adoption of ~~the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification~~this new guidance did not have a material impact on the ~~statement of cash flows. The Company elected~~Company’s consolidated financial statements and related disclosures. Refer to ~~continue~~Note 3 for the disclosures related to ~~estimate forfeitures expected to occur to determine stock-based compensation expense. Upon adoption,~~ the Company’s gross deferred tax assets and corresponding valuation allowance each increased by $17.7 million related to tax deductions from the exercise of stock options that previously would have been credited to additional paid-in-capital when realized.level 3 fair value measurements.
On January 1, ~~2017,~~2020, the Company adopted a new ~~U.S. GAAP~~ accounting standard ~~which simplifies how an entity~~that clarifies the interaction between the accounting guidance for collaborative arrangements and revenue from contracts with customers. The amendments clarify that certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606, when the collaborative arrangement participant is ~~required to test goodwill for impairment. A goodwill impairment will be measured by~~a customer in the ~~amount by which~~context of a ~~reporting unit’s carrying value exceeds its fair value, with~~unit of account. The adoption of this standard did not have a material impact on our consolidated financial statements, as we have no arrangements within the ~~amount~~scope of ~~impairment not to exceed the carrying amount of goodwill.~~ASC 808.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the ~~Financial Accounting Standards Board~~FASB or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s consolidated financial statements upon adoption.

In ~~May 2014,~~June 2016, the FASB issued ~~a new U.S GAAP accounting~~guidance on the Measurement of Credit Losses on Financial Instruments. The guidance requires that credit losses be reported using an expected losses model rather than the incurred losses model that is currently used, and establishes additional disclosures related to credit risks. For available-for-sale debt securities with unrealized losses, the standard that updates guidance and disclosure requirements for recognizing revenue. The new revenue recognition standard provides a five-step model for recognizing revenue from contracts with customers. The core principle is that a company should recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration to which the entity expectsnow requires allowances to be ~~entitled in exchange for those goods and services. The new~~recorded instead of reducing the amortized cost of the investment. This standard will be effective for the Company on January 1, 2018 and can be applied using one of two methods: retrospectively to each prior period presented or a modified retrospective application by recognizing a cumulative-effect adjustment as a component of equity as of the date of adoption. The Company expects to adopt the new revenue standard using the modified retrospective application method. During the fourth quarter of 2017, the Company plans to finalize its assessments over the impact that these standards may have on its consolidated financial statements and disclosures. As a result of adopting this standard, the Company plans to implement additional processes and controls, including additional disclosures, to comply with the new standard.
In February 2016, the FASB issued a new U.S. GAAP accounting standard which requires that all lessees recognize the assets and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The new standard will be effective for the Company on January 1, 2019. The Company is2023. We are currently evaluating the potential impact that this standard may have on the Company’s consolidated financial ~~statements.~~statements and related disclosures.

7
~~In August 2016,~~ the FASB issued new U.S. GAAP guidance which clarifies the classification of certain cash receipts and payments in the statement of cash flows. This standard is effective for the company on January 1, 2018. The adoption of this new guidance is not expected to have a material impact on the Company’s consolidated financial statements.

(3) Fair Value Measurements

The following tables set forth the Company’s financial assets and liabilities subject to fair value measurements:

As of
September 30, 2017

Level 1

Level 2

Level 3

As of
June 30, 2020 Level 1 Level 2 Level 3

(In thousands)

(In thousands)
Assets:

Money market funds and cash equivalents

$
42,032

$
—

$
42,032

$
—

$ 54,597     — $ 54,597 —
Marketable securities

85,795

—

85,795

—

138,888 — 138,888 —

$
127,827

$
—

$
127,827

$
—

$ 193,485 — $ 193,485 —

Liabilities:

Kolltan acquisition contingent consideration

$
44,000

$
—

$
—

$
44,000

$ 7,587 — — $ 7,587

$
44,000

$
—

$
—

$
44,000

$ 7,587 — — $ 7,587

As of
December 31, 2016

Level 1

Level 2

Level 3

(In thousands)

Assets:

Money market funds and cash equivalents

$
20,445

$
—

$
20,445

$
—

Marketable securities

147,315

—

147,315

—

$
167,760

$
—

$
167,760

$
—

Liabilities:

Kolltan acquisition contingent consideration

$
44,200

$
—

$
—

$
44,200

$
44,200

$
—

$
—

$
44,200

As of
December 31, 2019 Level 1 Level 2 Level 3
(In thousands)
Assets:
Money market funds and cash equivalents $ 4,024 — $ 4,024     —
Marketable securities 53,151 — 53,151 —
$ 57,175 — $ 57,175 —
Liabilities:
Kolltan acquisition contingent consideration $ 12,485 — — $ 12,485
$ 12,485 — — $ 12,485
The Company’s financial assets consist mainly of ~~cash and~~money market funds, cash equivalents and marketable securities and are classified as Level 2 within the valuation hierarchy. The Company values its marketable securities utilizing independent pricing services which normally derive security prices from recently reported trades for identical or similar securities, making adjustments based on significant observable transactions. At each balance sheet date, observable market inputs may include trade information, broker or dealer quotes, bids, offers or a combination of these data sources.

The following table reflects the activity for the Company’s contingent consideration liabilities measured at fair value using Level 3 inputs for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 (in thousands):

Other Long-Term
Liabilities:
Contingent
Consideration

Balance at December 31, 2016

$
44,200

Fair value adjustments included in operating expenses

(200
)
Balance at September 30, 2017

$
44,000

Other Liabilities:
Contingent
Consideration
Balance at December 31, 2019 $ 12,485
Fair value adjustments included in operating expenses (4,898 )
Balance at June 30, 2020 $ 7,587

The valuation technique used to measure fair value of the Company’s Level 3 liabilities, which consist of contingent consideration related to the acquisition of Kolltan in 2016, ~~(Note 11),~~ was primarily an income approach. ~~The Company may be required to pay future consideration of up to $172.5 million that is contingent upon the achievement of specified development, regulatory approvals or sales-based milestone events.~~ The significant unobservable inputs used in the fair value measurement of the contingent consideration are estimates including probability of success, discount rates and amount of time until the conditions of the milestone payments are met. As of June 30, 2020, the weighted average discount rate used in calculating the fair value of contingent consideration was 11.6% (with a range of 11.5% to 12.2%) and the weighted average amount of time until the conditions of the milestone payments are met was 3 years.

8
During the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, the Company recorded a ~~$4.6~~$5.1 million and ~~a $0.2~~$4.9 million gain on fair value remeasurement of contingent consideration, respectively, primarily due to updated assumptions for CDX-3379 related milestones due to the discontinuation of the CDX-3379 program and the passage of time. During the three and six months ended June 30, 2019, the Company recorded a ~~reduction in~~$1.0 million gain and $0.5 million loss on fair value ~~attributed to the milestones related to the Company’s anti-KIT program and partially offset by losses related~~remeasurement of contingent consideration, respectively, primarily due to changes in discount rates and the passage of ~~time affecting remaining milestones.~~time. The ~~Company’s anti-KIT program includes CDX-0158~~assumptions related to determining the fair value of contingent consideration include a significant amount of judgment, and ~~CDX-0159,~~any changes in the underlying estimates could have a ~~variant~~material impact on the amount of ~~CDX-0158. CDX-0159 is being fully developed in-house with the intention of replacing CDX-0158~~contingent consideration adjustment recorded in ~~clinical development. The Company expects manufacturing and IND-enabling efforts for CDX-0159 will be completed in 2018.~~any given period.

The Company did not have any transfers in or out of Level 3 assets or liabilities ~~between the fair value measurement classifications~~ during the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2020.
(4) Marketable Securities

The following is a summary of marketable debt securities, classified as available-for-sale:

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair Value

(In thousands)

September 30, 2017

Marketable securities

U.S. government and municipal obligations

Maturing in one year or less

$
13,725

$
5

$
(3
)
$
13,727

Maturing after one year through three years

—

—

—

—

Total U.S. government and municipal obligations

$
13,725

$
5

$
(3
)
$
13,727

Corporate debt securities

Maturing in one year or less

$
72,078

$
3

$
(13
)
$
72,068

Maturing after one year through three years

—

—

—

—

Total corporate debt securities

$
72,078

$
3

$
(13
)
$
72,068

Total marketable securities

$
85,803

$
8

$
(16
)
$
85,795

December 31, 2016

Marketable securities

U.S. government and municipal obligations

Maturing in one year or less

$
52,754

$
5

$
(12
)
$
52,747

Maturing after one year through three years

296

8

—

304

Total U.S. government and municipal obligations

$
53,050

$
13

$
(12
)
$
53,051

Corporate debt securities

Maturing in one year or less

$
94,320

$
—

$
(56
)
$
94,264

Maturing after one year through three years

—

—

—

—

Total corporate debt securities

$
94,320

$
—

$
(56
)
$
94,264

Total marketable securities

$
147,370

$
13

$
(68
)
$
147,315

Gross Unrealized
Amortized
Cost Gains Losses Fair
Value
(In thousands)
June 30, 2020
U.S. government and municipal obligations (maturing in one year or less) $ 79,937 $ — $ — $ 79,937
Corporate debt securities (maturing in one year or less) 58,954 10 (13 ) 58,951
Total Marketable Securities $ 138,891 $ 10 $ (13 ) $ 138,888

December 31, 2019
U.S. government and municipal obligations (maturing in one year or less) $ 18,509 $ 13 $ — $ 18,522
Corporate debt securities (maturing in one year or less) 34,619 13 (3 ) 34,629
Total Marketable Securities $ 53,128 $ 26 $ (3 ) $ 53,151

The Company holds ~~investment grade~~investment-grade marketable securities, and none were ~~considered to be other-than-temporarily impaired~~in a continuous unrealized loss position for more than twelve months as of ~~September~~June 30, ~~2017.~~2020 and December 31, 2019. The unrealized losses are attributable to changes in interest rates and the Company does not believe any unrealized losses represent other-than-temporary impairments. Marketable securities include ~~$0.3 million and $0.6~~$0.2 million in accrued interest at ~~September~~June 30, ~~2017~~2020 and December 31, ~~2016, respectively.~~2019.

(5) Intangible Assets ~~and Goodwill~~

~~Intangible Assets, Net~~
~~The table below presents information for~~At June 30, 2020 and December 31, 2019, the ~~Company’s finite-lived~~Company recorded indefinite-lived intangible assets ~~that are subject to amortization~~of $45.2 million and ~~indefinite-lived intangible assets:~~

September 30, 2017

December 31, 2016

Estimated
Life

Gross
Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

(In thousands)

Finite-lived Intangible Assets:

License Rights

16 years

$
14,500

$
(7,175
)
$
7,325

$
14,500

$
(6,503
)
$
7,997

Indefinite-lived Intangible Assets:

IPR&D

Indefinite

60,490

—

60,490

73,490

—

73,490

Total Intangible Assets, Net

$
74,990

$
(7,175
)
$
67,815

$
87,990

$
(6,503
)
$
81,487

$48.7 million, respectively. Indefinite-lived intangible assets consist of acquired in-process research and development (“IPR&D”) related to the development of ~~glembatumumab vedotin acquired in connection with the CuraGen acquisition and the development of~~CDX-3379, the anti-KIT program ~~CDX-3379~~(including CDX-0159) and the TAM ~~programs acquired~~program. The Company evaluated the CDX-3379 IPR&D asset for potential impairment as a result of the discontinuation of the CDX-3379 program. The Company concluded that the CDX-3379 IPR&D asset was fully impaired, and a non-cash impairment charge of $3.5 million was recorded for the three months ended June 30, 2020. CDX-0159 is in ~~connection with~~Phase 1 development and the ~~Kolltan acquisition.~~TAM program is in preclinical development. As of ~~September~~June 30, ~~2017, no~~2020, none of the Company’s IPR&D ~~asset~~assets had reached technological feasibility nor did any have alternative future uses.

The Company performs an impairment test on IPR&D assets at least annually, or more frequently if events or changes in circumstances indicate that IPR&D assets may be impaired. ~~During the three and nine months ended September 30, 2017, the~~
Company recorded a non-cash partial impairment charge of $13.0 million on the anti-KIT program IPR&D assets acquired from Kolltan. The Company determined that changes in projected development and regulatory timelines related to the anti-KIT program taken together constituted a triggering event that required the Company to evaluate the intangible asset for impairment. As part of this evaluation, the present value of probability adjusted estimated net future cash flows was used to determine the fair value of the program and compared to the carrying value of the program. As a result of this impairment assessment, the Company concluded that a non-cash partial impairment charge of $13.0 million on the anti-KIT program IPR&D asset acquired from Kolltan be recorded for the three and nine months ended September 30, 2017 for the amount the fair value of the anti-KIT program exceeded its carrying amount.
Due to the nature of IPR&D projects, the Company may experience future delays or failures to obtain regulatory approvals to conduct clinical trials, failures of such clinical trials or other failures to achieve a commercially viable product, and as a result, may recognize further impairment losses in the future.

9
~~Goodwill~~
(6) Other Assets

~~There~~In 2016, the Company entered into a research and collaboration agreement with an undisclosed private company to access novel technologies and paid $3.5 million to support research activities and make an investment in the private company. The Company recorded $1.8 million to other assets related to this investment and $1.7 million was recorded to research and development expense over the term of the research activities. The stock of the private company does not have ~~been no changes~~a readily determinable fair value, and therefore it is measured at cost less impairment, if any. Based on information received in April 2019, it was determined that there was a deterioration of the private company’s financial condition due to a working capital deficiency and an inability to secure additional funding as of March 31, 2019. Therefore, the ~~carrying amount~~Company concluded that the investment was impaired, and a non-cash impairment charge of ~~goodwill~~$1.8 million was recorded during the ~~nine~~first quarter of 2019. The Company assesses the private company’s financial condition on a quarterly basis. There was no change in the value of the investment during the six months ended ~~September~~June 30, ~~2017. The Company performs an annual impairment test of goodwill as of July 1 each year. The Company tested goodwill for impairment as of July 1, 2017 and concluded that goodwill was not impaired.~~2020.

~~(6)~~(7) Other Long-Term Liabilities

Other long-term liabilities include the following:

September 30, 2017

December 31, 2016

(In thousands)

Deferred Rent

$
669

$
398

Net Deferred Tax Liabilities related to IPR&D

22,854

28,054

Deferred Income from Sale of Tax Benefits

8,940

9,436

Accrued Lease Restructuring

854

1,154

Long-Term Severance

100

539

Contingent Milestones

44,000

44,200

Deferred Revenue

3,726

3,749

Total

81,143

87,530

Less Current Portion

(5,792
)
(4,826
)
Long-Term Portion

$
75,351

$
82,704

June 30,
2020 December 31,
2019
(In thousands)
Net Deferred Tax Liabilities Related to IPR&D (Note 12) $ 2,779 $ 3,007
Deferred Income From Sale of Tax Benefits 1,831 1,831
Contingent Milestones (Note 3) 7,587 12,485
Deferred Revenue (Note 11) 303 254
Total 12,500 17,577
Less Current Portion (2,104 ) (2,026 )
Long-Term Portion $ 10,396 $ 15,551

In November 2015, ~~December 2014, January 2014 and January 2013,~~ the Company received approval from the New Jersey Economic Development Authority and agreed to sell New Jersey tax benefits of $9.8 million ~~$1.9 million, $1.1 million and $0.8 million~~ to an independent third party for $9.2 ~~million, $1.8 million, $1.0 million and $0.8 million, respectively.~~million. Under the agreement, the Company must maintain a base of operations in New Jersey for five years or the tax benefits must be paid back on a pro-rata basis based on the number of years completed. The Company recognized $0.0 million ~~and $0.5 million~~ in other income related to the sale of these tax benefits ~~for~~during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017, respectively,~~2020 and $0.0 million and ~~$0.6~~$0.2 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2019, respectively.

In December 2016, the Company decided not to occupy the 11,500 square feet of expansion space (“Needham Expansion”) at its Needham, Massachusetts facility. The Company agreed to lease the Needham Expansion in August 2015 and the term of the lease expires in July 2020. In October 2017, the Company entered into a sublease agreement for the Needham Expansion. In March 2017, the Company terminated its lease in Branford, CT and consolidated its Connecticut operations in its New Haven, CT facility. The Company recorded restructuring expense of $0.2 million to general and administrative expense related to the Branford, CT lease termination. The activity related to accrued lease restructuring for the nine months ended September 30, 2017 is presented below (in thousands):

Accrued Lease
Restructuring

Balance at December 31, 2016

$
1,154

Expense

170

Payments

(470
)
Balance at September 30, 2017

$
854

~~(7)~~(8) Stockholders’ Equity

In May 2016, the Company ~~and Cantor Fitzgerald & Co. (“Cantor”)~~ entered into a controlled equity offering sales agreement ~~(“2016~~(the “Cantor Agreement”) with Cantor ~~Agreement”~~Fitzgerald & Co. (“Cantor”) to allow the Company to issue and sell shares of its common stock ~~having an aggregate offering price of up to $60.0 million~~ from time to time through Cantor, acting as agent. During the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, the Company issued ~~11,326,363~~6.7 million shares of ~~its~~ common stock ~~under~~pursuant to the ~~2016~~ Cantor Agreement resulting in net proceeds ~~to the Company~~ of ~~$32.6~~$25.3 million after deducting commission and offering expenses. At ~~September~~June 30, ~~2017,~~2020, the Company had ~~$11.7~~$18.3 million remaining in aggregate gross offering price available under a prospectus supplement filed pursuant to the ~~2016 Cantor Agreement. In October 2017,~~agreement.
During the three months ended June 30, 2020, the Company ~~completed sales under the 2016 Cantor Agreement and~~ issued ~~3,871,709~~15,384,614 shares of its common stock in an underwritten public offering resulting in net proceeds to the Company of ~~$11.3 million.~~$141.4 million, after deducting underwriting fees and offering expenses.
10
The changes in Stockholders’ Equity during the three and six months ended June 30, 2020 and 2019 are summarized below:
Common
Stock
Shares Common
Stock Par
Value Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Income Accumulated
Deficit Total
Stockholders’
Equity
(In thousands, except share amounts)
Consolidated Balance at December 31, 2019 16,972,077 $ 17 $ 1,104,706 $ 2,619 $ (1,013,316 ) $ 94,026
Shares Issued under Stock Option and Employee Stock Purchase Plans 12,573 — 24 — — 24
Shares Issued in Connection with Cantor Agreement 746,152 1 1,613 — — 1,614
Share-Based Compensation — — 686 — — 686
Unrealized Loss on Marketable Securities — — — (22 ) — (22 )
Net Loss — — — — (12,625 ) (12,625 )
Consolidated Balance at March 31, 2020 17,730,802 $ 18 $ 1,107,029 $ 2,597 $ (1,025,941 ) $ 83,703
Shares Issued in Connection with Cantor Agreement 5,978,452 6 23,686 — — 23,692
Shares Issued in Underwritten Offering 15,384,614 15 141,346 — — 141,361
Share-Based Compensation — — 722 — — 722
Unrealized Loss on Marketable Securities — — — (3 ) — (3 )
Net Loss — — — — (11,031 ) (11,031 )
Consolidated Balance at June 30, 2020 39,093,868 $ 39 $ 1,272,783 $ 2,594 $ (1,036,972 ) $ 238,444
Common
Stock
Shares Common
Stock Par
Value Additional
Paid-In
Capital Accumulated
Other
Comprehensive
Income Accumulated
Deficit Total
Stockholders’
Equity
(In thousands, except share amounts)
Consolidated Balance at December 31, 2018 11,957,635 $ 12 $ 1,083,903 $ 2,583 $ (962,438 ) $ 124,060
Shares Issued under Stock Option and Employee Stock Purchase Plans 3,507 — 9 — — 9
Shares Issued in Connection with Cantor Agreement 883,569 1 4,150 — — 4,151
Share-Based Compensation — — 1,693 — — 1,693
Unrealized Gain on Marketable Securities — — — 19 — 19
Net Loss — — — — (17,239 ) (17,239 )
Consolidated Balance at March 31, 2019 12,844,711 $ 13 $ 1,089,755 $ 2,602 $ (979,677 ) $ 112,693
Shares Cancelled under Stock Option and Employee Stock Purchase Plans (222 ) — — — — —
Shares Issued in Connection with Cantor Agreement 1,972,428 2 7,210 — — 7,212
Share-Based Compensation — — 1,464 — — 1,464
Unrealized Gain on Marketable Securities — — — 36 — 36
Net Loss — — — — (11,779 ) (11,779 )
Consolidated Balance at June 30, 2019 14,816,917 $ 15 $ 1,098,429 $ 2,638 $ (991,456 ) $ 109,626
11

~~(8)~~(9) Stock-Based Compensation

A summary of stock option activity for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 is as follows:

Shares

Weighted
Average
Exercise
Price
Per Share

Weighted
Average
Remaining
Contractual
Term (In Years)

Shares Weighted
Average
Exercise
Price
Per Share Weighted
Average
Remaining
Contractual
Term (In Years)
Options Outstanding at December 31, 2016

10,218,710

$
11.14

6.5

Options Outstanding at December 31, 2019 1,699,202 $ 44.87 8.0
Granted

2,309,900

$
2.34

1,439,175 $ 10.36
Exercised

—

$
—

— —
Canceled

(945,792
)
$
9.21

(53,090 ) $ 46.03
Options Outstanding at September 30, 2017

11,582,818

$
9.54

5.9

Options Vested and Expected to Vest at September 30, 2017

11,460,583

$
9.59

5.8

Options Exercisable at September 30, 2017

7,360,799

$
11.05

4.1

Options Outstanding at June 30, 2020 3,085,287 $ 28.76 8.69
Options Vested and Expected to Vest at June 30, 2020 2,875,684 $ 30.23 8.62
Options Exercisable at June 30, 2020 821,537 $ 84.93 6.39
Shares Available for Grant Under the 2008 Plan

7,780,663

938,178

The weighted average grant-date fair value of stock options granted during the ~~nine~~three and six month period ended ~~September~~June 30, ~~2017~~2020 was ~~$1.57.~~$7.96 and $7.95, respectively. Stock-based compensation expense for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 was recorded as follows:

Three months ended September 30,

Nine months ended September 30,

Three months ended June 30, Six months ended June 30,

2017

2016

2017

2016

2020 2019 2020 2019

(In thousands)

(In thousands) (In thousands)
Research and development

$
1,546

$
2,042

$
5,310

$
5,866

$ 342 $ 654 $ 652 $ 1,410
General and administrative

1,193

1,754

4,418

5,843

380 810 756 1,747
Total stock-based compensation expense

$
2,739

$
3,796

$
9,728

$
11,709

$ 722 $ 1,464 $ 1,408 $ 3,157

The fair ~~value~~values of employee and director stock options granted during the three and ~~nine month periods~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016~~2019 were valued using the Black-Scholes ~~option-pricing~~option pricing model with the following assumptions:

Three months ended September 30,

Nine months ended September 30,

2017

2016

2017

2016

Expected stock price volatility

76
%
76
%
76 — 77
%
70 — 77
%
Expected option term

6.0 years

6.0 years

6.0 years

6.0 years

Risk-free interest rate

2.0
%
1.4
%
2.0 — 2.3
%
1.4 — 1.6
%
Expected dividend yield

None

None

None

None

Three months ended June 30, Six months ended June 30,
2020 2019 2020 2019
Expected stock price volatility 97% 91% 91 – 97% 91%
Expected option term 6.0 Years 6.0 Years 6.0 Years 6.0 Years
Risk-free interest rate 0.5% 1.9 – 2.4% 0.5 – 0.6% 1.9 – 2.5%
Expected dividend yield None None None None
~~(9)~~
(10) Accumulated Other Comprehensive Income

The changes in accumulated other comprehensive income, which is reported as a component of stockholders’ equity, for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 are summarized below:

Unrealized (Loss)
Gain on
Marketable
Securities

Foreign
Currency Items

Total

(In thousands)

Balance at December 31, 2016

$
(55
)
$
2,596

$
2,541

Other comprehensive gain

47

—

47

Balance at September 30, 2017

$
(8
)
$
2,596

$
2,588

Unrealized
Gain/(Loss) on
Marketable
Securities Foreign
Currency Items Total
(In thousands)
Balance at December 31, 2019 $ 23 $ 2,596 $ 2,619
Other comprehensive loss (25 ) — (25 )
Balance at June 30, 2020 $ (2 ) $ 2,596 $ 2,594

No amounts were reclassified out of accumulated other comprehensive income during the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2020.

~~(10)~~
12
(11) Revenue

~~Rockefeller University (Rockefeller)~~Product Development and Licensing Revenue

~~In 2013, the~~The Company entered into an agreement with Rockefeller University in September 2013, as amended, ~~with Rockefeller~~(the “Rockefeller Agreement”) pursuant to which the Company performs manufacturing and development services for Rockefeller University for their portfolio of antibodies against HIV. This portfolio was licensed to Gilead Sciences in January 2020 from Rockefeller University (“Rockefeller Transaction”). Pursuant to the Rockefeller Agreement, the Company received an upfront payment of $1.8 million as a result of the Rockefeller Transaction which was recorded to revenue during the first quarter of 2020. The Company is eligible to receive additional payments from Rockefeller University if this portfolio progresses through clinical and commercial development.
Contract and Grants Revenue
The Company has entered into the Rockefeller Agreement and an agreement with Duke University pursuant to which the Company performs manufacturing and research and development services ~~for Rockefeller.~~on a time-and-materials basis or at a negotiated fixed-price. The Company ~~bills Rockefeller quarterly for actual time and direct costs incurred and records those amounts to revenue in the quarter the services are performed. The Company recorded $0.3~~recognized $0.2 million and ~~$1.4~~$0.5 million in revenue ~~related to the Rockefeller agreement~~under these agreements during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, respectively, and ~~$1.1 million and $1.8 million during the three and nine months ended September 30, 2016, respectively.~~
~~Bristol-Myers Squibb Company (BMS)~~
~~In 2014, the Company entered into a clinical trial collaboration with BMS to evaluate the safety, tolerability and preliminary efficacy of varlilumab and Opdivo~~®, BMS’s PD-1 immune checkpoint inhibitor, in a Phase 1/2 study. Under the terms of this clinical trial collaboration, BMS made a one-time payment to the Company of $5.0 million and BMS and the Company amended the terms of the Company’s existing license agreement with Medarex, which was acquired by BMS, related to the Company’s CD27 program whereby certain future milestone payments were waived and future royalty rates were reduced that may have been due from the Company to Medarex. In return, BMS was granted a time-limited right of first negotiation if the Company wishes to out-license varlilumab. The companies also agreed to work exclusively with each other to explore anti-PD-1 antagonist antibody and anti-CD27 agonist antibody combination regimens. The clinical trial collaboration provides that the companies share development costs and that the Company will be responsible for conducting the ongoing Phase 1/2 study.
The Company has determined that its performance obligations under the BMS agreement, which primarily include performing research and development, supplying varlilumab and participating in the joint development committee, should be accounted for as a single unit of accounting and estimated that its performance period under the BMS agreement would be 5 years. Accordingly, the $5.0 million up-front payment was initially recorded as deferred revenue and is being recognized as revenue on a straight-line basis over the estimated 5-year performance period using the Contingency Adjusted Performance Model (“CAPM”). The BMS agreement also provides for BMS to reimburse the Company for 50% of the external costs incurred by the Company in connection with the clinical trial. The BMS payments are recognized as revenue under the CAPM. The Company recorded $0.9 million and $2.1 million in revenue related to the BMS agreement during the three and nine months ended September 30, 2017, respectively, and $0.5$0.4 million and $1.5 million during the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2019, respectively.

~~International AIDS Vaccine Initiative (IAVI)~~Contract Assets and Liabilities

~~In 2017,~~At December 31, 2019 and June 30, 2020, the Company’s right to consideration under all contracts was considered unconditional, and as such, there were no recorded contract assets. At December 31, 2019 and June 30, 2020, the Company entered into an agreement with IAVI pursuant to which the Company performs research and development and manufacturing services for IAVI outlined under subsequently negotiated task orders. Revenue is recognized as services are performed under the negotiated task orders. The Company recorded $1.7 million and $4.0had $0.3 million in ~~revenue related to the IAVI agreement~~contract liabilities recorded. Revenue recognized from contract liabilities as of December 31, 2019 during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020 was $0.0 million and $0.1 million, respectively.
~~Frontier Biotechnologies, Inc. (Frontier)~~

In 2017, the Company entered into an agreement with Frontier pursuant to which the Company performs research and development and manufacturing services for Frontier outlined under subsequently negotiated task orders. Revenue is recognized as services are performed under the negotiated task orders. The Company recorded $0.6 million in revenue related to the Frontier agreement during both the three and nine months ended September 30, 2017.
~~(11) Kolltan Acquisition~~
In connection with the Kolltan Acquisition, effective November 29, 2016, the Company issued 18,257,996 shares of common stock of the Company in exchange for all of the share and debt interests in Kolltan. The Company also agreed to issue an aggregate of 437,901 shares of its common stock, less tax withholdings, to certain former officers of Kolltan. During the nine months ended September 30, 2017, the Company issued 91,749 shares of its common stock and at September 30, 2017, the Company’s remaining obligation is to issue 125,123 shares of its common stock, less tax withholdings, related to this severance obligation. In addition, in the event that certain specified preclinical and clinical development milestones related to Kolltan’s development programs and/or Celldex’s development programs and certain commercial milestones related to Kolltan’s drug candidates are achieved, Celldex will be required to pay Kolltan’s stockholders milestone payments of up to $172.5 million, which milestone payments may be made, at Celldex’s sole election, in cash, in shares of Celldex’s common stock or a combination of both, subject to provisions of the Merger Agreement.
The transaction was accounted for as a business combination with Celldex treated as the accounting acquirer. All of the assets acquired and liabilities assumed in the transaction are recognized at their acquisition-date fair values, while transaction costs associated with the transaction are expensed as incurred.
~~Purchase Price~~
The purchase price for Kolltan was based on the acquisition-date fair value of the consideration transferred, which was calculated based on the closing price of the Company’s common stock of $4.02 per share on November 29, 2016. The acquisition-date fair value of the consideration transferred consisted of the following (in thousands):
Fair value of common stock issued for upfront payment

$
73,397

Fair value of contingent consideration

44,200

Kolltan transaction expenses paid in cash by the Company

3,768

Total consideration transferred

$
121,365

~~Allocations of Assets and Liabilities~~
The Company has allocated the consideration transferred for Kolltan to net tangible assets, intangible assets, and goodwill. The difference between the aggregate consideration transferred and the fair value of assets acquired and liabilities assumed was allocated to goodwill. This goodwill relates to the potential synergies from the Kolltan Acquisition and deferred tax liabilities related to acquired IPR&D intangible assets. None of the goodwill is expected to be deductible for income tax purposes. The following table summarizes the fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands):
Cash and cash equivalents

$
8,160

Other current and long-term assets

799

Property and equipment, net

2,072

In-process research and development (IPR&D)

61,690

Goodwill

82,011

Deferred tax liabilities, net

(23,393
)
Other assumed liabilities

(9,974
)
Total

$
121,365

The purchase price allocation has been prepared on a preliminary basis and is subject to change as additional information becomes available concerning the fair value and tax basis of the acquired assets and liabilities. Any adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the acquisition date.
~~Pro Forma Financial Information~~
If the operations of the Company and Kolltan were combined as of January 1, 2016, the unaudited pro forma net loss for the three and nine months ended September 30, 2016 would have been $35.5 million and $120.4 million, respectively, or $(0.30) and $(1.02) per share, respectively. The unaudited pro forma combined results are not necessarily indicative of the actual results that would have occurred had the acquisition been consummated at that date or of the future operations of the combined entities.
(12) Income Taxes
Massachusetts, New Jersey and Connecticut are the three states in which the Company primarily operates or has operated and has income tax nexus. The Company’s wholly-owned subsidiary, Celldex Australia Pty Ltd, operates in Brisbane, Australia. The Company is not currently under examination by any jurisdictions for any tax year.

The Company has evaluated the positive and negative evidence bearing upon the realizability of its net deferred tax assets ~~which are comprised principally~~and considered its history of ~~net operating loss carryforwards, capitalized R&D expenditures and R&D tax credit carryforwards. The Company has determined~~losses, ultimately concluding that it is ~~more~~“more likely than ~~not~~not” that itthe Company will not recognize the benefits of federal, state and ~~state~~foreign deferred tax assets and, as ~~a result,~~such, has maintained a full valuation allowance ~~was maintained at September~~on its deferred tax assets as of June 30, ~~2017~~2020 and December 31, ~~2016 against the Company’s~~2019.
The net deferred tax ~~assets.~~
Asliability of ~~September~~$2.8 million and $3.0 million at June 30, ~~2017~~2020 and December 31, ~~2016,~~2019, respectively, relates to the ~~Company had $22.9 million and $28.1 million of deferred tax liabilities, net recorded on the balance sheet primarily~~temporary differences associated with ~~temporary differences~~the IPR&D intangible assets acquired in previous business combinations and is not deductible for tax purposes. During the quarter ended June 30, 2020, a $0.2 million non-cash income tax benefit was recorded related to the ~~Company’s IPR&D assets. The $5.2 million decrease in deferred tax liabilities, net during the three and nine months ended September 30, 2017 was due to the partial~~ impairment of the ~~anti-KIT program~~CDX-3379 IPR&D ~~assets.~~asset.
Massachusetts, New Jersey, New York and Connecticut are the jurisdictions in which the Company primarily operates or has operated and has income tax nexus. The Company is not currently under examination by these or any other jurisdictions for any tax year.
13
(13) Net Loss Per Share

Basic net loss per common share is based upon the weighted-average number of common shares outstanding during the period, excluding restricted stock that has been issued but is not yet vested. Diluted net loss per common share is based upon the weighted-average number of common shares outstanding during the period plus additional weighted-average potentially dilutive common shares outstanding during the period when the effect is dilutive. In periods in which the Company reports a net loss, there is no difference between basic and diluted net loss per share because dilutive shares of common stock are not assumed to have been issued as their effect is anti-dilutive. The potentially dilutive common shares that have not been included in the net loss per common share calculations because the effect would have been anti-dilutive are as follows:

Nine months ended September 30,

2017

2016

Stock options

11,582,818

10,150,598

Restricted stock

96,668

60,000

11,679,486

10,210,598

Six Months Ended June 30,
2020 2019
Stock Options 3,085,287 1,690,074
Restricted Stock — 1,110
3,085,287 1,691,184
(14) Kolltan Acquisition
On November 29, 2016, the Company acquired all of the share and debt interests of Kolltan Pharmaceuticals, Inc. (“Kolltan”), a clinical-stage biopharmaceutical company, in exchange for 1,217,200 shares of the Company’s common stock plus contingent consideration in the form of development, regulatory approval and sales-based milestones (“Kolltan Milestones”) of up to $172.5 million. The Kolltan Milestone payments, if any, may be made, at Celldex’s sole election, in cash, in shares of Celldex’s common stock or a combination of both, subject to provisions of the Merger Agreement. Certain Kolltan Milestones have been abandoned consistent with the provisions of the Merger Agreement and, because of this, as of June 30, 2020, the Company believes that the adjusted amount we may be required to pay for future consideration is up to $107.5 million contingent upon the achievement of the Kolltan Milestones.
In October 2019, the Company received a letter from the representative of Kolltan’s former stockholders notifying the Company that it objected to the Company’s abandonment of certain Kolltan Milestones relating to development, regulatory approval and sales-based milestones. The Company disagrees with their objection and believes their objection to be without merit. The Company is continuting to discuss with the representative of Kolltan’s former stockholders potential amendments to the Merger Agreement with respect to the Kolltan Milestones. There can be no assurances that an amendment to the Merger Agreement will be completed on terms acceptable to the Company or at all. At this time, the Company is unable to reasonably assess the ultimate outcome of the Company’s disagreement with the representative of Kolltan’s former stockholders over its objection to the Company’s abandonment of certain Kolltan Milestones or determine an estimate of potential losses, if any.
14
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: This report on Form 10-Q contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that could be forward-looking statements. You can identify these forward-looking statements through our use of words such as “may,” “will,” “can,” “anticipate,” “assume,” “should,” “indicate,” “would,” “believe,” “contemplate,” “expect,” “seek,” “estimate,” “continue,” “plan,” “point to,” “project,” “predict,” “could,” “intend,” “target,” “potential” and other similar words and expressions of the future.

There are a number of important factors that could cause the actual results to differ materially from those expressed in any forward-looking statement made by us. These factors include, but are not limited to:

· our dependence on product candidates, which are still in an early development stage;
·                  our ability to successfully complete research and further development, including animal, preclinical and clinical studies, and, if we obtain regulatory approval, commercialization of glembatumumab vedotin (also referred to as CDX-011) and other drug candidates and the growth of the markets for those drug candidates;
· our ability to successfully complete research and further development, including animal, preclinical and clinical studies, and, if we obtain regulatory approval, commercialization of our drug candidates and the growth of the markets for those drug candidates;
· our anticipated timing for preclinical development, regulatory submissions, commencement and completion of clinical trials and product approvals;
· The impact of the recent outbreak of a novel strain of coronavirus on our business or on the economy generally;
· Whether the recent coronavirus outbreak will affect the timing of the completion of our planned and/or currently ongoing preclinical/clinical trials;
· our ability to negotiate strategic partnerships, where appropriate, for our drug candidates;
· our ability to manage multiple clinical trials for a variety of drug candidates at different stages of development;
· the cost, timing, scope and results of ongoing preclinical and clinical testing;
· our expectations of the attributes of our product and development candidates, including pharmaceutical properties, efficacy, safety and dosing regimens;
· the cost, timing and uncertainty of obtaining regulatory approvals for our drug candidates;
· the availability, cost, delivery and quality of clinical management services provided by our clinical research organization partners;
· the availability, cost, delivery and quality of clinical and commercial-grade materials produced by our own manufacturing facility or supplied by contract manufacturers, suppliers and partners;
· our ability to develop and commercialize products before competitors that are superior to the alternatives developed by such competitors;
15
· our ability to develop technological capabilities, including identification of novel and clinically important targets, exploiting our existing technology platforms to develop new drug candidates and expand our focus to broader markets for our existing targeted immunotherapeutics;
· the cost of paying development, regulatory approval and sales-based milestones under the merger agreement by which we acquired Kolltan, including under any future amendment to that agreement;
· our ability to realize the anticipated benefits from the acquisition of Kolltan;
· our ability to raise sufficient capital to fund our animal, preclinical and clinical studies and to meet our liquidity needs, on terms acceptable to us, or at all. If we are unable to raise the funds necessary to meet our liquidity needs, we may have to delay or discontinue the development of one or more programs, discontinue or delay ongoing or anticipated clinical trials, license out programs earlier than expected, raise funds at significant discount or on other unfavorable terms, if at all, or sell all or part of our business;
· our ability to protect our intellectual property rights and our ability to avoid intellectual property litigation, which can be costly and divert management time and attention;
· our ability to develop and commercialize products without infringing the intellectual property rights of third parties; and
· the risk factors set forth elsewhere in this quarterly report on Form 10-Q and the factors listed under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s annual report on Form 10-K for the year ended December 31, 2019 and other reports that we file with the Securities and Exchange Commission.

·                  our ability to raise sufficient capital to fund our clinical studies and to meet our liquidity needs, on terms acceptable to us, or at all. If we are unable to raise the funds necessary to meet our liquidity needs, we may have to delay or discontinue the development of one or more programs, discontinue or delay ongoing or anticipated clinical trials, license out programs earlier than expected, raise funds at significant discount or on other unfavorable terms, if at all, or sell all or part of our business;
·                  ~~our ability to negotiate strategic partnerships, where appropriate, for our programs, which may include, glembatumumab vedotin;~~
·                  ~~our ability to realize the anticipated benefits from the acquisition of Kolltan and to operate the combined business efficiently;~~
·                  ~~our ability to manage multiple clinical trials for a variety of drug candidates at different stages of development;~~
·                  ~~the cost, timing, scope and results of ongoing safety and efficacy trials of glembatumumab vedotin, and other preclinical and clinical testing;~~
·                  ~~the cost, timing, and uncertainty of obtaining regulatory approvals for our drug candidates;~~
·                  ~~the availability, cost, delivery and quality of clinical management services provided by our clinical research organization partners;~~
·                  the availability, cost, delivery and quality of clinical and commercial-grade materials produced by our own manufacturing facility or supplied by contract manufacturers, suppliers and partners, who may be the sole source of supply;
·                  ~~our ability to develop and commercialize products before competitors that are superior to the alternatives developed by such competitors;~~
·                  our ability to develop technological capabilities, including identification of novel and clinically important targets, exploiting our existing technology platforms to develop new drug candidates and expand our focus to broader markets for our existing targeted immunotherapeutics;
·                  ~~our ability to adapt our proprietary antibody-targeted technology, or APC Targeting Technology™, to develop new, safe and effective therapeutics for oncology and infectious disease indications;~~
·                  our ability to protect our intellectual property rights, including the ability to successfully defend patent oppositions filed against a European patent related to technology we use in varlilumab, and our ability to avoid intellectual property litigation, which can be costly and divert management time and attention; and
·                  the factors listed under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s annual report on Form 10-K for the year ended December 31, 2016 and other reports that we file with the Securities and Exchange Commission.
All forward-looking statements are expressly qualified in their entirety by this cautionary notice. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this report or the date of the document incorporated by reference into this report. We have no obligation, and expressly disclaim any obligation, to update, revise or correct any of the forward-looking statements, whether as a result of new information, future events or otherwise. We have expressed our expectations, beliefs and projections in good faith, and we believe they have a reasonable basis. However, we cannot assure you that our expectations, beliefs or projections will result or be achieved or accomplished.

OVERVIEW

We are a biopharmaceutical company focused on the development and commercialization of ~~several immunotherapy technologies~~immunotherapies and other ~~cancer-targeting~~targeted biologics. Our drug candidates ~~including antibodies, antibody-drug conjugates and other protein-based therapeutics,~~ are derived from a broad set of ~~complementary technologies~~human and bispecific antibodies which have the ability to engage the human immune system and/or directly inhibit tumors to treat specific types of cancer or other diseases.
Our latest stage drug candidate, glembatumumab vedotin (also referred to as CDX-011) is a targeted antibody-drug conjugate in a randomized, Phase 2b study for the treatment of triple negative breast cancer and a Phase 2 study for the treatment of metastatic melanoma. Varlilumab (also referred to as CDX-1127) is an immune modulating antibody that is designed to enhance a patient’s immune response against cancer. We established proof of principle in a Phase 1 study with varlilumab, which supported the initiation of combination studies in various indications. We also have a number of earlier stage drug candidates in clinical development, including CDX-3379, a human monoclonal antibody designed to block the activity of ErbB3 (HER3) in solid tumors; CDX-014, an antibody-drug conjugate targeting renal and ovarian cancers; CDX-1401, a targeted immunotherapeutic They are aimed at ~~antigen presenting cells, or APCs, for cancer indications; and, CDX-301, an immune cell mobilizing agent and dendritic cell growth factor. Our drug candidates address~~addressing market opportunities for which we believe current therapies are inadequate or non-existent.

16
We are ~~building~~focusing our efforts and resources on the continued research and development of:
CDX-0159, a monoclonal antibody that specifically binds the KIT receptor and potently inhibits its activity, which recently completed a Phase 1a study in healthy subjects. We plan to study CDX-0159 in mast cell driven diseases, including, initially, initiating Phase 1b studies in chronic spontaneous urticaria (CSU) and chronic inducible urticarias (CIndUs) this fall; and,
• CDX-1140, an agonist monoclonal antibody targeted to CD40, a key activator of immune response, currently being studied as a single-agent and in combination with CDX-301, a dendritic cell growth factor. Dose escalation was completed in a Phase 1 study in solid tumors and lymphoma and the recommended dose for further study was determined to be 1.5 mg/kg for both CDX-1140 monotherapy and in combination with CDX-301. Celldex has initiated multiple expansion cohorts within the study, including a combination cohort with KEYTRUDA^® (pembrolizumab) in patients refractory to PD1/PDL1 treatment and plans to initiate a combination cohort with standard of care chemotherapy in patients with untreated metastatic pancreatic cancer later this year. The Company is exploring additional combination cohorts with mechanisms that we believe could be complementary or synergistic with CDX-1140;
CDX-527, a bispecific antibody that uses our proprietary highly active anti-PD-L1 and CD27 human antibodies to couple CD27 co-stimulation with blockade of the PD-L1/PD-1 pathway, for which we plan to initiate a Phase 1 study in advanced solid tumors later this year.
We are discontinuing development of CDX-3379, an ErbB3 inhibitor, and directing the resources allocated to this program to expanded development of CDX-0159 and other assets in our pipeline. CDX-3379 was in an exploratory study designed to evaluate of the utility of biomarkers for patient selection in the treatment of cetuximab-refractory head and neck squamous cell carcinoma.
We routinely work with external parties to collaboratively advance our drug candidates. In addition to Celldex-led studies, we also have an Investigator Initiated Research (IIR) program with multiple studies ongoing with our drug candidates.
Our goal is to build a fully integrated, commercial-stage biopharmaceutical company that develops important therapies for patients with unmet medical needs. ~~Our~~We believe our program assets provide us with the strategic options to either retain full economic rights to our innovative therapies or seek favorable economic terms through advantageous commercial partnerships. This approach allows us to maximize the overall value of our technology and product portfolio while best ensuring the expeditious development of each individual product.
~~The following table reflects Celldex-sponsored clinical studies that we are actively pursuing at this time. All~~ Currently, all programs are ~~currently~~ fully owned by Celldex.
~~Product (generic)~~
~~Indication/Field~~
~~Status~~
~~Sponsor~~
~~Glembatumumab vedotin~~
~~Triple negative breast cancer~~
~~Phase 2b~~
~~Celldex~~
~~Glembatumumab vedotin~~
~~Metastatic melanoma (with varlilumab or CPI~~1)
~~Phase 2~~
~~Celldex~~
~~Varlilumab~~
~~Multiple solid tumors (with nivolumab)~~
~~Phase 2~~
~~Celldex~~2
~~CDX-3379~~
~~Head and neck squamous cell cancer (with cetuximab)~~
~~Phase 2~~3
~~Celldex~~
~~CDX-014~~
~~Renal cell carcinoma~~
~~Phase 1~~
~~Celldex~~
~~CDX-1140~~
~~Multiple solid tumors~~
~~Phase 1~~3
~~Celldex~~
1~~checkpoint inhibitor;~~ 2~~BMS collaboration;~~ 3~~expected to initiate by year-end 2017~~
We also routinely work with external parties, such as government agencies, to collaboratively advance our drug candidates. The following pipeline reflects clinical trials of our drug candidates being actively pursued by outside organizations. In addition to the studies listed below, we also have an Investigator Initiated Research (IIR) program with seven studies ongoing with our drug candidates and additional studies currently under consideration.
~~Product (generic)~~
~~Indication/Field~~
~~Status~~
~~Sponsor~~
~~Glembatumumab vedotin~~
~~Uveal melanoma~~
~~Phase 2~~
~~NCI (CRADA)~~
~~Glembatumumab vedotin~~
~~Squamous cell lung cancer~~
~~Phase 2~~
~~PrECOG, LLC~~
~~CDX-1401/CDX-301~~
~~Malignant melanoma~~
~~Phase 2~~
~~NCI (CRADA)~~
~~CDX-1401/atezolizumab/SGI-110~~
~~Ovarian cancer~~
~~Phase 1~~
~~NCI (CRADA)~~

The expenditures that will be necessary to execute our business plan are subject to numerous uncertainties. Completion of clinical trials may take several years or more, and the length of time generally varies substantially according to the type, complexity, novelty and intended use of a ~~product~~drug candidate. It is not unusual for the clinical development of these types of ~~product~~drug candidates to
each take five years or more, and for total development costs to exceed $100 million for each ~~product~~drug candidate. We estimate that clinical trials of the type we generally conduct are typically completed over the following timelines:

Clinical Phase
Estimated
Completion
Period
Phase 1
1 - 2 Years
Phase 2
1 - 5 Years
Phase 3
1 - 5 Years
17

The duration and the cost of clinical trials may vary significantly over the life of a project as a result of differences arising during the clinical trial protocol, including, among others, the following:

·                  ~~the number of patients that ultimately participate in the trial;~~
· the number of patients that ultimately participate in the trial;

·                  ~~the duration of patient follow-up that seems appropriate in view of results;~~
· the duration of patient follow-up that seems appropriate in view of results;

·                  ~~the number of clinical sites included in the trials;~~
· the number of clinical sites included in the trials;

·                  ~~the length of time required to enroll suitable patient subjects; and~~
· the length of time required to enroll suitable patient subjects; and

·                  ~~the efficacy and safety profile of the product candidate.~~
· the efficacy and safety profile of the drug candidate.

We test potential ~~product~~drug candidates in numerous preclinical studies for safety, toxicology and immunogenicity. We may then conduct multiple clinical trials for each ~~product~~drug candidate. As we obtain results from trials, we may elect to discontinue or delay clinical trials for certain ~~product~~drug candidates in order to focus our resources on more promising ~~product~~drug candidates.

An element of our business strategy is to pursue the discovery, research and development of a broad portfolio of ~~product~~drug candidates. This is intended to allow us to diversify the risks associated with our research and development expenditures. To the extent we are unable to maintain a broad range of ~~product~~drug candidates, our dependence on the success of one or a few ~~product~~drug candidates increases.

Regulatory approval is required before we can market our ~~product~~drug candidates as therapeutic products. In order to proceed to subsequent clinical trial stages and to ultimately achieve regulatory approval, the regulatory agency must conclude that our clinical data demonstrate that our product candidates are safe and effective. Historically, the results from preclinical testing and early clinical trials (through Phase 2) have often not been predictive of results obtained in later clinical trials. A number of new drugs and biologics have shown promising results in early clinical trials but subsequently failed to establish sufficient safety and efficacy data to obtain necessary regulatory approvals.

Furthermore, our business strategy includes the option of entering into collaborative arrangements with third parties to complete the development and commercialization of our ~~product~~drug candidates. In the event that third parties take over the clinical trial process for one of our ~~product~~drug candidates, the estimated completion date would largely be under control of that third party rather than us. We cannot forecast with any degree of certainty which proprietary products, if any, will be subject to future collaborative arrangements, in whole or in part, and how such arrangements would affect our development plan or capital requirements. Our programs may also benefit from subsidies, grants, contracts or government or agency-sponsored studies that could reduce our development costs.

As a result of the uncertainties discussed above, among others, it is difficult to accurately estimate the duration and completion costs of our research and development projects or when, if ever, and to what extent we will receive cash inflows from the commercialization and sale of a product. Our inability to complete our research and development projects in a timely manner or our failure to enter into collaborative agreements, when appropriate, could significantly increase our capital requirements and could adversely impact our liquidity. These uncertainties could force us to seek additional, external sources of financing from time to time in order to continue with our business strategy. Our inability to raise additional capital, or to do so on terms reasonably acceptable to us, would jeopardize the future success of our business.

During the past five years through December 31, ~~2016,~~2019, we incurred an aggregate of ~~$422.1~~$408.2 million in research and development expenses. The following table indicates the amount incurred for each of our significant research programs and for other identified research and development activities during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 and ~~2016.~~2019. The amounts disclosed in the following table reflect direct research and development costs, license fees associated with the underlying technology and an allocation of indirect research and development costs to each program.

Nine Months Ended September 30,

2017

2016

(In thousands)

Glembatumumab vedotin

$
26,240

$
20,577

Varlilumab

11,956

22,777

Anti-KIT Program

3,223

—

CDX-3379

3,611

—

CDX-014

1,925

3,059

CDX-1401

617

3,804

CDX-301

1,058

3,402

CDX-1140

5,788

1,642

TAM Program

3,914

—

Rintega

1,429

14,624

Other Programs

12,946

8,283

Total R&D Expense

$
72,707

$
78,168

18
Six Months Ended
June 30, 2020 Six Months Ended
June 30, 2019
(In thousands)
CDX-0159/Anti-KIT Program $ 2,896 $ 1,974
CDX-1140 5,069 3,195
CDX-527 5,891 3,412
TAM Program 1,192 2,571
Other Programs 6,352 10,080
Total R&D Expense $ 21,400 $ 21,232

Clinical Development Programs

~~Glembatumumab Vedotin~~CDX-0159

~~Glembatumumab vedotin~~CDX-0159 is ~~an antibody-drug conjugate, or ADC, that consists of~~ a ~~fully human~~humanized monoclonal antibody ~~CR011, linked to a potent cell-killing drug, monomethyl auristatin E, or MMAE. The CR011 antibody~~that specifically ~~targets glycoprotein NMB, referred to as gpNMB, that~~binds the receptor tyrosine kinase KIT and potently inhibits its activity. KIT is ~~over-expressed~~expressed in a variety of ~~cancers~~cells, including ~~breast cancer, melanoma, non-small~~mast cells, and its activation by its ligand SCF regulates mast cell ~~lung cancer, uveal melanoma~~growth, differentiation, survival, chemotaxis and ~~osteosarcoma, among others. The ADC technology, comprised of MMAE~~degranulation. In certain inflammatory diseases, such as chronic spontaneous urticaria (CSU), also known as chronic idiopathic urticaria (CIU) and chronic inducible urticarias (CIndUs), mast cell degranulation plays a ~~stable linker system for attaching it to CR011, was licensed from Seattle Genetics, Inc. and is the same as that used~~central role in the ~~marketed product Adcetris~~®~~. The ADC~~onset and progression of the disease.
CDX-0159 is designed to ~~be stable in the bloodstream. Following intravenous administration, glembatumumab vedotin targets~~block KIT activation by disrupting both SCF binding and binds to gpNMB, and upon internalization into the targeted cell, glembatumumab vedotin is designed to release MMAE from CR011 to produce a cell-killing effect. Glembatumumab vedotin is being studied across multiple indications in company-sponsored trials and in collaborative studies with external parties. The U.S. Food and Drug Administration, or FDA, has granted Fast Track designation to glembatumumab vedotin for the treatment of advanced, refractory/resistant gpNMB-expressing breast cancer. A companion diagnostic is in development for certain indications, and we expectKIT dimerization. Celldex believes that ~~if necessary, such a companion diagnostic must be approved~~ by ~~the FDA or certain other foreign regulatory agencies before glembatumumab vedotin~~targeting KIT, CDX-0159 may be ~~commercialized in those indications.~~
~~Treatment of Metastatic Breast Cancer:~~ The Phase 1/2 study of glembatumumab vedotin administered intravenously once every three weeks evaluated patients with locally advanced or metastatic breast cancer (MBC) who had received prior therapy (median of seven prior regimens). Results were published in the ~~Journal of Clinical Oncology~~ ~~in September 2014. The study began with a bridging phase~~able to ~~confirm the maximum tolerated dose, or MTD,~~inhibit mast cell activity and then expanded into a Phase 2 open-label, multi-center study. The study supported an acceptable safety profile of glembatumumab vedotin at the pre-defined maximum dose level (1.88 mg/kg) in 6 patients. An additional 28 patients with MBC were enrolled in an expanded Phase 2 cohort (for a total of 34 treated patients at 1.88 mg/kg, the Phase 2 dose)decrease mast cell numbers to evaluate the progression-free survival (PFS) rate at 12 weeks. The 1.88 mg/kg dose exhibited an acceptable safety profile in this patient population with the most common adverse events being rash, neuropathy and fatigue. The primary anti-cancer activity endpoint, which called for at least 5 of 25 (20%) patients in the Phase 2 study portion to be progression-free at 12 weeks, was met as 9 of 27 (33%) evaluable patients were progression-free at 12 weeks. For all patients treated at the Phase 2 dose, median PFS was 9.1 weeks.
A subset of 10 patients had “triple negative disease,” a more aggressive metastatic breast cancer subtype that carries a high risk of relapse and reduced survival as well as limited therapeutic options. In these patients, the 12-week PFS rate was 60% (6/10), and median PFS was 17.9 weeks. Tumor samples from a subset of patients across all dose groups were analyzed for gpNMB expression. The tumor samples from most patients showed evidence of stromal and/or tumor cell expression of gpNMB.
The subsequent EMERGE study was a randomized, multi-center Phase 2b study of glembatumumab vedotin in 124 patients with heavily pre-treated, advanced, gpNMB-positive breast cancer. Results from EMERGE were published in the ~~Journal of Clinical Oncology~~ in April 2015. Patients were randomized (2:1) to receive either glembatumumab vedotin or single-agent Investigator’s Choice chemotherapy. Patients randomized to receive Investigator’s Choice were allowed to cross over to receive glembatumumab vedotin following disease progression. Activity endpoints included response rate, PFS and overall survival (OS). The final study results, as shown below, suggested that glembatumumab vedotin induced significant response rates compared to currently available therapies in patient subsets with advanced, refractory breast cancers with high gpNMB expression (expression in at least 25% of tumor cells) and in patients with triple negative breast cancer. The OS and PFS of patients treated with glembatumumab vedotin were also observed to be greatest in patients with high gpNMB expression and, in particular, in patients with triple negative breast cancer who also had high gpNMB expression.
~~EMERGE: Overall Response Rate and Disease Control Data (Intent-to-Treat Population)~~

High gpNMB Expression

Triple Negative
and gpNMB
Over-Expression

Glembatumumab
Vedotin

Investigator’s
Choice

Glembatumumab
Vedotin

Investigator’s
Choice

(n=23)

(n=11)

(n=10)

(n=6)

Response Rate

30
%
9
%
40
%
0
%
Disease Control Rate

65
%
27
%
90
%
17
%
~~Tumor response assessed by RECIST 1.1, inclusive of response observed at a single time point.~~
~~EMERGE: Progression Free Survival (PFS) and Overall Survival (OS) Data~~

High gpNMB Expression

Triple Negative
and gpNMB
Over-Expression

Glembatumumab
Vedotin

Investigator’s
Choice

Glembatumumab
Vedotin

Investigator’s
Choice

Median PFS (months)

2.8

1.5

3.5

1.5

p=0.18

p=0.0017

Median OS (months)

10.0

5.7

10.0

5.5

p=0.31

p=0.003

In December 2013, we initiated METRIC, a randomized, controlled Phase 2b study of glembatumumab vedotin in patients with triple negative breast cancer that over-expresses gpNMB. Clinical trial study sites were opened to enrollment across the U.S., Canada, Australia and the European Union. The METRIC protocol was amended in late 2014 based on feedback from clinical investigators conducting the study that the eligibility criteria for study entry were limiting their ability to enroll patients they felt were clinically appropriate. In addition, we had spoken to country-specific members of the European Medicines Agency, or EMA, and believed an opportunity existed to expand the study into the EU. The amendment expanded patient entry criteria to position it for the possibility of full marketing approval with global regulators, including the EMA, and to support improved enrollment in the study. The primary endpoint of the study is PFS, defined as the time from randomization to the earlier of disease progression or death due to any cause. PFS is an established endpoint for full approval registration studies in this patient population in both the U.S. and the EU. The sample size (n=300) and the secondary endpoint of OS remained unchanged. Since implementation of these changes, both the FDA and central European regulatory authorities have reviewed the protocol design, and we believe the METRIC study could potentially support marketing approval in both the U.S. and Europe dependent upon data results and review.
Enrollment (n=327) in METRIC was completed in August 2017. The study calls for 203 progression events for evaluation of the primary endpoint, which will be assessed based on an independent, central reading of patient scans. The sum of the data, including the secondary endpoints of response rate, overall survival, duration of response and safety, will be important in assessing clinical benefit. Based on the current rate of progression events in the study, the Company projects that topline primary endpoint data should be available in the second quarter of 2018.
Efforts to ensure delivery of manufactured drug that is ready for commercialization and a companion diagnostic, including partnering with a diagnostic company, are underway. While we have made and continue to make progress on these fronts, we have made the decision to stage some of the more costly work in these areas to begin after we have received results from the study. While this step will extend the timeline to complete our regulatory filings, we believe this is the most prudent use of our funds as we seek to advance our pipeline overall.
~~Treatment of Metastatic Melanoma:~~ The Phase 1/2 open-label, multi-center, dose escalation study evaluated the safety, tolerability and pharmacokinetics of glembatumumab vedotin in 117 patients with unresectable stage III or IV melanoma who had failed no more than one prior line of cytotoxic therapy. The MTD and resulting Phase 2 dose was determined to be 1.88 mg/kg administered intravenously once every three weeks. The study achieved its primary activity objective with an overall response rate (ORR) in the Phase 2 cohort of 15% (5/34). Median PFS was 3.3 months for patients treated with the Phase 2 dose. Glembatumumab vedotin was generally well tolerated, with the most frequent treatment-related adverse events being rash, fatigue, alopecia, pruritus, diarrhea and nausea. The development of rash, which may be associated with the presence of gpNMB in the skin, also seemed to correlate with greater PFS.
In December 2014, we initiated a single arm, single-agent, open-label Phase 2 study of glembatumumab vedotin in patients with unresectable stage III or IV melanoma, and enrollment has been completed. In May 2016, we amended the protocol to add a second cohort of patients to a glembatumumab vedotin and varlilumab combination arm to assess theprovide potential clinical benefit of the combination and to explore varlilumab’s potential biologic and immunologic effect when combined with an ADC, and enrollment has been completed. In November 2016, we amended the protocol to add a third cohort of patients evaluating glembatumumab vedotin in combination with an approved checkpoint inhibitor (i.e., nivolumab or pembrolizumab) following progression on the checkpoint inhibitor alone, and enrollment is ongoing. In September 2017, we amended the protocol again to add a fourth cohort of patients evaluating glembatumumab vedotin in combination with CDX-301 to assess the safety, tolerability and biologic activity of the combination. Following completion of this cohort and evaluation of available data, the protocol amendment also allows for the exploration of additional cohorts. The primary endpoint for each cohort is ORR, except the fourth cohort which is assessing safety and tolerability. Secondary endpoints include analyses of PFS, duration of response, OS, retrospective investigation of whether the anti-cancer activity of glembatumumab vedotin is dependent upon the degree of gpNMB expression in tumor tissue and safety of both the monotherapy and combination regimens.mast cell related diseases.

We ~~presented mature data from the single-agent~~recently completed a randomized, double-blind, placebo-controlled, single ascending dose escalation Phase 1a study of CDX-0159 in healthy subjects (n=32; 8 subjects per cohort, ~~in an oral presentation~~6 CDX-0159; 2 placebo). Subjects received a single intravenous infusion of CDX-0159 at ~~the 2017 American Society of Clinical Oncology Annual Meeting in June.~~0.3, 1.0, 3.0, or 9.0 mg/kg or placebo. The cohort enrolled 62 evaluable patients with unresectable stage IV melanoma. All patients had been heavily pre-treated (median prior therapies = 3; range 1-8) and had progressed during or after checkpoint inhibitor therapy, and almost all patients had received both ipilimumab (n=58; 94%) and anti-PD-1/anti-PD-L1 (n=58; 94%) therapy. Twelve patients presented with BRAF mutation, and fifteen had prior treatment with BRAF or BRAF/MEK targeted agents. Median overall survival (OS) for all patients was 9.0 months (95% CI: 6.1, 13.0). As previously reported in October 2016, the primary endpoint of the cohort (threshold of 6 or more objective responses in 52 evaluable patients) was exceeded. 7 of 62 (11%) patients experienced a confirmed response, and an additional three patients also experienced single timepoint partial responses. Since data were reported in October 2016, one patient converted from a confirmed partial response to a confirmed complete response. The median duration of response was 6.0 months. A 52% disease control rate (patients without progression for greater than three months) was demonstrated, and median progression free survival (PFS) for all patients was 4.4 months. Consistent with previous studies in melanoma and breast cancer, rash was associated with greater clinical benefit. Patients who experienced rash in Cycle 1 experienced a 21% confirmed response rate, a more prolonged PFS with a median of 5.5 months (p=0.006; HR=0.39) and a more prolonged OS with a median of 15.8 months (p=0.026, HR=0.44). The safety profile was consistent with prior studies of glembatumumab vedotin with rash, neutropenia and neuropathy experienced as the most significant adverse events. Pre-treatment tumor tissue was available for 59 patients. All samples were gpNMB positive, and 78% of patients had tumors with 100% of their epithelial cells expressing gpNMB. Given both the high level of expression and the intensity of expression across this patient population, identifying a potential population for gpNMB enrichment is not feasible; therefore, all patients with metastatic melanoma could be evaluated as potential candidates for treatment with glembatumumab vedotin in future studies. We intend to conduct exploratory analyses of pre-entry skin biopsies in future patients to investigate potential predictors of response to glembatumumab vedotin, given the association of rash and outcome.
Data from the second cohort, combining glembatumumab vedotin and varlilumab, were accepted for presentation at the Society for Immunotherapy of Cancer’s (SITC) 32nd Annual Meeting in November 2017. The cohort enrolled 34 patients with unresectable stage IV melanoma. All patients had been heavily pre-treated (median prior therapies = 3; range 1-8) and had progressed during or after checkpoint inhibitor (CPI) therapy (median prior CPI therapies = 2; range 1-4). Almost all patients had received ipilimumab (n=26; 76%) and/or anti-PD-1/anti-PD-L1 (n=34; 100%) therapy. Nine patients presented with BRAF mutation, and eleven had prior treatment with BRAF or BRAF/MEK targeted agents. Median PFS for all patients was 2.6 months (95% CI: 1.4, 2.8),
and median overall survival (OS) for all patients was 6.4 months (95% CI: 3.2, 8.3). One of 31 patients eligible for response evaluation experienced a confirmed partial response (3%) and an additional two patients also experienced single timepoint partial responses. 52% of patients experienced stable disease (minimum of six or more weeks). A 19% disease control rate (patients without progression for greater than three months) was demonstrated. The safety profile was consistent with prior studies of glembatumumab vedotin and there was no evidence of additive toxicity associated with the combination. Biological effects of varlilumab were consistent with prior observations and did not appear to be impacted by the addition of an antibody-drug conjugate (ADC). Modest clinical benefit in the combination could be due to multiple factors, including potential lack of sensitivity to immunotherapy in patients with checkpoint refractory disease, many of whom progressed so rapidly that they experienced a very short duration of varlilumab treatment (median 2 doses); a possible dearth of antigen presenting cells in tumors; and the potential for immune checkpoint molecules to remain unblocked without checkpoint inhibitor therapy. Planned future cohorts are designed to address some of these potential factors. No significant correlation between rash and outcome was observed, but will continue to be monitored in future cohorts.
~~Treatment of Other Indications:~~ We have entered into a collaborative relationship with PrECOG, LLC, which represents a research network established by the Eastern Cooperative Oncology Group (ECOG), under which PrECOG, LLC, is conducting an open-label Phase 1/2 study in patients with unresectable stage IIIB or IV, gpNMB-expressing, advanced or metastatic squamous cell carcinoma (SCC) of the lung, who have progressed on prior platinum-based chemotherapy. This study opened to enrollment in April 2016 and is ongoing. The study includes a dose-escalation phase followed by a two-stage Phase 2 portion (Simon two-stage design). The Phase 1, dose-escalation portion of the study is designed to assess the safety and tolerability of glembatumumab vedotin at varying dose levels. The first stage of the Phase 2 portion plans to enroll approximately 20 patients, and if at least two patients achieve a partial response or complete response, a second stage may enroll an additional 15 patients. The primary objective of the Phase 2 portion of the study is to assess the anti-tumor activity of glembatumumab vedotin in squamous cell lung cancer as measured by ORR. Secondary objectives of the study ~~include analyses of~~included safety and tolerability, pharmacokinetics (PK) and ~~further assessment of anti-tumor activity across a broad range of endpoints.~~
~~We have also entered into a Cooperative Research~~pharmacodynamics (tryptase and ~~Development Agreement, or CRADA, with the National Cancer Institute, or NCI, under which NCI~~stem cell factor) and immunogenicity. Tryptase is sponsoring a Phase 2 study of glembatumumab vedotin in uveal melanoma. The study is a single-arm, open-label study in patients with locally recurrent or metastatic uveal melanoma. The study has a two stage design with a pre-specified activity threshold necessary in the first stage to progress enrollment to the second stage. The primary outcome measure is ORR. Secondary outcome measures include change in gpNMB expression on tumor tissue via immunohistochemistry, safety, OSan enzyme synthesized and ~~PFS. Data from this study were presented at 9~~th World Congress of Melanoma in October of 2017. Two (6%) objective responses were observed in 31 patients to date and 35% of patients experienced stable disease greater than 100 days (median 5.5 months). The disease control rate (response rate + stable disease) for all patients on study was noteworthy at 61%. Median PFS was 3.2 months and median OS was 11.8 months. For patients who experienced either a partial response or stable disease, median PFS was 5.5 months and median OS has not yet been reached. The NCI is conducting exploratory immune correlates to provide insight into target saturation, antigen release and potential combination strategies.
~~Varlilumab~~
~~Varlilumab is a fully human monoclonal agonist antibody that binds to and activates CD27, a critical co-stimulatory molecule in the immune activation cascade. We believe varlilumab works primarily~~secreted almost exclusively by stimulating T cells, an important component of a person’s immune system, to attack cancer cells. Restricted expression and regulation of CD27 enables varlilumab specifically to activate T cells, resulting in an enhanced immune response with the potential for a favorable safety profile. In preclinical studies, varlilumab has been shown to directly kill or inhibit the growth of CD27 expressing lymphomas and leukemias in in ~~vitro~~ ~~and~~ ~~in vivo~~ models. We have entered into license agreements with the University of Southampton, UK for intellectual property to use anti-CD27 antibodies and with Medarex (acquired by Bristol-Myers Squibb Company, or BMS) for access to the UltiMab technology to develop and commercialize human antibodies to CD27. Varlilumab was initially studied as a single-agent to establish a safety profile and assess immunologic and clinical activity in patients with cancer, but we believe the greatest opportunity for varlilumab is as an immune activator in combination with other agents. Currently, we are focusing our efforts on a Phase 1/2 clinical trial being conducted in collaboration with BMS and their PD-1 immune checkpoint inhibitor, Opdivo. Varlilumab is also being explored in combination studies, including with glembatumumab vedotin, and in ongoing and planned investigator-sponsored studies.
~~Single-Agent Phase 1 Study:~~ Data from the completed, open-label Phase 1 study of varlilumab in patients with selected malignant solid tumors or hematologic cancers were presented at the Annual Meeting of the American Society of Clinical Oncology in June 2014. Varlilumab demonstrated an acceptable safety profile and induced immunologic activity in patients that is consistent with both its proposed mechanism of action and data in preclinical models. A total of 90 patients were dosed in the study at multiple clinical sites in the U.S. of which 55 patients were dosed in dose escalation cohorts (various solid and hematologic B- and T-cell tumors), and 35 patients were dosed in the expansion cohorts (melanoma, renal cell carcinoma and Hodgkin lymphoma) at 3 mg/kg. In both the solid tumor and hematologic dose-escalations, the pre-specified maximum dose level (10 mg/kg) was reached without
identification of a maximum tolerated dose. The majority of adverse events, or AEs, related to treatment have been mild to moderate (Grade 1/2) in severity, with only three serious AEs related to treatment reported. No significant immune-mediated adverse events (colitis, hepatitis, etc.) typically associated with checkpoint blockade have been observed to date. Two patients initially experienced significant objective responses including a complete response in Hodgkin lymphoma (patient remains in remission at 2.8+ years without further anticancer therapy as of September 2016; patient no longer on study) and a partial response in renal cell carcinoma (continued at 2.5+ years without further anticancer therapy as of June 2017). A patient with renal cell carcinoma that experienced significant stable disease (4+ years) has achieved a single-time point partial response at 4.2+ years without additional anticancer therapy. Twelve patients experienced stable disease up to 14 months. As of June 2017, there are two patients continuing in long term follow-up. Final results from the study in patients with solid tumors were published in the ~~Journal of Clinical Oncology~~ ~~in April 2017.~~
~~Phase 1/2 Varlilumab/Opdivo~~® ~~Combination Study:~~ In 2014, we entered into a clinical trial collaboration with Bristol-Myers Squibb to evaluate the safety, tolerability and preliminary efficacy of varlilumab and Opdivo, Bristol-Myers Squibb’s PD-1 immune checkpoint inhibitor, in a Phase 1/2 study. Under the terms of this clinical trial collaboration, Bristol-Myers Squibb made a one-time payment to us of $5.0 million, and the companies amended the terms of our existing license agreement with Medarex (acquired by Bristol-Myers Squibb) related to our CD27 program whereby certain future milestone payments were waived and future royalty rates were reduced that may have been due from us to Medarex. In return, Bristol-Myers Squibb was granted a time-limited right of first negotiation if we wish to out-license varlilumab. The companies also agreed to work exclusively with each other to explore anti-PD-1 antagonist antibody and anti-CD27 agonist antibody combination regimens. The clinical trial collaboration provides that the companies will share development costs and that we will be responsible for conducting the Phase 1/2 study.
The Phase 1/2 study was initiated in January 2015 and is being conducted in adult patients with multiple solid tumors to assess the safety and tolerability of varlilumab at varying doses when administered with Opdivo, followed by a Phase 2 expansion to evaluate the activity of the combination in disease specific cohorts.
Data (n=36) from the Phase 1 dose escalation portion of the study were presented in an oral presentation at the American Society of Clinical Oncology Annual Meeting in June 2017. The majority of patients had PD-L1 negative tumor at baseline and presented with stage IV, heavily-pretreated disease. 80% of patients enrolled presented with refractory or recurrent colorectal (n=21) or ovarian cancer (n=8), a population expected to have minimal response to checkpoint blockade. The primary objective of the Phase 1 portion of the study was to evaluate the safety and tolerability of the combination. The combination was well tolerated at all varlilumab dose levels tested without any evidence of increased autoimmunity or inappropriate immune activation. Marked changes in the tumor microenvironment including increased infiltrating CD8+ T cells and increased PD-L1 expression, which have been shown to correlate with a greater magnitude of treatment effect from checkpoint inhibitors in other clinical studies, were observed. Additional evidence of immune activity, such as increase in inflammatory chemokines and decrease in T regulatory cells, was also noted. Notable disease control was also observed (stable disease or better for at least 3 months), considering the stage IV patient population contained mostly colorectal and ovarian cases (80%): 0.1 mg/kg varlilumab + 240 mg Opdivo: 1/5 (20%), 1 mg/kg varlilumab + 240 mg Opdivo: 5/15 (33%) and 10 mg/kg varlilumab + 240 mg Opdivo: 6/15 (40%).
Three partial responses (PR) were observed. A patient with PD-L1 negative, MMR proficient colorectal cancer, typically unlikely to respond to checkpoint blockade monotherapy, achieved a confirmed PR (95% decrease in target lesions) and, following completion of combination treatment, continues to receive treatment with Opdivo monotherapy at 22+ months. A patient with low PD-L1 (5% expression) squamous cell head and neck cancer achieved a confirmed PR (59% shrinkage) and experienced progression free survival of 6.7 months. A patient with PD-L1 negative ovarian cancer experienced a single timepoint PR (49% shrinkage) but discontinued treatment to a dose-limiting toxicity (immune hepatitis, an event known to be associated with checkpoint inhibition therapy). A subgroup analysis was conducted in patients with ovarian cancer based on an observed increase of PD-L1 and tumor-infiltrating lymphocytes in this patient population. In patients with paired baseline and on-treatment biopsies (n=13), only 15% were PD-L1 positive (> 1% tumor cells) at baseline compared to 77% during treatment (p=0.015). Patients with increased tumor PD-L1 expression and tumor CD8 T cells correlated with better clinical outcome with treatment (stable disease or better).
The Phase 2 portion of the study opened to enrollment in April 2016 and includes cohorts in colorectal cancer (n=18), ovarian cancer (n=54), head and neck squamous cell carcinoma (n=54), renal cell carcinoma (n=25) and glioblastoma (n=20). Additional dosing schedules are being explored in ovarian cancer and in head and neck squamous cell carcinoma, increasing the overall size of the study compared to the original study design. The primary objective of the Phase 2 cohorts is ORR, except glioblastoma, where the primary objective is the rate of 12-month overall survival. Secondary objectives include pharmacokinetic assessments, determining the immunogenicity of varlilumab when given in combination with Opdivo and further assessing the anti-tumor activity of combination treatment. We plan to complete enrollment across all cohorts in the Phase 2 portion of the study in the first quarter of 2018 and expect to work with BMS to present data from the study at a future medical meeting.
~~Anti-Kit Program: CDX-0158 and CDX-0159~~
KIT activation is implicated in many disease processes including some cancers, neurofibromatosis and mast cell-related diseases, including autoimmune disease. CDX-0158, a humanized monoclonal antibody, is a potent inhibitor of wildtype KIT in mast cells and ~~has demonstrated preclinical activity versus the most common oncogenic KIT mutations found~~decreases in human gastrointestinal stromal tumors (GIST) in model cell lines and in spontaneous canine mast cell tumors (an established model for mastocytoma). A Phase 1 dose escalation study in patients with advanced refractory GIST and other KIT positive tumors opened to enrollment in December 2015 to determine the maximum tolerated dose, recommend a dose for further study and characterize the safety profile. A total of 28 patients have been treated with doses up to 15 mg/kg with one patient currently continuing on treatment. Importantly, no evidence of myelosuppression (an effect commonly associated with KIT inhibition) was observed in this study. Approximately two-thirds of the patients on study had infusion reactions that were manageable with pre-medication and longer infusion times. The biomarker data showed evidence of dose-related KIT engagement, and two patients experienced partial metabolic responses on fluorodeoxyglucose (FDG)-PET scan; however, these PET responses were not associated with tumor shrinkage.
~~The infusion reactions~~plasma tryptase levels are believed to ~~be the result of CDX-0158 acting as an agonist on mast cells~~ reflect a systemic reduction in ~~vivo~~~~, where the antibody can be cross-linked by Fc receptors and cause~~ mast cell degranulation. Given the infusion reactions, modifications have been introduced into the Fc portion of the CDX-0158 antibody to prevent these interactions, which should eliminate the potential for Fc receptor mediated agonist activity. This second-generation version, called CDX-0159, also includes modifications to increase the half-life of the antibody, giving it additional benefits over CDX-0158. Preclinical data to date with CDX-0159 have demonstrated equivalent KIT inhibition to CDX-0158, but unlike CDX-0158, CDX-0159 does not induce KIT activation when Fc receptors are used to cross-link the antibodies. CDX-0159 is being fully developed in-house with the intention of replacing CDX-0158 in clinical development. We expect manufacturing and IND-enabling efforts for CDX-0159 will be completed in 2018.
~~CDX-3379~~
CDX-3379 is a human monoclonal antibody with half-life extension designed to block the activity of ErbB3 (HER3). We believe ErbB3 may be an important receptor regulating cancer cell growth and survival as well as resistance to targeted therapies and is expressed in many cancers, including head and neck, thyroid, breast, lung and gastric cancers, as well as melanoma. We believe the proposed mechanism of action for CDX-3379 sets it apart from other drugs in development in this class due to its ability to block both ligand-independent and ligand-dependent ErbB3 signaling by binding to a unique epitope. It has a favorable pharmacologic profile, including a longer half-life and slower clearance relative to other drug candidates in this class. CDX-3379 also has potential to enhance anti-tumor activity and/or overcome resistance in combination with other targeted and cytotoxic therapies to directly kill tumor cells. Tumor cell death and the ensuing release of new tumor antigens has the potential to serve as a focus for combination therapy with immuno-oncology approaches, even in refractory patients.
A Phase 1a/1b study was conducted, including a single-agent, dose-escalation portion and combination expansion cohorts. Data from the dose-escalation portion, which completed enrollment in September 2015, and initial data from the expansion cohorts (enrollment ongoing at the time) were presented at the American Society of Clinical Oncology Annual Meeting in June 2016. The single-agent, dose-escalation portion of the study did not identify an MTD, and there were no dose limiting toxicities. The most common adverse events included rash and diarrhea and were predominantly grade 1 or 2. Four combination arms across multiple tumor types were added to evaluate CDX-3379 with several drugs that target EGFR, HER2 or BRAF. They include combinations with Erbitux® ~~(n=16), Tarceva~~® ~~(n=8), Zelboraf~~® ~~(n=4) and Herceptin~~® (n=10). Patients had advanced disease and were generally heavily pretreated. Across the combination arms, the most frequent adverse events were diarrhea, nausea, rash and fatigue. Objective responses were observed in the Erbitux and Zelboraf combination arms. In the Erbitux arm, there was one complete response in a patient with head and neck cancer, who had been previously treated with Erbitux and was refractory. In the Zelboraf arm, there were two partial responses in patients who had lung cancer, one of whom had been previously treated with Tafinlar® and was considered refractory. We have finalized plans for advancement into an open-label Phase 2 study in approximately 30 patients with recurrent/metastatic head and neck squamous cell cancer who are refractory to Erbitux (cetuximab). We anticipate initiating this study in the fourth quarter of 2017. The primary objective of the study is objective response rate. Second objectives include assessments of clinical benefit response (CBR), duration of response (DOR), PFS and OS, and safety and pharmacokinetics associated with the combination.
~~CDX-1401~~
CDX-1401, developed from our APC Targeting Technology, is an NY-ESO-1-antibody fusion protein for immunotherapy in multiple solid tumors. CDX-1401, which is administered with an adjuvant, is composed of the cancer-specific antigen NY-ESO-1 fused to a fully human antibody that binds to DEC-205 for efficient delivery to dendritic cells. Delivery of tumor-specific proteins directly to dendritic cells ~~in vivo~~ ~~elicits potent, broad, anti-tumor immune responses across populations with different genetic~~
backgrounds. In humans, NY-ESO-1 has been detected in 20% to 30% of melanoma, lung, esophageal, liver, gastric, ovarian and bladder cancers, and up to 70% of synovial sarcomas, thus representing a broad opportunity. CDX-1401 is being developed for the treatment of malignant melanoma and a variety of solid tumors which express the cancer antigen NY-ESO-1. Preclinical studies have shown that CDX-1401 treatment results in activation of human T cell responses against NY-ESO-1.
We have completed a Phase 1 study of CDX-1401 which assessed the safety, immunogenicity and clinical activity of escalating doses of CDX-1401 with TLR agonists (resiquimod and/or poly-ICLC) in 45 patients with advanced malignancies refractory to all available therapies. Results were published in ~~Science Translational Medicine~~ in April 2014. Sixty percent of patients had confirmed NY-ESO expression in archived tumor samples. Thirteen patients maintained stable disease for up to 13.4 months with a median of 6.7 months. Treatment indicates an acceptable safety profile to date, and there were no dose limiting toxicities. A variety of immune activation parameters were observed. Humoral responses were elicitedburden in both NY-ESO-1 positive and negative patients. NY-ESO-1-specific T cell responses were absent or low at baseline, but increased post-vaccination in 56% of evaluable patients, including both CD4 and/or CD8 T cell responses. Robust immune responses were observed with CDX-1401 with resiquimod and poly-ICLC alonehealthy volunteers and in combination. Long-term patient follow up suggested that treatment with CDX-1401 may predispose patients to better outcomes on subsequent therapy with checkpoint inhibitors. Of the 45 patients in the Phase 1 study, eight went on to receive subsequent therapy of either Yervoy® or an investigational checkpoint inhibitor within 3 months of CDX-1401, and six of these patients had objective tumor regression. Six patients with melanoma received Yervoy within three months of treatment with CDX-1401, and four (67%) had objective tumor responses, including one complete response, which compares favorably to the overall response rate of 11% previously reported in metastatic melanoma patients treated with single-agent Yervoy. In addition, two patients with non-small cell lung cancer received an investigational checkpoint blockade within two months of completing treatment with CDX-1401, and both achieved partial responses. Together with Roche, we are supporting an investigator initiated study of CDX-1401 in combination with Tecentriq® ~~(atezolizumab; anti-PD-L1) in patients with lung cancer.~~
CDX-1401’s potential activity is being explored in investigator sponsored and collaborative studies. A Phase 2 study of CDX-1401 in combination with CDX-301 is being conducted in malignant melanoma by the Cancer Immunotherapy Trials Network (CITN) under a CRADA with the Cancer Therapy Evaluation Program of the NCI. This study was designed to determine the activity of CDX-1401 with or without CDX-301 in melanoma. The primary outcome measure of the study is immune response to NY-ESO-1. Secondary outcome measures include analysis and characterization of peripheral blood mononuclear cells (dendritic cells, T cells, natural killer cells, etc.), additional immune monitoring, safety and clinical outcomes (survival and time to tumor recurrence). Enrollment is complete, and initial results were presented at the 2016 American Society of Clinical Oncology (ASCO) Annual Meeting. The data confirmed that CDX-1401 is capable of driving NY-ESO-1 immunity and further demonstrated the potential of CDX-301 as a combination agent for enhancing tumor specific immune responses. The NCI and CITN are planning to enroll additional cohorts to investigate alternative regimens of CDX-301.
In September 2017, a randomized, open-label Phase 1/2 study of CDX-1401 in combination with atezolizumab and SGI-110 opened to enrollment in recurrent ovarian, fallopian tube, or primary peritoneal cancer. This study is being conducted under a CRADA with the NCI Division of Cancer Treatment and Diagnosis and is designed to determine the activity of atezolizumab alone, atezolizumab plus SGI-110 and atezolizumab plus SGI-110 plus CDX-1401. The primary outcome of the Phase 1 dose escalation study is safety and only evaluates atezolizumab alone and in combination with SGI-110. The Phase 2 portion of the study is expected to add CDX-1401. The primary outcome of the Phase 2 portion of the study is a comparison of PFS between the three cohorts.
~~Other studies are being considered through investigator-sponsored and collaborative agreements.~~
~~CDX-301~~
CDX-301, a recombinant FMS-like tyrosine kinase 3 ligand, or Flt3L, is a hematopoietic cytokine that uniquely expands dendritic cells and hematopoietic stem cells in combination with other agents to potentiate the anti-tumor response. Depending on the setting, cells expanded by CDX-301 promote either enhanced or permissive immunity. CDX-301 is in clinical development for multiple cancers, in combination with vaccines, adjuvants and other treatments that release tumor antigens. We licensed CDX-301 from Amgen Inc. in March 2009 and believe CDX-301 may hold significant opportunity for synergistic development in combination with other proprietary molecules in our portfolio.
A Phase 1 study of CDX-301 evaluated seven different dosing regimens of CDX-301 to determine the appropriate dose for further development based on safety, tolerability and biological activity. The datadisease. Data from the study were featured in a late breaking presentation at the European Academy of Allergy and Clinical Immunology (EAACI) Annual Congress 2020 in June. CDX-0159 demonstrated a favorable safety profile as well as profound and durable reductions of plasma tryptase, consistent with ~~previous clinical experience and demonstrated that CDX-301 has an acceptable safety profile to date and can mobilize hematopoietic stem~~systemic mast cell ~~(HSC) populations in healthy volunteers.~~suppression.
At the 2016 ASCO Annual Meeting, initial results from a Phase 2 study of CDX-1401 in combination with CDX-301 in malignant melanoma were presented that further demonstrated the value of CDX-301 as a combination agent for enhancing tumor specific immune responses. The Phase 2 study was conducted by the Cancer Immunotherapy Trials Network, or CITN, under a CRADA with the Cancer Therapy Evaluation Program
· Most common adverse events were mild infusion-related reactions, all of which spontaneously resolved without intervention. Mild and asymptomatic decreases in neutrophil and white blood cell count were observed in laboratory testing.
· A single dose of CDX-0159 suppressed plasma tryptase levels in a dose-dependent manner, indicative of systemic mast cell suppression. Tryptase suppression below the level of detection was observed after a single 1.0 mg/kg dose and was maintained for more than 2 months at single doses of both 3.0 and 9.0 mg/kg of CDX-0159. A subset of subjects from the 3mg/kg and 9 mg/kg cohorts agreed to continued follow up for tryptase suppression which remained below the level of detection for over 3 months (14 weeks) in 50% of subjects and over 4 months (18 weeks) in all subjects, respectively.
· Dose dependent increases in plasma stem cell factor mirror decreases in tryptase, consistent with allosteric blockade of stem cell factor to KIT and demonstrate complete target engagement in vivo.
· Long serum half-life and non-immunogenic profile support a convenient dosing schedule.
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· Enhanced PK profile and durable tryptase suppression at low doses support re-formulation for sub-cutaneous administration.
These data support expansion of the ~~NCI. Based on these results~~CDX-0159 program into mast cell driven diseases, including initially studies in forms of chronic urticaria (CU) given the ~~CITN~~central role mast cells are known to play in the etiology of CU. Celldex plans to initiate Phase 1b studies of CDX-0159 this fall in patients with chronic spontaneous urticaria (CSU) and chronic inducible urticaria (CIndU), diseases where mast cell degranulation plays a central role in the onset and progression of the disease. The prevalence of CSU and CIndU is ~~planning~~approximately 0.5-1% of the total population or up to ~~enroll additional cohorts~~1 to ~~investigate alternative regimens~~3 million patients in the United States alone (Weller et al. 2010. Hautarzt. 61(8), Bartlett et al. 2018. DermNet. Org). CSU presents as itchy hives, angioedema or both for at least six weeks without a specific trigger; multiple episodes can play out over years or even decades. About 50% of ~~CDX-301. Other studies are being considered through investigator-sponsored and collaborative agreements.~~
~~CDX-014~~
~~CDX-014~~patients with CSU achieve symptomatic control with antihistamines or leukotriene receptor antagonists. Omalizumab, an IgE inhibitor, provides relief for roughly half of the remaining antihistamine/leukotriene refractory patients. Consequently, there is a ~~human monoclonal ADC~~need for additional therapies. CIndUs are forms of urticaria that ~~targets T cell immunoglobulin and mucin domain 1,~~have an attributable cause or ~~TIM-1. TIM-1 expression is upregulated in several cancers, most notably renal cell and ovarian carcinomas, and is~~trigger associated with a more malignant phenotype of renal cell carcinoma (RCC) and tumor progression. TIM-1 has restricted expression in healthy tissues, making it potentially amenable to an ADC approach. The TIM-1 antibody is linked to MMAE using Seattle Genetics’ proprietary technology. The ADC is designed to be stable in the bloodstream but to release MMAE upon internalization into TIM-1-expressing tumor cells,them, typically resulting in ~~a targeted cell-killing effect. CDX-014 has shown anti-tumor activity in preclinical models of ovarian~~hives or wheals. Celldex is exploring cold-induced and ~~renal cancers.~~
~~In July 2016, we announced that enrollment had opened in a Phase 1/2 study of CDX-014 to patients with both clear~~dermographism (scratch-induced) urticarias. Celldex is also exploring additional mast cell and papillary RCC. The Phase 1 dose-escalation portion of the study is evaluating cohorts of patients receiving increasing doses of CDX-014 to determine the maximum tolerated dose and a recommended dosedriven diseases for Phase 2 study. We anticipate expanding the Phase 1 study to encompass additional TIM-1 expressing tumor types and alternate dosing regimens. The Phase 2 portion of the study plans to enroll approximately 25 patients to assess the anti-tumor activity of CDX-014 at the recommended dose in advanced renal cell carcinoma as measured by objective response rate. Secondary objectives include safety and tolerability, pharmacokinetics, immunogenicity and additional measures of anti-tumor activity.
future development.
CDX-1140

CDX-1140 is a fully human agonist monoclonal antibody targeted to CD40, a key activator of immune response, which is found on dendritic cells, macrophages and B cells and is also expressed on many cancer cells. Potent CD40 agonist antibodies have shown encouraging results in early clinical studies; however, systemic toxicity associated with broad CD40 activation has limited their dosing. CDX-1140 has unique properties relative to other CD40 agonist antibodies: potent agonist activity is independent of Fc receptor interaction, contributing to more consistent, controlled immune activation; CD40L binding is not blocked, leading to potential synergistic effects of agonist activity near activated T cells in lymph nodes and tumors; and the antibody does not promote cytokine production in whole blood assays. CDX-1140 has shown direct anti-tumor activity in preclinical models of lymphoma.
Preclinical data, including the IND-enabling toxicology study of CDX-1140, were accepted for presentation at the Society for Immunotherapy of Cancer’s (SITC) 32nd Annual Meeting in November 2017. This toxicology studystudies of CDX-1140 clearly ~~demonstrates~~demonstrate strong immune activation effects and low systemic ~~toxicity. The No Observable Adverse Effect Level (NOAEL) for CDX-1140 was determined to be 10 mg/kg in this study. The data~~toxicity and support the design of the Phase 1 study ~~of CDX-1140~~ to ~~rapidly~~ identify the dose for characterizing single-agent and combination activity. ~~The Company believes that the potential for CDX-1140 will be best defined in combination studies with other immunotherapies or conventional cancer treatments.~~

We ~~plan to initiate~~initiated a Phase 1 study of CDX-1140 ~~by year-end~~in November 2017. This study ~~which~~ is expected to enroll up to approximately ~~105~~220 patients with recurrent, locally advanced or metastatic solid tumors and B cell lymphomas. The study is designed to determine the maximum tolerated dose, or MTD, during a dose-escalation phase (0.01 to 3.0 mg/kg once every four weeks until confirmed progression or intolerance) and to recommend a dose level for further study in a subsequent expansion phase. The expansion is designed to further evaluate the tolerability and biologic effects of selected dose(s) of CDX-1140 in specific tumor types. Secondary objectives include assessments of safety and tolerability, pharmacodynamics, pharmacokinetics, immunogenicity and additional measures of anti-tumor activity, including clinical benefit rate. We believe that the potential for CDX-1140 will be best defined in combination studies with other immunotherapies or conventional cancer treatments.

In support of this, the Phase 1 study protocol also allows for the exploration of CDX-1140 in combination with CDX-301 at a fixed dose of CDX-301 and escalating doses of CDX-1140. Dendritic cells, which express CD40, are often rare or missing from the tumor microenvironment and are critical for initiating anti-tumor immunity. CDX-301, a recombinant FMS-like tyrosine kinase 3 ligand, or Flt3L, is a hematopoietic cytokine that uniquely expands dendritic cells and hematopoietic stem cells, and in combination with other agents may potentiate anti-tumor responses. CDX-301 is being utilized as a priming agent in this study to increase the number of dendritic cells in blood and tissue available for CDX-1140 activation. CDX-1140 should, in turn, activate and mature the dendritic cells, an important step for enhancing anti-tumor immune responses.
20
Interim data from this ongoing study were presented at the Society for Immunotherapy of Cancer’s (SITC) 34th Annual Meeting in November 2019. CDX-1140 monotherapy dose escalation in the study is complete and the maximum tolerated dose and recommended Phase 2 dose was defined as 1.5 mg/kg every four weeks. CDX-1140 monotherapy and combination with CDX-301 was generally well tolerated, with mostly grade 1 or grade 2 drug related adverse events reported. Two patients out of six experienced pneumonitis as dose limiting toxicities (DLTs) in the CDX-1140 3.0 mg/kg monotherapy cohort. There were no DLTs observed in the CDX-301 combination cohorts up to 0.72 mg/kg CDX-1140. A cohort of CDX-1140 at 1.5 mg/kg plus CDX-301, which was ongoing at the time of data release, has subsequently completed dose escalation with no DLTs observed; therefore, the recommended dose of CDX-1140 in combination with CDX-301 is 1.5mg/kg.
As of the cut-off date for data reporting for SITC, 62 patients with advanced refractory solid tumors or lymphoma were enrolled and 38 patients had pre- and post-treatment scans available. Patients were heavily pretreated (median of 4 prior therapies) and per protocol were required to have received all standard of care treatments prior to study entry. CDX-1140 demonstrated clinical and biological activity in the study.
Two of five patients with head and neck squamous cell carcinoma (HNSCC) treated with CDX-1140 doses of 0.72 mg/kg or higher experienced clinical activity. The first patient experienced dramatic shrinkage of a large, protruding neck mass on physical exam after two doses of CDX-1140 at 1.5 mg/kg with documented evidence of tumor necrosis/cavitation on CT scan. This patient also reported decreased tumor pain. A second patient experienced cavitation of greater than 50% of lung metastases on CT scan after one dose of CDX-1140 3 mg/kg.
A patient with gastroesophageal carcinoma experienced a RECIST response after two cycles of CDX-1140 0.36 mg/kg plus CDX-301 that included 41% shrinkage of liver and lymph node target lesions, with near complete resolution of the liver lesion. This response was durable for four months.
Six patients experienced stable disease (n=4 CDX-1140 monotherapy; n=2 CDX-1140/CDX-301 combination) with a duration of 1.8 months to 5.4 months.
One patient experienced immune unconfirmed progressive disease on their first scan and continued on treatment for 10+ months without confirmation of progressive disease at CDX-1140 0.09 mg/kg plus CDX-301.
Potent pharmacological effects associated with immune activation were also observed, including transient induction of inflammatory cytokines and chemokines associated with dendritic cell and T cell activation at higher dose levels. Similar activation was observed with each cycle of therapy. Peripheral blood immune cells had upregulated immune activation markers and CDX-301 markedly increased the number of dendritic cells and was associated with higher IL-12p40 induction, a key molecule for inducing anti-tumor T cell responses.
CDX-1140 monotherapy expansion cohorts in HNSCC, renal cell carcinoma and gastroesophageal adenocarcinoma have been added to the study, along with a combination cohort of CDX-1140 and CDX-301 in HNSCC. In addition, we have prioritized a cohort to evaluate CDX-1140 in combination with KEYTRUDA^® (pembrolizumab), Merck’s anti-PD-1 therapy, under a clinical trial collaboration agreement with Merck (known as MSD outside of the U.S. and Canada). The cohort is designed to characterize the safety, pharmacodynamics and activity of CDX-1140 in combination with pembrolizumab in patients refractory to PD1/PDL1 treatment. Enrollment is ongoing. We also plan to initiate a cohort in combination with standard of care chemotherapy in patients with previously untreated metastatic pancreatic cancer later this year. The Company is exploring additional combination cohorts with mechanisms that we believe could be complementary or synergistic with CDX-1140.
CDX-527
CDX-527 is the first candidate from Celldex’s bispecific antibody platform. Bispecifics provide opportunities to engage two independent pathways involved in controlling immune responses to tumors. CDX-527 uses Celldex’s proprietary highly active anti-PD-L1 and CD27 human antibodies to couple CD27 co-stimulation with blockade of the PD-L1/PD-1 pathway to help prime and activate anti-tumor T cell responses through CD27 costimulation, while preventing PD-1 inhibitory signals that subvert the immune response.
21
Celldex’s prior clinical experience with combining CD27 activation and PD-1 blockade provide the rationale for linking these two pathways into one molecule. Preclinical data presented at the SITC 34th Annual Meeting in November 2019 demonstrated that CDX-527 is more potent at T cell activation and anti-tumor immunity than the combination of parental monoclonal antibodies.
Later this year, Celldex plans to initiate a Phase 1 dose-escalation study in up to ~90 patients with advanced or metastatic solid tumors that have progressed during or after standard of care therapy to be followed by tumor-specific expansion cohorts. The study is designed to determine the maximum tolerated dose, or MTD, during a dose-escalation phase and to recommend a dose level for further study in the subsequent expansion phase. The expansion is designed to further evaluate the tolerability, biologic and anti-tumor effects of selected dose level(s) of CDX-527 in specific tumor types.
CDX-3379
CDX-3379 is a human monoclonal antibody with half-life extension designed to block the activity of ErbB3 (HER3). We believe ErbB3 may be an important receptor regulating cancer cell growth and survival as well as resistance to targeted therapies. ErbB3 is expressed in many cancers, including head and neck, thyroid, breast, lung and gastric cancers, as well as melanoma. CDX-3379 was recently evaluated in a Phase 2 open-label exploratory study in combination with Erbitux in patients with human papillomavirus (HPV) negative, Erbitux-resistant, advanced HNSCC who have previously been treated with an anti-PD1 checkpoint inhibitor, a population with limited options and a particularly poor prognosis.
The study was initially designed as a Simon two-stage design with an interim futility analysis following enrollment of the first 13 patients. According to the study design, if at least one patient achieved an objective response in the first stage, enrollment could progress to the second stage. The primary endpoint of the study was objective response rate (ORR). Secondary endpoints included assessments of clinical benefit response (CBR), duration of response (DOR), progression-free survival (PFS), overall survival (OS), and safety and pharmacokinetics associated with the combination. Enrollment to the first stage of the Phase 2 study (n=15) was completed and interim data were presented at the 2019 ASCO Annual Meeting in June. A durable confirmed complete response (11+ months) and an unconfirmed partial response (uPR) in a patient that had not received cetuximab were observed; 7 patients experienced stable disease (47%; includes uPR). CDX-3379 in combination with cetuximab was generally associated with target-mediated adverse events of diarrhea and rash and dose reductions and/or delays to the combination therapy in the majority of patients were contemplated to have potentially impacted the magnitude of anti-tumor activity in the study. The analysis presented at ASCO also suggested that observed antitumor activity with CDX-3379 across the Phase 1 and Phase 2 studies might be associated with somatic mutations in the FAT1 and NOTCH1-3 genes—genes associated with tumor suppression.
Based on these biomarker observations and the clinical activity observed in the Phase 2 study, the study was amended and expanded to add an additional 30 patients to allow for an evaluation of the utility of biomarkers for patient selection. Enrollment of the first 15 patients in this expansion cohort was recently completed. One patient experienced an ongoing objective response (7%) and 5 (33%) patients experienced stable disease on at least one tumor assessment. Consistent with the first cohort, the combination of CDX-3379 and cetuximab appears to result in synergistic toxicity with target mediated adverse events of diarrhea and rash. While diarrhea prophylaxis implemented in second cohort appeared to have been effective in ameliorating severity of symptoms it did not decrease the frequency and the incidence of severe rash increased, resulting in dose reductions and/or delays to the combination therapy in the majority of patients. When considered together, the emerging clinical activity data is not adequate to justify the significant toxicity of the combination and the results do not support continued development of the combination, regardless of pending biomarker data. As a result, Celldex is discontinuing development of CDX-3379 and the resources allocated to this program will be focused on expanded development of CDX-0159 and additional assets in our pipeline.

CRITICAL ACCOUNTING POLICIES

See Note 2 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for information regarding ~~newly-adopted~~newly adopted and recent accounting pronouncements. See also Note 2 to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019 for a discussion of our critical accounting policies. There have been no material changes to such critical accounting policies. We believe our most critical accounting policies include accounting for contingent consideration, revenue recognition, ~~impairment of~~intangible and long-lived assets, research and development expenses and stock-based compensation expense.
RESULTS OF OPERATIONS

Three Months Ended ~~September~~June 30, ~~2017~~2020 Compared with Three Months Ended ~~September~~June 30, ~~2016~~2019

Three Months Ended
September 30,

Increase/
(Decrease)

Increase/
(Decrease)

Three Months Ended
June 30, Increase/
(Decrease) Increase/
(Decrease)

2017

2016

$

%

2020 2019 $ %

(In thousands)

(In thousands)
Revenue:

Revenues:
Product Development and Licensing Agreements

$
1,238

$
493

$
745

151
%
$ — $ 195 $ (195 ) (100 )%
Contracts and Grants

2,686

1,727

959

56
%
236 520 (284 ) (55 )%
Total Revenue

$
3,924

$
2,220

$
1,704

77
%
$ 236 $ 715 $ (479 ) (67 )%
Operating Expense:

Operating Expenses:
Research and Development

21,915

25,009

(3,094
)
(12
)%
9,705 10,081 (376 ) (4 )%
General and Administrative

5,346

6,950

(1,604
)
(23
)%
3,528 3,908 (380 ) (10 )%
In-Process Research and Development Impairment

13,000

—

13,000

n/a

Intangible Asset Impairment 3,500 — 3,500 n/a
Gain on Fair Value Remeasurement of Contingent Consideration

(4,600
)
—

4,600

n/a

(5,132 ) (1,017 ) 4,115 405 %
Amortization of Acquired Intangible Assets

224

254

(30
)
(12
)%
Total Operating Expense

35,885

32,213

3,672

11
%
11,601 12,972 (1,371 ) (11 )%
Operating Loss

(31,961
)
(29,993
)
1,968

7
%
(11,365 ) (12,257 ) (892 ) (7 )%
Investment and Other Income, Net

398

395

3

1
%
106 478 (372 ) (78 )%
Net Loss Before Income Tax Benefit

(31,563
)
(29,598
)
1,965

7
%
(11,259 ) (11,779 ) (520 ) (4 )%
Income Tax Benefit

5,200

—

5,200

n/a

228 — 228 n/a
Net Loss

$
(26,363
)
$
(29,598
)
$
(3,235
)
(11
)%
$ (11,031 ) $ (11,779 ) $ (748 ) (6 )%

Net Loss

The ~~$3.2~~$0.7 million decrease in net loss for the three months ended ~~September~~June 30, ~~2017,~~2020, as compared to the three months ended ~~September~~June 30, ~~2016,~~2019, was primarily the result of ~~a decrease~~an increase in ~~research and development and general and administrative expenses,~~ the gain on fair value remeasurement of contingent consideration, ~~and the income tax benefit recognized~~partially offset by the ~~in-process research and development impairment.~~
increase in non-cash intangible asset impairment expense.
Revenue

The ~~$0.7~~$0.2 million ~~increase~~decrease in product development and licensing agreements revenue for the three months ended ~~September~~June 30, ~~2017,~~2020, as compared to the three months ended ~~September~~June 30, ~~2016,~~2019, was primarily due to ~~an increase~~a decrease in ~~reimburseable clinical trial expenses from BMS associated with~~revenue under the ~~Phase 1/2 study of varlilumab and Opdivo~~®~~, BMS’s PD-1 immune checkpoint inhibitor.~~Rockefeller Agreement. The ~~$1.0~~$0.3 million ~~increase~~decrease in contracts and grants revenue for the three months ended ~~September~~June 30, ~~2017,~~2020, as compared to the three months ended ~~September~~June 30, ~~2016,~~2019, was primarily related to a decrease in services performed under our ~~IAVI and Frontier agreements pursuant to which we perform~~ manufacturing and ~~R&D services for IAVI~~research and ~~Frontier.~~development agreement with Duke University. We expect revenue to remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.

Research and Development Expense

Research and development expenses consist primarily of (i) personnel expenses, (ii) laboratory supply expenses relating to the development of our technology, (iii) facility expenses ~~(iv) license fees~~ and ~~(v)~~(iv) product development expenses associated with our ~~product~~drug candidates as follows:

Three Months Ended
September 30,

Increase/
(Decrease)

Increase/
(Decrease)

2017

2016

$

%

(In thousands)

Personnel

$
8,933

$
8,940

$
(7
)
n/a

Laboratory Supplies

1,230

1,114

116

10
%
Facility

2,056

1,537

519

34
%
License Fees

162

942

(780
)
(83
)%
Product Development

7,316

10,697

(3,381
)
(32
)%
Three Months Ended
June 30 Increase/
(Decrease)
2020 2019 $ %
(In thousands)
Personnel $ 5,216 $ 5,408 $ (192 ) (4 )%
Laboratory Supplies 775 1,257 (482 ) (38 )%
Facility 1,758 1,558 200 13 %
Product Development 1,023 827 196 24 %
Personnel expenses primarily include salary, benefits, stock-based compensation and payroll ~~taxes and were relatively consistent~~taxes. The $0.2 million decrease in personnel expenses for the three months ended ~~September~~June 30, ~~2017,~~2020, as compared to the three months ended ~~September~~June 30, ~~2016. Increases in salary expenses were offset by~~2019, was primarily due to lower ~~stock based~~stock-based compensation expense. We expect personnel expenses to remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.

Laboratory supplies expenses include laboratory materials and supplies, services, and other related expenses incurred in the development of our technology. The ~~$0.1~~$0.5 million ~~increase~~decrease in laboratory ~~supplies expense~~supply expenses for the three months ended ~~September~~June 30, ~~2017,~~2020, as compared to the three months ended ~~September~~June 30, ~~2016,~~2019, was primarily due to ~~higher~~lower laboratory ~~services expenses.~~materials and supplies purchases. We expect laboratory supplies ~~expense to remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.~~
Facility expenses include depreciation, amortization, utilities, rent, maintenance, and other related expenses incurred at our facilities. The $0.5 million increase in facility expenses for the three months ended September 30, 2017, as compared to the three months ended September 30, 2016, was primarily due to the addition of the New Haven facility that we acquired with the Kolltan Acquisition and higher depreciation expense of $0.3 million. ~~We expect facility~~ expenses to remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.

~~License fees expense includes annual license~~Facility expenses include depreciation, amortization, utilities, rent, maintenance ~~fees~~ and ~~milestone payments due upon the achievement of certain development, regulatory and/or commercial milestones.~~other related expenses incurred at our facilities. The ~~$0.8~~$0.2 million ~~decrease~~increase in ~~license fee~~facility expenses for the three months ended ~~September~~June 30, ~~2017,~~2020, as compared to the three months ended ~~September~~June 30, ~~2016,~~2019, was primarily due to higher variable lease expense, including common area maintenance and utilities, in the ~~timing~~second quarter of ~~certain development and/or regulatory milestones achieved by our drug candidates.~~2020. We expect ~~license fees expense~~facility expenses to ~~remain relatively consistent~~decrease over the next twelve months ~~although there may be fluctuations on~~as a ~~quarterly basis.~~result of the consolidation our Massachusetts lab and manufacturing facilities in the second quarter of 2020. In July 2020, we extended the term of its Fall River lease through July 2023.

Product development expenses include clinical investigator site fees, external trial monitoring costs, data accumulation costs, contracted research and outside clinical drug product manufacturing. The ~~$3.4~~$0.2 million ~~decrease~~increase in product development expenses for the three months ended ~~September~~June 30, ~~2017,~~2020, as compared to the three months ended ~~September~~June 30, ~~2016,~~2019, was primarily ~~the result of decreases~~due to an increase in ~~varlilumab~~ contract manufacturing and clinical ~~trials~~trial expenses of ~~$1.7~~$0.4 million, ~~and $1.0 million, respectively.~~partially offset by a decrease in contract research expenses of $0.2 million. We expect product development expenses to increase over the next twelve months, although there may be fluctuations on a quarterly basis.
General and Administrative Expense
The $0.4 million decrease in general and administrative expenses for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019, was primarily due to lower stock-based compensation expense. We expect general and administrative expenses to remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.

Intangible Asset Impairment
We evaluated the CDX-3379 IPR&D asset for potential impairment as a result of the discontinuation of the CDX-3379 program. We concluded that the CDX-3379 IPR&D asset was fully impaired, and a non-cash impairment charge of $3.5 million was recorded for the three months ended June 30, 2020.

Gain on Fair Value Remeasurement of Contingent Consideration
The $5.1 million gain on fair value remeasurement of contingent consideration for the three months ended June 30, 2020 was primarily due to updated assumptions for CDX-3379 related milestones due to the discontinuation of the CDX-3379 program. The $1.0 million gain on fair value remeasurement of contingent consideration for the three months ended June 30, 2019 was primarily due to changes in discount rates and the passage of time.
Investment and Other Income, Net
The $0.4 million decrease in investment and other income, net for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019, was primarily due to lower levels of cash and investment balances. We anticipate investment income to increase over the next twelve months due to higher levels of cash and investment balances and higher other income related to our sale of New Jersey tax benefits.
Income Tax Benefit
During the quarter ended June 30, 2020, a $0.2 million non-cash income tax benefit was recorded related to the impairment of the CDX-3379 IPR&D asset.
Six Months Ended June 30, 2020 Compared with Six Months Ended June 30, 2019
Six Months Ended
June 30, Increase/
(Decrease) Increase/
(Decrease)
2020 2019 $ %
(In thousands)
Revenues:
Product Development and Licensing Agreements $ 2,285 $ 325 $ 1,960 603 %
Contracts and Grants 680 1,815 (1,135 ) (63 )%
Total Revenue $ 2,965 $ 2,140 $ 825 39 %
Operating Expenses:
Research and Development 21,400 21,232 168 1 %
General and Administrative 7,194 8,804 (1,610 ) (18 )%
Intangible Asset Impairment 3,500 — 3,500 n/a
Other Asset Impairment — 1,800 (1,800 ) (100 )%
(Gain) Loss on Fair Value Remeasurement of Contingent Consideration (4,898 ) 502 5,400 1,076 %
Total Operating Expense 27,196 32,338 (5,142 ) (16 )%
Operating Loss (24,231 ) (30,198 ) (5,967 ) (20 )%
Investment and Other Income, Net 347 1,180 (833 ) (71 )%
Net Loss Before Income Tax Benefit (23,884 ) (29,018 ) (5,134 ) (18 )%
Income Tax Benefit 228 — 228 n/a
Net Loss $ (23,656 ) $ (29,018 ) $ (5,362 ) (18 )%
Net Loss
The $5.4 million decrease in net loss for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, was primarily the result of an increase in the gain on fair value remeasurement of contingent consideration and a decrease in non-cash other asset impairment expense, partially offset by an increase in intangible asset impairment expense.

Revenue
The $2.0 million increase in product development and licensing agreements revenue for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, was primarily due to the $1.8 million received from the Rockefeller Transaction. The $1.1 million decrease in contracts and grants revenue for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, was primarily related to a decrease in services performed under our manufacturing and research and development agreement with Duke University.
Research and Development Expense
Research and development expenses consist primarily of (i) personnel expenses, (ii) laboratory supply expenses relating to the development of our technology, (iii) facility expenses and (iv) product development expenses associated with our drug candidates as follows:
Six Months Ended
June 30, Increase/
(Decrease)
2020 2019 $ %
(In thousands)
Personnel $ 10,832 $ 11,162 $ (330 ) (3 )%
Laboratory Supplies 2,235 2,053 182 9 %
Facility 3,487 3,454 33 1 %
Product Development 2,829 2,522 307 12 %
Personnel expenses primarily include salary, benefits, stock-based compensation and payroll taxes. The $0.3 million decrease in personnel expenses for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, was primarily due to lower stock-based compensation expense.
Laboratory supplies expenses include laboratory materials and supplies, services, and other related expenses incurred in the development of our technology. The $0.2 million increase in laboratory supply expenses for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, was primarily due to higher laboratory materials and supplies purchases.
Facility expenses include depreciation, amortization, utilities, rent, maintenance and other related expenses incurred at our facilities. Facility expenses for the six months ended June 30, 2020 were consistent with the six months ended June 30, 2019.
Product development expenses include clinical investigator site fees, external trial monitoring costs, data accumulation costs, contracted research and outside clinical drug product manufacturing. The $0.3 million increase in product development expenses for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019, was primarily due to an increase in clinical trial and contract manufacturing expenses of $0.9 million, partially offset by a decrease in contract research expenses of $0.6 million.
General and Administrative Expense

The $1.6 million decrease in general and administrative expenses for the ~~three~~six months ended ~~September~~June 30, ~~2017,~~2020, as compared to the ~~three~~six months ended ~~September~~June 30, ~~2016,~~2019, was primarily due to lower ~~commercial planning costs of $0.7 million and lower~~ stock-based compensation ~~of $0.6 million. We expect general and administrative expense to remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.~~expense.

~~In-Process Research and Development~~Intangible Asset Impairment

We evaluated the CDX-3379 IPR&D asset for potential impairment as a result of the discontinuation of the CDX-3379 program. We concluded that the CDX-3379 IPR&D asset was fully impaired, and a non-cash impairment charge of $3.5 million was recorded for the three months ended June 30, 2020.

Other Asset Impairment
We concluded that the Company’s investment in an undisclosed private company was impaired as a result of a deterioration in the private company’s financial condition and recorded a non-cash impairment charge of ~~$13.0~~$1.8 million ~~on the anti-KIT program IPR&D assets acquired from Kolltan~~ during the ~~three months ended September 30, 2017. This impairment charge was related to changes in projected development and regulatory timelines regarding the anti-KIT program.~~first quarter of 2019.

Gain on Fair Value Remeasurement of Contingent Consideration

The ~~$4.6~~$4.9 million gain on fair value remeasurement of contingent consideration for the ~~three~~six months ended ~~September~~June 30, ~~2017~~2020 was primarily due to ~~a reduction in fair value attributed~~updated assumptions for CDX-3379 related milestones due to ~~milestones related to our anti-KIT program. This gain was partially offset by losses related to changes in discount rates~~the discontinuation of the CDX-3379 program and the passage of ~~time affecting remaining milestones. See Note 3 to the financial statements included herein for a discussion of the contingent consideration that may be payable related to the Kolltan Acquisition.~~
~~Amortization Expense~~
Amortization expenses for the three months ended September 30, 2017 were relatively consistent with the three months ended September 30, 2016. We expect amortization expense of acquired intangible assets to remain consistent over the next twelve months.
~~Investment and Other Income, Net~~
Investment and other income, net for the three months ended September 30, 2017 was consistent with the three months ended September 30, 2016. We anticipate investment income to decrease over the next twelve months primarily due to lower levels of cash and investment balances.
~~Income Tax Benefit~~
time. The ~~income tax benefit relates to a $5.2~~$0.5 million ~~decrease in deferred tax liabilities, net during the three months ended September 30, 2017. This decrease was due to the partial impairment of the anti-KIT program IPR&D assets.~~
~~Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016~~

Nine Months Ended
September 30,

Increase/
(Decrease)

Increase/
(Decrease)

2017

2016

$

%

(In thousands)

Revenue:

Product Development and Licensing Agreements

$
2,488

$
1,551

$
937

60
%
Contracts and Grants

6,799

3,362

3,437

102
%
Total Revenue

$
9,287

$
4,913

$
4,374

89
%
Operating Expense:

Research and Development

72,707

78,168

(5,461
)
(7
)%
General and Administrative

19,109

24,049

(4,940
)
(21
)%
In-Process Research and Development Impairment

13,000

—

13,000

n/a

Gain on Fair Value Remeasurement of Contingent Consideration

(200
)
—

200

n/a

Amortization of Acquired Intangible Assets

672

760

(88
)
(12
)%
Total Operating Expense

105,288

102,977

2,311

2
%
Operating Loss

(96,001
)
(98,064
)
(2,063
)
(2
)%
Investment and Other Income, Net

1,611

1,841

(230
)
(12
)%
Net Loss Before Income Tax Benefit

(94,390
)
(96,223
)
(1,833
)
(2
)%
Income Tax Benefit

5,200

—

5,200

n/a

Net Loss

$
(89,190
)
$
(96,223
)
(7,033
)
(7
)%
~~Net Loss~~
~~The $7.0 million decrease in net~~ loss for the nine months ended September 30, 2017, as compared to the nine months ended September 30, 2016, was primarily the result of an increase in contracts and grants revenue, a decrease in general and administrative and research and development expenses and the income tax benefit recognized offset by the in-process research and development impairment.
~~Revenue~~
The $0.9 million increase in product development and licensing agreements revenue for the nine months ended September 30, 2017, as compared to the nine months ended September 30, 2016, was primarily due to an increase in reimburseable clinical trial expenses related to our BMS agreement. The $3.4 million increase in contracts and grants revenue for the nine months ended September 30, 2017, as compared to the nine months ended September 30, 2016, was primarily related to our IAVI and Frontier agreements executed in 2017.
~~Research and Development Expense~~

Nine Months Ended
September 30,

Increase/
(Decrease)

Increase/
(Decrease)

2017

2016

$

%

(In thousands)

Personnel

$
28,079

$
26,551

$
1,528

6
%
Laboratory Supplies

3,541

2,774

767

28
%
Facility

6,649

4,421

2,228

50
%
License Fees

479

1,381

(902
)
(65
)%
Product Development

26,965

36,950

(9,985
)
(27
)%
The $1.5 million increase in personnel expenses for the nine months ended September 30, 2017, as compared to the nine months ended September 30, 2016, was primarily due to an increase in salaries expense and headcount related to the Kolltan acquisition.
The $0.8 million increase in laboratory supplies expense for the nine months ended September 30, 2017, as compared to the nine months ended September 30, 2016, was primarily due to higher manufacturing supply purchases.
~~The $2.2 million increase in facility expenses for the nine months ended September 30, 2017, as compared to the nine months ended September 30, 2016~~, was primarily due to the addition of our New Haven facility that we acquired with the Kolltan acquisition and higher depreciation expense of $1.3 million. In March 2017, the Company terminated its lease in Branford, CT and consolidated its Connecticut operations in its New Haven facility.
~~The $0.9 million decrease in license fees expense for the nine months ended September 30, 2017, as compared to the nine months ended September 30, 2016, was due to the timing of certain development and/or regulatory milestones achieved by our drug candidates.~~
The $10.0 million decrease in product development expenses for the nine months ended September 30, 2017, as compared to the nine months ended September 30, 2016, was primarily the result of (i) decreases in varlilumab and Rintega contract manufacturing expenses of $6.8 million and $2.5 million, respectively, partially offset by an increase in glembatumumab vedotin contract manufacturing expenses of $2.6 million and (ii) decreases in Rintega and varlilumab clinical trial costs of $5.1 million and $1.9 million, respectively, partially offset by increases in glembatumumab vedotin, anti-KIT and CDX-3379 clinical trial costs of $3.3 million.
~~General and Administrative Expense~~
The $4.9 million decrease in general and administrative expenses for the nine months ended September 30, 2017, as compared to the nine months ended September 30, 2016, was primarily due to lower commercial planning costs of $3.1 million and lower stock-based compensation of $1.4 million.
~~In-Process Research and Development Impairment~~
We recorded a non-cash impairment charge of $13.0 million on the anti-KIT program IPR&D assets acquired from Kolltan during the nine months ended September 30, 2017. This impairment charge was related to changes in projected development and regulatory timelines regarding the anti-KIT program.
~~Gain on Fair Value Remeasurement of Contingent Consideration~~
~~The $0.2 million gain~~ on fair value remeasurement of contingent consideration for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2019 was primarily due to ~~a reduction in fair value attributed to the milestones related to our anti-KIT program, partially offset by losses related to~~ changes in discount rates and the passage of ~~time affecting remaining milestones.~~time.

~~Amortization Expense~~
~~Amortization expenses for the nine months ended September 30, 2017 were relatively consistent as compared to the nine months ended September 30, 2016.~~
Investment and Other Income, Net

The ~~$0.2~~$0.8 million decrease in investment and other income, net for the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2020, as compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2019, was primarily due to lower levels of cash and investment ~~balances.~~balances and lower other income related to our sale of New Jersey tax benefits.

Income Tax Benefit

~~The deferred~~During the quarter ended June 30, 2020, a $0.2 million non-cash income tax benefit ~~relates~~was recorded related to ~~a $5.2 million decrease in deferred tax liabilities, net during~~ the ~~nine months ended September 30, 2017. This decrease was due to the partial~~ impairment of the ~~anti-KIT program~~CDX-3379 IPR&D ~~assets.~~asset.
LIQUIDITY AND CAPITAL RESOURCES

Our cash equivalents are highly liquid investments with a maturity of three months or less at the date of purchase and consist primarily of investments in money market mutual funds with commercial banks and financial institutions. We maintain cash balances with financial institutions in excess of insured limits. We do not anticipate any losses with respect to such cash balances. We invest our excess cash balances in marketable securities, including municipal bond securities, U.S. government agency securities and high-grade corporate bonds that meet high credit quality standards, as specified in our investment policy. Our investment policy seeks to manage these assets to achieve our goals of preserving principal and maintaining adequate liquidity.

The use of our cash flows for operations has primarily consisted of salaries and wages for our employees; facility and facility-related costs for our offices, laboratories and manufacturing facility; fees paid in connection with preclinical studies, clinical studies, contract manufacturing, laboratory supplies and services; and consulting, legal and other professional fees. To date, the primary sources of cash flows from operations have been payments received from our collaborative partners and from government ~~entities.~~entities and payments received for contract manufacturing and research and development services provided by us. The timing of any new contract manufacturing and research and development agreements, collaboration agreements, government contracts or grants and any payments under these agreements, contracts or grants cannot be easily predicted and may vary significantly from quarter to quarter.

At ~~September~~June 30, ~~2017,~~2020, our principal sources of liquidity consisted of cash, cash equivalents and marketable securities of ~~$140.5~~$206.9 million. We have had recurring losses and incurred a ~~net~~ loss of ~~$89.2~~$23.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2020. Net cash used in operations for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 was ~~$80.4~~$23.3 million. We believe that the cash, cash equivalents and marketable securities at ~~September~~June 30, ~~2017, combined with the $11.3 million in net proceeds from sales of common stock under the Cantor agreement during October 2017,~~2020 are sufficient to meet estimated working capital requirements and fund planned operations through ~~2018; however, this~~2023. This could be impacted if we elected to pay Kolltan contingent ~~consideration related to the Kolltan acquisition,~~milestones, if any, in cash.

During the next twelve months, we ~~will~~may take further steps to raise additional capital to meet our long-term liquidity ~~needs. Our capital raising activities may include,~~needs including, but may not be limited to, one or more of the following: the licensing of drug candidates with existing or new collaborative partners, possible business combinations, issuance of debt, or the issuance of common stock or other securities via private placements or public offerings. ~~While~~Although we ~~may seek~~have been successful in raising capital ~~through a number of means,~~in the past, there can be no assurance that additional financing will be available on acceptable terms, if at all, and our negotiating position in ~~capital-raising~~capital raising efforts may worsen as existing resources are used. There is also no assurance that we will be able to enter into further collaborative relationships. Additional equity financings may be dilutive to our stockholders; debt financing, if available, may involve significant cash payment obligations and covenants that restrict our ability to operate as a business; and licensing or strategic collaborations may result in royalties or other terms which reduce our economic potential from products under development. Our ability to continue funding our planned operations into and beyond twelve months from the issuance date is also dependent on the timing and manner of payment of future contingent milestones from the Kolltan acquisition, in the event that we achieve the drug candidate milestones related to those payments. We may decide to pay those milestone payments in cash, shares of our common stock or a combination thereof. If we are unable to raise the funds necessary to meet our long-term liquidity needs, we may have to delay or discontinue the development of one or more programs, discontinue or delay ongoing or anticipated clinical trials, license out programs earlier than expected, raise funds at a significant discount or on other unfavorable terms, if at all, or sell all or a part of our business.

Operating Activities

Net cash used in operating activities was ~~$80.4~~$23.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 as compared to ~~$92.7~~$24.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2019. The decrease in net cash used in operating activities was primarily due to a decrease in ~~net loss of $7.0 million~~general and ~~changes~~administrative expenses and an increase in ~~operating assets~~cash received related to product development and ~~liabilities.~~licensing agreements. We expect that cash used in operating activities will ~~decrease~~remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.

We have incurred and will continue to incur significant costs in the area of research and development, including preclinical studies and clinical trials, as our drug candidates are developed. We plan to spend significant amounts to progress our current drug candidates through the clinical trial and commercialization process as well as to develop additional drug candidates. As our drug candidates progress through the clinical trial process, we may be obligated to make significant milestone payments.

Investing Activities

Net cash ~~provided by~~used in investing activities was ~~$59.9~~$86.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 as compared to ~~$41.1 million for the nine months ended September 30, 2016. The increase in~~ net cash provided by investing activities of $8.3 million for the six months ended June 30, 2019. The increase in net cash used in investing activities was primarily due to net purchases of marketable securities for the six months ended June 30, 2020 of $85.4 million as compared to net sales and maturities of marketable securities ~~for the nine months ended September 30, 2017~~ of ~~$61.4 million as compared to $45.0~~$8.8 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2019.
Financing Activities

Net cash provided by financing activities was ~~$32.8~~$166.7 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2020 as compared to ~~$11.2~~$11.4 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016. Net proceeds from stock issuances pursuant to employee benefit plans were $0.2 million during~~2019.
During the ~~nine~~six months ended ~~September~~June 30, ~~2017 as compared to $0.5 million for the nine months ended September 30, 2016.~~
In May 2016, we entered into a controlled equity offering sales agreement with Cantor Fitzgerald & Co. to allow us to issue and sell shares of our common stock having an aggregate offering price of up to $60.0 million from time to time through Cantor, acting as agent. During the ~~nine months ended September 30, 2017 and 2016,~~2020, we issued ~~11,326,363 and 2,395,949~~6.7 million shares ~~respectively,~~ of ~~our~~ common stock under ~~this agreement with~~our Cantor Agreement resulting in net proceeds of $25.3 million after deducting commission and offering expenses. At June 30, 2020, we had $18.3 million remaining in aggregate gross offering price available under the agreement.
During the three months ended June 30, 2020, the Company issued 15,384,614 shares of its common stock in an underwritten public offering resulting in net proceeds to usthe Company of ~~$32.6~~$141.4 million, ~~and $10.7 million, respectively,~~ after deducting ~~commission~~underwriting fees and offering expenses.

~~AGGREGATE CONTRACTUAL OBLIGATIONS~~Aggregate Contractual Obligations

The disclosures relating to our contractual obligations reported in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019 which was filed with the SEC on March ~~14, 2017~~26, 2020 have not materially changed since we filed that report.
OFF-BALANCE SHEET ARRANGEMENTS
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.
~~Item 3.~~~~Quantitative and Qualitative Disclosures about Market Risk~~
Item 3. Quantitative and Qualitative Disclosures about Market Risk

We own financial instruments that are sensitive to market risk as part of our investment portfolio. Our investment portfolio is used to preserve our capital until it is used to fund operations, including our research and development activities. None of these market-risk sensitive instruments are held for trading purposes. We invest our cash primarily in money market mutual funds. These investments are evaluated quarterly to determine the fair value of the portfolio. From time to time, we invest our excess cash balances in marketable securities including municipal bond securities, U.S. government agency securities and high-grade corporate bonds that meet high credit quality standards, as specified in our investment policy. Our investment policy seeks to manage these assets to achieve our goals of preserving principal and maintaining adequate liquidity. Because of the short-term nature of these investments, we do not believe we have material exposure due to market risk. The impact to our financial position and results of operations from likely changes in interest rates is not material.

We do not utilize derivative financial instruments. The carrying amounts reflected in the consolidated balance sheet of cash and cash equivalents, accounts receivables and accounts payable ~~approximates~~approximate fair value at ~~September~~June 30, ~~2017~~2020 due to the short-term maturities of these instruments.
~~Item 4.~~~~Controls and Procedures~~
Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

As of ~~September~~June 30, ~~2017,~~2020, we evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of ~~September~~June 30, ~~2017.~~2020. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within time periods specified by the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting.

There were no changes in our internal control over financial reporting during the quarter ended ~~September~~June 30, ~~2017~~2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

~~Item 1A.~~~~Risk Factors~~
Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2019, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K may not be the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results.

There were no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March ~~14, 2017.~~26, 2020.
~~Item 5.~~~~Other Information~~
Item 5. Other Information

On ~~November 1, 2017,~~August 4, 2020, we determined that ~~we should record~~ a non-cash ~~partial~~ impairment charge of ~~$13.0~~$3.5 million should be recorded for the three months ended ~~September~~June 30, ~~2017~~2020 related to our ~~anti-KIT~~CDX-3379 program. The ~~anti-KIT~~CDX-3379 program was acquired as part of our acquisition of Kolltan Pharmaceuticals, ~~Inc.in~~Inc. in the fourth quarter of 2016. We determined that ~~changes in projected~~the discontinuation of development ~~and regulatory timelines related to the anti-KIT program~~of CDX-3379 constituted a triggering event that required us to evaluate the intangible asset for impairment. The time periods to receive approvals from the FDA and other regulatory agencies are subject to uncertainty and therefore we will continue to evaluate the development progress for the anti-KIT program and monitor the remaining $27.0 million intangible asset for further impairment. See Note 5 to the consolidated financial statements included elsewhere in this quarterly report on Form 10-Q for further discussion of this impairment charge.
~~Item 6.~~~~Exhibits~~
Item 6. Exhibits

The exhibits filed as part of this quarterly report on Form 10-Q are listed in the exhibit index ~~immediately preceding the exhibits~~included herewith and are incorporated by reference herein.
EXHIBIT INDEX

Exhibit
No.
Description
~~3.1~~
*10.1
~~Third Restated Certificate~~Extension of ~~Incorporation of~~Lease Agreement between the Company ~~incorporated by reference to Exhibit 3.1~~and University of ~~the Company’s Registration Statement on Form S-4 (Reg. No. 333-59215), filed~~Massachusetts Dartmouth dated as of July ~~16, 1998 with the Securities and Exchange Commission.~~1, 2020
~~3.2~~
*31.1
Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form S-4 (Reg. No. 333-59215), filed July 16, 1998 with the Securities and Exchange Commission.
~~3.3~~
Second Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form S-4 (Reg. No. 333-59215), filed July 16, 1998 with the Securities and Exchange Commission.
~~3.4~~
Third Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q, filed May 10, 2002 with the Securities and Exchange Commission.
~~3.5~~
Fourth Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K, filed on March 11, 2008 with the Securities and Exchange Commission.
~~3.6~~
Fifth Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K, filed on March 11, 2008 with the Securities and Exchange Commission.
~~3.7~~
Sixth Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.7 of the Company’s Quarterly Report on Form 10-Q, filed November 10, 2008 with the Securities and Exchange Commission.
~~10.1~~
Employment Agreement, dated October 3, 2017, by and between Margo Heath-Chiozzi and Celldex Therapeutics., Inc., incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed on October 3, 2017 with the Securities and Exchange Commission.
*31.1
Certification of President and Chief Executive Officer
*31.2
Certification of Senior Vice President and Chief Financial Officer
**32.1
Section 1350 Certifications
*101
XBRL Instance Document.
*101
XBRL Taxonomy Extension Schema Document.
*101
XBRL Taxonomy Extension Calculation Linkbase Document.
*101
XBRL Taxonomy Extension Definition Linkbase Document.
*101
XBRL Taxonomy Extension Label Linkbase Document.
*101
XBRL Taxonomy Extension Presentation Linkbase Document.

*       Filed herewith.
**       Furnished herewith.

*
~~Filed herewith.~~
**
~~Furnished herewith.~~
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CELLDEX THERAPEUTICS, INC.
BY:
/s/ ANTHONY S. MARUCCI
Dated: ~~November 7, 2017~~
August 6, 2020
Anthony S. Marucci
President and Chief Executive Officer
(Principal Executive Officer)
/s/ SAM MARTIN
Dated: ~~November 7, 2017~~
August 6, 2020
Sam Martin
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

35

Delaware		No. 13-3191702
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $.001		CLDX		Nasdaq Capital Market

Large accelerated filer o¨	Accelerated filer x¨

Non-accelerated filer ox	Smaller reporting company ox
~~(Do not check if a smaller reporting company)~~
	Emerging growth company o¨

	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016				Three Months Ended June 30, 2020			Three Months Ended June 30, 2019			Six Months Ended June 30, 2020			Six Months Ended June 30, 2019
REVENUES:
Product Development and Licensing Agreements	$	1,238		$	493		$	2,488		$	1,551		$	—		$	195		$	2,285		$	325
Contracts and Grants	2,686			1,727			6,799			3,362				236			520			680			1,815
Total Revenues	3,924			2,220			9,287			4,913				236			715			2,965			2,140

OPERATING EXPENSES:
Research and Development	21,915			25,009			72,707			78,168				9,705			10,081			21,400			21,232
General and Administrative	5,346			6,950			19,109			24,049				3,528			3,908			7,194			8,804
In-Process Research and Development Impairment	13,000			—			13,000			—
Gain on Fair Value Remeasurement of Contingent Consideration	(4,600		)	—			(200		)	—
Amortization of Acquired Intangible Assets	224			254			672			760
Intangible Asset Impairment														3,500			—			3,500			—
Other Asset Impairment														—			—			—			1,800
(Gain) Loss on Fair Value Remeasurement of Contingent Consideration														(5,132	)		(1,017	)		(4,898	)		502
Total Operating Expenses	35,885			32,213			105,288			102,977				11,601			12,972			27,196			32,338

Operating Loss	(31,961		)	(29,993		)	(96,001		)	(98,064		)		(11,365	)		(12,257	)		(24,231	)		(30,198	)
Investment and Other Income, Net	398			395			1,611			1,841				106			478			347			1,180
Net Loss Before Income Tax Benefit	(31,563		)	(29,598		)	(94,390		)	(96,223		)		(11,259	)		(11,779	)		(23,884	)		(29,018	)
Income Tax Benefit	5,200			—			5,200			—				228			—			228			—
Net Loss	$	(26,363	)	$	(29,598	)	$	(89,190	)	$	(96,223	)	$	(11,031	)	$	(11,779	)	$	(23,656	)	$	(29,018	)

Basic and Diluted Net Loss Per Common Share	$	(0.20	)	$	(0.29	)	$	(0.71	)	$	(0.97	)	$	(0.50	)	$	(0.84	)	$	(1.20	)	$	(2.21	)

Shares Used in Calculating Basic and Diluted Net Loss per Share	129,640			100,672			125,856			99,398
Shares Used in Calculating Basic and Diluted Net Loss Per Share														22,082			13,952			19,744			13,129

COMPREHENSIVE LOSS:
Net Loss	$	(26,363	)	$	(29,598	)	$	(89,190	)	$	(96,223	)	$	(11,031	)	$	(11,779	)	$	(23,656	)	$	(29,018	)
Other Comprehensive Income:
Unrealized Gain (Loss) on Marketable Securities	11			(113		)	47			303
Other Comprehensive Income (Loss):
Unrealized (Loss) Gain on Marketable Securities														(3	)		36			(25	)		55
Comprehensive Loss	$	(26,352	)	$	(29,711	)	$	(89,143	)	$	(95,920	)	$	(11,034	)	$	(11,743	)	$	(23,681	)	$	(28,963	)

	As of September 30, 2017		Level 1		Level 2		Level 3		As of June 30, 2020		Level 1		Level 2		Level 3
	(In thousands)								(In thousands)
Assets:
Money market funds and cash equivalents	$	42,032	$	—	$	42,032	$	—	$	54,597		—	$	54,597		—
Marketable securities	85,795		—		85,795		—			138,888		—		138,888		—
	$	127,827	$	—	$	127,827	$	—	$	193,485		—	$	193,485		—

Liabilities:
Kolltan acquisition contingent consideration	$	44,000	$	—	$	—	$	44,000	$	7,587		—		—	$	7,587
	$	44,000	$	—	$	—	$	44,000	$	7,587		—		—	$	7,587

	As of December 31, 2016		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Money market funds and cash equivalents	$	20,445	$	—	$	20,445	$	—
Marketable securities	147,315		—		147,315		—
	$	167,760	$	—	$	167,760	$	—

Liabilities:
Kolltan acquisition contingent consideration	$	44,200	$	—	$	—	$	44,200
	$	44,200	$	—	$	—	$	44,200

	As of December 31, 2019		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Money market funds and cash equivalents	$	4,024		—	$	4,024		—
Marketable securities		53,151		—		53,151		—
	$	57,175		—	$	57,175		—
Liabilities:
Kolltan acquisition contingent consideration	$	12,485		—		—	$	12,485
	$	12,485		—		—	$	12,485

	Other Long-Term Liabilities: Contingent Consideration
Balance at December 31, 2016	$	44,200
Fair value adjustments included in operating expenses	(200		)
Balance at September 30, 2017	$	44,000

	Other Liabilities: Contingent Consideration
Balance at December 31, 2019	$	12,485
Fair value adjustments included in operating expenses		(4,898	)
Balance at June 30, 2020	$	7,587

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
September 30, 2017
Marketable securities
U.S. government and municipal obligations
Maturing in one year or less	$	13,725	$	5	$	(3	)	$	13,727
Maturing after one year through three years	—		—		—			—
Total U.S. government and municipal obligations	$	13,725	$	5	$	(3	)	$	13,727
Corporate debt securities
Maturing in one year or less	$	72,078	$	3	$	(13	)	$	72,068
Maturing after one year through three years	—		—		—			—
Total corporate debt securities	$	72,078	$	3	$	(13	)	$	72,068
Total marketable securities	$	85,803	$	8	$	(16	)	$	85,795

December 31, 2016
Marketable securities
U.S. government and municipal obligations
Maturing in one year or less	$	52,754	$	5	$	(12	)	$	52,747
Maturing after one year through three years	296		8		—			304
Total U.S. government and municipal obligations	$	53,050	$	13	$	(12	)	$	53,051
Corporate debt securities
Maturing in one year or less	$	94,320	$	—	$	(56	)	$	94,264
Maturing after one year through three years	—		—		—			—
Total corporate debt securities	$	94,320	$	—	$	(56	)	$	94,264
Total marketable securities	$	147,370	$	13	$	(68	)	$	147,315

	Gross Unrealized
	Amortized Cost		Gains		Losses			Fair Value
	(In thousands)
June 30, 2020
U.S. government and municipal obligations (maturing in one year or less)	$	79,937	$	—	$	—		$	79,937
Corporate debt securities (maturing in one year or less)		58,954		10		(13	)		58,951
Total Marketable Securities	$	138,891	$	10	$	(13	)	$	138,888

December 31, 2019
U.S. government and municipal obligations (maturing in one year or less)	$	18,509	$	13	$	—		$	18,522
Corporate debt securities (maturing in one year or less)		34,619		13		(3	)		34,629
Total Marketable Securities	$	53,128	$	26	$	(3	)	$	53,151

		September 30, 2017							December 31, 2016
	Estimated Life	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
	(In thousands)
Finite-lived Intangible Assets:
License Rights	16 years	$	14,500	$	(7,175	)	$	7,325	$	14,500	$	(6,503	)	$	7,997
Indefinite-lived Intangible Assets:
IPR&D	Indefinite	60,490		—			60,490		73,490		—			73,490
Total Intangible Assets, Net		$	74,990	$	(7,175	)	$	67,815	$	87,990	$	(6,503	)	$	81,487

	Accrued Lease Restructuring
Balance at December 31, 2016	$	1,154
Expense	170
Payments	(470		)
Balance at September 30, 2017	$	854

	Common Stock Shares		Common Stock Par Value		Additional Paid-In Capital		Accumulated Other Comprehensive Income			Accumulated Deficit			Total Stockholders’ Equity
	(In thousands, except share amounts)
Consolidated Balance at December 31, 2019		16,972,077	$	17	$	1,104,706	$	2,619		$	(1,013,316	)	$	94,026
Shares Issued under Stock Option and Employee Stock Purchase Plans		12,573		—		24		—			—			24
Shares Issued in Connection with Cantor Agreement		746,152		1		1,613		—			—			1,614
Share-Based Compensation		—		—		686		—			—			686
Unrealized Loss on Marketable Securities		—		—		—		(22	)		—			(22	)
Net Loss		—		—		—		—			(12,625	)		(12,625	)
Consolidated Balance at March 31, 2020		17,730,802	$	18	$	1,107,029	$	2,597		$	(1,025,941	)	$	83,703
Shares Issued in Connection with Cantor Agreement		5,978,452		6		23,686		—			—			23,692
Shares Issued in Underwritten Offering		15,384,614		15		141,346		—			—			141,361
Share-Based Compensation		—		—		722		—			—			722
Unrealized Loss on Marketable Securities		—		—		—		(3	)		—			(3	)
Net Loss		—		—		—		—			(11,031	)		(11,031	)
Consolidated Balance at June 30, 2020		39,093,868	$	39	$	1,272,783	$	2,594		$	(1,036,972	)	$	238,444

	Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (In Years)	Shares			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (In Years)
Options Outstanding at December 31, 2016	10,218,710		$	11.14	6.5
Options Outstanding at December 31, 2019							1,699,202		$	44.87		8.0
Granted	2,309,900		$	2.34			1,439,175		$	10.36
Exercised	—		$	—			—			—
Canceled	(945,792	)	$	9.21			(53,090	)	$	46.03
Options Outstanding at September 30, 2017	11,582,818		$	9.54	5.9
Options Vested and Expected to Vest at September 30, 2017	11,460,583		$	9.59	5.8
Options Exercisable at September 30, 2017	7,360,799		$	11.05	4.1
Options Outstanding at June 30, 2020							3,085,287		$	28.76		8.69
Options Vested and Expected to Vest at June 30, 2020							2,875,684		$	30.23		8.62
Options Exercisable at June 30, 2020							821,537		$	84.93		6.39
Shares Available for Grant Under the 2008 Plan	7,780,663						938,178

	Three months ended September 30,				Nine months ended September 30,				Three months ended June 30,				Six months ended June 30,
	2017		2016		2017		2016		2020		2019		2020		2019
	(In thousands)								(In thousands)				(In thousands)
Research and development	$	1,546	$	2,042	$	5,310	$	5,866	$	342	$	654	$	652	$	1,410
General and administrative	1,193		1,754		4,418		5,843			380		810		756		1,747
Total stock-based compensation expense	$	2,739	$	3,796	$	9,728	$	11,709	$	722	$	1,464	$	1,408	$	3,157

	Unrealized (Loss) Gain on Marketable Securities			Foreign Currency Items		Total
	(In thousands)
Balance at December 31, 2016	$	(55	)	$	2,596	$	2,541
Other comprehensive gain	47			—		47
Balance at September 30, 2017	$	(8	)	$	2,596	$	2,588

	Unrealized Gain/(Loss) on Marketable Securities			Foreign Currency Items		Total
	(In thousands)
Balance at December 31, 2019	$	23		$	2,596	$	2,619
Other comprehensive loss		(25	)		—		(25	)
Balance at June 30, 2020	$	(2	)	$	2,596	$	2,594

Fair value of common stock issued for upfront payment	$	73,397
Fair value of contingent consideration	44,200
Kolltan transaction expenses paid in cash by the Company	3,768
Total consideration transferred	$	121,365

Cash and cash equivalents	$	8,160
Other current and long-term assets	799
Property and equipment, net	2,072
In-process research and development (IPR&D)	61,690
Goodwill	82,011
Deferred tax liabilities, net	(23,393		)
Other assumed liabilities	(9,974		)
Total	$	121,365

~~Product (generic)~~	~~Indication/Field~~	~~Status~~	~~Sponsor~~
~~Glembatumumab vedotin~~	~~Triple negative breast cancer~~	~~Phase 2b~~	~~Celldex~~
~~Glembatumumab vedotin~~	~~Metastatic melanoma (with varlilumab or CPI~~1)	~~Phase 2~~	~~Celldex~~
~~Varlilumab~~	~~Multiple solid tumors (with nivolumab)~~	~~Phase 2~~	~~Celldex~~2
~~CDX-3379~~	~~Head and neck squamous cell cancer (with cetuximab)~~	~~Phase 2~~3	~~Celldex~~
~~CDX-014~~	~~Renal cell carcinoma~~	~~Phase 1~~	~~Celldex~~
~~CDX-1140~~	~~Multiple solid tumors~~	~~Phase 1~~3	~~Celldex~~

Clinical Phase		Estimated Completion Period
Phase 1		1 - 2 Years
Phase 2		1 - 5 Years
Phase 3		1 - 5 Years

	Six Months Ended June 30, 2020		Six Months Ended June 30, 2019
	(In thousands)
CDX-0159/Anti-KIT Program	$	2,896	$	1,974
CDX-1140		5,069		3,195
CDX-527		5,891		3,412
TAM Program		1,192		2,571
Other Programs		6,352		10,080
Total R&D Expense	$	21,400	$	21,232

	High gpNMB Expression				Triple Negative and gpNMB Over-Expression
	Glembatumumab Vedotin		Investigator’s Choice		Glembatumumab Vedotin		Investigator’s Choice
	(n=23)		(n=11)		(n=10)		(n=6)
Response Rate	30	%	9	%	40	%	0	%
Disease Control Rate	65	%	27	%	90	%	17	%

	Three Months Ended September 30,						Increase/ (Decrease)			Increase/ (Decrease)		Three Months Ended June 30,						Increase/ (Decrease)			Increase/ (Decrease)
	2017			2016			$			%		2020			2019			$			%
	(In thousands)											(In thousands)
Revenue:
Revenues:
Product Development and Licensing Agreements	$	1,238		$	493		$	745		151	%	$	—		$	195		$	(195	)		(100	)%
Contracts and Grants	2,686			1,727			959			56	%		236			520			(284	)		(55	)%
Total Revenue	$	3,924		$	2,220		$	1,704		77	%	$	236		$	715		$	(479	)		(67	)%
Operating Expense:
Operating Expenses:
Research and Development	21,915			25,009			(3,094		)	(12	)%		9,705			10,081			(376	)		(4	)%
General and Administrative	5,346			6,950			(1,604		)	(23	)%		3,528			3,908			(380	)		(10	)%
In-Process Research and Development Impairment	13,000			—			13,000			n/a
Intangible Asset Impairment													3,500			—			3,500			n/a
Gain on Fair Value Remeasurement of Contingent Consideration	(4,600		)	—			4,600			n/a			(5,132	)		(1,017	)		4,115			405	%
Amortization of Acquired Intangible Assets	224			254			(30		)	(12	)%
Total Operating Expense	35,885			32,213			3,672			11	%		11,601			12,972			(1,371	)		(11	)%
Operating Loss	(31,961		)	(29,993		)	1,968			7	%		(11,365	)		(12,257	)		(892	)		(7	)%
Investment and Other Income, Net	398			395			3			1	%		106			478			(372	)		(78	)%
Net Loss Before Income Tax Benefit	(31,563		)	(29,598		)	1,965			7	%		(11,259	)		(11,779	)		(520	)		(4	)%
Income Tax Benefit	5,200			—			5,200			n/a			228			—			228			n/a
Net Loss	$	(26,363	)	$	(29,598	)	$	(3,235	)	(11	)%	$	(11,031	)	$	(11,779	)	$	(748	)		(6	)%

	Three Months Ended June 30				Increase/ (Decrease)
	2020		2019		$			%
	(In thousands)
Personnel	$	5,216	$	5,408	$	(192	)		(4	)%
Laboratory Supplies		775		1,257		(482	)		(38	)%
Facility		1,758		1,558		200			13	%
Product Development		1,023		827		196			24	%

	Six Months Ended June 30,						Increase/ (Decrease)			Increase/ (Decrease)
	2020			2019			$			%
				(In thousands)
Revenues:
Product Development and Licensing Agreements	$	2,285		$	325		$	1,960			603	%
Contracts and Grants		680			1,815			(1,135	)		(63	)%
Total Revenue	$	2,965		$	2,140		$	825			39	%
Operating Expenses:
Research and Development		21,400			21,232			168			1	%
General and Administrative		7,194			8,804			(1,610	)		(18	)%
Intangible Asset Impairment		3,500			—			3,500			n/a
Other Asset Impairment		—			1,800			(1,800	)		(100	)%
(Gain) Loss on Fair Value Remeasurement of Contingent Consideration		(4,898	)		502			5,400			1,076	%
Total Operating Expense		27,196			32,338			(5,142	)		(16	)%
Operating Loss		(24,231	)		(30,198	)		(5,967	)		(20	)%
Investment and Other Income, Net		347			1,180			(833	)		(71	)%
Net Loss Before Income Tax Benefit		(23,884	)		(29,018	)		(5,134	)		(18	)%
Income Tax Benefit		228			—			228			n/a
Net Loss	$	(23,656	)	$	(29,018	)	$	(5,362	)		(18	)%

	Nine Months Ended September 30,						Increase/ (Decrease)			Increase/ (Decrease)
	2017			2016			$			%
	(In thousands)
Revenue:
Product Development and Licensing Agreements	$	2,488		$	1,551		$	937		60	%
Contracts and Grants	6,799			3,362			3,437			102	%
Total Revenue	$	9,287		$	4,913		$	4,374		89	%
Operating Expense:
Research and Development	72,707			78,168			(5,461		)	(7	)%
General and Administrative	19,109			24,049			(4,940		)	(21	)%
In-Process Research and Development Impairment	13,000			—			13,000			n/a
Gain on Fair Value Remeasurement of Contingent Consideration	(200		)	—			200			n/a
Amortization of Acquired Intangible Assets	672			760			(88		)	(12	)%
Total Operating Expense	105,288			102,977			2,311			2	%
Operating Loss	(96,001		)	(98,064		)	(2,063		)	(2	)%
Investment and Other Income, Net	1,611			1,841			(230		)	(12	)%
Net Loss Before Income Tax Benefit	(94,390		)	(96,223		)	(1,833		)	(2	)%
Income Tax Benefit	5,200			—			5,200			n/a
Net Loss	$	(89,190	)	$	(96,223	)	(7,033		)	(7	)%

Exhibit No.		Description
~~3.1~~ *10.1		~~Third Restated Certificate~~Extension of ~~Incorporation of~~Lease Agreement between the Company ~~incorporated by reference to Exhibit 3.1~~and University of ~~the Company’s Registration Statement on Form S-4 (Reg. No. 333-59215), filed~~Massachusetts Dartmouth dated as of July ~~16, 1998 with the Securities and Exchange Commission.~~1, 2020

~~3.2~~ *31.1		Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of the Company’s Registration Statement on Form S-4 (Reg. No. 333-59215), filed July 16, 1998 with the Securities and Exchange Commission.

~~3.3~~		Second Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.2 of the Company’s Registration Statement on Form S-4 (Reg. No. 333-59215), filed July 16, 1998 with the Securities and Exchange Commission.

~~3.4~~		Third Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q, filed May 10, 2002 with the Securities and Exchange Commission.

~~3.5~~		Fourth Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K, filed on March 11, 2008 with the Securities and Exchange Commission.

~~3.6~~		Fifth Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K, filed on March 11, 2008 with the Securities and Exchange Commission.

~~3.7~~		Sixth Certificate of Amendment of Third Restated Certificate of Incorporation of the Company, incorporated by reference to Exhibit 3.7 of the Company’s Quarterly Report on Form 10-Q, filed November 10, 2008 with the Securities and Exchange Commission.

~~10.1~~		Employment Agreement, dated October 3, 2017, by and between Margo Heath-Chiozzi and Celldex Therapeutics., Inc., incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K, filed on October 3, 2017 with the Securities and Exchange Commission.

*31.1		Certification of President and Chief Executive Officer

*31.2		Certification of Senior Vice President and Chief Financial Officer

**32.1		Section 1350 Certifications

*101		XBRL Instance Document.

*101		XBRL Taxonomy Extension Schema Document.

*101		XBRL Taxonomy Extension Calculation Linkbase Document.

*101		XBRL Taxonomy Extension Definition Linkbase Document.

*101		XBRL Taxonomy Extension Label Linkbase Document.

*101		XBRL Taxonomy Extension Presentation Linkbase Document.

		CELLDEX THERAPEUTICS, INC.

		BY:

		/s/ ANTHONY S. MARUCCI
Dated: ~~November 7, 2017~~ August 6, 2020		Anthony S. Marucci
		President and Chief Executive Officer
		(Principal Executive Officer)

		/s/ SAM MARTIN
Dated: ~~November 7, 2017~~ August 6, 2020		Sam Martin
		Senior Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)