UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2017~~2022

o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 000-15006

CELLDEX THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

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

Perryville III Building, 53 Frontage Road, Suite 220, Hampton, New Jersey08827

(Address of principal executive offices) (Zip Code)

~~(908)~~ (908) 200-7500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x☒ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o☒	~~Accelerated filer~~ x
	Accelerated filer ☐
Non-accelerated filer o☐		Smaller reporting company o☐
~~(Do not check if a smaller reporting company)~~		Emerging growth company o☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x☒

As of October 31, ~~2017, 135,985,329~~2022, 47,099,831 shares of common stock, $.001 par value per share, were outstanding.

Table of Contents

CELLDEX THERAPEUTICS, INC.

FORM 10-Q

~~FORM 10-Q~~

For the Quarterly Period Ended September 30, ~~2017~~2022

Table of ~~Contents~~Contents

		Page
Part I — Financial Information

Item 1. Unaudited Financial Statements		3

Condensed Consolidated Balance Sheets at September 30, ~~2017~~2022 and December 31, ~~2016~~2021		3

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, ~~2017~~2022 and ~~2016~~2021		4

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, ~~2017~~2022 and ~~2016~~2021		5

Notes to Unaudited Condensed Consolidated Financial Statements		6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1615

Item 3. Quantitative and Qualitative Disclosures About Market Risk		3229

Item 4. Controls and Procedures		3229

Part II — Other Information

Item 1A. Risk Factors		30
Item 5. Other Information		30
Item 6. Exhibits		32
Exhibit Index		32
Signatures		33

Table of Contents

~~Item 5. Other Information~~

~~Item 6. Exhibits~~

~~Signatures~~

~~Exhibit Index~~

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

ASSETS

Current Assets:

Cash and Cash Equivalents

$
54,735

$
42,461

Marketable Securities

85,795

147,315

Accounts and Other Receivables

3,013

1,784

Prepaid and Other Current Assets

3,774

4,009

Total Current Assets

147,317

195,569

Property and Equipment, Net

11,308

13,192

Intangible Assets, Net

67,815

81,487

Other Assets

2,002

2,134

Goodwill

90,976

90,976

Total Assets

$
319,418

$
383,358

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Accounts Payable

$
1,278

$
1,740

Accrued Expenses

17,845

28,657

Current Portion of Long-Term Liabilities

5,792

4,826

Total Current Liabilities

24,915

35,223

Other Long-Term Liabilities

75,351

82,704

Total Liabilities

100,266

117,927

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

Additional Paid-In Capital

1,025,108

982,255

Accumulated Other Comprehensive Income

2,588

2,541

Accumulated Deficit

(808,676
)
(719,486
)
Total Stockholders’ Equity

219,152

265,431

Total Liabilities and Stockholders’ Equity

$
319,418

$
383,358


	September 30,		December 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	18,583	$	39,143
Marketable securities		304,888		369,107
Accounts and other receivables		189		172
Prepaid and other current assets		10,939		2,417
Total current assets		334,599		410,839
Property and equipment, net		3,753		3,551
Operating lease right-of-use assets, net		3,580		2,970
Intangible assets, net		27,190		27,190
Other assets		104		104
Total assets	$	369,226	$	444,654
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,272	$	1,228
Accrued expenses		11,425		12,000
Current portion of operating lease liabilities		1,438		1,746
Current portion of other long-term liabilities		1,152		1,554
Total current liabilities		16,287		16,528
Long-term portion of operating lease liabilities		2,190		1,296
Other long-term liabilities		5,333		7,354
Total liabilities		23,810		25,178
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, 2022 and December 31, 2021		—		—
Common stock, $.001 par value; 297,000,000 shares authorized; 47,096,063 and 46,730,198 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		47		47
Additional paid-in capital		1,574,926		1,561,142
Accumulated other comprehensive income		(112)		1,894
Accumulated deficit		(1,229,445)		(1,143,607)
Total stockholders’ equity		345,416		419,476
Total liabilities and stockholders’ equity	$	369,226	$	444,654

See accompanying notes to unaudited condensed consolidated financial statements

Table of Contents

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

REVENUES:

Product Development and Licensing Agreements

$
1,238

$
493

$
2,488

$
1,551

Contracts and Grants

2,686

1,727

6,799

3,362

Total Revenues

3,924

2,220

9,287

4,913

OPERATING EXPENSES:

Research and Development

21,915

25,009

72,707

78,168

General and Administrative

5,346

6,950

19,109

24,049

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

Total Operating Expenses

35,885

32,213

105,288

102,977

Operating Loss

(31,961
)
(29,993
)
(96,001
)
(98,064
)
Investment and Other Income, Net

398

395

1,611

1,841

Net Loss Before Income Tax Benefit

(31,563
)
(29,598
)
(94,390
)
(96,223
)
Income Tax Benefit

5,200

—

5,200

—

Net Loss

$
(26,363
)
$
(29,598
)
$
(89,190
)
$
(96,223
)

Basic and Diluted Net Loss Per Common Share

$
(0.20
)
$
(0.29
)
$
(0.71
)
$
(0.97
)

Shares Used in Calculating Basic and Diluted Net Loss per Share

129,640

100,672

125,856

99,398

COMPREHENSIVE LOSS:

Net Loss

$
(26,363
)
$
(29,598
)
$
(89,190
)
$
(96,223
)
Other Comprehensive Income:

Unrealized Gain (Loss) on Marketable Securities

11

(113
)
47

303

Comprehensive Loss

$
(26,352
)
$
(29,711
)
$
(89,143
)
$
(95,920
)


	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Revenues:
Product development and licensing agreements	$	—	$	—	$	30	$	29
Contracts and grants		407		153		714		4,288
Total revenues		407		153		744		4,317

Operating expenses:
Research and development		21,572		13,557		59,359		38,633
General and administrative		6,531		5,821		20,596		14,247
Intangible asset impairment		—		3,500		—		3,500
Gain on fair value remeasurement of contingent consideration		—		(1,901)		(6,862)		(1,160)
Litigation settlement related loss		—		—		15,000		—
Total operating expenses		28,103		20,977		88,093		55,220

Operating loss		(27,696)		(20,824)		(87,349)		(50,903)
Investment and other income, net		912		145		1,511		313
Net loss before income tax benefit		(26,784)		(20,679)		(85,838)		(50,590)
Income tax benefit		—		227		—		227
Net loss	$	(26,784)	$	(20,452)	$	(85,838)	$	(50,363)

Basic and diluted net loss per common share	$	(0.57)	$	(0.45)	$	(1.83)	$	(1.21)

Shares used in calculating basic and diluted net loss per share		46,916		45,453		46,806		41,582

Comprehensive loss:
Net loss	$	(26,784)	$	(20,452)	$	(85,838)	$	(50,363)
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities		305		(44)		(2,006)		(41)
Comprehensive loss	$	(26,479)	$	(20,496)	$	(87,844)	$	(50,404)

See accompanying notes to unaudited condensed consolidated financial statements

Table of Contents

CELLDEX THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

(In thousands)

Nine Months
Ended
September 30, 2017

Nine Months
Ended
September 30, 2016

Cash Flows from Operating Activities:

Net Loss

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

Depreciation and Amortization

3,392

2,135

Amortization of Intangible Assets

672

760

Amortization and Premium of Marketable Securities, Net

(171
)
768

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
)
—

Stock-Based Compensation Expense

9,728

11,709

Non-Cash Expense

—

1,638

Changes in Operating Assets and Liabilities:

Accounts and Other Receivables

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

525

(325
)
Other Assets

132

—

Accounts Payable and Accrued Expenses

(10,888
)
(11,560
)
Other Liabilities

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

(80,410
)
(92,687
)

Cash Flows from Investing Activities:

Sales and Maturities of Marketable Securities

183,683

194,915

Purchases of Marketable Securities

(122,235
)
(149,877
)
Investment in Other

—

(1,801
)
Acquisition of Property and Equipment

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

59,850

41,124

Cash Flows from Financing Activities:

Net Proceeds from Stock Issuances

32,642

10,666

Proceeds from Issuance of Stock from Employee Benefit Plans

192

532

Net Cash Provided by Financing Activities

32,834

11,198

Net Increase (Decrease) in Cash and Cash Equivalents

12,274

(40,365
)
Cash and Cash Equivalents at Beginning of Period

42,461

72,108

Cash and Cash Equivalents at End of Period

$
54,735

$
31,743

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

$
—


	Nine Months Ended		Nine Months Ended
	September 30, 2022		September 30, 2021
Cash flows from operating activities:
Net loss	$	(85,838)	$	(50,363)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,223		2,291
Amortization and premium of marketable securities, net		1,366		(3,407)
Loss (gain) on sale or disposal of assets		1		(23)
Intangible asset impairment		—		3,500
Gain on fair value remeasurement of contingent consideration		(6,862)		(1,160)
Non-cash income tax benefit		—		(227)
Stock-based compensation expense		11,103		5,813
Changes in operating assets and liabilities:
Accounts and other receivables		(17)		1,549
Prepaid and other current assets		(7,928)		(2,261)
Accounts payable and accrued expenses		720		1,757
Other liabilities		3,262		(3,855)
Net cash used in operating activities		(81,970)		(46,386)
Cash flows from investing activities:
Sales and maturities of marketable securities		192,866		129,000
Purchases of marketable securities		(132,613)		(325,342)
Acquisition of property and equipment		(1,593)		(895)
Proceeds from sale or disposal of assets		69		25
Net cash provided by (used in) investing activities		58,729		(197,212)
Cash flows from financing activities:
Net proceeds from stock issuances		—		269,893
Proceeds from issuance of stock from employee benefit plans		2,681		2,053
Net cash provided by financing activities		2,681		271,946

Net (decrease) increase in cash and cash equivalents		(20,560)		28,348
Cash and cash equivalents at beginning of period		39,143		43,836
Cash and cash equivalents at end of period	$	18,583	$	72,184

Non-cash investing activities
Accrued construction in progress	$	38	$	46

See accompanying notes to unaudited condensed consolidated financial statements

Table of Contents

CELLDEX THERAPEUTICS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, ~~2017~~2022

(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,~~2021, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on ~~March 14, 2017.~~February 28, 2022. 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.~~2022.

At September 30, ~~2017,~~2022, the Company had cash, cash equivalents and marketable securities of ~~$140.5~~$323.5 million. The Company has had recurring losses and incurred a loss of ~~$89.2~~$85.8 million for the nine months ended September 30, ~~2017.~~2022. Net cash used in operations for the nine months ended September 30, ~~2017~~2022 was ~~$80.4~~$82.0 million. The Company believes that the cash, cash equivalents and marketable securities at ~~November 7, 2017~~the filing date of this Form 10-Q 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~~amounts due under the ~~Kolltan acquisition,~~Settlement Agreement with Shareholder Representative Services LLC (“SRS”) (refer to Note 13), 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 the Company is unable to raise the funds necessary to meet its long-term liquidity needs, it 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 the Company.

COVID-19 continues to have an impact in the US and around the world. To date, we have managed delays and disruptions without significant impact in planned and ongoing preclinical and clinical trials, 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, and 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 in-process research and development (“IPR&D”) assets with a carrying value of $27.2 million at September 30, 2022.

Table of Contents

(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 nine months ended September 30, ~~2017~~2022 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, except for the adoption of new accounting standards during the first nine months of 2017 as discussed below.~~2021.

~~Newly-Adopted Accounting Pronouncements~~

On January 1, 2017, the Company adopted a new U.S. GAAP accounting standard which involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The Company elected to continue 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.

On January 1, 2017, the Company adopted a new U.S. GAAP accounting standard which simplifies how an entity is required to test goodwill for impairment. A goodwill impairment will be measured by the amount by which a reporting unit’s carrying value exceeds its fair value, with the amount of impairment not to exceed the carrying amount of goodwill.

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 is currently evaluating the potential impact that this standard may have on the Company’s consolidated financial statements.

~~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, 2018.2023. The adoption of this new guidance is not expected to have a material impact on the Company’s consolidated financial ~~statements.~~statements and related disclosures.

(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, 2022		Level 1		Level 2		Level 3
	As of September 30, 2017		Level 1		Level 2		Level 3
	(In thousands)
									(In thousands)
Assets:
Money market funds and cash equivalents	$	42,032	$	—	$	42,032	$	—	$	10,729		—	$	10,729		—
Marketable securities	85,795		—		85,795		—			304,888		—		304,888		—
	$	127,827	$	—	$	127,827	$	—

									$	315,617		—	$	315,617		—
Liabilities:
Kolltan acquisition contingent consideration	$	44,000	$	—	$	—	$	44,000	$	—		—		—	$	—
	$	44,000	$	—	$	—	$	44,000
									$	—		—		—	$	—

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, 2021		Level 1		Level 2		Level 3

	(In thousands)
Assets:
Money market funds and cash equivalents	$	26,220		—	$	26,220		—
Marketable securities		369,107		—		369,107		—
	$	395,327		—	$	395,327		—
Liabilities:
Kolltan acquisition contingent consideration	$	6,862		—		—	$	6,862
	$	6,862		—		—	$	6,862

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.

Table of Contents

The following table reflects the activity for the Company’s contingent consideration liabilities measured at fair value using Level 3 inputs for the nine months ended September 30, ~~2017~~2022 (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, 2021	$	6,862
Fair value adjustments included in operating expenses		(6,862)
Balance at September 30, 2022	$	—

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 Pharmaceuticals, Inc. (“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.

During the three and nine months ended September 30, ~~2017,~~2022, the Company recorded a ~~$4.6~~$0.0 million and ~~a $0.2~~$6.9 million gain on fair value remeasurement of contingent consideration, respectively, primarily due to the Company’s decision to deprioritize the CDX-1140 program. During the three and nine months ended September 30, 2021, the Company recorded a ~~reduction in~~$1.9 million and $1.2 million gain on fair value ~~attributed~~remeasurement of contingent consideration, respectively, primarily due to updated assumptions for the ~~milestones related to the Company’s anti-KIT~~TAM program, ~~and partially offset by losses related 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 months ended September 30, ~~2017.~~2022.

Table of Contents

(4) Marketable Securities

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


										Gross Unrealized
										Amortized							Fair
										Cost			Gains		Losses		Value
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
September 30, 2017
										(In thousands)
September 30, 2022
Marketable securities
U.S. government and municipal obligations
Maturing in one year or less	$	13,725	$	5	$	(3	)	$	13,727	$	132,422		$	—	$	(1,042)	$	131,380
Maturing after one year through three years	—		—		—			—			3,912			—		(71)		3,841
Total U.S. government and municipal obligations	$	13,725	$	5	$	(3	)	$	13,727	$	136,334		$	—	$	(1,113)	$	135,221
Corporate debt securities
Maturing in one year or less	$	72,078	$	3	$	(13	)	$	72,068	$	168,698		$	—	$	(1,548)	$	167,150
Maturing after one year through three years	—		—		—			—			2,564			—		(47)		2,517
Total corporate debt securities	$	72,078	$	3	$	(13	)	$	72,068	$	171,262		$	—	$	(1,595)	$	169,667
Total marketable securities	$	85,803	$	8	$	(16	)	$	85,795	$	307,596		$	—	$	(2,708)	$	304,888


										Gross Unrealized
										Amortized		��					Fair
										Cost			Gains		Losses		Value

December 31, 2016
										(In thousands)
December 31, 2021
Marketable securities
U.S. government and municipal obligations
Maturing in one year or less	$	52,754	$	5	$	(12	)	$	52,747	$	80,674		$	—	$	(133)	$	80,541
Maturing after one year through three years	296		8		—			304			51,319			—		(184)		51,135
Total U.S. government and municipal obligations	$	53,050	$	13	$	(12	)	$	53,051	$	131,993		$	—	$	(317)	$	131,676
Corporate debt securities
Maturing in one year or less	$	94,320	$	—	$	(56	)	$	94,264	$	170,034		$	—	$	(28)	$	170,006
Maturing after one year through three years	—		—		—			—			67,782			—		(357)		67,425
Total corporate debt securities	$	94,320	$	—	$	(56	)	$	94,264	$	237,816		$	—	$	(385)	$	237,431
Total marketable securities	$	147,370	$	13	$	(68	)	$	147,315	$	369,809		$	—	$	(702)	$	369,107

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 30, ~~2017.~~2022 and December 31, 2021. 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~~$0.7 million and ~~$0.6~~$1.3 million in accrued interest at September 30, ~~2017~~2022 and December 31, ~~2016,~~2021, respectively.

(5) Intangible Assets

At September 30, 2022 and ~~Goodwill~~

~~Intangible Assets, Net~~

~~The table below presents information for~~December 31, 2021, the carrying value of the Company’s ~~finite-lived~~indefinite-lived intangible assets ~~that are subject to amortization 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

was $27.2 million. Indefinite-lived intangible assets consist of acquired ~~in-process research and development (“~~IPR~~&D”)~~&D related to ~~the development of glembatumumab vedotin acquired in connection with the CuraGen acquisition and~~ the development of the anti-KIT program, ~~CDX-3379 and the TAM programs acquired~~including barzolvolimab (also referred to as CDX-0159), which was recorded in connection with the Kolltan acquisition. Barzolvolimab is in Phase 2 development. As of September 30, ~~2017, no~~2022, the IPR&D asset related to the anti-KIT program had not reached technological feasibility nor did ~~any~~the asset 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.

~~Goodwill~~

~~There have been no changes to the carrying amount~~Table of goodwill during the nine months ended September 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.Contents

(6) 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


	September 30,		December 31,
	2022		2021

	(In thousands)
Net deferred tax liabilities related to IPR&D (Note 11)	$	1,613	$	1,613
Deferred Income From Sale of Tax Benefits		4,650		—
Contingent milestones (Note 3 and Note 13)		—		6,862
Deferred revenue (Note 10)		222		433
Total		6,485		8,908
Less current portion		(1,152)		(1,554)
Long-term portion	$	5,333	$	7,354

In ~~November 2015, December 2014, January 2014 and January 2013,~~March 2022, 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~~$5.0 million to an independent third party for ~~$9.2 million, $1.8 million, $1.0 million and $0.8 million, respectively.~~$4.7 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 the three and nine months ended September 30, 2017, respectively, and $0.0 million and $0.6 million during the three and nine months ended September 30, 2016, 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) 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 months ended September 30, 2017, the Company issued 11,326,363 shares of its common stock under the 2016 Cantor Agreement resulting in net proceeds to the Company of $32.6 million, after deducting commission and offering expenses. At September 30, ~~2017,~~2022, the Company had ~~$11.7~~$50.0 million remaining in aggregate gross offering price available under the ~~2016 Cantor Agreement. In October 2017,~~Company’s November 2020 prospectus.

The changes in Stockholders’ Equity during the ~~Company completed sales under the 2016 Cantor Agreement~~three and ~~issued 3,871,709 shares~~nine months ended September 30, 2022 and 2021 are summarized below:


						Accumulated
	Common	Common		Additional		Other				Total
	Stock	Stock Par		Paid-In		Comprehensive		Accumulated		Stockholders’
	Shares	Value		Capital		Income		Deficit		Equity
Consolidated balance at December 31, 2021	46,730,198	$	47	$	1,561,142	$	1,894	$	(1,143,607)	$	419,476
Shares issued under stock option and employee stock purchase plans	24,150		—		304		—		—		304
Stock-based compensation	—		—		3,153		—		—		3,153
Unrealized loss on marketable securities	—		—		—		(1,782)		—		(1,782)
Net loss	—		—		—		—		(23,050)		(23,050)
Consolidated balance at March 31, 2022	46,754,348	$	47	$	1,564,599	$	112	$	(1,166,657)	$	398,101
Shares issued under stock option and employee stock purchase plans	10,355		—		71		—		—		71
Stock-based compensation	—		—		3,454		—		—		3,454
Unrealized loss on marketable securities	—		—		—		(529)		—		(529)
Net loss	—		—		—		—		(36,004)		(36,004)
Consolidated balance at June 30, 2022	46,764,703	$	47	$	1,568,124	$	(417)	$	(1,202,661)	$	365,093
Shares issued under stock option and employee stock purchase plans	331,360		—		2,306		—		—		2,306
Stock-based compensation	—		—		4,496		—		—		4,496
Unrealized gain on marketable securities	—		—		—		305		—		305
Net loss	—		—		—		—		(26,784)		(26,784)
Consolidated balance at September 30, 2022	47,096,063	$	47	$	1,574,926	$	(112)	$	(1,229,445)	$	345,416

Table of ~~its common stock resulting in net proceeds to the Company of $11.3 million.~~Contents


						Accumulated
	Common	Common		Additional		Other				Total
	Stock	Stock Par		Paid-In		Comprehensive		Accumulated		Stockholders’
	Shares	Value		Capital		Income		Deficit		Equity

	(In thousands, except share amounts)
Consolidated balance at December 31, 2020	39,603,771	$	40	$	1,279,824	$	2,589	$	(1,073,096)	$	209,357
Shares issued under stock option and employee stock purchase plans	10,867		—		74		—		—		74
Stock-based compensation	—		—		1,275		—		—		1,275
Unrealized loss on marketable securities	—		—		—		(2)		—		(2)
Net loss	—		—		—		—		(16,538)		(16,538)
Consolidated balance at March 31, 2021	39,614,638	$	40	$	1,281,173	$	2,587	$	(1,089,634)	$	194,166
Shares issued under stock option and employee stock purchase plans	2,058		—		(25)		—		—		(25)
Stock-based compensation	—		—		1,509		—		—		1,509
Unrealized gain on marketable securities	—		—		—		5		—		5
Net loss	—		—		—		—		(13,373)		(13,373)
Consolidated balance at June 30, 2021	39,616,696	$	40	$	1,282,657	$	2,592	$	(1,103,007)	$	182,282
Shares issued under stock option and employee stock purchase plans	201,406		—		2,004		—		—		2,004
Shares issued in underwritten offering, net	6,845,238		7		269,886		—		—		269,893
Stock-based compensation	—		—		3,029		—		—		3,029
Unrealized loss on marketable securities	—		—		—		(44)		—		(44)
Net loss	—		—		—		—		(20,452)		(20,452)
Consolidated balance at September 30, 2021	46,663,340	$	47	$	1,557,576	$	2,548	$	(1,123,459)	$	436,712

(8) Stock-Based Compensation

A summary of stock option activity for the nine months ended September 30, ~~2017~~2022 is as follows:

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

Granted

2,309,900

$
2.34

Exercised

—

$
—

Canceled

(945,792
)
$
9.21

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

Shares Available for Grant Under the 2008 Plan

7,780,663


		Weighted		Weighted
		Average		Average
		Exercise		Remaining
		Price		Contractual
	Shares	Per Share		Term (In Years)
Options outstanding at December 31, 2021	4,077,667	$	30.02	8.0
Granted	1,584,900	$	22.89
Exercised	(353,622)	$	6.71
Canceled	(118,974)	$	50.12
Options outstanding at September 30, 2022	5,189,971	$	28.97	8.07
Options vested and expected to vest at September 30, 2022	5,031,072	$	29.21	8.05
Options exercisable at September 30, 2022	1,985,506	$	41.56	6.74
Shares available for grant under the 2021 Plan	1,838,291

The weighted average grant-date fair value of stock options granted during the three and nine ~~month period~~months ended September 30, ~~2017~~2022 was ~~$1.57.~~ $25.38 and $17.36, respectively.

The aggregate intrinsic value of stock options vested and expected to vest at September 30, 2022 was $45.6 million. The aggregate intrinsic value of stock options exercisable at September 30, 2022 was $23.6 million. As of September 30, 2022, total compensation cost related to non-vested employee, consultant and non-employee director stock options not yet recognized was approximately $46.7 million, net of estimated forfeitures, which is expected to be recognized as expense over a weighted average period of 2.8 years.

Stock-based compensation expense for the three and nine months ended September 30, ~~2017~~2022 and ~~2016~~2021 was recorded as follows:


									Three months ended September 30,				Nine months ended September 30,
									2022		2021		2022		2021
	Three months ended September 30,				Nine months ended September 30,
	2017		2016		2017		2016
	(In thousands)
									(In thousands)				(In thousands)
Research and development	$	1,546	$	2,042	$	5,310	$	5,866	$	2,342	$	1,504	$	5,754	$	2,927
General and administrative	1,193		1,754		4,418		5,843			2,154		1,525		5,349		2,886
Total stock-based compensation expense	$	2,739	$	3,796	$	9,728	$	11,709	$	4,496	$	3,029	$	11,103	$	5,813

Table of Contents

The fair ~~value~~values of employee, consultant and non-employee director stock options granted during the three and nine ~~month periods~~months ended September 30, ~~2017~~2022 and ~~2016~~2021 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,

Three months ended September 30,

Nine months ended September 30,

2017

2016

2017

2016

2022

2021

2022

2021

Expected stock price volatility

76 — 77

70 — 77

91%

98%

90 – 97%

97 – 98%

Expected option term

6.0 years

6.0 Years

Risk-free interest rate

2.0

1.4

2.0 — 2.3

1.4 — 1.6

2.9 – 3.5%

1.1 – 1.2%

1.7 – 3.6%

0.8 – 1.3%

Expected dividend yield

None

(9) Accumulated Other Comprehensive Income

The changes in accumulated other comprehensive income, which is reported as a component of stockholders’ equity, for the nine months ended September 30, ~~2017~~2022 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
	Loss on
	Marketable		Foreign
	Securities		Currency Items		Total

	(In thousands)
Balance at December 31, 2021	$	(702)	$	2,596	$	1,894
Other comprehensive loss		(2,006)		—		(2,006)
Balance at September 30, 2022	$	(2,708)	$	2,596	$	(112)

No amounts were reclassified out of accumulated other comprehensive income during the nine months ended September 30, ~~2017.~~2022.

(10) Revenue

Contract and Grants Revenue

The Company has entered into agreements with Rockefeller University ~~(Rockefeller)~~

~~In 2013, the Company entered into an agreement, as amended, with Rockefeller~~and Gilead Sciences 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 $0.0 million and ~~$1.4~~$0.2 million in revenue ~~related to the Rockefeller agreement~~under these agreements during the three and nine months ended September 30, ~~2017,~~2022, respectively, and ~~$1.1~~$0.1 million and ~~$1.8~~$4.0 million during the three and nine months ended September 30, ~~2016,~~2021, respectively.

~~Bristol-Myers Squibb Company (BMS)~~Contract Assets and Liabilities

~~In 2014,~~At September 30, 2022 and December 31, 2021, the Company’s right to consideration under all contracts was considered unconditional, and as such, there were no recorded contract assets. At September 30, 2022, the Company ~~entered into a clinical trial collaboration with BMS~~had $0.2 million in contract liabilities recorded, which is expected to ~~evaluate~~be recognized during the ~~safety, tolerability~~next 12 months as manufacturing 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 reimburseservices are performed. At December 31, 2021, 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~~had $0.4 million in ~~revenue related to the BMS agreement~~contract liabilities recorded. Revenue recognized from contract liabilities as of December 31, 2021 during the three and nine months ended September 30, ~~2017, respectively, and $0.5~~2022 was $0.2 million and ~~$1.5~~$0.4 million, ~~during the three and nine months ended September 30, 2016,~~ respectively.

~~International AIDS Vaccine Initiative (IAVI)~~

In 2017, 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 $4.0 million in revenue related to the IAVI agreement during the three and nine months ended September 30, 2017, 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~~Income Taxes

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~~on its deferred tax assets as of September 30, 2022 and December 31, 2021.

The net deferred tax liability of $1.6 million at September 30, ~~2017~~2022 and December 31, ~~2016 against~~2021 relates to the ~~Company’s net deferred~~temporary differences associated with the IPR&D intangible assets acquired in previous business combinations and is not deductible for tax ~~assets.~~purposes.

AsTable of ~~September 30, 2017~~Contents

Massachusetts, New Jersey, New York and ~~December 31, 2016,~~Connecticut are the jurisdictions in which the Company ~~had $22.9 million~~primarily operates or has operated and ~~$28.1 million of deferred~~has income tax ~~liabilities, net recorded on the balance sheet primarily associated with temporary differences related to the Company’s IPR&D assets.~~nexus. The ~~$5.2 million decrease in deferred~~Company is not currently under examination by these or any other jurisdictions for any tax ~~liabilities, net during the three and nine months ended September 30, 2017 was due to the partial impairment of the anti-KIT program IPR&D assets.~~year.

~~(13)~~(12) 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


	Nine Months Ended September 30,
	2022	2021
Stock Options	5,189,971	4,129,626
Restricted Stock	—	—
	5,189,971	4,129,626

(13) Kolltan Acquisition

On November 29, 2016, the Company acquired all of the share and debt interests of 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 payable in cash, in shares of Celldex’s common stock or a combination of both, in the sole discretion of Celldex and subject to provisions of the Agreement and Plan of Merger, dated November 1, 2016 (the “Merger Agreement”).

In October 2019, the Company received a letter from SRS, the hired representative of the former stockholders of Kolltan, notifying the Company that it objected to the Company’s characterization of the development, regulatory approval and sales-based Kolltan Milestones relating to CDX-0158 as having been abandoned and contending instead that the related milestone payments are due from Celldex to the Kolltan stockholder.

On August 18, 2020, Celldex filed a Verified Complaint in the Court of Chancery of the State of Delaware against SRS (acting in its capacity as the representative of the former stockholders of Kolltan pursuant to the Merger Agreement) seeking declaratory relief with respect to the rights and obligations of the parties relating to certain contingent milestone payments under the Merger Agreement relating to the discontinued CDX-0158 program (the “Litigation”).

On June 20, 2022, the Company entered into a binding settlement term sheet (the “Term Sheet”) with SRS, related to the Litigation, which, upon execution of a definitive settlement agreement and the payment of the Initial Payment (as defined below), would result in the joint dismissal, with prejudice, of all claims and counterclaims in the Litigation. The definitive settlement agreement between the Company and SRS was executed on July 15, 2022 (the “Settlement Agreement”) and the Company and SRS jointly filed a Stipulation of Dismissal with prejudice relating to the Litigation on July 19, 2022.

Pursuant to the terms of the Term Sheet and the Settlement Agreement, all milestone payments provided for by the Merger Agreement are replaced in their entirety with the following payments, each of which is payable only once:

(i)

The Company paid $15.0 million upon execution of the Settlement Agreement (the “Initial Payment”).

(ii)

The Company shall pay $15.0 million upon the Successful Completion (as defined in the Term Sheet) of a Phase 2 Clinical Trial (as defined in the Merger Agreement) of CDX-0159, subject to the $2.5 million contractual credit as set forth in the Merger Agreement.

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(iii)

The Company shall pay $52.5 million upon the first United States Food and Drug Administration or European Medicines Agency, or, in each case, any successor organization, regulatory approval of a Surviving Company Product (as defined the Term Sheet).

The above payment obligations replace, in their entirety, the contingent consideration in the form of development, regulatory approval and sales-based milestones of up to $172.5 million contained in the Merger Agreement.

Under the Settlement Agreement, each of the Company and SRS provided broad mutual releases of all claims relating to or arising out of the Merger Agreement, including without limitation, all claims brought in the Litigation or that could have been brought in the Litigation.

The Company paid the Initial Payment in cash during the three months ended September 30, 2022. Any future milestone payments related to the CDX-0159 program, which was subject to the Litigation, will be recorded when and if payment becomes probable and reasonably estimable in accordance with the loss contingency model under ASC 450. Milestones related to the remaining Surviving Company Products are measured at fair value (refer to Note 3). When and if any of the remaining payments described above become due, they shall be payable, at the Company’s sole election, in either cash or stock (as set forth in the Merger Agreement) or a combination thereof.

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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 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 COVID-19 pandemic on our business or on the economy generally;

●

whether the COVID-19 pandemic 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;

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●

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 therapeutics;

●

the cost of paying the future milestones, if any, under the Settlement Agreement with SRS;

●

our ability to raise sufficient capital to fund our preclinical and clinical studies and to meet our long-term liquidity needs, on terms acceptable to us, or at all. 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 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 our annual report on Form 10-K for the year ended December 31, 2021 and other reports that we file with the Securities and Exchange Commission.

· 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 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~~dedicated to developing therapeutic monoclonal and ~~commercialization of several immunotherapy technologies and other cancer-targeting biologics.~~bispecific antibodies that address diseases for which available treatments are inadequate. Our drug candidates ~~including antibodies, antibody-drug conjugates and other protein-based~~include antibody-based therapeutics ~~are derived from a broad set of complementary technologies~~ which have the ability to engage the human immune system and/or directly ~~inhibit tumors~~affect critical pathways to ~~treat specific types~~improve the lives of ~~cancer or other diseases.~~patients with inflammatory diseases and many forms of cancer.

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 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 market opportunities for which we believe current therapies are inadequate or non-existent.

We are ~~building~~focusing our efforts and resources on the continued research and development of:

●

Barzolvolimab (also referred to as CDX-0159), a monoclonal antibody that specifically binds the KIT receptor and potently inhibits its activity, is currently being studied across multiple mast cell driven diseases including:

Chronic Urticarias: In June and July 2022 respectively, we announced that enrollment had opened and the first patients had been dosed in Phase 2 studies in chronic spontaneous urticaria (CSU) and chronic inducible urticaria (CIndU). Positive interim data from the ongoing Phase 1b study in CSU were reported in July 2022. Positive interim data from the Phase 1b study in CIndU were reported in July and September 2021 in patients with cold urticaria and symptomatic dermographism;

Prurigo Nodularis (PN): In December 2021 we announced that the first patient had been dosed in a Phase 1b study in PN; and

Eosinophilic Esophagitis (EoE): We plan to initiate a Phase 2 study in EoE in the first half of 2023.

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●

Our next generation bispecific antibody platform to support pipeline expansion with additional candidates for inflammatory diseases and oncology. Targets are being selected based on new science as well as their compatibility to be used in bispecific antibody formats with Celldex’s existing antibody programs. Development is focused on emerging, important pathways controlling inflammatory diseases or immunity to tumors.

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.~~us.

~~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:


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

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

●

the number of clinical sites included in the trials;

●

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

●

the efficacy and safety profile of the drug candidate.

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

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

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

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

· ~~the efficacy and safety profile of the product 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~~agencies 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.

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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,~~2021, we incurred an aggregate of ~~$422.1~~$301.1 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 months ended September 30, ~~2017~~2022 and ~~2016.~~2021. 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


	Nine Months		Nine Months
	Ended		Ended
	September 30, 2022		September 30, 2021

	(In thousands)
Barzolvolimab/Anti-KIT Program	$	35,519	$	18,264
CDX‑585		8,638		3,233
CDX‑527		1,659		3,008
CDX‑1140 and CDX-301		3,333		4,097
Other Programs		10,210		10,031
Total R&D Expense	$	59,359	$	38,633

Clinical Development Programs

~~Glembatumumab Vedotin~~

Glembatumumab vedotin is an antibody-drug conjugate, or ADC, that consists of a fully human monoclonal antibody, CR011, linked to a potent cell-killing drug, monomethyl auristatin E, or MMAE. The CR011 antibody specifically targets glycoprotein NMB,Barzolvolimab (also referred to as ~~gpNMB,~~CDX-0159)

Barzolvolimab is a humanized monoclonal antibody that specifically 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 and a stable linker system for attaching it to CR011, was licensed from Seattle Genetics, Inc. and is the same as that used in the marketed product Adcetris®~~. The ADC~~degranulation. Barzolvolimab is designed to block KIT activation by disrupting both SCF binding and KIT dimerization. We believe that by targeting KIT, barzolvolimab may be ~~stable~~able to inhibit mast cell activity and decrease mast cell numbers to provide potential clinical benefit in mast cell related diseases.

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In certain inflammatory diseases, such as chronic spontaneous urticaria (CSU), also known as chronic idiopathic urticaria (CIU), and chronic inducible urticaria (CIndU), mast cell degranulation plays a central role in the ~~bloodstream. Following~~onset and progression of the disease. In June 2020, we completed a randomized, double-blind, placebo-controlled, single ascending dose escalation Phase 1a study of barzolvolimab in healthy subjects (n=32; 8 subjects per cohort, 6 barzolvolimab; 2 placebo). Subjects received a single intravenous ~~administration, glembatumumab vedotin targets~~infusion of barzolvolimab at 0.3, 1.0, 3.0, or 9.0 mg/kg or placebo. The objectives of the study included safety and ~~binds~~tolerability, pharmacokinetics (PK) and pharmacodynamics (tryptase and stem cell factor) and immunogenicity. Tryptase is an enzyme synthesized and secreted almost exclusively by mast cells and decreases in plasma tryptase levels are believed to ~~gpNMB,~~reflect a systemic reduction in mast cell burden in both healthy volunteers and ~~upon internalization~~in disease. 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. Barzolvolimab demonstrated a favorable safety profile as well as profound and durable reductions of plasma tryptase, consistent with systemic mast cell suppression.

These data supported expansion of the barzolvolimab program into mast cell driven diseases, including initially in CSU and CIndU, diseases where mast cell degranulation plays a central role in the ~~targeted cell, glembatumumab vedotin~~onset and progression of the disease. The prevalence of CSU and CIndU is approximately 0.5-1% of the total population or up to 1 to 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 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 need for additional therapies. CIndUs are forms of urticaria that have an attributable cause or trigger associated with them, typically resulting in hives or wheals. We are exploring cold-induced, dermographism (scratch-induced) and cholinergic (exercise-induced) urticarias. In June and July 2022 respectively, we announced the initiation of Phase 2 studies in both CSU and CIndU.

In October 2020, we announced that enrollment had opened and the first patient had been dosed in a Phase 1b multi-center study of barzolvolimab in CSU. This study is a randomized, double-blind, placebo-controlled clinical trial designed to ~~release MMAE from CR011~~assess the safety of multiple ascending doses of barzolvolimab in up to ~~produce a cell-killing effect. Glembatumumab vedotin~~40 patients with CSU who remain symptomatic despite treatment with antihistamines. Secondary and exploratory objectives include pharmacokinetic and pharmacodynamic assessments, including measurement of tryptase and stem cell factor levels and clinical activity outcomes (impact on urticaria symptoms, disease control, clinical response) as well as quality of life assessments. Barzolvolimab 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 expect that, if necessary, such a companion diagnostic must be approved by the FDA or certain other foreign regulatory agencies before glembatumumab vedotin 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~~(0.5, 1.5, 3 and 4.5 mg/kg at varying dosing schedules) as add on treatment to H1-antihistamines, either alone or in combination with H2-antihistamines and/or leukotriene receptor agonists.

In June 2022, we reported positive interim data from the CSU study. As of the data cut-off on May 23, 2022, 34 patients with ~~locally advanced or metastatic breast cancer (MBC) who~~CSU were enrolled and treated [26 barzolvolimab (n=9 in 0.5 mg/kg; n=8 in 1.5 mg/kg; n=9 in 3.0 mg/kg) and 8 placebo]. The 0.5 mg/kg and 1.5 mg/kg cohorts had ~~received prior therapy (median~~completed study participation through 24 weeks; 7 of ~~seven prior regimens). Results were published~~12 patients in the ~~Journal~~3.0 mg/kg cohort had completed week 12; enrollment in the 4.5 mg/kg cohort was ongoing. Adverse events through data cutoff and hematology data through week 12 were included for all dose groups; clinical activity and tryptase data were included through week 12 for 0.5 mg/kg and 1.5 mg/kg, and through week 8 for 3 mg/kg (ongoing; reflecting the administration of ~~Clinical Oncology~~only one dose). Data shows that barzolvolimab results in ~~September 2014. The study began~~rapid, marked and durable responses in patients with ~~a bridging phase~~moderate to ~~confirm~~severe CSU refractory to antihistamines, including patients with prior omalizumab treatment.

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Mean reduction from baseline in urticaria activity (Urticaria Activity Score over 7 days or UAS7) of 66.6% in all patients in the 1.5 mg/kg dose group (n=8) at week 12 and 75.1% in all patients in the 3.0 mg/kg dose group (n=9) at week 8 (reflects only one dose), demonstrating clinically meaningful symptom improvements for patients.

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Complete response (UAS7=0) of 57.1% in the 1.5 mg/kg dose group at week 12 and 44.4% at week 8 (reflects only one dose) in the 3 mg/kg dose group which is a key therapeutic goal.

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75% well-controlled disease by Urticaria Control Test (UCT) in the 1.5 mg/kg dose group at week 12 and 83.3% in the 3 mg/kg dose group at week 8 (reflects only one dose).

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Patients with prior omalizumab therapy had similar symptom improvement as all patients.

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All three doses of barzolvolimab markedly improved urticaria symptoms and disease control, with rapid improvement in itch and hives. As predicted, the lowest dose of 0.5 mg/kg resulted in suboptimal clinical activity compared to the higher doses.

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Rapid onset of responses after initial dosing and sustained durability were observed; onset as early as 1 week after the first dose.

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Tryptase suppression, indicative of mast cell depletion, paralleled symptom improvement, demonstrating the impact of mast cell depletion on CSU disease activity.

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Barzolvolimab was well tolerated with a favorable safety profile; effects of multiple dose administration were consistent with observations in single dose studies. Most AEs were mild or moderate in severity and resolved while on study, with none leading to treatment discontinuation. The most common treatment emergent adverse events were urinary tract infections, headache, neutropenia and back pain. UTIs, headache and backpain were all reported as unrelated to treatment. Changes in hematologic parameters were consistent with observations in single dose studies, with no pattern of further decreases with multiple doses; hematologic values generally remained within the normal range.

In June 2022, we announced that the ~~maximum tolerated dose, or MTD, and then expanded into~~first patient has been dosed in a Phase 2 ~~open-label, multi-center study.~~study in patients with CSU who remain symptomatic despite antihistamine therapy. The study ~~supported an acceptable~~will be conducted at more than 75 sites across 10 or more countries. The study is a randomized, double-blind, placebo-controlled, parallel group Phase 2 study evaluating the efficacy and safety profile of ~~glembatumumab vedotin at~~multiple dose regimens of barzolvolimab to determine the ~~pre-defined maximum dose level (1.88 mg/kg) in 6 patients. An additional 28~~optimal dosing strategy. Approximately 168 patients ~~with MBC were enrolled in an expanded Phase 2 cohort (for~~will be randomly assigned on a total of 34 treated patients at 1.88 mg/kg, the Phase 2 dose) 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)~~1:1:1:1 ratio to receive ~~either glembatumumab vedotin~~subcutaneous injections of barzolvolimab at 75 mg every 4 weeks, 150 mg every 4 weeks, 300 mg every 8 weeks or ~~single-agent Investigator’s Choice chemotherapy.~~placebo during a 16-week placebo-controlled treatment phase. Patients will then enter a 36-week active treatment phase, in which patients not already randomized to ~~receive Investigator’s Choice were allowed to cross over~~barzolvolimab at 150 mg every 4 weeks or 300 mg every 8 weeks will be randomized 1:1 to receive ~~glembatumumab vedotin following disease progression. Activity endpoints included response rate, PFS and overall survival (OS). The final study results,~~one of these two dose regimens; patients already randomized to these treatment arms will remain on the same regimen 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 induring the placebo-controlled treatment phase. Following the treatment period, 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~~will enter 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.24-week follow up phase. The primary endpoint of the study is ~~PFS, defined as~~mean change in baseline to Week 12 in UAS7 (Urticaria Activity Score over 7 days). Secondary endpoints include safety and other assessments of clinical activity including ISS7 (Itch Severity Score over 7 days), HSS7 (Hive Severity Score over 7 days) and AAS7 (Angioedema Activity Score over 7 days).

In December 2020, we announced that enrollment had opened and the ~~time from randomization~~first patient had been dosed in a Phase 1b study in CIndU being conducted in Germany in patients who are refractory to ~~the earlier of disease progression or death due to any cause. PFS~~antihistamines. This study is an ~~established endpoint for full approval registration studies~~open label clinical trial designed to evaluate the safety of a single dose (3 mg/kg) of barzolvolimab in ~~this patient population~~patients with cold urticaria (n=10) or symptomatic dermographism (n=10). In March and June 2021, respectively, we added a third cohort (single dose, 3 mg/kg) in ~~both~~patients with cholinergic urticaria (n=10) and a fourth cohort at a lower dose (single dose, 1.5 mg/kg) in cold urticaria. Patient’s symptoms are induced via provocation testing that resembles real life triggering situations. Secondary and exploratory objectives include pharmacokinetic and pharmacodynamic assessments, including changes from baseline provocation thresholds, measurement of tryptase and stem cell factor levels, clinical activity outcomes (impact on urticaria symptoms, disease control, clinical response), quality of life assessments and measurement of tissue mast cells through skin biopsies. Barzolvolimab is administered intravenously on Day 1 as add on treatment to H1-antihistamines.

In July 2021, we reported positive interim data from the ~~U.S.~~cold urticaria 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 sumsymptomatic dermographism cohorts. As of the data cut-off on June 11, 2021, 20 patients had received a single intravenous infusion of barzolvolimab at 3 mg/kg, 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~~11 patients with ~~unresectable stage III or IV melanoma~~cold urticaria and 9 patients with symptomatic dermographism. Patients had high disease activity as assessed by provocation threshold testing. In patients with cold urticaria and symptomatic dermographism baseline critical temperature thresholds were 18.9°C/66°F (range: 5-27°C/41-80.6°F) and FricTest® thresholds were 3.8 (range: 3-4) of 4 pins. Safety results were reported for all 20 patients; activity results were reported for the 19 patients who ~~had failed no more than one prior line~~received a full dose of ~~cytotoxic therapy. The MTD~~barzolvolimab. 14 of 19 patients completed the 12-week study observation period 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 cohortfive were ongoing (range 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 development2-8 weeks) as of ~~rash, which may be associated with the presence~~June 11, 2021.

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All 19/19 (100)% patients experienced a clinical response as assessed by provocation threshold testing; 18/19 (95)% experienced a complete response and 1/19 (5)% experienced a partial response.10/10 (100)% patients with cold urticaria experienced a complete response. 8/9 (89)% patients with symptomatic dermographism experienced a complete response and 1/9 (11)% experienced a partial response. Compete responses were observed in all 3 patients (1 cold urticaria; 2 symptomatic dermographism) with prior Xolair® (omalizumab) experience, including two who were Xolair refractory.

Table of ~~gpNMB in the skin, also seemed to correlate with greater PFS.~~Contents

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Rapid onset of responses after dosing and sustained durability were observed. Most patients with cold urticaria and symptomatic dermographism experienced a complete response by week 1 and by week 4, respectively. The median duration of response for patients was 77+ days for cold urticaria and 57+ days for symptomatic dermographism.

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Improvements in disease activity as reported by physician’s and patient’s global assessment of disease severity were consistent with the complete responses as measured by provocation testing.

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A single 3 mg/kg dose of barzolvolimab resulted in rapid, marked and durable suppression of serum tryptase and depletion of skin mast cells (87% depletion) as measured through biopsy. The kinetics of serum tryptase and skin mast cell depletion mirrored clinical activity. This confirmed that serum tryptase level is a robust pharmacodynamic biomarker for assessing mast cell burden and clinical activity in inducible urticaria and potentially in other diseases with mast cell driven involvement.

●

Barzolvolimab was generally well tolerated. The most common adverse events were hair color changes, mild infusion reactions, and transient changes in taste perception. Hair color changes (generally small areas of hair color lightening) and taste disorders (generally partial changes of ability to taste salt) are consistent with inhibiting KIT signaling in other cell types and are expected to be fully reversible. As previously reported in March 2021, a single severe infusion reaction of brief loss of consciousness was observed in a patient with a history of fainting. The patient rapidly recovered. Importantly, no evidence of mast cell activation as measured by serum tryptase monitoring was observed. There was no evidence of clinically significant decreases in hematology parameters—an important finding for a KIT inhibitor.

●

One patient with symptomatic dermographism enrolled in the study also had a diagnosis of prurigo nodularis (PN). After a single dose of barzolvolimab, this patient experienced both a complete response of symptomatic dermographism and notable improvement of the PN.

In ~~December 2014,~~September 2021, 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 the 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 ofreported 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.

~~We presented mature~~positive data from the ~~single-agent cohort~~study on measurements of symptom control and quality of life. A single dose of barzolvolimab (3 mg/kg) resulted in ~~an oral presentation at the 2017 American Society~~a rapid and sustained improvement in urticaria control and greatly reduced disease impact on quality of Clinical Oncology Annual Meeting in June. 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 experiencedlife, 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 impactedmeasured by the ~~addition of an antibody-drug conjugate (ADC)~~Urticaria Control Test (UCT) and Dermatology Life Quality Index (DLQI). ~~Modest clinical benefit~~

In July 2022 we announced that the first patient has been dosed 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,~~CIndU who ~~have progressed on prior platinum-based chemotherapy. This study opened to enrollment in April 2016 and is ongoing.~~remain symptomatic despite antihistamine therapy. The study ~~includes a dose-escalation phase followed by a two-stage~~will be conducted at more than 75 sites across 10 or more countries. The randomized, double-blind, placebo-controlled, parallel group Phase 2 ~~portion (Simon two-stage design).~~study is evaluating the efficacy and safety profile of multiple dose regimens of barzolvolimab in patients with CIndU to determine the optimal dosing strategy. Approximately 180 patients in 2 cohorts (differentiated by CIndU subtype) including 90 patients with cold urticaria and 90 patients with symptomatic dermographism will be randomly assigned on a 1:1:1 ratio to receive subcutaneous injections of barzolvolimab at 150 mg every 4 weeks, 300 mg every 8 weeks or placebo during a 20-week treatment phase. Patients will then enter a follow-up phase for an additional 24 weeks. The ~~Phase 1, dose-escalation portion~~primary endpoint of the study is the percentage of patients with a negative provocation test at Week 12 (using TempTest(R) and FricTest(R)). Secondary endpoints include safety and other assessments of clinical activity including CTT (Critical Temperature Threshold), CFT (Critical Friction Threshold) and WI-NRS (Worst itch numeric rating scale).

We have expanded clinical development of barzolvolimab into prurigo nodularis (PN). PN is a chronic skin disease characterized by the development of hard, intensely itchy (pruritic) nodules on the skin. Mast cells through their interactions with sensory neurons and other immune cells are believed to play an important role in amplifying chronic itch and neuroinflammation, both of which are a hallmark of PN. There is currently only one FDA approved therapy for PN, representing an area of significant unmet need. Industry sources estimate there are approximately 154,000 patients in the United States with PN who have undergone treatment within the last 12 months and, of these, approximately 75,000 would be biologic-eligible. In December 2021, the first patient was dosed in a Phase 1b multi-center, randomized, double-blind, placebo-controlled study designed to assess the safety and ~~tolerability~~treatment effects across multiple dosing cohorts of ~~glembatumumab vedotin at varying dose levels. The first stage~~barzolvolimab in up to 30 patients with PN.

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Manufacturing activities to support the introduction 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 ofbarzolvolimab subcutaneous formulation into 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 safety and tolerability and further assessment of anti-tumor activity across a broad range of endpoints.

Weclinical program have also entered into a Cooperative Research and Development Agreement, or CRADA, with the National Cancer Institute, or NCI, under which NCI 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, OS and PFS. Data from this study were presented at 9th 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 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,completed and, in ~~ongoing and planned investigator-sponsored studies.~~

~~Single-Agent Phase 1 Study:~~ ~~Data from the completed, open-label~~September 2021, we initiated dosing in a randomized, double-blind, placebo-controlled, 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~~designed to evaluate the safety ~~tolerability~~of single ascending doses of the subcutaneous formulation of barzolvolimab in healthy volunteers. In February 2022, we reported that subcutaneous administration of barzolvolimab was well tolerated and ~~preliminary efficacy~~that multiple dose levels have been identified that possess promising pharmacokinetic and pharmacodynamic properties. Importantly, subcutaneous delivery of ~~varlilumab~~barzolvolimab resulted in dose-dependent, rapid and ~~Opdivo, Bristol-Myers Squibb’s PD-1 immune checkpoint inhibitor,~~sustained decreases in serum tryptase compared with placebo and achieved sufficient exposure to produce tryptase suppression levels comparable with the levels that generated impressive clinical activity observed in the Phase 1 CIndU intravenous study. The Phase 2 multi-dose studies in urticaria are designed to evaluate 75mg and 150mg administered every 4 weeks and 300mg administered every 8 weeks. These doses support a ~~Phase 1/~~0.5 to 2 ~~study. Under the terms of this clinical trial collaboration, Bristol-Myers Squibb made~~ml injection volume, allowing for a ~~one-time payment to us of $5.0 million, and the companies amended the terms~~single injection as barzolvolimab advances towards potential commercialization. In 2022, we initiated transfer of our ~~existing license agreement~~current barzolvolimab manufacturing process to a contract manufacturing organization to support late-stage trials and to prepare for potential commercialization.

In February 2022, we also reported interim data after completing the in-life dosing portion of our nine-month chronic toxicology study in non-human primates; a subset of the animals will continue to be followed beyond clearance of the barzolvolimab antibody to study completion. As expected and consistent with ~~Medarex (acquired by Bristol-Myers Squibb) related~~other KIT-targeting agents, impact on spermatogenesis was observed which is anticipated to be fully reversible upon clearance of the antibody. There were no other clinically adverse findings reported in the study. We believe these data strongly support our ~~CD27 program whereby certain~~Phase 2 studies in urticaria and in future ~~milestone payments were waived and future royalty rates were reduced that may have been due from us to Medarex.~~ indications.

In ~~return, Bristol-Myers Squibb was granted a time-limited right of first negotiation if~~February 2022, 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 andannounced that we will be ~~responsible~~expanding clinical development of barzolvolimab into eosinophilic esophagitis (EoE), the most common type of eosinophilic gastrointestinal disease. EoE is a chronic inflammatory disease of the esophagus characterized by the infiltration of eosinophils. This chronic inflammation can result in trouble swallowing, chest pain, vomiting and impaction of food in the esophagus, a medical emergency. Several studies have suggested that mast cells may be an important driver in the disease, demonstrating that the number and activation state of mast cells are greatly increased in EoE biopsies and that mast cell signatures correlate with markers of inflammation, fibrosis, pain and disease severity. Currently, there is only one FDA approved therapy for ~~conducting~~EoE, representing an area of significant unmet need. Industry sources estimate there are approximately 160,000 patients in the ~~Phase 1/2~~United States with EoE who have undergone treatment within the last 12 months and, of these, approximately 48,000 would be biologic-eligible. Given the lack of effective therapies for EoE and barzolvolimab’s potential as a mast cell depleting agent, we believe EoE is an important indication for future study.

~~The~~We continue to assess potential opportunities for barzolvolimab in other diseases where mast cells play an important role, such as dermatologic, respiratory, allergic, gastrointestinal and ophthalmic conditions.

Bispecific Platform

Our next generation bispecific antibody platform is supporting the expansion of our pipeline with additional candidates for inflammatory diseases and oncology. Targets are being selected based on new science as well as their compatibility to be used in bispecific antibody formats with our existing antibody programs. Development is focused on emerging, important pathways controlling inflammatory diseases or immunity to tumors.

CDX-585

CDX-585 combines our proprietary highly active PD-1 blockade and anti-ILT4 blockade to block immunosuppressive signals in T cells and myeloid cells. ILT4 is emerging as an important immune checkpoint on myeloid cells. CDX-585 is currently completing CMC and IND-enabling activities and is expected to enter the clinic in 2023.

CDX-527

CDX-527 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 to help prime and activate anti-tumor T cell responses through CD27 costimulation, while preventing PD-1 inhibitory signals that subvert the immune response. Our prior clinical experience with combining CD27 activation and PD-1 blockade provide the rationale for linking these two pathways into one molecule and preclinical data demonstrated that CDX-527 is more potent at T cell activation and anti-tumor immunity than the combination of parental monoclonal antibodies.

Table of Contents

In August 2020, we announced the initiation of a Phase ~~1/2~~1 dose-escalation study. The study was ~~initiated in January 2015 and is being conducted in adult~~designed to include up to 40 patients with ~~multiple~~advanced or metastatic solid tumors that had progressed during or after standard of care therapy to ~~assess the safety and tolerability of varlilumab at varying doses when administered with Opdivo,~~be followed by tumor-specific expansion cohorts. The study included a ~~Phase 2~~dose-escalation phase to determine a maximum tolerated dose, or MTD, and to recommend a dose level for further study in a subsequent expansion phase. The expansion was designed to further evaluate the ~~activity~~tolerability, and biologic and anti-tumor effects of ~~the combination~~selected dose level(s) of CDX-527 in ~~disease~~ specific ~~cohorts.~~

~~Data (n=36) from~~tumor types. Enrollment to 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~~18) of the study was ~~to evaluate~~completed with no dose-limiting toxicities or treatment related serious adverse events observed and CDX-527 demonstrated promising pharmacodynamic and pharmacokinetic activity, which are important key hurdles for the ~~safety and tolerability~~development of bispecific antibodies. An expansion cohort in ovarian cancer was initiated.

In November 2022, we provided an update on the ~~combination.~~study. The ~~combination was well tolerated at all varlilumab dose levels tested without any evidence~~standard of ~~increased autoimmunity or inappropriate immune activation. Marked changes~~care 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 negativeevolve, making drug development in this indication more challenging. With multiple clinical trials actively recruiting in ovarian cancer, ~~experienced a single timepoint PR (49% shrinkage) but discontinued treatment~~enrollment to ~~a dose-limiting toxicity (immune hepatitis, an event known to be associated with checkpoint inhibition therapy). A subgroup analysis was conducted~~the expansion cohort 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),~~checkpoint naïve ovarian cancer (n=~~54), head~~8) did not meet our internal timelines 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 sizea review of the ~~study compared~~results to date also did not meet internal hurdles for proceeding. Given 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 Opdivoevolving environment and ~~further assessing the anti-tumor activity of combination treatment. We plan to complete enrollment across all cohorts in the Phase 2 portion of~~our pipeline and resource priorities, we have decided that 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 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 are believed to be the result of CDX-0158 acting as an agonist on mast cells~~ ~~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 deathclosed 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.~~program discontinued.

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~~Other programs:

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 elicited 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 alone 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-1140

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 data from the study were consistent with previous clinical experience and demonstrated that CDX-301 has an acceptable safety profile to date and can mobilize hematopoietic stem cell (HSC) populations in healthy volunteers.

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 of the NCI. Based on these results the CITN is planning to enroll additional cohorts to investigate alternative regimens of CDX-301. Other studies are being considered through investigator-sponsored and collaborative agreements.

~~CDX-014~~

CDX-014 is a human monoclonal ADC that targets T cell immunoglobulin and mucin domain 1, or TIM-1. TIM-1 expression is upregulated in several cancers, most notably renal cell and ovarian carcinomas, and is 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, resulting in a targeted cell-killing effect. CDX-014 has shown anti-tumor activity in preclinical models of ovarian 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 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 dose 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.

~~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 study of CDX-1140 clearly demonstrates 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 support the design of theA 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~~was conducted in ~~combination studies with other immunotherapies or conventional cancer treatments.~~

~~We plan to initiate a Phase 1 study of CDX-1140 by year-end 2017. This study, which is expected to enroll up to approximately 105~~ patients with recurrent, locally advanced or metastatic solid tumors ~~is designed to determine the maximum tolerated dose during~~and B cell lymphomas. An MTD, of 1.5 mg/kg was established and clinical activity was observed both as a ~~dose-escalation phase (0.01 to 3.0 mg/kg once every four weeks until confirmed progression or intolerance)~~monotherapy 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~~combination with pembrolizumab. Despite evidence 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.~~questions remain to be answered about CDX-1140, and the broader CD40 agonist class, regarding the best clinical settings, regimens, and possible combinations before advancing into additional Celldex-sponsored studies. Given our pipeline priorities and resource requirements, we are not progressing further Company-sponsored studies at this time and are exploring these questions in third-party sponsored studies.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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~~2021 for a discussion of our critical accounting ~~policies.~~policies and estimates. There have been no material changes to such critical accounting ~~policies.~~policies or estimates. 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.

Table of Contents

RESULTS OF OPERATIONS

Three Months Ended September 30, ~~2017~~2022 Compared with Three Months Ended September 30, ~~2016~~2021

Three Months Ended
September 30,

Increase/
(Decrease)

Increase/
(Decrease)

2017

2016

$

%

(In thousands)

Revenue:

Product Development and Licensing Agreements

$
1,238

$
493

$
745

151
%
Contracts and Grants

2,686

1,727

959

56
%
Total Revenue

$
3,924

$
2,220

$
1,704

77
%
Operating Expense:

Research and Development

21,915

25,009

(3,094
)
(12
)%
General and Administrative

5,346

6,950

(1,604
)
(23
)%
In-Process Research and Development Impairment

13,000

—

13,000

n/a

Gain on Fair Value Remeasurement of Contingent Consideration

(4,600
)
—

4,600

n/a

Amortization of Acquired Intangible Assets

224

254

(30
)
(12
)%
Total Operating Expense

35,885

32,213

3,672

11
%
Operating Loss

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

7
%
Investment and Other Income, Net

398

395

3

1
%
Net Loss Before Income Tax Benefit

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

7
%
Income Tax Benefit

5,200

—

5,200

n/a

Net Loss

$
(26,363
)
$
(29,598
)
$
(3,235
)
(11
)%


	Three Months Ended				Increase/		Increase/
	September 30,				(Decrease)		(Decrease)
	2022		2021		$		%

	(In thousands)
Revenues:
Product development and licensing agreements	$	—	$	—	$	—	n/a
Contracts and grants		407		153		254	166	%
Total revenues	$	407	$	153	$	254	166	%
Operating expenses:
Research and development		21,572		13,557		8,015	59	%
General and administrative		6,531		5,821		710	12	%
Intangible asset impairment		—		3,500		(3,500)	(100)	%
Gain on fair value remeasurement of contingent consideration		—		(1,901)		(1,901)	(100)	%
Total operating expenses		28,103		20,977		7,126	34	%
Operating loss		(27,696)		(20,824)		6,872	33	%
Investment and other income, net		912		145		767	529	%
Net loss before income tax benefit		(26,784)		(20,679)		6,105	30	%
Income tax benefit		—		227		(227)	(100)	%
Net loss	$	(26,784)	$	(20,452)	$	6,332	31	%

Net Loss

The ~~$3.2~~$6.3 million ~~decrease~~increase in net loss for the three months ended September 30, ~~2017,~~2022, as compared to the three months ended September 30, ~~2016,~~2021, was primarily ~~the result of a decrease~~due to 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~~expense, partially offset by ~~the in-process research and development impairment.~~a decrease in non-cash intangible asset impairment expense.

Revenue

~~The $0.7 million increase in~~Revenue from product development and licensing agreements ~~revenue~~ for the three months ended September 30, ~~2017, as compared to~~2022 was consistent with the three months ended September 30, ~~2016, was primarily due to an increase in reimburseable clinical trial expenses from BMS associated with the Phase 1/2 study of varlilumab and Opdivo~~®~~, BMS’s PD-1 immune checkpoint inhibitor.~~2021. The ~~$1.0~~$0.3 million increase in contracts and grants revenue for the three months ended September 30, ~~2017,~~2022, as compared to the three months ended September 30, ~~2016,~~2021, was primarily ~~related~~due to an increase in revenue from the Company’s SBIR grant. We expect revenue to increase over the next twelve months as a result of an increase in services expected to be performed under our ~~IAVI and Frontier agreements pursuant to which we perform~~contract manufacturing and ~~R&D services for IAVI~~research and ~~Frontier.~~development agreement with Rockefeller 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 ~~(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				Increase/
	September 30,				(Decrease)
	2022		2021		$		%

		(In thousands)
Personnel	$	8,610	$	7,155	$	1,455	20	%
Laboratory supplies		1,075		1,255		(180)	(14)	%
Facility		1,088		1,148		(60)	(5)	%
Product development		9,271		3,101		6,170	199	%

Table of Contents

Personnel expenses primarily include salary, benefits, stock-based compensation and payroll ~~taxes and were relatively consistent~~taxes. The $1.5 million increase in personnel expenses for the three months ended September 30, ~~2017,~~2022, as compared to the three months ended September 30, ~~2016. Increases~~2021, was primarily due to higher stock-based compensation expense and an increase in ~~salary expenses were offset by lower stock based compensation expense.~~employee headcount. We expect personnel expenses to ~~remain relatively consistent~~increase over the next twelve months ~~although there may be fluctuations on~~as a ~~quarterly basis.~~result of additional headcount to support the expanded development of barzolvolimab.

Laboratory supplies expenses include laboratory materials and supplies, services, and other related expenses incurred in the development of our technology. The ~~$0.1~~$0.2 million ~~increase~~decrease in laboratory ~~supplies expense~~supply expenses for the three months ended September 30, ~~2017,~~2022, as compared to the three months ended September 30, ~~2016,~~2021, was primarily due to ~~higher~~lower laboratory ~~services expenses.~~materials and supplies purchases. We expect laboratory supplies ~~expense~~expenses 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~~Facility expenses for the three months ended September 30, ~~2017, as compared to~~2022 was relatively consistent with 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.~~ 2021. 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 maintenance fees and milestone payments due upon the achievement of certain development, regulatory and/or commercial milestones. The $0.8 million decrease in license fee expenses for the three months ended September 30, 2017, as compared to the three months ended September 30, 2016, was due to the timing of certain development and/or regulatory milestones achieved by our drug candidates. We expect license fees expense to remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.

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~~$6.2 million ~~decrease~~increase in product development expenses for the three months ended September 30, ~~2017,~~2022, as compared to the three months ended September 30, ~~2016,~~2021, was primarily due to an increase in barzolvolimab clinical trial and contract manufacturing expenses. We expect product development expenses to increase over the next twelve months as a result of ~~decreases~~further increases in ~~varlilumab~~barzolvolimab clinical trial, contract manufacturing and ~~clinical trials~~contract research expenses.

General and Administrative Expense

The $0.7 million increase in general and administrative expenses ~~of $1.7 million~~for the three months ended September 30, 2022, as compared to the three months ended September 30, 2021, was primarily due to higher stock-based compensation and ~~$1.0 million, respectively.~~barzolvolimab commercial planning expenses, partially offset by a decrease in legal expenses. We expect ~~product development~~general and administrative expenses to remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.

~~General and Administrative Expense~~Intangible Asset Impairment

~~The $1.6 million decrease~~During the third quarter of 2021, we evaluated the TAM program IPR&D asset for potential impairment as a result of a lack of interest in ~~general~~the program from third parties. We concluded that the TAM program IPR&D asset was fully impaired, and administrative expenses for the three months ended September 30, 2017, as compared to the three months ended September 30, 2016, 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.

~~In-Process Research and Development Impairment~~

~~We recorded~~ a non-cash impairment charge of ~~$13.0~~$3.5 million onwas recorded in 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.third quarter of 2021.

~~Gain~~(Gain) Loss on Fair Value Remeasurement of Contingent Consideration

The ~~$4.6~~$1.9 million gain on fair value remeasurement of contingent consideration for the three months ended September 30, ~~2017~~2021 was primarily due to a reduction in fair value attributed to milestones related to our anti-KIT program. This gain was partially offset by losses related to changes in discount rates 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~~updated assumptions 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.TAM program.

Investment and Other Income, Net

~~Investment~~The $0.8 million increase in investment and other income, net for the three months ended September 30, ~~2017 was consistent with~~2022, as compared to the three months ended September 30, ~~2016.~~2021, was primarily due to higher interest rates on fixed income investments. We ~~anticipate~~expect investment and other income to ~~decrease~~increase over the next twelve months primarily due to ~~lower levels~~higher interest rates and higher other income related to our sale of ~~cash and investment balances.~~New Jersey tax benefits.

Income Tax Benefit

~~The~~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 ~~three months ended September 30, 2017. This decrease was due to the partial~~ impairment of the ~~anti-KIT~~TAM program IPR&D ~~assets.~~asset in the third quarter of 2021.

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Nine Months Ended September 30, ~~2017~~2022 Compared with Nine Months Ended September 30, ~~2016~~2021

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
)%


	Nine Months Ended				Increase/		Increase/
	September 30,				(Decrease)		(Decrease)
	2022		2021		$		%

	(In thousands)
Revenues:
Product development and licensing agreements	$	30	$	29	$	1	3	%
Contracts and grants		714		4,288		(3,574)	(83)	%
Total revenues	$	744	$	4,317	$	(3,573)	(83)	%
Operating expenses:
Research and development		59,359		38,633		20,726	54	%
General and administrative		20,596		14,247		6,349	45	%
Intangible asset impairment		—		3,500		(3,500)	(100)	%
Gain on fair value remeasurement of contingent consideration		(6,862)		(1,160)		5,702	492	%
Litigation settlement related loss		15,000		—		15,000	n/a
Total operating expenses		88,093		55,220		32,873	60	%
Operating loss		(87,349)		(50,903)		36,446	72	%
Investment and other income, net		1,511		313		1,198	383	%
Net loss before income tax benefit		(85,838)		(50,590)		35,248	70	%
Income tax benefit		—		227		(227)	(100)	%
Net loss	$	(85,838)	$	(50,363)	$	35,475	70	%

Net Loss

The ~~$7.0~~$35.5 million ~~decrease~~increase in net loss for the nine months ended September 30, ~~2017,~~2022, as compared to the nine months ended September 30, ~~2016,~~2021, was primarily due to the ~~result~~$15.0 million litigation settlement related loss recorded in the second quarter of 2022 and increases in research and development and general and administrative expenses, partially offset by 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.~~gain on fair value remeasurement of contingent consideration.

Revenue

~~The $0.9 million increase in~~Revenue from product development and licensing agreements ~~revenue~~ for the nine months ended September 30, ~~2017, as compared to~~2022, was relatively consistent with the nine months ended September 30, ~~2016, was primarily due to an increase in reimburseable clinical trial expenses related to our BMS agreement.~~2021. The ~~$3.4~~$3.6 million ~~increase~~decrease in contracts and grants revenue for the nine months ended September 30, ~~2017,~~2022, as compared to the nine months ended September 30, ~~2016,~~2021, was primarily related to a decrease in services performed under our ~~IAVI~~manufacturing and ~~Frontier~~research and development agreements ~~executed in 2017.~~with Rockefeller University and Gilead Sciences.

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
)%

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:


	Nine Months Ended				Increase/
	September 30,				(Decrease)
	2022		2021		$		%

	(In thousands)
Personnel	$	24,116	$	19,037	$	5,079	27	%
Laboratory supplies		4,821		4,370		451	10	%
Facility		3,566		3,601		(35)	(1)	%
Product development		22,374		8,835		13,539	153	%

Personnel expenses primarily include salary, benefits, stock-based compensation and payroll taxes. The ~~$1.5~~$5.1 million increase in personnel expenses for the nine months ended September 30, ~~2017,~~2022, as compared to the nine months ended September 30, ~~2016,~~2021, was primarily due to higher stock-based compensation expense and an increase in ~~salaries expense~~employee headcount.

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Laboratory supplies expenses include laboratory materials and ~~headcount~~supplies, services, and other related toexpenses incurred in the ~~Kolltan acquisition.~~

development of our technology. The ~~$0.8~~$0.5 million increase in laboratory ~~supplies expense~~supply expenses for the nine months ended September 30, ~~2017,~~2022, as compared to the nine months ended September 30, ~~2016,~~2021, was primarily due to higher ~~manufacturing supply~~laboratory materials and supplies purchases.

~~The $2.2 million increase in facility~~Facility expenses include depreciation, amortization, utilities, rent, maintenance and other related expenses incurred at our facilities. Facility expenses for the nine months ended September 30, ~~2017, as compared to~~2022 was relatively consistent with 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~~2021.

Product development expenses include clinical investigator site fees, external trial monitoring costs, data accumulation costs, contracted research 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.~~

outside clinical drug product manufacturing. The ~~$0.9~~$13.5 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~~increase in product development expenses for the nine months ended September 30, ~~2017,~~2022, as compared to the nine months ended September 30, ~~2016,~~2021, 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~~due to an increase in ~~glembatumumab vedotin~~barzolvolimab clinical trial and 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.expenses.

General and Administrative Expense

The ~~$4.9~~$6.3 million ~~decrease~~increase in general and administrative expenses for the nine months ended September 30, ~~2017,~~2022, as compared to the nine months ended September 30, ~~2016,~~2021, was primarily due to ~~lower~~higher stock-based compensation, legal and barzolvolimab commercial planning ~~costs~~expenses.

Intangible Asset Impairment

During the third quarter of ~~$3.1 million~~2021, we evaluated the TAM program IPR&D asset for potential impairment as a result of a lack of interest in the program from third parties. We concluded that the TAM program IPR&D asset was fully impaired, 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~~$3.5 million onwas recorded in 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.third quarter of 2021.

~~Gain~~(Gain) Loss on Fair Value Remeasurement of Contingent Consideration

The ~~$0.2~~$6.9 million gain on fair value remeasurement of contingent consideration for the nine months ended September 30, ~~2017~~2022 was primarily due to ~~a reduction in~~our decision to deprioritize the CDX-1140 program. The $1.2 million gain on fair value ~~attributed~~remeasurement of contingent consideration for the nine months ended September 30, 2021 was primarily due to updated assumptions for the ~~milestones related to our anti-KIT~~TAM program, ~~partially offset by losses related to~~ changes in discount rates and the passage of ~~time affecting remaining milestones.~~time.

~~Amortization Expense~~Litigation Settlement Related Loss

~~Amortization expenses for~~We recorded a loss of $15.0 million in the ~~nine months ended September 30, 2017 were relatively consistent as compared~~second quarter of 2022 related to the ~~nine months ended September 30, 2016.~~Initial Payment due under the binding settlement term sheet (the “Term Sheet”) entered with SRS.

Investment and Other Income, Net

The ~~$0.2~~$1.2 million ~~decrease~~increase in investment and other income, net for the nine months ended September 30, ~~2017,~~2022, as compared to the nine months ended September 30, ~~2016,~~2021, was primarily due to ~~lower levels of cash and investment balances.~~higher interest rates on fixed income investments.

Income Tax Benefit

~~The deferred~~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~~TAM program IPR&D ~~assets.~~asset in the third quarter of 2021.

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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. We anticipate that our cash flows from operations will continue to be focused in these areas as we progress our current drug candidates through the clinical trial process and develop additional drug candidates. 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 30, ~~2017,~~2022, our principal sources of liquidity consisted of cash, cash equivalents and marketable securities of ~~$140.5~~$323.5 million. We have had recurring losses and incurred a ~~net~~ loss of ~~$89.2~~$85.8 million for the nine months ended September 30, ~~2017.~~2022. Net cash used in operations for the nine months ended September 30, ~~2017~~2022 was ~~$80.4~~$82.0 million. We believe that the cash, cash equivalents and marketable securities at September 30, ~~2017, combined with the $11.3 million in net proceeds from sales of common stock under the Cantor agreement during October 2017,~~2022 are sufficient to meet estimated working capital requirements and fund planned operations through ~~2018; however, this~~2025. This could be impacted if we ~~elected~~elect to pay ~~contingent consideration related to~~ the ~~Kolltan acquisition,~~future milestones under the Settlement Agreement with SRS, 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 the future ~~contingent~~ milestones ~~from~~under the ~~Kolltan acquisition,~~Settlement Agreement with SRS, 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~~$82.0 million for the nine months ended September 30, ~~2017~~2022 as compared to ~~$92.7~~$46.4 million for the nine months ended September 30, ~~2016.~~2021. The ~~decrease~~increase in net cash used in operating activities was primarily due to ~~a decrease~~an increase in ~~net loss of $7.0~~research and development and general and administrative expenses and the $15.0 million ~~and changes in operating assets and liabilities.~~Initial Payment made to SRS under the Settlement Agreement. We expect that cash used in operating activities (not including the $15.0 million Initial Payment made to SRS) will ~~decrease~~increase over the next twelve months ~~although there may be fluctuations on~~as a ~~quarterly basis.~~result of the expanded development of barzolvolimab.

We have incurred and will continue to incur significant costs in the area of research and development, including preclinical ~~studies~~ and clinical trials and clinical drug product manufacturing 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.~~payments, pursuant to our existing arrangements and arrangements we may enter in the future.

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Investing Activities

Net cash provided by investing activities was ~~$59.9~~$58.7 million for the nine months ended September 30, ~~2017~~2022 as compared to ~~$41.1~~net cash used in investing activities of $197.2 million for the nine months ended September 30, ~~2016.~~2021. The increase in net cash provided by investing activities was primarily due 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~~$60.3 million for the nine months ended September 30, ~~2016.~~2022 as compared to net purchases of $196.3 million for the nine months ended September 30, 2021.

Financing Activities

Net cash provided by financing activities was ~~$32.8~~$2.7 million for the nine months ended September 30, ~~2017~~2022 as compared to ~~$11.2~~$271.9 million for the nine months ended September 30, ~~2016. Net~~2021. The decrease in net cash provided by financing activities was primarily due to a decrease in net proceeds from stock ~~issuances pursuant to employee benefit plans were $0.2 million during~~issuances. During the ~~nine months ended September 30, 2017 as compared to $0.5 million for the nine months ended September 30, 2016.~~

~~In May 2016,~~third quarter of 2021, we ~~entered into a controlled equity offering sales agreement with Cantor Fitzgerald & Co. to allow us to issue and sell~~issued 6,845,238 shares of ~~our~~ common stock ~~having~~in an ~~aggregate~~underwritten public 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, we issued 11,326,363 and 2,395,949 shares, respectively, of our common stock under this agreement with Cantor~~ resulting in net proceeds ~~to us~~ of ~~$32.6~~$269.9 million, ~~and $10.7 million, respectively,~~ after deducting ~~commission~~underwriting fees and offering expenses.

~~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 which was filed with the SEC on March 14, 2017 have not materially changed since we filed that report.

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 30, ~~2017~~2022 due to the short-term maturities of these instruments.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

As of September 30, ~~2017,~~2022, 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 30, ~~2017.~~2022. 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 30, ~~2017~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

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,~~2021, 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.~~us. Additional risks and uncertainties not currently known to ~~the Company~~us or that ~~the Company~~we currently ~~deems~~deem to be immaterial also may materially adversely affect ~~the Company’s~~our 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.~~February 28, 2022.

Item 5. Other Information

On November ~~1, 2017, we determined that we should record a non-cash partial impairment charge~~3, 2022, our Board of ~~$13.0 million for~~Directors, upon the ~~three months ended September 30, 2017 related~~recommendation of the Board’s Nominating and Corporate Governance Committee, voted to amend and restate our ~~anti-KIT program.~~Amended and Restated By-Laws, as amended (the “Old Bylaws”) and approve the Second Amended and Restated By-Laws of Celldex Therapeutics, Inc. (the “New Bylaws), effective immediately. The ~~anti-KIT program was acquired as part~~New Bylaws include the following amendments:

●

Generally provide that for all matters (other than the election of directors, which is governed by a standard contained in a separate section of the New Bylaws and is unchanged from the standard in the Old Bylaws, and those where a different vote is required by applicable law, the Company’s Certificate of Incorporation, the New Bylaws or the rules of any stock exchange upon which the Company’s securities are listed) shall be determined by a majority of the votes cast on such matter. Prior to effectiveness of the New Bylaws, all matters other than the election of directors, and except as otherwise required by law, were authorized by the affirmative vote of the majority of the voting power of the shares present at the meeting and entitled to vote on the subject matter;

●

Amend the existing advance notice bylaw provisions by adopting certain technical and administrative clarifications and by supplementing additional stockholder proponent requirements, which, among other changes, now require: (i) disclosure of derivative ownership by the stockholder and the underlying beneficial owners, (ii) stockholders (including, if the stockholder is an entity, the control persons of that entity) to include a representation as to whether the stockholder intends to solicit proxies from other stockholders, (iii) disclosure of any significant equity interest held by the stockholder in any principal competitor of the Company, (iv) attendance by either the stockholder or a qualified representative to appear at the meeting, and (v) when a stockholder has submitted a nominee to stand for election to the Board of Directors, (a) a representation that the director nominee currently intends to serve for a full term if elected, (b) submission of a completed questionnaire by the director nominee (which form shall be provided by the Company), (c) a representation from the director nominee that they are not and will not become a party to any agreement, arrangement or understanding as to how he or she will vote if elected or relating to compensation for service as a director or nominee (in each case, that has not been disclosed to the Company) or that would limit or interfere with such person’s ability to comply with his or her fiduciary duties and (d) a representation from the director nominee that he or she agrees to comply with all of the Company’s policies and guidelines applicable to directors of the Company;

●

In cases where the “universal proxy” rules apply, the New Bylaws include a provision that disqualifies a director nominee if the stockholder proponent fails to comply with such rules;

●

For stockholder proposals submitted in compliance with Rule 14a-8 of the Exchange Act of 1934, as amended, the New Bylaws require attendance at the meeting by either the stockholder proponent or a qualified representative;

●

Provide that the Board of Directors, the President, the Chair of the Board or the chair of the meeting may adjourn any meeting of stockholders for any reason, whether or not a quorum is present;

●

Empowers the chair of the meeting to set the rules of procedure for the meeting and make administrative decisions thereat, including, among others, requirements related to attendance and procedures related to questions and answers at the meeting;

Table of ~~our acquisition of Kolltan Pharmaceuticals, Inc.in the fourth quarter of 2016. We determined that changes~~Contents

●

Designates, unless otherwise selected or consented to by the Company, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have, or declines to accept, jurisdiction, another state court or a federal court located within the State of Delaware) as the sole and exclusive forum for any complaint asserting any internal corporate claims. Such claims include claims in the right of the Company that are based upon a violation of a duty by a current or former director, officer, employee or stockholder in such capacity, or as to which the Delaware General Corporation Law (the “DGCL”) confers jurisdiction upon the Court of Chancery;

●

Designates, unless otherwise selected or consented to by the Company, the federal district courts of the United States of America as the sole and exclusive forum for any complaint asserting a cause of action arising under the Securities Act of 1933, as amended;

●

Amend the Company’s indemnification bylaw to clarify that (i) indemnification will not be provided to employees and agents of the Company, other than directors and officers as described in the New By-Laws and (ii) the Company will not be required to provide indemnification for any individual in connection with any action initiated by such individual unless such initiation was approved by the Board of Directors or the initiation was in connection with successfully establishing the individual’s right to indemnification or advancement of expenses;

●

Add provisions that, for the duration of an emergency as contemplated by Section 110 of the DGCL, grant flexibility for the Company and the Board of Directors to act during times where normal Board procedures would be impractical, as expressly authorized by the DGCL;

●

Adds a bylaw specifying that, unless otherwise directed by the Board of Directors, the President or any officer of the Company authorized by the President, has the power to vote and act on behalf of the Company with respect to any other entity in which the Company may hold securities;

●

Includes a provision which provides, among other things, greater flexibility with respect to the authority of committees of the Board in accordance with the DGCL; and

●

Make certain administrative, modernizing, clarifying and confirming changes.

The foregoing summary does not purport to be complete and is qualified in ~~projected development and regulatory timelines related~~its entirety by reference to the ~~anti-KIT program constituted a triggering event that required us~~Second Amended and Restated By-Laws of Celldex Therapeutics, Inc., filed as Exhibit 3.1 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~~Quarterly Report on Form 10-Q ~~for further discussion~~and incorporated by reference herein.

Table of ~~this impairment charge.~~Contents

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		~~Third~~Second Amended and Restated ~~Certificate~~By-Laws 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)~~Celldex Therapeutics, Inc., ~~filed July 16, 1998 with the Securities and Exchange Commission.~~dated November 3, 2022
**10.1		Amended and Restated License Agreement by and between the Company and Yale University dated as of July 26, 2022*
~~3.2~~**10.2		~~Certificate of~~Tenth Amendment ~~of Third Restated Certificate of Incorporation of~~to Lease by and 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 July 16, 1998 with the Securities and Exchange Commission.~~Massachusetts Dartmouth dated as of August 1, 2022
**31.1
~~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
*31.2		Certification of Senior Vice President and Chief Financial Officer
***32.1		Section 1350 Certifications
**~~32.1~~101.INS		~~Section 1350 Certifications~~Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
**101.SCH
*101		~~XBRL Instance Document.~~

*101		Inline XBRL Taxonomy Extension Schema Document.
**101.CAL
*101		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
**101.DEF
*101		Inline XBRL Taxonomy Extension Definition Linkbase Document.
**101.LAB
*101		Inline XBRL Taxonomy Extension Label Linkbase Document.
**101.PRE
*101		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101).

Certain confidential portions of this exhibit were redacted. Celldex Therapeutics, Inc. agrees to furnish supplementally to the U.S. Securities and Exchange Commission a copy of any omitted schedule and/or exhibit upon request. The confidential portions of this exhibit were omitted by means of marking such portions with asterisks because the identified confidential portions (i) are not material, (ii) would be competitively harmful if publicly disclosed and (iii) contain information that Celldex Therapeutics, Inc, customarily and actually treats as private or confidential.

Filed herewith.

Furnished herewith.

Table of Contents

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~~9, 2022	Anthony S. Marucci
	President and Chief Executive Officer
	(Principal Executive Officer)

	/s/ SAM MARTIN
Dated: November ~~7, 2017~~9, 2022	Sam Martin
	Senior Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

	Three Months Ended September 30, 2017			Three Months Ended September 30, 2016			Nine Months Ended September 30, 2017			Nine Months Ended September 30, 2016
REVENUES:
Product Development and Licensing Agreements	$	1,238		$	493		$	2,488		$	1,551
Contracts and Grants	2,686			1,727			6,799			3,362
Total Revenues	3,924			2,220			9,287			4,913

OPERATING EXPENSES:
Research and Development	21,915			25,009			72,707			78,168
General and Administrative	5,346			6,950			19,109			24,049
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
Total Operating Expenses	35,885			32,213			105,288			102,977

Operating Loss	(31,961		)	(29,993		)	(96,001		)	(98,064		)
Investment and Other Income, Net	398			395			1,611			1,841
Net Loss Before Income Tax Benefit	(31,563		)	(29,598		)	(94,390		)	(96,223		)
Income Tax Benefit	5,200			—			5,200			—
Net Loss	$	(26,363	)	$	(29,598	)	$	(89,190	)	$	(96,223	)

Basic and Diluted Net Loss Per Common Share	$	(0.20	)	$	(0.29	)	$	(0.71	)	$	(0.97	)

Shares Used in Calculating Basic and Diluted Net Loss per Share	129,640			100,672			125,856			99,398

COMPREHENSIVE LOSS:
Net Loss	$	(26,363	)	$	(29,598	)	$	(89,190	)	$	(96,223	)
Other Comprehensive Income:
Unrealized Gain (Loss) on Marketable Securities	11			(113		)	47			303
Comprehensive Loss	$	(26,352	)	$	(29,711	)	$	(89,143	)	$	(95,920	)

	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

	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

		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

	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
Granted	2,309,900		$	2.34
Exercised	—		$	—
Canceled	(945,792	)	$	9.21
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
Shares Available for Grant Under the 2008 Plan	7,780,663

	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

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

	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)
	2017			2016			$			%
	(In thousands)
Revenue:
Product Development and Licensing Agreements	$	1,238		$	493		$	745		151	%
Contracts and Grants	2,686			1,727			959			56	%
Total Revenue	$	3,924		$	2,220		$	1,704		77	%
Operating Expense:
Research and Development	21,915			25,009			(3,094		)	(12	)%
General and Administrative	5,346			6,950			(1,604		)	(23	)%
In-Process Research and Development Impairment	13,000			—			13,000			n/a
Gain on Fair Value Remeasurement of Contingent Consideration	(4,600		)	—			4,600			n/a
Amortization of Acquired Intangible Assets	224			254			(30		)	(12	)%
Total Operating Expense	35,885			32,213			3,672			11	%
Operating Loss	(31,961		)	(29,993		)	1,968			7	%
Investment and Other Income, Net	398			395			3			1	%
Net Loss Before Income Tax Benefit	(31,563		)	(29,598		)	1,965			7	%
Income Tax Benefit	5,200			—			5,200			n/a
Net Loss	$	(26,363	)	$	(29,598	)	$	(3,235	)	(11	)%

	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	)%