CELLDEX THERAPEUTICS, INC.

FORM 10-Q

For the Quarterly Period Ended ~~September 30, 2018~~March 31, 2019

Table of Contents

		Page
Part I — Financial Information

Item 1. Unaudited Financial Statements		32

Condensed Consolidated Balance Sheets at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017~~2018		32

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~		43

Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~		54

Notes to Unaudited Condensed Consolidated Financial Statements		65

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1514

Item 3. Quantitative and Qualitative Disclosures About Market Risk		2623

Item 4. Controls and Procedures		2724

Part II — Other Information

Item 1A. Risk Factors		2824

Item 6. Exhibits		2924

Exhibit Index		3025

Signatures		3126

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, 2018

December 31, 2017

March 31, 2019

December 31, 2018

ASSETS

Current Assets:

Cash and Cash Equivalents

$
32,823

$
40,288

$
31,533

$
24,310

Marketable Securities

72,795

99,139

53,535

69,712

Accounts and Other Receivables

3,175

1,880

2,307

3,162

Prepaid and Other Current Assets

2,176

3,449

1,476

1,895

Total Current Assets

110,969

144,756

88,851

99,079

Property and Equipment, Net

6,699

10,372

5,462

6,111

Operating Lease Right-of-Use Assets, Net

4,445

—

Intangible Assets, Net

48,690

67,591

48,690

48,690

Other Assets

1,929

1,929

129

1,929

Goodwill

—

90,976

Total Assets

$
168,287

$
315,624

$
147,577

$
155,809

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current Liabilities:

Accounts Payable

$
2,311

$
1,715

$
1,105

$
1,069

Accrued Expenses

9,614

19,455

5,474

7,007

Current Portion of Long-Term Liabilities

4,926

6,566

Current Portion of Operating Lease Liabilities

2,633

—

Current Portion of Other Long-Term Liabilities

2,777

4,526

Total Current Liabilities

16,851

27,736

11,989

12,602

Long-Term Portion of Operating Lease Liabilities

2,599

—

Other Long-Term Liabilities

23,302

51,519

20,296

19,147

Total Liabilities

40,153

79,255

34,884

31,749

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, 2018 and December 31, 2017

—

—

Common Stock, $.001 Par Value; 297,000,000 Shares Authorized; 168,575,504 and 138,520,404 Shares Issued and Outstanding at September 30, 2018 and December 31, 2017, Respectively

169

139

Convertible Preferred Stock, $.01 Par Value; 3,000,000 Shares Authorized; No Shares Issued and Outstanding at March 31, 2019 and December 31, 2018

—

—

Common Stock, $.001 Par Value; 297,000,000 Shares Authorized; 12,844,711 and 11,957,635 Shares Issued and Outstanding at March 31, 2019 and December 31, 2018, Respectively

13

12

Additional Paid-In Capital

1,078,419

1,046,183

1,089,755

1,083,903

Accumulated Other Comprehensive Income

2,582

2,564

2,602

2,583

Accumulated Deficit

(953,036
)
(812,517
)

(979,677
)
(962,438
)
Total Stockholders’ Equity

128,134

236,369

112,693

124,060

Total Liabilities and Stockholders’ Equity

$
168,287

$
315,624

$
147,577

$
155,809

See accompanying notes to unaudited condensed consolidated financial statements
CELLDEX THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)

(In thousands, except per share amounts)

Three Months
Ended
September 30, 2018

Three Months
Ended
September 30, 2017

Nine Months
Ended
September 30, 2018

Nine Months
Ended
September 30, 2017

Three Months
Ended
March 31, 2019

Three Months
Ended
March 31, 2018

REVENUES:

Product Development and Licensing Agreements

$
131

$
1,238

$
2,792

$
2,488

$
129

$
992

Contracts and Grants

810

2,686

4,982

6,799

1,296

3,076

Total Revenues

941

3,924

7,774

9,287

1,425

4,068

OPERATING EXPENSES:

Research and Development

11,918

21,915

55,242

72,707

11,151

21,875

General and Administrative

3,722

5,346

14,936

19,109

4,896

5,593

Goodwill Impairment

—

—

90,976

—

—

90,976

Intangible Asset Impairment

—

13,000

18,677

13,000

—

18,677

Gain on Fair Value Remeasurement of Contingent Consideration

(6,935
)
(4,600
)
(27,968
)
(200
)
Other Asset Impairment

1,800

—

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

1,519

(13,600
)
Amortization of Acquired Intangible Assets

—

224

224

672

—

224

Total Operating Expenses

8,705

35,885

152,087

105,288

19,366

123,745

Operating Loss

(7,764
)
(31,961
)
(144,313
)
(96,001
)

(17,941
)
(119,677
)
Investment and Other Income, Net

521

398

1,767

1,611

702

780

Net Loss Before Income Tax Benefit

(7,243
)
(31,563
)
(142,546
)
(94,390
)

(17,239
)
(118,897
)
Income Tax Benefit

—

5,200

765

5,200

—

765

Net Loss

$
(7,243
)
$
(26,363
)
$
(141,781
)
$
(89,190
)

$
(17,239
)
$
(118,132
)

Basic and Diluted Net Loss Per Common Share

$
(0.04
)
$
(0.20
)
$
(0.94
)
$
(0.71
)

$
(1.40
)
$
(12.61
)

Shares Used in Calculating Basic and Diluted Net Loss Per Share

163,679

129,640

150,636

125,856

12,297

9,370

COMPREHENSIVE LOSS:

Net Loss

$
(7,243
)
$
(26,363
)
$
(141,781
)
$
(89,190
)

$
(17,239
)
$
(118,132
)
Other Comprehensive Income (Loss):

Unrealized Gain (Loss) on Marketable Securities

(8
)
11

18

47

19

(5
)
Comprehensive Loss

$
(7,251
)
$
(26,352
)
$
(141,763
)
$
(89,143
)

$
(17,220
)
$
(118,137
)

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

(In thousands)

Nine Months Ended
September 30, 2018

Nine Months Ended
September 30, 2017

Three Months Ended
March 31, 2019

Three Months Ended
March 31, 2018

Cash Flows From Operating Activities:

Net Loss

$
(141,781
)
$
(89,190
)

$
(17,239
)
$
(118,132
)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:

Depreciation and Amortization

2,856

3,392

1,352

1,028

Amortization of Intangible Assets

224

672

—

224

Amortization and Premium of Marketable Securities, Net

(666
)
(171
)

(345
)
(155
)
Loss on Sale or Disposal of Assets

1,170

6

25

10

Goodwill Impairment

90,976

—

—

90,976

Intangible Asset Impairment

18,677

13,000

—

18,677

Gain on Fair Value Remeasurement of Contingent Consideration

(27,968
)
(200
)
Other Asset Impairment

1,800

—

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

1,519

(13,600
)
Non-Cash Income Tax Benefit

(765
)
(5,200
)

—

(765
)
Stock-Based Compensation Expense

6,329

9,728

1,693

2,488

Changes in Operating Assets and Liabilities:

Accounts and Other Receivables

(790
)
(1,229
)

855

(1,635
)
Prepaid and Other Current Assets

1,545

525

299

(144
)
Other Assets

—

132

Accounts Payable and Accrued Expenses

(9,246
)
(10,888
)

(1,455
)
(5,919
)
Other Liabilities

(366
)
(987
)

(1,737
)
(1,075
)
Net Cash Used in Operating Activities

(59,805
)
(80,410
)

(13,233
)
(28,022
)

Cash Flows From Investing Activities:

Sales and Maturities of Marketable Securities

178,335

183,683

37,886

46,871

Purchases of Marketable Securities

(151,558
)
(122,235
)

(21,404
)
(31,117
)
Acquisition of Property and Equipment

(651
)
(1,598
)

(186
)
(259
)
Proceeds from Sale or Disposal of Assets

342

—

Net Cash Provided by Investing Activities

26,468

59,850

16,296

15,495

Cash Flows From Financing Activities:

Net Proceeds from Stock Issuances

25,453

32,642

4,151

11,689

Proceeds from Issuance of Stock from Employee Benefit Plans

419

192

9

374

Net Cash Provided by Financing Activities

25,872

32,834

4,160

12,063

Net (Decrease) Increase in Cash and Cash Equivalents

(7,465
)
12,274

Net Increase/(Decrease) in Cash and Cash Equivalents

7,223

(464
)
Cash and Cash Equivalents at Beginning of Period

40,288

42,461

24,310

40,288

Cash and Cash Equivalents at End of Period

$
32,823

$
54,735

$
31,533

$
39,824

Non-cash Investing Activities

Accrued construction in progress

$
86

$
75

$
65

$
212

Non-cash Supplemental Disclosure

Shares issued to former Kolltan executive for settlement of severance

$
65

$
302

$
—

$
38

See accompanying notes to unaudited condensed consolidated financial statements
CELLDEX THERAPEUTICS, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
~~September 30, 2018~~March 31, 2019

(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 ~~whollyowned~~wholly-owned subsidiaries. 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, ~~2017,~~2018, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 7, ~~2018.~~2019. 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, ~~2018.~~2019.

At ~~September 30, 2018,~~March 31, 2019, the Company had cash, cash equivalents and marketable securities of ~~$105.6~~$85.1 million. The Company has had recurring losses and incurred a loss of ~~$141.8~~$17.2 million for the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019. Net cash used in operations for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 was ~~$59.8~~$13.2 million. The Company believes that the cash, cash equivalents and marketable securities at ~~November~~May 7, ~~2018~~2019 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.
The Board of Directors of the Company approved a one for fifteen reverse stock split of the Company’s outstanding common stock, which was effected on February 8, 2019. All share and per share amounts in the financial statements have been retroactively adjusted for all periods presented to give effect to the reverse stock split, including reclassifying an amount equal to the reduction in par value to additional paid-in capital.

During the next twelve months and beyond, the Company will take further steps to raise additional capital to meet its liquidity needs. These capital raising activities may include, 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 the Company may seek capital through a number of means, there can be no assurance that additional financing will be available on acceptable terms, if at all, and the Company’s negotiating position in capital-raising efforts may worsen as existing resources are used. There is also no assurance that the Company will be able to enter into further collaborative relationships. Additional equity financings may be dilutive to the Company’s stockholders; debt financing, if available, may involve significant cash payment obligations and covenants that restrict the Company’s ability to operate as a business; and licensing or strategic collaborations may result in royalties or other terms which reduce the Company’s economic potential from products under development. The Company’s ability to continue funding its planned operations into and beyond twelve months from the issuance date is also dependent on the timing and manner of payment of future contingent milestones from the Kolltan acquisition, in the event that the Company achieves the drug candidate milestones related to those payments. The Company, at its option, may decide to pay those milestone payments in cash, shares of its common stock or a combination thereof. If the Company is unable to raise the funds necessary to meet its 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.
(2) Significant Accounting Policies

The significant accounting policies used in preparation of these condensed consolidated financial statements on Form 10-Q for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 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, ~~2017,~~2018, except as it relates to the adoption of new accounting standards during the first ~~nine~~three months of ~~2018~~2019 as discussed below.

Newly Adopted Accounting Pronouncements

On January 1, ~~2018, the Company adopted the new U.S. GAAP standard~~ 2019,“~~Revenue from Contracts with Customers”~~ using a modified retrospective application method, recognizing an immaterial cumulative-effect adjustment to accumulated deficit. The Company applied the new guidance to (i) contracts not completed as of the date of adoption and (ii) all new revenue contracts entered into after January 1, 2018. Refer to Note 11 ~~“Revenue”~~ ~~for additional details on this adoption and the Company’s updated revenue accounting policy and disclosures.~~
~~On January 1, 2018,~~ the Company adopted a new U.S. GAAP accounting standard ~~update~~ ~~“Classification~~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 was adopted using the modified retrospective transition method, which requires the Company to apply the standard as of ~~Certain Cash Receipts~~the effective date and ~~Cash Payments”~~does not require restatement of prior periods. The Company elected to apply the package of practical expedients, which ~~clarifies~~allowed the Company to not reassess: (i) whether expired or existing contracts contain leases; (ii) lease classification ~~of certain cash receipts~~for any expired or existing leases; and ~~payments in the statement of cash flows. The adoption~~(iii) initial direct costs for any existing leases. Adoption of this ~~new standard did not impact the Company’s consolidated financial statements.~~
On July 1, 2018, the Company adopted a U.S. GAAP standard that aligns the accounting for share-based payment awards issued to employees and nonemployees. Under the new guidance, the existing employee guidance is applied to nonemployee share-based transactions. The adoption of this new standard did not have a material impact on the Company’s ~~consolidated financial statements.~~Consolidated Statement of Operations and Comprehensive Loss or Statement of Cash Flow, however, upon adoption, the Company recorded right-of-use assets of $3.8 million and lease liabilities of $4.7 million on its Consolidated Balance Sheet related to the Company’s operating leases. The difference between the right-of-use assets and lease liabilities recorded upon adoption is due to certain adjustments required to the right-of-use assets for prepaid rent and accrued termination expenses. Refer to Note 5 “Leases” for the Company’s updated lease accounting policy and disclosures.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the 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 ~~February~~June 2016, the FASB issued ~~a new U.S. GAAP accounting standard which~~guidance on the Measurement of Credit Losses on Financial Instruments. The guidance requires that ~~all lessees recognize~~credit losses be reported using an expected losses model rather than the ~~assets~~incurred losses model that is currently used, and liabilities that arise from leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. The Company will adopt the new guidance for its fiscal year beginning January 1, 2019 and expectsestablishes additional disclosures related to ~~use the modified retrospective transition method, which requires the Company to apply~~credit risks. For available-for-sale debt securities with unrealized losses, the standard asnow requires allowances to be recorded instead of reducing the amortized cost of the ~~effective date and does not require restatement of prior periods. The Company does not expect that this~~investment. This standard will have a material impact on its Consolidated Statement of Operations and Comprehensive Loss or Statement of Cash Flow, however the Company expects that adoption of this standard will result in the recognition of material right-of-use assets and lease liabilities on its Consolidated Balance Sheet.
In August 2018, the SEC issued a final rule amending certain disclosure requirements including expanding the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the consolidated balance sheet must be provided in a note or separate statement. This final rule will be effective for the ~~quarter ended March 31, 2019. The~~ Company ison January 1, 2020. We are currently evaluating the potential impact ofthat this standard may have on the ~~final rule on its~~Company’s consolidated financial statements and related disclosures.

In August 2018, the FASB issued amendments that modify certain disclosure requirements for fair value measurements. The amendments become effective, ~~for our fiscal year,~~ including interim periods, beginning January 1, 2020. Early adoption, of all the amendments or only the provisions that eliminate or modify the requirements, is permitted. The adoption of this new guidance is not expected to have a material impact on the Company’s consolidated financial statements and related disclosures.

In November 2018, the FASB issued guidance to clarify the interaction between the accounting guidance for collaborative arrangements and revenue from contracts with customers. The amendments become effective, including interim periods, beginning January 1, 2020. Early adoption, including adoption in an interim period, is permitted. This guidance is required to be applied retrospectively as of the date of our adoption of the new revenue standard on January 1, 2018. We are currently evaluating the timing of our adoption and the expected impact this guidance could have on our consolidated financial 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, 2018

Level 1

Level 2

Level 3

(In thousands)

Assets:

Money market funds and cash equivalents

$
24,145

—

$
24,145

—

Marketable securities

72,795

—

72,795

—

$
96,940

—

$
96,940

—

Liabilities:

Kolltan acquisition contingent consideration

$
15,432

—

—

$
15,432

$
15,432

—

—

$
15,432

As of
December 31, 2017

Level 1

Level 2

Level 3

(In thousands)

Assets:

Money market funds and cash equivalents

$
24,061

—

$
24,061

—

Marketable securities

99,139

—

99,139

—

$
123,200

—

$
123,200

—

Liabilities:

Kolltan acquisition contingent consideration

$
43,400

—

—

$
43,400

$
43,400

—

—

$
43,400

As of
March 31, 2019

Level 1

Level 2

Level 3

(In thousands)

Assets:

Money market funds and cash equivalents

$
21,432

—

$
21,432

—

Marketable securities

53,535

—

53,535

—

$
74,967

—

$
74,967

—

Liabilities:

Kolltan acquisition contingent consideration

$
15,298

—

—

$
15,298

$
15,298

—

—

$
15,298

As of
December 31, 2018

Level 1

Level 2

Level 3

(In thousands)

Assets:

Money market funds and cash equivalents

$
15,755

—

$
15,755

—

Marketable securities

69,712

—

69,712

—

$
85,467

—

$
85,467

—

Liabilities:

Kolltan acquisition contingent consideration

$
13,779

—

—

$
13,779

$
13,779

—

—

$
13,779

The Company’s financial assets consist mainly of money market funds and cash equivalents and marketable securities and are classified as Level 2 within the valuation hierarchy. The Company values its marketable securities utilizing independent pricing services which normally derive security prices from recently reported trades for identical or similar securities, making adjustments based on significant observable transactions. At each balance sheet date, observable market inputs may include trade information, broker or dealer quotes, bids, offers or a combination of these data sources.

The following table reflects the activity for the Company’s contingent consideration liabilities measured at fair value using Level 3 inputs for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 (in thousands):

Other Liabilities:
Contingent
Consideration

Balance at December 31, 2017

$
43,400

Fair value adjustments included in operating expenses

(27,968
)
Balance at September 30, 2018

$
15,432

Other Liabilities:
Contingent
Consideration

Balance at December 31, 2018

$
13,779

Fair value adjustments included in operating expenses

1,519

Balance at March 31, 2019

$
15,298

The valuation technique used to measure fair value of the Company’s Level 3 liabilities, which consist of contingent consideration related to the acquisition of Kolltan in 2016, was primarily an income approach. The Company may be required to pay future consideration of up to ~~$162.5~~$127.5 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 months ended ~~September 30, 2018,~~March 31, 2019, the Company recorded a ~~$6.9~~$1.5 million ~~gain~~loss on fair value remeasurement of contingent consideration, primarily due to ~~lower probability that milestones related to our anti-KIT program would be triggered by~~changes in discount rates and the ~~Company’s current anti-KIT program development.~~passage of time. During the ~~nine~~three months ended ~~September 30,~~March 31, 2018, the Company recorded a ~~$28.0~~$13.6 million gain on fair value remeasurement of contingent consideration, primarily due to updated assumptions for Glemba-related milestones due to the METRIC failure and discontinuation of the Glemba and CDX-014 programs, updated assumptions for the varlilumab program, and lower probability that milestones related to our anti-KIT program would be triggered by the Company’s current anti-KIT program development. During the three and nine months ended September 30, 2017, the Company recorded a $4.6 million and $0.2 million gain on fair value remeasurement of contingent consideration, respectively, primarily due to a reduction in fair value attributed to the milestones related to the Company’s anti-KIT program and partially offset by losses related to changes in discount rates and the passage of time affecting remaining milestones.program.

The Company did not have any transfers of assets or liabilities between the fair value measurement classifications during the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019.
(4) Marketable Securities

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

Gross Unrealized

Amortized
Cost

Gains

Losses

Fair
Value

(In thousands)

September 30, 2018

U.S. government and municipal obligations (maturing in one year or less)

$
22,318

$
—

$
(7
)
$
22,311

Corporate debt securities (maturing in one year or less)

50,491

—

(7
)
50,484

Total Marketable Securities

$
72,809

$
—

$
(14
)
$
72,795

December 31, 2017

U.S. government and municipal obligations (maturing in one year or less)

$
26,164

$
3

$
(9
)
$
26,158

Corporate debt securities (maturing in one year or less)

73,007

1

(27
)
72,981

Total Marketable Securities

$
99,171

$
4

$
(36
)
$
99,139

Gross Unrealized

Amortized
Cost

Gains

Losses

Fair
Value

(In thousands)

March 31, 2019

U.S. government and municipal obligations (maturing in one year or less)

$
17,641

$
3

$
—

$
17,644

Corporate debt securities (maturing in one year or less)

35,888

4

(1
)
35,891

Total Marketable Securities

$
53,529

$
7

$
(1
)
$
53,535

December 31, 2018

U.S. government and municipal obligations (maturing in one year or less)

$
27,355

$
—

$
(4
)
$
27,351

Corporate debt securities (maturing in one year or less)

42,370

—

(9
)
42,361

Total Marketable Securities

$
69,725

$
—

$
(13
)
$
69,712

The Company holds investment-grade marketable securities, and none were in a continuous unrealized loss position for more than twelve months as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018. 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 $0.1 million ~~and $0.3 million~~ in accrued interest at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017, respectively.~~2018.

(5) Leases
The Company has operating leases of office and laboratory space, which have remaining lease terms of one to six years and may include one or more options to renew or terminate early.
The Company determines if an arrangement contains a lease at inception. Operating lease right-of-use assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. Certain adjustments to the right-of-use asset may be required for items such as prepaid or accrued lease payments, initial direct costs paid or incentives received. The Company’s leases do not contain an implicit rate, and therefore the Company uses an estimated incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. Options to extend or terminate the lease are reflected in the calculation when it is reasonably certain that the option will be exercised. The Company has elected to account for lease and non-lease components as a single lease component, however non-lease components that are variable, such as common area maintenance and utilities, are generally paid separately from rent based on actual costs incurred and therefore are not included in the right-of-use asset and operating lease liability and are reflected as an expense in the period incurred. Leases with an initial term of 12 months or less are not recorded on the balance sheet.
During the quarter ended March 31, 2019, the Company amended its Hampton, New Jersey lease to eliminate 16,200 square feet of space and extend the remaining 33,400 square feet of space for an additional five-year term with an early termination option after three years. The Company recorded an additional right-of-use asset and lease liability of $1.4 million for the initial 3 years related to the amendment.
Operating lease expense and variable lease expense was $0.7 million and $0.4 million for the three months ended March 31, 2019, respectively. Operating cash flows used for operating leases during the three months ended March 31, 2019 was $0.9 million. As of March 31, 2019, the weighted-average remaining lease term was 2 years and the weighted-average discount rate was 11.3%.
Future minimum lease payments under non-cancellable leases as of March 31, 2019 were as follows:
Remainder of 2019

$
2,277

2020

2,171

2021

508

2022

746

2023

311

Total lease payments

6,013

Less imputed interest

(781
)
Present value of operating lease liabilities

$
5,232

Under the prior lease accounting guidance, operating lease obligations, including estimated variable lease obligations, as of December 31, 2018 were as follows:
2019

$
4,648

2020

3,140

Thereafter

—

Total lease payments

$
7,788

(6) Intangible Assets and Goodwill

Intangible Assets, Net

~~The table below presents information for the Company’s finite-lived intangible assets that are subject to amortization and indefinite-lived intangible assets:~~

Gross Carrying
Amount

Accumulated
Amortization

Accumulated
Impairments

Net Carrying
Amount

(In thousands)

September 30, 2018

Finite-lived Intangible Assets:

License Rights

$
14,500

$
(7,623
)
$
(6,877
)
$
—

Indefinite-lived Intangible Assets:

IPR&D

60,490

—

(11,800
)
48,690

Total Intangible Assets, Net

$
74,990

$
(7,623
)
$
(18,677
)
$
48,690

December 31, 2017

Finite-lived Intangible Assets:

License Rights

$
14,500

$
(7,399
)
$
—

$
7,101

Indefinite-lived Intangible Assets:

IPR&D

60,490

—

—

60,490

Total Intangible Assets, Net

$
74,990

$
(7,399
)
$
—

$
67,591

~~Finite-lived intangible assets consist solely of license rights amended under a 2009 agreement with Amgen Fremont related to developing and commercializing Glemba.~~ As a result of the discontinuation of the Glemba program, the Company ~~recorded~~concluded that the finite-lived intangible asset related to its Amgen Fremont license rights to develop and commercialize Glemba was fully impaired and a non-cash impairment charge of $6.9 million ~~during~~was recorded in the first quarter of 2018. Amortization expense related to this finite-lived intangible asset was $0.0 million and $0.2 million for the three months ended March 31, 2019 and ~~nine month periods ended September 30,~~ 2018, ~~respectively, and $0.2 million and $0.7 million for the three and nine month periods ended September 30, 2017,~~ respectively.

At March 31, 2019 and 2018, the Company recorded indefinite-lived intangible assets of $48.7 million. Indefinite-lived intangible assets consist of acquired in-process research and development (“IPR&D”) related to the development of CDX-3379, the anti-KIT program and the TAM program. CDX-3379 is in Phase 2 development. The anti-KIT and TAM programs are in preclinical development. As of March 31, 2019, none of the Company’s IPR&D assets had reached technological feasibility nor did any have alternative future uses.
The Company performs an impairment test on IPR&D assets at least annually, or more frequently if events or changes in circumstances indicate that IPR&D assets may be impaired. As a result of the discontinuation of the Glemba program, the Company ~~recorded~~concluded that the Glemba IPR&D asset was fully impaired and a non-cash impairment charge of $11.8 million ~~during~~was recorded in the first quarter of 2018. CDX-3379 is in Phase 2 development. The anti-KIT and TAM programs are in preclinical development. As of September 30, 2018, none of the remaining IPR&D assets had reached technological feasibility nor did any have alternative future uses. 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

The ~~changes in the carrying amount of goodwill for the nine months ended September 30, 2018 were as follows:~~

Goodwill

(In thousands)

Balance at December 31, 2017

$
90,976

Goodwill Impairment

(90,976
)
Balance at September 30, 2018

$
—

~~The~~ Company evaluated goodwill for potential impairment due to the ~~METRIC failure.~~discontinuation of the Glemba program. The carrying amount of the Company was compared to the Company’s fair value. The Company’s fair value assessment reflected a number of significant management assumptions and estimates including the Company’s probability forecasts for pipeline assets, income taxes, capital expenditures, market premium and changes in working capital requirements. Changes in these assumptions and/or discount rates could materially impact the Company’s conclusions. Through this assessment, it was determined that the carrying amount of the Company exceeded its fair value by over $91.0 million. As such, the full goodwill asset was considered impaired and a charge of $91.0 million was recorded during the first quarter of 2018.

~~(6)~~(7) Other Assets
In 2016, the Company entered into a research and collaboration agreement with an undisclosed private company to access novel technologies and paid $3.5 million to support research activities and make an investment in the private company. The Company recorded $1.8 million to other assets related to this investment and $1.7 million was recorded to research and development expense over the term of the research activities. The stock of the private company does not have a readily determinable fair value, and therefore it is measured at cost less impairment, if any. Based on information received in April 2019, it was determined that there was a deterioration of the private company’s financial condition due to a working capital deficiency and an inability to secure additional
funding as of March 31, 2019. Therefore, the Company concluded that the investment is impaired, and a non-cash impairment charge of $1.8 million was recorded for the three months ended March 31, 2019.
(8) Other Long-Term Liabilities

Other long-term liabilities include the following:

September 30,
2018

December 31,
2017

March 31, 2019

December 31, 2018

(In thousands)

(In thousands)

Net Deferred Tax Liabilities Related to IPR&D (Note 12)

$
3,007

$
3,772

Net Deferred Tax Liabilities Related to IPR&D (Note 13)

$
3,007

$
3,007

Deferred Income From Sale of Tax Benefits

6,402

6,756

4,014

4,218

Other

1,305

1,344

—

1,083

Contingent Milestones (Note 4)

15,432

43,400

Deferred Revenue (Note 11)

2,082

2,813

Contingent Milestones (Note 3)

15,298

13,779

Deferred Revenue (Note 12)

754

1,586

Total

28,228

58,085

23,073

23,673

Less Current Portion

(4,926
)
(6,566
)

(2,777
)
(4,526
)
Long-Term Portion

$
23,302

$
51,519

$
20,296

$
19,147

In November 2015 ~~December 2014~~ and ~~January~~December 2014, 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~~ and ~~$1.1~~$1.9 million to an independent third party for $9.2 million ~~$1.8 million~~ and ~~$1.0~~$1.8 million, respectively. 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~~$0.2 million and $0.4 million in other income related to the sale of these tax benefits during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, ~~respectively, and $0.0 million and $0.5 million during the three and nine months ended September 30, 2017,~~ respectively.

~~(7)~~(9) Stockholders’ Equity

In May 2016, the Company entered into an agreement with Cantor 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. In November 2017, the Company filed a prospectus supplement registering the offer and sale of shares of common stock of up to an additional $75.0 million under the agreement with Cantor. During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, the Company issued ~~29,760,486~~883,569 shares of common stock under this controlled equity offering sales agreement with Cantor resulting in net proceeds of ~~$25.5~~$4.2 million after deducting commission and offering expenses. At ~~September 30, 2018,~~March 31, 2019, the Company had ~~$41.3~~$33.3 million remaining in aggregate gross offering price available under the Cantor agreement. In ~~October 2018,~~April 2019, the Company issued ~~3,884,597~~924,167 shares of its common stock resulting in net proceeds to the Company of ~~$1.6~~$4.1 million.

~~(8) Restructuring Expenses~~The changes in Stockholders’ Equity during the three months ended March 31, 2019 and 2018 are summarized below:

~~As a result of the METRIC failure and discontinuation of the Glemba program~~, the Company approved a reduction in its workforce to reduce operating costs and recorded severance expense of $1.2 million in the nine months ended September 30, 2018. At September 30, 2018, the Company recorded accrued severance of $0.2 million related to this workforce reduction.

Common
Stock
Shares

Common
Stock Par
Value

Additional
Paid-In
Capital

Accumulated
Other
Comprehensive
Income

Accumulated
Deficit

Total
Stockholders’
Equity

(In thousands, except share amounts)

Consolidated Balance at December 31, 2017

9,234,693

9

1,046,313

2,564

(812,517
)
236,369

Shares Issued under Stock Option and Employee Stock Purchase Plans

9,453

—

374

—

—

374

Shares Issued in Connection with Cantor Agreement

312,802

—

11,689

—

—

11,689

Shares Issued in Connection with Kolltan Severance

971

—

38

—

—

38

Share-Based Compensation

—

—

2,488

—

—

2,488

Unrealized Loss on Marketable Securities

—

—

—

(5
)
—

(5
)
Adoption of ASC 606

—

—

—

—

1,261

1,261

Net Loss

—

—

—

—

(118,132
)
(118,132
)
Consolidated Balance at March 31, 2018

9,557,919

9

1,060,902

2,559

(929,388
)
134,082

Common
Stock
Shares

Common
Stock Par
Value

Additional
Paid-In
Capital

Accumulated
Other
Comprehensive
Income

Accumulated
Deficit

Total
Stockholders’
Equity

(In thousands, except share amounts)

Consolidated Balance at December 31, 2018

11,957,635

12

1,083,903

2,583

(962,438
)
124,060

Shares Issued under Stock Option and Employee Stock Purchase Plans

3,507

—

9

—

—

9

Shares Issued in Connection with Cantor Agreement

883,569

1

4,150

—

—

4,151

Share-Based Compensation

—

—

1,693

—

—

1,693

Unrealized Gain on Marketable Securities

—

—

—

19

—

19

Net Loss

—

—

—

—

(17,239
)
(17,239
)
Consolidated Balance at March 31, 2019

12,844,711

13

1,089,755

2,602

(979,677
)
112,693

~~(9)~~(10) Stock-Based Compensation

A summary of stock option activity for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 is as follows:

Shares

Weighted
Average
Exercise
Price
Per Share

Weighted
Average
Remaining
Contractual
Term (In Years)

Shares

Weighted
Average
Exercise
Price
Per Share

Weighted
Average
Remaining
Contractual
Term (In Years)

Options Outstanding at December 31, 2017

10,856,212

$
9.40

6.1

Options Outstanding at December 31, 2018

866,132

$
93.70

7.1

Granted

5,056,467

0.61

900

4.88

Exercised

(104,500
)
2.80

—

—

Canceled

(2,568,090
)
8.76

(30,928
)
125.69

Options Outstanding at September 30, 2018

13,240,089

6.22

7.4

Options Vested and Expected to Vest at September 30, 2018

12,884,023

6.36

7.3

Options Exercisable at September 30, 2018

6,190,301

10.97

5.2

Options Outstanding at March 31, 2019

836,104

92.42

7.0

Options Vested and Expected to Vest at March 31, 2019

800,868

95.77

6.9

Options Exercisable at March 31, 2019

416,737

163.47

5.2

Shares Available for Grant Under the 2008 Plan

5,096,110

387,138

The weighted average grant-date fair value of stock options granted during the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2018~~March 31, 2019 was ~~$0.30 and $0.44, respectively.~~$3.67. Stock-based compensation expense for the three months ended March 31, 2019 and ~~nine month periods ended September 30,~~ 2018 ~~and 2017~~ was recorded as follows:

Three months ended September 30,

Nine months ended September 30,

Three months ended March 31,

2018

2017

2018

2017

2019

2018

(In thousands)

(In thousands)

(In thousands)

Research and development

$
799

$
1,546

$
3,088

$
5,310

$
756

$
1,311

General and administrative

994

1,193

3,241

4,418

937

1,177

Total stock-based compensation expense

$
1,793

$
2,739

$
6,329

$
9,728

$
1,693

$
2,488

The fair values of employee and director stock options granted during the three months ended March 31, 2019 and ~~nine month periods ended September 30,~~ 2018 ~~and 2017~~ were valued using the Black-Scholes option pricing model with the following assumptions:

Three months ended September 30,

Nine months ended September 30,

2018

2017

2018

2017

Expected stock price volatility

85%

76%

73 – 85%

76 – 77%

Expected option term

6.0 Years

6.0 Years

6.0 Years

6.0 Years

Risk-free interest rate

2.8%

2.0%

2.8 – 3.0%

2.0 – 2.3%

Expected dividend yield

None

None

None

None

Three months ended March 31,

2019

2018

Expected stock price volatility

91%

73%

Expected option term

6.0 Years

6.0 Years

Risk-free interest rate

2.5%

2.8%

Expected dividend yield

None

None

~~(10)~~(11) Accumulated Other Comprehensive Income

The changes in accumulated other comprehensive income, which is reported as a component of stockholders’ equity, for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 are summarized below:

Unrealized
Gain/(Loss) on
Marketable
Securities

Foreign
Currency Items

Total

(In thousands)

Balance at December 31, 2017

$
(32
)
$
2,596

$
2,564

Other comprehensive loss

18

—

18

Balance at September 30, 2018

$
(14
)
$
2,596

$
2,582

Unrealized
Gain/(Loss) on
Marketable
Securities

Foreign
Currency Items

Total

(In thousands)

Balance at December 31, 2018

$
(13
)
$
2,596

$
2,583

Other comprehensive loss

19

—

19

Balance at March 31, 2019

$
6

$
2,596

$
2,602

No amounts were reclassified out of accumulated other comprehensive income during the three ~~or nine~~ months ended ~~September 30, 2018.~~
~~(11) Revenue~~March 31, 2019.

~~On January 1, 2018, the Company adopted a new revenue accounting standard, “~~(12) Revenue ~~from Contracts with Customers” (ASC 606)~~. Upon adoption using the modified retrospective application, the Company recognized a $1.3 million decrease to accumulated deficit, a $0.8 million decrease in deferred revenue and $0.5 million increase in accounts receivable due to the cumulative impact of adopting ~~ASC 606~~~~. This impact was driven by the acceleration of revenue using a percentage-of-completion method of accounting under~~ ~~ASC 606~~ ~~for an open contract that had previously been accounted for using the~~ ~~Contingency Adjusted Performance Model (“CAPM”) under previous guidance.~~
~~Results for reporting periods beginning after January 1, 2018 are presented under~~ ~~ASC 606~~ while prior period amounts were not adjusted and continue to be reported in accordance with historic accounting under previous guidance. There was not a material impact to revenues as a result of applying ~~ASC 606~~ for the three and nine month periods ended September 30, 2018, and there have not been significant changes to the Company’s business processes, systems or internal controls as a result of adopting the new standard. The Company expects revenue recognition to remain largely unchanged under the new standard.
~~Revenue Recognition~~
Revenues are recognized when performance obligations under agreements or contracts are satisfied, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services.
~~The Company determines revenue recognition through the following steps:~~
·                  ~~Identification of the contract, or contracts, with a customer;~~
·                  ~~Identification of the performance obligations in the contract;~~
·                  ~~Determination of the transaction price;~~
·                  ~~Allocation of the transaction price to the performance obligations in the contract; and~~
·                  ~~Recognition of revenue when, or as, the Company satisfies a performance obligation.~~
Revenue for the Company has historically been derived from biopharmaceutical product development agreements with collaborative partners for the research and development of therapeutic drug candidates. The terms of the agreements may include nonrefundable signing and licensing fees, funding for research, development and manufacturing, milestone payments and royalties on any product sales derived from collaborations. The Company assesses the multiple obligations typically within product development contracts to determine the distinct performance obligations and how to allocate the arrangement consideration to each distinct performance obligation.
Under product development agreements, revenue is generally recognized using a cost-to-cost measure of progress. Revenue is recognized based on the costs incurred to date as a percentage of the total estimated costs to fulfill the contract. Incurred cost represents work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Due to the nature of the work performed in these arrangements, the estimation of cost at completion is complex, subject to many variables, such as expected clinical trial costs, and requires significant judgements. Circumstances can arise that change original estimates of costs or progress toward completion. Any revisions to estimates are reflected in revenue on a cumulative catch-up basis in the period in which the change in circumstances became known.
~~Revenue for the Company is also derived from~~ manufacturing and research and development arrangements. The Company owns and operates a cGMP manufacturing facility in Fall River, Massachusetts, to produce drug substance for its current and planned early-stage clinical trials. In order to utilize excess capacity, the Company has, from time to time, entered into contract manufacturing and research and development arrangements in which services are provided on a time-and-material basis or at a negotiated fixed-price. Revenue from time-and-material contracts is generally recognized on an output basis as labor hours and/or direct expenses are incurred. Under fixed-price contracts, revenue is generally recognized on an output basis as progress is made toward completion of the performance obligations using surveys of performance completed to date.
~~Contract Assets and Liabilities~~
The Company classifies the right to consideration in exchange for products or services transferred to a client as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional as compared to a contract asset which is a right to consideration that is conditional upon factors other than the passage of time. At January 1, 2018 and September 30, 2018, the Company’s right to consideration under all contracts was considered unconditional, and as such, there were no recorded contract assets.
The Company’s contract liabilities result from arrangements where the Company has received payment in advance of performance under the contract. These amounts are included as deferred revenue within current portion of long-term liabilities on the condensed consolidated balance sheets. Revenue recognized from contract liabilities as of January 1, 2018 during the three and nine months ended September 30, 2018 was $0.0 million and $1.5 million, respectively. Revenue expected to be recognized in the future from contract liabilities as performance obligations are satisfied are not expected to be material.

Product Development and Licensing Revenue

The Company’s primary product development and licensing revenue is associated with a clinical collaboration agreement with BMS entered into in 2014 to evaluate the safety, tolerability and preliminary efficacy of varlilumab and Opdivo®, BMS’s PD-1 immune checkpoint inhibitor, in a Phase 1/2 study. Under this agreement, BMS made an upfront payment to Celldex of $5.0 million and provides funding for 50% of the external costs incurred by the Company in connection with the clinical trial. The Company recorded $0.1 million and ~~$2.7~~$0.9 million in revenue related to this agreement during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, respectively.

Contract and Grants Revenue

~~In 2017, the~~The Company has entered into ~~fixed-fee manufacturing~~agreements with Rockefeller University and ~~research and development arrangements with both the International AIDS Vaccine Initiative (IAVI) and Frontier Biotechnologies, Inc (Frontier). The Company recognized $~~0.1 million and $2.8 million in revenue under these agreements during the three and nine months ended September 30, 2018, respectively, and $2.3 million and $4.6 million during the three and nine months ended September 30, 2017.
~~In 2013, the Company entered into an agreement, as amended, with Rockefeller~~Duke University pursuant to which the Company performs manufacturing and research and development services ~~for Rockefeller University.~~on a time-and-materials basis. The Company recognized $~~0.5~~$1.2 million and ~~$1.8~~$0.8 million in revenue for labor hours and direct costs incurred ~~related to the Rockefeller University agreement~~under these agreements during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, ~~respectively, and $0.3 million and $1.4 million during the three and nine months ended September 30, 2017,~~ respectively.
~~(12) Income Taxes~~
On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was enacted and led to significant changes to U.S. tax law. Also on December 22, 2017, the SEC staff issued SAB 118, allowing companies to record the effects of the TCJA on a provisional basis during a measurement period not to extend beyond one year of the enactment date. SAB 118 was codified into ~~ASC 740~~ ~~by ASU 2018-05.~~

The Company has entered into fixed-fee manufacturing and research and development arrangements with the International AIDS Vaccine Initiative and Frontier Biotechnologies, Inc. The Company recognized ~~an income tax benefit of $19.1~~$0.1 million ~~related to implementing applicable provisions of the TCJA~~and $2.3 million in revenue under these agreements during the ~~year~~three months ended March 31, 2019 and 2018, respectively.
Contract Assets and Liabilities
At December 31, ~~2017. In accordance with SAB 118,~~2018 and March 31, 2019, the Company’s right to consideration under all contracts was considered unconditional, and as such, there were no recorded contract assets. At December 31, 2018 and March 31, 2019, the Company ~~considered this adjustment to be a provisional amount based on the Company’s best estimates at~~had $1.6 million and $0.8 million in contract liabilities recorded, respectively. Revenue recognized from contract liabilities as of December 31, ~~2017. The Company’s accounting for~~2018 during the ~~tax effects of the TCJA is complete as of September 30, 2018.~~three months ended March 31, 2019 was $0.8 million.
(13) Income Taxes

The Company has evaluated the positive and negative evidence bearing upon the realizability of its net deferred tax assets and considered its history of losses, ultimately concluding that it is “more likely than not” that the Company will not recognize the benefits of federal, state and foreign deferred tax assets and, as such, has maintained a full valuation allowance on its deferred tax assets as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018.

AThe net deferred tax liability of $3.0 million ~~and $3.8 million existed~~ at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017, respectively, related~~2018 relates to the temporary differences associated with the IPR&D intangible assets acquired in previous business combinations and is not deductible for tax purposes. As a result of the discontinuation of the Glemba program, the Company recorded a $0.8 million non-cash income tax benefit during the first quarter of 2018.
Massachusetts, New Jersey, Connecticut and Australia are the jurisdictions in which the Company primarily operates or has operated and has income tax nexus. The Company is not currently under examination by these or any other jurisdictions for any tax year.
~~(13)~~(14) 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. 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,

Three Months Ended March 31,

2018

2017

2019

2018

Stock Options

13,240,089

11,582,818

836,104

630,445

Restricted Stock

60,005

96,668

3,552

6,445

13,300,094

11,679,486

839,656

636,890

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

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

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

·                  our dependence on product candidates, which are still in an early development stage;
·                  our ability to successfully complete research and further development, including animal, preclinical and clinical studies, and, if we obtain regulatory approval, commercialization of our drug candidates and the growth of the markets for those drug candidates;

·                  our ability to raise sufficient capital to fund our animal, preclinical and clinical studies and to meet our liquidity needs, on terms acceptable to us, or at all. If we are unable to raise the funds necessary to meet our liquidity needs, we may have to delay or discontinue the development of one or more programs, discontinue or delay ongoing or anticipated clinical trials, license out programs earlier than expected, raise funds at significant discount or on other unfavorable terms, if at all, or sell all or part of our business;

·                  our anticipated timing for preclinical development, regulatory submissions, commencement and completion of clinical trials and product approvals;
·                  our ability to negotiate strategic partnerships, where appropriate, for our ~~program assets;~~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, who may be the sole source of supply;~~partners;

·                  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 ~~regain compliance with applicable NASDAQ listing standards for continued listing of our common stock on the NASDAQ Global Market;~~
·                  ~~our ability to realize the anticipated benefits and cost-savings from the restructuring we announced in April 2018;~~
·                  ~~our ability to~~ realize the anticipated benefits from the acquisition of ~~Kolltan and to operate the combined business efficiently;~~Kolltan;
·                  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;
·                  our ability to develop and commercialize products without infringing the intellectual property rights of third parties; and
·                  the risk factors set forth elsewhere in this quarterly report on Form 10-Q and the factors listed under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s annual report on Form 10-K for the year ended December 31, ~~2017~~2018 and other reports that we file with the Securities and Exchange Commission.

All forward-looking statements are expressly qualified in their entirety by this cautionary notice. You are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date of this report or the date of the document incorporated by reference into this report. We have no obligation, and expressly disclaim any obligation, to update, revise or correct any of the forward-looking statements, whether as a result of new information, future events or otherwise. We have expressed our expectations, beliefs and projections in good faith, and we believe they have a reasonable basis. However, we cannot assure you that our expectations, beliefs or projections will result or be achieved or accomplished.

OVERVIEW

We are a biopharmaceutical company focused on the development and commercialization of immunotherapies and other targeted biologics. Our drug candidates are derived from a broad set of complementary technologies which have the ability to engage the human immune system and/or directly inhibit tumors to treat specific types of cancer or other diseases. They are aimed at addressing market opportunities for which we believe current therapies are inadequate or non-existent.

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

·                  CDX-1140, an agonist human monoclonal antibody targeted to CD40, a key activator of immune response, currently being studied as a single-agent and in combination with CDX-301 in a Phase 1 dose-escalation study in multiple types of solid ~~tumors;~~tumors and B cell lymphomas;
·                  CDX-3379, a human monoclonal antibody designed to block the activity of ErbB3 (HER3), currently in an early Phase 2 study in advanced head and neck squamous cell cancer in combination with Erbitux®;
·                  CDX-301, a dendritic cell growth factor, currently being evaluated in a combination study with CDX-1140; and
·                  Varlilumab, an immune modulating antibody targeting CD27 designed to enhance a patient’s immune response, ~~against cancer that is~~ currently ~~completing a Phase 1/2 study in~~being evaluated for potential combination with ~~Opdivo~~®CDX-1140, especially in ~~collaboration with Bristol-Myers Squibb Company (BMS).~~lymphomas which co-express CD40 and CD27 receptors.

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 ~~seven~~eight studies ongoing with our prioritized drug ~~candidates and additional studies currently under consideration.~~
In April 2018, we announced that our Phase 2b METRIC Study of glembatumumab vedotin in metastatic triple-negative breast cancer did not meet its primary endpoint. Based on this result, in the second quarter of 2018, we prioritized our pipeline and evaluated our operational and workforce needs to extend our financial resources and direct them to continued pipeline advancement. As previously disclosed, in line with this initiative and to conserve resources, we discontinued development of glembatumumab vedotin, CDX-014 and CDX-1401.candidates.

Our goal is to build a fully integrated, commercial-stage biopharmaceutical company that develops important therapies for patients with unmet medical needs. 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. Currently, all programs are fully owned by Celldex.

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 drug candidate. It is not unusual for the clinical development of these types of drug candidates to each take five years or more, and for total development costs to exceed $100 million for each drug candidate. We estimate that clinical trials of the type we generally conduct are typically completed over the following timelines:
Clinical Phase

Estimated
Completion
Period
Phase 1

1 - 2 Years
Phase 2

1 - 5 Years
Phase 3

1 - 5 Years
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.

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

An element of our business strategy is to pursue the discovery, research and development of a broad portfolio of 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 drug candidates, our dependence on the success of one or a few drug candidates increases.

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

Furthermore, our business strategy includes the option of entering into collaborative arrangements with third parties to complete the development and commercialization of our drug candidates. In the event that third parties take over the clinical trial process for one of our 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, ~~2017,~~2018, we incurred an aggregate of ~~$470.9~~$469.9 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~~three months ended ~~September 30, 2018~~March 31, 2019 and ~~2017.~~2018. 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, 2018

Nine Months Ended
September 30, 2017

Three Months Ended
March 31, 2019

Three Months Ended
March 31, 2018

(In thousands)

(In thousands)

CDX-1140

$
3,756

$
5,788

$
1,573

$
932

CDX-3379

2,935

3,611

1,161

678

CDX-301

1,616

1,058

365

525

Varlilumab

7,222

11,956

1,174

2,510

Anti-KIT Program

6,436

3,223

1,143

1,686

TAM Program

4,245

3,914

1,336

1,692

Glembatumumab vedotin

16,355

26,240

CDX-014

1,412

1,925

CDX-1401

420

617

CDX-527

1,082

—

Other Programs

10,845

14,375

3,317

13,852

Total R&D Expense

$
55,242

$
72,707

$
11,151

$
21,875

Clinical Development Programs

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 studies of CDX-1140 clearly demonstrate strong immune activation effects and low systemic toxicity and support the design of the Phase 1 study to rapidly identify the dose for characterizing single-agent and combination activity.

We initiated a Phase 1 study of CDX-1140 in November 2017. This study is expected to enroll up to approximately ~~150~~180 patients with recurrent, locally advanced or metastatic solid tumors and ~~was recently amended to also include lymphoma.~~B cell lymphomas. The study is designed to determine the maximum tolerated dose, or MTD, during a dose-escalation phase (0.01 to 3.0 mg/kg once every four weeks until confirmed progression or intolerance) and to recommend a dose level for further study in a subsequent expansion phase. The expansion is designed to further evaluate the tolerability and biologic effects of selected dose(s) of CDX-1140 in specific tumor types. Secondary objectives include assessments of safety and tolerability, pharmacodynamics, pharmacokinetics, immunogenicity and additional measures of anti-tumor activity, including clinical benefit rate. We believe that the potential for CDX-1140 will be best defined in combination studies with other immunotherapies or conventional cancer treatments. To
In support of this, ~~end, in the second quarter of 2018, we amended~~ the Phase 1 study protocol to also ~~explore~~allows for the exploration of CDX-1140 in combination with CDX-301 at a fixed dose of CDX-301 and escalating doses of CDX-1140. Dendritic cells, which express CD40, are often rare or missing from the tumor microenvironment and are ~~considering additional combinations, including with varlilumab.~~critical for initiating anti-tumor immunity. CDX-301 is being utilized to increase the number of dendritic cells in blood and tissue available for CDX-1140 activation. CDX-1140 should, in turn, activate and mature the dendritic cells, an important step for enhancing anti-tumor immune responses.

Interim data from the Phase 1 study were presented in April 2019 at the American Association for Cancer Research (AACR) Annual Meeting. 30 patients were enrolled in the study at the time of data analysis (n=22 monotherapy; n=8 combination). Six monotherapy dosing cohorts in both solid tumors and non-Hodgkin lymphoma (NHL) (0.01, 0.03, 0.09, 0.18, 0.36 and 0.72 mg/kg) and two combination cohorts in solid tumors (0.09 and 0.18 mg/kg) with CDX-301 were completed. Enrollment to the seventh monotherapy cohort at 1.5 mg/kg and to the third CDX-301 combination cohort at 0.36 mg/kg were ongoing. In general, patients had advanced disease and were heavily pretreated (median number of prior therapies: 4 monotherapy arm; 3.5 combination arm). CDX-1140 was generally well tolerated. A maximum tolerated dose (MTD) had not been reached. Across both arms of the study, there were no high grade (Grade 3 or above) drug-related changes observed in liver function tests or platelets, including at CDX-1140 dose levels which exceed the MTDs reported with other CD40 agonists. The addition of CDX-301 did not affect the tolerability of CDX-1140 at the dose levels tested. Dose dependent biological effects consistent with CD40-mediated immune activation were reported. Higher dose levels achieved circulating antibody concentrations in the range of 20 to 30 micrograms CDX-1140 per milliliter. Transient dose-dependent pharmacodynamic effects were observed including activation of dendritic cells and B cells, along
with increases in pro-inflammatory cytokines and chemokines in the blood, all of which are consistent with CD40-mediated immune activation and the hypothesis that CDX-1140 is achieving dose levels optimal for systemic exposure. The addition of CDX-301 further enhanced cytokine responses. While not anticipated at low CDX-1140 dose levels, stable disease was observed in this heavily pretreated population.
Continued enrollment is ongoing to define the MTD and select a dose for disease-specific expansion cohorts that will be monitored for clinical activity. Future combination opportunities are also being considered, including with PD-1 or PD-L1 inhibitors, chemotherapy, radiation therapy and Celldex’s potent CD27 agonist monoclonal antibody varlilumab. Several B cell lymphomas, including diffuse large B-cell lymphoma and follicular lymphoma, also express both CD40 and CD27. Celldex’s varlilumab is a potent CD27 agonist and has been ~~accepted for presentation on Friday, November 9, 2018~~shown to synergize with CDX-1140 in NHL models. We plan to present updated data from the Phase 1 study at ~~the Society for Immunotherapy of Cancer (SITC) Annual Meeting.~~a future medical meeting in 2019.

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. We believe CDX-3379 also has potential to enhance anti-tumor activity and/or overcome resistance in combination with other targeted and cytotoxic therapies to directly kill tumor cells. Tumor cell death and the ensuing release of new tumor antigens has the potential to serve as a focus for combination therapy with immuno-oncology approaches, even in refractory patients. CDX-3379 has been evaluated in three Phase 1 studies for the treatment of multiple solid tumors that express ErbB3 and is currently being evaluated in a Phase 2 study in combination with Erbitux in Erbitux-resistant, advanced head and neck squamous cell carcinoma.
A Phase 1a/1b study of CDX-3379 was conducted in solid tumors. The study included a single-agent, dose-escalation portion and combination expansion cohorts. The single-agent, dose-escalation portion of the study did not identify an MTD, and there were no dose limiting toxicities. 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=9) 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 durable 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, as well as an unconfirmed partial response in a patient with thyroid cancer. Initial data were presented at the 2016 American Society of Clinical Oncology (ASCO) Annual Meeting.

In April 2018, results from a window-of-opportunity study evaluating the effect of CDX-3379 on potential biomarkers in patients with head and neck squamous cell carcinoma (HNSCC) were presented at the American Association for Cancer Research (AACR) Annual Meeting. The study enrolled 12 patients with newly diagnosed HNSCC who received two doses of CDX-3379, at a two-week interval prior to tumor resection. CDX-3379 reduced phosphorylated ErbB3 (pErbB3) levels in 83% (10/12) of patient samples, with greater than or equal to 50% decreases in 58% of patients (7/12), which met the primary study objective. Stable disease was observed in 92% (11/12) of patients prior to surgery, and a patient with HPV-negative disease experienced significant tumor shrinkage (92% in primary tumor; 26% in metastatic lesion). CDX-3379 was well-tolerated, and no treatment-related adverse events were observed.

Preclinical data from the combination of CDX-3379 and Erbitux in xenograft models of head and neck squamous cell carcinoma were also presented at the AACR Annual Meeting in April 2018. Combining CDX-3379 and Erbitux inhibited tumor growth more potently than Erbitux alone. Mechanistic studies demonstrated a reduction of PD-L1 expression from the combination.

We have initiated an open-label Phase 2 study in combination with Erbitux in approximately 30 patients with human papillomavirus (HPV) negative, Erbitux-resistant, advanced head and neck squamous cell carcinoma who have previously been treated with an anti-PD1 checkpoint inhibitor, a population with limited options and a particularly poor prognosis. We opened the study to enrollment in November 2017. The study employs a Simon two-stage design with an interim futility analysis following enrollment of the first 13 patients. According to the study’s two-stage design, if at least one patient achieves an objective response in the first stage, enrollment may progress to the second stage. Enrollment to the first stage of the Phase 2 study (n=13) is ~~nearing completion with~~complete. While a ~~number of~~confirmed complete response has been documented, Celldex will conduct a comprehensive review, including the full data set, before making decisions on future development, as patients are still undergoing treatment and ~~not yet~~are eligible for ~~response~~ evaluation. The primary objective of the study is objective response rate. Secondary objectives include assessments of clinical benefit response (CBR), duration of response (DOR), ~~PFS~~progression-free survival (PFS) and overall survival (OS), and safety and pharmacokinetics associated
with the combination. We plan to present updated data from the study at the 2019 ASCO Annual Meeting in June. CDX-3379 is also being studied in an investigator-sponsored study.

Varlilumab

Varlilumab is a fully human agonist monoclonal 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 inin 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.

Single-Agent Phase 1 Study: In an open-label Phase 1 study of varlilumab in patients with selected malignant solid tumors or hematologic cancers, 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 received varlilumab in the study at multiple clinical sites in the U.S. In both the solid tumor and hematologic dose escalations, the pre-specified maximum dose level (10 mg/kg) was reached without identification of an MTD. The majority of adverse events, or AEs, related to treatment were mild to moderate (Grade 1/2) in severity, and no significant immune-mediated adverse events typically associated with checkpoint blockade were observed. Durable, multi-year clinical benefit was demonstrated in select patients without additional anti-cancer therapy. Final results from the study in patients with solid tumors were published in the Journal of Clinical Oncologyin April 2017.
Phase 1/2 Varlilumab/Opdivo Combination Study: In 2014, we entered into a clinical trial collaboration with Bristol-Myers Squibb, or BMS, to evaluate the safety, tolerability and preliminary efficacy of varlilumab and Opdivo, ~~BMS’~~BMS’s PD-1 immune checkpoint inhibitor, in a Phase 1/2 study. The Phase 1 portion of the study was initiated in January 2015 and conducted in adult patients with multiple solid tumors to assess the safety and tolerability of varlilumab at varying doses when administered with Opdivo. It was followed by a Phase 2 expansion to evaluate the activity of the combination in disease specific cohorts. Enrollment to the Phase 2 portion of the study was completed in January 2018 with cohorts in colorectal cancer (n=21), ovarian cancer (n=58), head and neck squamous cell carcinoma SCCHN) (n=24), renal cell carcinoma (RCC) (n=14) and glioblastoma (GBM) (n=22). The primary objective of the Phase 2 cohorts iswas objective response rate, or ORR, except glioblastoma, where the primary objective iswas the rate of 12-month OS.

~~Data~~The combination of varlilumab and nivolumab was generally well tolerated across indications at all varlilumab dose levels/schedules tested. Clinical data from patients with “cold” tumors with low expectation of response to checkpoint inhibition monotherapy suggested potential benefit from the ~~ovarian and colorectal cancer cohorts were presented~~combination. Uniquely in ~~an oral presentation at~~ the ~~2018 ASCO Annual Meeting. Sixty-six patients with~~ ovarian cancer cohort, increased PD-L1 and CD8 TIL were ~~treated~~observed in ~~the study (8 patients in Phase 1; 58 patients in Phase 2). Patients had a median~~~ 60% of ~~three prior lines of therapy, 91% had Stage IV disease and 66% had PD-L1 negative tumors. The overall response rate was 14% (n=9; 7 confirmed, 2 unconfirmed) across 64 response-evaluable patients. For~~ patients with paired ~~tumor samples (n=24) from before and during treatment, increases~~biopsy samples. Patients with increase in ~~tumor expression of~~ PD-L1 and ~~CD8+~~CD8 TIL ~~levels were observed. These increases were associated with improved~~had good clinical outcome ~~including improved progression-free~~and higher doses of varlilumab trended towards better activity then lower/less frequent dosing. In recurrent GBM, results in the subgroup (n=16) with unmethylated MGMT appeared promising with 2 (14%) partial responses noted and a median overall survival ~~(PFS) and response rate.~~
~~Forty-two patients with~~of 12.5 months. Among colorectal cancer patients, durable clinical responses were ~~treated~~observed in a patient with MSI-high tumor and one with a high mutational burden. In SCCHN, in the study (21 patients in Phase 1; 21 patients in Phase 2). Patients had a median of four prior lines of therapy, 100% had Stage IV disease and 87% had PD-L1 negative tumors. One patient had disease that was MSI-high and 21 patients had disease that was MSI-low/mismatch repair (MMR) proficient; MSI status for the remaining 20 patients was unknown. One patient with PD-L1 negative, MSI-high disease experienced a confirmed partial response in the Phase 2 study portion. Of note, a patientsubgroup (n=9) with PD-L1 negative disease, ~~initially considered MMR proficient as determined by standard screening laboratory analysis, achieved a near complete~~one partial response ~~in the Phase 1 portion of the study, which continued at last follow-up at 35 months. This patient’s tumor had a high mutational burden~~was observed (13%) and ~~mutations in genes regulating DNA repair, which together likely contributed to the response. Disease control rate for the response-evaluable population was 20% (8/41).~~
In the second quarter of 2018, we reported preliminary data from the head and neck squamous cell carcinoma (HNSCC) and renal cell carcinoma (RCC) cohorts. Twenty-seven patients with HNSCC were treated in the study (3 patients in Phase 1; 24 patients in Phase 2). Patients had a median OS of ~~two prior lines of therapy, 96% had Stage IV disease, 63% had PD-L1 negative tumors and 52% had HPV positive tumors. The overall response rate~~11 months was ~~15% (n=4 confirmed) across 27 response-evaluable patients. In this small sample size, no correlation between PDL-1 status and clinical outcome was observed.~~reported. Given the changing treatment paradigm in ~~renal cell carcinoma,~~RCC, only fourteen patients ~~with RCC~~ were treated in the ~~study, all in Phase 2. All patients had experienced prior angiogenic therapy, with a range~~study; 39% of ~~1 to 4 prior treatments, 100% had Stage IV disease and 50% had PD-L1 negative tumors. 39% of~~these patients experienced stable disease.
~~Data from the GBM cohort has been accepted for presentation on Saturday, November 17, 2018 at the Society for Neuro-oncology (SNO) Annual Meeting.~~

Future development of varlilumab is focused on inclusion in internal combination studies, including potentially in the ongoing Phase 1 trial of CDX-1140, and several external investigator-initiated studies.

CDX-301

CDX-301, a recombinant FMS-like tyrosine kinase 3 ligand, or Flt3L, is a hematopoietic cytokine that uniquely expands dendritic cells and hematopoietic stem cells, and in combination with other agents may potentiate anti-tumor responses. Depending on the setting, cells expanded by CDX-301 promote either enhanced or permissive immunity. We ~~licensed CDX-301 from Amgen Inc. and~~ believe CDX-301 may hold significant opportunity for synergistic development in combination with other proprietary molecules in our portfolio, as well as with approved or investigational therapies for the treatment of cancer.

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 dendritic cell and hematopoietic stem cell populations in healthy volunteers. The study was published in the journal Bone Marrow Transplantation in 2015.
CDX-301 is being used as a priming agent to potentially increase the number of cells available to respond to CDX-1140 in the ongoing Phase 1 trial of CDX-1140. CDX-301 is also in clinical development for multiple cancers in ongoing ~~and planned~~ investigator-sponsored and collaborative studies, including in combination with treatments that release tumor antigens, such as radiation therapy.
CRITICAL ACCOUNTING POLICIES

See Note 32 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for information regarding 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, ~~2017~~2018 for a discussion of our critical accounting policies. There have been no material changes to such critical accounting policies except for the adoption of the updated ~~revenue recognition~~lease accounting standard on January 1, ~~2018.~~2019. We believe our most critical accounting policies include accounting for business combinations, revenue recognition, intangible and long-lived assets, research and development expenses and stock-based compensation expense.

RESULTS OF OPERATIONS

Three Months Ended ~~September 30, 2018~~March 31, 2019 Compared with Three Months Ended ~~September 30, 2017~~March 31, 2018

Three Months Ended
September 30,

Increase/
(Decrease)

Increase/
(Decrease)

Three Months Ended
March 31,

Increase/
(Decrease)

Increase/
(Decrease)

2018

2017

$

%

2019

2018

$

%

(In thousands)

(In thousands)

Revenues:

Product Development and Licensing Agreements

$
131

$
1,238

$
(1,107
)
(89
)%

$
129

$
992

$
(863
)
(87
)%
Contracts and Grants

810

2,686

(1,876
)
(70
)%

1,296

3,076

(1,780
)
(58
)%
Total Revenue

$
941

$
3,924

$
(2,983
)
(76
)%

$
1,425

$
4,068

$
(2,643
)
(65
)%
Operating Expenses:

Research and Development

11,918

21,915

(9,997
)
(46
)%

11,151

21,875

(10,724
)
(49
)%
General and Administrative

3,722

5,346

(1,624
)
(30
)%

4,896

5,593

(697
)
(12
)%
Goodwill Impairment

—

90,976

(90,976
)
(100
)%
Intangible Asset Impairment

—

13,000

(13,000
)
(100
)%

—

18,677

(18,677
)
(100
)%
Gain on Fair Value Remeasurement of Contingent Consideration

(6,935
)
(4,600
)
2,335

51
%
Other Asset Impairment

1,800

—

1,800

n/a

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

1,519

(13,600
)
15,119

111
%
Amortization of Acquired Intangible Assets

—

224

(224
)
(100
)%

—

224

(224
)
(100
)%
Total Operating Expense

8,705

35,885

(27,180
)
(76
)%

19,366

123,745

(104,379
)
(84
)%
Operating Loss

(7,764
)
(31,961
)
(24,197
)
(76
)%

(17,941
)
(119,677
)
(101,736
)
(85
)%
Investment and Other Income, Net

521

398

123

31
%

702

780

(78
)
(10
)%
Net Loss Before Income Tax Benefit

$
(7,243
)
$
(31,563
)
$
(24,320
)
(77
)%

(17,239
)
(118,897
)
(101,658
)
(86
)%
Income Tax Benefit

—

5,200

(5,200
)
(100
)%

—

765

(765
)
(100
)%
Net Loss

(7,243
)
(26,363
)
(19,120
)
(73
)%

$
(17,239
)
$
(118,132
)
$
(100,893
)
(85
)%

Net Loss

The ~~$19.1~~$100.9 million decrease in net loss for the three months ended ~~September 30, 2018,~~March 31, 2019, as compared to the three months ended ~~September 30, 2017,~~March 31, 2018, was primarily the result of a decrease in non-cash goodwill and intangible asset impairment expense and a decrease in research and development ~~expenses.~~expenses, partially offset by the increase in loss on fair value remeasurement of contingent consideration.

Revenue

The $~~1.1~~0.9 million decrease in product development and licensing agreements revenue for the three months ended ~~September 30, 2018,~~March 31, 2019, as compared to the three months ended ~~September 30, 2017,~~March 31, 2018, was primarily due to a decrease in revenue related to our BMS agreement. The ~~$1.9~~$1.8 million decrease in contracts and grants revenue for the three months ended ~~September 30, 2018,~~March 31, 2019, as compared to the three months ended ~~September 30, 2017,~~March 31, 2018, was primarily related to a decrease in services performed under our contract manufacturing and research and development agreement with the International AIDS Vaccine Initiative.
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 drug candidates as follows:

Three Months Ended
September 30,

Increase/
(Decrease)

Three Months Ended
March 31

Increase/
(Decrease)

2018

2017

$

%

2019

2018

$

%

(In thousands)

(In thousands)

Personnel

$
5,810

$
8,933

$
(3,123
)
(35
)%

$
5,753

$
9,057

$
(3,304
)
(36
)%
Laboratory Supplies

886

1,230

(344
)
(28
)%

796

1,257

(461
)
(37
)%
Facility

1,819

2,056

(237
)
(12
)%

1,897

2,063

(166
)
(8
)%
License Fees

56

162

(106
)
(65
)%
Product Development

1,764

7,316

(5,552
)
(76
)%

1,695

7,349

(5,654
)
(77
)%

Personnel expenses primarily include salary, benefits, stock-based compensation and payroll taxes. The ~~$3.1~~$3.3 million decrease in personnel expenses for the three months ended ~~September 30, 2018,~~March 31, 2019, as compared to the three months ended ~~September 30, 2017,~~March 31, 2018, was primarily due to a decrease in headcount and ~~lower~~ stock-based compensation expense. We expect personnel expenses to remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.

Laboratory supplies expenses include laboratory materials and supplies, services, and other related expenses incurred in the development of our technology. The ~~$0.3~~$0.5 million decrease in laboratory supply expenses for the three months ended ~~September 30, 2018,~~March 31, 2019, as compared to the three months ended ~~September 30, 2017,~~March 31, 2018, was primarily due to lower laboratory materials and supplies purchases. We expect laboratory supplies 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 $0.2 million decrease in facility expenses for the three months ended ~~September 30, 2018,~~March 31, 2019, as compared to the three months ended ~~September 30, 2017,~~March 31, 2018, was primarily due to lower depreciation expense. We expect facility expenses to ~~remain relatively consistent~~decrease over the next twelve months ~~although there may be fluctuations on~~as a ~~quarterly basis.~~
~~License fee expenses include annual license maintenance fees and milestone payments due upon~~result of the ~~achievement of certain development, regulatory and/or commercial milestones. The $0.1 million decrease~~reduction in license fee expenses for the three months ended September 30, 2018, as compared to the three months ended September 30, 2017, was due to the timing of certain development and/or regulatory milestones achieved byleased space in our ~~drug candidates. We expect license fee expense to remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.~~Hampton, New Jersey facility.

Product development expenses include clinical investigator site fees, external trial monitoring costs, data accumulation costs, contracted research and outside clinical drug product manufacturing. The ~~$5.6~~$5.7 million decrease in product development expenses for the three months ended ~~September 30, 2018,~~March 31, 2019, as compared to the three months ended ~~September 30, 2017,~~March 31, 2018, was primarily due to a decrease in clinical trial expenses of ~~$3.2~~$3.3 million and a decrease in contract manufacturing expenses of ~~$1.9 million~~.$2.1 million. We expect product development expenses to remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.

General and Administrative Expense

The ~~$1.6~~$0.7 million decrease in general and administrative expenses for the three months ended ~~September 30, 2018,~~March 31, 2019, as compared to the three months ended ~~September 30, 2017,~~ March 31, 2018, was primarily due to a decrease in headcount and lower ~~legal expense and marketing expense.~~commercial planning costs. We expect general and administrative expenses to remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.

Other Asset Impairment
We concluded that the Company’s investment in an undisclosed private company was impaired as a result of a deterioration in the private company’s financial condition and recorded a non-cash impairment charge of $1.8 million during the three months ended March 31, 2019.
Gain on Fair Value Remeasurement of Contingent Consideration

The $~~6.9~~1.5 million loss on fair value remeasurement of contingent consideration for the three months ended March 31, 2019 was primarily due to changes in discount rates and the passage of time. The $13.6 million gain on fair value remeasurement of contingent consideration for the three months ended ~~September 30,~~March 31, 2018 was primarily due to ~~lower probability that~~updated assumptions for Glemba-related milestones ~~related to our anti-KIT program would be triggered by the Company’s current anti-KIT program development.~~
~~Amortization Expense~~
~~The decrease in amortization expense for the three months ended September 30, 2018,~~ as ~~compared to the three months ended September 30, 2017, was the~~a result of ~~impairing~~ the ~~remaining balance of our intangible assets subject to amortization during the first quarter of 2018~~ ~~due to the~~METRIC failure and discontinuation of the Glemba program.
Investment and Other Income, Net

The $0.1 million ~~increase~~decrease in investment and other income, net for the three months ended ~~September 30, 2018,~~March 31, 2019, as compared to the three months ended ~~September 30, 2017,~~March 31, 2018, was primarily due to ~~higher interest rates on fixed~~lower other income ~~investments.~~related to our sale of New Jersey tax benefits. We anticipate investment income to decrease over the next twelve months due to lower levels of cash and investment balances.
~~Nine Months Ended September 30, 2018 Compared with Nine Months Ended September 30, 2017~~

Nine Months Ended
September 30,

Increase/
(Decrease)

Increase/
(Decrease)

2018

2017

$

%

(In thousands)

Revenues:

Product Development and Licensing Agreements

$
2,792

$
2,488

$
304

12
%
Contracts and Grants

4,982

6,799

(1,817
)
(27
)%
Total Revenue

$
7,774

$
9,287

$
(1,513
)
(16
)%
Operating Expenses:

Research and Development

55,242

72,707

(17,465
)
(24
)%
General and Administrative

14,936

19,109

(4,173
)
(22
)%
Goodwill Impairment

90,976

—

90,976

n/a

Intangible Asset Impairment

18,677

13,000

5,677

44
%
Gain on Fair Value Remeasurement of Contingent Consideration

(27,968
)
(200
)
27,768

139
%
Amortization of Acquired Intangible Assets

224

672

(448
)
(67
)%
Total Operating Expense

152,087

105,288

46,799

44
%
Operating Loss

(144,313
)
(96,001
)
48,312

50
%
Investment and Other Income, Net

1,767

1,611

156

10
%
Net Loss Before Income Tax Benefit

(142,546
)
(94,390
)
48,156

51
%
Income Tax Benefit

765

5,200

(4,435
)
(85
)%
Net Loss

$
(141,781
)
$
(89,190
)
$
52,591

59
%
~~Net Loss~~
The $52.6 million increase in net loss for the nine months ended September 30, 2018, as compared to the nine months ended September 30, 2017, was primarily the result of the non-cash charges related to fully impairing our goodwill asset and Glemba-related intangible assets. This increase was partially offset by the gain on fair value remeasurement of contingent consideration and a decrease in research and development expenses.
~~Revenue~~
~~The $~~0.3 million increase in product development and licensing agreements revenue for the nine months ended September 30, 2018, as compared to the nine months ended September 30, 2017, was primarily due to an increase in revenue related to our BMS agreement. The $1.8 million decrease in contracts and grants revenue for the nine months ended September 30, 2018, as compared to the nine months ended September 30, 2017, was primarily related to a decrease in services performed under our contract manufacturing and research and development agreement with International AIDS Vaccine Initiative.
~~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) product development expenses associated with our drug candidates as follows:

Nine Months Ended
September 30,

Increase/
(Decrease)

2018

2017

$

%

(In thousands)

Personnel

$
22,586

$
28,079

$
(5,493
)
(20
)%
Laboratory Supplies

3,354

3,541

(187
)
(5
)%
Facility

5,901

6,649

(748
)
(11
)%
License Fees

214

479

(265
)
(55
)%
Product Development

16,689

26,965

(10,276
)
(38
)%
Personnel expenses primarily include salary, benefits, stock-based compensation and payroll taxes. The $5.5 million decrease in personnel expenses for the nine months ended September 30, 2018, as compared to the nine months ended September 30, 2017, was primarily due to a decrease in headcount and lower stock-based compensation expense partially offset by severance expense of $1.0 million.
Laboratory supplies expenses include laboratory materials and supplies, services, and other related expenses incurred in the development of our technology. The $0.2 million decrease in laboratory supply expenses for the nine months ended September 30, 2018, as compared to the nine months ended September 30, 2017, was primarily due to lower laboratory materials and supplies purchases.
Facility expenses include depreciation, amortization, utilities, rent, maintenance and other related expenses incurred at our facilities. The $0.7 million decrease in facility expenses for the nine months ended September 30, 2018, as compared to the nine months ended September 30, 2017, was primarily due to lower depreciation expense.
License fee expenses include annual license maintenance fees and milestone payments due upon the achievement of certain development, regulatory and/or commercial milestones. The $0.3 million decrease in license fee expenses for the nine months ended September 30, 2018, as compared to the nine months ended September 30, 2017, was due to the timing of certain development and/or regulatory milestones achieved by our drug candidates.
Product development expenses include clinical investigator site fees, external trial monitoring costs, data accumulation costs, contracted research and outside clinical drug product manufacturing. The $10.3 million decrease in product development expenses for the nine months ended September 30, 2018, as compared to the nine months ended September 30, 2017, was primarily due to a decrease in clinical trial expenses of $5.8 million and a decrease in contract manufacturing expenses of $3.2 million.
~~General and Administrative Expense~~
~~The $4.2 million decrease in general and administrative expenses for the nine months ended September 30, 2018, as compared to the nine months ended September 30, 2017,~~ ~~was primarily due to a decrease in headcount and lower stock-based compensation expense and marketing expense.~~
~~Gain on Fair Value Remeasurement of Contingent Consideration~~
~~The~~ $28.0 million gain on fair value remeasurement of contingent consideration for the nine months ended September 30, 2018 was due to discontinuation of the Glemba and CDX-014 programs, updated assumptions for the varlilumab program, and lower probability that milestones related to our anti-KIT program would be triggered by the Company’s current anti-KIT program development.
~~Amortization Expense~~
The decrease in amortization expense for the nine months ended September 30, 2018, as compared to the nine months ended September 30, 2017, was the result of impairing the remaining balance of our intangible assets subject to amortization during the first quarter of 2018 ~~due to the discontinuation of the Glemba program.~~
~~Investment and Other Income, Net~~
The $0.2 million increase in investment and other income, net for the nine months ended September 30, 2018, as compared to the nine months ended September 30, 2017, was primarily due to higher interest rates on fixed income investments.

LIQUIDITY AND CAPITAL RESOURCES

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

The use of our cash flows for operations has primarily consisted of salaries and wages for our employees; facility and facility-related costs for our offices, laboratories and manufacturing facility; fees paid in connection with preclinical studies, clinical studies, contract manufacturing, laboratory supplies and services; and consulting, legal and other professional fees. To date, the primary sources of cash flows from operations have been payments received from our collaborative partners and from government entities 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, 2018,~~March 31, 2019, our principal sources of liquidity consisted of cash, cash equivalents and marketable securities of ~~$105.6~~$85.1 million. We have had recurring losses and incurred a loss of ~~$141.8~~$17.2 million for the ~~nine~~three months ended ~~September 30, 2018.~~March 31, 2019. Net cash used in operations for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 was ~~$59.8~~$13.2 million. We believe that the cash, cash equivalents and marketable securities at ~~September 30, 2018,~~March 31, 2019, combined with the anticipated proceeds from future sales of our common stock under the Cantor agreement, are sufficient to meet estimated working capital requirements and fund planned operations through ~~2020.~~2020, although there is no assurance that future sales under the Cantor agreement will occur. This could be impacted if we elected to pay Kolltan contingent milestones, if any, in cash.

During the next twelve months, we will take further steps to raise additional capital to meet our liquidity needs. Our capital raising activities may include, 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 we may seek capital through a number of means, there can be no assurance that additional financing will be available on acceptable terms, if at all, and our negotiating position in capital-raising efforts may worsen as existing resources are used. There is also no assurance that we will be able to enter into further collaborative relationships. Additional equity financings may be dilutive to our stockholders; debt financing, if available, may involve significant cash payment obligations and covenants that restrict our ability to operate as a business; and licensing or strategic collaborations may result in royalties or other terms which reduce our economic potential from products under development. Our ability to continue funding our planned operations into and beyond twelve months from the issuance date is also dependent on the timing and manner of payment of future contingent milestones from the Kolltan acquisition, in the event that we achieve the drug candidate milestones related to those payments. We may decide to pay those milestone payments in cash, shares of our common stock or a combination thereof. If we are unable to raise the funds necessary to meet our 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.

On May 29, 2018, we received a written notice from the Listing Qualifications department of The NASDAQ Stock Market (the “Notice”) indicating that we are not in compliance with the $1.00 Minimum Bid Price requirement set forth in NASDAQ Listing Rule 5450(a)(1) for continued listing on the NASDAQ Global Market. If we do not regain compliance with Listing Rule 5450(a)(1) by November 26, 2018, we intend to apply to transfer to the NASDAQ Capital Market where we should be afforded an additional 180-day period in which to regain compliance, provided that (i) we meet the applicable market value of publicly held shares requirement for continued listing and all other applicable requirements for initial listing on the NASDAQ Capital Market (except for the bid price requirement) based on our most recent public filings and market information and (ii) we notify NASDAQ of our intent to cure the bid price requirement deficiency prior to the completion of the second 180-day compliance period by effecting a reverse stock split, if necessary. At our 2018 Annual Meeting of Stockholders, our stockholders approved a proposal to grant discretionary authority to our board of directors to amend our certificate of incorporation to effect a reverse split of our outstanding shares of common stock within a range of one share of common stock for every ten shares of common stock to one share of common stock for every fifteen shares of common stock, with the exact reverse split ratio to be decided and publicly announced by the board of directors prior to the effective time of the amendment to the Company’s certificate of incorporation.
Operating Activities

Net cash used in operating activities was $~~59.8~~13.2 million for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 as compared to ~~$80.4~~$28.0 million for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018. The decrease in net cash used in operating activities was primarily due to decreases in both general and administrative and research and development expenses. We expect that cash used in operating activities will remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.

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

Net cash provided by investing activities was $~~26.5~~16.3 million for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 as compared to ~~$59.9~~$15.5 million for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018. The ~~decrease~~increase in net cash provided by investing activities was primarily due to net sales and maturities of marketable securities for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 of ~~$26.8~~$16.5 million as compared to ~~$61.4~~$15.8 million for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018.

Financing Activities

Net cash provided by financing activities was $~~25.9~~4.2 million for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 as compared to ~~$32.8~~$12.1 million for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018. Net proceeds from stock issuances pursuant to employee benefit plans were ~~$0.4~~$0.0 million during the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 as compared to ~~$0.2~~$0.4 million for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2018.

In May 2016, we entered into an agreement with Cantor Fitzgerald & Co. (“Cantor”) to allow us to issue and sell shares of our common stock having an aggregate offering price of up to $60.0 million from time to time through Cantor, acting as agent. In November 2017, we filed a prospectus supplement registering the offer and sale of shares of common stock of up to an additional $75.0 million under the agreement with Cantor. During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, we issued ~~29,760,486~~883,569 shares of common stock under this controlled equity offering sales agreement with Cantor resulting in net proceeds of ~~$25.5~~$4.2 million after deducting commission and offering expenses. At ~~September 30, 2018,~~March 31, 2019, we had ~~$41.3~~$33.3 million remaining in aggregate gross offering price available under the Cantor agreement. In ~~October 2018,~~April 2019, we issued ~~3,884,597~~924,167 shares of its common stock resulting in net proceeds to us of ~~$1.6~~$4.1 million.

Aggregate Contractual Obligations

~~The~~Except as set forth below, the disclosures relating to our contractual obligations reported in our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 which was filed with the SEC on March 7, ~~2018~~2019 have not materially changed since we filed that report.
In March 2019, the Company amended its Hampton, New Jersey lease to eliminate 16,200 square feet of space and extend the remaining 33,400 square feet of space for an additional five-year term with an early termination option after three years.

OFF-BALANCE SHEET ARRANGEMENTS

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.

Item 3.                         Quantitative and Qualitative Disclosures about Market Risk

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, 2018~~March 31, 2019 due to the short-term maturities of these instruments.
Item 4.      Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

As of ~~September 30, 2018,~~March 31, 2019, 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, 2018.~~March 31, 2019. 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, 2018~~March 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION

Item 1A.                Risk Factors

~~Any investment~~In addition to the other information set forth in ~~our business involves a high degree of risk. Before making an investment decision,~~this report, you should carefully consider the ~~information we include~~factors discussed in this Quarterly Report on Form 10-Q, including the risks described below and our condensed financial statements and accompanying notes, and the additional information in the other reports we file with the Securities and Exchange Commission along with the risks describedPart I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2017.~~
2018, which could materially affect our business, financial condition or future results. The risks described ~~below and~~ in our Annual Report on Form 10-K may not be the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial also may materially adversely affect the Company’s business, financial condition and/or operating results.

~~Except as set forth below, there have been~~There were no material changes to the risk factors previously disclosed ~~and included~~ in our Annual Report on Form 10-K ~~for the fiscal year ended December 31, 2017 and as updated in our quarterly report on Form 10-Q for the quarter ended June 30, 2018.~~
~~We are not currently in compliance~~filed with the continued listing requirements for NASDAQ. If the price of our common stock continues to trade below $1.00 per share for a sustained period or we do not meet other continued listing requirements, our common stock may be delisted from the NASDAQ Global Market, which could affect the market priceSecurities and ~~liquidity for our common stock and reduce our ability to raise additional capital.~~
~~Our common stock is listed~~Exchange Commission on the NASDAQ Global Market. In order to maintain that listing, we must satisfy minimum financial and other requirements including, without limitation, a requirement that our closing bid price be at least $1.00 per share. On May 29, 2018, we received a written notice from NASDAQ indicating that we are not in compliance with the minimum bid price requirement for continued listing on the NASDAQ Global Market. We have until November 26, 2018 to regain compliance. We can regain compliance if at any time prior to November 26, 2018 the bid price of our common stock closes at or above $1.00 per share for a minimum of ten consecutive business days.March 7, 2019.
If we fail to regain compliance with the minimum bid price requirement by November 26, 2018, we may apply to transfer to The NASDAQ Capital Market where we should be afforded an additional 180-day period to regain compliance provided that (i) we meet the applicable market value of publicly held shares requirement for continued listing and all other applicable requirements for initial listing on the NASDAQ Capital Market (except for the bid price requirement) based on our most recent public filings and market information and (ii) we notify NASDAQ of our intent to cure the bid price requirement deficiency prior to the completion of the second 180-day compliance period by effecting a reverse stock split, if necessary. At our annual meeting of stockholders in June 2018, our stockholders approved a proposal to grant discretionary authority to our board of directors to amend our certificate of incorporation to effect a reverse split of our outstanding shares of common stock within a range of one share of common stock for every ten shares of common stock to one share of common stock for every fifteen shares of common stock, with the exact reverse split ratio to be decided and publicly announced by the board of directors prior to the effective time of the amendment to our certificate of incorporation. We intend to monitor the closing bid price of our common stock and consider our available options to resolve our noncompliance with the minimum bid price requirement. No determination regarding our response has been made at this time. There can be no assurance that we will be able to regain compliance with the minimum bid price requirement or we will otherwise be in compliance with other NASDAQ listing criteria. If we fail to regain compliance with the minimum bid requirement or to meet the other applicable continued listing requirements for the NASDAQ Global Market in the future and NASDAQ determines to delist our common stock, the delisting could adversely affect the market price and liquidity of our common stock and reduce our ability to raise additional capital. In addition, if our common stock is delisted from NASDAQ and the trading price remains below $5.00 per share, trading in our common stock might also become subject to the requirements of certain rules promulgated under the Exchange Act, which require additional disclosure by broker-dealers in connection with any trade involving a stock defined as a “penny stock” (generally, any equity security not listed on a national securities exchange or quoted on NASDAQ that has a market price of less than $5.00 per share, subject to certain exceptions).
Item 6.         Exhibits

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

Exhibit
No.

Description
*10.1
Second Amendment to Lease Agreement between the Company and Crown Perryville, LLC dated as of March 8, 2019.
*31.1

Certification of President and Chief Executive Officer

*31.2

Certification of Senior Vice President and Chief Financial Officer

**32.1

Section 1350 Certifications

*101

XBRL Instance Document.

*101

XBRL Taxonomy Extension Schema Document.

*101

XBRL Taxonomy Extension Calculation Linkbase Document.

*101

XBRL Taxonomy Extension Definition Linkbase Document.

*101

XBRL Taxonomy Extension Label Linkbase Document.

*101

XBRL Taxonomy Extension Presentation Linkbase Document.

*                                         Filed herewith.
**                                  Furnished herewith.
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~~May 7, ~~2018~~2019
Anthony S. Marucci

President and Chief Executive Officer

(Principal Executive Officer)

/s/ SAM MARTIN
Dated: ~~November~~May 7, ~~2018~~2019
Sam Martin

Senior Vice President and Chief Financial Officer

(Principal Financial and Accounting Officer)

3126

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

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

Large accelerated filer o		Accelerated filer x

Non-accelerated filer o		Smaller reporting company x
		Emerging growth company o

	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
ASSETS
Current Assets:
Cash and Cash Equivalents	$	32,823		$	40,288		$	31,533		$	24,310
Marketable Securities	72,795			99,139			53,535			69,712
Accounts and Other Receivables	3,175			1,880			2,307			3,162
Prepaid and Other Current Assets	2,176			3,449			1,476			1,895
Total Current Assets	110,969			144,756			88,851			99,079
Property and Equipment, Net	6,699			10,372			5,462			6,111
Operating Lease Right-of-Use Assets, Net							4,445			—
Intangible Assets, Net	48,690			67,591			48,690			48,690
Other Assets	1,929			1,929			129			1,929
Goodwill	—			90,976
Total Assets	$	168,287		$	315,624		$	147,577		$	155,809
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable	$	2,311		$	1,715		$	1,105		$	1,069
Accrued Expenses	9,614			19,455			5,474			7,007
Current Portion of Long-Term Liabilities	4,926			6,566
Current Portion of Operating Lease Liabilities							2,633			—
Current Portion of Other Long-Term Liabilities							2,777			4,526
Total Current Liabilities	16,851			27,736			11,989			12,602
Long-Term Portion of Operating Lease Liabilities							2,599			—
Other Long-Term Liabilities	23,302			51,519			20,296			19,147
Total Liabilities	40,153			79,255			34,884			31,749
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, 2018 and December 31, 2017	—			—
Common Stock, $.001 Par Value; 297,000,000 Shares Authorized; 168,575,504 and 138,520,404 Shares Issued and Outstanding at September 30, 2018 and December 31, 2017, Respectively	169			139
Convertible Preferred Stock, $.01 Par Value; 3,000,000 Shares Authorized; No Shares Issued and Outstanding at March 31, 2019 and December 31, 2018							—			—
Common Stock, $.001 Par Value; 297,000,000 Shares Authorized; 12,844,711 and 11,957,635 Shares Issued and Outstanding at March 31, 2019 and December 31, 2018, Respectively							13			12
Additional Paid-In Capital	1,078,419			1,046,183			1,089,755			1,083,903
Accumulated Other Comprehensive Income	2,582			2,564			2,602			2,583
Accumulated Deficit	(953,036		)	(812,517		)	(979,677		)	(962,438		)
Total Stockholders’ Equity	128,134			236,369			112,693			124,060
Total Liabilities and Stockholders’ Equity	$	168,287		$	315,624		$	147,577		$	155,809

	Three Months Ended September 30, 2018			Three Months Ended September 30, 2017			Nine Months Ended September 30, 2018			Nine Months Ended September 30, 2017			Three Months Ended March 31, 2019			Three Months Ended March 31, 2018
REVENUES:
Product Development and Licensing Agreements	$	131		$	1,238		$	2,792		$	2,488		$	129		$	992
Contracts and Grants	810			2,686			4,982			6,799			1,296			3,076
Total Revenues	941			3,924			7,774			9,287			1,425			4,068

OPERATING EXPENSES:
Research and Development	11,918			21,915			55,242			72,707			11,151			21,875
General and Administrative	3,722			5,346			14,936			19,109			4,896			5,593
Goodwill Impairment	—			—			90,976			—			—			90,976
Intangible Asset Impairment	—			13,000			18,677			13,000			—			18,677
Gain on Fair Value Remeasurement of Contingent Consideration	(6,935		)	(4,600		)	(27,968		)	(200		)
Other Asset Impairment													1,800			—
Loss/(Gain) on Fair Value Remeasurement of Contingent Consideration													1,519			(13,600		)
Amortization of Acquired Intangible Assets	—			224			224			672			—			224
Total Operating Expenses	8,705			35,885			152,087			105,288			19,366			123,745

Operating Loss	(7,764		)	(31,961		)	(144,313		)	(96,001		)	(17,941		)	(119,677		)
Investment and Other Income, Net	521			398			1,767			1,611			702			780
Net Loss Before Income Tax Benefit	(7,243		)	(31,563		)	(142,546		)	(94,390		)	(17,239		)	(118,897		)
Income Tax Benefit	—			5,200			765			5,200			—			765
Net Loss	$	(7,243	)	$	(26,363	)	$	(141,781	)	$	(89,190	)	$	(17,239	)	$	(118,132	)

Basic and Diluted Net Loss Per Common Share	$	(0.04	)	$	(0.20	)	$	(0.94	)	$	(0.71	)	$	(1.40	)	$	(12.61	)

Shares Used in Calculating Basic and Diluted Net Loss Per Share	163,679			129,640			150,636			125,856			12,297			9,370

COMPREHENSIVE LOSS:
Net Loss	$	(7,243	)	$	(26,363	)	$	(141,781	)	$	(89,190	)	$	(17,239	)	$	(118,132	)
Other Comprehensive Income (Loss):
Unrealized Gain (Loss) on Marketable Securities	(8		)	11			18			47			19			(5		)
Comprehensive Loss	$	(7,251	)	$	(26,352	)	$	(141,763	)	$	(89,143	)	$	(17,220	)	$	(118,137	)

	Nine Months Ended September 30, 2018			Nine Months Ended September 30, 2017			Three Months Ended March 31, 2019			Three Months Ended March 31, 2018
Cash Flows From Operating Activities:
Net Loss	$	(141,781	)	$	(89,190	)	$	(17,239	)	$	(118,132	)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Depreciation and Amortization	2,856			3,392			1,352			1,028
Amortization of Intangible Assets	224			672			—			224
Amortization and Premium of Marketable Securities, Net	(666		)	(171		)	(345		)	(155		)
Loss on Sale or Disposal of Assets	1,170			6			25			10
Goodwill Impairment	90,976			—			—			90,976
Intangible Asset Impairment	18,677			13,000			—			18,677
Gain on Fair Value Remeasurement of Contingent Consideration	(27,968		)	(200		)
Other Asset Impairment							1,800			—
Loss/(Gain) on Fair Value Remeasurement of Contingent Consideration							1,519			(13,600		)
Non-Cash Income Tax Benefit	(765		)	(5,200		)	—			(765		)
Stock-Based Compensation Expense	6,329			9,728			1,693			2,488
Changes in Operating Assets and Liabilities:
Accounts and Other Receivables	(790		)	(1,229		)	855			(1,635		)
Prepaid and Other Current Assets	1,545			525			299			(144		)
Other Assets	—			132
Accounts Payable and Accrued Expenses	(9,246		)	(10,888		)	(1,455		)	(5,919		)
Other Liabilities	(366		)	(987		)	(1,737		)	(1,075		)
Net Cash Used in Operating Activities	(59,805		)	(80,410		)	(13,233		)	(28,022		)

Cash Flows From Investing Activities:
Sales and Maturities of Marketable Securities	178,335			183,683			37,886			46,871
Purchases of Marketable Securities	(151,558		)	(122,235		)	(21,404		)	(31,117		)
Acquisition of Property and Equipment	(651		)	(1,598		)	(186		)	(259		)
Proceeds from Sale or Disposal of Assets	342			—
Net Cash Provided by Investing Activities	26,468			59,850			16,296			15,495

Cash Flows From Financing Activities:
Net Proceeds from Stock Issuances	25,453			32,642			4,151			11,689
Proceeds from Issuance of Stock from Employee Benefit Plans	419			192			9			374
Net Cash Provided by Financing Activities	25,872			32,834			4,160			12,063

Net (Decrease) Increase in Cash and Cash Equivalents	(7,465		)	12,274
Net Increase/(Decrease) in Cash and Cash Equivalents							7,223			(464		)
Cash and Cash Equivalents at Beginning of Period	40,288			42,461			24,310			40,288
Cash and Cash Equivalents at End of Period	$	32,823		$	54,735		$	31,533		$	39,824

Non-cash Investing Activities
Accrued construction in progress	$	86		$	75		$	65		$	212
Non-cash Supplemental Disclosure
Shares issued to former Kolltan executive for settlement of severance	$	65		$	302		$	—		$	38

	As of September 30, 2018		Level 1	Level 2		Level 3
	(In thousands)
Assets:
Money market funds and cash equivalents	$	24,145	—	$	24,145	—
Marketable securities	72,795		—	72,795		—
	$	96,940	—	$	96,940	—
Liabilities:
Kolltan acquisition contingent consideration	$	15,432	—	—		$	15,432
	$	15,432	—	—		$	15,432

	As of December 31, 2017		Level 1	Level 2		Level 3
	(In thousands)
Assets:
Money market funds and cash equivalents	$	24,061	—	$	24,061	—
Marketable securities	99,139		—	99,139		—
	$	123,200	—	$	123,200	—
Liabilities:
Kolltan acquisition contingent consideration	$	43,400	—	—		$	43,400
	$	43,400	—	—		$	43,400

	As of March 31, 2019		Level 1	Level 2		Level 3
	(In thousands)
Assets:
Money market funds and cash equivalents	$	21,432	—	$	21,432	—
Marketable securities	53,535		—	53,535		—
	$	74,967	—	$	74,967	—
Liabilities:
Kolltan acquisition contingent consideration	$	15,298	—	—		$	15,298
	$	15,298	—	—		$	15,298

	As of December 31, 2018		Level 1	Level 2		Level 3
	(In thousands)
Assets:
Money market funds and cash equivalents	$	15,755	—	$	15,755	—
Marketable securities	69,712		—	69,712		—
	$	85,467	—	$	85,467	—
Liabilities:
Kolltan acquisition contingent consideration	$	13,779	—	—		$	13,779
	$	13,779	—	—		$	13,779

	Other Liabilities: Contingent Consideration

Balance at December 31, 2017	$	43,400
Fair value adjustments included in operating expenses	(27,968		)
Balance at September 30, 2018	$	15,432

	Other Liabilities: Contingent Consideration

Balance at December 31, 2018	$	13,779
Fair value adjustments included in operating expenses	1,519
Balance at March 31, 2019	$	15,298

	Gross Unrealized
	Amortized Cost		Gains		Losses			Fair Value
	(In thousands)
September 30, 2018
U.S. government and municipal obligations (maturing in one year or less)	$	22,318	$	—	$	(7	)	$	22,311
Corporate debt securities (maturing in one year or less)	50,491		—		(7		)	50,484
Total Marketable Securities	$	72,809	$	—	$	(14	)	$	72,795

December 31, 2017
U.S. government and municipal obligations (maturing in one year or less)	$	26,164	$	3	$	(9	)	$	26,158
Corporate debt securities (maturing in one year or less)	73,007		1		(27		)	72,981
Total Marketable Securities	$	99,171	$	4	$	(36	)	$	99,139

Remainder of 2019	$	2,277
2020	2,171
2021	508
2022	746
2023	311
Total lease payments	6,013
Less imputed interest	(781		)
Present value of operating lease liabilities	$	5,232

	Gross Carrying Amount		Accumulated Amortization			Accumulated Impairments			Net Carrying Amount
	(In thousands)
September 30, 2018
Finite-lived Intangible Assets:
License Rights	$	14,500	$	(7,623	)	$	(6,877	)	$	—
Indefinite-lived Intangible Assets:
IPR&D	60,490		—			(11,800		)	48,690
Total Intangible Assets, Net	$	74,990	$	(7,623	)	$	(18,677	)	$	48,690

December 31, 2017
Finite-lived Intangible Assets:
License Rights	$	14,500	$	(7,399	)	$	—		$	7,101
Indefinite-lived Intangible Assets:
IPR&D	60,490		—			—			60,490
Total Intangible Assets, Net	$	74,990	$	(7,399	)	$	—		$	67,591

	Goodwill
	(In thousands)
Balance at December 31, 2017	$	90,976
Goodwill Impairment	(90,976		)
Balance at September 30, 2018	$	—

	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
	(In thousands)						(In thousands)
Net Deferred Tax Liabilities Related to IPR&D (Note 12)	$	3,007		$	3,772
Net Deferred Tax Liabilities Related to IPR&D (Note 13)							$	3,007		$	3,007
Deferred Income From Sale of Tax Benefits	6,402			6,756			4,014			4,218
Other	1,305			1,344			—			1,083
Contingent Milestones (Note 4)	15,432			43,400
Deferred Revenue (Note 11)	2,082			2,813
Contingent Milestones (Note 3)							15,298			13,779
Deferred Revenue (Note 12)							754			1,586
Total	28,228			58,085			23,073			23,673
Less Current Portion	(4,926		)	(6,566		)	(2,777		)	(4,526		)
Long-Term Portion	$	23,302		$	51,519		$	20,296		$	19,147

	Common Stock Shares	Common Stock Par Value	Additional Paid-In Capital	Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders’ Equity
	(In thousands, except share amounts)
Consolidated Balance at December 31, 2017	9,234,693	9	1,046,313	2,564		(812,517	)	236,369
Shares Issued under Stock Option and Employee Stock Purchase Plans	9,453	—	374	—		—		374
Shares Issued in Connection with Cantor Agreement	312,802	—	11,689	—		—		11,689
Shares Issued in Connection with Kolltan Severance	971	—	38	—		—		38
Share-Based Compensation	—	—	2,488	—		—		2,488
Unrealized Loss on Marketable Securities	—	—	—	(5	)	—		(5	)
Adoption of ASC 606	—	—	—	—		1,261		1,261
Net Loss	—	—	—	—		(118,132	)	(118,132	)
Consolidated Balance at March 31, 2018	9,557,919	9	1,060,902	2,559		(929,388	)	134,082

	Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (In Years)	Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (In Years)
Options Outstanding at December 31, 2017	10,856,212		$	9.40	6.1
Options Outstanding at December 31, 2018						866,132		$	93.70	7.1
Granted	5,056,467		0.61			900		4.88
Exercised	(104,500	)	2.80			—		—
Canceled	(2,568,090	)	8.76			(30,928	)	125.69
Options Outstanding at September 30, 2018	13,240,089		6.22		7.4
Options Vested and Expected to Vest at September 30, 2018	12,884,023		6.36		7.3
Options Exercisable at September 30, 2018	6,190,301		10.97		5.2
Options Outstanding at March 31, 2019						836,104		92.42		7.0
Options Vested and Expected to Vest at March 31, 2019						800,868		95.77		6.9
Options Exercisable at March 31, 2019						416,737		163.47		5.2
Shares Available for Grant Under the 2008 Plan	5,096,110					387,138

	Three months ended September 30,				Nine months ended September 30,				Three months ended March 31,
	2018		2017		2018		2017		2019		2018
	(In thousands)				(In thousands)				(In thousands)
Research and development	$	799	$	1,546	$	3,088	$	5,310	$	756	$	1,311
General and administrative	994		1,193		3,241		4,418		937		1,177
Total stock-based compensation expense	$	1,793	$	2,739	$	6,329	$	9,728	$	1,693	$	2,488

	Unrealized Gain/(Loss) on Marketable Securities			Foreign Currency Items		Total
	(In thousands)
Balance at December 31, 2017	$	(32	)	$	2,596	$	2,564
Other comprehensive loss	18			—		18
Balance at September 30, 2018	$	(14	)	$	2,596	$	2,582

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

	Three Months Ended September 30,						Increase/ (Decrease)			Increase/ (Decrease)		Three Months Ended March 31,						Increase/ (Decrease)			Increase/ (Decrease)
	2018			2017			$			%		2019			2018			$			%
	(In thousands)											(In thousands)
Revenues:
Product Development and Licensing Agreements	$	131		$	1,238		$	(1,107	)	(89	)%	$	129		$	992		$	(863	)	(87	)%
Contracts and Grants	810			2,686			(1,876		)	(70	)%	1,296			3,076			(1,780		)	(58	)%
Total Revenue	$	941		$	3,924		$	(2,983	)	(76	)%	$	1,425		$	4,068		$	(2,643	)	(65	)%
Operating Expenses:
Research and Development	11,918			21,915			(9,997		)	(46	)%	11,151			21,875			(10,724		)	(49	)%
General and Administrative	3,722			5,346			(1,624		)	(30	)%	4,896			5,593			(697		)	(12	)%
Goodwill Impairment												—			90,976			(90,976		)	(100	)%
Intangible Asset Impairment	—			13,000			(13,000		)	(100	)%	—			18,677			(18,677		)	(100	)%
Gain on Fair Value Remeasurement of Contingent Consideration	(6,935		)	(4,600		)	2,335			51	%
Other Asset Impairment												1,800			—			1,800			n/a
Loss/(Gain) on Fair Value Remeasurement of Contingent Consideration												1,519			(13,600		)	15,119			111	%
Amortization of Acquired Intangible Assets	—			224			(224		)	(100	)%	—			224			(224		)	(100	)%
Total Operating Expense	8,705			35,885			(27,180		)	(76	)%	19,366			123,745			(104,379		)	(84	)%
Operating Loss	(7,764		)	(31,961		)	(24,197		)	(76	)%	(17,941		)	(119,677		)	(101,736		)	(85	)%
Investment and Other Income, Net	521			398			123			31	%	702			780			(78		)	(10	)%
Net Loss Before Income Tax Benefit	$	(7,243	)	$	(31,563	)	$	(24,320	)	(77	)%	(17,239		)	(118,897		)	(101,658		)	(86	)%
Income Tax Benefit	—			5,200			(5,200		)	(100	)%	—			765			(765		)	(100	)%
Net Loss	(7,243		)	(26,363		)	(19,120		)	(73	)%	$	(17,239	)	$	(118,132	)	$	(100,893	)	(85	)%

	Three Months Ended September 30,				Increase/ (Decrease)					Three Months Ended March 31				Increase/ (Decrease)
	2018		2017		$			%		2019		2018		$			%
	(In thousands)									(In thousands)
Personnel	$	5,810	$	8,933	$	(3,123	)	(35	)%	$	5,753	$	9,057	$	(3,304	)	(36	)%
Laboratory Supplies	886		1,230		(344		)	(28	)%	796		1,257		(461		)	(37	)%
Facility	1,819		2,056		(237		)	(12	)%	1,897		2,063		(166		)	(8	)%
License Fees	56		162		(106		)	(65	)%
Product Development	1,764		7,316		(5,552		)	(76	)%	1,695		7,349		(5,654		)	(77	)%

	Nine Months Ended September 30,						Increase/ (Decrease)			Increase/ (Decrease)
	2018			2017			$			%
	(In thousands)
Revenues:
Product Development and Licensing Agreements	$	2,792		$	2,488		$	304		12	%
Contracts and Grants	4,982			6,799			(1,817		)	(27	)%
Total Revenue	$	7,774		$	9,287		$	(1,513	)	(16	)%
Operating Expenses:
Research and Development	55,242			72,707			(17,465		)	(24	)%
General and Administrative	14,936			19,109			(4,173		)	(22	)%
Goodwill Impairment	90,976			—			90,976			n/a
Intangible Asset Impairment	18,677			13,000			5,677			44	%
Gain on Fair Value Remeasurement of Contingent Consideration	(27,968		)	(200		)	27,768			139	%
Amortization of Acquired Intangible Assets	224			672			(448		)	(67	)%
Total Operating Expense	152,087			105,288			46,799			44	%
Operating Loss	(144,313		)	(96,001		)	48,312			50	%
Investment and Other Income, Net	1,767			1,611			156			10	%
Net Loss Before Income Tax Benefit	(142,546		)	(94,390		)	48,156			51	%
Income Tax Benefit	765			5,200			(4,435		)	(85	)%
Net Loss	$	(141,781	)	$	(89,190	)	$	52,591		59	%

Exhibit No.		Description
*10.1		Second Amendment to Lease Agreement between the Company and Crown Perryville, LLC dated as of March 8, 2019.

*31.1		Certification of President and Chief Executive Officer

*31.2		Certification of Senior Vice President and Chief Financial Officer

**32.1		Section 1350 Certifications

*101		XBRL Instance Document.

*101		XBRL Taxonomy Extension Schema Document.

*101		XBRL Taxonomy Extension Calculation Linkbase Document.

*101		XBRL Taxonomy Extension Definition Linkbase Document.

*101		XBRL Taxonomy Extension Label Linkbase Document.

*101		XBRL Taxonomy Extension Presentation Linkbase Document.

	CELLDEX THERAPEUTICS, INC.

	BY:

	/s/ ANTHONY S. MARUCCI
Dated: ~~November~~May 7, ~~2018~~2019	Anthony S. Marucci
	President and Chief Executive Officer
	(Principal Executive Officer)

	/s/ SAM MARTIN
Dated: ~~November~~May 7, ~~2018~~2019	Sam Martin
	Senior Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)