Celldex Therapeutics, Inc. - Quarter Report: 2013 June (Form 10-Q)

Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

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

 

For the quarterly period ended June 30, 2013

 

OR

 

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

 

Commission File Number: 000-15006

 

CELLDEX THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

 

 

119 Fourth Avenue, Needham, Massachusetts 02494

(Address of principal executive offices) (Zip Code)

 

(781) 433-0771

(Registrant’s telephone number, including area code)

 

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

 

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

 

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

 

 

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

 

As of July 29, 2013, 80,987,871 shares of common stock, $.001 par value per share, were outstanding.

 

 

Table of Contents

 

CELLDEX THERAPEUTICS, INC.

 

FORM 10-Q

 

Quarter Ended June 30, 2013

 

Table of Contents

 

	Page
Part I—Financial Information
Item 1. Unaudited Financial Statements	3
Condensed Consolidated Balance Sheets at June 30, 2013 and December 31, 2012	3
Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Six Months Ended June 30, 2013 and 2012	4
Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2013 and 2012	5
Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3. Quantitative and Qualitative Disclosures About Market Risk	25
Item 4. Controls and Procedures	25
Part II — Other Information
Item 1A. Risk Factors	25
Item 6. Exhibits	27
Signatures	28
Exhibit Index	29

 

2

Table of Contents

 

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)

 

		June 30, 2013			December 31, 2012
ASSETS
Current Assets:
Cash and Cash Equivalents		$	25,900		$	24,897
Marketable Securities		129,083			59,065
Accounts and Other Receivables		12			44
Prepaid and Other Current Assets		1,435			1,108
Total Current Assets		156,430			85,114
Property and Equipment, Net		7,338			7,205
Intangible Assets, Net		23,326			23,833
Other Assets		174			424
Goodwill		8,965			8,965
Total Assets		$	196,233		$	125,541
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts Payable		$	2,069		$	745
Accrued Expenses		9,904			10,960
Current Portion of Long-Term Liabilities		530			388
Current Portion of Term Loan		—			5,592
Total Current Liabilities		12,503			17,685
Term Loan, less Current Portion		—			5,746
Other Long-Term Liabilities		6,636			6,336
Total Liabilities		19,139			29,767
Commitments and Contingent Liabilities (Note 13)
Stockholders’ Equity:
Convertible Preferred Stock, $.01 Par Value; 3,000,000 Shares Authorized; No Shares Issued and Outstanding at June 30, 2013 and December 31, 2012		—			—
Common Stock, $.001 Par Value; 297,000,000 Shares Authorized; 80,977,696 and 64,359,513 Shares Issued and Outstanding at June 30, 2013 and December 31, 2012, respectively		81			64
Additional Paid-In Capital		474,942			357,094
Accumulated Other Comprehensive Income		2,548			2,745
Accumulated Deficit		(300,477		)	(264,129		)
Total Stockholders’ Equity		177,094			95,774
Total Liabilities and Stockholders’ Equity		$	196,233		$	125,541

 

See accompanying notes to unaudited condensed consolidated financial statements

 

3

Table of Contents

 

CELLDEX THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPRENHENSIVE LOSS

(Unaudited)

 

(In thousands, except per share amounts)

 

		Three Months Ended						Six Months Ended
		June 30, 2013			June 30, 2012			June 30, 2013			June 30, 2012
REVENUE:
Product Development and Licensing Agreements		$	47		$	40		$	77		$	75
Contracts and Grants		50			96			100			149
Product Royalties		—			1,873			2,334			4,218
Total Revenue		97			2,009			2,511			4,442
OPERATING EXPENSE:
Research and Development		15,090			11,114			29,180			21,881
Royalty		—			1,873			2,334			4,218
General and Administrative		3,411			2,219			6,549			4,536
Amortization of Acquired Intangible Assets		254			291			507			583
Total Operating Expense		18,755			15,497			38,570			31,218
Operating Loss		(18,658		)	(13,488		)	(36,059		)	(26,776		)
Investment and Other Income, Net		161			126			540			331
Interest Expense		(519		)	(411		)	(829		)	(844		)
Net Loss		$	(19,016	)	$	(13,773	)	$	(36,348	)	$	(27,289	)
Basic and Diluted Net Loss Per Common Share (Note 3)		$	(0.24	)	$	(0.23	)	$	(0.47	)	$	(0.50	)
Shares Used in Calculating Basic and Diluted Net Loss per Share (Note 3)		80,899			58,733			77,482			54,439
COMPREHENSIVE LOSS:
Net Loss		$	(19,016	)	$	(13,773	)	$	(36,348	)	$	(27,289	)
Other Comprehensive (Loss) Income:
Foreign Currency Translation Adjustments		(1		)	(1		)	(3		)	1
Unrealized (Loss) Gain on Marketable Securities		(140		)	(39		)	(194		)	69
Comprehensive Loss		$	(19,157	)	$	(13,813	)	$	(36,545	)	$	(27,219	)

 

See accompanying notes to unaudited condensed consolidated financial statements

 

4

Table of Contents

 

CELLDEX THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

(In thousands)

 

		Six Months Ended
		June 30, 2013			June 30, 2012
Cash Flows from Operating Activities:
Net Loss		$	(36,348	)	$	(27,289	)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Depreciation and Amortization		943			1,073
Amortization of Intangible Assets		507			583
Amortization and Premium of Marketable Securities		(1,949		)	(157		)
Realized Gain on Sales and Maturities of Marketable Securities		—			(6		)
Gain on Sale or Disposal of Assets		(21		)	(12		)
Stock-Based Compensation Expense		1,384			1,088
Non-Cash Interest Expense		97			111
Changes in Operating Assets and Liabilities:
Accounts and Other Receivables		32			109
Prepaid and Other Current Assets		(424		)	(493		)
Other Assets		250			(99		)
Accounts Payable and Accrued Expenses		109			(993		)
Other Liabilities		162			573
Net Cash Used in Operating Activities		(35,258		)	(25,512		)
Cash Flows from Investing Activities:
Sales and Maturities of Marketable Securities		20,582			20,919
Purchases of Marketable Securities		(88,845		)	(39,383		)
Acquisition of Property and Equipment		(917		)	(122		)
Proceeds from Sale or Disposal of Assets		21			156
Net Cash Used in Investing Activities		(69,159		)	(18,430		)
Cash Flows from Financing Activities:
Net Proceeds from Stock Issuances		114,187			51,957
Proceeds from Issuance of Stock from Employee Benefit Plans		2,294			—
Payments of Term Loan		(11,029		)	(1,323		)
Payments of Other Liabilities		(29		)	(29		)
Net Cash Provided by Financing Activities		105,423			50,605
Effect of Exchange Rate Changes on Cash and Cash Equivalents		(3		)	1
Net Increase in Cash and Cash Equivalents		1,003			6,664
Cash and Cash Equivalents at Beginning of Period		24,897			11,899
Cash and Cash Equivalents at End of Period		$	25,900		$	18,563

 

See accompanying notes to unaudited condensed consolidated financial statements

 

5

Table of Contents

 

CELLDEX THERAPEUTICS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

June 30, 2013

 

(1)  Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared by Celldex Therapeutics, Inc. (the “Company” or “Celldex”) in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and reflect the operations of the Company and its wholly-owned subsidiary. All intercompany 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, 2012, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 8, 2013.  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 consolidated 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, 2013.

 

At June 30, 2013, the Company had cash, cash equivalents and marketable securities of $155.0 million and working capital of $143.9 million. The Company incurred a loss of $36.3 million for the six months ended June 30, 2013.  Net cash used in operations for the six months ended June 30, 2013 was $35.3 million. The Company believes that the cash, cash equivalents and marketable securities at June 30, 2013 will be sufficient to meet estimated working capital requirements and fund planned operations for at least the next twelve months.

 

During the next twelve months, the Company may take further steps to raise additional capital to meet its long-term liquidity needs.  These capital raising activities may include, but may not be limited to, one or more of the following: the licensing of technology programs 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 continues to 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 financing 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.

 

(2)  Significant Accounting Policies

 

The significant accounting policies used in preparation of these condensed consolidated financial statements for the six months ended June 30, 2013 are consistent with those discussed in Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2012, except for the adoption of new accounting standards during the first six months of 2013 as discussed below.

 

Recent Accounting Pronouncements

 

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

 

In January 2013, the Company adopted a new U.S. GAAP accounting standard which amended guidance applicable to annual impairment tests of indefinite-lived intangible assets. The amended guidance added an optional qualitative assessment for determining whether an indefinite-lived intangible asset is impaired. Prior to this guidance, companies were required to perform an annual impairment test that included a calculation of the fair value of the asset and a comparison of that fair value with its carrying value. If the carrying value exceeded the fair value, an impairment was recorded. The amended guidance allows a company the option to perform a qualitative assessment, considering both negative and positive evidence, regarding the potential impairment of the indefinite-lived intangible asset. If, based on the qualitative analysis, the company determines that it is more likely than not that the fair value of such an asset exceeds its carrying value, the company would be permitted to conclude that the indefinite-lived intangible asset was not impaired without a quantitative calculation of the fair value of the asset. Otherwise, the company would perform the

 

6

Table of Contents

 

quantitative calculation of the fair value and the comparison with the carrying value.  The Company’s adoption of this new standard did not have a material effect on its operating results or financial position.

 

(3)  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:

 

		Six months ended June 30,
		2013		2012
Stock options		5,005,603		4,304,897
Restricted stock		12,000		12,000
		5,017,603		4,316,897

 

(4)  Comprehensive Loss

 

In January 2013, the Company adopted a new U.S. GAAP accounting standard which requires the Company to separately disclose, on a prospective basis, the change in each component of other comprehensive income (loss) relating to reclassification adjustments and current period other comprehensive income (loss). As the new guidance relates to presentation only, the adoption did not have a material impact on the Company’s results of operations, financial position or cash flows. No amounts were reclassified out of accumulated other comprehensive income during the three or six months ended June 30, 2013.  The changes in accumulated other comprehensive income (loss) by component for the three and six months ended June 30, 2013 are summarized below.

 

		Unrealized Gain (Loss) on Marketable Securities, net of tax			Foreign Currency Items			Total
		(In thousands)
Balance at March 31, 2013		$	102		$	2,587		$	2,689
Other comprehensive income (loss) before reclassifications		(140		)	(1		)	(141		)
Amounts reclassified from other comprehensive income		—			—			—
Net current-period other comprehensive income		(140		)	(1		)	(141		)
Balance at June 30, 2013		$	(38	)	$	2,586		$	2,548
Balance at December 31, 2012		$	156		$	2,589		$	2,745
Other comprehensive income (loss) before reclassifications		(194		)	(3		)	(197		)
Amounts reclassified from other comprehensive income		—			—			—
Net current-period other comprehensive income		(194		)	(3		)	(197		)
Balance at June 30, 2013		$	(38	)	$	2,586		$	2,548

 

(5)  Fair Value Measurements

 

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

 

		As of June 30, 2013			Level 1			Level 2			Level 3
		(In thousands)
Money market funds and cash equivalents		$	22,709		$	22,709		—			—
Marketable securities		$	129,083		—			$	129,083		—
		$	151,792		$	22,709		$	129,083		—

 

7

Table of Contents

 

		As of December 31, 2012			Level 1			Level 2			Level 3
		(In thousands)
Money market funds and cash equivalents		$	18,688		$	18,688		—			—
Marketable securities		$	59,065		—			$	59,065		—
		$	77,753		$	18,688		$	59,065		—

 

There have been no transfers of assets or liabilities between the fair value measurement classifications. The Company’s financial instruments consist mainly of cash and cash equivalents, marketable securities, short-term accounts receivable, accounts payable and debt obligations. 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. Short-term accounts receivable and accounts payable are reflected in the accompanying consolidated financial statements at cost, which approximates fair value due to the short-term nature of these instruments.

 

(6)  Marketable Securities

 

A summary of marketable securities is shown below:

 

		Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
		(In thousands)
June 30, 2013
Marketable securities
U.S. government and municipal obligations
Maturing in one year or less		$	34,189		$	15		$	5		$	34,199
Maturing after one year through three years		34,030			61			22			34,069
Total U.S. government and municipal obligations		$	68,219		$	76		$	27		$	68,268
Corporate debt securities
Maturing in one year or less		$	33,336		$	10		$	32		$	33,314
Maturing after one year through three years		27,566			—			65			27,501
Total corporate debt securities		$	60,902		$	10		$	97		$	60,815
Total marketable securities		$	129,121		$	86		$	124		$	129,083
December 31, 2012
Marketable securities
U.S. government and municipal obligations
Maturing in one year or less		$	15,566		$	28		$	—		$	15,594
Maturing after one year through three years		19,797			99			1			19,895
Total U.S. government and municipal obligations		$	35,363		$	127		$	1		$	35,489
Corporate debt securities
Maturing in one year or less		$	17,353		$	23		$	4		$	17,372
Maturing after one year through three years		6,193			14			3			6,204
Total corporate debt securities		$	23,546		$	37		$	7		$	23,576
Total marketable securities		$	58,909		$	164		$	8		$	59,065

 

The marketable securities held by the Company were high investment grade and there were no marketable securities that the Company considered to be other-than-temporarily impaired as of June 30, 2013.

 

8

Table of Contents

 

(7)  Intangible Assets and Goodwill

 

Intangible assets, net of accumulated amortization, and goodwill are as follows:

 

				June 30, 2013									December 31, 2012
		Estimated Life		Cost			Accumulated Amortization			Net			Cost			Accumulated Amortization			Net
		(In thousands)
Intangible Assets:
IPR&D		Indefinite		$	11,800		—			$	11,800		$	11,800		—			$	11,800
Amgen Amendment		16 years		14,500			$	(3,363	)	11,137			14,500			$	(2,915	)	11,585
Core Technology		11 years		1,296			(907		)	389			1,296			(848		)	448
Total Intangible Assets				$	27,596		$	(4,270	)	$	23,326		$	27,596		$	(3,763	)	$	23,833
Goodwill		Indefinite		$	8,965		—			$	8,965		$	8,965		—			$	8,965

 

The IPR&D intangible asset was recorded in connection with the acquisition of CuraGen and relates to the development of CDX-011. At the date of acquisition and at June 30, 2013, CDX-011 had not yet reached technological feasibility nor did it have any alternative future use. The Company recently completed a randomized Phase 2b study of CDX-011 for the treatment of advanced breast cancer.

 

(8) Term Loan

 

In December 2010, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with MidCap Financial, LLC pursuant to which the Company borrowed $10 million (the “Term Loan”) from MidCap. In March 2011, the Company amended the Loan Agreement and borrowed an additional $5 million from General Electric Capital Corporation to increase the amount owed under the Term Loan to $15 million.  In March 2012, the Company amended the Loan Agreement to extend the maturity date from December 2013 to December 2014.  In May 2013, the Company elected to prepay the Term Loan in full, pursuant to the terms of the Loan Agreement, as amended, and paid $8.8 million in principal and $0.7 million in interest, prepayment and final payment fees.   The Company’s obligations under the Loan Agreement had been secured by a first priority security interest in substantially all of its assets, other than its intellectual property.  In connection with the repayment of the Term Loan and the termination of the Loan Agreement, those security interests were released.  Interest expense on the Term Loan was $0.5 million and $0.8 million for the three and six months ended June 30, 2013 and $0.4 million and $0.8 million for the three and six months ended June 30, 2012, respectively.

 

(9) Other Long-Term Liabilities

 

Other long-term liabilities include the following:

 

		June 30, 2013			December 31, 2012
		(In thousands)
Deferred Rent		$	422		$	434
Net Deferred Tax Liability related to IPR&D		4,661			4,661
Deferred Income from Sale of Tax Benefits		1,630			1,118
Loan Payable		443			472
Other		10			39
Total		7,166			6,724
Less Current Portion		(530		)	(388		)
Long-Term Portion		$	6,636		$	6,336

 

In January 2013, 2012 and 2011, the Company received approval from the New Jersey Economic Development Authority and agreed to sell New Jersey tax benefits worth $0.8 million, $0.8 million and $0.6 million to an independent third party for $0.8 million, $0.7 million and $0.5 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.  During the six months ended June 30, 2013 and 2012, the Company recorded $0.2 million and $0.1 million to other income related to the sale of these tax benefits, respectively.

 

(10) Stockholders’ Equity

 

In January 2011, the Company entered into a controlled equity offering sales agreement (the “Cantor Agreement”) with Cantor Fitzgerald & Co. pursuant to which the Company could issue and sell up to 5,000,000 shares of its common stock from time to

 

9

Table of Contents

 

time through Cantor, acting as agent.  During the six months ended June 30, 2012, the Company issued 2,450,000 shares of common stock under the Cantor Agreement and raised $8.5 million in net proceeds.

 

In September 2012, the Company and Cantor amended the Cantor Agreement (the “Cantor Amendment”) to allow the Company to issue and sell additional shares of its common stock having an aggregate offering price of up to $44.0 million. Under the Cantor Amendment, the Company will pay Cantor a fixed commission rate of 3.0% of the gross sales price per share of any common stock sold through Cantor. The Cantor Amendment terminates upon ten day notice by either Cantor or the Company.  During the six months ended June 30, 2013, the Company issued 2,433,608 shares under the Cantor Amendment and raised $17.1 million in net proceeds.  At June 30, 2013, the Company had $4.4 million remaining in aggregate offering price available under the Cantor Amendment.

 

During the six months ended June 30, 2012, the Company issued 12,075,000 shares of its common stock in an underwritten public offering, including the underwriter’s exercise of their full over-allotment option to purchase an additional 1,575,000 shares of common stock. The net proceeds to the Company were $43.4 million, after deducting underwriting fees and offering expenses.

 

During the six months ended June 30, 2013, the Company issued 13,800,000 shares of its common stock in an underwritten public offering, including the underwriter’s exercise of their full over-allotment option to purchase an additional 1,800,000 shares of common stock. The net proceeds to the Company were $97.0 million, after deducting underwriting fees and offering expenses.

 

(11)  Stock-Based Compensation

 

A summary of stock option activity for the six months ended June 30, 2013 is as follows:

 

		Shares		Weighted Average Exercise Price Per Share			Weighted Average Remaining Contractual Term (In Years)
Options Outstanding at December 31, 2012		5,349,810		$	5.98		7.0
Granted		38,750		$	13.01
Exercised		(370,627	)	$	6.17
Canceled		(12,330	)	$	6.64
Options Outstanding at June 30, 2013		5,005,603		$	6.02		6.5
Options Vested and Expected to Vest at June 30, 2013		4,967,369		$	6.02		6.5
Options Exercisable at June 30, 2013		3,176,119		$	6.58		5.3
Shares Available for Grant under the 2008 Plan		3,313,661

 

The weighted average grant-date fair value of stock options granted during the six months ended June 30, 2013 was $8.31. Stock-based compensation expense for the three and six months ended June 30, 2013 and 2012 was recorded as follows:

 

		Three months ended June 30,						Six months ended June 30,
		2013			2012			2013			2012
		(In thousands)
Research and development		$	422		$	284		$	863		$	679
General and administrative		254			164			521			409
Total stock-based compensation expense		$	676		$	448		$	1,384		$	1,088

 

The fair values of employee and director stock options granted during the three and six months ended June 30, 2013 and 2012 were valued using the Black-Scholes option-pricing model with the following assumptions:

 

		Three months ended June 30,				Six months ended June 30,
		2013		2012		2013		2012
Expected stock price volatility		72	%	71	%	72	%	70 - 71	%
Expected option term		6.0 years		6.0 years		6.0 years		6.0 years
Risk-free interest rate		1.2 — 1.8	%	0.9 — 1.3	%	1.2 — 1.8	%	0.9 — 1.4	%
Expected dividend yield		None		None		None		None

 

10

Table of Contents

 

(12)  Income Taxes

 

Massachusetts, New Jersey and Connecticut are the three states in which the Company primarily operates or has operated and has income tax nexus. The Company is not currently under examination by any jurisdictions for any tax year.

 

The Company has evaluated the positive and negative evidence bearing upon the realizability of its net deferred tax assets, which are comprised principally of net operating loss carryforwards, capitalized R&D expenditures and R&D tax credit carryforwards. The Company has determined that it is more likely than not that it will not recognize the benefits of federal and state deferred tax assets and, as a result, a full valuation allowance was maintained at June 30, 2013 and December 31, 2012 against the Company’s net deferred tax assets.

 

(13)  Commitments and Contingent Liabilities

 

Except as set forth below, the significant commitments and contingencies at June 30, 2013 are consistent with those disclosed in Notes 13 and 15 to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2012.

 

On May 1, 2013, the Company entered into a lease agreement (the “Lease”) with Crown Perryville, LLC., as Landlord, pursuant to which the Company will lease approximately 33,000 square feet of office space in Hampton, New Jersey for use as an office and laboratory.  The Lease has a five-year, five-month term which will commence on the later of November 15, 2013 or the date on which the alterations are substantially complete and a Certificate of Occupancy is issued.  The Company’s obligation to pay rent commences five months after the lease commencement date.  The annual rent obligations increase from $0.4 million in the first year to $0.5 million in the fifth year.  The Lease includes two renewal options of five years each.

 

11

 

Table of Contents

 

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 ability to successfully complete research and further development, including animal, preclinical and clinical studies, and commercialization of rindopepimut, CDX-011, and other drug candidates and the growth of the markets for those drug candidates;

 

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

 

·                  our ability to manage multiple clinical trials for a variety of drug candidates at different stages of development, including our Phase 3 trial for rindopepimut;

 

·                  the cost, timing, scope and results of ongoing safety and efficacy trials of rindopepimut, CDX-011, and other preclinical and clinical testing;

 

·                  our ability to fund and complete the development and commercialization of rindopepimut for North America internally;

 

·                  the ability to negotiate strategic partnerships, where appropriate, for our programs which may include rindopepimut outside North America;

 

·                  our ability to adapt our proprietary antibody-targeted technology, or APC Targeting Technology™, to develop new, safe and effective therapeutics for oncology and infectious disease indications;

 

·                  our ability to develop technological capabilities and expand our focus to broader markets for targeted immunotherapeutics;

 

·                  the availability, cost, delivery and quality of clinical and commercial grade materials produced by our own manufacturing facility or supplied by contract manufacturers and partners;

 

·                  the availability, cost, delivery and quality of clinical management services provided by our clinical research organization partners;

 

·                  the timing, cost and uncertainty of obtaining regulatory approvals for our drug candidates;

 

·                  our ability to develop and commercialize products before competitors that are superior to the alternatives developed by such competitors;

 

·                  the validity of our patents and our ability to avoid intellectual property litigation, which can be costly and divert management time and attention; and

 

·                  the factors listed under the headings “Business,” “Risk Factors” and Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s annual report on Form 10-K for the year ended December 31, 2012 and other reports that we file with the Securities and Exchange Commission.

 

12

Table of Contents

 

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

 

OVERVIEW

 

We are a biopharmaceutical company focused on the development and commercialization of several immunotherapy technologies for the treatment of cancer and other difficult-to-treat diseases. Our drug candidates are derived from a broad set of complementary technologies which have the ability to utilize the human immune system and enable the creation of therapeutic agents. We are using these technologies to develop targeted immunotherapeutics comprised of antibodies, adjuvants and monotherapies and antibody-drug conjugates that prevent or treat cancer and other diseases that modify undesirable activity by the body’s own proteins or cells.

 

Our lead drug candidates include rindopepimut (CDX-110) and CDX-011.  Rindopepimut is a targeted immunotherapeutic in a pivotal Phase 3 study for the treatment of front-line glioblastoma and a Phase 2 study for the treatment of recurrent glioblastoma.  CDX-011 is an antibody-drug conjugate for which we plan to initiate a randomized, accelerated approval study in patients with triple negative breast cancer that over-express GPNMB in the second half of 2013.  We also have a number of earlier stage candidates in clinical development, including CDX-1135, a molecule that inhibits a part of the immune system called the complement system, CDX-1127, a therapeutic fully human monoclonal antibody for cancer indications, CDX-301, an immune cell mobilizing agent and dendritic cell growth factor and CDX-1401, an APC Targeting Technology™ program for cancer indications. Our drug candidates address market opportunities for which we believe current therapies are inadequate or non-existent.

 

We are building a fully integrated, commercial-stage biopharmaceutical company that develops important therapies for patients with unmet medical needs. Our program assets provide us with the strategic options to either retain full economic rights to our innovative therapies or seek favorable economic terms through advantageous commercial partnerships. This approach allows us to maximize the overall value of our technology and product portfolio while best ensuring the expeditious development of each individual product.

 

The following table includes the programs that we currently believe are significant to our business:

 

Product (generic)		Indication/Field		Partner		Status
CLINICAL
CDX-110 (rindopepimut)		Front-line glioblastoma		—		Phase 3
CDX-011 (glembatumumab vedotin)		Metastatic breast cancer and melanoma		—		Phase 2b
CDX-110 (rindopepimut)		Recurrent glioblastoma		—		Phase 2
CDX-1135		Renal disease		—		Pilot
CDX-1127		Lymphoma/leukemia and solid tumors		—		Phase 1
CDX-301		Cancer, autoimmune disease and transplant		—		Phase 1
CDX-1401		Multiple solid tumors		—		Phase 1
PRECLINICAL
CDX-014		Ovarian and renal cancer		—		Preclinical

 

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

 

13

Table of Contents

 

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

 

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

 

·                  the number of clinical sites included in the trials;

 

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

 

·                  the efficacy and safety profile of the product candidate.

 

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

 

An element of our business strategy is to pursue the research and development of a broad portfolio of product candidates. This is intended to allow us to diversify the risks associated with our research and development expenditures. As a result, we believe our future capital requirements and our future financial success are not substantially dependent on any one product candidate. To the extent we are unable to maintain a broad range of product candidates, our dependence on the success of one or a few product candidates increases.

 

Regulatory approval is required before we can market our product 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 is safe and effective. Historically, the results from preclinical testing and early clinical trials (through Phase 2) have often not been predictive of results obtained in later clinical trials. A number of new drugs and biologics have shown promising results in early clinical trials, but subsequently failed to establish sufficient safety and efficacy data to obtain necessary regulatory approvals.

 

Furthermore, our business strategy includes the option of entering into collaborative arrangements with third parties to complete the development and commercialization of our product candidates. In the event that third parties take over the clinical trial process for one of our product 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 it 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, 2012, we incurred an aggregate of $156.3 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 six months ended June 30, 2013 and 2012. 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.

 

		Six Months Ended June 30,
		2013			2012
		(In thousands)
Rindopepimut		$	17,743		$	10,956
CDX-011		2,778			1,853
CDX-1135		794			4,577
CDX-1127		4,524			2,020
CDX-301		260			839
CDX-1401		318			710
CDX-014		508			320
Other Programs		2,255			606
Total R&D Expense		$	29,180		$	21,881

 

14

Table of Contents

 

Clinical Development Programs

 

Rindopepimut

 

Our lead clinical development program, rindopepimut, is a targeted immunotherapeutic that targets the tumor-specific molecule, epidermal growth factor receptor variant III, or EGFRvIII. EGFRvIII is a mutated form of the epidermal growth factor receptor, or EGFR, that is only expressed in cancer cells and not in normal tissue and can directly contribute to cancer cell growth. EGFRvIII is expressed in approximately 30% of glioblastoma, or GB, tumors, also referred to as glioblastoma multiforme, or GBM, the most common and aggressive form of brain cancer. Rindopepimut is composed of the EGFRvIII peptide linked to a carrier protein called Keyhole Limpet Hemocyanin, or KLH, and administered together with the adjuvant GM-CSF. The Food and Drug Administration, or FDA, and the European Medicines Agency, or EMA, have both granted orphan drug designation for rindopepimut for the treatment of EGFRvIII expressing GB. The FDA has also granted Fast Track designation.

 

The Phase 2a study of rindopepimut referred to as ACTIVATE was led by collaborating investigators at the Brain Center at Duke Comprehensive Cancer Center in Durham, North Carolina and at M.D. Anderson Cancer Center in Houston, Texas and enrolled 18 evaluable GB patients. An extension of the Phase 2a study referred to as ACT II evaluated 22 additional GB patients treated in combination with the current standard of care, maintenance temozolomide, or TMZ, at the same two institutions.

 

We initiated ACT III, a Phase 2b/3 randomized study of rindopepimut combined with standard of care, TMZ, versus standard of care alone in patients with GB in over 30 sites throughout the United States. In December 2008, we announced an amendment to convert the ACT III study to a single-arm Phase 2 clinical trial in which all patients were to receive rindopepimut in combination with TMZ. The decision, which followed the recommendation of the Independent Data Monitoring Committee, was based on the observation that the majority of patients randomized to the control (standard of care) arm withdrew from this open-label study after being randomized to the control arm. Patients participating in the control arm of the study were offered the option to receive treatment with rindopepimut. Under this amendment, the ACT III study provided for a multi-center, non-randomized dataset for rindopepimut in patients with newly diagnosed GB.

 

In November 2012, we announced three-year survival data for each of our three Phase 2 studies in rindopepimut, ACT III, ACT II and ACTIVATE. The median overall survival, or OS, in ACT III was 24.6 months from diagnosis (21.8 months from study entry) and OS was 26% at three years. The median OS in ACT II was 24.4 months from diagnosis (20.5 months from study entry) and OS was 23% at three years. The median OS in ACTIVATE was 24.6 months from diagnosis (20.4 months from study entry) and OS was 33% at three years. In addition we also announced data from a retrospective analysis of EGFRvIII expression status and associated clinical outcome in the Phase 3 Radiation Therapy Oncology Group’s, or RTOG, 0525 study. This analysis was conducted by The University of Texas MD Anderson Cancer Center in cooperation with RTOG to provide an assessment of the prognosis for patients with EGFRvIII-positive disease contemporary with the ACT III data. Across three Phase 2 studies of rindopepimut, survival data remains consistent and suggests a continuing survival benefit in comparison to independent control datasets (see chart below) at the median and at three years.

 

Rindopepimut Overall Survival (OS) in EGFRvIII-Positive Glioblastoma vs Independent Control Datasets

 

Rindopepimut Phase 2 Studies (all data from study entry)

 

		Medium (months)		OS at 3 years
ACT III (n=65)		21.8		26	%
ACT II (n=22)		20.5		23	%
ACTIVATE (n=18)		20.4		33	%

 

Independent Control Datasets (all data from study entry)

 

MD Anderson EGFRvIII-positive patients matched(1) to ACTIVATE patient population (n=17) (contemporary with ACTIVATE)		12.2	(2)	6	%
Radiation Therapy Oncology Group (RTOG) 0525 study—all EGFRvIII- positive patients (n=142) (contemporary with ACT III)		15.1		18	%
RTOG 0525 study—all EGFRvIII-positive patients treated with standard dose temozolomide (n=62) (contemporary with ACT III)		14.2		7	%
RTOG 0525 study—EGFRvIII-positive patients matched(1) to ACT III/IV patient population (n=29) (contemporary with ACT III)		16.0		13	%

(1)                                 Controls are closely matched to rindopepimut patient criteria including gross total resection of patient tumor and ~3 months without disease progression at time of study entry

 

15

Table of Contents

 

(2)                                 In order to provide comparable timeframes across datasets, data have been estimated assuming study entry at three months from diagnosis.

 

In December 2011, we initiated ACT IV, a pivotal, randomized, double-blind, controlled Phase 3 study of rindopepimut in patients with surgically resected, EGFRvIII-positive GB. Patients are randomized after the completion of surgery and standard chemoradiation treatment. The treatment regime includes a rindopepimut priming phase post-radiation followed by an adjuvant TMZ phase and a rindopepimut maintenance therapy phase. Patients are treated until disease progression or intolerance to therapy. The primary objective of the study is to determine whether rindopepimut plus adjuvant GM-CSF improves the overall survival of patients with newly diagnosed EGFRvIII-positive GB after Gross Total Resection, or GTR, when compared to treatment with TMZ and a control injection of KLH. KLH is a component of rindopepimut and was selected due to its ability to generate a similar injection site reaction to that observed with rindopepimut. ACT IV will enroll up to 440 patients at over 150 centers worldwide to recruit approximately 374 patients with GTR to be included in the primary analysis. We expect to complete patient accrual by the end of 2013 and anticipate receiving data 18 to 24 months after completing accrual. We anticipate ACT IV to cost over $60 million during its duration.

 

In December 2011, we also initiated ReACT, a Phase 2 study of rindopepimut in combination with Avastin® in patients with recurrent EGFRvIII-positive GB. ReACT will enroll approximately 95 patients in a first or second relapse of GB following receipt of standard therapy and will be conducted at approximately 25 sites across the United States. Approximately 70 patients who have yet to receive Avastin will be randomized to receive either rindopepimut and Avastin or a control injection of KLH and Avastin in a blinded fashion. Another 25 patients who are refractory to Avastin having received Avastin in either the frontline or recurrent setting with subsequent progression will receive rindopepimut plus Avastin in a single treatment arm. We expect to report data from this study at the Society for Neuro-Oncology (SNO) Annual Meeting in November 2013.

 

In addition, researchers at Stanford University are conducting an investigator sponsored, pilot trial of rindopepimut in pediatric patients with pontine glioma. Patient enrollment is ongoing for this trial.

 

Glembatumumab Vedotin (CDX-011)

 

CDX-011 is an antibody-drug conjugate, or ADC, that consists of a fully-human monoclonal antibody, CR011, linked to a potent cell-killing drug, monomethyl-auristatin E, or MMAE. The CR011 antibody specifically targets glycoprotein NMB, referred to as GPNMB, that is expressed in a variety of human cancers including breast cancer and melanoma. The ADC technology, comprised of MMAE and a stable linker system for attaching it to CR011, was licensed from Seattle Genetics, Inc. The ADC is designed to be stable in the bloodstream. Following intravenous administration, CDX-011 targets and binds to GPNMB and upon internalization into the targeted cell, CDX-011 is designed to release MMAE from CR011 to produce a cell-killing effect. The FDA has granted Fast Track designation to CDX-011 for the treatment of advanced, refractory/resistant GPNMB-expressing breast cancer.

 

Treatment of Breast Cancer:  In June 2008, an open-label, multi-center Phase 1/2 study was initiated of CDX-011 administered intravenously once every three weeks to patients with locally advanced or metastatic breast cancer who had received prior therapy (median of seven prior regimens). The study began with a bridging phase to confirm the maximum tolerated dose, or MTD, and then expanded into a Phase 2 open-label, multi-center study.

 

The study confirmed the safety of CDX-011 at the pre-defined maximum dose level (1.88 mg/kg) in 6 patients. An additional 28 patients were enrolled in an expanded Phase 2 cohort (for a total of 34 treated patients at 1.88 mg/kg, the Phase 2 dose) to evaluate the PFS rate at 12 weeks. As previously seen in melanoma patients, the 1.88 mg/kg dose was well tolerated in this patient population with the most common adverse events of rash, alopecia, and fatigue. The primary activity endpoint, which called for at least 5 of 25 (20%) patients in the Phase 2 study portion to be progression-free at 12 weeks, was met as 9 of 26 (35%) evaluable patients were progression-free at 12 weeks.

 

For all patients treated at the maximum dose level, tumor shrinkage was seen in 62% (16/26) and median PFS was 9.1 weeks. A subset of 10 patients had “triple negative disease,” a more aggressive breast cancer subtype that carries a high risk of relapse and reduced survival as well as limited therapeutic options due to lack of over-expression of HER2/neu, estrogen and progesterone receptors. In these patients, 78% (7/9) had some tumor shrinkage, 12-week PFS rate was 70% (7/10), and median PFS was 17.9 weeks. Tumor samples from a subset of patients across all dose groups were analyzed for GPNMB expression. The tumor samples from most patients showed evidence of stromal and/or tumor cell expression of GPNMB.

 

In December 2011, we completed enrollment of EMERGE, a randomized, multi-center Phase 2b study of CDX-011 in 122 patients with heavily pre-treated, advanced, GPNMB positive breast cancer. Patients were randomized (2:1) to receive either CDX-

 

16

Table of Contents

 

011 or single-agent Investigator’s Choice, or IC, chemotherapy. Patients randomized to receive IC were allowed to cross over to receive CDX-011 following disease progression. Activity endpoints included response rate, PFS and OS.

 

In December 2012, we announced final results, as shown below, from the EMERGE study which suggested that CDX-011 induces significant response rates compared to currently available therapies in patient subsets with advanced, refractory breast cancers with GPNMB over-expression (expression in greater than 25% of tumor cells) and in patients with triple negative breast cancer. The overall survival, or OS, and progression free survival, or PFS, of patients treated with CDX-011 was also observed to be greatest in patients with triple negative breast cancer who also over-express GPNMB and all patients with GPNMB over-expression.

 

EMERGE: Overall Response Rate and Disease Control Data

 

										On target effect clearly demonstrated in targeted patient populations
		All Patients				Triple Negative				GPNMB Over-Expression				Triple Negative and GPNMB Over-Expression
		CDX-011		IC		CDX-011		IC		CDX-011		IC		CDX-011		IC
		(n=81)		(n=36)		(n=27)		(n=9)		(n=25)		(n=8)		(n=12)		(n=4)
Response		16	%	14	%	19	%	0	%	32	%	13	%	33	%	0	%
Disease Control Rate		57	%	53	%	67	%	33	%	64	%	38	%	75	%	25	%

 

Responses per RECIST 1.1; IC = Investigator’s Choice; CDX-011 arm includes 15 patients who crossed over to receive CDX-011 treatment after progression on IC. Analysis of best response excludes patients who discontinued from study without evaluable post-baseline radiographic imaging (n=15 for CDX-011 arm; n=5 for IC arm).

 

EMERGE: Overall Survival (OS) and Progression Free Survival (PFS) Data

 

										On target effect clearly demonstrated in targeted patient populations
		All Patients				Triple Negative				GPNMB Over-Expression				Triple Negative and GPNMB Over-Expression
		CDX-011		IC		CDX-011		IC		CDX-011		IC		CDX-011		IC
Median OS (months)		7.5		7.4		6.9		6.5		10.0		5.7		10.0		5.5
		p=0.24				p=0.30				p=0.18				p=0.003
Median PFS (months)		2.1		2.0		2.3		1.6		2.7		1.5		3.0		1.5
		p=0.38				p=0.43				p=0.14				p=0.008

 

Analyses include all treated patients. Patients who initially received Investigator’s Choice (IC) and subsequently crossed over to receive CDX-011 (n=15) are included in the PFS analysis for each treatment. These patients, with a median OS of 12.5 months, are assigned to the IC arm only for OS analysis. Median OS for the remaining IC patients who did not cross over is 5.4 months. When cross over patients are removed, median OS in patients with GPNMB over-expression is 10.0 months for CDX-011 vs 5.2 months for IC (p=0.05) and median OS in triple negative patients with GPNMB over-expression is 10.0 months for CDX-011 vs 5.2 months for IC (p=0.009).

 

In December 2012, we had our end of Phase 2b meeting with the FDA for our CDX-011 program. Based on this meeting, we intend to initiate METRIC, a randomized, accelerated approval study of CDX-011 in patients with triple negative breast cancer that over-express GPNMB in the second half of 2013.   METRIC will be conducted in approximately 100 sites, primarily across the United States with additional sites in Canada and Australia.

 

Treatment of Metastatic Melanoma:  In 2009, we completed enrollment of 117 patients in a Phase 1/2 open-label, multi-center, dose escalation study to evaluate the safety, tolerability and pharmacokinetics of CDX-011 for patients with un-resectable Stage III or Stage IV melanoma who had failed no more than one prior line of cytotoxic therapy. The MTD was determined to be 1.88 mg/kg administered intravenously once every three weeks. The study achieved its primary activity objective with an ORR in the Phase 2 cohort of 15% (5/34). Median PFS was 3.9 months. CDX-011 was generally well tolerated, with the most frequent treatment-related adverse events being rash, fatigue, hair loss, pruritus, diarrhea and neuropathy. In the subset of patients with tumor biopsies, high levels of tumor expression of GPNMB appeared to correlate with favorable outcome. In the seven patients whose tumors were found to express high amounts of GPNMB, and who were treated at the maximum tolerated doses across all dosing schedules, median

 

17