UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2022

OR

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

Commission File Number: 000-15006

CELLDEX THERAPEUTICS, INC.

(Exact name of registrant as specified in its charter)

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

Perryville III Building, 53 Frontage Road, Suite 220, Hampton, New Jersey 08827

(Address of principal executive offices) (Zip Code)

(908) 200-7500

(Registrant’s telephone number, including area code)

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

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

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

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

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

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

CELLDEX THERAPEUTICS, INC.

FORM 10-Q

For the Quarterly Period Ended September 30, 2022

Table of Contents

	Page
Part I — Financial Information
Item 1. Unaudited Financial Statements	3
Condensed Consolidated Balance Sheets at September 30, 2022 and December 31, 2021	3
Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three and Nine Months Ended September 30, 2022 and 2021	4
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021	5
Notes to Unaudited Condensed Consolidated Financial Statements	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk	29
Item 4. Controls and Procedures	29
Part II — Other Information
Item 1A. Risk Factors	30
Item 5. Other Information	30
Item 6. Exhibits	32
Exhibit Index	32
Signatures	33

2

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,		December 31,
	2022		2021
Assets
Current assets:
Cash and cash equivalents	$	18,583	$	39,143
Marketable securities		304,888		369,107
Accounts and other receivables		189		172
Prepaid and other current assets		10,939		2,417
Total current assets		334,599		410,839
Property and equipment, net		3,753		3,551
Operating lease right-of-use assets, net		3,580		2,970
Intangible assets, net		27,190		27,190
Other assets		104		104
Total assets	$	369,226	$	444,654
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	2,272	$	1,228
Accrued expenses		11,425		12,000
Current portion of operating lease liabilities		1,438		1,746
Current portion of other long-term liabilities		1,152		1,554
Total current liabilities		16,287		16,528
Long-term portion of operating lease liabilities		2,190		1,296
Other long-term liabilities		5,333		7,354
Total liabilities		23,810		25,178
Commitments and contingent liabilities
Stockholders’ equity:
Convertible preferred stock, $.01 par value; 3,000,000 shares authorized; no shares issued and outstanding at September 30, 2022 and December 31, 2021		—		—
Common stock, $.001 par value; 297,000,000 shares authorized; 47,096,063 and 46,730,198 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		47		47
Additional paid-in capital		1,574,926		1,561,142
Accumulated other comprehensive income		(112)		1,894
Accumulated deficit		(1,229,445)		(1,143,607)
Total stockholders’ equity		345,416		419,476
Total liabilities and stockholders’ equity	$	369,226	$	444,654

See accompanying notes to unaudited condensed consolidated financial statements

3

CELLDEX THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended
	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021
Revenues:
Product development and licensing agreements	$	—	$	—	$	30	$	29
Contracts and grants		407		153		714		4,288
Total revenues		407		153		744		4,317
Operating expenses:
Research and development		21,572		13,557		59,359		38,633
General and administrative		6,531		5,821		20,596		14,247
Intangible asset impairment		—		3,500		—		3,500
Gain on fair value remeasurement of contingent consideration		—		(1,901)		(6,862)		(1,160)
Litigation settlement related loss		—		—		15,000		—
Total operating expenses		28,103		20,977		88,093		55,220
Operating loss		(27,696)		(20,824)		(87,349)		(50,903)
Investment and other income, net		912		145		1,511		313
Net loss before income tax benefit		(26,784)		(20,679)		(85,838)		(50,590)
Income tax benefit		—		227		—		227
Net loss	$	(26,784)	$	(20,452)	$	(85,838)	$	(50,363)
Basic and diluted net loss per common share	$	(0.57)	$	(0.45)	$	(1.83)	$	(1.21)
Shares used in calculating basic and diluted net loss per share		46,916		45,453		46,806		41,582
Comprehensive loss:
Net loss	$	(26,784)	$	(20,452)	$	(85,838)	$	(50,363)
Other comprehensive income (loss):
Unrealized gain (loss) on marketable securities		305		(44)		(2,006)		(41)
Comprehensive loss	$	(26,479)	$	(20,496)	$	(87,844)	$	(50,404)

See accompanying notes to unaudited condensed consolidated financial statements

4

CELLDEX THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(Unaudited)

(In thousands)

	Nine Months Ended		Nine Months Ended
	September 30, 2022		September 30, 2021
Cash flows from operating activities:
Net loss	$	(85,838)	$	(50,363)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,223		2,291
Amortization and premium of marketable securities, net		1,366		(3,407)
Loss (gain) on sale or disposal of assets		1		(23)
Intangible asset impairment		—		3,500
Gain on fair value remeasurement of contingent consideration		(6,862)		(1,160)
Non-cash income tax benefit		—		(227)
Stock-based compensation expense		11,103		5,813
Changes in operating assets and liabilities:
Accounts and other receivables		(17)		1,549
Prepaid and other current assets		(7,928)		(2,261)
Accounts payable and accrued expenses		720		1,757
Other liabilities		3,262		(3,855)
Net cash used in operating activities		(81,970)		(46,386)
Cash flows from investing activities:
Sales and maturities of marketable securities		192,866		129,000
Purchases of marketable securities		(132,613)		(325,342)
Acquisition of property and equipment		(1,593)		(895)
Proceeds from sale or disposal of assets		69		25
Net cash provided by (used in) investing activities		58,729		(197,212)
Cash flows from financing activities:
Net proceeds from stock issuances		—		269,893
Proceeds from issuance of stock from employee benefit plans		2,681		2,053
Net cash provided by financing activities		2,681		271,946
Net (decrease) increase in cash and cash equivalents		(20,560)		28,348
Cash and cash equivalents at beginning of period		39,143		43,836
Cash and cash equivalents at end of period	$	18,583	$	72,184
Non-cash investing activities
Accrued construction in progress	$	38	$	46

See accompanying notes to unaudited condensed consolidated financial statements

5

CELLDEX THERAPEUTICS, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

September 30, 2022

(1)  Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by Celldex Therapeutics, Inc. (the “Company” or “Celldex”) in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and reflect the operations of the Company and its wholly-owned subsidiary. 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, 2021, which are included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2022. In the opinion of management, the interim financial statements reflect all normal recurring adjustments necessary to fairly state the Company’s financial position and results of operations for the interim periods presented. The year-end condensed balance sheet data presented for comparative purposes was derived from audited financial statements but does not include all disclosures required by U.S. GAAP.

The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for any future interim period or the fiscal year ending December 31, 2022.

At September 30, 2022, the Company had cash, cash equivalents and marketable securities of $323.5 million. The Company has had recurring losses and incurred a loss of $85.8 million for the nine months ended September 30, 2022. Net cash used in operations for the nine months ended September 30, 2022 was $82.0 million. The Company believes that the cash, cash equivalents and marketable securities at the filing date of this Form 10-Q will be sufficient to meet estimated working capital requirements and fund planned operations for at least the next twelve months from the date of issuance of these financial statements.

During the next twelve months and beyond, the Company may take further steps to raise additional capital to meet its long-term liquidity needs including, but not 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. Although the Company has been successful in raising capital in the past, there can be no assurance that additional financing will be available on acceptable terms, if at all, and the Company’s negotiating position in capital-raising efforts may worsen as existing resources are used. There is also no assurance that the Company will be able to enter into further collaborative relationships. Additional equity financings may be dilutive to the Company’s stockholders; debt financing, if available, may involve significant cash payment obligations and covenants that restrict the Company’s ability to operate as a business; and licensing or strategic collaborations may result in royalties or other terms which reduce the Company’s economic potential from products under development. The Company’s ability to continue funding its planned operations beyond twelve months from the issuance date is also dependent on the timing and manner of payment of amounts due under the Settlement Agreement with Shareholder Representative Services LLC (“SRS”) (refer to Note 13), in the event that the Company achieves the milestones related to those payments. The Company, at its option, may decide to pay those milestone payments in cash, shares of its common stock or a combination thereof. If the Company is unable to raise the funds necessary to meet its long-term liquidity needs, it may have to delay or discontinue the development of one or more programs, discontinue or delay ongoing or anticipated clinical trials, license out programs earlier than expected, raise funds at a significant discount or on other unfavorable terms, if at all, or sell all or a part of the Company.

COVID-19 continues to have an impact in the US and around the world. To date, we have managed delays and disruptions without significant impact in planned and ongoing preclinical and clinical trials, manufacturing or shipping. Potential impacts to our business include delays in planned and ongoing preclinical and clinical trials including enrollment of patients, disruptions in time and resources provided by independent clinical investigators, contract research organizations, and other third-party service providers, temporary closures of our facilities, disruptions or restrictions on our employees’ ability to travel, and delays in manufacturing and/or shipments to and from third-party suppliers and contract manufacturers for APIs and drug product. Any prolonged negative impacts to our business could materially impact our operating results and could lead to impairments of our intangible in-process research and development (“IPR&D”) assets with a carrying value of $27.2 million at September 30, 2022.

6

(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, 2022 are consistent with those discussed in Note 2 to the financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021.

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 June 2016, the FASB issued guidance on the Measurement of Credit Losses on Financial Instruments. The guidance requires that credit losses be reported using an expected losses model rather than the incurred losses model that is currently used, and establishes additional disclosures related to credit risks. For available-for-sale debt securities with unrealized losses, the standard now requires allowances to be recorded instead of reducing the amortized cost of the investment. This standard will be effective for the Company on January 1, 2023. The adoption of this new guidance is not expected to have a material impact on the Company’s 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, 2022		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Money market funds and cash equivalents	$	10,729		—	$	10,729		—
Marketable securities		304,888		—		304,888		—
	$	315,617		—	$	315,617		—
Liabilities:
Kolltan acquisition contingent consideration	$	—		—		—	$	—
	$	—		—		—	$	—

	As of
	December 31, 2021		Level 1		Level 2		Level 3
	(In thousands)
Assets:
Money market funds and cash equivalents	$	26,220		—	$	26,220		—
Marketable securities		369,107		—		369,107		—
	$	395,327		—	$	395,327		—
Liabilities:
Kolltan acquisition contingent consideration	$	6,862		—		—	$	6,862
	$	6,862		—		—	$	6,862

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

7

The following table reflects the activity for the Company’s contingent consideration liabilities measured at fair value using Level 3 inputs for the nine months ended September 30, 2022 (in thousands):

	Other Liabilities:
	Contingent
	Consideration
Balance at December 31, 2021	$	6,862
Fair value adjustments included in operating expenses		(6,862)
Balance at September 30, 2022	$	—

The valuation technique used to measure fair value of the Company’s Level 3 liabilities, which consist of contingent consideration related to the acquisition of Kolltan Pharmaceuticals, Inc. (“Kolltan”) in 2016, was primarily an income approach. The significant unobservable inputs used in the fair value measurement of the contingent consideration are estimates including probability of success, discount rates and amount of time until the conditions of the milestone payments are met.

During the three and nine months ended September 30, 2022, the Company recorded a $0.0 million and $6.9 million gain on fair value remeasurement of contingent consideration, respectively, primarily due to the Company’s decision to deprioritize the CDX-1140 program. During the three and nine months ended September 30, 2021, the Company recorded a $1.9 million and $1.2 million gain on fair value remeasurement of contingent consideration, respectively, primarily due to updated assumptions for the TAM program, changes in discount rates and the passage of time. The assumptions related to determining the fair value of contingent consideration include a significant amount of judgment, and any changes in the underlying estimates could have a material impact on the amount of contingent consideration adjustment recorded in any given period.

The Company did not have any transfers in or out of Level 3 assets or liabilities during the nine months ended September 30, 2022.

8

(4)  Marketable Securities

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

	Gross Unrealized
	Amortized						Fair
	Cost		Gains		Losses		Value
	(In thousands)
September 30, 2022
Marketable securities
U.S. government and municipal obligations
Maturing in one year or less	$	132,422	$	—	$	(1,042)	$	131,380
Maturing after one year through three years		3,912		—		(71)		3,841
Total U.S. government and municipal obligations	$	136,334	$	—	$	(1,113)	$	135,221
Corporate debt securities
Maturing in one year or less	$	168,698	$	—	$	(1,548)	$	167,150
Maturing after one year through three years		2,564		—		(47)		2,517
Total corporate debt securities	$	171,262	$	—	$	(1,595)	$	169,667
Total marketable securities	$	307,596	$	—	$	(2,708)	$	304,888
	Gross Unrealized
	Amortized						Fair
	Cost		Gains		Losses		Value
	(In thousands)
December 31, 2021
Marketable securities
U.S. government and municipal obligations
Maturing in one year or less	$	80,674	$	—	$	(133)	$	80,541
Maturing after one year through three years		51,319		—		(184)		51,135
Total U.S. government and municipal obligations	$	131,993	$	—	$	(317)	$	131,676
Corporate debt securities
Maturing in one year or less	$	170,034	$	—	$	(28)	$	170,006
Maturing after one year through three years		67,782		—		(357)		67,425
Total corporate debt securities	$	237,816	$	—	$	(385)	$	237,431
Total marketable securities	$	369,809	$	—	$	(702)	$	369,107

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, 2022 and December 31, 2021. The unrealized losses are attributable to changes in interest rates and the Company does not believe any unrealized losses represent other-than-temporary impairments. Marketable securities include $0.7 million and $1.3 million in accrued interest at September 30, 2022 and December 31, 2021, respectively.

(5)  Intangible Assets

At September 30, 2022 and December 31, 2021, the carrying value of the Company’s indefinite-lived intangible assets was $27.2 million. Indefinite-lived intangible assets consist of acquired IPR&D related to the development of the anti-KIT program, including barzolvolimab (also referred to as CDX-0159), which was recorded in connection with the Kolltan acquisition. Barzolvolimab is in Phase 2 development. As of September 30, 2022, the IPR&D asset related to the anti-KIT program had not reached technological feasibility nor did the asset have alternative future uses.

The Company performs an impairment test on IPR&D assets at least annually, or more frequently if events or changes in circumstances indicate that IPR&D assets may be impaired. Due to the nature of IPR&D projects, the Company may experience future delays or failures to obtain regulatory approvals to conduct clinical trials, failures of such clinical trials or other failures to achieve a commercially viable product, and as a result, may recognize further impairment losses in the future.

9

(6) Other Long-Term Liabilities

Other long-term liabilities include the following:

	September 30,		December 31,
	2022		2021
	(In thousands)
Net deferred tax liabilities related to IPR&D (Note 11)	$	1,613	$	1,613
Deferred Income From Sale of Tax Benefits		4,650		—
Contingent milestones (Note 3 and Note 13)		—		6,862
Deferred revenue (Note 10)		222		433
Total		6,485		8,908
Less current portion		(1,152)		(1,554)
Long-term portion	$	5,333	$	7,354

In March 2022, the Company received approval from the New Jersey Economic Development Authority and agreed to sell New Jersey tax benefits of $5.0 million to an independent third party for $4.7 million. Under the agreement, the Company must maintain a base of operations in New Jersey for five years or the tax benefits must be paid back on a pro-rata basis based on the number of years completed.

(7) Stockholders’ Equity

In May 2016, the Company entered into a controlled equity offering sales agreement (the “Cantor Agreement”) with Cantor Fitzgerald & Co. (“Cantor”) to allow the Company to issue and sell shares of its common stock from time to time through Cantor, acting as agent. At September 30, 2022, the Company had $50.0 million remaining in aggregate gross offering price available under the Company’s November 2020 prospectus.

The changes in Stockholders’ Equity during the three and nine months ended September 30, 2022 and 2021 are summarized below:

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

10

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

(8)  Stock-Based Compensation

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

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

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

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

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

	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
	(In thousands)				(In thousands)
Research and development	$	2,342	$	1,504	$	5,754	$	2,927
General and administrative		2,154		1,525		5,349		2,886
Total stock-based compensation expense	$	4,496	$	3,029	$	11,103	$	5,813

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The fair values of employee, consultant and non-employee director stock options granted during the three and nine months ended September 30, 2022 and 2021 were valued using the Black-Scholes option pricing model with the following assumptions:

	Three months ended September 30,		Nine months ended September 30,
	2022	2021	2022	2021
Expected stock price volatility	91%	98%	90 – 97%	97 – 98%
Expected option term	6.0 Years	6.0 Years	6.0 Years	6.0 Years
Risk-free interest rate	2.9 – 3.5%	1.1 – 1.2%	1.7 – 3.6%	0.8 – 1.3%
Expected dividend yield	None	None	None	None

(9)  Accumulated Other Comprehensive Income

The changes in accumulated other comprehensive income, which is reported as a component of stockholders’ equity, for the nine months ended September 30, 2022 are summarized below:

	Unrealized
	Loss on
	Marketable		Foreign
	Securities		Currency Items		Total
	(In thousands)
Balance at December 31, 2021	$	(702)	$	2,596	$	1,894
Other comprehensive loss		(2,006)		—		(2,006)
Balance at September 30, 2022	$	(2,708)	$	2,596	$	(112)

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

(10)  Revenue

Contract and Grants Revenue

The Company has entered into agreements with Rockefeller University and Gilead Sciences pursuant to which the Company performs manufacturing and research and development services on a time-and-materials basis or at a negotiated fixed-price. The Company recognized $0.0 million and $0.2 million in revenue under these agreements during the three and nine months ended September 30, 2022, respectively, and $0.1 million and $4.0 million during the three and nine months ended September 30, 2021, respectively.

Contract Assets and Liabilities

At September 30, 2022 and December 31, 2021, the Company’s right to consideration under all contracts was considered unconditional, and as such, there were no recorded contract assets. At September 30, 2022, the Company had $0.2 million in contract liabilities recorded, which is expected to be recognized during the next 12 months as manufacturing and research and development services are performed. At December 31, 2021, the Company had $0.4 million in contract liabilities recorded. Revenue recognized from contract liabilities as of December 31, 2021 during the three and nine months ended September 30, 2022 was $0.2 million and $0.4 million, respectively.

(11)  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, 2022 and December 31, 2021.

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

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

(12)  Net Loss Per Share

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

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

(13)  Kolltan Acquisition

On November 29, 2016, the Company acquired all of the share and debt interests of Kolltan, a clinical-stage biopharmaceutical company, in exchange for 1,217,200 shares of the Company’s common stock plus contingent consideration in the form of development, regulatory approval and sales-based milestones (“Kolltan Milestones”) of up to $172.5 million payable in cash, in shares of Celldex’s common stock or a combination of both, in the sole discretion of Celldex and subject to provisions of the Agreement and Plan of Merger, dated November 1, 2016 (the “Merger Agreement”).

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

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

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

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

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

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

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

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

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

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

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

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

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

● our dependence on product candidates, which are still in an early development stage;

● our ability to successfully complete research and further development, including preclinical and clinical studies, and, if we obtain regulatory approval, commercialization of our drug candidates and the growth of the markets for those drug candidates;

● our anticipated timing for preclinical development, regulatory submissions, commencement and completion of clinical trials and product approvals;

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

● whether the COVID-19 pandemic will affect the timing of the completion of our planned and/or currently ongoing preclinical/clinical trials;

● our ability to negotiate strategic partnerships, where appropriate, for our drug candidates;

● our ability to manage multiple clinical trials for a variety of drug candidates at different stages of development;

● the cost, timing, scope and results of ongoing preclinical and clinical testing;

● our expectations of the attributes of our product and development candidates, including pharmaceutical properties, efficacy, safety and dosing regimens;

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

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

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

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

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● our ability to develop technological capabilities, including identification of novel and clinically important targets, exploiting our existing technology platforms to develop new drug candidates and expand our focus to broader markets for our existing targeted therapeutics;

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

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

● our ability to protect our intellectual property rights and our ability to avoid intellectual property litigation, which can be costly and divert management time and attention;

● our ability to develop and commercialize products without infringing the intellectual property rights of third parties; and

● the risk factors set forth elsewhere in this quarterly report on Form 10-Q and the factors listed under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K for the year ended December 31, 2021 and other reports that we file with the Securities and Exchange Commission.

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 dedicated to developing therapeutic monoclonal and bispecific antibodies that address diseases for which available treatments are inadequate. Our drug candidates include antibody-based therapeutics which have the ability to engage the human immune system and/or directly affect critical pathways to improve the lives of patients with inflammatory diseases and many forms of cancer.

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

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

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

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

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

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

We routinely work with external parties to collaboratively advance our drug candidates. In addition to Celldex-led studies, we also have an Investigator Initiated Research (IIR) program with multiple studies ongoing with our drug candidates.

Our goal is to build a fully integrated, commercial-stage biopharmaceutical company that develops important therapies for patients with unmet medical needs. 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 us.

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:

	Estimated
	Completion
Clinical Phase	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 agencies must conclude that our clinical data demonstrate that our product candidates are safe and effective. Historically, the results from preclinical testing and early clinical trials (through Phase 2) have often not been predictive of results obtained in later clinical trials. A number of new drugs and biologics have shown promising results in early clinical trials but subsequently failed to establish sufficient safety and efficacy data to obtain necessary regulatory approvals.

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Furthermore, our business strategy includes the option of entering into collaborative arrangements with third parties to complete the development and commercialization of our 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, 2021, we incurred an aggregate of $301.1 million in research and development expenses. The following table indicates the amount incurred for each of our significant research programs and for other identified research and development activities during the nine months ended September 30, 2022 and 2021. The amounts disclosed in the following table reflect direct research and development costs, license fees associated with the underlying technology and an allocation of indirect research and development costs to each program.

	Nine Months		Nine Months
	Ended		Ended
	September 30, 2022		September 30, 2021
	(In thousands)
Barzolvolimab/Anti-KIT Program	$	35,519	$	18,264
CDX‑585		8,638		3,233
CDX‑527		1,659		3,008
CDX‑1140 and CDX-301		3,333		4,097
Other Programs		10,210		10,031
Total R&D Expense	$	59,359	$	38,633

Clinical Development Programs

COVID-19 continues to have an impact in the US and around the world. To date, we have managed delays and disruptions without significant impact in planned and ongoing preclinical and clinical trials, manufacturing or shipping. Potential impacts to our business include delays in planned and ongoing preclinical and clinical trials including enrollment of patients, disruptions in time and resources provided by independent clinical investigators, contract research organizations, and other third-party service providers, temporary closures of our facilities, disruptions or restrictions on our employees’ ability to travel, and delays in manufacturing and/or shipments to and from third-party suppliers and contract manufacturers for APIs and drug product.

Barzolvolimab (also referred to as CDX-0159)

Barzolvolimab is a humanized monoclonal antibody that specifically binds the receptor tyrosine kinase KIT and potently inhibits its activity. KIT is expressed in a variety of cells, including mast cells, and its activation by its ligand SCF regulates mast cell growth, differentiation, survival, chemotaxis and degranulation. Barzolvolimab is designed to block KIT activation by disrupting both SCF binding and KIT dimerization. We believe that by targeting KIT, barzolvolimab may be able to inhibit mast cell activity and decrease mast cell numbers to provide potential clinical benefit in mast cell related diseases.

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

These data supported expansion of the barzolvolimab program into mast cell driven diseases, including initially in CSU and CIndU, diseases where mast cell degranulation plays a central role in the onset and progression of the disease. The prevalence of CSU and CIndU is approximately 0.5-1% of the total population or up to 1 to 3 million patients in the United States alone (Weller et al. 2010. Hautarzt. 61(8), Bartlett et al. 2018. DermNet. Org). CSU presents as itchy hives, angioedema or both for at least six weeks without a specific trigger; multiple episodes can play out over years or even decades. About 50% of patients with CSU achieve symptomatic control with antihistamines or leukotriene receptor antagonists. Omalizumab, an IgE inhibitor, provides relief for roughly half of the remaining antihistamine/leukotriene refractory patients. Consequently, there is a need for additional therapies. CIndUs are forms of urticaria that have an attributable cause or trigger associated with them, typically resulting in hives or wheals. We are exploring cold-induced, dermographism (scratch-induced) and cholinergic (exercise-induced) urticarias. In June and July 2022 respectively, we announced the initiation of Phase 2 studies in both CSU and CIndU.

In October 2020, we announced that enrollment had opened and the first patient had been dosed in a Phase 1b multi-center study of barzolvolimab in CSU. This study is a randomized, double-blind, placebo-controlled clinical trial designed to assess the safety of multiple ascending doses of barzolvolimab in up to 40 patients with CSU who remain symptomatic despite treatment with antihistamines. Secondary and exploratory objectives include pharmacokinetic and pharmacodynamic assessments, including measurement of tryptase and stem cell factor levels and clinical activity outcomes (impact on urticaria symptoms, disease control, clinical response) as well as quality of life assessments. Barzolvolimab is administered intravenously (0.5, 1.5, 3 and 4.5 mg/kg at varying dosing schedules) as add on treatment to H1-antihistamines, either alone or in combination with H2-antihistamines and/or leukotriene receptor agonists.

In June 2022, we reported positive interim data from the CSU study. As of the data cut-off on May 23, 2022, 34 patients with CSU were enrolled and treated [26 barzolvolimab (n=9 in 0.5 mg/kg; n=8 in 1.5 mg/kg; n=9 in 3.0 mg/kg) and 8 placebo]. The 0.5 mg/kg and 1.5 mg/kg cohorts had completed study participation through 24 weeks; 7 of 12 patients in the 3.0 mg/kg cohort had completed week 12; enrollment in the 4.5 mg/kg cohort was ongoing. Adverse events through data cutoff and hematology data through week 12 were included for all dose groups; clinical activity and tryptase data were included through week 12 for 0.5 mg/kg and 1.5 mg/kg, and through week 8 for 3 mg/kg (ongoing; reflecting the administration of only one dose). Data shows that barzolvolimab results in rapid, marked and durable responses in patients with moderate to severe CSU refractory to antihistamines, including patients with prior omalizumab treatment.

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

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

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

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

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

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

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

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

In June 2022, we announced that the first patient has been dosed in a Phase 2 study in patients with CSU who remain symptomatic despite antihistamine therapy. The study will be conducted at more than 75 sites across 10 or more countries. The study is a randomized, double-blind, placebo-controlled, parallel group Phase 2 study evaluating the efficacy and safety profile of multiple dose regimens of barzolvolimab to determine the optimal dosing strategy. Approximately 168 patients will be randomly assigned on a 1:1:1:1 ratio to receive subcutaneous injections of barzolvolimab at 75 mg every 4 weeks, 150 mg every 4 weeks, 300 mg every 8 weeks or placebo during a 16-week placebo-controlled treatment phase. Patients will then enter a 36-week active treatment phase, in which patients not already randomized to barzolvolimab at 150 mg every 4 weeks or 300 mg every 8 weeks will be randomized 1:1 to receive one of these two dose regimens; patients already randomized to these treatment arms will remain on the same regimen as during the placebo-controlled treatment phase. Following the treatment period, patients will enter a 24-week follow up phase. The primary endpoint of the study is mean change in baseline to Week 12 in UAS7 (Urticaria Activity Score over 7 days). Secondary endpoints include safety and other assessments of clinical activity including ISS7 (Itch Severity Score over 7 days), HSS7 (Hive Severity Score over 7 days) and AAS7 (Angioedema Activity Score over 7 days).

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

In July 2021, we reported positive interim data from the cold urticaria and symptomatic dermographism cohorts. As of the data cut-off on June 11, 2021, 20 patients had received a single intravenous infusion of barzolvolimab at 3 mg/kg, including 11 patients with cold urticaria and 9 patients with symptomatic dermographism. Patients had high disease activity as assessed by provocation threshold testing. In patients with cold urticaria and symptomatic dermographism baseline critical temperature thresholds were 18.9°C/66°F (range: 5-27°C/41-80.6°F) and FricTest® thresholds were 3.8 (range: 3-4) of 4 pins. Safety results were reported for all 20 patients; activity results were reported for the 19 patients who received a full dose of barzolvolimab. 14 of 19 patients completed the 12-week study observation period and five were ongoing (range of 2-8 weeks) as of June 11, 2021.

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

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

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

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

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

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

In September 2021, we reported additional positive data from the study on measurements of symptom control and quality of life. A single dose of barzolvolimab (3 mg/kg) resulted in a rapid and sustained improvement in urticaria control and greatly reduced disease impact on quality of life, as measured by the Urticaria Control Test (UCT) and Dermatology Life Quality Index (DLQI).

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

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

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Manufacturing activities to support the introduction of the barzolvolimab subcutaneous formulation into the clinical program have been completed and, in September 2021, we initiated dosing in a randomized, double-blind, placebo-controlled, Phase 1 study designed to evaluate the safety of single ascending doses of the subcutaneous formulation of barzolvolimab in healthy volunteers. In February 2022, we reported that subcutaneous administration of barzolvolimab was well tolerated and that multiple dose levels have been identified that possess promising pharmacokinetic and pharmacodynamic properties. Importantly, subcutaneous delivery of barzolvolimab resulted in dose-dependent, rapid and sustained decreases in serum tryptase compared with placebo and achieved sufficient exposure to produce tryptase suppression levels comparable with the levels that generated impressive clinical activity observed in the Phase 1 CIndU intravenous study. The Phase 2 multi-dose studies in urticaria are designed to evaluate 75mg and 150mg administered every 4 weeks and 300mg administered every 8 weeks. These doses support a 0.5 to 2 ml injection volume, allowing for a single injection as barzolvolimab advances towards potential commercialization. In 2022, we initiated transfer of our current barzolvolimab manufacturing process to a contract manufacturing organization to support late-stage trials and to prepare for potential commercialization.

In February 2022, we also reported interim data after completing the in-life dosing portion of our nine-month chronic toxicology study in non-human primates; a subset of the animals will continue to be followed beyond clearance of the barzolvolimab antibody to study completion. As expected and consistent with other KIT-targeting agents, impact on spermatogenesis was observed which is anticipated to be fully reversible upon clearance of the antibody. There were no other clinically adverse findings reported in the study. We believe these data strongly support our Phase 2 studies in urticaria and in future indications.

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

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

Bispecific Platform

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

CDX-585

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

CDX-527

CDX-527 uses our proprietary highly active anti-PD-L1 and CD27 human antibodies to couple CD27 co-stimulation with blockade of the PD-L1/PD-1 pathway to help prime and activate anti-tumor T cell responses through CD27 costimulation, while preventing PD-1 inhibitory signals that subvert the immune response. Our prior clinical experience with combining CD27 activation and PD-1 blockade provide the rationale for linking these two pathways into one molecule and preclinical data demonstrated that CDX-527 is more potent at T cell activation and anti-tumor immunity than the combination of parental monoclonal antibodies.

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In August 2020, we announced the initiation of a Phase 1 dose-escalation study. The study was designed to include up to 40 patients with advanced or metastatic solid tumors that had progressed during or after standard of care therapy to be followed by tumor-specific expansion cohorts. The study included a dose-escalation phase to determine a maximum tolerated dose, or MTD, and to recommend a dose level for further study in a subsequent expansion phase. The expansion was designed to further evaluate the tolerability, and biologic and anti-tumor effects of selected dose level(s) of CDX-527 in specific tumor types. Enrollment to the dose escalation portion (n=18) of the study was completed with no dose-limiting toxicities or treatment related serious adverse events observed and CDX-527 demonstrated promising pharmacodynamic and pharmacokinetic activity, which are important key hurdles for the development of bispecific antibodies. An expansion cohort in ovarian cancer was initiated.

In November 2022, we provided an update on the study. The standard of care in ovarian cancer continues to evolve, making drug development in this indication more challenging. With multiple clinical trials actively recruiting in ovarian cancer, enrollment to the expansion cohort in patients with checkpoint naïve ovarian cancer (n=8) did not meet our internal timelines and a review of the results to date also did not meet internal hurdles for proceeding. Given the evolving environment and our pipeline and resource priorities, we have decided that the study will be closed and the program discontinued.

Other 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. 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.

A Phase 1 study was conducted in patients with recurrent, locally advanced or metastatic solid tumors and B cell lymphomas. An MTD, of 1.5 mg/kg was established and clinical activity was observed both as a monotherapy and in combination with pembrolizumab. Despite evidence of clinical benefit, questions remain to be answered about CDX-1140, and the broader CD40 agonist class, regarding the best clinical settings, regimens, and possible combinations before advancing into additional Celldex-sponsored studies. Given our pipeline priorities and resource requirements, we are not progressing further Company-sponsored studies at this time and are exploring these questions in third-party sponsored studies.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

See Note 2 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for information regarding newly adopted 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, 2021 for a discussion of our critical accounting policies and estimates. There have been no material changes to such critical accounting policies or estimates. We believe our most critical accounting policies include accounting for contingent consideration, revenue recognition, intangible and long-lived assets, research and development expenses and stock-based compensation expense.

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RESULTS OF OPERATIONS

Three Months Ended September 30, 2022 Compared with Three Months Ended September 30, 2021

	Three Months Ended				Increase/		Increase/
	September 30,				(Decrease)		(Decrease)
	2022		2021		$		%
	(In thousands)
Revenues:
Product development and licensing agreements	$	—	$	—	$	—	n/a
Contracts and grants		407		153		254	166	%
Total revenues	$	407	$	153	$	254	166	%
Operating expenses:
Research and development		21,572		13,557		8,015	59	%
General and administrative		6,531		5,821		710	12	%
Intangible asset impairment		—		3,500		(3,500)	(100)	%
Gain on fair value remeasurement of contingent consideration		—		(1,901)		(1,901)	(100)	%
Total operating expenses		28,103		20,977		7,126	34	%
Operating loss		(27,696)		(20,824)		6,872	33	%
Investment and other income, net		912		145		767	529	%
Net loss before income tax benefit		(26,784)		(20,679)		6,105	30	%
Income tax benefit		—		227		(227)	(100)	%
Net loss	$	(26,784)	$	(20,452)	$	6,332	31	%

Net Loss

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

Revenue

Revenue from product development and licensing agreements for the three months ended September 30, 2022 was consistent with the three months ended September 30, 2021. The $0.3 million increase in contracts and grants revenue for the three months ended September 30, 2022, as compared to the three months ended September 30, 2021, was primarily due to an increase in revenue from the Company’s SBIR grant. We expect revenue to increase over the next twelve months as a result of an increase in services expected to be performed under our contract manufacturing and research and development agreement with Rockefeller University.

Research and Development Expense

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

	Three Months Ended				Increase/
	September 30,				(Decrease)
	2022		2021		$		%
		(In thousands)
Personnel	$	8,610	$	7,155	$	1,455	20	%
Laboratory supplies		1,075		1,255		(180)	(14)	%
Facility		1,088		1,148		(60)	(5)	%
Product development		9,271		3,101		6,170	199	%

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Personnel expenses primarily include salary, benefits, stock-based compensation and payroll taxes. The $1.5 million increase in personnel expenses for the three months ended September 30, 2022, as compared to the three months ended September 30, 2021, was primarily due to higher stock-based compensation expense and an increase in employee headcount. We expect personnel expenses to increase over the next twelve months as a result of additional headcount to support the expanded development of barzolvolimab.

Laboratory supplies expenses include laboratory materials and supplies, services, and other related expenses incurred in the development of our technology. The $0.2 million decrease in laboratory supply expenses for the three months ended September 30, 2022, as compared to the three months ended September 30, 2021, 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. Facility expenses for the three months ended September 30, 2022 was relatively consistent with the three months ended September 30, 2021. We expect facility expenses to remain relatively consistent over the next twelve months, although there may be fluctuations on a quarterly basis.

Product development expenses include clinical investigator site fees, external trial monitoring costs, data accumulation costs, contracted research and outside clinical drug product manufacturing. The $6.2 million increase in product development expenses for the three months ended September 30, 2022, as compared to the three months ended September 30, 2021, was primarily due to an increase in barzolvolimab clinical trial and contract manufacturing expenses. We expect product development expenses to increase over the next twelve months as a result of further increases in barzolvolimab clinical trial, contract manufacturing and contract research expenses.

General and Administrative Expense

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

Intangible Asset Impairment

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

(Gain) Loss on Fair Value Remeasurement of Contingent Consideration

The $1.9 million gain on fair value remeasurement of contingent consideration for the three months ended September 30, 2021 was primarily due to updated assumptions for the TAM program.

Investment and Other Income, Net

The $0.8 million increase in investment and other income, net for the three months ended September 30, 2022, as compared to the three months ended September 30, 2021, was primarily due to higher interest rates on fixed income investments. We expect investment and other income to increase over the next twelve months primarily due to higher interest rates and higher other income related to our sale of New Jersey tax benefits.

Income Tax Benefit

A $0.2 million non-cash income tax benefit was recorded related to the impairment of the TAM program IPR&D asset in the third quarter of 2021.

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

	Nine Months Ended				Increase/		Increase/
	September 30,				(Decrease)		(Decrease)
	2022		2021		$		%
	(In thousands)
Revenues:
Product development and licensing agreements	$	30	$	29	$	1	3	%
Contracts and grants		714		4,288		(3,574)	(83)	%
Total revenues	$	744	$	4,317	$	(3,573)	(83)	%
Operating expenses:
Research and development		59,359		38,633		20,726	54	%
General and administrative		20,596		14,247		6,349	45	%
Intangible asset impairment		—		3,500		(3,500)	(100)	%
Gain on fair value remeasurement of contingent consideration		(6,862)		(1,160)		5,702	492	%
Litigation settlement related loss		15,000		—		15,000	n/a
Total operating expenses		88,093		55,220		32,873	60	%
Operating loss		(87,349)		(50,903)		36,446	72	%
Investment and other income, net		1,511		313		1,198	383	%
Net loss before income tax benefit		(85,838)		(50,590)		35,248	70	%
Income tax benefit		—		227		(227)	(100)	%
Net loss	$	(85,838)	$	(50,363)	$	35,475	70	%

Net Loss

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

Revenue

Revenue from product development and licensing agreements for the nine months ended September 30, 2022, was relatively consistent with the nine months ended September 30, 2021. The $3.6 million decrease in contracts and grants revenue for the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021, was primarily related to a decrease in services performed under our manufacturing and research and development agreements with Rockefeller University and Gilead Sciences.

Research and Development Expense

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

	Nine Months Ended				Increase/
	September 30,				(Decrease)
	2022		2021		$		%
	(In thousands)
Personnel	$	24,116	$	19,037	$	5,079	27	%
Laboratory supplies		4,821		4,370		451	10	%
Facility		3,566		3,601		(35)	(1)	%
Product development		22,374		8,835		13,539	153	%

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

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Laboratory supplies expenses include laboratory materials and supplies, services, and other related expenses incurred in the development of our technology. The $0.5 million increase in laboratory supply expenses for the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021, was primarily due to higher laboratory materials and supplies purchases.

Facility expenses include depreciation, amortization, utilities, rent, maintenance and other related expenses incurred at our facilities. Facility expenses for the nine months ended September 30, 2022 was relatively consistent with the nine months ended September 30, 2021.

Product development expenses include clinical investigator site fees, external trial monitoring costs, data accumulation costs, contracted research and outside clinical drug product manufacturing. The $13.5 million increase in product development expenses for the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021, was primarily due to an increase in barzolvolimab clinical trial and contract manufacturing expenses.

General and Administrative Expense

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

Intangible Asset Impairment

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

(Gain) Loss on Fair Value Remeasurement of Contingent Consideration

The $6.9 million gain on fair value remeasurement of contingent consideration for the nine months ended September 30, 2022 was primarily due to our decision to deprioritize the CDX-1140 program. The $1.2 million gain on fair value remeasurement of contingent consideration for the nine months ended September 30, 2021 was primarily due to updated assumptions for the TAM program, changes in discount rates and the passage of time.

Litigation Settlement Related Loss

We recorded a loss of $15.0 million in the second quarter of 2022 related to the Initial Payment due under the binding settlement term sheet (the “Term Sheet”) entered with SRS.

Investment and Other Income, Net

The $1.2 million increase in investment and other income, net for the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021, was primarily due to higher interest rates on fixed income investments.

Income Tax Benefit

A $0.2 million non-cash income tax benefit was recorded related to the impairment of the TAM program IPR&D asset in the third quarter of 2021.

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LIQUIDITY AND CAPITAL RESOURCES

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

The use of our cash flows for operations has primarily consisted of salaries and wages for our employees; facility and facility-related costs for our offices, laboratories and manufacturing facility; fees paid in connection with preclinical studies, clinical studies, contract manufacturing, laboratory supplies and services; and consulting, legal and other professional fees. We anticipate that our cash flows from operations will continue to be focused in these areas as we progress our current drug candidates through the clinical trial process and develop additional drug candidates. To date, the primary sources of cash flows from operations have been payments received from our collaborative partners and from government entities 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, 2022, our principal sources of liquidity consisted of cash, cash equivalents and marketable securities of $323.5 million. We have had recurring losses and incurred a loss of $85.8 million for the nine months ended September 30, 2022. Net cash used in operations for the nine months ended September 30, 2022 was $82.0 million. We believe that the cash, cash equivalents and marketable securities at September 30, 2022 are sufficient to meet estimated working capital requirements and fund planned operations through 2025. This could be impacted if we elect to pay the future milestones under the Settlement Agreement with SRS, if any, in cash.

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

Operating Activities

Net cash used in operating activities was $82.0 million for the nine months ended September 30, 2022 as compared to $46.4 million for the nine months ended September 30, 2021. The increase in net cash used in operating activities was primarily due to an increase in research and development and general and administrative expenses and the $15.0 million Initial Payment made to SRS under the Settlement Agreement. We expect that cash used in operating activities (not including the $15.0 million Initial Payment made to SRS) will increase over the next twelve months as a result of the expanded development of barzolvolimab.

We have incurred and will continue to incur significant costs in the area of research and development, including preclinical and clinical trials and clinical drug product manufacturing as our drug candidates are developed. We plan to spend significant amounts to progress our current drug candidates through the clinical trial 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, pursuant to our existing arrangements and arrangements we may enter in the future.

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Investing Activities

Net cash provided by investing activities was $58.7 million for the nine months ended September 30, 2022 as compared to net cash used in investing activities of $197.2 million for the nine months ended September 30, 2021. The increase in net cash provided by investing activities was primarily due to net sales and maturities of marketable securities of $60.3 million for the nine months ended September 30, 2022 as compared to net purchases of $196.3 million for the nine months ended September 30, 2021.

Financing Activities

Net cash provided by financing activities was $2.7 million for the nine months ended September 30, 2022 as compared to $271.9 million for the nine months ended September 30, 2021. The decrease in net cash provided by financing activities was primarily due to a decrease in net proceeds from stock issuances. During the third quarter of 2021, we issued 6,845,238 shares of common stock in an underwritten public offering resulting in net proceeds of $269.9 million, after deducting underwriting fees and offering expenses.

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 approximate fair value at September 30, 2022 due to the short-term maturities of these instruments.

Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

As of September 30, 2022, we evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of September 30, 2022. Our disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within time periods specified by the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting.

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1A.  Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K may not be the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

There were no material changes to the risk factors previously disclosed in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2022.

Item 5.  Other Information

On November 3, 2022, our Board of Directors, upon the recommendation of the Board’s Nominating and Corporate Governance Committee, voted to amend and restate our Amended and Restated By-Laws, as amended (the “Old Bylaws”) and approve the Second Amended and Restated By-Laws of Celldex Therapeutics, Inc. (the “New Bylaws), effective immediately. The New Bylaws include the following amendments:

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

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

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

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

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

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

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

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

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

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

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

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

● Make certain administrative, modernizing, clarifying and confirming changes.

The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the Second Amended and Restated By-Laws of Celldex Therapeutics, Inc., filed as Exhibit 3.1 to this Quarterly Report on Form 10-Q and incorporated by reference herein.

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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
**3.1	Second Amended and Restated By-Laws of Celldex Therapeutics, Inc., dated November 3, 2022
**10.1	Amended and Restated License Agreement by and between the Company and Yale University dated as of July 26, 2022*
**10.2	Tenth Amendment to Lease by and between the Company and University of Massachusetts Dartmouth dated as of August 1, 2022
**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.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
**101.SCH	Inline XBRL Taxonomy Extension Schema Document.
**101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
**101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
**101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
**101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibits 101).

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

** Filed herewith.

*** Furnished herewith.

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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 9, 2022	Anthony S. Marucci
	President and Chief Executive Officer
	(Principal Executive Officer)
	/s/ SAM MARTIN
Dated: November 9, 2022	Sam Martin
	Senior Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

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