CELLDEX THERAPEUTICS, INC.
FORM 10-K/A
(Amended Annual Report)
Filed 02/25/16 for the Period Ending 12/31/15
Address
Telephone
CIK
53 FRONTAGE ROAD
SUITE 220
HAMPTON, NJ 08827
908-200-7500
0000744218
Symbol CLDX
SIC Code
Industry
2835 - In Vitro and In Vivo Diagnostic Substances
Biotechnology & Drugs
Sector Healthcare
Fiscal Year
12/31
http://www.edgar-online.com
© Copyright 2016, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.
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TABLE
OF
CONTENTS
Table
of
ContentsUNITED
STATES
SECURITIES
AND
EXCHANGE
COMMISSION
Washington,
D.C.
20549FORM
10-K/A
Amendment
No.
1Commission
File
Number
000-15006CELLDEX
THERAPEUTICS,
INC.
(Exact
name
of
registrant
as
specified
in
its
charter)Delaware
13-3191702(State
or
other
jurisdiction
of
incorporation
ororganization)
(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)Registrant's
telephone
number,
including
area
code:
(908)
200-7500Securities
registered
pursuant
to
Section
12(b)
of
the
Act:Title
of
Class:
Name
of
Each
Exchange
on
WhichRegistered:Common
Stock,
par
value
$.001
NASDAQ
Global
MarketSecurities
registered
pursuant
to
Section
12(g)
of
the
Act:
None
Indicate
by
check
mark
if
the
registrant
is
a
well-known
seasoned
issuer,
as
defined
in
Rule
405
of
the
Securities
Act.
Yes
ý
No
o
Indicate
by
check
mark
if
the
registrant
is
not
required
to
file
reports
pursuant
to
Section
13
or
Section
15(d)
of
the
Act.
Yes
o
No
ý
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
1934during
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
requirementsfor
the
past
90
days.
Yes
ý
No
o
Indicate
by
check
mark
whether
the
registrant
has
submitted
electronically
and
posted
on
its
corporate
Web
site,
if
any,
every
Interactive
Data
File
required
tobe
submitted
and
posted
pursuant
to
Rule
405
of
Regulation
S-T
(§232.405
of
this
chapter)
during
the
preceding
12
months
(or
for
such
shorter
period
that
theregistrant
was
required
to
submit
and
post
such
files).
Yes
ý
No
o
Indicate
by
check
mark
if
disclosure
of
delinquent
filers
pursuant
to
Item
405
of
Regulation
S-K
(§229.405
of
this
Chapter)
is
not
contained
herein,
and
willnot
be
contained,
to
the
best
of
registrant's
knowledge,
in
definitive
proxy
or
information
statements
incorporated
by
reference
in
Part
III
of
this
Form
10-K
or
anyamendment
to
this
Form
10-K.
ý
Indicate
by
check
mark
whether
the
registrant
is
a
large
accelerated
filer,
an
accelerated
filer,
a
non-accelerated
filer
or
a
smaller
reporting
company.
Seedefinitions
of
"large
accelerated
filer,"
"accelerated
filer,"
and
"smaller
reporting
company"
in
Rule
12b-2
of
the
Exchange
Act.
(Check
one):(Mark
one)
ý
ANNUAL
REPORT
PURSUANT
TO
SECTION
13
OR
15(D)
OF
THE
SECURITIES
EXCHANGE
ACT
OF
1934For
the
fiscal
year
ended
December
31,
2015oro
TRANSITION
REPORT
PURSUANT
TO
SECTION
13
OR
15(D)
OF
THE
SECURITIES
EXCHANGE
ACT
OF
1934Large
accelerated
filer
ý
Accelerated
filer
o
Non-accelerated
filer
o
(Do
not
check
if
a
Smaller
Reporting
Company
o
Indicate
by
check
mark
whether
the
registrant
is
a
shell
company
(as
defined
in
Rule
12b-2
of
the
Act).
Yes
o
No
ý
The
aggregate
market
value
of
the
registrant's
common
stock
held
by
non-affiliates
as
of
June
30,
2015
was
$2.5
billion.
Exclusion
of
shares
held
by
anyperson
should
not
be
construed
to
indicate
that
such
person
possesses
the
power,
direct
or
indirect,
to
direct
or
cause
the
actions
of
the
management
or
policies
ofthe
registrant,
or
that
such
person
is
controlled
by
or
under
common
control
with
the
registrant.
The
number
of
shares
of
common
stock
outstanding
at
February
16,
2016
was
98,703,484
shares.DOCUMENTS
INCORPORATED
BY
REFERENCE
Portions
of
the
definitive
Proxy
Statement
for
our
2016
Annual
Meeting
of
Stockholders
are
incorporated
by
reference
into
Part
III
of
this
Report.
smaller
reporting
company) Table
of
ContentsExplanatory
note:
On
February
23,
2016,
the
registrant's
financial
printer
inadvertently
submitted
to
the
Securities
and
Exchange
Commission's
EDGAR
system
theregistrant's
annual
report
on
Form
10-K
for
the
year
ended
December
31,
2015,
while
the
financial
printer
was
preparing
a
test
file.
The
inadvertent
submission
wasnot
authorized
by
any
representative
of
the
registrant
and
was,
instead,
the
result
of
human
error
by
the
financial
printer.
Subsequently,
also
on
February
23,
2016,the
registrant
filed
a
current
report
on
Form
8-K
announcing
that
the
document
was
submitted
by
the
financial
printer
in
error
and
should
be
disregarded.
Thisannual
report
on
Form
10-K/A
is
being
filed
with
the
registrant's
authorization
and
is
identical
to
the
document
which
was
inadvertently
submitted
by
theregistration's
financial
printer
(with
the
exception
of
this
explanatory
note).CELLDEX
THERAPEUTICS,
INC.
ANNUAL
REPORT
ON
FORM
10-K
YEAR
ENDED
DECEMBER
31,
2015
TABLE
OF
CONTENTS
i
Page
Part
I
Item
1.
Business
1
Item
1A.
Risk
Factors
31
Item
1B.
Unresolved
Staff
Comments
57
Item
2.
Properties
57
Item
3.
Legal
Proceedings
58
Item
4.
Mine
Safety
Disclosures
58
Part
II
Item
5.
Market
for
Registrant's
Common
Equity,
Related
Stockholder
Matters
and
Issuer
Purchases
of
EquitySecurities
59
Item
6.
Selected
Financial
Data
60
Item
7.
Management's
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations
62
Item
7A.
Quantitative
and
Qualitative
Disclosures
About
Market
Risk
84
Item
8.
Financial
Statements
and
Supplementary
Data
85
Item
9.
Changes
in
and
Disagreements
With
Accountants
on
Accounting
and
Financial
Disclosure
113
Item
9A.
Controls
and
Procedures
113
Item
9B.
Other
Information
114
Part
III
Item
10.
Directors,
Executive
Officers
and
Corporate
Governance
114
Item
11.
Executive
Compensation
114
Item
12.
Security
Ownership
of
Certain
Beneficial
Owners
and
Management
and
Related
Stockholder
Matters
114
Item
13.
Certain
Relationships
and
Related
Transactions,
and
Director
Independence
114
Item
14.
Principal
Accountant
Fees
and
Services
115
Part
IV
Item
15.
Exhibits,
Financial
Statement
Schedules
116
Signatures
121
Table
of
Contents Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This
Annual
Report
on
Form
10-K
contains
forward-lookingstatements
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,
asamended,
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
andother
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
thatcould
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
byus.
These
factors
include,
but
are
not
limited
to:•our
ability
to
successfully
complete
research
and
further
development,
including
animal,
preclinical
and
clinical
studies,
and,
if
we
obtain
regulatoryapproval,
commercialization
of
Rintega®
(also
referred
to
as
rindopepimut
and
CDX-110),
glembatumumab
vedotin
(also
referred
to
as
CDX-011)and
other
drug
candidates
and
the
growth
of
the
markets
for
those
drug
candidates;
•our
ability
to
raise
sufficient
capital
to
fund
our
clinical
studies
and
to
meet
our
long-term
liquidity
needs,
on
terms
acceptable
to
us,
or
at
all.
If
weare
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
moreprograms,
discontinue
or
delay
on-going
or
anticipated
clinical
trials,
license
out
programs
earlier
than
expected,
raise
funds
at
significant
discountor
on
other
unfavorable
terms,
if
at
all,
or
sell
all
or
part
of
our
business;
•our
ability
to
manage
multiple
clinical
trials
for
a
variety
of
drug
candidates
at
different
stages
of
development,
including
ACT
IV
and
ReACT
forRintega
and
METRIC
for
glembatumumab
vedotin;
•the
cost,
timing,
scope
and
results
of
ongoing
safety
and
efficacy
trials
of
Rintega,
glembatumumab
vedotin,
and
other
preclinical
and
clinicaltesting;
•the
cost,
timing,
and
uncertainty
of
obtaining
regulatory
approvals
for
our
drug
candidates;
•our
ability
to
fund
and
complete
the
development
and,
if
we
obtain
regulatory
approval,
to
commercialize
Rintega
in
North
America
and
Europeourselves;
•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
bycontract
manufacturers,
suppliers
and
partners,
who
may
be
the
sole
source
of
supply;
•our
ability
to
develop
and
commercialize
products
before
competitors
that
are
superior
to
the
alternatives
developed
by
such
competitors;ii Table
of
Contents•our
ability
to
negotiate
strategic
partnerships,
where
appropriate,
for
our
programs,
which
may
include,
Rintega
outside
of
North
America
andEurope,
glembatumumab
vedotin
and
varlilumab
(also
referred
to
as
CDX-1127);
•our
ability
to
develop
technological
capabilities,
including
identification
of
novel
and
clinically
important
targets,
exploiting
our
existing
technologyplatforms
to
develop
new
product
candidates
and
expand
our
focus
to
broader
markets
for
our
existing
targeted
immunotherapeutics;
•our
ability
to
adapt
our
proprietary
antibody-targeted
technology,
or
APC
Targeting
Technology™,
to
develop
new,
safe
and
effective
therapeuticsfor
oncology
and
infectious
disease
indications;
•our
ability
to
protect
our
intellectual
property
rights,
including
the
ability
to
successfully
defend
patent
oppositions
filed
against
a
European
patentrelated
to
technology
we
use
in
varlilumab,
and
our
ability
to
avoid
intellectual
property
litigation,
which
can
be
costly
and
divert
management
timeand
attention;
and
•the
factors
listed
under
"Risk
Factors"
in
this
Annual
Report
on
Form
10-K.
All
forward-looking
statements
are
expressly
qualified
in
their
entirety
by
this
cautionary
notice.
You
are
cautioned
not
to
place
undue
reliance
on
anyforward-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
noobligation,
and
expressly
disclaim
any
obligation,
to
update,
revise
or
correct
any
of
the
forward-looking
statements,
whether
as
a
result
of
new
information,
futureevents
or
otherwise.
We
have
expressed
our
expectations,
beliefs
and
projections
in
good
faith,
and
we
believe
they
have
a
reasonable
basis.
However,
we
cannotassure
you
that
our
expectations,
beliefs
or
projections
will
result
or
be
achieved
or
accomplished.iii Table
of
ContentsPART
I
Item
1.
BUSINESS
Overview
Celldex
Therapeutics,
Inc.,
which
we
refer
to
as
"Celldex,"
"we,"
"us,"
"our"
or
the
"Company,"
is
a
biopharmaceutical
company
focused
on
the
developmentand
commercialization
of
several
immunotherapy
technologies
for
the
treatment
of
cancer
and
other
difficult-to-treat
diseases.
Our
drug
candidates
are
derivedfrom
a
broad
set
of
complementary
technologies
which
have
the
ability
to
utilize
the
human
immune
system
and
enable
the
creation
of
therapeutic
agents.
We
areusing
these
technologies
to
develop
targeted
immunotherapeutics
comprised
of
protein-based
molecules
such
as
vaccines,
antibodies
and
antibody-drug
conjugatesthat
are
used
to
treat
specific
types
of
cancer
or
other
diseases.
Our
latest
stage
drug
candidate,
Rintega
(also
referred
to
as
rindopepimut
and
CDX-110)
is
a
therapeutic
vaccine
in
clinical
studies
for
the
treatment
ofglioblastoma
patients
that
express
a
specific
cancer
marker
known
as
EGFRvIII.
In
February
2015,
the
U.S.
Food
and
Drug
Administration,
or
FDA,
grantedRintega
Breakthrough
Therapy
Designation
for
the
treatment
of
adult
patients
with
EGFRvIII-positive
glioblastoma.
We
completed
enrollment
in
December
2014in
ACT
IV,
a
pivotal
Phase
3
study
in
front-line
glioblastoma.
ACT
IV
completed
its
first
interim
analysis
at
50%
of
events
(deaths)
in
June
2015,
and
anindependent
Data
Safety
and
Monitoring
Board
recommended
that
the
study
continue
as
planned.
The
required
number
of
events
to
perform
the
second
interimanalysis
of
ACT
IV
were
reached
in
late
2015
and
the
analysis
is
expected
to
occur
in
March
2016.
Final
data
from
ACT
IV
are
expected
by
the
end
of
2016,although
our
expectations
regarding
the
timing
for
the
final
data
read
out
may
change
based
on
event
rates.We
have
also
completed
a
Phase
2
study
in
patients
withrecurrent
EGFRvIII-positive
glioblastoma.
Updated
results
from
this
randomized
study
comparing
Rintega
added
to
the
standard
of
care,
or
SOC,
compared
to
SOCalone
were
presented
in
November
2015.
A
statistically
significant
overall
survival
benefit
and
the
emergence
of
a
long-term
survival
benefit
were
observed.
Theprimary
endpoint
of
the
study,
progression-free
survival
at
six
months,
or
PFS6,
was
met.
Glembatumumab
vedotin
(also
referred
to
as
CDX-011)
is
a
targeted
antibody-drug
conjugate
in
a
randomized,
Phase
2b
study
for
the
treatment
of
triplenegative
breast
cancer
and
a
Phase
2
study
for
the
treatment
of
metastatic
melanoma.
Varlilumab
(also
referred
to
as
CDX-1127)
is
an
immune
modulatingantibody
that
is
designed
to
enhance
a
patient's
immune
response
against
their
cancer.
We
established
proof
of
concept
in
a
Phase
1
study
with
varlilumab,
whichhas
allowed
several
combination
studies
to
begin
in
various
indications.
We
also
have
a
number
of
earlier
stage
drug
candidates
in
clinical
development,
includingCDX-1401,
a
targeted
immunotherapeutic
aimed
at
antigen
presenting
cells,
or
APC,
for
cancer
indications
and
CDX-301,
an
immune
cell
mobilizing
agent
anddendritic
cell
growth
factor.
Our
drug
candidates
address
market
opportunities
for
which
we
believe
current
therapies
are
inadequate
or
non-existent.
We
are
building
a
fully
integrated,
commercial-stage
biopharmaceutical
company
that
develops
important
therapies
for
patients
with
unmet
medical
needs.Our
program
assets
provide
us
with
the
strategic
options
to
either
retain
full
economic
rights
to
our
innovative
therapies
or
seek
favorable
economic
terms
throughadvantageous
commercial
partnerships.
This
approach
allows
us
to
maximize
the
overall
value
of
our
technology
and
product
portfolio
while
best
ensuring
theexpeditious
development
of
each
individual
product.1 Table
of
Contents
The
following
table
includes
the
programs
that
we
currently
believe
are
significant
to
our
business:
Our
future
success
depends
upon
many
factors,
including
our
ability,
and
that
of
any
licensees
and
collaborators
that
we
may
have,
to
successfully
develop,obtain
regulatory
approval
for
and
commercialize
our
drug
candidates,
as
well
as
any
related
companion
diagnostic
tests.
We
have
had
no
commercial
revenuesfrom
sales
of
our
drug
candidates,
and
we
have
had
a
history
of
operating
losses.
It
is
possible
that
we
may
not
be
able
to
successfully
develop,
obtain
regulatoryapproval
for,
or
commercialize,
our
drug
candidates,
and
we
are
subject
to
a
number
of
risks
that
you
should
be
aware
of
before
investing
in
us.
These
risks
aredescribed
more
fully
in
"Item
1A.
Risk
Factors."Clinical
Development
ProgramsRintega
Rintega
is
an
epidermal
growth
factor
receptor
variant
III,
or
EGFRvIII,
specific
vaccine
for
glioblastoma,
or
GBM.
EGFRvIII
is
a
mutated
form
of
theepidermal
growth
factor
receptor,
or
EGFR,
that
is
only
expressed
in
cancer
cells
and
not
in
normal
tissue
and
can
directly
contribute
to
cancer
cell
growth.EGFRvIII
is
expressed
in
approximately
30%
of
GBM
tumors,
the
most
common
and
aggressive
form
of
brain
cancer.
Rintega
is
composed
of
the
EGFRvIIIpeptide
linked
to
a
carrier
protein
called
Keyhole
Limpet
Hemocyanin,
or
KLH,
and
administered
together
with
the
adjuvant
GM-CSF.
The
FDA
and
the
EuropeanMedicines
Agency,
or
EMA,
have
both
granted
Orphan
Drug
Designation
for
Rintega
for
the
treatment
of
EGFRvIII
expressing
GBM.
The
FDA
has
also
grantedFast
Track
designation.
In
February
2015,
the
FDA
granted
Rintega
Breakthrough
Therapy
Designation
for
the
treatment
of
adult
patients
with
EGFRvIII-positiveglioblastoma.
The
Phase
2a
study
of
Rintega
referred
to
as
ACTIVATE
was
led
by
collaborating
investigators
at
the
Brain
Tumor
Center
at
Duke
Cancer
Institute
inDurham,
North
Carolina
and
at
M.D.
Anderson
Cancer
Center
in
Houston,
Texas
and
enrolled
18
evaluable
GBM
patients.
An
extension
of
the
Phase
2a
studyreferred
to
as
ACT
II
evaluated
22
additional
GBM
patients
treated
in
combination
with
the
current
standard
of
care,
maintenance
temozolomide,
or
TMZ,
at
thesame
two
institutions.
The
Phase
2b
study
of
Rintega
referred
to
as
ACT
III
combined
Rintega
with
standard
of
care,
TMZ,
in
patients
with
newly
diagnosed
GBM.
The
ACT
IIIstudy
provided
for
a
multi-center,
non-randomized
dataset
for
Rintega
in
65
patients
at
over
30
sites
throughout
the
United
States,
or
U.S.
In
November
2013,
we
announced
the
four-
and
five-year
survival
data
from
the
105
patients
enrolled
in
the
three
Phase
2
Rintega
clinical
studies(ACTIVATE,
ACT
II
and
ACT
III)
in
EGFRvIII-positive
GBM.
Across
these
three
Phase
2
studies
of
Rintega,
survival
data
remains
consistent
and
suggests
acontinuing
survival
benefit
in
comparison
to
independent
control
datasets
(see
chart
below)
at
the
median
and
at
all
other
time
points
evaluated.2Product
(generic)
Indication/Field
Partner
StatusRintega
Front-line
glioblastoma
—
Phase
3Glembatumumab
vedotin
Metastatic
breast
cancer
—
Phase
2bRintega
Recurrent
glioblastoma
—
Phase
2Glembatumumab
vedotin
Metastatic
melanoma
—
Phase
2Varlilumab
Multiple
solid
tumors
—
Phase
1/2CDX-1401
Multiple
solid
tumors
—
Phase
1CDX-301
Allogeneic
hematopoietic
stem
cell
transplantation
—
Phase
2CDX-014
Renal
cancer
—
Phase
1 Table
of
ContentsPhase
2
Front-line
Long-term
Overall
Survival
Assessments
The
pooled
overall
long-term
survival
results
continue
to
be
consistent
with
the
ACT
III
Phase
2
study
(18%
for
4-years
and
14%
for
5-years).
In
December
2011,
we
initiated
ACT
IV,
a
pivotal,
randomized,
double-blind,
controlled
Phase
3
study
of
Rintega
in
patients
with
surgically
resected,EGFRvIII-positive
GBM.
Patients
were
randomized
after
the
completion
of
surgery
and
standard
chemoradiation
treatment.
The
treatment
regimen
includes
aRintega
priming
phase
post-radiation
followed
by
an
adjuvant
phase
where
Rintega
is
dosed
along
with
TMZ
and
a
Rintega
maintenance
therapy
phase.
Patients
aretreated
until
disease
progression
or
intolerance
to
therapy.
The
primary
objective
of
the
study
is
to
determine
whether
Rintega
plus
adjuvant
GM-CSF
improves
theoverall
survival
of
patients
with
newly
diagnosed
EGFRvIII-positive
GBM
with
minimal
residual
disease
post
resection
and
traditional
chemoradiation
whencompared
to
treatment
with
TMZ
and
a
control
injection
of
KLH.
KLH
is
a
component
of
Rintega
and
was
selected
due
to
its
ability
to
generate
a
similar
injectionsite
reaction
to
that
observed
with
Rintega.
In
December
2014,
enrollment
was
completed
in
the
ACT
IV
study.
In
total,
over
4,800
tissue
samples
from
GBM
patients
were
submitted
for
EGFRvIIIevaluation
from
more
than
200
clinical
trial
sites
across
22
countries
and,
consistent
with
prior
studies,
30%
were
positive
for
the
EGFRvIII
mutation.
The
studyenrolled
745
patients
to
reach
the
required
374
patients
with
minimal
residual
disease
(assessed
by
central
review)
needed
for
analysis
of
the
primary
overallsurvival
endpoint.
All
patients,
including
patients
with
disease
that
exceed
this
threshold,
will
be
included
in
a
secondary
analysis
of
overall
survival
as
well
asanalyses
of
progression-free
survival,
safety
and
tolerability,
and
quality
of
life.
The
timing
of
the
overall
survival
primary
endpoint
data
is
event-driven.
The
studydesign
requires
interim
analyses
to
be
conducted
by
an
independent
Data
Safety
and
Monitoring
Board
(DSMB)
at
50%
and
75%
of
events
(deaths).
The
firstinterim
analysis
occurred
in
June
2015,
and
the
DSMB
recommended
continuation
of
the
study
as
planned.
The
required
number
of
events
to
perform
the
secondinterim
analysis
of
ACT
IV
were
reached
in
late
2015,
and
the
analysis
is
expected
to
occur
in
March
2016.
Final
data
from
ACT
IV
are
expected
by
the
end
of2016,
although
our
expectations
regarding
the
timing
for
the
final
data
read
out
may
change
based
on
event
rates.
In
December
2011,
we
also
initiated
ReACT,
a
Phase
2
study
of
Rintega
in
combination
with
Avastin®
in
patients
with
recurrent
EGFRvIII-positive
GBM.This
study
completed
enrollment
in
2014
and
includes
3
groups.
Group
1
consists
of
73
patients
who
had
not
previously
received
Avastin
and
were
randomized
toreceive
either
Rintega
and
Avastin
or
a
control
injection
of
KLH
and
Avastin
in
a
blinded
fashion.
Group
2
includes
25
patients
who
are
refractory
to
Avastinhaving
received
Avastin
in
either
the
frontline
or
recurrent
setting
with
subsequent
progression
and
who
received
Rintega
plus
Avastin
in
a
single
treatment
arm.
InAugust
2013,
we
announced
the
addition
of
an
expansion
cohort
of
up
to
75
patients,
called
Group
2C,
to
better
characterize
the
potential
activity
of
Rintega
in
thisrefractory
patient
population.
This
decision
was
based
on
early
evidence
of
anti-tumor
activity,
including
stable
disease,
tumor
shrinkage
and
investigator-reportedresponse.
In
total,
Group
2C
enrolled
28
patients.
The
primary
endpoint
is
six
month
progression-free
survival
rate
(PFS-6)
for3
Median,
Years
(95%
CI)
2-year
rate
3-year
rate
4-year
rate
5-year
rate
Phase
2
Rintega
studies
(n=105)
2.1
(1.8,
2.4)
51%
30%
18%
14%Matched
historical
control
(n=17)(1)
1.3
(0.9,
1.7)
6%
6%
0%
0%(1)Patients treated at M.D. Anderson contemporaneously to ACTIVATE, matched for major eligibility requirements, including EGFRvIII-positive GBM, gross total resection and no disease progression through chemoradiation treatment. Table
of
Contentsgroups
1
and
2
and
objective
response
rate
(ORR)
for
group
2C.
Other
study
endpoints
include
PFS-6,
ORR,
PFS,
overall
survival,
or
OS
and
safety
andtolerability.
In
November
2015,
we
reported
the
following
mature
data
from
Group
1
of
the
ReACT
study.
Tumor
responses
were
evaluated
in
accordance
with
ResponseAssessment
in
Neuro-Oncology
(RANO)
criteria
by
an
independent
expert
review
committee
blinded
to
treatment
group
assignment.
Data
for
this
long-term
updateincluded
study
results
through
September
1,
2015.•PFS6:
As
previously
reported
in
May
2015,
the
primary
endpoint
of
the
study,
PFS6,
was
met.
In
the
intent
to
treat
(ITT)
population,
28%
ofpatients
on
the
Rintega
arm
were
progression
free
at
six
months
compared
to
16%
of
patients
on
the
control
arm
(p=0.1163).
•Survival:
Mature
overall
survival
(OS)
data
continue
to
show
a
marked
benefit
[hazard
ratio
=
0.53
(0.32,
0.88);
p=0.0137]
with
a
long-termsurvival
benefit
observed
in
the
Rintega
arm.
Consistent
with
previous
studies
of
Rintega
and
the
published
data
observed
for
immune-mediatedtherapeutics,
this
survival
benefit
includes
multiple
patients
exceeding
what
is
customary
survival
for
EGFRvIII-positive
glioblastoma,
also
referredto
as
a
tail
on
the
survival
curve.
At
two
years,
the
survival
rate
for
Rintega
patients
in
the
ITT
population
is
25%
versus
0%
for
control
patients.Overall
Survival
(OS),
Intent
to
Treat
(ITT)
Population
•Objective
Response
Rate
(ORR):
Nine
out
of
30
evaluable
ITT
patients
(30%)
on
the
Rintega
arm
experienced
a
confirmed
objective
responseversus
six
out
of
34
evaluable
patients
(18%)
on
the
control
arm.
Five
patients
on
the
Rintega
arm
experienced
durable
responses
greater
than
sixmonths,
and
three
of
these
patients
experienced
durable
responses
greater
than
18
months
(range
of
18.6+
to
22.2
months).
In
contrast,
only
twopatients
on
the
control
arm
experienced
a
durable
response
greater
than
six
months,
and
none
experienced
a
response
greater
than
7.4
months.
•Steroid
Use:
Further
emphasizing
the
level
of
disease
control,
50%
of
the
18
patients
on
the
Rintega
arm
who
were
on
steroids
at
the
start
oftreatment
were
able
to
stop
steroids
for
at
least
two
months
during
treatment
versus
only
26%
of
the
19
patients
on
the
control
arm
who
were
onsteroids
at
the
start
of
treatment.
33%
of
patients
on
the
Rintega
arm
were
able
to
stop
steroids
for
more
than
six
months,
and,
of
these,
three
wereable
to
stop
for
more
than
one
year
versus
none
on
the
control
arm
for
either
time
point.
•Immune
Response:
Prolonged
survival
was
associated
with
high
anti-EGFRvIII
humoral
responses.
Recent
in vivo experiments
have
shown
thoseimmune
responses
had
tumor
killing
function
through
antibody
dependent
cellular
cytotoxicity
(ADCC)
of
EGFRvIII-expressing
tumor
cells.
Thisbiologic
effector
function
is
rarely
proven
for
immune
therapies.
Importantly,
rapid
generation
of
anti-EGFRvIII
humoral
response
correlated
withlonger
survival;
however,
even
those
with
slower
development
of
immune
responses
benefitted.
No
patient
in
the
control
arm
had
detectableEGFRvIII
specific
antibody
response.
This
effect
is
consistent
with
Rintega's
proposed
mechanism
of
action
as
a
targeted
immunotherapeuticvaccine.
•Other:
Multiple
subgroup
and
adjusted
analyses
have
concluded
that
the
consistent
survival
benefit
observed
in
the
study
was
not
influenced
bypotential
imbalances
in
patient
demographics.4
Hazard
Ratio
(HR)
HR
=
0.53
(0.32,
0.88);
p=0.0137
Median
(95%
CI)
OS
12
months
OS
18
months
OS
24
months
Rintega
+
BV
11.3
(9.9,
16.2)
44%
32%
25%
Control
+
BV
9.3
(7.1,
11.4)
32%
13%
0% Table
of
Contents•Safety:
Rintega
was
very
well
tolerated
without
unexpected
additive
toxicity
to
Avastin.
Additional
studies
of
Rintega
are
currently
planned
including:•A
Phase
2
study
of
Rintega
prior
to
and
concurrent
with
chemoradiation
and
maintenance
temozolomide
in
patients
with
newly
diagnosedEGFRvIII-positive
glioblastoma.
Prior
studies
of
Rintega
in
the
newly
diagnosed
setting
have
initiated
Rintega
dosing
upon
completion
ofchemoradiation
concurrent
with
maintenance
temozolomide.
This
single-cohort,
open
label
study
is
designed
to
explore
the
feasibility
of
dosing
atan
earlier
timepoint
(after
surgery
but
prior
to
and
concurrent
with
chemoradiation).
The
primary
objective
of
the
study
is
to
evaluate
the
EGFRvIIIpeptide-specific
immune
response
obtained
with
this
dosing
regimen.
Secondary
objectives
include
evaluation
of
anti-tumor
activity,
including
PFS,OS,
ORR
and
duration
of
response,
assessment
of
health-related
quality
of
life
outcomes,
and
safety
and
tolerability.
This
study
is
expected
to
opento
enrollment
in
the
second
half
of
2016.
•A
Phase
2
single-arm
study
of
Rintega
with
adjuvant
imiquimod,
a
topically
administered
immune
response
modifier,
in
combination
with
Avastinin
patients
with
recurrent
EGFRvIII-positive
glioblastoma.
Previous
studies
of
Rintega
have
utilized
the
immune
response
modifier
GM-CSF.Imiquimod
has
broad
commercial
availability
and
could
potentially
serve
as
a
second
source
of
adjuvant
if
needed,
especially
outside
the
UnitedStates
where
GM-CSF
is
currently
available
through
specialty
distribution
channels.
The
primary
objective
of
this
study
is
to
evaluate
EGFRvIII-specific
immune
responses.
Secondary
objectives
include
evaluation
of
measures
of
anti-tumor
activity,
including
ORR,
duration
of
response,
PFS,and
OS,
and
to
characterize
the
safety
and
tolerability
profile
of
this
combination
approach.
This
study
is
expected
to
open
to
enrollment
in
March
of2016.
Concurrent
with
our
Rintega
clinical
development
program,
we
are
collaborating
with
Laboratory
Corporation
of
America
(LabCorp)
in
the
U.S.
and
Qiagenin
the
European
Union,
or
EU,
for
the
potential
commercialization
of
a
companion
diagnostic
to
enable
identification
of
the
EGFRvIII
mutation
in
patients
withglioblastoma.
The
LabCorp
diagnostic
has
been
developed
in
parallel
with
the
clinical
development
of
Rintega
and
was
utilized
to
screen
patients
for
the
Phase
3ACT
IV
study
and
the
Phase
2
ReACT
study.
In
the
U.S.,
we
are
working
with
LabCorp
to
file
the
diagnostic
for
FDA
approval
concurrently
with
Celldex'spotential
BLA
submission,
pending
successful
completion
of
the
ACT
IV
study.
In
the
EU,
Qiagen
will
seek
CE
marking
of
the
diagnostic
and
anticipatescompleting
this
certification
in
the
second
half
of
2016.Glembatumumab Vedotin
Glembatumumab
vedotin
is
an
antibody-drug
conjugate,
or
ADC,
that
consists
of
a
fully
human
monoclonal
antibody,
CR011,
linked
to
a
potent
cell-killingdrug,
monomethyl-auristatin
E,
or
MMAE.
The
CR011
antibody
specifically
targets
glycoprotein
NMB,
referred
to
as
gpNMB,
that
is
over-expressed
in
a
varietyof
cancers
including
breast
cancer
and
melanoma.
The
ADC
technology,
comprised
of
MMAE
and
a
stable
linker
system
for
attaching
it
to
CR011,
was
licensedfrom
Seattle
Genetics,
Inc.
and
is
the
same
as
that
used
in
the
marketed
product
Adcetris®.
The
ADC
is
designed
to
be
stable
in
the
bloodstream.
Followingintravenous
administration,
glembatumumab
vedotin
targets
and
binds
to
gpNMB,
and
upon
internalization
into
the
targeted
cell,
glembatumumab
vedotin
isdesigned
to
release
MMAE
from
CR011
to
produce
a
cell-killing
effect.
The
FDA
has
granted
Fast
Track
designation
to
glembatumumab
vedotin
for
the
treatmentof
advanced,
refractory/resistant
gpNMB-expressing
breast
cancer.
Treatment
of
Breast
Cancer:
The
Phase
1/2
study
of
glembatumumab
vedotin
administered
intravenously
once
every
three
weeks
evaluated
patients
withlocally
advanced
or
metastatic
breast
cancer
who
had
received
prior
therapy
(median
of
seven
prior
regimens).
The
study
began
with
a
bridging
phase
to
confirmthe
maximum
tolerated
dose,
or
MTD,
and
then
expanded
into
a
Phase
25 Table
of
Contentsopen-label,
multi-center
study.
The
study
confirmed
the
safety
of
glembatumumab
vedotin
at
the
pre-defined
maximum
dose
level
(1.88
mg/kg)
in
6
patients.
Anadditional
28
patients
were
enrolled
in
an
expanded
Phase
2
cohort
(for
a
total
of
34
treated
patients
at
1.88
mg/kg,
the
Phase
2
dose)
to
evaluate
the
PFS
rate
at12
weeks.
The
1.88
mg/kg
dose
was
well
tolerated
in
this
patient
population
with
the
most
common
adverse
events
of
rash,
alopecia
and
fatigue.
The
primaryactivity
endpoint,
which
called
for
at
least
5
of
25
(20%)
patients
in
the
Phase
2
study
portion
to
be
progression-free
at
12
weeks,
was
met
as
9
of
26
(35%)evaluable
patients
were
progression-free
at
12
weeks.
For
all
patients
treated
at
the
maximum
dose
level,
tumor
shrinkage
was
seen
in
62%
(16/26)
and
median
PFS
was
9.1
weeks.
A
subset
of
10
patients
had"triple
negative
disease,"
a
more
aggressive
breast
cancer
subtype
that
carries
a
high
risk
of
relapse
and
reduced
survival
as
well
as
limited
therapeutic
options
dueto
lack
of
over-expression
of
HER2/neu,
estrogen
and
progesterone
receptors.
In
these
patients,
78%
(7/9)
had
some
tumor
shrinkage,
12-week
PFS
rate
was
70%(7/10),
and
median
PFS
was
17.9
weeks.
Tumor
samples
from
a
subset
of
patients
across
all
dose
groups
were
analyzed
for
gpNMB
expression.
The
tumor
samplesfrom
most
patients
showed
evidence
of
stromal
and/or
tumor
cell
expression
of
gpNMB.
In
December
2012,
we
announced
final
results
from
the
EMERGE
study,
a
randomized,
multi-center
Phase
2b
study
of
glembatumumab
vedotin
in
122patients
with
heavily
pre-treated,
advanced,
gpNMB-positive
breast
cancer.
Patients
were
randomized
(2:1)
to
receive
either
glembatumumab
vedotin
or
single-agent
Investigator's
Choice,
or
IC,
chemotherapy.
Patients
randomized
to
receive
IC
were
allowed
to
cross
over
to
receive
glembatumumab
vedotin
followingdisease
progression.
Activity
endpoints
included
response
rate,
PFS
and
OS.
The
final
results,
as
shown
below,
suggested
that
glembatumumab
vedotin
inducessignificant
response
rates
compared
to
currently
available
therapies
in
patient
subsets
with
advanced,
refractory
breast
cancers
with
gpNMB
over-expression(expression
in
at
least
25%
of
tumor
cells)
and
in
patients
with
triple
negative
breast
cancer.
The
OS
and
PFS
of
patients
treated
with
glembatumumab
vedotin
wasalso
observed
to
be
greatest
in
patients
with
triple
negative
breast
cancer
who
also
over-express
gpNMB
and
all
patients
with
gpNMB
over-expression.EMERGE:
Overall
Response
Rate
and
Disease
Control
Data
6
gpNMB
Over-Expression
Triple
Negative
and
gpNMB
Over-Expression
glembatumumab
vedotin
Investigator
Choice
glembatumumab
vedotin
Investigator
Choice
(n=25)
(n=8)
(n=12)
(n=4)
Response
32%
13%
33%
0%Disease
Control
Rate
64%
38%
75%
25%Responses per RECIST 1.1; IC = Investigator's Choice; glembatumumab vedotin arm includes 15 patients who crossed over to receiveglembatumumab vedotin treatment after progression on IC. Analysis of best response excludes patients who discontinued from study withoutevaluable post-baseline radiographic imaging (n=15 for glembatumumab vedotin arm; n=5 for IC arm). Table
of
ContentsEMERGE:
Progression
Free
Survival
(PFS)
and
Overall
Survival
(OS)
Data
In
December
2013,
we
initiated
METRIC,
a
randomized,
controlled
Phase
2b
study
of
glembatumumab
vedotin
in
patients
with
triple
negative
breast
cancerthat
over-express
gpNMB.
Clinical
trial
sites
are
open
to
enrollment
across
the
U.S.,
Canada
and
Australia,
and
trial
expansion
into
the
EU
is
underway
withenrollment
planned
to
open
in
the
first
quarter
of
2016.
The
METRIC
protocol
was
amended
in
late
2014
based
on
feedback
from
clinical
investigators
conductingthe
study
that
the
eligibility
criteria
for
study
entry
were
limiting
their
ability
to
enroll
patients
they
felt
were
clinically
appropriate.
In
addition,
we
had
spoken
tocountry-specific
members
of
the
European
Medicines
Agency,
or
EMA,
and
believed
a
significant
opportunity
existed
to
expand
the
study
into
the
EU.
Theamendment
expanded
patient
entry
criteria
to
position
it
for
full
marketing
approval
with
global
regulators,
including
the
EMA,
and
to
support
improved
enrollmentin
the
study.
The
primary
endpoint
of
the
study
is
PFS
as
PFS
is
an
established
endpoint
for
full
approval
registration
studies
in
this
patient
population
in
both
theU.S.
and
the
EU.
The
sample
size
(n=300)
and
the
secondary
endpoint
of
OS
remained
unchanged.
We
implemented
these
changes
in
parallel
to
regulatorydiscussions
to
maintain
momentum
at
open
clinical
trial
sites.
Since
implementation,
both
the
FDA
and
central
European
regulatory
authorities
have
reviewed
theprotocol
design,
and
we
believe
the
METRIC
study
could
support
marketing
approval
in
both
the
U.S.
and
Europe
dependent
upon
data
review.
Based
on
currentprojections,
we
believe
enrollment
will
be
completed
in
the
second
half
of
2016.
Treatment
of
Metastatic
Melanoma:
The
Phase
1/2
open-label,
multi-center,
dose
escalation
study
evaluated
the
safety,
tolerability
and
pharmacokineticsof
glembatumumab
vedotin
in
117
patients
with
un-resectable
Stage
III
or
Stage
IV
melanoma
who
had
failed
no
more
than
one
prior
line
of
cytotoxic
therapy.
TheMTD
was
determined
to
be
1.88
mg/kg
administered
intravenously
once
every
three
weeks.
The
study
achieved
its
primary
activity
objective
with
an
ORR
in
thePhase
2
cohort
of
15%
(5/34).
Median
PFS
was
3.9
months.
Glembatumumab
vedotin
was
generally
well
tolerated,
with
the
most
frequent
treatment-relatedadverse
events
being
rash,
fatigue,
hair
loss,
pruritus,
diarrhea
and
neuropathy.
In
the
subset
of
patients
with
tumor
biopsies,
high
levels
of
tumor
expression
ofgpNMB
appeared
to
correlate
with
favorable
outcome.
In
the
seven
patients
whose
tumors
were
found
to
express
high
amounts
of
gpNMB,
and
who
were
treated
atthe
maximum
tolerated
doses
across
all
dosing
schedules,
median
PFS
was
4.9
months.
The
development
of
rash,
which
may
be
associated
with
the
presence
ofgpNMB
in
the
skin,
also
seemed
to
correlate
with
greater
PFS.
In
December
2014,
we
initiated
a
single
arm,
open-label
Phase
2
study
of
glembatumumab
vedotin
in
patients
with
unresectable
Stage
III
or
IV
melanoma.The
study
includes
approximately
10
sites
in
the
United
States
and
will
enroll
approximately
60
patients.
The
primary
objective
is
to
evaluate
the
anticancer
activityof
glembatumumab
vedotin
in
advanced
melanoma
as
measured
by
the
ORR.
Secondary
endpoints
include
analyses
of
PFS,
duration
of
response,
OS,
retrospectiveinvestigation
of7
gpNMB
Over-Expression
Triple
Negative
and
gpNMB
Over-Expression
glembatumumab
vedotin
Investigator
Choice
glembatumumab
vedotin
Investigator
Choice
Median
PFS
(months)
2.7
1.5
3.0
1.5
p=0.14
p=0.008
Median
OS
(months)
10.0
5.7
10.0
5.5
p=0.18
p=0.003
When cross over patients are removed, median OS in patients with gpNMB over-expression is 10.0 months for glembatumumab vedotin vs5.2 months for IC (p=0.05), and median OS in triple negative patients with gpNMB over-expression is 10.0 months for glembatumumab vedotin vs5.2 months for IC (p=0.009). Table
of
Contentswhether
the
anticancer
activity
of
glembatumumab
vedotin
is
dependent
upon
the
degree
of
gpNMB
expression
in
tumor
tissue
and
safety.
Based
on
currentprojections,
we
believe
enrollment
will
be
completed
in
the
second
quarter
of
2016.
We
have
entered
into
a
collaborative
relationship
with
PrECOG
under
which
they
will
conduct
a
Phase
2
study
in
squamous
cell
lung
cancer.
This
study
isexpected
to
open
to
enrollment
in
the
first
half
of
2016.
We
have
also
entered
into
a
Cooperative
Research
and
Development
Agreement,
or
CRADA,
with
theNational
Cancer
Institute,
or
NCI,
under
which
NCI
is
sponsoring
two
studies
of
glembatumumab
vedotin—one
in
uveal
melanoma
and
one
in
pediatricosteosarcoma.
Both
studies
are
currently
open
to
enrollment.
The
uveal
melanoma
study
is
a
single
arm,
open
label
study
in
patients
with
locally
recurrent
ormetastatic
uveal
melanoma.
The
primary
outcome
measure
is
ORR.
Secondary
outcome
measures
include
change
in
gpNMB
expression
on
tumor
tissue
viaimmunohistochemistry,
safety,
OS
and
PFS.
The
osteosarcoma
study
is
a
single
arm,
open
label,
evaluation
of
adolescent
and
adult
patients
with
recurrent
orrefractory
osteosarcoma.
The
co-primary
objectives
are
to
determine
whether
glembatumumab
vedotin
therapy
either
increases
the
disease
control
rate
at
4
monthsin
patients
with
recurrent
measurable
osteosarcoma
as
compared
to
historical
experience
and/or
whether
glembatumumab
vedotin
therapy
produces
an
objectiveresponse
rate
greater
than
20%
in
patients
without
previous
eribulin
(eribulin
mesylate)
treatment.
Secondary
outcome
measures
include
safety,
pharmacokineticsand
the
relation
of
gpNMB
expression
as
measured
by
immunohistochemistry
to
clinical
response.Varlilumab
Varlilumab,
a
fully
human
monoclonal
agonist
antibody,
binds
and
activates
CD27,
a
critical
co-stimulatory
molecule
in
the
immune
activation
cascade,primarily
by
stimulating
T
cells
to
attack
cancer
cells.
Restricted
expression
and
regulation
of
CD27
enables
varlilumab
specifically
to
activate
T
cells,
resulting
inan
enhanced
immune
response
with
a
favorable
safety
profile.
Varlilumab
has
also
been
shown
to
directly
kill
or
inhibit
the
growth
of
CD27
expressing
lymphomasand
leukemias
in vitro and
in vivo .
We
have
entered
into
license
agreements
with
the
University
of
Southampton,
UK
for
intellectual
property
to
use
anti-CD27antibodies
and
with
Medarex
(now
a
subsidiary
of
the
Bristol-Myers
Squibb
Company,
or
BMS)
for
access
to
the
UltiMab
technology
to
develop
andcommercialize
human
antibodies
to
CD27.
Patient
treatment
is
complete
in
the
open
label
Phase
1
study
of
varlilumab
in
patients
with
selected
malignant
solid
tumors
or
hematologic
cancers
at
multipleclinical
sites
in
the
U.S.
Initial
dose
escalation
cohorts
were
conducted
to
determine
an
optimal
dose
for
future
study,
and
no
maximum
tolerated
dose
was
reached.The
lymphoid
malignancies
dose
escalation
arm
completed
enrollment
(n=24),
and
a
new
cohort
was
added
to
include
evaluation
of
T
cell
malignancies.
Anexpansion
cohort
was
also
added
at
0.3
mg/kg
dosed
once
every
three
weeks
in
patients
with
Hodgkin
lymphoma
(n=
up
to
15).
The
solid
tumor
arm,
whichincluded
patients
with
various
solid
tumors,
completed
dose
escalation
in
2013.
Two
expansion
cohorts
were
subsequently
added
at
3
mg/kg
dosed
weekly
inmetastatic
melanoma
(n=16)
and
renal
cell
carcinoma,
or
RCC,
(n=15)
to
better
characterize
clinical
activity
and
further
define
the
safety
profile
in
preparation
forcombination
studies.
We
presented
updated
data
from
this
Phase
1
study
in
November
2014.
Varlilumab
was
very
well
tolerated
and
induced
immunologic
activity
in
patients
thatis
consistent
with
both
its
mechanism
of
action
and
preclinical
models.
A
total
of
86
patients
have
been
dosed
in
the
study.
55
patients
have
been
dosed
in
doseescalation
cohorts
(various
solid
and
hematologic
B-cell
tumors),
and
31
patients
have
been
dosed
in
the
expansion
cohorts
(melanoma
and
RCC)
at
3
mg/kg.
Inboth
the
solid
tumor
and
hematologic
dose-escalations,
the
pre-specified
maximum
dose
level
(10
mg/kg)
was
reached
without
identification
of
a
maximumtolerated
dose.
The
majority
of
adverse
events,
or
AEs,
related
to
treatment
have
been
mild
to
moderate
(Grade
1/2)
in
severity,
with
only
three
serious
AEs
relatedto
treatment
reported.
No
significant
immune-mediated
adverse
events
(colitis,
hepatitis,
etc.)
typically8 Table
of
Contentsassociated
with
checkpoint
blockade
have
been
observed.
Two
patients
experienced
objective
responses
including
a
complete
response
in
Hodgkin
lymphoma
and
apartial
response
in
renal
cell
carcinoma.
Thirteen
patients
experienced
stable
disease
with
a
range
of
3-36.2+
months
(as
of
November
2015)
to-date.
Based
on
theresults
observed
in
hematologic
malignancies,
an
expansion
cohort
in
up
to
15
patients
with
Hodgkin
lymphoma,
and
an
abbreviated
dose
escalation
in
T
cellhematologic
malignancies
were
added
and
are
now
closed
to
enrollment.
Any
incremental
data
updates
from
this
study
will
be
included
in
future
scientificpresentations/publications.
In
May
2014,
we
entered
into
a
clinical
trial
collaboration
with
BMS
to
evaluate
the
safety,
tolerability
and
preliminary
efficacy
of
varlilumab
and
Opdivo®,BMS'
PD-1
immune
checkpoint
inhibitor,
in
a
Phase
1/2
study.
Under
the
terms
of
this
clinical
trial
collaboration,
BMS
made
a
one-time
payment
to
us
of$5.0
million,
and
the
companies
amended
the
terms
of
our
existing
license
agreement
with
Medarex
(a
subsidiary
of
BMS)
related
to
our
CD27
program
wherebycertain
future
milestone
payments
were
waived
and
future
royalty
rates
were
reduced
that
may
have
been
due
from
us
to
Medarex.
In
return,
BMS
was
granted
atime-limited
right
of
first
negotiation
if
we
wish
to
out-license
varlilumab.
The
companies
also
agreed
to
work
exclusively
with
each
other
to
explore
anti-PD-1antagonist
antibody
and
anti-CD27
agonist
antibody
combination
regimens.
The
clinical
trial
collaboration
provides
that
the
companies
will
share
developmentcosts
and
that
we
will
be
responsible
for
conducting
the
Phase
1/2
study.
The
Phase
1/2
study
was
initiated
in
January
2015
and
is
being
conducted
in
adult
patients
with
multiple
solid
tumors
to
assess
the
safety
and
tolerability
ofvarlilumab
at
varying
doses
when
administered
with
Opdivo
followed
by
a
Phase
2
expansion
to
evaluate
the
activity
of
the
combination
in
disease
specific
cohorts.We
completed
enrollment
of
the
dose
escalation
portion
of
the
study
without
identification
of
a
maximum
tolerated
dose,
and
a
varlilumab
dose
has
been
identifiedfor
study
in
Phase
2
(3
mg/kg).
We
anticipate
that
the
Phase
2
portion
of
the
study
will
open
to
enrollment
in
the
second
quarter
of
2016.
The
protocol
originallyincluded
five
disease
cohorts
in
the
Phase
2
portion
of
the
study—advanced
non-small
cell
lung
cancer,
colorectal
cancer,
ovarian
cancer,
head
and
neck
squamouscell
carcinoma,
and
metastatic
melanoma.
Based
on
the
evolving
treatment
paradigm
for
the
combination
of
Opdivo
and
Yervoy®
in
metastatic
melanoma,
adecision
has
been
made
not
to
enroll
patients
in
this
disease
setting
at
this
time.
The
protocol
is
also
being
amended
to
include
additional
cohorts
in
renal
cellcarcinoma,
where
varlilumab
has
demonstrated
single-agent
clinical
activity,
and
glioblastoma,
an
area
of
focus
for
both
Celldex
and
BMS.
The
primary
objectiveof
the
Phase
2
cohorts
will
be
ORR.
Secondary
objectives
include
pharmacokinetics
assessments,
determining
the
immunogenicity
of
varlilumab
when
given
incombination
with
Opdivo
and
further
assessing
the
anti-tumor
activity
of
combination
treatment.
In
March
2015,
we
entered
into
a
clinical
trial
collaboration
with
Roche
to
evaluate
the
safety,
tolerability
and
preliminary
efficacy
of
varlilumab
andatezolizumab
(anti-PDL1),
Roche's
investigational
cancer
immunotherapy,
in
a
Phase
1/2
study.
The
Phase
1
portion
of
the
study
is
being
conducted
in
multipletumor
types,
and
the
primary
outcome
is
safety
and
tolerability.
The
Phase
2
portion
of
the
study
will
be
conducted
in
RCC,
and
the
primary
outcome
is
ORR.Secondary
outcome
measures
include
safety
and
tolerability,
pharmacokinetics,
immunogenicity
and
further
assessment
of
anti-tumor
activity
across
a
broad
rangeof
endpoints.
Under
the
terms
of
this
agreement,
Roche
will
provide
study
drug,
and
we
will
be
responsible
for
conducting
and
funding
the
study,
which
opened
toenrollment
in
December
2015.
In
April
2015,
we
initiated
a
Phase
1/2
safety
pilot
and
expansion
study
examining
the
combination
of
varlilumab
and
Yervoy
in
patients
with
Stage
III
or
IVmetastatic
melanoma.
In
the
Phase
2
portion
of
the
study,
patients
with
tumors
that
express
NY-ESO-1
will
also
receive
CDX-1401.
The
Phase
1
portion
of
thestudy
will
assess
the
safety
and
tolerability
of
varlilumab
at
varying
doses
when
administered
with
Yervoy
to
identify
a
recommended
dose
for
the
Phase
2
portionof
the
study.
The
Phase
2
study
will
include
two
cohorts—one
comprised
of
patients
who
are
NY-ESO-1
positive
and
one9 Table
of
Contentscomprised
of
patients
who
are
NY-ESO-1
negative.
Patients
who
are
NY-ESO-1
positive
will
also
receive
CDX-1401
(with
poly-ICLC
at
2
mg
given
as
anadjuvant)
in
addition
to
varlilumab
and
Yervoy.
The
primary
objective
for
both
cohorts
is
objective
response
rate
up
to
24
weeks.
Secondary
objectives
for
thePhase
2
study
include
safety
and
tolerability,
immunogenicity,
pharmacokinetics
and
further
assessment
of
anti-tumor
activity
across
a
broad
range
of
endpoints.
In
May
2015,
we
initiated
a
Phase
1/2
safety
and
tolerability
study
examining
the
combination
of
varlilumab
and
sunitinib
(Sutent®)
in
patients
withmetastatic
clear
cell
renal
cell
carcinoma.
The
Phase
1
portion
of
the
study
will
assess
the
safety
and
tolerability
of
varlilumab
at
varying
doses
when
administeredwith
sunitinib
to
identify
a
recommended
dose
for
the
Phase
2
portion
of
the
study.
The
primary
objective
of
the
Phase
2
portion
of
the
study
is
to
assess
thepreliminary
anti-tumor
efficacy
of
the
varlilumab/sunitinib
combination
measured
by
the
overall
response
rate.
Secondary
objectives
include
safety
and
tolerability,pharmacokinetics,
immunogenicity
and
further
assessment
of
anti-tumor
activity
across
a
broad
range
of
endpoints.
In
addition
to
our
sponsored
studies
and
clinical
trial
collaborations,
we
anticipate
that
varlilumab's
potential
activity
will
also
be
explored
in
investigatorsponsored
studies
at
various
academic
institutions.CDX-1401
CDX-1401,
developed
from
our
APC
Targeting
Technology,
is
an
antibody-based
NY-ESO-1-specific
therapeutic
vaccine
for
multiple
solid
tumors.
Thevaccine,
which
is
administered
with
an
adjuvant,
is
composed
of
the
cancer-specific
antigen
NY-ESO-1
fused
to
a
fully
human
antibody
that
binds
to
DEC-205
forefficient
delivery
to
dendritic
cells.
Delivery
of
tumor-specific
proteins
directly
to
dendritic
cells
in vivo elicits
potent,
broad,
anti-tumor
immune
responses
acrosspopulations
with
different
genetic
backgrounds.
In
humans,
NY-ESO-1
has
been
detected
in
20%
to
30%
of
all
melanoma,
lung,
esophageal,
liver,
gastric,
prostate,ovarian
and
bladder
cancers,
thus
representing
a
broad
opportunity.
We
are
developing
CDX-1401
for
the
treatment
of
malignant
melanoma
and
a
variety
of
solidtumors
which
express
the
proprietary
cancer
antigen
NY-ESO-1,
which
we
licensed
from
the
Ludwig
Institute
for
Cancer
Research
in
2006.
Preclinical
studieshave
shown
that
CDX-1401
is
effective
for
activation
of
human
T
cell
responses
against
NY-ESO-1.
We
have
completed
a
Phase
1
study
of
CDX-1401
which
assessed
the
safety,
immunogenicity
and
clinical
activity
of
escalating
doses
of
CDX-1401
with
TLRagonists
(resiquimod
and/or
Poly
ICLC)
in
45
patients
with
advanced
malignancies
refractory
to
all
available
therapies.
Sixty
percent
of
patients
had
confirmedNY-ESO
expression
in
archived
tumor
sample.
Thirteen
patients
maintained
stable
disease
for
up
to
13.4
months
with
a
median
of
6.7
months.
Treatment
was
welltolerated,
and
there
were
no
dose
limiting
toxicities.
Humoral
responses
were
elicited
in
both
NY-ESO-1
positive
and
negative
patients.
NY-ESO-1-specific
T
cellresponses
were
absent
or
low
at
baseline,
but
increased
post-vaccination
in
53%
of
evaluable
patients,
including
both
CD4
and/or
CD8
T
cell
responses.
Robustimmune
responses
were
observed
with
CDX-1401
with
resiquimod
and
Poly
ICLC
alone
and
in
combination.
Long-term
patient
follow
up
suggested
that
treatmentwith
CDX-1401
may
predispose
patients
to
better
outcomes
on
subsequent
therapy
with
checkpoint
inhibitors.
Of
the
45
patients
in
the
Phase
1
study,
eight
wenton
to
receive
subsequent
therapy
of
either
Yervoy
or
an
investigational
checkpoint
inhibitor,
and
six
of
these
patients
had
objective
tumor
regression.
Six
patientswith
melanoma
received
Yervoy
within
three
months
of
treatment
with
CDX-1401,
and
four
(67%)
had
objective
tumor
responses,
including
one
completeresponse,
which
compares
favorably
to
the
overall
response
rate
of
11%
previously
reported
in
metastatic
melanoma
patients
treated
with
single-agent
Yervoy.
Inaddition,
two
patients
with
non-small
cell
lung
cancer
received
an
investigational
checkpoint
blockade
within
two
months
of
completing
treatment
with
CDX-1401,and
both
achieved
partial
responses.
We
are
currently
developing
a
follow
on
program
that
will
better
assess
the
impact
of
CDX-1401
activity
on
response
tosubsequent
checkpoint
inhibitor
therapy
in
these
diseases.10 Table
of
Contents
The
Phase
1
study
identified
a
well-tolerated
and
immunogenic
regimen
to
take
forward
into
future
studies.
As
described
above,
in
April
2015,
we
initiated
aPhase
1/2
safety
pilot
and
expansion
study
examining
the
combination
of
varlilumab
and
Yervoy
in
patients
with
Stage
III
or
IV
metastatic
melanoma.
In
thePhase
2
portion
of
the
study,
patients
with
tumors
that
express
NY-ESO-1
will
also
receive
CDX-1401.
In
addition
to
our
sponsored
studies,
CDX-1401's
potential
activity
is
also
being
explored
in
investigator
sponsored
and
collaborative
studies.
A
Phase
2
studyof
CDX-1401
in
combination
with
CDX-301
is
being
conducted
in
metastatic
melanoma
by
the
Cancer
Immunotherapy
Trials
Network
under
a
CRADA
with
theCancer
Therapy
Evaluation
Program
of
the
NCI.
This
study
will
determine
if
CDX-1401
works
better
with
or
without
CDX-301
in
melanoma.
The
primaryoutcome
measure
of
the
study
is
immune
response
to
NY-ESO-1.
Secondary
outcome
measures
include
analysis
and
characterization
of
peripheral
bloodmononuclear
cells
(dendritic
cells,
T
cells,
natural
killer
cells,
etc.),
additional
immune
monitoring,
safety
and
clinical
outcomes
(survival
and
time
to
tumorrecurrence).
Enrollment
is
now
complete.
Based
on
results
to
date,
plans
for
additional
studies
are
being
considered
by
NCI.
Additionally,
a
Phase
1/2b
multi-arm
study
of
the
IDO1
inhibitor
INCB024360
in
combination
with
CDX-1401
and
Hiltonol®
is
being
conducted
in
patientsin
remission
with
ovarian,
fallopian
tube
or
primary
peritoneal
cancer
by
the
Roswell
Park
Cancer
Institute.
Celldex
is
providing
CDX-1401
and
Hiltonol
in
supportof
this
study.
Patients'
tumors
must
have
expressed
NY-ESO-1
or
the
LAGE-1
antigen
to
be
eligible
for
the
study.
Primary
outcome
measures
include
identifying
amaximum
tolerated
dose
determined
by
the
incidence
of
dose
limiting
toxicities
and
progression
free
survival.
Secondary
outcome
measures
include
additionalsafety
analyses
and
immune
monitoring.CDX-301
CDX-301,
a
recombinant
FMS-like
tyrosine
kinase
3
ligand,
or
Flt3L,
is
a
potent
hematopoietic
cytokine
that
uniquely
expands
dendritic
cells
andhematopoietic
stem
cells
in
combination
with
other
agents
to
potentiate
the
anti-tumor
response.
Depending
on
the
setting,
cells
expanded
by
CDX-301
promoteeither
enhanced
or
permissive
immunity.
CDX-301
is
in
clinical
development
for
multiple
cancers,
in
combination
with
vaccines,
adjuvants
and
other
treatmentsthat
release
tumor
antigens.
We
licensed
CDX-301
from
Amgen
Inc.
in
March
2009
and
believe
CDX-301
may
hold
significant
opportunity
for
synergisticdevelopment
in
combination
with
other
proprietary
molecules
in
our
portfolio.
In
February
2013,
we
announced
final
results
from
our
dose-escalating
Phase
1
study
of
CDX-301
in
30
healthy
subjects
in
collaboration
with
RockefellerUniversity.
The
Phase
1
study
evaluated
seven
different
dosing
regimens
of
CDX-301
to
determine
the
appropriate
dose
for
further
development
based
on
safety,tolerability
and
biological
activity.
The
data
from
the
study
were
consistent
with
previous
clinical
experience
and
demonstrated
that
CDX-301
was
well
toleratedand
can
effectively
mobilize
hematopoietic
stem
cell
populations
in
healthy
volunteers.
In
December
2013,
we
announced
data
from
a
preclinical
combinationstudy
of
CDX-301and
Mozobil®
(Plerixafor
injection,
formerly
AMD3100)
demonstrating
that
the
combination
of
these
agents
significantly
increaseshematopoietic
stem
cell
mobilization
in
mice.
The
data
demonstrate
a
novel
potent
cell
mobilization
regimen
combining
CDX-301
and
Mozobil®,
which
may
havesignificant
potential
for
use
in
autologous
and
allogeneic
hematopoietic
stem
cell
transplantation.
Based
on
the
safety
profile
and
the
clinical
and
preclinical
data
todate,
we
initiated
a
pilot
clinical
study
of
CDX-301
for
the
mobilization
and
transplantation
of
allogeneic
hematopoietic
stem
cells
in
patients
with
hematologicalmalignancies
undergoing
hematopoietic
stem
cell
transplantation.
Related
donors
of
patients
with
hematological
malignancies
requiring
hematopoietic
stem
celltransplant
are
administered
CDX-301
for
5
or
7
days
alone
or
in
combination
with
Mozobil
to
mobilize
CD34+
stem
cells.
The
primary
efficacy
endpoint
of
thestudy
is
determine
if
treatment
of
the
donor
results
in
the
collection
of
³
2
million
CD34+11 Table
of
ContentsHSCs/kg
recipient
body
weight
in
£
2
leukopoiesis
collections.
Other
key
endpoints
are
the
safety
of
the
treatment
regimen
in
the
donor
and
clinical
outcomes
inthe
recipient,
including
stem
cell
engraftment,
graft-versus-host
disease,
immune
reconstitution
and
relapse.
Preliminary
results
from
this
study
were
presented
atthe
annual
meeting
of
the
American
Society
for
Blood
and
Marrow
Transplantation
in
February
2016.
These
preliminary
data
from
three
donor/patient
pairsshowed
that
CDX-301
given
as
a
single
agent
was
well
tolerated
and
effective
at
mobilizing
hematopoietic
stem
cells
in
healthy
donors.
The
stem
cell
graftcontained
notable
increases
in
naïve
lymphocytes
and
plasmacytoid
dendritic
cells
consistent
with
preclinical
data
suggesting
a
possible
better
outcome.
Recipientsexperienced
successful
engraftment
in
an
expected
time
frame.
Additional
subjects
are
being
accrued
to
assess
the
potential
synergy
of
combining
CDX-301
withMozobil
in
this
setting.
In
addition
to
our
sponsored
studies
and
clinical
trial
collaborations,
CDX-301's
potential
activity
is
also
being
explored
in
investigator
sponsored
studies
atvarious
academic
institutions.
This
includes
a
Phase
1/2
study
of
CDX-301
and
Hiltonol
in
combination
with
low-dose
radiotherapy
in
patients
with
low-grade
B-cell
lymphomas
conducted
by
the
Icahn
School
of
Medicine
at
Mount
Sinai.
The
primary
outcome
of
the
study
is
objective
response
rate.
Secondary
outcomemeasures
include
safety
and
tumor
specific
immune
response.CDX-014
CDX-014
is
a
fully-human
monoclonal
ADC
that
targets
T
cell
immunoglobulin
and
mucin
domain
1,
or
TIM-1,
a
molecule
that
is
upregulated
in
severalcancers,
including
renal
cell
and
ovarian
carcinomas.
TIM-1
is
associated
with
kidney
injury,
and
the
shedding
of
its
ectodomain
is
a
predictive
biomarker
fortumor
progression.
TIM-1
has
very
restricted
expression
in
healthy
tissues,
making
it
a
promising
target
for
antibody
mediated
therapy.
The
TIM-1
antibody
islinked
to
MMAE
using
Seattle
Genetics'
proprietary
technology.
The
ADC
is
designed
to
be
stable
in
the
bloodstream,
but
to
release
MMAE
upon
internalizationinto
TIM-1-expressing
tumor
cells,
resulting
in
a
targeted
cell-killing
effect.
CDX-014
has
shown
potent
activity
in
preclinical
models
of
ovarian
and
renal
cancer.The
Investigative
New
Drug
(IND)
Application
is
active,
and
we
expect
to
initiate
a
Phase
1
clinical
study
in
renal
cell
carcinoma
in
2016.Development
StrategyImmunotherapy Platform:
We
believe
there
is
untapped
potential
in
immunotherapy
that
can
be
captured
through
the
right
combination
and/or
sequence
of
therapeutic
agents.Immunotherapy
approaches
have
encountered
difficulties
when
following
standard
drug
development.
The
mechanisms
of
action
are
complex,
activity
is
generallynot
dependent
on
highest
tolerated
dose
and
patient
response
is
highly
variable.
Our
understanding
of
the
immune
system,
cancer's
effect
on
immune
mediatedmechanisms,
and
the
impact
of
conventional
therapies
on
the
immune
system
provide
a
new
rationale
for
combining
therapies
that
may
lead
to
significant
clinicalbenefit
for
patients
with
cancer.
Our
intent
is
to
leverage
this
knowledge
and
the
availability
of
good,
tested
products
that
may
not
have
optimal
clinical
activity
as
a
monotherapy,
but
whichwe
believe
may
be
very
effective
in
combination
approaches.
Our
goal
is
to
design
and
develop
targeted
products
that
maximize
the
efficacy
of
immunotherapyregimens
through
combinations
of
therapeutic
agents
in
significant
and
growing
markets.
We
establish
governmental
and
corporate
alliances
to
fund
developmentwhen
appropriate
and
intend
to
commercialize
our
products
either
through
our
own
direct
selling
efforts
or,
for
products
which
we
cannot
develop
ourselvesthrough
to
commercialization,
through
corporate
partners.
This
approach
allows
us
to
maximize
the
overall
value
of
our
technology
and
product
portfolios
whilebest
ensuring
the
expeditious
development
of
each
individual
product.12 Table
of
Contents
Factors
that
may
significantly
harm
our
commercial
success,
and
ultimately
the
market
price
of
our
common
stock,
include
but
are
not
limited
to,announcements
of
technological
innovations
or
new
commercial
products
by
our
competitors,
disclosure
of
unsuccessful
results
of
clinical
testing
or
regulatoryproceedings
and
governmental
approvals,
adverse
developments
in
patent
or
other
proprietary
rights,
public
concern
about
the
safety
of
products
developed
by
usand
general
economic
and
market
conditions.
See
"Item
1A.
Risk
Factors."Partnerships
We
plan
to
commercialize
our
lead
drug
candidate
Rintega
ourselves
in
North
America
and
Europe.
We
may
enter
into
co-development
andcommercialization
partnerships
for
any
of
our
programs
where
appropriate,
including
Rintega
for
commercialization
outside
of
North
America
and
Europe,glembatumumab
vedotin
and
varlilumab.
In
the
past,
we
have
entered
into
collaborative
partnership
agreements
with
pharmaceutical
and
other
companies
andorganizations
that
provided
financial
and
other
resources,
including
capabilities
in
research,
development,
manufacturing,
and
sales
and
marketing,
to
support
ourresearch
and
development
programs
and
may
enter
into
more
of
them
in
the
future.
Partnership
agreements
may
terminate
without
benefit
to
us
if
the
underlying
products
are
not
fully
developed.
If
we
fail
to
meet
our
obligations
under
theseagreements,
they
could
terminate
and
we
might
need
to
enter
into
relationships
with
other
collaborators
and
to
spend
additional
time,
money,
and
other
valuableresources
in
the
process.
We
cannot
predict
whether
our
collaborators
will
continue
their
development
efforts
or,
if
they
do,
whether
their
efforts
will
achievesuccess.
Many
of
our
collaborators
face
the
same
kinds
of
risks
and
uncertainties
in
their
business
that
we
face.
A
delay
or
setback
to
a
partner
will,
at
a
minimum,delay
the
commercialization
of
any
affected
products,
and
may
ultimately
prevent
it.
Moreover,
any
partner
could
breach
its
agreement
with
us
or
otherwise
not
usebest
efforts
to
promote
our
products.
A
partner
may
choose
to
pursue
alternative
technologies
or
products
that
compete
with
our
technologies
or
products.
In
eithercase,
if
a
partner
failed
to
successfully
develop
one
of
our
products,
we
would
need
to
find
another
partner.
Our
ability
to
do
so
would
depend
upon
our
legal
rightto
do
so
at
the
time
and
whether
the
product
remained
commercially
viable.Research
Collaboration
and
License
Agreements
We
have
entered
into
license
agreements
whereby
we
have
received
licenses
or
options
to
license
technology,
specified
patents
and/or
patent
applications.These
license
and
collaboration
agreements
generally
provide
for
royalty
payments
equal
to
specified
percentages
of
product
sales,
annual
license
maintenancefees,
continuing
patent
prosecution
costs
and
potential
future
milestone
payments
to
third
parties
upon
the
achievement
of
certain
development,
regulatory
and/orcommercial
milestones.Medarex, Inc., a subsidiary of Bristol-Myers Squibb (Medarex)
We
and
Medarex
have
entered
into
an
assignment
and
license
agreement,
as
amended,
that
provides
for
the
assignment
of
certain
patent
and
other
intellectualproperty
rights
and
a
license
to
certain
Medarex
technology
related
to
the
Company's
APC
Targeting
Technology™
and
an
anti-mannose
receptor
product.
Underthe
terms
of
the
agreement,
we
may
be
required
to
pay
royalties
in
the
low-single
digits
on
any
net
product
sale
of
a
Licensed
Royalty-Bearing
Product
or
Anti-Mannose
Product
to
Medarex
until
the
later
of
(i)
the
expiration
of
the
last
to
expire
applicable
patent
and
(ii)
the
tenth
anniversary
of
the
first
commercial
sale
ofsuch
licensed
product.
We
and
Medarex
have
also
entered
into
a
research
and
commercialization
agreement,
as
amended,
that
provides
that
we
may
be
required
to
pay
Medarexmilestones
of
up
to
$7.0
million
upon
obtaining
first
approval
for
commercial
sale
in
a
first
indication
of
a
product
containing
a
licensed
antibody
and13 Table
of
Contentsroyalty
payments
in
the
low-to-mid
single
digits
on
any
net
product
sales
with
respect
to
the
development
of
any
products
containing
such
licensed
antibodies
untilthe
later
of
(i)
the
expiration
of
the
last
to
expire
applicable
patent
and
(ii)
the
tenth
anniversary
of
the
first
commercial
sale
of
such
licensed
product.
In
September2010,
we
exercised
an
option
under
our
research
and
commercialization
agreement,
whereby
we
licensed
from
Medarex
access
to
the
UltiMab
technology
todevelop
and
commercialize
human
antibodies
to
CD27,
including
varlilumab.
In
connection
with
the
clinical
trial
collaboration
we
entered
into
with
BMS
in
May2014,
we
and
BMS
agreed
to
waive
certain
future
milestone
payments
and
to
reduce
future
royalty
rates
that
we
may
have
owed
Medarex
in
connection
with
anyCD27
program.Rockefeller University (Rockefeller)
In
November
2005,
we
and
Rockefeller
entered
into
a
license
agreement
for
the
exclusive
worldwide
rights
to
human
DEC-205
receptor,
with
the
right
tosublicense
the
technology.
The
license
grant
is
exclusive
except
that
Rockefeller
may
use
and
permit
other
nonprofit
organizations
to
use
the
human
DEC-205receptor
patent
rights
for
educational
and
research
purposes.
We
may
be
required
to
pay
Rockefeller
milestones
of
up
to
$3.8
million
upon
obtaining
first
approvalfor
commercial
sale
in
a
first
indication
of
a
product
targeting
the
licensed
receptor
and
royalty
payments
in
the
low-to-mid
single
digits
on
any
net
product
saleswith
respect
to
development
and
commercialization
of
the
human
DEC-205
receptor.Duke University Brain Tumor Cancer Center (Duke)
In
September
2006,
we
and
Duke
entered
into
a
license
agreement
that
gave
us
access
and
reference
to
the
clinical
data
generated
by
Duke
and
itscollaborators
in
order
for
us
to
generate
our
own
filing
with
the
FDA
relating
to
Rintega.
We
may
be
required
to
pay
Duke
milestones
of
up
to
$0.7
million
uponobtaining
first
approval
for
commercial
sale
in
a
first
indication
and
royalty
payments
in
the
low-single
digits
on
any
net
product
sales
with
respect
to
developmentand
commercialization
of
Rintega.Ludwig Institute for Cancer Research (Ludwig)
In
October
2006,
we
and
Ludwig
entered
into
an
agreement
for
the
nonexclusive
rights
to
certain
cancer
tumor
targets
for
use
in
combination
with
our
APCTargeting
Technology.
We
may
be
required
to
pay
Ludwig
milestones
of
up
to
$1.0
million
upon
obtaining
first
approval
for
commercial
sale
in
a
first
indicationand
royalty
payments
in
the
low-single
digits
on
any
net
product
sales
with
respect
to
development
and
commercialization
of
the
technology
licensed
from
Ludwig.Alteris Therapeutics, Inc. (Alteris)
In
October
2005,
we
completed
the
acquisition
of
the
assets
of
Alteris,
including
the
EGFRvIII
molecule.
We
may
be
required
to
pay
Alteris
up
to
$5.0
millionupon
obtaining
the
first
approval
for
commercial
sale
of
a
product
containing
EGFRvIII,
including
Rintega.University of Southampton, UK (Southampton)
In
November
2008,
we
entered
into
a
license
agreement
with
Southampton
to
develop
human
antibodies
towards
CD27,
a
potentially
important
target
forimmunotherapy
of
various
cancers.
We
may
be
required
to
pay
Southampton
milestones
of
up
to
approximately
$1.4
million
upon
obtaining
first
approval
forcommercial
sale
in
a
first
indication
and
royalty
payments
in
the
low-single
digits
on
any
net
product
sales
with
respect
to
development
and
commercialization
ofvarlilumab.14 Table
of
ContentsAmgen Inc. (Amgen)
In
March
2009,
we
entered
into
a
license
agreement
with
Amgen
to
acquire
the
exclusive
rights
to
CDX-301
and
CD40
ligand,
or
CD40L.
CDX-301
andCD40L
are
immune
modulating
molecules
that
increase
the
numbers
and
activity
of
immune
cells
that
control
immune
responses.
We
may
be
required
to
payAmgen
milestones
of
up
to
$0.9
million
upon
obtaining
first
approval
for
commercial
sale
in
a
first
indication
and
royalty
payments
in
the
low-single
digits
on
anynet
product
sales
with
respect
to
development
and
commercialization
of
the
technology
licensed
from
Amgen,
including
CDX-301.Amgen Fremont (formerly Abgenix)
In
connection
with
our
acquisition
of
CuraGen
Corporation
in
2009,
we
assumed
the
license
agreement
between
CuraGen
and
Amgen
Fremont
(successor
in-interest
to
Abgenix)
to
develop
fully-human
monoclonal
antibody
therapeutics.
In
May
2009,
an
amendment
to
the
license
agreement
was
entered
into
related
toCuraGen's
exclusive
rights
to
develop
and
commercialize
glembatumumab
vedotin,
CDX-014
and
antibodies
to
10
other
licensed
antigens.
Under
the
amendment,CuraGen
and
Amgen
Fremont
agreed
to
modify
the
terms
of
their
existing
cross-license
of
antigens
whereby
our
amended
license
is
fully
paid-up
and
royalty-free.Seattle Genetics, Inc. (Seattle Genetics)
In
connection
with
our
acquisition
of
CuraGen,
we
assumed
the
license
agreement
between
CuraGen
and
Seattle
Genetics
whereby
CuraGen
acquired
therights
to
proprietary
ADC
technology,
with
the
right
to
sublicense,
for
use
with
its
proprietary
antibodies
for
the
potential
treatment
of
cancer.
Under
the
terms
ofthe
agreement,
we
have
the
responsibility
of
using
commercially
reasonable
efforts
to
develop,
commercialize
and
market
such
treatment.
In
furtherance
of
theseresponsibilities,
technical
assistance
from
Seattle
Genetics
is
available
to
us
as
necessary.
We
may
be
required
to
pay
Seattle
Genetics
milestones
of
up
to$5.0
million
and
$9.0
million
for
glembatumumab
vedotin
and
CDX-014,
respectively,
upon
obtaining
first
approval
for
commercial
sale
in
a
first
indication
androyalty
payments
in
the
mid-single
digits
on
any
net
product
sales
with
respect
to
development
and
commercialization
of
these
product
candidates.
The
term
of
theagreement
varies
country
to
country
and
may
be
until
the
later
of
the
expiration
of
the
last
relevant
patent
or
the
10
th
anniversary
of
the
first
commercial
sale.
Theagreement
allows
us
to
terminate
with
prior
written
notice,
with
both
parties
being
able
to
terminate
the
agreement
for
an
uncured
material
breach
or
insolvency
ofthe
other
party.Competition
The
biotechnology
and
pharmaceutical
industry
is
intensely
competitive
and
subject
to
rapid
and
significant
technological
change.
Many
of
the
products
thatwe
are
attempting
to
develop
and
commercialize
will
be
competing
with
existing
therapies.
Other
companies
are
pursuing
the
development
of
new
therapies
thattarget
the
same
diseases
and
conditions
that
we
are
targeting
and
may
compete
directly
with
our
drug
candidates.
We
face
competition
from
companies,
majoruniversities
and
research
institutions
in
the
United
States
and
abroad,
including
a
number
of
large
pharmaceutical
companies,
as
well
as
firms
specialized
in
thedevelopment
and
production
of
vaccines,
adjuvants
and
immunotherapeutic
delivery
systems.
Some
of
our
competitors
possess
substantially
greater
financial,technical
and
human
resources
than
we
possess.
Competitors
that
we
are
aware
of
that
have
initiated
a
Phase
3
study
or
have
obtained
marketing
approval
for
a
potential
competitive
drug/device
for
Rintegain
the
treatment
of
glioblastoma
and/or
glembatumumab
vedotin
in
the
treatment
of
breast
cancer
include
AbbVie,
Arbor
Pharmaceutics,
Inc.,
AstraZeneca
PLC,Bayer,
Bristol-Myers
Squibb,
Celgene
Corporation,
Eisai
Inc.,
Eli
Lilly
and
Company,
Medigene
AG,
Northwest
Biotherapeutics,
Inc.,
Novartis,
Novocure,Pfizer
Inc.,
and
Roche.15 Table
of
Contents
Our
competitors
may
utilize
discovery
technologies
and
techniques
or
partner
with
collaborators
in
order
to
develop
products
more
rapidly
or
successfully
thanus
or
our
collaborators
are
able
to.
In
addition,
some
competitors
have
significantly
greater
experience
than
we
have
in
conducting
preclinical
and
nonclinicaltesting
and
human
clinical
trials
of
drug
candidates,
scaling
up
manufacturing
operations
and
obtaining
regulatory
approvals
of
drugs
and
manufacturing
facilities.Accordingly,
our
competitors
may
succeed
in
obtaining
regulatory
approval
for
drugs
more
rapidly
than
we
do.
If
we
obtain
regulatory
approval
and
commencecommercial
sales
of
our
drug
candidates,
we
also
will
compete
with
respect
to
manufacturing
efficiency
and
sales
and
marketing
capabilities,
areas
in
which
wecurrently
have
limited
experience.
In
addition,
academic
institutions,
government
agencies
and
other
public
and
private
organizations
conducting
research
may
seek
patent
protection
withrespect
to
potentially
competitive
products
or
technologies
and
may
establish
exclusive
collaborative
or
licensing
relationships
with
our
competitors.
Moreover,technology
controlled
by
third
parties
that
may
be
advantageous
to
our
business
may
be
acquired
or
licensed
by
our
competitors,
thereby
preventing
us
fromobtaining
technology
on
commercially
reasonable
terms,
if
at
all.
We
will
also
compete
for
the
services
of
third
parties
that
may
have
already
developed
or
acquiredinternal
biotechnology
capabilities
or
made
commercial
arrangements
with
other
biopharmaceutical
companies
to
target
the
diseases
on
which
we
have
focusedboth
in
the
U.S.
and
outside
of
the
U.S.
We
also
face
competition
in
recruiting
and
retaining
highly
qualified
scientific
personnel
and
consultants
and
in
the
development
and
acquisition
oftechnologies.
Our
competitive
position
will
depend
upon
our
ability
to
attract
and
retain
qualified
personnel,
obtain
patent
protection
or
otherwise
develop
proprietaryproducts
or
processes
and
secure
sufficient
capital
resources
for
the
often
lengthy
period
between
technological
conception
and
commercial
sales.
We
will
requiresubstantial
capital
resources
to
complete
development
of
some
or
all
of
our
products,
obtain
the
necessary
regulatory
approvals
and
successfully
manufacture
andmarket
our
products.
In
order
to
secure
capital
resources,
we
anticipate
having
to
sell
additional
capital
stock,
which
would
dilute
existing
stockholders.
We
mayalso
attempt
to
obtain
funds
through
research
grants
and
agreements
with
commercial
collaborators.
However,
these
types
of
funding
are
uncertain
because
they
areat
the
discretion
of
the
organizations
and
companies
that
control
the
funds.
As
a
result,
we
may
not
receive
any
funds
from
grants
or
collaborations.
Alternatively,we
may
borrow
funds
from
commercial
lenders,
likely
at
high
interest
rates,
which
would
increase
the
risk
of
any
investment
in
us.Manufacturing
We
have
limited
experience
in
commercial
manufacturing.
Our
ability
to
conduct
late-stage
clinical
trials,
manufacture
and
commercialize
our
drug
candidateswill
depend
on
the
ability
of
such
third
parties
to
manufacture
our
drug
candidates
on
a
large
scale
at
a
competitive
cost
and
in
accordance
with
current
GoodManufacturing
Practices,
or
cGMP,
and
foreign
regulatory
requirements,
if
applicable.
We
rely
on
contract
manufacturing
organizations,
or
CMOs,
to
manufacturedrug
substance
and
drug
product
for
our
late-stage
clinical
studies
of
Rintega
and
glembatumumab
vedotin
as
well
as
for
future
commercial
supplies.
We
also
relyon
CMOs
for
filling
and
packaging,
labeling,
storage
and
shipping
of
drug
product.
In
order
for
us
to
establish
our
own
commercial
manufacturing
facility,
wewould
require
substantial
additional
funds
and
would
need
to
hire
and
retain
significant
additional
personnel
and
comply
with
extensive
cGMP
regulationsapplicable
to
such
a
facility.
The
commercial
manufacturing
facility
would
also
need
to
be
licensed
for
the
production
of
our
drug
candidates
by
the
FDA.
We
workwith
CMOs
under
established
manufacturing
arrangements
that
comply
with
the
FDA's
requirements
and
other
regulatory
standards,
although
there
is
no
assurancethat
the
manufacturing
will
be
successful.16 Table
of
Contents
We
have
recently
initiated
use
of
Rintega
drug
product
manufactured
by
MilliporeSigma
(formerly
SAFC,
a
division
of
the
Sigma
Aldrich
Corporation)
andPatheon
Ferentino,
in
the
ACT
IV
and
ReACT
clinical
studies
as
well
as
in
compassionate
use.
We
have
also
established
a
relationship
with
Cook
Pharmica
to
fillRintega
for
commercial
supply.
We
rely
on
Biosyn
and
Ambiopharm
for
supplying
suitable
quantities
of
cGMP
starting
materials
for
the
manufacture
of
Rintega.We
also
rely
on
Sanofi
to
supply
suitable
quantities
of
commercial
quality
GM-CSF
which
is
co-administered
with
Rintega.
Any
manufacturing
failures
or
delaysby
our
Rintega
contract
manufacturers
or
suppliers
of
critical
materials
could
cause
delays
in
ACT
IV
and/or
the
commercial
launch
of
Rintega.
To
date,
we
have
utilized
contract
manufacturing
organizations
for
the
manufacture
of
clinical
trial
supplies
of
glembatumumab
vedotin.
We
have
establishedrelationships
with
Lonza
Biologics
to
manufacture
the
glembatumumab
vedotin
antibody
and
Piramal
Healthcare
UK
Ltd.
to
manufacture
the
antibody
drugconjugate
with
the
MMAE
toxin.
The
drug
substance
is
then
filled
and
packaged
at
contract
manufacturers.
We
rely
on
MilliporeSigma
for
sourcing
of
suitablequantities
of
vcMMAE.
Any
manufacturing
failures
or
delays
by
our
glembatumumab
vedotin
contract
manufacturers
or
suppliers
of
materials
could
cause
delaysin
our
glembatumumab
vedotin
clinical
studies
including
the
METRIC
study
and/or
the
commercial
launch
of
glembatumumab
vedotin.
We
have
established
a
relationship
with
Patheon
Biologics
to
scale
up
and
manufacture
varlilumab
drug
substance
for
global
clinical
trials
and
potentialcommercialization.
We
operate
our
own
cGMP
manufacturing
facility
in
Fall
River,
Massachusetts,
to
produce
drug
substance
for
our
current
and
planned
early-stage
clinicaltrials.
Our
Fall
River
manufacturing
facility
has
250L
and
1000L
bioreactor
capacity
and
is
able
to
manufacture
in
compliance
with
FDA
regulations,
allowing
usto
distribute
potential
products
to
clinical
sites
in
the
U.S.
for
early
clinical
trials.
We
manufacture
CDX-1401,
CDX-301
and
CDX-014
drug
substance
in
our
FallRiver
facility
for
our
current
and
planned
Phase
1
and
Phase
2
clinical
trials.
The
products
are
then
filled
and
packaged
at
contract
manufacturers.
Anymanufacturing
failures
or
compliance
issues
at
contract
manufacturers
could
cause
delays
in
our
Phase
1
and
Phase
2
clinical
studies
for
these
product
candidates.
The
manufacturing
processes
for
our
drug
candidates
and
immunotherapeutic
delivery
systems
utilize
known
technologies.
We
believe
that
the
products
wecurrently
have
under
development
can
be
scaled
up
to
permit
manufacture
in
commercial
quantities.
However,
there
can
be
no
assurance
that
we
will
not
encounterdifficulties
in
scaling
up
the
manufacturing
processes.
While
we
believe
that
there
is
currently
sufficient
capacity
worldwide
for
the
production
of
our
potential
products
through
contract
manufacturers,
establishinglong-term
relationships
with
contract
manufacturers
and
securing
multiple
sources
for
the
necessary
quantities
of
clinical
and
commercial
materials
required
can
bea
challenge.
Qualifying
the
initial
source
of
clinical
and
ultimately
commercial
material
is
a
time
consuming
and
expensive
process
due
to
the
highly
regulatednature
of
the
pharmaceutical/biotech
industry.
These
costs
may
be
mitigated
by
the
economies
of
scale
realized
in
commercial
manufacture
and
product
sale.
Thekey
difficulty
in
qualifying
more
than
one
source
for
each
product
is
the
duplicated
time
and
expense
in
doing
so
without
the
potential
to
mitigate
these
costs
if
thesecondary
source
is
never
utilized.
Use
of
third
party
manufacturers
limits
our
control
over
and
ability
to
monitor
the
manufacturing
process.
As
a
result,
we
may
not
be
able
to
detect
a
variety
ofproblems
that
may
arise
and
may
face
additional
costs
in
the
process
of
interfacing
with
and
monitoring
the
progress
of
our
contract
manufacturers.
If
third
partymanufacturers
fail
to
meet
our
manufacturing
needs
in
an
acceptable
manner,
we
would
face
delays
and
additional
costs
while
we
develop
internal
manufacturingcapabilities
or
find
alternate
third
party
manufacturers.
It
may
not
be
possible
to
have
multiple
third
party
manufacturers
ready
to
supply
us
with
needed
material
atall
or
without
incurring
significant
costs.17 Table
of
ContentsCommercial
Organization
Our
strategy
is
to
build
a
fully
integrated,
commercial
stage
biopharmaceutical
company
that
would
give
us
the
opportunity
to
retain
marketing
rights
to
ourproduct
candidates
and
commercialize
such
products
ourselves
where
we
deem
appropriate
or
pursue
strategic
partnerships
to
develop,
sell,
market
and
distributeour
product
candidates
where
we
deem
appropriate.
We
currently
plan
to
commercialize
Rintega
in
the
United
States
and
Europe
ourselves,
if
regulatory
approvalis
obtained,
and
to
seek
strategic
partnerships
to
commercialize
Rintega
in
other
geographies.
We
may
enter
into
strategic
partnerships
to
develop,
sell,
market
anddistribute
our
other
product
candidates,
including
glembatumumab
vedotin
and
varlilumab.
Over
the
past
few
years,
we
have
begun
to
assemble
key
components
of
a
commercial
organization
with
a
focus
on
preparation
for
the
potential
commerciallaunch
of
Rintega,
if
regulatory
approval
is
obtained.
We
are
assembling
a
focused
commercial
team
with
broad
experience
in
marketing,
sales,
distribution
andproduct
reimbursement.
We
have
also
developed
the
capability
to
provide
current
and
future
market
insights
to
our
research
and
development
organizationregarding
glembatumumab
vedotin,
varlilumab
and
our
earlier-stage
product
candidates.
We
have
been
expanding
our
understanding
of
the
glioblastoma
market,
developing
our
commercial
strategy
for
the
potential
commercial
launch
of
Rintega,and
planning
the
infrastructure
necessary
to
support
future
commercial
activities.
Our
understanding
of
the
glioblastoma
market
in
the
United
States
and
Europeincorporates
information
regarding
the
current
standard
of
care
as
well
as
patient,
health
care
provider
and
payor
attitudes
toward
current
and
potential
futuretherapies.
Based
on
this
information
and
the
data
obtained
from
our
Phase
2
clinical
trials
of
Rintega,
we
have
begun
developing
our
go-
to-market
strategy
forRintega,
which
we
intend
to
update
and
refine
as
we
obtain
additional
information
regarding
the
potential
commercial
profile
for
Rintega.
In
particular,
we
plan
toincorporate
the
information
we
obtain
regarding
the
efficacy
and
safety
of
Rintega
from
our
registration
program
into
our
marketing
strategy.
As
we
continue
to
prepare
for
a
potential
Rintega
commercial
launch
in
the
United
States
and
Europe,
we
plan
to
expand
our
commercial
organization
over
thenext
six
to
twelve
months.
This
expansion
will
include
implementation
of
internal
systems
and
infrastructure
in
order
to
support
commercial
sales,
incorporation
ofappropriate
compliance
policies
and
procedures,
establishment
of
patient-focused
programs
and
hiring
and
training
a
marketing
and
sales
force
to
promote
Rintega,if
regulatory
approval
is
obtained,
to
health
care
providers.
There
can
be
no
assurance
that
we
will
be
able
to
accomplish
any
of
these
activities
or
hire
and
train
aneffective
marketing
and
sales
force.Patents,
Licenses
and
Proprietary
Rights
In
general,
our
intellectual
property
strategy
is
to
protect
our
technology
by
filing
patent
applications
and
obtaining
patent
rights
covering
our
own
technology,both
in
the
United
States
and
in
foreign
countries
that
we
consider
important
to
our
business.
In
addition,
we
have
acquired
and
will
seek
to
acquire
as
needed
ordesired,
exclusive
rights
of
others
through
assignment
or
license
to
complement
our
portfolio
of
patent
rights.
We
also
rely
on
trade
secrets,
unpatented
know-howand
technological
expertise
and
innovation
to
develop
and
maintain
our
competitive
position.Patents
The
successful
development
and
marketing
of
products
by
us
will
depend
in
part
on
our
ability
to
create
and
maintain
intellectual
property,
including
patentrights.
We
are
the
owner
or
exclusive
licensee
to
proprietary
patent
positions
in
the
areas
of
immunotherapy
technologies,
vaccine
technologies,
antibodytechnologies
and
complement
inhibitor
technology.
Although
we
continue
to
pursue
patent
protection
for
our
products,
no
assurance
can
be
given
that
any
pendingapplication
will
issue
as
a
patent,
that
any
issued
patent
will
have
a
scope
that
will
be
of
commercial
benefit
or
that
we18 Table
of
Contentswill
be
able
to
successfully
enforce
our
patent
position
against
infringers.
We
routinely
review
our
patent
portfolio
and
adjust
our
strategies
for
prosecution
andmaintenance
of
individual
cases
according
to
a
number
of
factors
including
program
priorities,
stage
of
development
and
patent
term.
We
own
or
license
rights
under
more
than
300
granted
patents
and
national
and
regional
patent
applications
in
the
U.S.
and
in
major
international
territoriescovering
inventions
relating
to
our
business.
The
key
patents
and
patent
applications
owned
by
us
or
licensed
to
us
that
we
consider
important
to
our
businessinclude
the
following
(the
indicated
and
estimated
patent
expiry
dates
do
not
include
any
possible
patent
term
extensions
or
supplementary
protection
certificates,
ifthese
may
be
secured
in
due
course):•We
have
licensed
rights
from
Duke
University
under
an
issued
European
patent,
a
patent
application
in
the
U.S.
and
patents
and
patent
applicationsin
other
major
international
territories
relating
to
uses
of
Rintega.
If
and
where
issued
and
maintained
to
full
term
in
a
form
which
coverscommercial
use
of
Rintega,
the
filings
could
potentially
provide
patent
protection
for
the
relevant
use
in
the
relevant
territories
to
2026.
We
alsohave
patent
applications
in
the
U.S.
and
major
international
territories
relating
to
methods
of
manufacture
and
formulation
of
Rintega,
which,
ifissued
in
a
form
which
covers
manufacture
and/or
formulation
of
Rintega
and
maintained
to
full
term
in
due
course,
would
have
estimated
patentexpiry
dates
in
2030.
•Our
patent
portfolio
for
glembatumumab
vedotin
includes
issued
patents
in
the
U.S.,
Europe,
Japan
and
Australia
and
a
pending
patent
applicationin
Canada.
If
and
where
issued
and
maintained
to
full
term
in
due
course,
these
would
have
estimated
patent
expiry
dates
in
2025.
In
addition,
patentrights
relating
to
the
toxin
and
conjugation
technology
used
in
glembatumumab
vedotin
have
been
licensed
from
Seattle
Genetics.
The
patent
rightsfrom
Seattle
Genetics
include
issued
patents
and
pending
applications
in
Australia,
Canada,
Europe,
the
U.S.
and
Japan
which
include
compositionof
matter
claims
relating
to
the
toxin
and
conjugation
technology.
If
maintained
to
full
term
in
due
course,
the
main
Seattle
Genetics
patent
rightswould
have
estimated
patent
expiry
dates
ranging
from
2023
in
Europe
to
2026
in
the
U.S.
•We
have
licensed
rights
from
the
University
of
Southampton
under
issued
U.S.
and
European
patents
and
under
pending
patent
applications
inJapan
and
Canada
relating
to
the
technology
used
in
varlilumab.
If
and
where
issued
and
maintained
to
full
term
in
due
course,
these
would
haveestimated
patent
expiry
dates
in
2027.
In
July
2013,
the
United
States
Patent
and
Trademark
Office
issued
a
patent
to
the
University
ofSouthampton,
that
we
have
exclusive
license
to
under
our
license
agreement,
which
broadly
supports
varlilumab.
The
patent
includes
18
claimscovering
various
methods
of
treating
cancer
using
agonistic
anti-human
CD27
antibodies
and
relates,
among
other
things,
directly
to
our
CD27antibody
program
and
therapeutic
uses
of
varlilumab.
In
September
2014,
two
European
patent
oppositions
were
filed
against
the
University
ofSouthampton
European
patent.
We
intend
to
defend
the
European
patent
vigorously
in
cooperation
with
the
University
of
Southampton.
We
alsohave
an
issued
U.S.
patent
which
covers
varlilumab
as
a
composition
of
matter.
If
maintained
to
full
term
this
patent
would
have
an
estimated
patentexpiry
date
in
2034
(including
additional
term
due
to
Patent
Term
Adjustment).
We
also
have
corresponding
patent
applications
in
the
majorinternational
territories
which,
if
issued
and
maintained
to
full
term
in
due
course,
would
have
estimated
patent
expiry
dates
in
2031.19 Table
of
Contents•We
have
issued
U.S.
patents
relating
to
the
technology
used
in
CDX-1401
which
have
estimated
patent
expiry
dates
in
at
least
2028
(not
includingincreases
of
term
due
to
Patent
Term
Adjustment).
We
have
a
corresponding
issued
European
patent
and
further
patents
and
pending
patentapplications
in
other
international
territories
relating
to
the
technology
used
in
CDX-1401
which,
if
and
where
issued
and
maintained
to
full
term
indue
course,
would
have
estimated
patent
expiry
dates
in
2028.
•Patents
for
the
technology
used
in
CDX-301
have
current
expiration
dates
that
range
from
2016
in
the
major
European
territories
to
2020
in
the
U.S.•Our
patent
portfolio
for
CDX-014
includes
rights
under
issued
U.S.
and
European
patents
and
further
pending
patent
applications
in
the
U.S.,Europe,
Australia,
Canada
and
Japan.
If
issued
and
maintained
to
full
term
in
due
course,
these
filings
would
have
estimated
patent
expiry
dates
in
atleast
2024
(not
including
increases
of
term
due
to
Patent
Term
Adjustment
in
the
U.S.).
In
addition,
patent
rights
relating
to
toxin
and
conjugationtechnology
have
been
licensed
from
Seattle
Genetics.
The
patent
rights
from
Seattle
Genetics
include
issued
patents
and
pending
patent
applicationsin
Australia,
Canada,
Europe,
the
U.S.
and
Japan
which
include
composition
of
matter
claims
relating
to
the
toxin
and
conjugation
technology.
Ifmaintained
to
full
term
in
due
course,
the
main
Seattle
Genetics
patent
rights
would
have
estimated
patent
expiry
dates
ranging
from
2023
in
Europeto
2026
in
the
U.S.
There
can
be
no
assurance
that
patent
applications
owned
by
or
licensed
to
us
will
result
in
granted
patents
or
that,
if
granted,
the
resultant
patents
will
affordprotection
against
competitors
with
similar
technology.
It
is
also
possible
that
third
parties
may
obtain
patents
or
other
proprietary
rights
that
may
be
necessary
oruseful
to
us.
In
cases
where
third
parties
are
first
to
invent
a
particular
product
or
technology,
it
is
possible
that
those
parties
will
obtain
patents
that
will
besufficiently
broad
to
prevent
us
from
using
important
technology
or
from
further
developing
or
commercializing
important
drug
candidates
and
immunotherapeuticsystems.
If
licenses
from
third
parties
are
necessary
but
cannot
be
obtained,
commercialization
of
the
covered
products
might
be
delayed
or
prevented.
Even
if
theselicenses
can
be
obtained,
they
would
probably
require
us
to
pay
ongoing
royalties
and
other
costs,
which
could
be
substantial.
Although
a
patent
has
a
statutory
presumption
of
validity
in
the
United
States,
the
issuance
of
a
patent
is
not
conclusive
as
to
validity
or
as
to
the
enforceablescope
of
the
patent
claims.
The
validity
or
enforceability
of
a
patent
after
its
issuance
by
the
Patent
and
Trademark
Office
can
be
challenged
in
litigation.
As
abusiness
that
uses
a
substantial
amount
of
intellectual
property,
we
face
a
heightened
risk
of
intellectual
property
litigation.
If
the
outcome
of
the
litigation
isadverse
to
the
owner
of
the
patent,
third
parties
may
then
be
able
to
use
the
invention
covered
by
the
patent
without
authorization
or
payment.
There
can
be
noassurance
that
our
issued
patents
or
any
patents
subsequently
issued
to
or
licensed
by
us
will
not
be
successfully
challenged
in
the
future.
In
addition,
there
can
beno
assurance
that
our
patents
will
not
be
infringed
or
that
the
coverage
of
our
patents
will
not
be
successfully
avoided
by
competitors
through
design
innovation.
We
are
aware
that
others,
including
universities
and
companies,
have
filed
patent
applications
and
have
been
granted
patents
in
the
United
States
and
othercountries
which
claim
subject
matter
potentially
useful
or
necessary
to
the
commercialization
of
our
products.
The
ultimate
scope
and
validity
of
existing
or
futurepatents
which
have
been
or
may
be
granted
to
third
parties,
and
the
availability
and
cost
of
acquiring
rights
in
those
patents
necessary
to
the
manufacture,
use
orsale
of
our
products
presently
cannot
be
determined
by
us.20 Table
of
Contents
Third
parties
may
have
or
may
obtain
valid
and
enforceable
patents
or
proprietary
rights
that
could
block
us
from
developing
products
using
our
technology,including:•certain
patents
and
applications
in
the
United
States
and
Europe
owned
by
Sanofi,
which
relate
to
antibody-antigen
conjugates
and
methods
of
theiruse
for
eliciting
an
immune
response
against
the
antigen;
•certain
patents
and
applications
in
the
United
States
and
foreign
countries
covering
particular
antigens
and
antigenic
fragments
targeted
by
ourcurrent
drug
candidates,
including
CDX-1401;
•certain
patents
and
pending
applications
related
to
particular
receptors
and
other
molecules
on
dendritic
cells
and
macrophages
that
may
be
usefulfor
generating
monoclonal
antibodies
and
can
be
employed
in
our
APC
Targeting
Technology;
•two
United
States
patents
and
related
foreign
patents
and
applications
covering
methods
of
diagnosing
gliomas
by
detecting
the
presence
of
theEGFRvIII
(tumor
specific
splice
variant)
protein;
•a
United
States
patent
relating
to
certain
uses
of
GM-CSF;
•a
United
States
patent
owned
by
Genentech,
Inc.,
relating
to
the
production
of
recombinant
antibodies
in
host
cells;
•a
United
States
patent
owned
by
GlaxoSmithKline
plc
related
to
methods
of
culturing
cells
under
certain
conditions;
and
•certain
patents
held
by
third
parties
relating
to
antibody
expression
in
particular
types
of
host
cells.
In
addition
to
the
patents
referred
to
in
the
previous
paragraphs,
there
may
be
other
patent
applications
and
issued
patents
belonging
to
competitors
that
mayrequire
us
to
alter
our
drug
candidates
and
immunotherapeutic
delivery
systems,
pay
licensing
fees
or
cease
some
of
our
activities.
If
our
drug
candidates
conflictwith
patents
that
have
been
or
may
be
granted
to
competitors,
universities
or
others,
the
patent
owners
could
bring
legal
action
against
us
claiming
damages
andseeking
to
enjoin
manufacturing
and
marketing
of
the
patented
products.
If
any
of
these
actions
is
successful,
in
addition
to
any
potential
liability
for
damages,
wecould
be
required
to
obtain
a
license
in
order
to
continue
to
manufacture
or
market
the
affected
products.
There
can
be
no
assurance
that
we
would
prevail
in
anysuch
action
or
that
any
license
required
under
any
such
third
party
patent
would
be
made
available
on
acceptable
terms
or
at
all.
We
believe
that
there
may
besignificant
litigation
in
the
biotechnology
industry
regarding
patent
and
other
intellectual
property
rights.
If
we
become
involved
in
that
litigation,
we
couldconsume
substantial
resources.Licenses
We
have
entered
into
several
significant
license
agreements
relating
to
technologies
that
are
being
developed
by
us.
In
general,
these
institutions
have
grantedus
an
exclusive
worldwide
license
(with
right
to
sublicense)
to
make,
use
and
sell
products
embodying
the
licensed
technology,
subject
to
the
reservation
by
thelicensor
of
a
non-exclusive
right
to
use
the
technologies
for
non-commercial
research
purposes.
Generally,
the
term
of
each
license
is
through
the
expiration
of
thelast
of
the
patents
issued
with
respect
to
the
technologies
covered
by
the
license.
We
have
generally
agreed
to
use
reasonable
efforts
to
develop
and
commercializelicensed
products
and
to
achieve
specified
milestones
and
pay
license
fees,
milestone
payments
and
royalties
based
on
the
net
sales
of
the
licensed
products
or
topay
a
percentage
of
sublicense
income.
If
we
breach
our
obligations,
the
licensor
has
the
right
to
terminate
the
license,
and,
in
some
cases,
convert
the
license
to
anon-exclusive
license.
Generally,
we
control
and
are
responsible
for
the
cost
of
defending
the
patent
rights
of
the
technologies
that
we
license.21 Table
of
ContentsProprietary Rights
We
also
rely
on
unpatented
technology,
trade
secrets
and
confidential
information,
and
no
assurance
can
be
given
that
others
will
not
independently
developsubstantially
equivalent
information
and
techniques
or
otherwise
gain
access
to
our
know-how
and
information,
or
that
we
can
meaningfully
protect
our
rights
insuch
unpatented
technology,
trade
secrets
and
information.
We
require
each
of
our
employees,
consultants
and
advisors
to
execute
a
confidentiality
agreement
atthe
commencement
of
an
employment
or
consulting
relationship
with
us.
The
agreements
generally
provide
that
all
inventions
conceived
by
the
individual
in
thecourse
of
employment
or
in
providing
services
to
us
and
all
confidential
information
developed
by,
or
made
known
to,
the
individual
during
the
term
of
therelationship
shall
be
the
exclusive
property
of
us
and
shall
be
kept
confidential
and
not
disclosed
to
third
parties
except
in
limited
specified
circumstances.
Therecan
be
no
assurance,
however,
that
these
agreements
will
provide
meaningful
protection
for
our
information
in
the
event
of
unauthorized
use
or
disclosure
of
suchconfidential
information.Government
Regulation
Our
activities
and
products
are
significantly
regulated
by
a
number
of
governmental
entities,
including
the
FDA
in
the
United
States
and
by
comparableauthorities
in
other
countries.
These
entities
regulate,
among
other
things,
the
manufacture,
testing,
safety,
effectiveness,
labeling,
documentation,
advertising
andsale
of
our
products.
We
must
obtain
regulatory
approval
from
FDA
and
comparable
authorities
in
other
countries,
as
applicable,
for
our
drug
candidates
before
wecan
commercialize
such
drugs
in
the
U.S.
and
foreign
jurisdictions.
Product
development
within
this
regulatory
framework
takes
a
number
of
years
and
involvesthe
expenditure
of
substantial
resources.
Many
products
that
initially
appear
promising
ultimately
do
not
reach
the
market
because
they
are
found
to
be
unsafe
orineffective
when
tested.
Our
inability
to
commercialize
a
product
would
impair
our
ability
to
earn
future
revenues.FDA Approval Process
In
the
United
States,
the
FDA
regulates
drugs
and
biological
products
under
the
Federal
Food,
Drug,
and
Cosmetic
Act,
or
FDCA,
the
Public
Health
ServiceAct,
or
PHSA,
and
implementing
regulations.
The
process
of
obtaining
regulatory
approvals
and
the
subsequent
compliance
with
appropriate
federal,
state,
localand
foreign
statutes
and
regulations
requires
the
expenditure
of
substantial
time
and
financial
resources.
Failure
to
comply
with
the
applicable
United
Statesrequirements
at
any
time
during
the
product
development
process,
approval
process
or
after
approval
may
subject
an
applicant
to
a
variety
of
administrative
orjudicial
sanctions,
such
as
the
FDA's
refusal
to
approve
pending
applications,
withdrawal
of
an
approval,
imposition
of
a
clinical
hold,
issuance
of
untitled
orwarning
letters,
product
recalls,
product
seizures,
total
or
partial
suspension
of
production
or
distribution
injunctions,
fines,
refusals
of
government
contracts,restitution,
disgorgement
of
profits,
civil
penalties
and
criminal
prosecution.
The
process
required
by
the
FDA
before
a
drug
or
biological
product
may
be
marketed
in
the
United
States
generally
involves
the
following:•completion
of
preclinical
laboratory
tests,
animal
studies
and
formulation
studies
in
compliance
with
the
FDA's
good
laboratory
practice,
or
GLP,regulations;
•submission
to
the
FDA
of
an
IND,
which
must
become
effective
before
human
clinical
trials
may
begin;
•approval
by
an
independent
institutional
review
board,
or
IRB,
at
each
clinical
site
before
each
trial
may
be
initiated;22 Table
of
Contents•performance
of
adequate
and
well-controlled
human
clinical
trials
in
accordance
with
good
clinical
practices,
or
GCP,
to
establish
the
safety
andefficacy
of
the
proposed
drug
or
biological
product
for
each
indication;
•submission
to
the
FDA
of
an
NDA
or
BLA,
as
applicable;
•satisfactory
completion
of
an
FDA
advisory
committee
review,
if
applicable;
•satisfactory
completion
of
an
FDA
inspection
of
the
manufacturing
facility
or
facilities
at
which
the
product
is
produced
to
assess
compliance
withcGMP
requirements
and
to
assure
that
the
facilities,
methods
and
controls
are
adequate
to
preserve
the
drug's
identity,
strength,
quality
and
purity;and
•FDA
review
and
approval
of
the
NDA
or
BLA.
We
expect
that
all
of
our
clinical
product
candidates
will
be
subject
to
review
as
biological
products
under
BLA
standards.
Data
obtained
at
any
stage
of
testing
is
susceptible
to
varying
interpretations,
which
could
delay,
limit
or
prevent
regulatory
approval.
Moreover,
during
theregulatory
process,
new
or
changed
drug
approval
policies
may
cause
unanticipated
delays
or
rejection
of
our
product.
We
may
not
obtain
necessary
regulatoryapprovals
within
a
reasonable
period
of
time,
if
at
all,
or
avoid
delays
or
other
problems
in
testing
our
products.
Moreover,
even
if
we
received
regulatory
approvalfor
a
product,
the
approval
may
require
limitations
on
use,
which
could
restrict
the
size
of
the
potential
market
for
the
product.Clinical Trials
The
FDA
provides
that
human
clinical
trials
may
begin
thirty
(30)
days
after
receipt
and
review
of
an
IND
application,
unless
the
FDA
requests
additionalinformation
or
changes
to
the
study
protocol
within
that
period.
An
IND
must
be
sponsored
and
filed
for
each
of
our
proposed
products.
Authorization
to
conduct
aclinical
trial
in
no
way
assures
that
the
FDA
will
ultimately
approve
the
product.
Clinical
trials
are
generally
conducted
in
three
sequential
phases.
In
a
Phase
1
trial,the
product
is
given
to
a
small
number
of
healthy
volunteers
to
test
for
safety
(adverse
effects).
Phase
2
trials
are
conducted
on
a
limited
group
of
the
target
patientpopulation;
safety,
optimal
dosage
and
efficacy
are
studied.
A
Phase
3
trial
is
performed
in
a
large
patient
population,
generally
over
a
wide
geographic
area
toprovide
evidence
for
the
safety
and
efficacy
of
the
product.
A
product's
safety
and
effectiveness
in
one
clinical
trial
is
not
necessarily
indicative
of
its
safety
and
effectiveness
in
another
clinical
trial.
Moreover,
we
maynot
discover
all
potential
problems
with
a
product
even
after
completing
clinical
trials
on
it.
Some
of
our
products
and
technologies
have
undergone
only
preclinicaltesting.
As
a
result,
we
do
not
know
whether
they
are
safe
or
effective
for
humans.
Also,
regulatory
authorities
may
decide,
contrary
to
our
findings,
that
a
productis
unsafe
or
not
as
effective
in
actual
use
as
its
clinical
trial
results
indicated.
This
could
prevent
the
product's
widespread
use,
require
its
withdrawal
from
themarket
or
expose
us
to
liability.
The
FDA
or
the
sponsor
may
suspend
or
terminate
a
clinical
trial
at
any
time
on
various
grounds,
including
a
finding
that
theresearch
subjects
are
being
exposed
to
an
unacceptable
health
risk.
Similarly,
an
IRB
can
suspend
or
terminate
approval
of
a
clinical
trial
at
its
institution
if
theclinical
trial
is
not
being
conducted
in
accordance
with
the
IRB's
requirements
or
if
the
drug
has
been
associated
with
unexpected
serious
harm
to
patients.
Anysuch
action
could
materially
harm
us.
Clinical
trials
are
critical
to
the
success
of
our
products
but
are
subject
to
unforeseen
and
uncontrollable
delay,
includingdelay
in
enrollment
of
patients.
Any
delay
in
clinical
trials
could
delay
our
commercialization
of
a
product.23 Table
of
ContentsMarketing Approval
Assuming
successful
completion
of
the
required
clinical
testing,
the
results
of
the
preclinical
and
clinical
studies,
together
with
detailed
information
relating
tothe
product's
pharmacology
chemistry,
manufacture,
controls
and
proposed
labeling,
among
other
things,
are
submitted
to
the
FDA
as
part
of
an
NDA
or
BLArequesting
approval
to
market
the
product
for
one
or
more
indications.
FDA
approval
of
the
NDA
or
BLA
is
required
before
marketing
of
the
product
may
begin
inthe
United
States.
Under
federal
law,
the
submission
of
most
NDAs
and
BLAs
is
additionally
subject
to
a
substantial
application
user
fee,
currently
exceeding$2,374,200,
and
the
sponsor
of
an
approved
NDA
or
BLA
is
also
subject
to
annual
product
and
establishment
user
fees,
currently
exceeding
$114,450
per
productand
$585,200
per
establishment.
These
fees
are
typically
increased
annually.
The
FDA
conducts
a
preliminary
review
of
all
NDAs
and
BLAs
within
the
first
60
days
after
receipt
before
accepting
them
for
filing
based
on
the
agency'sthreshold
determination
that
they
are
sufficiently
complete
to
permit
substantive
review.
The
FDA
may
request
additional
information
rather
than
accept
an
NDAor
BLA
for
filing.
In
this
event,
the
application
must
be
resubmitted
with
the
additional
information.
The
resubmitted
application
is
also
subject
to
review
beforethe
FDA
accepts
it
for
filing.
Once
the
submission
is
accepted
for
filing,
the
FDA
begins
an
in-depth
substantive
review.
The
FDA
has
agreed
to
specifiedperformance
goals
in
the
review
of
NDAs
and
BLAs.
Most
such
applications
for
non-priority
products
are
reviewed
within
ten
to
twelve
months
after
filing,
andmost
applications
for
priority
review
products,
that
is,
drugs
and
biologics
that
the
FDA
determines
represent
a
significant
improvement
over
existing
therapy,
arereviewed
in
six
to
eight
months
after
filing.
The
review
process
may
be
extended
by
the
FDA
for
three
additional
months
to
consider
certain
late-submittedinformation
or
clarification
regarding
information
already
provided
in
the
submission.
The
FDA
may
also
refer
applications
for
novel
drugs
or
biological
productsor
products
that
present
difficult
questions
of
safety
or
efficacy
to
an
advisory
committee,
typically
a
panel
that
includes
clinicians
and
other
experts,
for
review,evaluation
and
a
recommendation
as
to
whether
the
application
should
be
approved.
The
FDA
is
not
bound
by
the
recommendations
of
an
advisory
committee,
butit
considers
such
recommendations
carefully
when
making
decisions.
Before
approving
an
NDA
or
BLA,
the
FDA
typically
will
inspect
the
facility
or
facilities
where
the
product
is
manufactured.
The
FDA
will
not
approve
anapplication
unless
it
determines
that
the
manufacturing
processes
and
facilities
are
in
compliance
with
cGMP
requirements
and
adequate
to
assure
consistentproduction
of
the
product
within
required
specifications.
In
addition,
before
approving
an
NDA
or
BLA,
the
FDA
will
typically
inspect
one
or
more
clinical
sites
toassure
compliance
with
GCP
and
integrity
of
the
clinical
data
submitted.
The
testing
and
approval
process
requires
substantial
time,
effort
and
financial
resources,
and
each
may
take
many
years
to
complete.
Data
obtained
fromclinical
activities
are
not
always
conclusive
and
may
be
susceptible
to
varying
interpretations,
which
could
delay,
limit
or
prevent
regulatory
approval.
The
FDAmay
not
grant
approval
on
a
timely
basis,
or
at
all.
We
may
encounter
difficulties
or
unanticipated
costs
in
our
efforts
to
develop
our
product
candidates
and
securenecessary
governmental
approvals,
which
could
delay
or
preclude
us
from
marketing
our
products.
After
the
FDA's
evaluation
of
the
NDA
or
BLA
and
inspection
of
the
manufacturing
facilities,
the
FDA
may
issue
an
approval
letter
or
a
complete
responseletter.
An
approval
letter
authorizes
commercial
marketing
of
the
drug
or
biological
product
with
specific
prescribing
information
for
specific
indications.
Acomplete
response
letter
generally
outlines
the
deficiencies
in
the
submission
and
may
require
substantial
additional
testing
or
information
in
order
for
the
FDA
toreconsider
the
application.
If
and
when
those
deficiencies
have
been
addressed
to
the
FDA's
satisfaction
in
a
resubmission
of
the
NDA,
the
FDA
will
issue
anapproval
letter.
The
FDA
has
committed
to
reviewing
such
resubmissions
in
two
or
six
months
depending
on
the
type
of
information
included.
Even
with24 Table
of
Contentssubmission
of
this
additional
information,
the
FDA
ultimately
may
decide
that
the
application
does
not
satisfy
the
regulatory
criteria
for
approval.
Even
if
the
FDA
approves
a
product,
it
may
limit
the
approved
indications
for
use
for
the
product,
require
that
contraindications,
warnings
or
precautions
beincluded
in
the
product
labeling,
require
that
post-approval
studies,
including
Phase
4
clinical
trials,
be
conducted
to
further
assess
a
drug's
safety
after
approval,require
testing
and
surveillance
programs
to
monitor
the
product
after
commercialization,
or
impose
other
conditions,
including
distribution
restrictions
or
otherrisk
management
mechanisms,
which
can
materially
affect
the
potential
market
and
profitability
of
the
product.
The
FDA
may
prevent
or
limit
further
marketing
ofa
product
based
on
the
results
of
post-market
studies
or
surveillance
programs.
After
approval,
some
types
of
changes
to
the
approved
product,
such
as
changes
inindications,
manufacturing
changes
and
labeling,
are
subject
to
further
testing
requirements
and
FDA
review
and
approval.Special Regulatory Procedures Fast track designation —The
FDA
is
required
to
facilitate
the
development
and
expedite
the
review
of
drugs
and
biologics
that
are
intended
for
the
treatmentof
a
serious
or
life-threatening
disease
or
condition
and
which
demonstrate
the
potential
to
address
unmet
medical
needs
for
the
condition.
Under
the
fast
trackprogram,
the
sponsor
of
a
new
drug
or
biologic
candidate
may
request
the
FDA
to
designate
the
product
for
a
specific
indication
as
a
fast
track
product
concurrentwith
or
after
the
filing
of
the
IND
for
the
product
candidate.
A
drug
that
receives
Fast
Track
designation
is
eligible
for
some
or
all
of
the
following:
(i)
morefrequent
meetings
with
FDA
to
discuss
the
drug's
development
plan
and
ensure
collection
of
appropriate
data
needed
to
support
drug
approval;
(ii)
more
frequentwritten
communication
from
FDA
about
such
things
as
the
design
of
the
proposed
clinical
trials
and
use
of
biomarkers;
(iii)
eligibility
for
Accelerated
Approvaland
Priority
Review,
if
relevant
criteria
are
met;
and
(iv)
Rolling
Review,
which
means
that
a
drug
company
can
submit
completed
sections
of
its
BLA
or
NDA
forreview
by
FDA,
rather
than
waiting
until
every
section
of
the
NDA
or
BLA
is
completed
before
the
entire
application
can
be
reviewed.
This
rolling
review
isavailable
if
the
applicant
provides
and
the
FDA
approves
a
schedule
for
the
submission
of
the
remaining
information
and
the
applicant
pays
applicable
user
fees.However,
the
FDA's
time
period
goal
for
reviewing
a
fast
track
application
does
not
begin
until
the
last
section
of
the
NDA
or
BLA
is
submitted.
In
addition,
thefast
track
designation
may
be
withdrawn
by
the
FDA
if
the
FDA
believes
that
the
designation
is
no
longer
supported
by
data
emerging
in
the
clinical
trial
process. Priority review —Under
FDA
policies,
a
product
candidate
may
be
eligible
for
priority
review,
or
review
within
a
six
to
eight
month
time
frame
from
the
timea
complete
application
is
accepted
for
filing.
Products
regulated
by
the
FDA's
Center
for
Drug
Evaluation
and
Research,
or
CDER,
are
eligible
for
priority
review
ifthey
provide
a
significant
improvement
compared
to
marketed
products
in
the
treatment,
diagnosis
or
prevention
of
a
disease.
Products
regulated
by
the
FDA'sCenter
for
Biologics
Evaluation
and
Research,
or
CBER,
are
eligible
for
priority
review
if
they
provide
a
significant
improvement
in
the
safety
or
effectiveness
ofthe
treatment,
diagnosis
or
prevention
of
a
serious
or
life-threatening
disease.
A
fast
track
designated
product
candidate
could
be
eligible
for
priority
review
ifsupported
by
clinical
data
at
the
time
of
the
BLA
or
NDA
submission. Accelerated approval —Under
the
FDA's
accelerated
approval
regulations,
the
FDA
may
approve
a
drug
or
biologic
for
a
serious
or
life-threatening
illnessthat
provides
meaningful
therapeutic
benefit
to
patients
over
existing
treatments
based
on
a
surrogate
endpoint
that
is
reasonably
likely
to
predict
clinical
benefit.Surrogate
endpoints
can
often
be
measured
more
easily
or
more
rapidly
than
clinical
endpoints.
A
product
candidate
approved
on
this
basis
is
subject
to
rigorouspost-marketing
compliance
requirements,
including
the
completion
of
Phase
4
or
post-approval
clinical
trials
to
confirm
the
effect
on
the
clinical
endpoint.
Failureto
conduct
required
post-approval
studies,
or
confirm
a
clinical
benefit25 Table
of
Contentsduring
post-marketing
studies,
would
allow
the
FDA
to
withdraw
the
drug
from
the
market
on
an
expedited
basis.
All
promotional
materials
for
drug
candidatesapproved
under
accelerated
regulations
are
subject
to
prior
review
by
the
FDA. Breakthrough therapy designation —The
FDA
is
also
required
to
expedite
the
development
and
review
of
the
application
for
approval
of
drugs
that
areintended
to
treat
a
serious
or
life-threatening
disease
or
condition
where
preliminary
clinical
evidence
indicates
that
the
drug
may
demonstrate
substantialimprovement
over
existing
therapies
on
one
or
more
clinically
significant
endpoints.
Under
the
breakthrough
therapy
program,
the
sponsor
of
a
new
drug
candidatemay
request
that
the
FDA
designate
the
drug
candidate
for
a
specific
indication
as
a
breakthrough
therapy
concurrent
with,
or
after,
the
filing
of
the
IND
for
thedrug
candidate. Orphan drug designation —Under
the
Orphan
Drug
Act,
the
FDA
may
grant
orphan
drug
designation
to
drugs
or
biologics
intended
to
treat
a
rare
disease
orcondition,
which
is
generally
defined
as
a
disease
or
condition
that
affects
fewer
than
200,000
individuals
in
the
United
States.
Orphan
drug
designation
does
notconvey
any
advantage
in,
or
shorten
the
duration
of,
the
regulatory
review
and
approval
process.
The
first
NDA
or
BLA
applicant
to
receive
FDA
approval
for
aparticular
active
ingredient
to
treat
a
particular
disease
with
FDA
orphan
drug
designation
is
entitled
to
a
seven-year
exclusive
marketing
period
in
the
UnitedStates
for
that
product,
for
that
indication.
During
the
seven-year
exclusivity
period,
the
FDA
may
not
approve
any
other
applications
to
market
the
same
drug
orbiologic
for
the
same
orphan
indication,
except
in
limited
circumstances.
Among
the
other
benefits
of
orphan
drug
designation
are
tax
credits
for
certain
researchand
a
waiver
of
the
NDA
or
BLA
application
user
fee.Pediatric information
Under
the
Pediatric
Research
Equity
Act
of
2003,
an
NDA,
BLA
or
supplement
to
an
NDA
or
BLA
must
contain
data
that
are
adequate
to
assess
the
safetyand
effectiveness
of
the
drug
or
biological
product
for
the
claimed
indications
in
all
relevant
pediatric
subpopulations,
and
to
support
dosing
and
administration
foreach
pediatric
subpopulation
for
which
the
product
is
safe
and
effective.
The
FDA
may,
on
its
own
initiative
or
at
the
request
of
the
applicant,
grant
deferrals
forsubmission
of
some
or
all
pediatric
data
until
after
approval
of
the
product
for
use
in
adults,
or
full
or
partial
waivers
from
the
pediatric
data
requirements.
Underthe
Food
and
Drug
Administration
Safety
and
Innovation
Act,
or
FDASIA,
the
FDA
has
additional
authority
to
take
action
against
manufacturers
not
adhering
topediatric
study
requirements.
Unless
otherwise
required
by
regulation,
the
pediatric
data
requirements
do
not
apply
to
products
with
orphan
drug
designation.Post Approval
Any
drug
or
biological
products
manufactured
or
distributed
by
us
pursuant
to
FDA
approvals
are
subject
to
pervasive
and
continuing
regulation
by
the
FDA,including,
among
other
things,
requirements
relating
to
recordkeeping,
periodic
reporting,
product
sampling
and
distribution,
advertising
and
promotion
andreporting
of
adverse
experiences
with
the
product.
After
approval,
most
changes
to
the
approved
product,
such
as
adding
new
indications
or
other
labeling
claimsare
subject
to
prior
FDA
review
and
approval.
The
FDA
may
impose
a
number
of
post-approval
requirements
as
a
condition
of
approval
of
an
NDA
or
BLA.
For
example,
the
FDA
may
require
post-marketing
testing,
including
Phase
4
clinical
trials,
and
surveillance
to
further
assess
and
monitor
the
product's
safety
and
effectiveness
after
commercialization.Regulatory
approval
of
oncology
products
often
requires
that
patients
in
clinical
trials
be
followed
for
long
periods
to
determine
the
overall
survival
benefit
of
thedrug
or
biologic.26 Table
of
Contents
In
addition,
drug
and
biologic
manufacturers
and
other
entities
involved
in
the
manufacture
and
distribution
of
approved
drugs
and
biological
products
arerequired
to
register
their
establishments
with
the
FDA
and
state
agencies
and
are
subject
to
periodic
unannounced
inspections
by
the
FDA
and
these
state
agenciesfor
compliance
with
cGMP
requirements.
The
FDA
was
also
granted
new
inspection
authorities
under
FDASIA.
Changes
to
the
manufacturing
process
are
strictlyregulated
and
often
require
prior
FDA
approval
before
being
implemented.
FDA
regulations
also
require
investigation
and
correction
of
any
deviations
from
cGMPand
impose
reporting
and
documentation
requirements
upon
us
and
any
third-party
manufacturers
that
we
may
decide
to
use.
Accordingly,
manufacturers
mustcontinue
to
expend
time,
money
and
effort
in
the
areas
of
production
and
quality
control
to
maintain
cGMP
compliance.
Once
an
approval
is
granted,
the
FDA
may
withdraw
the
approval
if
compliance
with
regulatory
requirements
and
standards
is
not
maintained
or
if
problemsoccur
after
the
product
reaches
the
market.
Later
discovery
of
previously
unknown
problems
with
a
product,
including
adverse
events
of
unanticipated
severity
orfrequency,
or
with
manufacturing
processes,
or
failure
to
comply
with
regulatory
requirements,
may
result
in
revisions
to
the
approved
labeling
to
add
new
safetyinformation,
imposition
of
post-market
studies
or
clinical
trials
to
assess
new
safety
risks
or
imposition
of
distribution
or
other
restrictions
under
a
Risk
Evaluationand
Mitigation
Strategy
program.
Other
potential
consequences
include,
among
other
things:•restrictions
on
the
marketing
or
manufacturing
of
the
product,
complete
withdrawal
of
the
product
from
the
market
or
product
recalls;
•fines,
untitled
and
warning
letters
or
holds
on
post-approval
clinical
trials;
•refusal
of
the
FDA
to
approve
pending
applications
or
supplements
to
approved
applications,
or
suspension
or
revocation
of
product
licenseapprovals;
•product
seizure
or
detention,
or
refusal
to
permit
the
import
or
export
of
products;
or
•consent
decrees,
injunctions
or
the
imposition
of
civil
or
criminal
prosecution.
The
FDA
strictly
regulates
marketing,
labeling,
advertising
and
promotion
of
products
that
are
placed
on
the
market.
Drugs
and
biologics
may
be
promotedonly
for
the
approved
indications
and
in
accordance
with
the
provisions
of
the
approved
label.
The
FDA
and
other
agencies
actively
enforce
the
laws
andregulations
prohibiting
the
promotion
of
off
label
uses,
and
a
company
that
is
found
to
have
improperly
promoted
off
label
uses
may
be
subject
to
significantliability.Biosimilars Law
The
Biologics
Price
Competition
and
Innovation
Act
of
2009,
or
BPCIA,
amended
the
PHSA
to
provide
for
an
abbreviated
approval
pathway
for
biologicalproducts
that
demonstrate
biosimilarity
to
a
previously-approved
biological
product.
The
BPCI
Act
establishes
criteria
for
determining
that
a
product
is
biosimilarto
an
already-licensed
biologic,
or
reference
product,
and
establishes
a
process
by
which
an
abbreviated
BLA
for
a
biosimilar
product
is
submitted,
reviewed
andapproved.
The
BPCI
Act
provides
periods
of
exclusivity
that
protect
a
reference
product
from
biosimilars
competition.
Under
the
BPCI
Act,
the
FDA
may
notaccept
a
biosimilar
application
for
review
until
four
years
after
the
date
of
first
licensure
of
the
reference
product,
and
the
biosimilar
may
not
be
licensed
until12
years
after
the
reference
product's
approval.
Additionally,
the
BPCI
Act
establishes
procedures
by
which
the
biosimilar
applicant
must
provide
informationabout
its
application
and
product
to
the
reference
product
sponsor,
and
by
which
information
about
potentially
relevant
patents
is
shared
and
litigation
over
patentsmay
proceed
in
advance
of
approval.
The
BPCI
Act
also
provides
a
period
of
exclusivity
for
the
first
biosimilar
to
be
determined
by
the
FDA
to
be
interchangeablewith
the
reference
product.
The
BPCIA
may
be
applied
to
our
drug
candidates
in
the
future
and
could
be
applied
to
allow
approval
of
biosimilars
to
our
products.27 Table
of
Contents
The
FDA
has
not
yet
issued
proposed
regulations
setting
forth
its
interpretation
of
the
BPCIA's
provisions
but
has
issued
guidance
documents
related
toBPCIA
implementation.
Because
the
BPCI
Act
is
a
relatively
new
law,
we
anticipate
that
its
contours
will
be
defined
as
the
statute
is
implemented
over
a
period
ofyears.
This
likely
will
be
accomplished
by
a
variety
of
means,
including
FDA
issuance
of
guidance
documents,
proposed
regulations
and
decisions
in
the
course
ofconsidering
specific
applications.
Such
evolution
may
significantly
affect
the
impact
of
the
BPCI
Act
on
both
reference
product
and
biosimilar
sponsors.Companion Diagnostic Review and Approval
We
expect
that
some
of
our
drug
candidates,
including
Rintega,
will
rely
on
the
use
of
a
companion
diagnostic.
Companion
diagnostics
are
subject
toregulation
by
the
FDA
and
comparable
foreign
regulatory
authorities
as
medical
devices
and
require
separate
clearance
or
approval
prior
to
theircommercialization.
Based
on
the
guidance
published
by
the
FDA
in
July
2014
and
the
FDA's
past
treatment
of
companion
diagnostics,
we
believe
that
the
FDAwill
likely
require
one
or
more
of
our
in vitro companion
diagnostics
to
obtain
Premarket
Approval
Application,
or
PMA,
in
conjunction
with
approval
of
therelated
drug
candidate.
The
receipt
and
timing
of
PMA
approval
may
have
a
significant
effect
on
the
receipt
and
timing
of
commercial
approval
for
such
drugcandidates.
Currently
we
rely
on
third
party
collaborators
to
develop
companion
diagnostics
for
our
drug
candidates.
The
PMA
process
is
costly,
lengthy
and
uncertain.
PMA
applications
must
be
supported
by
valid
scientific
evidence,
which
typically
requires
extensive
data,including
technical,
preclinical,
clinical
and
manufacturing
data,
to
demonstrate
to
the
FDA's
satisfaction
the
safety
and
effectiveness
of
the
device.
For
diagnostictests,
a
PMA
application
typically
includes
data
regarding
analytical
and
clinical
validation
studies.
As
part
of
its
review
of
the
PMA,
the
FDA
will
conduct
a
pre-approval
inspection
of
the
manufacturing
facility
or
facilities
to
ensure
compliance
with
the
Quality
System
Regulation,
or
QSR,
which
requires
manufacturers
tofollow
design,
testing,
control,
documentation
and
other
quality
assurance
procedures.
If
the
FDA
evaluations
of
both
the
PMA
application
and
the
manufacturingfacilities
are
favorable,
the
FDA
will
either
issue
an
approval
letter
or
an
approvable
letter,
which
usually
contains
a
number
of
conditions
that
must
be
met
in
orderto
secure
the
final
approval
of
the
PMA.
If
the
FDA's
evaluation
of
the
PMA
or
manufacturing
facilities
is
not
favorable,
the
FDA
will
deny
approval
of
the
PMAor
issue
a
not
approvable
letter.
A
not
approvable
letter
will
outline
the
deficiencies
in
the
application
and,
where
practical,
will
identify
what
is
necessary
to
makethe
PMA
approvable.
The
FDA
may
also
determine
that
additional
clinical
trials
are
necessary,
in
which
case
the
PMA
approval
may
be
delayed
while
the
trials
areconducted
and
then
the
data
submitted
in
an
amendment
to
the
PMA.
Furthermore,
even
after
PMA
approval
is
obtained,
numerous
regulatory
requirements
apply
to
the
manufacturer
of
the
companion
diagnostic.
The
FDAenforces
these
requirements
by
inspection
and
market
surveillance.
These
requirements
include:
the
QSR,
labeling
regulations,
the
FDA's
general
prohibitionagainst
promoting
products
for
unapproved
or
"off
label"
uses,
the
medical
device
reporting
regulation,
and
the
reports
of
corrections
and
removals
regulation.
Ifthe
FDA
finds
a
violation,
it
can
institute
a
wide
variety
of
enforcement
actions,
ranging
from
a
public
warning
letter
to
more
severe
sanctions
such
as:
fines,injunctions
and
civil
penalties;
recall
or
seizure
of
products;
operating
restrictions,
partial
suspension
or
total
shutdown
of
production;
refusing
requests
for
PMA
ofnew
products;
and
withdrawing
PMAs
already
granted.Federal and State Fraud and Abuse, Data Privacy and Security and Transparency Laws
In
addition
to
FDA
restrictions
on
marketing
and
promotion
of
pharmaceutical
products,
several
other
types
of
federal
and
state
laws
have
been
applied
torestrict
certain
marketing
business
practices
in
the
biopharmaceutical
and
medical
device
industries
in
recent
years.
These
laws
include,
without
limitation,
stateand
federal
anti-kickback
statutes
and
false
claims
statutes
and
false
claims
laws,
data28 Table
of
Contentsprivacy
and
security
laws,
as
well
as
transparency
laws
regarding
payments
or
other
items
of
value
provided
to
healthcare
providers.
Applicable
state
law
may
bebroader
in
scope
than
federal
law
and
may
apply
regardless
of
payor,
in
addition
to
items
and
services
reimbursed
under
Medicaid
and
other
state
programs.
If
ouroperations
are
found
to
be
in
violation
of
any
of
the
health
regulatory
laws
described
above
or
any
other
laws
that
apply
to
us,
we
may
be
subject
to
penalties,including
potentially
significant
criminal
and
civil
and/or
administrative
penalties,
damages,
fines,
disgorgement,
imprisonment,
exclusion
from
participation
ingovernment
healthcare
programs,
contractual
damages,
reputational
harm,
administrative
burdens,
diminished
profits
and
future
earnings,
and
the
curtailment
orrestructuring
of
our
operations,
any
of
which
could
adversely
affect
our
ability
to
operate
our
business
and
our
results
of
operations.
To
the
extent
that
any
of
ourproducts
are
sold
in
a
foreign
country,
we
may
be
subject
to
similar
foreign
laws,
which
may
include,
for
instance,
applicable
post-marketing
requirements,including
safety
surveillance,
anti-fraud
and
abuse
laws
and
implementation
of
corporate
compliance
programs
and
reporting
of
payments
or
transfers
of
value
tohealthcare
professionals.
In
addition,
the
United
States
Foreign
Corrupt
Practices
Act,
or
FCPA,
prohibits
corporations
and
individuals
from
engaging
in
certain
activities
to
obtain
orretain
business
or
to
influence
a
person
working
in
an
official
capacity.
It
is
illegal
to
pay,
offer
to
pay
or
authorize
the
payment
of
anything
of
value
to
any
officialof
another
country,
government
staff
member,
political
party
or
political
candidate
in
an
attempt
to
obtain
or
retain
business
or
to
otherwise
influence
a
personworking
in
that
capacity.
In
many
countries,
the
healthcare
professionals
we
may
interact
with
may
meet
the
FCPA's
definition
of
a
foreign
government
official.Foreign Regulation
In
order
to
market
any
therapeutic
or
diagnostic
product
outside
of
the
United
States,
we
need
to
comply
with
numerous
and
varying
regulatory
requirementsof
other
countries
regarding
safety
and
efficacy
and
governing,
among
other
things,
clinical
trials,
marketing
authorization,
commercial
sales
and
distribution
of
ourproducts.
Whether
or
not
we
obtain
FDA
approval
for
a
product,
we
need
to
obtain
the
necessary
approvals
by
the
comparable
regulatory
authorities
of
foreigncountries
before
we
can
commence
clinical
trials
or
marketing
of
the
product
in
those
countries.
The
approval
process
varies
from
country
to
country
and
caninvolve
additional
product
testing
and
additional
administrative
review
periods.
The
time
required
to
obtain
approval
in
other
countries
might
differ
from
and
belonger
than
that
required
to
obtain
FDA
approval.
Regulatory
approval
in
one
country
does
not
ensure
regulatory
approval
in
another,
but
a
failure
or
delay
inobtaining
regulatory
approval
in
one
country
may
negatively
impact
the
regulatory
process
in
others.
Under
the
EU
regulatory
system,
we
will
submit
most
of
our
marketing
authorization
applications
under
the
centralized
procedure.
The
centralized
procedureis
compulsory
for
medicines
produced
by
biotechnology,
or
are
for
the
treatment
of
cancer,
or
officially
designated
as
'orphan
medicines'.
The
centralizedprocedure
provides
for
the
grant
of
a
single
marketing
authorization
that
is
valid
for
all
EU
member
states.
As
in
the
United
States,
we
may
apply
for
designation
ofour
products
as
orphan
drug
for
the
treatment
of
a
specific
indication
in
the
EU
before
the
application
for
marketing
authorization
is
made.
The
EMA
grants
orphanmedicinal
product
designation
to
promote
the
development
of
products
that
may
offer
therapeutic
benefits
for
life-threatening
or
chronically
debilitating
conditionsaffecting
not
more
than
five
in
10,000
people
in
the
EU.
Orphan
drugs
in
Europe
enjoy
economic
and
marketing
benefits,
including
a
10-year
market
exclusivityperiod
for
the
approved
indication,
but
not
for
the
same
product,
unless
another
applicant
can
show
that
its
product
is
safer,
more
effective
or
otherwise
clinicallysuperior
to
the
orphan-designated
product.29 Table
of
ContentsOther Regulatory Processes
From
time
to
time,
legislation
is
drafted,
introduced
and
passed
in
Congress
that
could
significantly
change
the
statutory
provisions
governing
the
testing,approval,
manufacturing
and
marketing
of
products
regulated
by
the
FDA.
In
addition
to
new
legislation,
FDA
regulations
and
policies
are
often
revised
or
interpreted
by
the
agency
in
ways
that
may
significantly
affect
our
businessand
our
products.
It
is
impossible
to
predict
whether
further
legislative
changes
will
be
enacted
or
whether
FDA
regulations,
guidance,
policies
or
interpretationschanged
or
what
the
effect
of
such
changes,
if
any,
may
be.Third-Party
Payor
Coverage
and
Reimbursement
Significant
uncertainty
exists
as
to
the
coverage
and
reimbursement
status
of
any
drug
products
for
which
we
obtain
regulatory
approval.
Sales
of
any
of
ourdrug
candidates,
if
approved,
will
depend,
in
part,
on
the
extent
to
which
the
costs
of
the
drugs
will
be
covered
by
third-party
payors,
including
government
healthprograms
such
as
Medicare
and
Medicaid,
as
well
as
commercial
health
insurers,
such
as
managed
care
organizations.
The
process
for
determining
reimbursementrates
is
separate
from
the
payor
coverage
decision.
Therefore,
despite
obtaining
coverage,
reimbursement
rates
may
be
lower
than
expected,
which
can
result
inlarger
out-of-pocket
payments
for
the
patient.
In
order
to
secure
coverage
and
reimbursement
for
any
drug
that
might
be
approved
for
sale,
we
need
to
conduct
analyses
and
pharmaco-economic
studies
inorder
to
demonstrate
the
incremental
medical
benefit
over
and
above
the
generally-accepted
standard
of
care
and
cost-effectiveness
of
the
drug.
Our
drugcandidates
may
not
be
considered
medically
necessary,
provide
insufficient
incremental
medical
benefit,
or
may
not
be
deemed
cost-effective.
A
payor's
decision
toprovide
coverage
for
a
drug
product
does
not
imply
that
an
adequate
reimbursement
rate
will
be
approved.
The
containment
of
healthcare
costs
has
become
a
priority
of
federal,
state
and
foreign
governments,
and
the
prices
of
drugs
have
been
a
focus
in
this
effort.Third-party
payors
are
increasingly
challenging
the
prices
charged
for
medical
products
and
services
and
examining
the
medical
necessity
and
cost-effectiveness
ofmedical
products
and
services,
in
addition
to
their
safety
and
efficacy.
If
these
third-party
payors
do
not
consider
our
drugs
to
be
cost-effective
compared
to
otheravailable
therapies,
they
may
not
cover
our
drugs
after
approval
as
a
benefit
under
their
plans
or,
if
they
do,
the
level
of
reimbursement
and/or
restrictions
informulary
placement
may
be
such
that
they
would
significantly
limit
projected
sales
volumes.
In
addition
to
third
party
payors,
we
will
also
need
to
negotiateformulary
placement
with
hospitals,
health
systems
and
certain
independent
delivery
networks.
Such
negotiations
may
be
more
protracted
than
anticipated
and
maybe
compromised
because
of
similar
considerations,
relating
to
insufficient
incremental
medical
benefit
and/or
cost-effectiveness.
Pricing
and
reimbursement
schemes
vary
widely
from
country
to
country.
For
example,
certain
EU
member
states
may
approve
a
specific
price
and
volumefor
a
drug
product
after
which
incremental
revenues
or
profits
need
to
be
paid
back
by
way
of
rebates.
They
may
also
institutionalize
utilization
restrictions,
curbphysicians'
drug
budgets,
provide
conditional
reimbursement
schemes
that
require
additional
evidence
to
be
generated
post-marketing
authorization,
etc.
Thedownward
pressure
on
healthcare
costs
in
general,
particularly
prescription
drugs,
has
been
particularly
evident
in
EU
markets,
for
some
time,
with
evidencepointing
to
increasing
pressures
on
the
horizon.
As
a
result,
increasingly
high
barriers
are
being
erected
to
the
pricing
and
reimbursement
of
new
drugs,
despiteregulatory
efforts
to
bring
drugs
to
market
sooner.
In
addition,
cross-border
trade
has
existed
for
some
time
in
the
EU,
allowing
pharmacies
in
one
country
toimport,
at
a
lower
price,
drug
from
another
country,
further
exerting
pricing
pressures
across
the
EU.
There
can
be
no
assurance
that
any
country
that
has
pricecontrols
or
reimbursement
limitations
for
drug
products
will
allow
favorable
reimbursement
and
pricing
arrangements
for
any
of
our
drugs.30 Table
of
Contents
The
marketability
of
any
drugs
for
which
we
receive
regulatory
approval
for
commercial
sale
may
suffer
if
third-party
payors
and/or
hospital
administratorsfail
to
provide
adequate
coverage,
reimbursement
or
formulary
placement.
Coverage
policies,
third-party
reimbursement
rates
and
drug
pricing
regulations
maychange
in
the
future.
In
particular,
uncertainty
within,
and
over
the
long-term,
of
the
Patient
Protection
and
Affordable
Care
Act,
or
PPACA,
in
the
U.S.,
may
meanthat
coverage,
reimbursement
and
pricing
structures
available
today
may
be
different
in
the
future.
In
addition,
the
States
may
continue
to
consider
legislation
oftheir
own
which
could
further
restrict
the
ability
to
freely
price
drugs
and/or
curb
utilization
in
the
U.S.
Even
if
favorable
coverage
and
reimbursement
status
isattained
for
one
or
more
drugs
for
which
we
receive
regulatory
approval,
less
favorable
coverage
policies
and
reimbursement
rates
may
be
implemented
in
thefuture.Employees
As
of
December
31,
2015,
we
employed
199
employees
(196
full-time,
1
part-time
and
2
interns),
36
of
whom
have
Ph.D.
and/or
M.D.
degrees.
Of
theseemployees,
162
were
engaged
in
or
directly
support
research
and
development
activities.
We
believe
that
our
employee
relations
are
good.
We
believe
that
ourfuture
success
will
depend
in
large
part
on
our
ability
to
attract
and
retain
experienced
and
skilled
employees.Corporate
and
Available
Information
We
are
incorporated
in
Delaware.
In
February
2016,
we
formed
a
wholly-owned
subsidiary,
Celldex
Therapeutics
Europe
GmbH,
in
Zug,
Switzerland,
tooperate
as
Celldex'
European
headquarters
when
European
operations
commence,
pursuant
to
intercompany
agreements.
Our
website
is
located
at
http://www.celldex.com. On
our
website,
investors
can
obtain,
free
of
charge,
a
copy
of
our
Annual
Report
on
Form
10-K,
QuarterlyReports
on
Form
10-Q,
Current
Reports
on
Form
8-K,
other
reports
and
any
amendments
thereto
filed
or
furnished
pursuant
to
Section
13(a)
or
15(d)
of
theExchange
Act
of
1934,
as
amended,
as
soon
as
reasonably
practicable
after
we
file
such
material
electronically
with,
or
furnish
it
to,
the
Securities
and
ExchangeCommission,
or
SEC.
None
of
the
information
posted
on
our
website
is
incorporated
by
reference
into
this
Annual
Report.Item
1A.
RISK
FACTORS
You
should
consider
carefully
these
risk
factors
together
with
all
of
the
information
included
or
incorporated
by
reference
in
this
Annual
Report
in
addition
toour
financial
statements
and
the
notes
to
our
financial
statements.
This
section
includes
forward-looking
statements.
The
following
is
a
discussion
of
the
risk
factors
that
we
believe
are
material
to
us
at
this
time.
These
risks
and
uncertainties
are
not
the
only
ones
facing
us
andthere
may
be
additional
matters
that
we
are
unaware
of
or
that
we
currently
consider
immaterial.
All
of
these
could
adversely
affect
our
business,
results
ofoperations,
financial
condition
and
cash
flows.Risks
Related
to
our
Financial
Condition
and
Capital
RequirementsWe currently have no product revenue and will need to raise capital to operate our business.
To
date,
we
have
generated
no
product
revenue
and
cannot
predict
when
and
if
we
will
generate
product
revenue.
We
had
an
accumulated
deficit
of$591.0
million
as
of
December
31,
2015.
Until,
and
unless,
we
complete
clinical
trials
and
further
development,
and
receive
approval
from
the
FDA
and
otherregulatory
authorities,
for
Rintega
and
our
other
drug
candidates,
we
cannot
sell
our
drugs
and
will
not
have
product
revenue.
We
expect
to
spend
substantial
fundsto
continue
the
research,
development
and
testing
of
our
products
that
are
in
the
preclinical
and
clinical
testing
stages
of31 Table
of
Contentsdevelopment
and
to
prepare
to
commercialize
products
in
anticipation
of
FDA
approval.
Therefore,
for
the
foreseeable
future,
we
will
have
to
fund
all
of
ouroperations
and
development
expenditures
from
cash
on
hand,
equity
or
debt
financings,
licensing
fees
and
grants.
Additional
financing
will
be
required
to
meet
ourlong
term
liquidity
needs.
If
we
do
not
succeed
in
raising
additional
funds
on
acceptable
terms,
we
might
not
be
able
to
complete
planned
preclinical
and
clinicaltrials
or
obtain
approval
of
any
drug
candidates
from
the
FDA
and
other
regulatory
authorities.
In
addition,
we
could
be
forced
to
discontinue
product
development,reduce
or
forego
sales
and
marketing
efforts,
forego
attractive
business
opportunities
or
curtail
operations.
Any
additional
sources
of
financing
could
involve
theissuance
of
our
equity
securities,
which
would
have
a
dilutive
effect
on
our
stockholders.
No
assurance
can
be
given
that
additional
financing
will
be
available
to
uswhen
needed
on
acceptable
terms,
or
at
all.
We
cannot
be
certain
that
we
will
achieve
or
sustain
profitability
in
the
future.
Failure
to
achieve
profitability
could
diminish
our
ability
to
sustain
operations,pay
dividends
on
our
common
stock,
obtain
additional
required
funds
and
make
required
payments
on
our
present
or
future
indebtedness.We expect to incur future losses and we may never become profitable.
We
have
incurred
operating
losses
of
$129.5
million,
$122.4
million
and
$81.4
million
during
2015,
2014
and
2013,
respectively,
and
expect
to
incur
anoperating
loss
in
2016.
We
believe
that
operating
losses
will
continue
in
2016
because
we
are
planning
to
incur
significant
costs
associated
with
the
clinicaldevelopment,
manufacturing
of
commercial
supply
and
building
a
commercial
organization
to
prepare
for
the
potential
commercial
launch
of
Rintega
andglembatumumab
vedotin
if
regulatory
approval
is
obtained.
During
the
years
ended
December
31,
2015,
2014
and
2013,
we
incurred
$36.3
million,
$45.6
millionand
$32.3
million
in
clinical
trial
expense
and
$14.8
million,
$21.2
million
and
$6.6
million
in
contract
manufacturing
expense.
We
anticipate
clinical
trial
andcontract
manufacturing
expense
to
increase
over
the
next
twelve
months
related
to
our
Rintega,
glembatumumab
vedotin
and
varlilumab
programs.
In
addition,
weare
planning
to
incur
additional
costs
in
the
clinical
development
of
CDX-1401
and
CDX-301.
Our
net
losses
have
had
and
will
continue
to
have
an
adverse
effecton,
among
other
things,
our
stockholders'
equity,
total
assets
and
working
capital.
We
expect
that
losses
will
fluctuate
from
quarter
to
quarter
and
year
to
year,
andthat
such
fluctuations
may
be
substantial.
We
cannot
predict
when
we
will
become
profitable,
if
at
all.We will need additional capital to fund our operations, including the development, manufacture and potential commercialization of our drug candidates. If wedo not have or cannot raise additional capital when needed, we may be unable to develop and ultimately commercialize our drug candidates successfully.
We
expect
to
incur
significant
costs
as
we
develop
our
drug
candidates.
In
particular,
the
continuing
development
and
commercialization
of
Rintega,glembatumumab
vedotin
and
our
other
drug
candidates
requires
additional
capital
beyond
our
current
resources.
As
of
December
31,
2015,
we
had
cash,
cashequivalents
and
marketable
securities
of
$289.9
million.
During
the
next
twelve
months,
we
may
take
further
steps
to
raise
additional
capital
to
fund
our
long-termliquidity
needs.
Our
capital
raising
activities
may
include,
but
may
not
be
limited
to,
one
or
more
of
the
following:•licensing
of
drug
candidates
with
existing
or
new
collaborative
partners;
•possible
business
combinations;
•issuance
of
debt;
or
•issuance
of
common
stock
or
other
securities
via
private
placements
or
public
offerings.32 Table
of
Contents
While
we
may
continue
to
seek
capital
through
a
number
of
means,
there
can
be
no
assurance
that
additional
financing
will
be
available
on
acceptable
terms,
ifat
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
intofurther
collaborative
relationships.
Additional
equity
financing
may
be
dilutive
to
our
stockholders;
debt
financing,
if
available,
may
involve
significant
cashpayment
obligations
and
covenants
that
restrict
our
ability
to
operate
as
a
business;
and
licensing
or
strategic
collaborations
may
result
in
royalties
or
other
termswhich
reduce
our
economic
potential
from
products
under
development.
If
we
are
unable
to
raise
the
funds
necessary
to
meet
our
long-term
liquidity
needs,
we
mayhave
to
delay
or
discontinue
the
development
of
one
or
more
programs,
discontinue
or
delay
the
build-out
of
our
commercial
infrastructure
and
our
commercialplanning
and
preparation
activities,
discontinue
or
delay
on-going
or
anticipated
clinical
trials,
license
out
programs
earlier
than
expected,
raise
funds
at
significantdiscount
or
on
other
unfavorable
terms,
if
at
all,
or
sell
all
or
part
of
our
business.Risks
Related
to
Development
and
Regulatory
Approval
of
Drug
CandidatesOur long term success depends heavily on our ability to fund and complete the research and development activities and obtain regulatory approval for ourprogram assets, including our lead drug candidates, Rintega and glembatumumab vedotin.
We
are
particularly
dependent
on
the
future
success
of
Rintega
and
glembatumumab
vedotin
because
they
are
our
most
advanced
drug
candidates.
Ourmanagement
team
lacks
significant
experience
in
completing
Phase
3
clinical
trials
and
obtaining
regulatory
approval
for
a
drug
candidate.
Only
a
small
minorityof
all
research
and
development
programs
ultimately
result
in
commercially
successful
drugs.
Clinical
failure
can
occur
at
any
stage
of
clinical
development.Clinical
trials
may
produce
negative
or
inconclusive
results,
and
we
may
decide,
or
regulators
may
require
us,
to
conduct
additional
clinical
or
preclinical
trials.
Inaddition,
data
obtained
from
trials
are
susceptible
to
varying
interpretations,
and
regulators
may
not
interpret
our
data
as
favorably
as
we
do,
which
may
delay,
limitor
prevent
regulatory
approval.
Success
in
preclinical
testing
and
early
clinical
trials
does
not
ensure
that
later
clinical
trials
will
generate
the
same
results
orotherwise
provide
adequate
data
to
demonstrate
the
efficacy
and
safety
of
a
drug
candidate.
If
we
face
delays,
difficulties
or
unanticipated
costs
in
completing
the
development
of
Rintega
or
glembatumumab
vedotin,
we
will
need
substantial
additionalfinancing.
Further,
even
if
we
complete
the
development
of
Rintega
or
glembatumumab
vedotin
and
gain
marketing
approvals
from
the
FDA
and
comparableforeign
regulatory
authorities
in
a
timely
manner,
we
cannot
be
sure
that
Rintega
or
glembatumumab
vedotin
will
be
commercially
successful
in
the
pharmaceuticalmarket.
If
the
results
of
clinical
trials,
the
anticipated
or
actual
timing
of
marketing
approvals,
or
the
market
acceptance
of
Rintega
or
glembatumumab
vedotin,
ifapproved,
do
not
meet
the
expectations
of
investors
or
public
market
analysts,
the
market
price
of
our
common
stock
would
likely
decline.We may enter into collaboration agreements for the licensing, development and ultimate commercialization of some of our drug candidates including, whereappropriate, for our lead drug candidates. In such cases, we will depend greatly on our third-party collaborators to license, develop and commercialize suchdrug candidates, and they may not meet our expectations.
We
may
enter
into
co-development
and
commercialization
partnerships
for
certain
products,
including
Rintega
for
commercialization
outside
of
NorthAmerica
and
Europe,
glembatumumab
vedotin
and
varlilumab.
The
process
of
identifying
collaborators
and
negotiating
collaboration
agreements
for
the
licensing,development
and
ultimate
commercialization
of
some
of
our
drug
candidates
may
cause
delays
and
increased
costs.
We
may
not
be
able
to
enter
into
collaborationagreements
on
terms
favorable
to
us
or
at
all.
Furthermore
some
of
those
agreements
may
give
substantial
responsibility
over
our
drug
candidates
to
thecollaborator.
Some
collaborators
may
be33 Table
of
Contentsunable
or
unwilling
to
devote
sufficient
resources
to
develop
our
drug
candidates
as
their
agreements
require.
They
often
face
business
risks
similar
to
ours,
and
thiscould
interfere
with
their
efforts.
Also,
collaborators
may
choose
to
devote
their
resources
to
products
that
compete
with
ours.
If
a
collaborator
does
notsuccessfully
develop
any
one
of
our
products,
we
will
need
to
find
another
collaborator
to
do
so.
The
success
of
our
search
for
a
new
collaborator
will
depend
onour
legal
right
to
do
so
at
the
time
and
whether
the
product
remains
commercially
viable.
If
we
enter
into
collaboration
agreements
for
one
or
more
of
our
lead
drug
candidates,
the
success
of
such
drug
candidates
will
depend
in
great
part
upon
ourand
our
collaborators'
success
in
promoting
them
as
superior
to
other
treatment
alternatives.
We
believe
that
our
drug
candidates
can
be
proven
to
offer
diseaseprevention
and
treatment
with
notable
advantages
over
drugs
in
terms
of
patient
compliance
and
effectiveness.
However,
there
can
be
no
assurance
that
we
will
beable
to
prove
these
advantages
or
that
the
advantages
will
be
sufficient
to
support
the
successful
commercialization
of
our
drug
candidates.Our drug candidates are subject to extensive regulatory scrutiny.
All
of
our
drug
candidates
are
at
various
stages
of
development
and
our
activities
and
drug
candidates
are
significantly
regulated
by
a
number
of
governmentalentities,
including
the
FDA
in
the
United
States
and
by
comparable
authorities
in
other
countries.
These
entities
regulate,
among
other
things,
the
manufacture,testing,
safety,
effectiveness,
labeling,
documentation,
advertising
and
sale
of
drugs
and
drug
candidates.
We
or
our
partners
must
obtain
regulatory
approval
for
adrug
candidate
in
all
of
these
areas
before
we
can
commercialize
any
of
our
drug
candidates.
Product
development
within
this
regulatory
framework
takes
a
numberof
years
and
involves
the
expenditure
of
substantial
resources.
This
process
typically
requires
extensive
preclinical
and
clinical
testing,
which
may
take
longer
orcost
more
than
we
anticipate,
and
may
prove
unsuccessful
due
to
numerous
factors.
Many
drug
candidates
that
initially
appear
promising
ultimately
do
not
reachthe
market
because
they
are
found
to
be
unsafe
or
ineffective
when
tested.
Companies
in
the
pharmaceutical,
biotechnology
and
immunotherapeutic
drug
industrieshave
suffered
significant
setbacks
in
advanced
clinical
trials,
even
after
obtaining
promising
results
in
earlier
trials.
Our
inability
to
commercialize
a
drug
candidatewould
impair
our
ability
to
earn
future
revenues.If our drug candidates do not pass required tests for safety and effectiveness, we will not be able to obtain regulatory approval and derive commercial revenuefrom them.
In
order
to
succeed,
we
will
need
to
obtain
regulatory
approval
for
our
drug
candidates.
The
FDA
has
not
approved
our
lead
drug
candidates,
Rintega
orglembatumumab
vedotin,
or
any
of
our
other
products
for
sale
to
date.
Our
drug
candidates
are
in
various
stages
of
preclinical
and
clinical
testing.
Preclinical
testsare
performed
at
an
early
stage
of
a
product's
development
and
provide
information
about
a
product's
safety
and
effectiveness
on
laboratory
animals.
Preclinicaltests
can
last
years.
If
a
product
passes
its
preclinical
tests
satisfactorily,
and
we
determine
that
further
development
is
warranted,
we
would
file
an
IND
applicationfor
the
product
with
the
FDA,
and
if
the
FDA
gives
its
approval
we
would
begin
Phase
1
clinical
tests.
Phase
1
testing
generally
lasts
between
6
and
24
months.
IfPhase
1
test
results
are
satisfactory
and
the
FDA
gives
its
approval,
we
can
begin
Phase
2
clinical
tests.
Phase
2
testing
generally
lasts
between
6
and
36
months.
IfPhase
2
test
results
are
satisfactory
and
the
FDA
gives
its
approval,
we
can
begin
Phase
3
pivotal
studies.
Phase
3
studies
generally
last
between
12
and
48
months.Once
clinical
testing
is
completed
and
a
BLA
or
NDA
is
filed
with
the
FDA,
it
may
take
more
than
a
year
to
receive
FDA
approval.
In
all
cases
we
must
show
that
a
pharmaceutical
product
is
both
safe
and
effective
before
the
FDA,
or
drug
approval
agencies
of
other
countries
where
weintend
to
sell
the
product,
will
approve
it
for
sale.
Our
research
and
testing
programs
must
comply
with
drug
approval
requirements
both
in
the
United
States
and
inother
countries,
since
we
are
developing
our
lead
products
with
the
intention
to,34 Table
of
Contentsor
could
later
decide
to,
commercialize
them
both
in
the
U.S.
and
abroad.
A
product
may
fail
for
safety
or
effectiveness
at
any
stage
of
the
testing
process.
A
majorrisk
we
face
is
the
possibility
that
none
of
our
products
under
development
will
come
through
the
testing
process
to
final
approval
for
sale,
with
the
result
that
wecannot
derive
any
commercial
revenue
from
them
after
investing
significant
amounts
of
capital
in
multiple
stages
of
preclinical
and
clinical
testing.We may be unable to manage multiple late stage clinical trials for a variety of drug candidates simultaneously.
As
our
current
clinical
trials
progress,
we
may
need
to
manage
multiple
late
stage
clinical
trials
simultaneously
in
order
to
continue
developing
all
of
ourcurrent
products.
Our
management
team
does
not
have
significant
experience
in
completing
late
stage
clinical
trials
and
the
management
of
late
stage
clinical
trialsis
more
complex
and
time
consuming
than
early
stage
trials.
Typically,
early
stage
trials
involve
several
hundred
patients
in
no
more
than
10-30
clinical
sites.
Latestage
(Phase
3)
trials
may
involve
up
to
several
thousand
patients
in
up
to
several
hundred
clinical
sites
and
may
require
facilities
in
several
countries.
Therefore,the
project
management
required
to
supervise
and
control
such
an
extensive
program
is
substantially
larger
than
early
stage
programs.
As
the
need
for
theseresources
is
not
known
until
some
months
before
the
trials
begin,
it
is
necessary
to
recruit
large
numbers
of
experienced
and
talented
individuals
very
quickly.
If
thelabor
market
does
not
allow
this
team
to
be
recruited
quickly,
the
sponsor
is
faced
with
a
decision
to
delay
the
program
or
to
initiate
it
with
inadequate
managementresources.
This
may
result
in
recruitment
of
inappropriate
patients,
inadequate
monitoring
of
clinical
investigators
and
inappropriate
handling
of
data
or
dataanalysis.
Consequently
it
is
possible
that
conclusions
of
efficacy
or
safety
may
not
be
acceptable
to
permit
filing
of
a
BLA
or
NDA
for
any
one
of
the
above
reasonsor
a
combination
of
several.Product testing is critical to the success of our products but subject to delay or cancellation if we have difficulty enrolling patients.
As
our
portfolio
of
drug
candidates
moves
from
preclinical
testing
to
clinical
testing,
and
then
through
progressively
larger
and
more
complex
clinical
trials,we
will
need
to
enroll
an
increasing
number
of
patients
with
the
appropriate
characteristics.
At
times
we
have
experienced
difficulty
enrolling
patients
and
we
mayexperience
more
difficulty
as
the
scale
of
our
clinical
testing
program
increases.
The
factors
that
affect
our
ability
to
enroll
patients
are
largely
uncontrollable
andinclude
principally
the
following:•the
nature
of
the
clinical
test;
•the
size
of
the
patient
population;
•patients'
willingness
to
receive
a
placebo
or
less
effective
treatment
on
the
control
arm
of
a
clinical
study;
•the
distance
between
patients
and
clinical
test
sites;
and
•the
eligibility
criteria
for
the
trial.
If
we
cannot
enroll
patients
as
needed,
our
costs
may
increase
or
we
may
be
forced
to
delay
or
terminate
testing
for
a
product.We may have delays in completing our clinical trials and we may not complete them at all.
We
have
not
completed
the
clinical
trials
necessary
to
obtain
FDA
approval
to
market
Rintega,
glembatumumab
vedotin
or
any
of
our
other
products
indevelopment.
Other
than
ACT
IV
and
METRIC
which
is
designed
for
approval,
we
have
not
initiated
Phase
3
studies
for
any
of
our
other
products
in
development.Our
management
lacks
significant
experience
in
completing
Phase
3
trials
and35 Table
of
Contentsbringing
a
drug
through
commercialization.
ACT
IV
and
METRIC
and
clinical
trials
for
other
products
in
development
may
be
delayed
or
terminated
as
a
result
ofmany
factors,
including
the
following:•difficulty
in
enrolling
patients
in
our
clinical
trials;
•patients
failing
to
complete
clinical
trials
due
to
dissatisfaction
with
the
treatment,
side
effects
or
other
reasons;
•failure
by
regulators
to
authorize
us
to
commence
a
clinical
trial;
•suspension
or
termination
by
regulators
of
clinical
research
for
many
reasons,
including
concerns
about
patient
safety
or
failure
of
our
contractmanufacturers
to
comply
with
cGMP
requirements;
•delays
or
failure
to
obtain
clinical
supply
for
our
products
necessary
to
conduct
clinical
trials
from
contract
manufacturers,
including
commercialgrade
clinical
supply
for
our
Phase
3
clinical
trials;
•treatment
candidates
demonstrating
a
lack
of
efficacy
during
clinical
trials;
•inability
to
continue
to
fund
clinical
trials
or
to
find
a
partner
to
fund
the
clinical
trials;
•competition
with
ongoing
clinical
trials
and
scheduling
conflicts
with
participating
clinicians;
and
•delays
in
completing
data
collection
and
analysis
for
clinical
trials.
Any
delay
or
failure
to
complete
clinical
trials
and
obtain
FDA
approval
for
our
drug
candidates
could
have
a
material
adverse
effect
on
our
cost
to
developand
commercialize,
and
our
ability
to
generate
revenue
from,
a
particular
drug
candidate.Failure to successfully validate, develop and obtain regulatory approval for companion diagnostics for certain of our drug candidates, including our lead drugcandidate Rintega, could harm our drug development strategy and operational results.
As
an
element
of
our
clinical
development
approach,
we
may
seek
to
screen
and
identify
subsets
of
patients
that
express
a
certain
biomarker
or
that
have
acertain
genetic
alteration
who
may
derive
meaningful
benefit
from
our
development
drug
candidates.
To
achieve
this,
one
or
more
of
our
drug
developmentprograms
may
be
dependent
on
the
development
and
commercialization
of
a
companion
diagnostic
by
us
or
by
third
party
collaborators.
For
example,
we
haveengaged
a
third
party
collaborator
to
develop
a
companion
diagnostic
test
to
identify
patients
with
EGRFvIII
for
use
with
our
lead
drug
candidate
Rintega
and
suchcompanion
diagnostic
requires
separate
approval
by
the
FDA,
for
which
we
must
rely
on
our
third
party
collaborator
to
obtain.
Companion
diagnostics
aredeveloped
in
conjunction
with
clinical
programs
for
the
associated
drug
candidate.
Companion
diagnostics
are
subject
to
regulation
as
medical
devices
and
mustthemselves
be
approved
for
marketing
by
the
FDA
or
certain
other
foreign
regulatory
agencies
before
the
related
drug
candidate
may
be
commercialized.
Theapproval
of
a
companion
diagnostic
as
part
of
the
product
label
will
limit
the
use
of
the
drug
candidate
to
only
those
patients
who
express
the
specific
geneticalteration
it
was
developed
to
detect.
We
or
our
third
party
collaborators
may
also
experience
delays
in
developing
a
sustainable,
reproducible
and
scalablemanufacturing
process
or
transferring
that
process
to
commercial
partners
or
negotiating
insurance
reimbursement
for
such
companion
diagnostic,
all
of
which
mayprevent
us
from
completing
our
clinical
trials
or
commercializing
our
drugs
on
a
timely
or
profitable
basis,
if
at
all.
To
date,
the
FDA
has
required
premarket
approval
of
all
companion
diagnostics
for
cancer
therapies.
We
and
our
third-party
collaborators
may
encounterdifficulties
in
developing
and
obtaining
approval
for
these
companion
diagnostics.
Any
delay
or
failure
by
us
or
third-party
collaborators
to
develop
or
obtainregulatory
approval
of
a
companion
diagnostic
could
delay
or
prevent
approval
of36 Table
of
Contentsour
related
drug
candidates
or,
if
regulatory
approval
is
obtained,
delay
or
limit
our
ability
to
commercialize
our
related
drug
candidates.Any delay in obtaining regulatory approval would have an adverse impact on our ability to earn future revenues.
It
is
possible
that
none
of
the
drug
candidates
that
we
develop
will
obtain
the
regulatory
approvals
necessary
for
us
to
begin
commercializing
them.
The
timerequired
to
obtain
FDA
and
other
approvals
is
unpredictable
but
often
can
take
years
following
the
commencement
of
clinical
trials,
depending
upon
the
nature
ofthe
drug
candidate.
Any
analysis
we
perform
of
data
from
clinical
activities
is
subject
to
confirmation
and
interpretation
by
regulatory
authorities,
which
coulddelay,
limit
or
prevent
regulatory
approval.
Rintega
has
been
granted
Breakthrough
Therapy
designation
for
the
treatment
of
adult
patients
with
EGFRvIII-positiveglioblastoma
and
Fast
Track
designation
by
the
FDA.
Glembatumumab
vedotin
has
been
granted
Fast
Track
designation
by
the
FDA.
Breakthrough
Therapy
andFast
Track
designation
do
not
change
the
standards
for
approval
but
may
expedite
the
development
or
approval
process.
Such
designations
do
not
guaranteed
afaster
review
time
as
compared
to
other
drugs
and
do
not
ensure
that
the
drug
will
ultimately
obtain
marketing
approval.
In
addition,
the
FDA
may
withdraw
thesedesignations
at
any
time.
Any
delay
or
failure
in
obtaining
required
approvals
could
have
a
material
adverse
effect
on
our
ability
to
generate
revenues
from
theparticular
drug
candidate
including,
but
not
limited
to,
loss
of
patent
term
during
the
approval
period.
Furthermore,
if
we,
or
our
partners,
do
not
reach
the
marketwith
our
products
before
our
competitors
offer
products
for
the
same
or
similar
uses,
or
if
we,
or
our
partners,
are
not
effective
in
marketing
our
products,
ourrevenues
from
product
sales,
if
any,
will
be
reduced.
We
face
intense
competition
in
our
development
activities.
We
face
competition
from
many
companies
in
the
United
States
and
abroad,
including
a
number
oflarge
pharmaceutical
companies,
firms
specialized
in
the
development
and
production
of
vaccines,
adjuvants
and
vaccine
and
immunotherapeutic
delivery
systemsand
major
universities
and
research
institutions.
Competitors
that
we
are
aware
of
that
have
initiated
a
Phase
3
study
or
have
obtained
marketing
approval
for
apotential
competitive
drug/device
for
Rintega
in
the
treatment
of
glioblastoma
and/or
glembatumumab
vedotin
in
the
treatment
of
breast
cancer
include
AbbVie,Arbor
Pharmaceutics,
Inc.,
AstraZeneca
PLC,
Bayer,
Bristol-Myers
Squibb,
Celgene
Corporation,
Eisai
Inc.,
Eli
Lilly
and
Company,
Medigene
AG,
NorthwestBiotherapeutics,
Inc.,
Novartis,
Novocure,
Pfizer
Inc.,
and
Roche.
Most
of
our
competitors
have
substantially
greater
resources,
more
extensive
experience
in
conducting
preclinical
studies
and
clinical
testing
and
obtainingregulatory
approvals
for
their
products,
greater
operating
experience,
greater
research
and
development
and
marketing
capabilities
and
greater
productioncapabilities
than
those
of
ours.
These
companies
might
succeed
in
obtaining
regulatory
approval
for
competitive
products
more
rapidly
than
we
can
for
ourproducts,
especially
if
we
experience
any
delay
in
obtaining
required
regulatory
approvals.A fast track designation or grant of priority review status by the FDA may not actually lead to a faster development or regulatory review or approval process.
In
the
United
States,
Rintega
and
glembatumumab
vedotin
have
received
fast
track
designation
and
may
be
eligible
for
priority
review
status.
If
a
drug
isintended
for
the
treatment
of
a
serious
or
life-threatening
disease
or
condition
and
the
drug
demonstrates
the
potential
to
address
unmet
medical
needs
for
thisdisease
or
condition,
the
drug
sponsor
may
apply
for
FDA
fast
track
designation.
If
a
drug
offers
major
advances
in
treatment,
the
drug
sponsor
may
apply
for
FDApriority
review
status.
The
FDA
has
broad
discretion
whether
or
not
to
grant
fast
track
designation
or
priority
review
status,
so
even
if
we
believe
a
particular
drugcandidate
is
eligible
for
such
designation
or
status,
the
FDA
could
decide
not
to
grant
it.
Even
though
Rintega
and
glembatumumab
vedotin
have
received
fast
trackdesignation
and
may
be
eligible
for
priority
review
status,
we
may
not
experience
a
faster
development37 Table
of
Contentsprocess,
review
or
approval
compared
to
conventional
FDA
procedures.
Furthermore,
the
FDA
may
withdraw
fast
track
designation
if
it
believes
that
thedesignation
is
no
longer
supported
by
data
from
our
clinical
development
program.We have many competitors in our field and they may develop technologies that make ours obsolete.
Biotechnology,
pharmaceuticals
and
therapeutics
are
rapidly
evolving
fields
in
which
scientific
and
technological
developments
are
expected
to
continue
at
arapid
pace.
We
have
many
competitors
in
the
U.S.
and
abroad.
Competitors
that
we
are
aware
of
that
have
initiated
a
Phase
3
study
or
have
obtained
marketingapproval
for
a
potential
competitive
drug/device
for
Rintega
in
the
treatment
of
glioblastoma
and/or
glembatumumab
vedotin
in
the
treatment
of
breast
cancerinclude
AbbVie,
Arbor
Pharmaceutics,
Inc.,
AstraZeneca
PLC,
Bayer,
Bristol-Myers
Squibb,
Celgene
Corporation,
Eisai
Inc.,
Eli
Lilly
and
Company,
MedigeneAG,
Northwest
Biotherapeutics,
Inc.,
Novartis,
Novocure,
Pfizer
Inc.,
and
Roche.
Our
success
depends
upon
our
ability
to
develop
and
maintain
a
competitiveposition
in
the
product
categories
and
technologies
on
which
we
focus.
Many
of
our
competitors
have
greater
capabilities,
experience
and
financial
resources
thanwe
do.
Competition
is
intense
and
is
expected
to
increase
as
new
products
enter
the
market
and
new
technologies
become
available.
Our
competitors
may:•develop
technologies
and
products
that
are
more
effective
than
ours,
making
ours
obsolete
or
otherwise
noncompetitive;
•obtain
regulatory
approval
for
products
more
rapidly
or
effectively
than
us;
and
•obtain
patent
protection
or
other
intellectual
property
rights
that
would
block
our
ability
to
develop
competitive
products.Risks
Related
to
Commercialization
of
Our
Drug
CandidatesWe may face delays, difficulties or unanticipated costs in establishing sales and distribution capabilities for the commercialization of Rintega, if regulatoryapproval is obtained, or any other of our drug candidates.
We
are
in
the
process
of
building
a
commercial
organization
which
we
believe
will
provide
us
with
the
strategic
options
to
either
retain
full
economic
rights
toour
drug
candidates
or
seek
favorable
economic
terms
through
advantageous
commercial
partnerships.
We
plan
to
commercialize
our
lead
drug
candidate
Rintegaourselves
in
North
America
and
Europe.
As
a
result,
we
may
have
full
responsibility
for
commercialization
of
Rintega
and
our
other
drug
candidates
if
and
whenthey
are
approved
for
sale.
We
currently
lack
sufficient
marketing,
sales
and
distribution
capabilities
to
carry
out
this
strategy.
If
any
of
our
drug
candidates
areapproved
by
the
FDA,
we
will
need
a
drug
sales
force
with
technical
expertise
prior
to
the
commercialization
of
any
of
our
drug
candidates.
We
have
recentlyestablished
a
core
commercial
team
with
experience
in
commercialization
of
immune-modulating
and
oncology
products
in
preparation
for
a
potential
commerciallaunch
of
Rintega.
Although
our
core
commercial
team
has
engaged
qualified
external
consultants
and
vendors
to
help
establish
sales
and
distribution
capabilitiesfor
Rintega,
we
may
not
succeed
in
developing
such
sales
and
distribution
capabilities,
the
cost
of
establishing
such
sales
and
distribution
capabilities
may
exceedany
product
revenue,
or
our
direct
marketing
and
sales
efforts
may
be
unsuccessful.
We
may
find
it
necessary
to
enter
into
strategic
partnerships,
co-promotion
orother
licensing
arrangements
and
to
the
extent
we
enter
into
such
strategic
partnerships,
co-promotion
or
other
licensing
arrangements,
our
product
revenues
arelikely
to
be
lower
than
if
we
directly
marketed
and
sold
such
drugs,
and
some
or
all
of
the
revenues
we
receive
will
depend
upon
the
efforts
of
third
parties,
whichmay
not
be
successful
and
may
not
be
within
our
control.
If
we
are
unable
to
enter
into
such
strategic
partnerships,
co-promotion
or
other
licensing
arrangements
onacceptable
terms
or
at
all,
we
may
not
be
able
to
successfully
commercialize
our
existing
and
future
drug
candidates.
If
we
are
not
successful
in
commercializingRintega
or
any
of
our
other
drug
candidates,
either
on
our
own
or
through
collaborations
with
one
or38 Table
of
Contentsmore
third
parties,
our
future
product
revenue
will
suffer
and
we
may
never
achieve
profitability
or
become
unable
to
continue
the
operation
of
our
business.If we are unable to effectively recruit and train a sales force, our ability to successfully commercialize Rintega will be harmed.
If
regulatory
approval
is
obtained,
we
need
to
recruit
and
train
a
sales
force
prior
to
commercial
launch.
Rintega
will
be
a
newly-marketed
drug
with
a
specificpatient
population.
As
a
result,
we
will
be
required
to
expend
significant
time
and
resources
to
recruit
and
train
a
specialty
sales
force
to
be
credible
and
effective
inmarketing
Rintega
for
use
in
front-line
glioblastoma
in
patients
that
express
a
specific
cancer
marker
known
as
EGFRvIII.
If
we
are
unable
to
effectively
train
aspecialty
sales
force
and
equip
them
with
effective
materials,
including
medical
and
sales
literature
to
help
them
inform
and
educate
potential
customers
about
thebenefits
of
Rintega,
we
may
not
be
able
to
successfully
commercialize
Rintega.If Rintega or any other drug candidates for which we obtain regulatory approval do not achieve broad acceptance from physicians, patients and third-partypayors, we may be unable to generate significant revenues, if any.
Even
if
we
obtain
regulatory
approval
for
our
drug
candidates,
our
approved
drugs
may
not
gain
market
acceptance
among
physicians
and
patients.
We
believethat
effectively
marketing
Rintega,
if
it
is
approved,
and
our
other
drug
candidates,
if
any
of
them
are
approved,
will
require
substantial
efforts,
both
prior
tocommercial
launch
and
after
approval.
Physicians
may
elect
not
to
prescribe
our
drugs,
and
patients
may
elect
not
to
request
or
take
them,
for
a
variety
of
reasonsincluding:•limitations
or
warnings
contained
in
a
drug's
FDA-approved
labeling;
•changes
in
the
standard
of
care
or
the
availability
of
alternative
drugs
for
the
targeted
indications
for
any
of
our
drug
candidates;
•limitations
in
the
approved
indications
for
our
drug
candidates;
•the
approval,
availability,
market
acceptance
and
reimbursement
for
the
companion
diagnostic,
where
applicable;
•demonstrated
clinical
safety
and
efficacy
compared
to
other
drugs;
•significant
adverse
side
effects;
•effectiveness
of
education,
sales,
marketing
and
distribution
support;
•timing
of
market
introduction
and
perceived
effectiveness
of
competitive
drugs;
•cost-effectiveness;
•adverse
publicity
about
our
drug
candidates
or
favorable
publicity
about
competitive
drugs;
•convenience
and
ease
of
administration
of
our
drug
candidates;
and
•willingness
of
third-party
payors
to
reimburse
for
the
cost
of
our
drug
candidates.
If
our
future
drugs
fail
to
achieve
market
acceptance,
we
will
not
be
able
to
generate
significant
revenues
and
may
never
achieve
profitability.39 Table
of
ContentsEven if our lead drug candidate Rintega or any of our other drug candidates receives FDA approval, the terms of the approval may limit such drug'scommercial potential. Additionally, even after receipt of FDA approval, such drug would be subject to substantial, ongoing regulatory requirements.
The
FDA
has
complete
discretion
over
the
approval
of
our
lead
drug
candidate
Rintega
and
our
other
drug
candidates.
If
the
FDA
grants
approval,
the
scope
ofthe
approval
may
limit
our
ability
to
commercialize
such
drug,
and
in
turn,
limit
our
ability
to
generate
substantial
product
revenue.
For
example,
the
FDA
maygrant
approval
contingent
on
the
performance
of
costly
post-approval
clinical
trials
or
subject
to
warnings
or
contraindications.
Additionally,
even
after
grantingapproval,
the
manufacturing
processes,
labeling,
packaging,
distribution,
adverse
event
reporting,
storage,
advertising,
promotion
and
recordkeeping
for
such
drugwill
be
subject
to
extensive
and
ongoing
regulatory
requirements.
In
addition,
manufacturers
of
our
drug
products
are
required
to
comply
with
cGMP
regulations,which
include
requirements
related
to
quality
control
and
quality
assurance
as
well
as
the
corresponding
maintenance
of
records
and
documentation.
Further,regulatory
authorities
must
inspect
and
approve
these
manufacturing
facilities
before
they
can
be
used
to
manufacture
our
drug
products,
and
these
facilities
aresubject
to
continual
review
and
periodic
inspections
by
the
FDA
and
other
regulatory
authorities
for
compliance
with
cGMP
regulations.
If
we
or
a
third
partydiscover
previously
unknown
problems
with
a
drug,
such
as
adverse
events
of
unanticipated
severity
or
frequency,
or
problems
with
the
facility
where
the
drug
ismanufactured,
a
regulatory
authority
may
impose
restrictions
on
that
product,
the
manufacturer
or
us,
including
requiring
withdrawal
of
the
drug
from
the
market
orsuspension
of
manufacturing.
If
we,
our
drug
candidates
or
the
manufacturing
facilities
for
our
drug
candidates
fail
to
comply
with
regulatory
requirements
of
theFDA
and/or
other
non-U.S.
regulatory
authorities,
we
could
be
subject
to
administrative
or
judicially
imposed
sanctions,
including
the
following:•warning
letters;
•civil
or
criminal
penalties
and
fines;
•injunctions;
•consent
decrees;
•suspension
or
withdrawal
of
regulatory
approval;
•suspension
of
any
ongoing
clinical
studies;
•voluntary
or
mandatory
product
recalls
and
publicity
requirements;
•refusal
to
accept
or
approve
applications
for
marketing
approval
of
new
drugs;
•restrictions
on
operations,
including
costly
new
manufacturing
requirements;
or
•seizure
or
detention
of
drugs
or
import
bans.
The
regulatory
requirements
and
policies
may
change
and
additional
government
regulations
may
be
enacted
for
which
we
may
also
be
required
to
comply.We
cannot
predict
the
likelihood,
nature
or
extent
of
government
regulation
that
may
arise
from
future
legislation
or
administrative
action,
either
in
the
UnitedStates
or
in
other
countries.
If
we
are
not
able
to
maintain
regulatory
compliance,
we
may
not
be
permitted
to
market
our
future
products
and
our
business
maysuffer.Reimbursement decisions by third-party payors may have an adverse effect on pricing and market acceptance of Rintega or any of our other drug candidates. Ifthere is not sufficient reimbursement for our future drugs, it is less likely that such drugs will be widely used.
Market
acceptance
and
sales
of
Rintega,
if
regulatory
approval
is
obtained,
or
any
other
drug
candidates
for
which
we
obtain
regulatory
approval
will
dependon
reimbursement
policies
and
may
be40 Table
of
Contentsaffected
by
future
healthcare
reform
measures
in
both
the
United
States
and
foreign
jurisdictions.
Government
authorities
and
third-party
payors,
such
as
privatehealth
insurers
and
health
maintenance
organizations,
decide
which
drugs
they
will
cover
and
establish
payment
levels.
In
addition,
government
authorities
andthese
third-party
payors
are
increasingly
attempting
to
contain
health
care
costs
by
demanding
price
discounts
or
rebates
and
limiting
both
the
types
and
variety
ofdrugs
that
they
will
cover
and
the
amounts
that
they
will
pay
for
these
drugs.
In
addition,
we
might
need
to
conduct
post-marketing
studies
in
order
to
demonstratethe
cost-effectiveness
of
any
future
drugs
to
such
payors'
satisfaction.
Such
studies
might
require
us
to
commit
a
significant
amount
of
management
time
andfinancial
and
other
resources.
Reimbursement
rates
may
vary
according
to
the
use
of
the
drug
and
the
clinical
setting
in
which
it
is
used,
may
be
based
on
payments
allowed
for
lower-costproducts
that
are
already
reimbursed,
may
be
incorporated
into
existing
payments
for
other
products
or
services,
and
may
reflect
budgetary
constraints
and/orimperfections
in
Medicare
or
Medicaid
data
used
to
calculate
these
rates.
Net
prices
for
drugs
may
be
reduced
by
mandatory
discounts
or
rebates
required
bygovernment
health
care
programs.
Such
legislation,
or
similar
regulatory
changes
or
relaxation
of
laws
that
restrict
imports
of
drugs
from
other
countries,
couldreduce
the
net
price
we
receive
for
any
future
marketed
drugs.
As
a
result,
our
future
drugs
might
not
ultimately
be
considered
cost-effective.
We
cannot
be
certain
that
reimbursement
will
be
available
for
Rintega
or
any
other
drug
candidates
that
we
develop.
Also,
we
cannot
be
certain
thatreimbursement
policies
will
not
reduce
the
demand
for,
or
the
price
paid
for,
any
future
drugs.
If
reimbursement
is
not
available
or
is
available
on
a
limited
basis,we
may
not
be
able
to
successfully
commercialize
Rintega
or
any
other
drug
candidates
that
we
develop.Other factors could affect the demand for and sales and profitability of any drug candidates that we may commercialize in the future.
In
general,
other
factors
that
could
affect
the
demand
for
and
sales
and
profitability
of
our
future
drugs
include,
but
are
not
limited
to:•the
timing
of
regulatory
approval,
if
any,
of
competitive
drugs;
•our
or
any
other
of
our
partners'
pricing
decisions,
as
applicable,
including
a
decision
to
increase
or
decrease
the
price
of
a
drug,
and
the
pricingdecisions
of
our
competitors;
•government
and
third-party
payor
reimbursement
and
coverage
decisions
that
affect
the
utilization
of
our
future
drugs
and
competing
drugs;
•negative
safety
or
efficacy
data
from
new
clinical
studies
conducted
either
in
the
U.S.
or
internationally
by
any
party
could
cause
the
sales
of
ourfuture
drugs
to
decrease
or
a
future
drug
to
be
recalled;
•the
degree
of
patent
protection
afforded
our
future
drugs
by
patents
granted
to
or
licensed
by
us
and
by
the
outcome
of
litigation
involving
our
orany
of
our
licensor's
patents;
•the
outcome
of
litigation
involving
patents
of
other
companies
concerning
our
future
drugs
or
processes
related
to
production
and
formulation
ofthose
drugs
or
uses
of
those
drugs;
•the
increasing
use
and
development
of
alternate
therapies;
•the
rate
of
market
penetration
by
competing
drugs;
and
•the
termination
of,
or
change
in,
existing
arrangements
with
our
partners.
Any
of
these
factors
could
have
a
material
adverse
effect
on
the
sales
of
any
drug
candidates
that
we
may
commercialize
in
the
future.41 Table
of
ContentsFailure to obtain regulatory approvals in foreign jurisdictions will prevent us from marketing our products internationally.
We
intend
to
seek
approval
for
Rintega
in
Europe
and
may
seek
approval
of
our
other
drug
candidates
outside
the
United
States
and
may
market
futureproducts
in
international
markets.
In
order
to
market
our
future
products
in
the
European
Economic
Area,
or
EEA,
and
many
other
foreign
jurisdictions,
we
mustobtain
separate
regulatory
approvals.
Specifically,
in
the
EEA,
medicinal
products
can
only
be
commercialized
after
obtaining
a
Marketing
Authorization,
or
MA.
Before
granting
the
MA,
the
European
Medicines
Agency
or
the
competent
authorities
of
the
member
states
of
the
EEA
make
an
assessment
of
the
risk-benefitbalance
of
the
product
on
the
basis
of
scientific
criteria
concerning
its
quality,
safety
and
efficacy.
The
approval
procedures
vary
among
countries
and
can
involve
additional
clinical
testing,
and
the
time
required
to
obtain
approval
may
differ
from
thatrequired
to
obtain
FDA
approval.
For
example,
previous
studies
of
Rintega
have
utilized
the
immune
response
modifier
GM-CSF,
which
is
available
in
the
UnitedStates,
but
is
currently
only
available
through
specialty
distribution
channels
outside
the
United
States.
We
are
planning
to
initiate
a
Phase
2
study
of
Rintega
withadjuvant
imiquimod,
which
could
potentially
serve
as
an
alternative
to
GM-CSF,
if
needed,
particularly
outside
the
United
States.
Clinical
studies
conducted
in
onecountry
may
not
be
accepted
by
regulatory
authorities
in
other
countries.
Approval
by
the
FDA
does
not
ensure
approval
by
regulatory
authorities
in
othercountries,
and
approval
by
one
or
more
foreign
regulatory
authorities
does
not
ensure
approval
by
regulatory
authorities
in
other
foreign
countries
or
by
the
FDA.However,
a
failure
or
delay
in
obtaining
regulatory
approval
in
one
country
may
have
a
negative
effect
on
the
regulatory
process
in
others.
The
foreign
regulatoryapproval
process
may
include
all
of
the
risks
associated
with
obtaining
FDA
approval.
We
may
not
obtain
foreign
regulatory
approvals
on
a
timely
basis,
if
at
all.We
may
not
be
able
to
file
for
regulatory
approvals
and
even
if
we
file
we
may
not
receive
necessary
approvals
to
commercialize
our
products
in
any
market.If we obtain approval to commercialize any approved products outside of the United States, a variety of risks associated with international operations couldmaterially adversely affect our business.
We
plan
to
commercialize
our
lead
drug
candidate
Rintega
ourselves
in
Europe,
if
regulatory
approval
is
obtained.
If
our
other
drug
candidates
are
approvedfor
commercialization
outside
of
the
United
States,
we
may
enter
into
agreements
with
third
parties
to
market
them
on
a
worldwide
basis
or
in
more
limitedgeographical
regions.
We
expect
that
we
will
be
subject
to
additional
risks
related
to
international
operations
and
entering
into
international
business
relationships,including:•different
regulatory
requirements
for
drug
approvals;
•reduced
protection
for
intellectual
property
rights,
including
trade
secret
and
patent
rights;
•unexpected
changes
in
tariffs,
trade
barriers
and
regulatory
requirements;
•economic
weakness,
including
inflation,
or
political
instability
in
particular
foreign
economies
and
markets;
•compliance
with
tax,
employment,
immigration
and
labor
laws
for
employees
living
or
traveling
abroad;
•foreign
taxes,
including
withholding
of
payroll
taxes;
•foreign
currency
fluctuations,
which
could
result
in
increased
operating
expenses
and
reduced
revenues,
and
other
obligations
incident
to
doingbusiness
in
another
country;
•workforce
uncertainty
in
countries
where
employment
regulations
are
different
than,
and
labor
unrest
is
more
common
than,
in
the
United
States;42 Table
of
Contents•production
shortages
resulting
from
any
events
affecting
raw
material
supply
or
manufacturing
capabilities
abroad;
•business
interruptions
resulting
from
geopolitical
actions,
including
war
and
terrorism,
or
natural
disasters
including
earthquakes,
hurricanes,
floodsand
fires;
and
•difficulty
in
importing
and
exporting
clinical
trial
materials
and
study
samples.Risks
Related
to
Reliance
on
Third
PartiesWe rely on third parties to plan, conduct and monitor our clinical tests, and their failure to perform as required would interfere with our product development.
We
rely
on
third
parties
to
conduct
a
significant
portion
of
our
clinical
development
activities.
These
activities
include
clinical
patient
recruitment
andobservation,
clinical
trial
monitoring,
clinical
data
management
and
analysis,
safety
monitoring
and
project
management.
We
conduct
project
management
andmedical
and
safety
monitoring
in-house
for
some
of
our
programs
and
rely
on
third
parties
for
the
remainder
of
our
clinical
development
activities.
The
significant
third
parties
who
we
currently
rely
on
for
clinical
development
activities
include
Novella
Clinical,
a
Quintiles
company,
for
our
ACT
IV
studyand
PPD
Development,
LLC
for
clinical
studies
including
our
METRIC
study.
If
Novella
or
PPD
Development
is
unable
to
perform
in
a
quality
and
timely
manner,and
at
a
feasible
cost,
our
clinical
studies
will
face
delays.
Further,
if
any
of
these
third
parties
fails
to
perform
as
we
expect
or
if
their
work
fails
to
meet
regulatorystandards,
our
testing
could
be
delayed,
cancelled
or
rendered
ineffective.We rely on contract manufacturers over whom we have limited control. Should the cost, delivery and quality of clinical and commercial grade materialsmanufactured by us in our Fall River facility or supplied by contract manufacturers vary to our disadvantage, our business operations could suffer significantharm.
We
have
limited
experience
in
commercial
manufacturing.
We
rely
on
CMOs,
to
manufacture
drug
substance
and
drug
product
for
our
late-stage
clinicalstudies
of
Rintega
and
glembatumumab
vedotin
as
well
as
for
future
commercial
supplies.
Our
ability
to
conduct
late-stage
clinical
trials,
manufacture
andcommercialize
our
drug
candidates,
if
regulatory
approval
is
obtained,
depends
on
the
ability
of
such
third
parties
to
manufacture
our
drug
candidates
on
a
largescale
at
a
competitive
cost
and
in
accordance
with
cGMP
and
foreign
regulatory
requirements,
if
applicable.
We
also
rely
on
CMOs
for
filling,
packaging,
storageand
shipping
of
drug
product.
In
order
for
us
to
establish
our
own
commercial
manufacturing
facility,
we
would
require
substantial
additional
funds
and
would
needto
hire
and
retain
significant
additional
personnel
and
comply
with
extensive
cGMP
regulations
applicable
to
such
a
facility.
The
commercial
manufacturing
facilitywould
also
need
to
be
licensed
for
the
production
of
our
drug
candidates
by
the
FDA.
For
our
most
advanced
programs,
we
are
working
with
CMOs
under
established
manufacturing
arrangements
that
comply
with
the
FDA's
requirements
andother
regulatory
standards,
although
there
is
no
assurance
that
the
manufacturing
will
be
successful.
Prior
to
approval
of
Rintega
or
any
other
drug
candidate,
theFDA
must
review
and
approve
validation
studies
for
drug
product.
The
manufacturing
processes
for
our
drug
candidates
and
immunotherapeutic
delivery
systemsutilize
known
technologies.
We
believe
that
the
products
we
currently
have
under
development
can
be
scaled
up
to
permit
manufacture
in
commercial
quantities.However,
there
can
be
no
assurance
that
we
will
not
encounter
difficulties
in
scaling
up
the
manufacturing
processes.
Significant
scale-up
of
manufacturing
mayresult
in
unanticipated
technical
challenges
and
may
require
additional
validation
studies
that
the
FDA
must
review
and
approve.
CMOs
may
encounter
difficultiesin
scaling
up
production,
including
problems
involving
raw
material
suppliers,
production
yields,
technical
difficulties,
scaled-up
product
characteristics,
qualitycontrol
and
assurance,
shortage
of
qualified
personnel,
capacity
constraints,43 Table
of
Contentschanging
priorities
within
the
CMOs,
compliance
with
FDA
and
foreign
regulations,
environmental
compliance,
production
costs
and
development
of
advancedmanufacturing
techniques
and
process
controls.
Any
of
these
difficulties,
if
they
occur,
and
are
not
overcome
to
the
satisfaction
of
the
FDA
or
other
regulatoryagency,
could
lead
to
significant
delays
and
possibly
the
termination
of
the
development
program
for
such
drug
candidate.
These
risks
become
more
acute
as
wescale
up
for
commercial
quantities,
where
a
reliable
source
of
drug
product
becomes
critical
to
commercial
success.
The
commercial
viability
of
Rintega,
ifapproved,
will
depend
on
the
ability
of
our
contract
manufacturers
to
produce
drug
product
on
a
large
scale.
Failure
to
achieve
this
level
of
supply
can
jeopardizeand
prevent
the
successful
commercialization
of
the
drug.
We
have
recently
initiated
use
of
Rintega
drug
product
manufactured
by
MilliporeSigma
(formerly
SAFC,
a
division
of
the
Sigma
Aldrich
Corporation)
andPatheon
Ferentino,
in
the
ACT
IV
and
ReACT
clinical
studies
as
well
as
in
compassionate
use.
We
have
also
established
relationship
with
Cook
Pharmica
to
fillRintega
for
commercial
supply.
We
rely
on
Biosyn
and
Ambiopharm
for
supplying
suitable
quantities
of
cGMP
starting
materials
for
the
manufacture
of
Rintega.We
also
rely
on
Sanofi
to
supply
suitable
quantities
of
commercial
quality
GM-CSF
which
is
co-administered
with
Rintega.
Any
manufacturing
failures
or
delaysby
our
Rintega
contract
manufacturers
or
suppliers
of
critical
materials
could
cause
delays
in
ACT
IV
and/or
the
commercial
launch
of
Rintega.
To
date,
we
have
utilized
contract
manufacturing
organizations
for
the
manufacture
of
clinical
trial
supplies
of
glembatumumab
vedotin.
We
have
establishedrelationships
with
Lonza
Biologics
to
manufacture
the
glembatumumab
vedotin
antibody
and
Piramal
Healthcare
UK
Ltd.
to
manufacture
the
antibody
drugconjugate
with
the
MMAE
toxin.
The
drug
substance
is
then
filled
and
packaged
at
contract
manufacturers.
We
rely
on
MilliporeSigma
for
sourcing
of
suitablequantities
of
vcMMAE.
Any
manufacturing
failures
or
delays
by
our
glembatumumab
vedotin
contract
manufacturers
or
suppliers
of
materials
could
cause
delaysin
our
glembatumumab
vedotin
clinical
studies
including
the
METRIC
study
and/or
the
commercial
launch
of
glembatumumab
vedotin.
We
have
established
a
relationship
with
Patheon
Biologics
to
scale
up
and
manufacture
varlilumab
drug
substance
for
global
clinical
trials
and
potentialcommercialization.
We
operate
our
own
cGMP
manufacturing
facility
in
Fall
River,
Massachusetts,
to
produce
drug
substance
for
our
current
and
planned
early-stage
clinicaltrials.
Our
Fall
River
manufacturing
facility
has
250L
and
1000L
bioreactor
capacity
and
is
able
to
manufacture
in
compliance
with
FDA
regulations,
allowing
usto
distribute
potential
products
to
clinical
sites
in
the
U.S.
for
early
clinical
trials.
We
manufacture
CDX-1401,
CDX-301
and
CDX-014
drug
substance
in
our
FallRiver
facility
for
our
current
and
planned
Phase
1
and
Phase
2
clinical
trials.
The
products
are
then
filled
and
packaged
at
contract
manufacturers.
Anymanufacturing
failures
or
compliance
issues
at
contract
manufacturers
could
cause
delays
in
our
Phase
1
and
Phase
2
clinical
studies
for
these
product
candidates.
Our
leading
drug
candidates
require
specialized
manufacturing
capabilities
and
processes.
We
may
face
difficulty
in
securing
commitments
from
U.S.
andforeign
contract
manufacturers
as
these
manufacturers
could
be
unwilling
or
unable
to
accommodate
our
needs.
Relying
on
foreign
manufacturers
involves
peculiarand
increased
risks,
including
the
risk
relating
to
the
difficulty
foreign
manufacturers
may
face
in
complying
with
cGMP
requirements
as
a
result
of
languagebarriers,
lack
of
familiarity
with
cGMP
or
the
FDA
regulatory
process
or
other
causes,
economic
or
political
instability
in
or
affecting
the
home
countries
of
ourforeign
manufacturers,
shipping
delays,
potential
changes
in
foreign
regulatory
laws
governing
the
sales
of
our
product
supplies,
fluctuations
in
foreign
currencyexchange
rates
and
the
imposition
or
application
of
trade
restrictions.
There
can
be
no
assurances
that
contract
manufacturers
will
be
able
to
meet
our
timetable
and
requirements.
Further,
contract
manufacturers
must
operate
incompliance
with
cGMP
and
failure
to
do
so
could
result
in,
among
other
things,
the
disruption
of
product
supplies.
As
noted
above,
non-U.S.
contractmanufacturers
may
face
special
challenges
in
complying
with
cGMP
requirements,
and44 Table
of
Contentsalthough
we
are
not
currently
dependent
on
non-U.S.
collaborators
or
contract
manufacturers,
we
may
choose
or
be
required
to
rely
on
non-U.S.
sources
in
thefuture
as
we
seek
to
develop
stable
supplies
of
increasing
quantities
of
materials
for
ongoing
clinical
trials
of
larger
scale.
Our
dependence
upon
third
parties
for
themanufacture
of
our
products
may
adversely
affect
our
profit
margins
and
our
ability
to
develop,
manufacture,
sell
and
deliver
products
on
a
timely
and
competitivebasis.We currently rely on sole suppliers for key components of our drug candidates. Any production problems with our suppliers or other disruptions in the supplyof such components could adversely affect us
We
currently
rely
on
sole
suppliers
for
key
components
of
our
drug
candidates,
including
Hiltonol,
vcMMAE,
KLH,
APi1036,
and
GM-CSF.
While
we
workwith
the
suppliers
of
these
key
components
to
ensure
continuity
of
supply,
no
assurance
can
be
given
that
these
efforts
will
be
successful.
In
addition,
due
toregulatory
requirements
relating
to
the
qualification
of
suppliers,
we
may
not
be
able
to
establish
additional
or
replacement
sources
on
a
timely
basis
or
withoutexcessive
cost.
If
our
suppliers
were
to
terminate
our
arrangements
or
fail
to
meet
our
supply
needs
we
might
be
forced
to
delay
our
development
programs
or
wecould
face
disruptions
in
the
distribution
and
sale
of
any
drugs
for
which
we
obtain
regulatory
approval.We currently rely on third party collaborators to develop and commercialize companion diagnostic tests for certain of our drug candidates, including our leaddrug candidate Rintega.
We
do
not
have
experience
or
capabilities
in
developing,
administering,
obtaining
regulatory
approval
for,
or
commercializing
companion
diagnostic
tests
andwill
need
to
rely
in
large
part
on
third
party
collaborators
to
perform
these
functions.
Companion
diagnostic
tests
are
subject
to
regulation
by
the
FDA
and
similarregulatory
authorities
outside
of
the
United
States
as
medical
devices
and
require
separate
regulatory
approval
prior
to
commercialization.
We
are
dependent
onsuch
third
party
collaborators
to
obtain
regulatory
approval
and
commercialize
such
companion
diagnostic
tests.
Such
third
party
collaborators:•may
not
perform
its
obligations
as
expected
or
as
required
under
our
collaboration
agreement;
•may
encounter
production
difficulties
that
could
constrain
the
supply
of
the
companion
diagnostic
test;
•may
have
difficulties
gaining
acceptance
of
the
use
of
the
companion
diagnostic
test
in
the
clinical
community;
•may
not
pursue
commercialization
of
the
companion
diagnostic
test
even
if
they
receive
any
required
regulatory
approvals;
•may
elect
not
to
continue
the
development
or
commercialization
of
the
companion
diagnostic
test
based
on
changes
in
the
third
parties'
strategicfocus
or
available
funding,
or
external
factors
such
as
an
acquisition,
that
divert
resources
or
create
competing
priorities;
•may
not
commit
sufficient
resources
to
the
marketing
and
distribution
of
the
companion
diagnostic
test;
and
•may
terminate
their
relationship
with
us.
If
such
third
party
collaborators
fail
to
develop,
obtain
regulatory
approval
or
commercialize
the
companion
diagnostic
test,
we
may
not
be
able
to
enter
intoarrangements
with
another
diagnostic
company
to
obtain
supplies
of
an
alternative
diagnostic
test
for
use
in
connection
with
the
development
andcommercialization
of
our
product
candidates
or
do
so
on
commercially
reasonable
terms,
which
could
adversely
affect
and/or
delay
the
development
orcommercialization
of
our
product
candidates.45 Table
of
ContentsOur reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them.
Because
we
rely
on
third
parties
to
develop
our
products,
we
must
share
trade
secrets
with
them.
We
seek
to
protect
our
proprietary
technology
in
part
byentering
into
confidentiality
agreements
and,
if
applicable,
material
transfer
agreements,
collaborative
research
agreements,
consulting
agreements
or
other
similaragreements
with
our
collaborators,
advisors,
employees
and
consultants
prior
to
beginning
research
or
disclosing
proprietary
information.
These
agreementstypically
restrict
the
ability
of
our
collaborators,
advisors,
employees
and
consultants
to
publish
data
potentially
relating
to
our
trade
secrets.
Our
academiccollaborators
typically
have
rights
to
publish
data,
provided
that
we
are
notified
in
advance
and
may
delay
publication
for
a
specified
time
in
order
to
secure
ourintellectual
property
rights
arising
from
the
collaboration.
In
other
cases,
publication
rights
are
controlled
exclusively
by
us,
although
in
some
cases
we
may
sharethese
rights
with
other
parties.
We
also
conduct
joint
research
and
development
programs
which
may
require
us
to
share
trade
secrets
under
the
terms
of
researchand
development
partnership
or
similar
agreements.
Despite
our
efforts
to
protect
our
trade
secrets,
our
competitors
may
discover
our
trade
secrets,
either
throughbreach
of
these
agreements,
independent
development
or
publication
of
information
including
our
trade
secrets
in
cases
where
we
do
not
have
proprietary
orotherwise
protected
rights
at
the
time
of
publication.
A
competitor's
discovery
of
our
trade
secrets
would
impair
our
competitive
position.Risks
Related
to
Business
OperationsWe depend greatly on the intellectual capabilities and experience of our key executives, commercial personnel and scientists and the loss of any of them couldaffect our ability to develop our products.
The
loss
of
Anthony
S.
Marucci,
our
President
and
Chief
Executive
Officer,
or
other
key
members
of
our
staff,
including
Avery
W.
Catlin,
our
Chief
FinancialOfficer,
Dr.
Thomas
Davis,
our
Chief
Medical
Officer,
Dr.
Tibor
Keler,
our
Chief
Scientific
Officer,
Dr.
Ronald
Pepin,
our
Chief
Business
Officer
and
Dr.
RichardWright,
our
Chief
Commercial
Officer,
could
harm
us.
We
entered
into
employment
agreements
with
Messrs.
Marucci,
Catlin,
Davis,
Keler,
Pepin
and
Wrightalthough
an
employment
agreement
as
a
practical
matter
does
not
guarantee
retention
of
an
employee.
We
also
depend
on
our
scientific
and
clinical
collaboratorsand
advisors,
all
of
whom
have
outside
commitments
that
may
limit
their
availability
to
us.
In
addition,
we
believe
that
our
future
success
will
depend
in
large
partupon
our
ability
to
attract
and
retain
highly
skilled
scientific,
managerial
and
marketing
personnel,
particularly
as
we
expand
our
activities
in
clinical
trials,
theregulatory
approval
process
and
sales
and
manufacturing.
We
routinely
enter
into
consulting
agreements
with
our
scientific
and
clinical
collaborators
and
advisors,key
opinion
leaders
and
heads
of
academic
departments
in
the
ordinary
course
of
our
business.
We
also
enter
into
contractual
agreements
with
physicians
andinstitutions
who
recruit
patients
into
our
clinical
trials
on
our
behalf
in
the
ordinary
course
of
our
business.
Notwithstanding
these
arrangements,
we
face
significantcompetition
for
this
type
of
personnel
from
other
companies,
research
and
academic
institutions,
government
entities
and
other
organizations.
We
cannot
predictour
success
in
hiring
or
retaining
the
personnel
we
require
for
continued
growth.We expect to expand our clinical development, regulatory and sales and marketing capabilities, and as a result, we may encounter difficulties in managing ourgrowth, which could disrupt our operations.
We
expect
that
if
our
clinical
drug
candidates
continue
to
progress
in
development,
we
will
require
significant
additional
investment
in
personnel,
managementsystems
and
resources,
particularly
in
the
build
out
of
our
commercial
capabilities.
In
preparation
for
potential
approval
of
Rintega
we
are
building
the
commercialorganization
that
will
be
responsible
for
the
commercial
launch
of
Rintega
in
the
United
States
and
Europe,
if
it
receives
marketing
approval
in
such
jurisdictions.To
date,
we
have
hired
a
core
commercial
team,
which
is
building
our
sales
and
distribution
capabilities
in
preparation
for
a
possible
commercial
launch
of
Rintega.Over
the
next
several
years,
we
expect
to
experience46 Table
of
Contentssignificant
growth
in
the
number
of
our
employees
and
the
scope
of
our
operations,
particularly
in
the
areas
of
drug
development,
regulatory
affairs
and
sales
andmarketing.
To
manage
our
anticipated
future
growth,
we
must
continue
to
implement
and
improve
our
managerial,
operational
and
financial
systems,
expand
ourfacilities
and
continue
to
recruit
and
train
additional
qualified
personnel.
Due
to
our
limited
financial
resources
and
the
limited
experience
of
our
management
teamin
managing
a
company
with
such
anticipated
growth,
we
may
not
be
able
to
effectively
manage
the
expansion
of
our
operations
or
recruit
and
train
additionalqualified
personnel.
The
physical
expansion
of
our
operations
may
lead
to
significant
costs
and
may
divert
our
management
and
business
development
resources.Any
inability
to
manage
growth
could
delay
the
execution
of
our
business
plans
or
disrupt
our
operations.Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which couldhave a material adverse effect on our business.
We
are
exposed
to
the
risk
of
employee
fraud
or
other
misconduct.
Misconduct
by
employees
could
include
intentional
failures
to
comply
with
FDAregulations,
provide
accurate
information
to
the
FDA,
comply
with
applicable
privacy
laws,
comply
with
manufacturing
standards
we
have
established,
complywith
federal
and
state
health-care
fraud
and
abuse
laws
and
regulations,
report
financial
information
or
data
accurately
or
disclose
unauthorized
activities
to
us.
Inparticular,
sales,
marketing
and
business
arrangements
in
the
healthcare
industry
are
subject
to
extensive
laws
and
regulations
intended
to
prevent
fraud,
kickbacks,self-dealing
and
other
abusive
practices.
These
laws
and
regulations
may
restrict
or
prohibit
a
wide
range
of
pricing,
discounting,
marketing
and
promotion,
salescommission,
customer
incentive
programs
and
other
business
arrangements.
Employee
misconduct
could
also
involve
the
improper
use
of
information
obtained
inthe
course
of
clinical
trials,
which
could
result
in
regulatory
sanctions
and
serious
harm
to
our
reputation.
We
have
adopted
a
Code
of
Business
Ethics,
but
it
is
notalways
possible
to
identify
and
deter
employee
misconduct,
and
the
precautions
we
take
to
detect
and
prevent
this
activity
may
not
be
effective
in
controllingunknown
or
unmanaged
risks
or
losses
or
in
protecting
us
from
governmental
investigations
or
other
actions
or
lawsuits
stemming
from
a
failure
to
be
incompliance
with
such
laws
or
regulations.
If
any
such
actions
are
instituted
against
us,
and
we
are
not
successful
in
defending
ourselves
or
asserting
our
rights,those
actions
could
have
a
significant
effect
on
our
business
and
results
of
operations,
including
the
imposition
of
significant
fines
or
other
sanctions.We may engage in strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our management.
From
time
to
time
we
may
consider
strategic
transactions,
such
as
acquisitions
of
companies,
asset
purchases
and
out-licensing
or
in-licensing
of
products,product
candidates
or
technologies.
Additional
potential
transactions
that
we
may
consider
include
a
variety
of
different
business
arrangements,
including
spin-offs,strategic
partnerships,
joint
ventures,
restructurings,
divestitures,
business
combinations
and
investments.
Any
such
transaction
may
require
us
to
incur
non-recurring
or
other
charges,
may
increase
our
near
and
long-term
expenditures
and
may
pose
significant
integration
challenges
or
disrupt
our
management
orbusiness,
which
could
adversely
affect
our
operations
and
financial
results.
For
example,
these
transactions
may
entail
numerous
operational
and
financial
risks,including:•exposure
to
unknown
liabilities;
•disruption
of
our
business
and
diversion
of
our
management's
time
and
attention
in
order
to
develop
acquired
products,
product
candidates
ortechnologies;
•incurrence
of
substantial
debt
or
dilutive
issuances
of
equity
securities
to
pay
for
acquisitions;
•higher
than
expected
acquisition
and
integration
costs;47 Table
of
Contents•write-downs
of
assets
or
goodwill
or
impairment
charges;
•increased
amortization
expenses;
•difficulty
and
cost
in
combining
the
operations
and
personnel
of
any
acquired
businesses
with
our
operations
and
personnel;
•impairment
of
relationships
with
key
suppliers
or
customers
of
any
acquired
businesses
due
to
changes
in
management
and
ownership;
and
•inability
to
retain
key
employees
of
any
acquired
businesses.
Accordingly,
although
there
can
be
no
assurance
that
we
will
undertake
or
successfully
complete
any
transactions
of
the
nature
described
above,
anytransactions
that
we
do
complete
could
have
a
material
adverse
effect
on
our
business,
results
of
operations,
financial
condition
and
prospects.We may not be able to successfully integrate our existing technology or to modify our technologies to create new immunotherapeutic drugs
If
we
are
able
to
integrate
our
acquired
and
licensed
assets
with
our
immunotherapy
technologies,
we
believe
these
assets
will
give
our
immunotherapeuticdrugs
a
competitive
advantage.
However,
if
we
are
unable
to
successfully
integrate
licensed
assets,
or
other
technologies
which
we
have
acquired
or
may
acquire
inthe
future,
with
our
existing
technologies
and
potential
products
currently
under
development,
we
may
be
unable
to
realize
any
benefit
from
our
acquisition
of
theseassets,
or
other
technologies
which
we
have
acquired
or
may
acquire
in
the
future
and
may
face
the
loss
of
our
investment
of
financial
resources
and
time
in
theintegration
process.
We
believe
that
our
immunotherapy
technology
portfolio
may
offer
opportunities
to
develop
immunotherapeutic
drugs
that
treat
a
variety
of
oncology,inflammatory
and
infectious
diseases
by
stimulating
a
patient's
immune
system
against
those
disease
organisms.
If
our
immunotherapy
technology
portfolio
cannotbe
used
to
create
effective
immunotherapeutic
drugs
against
a
variety
of
disease
organisms,
we
may
lose
all
or
portions
of
our
investment
in
development
effortsfor
new
drug
candidates.Our internal computer systems, or those of our CROs, CMOs, or other contractors or consultants, may fail or suffer security breaches, which could result in amaterial disruption of our drug development programs.
Despite
the
implementation
of
security
measures,
our
internal
computer
systems
and
those
of
our
CROs,
CMOs
and
other
contractors
and
consultants
arevulnerable
to
damage
from
cyberattacks,
malicious
intrusion,
computer
viruses,
unauthorized
access,
loss
of
data
privacy,
natural
disasters,
terrorism,
war
andtelecommunication,
electrical
failures
or
other
significant
disruption.
If
such
an
event
were
to
occur
and
cause
interruptions
in
our
operations,
it
could
result
in
amaterial
disruption
of
our
drug
development
programs
and
commercialization
efforts.
For
example,
the
loss
of
clinical
study
data
from
completed
or
ongoingclinical
studies
for
any
of
our
drug
candidates
could
result
in
delays
in
our
regulatory
approval
efforts
and
significantly
increase
our
costs
to
recover
or
reproducethe
data.
To
the
extent
that
any
disruption
or
security
breach
were
to
result
in
a
loss
of
or
damage
to
our
data
or
applications,
or
inappropriate
disclosure
ofconfidential
or
proprietary
information,
we
could
incur
liability
and
the
further
development
or
commercialization
of
our
drug
candidates
could
be
delayed.Our business requires us to use hazardous materials, which increases our exposure to dangerous and costly accidents.
Our
research
and
development
activities
involve
the
use
of
hazardous
chemicals,
biological
materials
and
radioactive
compounds.
Although
we
believe
thatour
safety
procedures
for
handling
and48 Table
of
Contentsdisposing
of
hazardous
materials
comply
with
the
standards
prescribed
by
applicable
laws
and
regulations,
we
cannot
completely
eliminate
the
risk
of
accidentalcontamination
or
injury
from
these
materials.
In
the
event
of
an
accident,
an
injured
party
will
likely
sue
us
for
any
resulting
damages
with
potentially
significantliability.
The
ongoing
cost
of
complying
with
environmental
laws
and
regulations
is
significant
and
may
increase
in
the
future.We face the risk of product liability claims, which could exceed our insurance coverage, and produce recalls, each of which could deplete our cash resources.
As
a
participant
in
the
pharmaceutical,
biotechnology
and
immunotherapeutic
drug
industries,
we
are
exposed
to
the
risk
of
product
liability
claims
allegingthat
use
of
our
drug
candidates
caused
an
injury
or
harm.
These
claims
can
arise
at
any
point
in
the
development,
testing,
manufacture,
marketing
or
sale
of
ourdrug
candidates
and
may
be
made
directly
by
patients
involved
in
clinical
trials
of
our
products,
by
consumers
or
healthcare
providers
or
by
individuals,organizations
or
companies
selling
our
products.
Product
liability
claims
can
be
expensive
to
defend,
even
if
the
drug
or
drug
candidate
did
not
actually
cause
thealleged
injury
or
harm.
Insurance
covering
product
liability
claims
becomes
increasingly
expensive
as
a
drug
candidate
moves
through
the
development
pipeline
tocommercialization.
Under
our
license
agreements,
we
are
required
to
maintain
clinical
trial
liability
insurance
coverage
up
to
$15
million.
However,
there
can
be
noassurance
that
such
insurance
coverage
is
or
will
continue
to
be
adequate
or
available
to
us
at
a
cost
acceptable
to
us
or
at
all.
We
may
choose
or
find
it
necessaryunder
our
collaborative
agreements
to
increase
our
insurance
coverage
in
the
future.
We
may
not
be
able
to
secure
greater
or
broader
product
liability
insurancecoverage
on
acceptable
terms
or
at
reasonable
costs
when
needed.
Any
liability
for
damages
resulting
from
a
product
liability
claim
could
exceed
the
amount
of
ourcoverage,
require
us
to
pay
a
substantial
monetary
award
from
our
own
cash
resources
and
have
a
material
adverse
effect
on
our
business,
financial
condition
andresults
of
operations.
Moreover,
a
product
recall,
if
required,
could
generate
substantial
negative
publicity
about
our
products
and
business
and
inhibit
or
preventdevelopment
of
our
drug
candidates
and,
if
approval
is
obtained,
commercialization
of
our
future
drugs.Risks
Related
to
Intellectual
PropertyWe license technology from other companies to develop products, and those companies could influence research and development or restrict our use of it. Inaddition, if we fail to comply with our obligations in our intellectual property licenses with third parties, we could lose license rights that are important to ourbusiness.
Companies
that
license
technologies
to
us
that
we
use
in
our
research
and
development
programs
may
require
us
to
achieve
milestones
or
devote
minimumamounts
of
resources
to
develop
products
using
those
technologies.
They
may
also
require
us
to
make
significant
royalty
and
milestone
payments,
including
apercentage
of
any
sublicensing
income,
as
well
as
payments
to
reimburse
them
for
patent
costs.
The
number
and
variety
of
our
research
and
development
programsrequire
us
to
establish
priorities
and
to
allocate
available
resources
among
competing
programs.
From
time
to
time
we
may
choose
to
slow
down
or
cease
ourefforts
on
particular
products.
If
in
doing
so
we
fail
to
fully
perform
our
obligations
under
a
license,
the
licensor
can
terminate
the
licenses
or
permit
ourcompetitors
to
use
the
technology.
Termination
of
these
licenses
or
reduction
or
elimination
of
our
licensed
rights
may
result
in
our
having
to
negotiate
new
orreinstated
licenses
with
less
favorable
terms.
Moreover,
we
may
lose
our
right
to
market
and
sell
any
products
based
on
the
licensed
technology.
The
occurrence
ofsuch
events
could
materially
harm
our
business.49 Table
of
ContentsOur ability to successfully develop and, if regulatory approval is obtained, commercialize our drug candidates may be materially adversely affected if we areunable to obtain and maintain effective intellectual property rights for our drug candidates and technologies.
Our
success
depends
in
part
on
our
ability
to
obtain
and
maintain
patent
protection
and
other
intellectual
property
protection
for
our
drug
candidates
andproprietary
technology.
We
have
sought
to
protect
our
proprietary
position
by
filing
patent
applications
in
the
United
States
and
abroad
related
to
our
drugcandidates
and
technology
that
are
important
to
our
business.
This
process
is
expensive
and
time-consuming,
and
we
may
not
be
able
to
file
and
prosecute
allnecessary
or
desirable
patent
applications
at
a
reasonable
cost
or
in
a
timely
manner.
It
is
also
possible
that
we
will
fail
to
identify
patentable
aspects
of
our
researchand
development
output
before
it
is
too
late
to
obtain
patent
protection.
Our
existing
patents
and
any
future
patents
we
obtain
may
not
be
sufficiently
broad
toprevent
others
from
using
our
technologies
or
from
developing
competing
drugs
and
technologies.
Biotechnology
patents
involve
complex
legal,
scientific
and
factual
questions
and
are
highly
uncertain.
To
date,
there
is
no
consistent
policy
regarding
thebreadth
of
claims
allowed
in
biotechnology
patents,
particularly
in
regard
to
patents
for
technologies
for
human
uses
like
those
we
use
in
our
business.
We
cannotpredict
whether
the
patents
we
or
our
licensors
seek
will
issue.
If
such
patents
are
issued,
a
competitor
may
challenge
them
and
limit
their
scope.
Moreover,
ourpatents
may
not
afford
effective
protection
against
competitors
with
similar
technology.
A
successful
challenge
to
any
one
of
our
patents
could
result
in
a
thirdparty's
ability
to
use
the
technology
covered
by
the
patent.
We
also
face
the
risk
that
others
will
infringe,
avoid
or
circumvent
our
patents.
Technology
that
welicense
from
others
is
subject
to
similar
risks
and
this
could
harm
our
ability
to
use
that
technology.
If
we,
or
a
company
that
licenses
technology
to
us,
were
not
thefirst
creator
of
an
invention
that
we
use,
our
use
of
the
underlying
product
or
technology
will
face
restrictions,
including
elimination.
For
example,
in
September2014,
two
European
patent
oppositions
were
filed
against
a
University
of
Southampton
European
patent
to
which
we
have
exclusive
rights
and
which
broadlysupports
one
of
our
drug
candidates,
varlilumab.
While
we
plan
to
defend
the
European
patent
vigorously
in
cooperation
with
the
University
of
Southampton,
wemay
be
unsuccessful
and
the
scope
of
such
patent
may
be
limited
or
the
patent
may
be
invalidated.
If
we
must
defend
against
suits
brought
against
us
or
prosecute
suits
against
others
involving
intellectual
property
rights,
we
will
incur
substantial
costs.
Inaddition
to
any
potential
liability
for
significant
monetary
damages,
a
decision
against
us
may
require
us
to
obtain
licenses
to
patents
or
other
intellectual
propertyrights
of
others
on
potentially
unfavorable
terms.
If
those
licenses
from
third
parties
are
necessary
but
we
cannot
acquire
them,
we
would
attempt
to
design
aroundthe
relevant
technology,
which
would
cause
higher
development
costs
and
delays,
and
may
ultimately
prove
impracticable.We may be unable to protect the confidentiality of our trade secrets, thus harming our business and competitive position.
We
rely
upon
trade
secrets,
including
unpatented
know-how,
technology
and
other
proprietary
information
to
develop
and
maintain
our
competitive
position,which
we
seek
to
protect,
in
part,
by
confidentiality
agreements
with
our
employees
and
our
collaborators
and
consultants.
We
also
have
agreements
with
ouremployees
that
obligate
them
to
assign
their
inventions
to
us.
However,
it
is
possible
that
technology
relevant
to
our
business
will
be
independently
developed
by
aperson
that
is
not
a
party
to
such
an
agreement.
Furthermore,
if
the
employees,
consultants
or
collaborators
that
are
parties
to
these
agreements
breach
or
violate
theterms
of
these
agreements,
we
may
not
have
adequate
remedies
for
any
such
breach
or
violation,
and
we
could
lose
our
trade
secrets
through
such
breaches
orviolations.
Further,
our
trade
secrets
could
be
disclosed,
misappropriated
or
otherwise
become
known
or
be
independently
discovered
by
our
competitors.
Inaddition,
intellectual
property
laws
in
foreign
countries
may
not
protect
our
intellectual
property
to
the
same
extent
as
the
laws
of
the
United50 Table
of
ContentsStates.
If
our
trade
secrets
are
disclosed
or
misappropriated,
it
would
harm
our
ability
to
protect
our
rights
and
have
a
material
adverse
effect
on
our
business.We may become involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful.
Competitors
may
infringe
our
patents.
To
counter
infringement
or
unauthorized
use,
we
may
be
required
to
file
infringement
claims,
which
can
be
expensiveand
time-consuming.
In
addition,
in
an
infringement
proceeding,
a
court
may
decide
that
a
patent
of
ours
is
invalid
or
unenforceable,
or
may
refuse
to
stop
the
otherparty
from
using
the
technology
at
issue
on
the
grounds
that
our
patents
do
not
cover
the
technology
in
question.
An
adverse
result
in
any
litigation
proceedingcould
put
one
or
more
of
our
patents
at
risk
of
being
invalidated
or
interpreted
narrowly.
Furthermore,
because
of
the
substantial
amount
of
discovery
required
inconnection
with
intellectual
property
litigation,
there
is
a
risk
that
some
of
our
confidential
information
could
be
compromised
by
disclosure
during
this
type
oflitigation.Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain andcould have a material adverse effect on the success of our business.
Our
commercial
success
depends
upon
our
ability
and
the
ability
of
our
collaborators
to
develop,
manufacture,
market
and
sell
our
drug
candidates
and
use
ourproprietary
technologies
without
infringing,
misappropriating
or
otherwise
violating
the
proprietary
rights
or
intellectual
property
of
third
parties.
We
may
becomeparty
to,
or
be
threatened
with,
future
adversarial
proceedings
or
litigation
regarding
intellectual
property
rights
with
respect
to
our
drug
candidates
and
technology.Third
parties
may
assert
infringement
claims
against
us
based
on
existing
patents
or
patents
that
may
be
granted
in
the
future.
If
we
are
found
to
infringe
a
third-party's
intellectual
property
rights,
we
could
be
required
to
obtain
a
license
from
such
third-party
to
continue
developing
our
drug
candidates
and
technology.However,
we
may
not
be
able
to
obtain
any
required
license
on
commercially
reasonable
terms
or
at
all.
Even
if
we
were
able
to
obtain
a
license,
it
could
be
non-exclusive,
thereby
giving
our
competitors
access
to
the
same
technologies
licensed
to
us.
We
could
be
forced,
including
by
court
order,
to
cease
developing
theinfringing
technology
or
product.
In
addition,
we
could
be
found
liable
for
monetary
damages.
Claims
that
we
have
misappropriated
the
confidential
information
ortrade
secrets
of
third
parties
can
have
a
similar
negative
impact
on
our
business.Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets.
We
employ
individuals
who
were
previously
employed
at
universities
or
other
diagnostic
or
biopharmaceutical
companies,
including
our
competitors
orpotential
competitors.
Although
we
try
to
ensure
that
our
employees
and
consultants
do
not
use
the
proprietary
information
or
know-how
of
others
in
their
work
forus,
we
may
be
subject
to
claims
that
we
or
our
employees,
consultants
or
independent
contractors
have
inadvertently
or
otherwise
used
or
disclosed
intellectualproperty,
including
trade
secrets
or
other
proprietary
information,
of
a
former
employer
or
other
third
parties.
Litigation
may
be
necessary
to
defend
against
theseclaims.
If
we
fail
in
defending
any
such
claims,
in
addition
to
paying
monetary
damages,
we
may
lose
valuable
intellectual
property
rights
or
personnel.
Even
if
weare
successful
in
defending
against
such
claims,
litigation
could
result
in
substantial
costs
and
be
a
distraction
to
management
and
other
employees.51 Table
of
ContentsRegulatory
RisksIf our processes and systems are not compliant with regulatory requirements, we could be subject to delays in submitting BLAs, NDAs or restrictions onmarketing of drugs after they have been approved.
We
currently
are
developing
drug
candidates
for
regulatory
approval
and
are
in
the
process
of
implementing
regulated
processes
and
systems
required
toobtain
and
maintain
regulatory
approval
for
our
drug
candidates.
Certain
of
these
processes
and
systems
for
conducting
clinical
trials
and
manufacturing
materialmust
be
compliant
with
regulatory
requirements
before
we
can
apply
for
regulatory
approval
for
our
drug
candidates.
These
processes
and
systems
will
be
subjectto
continual
review
and
periodic
inspection
by
the
FDA
and
other
regulatory
bodies.
If
we
are
unable
to
achieve
compliance
in
a
timely
fashion,
or
if
complianceissues
are
identified
at
any
point
in
the
development
and
approval
process,
we
may
experience
delays
in
filing
for
regulatory
approval
for
our
drug
candidates,
ordelays
in
obtaining
regulatory
approval
after
filing.
In
addition,
any
later
discovery
of
previously
unknown
problems
or
safety
issues
with
approved
drugs
ormanufacturing
processes,
or
failure
to
comply
with
regulatory
requirements,
may
result
in
restrictions
on
such
drugs
or
manufacturing
processes,
withdrawal
ofdrugs
from
the
market,
the
imposition
of
civil
or
criminal
penalties
or
a
refusal
by
the
FDA
and/or
other
regulatory
bodies
to
approve
pending
applications
formarketing
approval
of
new
drugs
or
supplements
to
approved
applications,
any
of
which
could
have
a
material
adverse
effect
on
our
business.
In
addition,
we
are
aparty
to
agreements
that
transfer
responsibility
for
complying
with
specified
regulatory
requirements,
such
as
filing
and
maintenance
of
marketing
authorizationsand
safety
reporting
or
compliance
with
manufacturing
requirements,
to
our
collaborators
and
third-party
manufacturers.
If
our
collaborators
or
third-partymanufacturers
do
not
fulfill
these
regulatory
obligations,
any
drugs
for
which
we
or
they
obtain
approval
may
be
subject
to
later
restrictions
on
manufacturing
orsale,
or
may
even
risk
withdrawal,
which
could
have
a
material
adverse
effect
on
our
business.Even if we receive regulatory approval for a drug candidate, we will be subject to ongoing regulatory obligations and continued regulatory review, which mayresult in significant additional expense and subject us to penalties if we fail to comply with applicable regulatory requirements.
Once
regulatory
approval
has
been
granted,
the
approved
product
and
its
manufacturer
are
subject
to
continual
review
by
the
FDA
and/or
non-U.S.
regulatoryauthorities.
Any
regulatory
approval
that
we
or
our
collaboration
partners
receive
for
our
drug
candidates
may
be
subject
to
limitations
on
the
indicated
uses
forwhich
the
product
may
be
marketed
or
contain
requirements
for
potentially
costly
post-marketing
follow-up
studies
to
monitor
the
safety
and
efficacy
of
theproduct.
In
addition,
if
the
FDA
and/or
non-U.S.
regulatory
authorities
approve
any
of
our
drug
candidates,
we
will
be
subject
to
extensive
and
ongoing
regulatoryrequirements
by
the
FDA
and
other
regulatory
authorities
with
regard
to
the
labeling,
packaging,
adverse
event
reporting,
storage,
advertising,
promotion
andrecordkeeping
for
our
products.
In
addition,
manufacturers
of
our
drug
products
are
required
to
comply
with
cGMP
regulations,
which
include
requirements
relatedto
quality
control
and
quality
assurance
as
well
as
the
corresponding
maintenance
of
records
and
documentation.
Further,
regulatory
authorities
must
inspect
andapprove
these
manufacturing
facilities
before
they
can
be
used
to
manufacture
our
drug
products,
and
these
facilities
are
subject
to
continual
review
and
periodicinspections
by
the
FDA
and
other
regulatory
authorities
for
compliance
with
cGMP
regulations.
If
we
or
a
third
party
discover
previously
unknown
problems
witha
product,
such
as
adverse
events
of
unanticipated
severity
or
frequency,
or
problems
with
the
facility
where
the
product
is
manufactured,
a
regulatory
authoritymay
impose
restrictions
on
that
product,
the
manufacturer
or
us,
including
requiring
withdrawal
of
the
product
from
the
market
or
suspension
of
manufacturing.
Ifwe,
our
drug
candidates
or
the
manufacturing
facilities
for
our
drug
candidates
fail
to
comply
with
regulatory
requirements
of
the
FDA
and/or
other
non-U.S.52 Table
of
Contentsregulatory
authorities,
we
could
be
subject
to
administrative
or
judicially
imposed
sanctions,
including
the
following:•warning
letters;
•civil
or
criminal
penalties
and
fines;
•injunctions;
•consent
decrees;
•suspension
or
withdrawal
of
regulatory
approval;
•suspension
of
any
ongoing
clinical
studies;
•voluntary
or
mandatory
product
recalls
and
publicity
requirements;
•refusal
to
accept
or
approve
applications
for
marketing
approval
of
new
drugs;
•restrictions
on
operations,
including
costly
new
manufacturing
requirements;
or
•seizure
or
detention
of
drugs
or
import
bans.
The
regulatory
requirements
and
policies
may
change
and
additional
government
regulations
may
be
enacted
for
which
we
may
also
be
required
to
comply.We
cannot
predict
the
likelihood,
nature
or
extent
of
government
regulation
that
may
arise
from
future
legislation
or
administrative
action,
either
in
the
UnitedStates
or
in
other
countries.
If
we
are
not
able
to
maintain
regulatory
compliance,
we
may
not
be
permitted
to
market
our
future
products
and
our
business
maysuffer.We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws and health information privacy and securitylaws. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.
If
we
obtain
FDA
approval
for
any
of
our
drug
candidates
and
begin
commercializing
those
products
in
the
United
States,
our
operations
may
be
directly,
orindirectly
through
our
customers,
subject
to
various
federal
and
state
fraud
and
abuse
laws,
including,
without
limitation,
the
federal
Anti-Kickback
Statute
and
thefederal
False
Claims
Act.
These
laws
may
affect,
among
other
things,
our
proposed
sales,
marketing
and
education
programs.
In
addition,
we
may
be
subject
topatient
privacy
regulation
by
both
the
federal
government
and
the
states
in
which
we
conduct
our
business.
The
laws
that
may
affect
our
ability
to
operate
include:•the
federal
Anti-Kickback
Statute,
which
prohibits,
among
other
things,
persons
from
knowingly
and
willfully
soliciting,
receiving,
offering
orpaying
remuneration,
directly
or
indirectly,
to
induce,
or
in
return
for,
the
purchase
or
recommendation
of
an
item
or
service
reimbursable
under
afederal
healthcare
program,
such
as
the
Medicare
and
Medicaid
programs;
•federal
civil
and
criminal
false
claims
laws
and
civil
monetary
penalty
laws,
which
prohibit,
among
other
things,
individuals
or
entities
fromknowingly
presenting,
or
causing
to
be
presented,
claims
for
payment
from
Medicare,
Medicaid,
or
other
third-party
payors
that
are
false
orfraudulent;
•the
federal
Health
Insurance
Portability
and
Accountability
Act
of
1996,
or
HIPAA,
which
created
new
federal
criminal
statutes
that
prohibitexecuting
a
scheme
to
defraud
any
healthcare
benefit
program
or
making
false
statements
relating
to
healthcare
matters;
•HIPAA,
as
amended
by
the
Health
Information
Technology
for
Economic
and
Clinical
Health
Act
of
2009,
or
HITECH,
and
its
implementingregulations,
which
imposes
certain
requirements
relating
to
the
privacy,
security
and
transmission
of
individually
identifiable
health
information;53 Table
of
Contents•the
federal
transparency
requirements
under
the
Patient
Protection
and
Affordable
Care
Act
of
2010
requires
manufacturers
of
drugs,
devices,biologics
and
medical
supplies
to
report
to
the
Department
of
Health
and
Human
Services
information
related
to
physician
payments
and
othertransfers
of
value
and
physician
ownership
and
investment
interests;
and
•state
law
and
foreign
law
equivalents
of
each
of
the
above
federal
laws,
such
as
anti-kickback
and
false
claims
laws
which
may
apply
to
items
orservices
reimbursed
by
any
third-party
payor,
including
commercial
insurers,
and
state
laws
governing
the
privacy
and
security
of
healthinformation
in
certain
circumstances,
many
of
which
differ
from
each
other
in
significant
ways
and
may
not
have
the
same
effect,
thus
complicatingcompliance
efforts.
Although
compliance
programs
can
mitigate
the
risk
of
investigation
and
prosecution
for
violations
of
these
laws,
the
risks
cannot
be
entirely
eliminated.
Ifour
operations
are
found
to
be
in
violation
of
any
of
the
laws
described
above
or
any
other
governmental
regulations
that
apply
to
us,
we
may
be
subject
topenalties,
including
civil
and
criminal
penalties,
damages,
fines
and
the
curtailment
or
restructuring
of
our
operations,
any
of
which
could
adversely
affect
ourability
to
operate
our
business
and
our
results
of
operations.
Moreover,
achieving
and
sustaining
compliance
with
applicable
federal
and
state
privacy,
security
andfraud
laws
may
prove
costly.Compliance with laws and regulations pertaining to the privacy and security of health information may be time consuming, difficult and costly, particularly inlight of increased focus on privacy issues in countries around the world, including the U.S. and the EU.
We
are
subject
to
various
domestic
and
international
privacy
and
security
regulations.
The
confidentiality,
collection,
use
and
disclosure
of
personal
data,including
clinical
trial
patient-specific
information,
are
subject
to
governmental
regulation
generally
in
the
country
that
the
personal
data
were
collected
or
used.
Inthe
United
States
were
are
subject
to
various
state
and
federal
privacy
and
data
security
regulations,
including
but
not
limited
to
Health
Insurance
Portability
andAccountability
Act
of
1996,
or
HIPAA,
and
as
amended
in
2014
by
the
Health
Information
Technology
for
Economic
and
Clinical
Health
("HITECH")
Act.HIPAA
mandates,
among
other
things,
the
adoption
of
uniform
standards
for
the
electronic
exchange
of
information
in
common
healthcare
transactions,
as
well
asstandards
relating
to
the
privacy
and
security
of
individually
identifiable
health
information,
which
require
the
adoption
of
administrative,
physical
and
technicalsafeguards
to
protect
such
information.
In
the
EU
personal
data
includes
any
information
that
relates
to
an
identified
or
identifiable
natural
person
with
healthinformation
carrying
additional
obligations,
including
obtaining
the
explicit
consent
from
the
individual
for
collection,
use
or
disclosure
of
the
information.
Inaddition,
we
are
subject
to
EU
rules
with
respect
to
cross-border
transfers
of
such
data
out
of
the
EU.
Furthermore,
the
legislative
and
regulatory
landscape
forprivacy
and
data
protection
continues
to
evolve,
and
there
has
been
an
increasing
amount
of
focus
on
privacy
and
data
protection
issues.
The
United
States
and
theEU
and
its
member
states
continue
to
issue
new
privacy
and
data
protection
rules
and
regulations
that
relate
to
personal
data
and
health
information.
Compliance
with
these
laws
may
be
time
consuming,
difficult
and
costly.
If
we
fail
to
comply
with
applicable
laws,
regulations
or
duties
relating
to
the
use,privacy
or
security
of
personal
data
we
could
be
subject
to
the
imposition
of
significant
civil
and
criminal
penalties,
be
forced
to
alter
our
business
practices
andsuffer
reputational
harm.Health care reform and restrictions on reimbursement may limit our returns on potential products.
Because
our
strategy
ultimately
depends
on
the
commercial
success
of
our
products,
we
assume,
among
other
things,
that
end
users
of
our
products
will
beable
to
pay
for
them.
In
the
United
States
and
other
countries,
in
most
cases,
the
volume
of
sales
of
products
like
those
we
are
developing
depends
on
theavailability
of
reimbursement
from
third-party
payors,
including
national
health
care54 Table
of
Contentsagencies,
private
health
insurance
plans
and
health
maintenance
organizations.
Third-party
payors
increasingly
challenge
the
prices
charged
for
medical
productsand
services.
Accordingly,
if
we
succeed
in
bringing
products
to
market,
and
reimbursement
is
not
available
or
is
insufficient,
we
could
be
prevented
fromsuccessfully
commercializing
our
potential
products.
The
health
care
industry
in
the
United
States
and
in
Europe
is
undergoing
fundamental
changes
as
a
result
of
political,
economic
and
regulatory
influences.Reforms
proposed
from
time
to
time
include
mandated
basic
health
care
benefits,
controls
on
health
care
spending,
the
establishment
of
governmental
controls
overthe
cost
of
therapies,
creation
of
large
medical
services
and
products
purchasing
groups
and
fundamental
changes
to
the
health
care
delivery
system.
We
anticipateongoing
review
and
assessment
of
health
care
delivery
systems
and
methods
of
payment
in
the
United
States
and
other
countries.
We
cannot
predict
whether
anyparticular
reform
initiatives
will
result
or,
if
adopted,
what
their
impact
on
us
will
be.
However,
we
expect
that
adoption
of
any
reform
proposed
will
impair
ourability
to
market
products
at
acceptable
prices
and
that
uncertainty
concerning
future
government
regulation
of
consumer
healthcare
purchasing
and
insurance
mayresult
in
difficulties
for
drug
development
companies,
like
us,
in
raising
capital.Changes in laws affecting the health care industry could adversely affect our business.
In
the
U.S.,
there
have
been
numerous
proposals
considered
at
the
federal
and
state
levels
to
reform
the
health
care
industry
and
its
cost,
and
it
is
likely
thatfederal
and
state
legislatures
and
health
agencies
will
continue
to
focus
on
health
care
reform
in
the
future.
While
additional
health
care
reform
may
increase
thenumber
of
patients
who
have
insurance
coverage
for
our
products,
it
may
also
include
cost
containment
measures
that
adversely
affect
reimbursement
for
ourproducts.
Congress
has
also
considered
legislation
to
change
the
Medicare
reimbursement
system
for
outpatient
drugs,
increase
the
amount
of
rebates
thatmanufacturers
pay
for
coverage
of
their
drugs
by
Medicaid
programs
and
facilitate
the
importation
of
lower-cost
prescription
drugs
that
are
marketed
outside
theU.S.
Some
states
are
also
considering
legislation
that
would
control
the
prices
of
drugs,
and
state
Medicaid
programs
are
increasingly
requesting
manufacturers
topay
supplemental
rebates
and
requiring
prior
authorization
by
the
state
program
for
use
of
any
drug
for
which
supplemental
rebates
are
not
being
paid.
Managedcare
organizations
continue
to
seek
price
discounts
and,
in
some
cases,
to
impose
restrictions
on
the
coverage
of
particular
drugs.
Government
efforts
to
reduceMedicaid
expenses
may
lead
to
increased
use
of
managed
care
organizations
by
Medicaid
programs.
This
may
result
in
managed
care
organizations
influencingprescription
decisions
for
a
larger
segment
of
the
population
and
a
corresponding
constraint
on
prices
and
reimbursement
for
our
products.
We
and
our
collaborators
and
partners
operate
in
a
highly
regulated
industry.
As
a
result,
governmental
actions
may
adversely
affect
our
business,
operationsor
financial
condition,
including:•new
laws,
regulations
or
judicial
decisions,
or
new
interpretations
of
existing
laws,
regulations
or
decisions,
related
to
health
care
availability,method
of
delivery
and
payment
for
health
care
products
and
services;
•changes
in
the
FDA
and
foreign
regulatory
approval
processes
that
may
delay
or
prevent
the
approval
of
new
products
and
result
in
lost
marketopportunity;
•changes
in
FDA
and
foreign
regulations
that
may
require
additional
safety
monitoring,
labeling
changes,
restrictions
on
product
distribution
or
use,or
other
measures
after
the
introduction
of
our
products
to
market,
which
could
increase
our
costs
of
doing
business,
adversely
affect
the
futurepermitted
uses
of
approved
products,
or
otherwise
adversely
affect
the
market
for
our
products;
•new
laws,
regulations
and
judicial
decisions
affecting
pricing
or
marketing
practices;
and
•changes
in
the
tax
laws
relating
to
our
operations.55 Table
of
Contents
The
enactment
in
the
U.S.
of
health
care
reform,
possible
legislation
which
could
ease
the
entry
of
competing
follow-on
biologics
in
the
marketplace,
newlegislation
or
implementation
of
existing
statutory
provisions
on
importation
of
lower-cost
competing
drugs
from
other
jurisdictions,
and
legislation
on
comparativeeffectiveness
research
are
examples
of
previously
enacted
and
possible
future
changes
in
laws
that
could
adversely
affect
our
business.
In
addition,
the
Food
andDrug
Administration
Amendments
Act
of
2007
included
new
authorization
for
the
FDA
to
require
post-market
safety
monitoring,
along
with
an
expanded
clinicaltrials
registry
and
clinical
trials
results
database,
and
expanded
authority
for
the
FDA
to
impose
civil
monetary
penalties
on
companies
that
fail
to
meet
certaincommitments.Risks
Related
to
Our
Capital
StockOur history of losses and uncertainty of future profitability make our common stock a highly speculative investment.
We
have
had
no
commercial
revenue
to
date
from
sales
of
our
drug
candidates.
We
had
an
accumulated
deficit
of
$591.0
million
as
of
December
31,
2015.
Weexpect
to
spend
substantial
funds
to
continue
the
research
and
development
testing
of
our
products
candidates.
In
anticipation
of
FDA
approval
of
these
products,
we
will
need
to
make
substantial
investments
to
establish
sales,
marketing,
quality
control,
regulatorycompliance
capabilities
and
commercial
manufacturing
alliances.
These
investments
will
increase
if
and
when
any
of
these
products
receive
FDA
approval.
Wecannot
predict
how
quickly
our
lead
products
will
progress
through
the
regulatory
approval
process.
As
a
result,
we
may
continue
to
lose
money
for
several
years.
We
cannot
be
certain
that
we
will
achieve
or
sustain
profitability
in
the
future.
Failure
to
achieve
profitability
could
diminish
our
ability
to
sustain
operations,pay
dividends
on
our
common
stock,
obtain
additional
required
funds
and
make
required
payments
on
our
present
or
future
indebtedness.Our share price has been and could remain volatile.
The
market
price
of
our
common
stock
has
historically
experienced
and
may
continue
to
experience
significant
volatility.
From
January
2015
throughDecember
2015,
the
market
price
of
our
common
stock
has
fluctuated
from
a
high
of
$32.82
per
share
in
the
first
quarter
of
2015,
to
a
low
of
$10.11
per
share
inthe
third
quarter
of
2015.
Our
progress
in
developing
and
commercializing
our
products,
the
impact
of
government
regulations
on
our
products
and
industry,
thepotential
sale
of
a
large
volume
of
our
common
stock
by
stockholders,
our
quarterly
operating
results,
changes
in
general
conditions
in
the
economy
or
the
financialmarkets
and
other
developments
affecting
us
or
our
competitors
could
cause
the
market
price
of
our
common
stock
to
fluctuate
substantially
with
significant
marketlosses.
If
our
stockholders
sell
a
substantial
number
of
shares
of
common
stock,
especially
if
those
sales
are
made
during
a
short
period
of
time,
those
sales
couldadversely
affect
the
market
price
of
our
common
stock
and
could
impair
our
ability
to
raise
capital.
In
addition,
in
recent
years,
the
stock
market
has
experiencedsignificant
price
and
volume
fluctuations.
This
volatility
has
affected
the
market
prices
of
securities
issued
by
many
companies
for
reasons
unrelated
to
theiroperating
performance
and
may
adversely
affect
the
price
of
our
common
stock.
In
addition,
we
could
be
subject
to
a
securities
class
action
litigation
as
a
result
ofvolatility
in
the
price
of
our
stock,
which
could
result
in
substantial
costs
and
diversion
of
management's
attention
and
resources
and
could
harm
our
stock
price,business,
prospects,
results
of
operations
and
financial
condition.Our ability to use our net operating loss carryforwards will be subject to limitation and, under certain circumstances, may be eliminated.
Utilization
of
our
net
operating
loss
and
research
and
development
credit
carryforwards
may
be
subject
to
substantial
annual
limitation
due
to
ownershipchange
limitations
that
have
occurred56 Table
of
Contentspreviously
or
that
could
occur
in
the
future
provided
by
Section
382
of
the
Internal
Revenue
Code
of
1986,
or
Section
382,
as
well
as
similar
state
provisions.
Ingeneral,
an
ownership
change,
as
defined
by
Section
382,
results
from
transactions
increasing
the
ownership
of
certain
shareholders
or
public
groups
in
the
stock
ofa
corporation
by
more
than
50
percentage
points
over
a
three-year
period.
In
October
2007,
June
2009,
December
2009
and
December
2013,
we
experienced
a
change
in
ownership
as
defined
by
Section
382
of
the
Internal
RevenueCode.
Historically,
we
have
raised
capital
through
the
issuance
of
capital
stock
on
several
occasions
which,
combined
with
shareholders'
subsequent
disposition
ofthose
shares,
has
resulted
in
three
changes
of
control,
as
defined
by
Section
382.
As
a
result
of
these
ownership
changes,
utilization
of
our
Federal
net
operating
losscarryforwards
is
subject
to
an
annual
limitation.
Any
unused
annual
limitation
may
be
carried
over
to
later
years,
and
the
amount
of
the
limitation
may,
undercertain
circumstances,
be
subject
to
adjustment
if
the
fair
value
of
the
our
net
assets
are
determined
to
be
below
or
in
excess
of
the
tax
basis
of
such
assets
at
thetime
of
the
ownership
change,
and
such
unrealized
loss
or
gain
is
recognized
during
the
five-year
period
after
the
ownership
change.
Subsequent
ownershipchanges,
as
defined
in
Section
382,
could
further
limit
the
amount
of
net
operating
loss
carryforwards
and
research
and
development
credits
that
can
be
utilizedannually
to
offset
future
taxable
income.
We
have
not
undertaken
a
study
to
assess
whether
an
ownership
change
or
multiple
ownership
changes
has
occurred
for
(i)
AVANT
or
CuraGen
prior
to
ouracquisitions,
(ii)
the
Company
on
the
state
level,
(iii)
the
Company
since
March
2015,
or
(iv)
research
and
development
credits.
If,
based
on
such
a
study,
we
wereto
determine
that
there
has
been
an
ownership
change
at
any
time
since
its
formation,
utilization
of
net
operating
loss
or
tax
credit
carryforwards
would
be
subjectto
an
annual
limitation
under
Section
382.
Refer
to
Note
15,
"Income
Taxes,"
in
the
accompanying
notes
to
the
financial
statements
for
additional
discussion
on
income
taxes.Item
1B.
UNRESOLVED
STAFF
COMMENTS
None.Item
2.
PROPERTIES
As
of
February
16,
2016
our
significant
leased
properties
are
described
below.57Property
Location
Approximate
Square
Feet
Use
Lease
Expiration
DateHampton,
New
Jersey
49,600
Headquarters,
Office
and
Laboratory
July
2020(1)Needham,
Massachusetts
35,200
Office
and
Laboratory
July
2020(2)Fall
River,
Massachusetts
28,900
Manufacturing
Facility
July
2020(3)Branford,
Connecticut
10,300
Office
December
2019(4)(1)Lease
includes
two
renewal
options
of
five
years
each.
(2)Lease
includes
two
renewal
options
of
five
years
each.
Lease
includes
potential
for
11,500
square
feet
of
expansion
space.
(3)Lease
includes
two
renewal
options
of
five
years
each.
(4)Lease
includes
two
renewal
options
of
three
years.
Lease
also
includes
provision
for
early
termination
with
12
months
notice. Table
of
ContentsItem
3.
LEGAL
PROCEEDINGS
We
are
not
currently
a
party
to
any
material
legal
proceedings.Item
4.
MINE
SAFETY
DISCLOSURES
Not
applicable.58 Table
of
ContentsPART
II
Item
5.
MARKET
FOR
REGISTRANT'S
COMMON
EQUITY,
RELATED
STOCKHOLDER
MATTERS
AND
ISSUER
PURCHASES
OF
EQUITYSECURITIES
Our
common
stock
currently
trades
on
the
Nasdaq
Global
Market
(NASDAQ)
under
the
symbol
"CLDX".
The
following
table
sets
forth
for
the
periodsindicated
the
high
and
low
sale
prices
per
share
for
our
common
stock,
as
reported
by
NASDAQ.
As
of
February
16,
2016,
there
were
approximately
335
shareholders
of
record
of
our
common
stock.
On
February
16,
2016
the
closing
price
of
our
commonstock,
as
reported
by
NASDAQ,
was
$7.69
per
share.
We
have
not
paid
any
dividends
on
our
common
stock
since
our
inception
and
do
not
intend
to
pay
anydividends
in
the
foreseeable
future.Equity
Compensation
Plan
Information
The
following
table
provides
information
as
of
December
31,
2015
regarding
shares
of
our
common
stock
that
may
be
issued
under
our
existing
equitycompensation
plans,
including
our
2008
Stock
Option
and
Incentive
Plan
(the
"2008
Plan")
and
our
2004
Employee
Stock
Purchase
Plan
(the
"2004
ESPP
Plan").59Fiscal
Period
High
Low
Year
Ended
December
31,
2015
First
Quarter
$32.82
$17.81
Second
Quarter
30.28
23.62
Third
Quarter
28.08
10.11
Fourth
Quarter
18.62
10.15
Year
Ended
December
31,
2014
First
Quarter
$33.33
$16.58
Second
Quarter
18.52
10.76
Third
Quarter
18.30
11.93
Fourth
Quarter
21.70
12.11
Equity
Compensation
Plan
Information
Number
of
securities
to
be
issued
upon
exercise
of
outstanding
options
and
rights(1)
Weighted
Average
exercise
price
of
outstanding
options
and
rights
Number
of
securities
remaining
available
for
future
issuance
under
equity
compensation
plan
(excluding
securities
referenced
in
column
(a))
Equity
compensation
plans
approved
by
securityholders(2)
8,110,239(3)$13.13
5,928,280(4)(1)Does
not
include
any
Restricted
Stock
as
such
shares
are
already
reflected
in
our
outstanding
shares.
(2)Consists
of
the
2008
Plan,
2004
ESPP
Plan
and
Celldex
Research's
2005
Equity
Incentive
Plan.
(3)Does
not
include
purchase
rights
accruing
under
the
2004
ESPP
Plan
because
the
purchase
price
(and
therefore
the
number
of
shares
to
bepurchased)
will
not
be
determined
until
the
end
of
the
purchase
period.
(4)Includes
shares
available
for
future
issuance
under
the
2008
Plan
and
the
2004
ESPP
Plan. Table
of
ContentsCELLDEX
THEAPEUTICS,
INC.,
NASDAQ
MARKET
INDEX—U.S.
AND
PEER
GROUP
INDICES
The
graph
below
compares
the
cumulative
total
stockholder
return
on
the
common
stock
for
the
period
from
December
31,
2010
through
December
31,
2015,with
the
cumulative
return
on
(i)
NASDAQ
U.S.
Benchmark
TR
Index
and
(ii)
NASDAQ
Pharmaceutical
(Subsector)
Index.
The
comparison
assumes
investmentof
$100
on
December
31,
2010
in
our
common
stock
and
in
each
of
the
indices
and,
in
each
case,
assumes
reinvestment
of
all
dividends.
The
points
on
the
graphare
as
of
December
31
of
the
year
indicated.Item
6.
SELECTED
FINANCIAL
DATA
The
following
selected
financial
data
are
derived
from
our
financial
statements.
The
statement
of
operations
data
for
the
years
ended
December
31,
2015,
2014and
2013
and
the
balance
sheet
data
as
of
December
31,
2015
and
2014
have
been
derived
from
our
audited
financial
statements
included
in
Item
8
of
this
AnnualReport
on
Form
10-K.
This
data
should
be
read
in
conjunction
with
our
audited
financial
statements
and
related
notes
which
are
included
elsewhere
in
this
AnnualReport
on
Form
10-K,
and
"Management's
Discussion
and
Analysis
of
Financial
Condition
and
Results
of
Operations"
included
in
Item
7
below.60
2010
2011
2012
2013
2014
2015
Celldex
Therapeutics,
Inc.
$100
$63
$163
$588
$443
$381
NASDAQ
U.S.
Benchmark
TR
Index
$100
$100
$117
$156
$175
$176
NASDAQ
Pharmaceutical
(Subsector)
Index
$100
$117
$134
$182
$222
$234
Table
of
ContentsSTATEMENTS
OF
OPERATIONS
DATA
(In
thousands,
except
per
share
amounts)BALANCE
SHEET
DATA
(In
thousands)61
Year
Ended
December
31,
2015
2014
2013
2012
2011
REVENUE:
Product
Development
and
Licensing
Agreements
$1,442
$838
$160
$146
$110
Contracts
and
Grants
4,038
2,748
1,617
281
36
Product
Royalties
—
—
2,334
10,775
9,119
Total
Revenue
5,480
3,586
4,111
11,202
9,265
OPERATING
EXPENSE:
Research
and
Development
100,171
104,381
67,401
47,398
32,439
Royalty
—
—
2,334
10,775
9,119
Other
Operating
Expense
34,850
21,635
15,818
11,106
11,106
Total
Operating
Expense
135,021
126,016
85,553
69,279
52,664
Operating
Loss
(129,541)
(122,430)
(81,442)
(58,077)
(43,399)Investment
and
Other
Income,
Net
2,344
4,350
819
530
396
Interest
Expense
—
—
(927)
(1,576)
(1,796)Net
Loss
$(127,197)$(118,080)$(81,550)$(59,123)$(44,799)Basic
and
Diluted
Net
Loss
Per
Common
Share
$(1.31)$(1.32)$(1.02)$(1.02)$(1.13)Shares
Used
in
Calculating
Basic
and
Diluted
Net
Loss
PerCommon
Share
97,051
89,399
79,777
57,713
39,501
December
31,
2015
2014
2013
2012
2011
Working
Capital
$264,696
$180,494
$284,839
$67,429
$40,386
Total
Assets
337,584
248,014
347,095
125,541
97,994
Long-Term
Liabilities
17,239
11,863
6,950
12,082
14,974
Accumulated
Deficit
(590,956)
(463,759)
(345,679)
(264,129)
(205,006)Total
Stockholders'
Equity
290,105
211,660
319,795
95,774
68,722
Table
of
ContentsItem
7.
MANAGEMENT'S
DISCUSSION
AND
ANALYSIS
OF
FINANCIAL
CONDITION
AND
RESULTS
OF
OPERATIONS
OVERVIEW
We
are
a
biopharmaceutical
company
focused
on
the
development
and
commercialization
of
several
immunotherapy
technologies
for
the
treatment
of
cancerand
other
difficult-to-treat
diseases.
Our
drug
candidates
are
derived
from
a
broad
set
of
complementary
technologies
which
have
the
ability
to
utilize
the
humanimmune
system
and
enable
the
creation
of
therapeutic
agents.
We
are
using
these
technologies
to
develop
targeted
immunotherapeutics
comprised
of
protein-basedmolecules
such
as
vaccines,
antibodies
and
antibody-drug
conjugates
that
are
used
to
treat
specific
types
of
cancer
or
other
diseases.
Our
latest
stage
drug
candidate,
Rintega
(also
referred
to
as
rindopepimut
and
CDX-110)
is
a
therapeutic
vaccine
in
clinical
studies
for
the
treatment
ofglioblastoma
patients
that
express
a
specific
cancer
marker
known
as
EGFRvIII.
In
February
2015,
the
U.S.
Food
and
Drug
Administration,
or
FDA,
grantedRintega
Breakthrough
Therapy
Designation
for
the
treatment
of
adult
patients
with
EGFRvIII-positive
glioblastoma.
We
completed
enrollment
in
December
2014in
ACT
IV,
a
pivotal
Phase
3
study
in
front-line
glioblastoma.
ACT
IV
completed
its
first
interim
analysis
at
50%
of
events
(deaths)
in
June
2015,
and
anindependent
Data
Safety
and
Monitoring
Board
recommended
that
the
study
continue
as
planned.
The
required
number
of
events
to
perform
the
second
interimanalysis
of
ACT
IV
were
reached
in
late
2015
and
the
analysis
is
expected
to
occur
in
March
2016.
Final
data
from
ACT
IV
are
expected
by
the
end
of
2016,although
our
expectations
regarding
the
timing
for
the
final
data
read
out
may
change
based
on
event
rates.We
have
also
completed
a
Phase
2
study
in
patients
withrecurrent
EGFRvIII-positive
glioblastoma.
Updated
results
from
this
randomized
study
comparing
Rintega
added
to
the
standard
of
care,
or
SOC,
compared
to
SOCalone
were
presented
in
November
2015.
A
statistically
significant
overall
survival
benefit
and
the
emergence
of
a
long-term
survival
benefit
were
observed.
Theprimary
endpoint
of
the
study,
progression-free
survival
at
six
months,
or
PFS6,
was
met.
Glembatumumab
vedotin
(also
referred
to
as
CDX-011)
is
a
targeted
antibody-drug
conjugate
in
a
randomized,
Phase
2b
study
for
the
treatment
of
triplenegative
breast
cancer
and
a
Phase
2
study
for
the
treatment
of
metastatic
melanoma.
Varlilumab
(also
referred
to
as
CDX-1127)
is
an
immune
modulatingantibody
that
is
designed
to
enhance
a
patient's
immune
response
against
their
cancer.
We
established
proof
of
concept
in
a
Phase
1
study
with
varlilumab,
whichhas
allowed
several
combination
studies
to
begin
in
various
indications.
We
also
have
a
number
of
earlier
stage
drug
candidates
in
clinical
development,
includingCDX-1401,
a
targeted
immunotherapeutic
aimed
at
antigen
presenting
cells,
or
APC,
for
cancer
indications
and
CDX-301,
an
immune
cell
mobilizing
agent
anddendritic
cell
growth
factor.
Our
drug
candidates
address
market
opportunities
for
which
we
believe
current
therapies
are
inadequate
or
non-existent.
We
are
building
a
fully
integrated,
commercial-stage
biopharmaceutical
company
that
develops
important
therapies
for
patients
with
unmet
medical
needs.Our
program
assets
provide
us
with
the
strategic
options
to
either
retain
full
economic
rights
to
our
innovative
therapies
or
seek
favorable
economic
terms
throughadvantageous
commercial
partnerships.
This
approach
allows
us
to
maximize
the
overall
value
of
our
technology
and
product
portfolio
while
best
ensuring
theexpeditious
development
of
each
individual
product.62 Table
of
Contents
The
following
table
includes
the
programs
that
we
currently
believe
are
significant
to
our
business:
The
expenditures
that
will
be
necessary
to
execute
our
business
plan
are
subject
to
numerous
uncertainties.
Completion
of
clinical
trials
may
take
several
yearsor
more,
and
the
length
of
time
generally
varies
substantially
according
to
the
type,
complexity,
novelty
and
intended
use
of
a
product
candidate.
It
is
not
unusualfor
the
clinical
development
of
these
types
of
product
candidates
to
each
take
five
years
or
more,
and
for
total
development
costs
to
exceed
$100
million
for
eachproduct
candidate.
We
estimate
that
clinical
trials
of
the
type
we
generally
conduct
are
typically
completed
over
the
following
timelines:
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
product
candidate.
We
test
potential
product
candidates
in
numerous
preclinical
studies
for
safety,
toxicology
and
immunogenicity.
We
may
then
conduct
multiple
clinical
trialsfor
each
product
candidate.
As
we
obtain
results
from
trials,
we
may
elect
to
discontinue
or
delay
clinical
trials
for
certain
product
candidates
in
order
to
focus
ourresources
on
more
promising
product
candidates.
An
element
of
our
business
strategy
is
to
pursue
the
research
and
development
of
a
broad
portfolio
of
product
candidates.
This
is
intended
to
allow
us
todiversify
the
risks
associated
with
our
research
and
development
expenditures.
To
the
extent
we
are
unable
to
maintain
a
broad
range
of
product
candidates,
ourdependence
on
the
success
of
one
or
a
few
product
candidates
increases.
Regulatory
approval
is
required
before
we
can
market
our
product
candidates
as
therapeutic
products.
In
order
to
proceed
to
subsequent
clinical
trial
stagesand
to
ultimately
achieve
regulatory
approval,
the
regulatory
agency
must
conclude
that
our
clinical
data
is
safe
and
effective.
Historically,
the
results
frompreclinical
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
andbiologics
have
shown63Product
(generic)
Indication/Field
Partner
StatusRintega
Front-line
glioblastoma
—
Phase
3Glembatumumab
vedotin
Metastatic
breast
cancer
—
Phase
2bRintega
Recurrent
glioblastoma
—
Phase
2Glembatumumab
vedotin
Metastatic
melanoma
—
Phase
2Varlilumab
Multiple
solid
tumors
—
Phase
1/2CDX-1401
Multiple
solid
tumors
—
Phase
1CDX-301
Allogeneic
hematopoietic
stem
cell
transplantation
—
Phase
2CDX-014
Renal
cancer
—
Phase
1Clinical
Phase
Estimated
Completion
PeriodPhase
1
1
-
2
YearsPhase
2
1
-
5
YearsPhase
3
1
-
5
Years Table
of
Contentspromising
results
in
early
clinical
trials,
but
subsequently
failed
to
establish
sufficient
safety
and
efficacy
data
to
obtain
necessary
regulatory
approvals.
Furthermore,
our
business
strategy
includes
the
option
of
entering
into
collaborative
arrangements
with
third
parties
to
complete
the
development
andcommercialization
of
our
product
candidates.
In
the
event
that
third
parties
take
over
the
clinical
trial
process
for
one
of
our
product
candidates,
the
estimatedcompletion
date
would
largely
be
under
control
of
that
third
party
rather
than
us.
We
cannot
forecast
with
any
degree
of
certainty
which
proprietary
products,
ifany,
will
be
subject
to
future
collaborative
arrangements,
in
whole
or
in
part,
and
how
such
arrangements
would
affect
our
development
plan
or
capitalrequirements.
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
anddevelopment
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
completeour
research
and
development
projects
in
a
timely
manner
or
our
failure
to
enter
into
collaborative
agreements,
when
appropriate,
could
significantly
increase
ourcapital
requirements
and
could
adversely
impact
our
liquidity.
These
uncertainties
could
force
us
to
seek
additional,
external
sources
of
financing
from
time
to
timein
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
thefuture
success
of
our
business.
During
the
past
five
years
through
December
31,
2015,
we
incurred
an
aggregate
of
$351.8
million
in
research
and
development
expenses.
The
following
tableindicates
the
amount
incurred
for
each
of
our
significant
research
programs
and
for
other
identified
research
and
development
activities
during
the
years
endedDecember
31,
2015,
2014
and
2013.
The
amounts
disclosed
in
the
following
table
reflect
direct
research
and
development
costs,
license
fees
associated
with
theunderlying
technology
and
an
allocation
of
indirect
research
and
development
costs
to
each
program.Clinical
Development
ProgramsRintega
Rintega
is
an
epidermal
growth
factor
receptor
variant
III,
or
EGFRvIII,
specific
vaccine
for
glioblastoma,
or
GBM.
EGFRvIII
is
a
mutated
form
of
theepidermal
growth
factor
receptor,
or
EGFR,
that
is
only
expressed
in
cancer
cells
and
not
in
normal
tissue
and
can
directly
contribute
to
cancer
cell
growth.EGFRvIII
is
expressed
in
approximately
30%
of
GBM
tumors,
the
most
common
and
aggressive
form
of
brain
cancer.
Rintega
is
composed
of
the
EGFRvIIIpeptide
linked
to
a
carrier
protein
called
Keyhole
Limpet
Hemocyanin,
or
KLH,
and
administered
together
with
the
adjuvant
GM-CSF.
The
FDA
and
the
EuropeanMedicines
Agency,
or
EMA,
have
both
granted
Orphan
Drug
Designation
for
Rintega
for
the
treatment
of
EGFRvIII
expressing
GBM.
The
FDA
has
also
granted64
Year
Ended
December
31,
2015
Year
Ended
December
31,
2014
Year
Ended
December
31,
2013
(In
thousands)
Rintega
$43,038
$52,861
$38,149
Glembatumumab
vedotin
19,124
26,907
11,284
Varlilumab
18,484
9,459
9,376
CDX-1401
3,385
4,144
612
CDX-301
2,206
1,238
532
CDX-014
5,724
3,722
937
Other
Programs
8,210
6,050
6,511
Total
R&D
Expense
$100,171
$104,381
$67,401
Table
of
ContentsFast
Track
designation.
In
February
2015,
the
FDA
granted
Rintega
Breakthrough
Therapy
Designation
for
the
treatment
of
adult
patients
with
EGFRvIII-positiveglioblastoma.
The
Phase
2a
study
of
Rintega
referred
to
as
ACTIVATE
was
led
by
collaborating
investigators
at
the
Brain
Tumor
Center
at
Duke
Cancer
Institute
inDurham,
North
Carolina
and
at
M.D.
Anderson
Cancer
Center
in
Houston,
Texas
and
enrolled
18
evaluable
GBM
patients.
An
extension
of
the
Phase
2a
studyreferred
to
as
ACT
II
evaluated
22
additional
GBM
patients
treated
in
combination
with
the
current
standard
of
care,
maintenance
temozolomide,
or
TMZ,
at
thesame
two
institutions.
The
Phase
2b
study
of
Rintega
referred
to
as
ACT
III
combined
Rintega
with
standard
of
care,
TMZ,
in
patients
with
newly
diagnosed
GBM.
The
ACT
IIIstudy
provided
for
a
multi-center,
non-randomized
dataset
for
Rintega
in
65
patients
at
over
30
sites
throughout
the
United
States,
or
U.S.
In
November
2013,
we
announced
the
four-
and
five-year
survival
data
from
the
105
patients
enrolled
in
the
three
Phase
2
Rintega
clinical
studies(ACTIVATE,
ACT
II
and
ACT
III)
in
EGFRvIII-positive
GBM.
Across
these
three
Phase
2
studies
of
Rintega,
survival
data
remains
consistent
and
suggests
acontinuing
survival
benefit
in
comparison
to
independent
control
datasets
(see
chart
below)
at
the
median
and
at
all
other
time
points
evaluated.Phase
2
Front-line
Long-term
Overall
Survival
Assessments
The
pooled
overall
long-term
survival
results
continue
to
be
consistent
with
the
ACT
III
Phase
2
study
(18%
for
4-years
and
14%
for
5-years).
In
December
2011,
we
initiated
ACT
IV,
a
pivotal,
randomized,
double-blind,
controlled
Phase
3
study
of
Rintega
in
patients
with
surgically
resected,EGFRvIII-positive
GBM.
Patients
were
randomized
after
the
completion
of
surgery
and
standard
chemoradiation
treatment.
The
treatment
regimen
includes
aRintega
priming
phase
post-radiation
followed
by
an
adjuvant
phase
where
Rintega
is
dosed
along
with
TMZ
and
a
Rintega
maintenance
therapy
phase.
Patients
aretreated
until
disease
progression
or
intolerance
to
therapy.
The
primary
objective
of
the
study
is
to
determine
whether
Rintega
plus
adjuvant
GM-CSF
improves
theoverall
survival
of
patients
with
newly
diagnosed
EGFRvIII-positive
GBM
with
minimal
residual
disease
post
resection
and
traditional
chemoradiation
whencompared
to
treatment
with
TMZ
and
a
control
injection
of
KLH.
KLH
is
a
component
of
Rintega
and
was
selected
due
to
its
ability
to
generate
a
similar
injectionsite
reaction
to
that
observed
with
Rintega.
In
December
2014,
enrollment
was
completed
in
the
ACT
IV
study.
In
total,
over
4,800
tissue
samples
from
GBM
patients
were
submitted
for
EGFRvIIIevaluation
from
more
than
200
clinical
trial
sites
across
22
countries
and,
consistent
with
prior
studies,
30%
were
positive
for
the
EGFRvIII
mutation.
The
studyenrolled
745
patients
to
reach
the
required
374
patients
with
minimal
residual
disease
(assessed
by
central
review)
needed
for
analysis
of
the
primary
overallsurvival
endpoint.
All
patients,
including
patients
with
disease
that
exceed
this
threshold,
will
be
included
in
a
secondary
analysis
of
overall
survival
as
well
asanalyses
of
progression-free
survival,
safety
and
tolerability,
and
quality
of
life.
The
timing
of
the
overall
survival
primary
endpoint
data
is
event-driven.
The
study65
Median,
Years
(95%
CI)
2-year
rate
3-year
rate
4-year
rate
5-year
rate
Phase
2
Rintega
studies
(n=105)
2.1
(1.8,
2.4)
51%
30%
18%
14%Matched
historical
control
(n=17)(1)
1.3
(0.9,
1.7)
6%
6%
0%
0%(1)Patients treated at M.D. Anderson contemporaneously to ACTIVATE, matched for major eligibility requirements, including EGFRvIII-positive GBM, gross total resection and no disease progression through chemoradiation treatment. Table
of
Contentsdesign
requires
interim
analyses
to
be
conducted
by
an
independent
Data
Safety
and
Monitoring
Board
(DSMB)
at
50%
and
75%
of
events
(deaths).
The
firstinterim
analysis
occurred
in
June
2015,
and
the
DSMB
recommended
continuation
of
the
study
as
planned.
The
required
number
of
events
to
perform
the
secondinterim
analysis
of
ACT
IV
were
reached
in
late
2015,
and
the
analysis
is
expected
to
occur
in
March
2016.
Final
data
from
ACT
IV
are
expected
by
the
end
of2016,
although
our
expectations
regarding
the
timing
for
the
final
data
read
out
may
change
based
on
event
rates.
In
December
2011,
we
also
initiated
ReACT,
a
Phase
2
study
of
Rintega
in
combination
with
Avastin®
in
patients
with
recurrent
EGFRvIII-positive
GBM.This
study
completed
enrollment
in
2014
and
includes
3
groups.
Group
1
consists
of
73
patients
who
had
not
previously
received
Avastin
and
were
randomized
toreceive
either
Rintega
and
Avastin
or
a
control
injection
of
KLH
and
Avastin
in
a
blinded
fashion.
Group
2
includes
25
patients
who
are
refractory
to
Avastinhaving
received
Avastin
in
either
the
frontline
or
recurrent
setting
with
subsequent
progression
and
who
received
Rintega
plus
Avastin
in
a
single
treatment
arm.
InAugust
2013,
we
announced
the
addition
of
an
expansion
cohort
of
up
to
75
patients,
called
Group
2C,
to
better
characterize
the
potential
activity
of
Rintega
in
thisrefractory
patient
population.
This
decision
was
based
on
early
evidence
of
anti-tumor
activity,
including
stable
disease,
tumor
shrinkage
and
investigator-reportedresponse.
In
total,
Group
2C
enrolled
28
patients.
The
primary
endpoint
is
six
month
progression-free
survival
rate
(PFS-6)
for
groups
1
and
2
and
objectiveresponse
rate
(ORR)
for
group
2C.
Other
study
endpoints
include
PFS-6,
ORR,
PFS,
overall
survival,
or
OS
and
safety
and
tolerability.
In
November
2015,
we
reported
the
following
mature
data
from
Group
1
of
the
ReACT
study.
Tumor
responses
were
evaluated
in
accordance
with
ResponseAssessment
in
Neuro-Oncology
(RANO)
criteria
by
an
independent
expert
review
committee
blinded
to
treatment
group
assignment.
Data
for
this
long-term
updateincluded
study
results
through
September
1,
2015.•PFS6:
As
previously
reported
in
May
2015,
the
primary
endpoint
of
the
study,
PFS6,
was
met.
In
the
intent
to
treat
(ITT)
population,
28%
ofpatients
on
the
Rintega
arm
were
progression
free
at
six
months
compared
to
16%
of
patients
on
the
control
arm
(p=0.1163).
•Survival:
Mature
overall
survival
(OS)
data
continue
to
show
a
marked
benefit
[hazard
ratio
=
0.53
(0.32,
0.88);
p=0.0137]
with
a
long-termsurvival
benefit
observed
in
the
Rintega
arm.
Consistent
with
previous
studies
of
Rintega
and
the
published
data
observed
for
immune-mediatedtherapeutics,
this
survival
benefit
includes
multiple
patients
exceeding
what
is
customary
survival
for
EGFRvIII-positive
glioblastoma,
also
referredto
as
a
tail
on
the
survival
curve.
At
two
years,
the
survival
rate
for
Rintega
patients
in
the
ITT
population
is
25%
versus
0%
for
control
patients.Overall
Survival
(OS),
Intent
to
Treat
(ITT)
Population
•Objective
Response
Rate
(ORR):
Nine
out
of
30
evaluable
ITT
patients
(30%)
on
the
Rintega
arm
experienced
a
confirmed
objective
responseversus
six
out
of
34
evaluable
patients
(18%)
on
the
control
arm.
Five
patients
on
the
Rintega
arm
experienced
durable
responses
greater
than
sixmonths,
and
three
of
these
patients
experienced
durable
responses
greater
than
18
months
(range
of
18.6+
to
22.2
months).
In
contrast,
only
twopatients
on
the
control
arm
experienced
a
durable
response
greater
than
six
months,
and
none
experienced
a
response
greater
than
7.4
months.66
Hazard
Ratio
(HR)
HR
=
0.53
(0.32,
0.88);
p=0.0137
Median
(95%
CI)
OS
12
months
OS
18
months
OS
24
months
Rintega
+
BV
11.3
(9.9,
16.2)
44%
32%
25%
Control
+
BV
9.3
(7.1,
11.4)
32%
13%
0% Table
of
Contents•Steroid
Use:
Further
emphasizing
the
level
of
disease
control,
50%
of
the
18
patients
on
the
Rintega
arm
who
were
on
steroids
at
the
start
oftreatment
were
able
to
stop
steroids
for
at
least
two
months
during
treatment
versus
only
26%
of
the
19
patients
on
the
control
arm
who
were
onsteroids
at
the
start
of
treatment.
33%
of
patients
on
the
Rintega
arm
were
able
to
stop
steroids
for
more
than
six
months,
and,
of
these,
three
wereable
to
stop
for
more
than
one
year
versus
none
on
the
control
arm
for
either
time
point.
•Immune
Response:
Prolonged
survival
was
associated
with
high
anti-EGFRvIII
humoral
responses.
Recent
in vivo experiments
have
shown
thoseimmune
responses
had
tumor
killing
function
through
antibody
dependent
cellular
cytotoxicity
(ADCC)
of
EGFRvIII-expressing
tumor
cells.
Thisbiologic
effector
function
is
rarely
proven
for
immune
therapies.
Importantly,
rapid
generation
of
anti-EGFRvIII
humoral
response
correlated
withlonger
survival;
however,
even
those
with
slower
development
of
immune
responses
benefitted.
No
patient
in
the
control
arm
had
detectableEGFRvIII
specific
antibody
response.
This
effect
is
consistent
with
Rintega's
proposed
mechanism
of
action
as
a
targeted
immunotherapeuticvaccine.
•Other:
Multiple
subgroup
and
adjusted
analyses
have
concluded
that
the
consistent
survival
benefit
observed
in
the
study
was
not
influenced
bypotential
imbalances
in
patient
demographics.
•Safety:
Rintega
was
very
well
tolerated
without
unexpected
additive
toxicity
to
Avastin.
Additional
studies
of
Rintega
are
currently
planned
including:•A
Phase
2
study
of
Rintega
prior
to
and
concurrent
with
chemoradiation
and
maintenance
temozolomide
in
patients
with
newly
diagnosedEGFRvIII-positive
glioblastoma.
Prior
studies
of
Rintega
in
the
newly
diagnosed
setting
have
initiated
Rintega
dosing
upon
completion
ofchemoradiation
concurrent
with
maintenance
temozolomide.
This
single-cohort,
open
label
study
is
designed
to
explore
the
feasibility
of
dosing
atan
earlier
timepoint
(after
surgery
but
prior
to
and
concurrent
with
chemoradiation).
The
primary
objective
of
the
study
is
to
evaluate
the
EGFRvIIIpeptide-specific
immune
response
obtained
with
this
dosing
regimen.
Secondary
objectives
include
evaluation
of
anti-tumor
activity,
including
PFS,OS,
ORR
and
duration
of
response,
assessment
of
health-related
quality
of
life
outcomes,
and
safety
and
tolerability.
This
study
is
expected
to
opento
enrollment
in
the
second
half
of
2016.
•A
Phase
2
single-arm
study
of
Rintega
with
adjuvant
imiquimod,
a
topically
administered
immune
response
modifier,
in
combination
with
Avastinin
patients
with
recurrent
EGFRvIII-positive
glioblastoma.
Previous
studies
of
Rintega
have
utilized
the
immune
response
modifier
GM-CSF.Imiquimod
has
broad
commercial
availability
and
could
potentially
serve
as
a
second
source
of
adjuvant
if
needed,
especially
outside
the
UnitedStates
where
GM-CSF
is
currently
available
through
specialty
distribution
channels.
The
primary
objective
of
this
study
is
to
evaluate
EGFRvIII-specific
immune
responses.
Secondary
objectives
include
evaluation
of
measures
of
anti-tumor
activity,
including
ORR,
duration
of
response,
PFS,and
OS,
and
to
characterize
the
safety
and
tolerability
profile
of
this
combination
approach.
This
study
is
expected
to
open
to
enrollment
in
March
of2016.
Concurrent
with
our
Rintega
clinical
development
program,
we
are
collaborating
with
Laboratory
Corporation
of
America
(LabCorp)
in
the
U.S.
and
Qiagenin
the
EU
for
the
potential
commercialization
of
a
companion
diagnostic
to
enable
identification
of
the
EGFRvIII
mutation
in
patients
with
glioblastoma.
TheLabCorp
diagnostic
has
been
developed
in
parallel
with
the
clinical
development
of
Rintega
and
was
utilized
to
screen
patients
for
the
Phase
3
ACT
IV
study
andthe
Phase
2
ReACT
study.
In
the
U.S.,
we
are
working
with
LabCorp
to
file
the
diagnostic
for
FDA
approval
concurrently
with
Celldex's
potential
BLAsubmission,
pending
successful
completion
of
the67 Table
of
ContentsACT
IV
study.
In
the
EU,
Qiagen
will
seek
CE
marking
of
the
diagnostic
and
anticipates
completing
this
certification
in
the
second
half
of
2016.Glembatumumab Vedotin
Glembatumumab
vedotin
is
an
antibody-drug
conjugate,
or
ADC,
that
consists
of
a
fully
human
monoclonal
antibody,
CR011,
linked
to
a
potent
cell-killingdrug,
monomethyl-auristatin
E,
or
MMAE.
The
CR011
antibody
specifically
targets
glycoprotein
NMB,
referred
to
as
gpNMB,
that
is
over-expressed
in
a
varietyof
cancers
including
breast
cancer
and
melanoma.
The
ADC
technology,
comprised
of
MMAE
and
a
stable
linker
system
for
attaching
it
to
CR011,
was
licensedfrom
Seattle
Genetics,
Inc.
and
is
the
same
as
that
used
in
the
marketed
product
Adcetris®.
The
ADC
is
designed
to
be
stable
in
the
bloodstream.
Followingintravenous
administration,
glembatumumab
vedotin
targets
and
binds
to
gpNMB,
and
upon
internalization
into
the
targeted
cell,
glembatumumab
vedotin
isdesigned
to
release
MMAE
from
CR011
to
produce
a
cell-killing
effect.
The
FDA
has
granted
Fast
Track
designation
to
glembatumumab
vedotin
for
the
treatmentof
advanced,
refractory/resistant
gpNMB-expressing
breast
cancer.
Treatment
of
Breast
Cancer:
The
Phase
1/2
study
of
glembatumumab
vedotin
administered
intravenously
once
every
three
weeks
evaluated
patients
withlocally
advanced
or
metastatic
breast
cancer
who
had
received
prior
therapy
(median
of
seven
prior
regimens).
The
study
began
with
a
bridging
phase
to
confirmthe
maximum
tolerated
dose,
or
MTD,
and
then
expanded
into
a
Phase
2
open-label,
multi-center
study.
The
study
confirmed
the
safety
of
glembatumumab
vedotinat
the
pre-defined
maximum
dose
level
(1.88
mg/kg)
in
6
patients.
An
additional
28
patients
were
enrolled
in
an
expanded
Phase
2
cohort
(for
a
total
of
34
treatedpatients
at
1.88
mg/kg,
the
Phase
2
dose)
to
evaluate
the
PFS
rate
at
12
weeks.
The
1.88
mg/kg
dose
was
well
tolerated
in
this
patient
population
with
the
mostcommon
adverse
events
of
rash,
alopecia
and
fatigue.
The
primary
activity
endpoint,
which
called
for
at
least
5
of
25
(20%)
patients
in
the
Phase
2
study
portion
tobe
progression-free
at
12
weeks,
was
met
as
9
of
26
(35%)
evaluable
patients
were
progression-free
at
12
weeks.
For
all
patients
treated
at
the
maximum
dose
level,
tumor
shrinkage
was
seen
in
62%
(16/26)
and
median
PFS
was
9.1
weeks.
A
subset
of
10
patients
had"triple
negative
disease,"
a
more
aggressive
breast
cancer
subtype
that
carries
a
high
risk
of
relapse
and
reduced
survival
as
well
as
limited
therapeutic
options
dueto
lack
of
over-expression
of
HER2/neu,
estrogen
and
progesterone
receptors.
In
these
patients,
78%
(7/9)
had
some
tumor
shrinkage,
12-week
PFS
rate
was
70%(7/10),
and
median
PFS
was
17.9
weeks.
Tumor
samples
from
a
subset
of
patients
across
all
dose
groups
were
analyzed
for
gpNMB
expression.
The
tumor
samplesfrom
most
patients
showed
evidence
of
stromal
and/or
tumor
cell
expression
of
gpNMB.
In
December
2012,
we
announced
final
results
from
the
EMERGE
study,
a
randomized,
multi-center
Phase
2b
study
of
glembatumumab
vedotin
in
122patients
with
heavily
pre-treated,
advanced,
gpNMB-positive
breast
cancer.
Patients
were
randomized
(2:1)
to
receive
either
glembatumumab
vedotin
or
single-agent
Investigator's
Choice,
or
IC,
chemotherapy.
Patients
randomized
to
receive
IC
were
allowed
to
cross
over
to
receive
glembatumumab
vedotin
followingdisease
progression.
Activity
endpoints
included
response
rate,
PFS
and
OS.
The
final
results,
as
shown
below,
suggested
that
glembatumumab
vedotin
inducessignificant
response
rates
compared
to
currently
available
therapies
in
patient
subsets
with
advanced,
refractory
breast
cancers
with
gpNMB
over-expression(expression
in
at
least
25%
of
tumor
cells)
and
in
patients
with
triple
negative
breast
cancer.
The
OS
and
PFS
of
patients
treated
with
glembatumumab
vedotin
wasalso
observed
to
be
greatest
in
patients
with
triple
negative
breast
cancer
who
also
over-express
gpNMB
and
all
patients
with
gpNMB
over-expression.68 Table
of
ContentsEMERGE:
Overall
Response
Rate
and
Disease
Control
Data
EMERGE:
Progression
Free
Survival
(PFS)
and
Overall
Survival
(OS)
Data
In
December
2013,
we
initiated
METRIC,
a
randomized,
controlled
Phase
2b
study
of
glembatumumab
vedotin
in
patients
with
triple
negative
breast
cancerthat
over-express
gpNMB.
Clinical
trial
sites
are
open
to
enrollment
across
the
U.S.,
Canada
and
Australia,
and
trial
expansion
into
the
EU
is
underway
withenrollment
planned
to
open
in
the
first
quarter
of
2016.
The
METRIC
protocol
was
amended
in
late
2014
based
on
feedback
from
clinical
investigators
conductingthe
study
that
the
eligibility
criteria
for
study
entry
were
limiting
their
ability
to
enroll
patients
they
felt
were
clinically
appropriate.
In
addition,
we
had
spoken
tocountry-specific
members
of
the
European
Medicines
Agency,
or
EMA,
and
believed
a
significant
opportunity
existed
to
expand
the
study
into
the
EU.
Theamendment
expanded
patient
entry
criteria
to
position
it
for
full
marketing
approval
with
global
regulators,
including
the
EMA,
and
to
support
improved
enrollmentin
the
study.
The
primary
endpoint
of
the
study
is
PFS
as
PFS
is
an
established
endpoint
for
full
approval
registration
studies
in
this
patient
population
in
both
theU.S.
and
the
EU.
The
sample
size
(n=300)
and
the
secondary
endpoint
of
OS
remained
unchanged.
We
implemented
these
changes
in
parallel
to
regulatorydiscussions
to
maintain
momentum
at
open
clinical
trial
sites.
Since
implementation,
both
the
FDA
and
central
European
regulatory
authorities
have
reviewed
theprotocol
design,
and
we
believe
the
METRIC
study
could
support
marketing
approval
in
both
the
U.S.
and
Europe
dependent
upon
data
review.
Based
on
currentprojections,
we
believe
enrollment
will
be
completed
in
the
second
half
of
2016.
Treatment
of
Metastatic
Melanoma:
The
Phase
1/2
open-label,
multi-center,
dose
escalation
study
evaluated
the
safety,
tolerability
and
pharmacokineticsof
glembatumumab
vedotin
in
117
patients
with69
gpNMB
Over-Expression
Triple
Negative
and
gpNMB
Over-Expression
glembatumumab
vedotin
Investigator
Choice
glembatumumab
vedotin
Investigator
Choice
(n=25)
(n=8)
(n=12)
(n=4)
Response
32%
13%
33%
0%Disease
Control
Rate
64%
38%
75%
25%Responses per RECIST 1.1; IC = Investigator's Choice; glembatumumab vedotin arm includes 15 patients who crossed over to receiveglembatumumab vedotin treatment after progression on IC. Analysis of best response excludes patients who discontinued from study withoutevaluable post-baseline radiographic imaging (n=15 for glembatumumab vedotin arm; n=5 for IC arm).
gpNMB
Over-Expression
Triple
Negative
and
gpNMB
Over-Expression
glembatumumab
vedotin
Investigator
Choice
glembatumumab
vedotin
Investigator
Choice
Median
PFS
(months)
2.7
1.5
3.0
1.5
p=0.14
p=0.008
Median
OS
(months)
10.0
5.7
10.0
5.5
p=0.18
p=0.003
When cross over patients are removed, median OS in patients with gpNMB over-expression is 10.0 months for glembatumumab vedotin vs5.2 months for IC (p=0.05), and median OS in triple negative patients with gpNMB over-expression is 10.0 months for glembatumumab vedotin vs5.2 months for IC (p=0.009). Table
of
Contentsun-resectable
Stage
III
or
Stage
IV
melanoma
who
had
failed
no
more
than
one
prior
line
of
cytotoxic
therapy.
The
MTD
was
determined
to
be
1.88
mg/kgadministered
intravenously
once
every
three
weeks.
The
study
achieved
its
primary
activity
objective
with
an
ORR
in
the
Phase
2
cohort
of
15%
(5/34).
MedianPFS
was
3.9
months.
Glembatumumab
vedotin
was
generally
well
tolerated,
with
the
most
frequent
treatment-related
adverse
events
being
rash,
fatigue,
hair
loss,pruritus,
diarrhea
and
neuropathy.
In
the
subset
of
patients
with
tumor
biopsies,
high
levels
of
tumor
expression
of
gpNMB
appeared
to
correlate
with
favorableoutcome.
In
the
seven
patients
whose
tumors
were
found
to
express
high
amounts
of
gpNMB,
and
who
were
treated
at
the
maximum
tolerated
doses
across
alldosing
schedules,
median
PFS
was
4.9
months.
The
development
of
rash,
which
may
be
associated
with
the
presence
of
gpNMB
in
the
skin,
also
seemed
tocorrelate
with
greater
PFS.
In
December
2014,
we
initiated
a
single
arm,
open-label
Phase
2
study
of
glembatumumab
vedotin
in
patients
with
unresectable
Stage
III
or
IV
melanoma.The
study
includes
approximately
10
sites
in
the
United
States
and
will
enroll
approximately
60
patients.
The
primary
objective
is
to
evaluate
the
anticancer
activityof
glembatumumab
vedotin
in
advanced
melanoma
as
measured
by
the
ORR.
Secondary
endpoints
include
analyses
of
PFS,
duration
of
response,
OS,
retrospectiveinvestigation
of
whether
the
anticancer
activity
of
glembatumumab
vedotin
is
dependent
upon
the
degree
of
gpNMB
expression
in
tumor
tissue
and
safety.
Basedon
current
projections,
we
believe
enrollment
will
be
completed
in
the
second
quarter
of
2016.
We
have
entered
into
a
collaborative
relationship
with
PrECOG
under
which
they
will
conduct
a
Phase
2
study
in
squamous
cell
lung
cancer.
This
study
isexpected
to
open
to
enrollment
in
the
first
half
of
2016.
We
have
also
entered
into
a
Cooperative
Research
and
Development
Agreement,
or
CRADA,
with
theNational
Cancer
Institute,
or
NCI,
under
which
NCI
is
sponsoring
two
studies
of
glembatumumab
vedotin—one
in
uveal
melanoma
and
one
in
pediatricosteosarcoma.
Both
studies
are
currently
open
to
enrollment.
The
uveal
melanoma
study
is
a
single
arm,
open
label
study
in
patients
with
locally
recurrent
ormetastatic
uveal
melanoma.
The
primary
outcome
measure
is
ORR.
Secondary
outcome
measures
include
change
in
gpNMB
expression
on
tumor
tissue
viaimmunohistochemistry,
safety,
OS
and
PFS.
The
osteosarcoma
study
is
a
single
arm,
open
label,
evaluation
of
adolescent
and
adult
patients
with
recurrent
orrefractory
osteosarcoma.
The
co-primary
objectives
are
to
determine
whether
glembatumumab
vedotin
therapy
either
increases
the
disease
control
rate
at
4
monthsin
patients
with
recurrent
measurable
osteosarcoma
as
compared
to
historical
experience
and/or
whether
glembatumumab
vedotin
therapy
produces
an
objectiveresponse
rate
greater
than
20%
in
patients
without
previous
eribulin
(eribulin
mesylate)
treatment.
Secondary
outcome
measures
include
safety,
pharmacokineticsand
the
relation
of
gpNMB
expression
as
measured
by
immunohistochemistry
to
clinical
response.Varlilumab
Varlilumab,
a
fully
human
monoclonal
agonist
antibody,
binds
and
activates
CD27,
a
critical
co-stimulatory
molecule
in
the
immune
activation
cascade,primarily
by
stimulating
T
cells
to
attack
cancer
cells.
Restricted
expression
and
regulation
of
CD27
enables
varlilumab
specifically
to
activate
T
cells,
resulting
inan
enhanced
immune
response
with
a
favorable
safety
profile.
Varlilumab
has
also
been
shown
to
directly
kill
or
inhibit
the
growth
of
CD27
expressing
lymphomasand
leukemias
in vitro and
in vivo .
We
have
entered
into
license
agreements
with
the
University
of
Southampton,
UK
for
intellectual
property
to
use
anti-CD27antibodies
and
with
Medarex
(now
a
subsidiary
of
the
Bristol-Myers
Squibb
Company,
or
BMS)
for
access
to
the
UltiMab
technology
to
develop
andcommercialize
human
antibodies
to
CD27.
Patient
treatment
is
complete
in
the
open
label
Phase
1
study
of
varlilumab
in
patients
with
selected
malignant
solid
tumors
or
hematologic
cancers
at
multipleclinical
sites
in
the
U.S.
Initial
dose
escalation
cohorts
were
conducted
to
determine
an
optimal
dose
for
future
study,
and
no
maximum
tolerated
dose
was
reached.The
lymphoid
malignancies
dose
escalation
arm
completed
enrollment70 Table
of
Contents(n=24),
and
a
new
cohort
was
added
to
include
evaluation
of
T
cell
malignancies.
An
expansion
cohort
was
also
added
at
0.3
mg/kg
dosed
once
every
three
weeksin
patients
with
Hodgkin
lymphoma
(n=
up
to
15).
The
solid
tumor
arm,
which
included
patients
with
various
solid
tumors,
completed
dose
escalation
in
2013.
Twoexpansion
cohorts
were
subsequently
added
at
3
mg/kg
dosed
weekly
in
metastatic
melanoma
(n=16)
and
RCC
(n=15)
to
better
characterize
clinical
activity
andfurther
define
the
safety
profile
in
preparation
for
combination
studies.
We
presented
updated
data
from
this
Phase
1
study
in
November
2014.
Varlilumab
was
very
well
tolerated
and
induced
immunologic
activity
in
patients
thatis
consistent
with
both
its
mechanism
of
action
and
preclinical
models.
A
total
of
86
patients
have
been
dosed
in
the
study.
55
patients
have
been
dosed
in
doseescalation
cohorts
(various
solid
and
hematologic
B-cell
tumors),
and
31
patients
have
been
dosed
in
the
expansion
cohorts
(melanoma
and
RCC)
at
3
mg/kg.
Inboth
the
solid
tumor
and
hematologic
dose-escalations,
the
pre-specified
maximum
dose
level
(10
mg/kg)
was
reached
without
identification
of
a
maximumtolerated
dose.
The
majority
of
adverse
events,
or
AEs,
related
to
treatment
have
been
mild
to
moderate
(Grade
1/2)
in
severity,
with
only
three
serious
AEs
relatedto
treatment
reported.
No
significant
immune-mediated
adverse
events
(colitis,
hepatitis,
etc.)
typically
associated
with
checkpoint
blockade
have
been
observed.Two
patients
experienced
objective
responses
including
a
complete
response
in
Hodgkin
lymphoma
and
a
partial
response
in
renal
cell
carcinoma.
Thirteen
patientsexperienced
stable
disease
with
a
range
of
3-36.2+
months
(as
of
November
2015)
to-date.
Based
on
the
results
observed
in
hematologic
malignancies,
anexpansion
cohort
in
up
to
15
patients
with
Hodgkin
lymphoma,
and
an
abbreviated
dose
escalation
in
T
cell
hematologic
malignancies
were
added
and
are
nowclosed
to
enrollment.
Any
incremental
data
updates
from
this
study
will
be
included
in
future
scientific
presentations/publications.
In
May
2014,
we
entered
into
a
clinical
trial
collaboration
with
BMS
to
evaluate
the
safety,
tolerability
and
preliminary
efficacy
of
varlilumab
and
Opdivo®,BMS'
PD-1
immune
checkpoint
inhibitor,
in
a
Phase
1/2
study.
Under
the
terms
of
this
clinical
trial
collaboration,
BMS
made
a
one-time
payment
to
us
of$5.0
million,
and
the
companies
amended
the
terms
of
our
existing
license
agreement
with
Medarex
(a
subsidiary
of
BMS)
related
to
our
CD27
program
wherebycertain
future
milestone
payments
were
waived
and
future
royalty
rates
were
reduced
that
may
have
been
due
from
us
to
Medarex.
In
return,
BMS
was
granted
atime-limited
right
of
first
negotiation
if
we
wish
to
out-license
varlilumab.
The
companies
also
agreed
to
work
exclusively
with
each
other
to
explore
anti-PD-1antagonist
antibody
and
anti-CD27
agonist
antibody
combination
regimens.
The
clinical
trial
collaboration
provides
that
the
companies
will
share
developmentcosts
and
that
we
will
be
responsible
for
conducting
the
Phase
1/2
study.
The
Phase
1/2
study
was
initiated
in
January
2015
and
is
being
conducted
in
adult
patients
with
multiple
solid
tumors
to
assess
the
safety
and
tolerability
ofvarlilumab
at
varying
doses
when
administered
with
Opdivo
followed
by
a
Phase
2
expansion
to
evaluate
the
activity
of
the
combination
in
disease
specific
cohorts.We
completed
enrollment
of
the
dose
escalation
portion
of
the
study
without
identification
of
a
maximum
tolerated
dose,
and
a
varlilumab
dose
has
been
identifiedfor
study
in
Phase
2
(3
mg/kg).
We
anticipate
that
the
Phase
2
portion
of
the
study
will
open
to
enrollment
in
the
second
quarter
of
2016.
The
protocol
originallyincluded
five
disease
cohorts
in
the
Phase
2
portion
of
the
study—advanced
non-small
cell
lung
cancer,
colorectal
cancer,
ovarian
cancer,
head
and
neck
squamouscell
carcinoma,
and
metastatic
melanoma.
Based
on
the
evolving
treatment
paradigm
for
the
combination
of
Opdivo
and
Yervoy
in
metastatic
melanoma,
a
decisionhas
been
made
not
to
enroll
patients
in
this
disease
setting
at
this
time.
The
protocol
is
also
being
amended
to
include
additional
cohorts
in
renal
cell
carcinoma,where
varlilumab
has
demonstrated
single-agent
clinical
activity,
and
glioblastoma,
an
area
of
focus
for
both
Celldex
and
BMS.
The
primary
objective
of
thePhase
2
cohorts
will
be
ORR.
Secondary
objectives
include
pharmacokinetics
assessments,
determining
the
immunogenicity
of
varlilumab
when
given
incombination
with
Opdivo
and
further
assessing
the
anti-tumor
activity
of
combination
treatment.71 Table
of
Contents
In
March
2015,
we
entered
into
a
clinical
trial
collaboration
with
Roche
to
evaluate
the
safety,
tolerability
and
preliminary
efficacy
of
varlilumab
andatezolizumab
(anti-PDL1),
Roche's
investigational
cancer
immunotherapy,
in
a
Phase
1/2
study.
The
Phase
1
portion
of
the
study
is
being
conducted
in
multipletumor
types,
and
the
primary
outcome
is
safety
and
tolerability.
The
Phase
2
portion
of
the
study
will
be
conducted
in
RCC,
and
the
primary
outcome
is
ORR.Secondary
outcome
measures
include
safety
and
tolerability,
pharmacokinetics,
immunogenicity
and
further
assessment
of
anti-tumor
activity
across
a
broad
rangeof
endpoints.
Under
the
terms
of
this
agreement,
Roche
will
provide
study
drug,
and
we
will
be
responsible
for
conducting
and
funding
the
study,
which
opened
toenrollment
in
December
2015.
In
April
2015,
we
initiated
a
Phase
1/2
safety
pilot
and
expansion
study
examining
the
combination
of
varlilumab
and
Yervoy
in
patients
with
Stage
III
or
IVmetastatic
melanoma.
In
the
Phase
2
portion
of
the
study,
patients
with
tumors
that
express
NY-ESO-1
will
also
receive
CDX-1401.
The
Phase
1
portion
of
thestudy
will
assess
the
safety
and
tolerability
of
varlilumab
at
varying
doses
when
administered
with
Yervoy
to
identify
a
recommended
dose
for
the
Phase
2
portionof
the
study.
The
Phase
2
study
will
include
two
cohorts—one
comprised
of
patients
who
are
NY-ESO-1
positive
and
one
comprised
of
patients
who
are
NY-ESO-1
negative.
Patients
who
are
NY-ESO-1
positive
will
also
receive
CDX-1401
(with
poly-ICLC
at
2
mg
given
as
an
adjuvant)
in
addition
to
varlilumab
and
Yervoy.The
primary
objective
for
both
cohorts
is
objective
response
rate
up
to
24
weeks.
Secondary
objectives
for
the
Phase
2
study
include
safety
and
tolerability,immunogenicity,
pharmacokinetics
and
further
assessment
of
anti-tumor
activity
across
a
broad
range
of
endpoints.
In
May
2015,
we
initiated
a
Phase
1/2
safety
and
tolerability
study
examining
the
combination
of
varlilumab
and
sunitinib
(Sutent®)
in
patients
withmetastatic
clear
cell
renal
cell
carcinoma.
The
Phase
1
portion
of
the
study
will
assess
the
safety
and
tolerability
of
varlilumab
at
varying
doses
when
administeredwith
sunitinib
to
identify
a
recommended
dose
for
the
Phase
2
portion
of
the
study.
The
primary
objective
of
the
Phase
2
portion
of
the
study
is
to
assess
thepreliminary
anti-tumor
efficacy
of
the
varlilumab/sunitinib
combination
measured
by
the
overall
response
rate.
Secondary
objectives
include
safety
and
tolerability,pharmacokinetics,
immunogenicity
and
further
assessment
of
anti-tumor
activity
across
a
broad
range
of
endpoints.
In
addition
to
our
sponsored
studies
and
clinical
trial
collaborations,
we
anticipate
that
varlilumab's
potential
activity
will
also
be
explored
in
investigatorsponsored
studies
at
various
academic
institutions.CDX-1401
CDX-1401,
developed
from
our
APC
Targeting
Technology,
is
an
antibody-based
NY-ESO-1-specific
therapeutic
vaccine
for
multiple
solid
tumors.
Thevaccine,
which
is
administered
with
an
adjuvant,
is
composed
of
the
cancer-specific
antigen
NY-ESO-1
fused
to
a
fully
human
antibody
that
binds
to
DEC-205
forefficient
delivery
to
dendritic
cells.
Delivery
of
tumor-specific
proteins
directly
to
dendritic
cells
in vivo elicits
potent,
broad,
anti-tumor
immune
responses
acrosspopulations
with
different
genetic
backgrounds.
In
humans,
NY-ESO-1
has
been
detected
in
20%
to
30%
of
all
melanoma,
lung,
esophageal,
liver,
gastric,
prostate,ovarian
and
bladder
cancers,
thus
representing
a
broad
opportunity.
We
are
developing
CDX-1401
for
the
treatment
of
malignant
melanoma
and
a
variety
of
solidtumors
which
express
the
proprietary
cancer
antigen
NY-ESO-1,
which
we
licensed
from
the
Ludwig
Institute
for
Cancer
Research
in
2006.
Preclinical
studieshave
shown
that
CDX-1401
is
effective
for
activation
of
human
T
cell
responses
against
NY-ESO-1.
We
have
completed
a
Phase
1
study
of
CDX-1401
which
assessed
the
safety,
immunogenicity
and
clinical
activity
of
escalating
doses
of
CDX-1401
with
TLRagonists
(resiquimod
and/or
Poly
ICLC)
in
45
patients
with
advanced
malignancies
refractory
to
all
available
therapies.
Sixty
percent
of
patients
had
confirmedNY-ESO
expression
in
archived
tumor
sample.
Thirteen
patients
maintained
stable72 Table
of
Contentsdisease
for
up
to
13.4
months
with
a
median
of
6.7
months.
Treatment
was
well
tolerated,
and
there
were
no
dose
limiting
toxicities.
Humoral
responses
wereelicited
in
both
NY-ESO-1
positive
and
negative
patients.
NY-ESO-1-specific
T
cell
responses
were
absent
or
low
at
baseline,
but
increased
post-vaccination
in53%
of
evaluable
patients,
including
both
CD4
and/or
CD8
T
cell
responses.
Robust
immune
responses
were
observed
with
CDX-1401
with
resiquimod
and
PolyICLC
alone
and
in
combination.
Long-term
patient
follow
up
suggested
that
treatment
with
CDX-1401
may
predispose
patients
to
better
outcomes
on
subsequenttherapy
with
checkpoint
inhibitors.
Of
the
45
patients
in
the
Phase
1
study,
eight
went
on
to
receive
subsequent
therapy
of
either
Yervoy
or
an
investigationalcheckpoint
inhibitor,
and
six
of
these
patients
had
objective
tumor
regression.
Six
patients
with
melanoma
received
Yervoy
within
three
months
of
treatment
withCDX-1401,
and
four
(67%)
had
objective
tumor
responses,
including
one
complete
response,
which
compares
favorably
to
the
overall
response
rate
of
11%previously
reported
in
metastatic
melanoma
patients
treated
with
single-agent
Yervoy.
In
addition,
two
patients
with
non-small
cell
lung
cancer
received
aninvestigational
checkpoint
blockade
within
two
months
of
completing
treatment
with
CDX-1401,
and
both
achieved
partial
responses.
We
are
currently
developinga
follow
on
program
that
will
better
assess
the
impact
of
CDX-1401
activity
on
response
to
subsequent
checkpoint
inhibitor
therapy
in
these
diseases.
The
Phase
1
study
identified
a
well-tolerated
and
immunogenic
regimen
to
take
forward
into
future
studies.
As
described
above,
in
April
2015,
we
initiated
aPhase
1/2
safety
pilot
and
expansion
study
examining
the
combination
of
varlilumab
and
Yervoy
in
patients
with
Stage
III
or
IV
metastatic
melanoma.
In
thePhase
2
portion
of
the
study,
patients
with
tumors
that
express
NY-ESO-1
will
also
receive
CDX-1401.
In
addition
to
our
sponsored
studies,
CDX-1401's
potential
activity
is
also
being
explored
in
investigator
sponsored
and
collaborative
studies.
A
Phase
2
studyof
CDX-1401
in
combination
with
CDX-301
is
being
conducted
in
metastatic
melanoma
by
the
Cancer
Immunotherapy
Trials
Network
under
a
CRADA
with
theCancer
Therapy
Evaluation
Program
of
the
NCI.
This
study
will
determine
if
CDX-1401
works
better
with
or
without
CDX-301
in
melanoma.
The
primaryoutcome
measure
of
the
study
is
immune
response
to
NY-ESO-1.
Secondary
outcome
measures
include
analysis
and
characterization
of
peripheral
bloodmononuclear
cells
(dendritic
cells,
T
cells,
natural
killer
cells,
etc.),
additional
immune
monitoring,
safety
and
clinical
outcomes
(survival
and
time
to
tumorrecurrence).
Enrollment
is
now
complete.
Based
on
results
to
date,
plans
for
additional
studies
are
being
considered
by
NCI.
Additionally,
a
Phase
1/2b
multi-arm
study
of
the
IDO1
inhibitor
INCB024360
in
combination
with
CDX-1401
and
Hiltonol
is
being
conducted
in
patients
inremission
with
ovarian,
fallopian
tube
or
primary
peritoneal
cancer
by
the
Roswell
Park
Cancer
Institute.
Celldex
is
providing
CDX-1401
and
Hiltonol
in
supportof
this
study.
Patients'
tumors
must
have
expressed
NY-ESO-1
or
the
LAGE-1
antigen
to
be
eligible
for
the
study.
Primary
outcome
measures
include
identifying
amaximum
tolerated
dose
determined
by
the
incidence
of
dose
limiting
toxicities
and
progression
free
survival.
Secondary
outcome
measures
include
additionalsafety
analyses
and
immune
monitoring.CDX-301
CDX-301,
a
recombinant
FMS-like
tyrosine
kinase
3
ligand,
or
Flt3L,
is
a
potent
hematopoietic
cytokine
that
uniquely
expands
dendritic
cells
andhematopoietic
stem
cells
in
combination
with
other
agents
to
potentiate
the
anti-tumor
response.
Depending
on
the
setting,
cells
expanded
by
CDX-301
promoteeither
enhanced
or
permissive
immunity.
CDX-301
is
in
clinical
development
for
multiple
cancers,
in
combination
with
vaccines,
adjuvants
and
other
treatmentsthat
release
tumor
antigens.
We
licensed
CDX-301
from
Amgen
Inc.
in
March
2009
and
believe
CDX-301
may
hold
significant
opportunity
for
synergisticdevelopment
in
combination
with
other
proprietary
molecules
in
our
portfolio.73 Table
of
Contents
In
February
2013,
we
announced
final
results
from
our
dose-escalating
Phase
1
study
of
CDX-301
in
30
healthy
subjects
in
collaboration
with
RockefellerUniversity.
The
Phase
1
study
evaluated
seven
different
dosing
regimens
of
CDX-301
to
determine
the
appropriate
dose
for
further
development
based
on
safety,tolerability
and
biological
activity.
The
data
from
the
study
were
consistent
with
previous
clinical
experience
and
demonstrated
that
CDX-301
was
well
toleratedand
can
effectively
mobilize
hematopoietic
stem
cell
populations
in
healthy
volunteers.
In
December
2013,
we
announced
data
from
a
preclinical
combinationstudy
of
CDX-301and
Mozobil®
(Plerixafor
injection,
formerly
AMD3100)
demonstrating
that
the
combination
of
these
agents
significantly
increaseshematopoietic
stem
cell
mobilization
in
mice.
The
data
demonstrate
a
novel
potent
cell
mobilization
regimen
combining
CDX-301
and
Mozobil®,
which
may
havesignificant
potential
for
use
in
autologous
and
allogeneic
hematopoietic
stem
cell
transplantation.
Based
on
the
safety
profile
and
the
clinical
and
preclinical
data
todate,
we
initiated
a
pilot
clinical
study
of
CDX-301
for
the
mobilization
and
transplantation
of
allogeneic
hematopoietic
stem
cells
in
patients
with
hematologicalmalignancies
undergoing
hematopoietic
stem
cell
transplantation.
Related
donors
of
patients
with
hematological
malignancies
requiring
hematopoietic
stem
celltransplant
are
administered
CDX-301
for
5
or
7
days
alone
or
in
combination
with
Mozobil
to
mobilize
CD34+
stem
cells.
The
primary
efficacy
endpoint
of
thestudy
is
determine
if
treatment
of
the
donor
results
in
the
collection
of
³
2
million
CD34+
HSCs/kg
recipient
body
weight
in
£
2
leukopoiesis
collections.
Other
keyendpoints
are
the
safety
of
the
treatment
regimen
in
the
donor
and
clinical
outcomes
in
the
recipient,
including
stem
cell
engraftment,
graft-versus-host
disease,immune
reconstitution
and
relapse.
Preliminary
results
from
this
study
were
presented
at
the
annual
meeting
of
the
American
Society
for
Blood
and
MarrowTransplantation
in
February
2016.
These
preliminary
data
from
three
donor/patient
pairs
showed
that
CDX-301
given
as
a
single
agent
was
well
tolerated
andeffective
at
mobilizing
hematopoietic
stem
cells
in
healthy
donors.
The
stem
cell
graft
contained
notable
increases
in
naïve
lymphocytes
and
plasmacytoid
dendriticcells
consistent
with
preclinical
data
suggesting
a
possible
better
outcome.
Recipients
experienced
successful
engraftment
in
an
expected
time
frame.
Additionalsubjects
are
being
accrued
to
assess
the
potential
synergy
of
combining
CDX-301
with
Mozobil
in
this
setting.
In
addition
to
our
sponsored
studies
and
clinical
trial
collaborations,
CDX-301's
potential
activity
is
also
being
explored
in
investigator
sponsored
studies
atvarious
academic
institutions.
This
includes
a
Phase
1/2
study
of
CDX-301
and
Hiltonol
in
combination
with
low-dose
radiotherapy
in
patients
with
low-grade
B-cell
lymphomas
conducted
by
the
Icahn
School
of
Medicine
at
Mount
Sinai.
The
primary
outcome
of
the
study
is
objective
response
rate.
Secondary
outcomemeasures
include
safety
and
tumor
specific
immune
response.CDX-014
CDX-014
is
a
fully-human
monoclonal
ADC
that
targets
T
cell
immunoglobulin
and
mucin
domain
1,
or
TIM-1,
a
molecule
that
is
upregulated
in
severalcancers,
including
renal
cell
and
ovarian
carcinomas.
TIM-1
is
associated
with
kidney
injury,
and
the
shedding
of
its
ectodomain
is
a
predictive
biomarker
fortumor
progression.
TIM-1
has
very
restricted
expression
in
healthy
tissues,
making
it
a
promising
target
for
antibody
mediated
therapy.
The
TIM-1
antibody
islinked
to
MMAE
using
Seattle
Genetics'
proprietary
technology.
The
ADC
is
designed
to
be
stable
in
the
bloodstream,
but
to
release
MMAE
upon
internalizationinto
TIM-1-expressing
tumor
cells,
resulting
in
a
targeted
cell-killing
effect.
CDX-014
has
shown
potent
activity
in
preclinical
models
of
ovarian
and
renal
cancer.The
Investigative
New
Drug
(IND)
Application
is
active,
and
we
expect
to
initiate
a
Phase
1
clinical
study
in
renal
cell
carcinoma
in
2016.CRITICAL
ACCOUNTING
POLICIES
AND
ESTIMATES
Our
significant
accounting
policies
are
described
in
Note
2
to
the
financial
statements
included
in
Item
8
of
this
Form
10-K.
We
believe
our
most
criticalaccounting
policies
include
accounting
for74 Table
of
Contentsrevenue
recognition,
impairment
of
intangible
and
long-lived
assets,
research
and
development
expenses
and
stock-based
compensation
expense.
The
methods,
estimates
and
judgments
we
use
in
applying
our
most
critical
accounting
policies
have
a
significant
impact
on
the
results
we
report
in
ourfinancial
statements.
We
evaluate
our
estimates
and
judgments
on
an
on-going
basis.
We
base
our
estimates
on
historical
experience
and
on
assumptions
that
webelieve
to
be
reasonable
under
the
circumstances.
Our
experience
and
assumptions
form
the
basis
for
our
judgments
about
the
carrying
value
of
assets
and
liabilitiesthat
are
not
readily
apparent
from
other
sources.
Actual
results
may
vary
from
what
we
anticipate
and
different
assumptions
or
estimates
about
the
future
couldmaterially
change
our
reported
results.
We
believe
the
following
accounting
policies
are
the
most
critical
to
us
in
that
they
are
important
to
the
portrayal
of
ourfinancial
statements
and
they
require
our
most
difficult,
subjective
or
complex
judgments
in
the
preparation
of
our
financial
statements:Revenue Recognition
We
recognize
revenue
when
all
of
the
following
criteria
are
met:
persuasive
evidence
of
an
arrangement
exists;
delivery
has
occurred
or
services
have
beenrendered;
the
seller's
price
to
the
buyer
is
fixed
or
determinable;
and
collectability
is
reasonably
assured.
We
have
entered
into
and
in
the
future
may
enter
into
biopharmaceutical
product
development
agreements
with
collaborative
partners
for
the
research
anddevelopment
of
therapeutic
drug
products.
The
terms
of
the
agreements
may
include
nonrefundable
signing
and
licensing
fees,
funding
for
research,
developmentand
manufacturing,
milestone
payments
and
royalties
on
any
product
sales
derived
from
collaborations.
These
multiple
element
arrangements
are
analyzed
todetermine
whether
the
deliverables
can
be
separated
or
whether
they
must
be
accounted
for
as
a
single
unit
of
accounting.
In
accounting
for
these
transactions,
weallocate
revenue
to
the
various
elements
based
on
their
relative
fair
value.
The
fair
value
of
a
revenue
generating
element
can
be
based
on
current
selling
pricesoffered
by
us
or
another
party
for
current
products
or
our
best
estimate
of
a
selling
price
for
future
products.
Revenue
allocated
to
an
individual
element
isrecognized
when
all
other
revenue
recognition
criteria
are
met
for
that
element.
These
collaborative
and
other
agreements
may
contain
milestone
payments.
Revenues
from
milestones,
if
they
are
considered
substantive,
are
recognized
uponsuccessful
accomplishment
of
the
milestones.
Determining
whether
a
milestone
is
substantive
involves
judgment,
including
an
assessment
of
our
involvement
inachieving
the
milestones
and
whether
the
amount
of
the
payment
is
commensurate
to
our
performance.
If
not
considered
substantive,
milestones
are
initiallydeferred
and
recognized
over
the
remaining
period
of
the
performance
obligation.
Payments
received
to
fund
certain
research
activities
are
recognized
as
revenue
in
the
period
in
which
the
research
activities
are
performed.
Revenue
fromcontracts
and
grants
is
recognized
as
the
services
are
performed
and
recorded
as
effort
is
expended
on
the
contracted
work
and
billed
to
the
government
or
ourcontractual
partner.
Payments
received
in
advance
that
are
related
to
future
performance
are
deferred
and
recognized
as
revenue
when
the
research
projects
areperformed.
Product
royalty
revenue
consists
of
payments
received
from
licensees
for
a
portion
of
sales
proceeds
from
products
that
utilize
our
licensed
technologies
andare
recognized
when
the
amount
of
and
basis
for
such
royalty
payments
are
reported
to
us
in
accurate
and
appropriate
form
and
in
accordance
with
the
relatedlicense
agreement.Impairment of Intangible and Long-Lived Assets
We
evaluate
the
recoverability
of
our
long-lived
assets,
including
property
and
equipment,
and
finite-lived
intangible
assets
when
circumstances
indicate
thatan
event
of
impairment
may
have75 Table
of
Contentsoccurred.
Determination
of
recoverability
is
based
on
an
estimate
of
undiscounted
future
cash
flows
resulting
from
the
use
of
the
asset
and
its
eventual
disposition.In
the
event
that
such
cash
flows
are
not
expected
to
be
sufficient
to
recover
the
carrying
amount
of
the
assets,
the
assets
are
written-down
to
their
estimated
fairvalues.
IPR&D
assets
acquired
in
a
business
combination
initially
are
recorded
at
fair
value
and
accounted
for
as
indefinite-lived
intangible
assets.
These
assets
arecapitalized
on
our
balance
sheets
until
either
the
project
underlying
them
is
completed
or
the
assets
become
impaired.
If
a
project
is
completed,
the
carrying
valueof
the
related
intangible
asset
is
amortized
over
the
remaining
estimated
life
of
the
asset
beginning
in
the
period
in
which
the
project
is
completed.
If
a
projectbecomes
impaired
or
is
abandoned,
the
carrying
value
of
the
related
intangible
asset
is
written
down
to
its
fair
value
and
an
impairment
charge
is
taken
in
the
periodin
which
the
impairment
occurs.
IPR&D
assets
are
tested
for
impairment
on
an
annual
basis
during
the
third
quarter,
or
earlier
if
impairment
indicators
are
present.Discounted
cash
flow
models
are
typically
used
in
these
tests
and
the
models
require
the
use
of
significant
estimates
and
assumptions
including
but
not
limited
to:•timing
and
costs
to
complete
the
in-process
projects;
•timing
and
probability
of
success
of
clinical
events
or
regulatory
approvals;
•estimated
future
cash
flows
from
product
sales
resulting
from
completed
products
and
in-process
projects;
and
•discount
rates
We
performed
an
annual
impairment
test
of
the
IPR&D
assets
as
of
July
1,
2015
and
concluded
that
the
IPR&D
assets
were
not
impaired.
Intangible
assetsacquired
in
a
business
combination
with
a
finite
life
are
recorded
at
fair
value
and
amortized
over
the
greater
of
economic
consumption
or
on
a
straight-line
basisover
their
estimated
useful
life.
The
difference
between
the
purchase
price
and
the
fair
value
of
assets
acquired
and
liabilities
assumed
in
a
business
combination
is
recorded
to
goodwill.Goodwill
is
evaluated
for
impairment
on
an
annual
basis
during
the
third
quarter,
or
earlier
if
impairment
indicators
are
present.
We
performed
an
annualimpairment
test
of
the
goodwill
asset
as
of
July
1,
2015
and
concluded
that
goodwill
was
not
impaired.Research and Development Expenses
Research
and
development
costs,
including
internal
and
contract
research
costs,
are
expensed
as
incurred.
Research
and
development
expenses
consist
mainlyof
clinical
trial
costs,
manufacturing
of
clinical
material,
toxicology
and
other
preclinical
studies,
personnel
costs,
depreciation,
license
fees
and
funding
of
outsidecontracted
research.
Clinical
trial
expenses
include
expenses
associated
with
clinical
research
organizations,
or
CRO,
services.
Contract
manufacturing
expenses
include
expensesassociated
with
contract
manufacturing
organizations,
or
CMO,
services.
The
invoicing
from
CROs
and
CMOs
for
services
rendered
can
lag
several
months.
Weaccrue
the
cost
of
services
rendered
in
connection
with
CRO
and
CMO
activities
based
on
our
estimate
of
costs
incurred.
We
maintain
regular
communication
withour
CROs
and
CMOs
to
assess
the
reasonableness
of
our
estimates.
Differences
between
actual
expenses
and
estimated
expenses
recorded
have
not
been
materialand
are
adjusted
for
in
the
period
in
which
they
become
known.76 Table
of
ContentsStock-Based Compensation Expense
We
record
stock-based
compensation
expense
for
all
stock-based
awards
made
to
employees
and
directors
based
on
the
estimated
fair
values
of
the
stock-based
awards
expected
to
vest
at
the
grant
date
and
is
adjusted,
if
necessary,
to
reflect
actual
forfeitures.
Our
estimates
of
employee
stock
option
values
rely
onestimates
of
future
uncertain
events.
Significant
assumptions
include
the
use
of
historical
volatility
to
estimate
the
expected
stock
price
volatility.
We
also
estimateexpected
term
based
on
historical
exercise
patterns.
Actual
volatility
and
lives
of
options
may
be
significantly
different
from
our
estimates.
Compensation
expensefor
all
stock-based
awards
to
employees
and
directors
is
recognized
using
the
straight-line
method
over
the
term
of
vesting
or
performance.
We
record
stock-based
compensation
expense
for
stock
options
granted
to
non-employees
based
on
the
fair
value
of
the
stock
options
which
is
re-measuredover
the
vesting
term
resulting
in
periodic
adjustments
to
stock-based
compensation
expense.RESULTS
OF
OPERATIONSYear Ended December 31, 2015 compared with Year Ended December 31, 2014Net Loss
The
$9.1
million
increase
in
net
loss
for
the
year
ended
December
31,
2015
compared
to
the
year
ended
December
31,
2014
was
primarily
the
result
of
anincrease
in
general
and
administrative
expenses,
partially
offset
by
a
decrease
in
research
and
development
expenses.Revenue
The
$0.6
million
increase
in
product
development
and
licensing
agreements
revenue
for
the
year
ended
December
31,
2015
compared
to
the
year
endedDecember
31,
2014
was
primarily
related
to
our
BMS
agreement.
In
May
2014,
we
entered
into
a
clinical
trial
collaboration
with
BMS
whereby
BMS
made
a
one-time
payment
to
us
of
$5.0
million
which
we
are
recognizing
as
revenue
along
with
BMS's
50%
share
of
the
clinical
trial
cost
over
our
estimated
performanceperiod
of
five
years.
The77
Year
Ended
December
31
Increase/
(Decrease)
2015
2014
$
%
(In
thousands)
Revenue:
Product
Development
and
Licensing
Agreements
$1,442
$838
$604
72%Contracts
and
Grants
4,038
2,748
1,290
47%Total
Revenue
5,480
3,586
1,894
53%Operating
Expense:
Research
and
Development
100,171
104,381
(4,210)
(4)%General
and
Administrative
33,837
20,622
13,215
64%Amortization
of
Acquired
Intangible
Assets
1,013
1,013
—
0%Total
Operating
Expense
135,021
126,016
9,005
7%Operating
Loss
(129,541)
(122,430)
7,111
6%Investment
and
Other
Income,
Net
2,344
4,350
(2,006)
(46)%Net
Loss
$(127,197)$(118,080)$9,117
8% Table
of
Contents$1.3
million
increase
in
contracts
and
grants
revenue
for
the
year
ended
December
31,
2015
compared
to
the
year
ended
December
31,
2014
was
primarily
relatedto
our
Rockefeller
University
agreement
pursuant
to
which
we
perform
research
and
development
services
for
Rockefeller.Research and Development Expense
Research
and
development
expenses
consist
primarily
of
(i)
personnel
expenses,
(ii)
laboratory
supply
expenses
relating
to
the
development
of
our
technology,(iii)
facility
expenses,
(iv)
license
fees
and
(v)
product
development
expenses
associated
with
our
drug
candidates
as
follows:
Personnel
expenses
primarily
include
salary,
benefits,
stock-based
compensation
and
payroll
taxes.
The
$9.1
million
increase
in
personnel
expenses
for
theyear
ended
December
31,
2015
compared
to
the
year
ended
December
31,
2014
was
primarily
due
to
increased
headcount
and
higher
stock-based
compensation
of$2.7
million.
We
expect
personnel
expenses
to
increase
over
the
next
twelve
months
as
we
plan
to
continue
to
increase
our
headcount
to
support
our
Rintega,glembatumumab
vedotin
and
varlilumab
programs.
Laboratory
supply
expenses
include
laboratory
materials
and
supplies,
services,
and
other
related
expenses
incurred
in
the
development
of
our
technology.
The$0.8
million
increase
in
laboratory
supply
expenses
for
the
year
ended
December
31,
2015
compared
to
the
year
ended
December
31,
2014
was
primarily
due
tohigher
manufacturing
supply
purchases.
We
expect
supply
expenses
to
remain
relatively
consistent
over
the
next
twelve
months,
although
there
may
be
fluctuationson
a
quarterly
basis.
Facility
expenses
include
depreciation,
amortization,
utilities,
rent,
maintenance,
and
other
related
expenses
incurred
at
our
facilities.
The
$0.7
million
increasein
facility
expenses
for
the
year
ended
December
31,
2015
compared
to
the
year
ended
December
31,
2014
was
primarily
due
to
an
increase
in
rent
and
depreciationand
amortization
expense.
We
expect
facility
expenses
to
increase
over
the
next
twelve
months
as
a
result
of
us
leasing
additional
space
at
our
facilities
inHampton,
NJ,
Needham
MA,
and
Fall
River
MA.
License
fee
expenses
include
annual
license
maintenance
fees
and
milestone
payments
due
upon
the
achievement
of
certain
development,
regulatory
and/orcommercial
milestones.
The
$2.3
million
decrease
in
license
fee
expenses
for
the
year
ended
December
31,
2015
compared
to
the
year
ended
December
31,
2014was
primarily
due
to
the
one-time
$2.5
million
milestone
incurred
and
paid
to
Seattle
Genetics
in
2014
as
a
result
of
the
METRIC
study
initiation.
We
expectlicense
fee
expense
may
increase
over
the
next
twelve
months
as
our
drug
candidates
reach
achievement
of
certain
development,
regulatory
and/or
commercialmilestones,
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
outsideclinical
drug
product
manufacturing.
The
$14.4
million
decrease
in
product
development
expenses
for
the
year
ended
December
31,
2015
compared
to
the
yearended
December
31,
2014
was
primarily
due
to
a
$13.5
million
decrease
in
ACT
IV
costs.
Increases
in
glembatumumab
vedotin
and
varlilumab
clinical
trial
costsof
$2.4
million
and
$3.0
million,
respectively,
were
offset
by
decreases
in
contract
manufacturing
costs
of
$6.4
million.78
Year
Ended
December
31,
Increase/
(Decrease)
2015
2014
$
%
(In
thousands)
Personnel
$29,774
$20,666
$9,108
44%Laboratory
Supplies
4,355
3,598
757
21%Facility
5,756
5,062
694
14%License
Fees
896
3,150
(2,254)
(72)%Product
Development
52,776
67,205
(14,429)
(21)% Table
of
ContentsWe
expect
product
development
expenses
to
increase
over
the
next
twelve
months
primarily
due
to
increases
in
our
glembatumumab
vedotin
and
varlilumabprograms,
although
there
may
be
fluctuations
on
a
quarterly
basis.General and Administrative Expense
The
$13.2
million
increase
in
general
and
administrative
expenses
for
the
year
ended
December
31,
2015
compared
to
the
year
ended
December
31,
2014
wasprimarily
due
to
higher
headcount,
stock-based
compensation
of
$3.2
million
and
a
$6.5
million
increase
in
Rintega
and
glembatumumab
vedotin
commercialplanning
costs
as
we
prepare
for
potential
commercial
launches.
We
expect
general
and
administrative
expense
to
increase
over
the
next
twelve
months
primarilydue
to
increased
commercial
planning
efforts
for
Rintega
and
glembatumumab
vedotin.Amortization Expense
Amortization
expenses
for
the
year
ended
December
31,
2015
were
consistent
compared
to
the
year
ended
December
31,
2014.
We
expect
amortizationexpense
of
acquired
intangible
assets
to
remain
relatively
consistent
over
the
next
twelve
months.Investment and Other Income, Net
The
$2.0
million
decrease
in
investment
and
other
income,
net
for
the
year
ended
December
31,
2015
compared
to
the
year
ended
December
31,
2014
wasprimarily
due
to
other
income
of
$3.0
million
received
in
2014
in
connection
with
our
TopoTarget
agreement.
These
payments
are
the
last
milestone
payments
wewere
owed
from
TopoTarget.
We
anticipate
investment
income
to
remain
relatively
consistent
over
the
next
twelve
months,
although
there
may
be
fluctuations
on
aquarterly
basis.Year Ended December 31, 2014 compared with Year Ended December 31, 201379
Year
Ended
December
31,
Increase/
(Decrease)
2014
2013
$
%
(In
thousands)
Revenue:
Product
Development
and
Licensing
Agreements
$838
$160
$678
424%Contracts
and
Grants
2,748
1,617
1,131
70%Product
Royalties
—
2,334
(2,334)
(100)%Total
Revenue
3,586
4,111
(525)
(13)%Operating
Expense:
Research
and
Development
104,381
67,401
36,980
55%Royalty
—
2,334
(2,334)
(100)%General
and
Administrative
20,622
14,805
5,817
39%Amortization
of
Acquired
Intangible
Assets
1,013
1,013
—
0%Total
Operating
Expense
126,016
85,553
40,463
47%Operating
Loss
(122,430)
(81,442)
40,988
50%Investment
and
Other
Income,
Net
4,350
819
3,531
431%Interest
Expense
—
(927)
(927)
(100)%Net
Loss
$(118,080)$(81,550)$36,530
45% Table
of
ContentsNet Loss
The
$36.5
million
increase
in
net
loss
for
the
year
ended
December
31,
2014
compared
to
the
year
ended
December
31,
2013
was
primarily
the
result
of
anincrease
in
research
and
development
and
general
and
administrative
expenses,
partially
offset
by
an
increase
in
investment
and
other
income.Revenue
The
$0.7
million
increase
in
product
development
and
licensing
agreements
revenue
for
the
year
ended
December
31,
2014
compared
to
the
year
endedDecember
31,
2013
was
primarily
related
to
our
BMS
agreement.
The
$1.1
million
increase
in
contracts
and
grants
revenue
for
the
year
ended
December
31,
2014compared
to
the
year
ended
December
31,
2013
was
primarily
related
to
our
Rockefeller
University
agreement
pursuant
to
which
we
perform
research
anddevelopment
services
for
Rockefeller.
The
$2.3
million
decrease
in
product
royalty
revenue
for
the
year
ended
December
31,
2014
compared
to
the
year
endedDecember
31,
2013
was
due
to
the
termination
of
our
agreement
with
GlaxoSmithKline
plc
which
occurred
upon
the
expiration
of
the
last
relevant
patent
rightcovered
by
the
agreement.
The
terminated
retained
interests
in
Rotarix®
net
royalties
which
were
not
sold
to
Paul
Royalty
Fund
II,
L.P.
had
been
equal
to
theamount
payable
to
Cincinnati
Children's
Hospital
Medical
Center
and
recognized
as
royalty
expense
by
us.Research and Development Expense
The
$3.6
million
increase
in
personnel
expenses
for
the
year
ended
December
31,
2014
compared
to
the
year
ended
December
31,
2013
was
primarily
due
toincreased
headcount
and
higher
stock-based
compensation
of
$0.8
million.
The
$0.4
million
increase
in
laboratory
supply
expenses
for
the
year
ended
December
31,
2014
compared
to
the
year
ended
December
31,
2013
was
primarilydue
to
higher
manufacturing
supply
purchases.
The
$0.5
million
increase
in
facility
expenses
for
the
year
ended
December
31,
2014
compared
to
the
year
ended
December
31,
2013
was
primarily
due
to
anincrease
in
amortization
expense
related
to
the
leasehold
improvements
made
at
our
headquarters
facility
in
Hampton,
New
Jersey.
The
$2.5
million
increase
in
license
fee
expenses
for
the
year
ended
December
31,
2014
compared
to
the
year
ended
December
31,
2013
was
primarily
due
tothe
one-time
$2.5
million
milestone
incurred
and
paid
to
Seattle
Genetics
as
a
result
of
the
METRIC
initiation.
The
$27.9
million
increase
in
product
development
expenses
for
the
year
ended
December
31,
2014
compared
to
the
year
ended
December
31,
2013
wasprimarily
the
result
of
an
increase
in
clinical
trial
costs
and
contract
manufacturing
of
$13.2
million
and
$14.3
million,
respectively,
primarily
related
to
our
Rintegaand
glembatumumab
vedotin
programs.80
Year
Ended
December
31,
Increase/
(Decrease)
2014
2013
$
%
(In
thousands)
Personnel
$20,666
$17,040
$3,626
21%Laboratory
Supplies
3,598
3,247
351
11%Facility
5,062
4,526
536
12%License
Fees
3,150
700
2,450
350%Product
Development
67,205
39,343
27,862
71% Table
of
ContentsRoyalty Expense
The
$2.3
million
decrease
in
royalty
expenses
for
the
year
ended
December
31,
2014
compared
to
the
year
ended
December
31,
2013
was
due
to
thetermination
of
our
agreement
with
GlaxoSmithKline
plc
which
occurred
upon
the
expiration
of
the
last
relevant
patent
right
covered
by
the
agreement.General and Administrative Expense
The
$5.8
million
increase
in
general
and
administrative
expenses
for
the
year
ended
December
31,
2014
compared
to
the
year
ended
December
31,
2013
wasprimarily
due
to
higher
stock-based
compensation
of
$1.5
million,
increased
headcount
and
Rintega
and
glembatumumab
vedotin
commercialization
planningcosts.Amortization Expense
Amortization
expenses
for
the
year
ended
December
31,
2014
were
consistent
compared
to
the
year
ended
December
31,
2013.Investment and Other Income, Net
The
$3.5
million
increase
in
investment
and
other
income,
net
for
the
year
ended
December
31,
2014
compared
to
the
year
ended
December
31,
2013
wasprimarily
due
to
other
income
in
2014
of
$3.0
million
related
to
TopoTarget
milestone
payments.
These
payments
are
the
last
milestone
payments
we
were
owedfrom
TopoTarget.Interest Expense
The
$0.9
million
decrease
in
interest
expense
for
the
year
ended
December
31,
2014
compared
to
the
year
ended
December
31,
2013
was
primarily
due
to
ourelection
in
May
2013
to
prepay
the
Term
Loan
in
full,
pursuant
to
the
terms
of
our
loan
agreement.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
inmoney
market
mutual
funds
with
commercial
banks
and
financial
institutions.
We
maintain
cash
balances
with
financial
institutions
in
excess
of
insured
limits.
Wedo
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
investmentpolicy
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,consulting,
legal
and
other
professional
fees.
To
date,
the
primary
sources
of
cash
flows
from
operations
have
been
payments
received
from
our
collaborativepartners
and
from
government
entities.
The
timing
of
any
new
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.81 Table
of
Contents
At
December
31,
2015,
our
principal
sources
of
liquidity
consisted
of
cash,
cash
equivalents
and
marketable
securities
of
$289.9
million.
We
incurred
a
loss
of$127.2
million
for
the
year
ended
December
31,
2015.
Net
cash
used
in
operations
for
the
year
ended
December
31,
2015
was
$98.9
million.
We
believe
that
thecash,
cash
equivalents
and
marketable
securities
at
December
31,
2015
are
sufficient
to
meet
estimated
working
capital
requirements
and
fund
planned
operationsthrough
2017,
however,
this
could
be
impacted
by
our
clinical
data
results
from
our
Rintega
program
and
their
impact
on
our
pace
of
commercial
manufacturingand
the
rate
of
expansion
of
our
commercial
operations.
During
the
next
twelve
months,
we
may
take
further
steps
to
raise
additional
capital
to
meet
our
long-term
liquidity
needs.
Our
capital
raising
activities
mayinclude,
but
may
not
be
limited
to,
one
or
more
of
the
following:
the
licensing
of
technology
programs
with
existing
or
new
collaborative
partners,
possiblebusiness
combinations,
issuance
of
debt,
or
the
issuance
of
common
stock
or
other
securities
via
private
placements
or
public
offerings.
While
we
may
seek
capitalthrough
a
number
of
means,
there
can
be
no
assurance
that
additional
financing
will
be
available
on
acceptable
terms,
if
at
all,
and
our
negotiating
position
incapital-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
financing
may
be
dilutive
to
our
stockholders;
debt
financing,
if
available,
may
involve
significant
cash
payment
obligations
and
covenants
thatrestrict
our
ability
to
operate
as
a
business;
and
licensing
or
strategic
collaborations
may
result
in
royalties
or
other
terms
which
reduce
our
economic
potential
fromproducts
under
development.Operating Activities
Net
cash
used
in
operating
activities
was
$98.9
million
for
the
year
ended
December
31,
2015
compared
to
$101.5
million
for
the
year
ended
December
31,2014.
The
decrease
in
net
cash
used
in
operating
activities
was
primarily
due
to
increases
in
accounts
payable
and
other
accrued
expenses
of
$3.4
million
and
stock-based
compensation
expense
of
$5.9
million,
offset
by
an
increase
in
net
loss
of
$9.1
million.
Net
cash
used
in
operating
activities
was
$101.5
million
for
the
year
ended
December
31,
2014
compared
to
$67.7
million
for
the
year
ended
December
31,2013.
The
increase
in
net
cash
used
in
operating
activities
was
primarily
due
to
an
increase
in
net
loss
of
$36.5
million.
We
expect
that
cash
used
in
operating
activities
will
increase
over
the
next
twelve
months
primarily
related
to
costs
incurred
on
our
Rintega,
glembatumumabvedotin
and
varlilumab
programs.
We
have
incurred
and
will
continue
to
incur
significant
costs
in
the
area
of
research
and
development,
including
preclinical
andclinical
trials
and
clinical
drug
product
manufacturing
as
our
drug
candidates
are
developed.
We
plan
to
spend
significant
amounts
to
progress
our
current
drugcandidates
through
the
clinical
trial
and
commercialization
processes
as
well
as
to
develop
additional
drug
candidates.
As
our
drug
candidates
progress
through
theclinical
trial
process,
we
may
be
obligated
to
make
significant
milestone
payments.Investing Activities
Net
cash
used
in
investing
activities
was
$50.2
million
for
the
year
ended
December
31,
2015
compared
to
$41.0
million
for
the
year
ended
December
31,2014.
The
increase
in
net
cash
used
in
investing
activities
was
primarily
due
to
net
purchases
of
marketable
securities
for
the
year
ended
December
31,
2015
of$45.3
million
as
compared
to
$39.1
million
for
the
year
ended
December
31,
2014.
Net
cash
used
in
investing
activities
was
$41.0
million
for
the
year
ended
December
31,
2014
compared
to
$77.4
million
for
the
year
ended
December
31,2013.
The
decrease
in
net
cash
used
in
investing
activities
was
primarily
due
to
net
purchases
of
marketable
securities
for
the
year
ended82 Table
of
ContentsDecember
31,
2014
of
$39.1
million
as
compared
to
$73.2
million
for
the
year
ended
December
31,
2013.
We
expect
that
cash
provided
by
investing
activities
will
increase
over
the
next
twelve
months
as
we
fund
our
operations
through
the
net
proceeds
from
thesale
and
maturity
of
marketable
securities,
cash
provided
by
financing
activities
and/or
new
partnerships,
although
there
may
be
significant
fluctuations
on
aquarterly
basis.Financing Activities
Net
cash
provided
by
financing
activities
was
$193.2
million
for
the
year
ended
December
31,
2015
compared
to
$1.2
million
for
the
year
ended
December
31,2014.
Net
proceeds
from
stock
issuances,
including
stock
issued
pursuant
to
employee
benefit
plans,
were
$193.2
million
during
the
year
ended
December
31,
2015compared
to
$1.2
million
for
the
year
ended
December
31,
2014.
Net
cash
provided
by
financing
activities
was
$1.2
million
for
the
year
ended
December
31,
2014
compared
to
$289.6
million
for
the
year
ended
December
31,2013.
Net
proceeds
from
stock
issuances,
including
stock
issued
pursuant
to
employee
benefit
plans,
were
$1.2
million
during
the
year
ended
December
31,
2014compared
to
$301.1
million
for
the
year
ended
December
31,
2013.
We
paid
$11.0
million
in
principal
payments
on
our
Term
Loan
during
the
year
endedDecember
31,
2013.Equity Offerings
In
December
2013,
we
filed
an
automatic
shelf
registration
statement
with
the
Securities
and
Exchange
Commission
to
register
for
sale
any
combination
of
thetypes
of
securities
described
in
the
shelf
registration
statement.
During
the
years
ended
December
31,
2015
and
December
31,
2013,
we
issued
8,337,500
and
21,613,483
shares
of
our
common
stock
in
underwritten
publicofferings
resulting
in
net
proceeds
to
us
of
$188.8
million
and
$278.6
million,
after
deducting
underwriting
fees
and
offering
expenses,
respectively.
During
the
year
ended
December
31,
2013,
we
issued
2,433,608
shares
of
our
common
stock
under
our
controlled
equity
offering
sales
agreement
with
CantorFitzgerald
&
Co.,
as
amended,
resulting
in
net
proceeds
to
us
of
$17.1
million,
after
deducting
commission
and
offering
expenses.AGGREGATE
CONTRACTUAL
OBLIGATIONS
We
have
entered
into
license
agreements
whereby
we
have
received
licenses
or
options
to
license
technology,
specified
patents
and/or
patent
applications.These
license
and
collaboration
agreements
generally
provide
for
royalty
payments
equal
to
specified
percentages
of
product
sales,
annual
license
maintenancefees,
continuing
patent
prosecution
costs
and
potential
future
milestone
payments
to
third
parties
upon
the
achievement
of
certain
development,
regulatory
and/orcommercial
milestones.
Because
the
achievement
of
these
milestones
had
not
occurred
as
of
December
31,
2015
such
contingencies
have
not
been
recorded
in
ourfinancial
statements.
We
expect
to
incur
approximately
$2.0
million
of
license
and
milestone
payments
in
2016.
The
following
table
summarizes
our
contractual
obligations
(not
including
contingent
royalty
and
milestone
payments
as
described
above)
at
December
31,2015
and
the
effect
such
obligations
and
commercial
commitments
are
expected
to
have
on
our
liquidity
and
cash
flow
in
future
years.
These83 Table
of
Contentsobligations,
commitments
and
supporting
arrangements
represent
expected
payments
based
on
current
operating
forecasts,
which
are
subject
to
change:RECENT
ACCOUNTING
PRONOUNCEMENTS
Refer
to
Note
2,
"Summary
of
Significant
Accounting
Policies,"
in
the
accompanying
notes
to
the
financial
statements
for
a
discussion
of
recent
accountingpronouncements.OFF-BALANCE
SHEET
ARRANGEMENTS
None.Item
7A.
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
untilit
is
used
to
fund
operations,
including
our
research
and
development
activities.
None
of
these
market-risk
sensitive
instruments
are
held
for
trading
purposes.
Weinvest
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
corporatebonds
that
meet
high
credit
quality
standards,
as
specified
in
our
investment
policy.
Our
investment
policy
seeks
to
manage
these
assets
to
achieve
our
goals
ofpreserving
principal
and
maintaining
adequate
liquidity.
Because
of
the
short-term
nature
of
these
investments,
we
do
not
believe
we
have
material
exposure
due
tomarket
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
balance
sheet
of
cash
and
cash
equivalents,
accounts
receivables
andaccounts
payable
approximates
fair
value
at
December
31,
2015
due
to
the
short-term
maturities
of
these
instruments.84
Total
2016
2017
-
2018
2019
-
2020
Thereafter
(In
thousands)
Contractual
obligations:
Operating
lease
obligations(1)
$13,239
$3,021
$5,940
$4,278
$—
Other
contractual
obligations(2)
12,439
11,400
1,039
—
—
Total
contractual
obligations
$25,678
$14,421
$6,979
$4,278
$—
(1)Such
amounts
primarily
consist
of
payments
for
our
facility
leases
and
do
not
assume
the
exercise
of
renewal
terms
or
early
terminationprovisions.
In
February
2016,
the
Company
amended
the
facility
lease
in
Fall
River,
MA
for
additional
space
and
to
extend
the
term
from2017
to
2020.
(2)We
enter
into
agreements
in
the
normal
course
of
business
with
contract
research
organizations
for
clinical
trials,
contract
manufacturingorganizations,
vendors
for
preclinical
research
studies
and
other
services
and
products
for
operating
purposes.
We
have
included
obligationsin
the
table
above
if
the
contracts
are
not
cancelable
at
any
time
by
us,
generally
upon
30
days
prior
written
notice
to
the
vendor. Table
of
ContentsItem
8.
FINANCIAL
STATEMENTS
AND
SUPPLEMENTARY
DATA
REPORT
OF
INDEPENDENT
REGISTERED
PUBLIC
ACCOUNTING
FIRM
To
the
Board
of
Directors
and
Stockholders
of
Celldex
Therapeutics,
Inc.
In
our
opinion,
the
accompanying
balance
sheets
and
the
related
statements
of
operations
and
comprehensive
loss,
of
stockholders'
equity,
and
of
cash
flowspresent
fairly,
in
all
material
respects,
the
financial
position
of
Celldex
Therapeutics,
Inc.
at
December
31,
2015
and
December
31,
2014
and
the
results
of
itsoperations
and
its
cash
flows
for
each
of
the
three
years
in
the
period
ended
December
31,
2015
in
conformity
with
accounting
principles
generally
accepted
in
theUnited
States
of
America.
Also
in
our
opinion,
the
Company
maintained,
in
all
material
respects,
effective
internal
control
over
financial
reporting
as
ofDecember
31,
2015,
based
on
criteria
established
in
Internal Control—Integrated Framework (2013) issued
by
the
Committee
of
Sponsoring
Organizations
of
theTreadway
Commission
(COSO).
The
Company's
management
is
responsible
for
these
financial
statements,
for
maintaining
effective
internal
control
over
financialreporting
and
for
its
assessment
of
the
effectiveness
of
internal
control
over
financial
reporting,
included
in
Management's
Annual
Report
on
Internal
Control
overFinancial
Reporting
appearing
under
Item
9A.
Our
responsibility
is
to
express
opinions
on
these
financial
statements
and
on
the
Company's
internal
control
overfinancial
reporting
based
on
our
integrated
audits.
We
conducted
our
audits
in
accordance
with
the
standards
of
the
Public
Company
Accounting
Oversight
Board(United
States).
Those
standards
require
that
we
plan
and
perform
the
audits
to
obtain
reasonable
assurance
about
whether
the
financial
statements
are
free
ofmaterial
misstatement
and
whether
effective
internal
control
over
financial
reporting
was
maintained
in
all
material
respects.
Our
audits
of
the
financial
statementsincluded
examining,
on
a
test
basis,
evidence
supporting
the
amounts
and
disclosures
in
the
financial
statements,
assessing
the
accounting
principles
used
andsignificant
estimates
made
by
management,
and
evaluating
the
overall
financial
statement
presentation.
Our
audit
of
internal
control
over
financial
reportingincluded
obtaining
an
understanding
of
internal
control
over
financial
reporting,
assessing
the
risk
that
a
material
weakness
exists,
and
testing
and
evaluating
thedesign
and
operating
effectiveness
of
internal
control
based
on
the
assessed
risk.
Our
audits
also
included
performing
such
other
procedures
as
we
considerednecessary
in
the
circumstances.
We
believe
that
our
audits
provide
a
reasonable
basis
for
our
opinions.
A
company's
internal
control
over
financial
reporting
is
a
process
designed
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
andthe
preparation
of
financial
statements
for
external
purposes
in
accordance
with
generally
accepted
accounting
principles.
A
company's
internal
control
overfinancial
reporting
includes
those
policies
and
procedures
that
(i)
pertain
to
the
maintenance
of
records
that,
in
reasonable
detail,
accurately
and
fairly
reflect
thetransactions
and
dispositions
of
the
assets
of
the
company;
(ii)
provide
reasonable
assurance
that
transactions
are
recorded
as
necessary
to
permit
preparation
offinancial
statements
in
accordance
with
generally
accepted
accounting
principles,
and
that
receipts
and
expenditures
of
the
company
are
being
made
only
inaccordance
with
authorizations
of
management
and
directors
of
the
company;
and
(iii)
provide
reasonable
assurance
regarding
prevention
or
timely
detection
ofunauthorized
acquisition,
use,
or
disposition
of
the
company's
assets
that
could
have
a
material
effect
on
the
financial
statements.
Because
of
its
inherent
limitations,
internal
control
over
financial
reporting
may
not
prevent
or
detect
misstatements.
Also,
projections
of
any
evaluation
ofeffectiveness
to
future
periods
are
subject
to
the
risk
that
controls
may
become
inadequate
because
of
changes
in
conditions,
or
that
the
degree
of
compliance
withthe
policies
or
procedures
may
deteriorate./s/
PricewaterhouseCoopers
LLPBoston,
Massachusetts
February
25,
201685 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.
BALANCE
SHEETS
(In
thousands,
except
share
and
per
share
amounts)
The
accompanying
notes
are
an
integral
part
of
the
financial
statements.86
December
31,
2015
Consolidated
December
31,
2014
ASSETS
Current
Assets:
Cash
and
Cash
Equivalents
$72,108
$28,020
Marketable
Securities
217,781
173,023
Accounts
and
Other
Receivables
970
427
Prepaid
and
Other
Current
Assets
4,077
3,515
Total
Current
Assets
294,936
204,985
Property
and
Equipment,
Net
11,461
10,535
Intangible
Assets,
Net
20,794
21,807
Other
Assets
1,428
1,722
Goodwill
8,965
8,965
Total
Assets
$337,584
$248,014
LIABILITIES
AND
STOCKHOLDERS'
EQUITY
Current
Liabilities:
Accounts
Payable
$1,506
$2,603
Accrued
Expenses
24,316
19,296
Current
Portion
of
Long-Term
Liabilities
4,418
2,592
Total
Current
Liabilities
30,240
24,491
Other
Long-Term
Liabilities
17,239
11,863
Total
Liabilities
47,479
36,354
Commitments
and
Contingent
Liabilities
(Notes
14
and
16)
Stockholders'
Equity:
Convertible
Preferred
Stock,
$.01
Par
Value;
3,000,000
Shares
Authorized;
NoShares
Issued
and
Outstanding
at
December
31,
2015
and
2014
—
—
Common
Stock,
$.001
Par
Value;
297,000,000
Shares
Authorized;
98,685,595
and89,592,779
Shares
Issued
and
Outstanding
at
December
31,
2015
and
2014,respectively
99
90
Additional
Paid-In
Capital
878,655
672,739
Accumulated
Other
Comprehensive
Income
2,307
2,590
Accumulated
Deficit
(590,956)
(463,759)Total
Stockholders'
Equity
290,105
211,660
Total
Liabilities
and
Stockholders'
Equity
$337,584
$248,014
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.
STATEMENTS
OF
OPERATIONS
AND
COMPREHENSIVE
LOSS
(In
thousands,
except
per
share
amounts)
The
accompanying
notes
are
an
integral
part
of
the
financial
statements.87
Year
Ended
December
31,
2015
Consolidated
Year
Ended
December
31,
2014
Consolidated
Year
Ended
December
31,
2013
REVENUE:
Product
Development
and
Licensing
Agreements
$1,442
$838
$160
Contracts
and
Grants
4,038
2,748
1,617
Product
Royalties
—
—
2,334
Total
Revenue
5,480
3,586
4,111
OPERATING
EXPENSE:
Research
and
Development
100,171
104,381
67,401
Royalty
—
—
2,334
General
and
Administrative
33,837
20,622
14,805
Amortization
of
Acquired
Intangible
Assets
1,013
1,013
1,013
Total
Operating
Expense
135,021
126,016
85,553
Operating
Loss
(129,541)
(122,430)
(81,442)Investment
and
Other
Income,
Net
2,344
4,350
819
Interest
Expense
—
—
(927)Net
Loss
$(127,197)$(118,080)$(81,550)Basic
and
Diluted
Net
Loss
Per
Common
Share
$(1.31)$(1.32)$(1.02)Shares
Used
in
Calculating
Basic
and
Diluted
Net
Loss
per
Share
97,051
89,399
79,777
COMPREHENSIVE
LOSS:
Net
Loss
$(127,197)$(118,080)$(81,550)Other
Comprehensive
Income
(Loss):
Foreign
Currency
Translation
Adjustments
15
(5)
(3)Unrealized
Loss
on
Marketable
Securities
(298)
(73)
(74)Comprehensive
Loss
$(127,480)$(118,158)$(81,627) Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.STATEMENTS
OF
STOCKHOLDERS'
EQUITY(In
thousands,
except
share
amounts)The
accompanying
notes
are
an
integral
part
of
the
financial
statements.88
Common
Stock
Shares
Common
Stock
Par
Value
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income
Accumulated
Deficit
Total
Stockholders'
Equity
Consolidated
Balance
atDecember
31,
2012
64,359,513
$64
$357,094
$2,745
$(264,129)$95,774
Shares
Issued
under
Stock
Option
andEmployee
Stock
Purchase
Plans
840,228
1
5,402
—
—
5,403
Shares
Issued
in
Connection
withCantor
Agreement
2,433,608
2
17,132
—
—
17,134
Shares
Issued
in
Underwritten
Offering
21,613,483
22
278,541
—
—
278,563
Share-Based
Compensation
—
—
4,548
—
—
4,548
Foreign
Currency
TranslationAdjustments
—
—
—
(3)
—
(3)Unrealized
Losses
on
MarketableSecurities
—
—
—
(74)
—
(74)Net
Loss
—
—
—
—
(81,550)
(81,550)Consolidated
Balance
atDecember
31,
2013
89,246,832
89
662,717
2,668
(345,679)
319,795
Shares
Issued
under
Stock
Option
andEmployee
Stock
Purchase
Plans
193,775
1
1,170
—
—
1,171
Shares
Issued
in
Connection
withSupply
Agreement
152,172
—
2,000
—
—
2,000
Share-Based
Compensation
—
—
6,852
—
—
6,852
Foreign
Currency
TranslationAdjustments
—
—
—
(5)
—
(5)Unrealized
Losses
on
MarketableSecurities
—
—
—
(73)
—
(73)Net
Loss
—
—
—
—
(118,080)
(118,080)Consolidated
Balance
atDecember
31,
2014
89,592,779
90
672,739
2,590
(463,759)
211,660
Shares
Issued
under
Stock
Option
andEmployee
Stock
Purchase
Plans
755,316
1
4,310
—
—
4,311
Shares
Issued
in
Underwritten
Offering
8,337,500
8
188,832
—
—
188,840
Share-Based
Compensation
—
—
12,774
—
—
12,774
Foreign
Currency
TranslationAdjustments
—
—
—
15
—
15
Unrealized
Losses
on
MarketableSecurities
—
—
—
(298)
—
(298)Net
Loss
—
—
—
—
(127,197)
(127,197)Balance
at
December
31,
2015
98,685,595
$99
$878,655
$2,307
$(590,956)$290,105
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.
STATEMENTS
OF
CASH
FLOWS
(In
thousands)
The
accompanying
notes
are
an
integral
part
of
the
financial
statements.89
Year
Ended
December
31,
2015
Consolidated
Year
Ended
December
31,
2014
Consolidated
Year
Ended
December
31,
2013
Cash
Flows
From
Operating
Activities:
Net
Loss
$(127,197)$(118,080)$(81,550)Adjustments
to
Reconcile
Net
Loss
to
Net
Cash
Used
inOperating
Activities:
Depreciation
and
Amortization
2,998
2,388
1,932
Amortization
of
Intangible
Assets
1,013
1,013
1,013
Amortization
and
Premium
of
Marketable
Securities,
Net
350
95
(1,366)Realized
Gain
on
Sales
and
Maturities
of
MarketableSecurities
—
(11)
—
Loss
(Gain)
on
Sale
or
Disposal
of
Assets
—
6
(21)Stock-Based
Compensation
Expense
12,774
6,852
4,548
Non-Cash
Expense
288
72
97
Changes
in
Operating
Assets
and
Liabilities:
Accounts
and
Other
Receivables
(543)
62
(445)Prepaid
and
Other
Current
Assets
(653)
(2,026)
(706)Other
Assets
6
65
276
Accounts
Payable
and
Accrued
Expenses
4,875
1,450
7,236
Other
Liabilities
7,202
6,577
1,317
Net
Cash
Used
in
Operating
Activities
(98,887)
(101,537)
(67,669)Cash
Flows
From
Investing
Activities:
Sales
and
Maturities
of
Marketable
Securities
161,090
109,232
38,894
Purchases
of
Marketable
Securities
(206,405)
(148,314)
(112,118)Acquisition
of
Property
and
Equipment
(4,876)
(1,929)
(4,219)Proceeds
from
Sale
or
Disposal
of
Assets
—
—
21
Net
Cash
Used
in
Investing
Activities
(50,191)
(41,011)
(77,422)Cash
Flows
From
Financing
Activities:
Net
Proceeds
from
Stock
Issuances
188,840
—
295,697
Proceeds
from
Issuance
of
Stock
from
Employee
Benefit
Plans
4,311
1,171
5,403
Payments
of
Term
Loan
—
—
(11,029)Payment
of
Other
Liabilities
—
—
(472)Net
Cash
Provided
by
Financing
Activities
193,151
1,171
289,599
Effect
of
Exchange
Rate
Changes
on
Cash
and
Cash
Equivalents
15
(5)
(3)Net
Increase
(Decrease)
in
Cash
and
Cash
Equivalents
44,088
(141,382)
144,505
Cash
and
Cash
Equivalents
at
Beginning
of
Period
28,020
169,402
24,897
Cash
and
Cash
Equivalents
at
End
of
Period
$72,108
$28,020
$169,402
Supplemental Disclosure of Cash Flow Information
Cash
Paid
for
Interest
$—
$—
$1,209
Non-cash Investing Activities
Accrued
construction
in
progress
$75
$1,027
$—
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.
NOTES
TO
FINANCIAL
STATEMENTS
(1)
NATURE
OF
BUSINESS
AND
OVERVIEW
Celldex
Therapeutics,
Inc.
(the
"Company"
or
"Celldex")
is
a
biopharmaceutical
company
focused
on
the
development
and
commercialization
of
severalimmunotherapy
technologies
for
the
treatment
of
cancer
and
other
difficult-to-treat
diseases.
The
Company
currently
has
five
drug
candidates
in
clinicaldevelopment
including
Rintega
(also
referred
to
as
rindopepimut
and
CDX-110),
glembatumumab
vedotin
(also
referred
to
as
CDX-011),
varlilumab
(also
referredto
as
CDX-1127),
CDX-1401
and
CDX-301.
The
Company's
latest
stage
drug
candidate,
Rintega,
is
a
therapeutic
vaccine
that
completed
enrollment
in
December2014
to
a
pivotal
Phase
3
study
in
front-line
glioblastoma
in
patients
that
express
a
specific
cancer
marker
known
as
EGFRvIII.
This
Phase
3
study
completed
itsfirst
interim
analysis
in
June
2015
and
an
independent
Data
Safety
and
Monitoring
Board
recommended
that
the
study
continue
as
planned.
Updated
results
from
arandomized,
Phase
2
study
of
Rintega
added
to
the
standard
of
care
for
the
treatment
of
recurrent
glioblastoma
were
presented
in
November
2015.
At
December
31,
2015,
the
Company
had
cash,
cash
equivalents
and
marketable
securities
of
$289.9
million.
The
Company
incurred
a
loss
of
$127.2
millionfor
the
year
ended
December
31,
2015.
Net
cash
used
in
operations
for
the
year
ended
December
31,
2015
was
$98.9
million.
The
Company
believes
that
the
cash,cash
equivalents
and
marketable
securities
at
December
31,
2015
will
be
sufficient
to
meet
estimated
working
capital
requirements
and
fund
planned
operations
forat
least
the
next
twelve
months.
During
the
next
twelve
months,
the
Company
may
take
further
steps
to
raise
additional
capital
to
meet
its
long-term
liquidity
needs.
These
capital
raisingactivities
may
include,
but
may
not
be
limited
to,
one
or
more
of
the
following:
the
licensing
of
technology
programs
with
existing
or
new
collaborative
partners,possible
business
combinations,
issuance
of
debt,
or
the
issuance
of
common
stock
or
other
securities
via
private
placements
or
public
offerings.
While
theCompany
may
seek
capital
through
a
number
of
means,
there
can
be
no
assurance
that
additional
financing
will
be
available
on
acceptable
terms,
if
at
all,
and
theCompany'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
toenter
into
further
collaborative
relationships.
Additional
equity
financings
may
be
dilutive
to
the
Company's
stockholders;
debt
financing,
if
available,
may
involvesignificant
cash
payment
obligations
and
covenants
that
restrict
the
Company's
ability
to
operate
as
a
business;
and
licensing
or
strategic
collaborations
may
resultin
royalties
or
other
terms
which
reduce
the
Company's
economic
potential
from
products
under
development.(2)
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIESBasis of Presentation
On
December
31,
2014,
the
Company's
wholly-owned
subsidiary,
Celldex
Research
Corporation,
merged
into
Celldex
Therapeutics,
Inc.
The
statements
ofoperations
and
comprehensive
loss,
of
stockholders'
equity,
and
of
cash
flows,
are
consolidated
for
the
years
ended
December
31,
2014
and
2013.
Theseconsolidated
financial
statements
reflect
the
operations
of
the
Company
and
its
wholly-owned
subsidiary
prior
to
the
merger.
All
intercompany
balances
andtransactions
have
been
eliminated
in
consolidation.
The
Company
operates
in
one
segment,
which
is
the
business
of
development,
manufacturing
andcommercialization
of
novel
therapeutics
for
human
health
care.
In
February
2016,
the
Company
formed
a
wholly-owned
subsidiary,
Celldex
TherapeuticsEurope
GmbH,
in
Zug,
Switzerland,
to
operate
as
Celldex'
European
headquarters
when
European
operations
commence,
pursuant
to
intercompany
agreements.90 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(2)
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(Continued)Use of Estimates
The
preparation
of
the
financial
statements
in
conformity
with
accounting
principles
generally
accepted
in
the
United
States
of
America
(U.S.
GAAP)
requiresmanagement
to
make
estimates
and
use
assumptions
that
affect
the
reported
amounts
of
assets
and
liabilities
and
the
disclosure
of
contingent
assets
and
liabilities
atthe
dates
of
the
financial
statements
and
the
reported
amounts
of
revenues
and
expenses
during
the
reporting
period.
Actual
results
could
differ
from
thoseestimates.Cash and Cash Equivalents
The
Company
considers
all
highly
liquid
investments
purchased
with
a
maturity
date
of
90
days
or
less
at
the
date
of
purchase
to
be
cash
equivalents.
Cashequivalents
consist
principally
of
money
market
funds
and
debt
securities.Marketable Securities
The
Company
invests
its
excess
cash
balances
in
marketable
securities
including
municipal
bond
securities,
U.S.
government
agency
securities,
and
high-grade
corporate
bonds.
The
Company
classifies
all
of
its
marketable
securities
as
current
assets
on
the
balance
sheets
because
they
are
available-for-sale
andavailable
to
fund
current
operations.
Marketable
securities
are
stated
at
fair
value
with
their
unrealized
gains
and
losses
included
as
a
component
of
accumulatedother
comprehensive
income
(loss),
which
is
a
separate
component
of
stockholders'
equity,
until
such
gains
and
losses
are
realized.
If
a
decline
in
the
fair
value
isconsidered
other-than-temporary,
based
on
available
evidence,
the
unrealized
loss
is
transferred
from
other
comprehensive
income
(loss)
to
the
statements
ofoperations.
Realized
gains
and
losses
are
determined
on
the
specific
identification
method
and
are
included
in
investment
and
other
income,
net.Concentration of Credit Risk and of Significant Customers and Suppliers
Financial
instruments
that
potentially
subject
the
Company
to
concentrations
of
credit
risk
primarily
consist
of
cash,
cash
equivalents,
marketable
securitiesand
accounts
receivable.
The
Company
invests
its
cash,
cash
equivalents
and
marketable
securities
in
debt
instruments
and
interest
bearing
accounts
at
majorfinancial
institutions
in
excess
of
insured
limits.
The
Company
mitigates
credit
risk
by
limiting
the
investment
type
and
maturity
to
securities
that
preserve
capital,maintain
liquidity
and
have
a
high
credit
quality.
The
Company
has
not
historically
experienced
credit
losses
from
its
accounts
receivable
and
therefore
has
notestablished
an
allowance
for
doubtful
accounts.
Revenue
from
Rockefeller
and
BMS
represented
62%
and
24%
for
the
year
ended
December
31,
2015,
75%
and
20%
for
the
year
ended
December
31,
2014,35%
and
0%
for
the
year
ended
December
31,
2013,
of
total
Company
revenue,
respectively.
The
Company
relies
on
contract
manufacturing
organizations
(CMO)
to
manufacture
drug
substance
and
drug
product
for
its
late-stage
clinical
studies
ofRintega
and
glembatumumab
vedotin
as
well
as
for
future
commercial
supplies.
The
Company
also
relies
on
CMOs
for
supply
of
raw
materials
as
well
as
filling,packaging,
storage
and
shipping
of
drug
product.
These
clinical
studies
would
be
adversely
affected
by
a
significant
interruption
in
the
supply
of
Rintega
andglembatumumab
vedotin.
The
Company
also
relies
on
third-party
collaborators
to
develop
companion
diagnostic
tests
for
certain
of
its
drug
candidates,
includingRintega.91 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(2)
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(Continued)Fair Value Measurements
The
Company
has
certain
assets
and
liabilities
that
are
measured
at
fair
value
in
the
financial
statements.
The
Company
seeks
to
maximize
the
use
ofobservable
inputs
(market
data
obtained
from
sources
independent
from
the
Company)
and
to
minimize
the
use
of
unobservable
inputs
(the
Company's
assumptionsabout
how
market
participants
would
price
assets
and
liabilities)
when
measuring
the
fair
value
of
its
assets
and
liabilities.
These
assets
and
liabilities
are
classifiedinto
one
of
three
levels
of
the
following
fair
value
hierarchy
as
defined
by
U.S.
GAAP:
Level
1:
Observable
inputs
such
as
quoted
prices
in
active
markets
for
identical
assets
or
liabilities.
An
active
market
for
an
asset
or
liability
is
amarket
in
which
transactions
for
the
asset
or
liability
occur
with
sufficient
frequency
and
volume
to
provide
pricing
information
on
an
ongoing
basis.
Level
2:
Observable
inputs
other
than
Level
1
prices,
such
as
quoted
prices
in
active
markets
for
similar
assets
or
liabilities
and
quoted
prices
foridentical
assets
or
liabilities
in
markets
that
are
not
active.
Level
3:
Unobservable
inputs
based
on
the
Company's
assessment
of
the
assumptions
that
market
participants
would
use
in
pricing
the
asset
orliability.Property and Equipment
Property
and
equipment
is
stated
at
cost
and
depreciated
over
the
estimated
useful
lives
of
the
related
assets
using
the
straight-line
method.
Laboratoryequipment
and
office
furniture
and
equipment
are
depreciated
over
five
years
and
computer
equipment
is
depreciated
over
three
years.
Manufacturing
equipment
isamortized
over
seven
to
ten
years.
Leasehold
improvements
are
amortized
over
the
shorter
of
the
estimated
useful
life
or
the
non-cancelable
term
of
the
relatedlease,
including
any
renewals
that
are
reasonably
assured
of
occurring.
Property
and
equipment
under
construction
is
classified
as
construction
in
progress
and
isdepreciated
or
amortized
only
after
the
asset
is
placed
in
service.
Expenditures
for
maintenance
and
repairs
are
charged
to
expense
whereas
the
costs
of
significantimprovements
which
extend
the
life
of
the
underlying
asset
are
capitalized.
Upon
retirement
or
sale,
the
cost
of
assets
disposed
of
and
the
related
accumulateddepreciation
are
eliminated
and
any
resulting
gain
or
loss
is
reflected
in
the
Company's
statements
of
operations
and
comprehensive
loss.
The
treatment
of
costs
to
construct
property
and
equipment
depends
on
the
nature
of
the
costs
and
the
stage
of
construction.
Costs
incurred
in
the
projectplanning,
design,
construction
and
installation
phases
are
capitalized
as
part
of
the
cost
of
the
asset.
The
Company
stops
capitalizing
these
costs
when
the
asset
issubstantially
complete
and
ready
for
its
intended
use.
For
manufacturing
property
and
equipment,
the
Company
also
capitalizes
the
cost
of
validating
these
assetsfor
the
underlying
manufacturing
process.
The
Company
completes
the
capitalization
of
validation
costs
when
the
asset
is
substantially
complete
and
ready
for
itsintended
use.
Costs
capitalized
include
incremental
labor
and
fringe
benefits,
and
direct
consultancy
services.Business Combinations
The
Company
records
the
fair
value
of
the
consideration
transferred
to
acquire
a
business
to
the
tangible
assets
and
identifiable
intangible
assets
acquired
andliabilities
assumed
on
the
basis
of
their92 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(2)
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(Continued)fair
values
at
the
date
of
acquisition.
The
Company
assesses
the
fair
value
of
assets,
including
intangible
assets
such
as
in-process
research
and
development(IPR&D),
using
a
variety
of
methods
including
present
value
models.
Each
asset
is
measured
at
fair
value
from
the
perspective
of
a
market
participant.
The
methodused
to
estimate
the
fair
values
of
IPR&D
assets
incorporates
significant
assumptions
regarding
the
estimates
a
market
participant
would
make
in
order
to
evaluatean
asset,
including
a
market
participant's
assumptions
regarding
the
probability
of
completing
IPR&D
projects,
which
would
require
obtaining
regulatory
approvalfor
marketing
of
the
associated
drug
candidate;
a
market
participant's
estimates
regarding
the
timing
of
and
the
expected
costs
to
complete
IPR&D
projects;
amarket
participant's
estimates
of
future
cash
flows
from
potential
product
sales;
and
the
appropriate
discount
rates
for
a
market
participant.
Transaction
costs
andrestructuring
costs
associated
with
the
transaction
are
expensed
as
incurred.Intangible Assets
IPR&D
assets
acquired
in
a
business
combination
initially
are
recorded
at
fair
value
and
accounted
for
as
indefinite-lived
intangible
assets.
These
assets
arecapitalized
on
the
Company's
balance
sheets
until
either
the
project
underlying
them
is
completed
or
the
assets
become
impaired.
If
a
project
is
completed,
thecarrying
value
of
the
related
intangible
asset
is
amortized
over
the
remaining
estimated
life
of
the
asset
beginning
in
the
period
in
which
the
project
is
completed.
Ifa
project
becomes
impaired
or
is
abandoned,
the
carrying
value
of
the
related
intangible
asset
is
written
down
to
its
fair
value
and
an
impairment
charge
is
taken
inthe
period
in
which
the
impairment
occurs.
IPR&D
assets
are
tested
for
impairment
on
an
annual
basis
during
the
third
quarter,
or
earlier
if
impairment
indicators
are
present.
As
part
of
the
annualimpairment
test
of
the
IPR&D
assets
as
of
July
1,
2015,
the
Company
bypassed
the
optional
qualitative
assessment
and
performed
a
calculation
of
the
fair
value
ofthe
asset.
The
Company
concluded
that
the
IPR&D
assets
were
not
impaired.
Intangible
assets
acquired
in
a
business
combination
with
a
finite
life
are
recorded
at
fair
value
and
amortized
over
the
greater
of
economic
consumption
or
ona
straight-line
basis
over
their
estimated
useful
life.Goodwill
The
difference
between
the
purchase
price
and
the
fair
value
of
assets
acquired
and
liabilities
assumed
in
a
business
combination
is
allocated
to
goodwill.Goodwill
is
evaluated
for
impairment
on
an
annual
basis
during
the
third
quarter,
or
earlier
if
impairment
indicators
are
present.
The
Company
has
the
option
toassess
qualitative
factors
to
determine
if
it
is
more
likely
than
not
that
goodwill
might
be
impaired
and
whether
it
is
necessary
to
perform
the
two-step
goodwillimpairment
test
required
under
U.S.
GAAP.
As
part
of
its
annual
impairment
test
of
the
goodwill
asset
as
of
July
1,
2015,
the
Company
bypassed
the
optionalqualitative
assessment
and
performed
the
two-step
impairment
test.
The
Company
concluded
that
goodwill
was
not
impaired.Impairment of Intangible and Long-Lived Assets
The
Company
evaluates
the
recoverability
of
its
long-lived
assets,
including
property
and
equipment,
and
intangible
assets
when
circumstances
indicate
thatan
event
of
impairment
may
have
occurred.
Determination
of
recoverability
is
based
on
an
estimate
of
undiscounted
future
cash
flows93 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(2)
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(Continued)resulting
from
the
use
of
the
asset
and
its
eventual
disposition.
In
the
event
that
such
cash
flows
are
not
expected
to
be
sufficient
to
recover
the
carrying
amount
ofthe
assets,
the
assets
are
written-down
to
their
estimated
fair
values.Revenue Recognition
The
Company
recognizes
revenue
when
all
of
the
following
criteria
are
met:
persuasive
evidence
of
an
arrangement
exists;
delivery
has
occurred
or
serviceshave
been
rendered;
the
seller's
price
to
the
buyer
is
fixed
or
determinable;
and
collectability
is
reasonably
assured.
The
Company
has
entered
into
and
in
the
future
may
enter
into
biopharmaceutical
product
development
agreements
with
collaborative
partners
for
theresearch
and
development
of
therapeutic
drug
products.
The
terms
of
the
agreements
may
include
nonrefundable
signing
and
licensing
fees,
funding
for
research,development
and
manufacturing,
milestone
payments
and
royalties
on
any
product
sales
derived
from
collaborations.
These
multiple
element
arrangements
areanalyzed
to
determine
whether
the
deliverables
can
be
separated
or
whether
they
must
be
accounted
for
as
a
single
unit
of
accounting.
In
accounting
for
thesetransactions,
the
Company
allocates
revenue
to
the
various
elements
based
on
their
relative
fair
value.
The
fair
value
of
a
revenue
generating
element
can
be
basedon
current
selling
prices
offered
by
the
Company
or
another
party
for
current
products
or
the
Company's
best
estimate
of
a
selling
price
for
future
products.Revenue
allocated
to
an
individual
element
is
recognized
when
all
other
revenue
recognition
criteria
are
met
for
that
element.
These
collaborative
and
other
agreements
may
contain
milestone
payments.
Revenues
from
milestones,
if
they
are
considered
substantive,
are
recognized
uponsuccessful
accomplishment
of
the
milestones.
Determining
whether
a
milestone
is
substantive
involves
judgment,
including
an
assessment
of
the
Company'sinvolvement
in
achieving
the
milestones
and
whether
the
amount
of
the
payment
is
commensurate
to
the
Company's
performance.
If
not
considered
substantive,milestones
are
initially
deferred
and
recognized
over
the
period
of
the
remaining
performance
obligation.
Payments
received
to
fund
certain
research
activities
are
recognized
as
revenue
in
the
period
in
which
the
research
activities
are
performed.
Revenue
fromcontracts
and
grants
is
recognized
as
the
services
are
performed
and
recorded
as
effort
is
expended
on
the
contracted
work
and
billed
to
the
government
or
theCompany's
contractual
partner.
Payments
received
in
advance
that
are
related
to
future
performance
are
deferred
and
recognized
as
revenue
when
the
researchprojects
are
performed.
Product
royalty
revenue
consists
of
payments
received
from
licensees
for
a
portion
of
sales
proceeds
from
products
that
utilize
the
Company's
licensedtechnologies
and
are
recognized
when
the
amount
of
and
basis
for
such
royalty
payments
are
reported
to
the
Company
in
accurate
and
appropriate
form
and
inaccordance
with
the
related
license
agreement.Research and Development Expenses
Research
and
development
costs,
including
internal
and
contract
research
costs,
are
expensed
as
incurred.
Research
and
development
expenses
consist
mainlyof
clinical
trial
costs,
manufacturing
of
clinical
material,
toxicology
and
other
preclinical
studies,
personnel
costs,
depreciation,
license
fees
and
funding
of
outsidecontracted
research.94 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(2)
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(Continued)
Clinical
trial
expenses
include
expenses
associated
with
clinical
research
organizations,
or
CRO,
services.
Contract
manufacturing
expenses
include
expensesassociated
with
contract
manufacturing
organizations,
or
CMO,
services.
The
invoicing
from
CROs
and
CMOs
for
services
rendered
can
lag
several
months.
TheCompany
accrues
the
cost
of
services
rendered
in
connection
with
CRO
and
CMO
activities
based
on
our
estimate
of
costs
incurred.
The
Company
maintainsregular
communication
with
our
CROs
and
CMOs
to
assess
the
reasonableness
of
its
estimates.
Differences
between
actual
expenses
and
estimated
expensesrecorded
have
not
been
material
and
are
adjusted
for
in
the
period
in
which
they
become
known.Patent Costs
Patent
costs
are
expensed
as
incurred.
Certain
patent
costs
are
reimbursed
by
the
Company's
product
development
and
licensing
partners.
Any
reimbursedpatent
costs
are
recorded
as
product
development
and
licensing
agreement
revenues
in
the
Company's
financial
statements.Stock-Based Compensation
The
Company
records
stock-based
compensation
expense
for
all
stock-based
awards
made
to
employees
and
directors
based
on
the
estimated
fair
values
of
thestock-based
awards
expected
to
vest
at
the
grant
date
and
is
adjusted,
if
necessary,
to
reflect
actual
forfeitures.
Compensation
expense
for
all
stock-based
awards
toemployees
and
directors
is
recognized
using
the
straight-line
method
over
the
term
of
vesting
or
performance.
The
Company
records
stock-based
compensation
expense
for
stock
options
granted
to
non-employees
based
on
the
fair
value
of
the
stock
options
which
is
re-measured
over
the
graded
vesting
term
resulting
in
periodic
adjustments
to
stock-based
compensation
expense.Foreign Currency Translation
Net
unrealized
gains
and
losses
resulting
from
foreign
currency
translation
are
included
in
other
comprehensive
income
(loss).
At
December
31,
2015
andDecember
31,
2014,
accumulated
other
comprehensive
income
includes
a
net
unrealized
gain
related
to
foreign
currency
translation
of
$2.6
million.Income Taxes
The
Company
uses
the
asset
and
liability
method
to
account
for
income
taxes,
including
the
recognition
of
deferred
tax
assets
and
deferred
tax
liabilities
forthe
anticipated
future
tax
consequences
attributable
to
differences
between
financial
statement
amounts
and
their
respective
tax
basis.
Quarterly,
the
Companyreviews
its
deferred
tax
assets
for
recovery.
A
valuation
allowance
is
established
when
the
Company
believes
that
it
is
more
likely
than
not
that
its
deferred
taxassets
will
not
be
realized.
Changes
in
valuation
allowances
from
period
to
period
are
included
in
the
Company's
tax
provision
in
the
period
of
change.
The
Company
records
uncertain
tax
positions
in
the
financial
statements
only
if
it
is
more
likely
than
not
that
the
uncertain
tax
position
will
be
sustained
uponexamination
by
the
taxing
authorities.
The
Company
records
interest
and
penalties
related
to
uncertain
tax
positions
in
income
tax
expense.95 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(2)
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(Continued)Comprehensive Loss
Comprehensive
loss
is
comprised
of
net
loss
and
certain
changes
in
stockholders'
equity
that
are
excluded
from
net
loss.
The
Company
includes
foreigncurrency
translation
adjustments
and
unrealized
gains
and
losses
on
marketable
securities
in
other
comprehensive
loss.
The
statements
of
operations
andcomprehensive
loss
reflect
total
comprehensive
loss
for
the
years
ended
December
31,
2015,
2014
and
2013.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
thathas
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
theperiod
plus
additional
weighted-average
potentially
dilutive
common
shares
outstanding
during
the
period
when
the
effect
is
dilutive.
The
potentially
dilutivecommon
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:Recent Accounting Pronouncements
From
time
to
time,
new
accounting
pronouncements
are
issued
by
the
Financial
Accounting
Standards
Board
(FASB)
or
other
standard
setting
bodies
that
areadopted
by
the
Company
as
of
the
specified
effective
date.
Unless
otherwise
discussed,
the
Company
believes
that
the
impact
of
recently
issued
standards
that
arenot
yet
effective
will
not
have
a
material
impact
on
the
Company's
financial
position
or
results
of
operations
upon
adoption.
In
May
2014,
the
FASB
issued
a
new
U.S.
GAAP
accounting
standard
that
creates
modifications
to
various
other
revenue
accounting
standards
for
specializedtransactions
and
industries.
The
new
U.S.
GAAP
accounting
standard
requires
a
company
to
recognize
revenue
when
it
transfers
goods
or
services
to
customers
inan
amount
that
reflects
the
consideration
that
the
company
expects
to
receive
for
those
goods
or
services.
In
August
2015,
the
FASB
deferred
the
effective
date
ofthe
new
standard
from
January
1,
2017
to
January
1,
2018.
The
amendment
allows
for
two
methods
of
adoption,
a
full
retrospective
method
or
a
modifiedretrospective
approach
with
the
cumulative
effect
recognized
at
the
date
of
initial
application.
The
Company
will
further
study
the
implications
of
this
standard
inorder
to
evaluate
the
expected
impact
on
the
financial
statements.
In
April
2015,
the
FASB
issued
amendments
that
provide
guidance
to
customers
about
whether
a
cloud
computing
arrangement
includes
a
software
license.
Ifa
cloud
computing
arrangement
includes
a
software
license,
then
the
customer
should
account
for
the
software
license
element
of
the
arrangement
consistent
withthe
acquisition
of
other
software
licenses.
If
a
cloud
computing
arrangement
does
not96
Year
Ended
December
31,
2015
2014
2013
Stock
options
8,110,239
7,015,350
5,770,544
Restricted
stock
19,500
7,000
6,000
8,129,739
7,022,350
5,776,544
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(2)
SUMMARY
OF
SIGNIFICANT
ACCOUNTING
POLICIES
(Continued)include
a
software
license,
the
customer
should
account
for
the
arrangement
as
a
service
contract.
The
new
guidance
does
not
change
the
accounting
for
acustomer's
accounting
for
service
contracts.
The
standard
update
is
effective
for
fiscal
years
beginning
after
December
15,
2015
and
interim
periods
within
thoseyears.
Early
adoption
is
permitted.
The
standard
allows
for
adoption
retrospectively
or
prospectively
to
all
arrangements
entered
into
or
materially
modified
afterthe
effective
date.
The
amendment
is
not
expected
to
have
a
material
impact
on
our
financial
statements.
In
August
2014,
the
FASB
issued
a
new
U.S.
GAAP
accounting
standard
that
provides
guidance
about
management's
responsibility
to
evaluate
whether
thereis
substantial
doubt
about
an
entity's
ability
to
continue
as
a
going
concern
and
to
provide
related
footnote
disclosures.
The
new
accounting
standard
requiresmanagement
to
assess
an
entity's
ability
to
continue
as
a
going
concern
by
incorporating
and
expanding
upon
certain
principles
that
are
currently
in
U.S.
auditingstandards.
The
new
accounting
standard
is
effective
for
the
annual
period
ending
after
December
15,
2016,
and
for
annual
periods
and
interim
periods
thereafter.Early
application
is
permitted.
The
Company
does
not
expect
the
adoption
of
this
standard
to
have
a
material
impact
on
the
financial
statements.(3)
COMPREHENSIVE
LOSS
The
changes
in
accumulated
other
comprehensive
income
(loss)
by
component
for
the
years
ended
December
31,
2015,
2014
and
2013
are
summarized
below.No
amounts
were
reclassified
out
of
accumulated
other
comprehensive
income
during
the
years
ended
December
31,
2015,
2014
and
2013.97
Unrealized
Gain
(Loss)
on
Marketable
Securities
Foreign
Currency
Items
Total
(In
thousands)
Balance
at
December
31,
2012
$156
$2,589
$2,745
Other
comprehensive
loss
before
reclassifications
(74)
(3)
(77)Amounts
reclassified
from
other
comprehensive
income
—
—
—
Net
current-period
other
comprehensive
loss
(74)
(3)
(77)Balance
at
December
31,
2013
82
2,586
2,668
Other
comprehensive
loss
before
reclassifications
(73)
(5)
(78)Amounts
reclassified
from
other
comprehensive
income
—
—
—
Net
current-period
other
comprehensive
loss
(73)
(5)
(78)Balance
at
December
31,
2014
9
2,581
2,590
Other
comprehensive
loss
before
reclassifications
(298)
15
(283)Amounts
reclassified
from
other
comprehensive
income
—
—
—
Net
current-period
other
comprehensive
loss
(298)
15
(283)Balance
at
December
31,
2015
$(289)$2,596
$2,307
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(4)
FAIR
VALUE
MEASUREMENTS
The
following
tables
set
forth
the
Company's
financial
assets
subject
to
fair
value
measurements:
There
have
been
no
transfers
of
assets
or
liabilities
between
the
fair
value
measurement
classifications.
The
Company's
financial
instruments
consist
mainly
ofcash
and
cash
equivalents,
marketable
securities,
short-term
accounts
receivable
and
accounts
payable.
The
Company
values
its
marketable
securities
utilizingindependent
pricing
services
which
normally
derive
security
prices
from
recently
reported
trades
for
identical
or
similar
securities,
making
adjustments
based
onsignificant
observable
transactions.
At
each
balance
sheet
date,
observable
market
inputs
may
include
trade
information,
broker
or
dealer
quotes,
bids,
offers
or
acombination
of
these
data
sources.
Short-term
accounts
receivable
and
accounts
payable
are
reflected
in
the
accompanying
financial
statements
at
cost,
whichapproximates
fair
value
due
to
the
short-term
nature
of
these
instruments.98
As
of
December
31,
2014
Level
1
Level
2
Level
3
(In
thousands)
Money
market
funds
and
cash
equivalents
$18,677
—
$18,677
—
Marketable
securities
$173,023
—
$173,023
—
$191,700
—
$191,700
—
As
of
December
31,
2015
Level
1
Level
2
Level
3
(In
thousands)
Money
market
funds
and
cash
equivalents
$59,831
—
$59,831
—
Marketable
securities
$217,781
—
$217,781
—
$277,612
—
$277,612
—
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(5)
MARKETABLE
SECURITIES
A
summary
of
marketable
securities
is
shown
below:
The
marketable
securities
held
by
the
Company
were
high
investment
grade
and
there
were
no
marketable
securities
that
the
Company
considered
to
be
other-than-temporarily
impaired
as
of
December
31,
2015.
Marketable
securities
include
$1.5
million
and
$1.4
million
in
accrued
interest
at
December
31,
2015
andDecember
31,
2014,
respectively.99
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
(In
thousands)
December
31,
2014
Marketable
securities
U.S.
government
and
municipal
obligations
Maturing
in
one
year
or
less
$44,580
$30
$(6)$44,604
Maturing
after
one
year
through
three
years
16,108
49
(1)
16,156
Total
U.S.
government
and
municipal
obligations
$60,688
$79
$(7)$60,760
Corporate
debt
securities
Maturing
in
one
year
or
less
$89,636
6
$(37)$89,605
Maturing
after
one
year
through
three
years
22,690
3
(35)
22,658
Total
corporate
debt
securities
$112,326
$9
$(72)$112,263
Total
marketable
securities
$173,014
$88
$(79)$173,023
December
31,
2015
Marketable
securities
U.S.
government
and
municipal
obligations
Maturing
in
one
year
or
less
$48,871
$4
$(20)$48,855
Maturing
after
one
year
through
three
years
15,940
24
(57)
15,907
Total
U.S.
government
and
municipal
obligations
$64,811
$28
$(77)$64,762
Corporate
debt
securities
Maturing
in
one
year
or
less
$129,327
$2
$(141)$129,188
Maturing
after
one
year
through
three
years
23,932
1
(102)
23,831
Total
corporate
debt
securities
$153,259
$3
$(243)$153,019
Total
marketable
securities
$218,070
$31
$(320)$217,781
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(6)
PROPERTY
AND
EQUIPMENT,
NET
Property
and
equipment
include
the
following:
Depreciation
and
amortization
expense
related
to
property
and
equipment
was
$3.0
million,
$2.4
million
and
$1.9
million
for
the
years
ended
December
31,2015,
2014
and
2013,
respectively.(7)
INTANGIBLE
ASSETS
AND
GOODWILL
Intangible
assets,
net
of
accumulated
amortization,
and
goodwill
are
as
follows:
The
IPR&D
intangible
asset
was
recorded
in
connection
with
the
acquisition
of
CuraGen
and
relates
to
the
development
of
glembatumumab
vedotin.
At
thedate
of
acquisition
and
at
December
31,
2015,
glembatumumab
vedotin
had
not
yet
reached
technological
feasibility
nor
did
it
have
any
alternative
future
use.Glembatumumab
vedotin
is
in
a
randomized,
Phase
2b
study
for
the
treatment
of
triple
negative
breast
cancer
and
a
Phase
2
study
for
the
treatment
of
metastaticmelanoma.
Amortization
expense
for
intangible
assets
was
$1.0
million
for
the
years
ended
December
31,
2015,
2014
and
2013.
The
estimated
future
amortizationexpense
of
intangible
assets
for
the
years
ending
December
31,
2016,
2017,
2018,
2019
and
2020
is
$1.0
million,
$0.9
million,
$0.9
million,
$0.9
million
and$0.9
million,
respectively.100
December
31,
2015
December
31,
2014
(In
thousands)
Laboratory
Equipment
$5,432
$4,223
Manufacturing
Equipment
4,178
2,274
Office
Furniture
and
Equipment
3,088
1,888
Leasehold
Improvements
15,371
14,603
Construction
in
Progress
451
1,767
Total
Property
and
Equipment
28,520
24,755
Less
Accumulated
Depreciation
and
Amortization
(17,059)
(14,220)
$11,461
$10,535
December
31,
2015
December
31,
2014
Estimated
Life
Cost
Accumulated
Amortization
Net
Cost
Accumulated
Amortization
Net
(In
thousands)
Intangible
Assets:
IPR&D
Indefinite
$11,800
$—
$11,800
$11,800
$—
$11,800
Amgen
Amendment
16
years
14,500
(5,605)
8,895
14,500
(4,708)
9,792
Core
Technology
11
years
1,296
(1,197)
99
1,296
(1,081)
215
Total
Intangible
Assets
$27,596
$(6,802)$20,794
$27,596
$(5,789)$21,807
Goodwill
Indefinite
$8,965
$—
$8,965
$8,965
$—
$8,965
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(8)
ACCRUED
EXPENSES
Accrued
expenses
include
the
following:(9)
OTHER
LONG-TERM
LIABILITIES
Other
long-term
liabilities
include
the
following:
In
November
2015,
December
2014,
January
2014,
January
2013,
January
2012
and
January
2011,
the
Company
received
approval
from
the
New
JerseyEconomic
Development
Authority
and
agreed
to
sell
New
Jersey
tax
benefits
of
$9.8
million,
$1.9
million,
$1.1
million,
$0.8
million,
$0.8
million
and
$0.6
millionto
an
independent
third
party
for
$9.2
million,
$1.8
million,
$1.0
million,
$0.8
million,
$0.7
million
and
$0.5
million,
respectively.
Under
the
agreement,
theCompany
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
yearscompleted.
During
the
years
ended
December
31,
2015
and
2014,
the
Company
recorded
$1.0
million
and
$0.4
million
to
other
income
related
to
the
sale
of
thesetax
benefits,
respectively.(10)
TERM
LOAN
In
December
2010,
the
Company
entered
into
a
loan
and
security
agreement
pursuant
to
which
the
Company
borrowed
$10.0
million
under
a
term
loan.
InMarch
2011,
the
Company
amended
the
loan
agreement
and
borrowed
an
additional
$5.0
million.
In
May
2013,
the
Company
elected
to
prepay
the
outstandingprincipal
under
the
term
loan
in
full,
pursuant
to
the
terms
of
its
loan
agreement,
as
amended,
and
paid
$8.8
million
in
principal
and
$0.7
million
in
interest,prepayment
and
final
payment
fees.
The
Company's
obligations
under
the
loan
agreement
had
been
collateralized
by
a
first
priority
security
interest
in
substantiallyall
of
its
assets,
other
than
its
intellectual
property.
In
connection
with
the
repayment
of
the
term
loan
and
the
termination
of
the
loan
agreement,
those
securityinterests101
December
31,
2015
December
31,
2014
(In
thousands)
Accrued
Payroll
and
Employee
Benefits
$5,601
$4,284
Accrued
Research
and
Development
Contract
Costs
14,548
12,696
Accrued
Professional
Fees
399
490
Other
Accrued
Expenses
3,768
1,826
$24,316
$19,296
December
31,
2015
December
31,
2014
(In
thousands)
Deferred
Rent
$409
$482
Net
Deferred
Tax
Liability
related
to
IPR&D
4,661
4,661
Deferred
Income
from
Sale
of
Tax
Benefits
12,219
4,015
Deferred
Revenue
4,368
5,297
Total
21,657
14,455
Less
Current
Portion
(4,418)
(2,592)Long-Term
Portion
$17,239
$11,863
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(10)
TERM
LOAN
(Continued)were
released.
Interest
expense
on
the
term
loan
was
$0.8
million
for
the
year
ended
December
31,
2013.(11)
STOCKHOLDERS'
EQUITYCommon Stock
In
December
2013,
the
Company
filed
an
automatic
shelf
registration
statement
with
the
Securities
and
Exchange
Commission
to
register
for
sale
anycombination
of
the
types
of
securities
described
in
the
shelf
registration
statement.
During
the
years
ended
December
31,
2015
and
December
31,
2013,
the
Company
issued
8,337,500
and
21,613,483
shares
of
its
common
stock
inunderwritten
public
offerings
resulting
in
net
proceeds
to
the
Company
of
$188.8
million
and
$278.6
million,
after
deducting
underwriting
fees
and
offeringexpenses,
respectively.
During
the
year
ended
December
31,
2014,
the
Company
entered
into
an
amended
and
restated
supply
agreement
with
Biosyn
Corporation.
Under
the
supplyagreement,
Biosyn
will
manufacture
and
supply
keyhole
limpet
hemocyanin
(KLH)
to
the
Company
for
use
in
connection
with
the
development,
manufacture
orcommercial
sale
of
Rintega.
In
connection
with
the
supply
agreement,
the
Company
issued
to
Biosyn
152,172
shares
of
its
common
stock
having
a
value
of$2.0
million.
The
Company
is
recording
the
$2.0
million
to
research
and
development
expense
through
August
2021,
the
current
term
of
the
supply
agreement.
During
the
year
ended
December
31,
2013,
Company
issued
2,433,608
shares
of
its
common
stock
under
a
controlled
equity
offering
sales
agreement
withCantor
Fitzgerald
&
Co.,
as
amended,
resulting
in
net
proceeds
to
the
Company
of
$17.1
million,
after
deducting
commission
and
offering
expenses.Convertible Preferred Stock
At
December
31,
2015,
the
Company
had
authorized
3,000,000
shares
of
preferred
stock
all
of
which
have
been
designated
Class
C
Preferred
Stock
including350,000
shares
which
have
been
designated
Series
C-1
Junior
Participating
Cumulative
Preferred
Stock
(the
"Series
C-1
Preferred
Stock").(12)
STOCK-BASED
COMPENSATION
The
Company
has
the
following
stock-based
compensation
plans:
the
2004
Employee
Stock
Purchase
Plan
(the
"2004
ESPP
Plan"),
the
2008
Stock
Option
andIncentive
Plan
(the
"2008
Plan")
and
Celldex
Research's
2005
Equity
Incentive
Plan
(the
"Celldex
Research
2005
Plan").
There
are
no
shares
available
for
futuregrant
under
the
Celldex
Research
2005
Plan.Employee Stock Purchase Plan
At
December
31,
2015,
a
total
of
200,000
shares
of
common
stock
are
reserved
for
issuance
under
the
2004
ESPP
Plan.
Under
the
2004
ESPP
Plan,
eachparticipating
employee
may
purchase
shares
of
common
stock
through
payroll
deductions
at
a
purchase
price
equal
to
85%
of
the
lower
of
the
fair
market
value
ofthe
common
stock
at
either
the
beginning
of
the
offering
period
or
the
applicable
exercise
date.
During
the
years
ended
December
31,
2015
and
2014,
the
Companyissued
15,755
and102 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(12)
STOCK-BASED
COMPENSATION
(Continued)10,798
shares
under
the
2004
ESPP
Plan,
respectively.
At
December
31,
2015,
137,571
shares
were
available
for
issuance
under
the
2004
ESPP
Plan.Employee Stock Option and Incentive Plan
The
2008
Plan
permits
the
granting
of
incentive
stock
options
(intended
to
qualify
as
such
under
Section
422A
of
the
Internal
Revenue
Code
of
1986,
asamended),
non-qualified
stock
options,
stock
appreciation
rights,
performance
share
units,
restricted
stock
and
other
awards
of
restricted
stock
in
lieu
of
cashbonuses
to
employees,
consultants
and
non-employee
directors.
At
December
31,
2015,
the
2008
Plan
allowed
for
a
maximum
of
14,350,000
shares
of
common
stock
to
be
issued
for
grants
of
Stock
Options
and
otherAwards
made
prior
to
June
9,
2025
and
grants
of
Incentive
Stock
Options
made
prior
to
April
16,
2025.
The
Company's
board
of
directors
determines
the
term
ofeach
option,
option
price,
and
number
of
shares
for
which
each
option
is
granted
and
the
rate
at
which
each
option
vests.
Options
generally
vest
over
a
period
not
toexceed
four
years.
The
term
of
each
option
cannot
exceed
ten
years
(five
years
for
options
granted
to
holders
of
more
than
10%
of
the
voting
stock
of
the
Company)and
the
exercise
price
of
stock
options
cannot
be
less
than
the
fair
market
value
of
the
common
stock
at
the
date
of
grant
(110%
of
fair
market
value
for
incentivestock
options
granted
to
holders
of
more
than
10%
of
the
voting
stock
of
the
Company).
Vesting
of
all
employee
and
non-employee
director
stock
option
awardsmay
accelerate
upon
a
change
in
control
as
defined
in
the
2008
Plan.
A
summary
of
stock
option
activity
for
the
year
ended
December
31,
2015
is
as
follows:
The
total
intrinsic
value
of
stock
options
exercised
during
the
years
ended
December
31,
2015,
2014
and
2013
was
$14.4
million,
$2.7
million
and$10.0
million,
respectively.
The
weighted
average
grant-date
fair
value
of
stock
options
granted
during
the
years
ended
December
31,
2015,
2014
and
2013
was$15.25,
$8.82
and
$10.51,
respectively.
The
total
fair
value
of
stock
options
vested
during
the
years
ended
December
31,
2015,
2014
and
2013
was
$10.0
million,$5.7
million
and
$2.4
million,
respectively.
The
aggregate
intrinsic
value
of
stock
options
outstanding
at
December
31,
2015
was
$38.6
million.
The
aggregate
intrinsic
value
of
stock
options
vested
andexpected
to
vest
at
December
31,
2015
was
$38.6
million.
As
of
December
31,
2015,
total
compensation
cost
related
to
non-vested
employee
and103
Shares
Weighted
Average
Exercise
Price
Per
Share
Weighted
Average
Remaining
Contractual
Term
(In
Years)
Options
Outstanding
at
December
31,
2014
7,015,350
$9.34
6.6
Granted
1,865,250
$24.75
Exercised
(700,561)$5.81
Canceled
(69,800)$15.79
Options
Outstanding
at
December
31,
2015
8,110,239
$13.13
6.7
Options
Vested
and
Expected
to
Vest
at
December
31,
2015
8,065,256
$13.08
6.7
Options
Exercisable
at
December
31,
2015
4,705,304
$8.53
5.3
Shares
Available
for
Grant
under
the
2008
Plan
5,790,709
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(12)
STOCK-BASED
COMPENSATION
(Continued)non-employee
director
stock
options
not
yet
recognized
was
approximately
$36.2
million,
net
of
estimated
forfeitures,
which
is
expected
to
be
recognized
asexpense
over
a
weighted
average
period
of
2.6
years.Restricted Stock
A
summary
of
restricted
stock
activity
under
the
2008
Plan
for
the
year
ended
December
31,
2015
is
as
follows:Valuation and Expenses Information
Stock-based
compensation
expense
for
the
years
ended
December
31,
2015,
2014
and
2013
was
recorded
as
follows:
The
fair
values
of
employee
stock
options
granted
during
the
years
ended
December
31,
2015,
2014
and
2013
were
valued
using
the
Black-Scholes
option-pricing
model
with
the
following
assumptions:
The
Company
estimates
expected
term
based
on
historical
exercise
patterns.
The
Company
uses
its
historical
stock
price
volatility
consistent
with
the
expectedterm
of
grant
as
the
basis
for
its
expected
volatility
assumption.
The
risk-free
interest
rate
is
based
upon
the
yield
of
U.S.
Treasury
securities
consistent
with
theexpected
term
of
the
option.
The
dividend
yield
assumption
is
based
on
the104
Shares
Weighted
Average
Grant
Date
Fair
Value
(per
share)
Outstanding
and
unvested
at
December
31,
2014
7,000
$14.78
Granted
39,000
$25.41
Vested
(26,500)$22.60
Canceled
—
—
Outstanding
and
unvested
at
December
31,
2015
19,500
$25.41
2015
2014
2013
(In
thousands)
Research
and
development
$6,186
$3,459
$2,640
General
and
administrative
6,588
3,393
1,908
Total
stock-based
compensation
expense
$12,774
$6,852
$4,548
Year
Ended
December
31,
2015
Year
Ended
December
31,
2014
Year
Ended
December
31,
2013Expected
stock
price
volatility
67
-
69%
70
-
72%
71
-
72%Expected
option
term
6.0
Years
6.0
Years
6.0
YearsRisk-free
interest
rate
1.8
-
2.2%
1.9
-
2.2%
1.2
-
2.1%Expected
dividend
yield
None
None
None Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(12)
STOCK-BASED
COMPENSATION
(Continued)Company's
history
of
zero
dividend
payouts
and
expectation
that
no
dividends
will
be
paid
in
the
foreseeable
future.(13)
REVENUEBristol-Myers Squibb Company (BMS)
In
May
2014,
the
Company
entered
into
a
clinical
trial
collaboration
with
BMS
to
evaluate
the
safety,
tolerability
and
preliminary
efficacy
of
varlilumab
andOpdivo®,
BMS's
PD-1
immune
checkpoint
inhibitor,
in
a
Phase
1/2
study.
Under
the
terms
of
this
clinical
trial
collaboration,
BMS
made
a
one-time
payment
to
theCompany
of
$5.0
million
and
BMS
and
the
Company
amended
the
terms
of
the
Company's
existing
license
agreement
with
Medarex
(a
subsidiary
of
BMS)
relatedto
the
Company's
CD27
program
whereby
certain
future
milestone
payments
were
waived
and
future
royalty
rates
were
reduced
that
may
have
been
due
from
theCompany
to
Medarex.
In
return,
BMS
was
granted
a
time-limited
right
of
first
negotiation
if
the
Company
wishes
to
out-license
varlilumab.
The
companies
alsoagreed
to
work
exclusively
with
each
other
to
explore
anti-PD-1
antagonist
antibody
and
anti-CD27
agonist
antibody
combination
regimens.
The
clinical
trialcollaboration
provides
that
the
companies
will
share
development
costs
and
that
the
Company
will
be
responsible
for
conducting
the
ongoing
Phase
1/2
study.
The
Company
has
determined
that
its
performance
obligations
under
the
BMS
agreement,
which
primarily
include
performing
research
and
development,supplying
varlilumab
and
participating
in
the
joint
development
committee,
should
be
accounted
for
as
a
single
unit
of
accounting
and
estimated
that
itsperformance
period
under
the
BMS
agreement
would
be
5
years.
Accordingly,
the
$5.0
million
up-front
payment
was
initially
recorded
as
deferred
revenue
and
isbeing
recognized
as
revenue
on
a
straight-line
basis
over
the
estimated
5-year
performance
period
using
the
Contingency
Adjusted
Performance
Model
("CAPM").The
BMS
agreement
also
provides
for
BMS
to
reimburse
the
Company
for
50%
of
the
external
costs
incurred
by
the
Company
in
connection
with
the
clinical
trial.These
BMS
payments
are
being
recognized
as
revenue
using
the
CAPM.
The
Company
recorded
$1.3
million
and
$0.7
million
in
revenue
related
to
the
BMSagreement
during
the
year
ended
December
31,
2015
and
2014,
respectively.Rockefeller University (Rockefeller)
In
September
2013,
the
Company
entered
into
an
agreement,
as
amended,
with
Rockefeller
pursuant
to
which
the
Company
performs
research
anddevelopment
services
for
Rockefeller.
The
Company
bills
Rockefeller
quarterly
for
actual
time
and
direct
costs
incurred
and
records
those
amounts
to
revenue
inthe
quarter
the
services
are
performed.
The
Company
recorded
$3.4
million,
$2.7
million
and
$1.4
million
in
revenue
related
to
the
Rockefeller
agreement
duringthe
years
ended
December
31,
2015,
2014
and
2013,
respectively.GlaxoSmithKline plc (Glaxo)
In
1997,
the
Company
licensed
its
oral
rotavirus
strain
to
Glaxo
and
Glaxo
assumed
responsibility
for
all
subsequent
clinical
trials
and
all
other
developmentactivities.
The
Company's
licensed-in
the
rotavirus
strain
that
was
used
to
develop
Glaxo's
Rotarix
rotavirus
vaccine
in
1995
and
owed
a
license
fee
of
30%
toCincinnati
Children's
Hospital
Medical
Center
("CCH")
on
net
royalties
received
from105 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(13)
REVENUE
(Continued)Glaxo.
In
May
2005,
the
Company
entered
into
an
agreement
whereby
an
affiliate
of
Paul
Royalty
Fund
II,
L.P.
("PRF")
purchased
a
70%
interest
in
the
netroyalties
the
Company
received
on
worldwide
sales
of
Rotarix.
In
December
2012,
the
Glaxo
agreement
expired
automatically
upon
the
expiration
of
the
lastrelevant
patent
right
covered
by
the
Glaxo
agreement.
The
Company's
retained
interests
in
Rotarix
net
royalties
which
were
not
sold
to
PRF
are
recorded
as
productroyalty
revenue
and
a
corresponding
amount
that
is
payable
to
CCH
is
recorded
as
royalty
expense.
Product
royalty
revenue
and
royalty
expense
related
to
theCompany's
retained
interest
in
Rotarix
was
$2.3
million
for
the
year
ended
December
31,
2013.(14)
COLLABORATION
AGREEMENTS
The
Company
has
entered
into
license
agreements
whereby
the
Company
has
received
licenses
or
options
to
license
technology,
specified
patents
or
patentapplications.
The
Company's
licensing
and
development
collaboration
agreements
generally
provide
for
royalty
payments
equal
to
specified
percentages
of
productsales,
annual
license
maintenance
fees,
continuing
patent
prosecution
costs
and
potential
future
milestone
payments
to
third
parties
upon
the
achievement
of
certaindevelopmental,
regulatory
and/or
commercial
milestones.
Nonrefundable
license
fee
expense
of
$0.9
million,
$3.2
million
and
$0.7
million
was
recorded
toresearch
and
development
expense
for
the
years
ended
December
31,
2015,
2014
and
2013,
respectively.Medarex, Inc., a subsidiary of Bristol-Myers Squibb (Medarex)
The
Company
and
Medarex
have
entered
into
an
assignment
and
license
agreement,
as
amended,
that
provides
for
the
assignment
of
certain
patent
and
otherintellectual
property
rights
and
a
license
to
certain
Medarex
technology
related
to
the
Company's
APC
Targeting
Technology™
and
an
anti-mannose
receptorproduct.
Under
the
terms
of
the
agreement,
the
Company
may
be
required
to
pay
royalties
in
the
low-single
digits
on
any
net
product
sale
of
a
Licensed
Royalty-Bearing
Product
or
Anti-Mannose
Product
to
Medarex
until
the
later
of
(i)
the
expiration
of
the
last
to
expire
applicable
patent
and
(ii)
the
tenth
anniversary
of
thefirst
commercial
sale
of
such
licensed
product.
The
Company
and
Medarex
have
also
entered
into
a
research
and
commercialization
agreement,
as
amended,
that
provides
that
the
Company
may
be
requiredto
pay
Medarex
milestones
of
up
to
$7.0
million
upon
obtaining
first
approval
for
commercial
sale
in
a
first
indication
of
a
product
containing
a
licensed
antibodyand
royalty
payments
in
the
low-to-mid
single
digits
on
any
net
product
sales
with
respect
to
the
development
of
any
products
containing
such
licensed
antibodiesuntil
the
later
of
(i)
the
expiration
of
the
last
to
expire
applicable
patent
and
(ii)
the
tenth
anniversary
of
the
first
commercial
sale
of
such
licensed
product.
InSeptember
2010,
the
Company
exercised
an
option
under
the
agreement,
whereby
it
licensed
from
Medarex
access
to
the
UltiMab
technology
to
develop
andcommercialize
human
antibodies
to
CD27,
including
varlilumab.
In
connection
with
the
clinical
trial
collaboration,
the
Company
entered
into
with
BMS
in
May2014,
certain
future
milestone
payments
were
waived
and
future
royalty
rates
that
the
Company
may
have
owed
Medarex
in
connection
with
any
CD27
programwere
reduced.Rockefeller University (Rockefeller)
In
November
2005,
the
Company
and
Rockefeller
entered
into
a
license
agreement
for
the
exclusive
worldwide
rights
to
human
DEC-205
receptor,
with
theright
to
sublicense
the
technology.106 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(14)
COLLABORATION
AGREEMENTS
(Continued)The
license
grant
is
exclusive
except
that
Rockefeller
may
use
and
permit
other
nonprofit
organizations
to
use
the
human
DEC-205
receptor
patent
rights
foreducational
and
research
purposes.
The
Company
may
be
required
to
pay
Rockefeller
milestones
of
up
to
$3.8
million
upon
obtaining
first
approval
for
commercialsale
in
a
first
indication
of
a
product
targeting
the
licensed
receptor
and
royalty
payments
in
the
low-to-mid
single
digits
on
any
net
product
sales
with
respect
todevelopment
and
commercialization
of
the
human
DEC-205
receptor.Duke University Brain Tumor Cancer Center (Duke)
In
September
2006,
the
Company
and
Duke
entered
into
a
license
agreement
that
gave
the
Company
access
and
reference
to
the
clinical
data
generated
byDuke
and
its
collaborators
in
order
for
the
Company
to
generate
its
own
filing
with
the
FDA
relating
to
Rintega.
The
Company
may
be
required
to
pay
Dukemilestones
of
up
to
$0.7
million
upon
obtaining
first
approval
for
commercial
sale
in
a
first
indication
and
royalty
payments
in
the
low-single
digits
on
any
netproduct
sales
with
respect
to
development
and
commercialization
of
Rintega.Ludwig Institute for Cancer Research (Ludwig)
In
October
2006,
the
Company
and
Ludwig
entered
into
an
agreement
for
the
nonexclusive
rights
to
certain
cancer
tumor
targets
for
use
in
combination
withthe
Company's
APC
Targeting
Technology.
The
Company
may
be
required
to
pay
Ludwig
milestones
of
up
to
$1.0
million
upon
obtaining
first
approval
forcommercial
sale
in
a
first
indication
and
royalty
payments
in
the
low-single
digits
on
any
net
product
sales
with
respect
to
development
and
commercialization
ofthe
technology
licensed
from
Ludwig.Alteris Therapeutics, Inc. (Alteris)
In
October
2005,
the
Company
completed
the
acquisition
of
the
assets
of
Alteris,
including
the
EGFRvIII
molecule.
The
Company
may
be
required
to
payAlteris
up
to
$5.0
million
upon
obtaining
the
first
approval
for
commercial
sale
of
a
product
containing
EGFRvIII,
including
Rintega.University of Southampton, UK (Southampton)
In
November
2008,
the
Company
entered
into
a
license
agreement
with
Southampton
to
develop
human
antibodies
towards
CD27,
a
potentially
importanttarget
for
immunotherapy
of
various
cancers.
The
Company
may
be
required
to
pay
Southampton
milestones
of
up
to
approximately
$1.4
million
upon
obtainingfirst
approval
for
commercial
sale
in
a
first
indication
and
royalty
payments
in
the
low-single
digits
on
any
net
product
sales
with
respect
to
development
andcommercialization
of
varlilumab.Amgen Inc. (Amgen)
In
March
2009,
the
Company
entered
into
a
license
agreement
with
Amgen
to
acquire
the
exclusive
rights
to
CDX-301
and
CD40
ligand
(CD40L).
CDX-301and
CD40L
are
immune
modulating
molecules
that
increase
the
numbers
and
activity
of
immune
cells
that
control
immune
responses.
The
Company
may
berequired
to
pay
Amgen
milestones
of
up
to
$0.9
million
upon
obtaining
first
approval
for
commercial
sale
in
a
first
indication
and
royalty
payments
in
the
low-single
digits
on
any
net107 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(14)
COLLABORATION
AGREEMENTS
(Continued)product
sales
with
respect
to
development
and
commercialization
of
the
technology
licensed
from
Amgen,
including
CDX-301.Seattle Genetics, Inc. (Seattle Genetics)
In
connection
with
the
acquisition
of
CuraGen,
the
Company
assumed
the
license
agreement
between
CuraGen
and
Seattle
Genetics
whereby
CuraGenacquired
the
rights
to
proprietary
antibody-drug
conjugate
(ADC)
technology
for
use
with
the
Company's
proprietary
antibodies
for
the
potential
treatment
ofcancer.
The
Company
may
be
required
to
pay
Seattle
Genetics
milestones
of
up
to
$5.0
million
and
$9.0
million
for
glembatumumab
vedotin
and
CDX-014,respectively,
upon
obtaining
first
approval
for
commercial
sale
in
a
first
indication
and
royalty
payments
in
the
mid-single
digits
on
any
net
product
sales
withrespect
to
development
and
commercialization
of
these
product
candidates.(15)
INCOME
TAXES
The
components
of
income
tax
expense
attributable
to
continuing
operations
consist
of
the
following:
A
reconciliation
between
the
amount
of
reported
income
tax
and
the
amount
computed
using
the
U.S.
Statutory
rate
of
34%
follows:108
Year
Ended
December
31,
2015
2014
2013
(In
thousands)
Income
tax
benefit
(provision):
Federal
$46,598
$43,536
$30,962
State
10,642
7,328
4,920
Expiration
of
Net
Operating
Losses
and
Research
&
Development
Tax
Credits
(155)
(2,302)
(126)
57,085
48,562
35,756
Deferred
tax
valuation
allowance
(57,085)
(48,562)
(35,756)
$—
$—
$—
2015
2014
2013
(In
thousands)
Pre-tax
loss
$(127,197)$(118,080)$(81,550)Loss
at
Statutory
Rates
(43,247)
(40,147)
(27,727)Research
and
Development
Credits
(4,935)
(4,126)
(3,261)State
Taxes
(10,642)
(7,328)
(4,920)Other
1,584
737
26
Expiration
of
Net
Operating
Losses
and
Research
&
Development
Tax
Credits
155
2,302
126
Change
in
Valuation
Allowance
57,085
48,562
35,756
Income
tax
(benefit)
provision
$—
$—
$—
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(15)
INCOME
TAXES
(Continued)
Deferred
tax
assets
and
liabilities
are
recognized
based
on
temporary
differences
between
the
financial
reporting
and
tax
basis
of
assets
and
liabilities
usingfuture
expected
enacted
rates.
A
valuation
allowance
is
recorded
against
deferred
tax
assets
if
it
is
more
likely
than
not
that
some
or
all
of
the
deferred
tax
assetswill
not
be
realized.
The
principal
components
of
the
deferred
tax
assets
and
liabilities
at
December
31,
2015
and
2014,
respectively,
are
as
follows:
The
net
deferred
tax
liability
of
$4.7
million
at
December
31,
2015
and
2014
relates
to
the
temporary
differences
associated
with
the
IPR&D
intangible
assetsacquired
in
the
CuraGen
acquisition,
which
are
not
deductible
for
tax
purposes.
As
of
December
31,
2015,
the
Company
had
the
following
federal
net
operating
loss
("NOL")
carryforwards:•Prior
to
the
merger
of
the
Company
and
AVANT,
$33.0
million
was
generated
by
the
Company
which
expire
at
various
dates
starting
in
2023
andgoing
through
2028;
•Prior
to
the
merger
of
the
Company
and
AVANT,
$101.2
million,
net
of
expirations
and
utilization,
was
generated
by
AVANT
which
expire
atvarious
dates
starting
in
2018
and
going
through
2028;
•Following
the
merger
of
the
Company
and
AVANT,
$392.9
million
was
generated
by
the
combined
company
which
expire
at
various
dates
startingin
2028
and
going
through
2035;
and
•Prior
to
its
acquisition
by
the
Company,
$518.3
million
was
generated
by
CuraGen.109
December
31,
2015
December
31,
2014
(In
thousands)
Gross
Deferred
Tax
Assets
Net
Operating
Loss
Carryforwards
$180,777
$95,577
Tax
Credit
Carryforwards
35,895
29,709
Deferred
Expenses
48,608
85,889
Stock-based
Compensation
8,393
5,556
Fixed
Assets
2,017
1,882
Deferred
Revenue
1,703
2,078
Accrued
Expenses
and
Other
219
202
277,612
220,893
Gross
Deferred
Tax
Liabilities
Other
Acquired
Intangibles
(3,382)
(3,749)IPR&D
Intangibles
(4,661)
(4,661)
(8,043)
(8,410)Total
Deferred
Tax
Assets
and
Liabilities
269,569
212,483
Deferred
Tax
Assets
Valuation
Allowance
(274,230)
(217,144)Net
Deferred
Tax
Asset
(Liability)
$(4,661)$(4,661) Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(15)
INCOME
TAXES
(Continued)
As
of
December
31,
2015,
the
Company
has
an
additional
$17.7
million
of
federal
and
state
net
operating
losses
not
reflected
above,
that
are
attributable
tostock
option
exercises
which
will
be
recorded
as
an
increase
in
additional
paid
in
capital
on
the
balance
sheet
once
they
are
"realized"
in
accordance
with
ASC
718.
In
general,
an
ownership
change,
as
defined
by
Section
382
of
the
Internal
Revenue
Code,
results
from
transactions
increasing
the
ownership
of
certainshareholders
or
public
groups
in
the
stock
of
a
corporation
by
more
than
50
percentage
points
over
a
three-year
period.
Such
ownership
changes
can
significantlylimit
the
amount
of
NOLs
that
may
be
utilized
in
future
periods.
The
Company
currently
expects
that
it
is
remote
that
the
CuraGen
NOLs
may
be
utilized
and,
assuch,
no
related
asset
has
been
recorded
for
such
losses.
The
Company
has
not
completed
an
analysis
of
losses
generated
by
AVANT,
however,
the
Companybelieves
it
is
remote
that
$60.8
million
of
the
AVANT
NOLs
may
be
utilized
in
future
periods
and
there
may
be
substantial
limitations
on
the
Company's
ability
touse
the
remaining
NOLs
of
$40.4
million.
Following
the
merger
of
the
Company
and
AVANT,
the
Company
experienced
changes
in
ownership
as
defined
bySection
382
in
June
2009,
December
2009
and
December
2013.
Further,
prior
to
the
AVANT
merger,
the
Company
as
a
stand
alone
company
experienced
a
changein
ownership
in
October
2007.
As
a
result
of
the
ownership
changes
in
June
2009
and
December
2009,
there
is
an
annual
limitation
amount
of
$6.0
million
on$67.7
million
of
NOLs
generated
before
that
date.
As
a
result
of
the
ownership
change
in
December
2013,
there
is
an
annual
limitation
amount
of
$77.0
million
on$178.7
million
of
NOLs
generated
before
that
date.
Any
unused
annual
limitation
may
be
carried
over
to
later
years,
and
the
amount
of
the
limitation
may,
undercertain
circumstances,
be
subject
to
adjustment
if
the
fair
value
of
the
Company's
net
assets
are
determined
to
be
below
or
in
excess
of
the
tax
basis
of
such
assets
atthe
time
of
the
ownership
change,
and
such
unrealized
loss
or
gain
is
recognized
during
the
five-year
period
after
the
ownership
change.
Similar
to
the
AVANT
and
CuraGen
NOL
carryforwards
above,
the
Company
believes
that
it
is
not
more
likely
than
not
that
federal
and
state
research
anddevelopment
("R&D")
credits
of
$20.8
million
and
$14.4
million,
respectively,
will
be
utilized
in
the
future
periods.
Further,
the
Company's
ability
to
use
the
stateNOLs
of
approximately
$382.3
million
and
the
remaining
federal
and
state
R&D
credit
carryforwards
of
approximately
$28.5
million
and
$11.2
million,respectively,
may
be
substantially
limited.
These
state
NOLs
and
federal
and
state
credits
expire
at
various
dates
starting
in
2016
going
through
2035.
TheCompany
has
not
yet
completed
a
study
of
these
credits
to
substantiate
the
amounts.
Until
a
study
is
completed,
no
amounts
are
being
presented
as
an
uncertain
taxposition.
Subsequent
ownership
changes,
as
defined
in
Section
382,
could
further
limit
the
amount
of
net
operating
loss
carryforwards
and
research
and
developmentcredits
that
can
be
utilized
annually
to
offset
future
taxable
income.
The
Company
applies
the
authoritative
guidance
on
account
for
and
disclosure
of
uncertainty
in
income
tax
positions
which
requires
the
Company
todetermine
whether
an
income
tax
position
of
the
Company
is
more
likely
than
not
to
be
sustained
upon
examination,
including
resolution
of
any
related
appeals
orlitigation
processes,
based
on
the
technical
merits
of
the
position.
For
income
tax
positions
meeting
the
more
likely
than
not
threshold,
the
tax
amount
recognized
inthe
financial
statements
is
reduced
to
the
largest
benefit
that
has
a
greater
than
fifty
perfect
likelihood
of
being
realized
upon
the
ultimate
settlement
with
therelevant
taxing
authority.
At
December
31,
2015
and
2014,
we
had
no
unrecognized
tax
benefits.
A
full
valuation
allowance
has
been
provided
against
our
deferredtax
assets
and
liabilities
and,
if
an
adjustment
is
required,
this
adjustment
would
be
offset
by
an
adjustment
to
the110 Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(15)
INCOME
TAXES
(Continued)valuation
allowance.
Thus,
there
would
be
no
impact
to
the
balance
sheet
or
statement
of
operations
if
an
adjustment
were
required.
Massachusetts,
New
Jersey
and
Connecticut
are
the
three
states
in
which
the
Company
primarily
operates
or
has
operated
and
has
income
tax
nexus.
TheCompany
is
not
currently
under
examination
by
these
or
any
other
jurisdictions
for
any
tax
year.
The
Company
has
evaluated
the
positive
and
negative
evidence
bearing
upon
the
realizability
of
its
net
deferred
tax
assets,
which
are
comprised
principally
ofnet
operating
loss
carryforwards,
capitalized
R&D
expenditures
and
R&D
tax
credit
carryforwards.
The
Company
has
determined
that
it
is
more
likely
than
not
thatit
will
not
recognize
the
benefits
of
federal
and
state
deferred
tax
assets
and,
as
a
result,
a
full
valuation
allowance
was
maintained
at
December
31,
2015
against
theCompany's
net
deferred
tax
assets.(16)
COMMITMENTS
AND
CONTINGENCIES
The
Company
has
facility
and
equipment
leases
that
expire
at
various
dates
through
2020.
Certain
of
these
facility
leases
contain
renewal
options,
earlytermination
provisions,
and
provisions
that
escalate
the
base
rent
payments
and
require
the
Company
to
pay
common
area
maintenance
costs
("CAM")
during
thelease
term.
The
following
obligations
for
base
rent
and
CAM
costs
under
facility
and
other
non-cancelable
operating
leases
as
of
December
31,
2015
do
not
includethe
exercise
of
renewal
terms
or
early
termination
provisions
(in
thousands):
In
February
2016,
the
Company
amended
the
facility
lease
in
Fall
River,
MA
for
additional
space
and
to
extend
the
term
from
2017
to
2020.
The
Company'stotal
rent
and
CAM
expense
for
all
facility
leases
was
$2.9
million,
$2.7
million
and
$2.7
million
for
the
years
ended
December
31,
2015,
2014
and
2013,respectively.(17)
RETIREMENT
SAVINGS
PLAN
The
Company
maintains
a
401(k)
Plan
which
is
available
to
substantially
all
employees.
Under
the
terms
of
the
401(k)
Plan,
participants
may
elect
tocontribute
up
to
15%
of
their
compensation,
or
the
statutory
prescribed
limits.
The
Company
may
make
50%
matching
contributions
on
up
to
4%
of
a
participant'sannual
salary.
Benefit
expense
for
the
401(k)
Plan
was
$0.4
million,
$0.3
million
and
$0.3
million
for
the
years
ended
December
31,
2015,
2014
and
2013,respectively.1112016
$3,021
2017
3,242
2018
2,698
2019
2,754
2020
1,524
Thereafter
—
Total
minimum
lease
payments
$13,239
Table
of
ContentsCELLDEX
THERAPEUTICS,
INC.NOTES
TO
FINANCIAL
STATEMENTS
(Continued)(18)
SELECTED
QUARTERLY
FINANCIAL
DATA
(Unaudited)
1122014
Q1
2014
Q2
2014
Q3
2014
Q4
2014
(In
thousands,
except
per
share
amounts)
Total
revenue
$416
$592
$1,101
$1,477
Net
loss
(29,903)
(28,274)
(28,082)
(31,821)Basic
and
diluted
net
loss
per
common
share
(0.33)
(0.32)
(0.31)
(0.36)2015
Q1
2015
Q2
2015
Q3
2015
Q4
2015
(In
thousands,
except
per
share
amounts)
Total
revenue
$486
$2,178
$1,026
$1,790
Net
loss
(30,174)
(32,359)
(31,980)
(32,684)Basic
and
diluted
net
loss
per
common
share
(0.33)
(0.33)
(0.32)
(0.33) Table
of
ContentsItem
9.
CHANGES
IN
AND
DISAGREEMENTS
WITH
ACCOUNTANTS
ON
ACCOUNTING
AND
FINANCIAL
DISCLOSURE
None.Item
9A.
CONTROLS
AND
PROCEDURES
Evaluation of Disclosure Controls and Procedures
As
of
December
31,
2015,
we
evaluated,
with
the
participation
of
our
Chief
Executive
Officer
and
Chief
Financial
Officer,
the
effectiveness
of
our
disclosurecontrols
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
thatevaluation,
our
Chief
Executive
Officer
and
Chief
Financial
Officer
concluded
that
our
disclosure
controls
and
procedures
were
effective
at
the
reasonableassurance
level
as
of
December
31,
2015.
Our
disclosure
controls
and
procedures
are
designed
to
provide
reasonable
assurance
that
information
required
to
bedisclosed
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'srules
and
forms,
and
that
such
information
is
accumulated
and
communicated
to
our
management,
including
our
Chief
Executive
Officer
and
Chief
FinancialOfficer,
as
appropriate
to
allow
timely
decisions
regarding
required
disclosure.Management's Annual Report on Internal Control Over Financial Reporting
Our
management
is
responsible
for
establishing
and
maintaining
adequate
internal
control
over
our
financial
reporting.
Internal
control
over
financial
reportingis
defined
in
Rules
13a-15(f)
and
15d-15(f)
under
the
Exchange
Act
as
the
process
designed
by,
or
under
the
supervision
of,
our
Chief
Executive
Officer
and
ChiefFinancial
Officer,
and
effected
by
our
board
of
directors,
management
and
other
personnel,
to
provide
reasonable
assurance
regarding
the
reliability
of
our
financialreporting
and
the
preparation
of
our
financial
statements
for
external
purposes
in
accordance
with
generally
accepted
accounting
principles,
and
includes
thosepolicies
and
procedures
that:•pertain
to
the
maintenance
of
records
that,
in
reasonable
detail,
accurately
and
fairly
reflect
the
transactions
and
dispositions
of
assets;
•provide
reasonable
assurance
that
transactions
are
recorded
as
necessary
to
permit
preparation
of
financial
statements
in
accordance
with
generallyaccepted
accounting
principles,
and
that
receipts
and
expenditures
are
being
made
only
in
accordance
with
the
authorizations
of
management
anddirectors;
and
•provide
reasonable
assurance
regarding
the
prevention
or
timely
detection
of
unauthorized
acquisition,
use
or
disposition
of
assets
that
could
have
amaterial
effect
on
our
financial
statements.
Because
of
its
inherent
limitations,
internal
control
over
financial
reporting
may
not
prevent
or
detect
misstatements.
Projections
of
any
evaluation
ofeffectiveness
to
future
periods
are
subject
to
the
risk
that
controls
may
become
inadequate
because
of
changes
in
conditions,
or
that
the
degree
of
compliance
withthe
policies
or
procedures
may
deteriorate.
Under
the
supervision
and
with
the
participation
of
our
management,
including
our
Chief
Executive
Officer
and
Chief
Financial
Officer,
we
conducted
anevaluation
of
the
effectiveness
of
our
internal
control
over
financial
reporting
based
on
the
framework
provided
in
Internal Control—Integrated Framework (2013)issued
by
the
Committee
of
Sponsoring
Organizations
of
the
Treadway
Commission.
Based
on
this
evaluation,
our
management
concluded
that
our
internal
controlover
financial
reporting
was
effective
as
of
December
31,
2015.113 Table
of
Contents
The
effectiveness
of
our
internal
control
over
financial
reporting
as
of
December
31,
2015
has
been
audited
by
PricewaterhouseCoopers
LLP,
an
independentregistered
public
accounting
firm,
as
stated
in
their
report,
which
is
included
herein.Changes in Internal Control Over Financial Reporting
There
were
no
changes
in
our
internal
control
over
financial
reporting
during
the
three
months
ended
December
31,
2015
that
have
materially
affected,
or
arereasonably
likely
to
materially
affect,
our
internal
control
over
financial
reporting.Item
9B.
OTHER
INFORMATION
None.PART
III
Item
10.
DIRECTORS,
EXECUTIVE
OFFICERS
AND
CORPORATE
GOVERNANCE
The
information
required
by
this
Item
10
will
be
included
in
the
definitive
Proxy
Statement
for
our
2016
Annual
Meeting
of
Stockholders,
or
the
2016
ProxyStatement,
under
"Information
Regarding
the
Current
Directors
and
Executive
Officers
of
Celldex
Therapeutic,
Inc.,"
"Section
16(a)
Beneficial
OwnershipReporting
Compliance,"
"Code
of
Business
Conduct
and
Ethics"
and
"The
Board
of
Directors
and
Its
Committees"
and
is
incorporated
herein
by
reference.
If
the2016
Proxy
Statement
is
not
filed
with
the
SEC
within
120
days
after
the
end
of
our
most
recent
fiscal
year,
we
will
provide
such
information
by
means
of
anamendment
to
this
Annual
Report
on
Form
10-K.Item
11.
EXECUTIVE
COMPENSATION
The
information
required
by
this
Item
11
will
be
included
in
the
2016
Proxy
Statement
under
"Executive
Compensation,"
and
"Compensation
CommitteeInterlocks
and
Insider
Participation,"
and
is
incorporated
herein
by
reference.
If
the
2016
Proxy
Statement
is
not
filed
with
the
SEC
within
120
days
after
the
end
ofour
most
recent
fiscal
year,
we
will
provide
such
information
by
means
of
an
amendment
to
this
Annual
Report
on
Form
10-K.Item
12.
SECURITY
OWNERSHIP
OF
CERTAIN
BENEFICIAL
OWNERS
AND
MANAGEMENT
AND
RELATED
STOCKHOLDER
MATTERS
The
information
required
by
this
Item
12
will
be
included
in
the
2016
Proxy
Statement
under
"Security
Ownership
of
Certain
Beneficial
Owners
andManagement"
and
"Equity
Compensation
Plan
Information"
and
is
incorporated
herein
by
reference.
If
the
2016
Proxy
Statement
is
not
filed
with
the
SEC
within120
days
after
the
end
of
our
most
recent
fiscal
year,
we
will
provide
such
information
by
means
of
an
amendment
to
this
Annual
Report
on
Form
10-K.Item
13.
CERTAIN
RELATIONSHIPS
AND
RELATED
TRANSACTIONS,
AND
DIRECTOR
INDEPENDENCE
The
information
required
by
this
Item
13
will
be
included
in
the
2016
Proxy
Statement
under
"Election
of
Directors"
and
"Approval
of
Related
PersonTransactions
and
Transactions
with
Related
Persons"
and
is
incorporated
herein
by
reference.
If
the
2016
Proxy
Statement
is
not
filed
with
the
SEC
within
120
daysafter
the
end
of
our
most
recent
fiscal
year,
we
will
provide
such
information
by
means
of
an
amendment
to
this
Annual
Report
on
Form
10-K.114 Table
of
ContentsItem
14.
PRINCIPAL
ACCOUNTING
FEES
AND
SERVICES
The
information
required
by
this
Item
14
will
be
included
in
the
2016
Proxy
Statement
under
"Independent
Registered
Public
Accounting
Firm"
and
isincorporated
herein
by
reference.
If
the
2016
Proxy
Statement
is
not
filed
with
the
SEC
within
120
days
after
the
end
of
our
most
recent
fiscal
year,
we
will
providesuch
information
by
means
of
an
amendment
to
this
Annual
Report
on
Form
10-K.115 Table
of
ContentsPART
IV
Item
15.
EXHIBITS,
FINANCIAL
STATEMENT
SCHEDULES
(A)The
following
documents
are
filed
as
part
of
this
Form
10-K:
(1)Financial Statements:
The
Financial
Statements
and
Supplementary
Data
are
included
in
Part
II
Item
8
of
this
report.(2)Financial Statement Schedules:
Schedules
are
omitted
since
the
required
information
is
not
applicable
or
is
not
present
in
amounts
sufficient
to
require
submission
of
the
schedule,
or
becausethe
information
required
is
included
in
the
Financial
Statements
or
Notes
thereto.(3)Exhibits:116
Incorporated
by
Reference
toNo.
Description
Form
and
SEC
File
No.
Exhibit
No.
SEC
Filing
Date
Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
2.1
Agreement
and
Plan
of
Merger,
dated
as
of
October
19,
2007,
by
andamong
AVANT,
Celldex
Merger
Corporation,
and
CelldexTherapeutics,
Inc.
8-K
(000-15006)
2.1
10/22/07
2.2
Agreement
and
Plan
of
Merger,
dated
as
of
May
28,
2009,
by
and
amongCelldex
Therapeutics,
Inc.,
CuraGen
Corporation
and
Cottrell
MergerSub,
Inc.
8-K
(000-15006)
2.1
5/29/09
Articles of Incorporation and By-Laws
3.1
Third
Restated
Certificate
of
Incorporation
S-4
(333-59215)
3.1
7/16/98
3.2
Certificate
of
Amendment
of
Third
Restated
Certificate
of
Incorporation
S-4
(333-59215)
3.1
7/16/98
3.3
Second
Certificate
of
Amendment
of
Third
Restated
Certificate
ofIncorporation
S-4
(333-59215)
3.2
7/16/98
3.4
Third
Certificate
of
Amendment
of
Third
Restated
Certificate
ofIncorporation
10-Q
(000-15006)
3.1
5/10/02
3.5
Fourth
Certificate
of
Amendment
of
Third
Restated
Certificate
ofIncorporation
8-K
(000-15006)
3.1
3/11/08
3.6
Fifth
Certificate
of
Amendment
of
Third
Restated
Certificate
ofIncorporation
8-K
(000-15006)
3.2
3/11/08
3.7
Sixth
Certificate
of
Amendment
of
Third
Restated
Certificate
ofIncorporation
10-Q
(000-15006)
3.7
11/10/08
3.8
Amended
and
Restated
By-Laws,
dated
April
7,
2014
8-K
(000-15006)
3.1
4/8/14
Instruments Defining the Rights of Security Holders
4.1
Specimen
of
Common
Stock
Certificate
10-K
(000-15006)
4.1
2/24/15 Table
of
Contents117
Incorporated
by
Reference
toNo.
Description
Form
and
SEC
File
No.
Exhibit
No.
SEC
Filing
Date
4.2
Certificate
of
Designations,
Preferences
and
Rights
of
a
Series
ofPreferred
Stock
classifying
and
designating
the
Series
C-1
JuniorParticipating
Cumulative
Preferred
Stock
8-A
(000-15006)
3.1
11/8/04
Material Contracts—Leases
10.1
Commercial
Lease
Agreement
of
May
1,
1996
between
the
Company
andFourth
Avenue
Ventures
Limited
Partnership
10-Q/A
(000-15006)
10.11
8/23/96
10.2
Extension
of
Lease
Agreement
of
May
1,
1997
between
the
Company
andDIV
Needham
53
LLC
(successor
in
interest
to
Fourth
Avenue
VenturesLimited
Partnership)
dated
as
of
August
23,
2001
10-K
(000-15006)
10.9
3/27/02
10.3
First
Amendment
to
Lease
by
and
between
the
Company
and
DIVNeedham
115
LLC
(successor
in
interest
to
Fourth
Avenue
VenturesLimited
Partnership)
dated
November
29,
2005
10-K
(000-15006)
10.40
3/16/06
10.4
Second
Amendment
to
Lease
by
and
between
the
Company
and
DIVNeedham
115
LLC
dated
as
of
August
1,
2015
Filed
herewith
*10.5
Lease
Agreement,
by
and
between
the
Company
and
the
MassachusettsDevelopment
Finance
Agency,
dated
as
of
December
22,
2003
10-Q
(000-15006)
10.1
4/30/04
10.6
First
Amendment
to
Lease
between
Massachusetts
Development
FinanceAgency
and
the
Company
dated
March
17,
2005
10-K/A
(000-15006)
10.6
12/23/10
10.7
Second
Amendment
to
Lease
by
and
between
the
Company
and
theMassachusetts
Development
Finance
Agency
dated
as
of
November
4,2005
10-K
(000-15006)
10.41
3/16/06
10.8
Third
Amendment
to
Lease
between
Massachusetts
Development
FinanceAgency
and
the
Company
dated
December
20,
2006
10-K/A
(000-15006)
10.7
12/23/10
10.9
Fifth
Amendment
to
Lease
between
Massachusetts
Development
FinanceAgency
and
the
Company
dated
October
3,
2008
10-K/A
(000-15006)
10.8
12/23/10
10.10
Sixth
Amendment
to
Lease
between
Massachusetts
Development
FinanceAgency
and
the
Company
dated
August
20,
2009
10-K/A
(000-15006)
10.9
12/23/10
10.11
Seventh
Amendment
to
Lease
by
and
between
the
Company
and
theMassachusetts
Development
Finance
Agency
dated
as
of
June
22,
2010
10-Q
(000-15006)
10.1
8/5/10 Table
of
Contents118
Incorporated
by
Reference
toNo.
Description
Form
and
SEC
File
No.
Exhibit
No.
SEC
Filing
Date
10.12
Eighth
Amendment
to
Lease
by
and
between
the
Company
and
theMassachusetts
Development
Finance
Agency
dated
as
of
November
1,2015
Filed
herewith
10.13
Lease
Agreement
dated
as
of
May
1,
2013
by
and
between
CrownPerryville,
LLC
and
the
Company.
10-Q
(000-15006)
10.1
5/03/13
10.14
First
Amendment
to
Lease
between
Company
and
Crown
Perryville,
LLCdated
as
of
June
17,
2015
10-Q
(000-15006)
10.2
8/10/15
Material Contracts—License, Collaboration, Supply and Distribution Agreements
*10.15
License
Agreement
dated
as
of
November
1,
2005
by
and
between
TheRockefeller
University
and
the
Company
S-4
(333-148291)
10.2
1/18/08
*10.16
License
Agreement
dated
September
1,
2006
by
and
between
DukeUniversity
and
the
Company
S-4
(333-148291)
10.3
1/18/08
10.17
Amendment
to
License
Agreement
between
Duke
University
and
theCompany
dated
April
2,
2008
10-K/A
(000-15006)
10.5
12/23/10
*10.18
License
Agreement
between
Duke
University,
The
Johns
HopkinsUniversity
and
the
Company
dated
December
31,
2003
10-K/A
(000-15006)
10.11
12/23/10
*10.19
Amendment
to
License
Agreement
between
Duke
University,
The
JohnsHopkins
University
and
the
Company
dated
April
2,
2008
10-K/A
(000-15006)
10.13
12/23/10
*10.20
Assignment
and
License
Agreement,
as
amended,
dated
April
6,
2004
byand
among
Medarex,
Inc.,
GenPharm
International,
Inc.
and
the
Company
S-4
(333-148291)
10.4
1/18/08
*10.21
Research
and
Commercialization
Agreement,
as
amended,
dated
as
ofApril
6,
2004
by
and
among
Medarex,
Inc.,
GenPharm
International,
Inc.and
the
Company
S-4
(333-148291)
10.5
1/18/08
*10.22
Research
Collaboration
and
Commercialization
Agreement
effectiveOctober
20,
2006
between
the
Company
and
the
Ludwig
Institute
forCancer
Research
10-K
(000-15006)
10.45
3/2/09
*10.23
Exclusive
Patent
and
Know-How
License
Agreement
dated
as
ofNovember
5,
2008
between
the
Company
and
the
University
ofSouthampton
10-K
(000-15006)
10.47
3/2/09
*10.24
License
and
Assignment
Agreement,
between
Amgen
Inc.
and
theCompany
dated
March
16,
2009
10-K/A
(000-15006)
10.1
12/23/10
*10.25
Collaboration
Agreement
dated
June
18,
2004
between
Seattle
Geneticsand
CuraGen
10-K
(000-15006)
10.27
3/12/10 Table
of
Contents119
Incorporated
by
Reference
toNo.
Description
Form
and
SEC
File
No.
Exhibit
No.
SEC
Filing
Date
*10.26
Second
Restated
Collaboration
Agreement
dated
April
12,
2004
andamended
October
19,
2004
between
Abgenix
Inc.
and
CuraGen
10-K
(000-15006)
10.28
3/12/10
10.27
Amgen
Letter
Agreement,
by
and
between
CuraGen
and
AmgenFremont,
Inc.
dated
May
2,
2009
10-K
(000-15006)
10.29
3/12/10
*10.28
Transfer
and
Termination
Agreement,
dated
as
of
April
21,
2008
by
andbetween
TopoTarget
A/S
and
CuraGen
10-K
(000-15006)
10.30
3/12/10
*10.29
License
Agreement
between
Medarex
and
Company
dated
September
17,2010
10-Q/A
(000-15006)
10.3
12/23/10
10.30
Master
Services
Agreement
dated
March
29,
2010
by
and
between
theCompany
and
Prologue
Research
International,
Inc.
(Prologue)
10-Q
(000-15006)
10.2
11/3/11
10.31
Amendment
to
Master
Services
Agreement
dated
July
6,
2011
by
andbetween
the
Company
and
Novella
Clinical
Inc.
(formerly
known
asPrologue)
10-Q
(000-15006)
10.3
11/3/11
10.32
Master
Services
Agreement
dated
May
6,
2013
by
and
between
theCompany
and
PPD
Development,
LLC
10-Q
(000-15006)
10.3
8/6/13
*10.33
Third
Amended
and
Restated
Supply
Agreement
dated
October
15,
2014between
the
Company
and
Biosyn
Corporation
10-Q
(000-15006)
10.1
11/5/14
10.34
Subscription
Agreement
dated
as
of
October
15,
2014
by
and
between
theCompany
and
Biosyn
Corporation
8-K
(000-15006)
10.1
10/20/14
Material Contracts—Stock Purchase, Financing and Credit Agreements
10.35
Sales
Agreement,
dated
January
6,
2011,
between
CelldexTherapeutics,
Inc.
and
Cantor
Fitzgerald
&
Co.
8-K
(000-15006)
10.1.3
1/6/11
10.36
Amendment
No.
1
to
Sales
Agreement,
dated
January
6,
2011,
betweenCelldex
Therapeutics,
Inc.
and
Cantor
Fitzgerald
&
Co.,
datedSeptember
20,
2012
8-K
(000-15006)
10.1
9/24/12
Material Contracts—Management Contracts and Compensatory Plans
†10.37
2008
Stock
Option
and
Incentive
Plan,
as
amended
and
restated
8-K
(000-15006)
10.1
6/11/15
†10.38
2004
Employee
Stock
Purchase
Plan,
as
amended
and
restated
8-K
(000-15006)
10.1
6/13/13
†10.39
Employment
Agreement,
dated
as
of
January
1,
2013,
by
and
between
theCompany
and
Anthony
S.
Marucci
8-K
(000-15006)
10.1
12/21/12
†10.40
Employment
Agreement,
dated
as
of
January
1,
2013,
by
and
between
theCompany
and
Avery
W.
Catlin
8-K
(000-15006)
10.2
12/21/12 Table
of
Contents120
Incorporated
by
Reference
toNo.
Description
Form
and
SEC
File
No.
Exhibit
No.
SEC
Filing
Date
†10.41
Employment
Agreement,
dated
as
of
January
1,
2013,
by
and
between
theCompany
and
Thomas
Davis,
MD
8-K
(000-15006)
10.3
12/21/12
†10.42
Employment
Agreement,
dated
as
of
January
1,
2013,
by
and
between
theCompany
and
Tibor
Keler,
Ph.D.
8-K
(000-15006)
10.4
12/21/12
†10.43
Employment
Agreement,
dated
as
of
January
1,
2013,
by
and
between
theCompany
and
Ronald
A.
Pepin,
Ph.D.
8-K
(000-15006)
10.5
12/21/12
†10.44
Employment
Agreement,
dated
as
of
July
1,
2015,
by
and
between
theCompany
and
Richard
Wright,
Ph.D.
10-Q
(000-15006)
10.3
8/10/15
†10.45
Form
of
Stock
Option
Agreement
8-K
(000-15006)
10.1
1/25/10
†10.46
Form
of
Restricted
Stock
Award
10-K
(000-15006)
10.42
3/12/10
21.1
Subsidiaries
of
Celldex
Therapeutics,
Inc.
Filed
herewith
23.1
Consent
of
PricewaterhouseCoopers
LLP,
an
Independent
RegisteredPublic
Accounting
Firm
Filed
herewith
31.1
Certification
of
President
and
Chief
Executive
Officer
Filed
herewith
31.2
Certification
of
Senior
Vice
President
and
Chief
Financial
Officer
Filed
herewith
32
Section
1350
Certifications
Furnished
herewith
101
XBRL
Instance
Document
Filed
herewith
101
XBRL
Taxonomy
Extension
Schema
Document
Filed
herewith
101
XBRL
Taxonomy
Extension
Calculation
Linkbase
Document
Filed
herewith
101
XBRL
Taxonomy
Extension
Definition
Linkbase
Document
Filed
herewith
101
XBRL
Taxonomy
Extension
Label
Linkbase
Document
Filed
herewith
101
XBRL
Taxonomy
Extension
Presentation
Linkbase
Document
Filed
herewith
*Confidential
treatment
has
been
requested
for
certain
provisions
of
this
Exhibit
pursuant
to
Rule
24b-2
promulgated
under
the
SecuritiesExchange
Act
of
1934,
as
amended.
†Indicates
a
management
contract
or
compensation
plan,
contract
or
arrangement. Table
of
ContentsSIGNATURES
Pursuant
to
the
requirements
of
Section
13
or
15(d)
of
the
Securities
Exchange
Act
of
1934,
the
registrant
has
duly
caused
this
report
to
be
signed
on
its
behalfby
the
undersigned,
thereunto
duly
authorized.
Pursuant
to
the
requirements
of
the
Securities
Exchange
Act
of
1934,
this
report
has
been
signed
by
the
following
persons
on
behalf
of
the
registrant
and
in
thecapacities
and
on
the
dates
indicated.121
CELLDEX
THERAPEUTICS,
INC.
By:
/s/
ANTHONY
S.
MARUCCI
Date
Anthony
S.
MarucciFebruary
25,
2016
President and Chief Executive OfficerSignature
Title
Date
/s/
ANTHONY
S.
MARUCCI
Anthony
S.
Marucci
President,
Chief
Executive
Officer,
and
Director
(Principal
Executive
Officer)
February
25,
2016/s/
AVERY
W.
CATLIN
Avery
W.
Catlin
Senior
Vice
President,
Chief
Financial
Officer
and
Treasurer
(Principal
Financial
and
Accounting
Officer)
February
25,
2016/s/
LARRY
ELLBERGER
Larry
Ellberger
Director,
Chairman
of
the
Board
of
Directors
February
25,
2016/s/
HERBERT
J.
CONRAD
Herbert
J.
Conrad
Director
February
25,
2016/s/
GEORGE
O.
ELSTON
George
O.
Elston
Director
February
25,
2016/s/
HARRY
H.
PENNER,
JR.
Harry
H.
Penner,
Jr.
Director
February
25,
2016/s/
KAREN
L.
SHOOS
Karen
L.
Shoos
Director
February
25,
2016/s/
RICHARD
A.
VAN
DEN
BROEK
Richard
A.
van
den
Broek
Director
February
25,
2016 Exhibit
10.4
SECOND
AMENDMENT
TO
LEASE
This
Second
Amendment
to
Lease
(this
“
Amendment
”)
is
dated
as
of
August
1,
2015,
by
and
between
DIV
NEEDHAM
115
LLC,
a
Massachusettslimited
liability
company
(successor-in-interest
to
Fourth
Avenue
Ventures
Limited
Partnership),
as
landlord
(“
Landlord
”),
and
CELLDEXTHERAPEUTICS,
INC.,
a
Delaware
corporation
(successor-by
name-change
to
T
Cell
Sciences,
Inc.
and
Avant
Immunotherapeutics,
Inc.),
as
tenant
(“
Tenant
”),with
respect
to
that
certain
Lease
dated
as
of
May
1,
1996
(the
“
1996
Lease
”),
as
amended
by
that
certain
First
Amendment
to
Lease
dated
as
of
November
29,2005
(the
“
First
Amendment
”;
the
1996
Lease
as
amended
by
the
First
Amendment
is
referred
to
herein
as
the
“
Original
Lease
”,
and
the
Original
Lease
asamended
hereby
is
referred
to
herein
as
the
“
Lease
”),
by
and
between
Landlord
and
Tenant,
regarding
certain
premises
(the
“
Existing
Premises
”)
constitutingapproximately
35,189
rentable
square
feet
on
the
first
(1
)
floor
of
the
building
located
at
115-119
Fourth
Avenue,
Needham,
Massachusetts
(the
“
Building
”),
asmore
particularly
described
in
the
Lease.
WHEREAS,
Landlord
and
Tenant
desire
to
enter
into
this
Amendment
to
modify
certain
terms
and
conditions
of
the
Lease,
as
more
particularly
set
forthherein.
NOW,
THEREFORE,
for
One
Dollar
($1.00)
and
other
good
and
valuable
consideration,
and
in
consideration
of
the
mutual
covenants
and
agreements
setforth
herein,
the
receipt
and
sufficiency
of
which
are
hereby
acknowledged,
Landlord
and
Tenant
hereby
agree
that:
A.
Defined
Terms
.
Unless
otherwise
defined
herein,
all
capitalized
terms
used
in
this
Amendment
shall
have
the
meanings
ascribed
to
them
in
theOriginal
Lease.
B.
Lease
Amendments
.
The
Original
Lease
is
hereby
amended
as
follows:
1.
Term
.
Landlord
and
Tenant
acknowledge
and
agree
that
the
Lease
Term
commenced
on
May
1,
1996
and
is
scheduled
to
expire
onApril
30,
2017.
Landlord
and
Tenant
hereby
extend
the
Lease
Term
for
the
period
commencing
on
May
1,
2017
and
expiring
on
July
31,
2020(the
“
Additional
Term
”),
unless
further
extended
or
earlier
terminated
in
accordance
with
the
provisions
of
the
Lease.
2.
Expansion
Premises
.
Landlord
desires
to
lease
to
Tenant,
and
Tenant
desires
to
lease
from
Landlord,
certain
space
currently
leased
toPartners
Community
Healthcare,
Inc.
(“
Partners
”),
such
space
consisting
of
approximately
11,540
rentable
square
feet
on
the
first
(1
)
floorof
the
Building
as
more
particularly
described
on
Exhibit
A
attached
hereto
(the
“
Expansion
Premises
”).
Tenant
acknowledges
that
Partners,under
its
lease,
has
the
right
to
occupy
the
Expansion
Premises
through
and
including
November
30,
2017,
with
an
option
to
extend
its
lease
termthrough
and
including
November
30,
2022.
Effective
as
of
the
date
on
which
Landlord
delivers
the
Expansion
Premises
to
Tenant
in
thecondition
required
by
Section
3
of
this
Amendment
(the
“
Expansion
Premises
Commencement
Date
”),
and
continuing
for
the
duration
of
theLease
Term
(as
extended
by
the
Additional
Term),
the
Expansion
Premises
1st
st
shall
be
added
to
the
“Premises”
demised
under
the
Lease.
Landlord
shall
use
commercially
reasonable
efforts
to
provide
written
notice
toTenant
at
least
ninety
(90)
days
prior
to
the
date
which
Landlord
reasonably
anticipates
to
be
the
Expansion
Premises
Commencement
Date,
itbeing
acknowledged
that
Landlord
estimates
that
the
Expansion
Premises
Commencement
Date
will
occur
approximately
fifteen
(15)
days
afterthe
date
on
which
Partners
vacates
the
Expansion
Premises
and
delivers
the
Expansion
Premises
to
Landlord.
As
of
the
Expansion
PremisesCommencement
Date,
(i)
the
“Premises”
shall
be
deemed
to
include
both
the
Existing
Premises
and
the
Expansion
Premises,
(ii)
the
rentable
areaof
the
Premises
shall
be
deemed
to
equal
46,729
rentable
square
feet,
and
(iii)
Tenant’s
Proportionate
Fraction
shall
be
increased
from
44.78%
to59.47%.
Except
as
expressly
provided
herein,
all
terms
and
provisions
of
the
Original
Lease
shall
be
applicable
to
Tenant’s
leasing
of
theExpansion
Premises.
3.
Delivery
Condition
of
Expansion
Premises
.
Landlord
shall
deliver
the
Expansion
Premises
in
its
“as
is”
condition
as
of
the
ExpansionPremises
Commencement
Date,
without
any
obligation
on
the
part
of
Landlord
to
perform
any
construction
therein
or
to
prepare
the
same
forTenant’s
occupancy;
provided,
however,
that
Landlord
agrees
(i)
to
deliver
in
good
working
order
those
base
building
systems
which
exclusivelyserve
the
Expansion
Premises,
and
(ii)
to
deliver
the
Expansion
Premises
in
compliance
with
applicable
law
(except
Landlord
shall
have
noobligation
to
perform
upgrades
to
bring
ADA-noncompliant
bathrooms
into
compliance).
4.
Delivery
Condition
of
Existing
Premises
.
Tenant
shall
continue
in
possession
of
the
Existing
Premises
in
its
“as
is”
condition
as
of
thedate
of
this
Amendment,
without
any
obligation
on
the
part
of
Landlord
to
perform
any
construction
therein
or
to
prepare
the
same
for
Tenant’soccupancy.
5.
Second
Amendment
Allowance
.
(i)
Subject
to
the
terms
of
this
Amendment,
Tenant
shall
be
entitled
to
receive
from
Landlord
an
allowance
(the
“
Second
AmendmentAllowance
”)
up
to
and
not
to
exceed
$321,617.50
(i.e.,
calculated
at
the
rate
of
$7.50
per
rentable
square
foot
of
the
Existing
Premises,plus
$5.00
per
rentable
square
foot
of
the
Expansion
Premises)
for
tenant
improvements
within,
at
Tenant’s
sole
election,
either
theExisting
Premises
or
the
Expansion
Premises
(the
“
Second
Amendment
Improvements
”).
Upon
the
request
of
Tenant,
Landlordshall
provide
Tenant
with
one
(1)
initial
fit
plan
as
well
as
one
(1)
revision
to
the
initial
fit
plan,
all
at
Landlord’s
sole
cost
and
withoutresort
to
the
Second
Amendment
Allowance;
provided,
however,
that
as
of
December
31,
2015,
Landlord
shall
have
no
furtherobligation
to
provide
the
initial
fit
plan
or
to
make
any
revisions
thereto.
The
Second
Amendment
Allowance
shall
be
used
tocontribute
toward
the
payment
of
documented,
out-of-pocket,
so-called
“hard”
construction
costs
incurred
by
Tenant
in
constructing
theSecond
Amendment
2
Improvements
(the
“
Second
Amendment
Work
Cost
”)
consistent
with
the
plans,
drawings
and
specifications
(“
SecondAmendment
Plans
”)
which
have
been
reviewed
and
approved
by
Landlord
(such
approval
not
to
be
unreasonably
withheld
or
delayed)prior
to
the
commencement
of
such
Second
Amendment
Improvements.
Notwithstanding
the
foregoing,
no
more
than
ten
percent(10%)
of
the
Second
Amendment
Allowance
(i.e.,
$32,161.75)
shall
be
eligible
for
application
to
so-called
“soft
costs”
incurred
byTenant
in
designing
and
constructing
the
Second
Amendment
Improvements.
Tenant
shall
provide
Landlord
with
information
asreasonably
requested
by
Landlord
to
substantiate
the
complete
Second
Amendment
Work
Cost
following
acceptance
of
any
bids
for
theSecond
Amendment
Improvements
in
accordance
with
the
Second
Amendment
Plans.
At
the
expiration
or
earlier
termination
of
theLease
Term,
Tenant
shall,
at
Tenant’s
sole
cost
and
expense,
remove
and
restore
(a)
any
components
of
the
Second
AmendmentImprovements
for
which
Landlord
requires
restoration
in
writing
at
the
time
of
Landlord’s
approval
of
the
Second
Amendment
Plans,and
(b)
any
specialty
alterations
not
typically
performed
under
tenancies
having
general
office
use,
as
determined
by
Landlord
in
itsreasonable
discretion.
(ii)
Tenant
shall
notify
Landlord
of
the
parties
which
Tenant
intends
to
use
as
architect,
engineer
and
contractor
for
the
SecondAmendment
Improvements,
and
such
consultants
shall
be
subject
to
Landlord’s
prior
written
consent
(not
to
be
unreasonably
withheld,conditioned
or
delayed).
(iii)
Tenant
shall
obtain
and
furnish
to
Landlord
true
and
complete
copies
of
all
necessary
governmental
permits
and
certificates
as
may
berequired
(a)
for
the
commencement
and
prosecution
of
the
Second
Amendment
Improvements
and
(b)
to
evidence
final
approval
thereofupon
completion.
It
shall
be
the
responsibility
of
Tenant:
(i)
to
submit,
at
its
sole
cost
and
expense,
all
Second
Amendment
Plans
to
anygovernmental
authority
requiring
the
same,
and
(ii)
to
secure
and
pay
for
all
permits
or
governmental
approvals
necessary
to
constructthe
Second
Amendment
Improvements
and
to
use
and
occupy
the
Premises
(including,
without
limitation,
any
required
certificate
ofoccupancy).
Landlord
shall
not
charge
Tenant
any
oversight
or
supervisory
fee
with
regard
to
Tenant’s
initial
construction
of
theSecond
Amendment
Improvements.
(iv)
Tenant
shall
construct
the
Second
Amendment
Improvements
in
accordance
with
the
Second
Amendment
Plans,
and
any
materialdeviations
from
the
Second
Amendment
Plans
shall
require
resubmission
to
Landlord,
for
Landlord’s
prior
approval,
of
detailed
plansand
drawings
describing
such
material
deviations.
Tenant
shall
construct
and
complete
the
Second
Amendment
Improvements
in
agood
and
workmanlike
manner,
using
materials
of
first
quality
(using
no
less
than
building
standard
materials
and
finishes)
and
shallcomply
with
the
Landlord’s
3
construction
standards,
all
applicable
requirements
of
insurance
bodies
and
with
the
Second
Amendment
Plans
.
(v)
Tenant
shall
pay
all
debts
incurred
and
shall
satisfy
or
bond
all
liens
of
contractors,
subcontractors,
mechanics,
laborers,
andmaterialmen
in
respect
to
construction,
alteration
and
repair
in
and
on
the
Premises.
If
any
mechanic’s,
laborer’s,
or
materialman’s
lienshall
at
any
time
be
filed
against
the
Building
(or
any
portion
thereof)
by
reason
of
any
act
or
omission
of
Tenant,
Tenant
shall
cause
thesame
to
be
discharged
by
payment,
deposit,
bond
or
order
of
a
court
of
competent
jurisdiction
within
twenty
(20)
days
of
written
noticeof
Landlord.
(vi)
The
Second
Amendment
Allowance
shall
be
payable
by
Landlord
to
Tenant
not
more
than
one
(1)
time
per
month
on
a
progresspayment
basis.
In
connection
with
each
request
for
payment,
Tenant
shall
submit
to
Landlord
a
detailed
requisition
request
satisfactoryto
Landlord
(each,
a
“
Requisition
Request
”).
Each
disbursement
to
Tenant
shall
be
made
within
thirty
(30)
days
after
Tenant
hasdelivered
to
Landlord
evidence
of
the
completion
of
the
Second
Amendment
Improvements
(or
any
portion
thereof)
pursuant
to
theSecond
Amendment
Plans
and
a
complete
Requisition
Request
and
shall
be
in
an
amount
equal
to
the
substantiated
amount
of
theexpense
paid
or
incurred
by
Tenant
with
respect
to
the
Second
Amendment
Work
Cost.
Landlord
shall
not
be
obligated
to
pay
anyportion
of
the
Second
Amendment
Allowance
during
such
time
that
Tenant
is
in
default
of
any
of
its
obligations
under
the
Lease.
In
noevent
shall
Landlord
be
responsible
for
any
sums
in
excess
of
the
Second
Amendment
Allowance,
and
as
a
result,
after
Landlord
hasdisbursed
the
full
amount
of
the
Second
Amendment
Allowance,
Tenant
shall
be
financially
responsible
for
all
remaining
constructionexpenses
for
its
Second
Amendment
Improvements.
Each
Requisition
Request
shall
be
accompanied
by
(a)
reasonably
detailedinvoices
and
billing
statements
evidencing
the
completion
of
the
work
that
is
the
subject
of
such
Requisition
Request,
(b)
sworn
tenant’sand
contractor’s
statements
in
customary
form
in
use
by
Chicago
Title
Insurance
Company
reflecting
(i)
the
total
cost
of
the
SecondAmendment
Improvements,
provided,
however,
that
line
items
for
work
or
materials
not
yet
bid
or
let
(e.g.,
furniture)
shall
reflect
aprojected
amount
and
clearly
reflect
such
line
items
as
not
yet
let;
(ii)
the
progress
payments
funded
to
date;
(iii)
the
amount
to
befunded
for
the
draw
being
requested;
and
(iv)
the
balance
to
be
disbursed,
(c)
such
contractor’s
affidavits
and
partial
or
final
lienwaivers
as
Landlord
shall
require;
(d)
with
respect
to
the
final
draw
request,
a
certificate
from
Tenant’s
architect
stating
that
the
SecondAmendment
Work
has
been
completed
in
accordance
with
the
Second
Amendment
Plans
and
applicable
zoning,
building,environmental
and
other
laws
and
final
lien
waivers,
and
(e)
any
other
commercially
reasonable
documentation
that
may
be
requestedby
Landlord.
Tenant
4
shall
submit
all
Requisition
Requests
no
sooner
than
the
Expansion
Premises
Commencement
Date
and
no
later
than
the
day
that
is
six(6)
months
following
the
Expansion
Premises
Commencement
Date,
unless
delayed
by
Acts
of
God
(as
defined
in
Section
14.5
of
the1996
Lease),
and
Landlord
shall
have
no
obligation
to
pay
any
monies
with
respect
to
the
Second
Amendment
Improvements
outside
ofsuch
period.
(vii)
Tenant
no
longer
shall
have
the
right
to
seek
reimbursement
from
Landlord
for
Qualified
Tenant
Improvements.
Accordingly,Section
15.3
of
the
1996
Lease
is
hereby
made
void
and
shall
be
of
no
further
force
and
effect.
6.
Annual
Fixed
Rent
.
(i)
Effective
as
of
August
1,
2015,
notwithstanding
the
Annual
Fixed
Rent
chart
set
forth
in
Section
5(a)
of
the
First
Amendment,
AnnualFixed
Rent
for
the
Existing
Premises
shall
be
payable
in
the
manner
set
forth
in
Section
4
of
the
1996
Lease,
at
the
rates
set
forth
below.
Period
Annual
Fixed
Rent
Monthly
Installment
August
1,
2015
–
July
31,
2016
$1,073,264.50
$89,438.71
August
1,
2016
–
July
31,
2017
$1,102,823.26
$91,901.94
August
1,
2017
–
July
31,
2018
$1,133,085.80
$94,423.82
August
1,
2018
–
July
31,
2019
$1,164,404.01
$97,033.67
August
1,
2019
–
July
31,
2020
$1,196,426.00
$99,702.17
(ii)
Effective
as
of
the
Expansion
Premises
Commencement
Date,
Annual
Fixed
Rent
for
the
Expansion
Premises
shall
be
payable
in
themanner
set
forth
in
Section
4
of
the
1996
Lease,
at
the
rates
set
forth
below.
For
the
avoidance
of
doubt,
Landlord
and
Tenantacknowledge
and
agree
that
Tenant
shall
owe
no
Annual
Fixed
Rent
in
respect
of
the
Expansion
Premises
for
the
period
prior
to
theExpansion
Premises
Commencement
Date.
Period*
Annual
Fixed
Rent
Monthly
Installment
August
1,
2015
–
July
31,
2016
$351,970.00
$29,330.83
August
1,
2016
–
July
31,
2017
$361,663.60
$30,138.63
August
1,
2017
–
July
31,
2018
$371,588.00
$30,965.67
August
1,
2018
–
July
31,
2019
$381,858.60
$31,821.55
August
1,
2019
–
July
31,
2020
$392,360.00
$32,696.67
5
*
Notwithstanding
the
foregoing,
provided
that
no
default
has
occurred
beyond
applicable
notice
and
cure
periods
under
the
Lease,Tenant
shall
not
be
obligated
to
make
payments
of
Annual
Fixed
Rent
in
respect
of
the
Expansion
Premises
for
the
period
commencingon
the
Expansion
Premises
Commencement
Date
and
ending
on
the
earlier
of
(a)
the
day
before
the
Town
of
Needham
issues
atemporary
or
permanent
certificate
of
occupancy
for
the
Expansion
Premises,
and
(b)
the
one
hundred
twentieth
(120
)
day
followingthe
Expansion
Premises
Commencement
Date.
7.
Additional
Rent
.
From
the
date
of
this
Amendment
through
and
including
the
Additional
Term,
Tenant
shall
continue
to
payAdditional
Rent
and
all
other
charges
due
under
the
Lease
in
respect
of
the
Existing
Premises.
From
and
after
the
Expansion
PremisesCommencement
Date,
through
and
including
the
Additional
Term,
Tenant
shall
pay
Additional
Rent
and
all
other
charges
due
under
the
Lease
inrespect
of
the
Existing
Premises.
Landlord
represents
and
warrants
that
the
Expansion
Premises
will
be
submetered
for
electricity
as
of
theExpansion
Premises
Commencement
Date.
8.
Utilities
.
For
the
period
commencing
on
the
date
of
this
Amendment
through
and
including
the
Additional
Term,
Tenant
shallcontinue
to
pay
all
charges
for
Tenant’s
utilities
in
respect
of
the
Existing
Premises
in
accordance
with
Section
7.1
of
the
1996
Lease.
For
theperiod
commencing
on
the
Expansion
Premises
Commencement
Date
through
and
including
the
Additional
Term,
Tenant
shall
pay
all
chargesfor
Tenant’s
utilities
in
respect
of
the
Expansion
Premises
in
accordance
with
Section
7.1
of
the
1996
Lease.
HVAC
shall
be
available
in
theExpansion
Premises
Monday
through
Friday
from
7:30
a.m.
to
6:30
p.m.
and
Saturdays
from
9:00
a.m.
to
3:00
p.m.
9.
HVAC
Maintenance
.
For
the
period
commencing
on
the
date
of
this
Amendment
through
and
including
the
Additional
Term,
Tenantshall
continue
to
be
solely
responsible
for
the
cost
of
maintenance,
replacement
and
repair
of
those
portions
of
the
HVAC
equipment
and
systemssolely
serving
the
Existing
Premises,
all
in
accordance
with
Section
13
of
the
First
Amendment.
Within
the
period
of
sixty
(60)
days
prior
to
theExpansion
Premises
Commencement
Date,
Landlord
shall
cause
the
HVAC
equipment
serving
the
Expansion
Premises
to
be
inspected
by
aproperly
qualified
technical
firm
selected
by
Landlord
in
its
reasonable
discretion,
which
technical
firm
shall
certify
that
such
HVAC
equipmentis
in
good
working
condition.
If
such
HVAC
equipment
is
not
then
in
good
working
condition,
then
Landlord
shall
cause
such
HVAC
equipmentto
be
placed
in
good
working
condition
at
Landlord’s
expense
prior
to
the
Expansion
Premises
Commencement
Date.
For
the
periodcommencing
on
the
Expansion
Premises
Commencement
Date
through
and
including
the
Additional
Term,
Landlord
shall
have
control
of
andshall
maintain,
repair
and
replace
the
HVAC
equipment
and
systems
serving
the
Expansion
Premises,
all
in
accordance
with
Section
13
of
theFirst
Amendment,
it
being
acknowledged
and
agreed
that
the
6th
HVAC
equipment
and
systems
serving
the
Expansion
Premises
are
“Common
HVAC”
under
Section
13
of
the
First
Amendment.
10.
Parking
.
Effective
as
of
the
Expansion
Premises
Commencement
Date,
(i)
thirteen
(13)
of
the
spaces
which
Tenant
is
entitled
to
useunder
Section
1.3
of
the
1996
Lease,
which
thirteen
(13)
parking
spaces
are
shown
on
Exhibit
B
attached
hereto
(the
“
Reserved
Parking
Spaces”),
will
be
designated,
marked
and
identified
by
Landlord
as
being
reserved
for
the
exclusive
use
of
Tenant
and
its
employees
and
invitees,
itbeing
acknowledged,
however,
that
Landlord
shall
be
under
no
obligation
to
enforce
Tenant’s
exclusive
parking
rights,
and
(ii)
Tenant
shall
beentitled
to
use
one
hundred
thirty-seven
(137)
unreserved
parking
spaces
(the
“
Unreserved
Parking
Spaces
”),
subject
to
and
in
accordancewith
Section
1.3
of
the
1996
Lease.
For
the
avoidance
of
doubt,
Landlord
and
Tenant
hereby
acknowledge
and
agree
that
the
UnreservedParking
Spaces
shall
be
allocated
as
follows:
103
unreserved
parking
spaces
on
the
“Building
Parcel”
(as
designated
on
Exhibit
B
)
and
34unreserved
parking
spaces
on
the
“Parking
Parcel”
(as
designated
on
Exhibit
B
).
11.
Extension
Terms
.
Tenant
shall
have
the
right
to
extend
the
Lease
Term
for
two
(2)
periods
of
five
(5)
years
each,
subject
to
and
inaccordance
with
the
terms
and
conditions
of
Section
8
of
the
First
Amendment.
Accordingly,
Section
8
of
the
First
Amendment
is
herebyamended
by
(i)
deleting
the
phrase
“one
extended
term”
and
substituting
therefor
the
phrase
“two
extended
terms
(the
“
Second
Extension
Term”
and
the
“
Third
Extension
Term
”,
respectively)”,
and
(ii)
except
for
the
instance
of
“Second
Extension
Term”
in
the
first
(1
)
sentence
ofsaid
Section
8
(which
is
modified
by
the
foregoing
clause
(i)),
deleting
the
phrase
“Second
Extension
Term”
in
each
instance
and
substitutingtherefor
the
phrase
“Second
Extension
Term
or
Third
Extension
Term,
as
applicable”,
it
being
acknowledged
that
(notwithstanding
the
foregoingdeletion
and
substitution),
during
the
Second
Extension
Term,
Tenant
shall
have
one
(1)
further
option
to
extend
the
Lease
Term
for
the
ThirdExtension
Term.
12.
Insurance
.
Effective
as
of
the
date
of
this
Amendment,
Section
6.1(g)
of
the
First
Amendment
is
hereby
amended
by
deleting
thephrase
“the
Extension
Term”
and
substituting
therefor
the
phrase
“any
extended
term
of
this
Lease”,
it
being
agreed
that
Landlord
shall
have
theright
to
increase
insurance
limits
or
require
additional
types
of
insurance
coverage,
all
as
more
particularly
provided
in
Section
6.1(g)
of
the
FirstAmendment,
effective
as
of
the
first
day
of
the
Additional
Term,
the
Second
Extension
Term,
the
Third
Extension
Term
or
any
other
extendedterm
of
the
Lease.
13.
Exterior
Signage
.
Subject
to
Landlord’s
reasonable
approval
as
to
size,
design,
location
and
method
of
installation,
not
to
beunreasonably
withheld,
delayed
or
conditioned,
and
to
applicable
laws,
Tenant
shall
have
the
right,
prior
to
the
first
anniversary
of
the
ExpansionPremises
Commencement
Date,
to
install
and
thereafter
maintain
one
sign
on
the
exterior
of
the
Building
(the
“
Exterior
7
Building
Signage
”).
Tenant
shall
be
responsible,
at
Tenant’s
expense,
for
obtaining
all
permits
related
to
the
installation
of
Tenant’s
ExteriorBuilding
Signage.
The
provisions
of
this
paragraph
are
personal
to
Celldex
Therapeutics,
Inc.
or
a
successor
entity
under
a
“Merger”
or
as
aresult
of
a
transfer
to
a
parent
or
subsidiary
of
Tenant
for
which
Landlord’s
consent
is
not
required,
all
as
more
particularly
provided
inSection
9.13(a)
of
the
1996
Lease
(as
amended
and
restated
by
Section
9(a)
of
the
First
Amendment)
.
Notwithstanding
anything
herein
to
thecontrary,
if
(i)
Tenant
defaults
beyond
applicable
notice
and
cure
periods
under
the
Lease,
or
(ii)
Tenant
subleases
more
than
forty
percent
(40%)of
the
then
rentable
area
of
the
Premises,
or
(iii)
the
Lease
expires
or
otherwise
terminates,
Tenant’s
right
to
the
Exterior
Building
Signage
shallterminate,
and
Tenant
shall
remove
the
Exterior
Building
Signage
and
repair
any
damage
caused
by
such
removal,
at
Tenant’s
sole
cost,
in
acommercially
reasonable
manner
that
restores
the
portion
of
the
Building
that
was
subject
to
the
Exterior
Building
Signage
to
substantially
thecondition
that
existed
prior
to
the
installation
of
the
Exterior
Building
Signage.
If
Tenant’s
Exterior
Building
Signage
requires
municipal
orother
governmental
approval,
and
such
approval
is
denied,
Landlord
shall
not
be
deemed
to
be
in
default
hereunder
and
the
Lease
shall
continuein
full
force
and
effect,
it
being
agreed,
however,
that
Landlord
shall
use
reasonable
efforts
(at
no
cost
or
legal
obligation
to
Landlord)
tocooperate
with
Tenant
in
obtaining
such
approvals,
including,
without
limitation,
executing
such
documentation
that
is
required
of
Landlord
bysuch
municipal
or
governmental
authority
in
connection
therewith.
If
Tenant
does
not
install
Exterior
Building
Signage
prior
to
the
firstanniversary
of
the
Expansion
Premises
Commencement
Date,
then
Tenant’s
rights
to
install
Exterior
Building
Signage
shall
terminate.
Landlordshall
have
the
right
to
relocate
the
Exterior
Building
Signage
on
a
temporary
basis
in
connection
with
the
maintenance
and
repair
of
the
Building.
14.
Right
of
First
Refusal
.
Commencing
on
the
Expansion
Premises
Commencement
Date,
Tenant
shall
have
a
right
of
first
refusal
oncertain
space
in
the
Building,
as
more
particularly
provided
in
Exhibit
C
attached
hereto.
15.
Roof
Penetrations
.
Subject
to
Landlord’s
approval,
which
shall
not
be
unreasonably
withheld,
conditioned
or
delayed,
Tenant
shallhave
the
right
to
repair
and
service
Tenant’s
existing
HVAC
equipment
on
the
roof
of
the
Building
and
to
replace
such
equipment
in
the
samelocation
and
to
add
new
equipment
that
is
substantially
similar
in
size
and
function,
except
as
provided
in
the
next
succeeding
sentence.
Tenantshall
not
install
any
new
HVAC
equipment
on
the
lower,
front,
roof
of
the
Building
(commonly
called
the
“view
roof”)
or
make
any
newpenetrations
on
that
portion
of
the
roof
of
the
Building
(collectively,
“
New
Lower
Roof
Equipment
and
Penetrations
”)
without
Landlord’sprior
written
consent
to
the
location,
design,
materials
and
installation
method
thereof,
which
consent
Landlord
reserves
the
right
to
withhold
forany
reason
in
Landlord’s
sole
and
absolute
discretion.
In
the
event
that
Landlord
approves
any
roof
penetrations
(whether
New
Lower
RoofPenetration
or
any
others),
(i)
Tenant
shall
be
solely
responsible
for
obtaining
any
and
all
permits
and
approvals
required
in
connection
8st
with
installation
of
such
penetrations
and
the
ongoing
maintenance
thereof,
and
for
any
and
all
costs
in
connection
with
the
permitting,fabrication,
installation
and
maintenance
of
such
penetrations,
(ii)
Tenant
shall
maintain
all
such
penetrations
in
good
condition
at
all
times,
and(iii)
at
the
expiration
or
earlier
termination
of
the
Lease,
Tenant
shall
remove
all
such
penetrations,
repair
all
damage
caused
by
such
removal,and
restore
the
roof
of
the
Building
to
its
condition
immediately
prior
to
installation
of
all
such
penetrations.
16.
Landlord’s
Address
for
Notices
and
Payments
.
Section
1.1
of
the
1996
Lease
is
hereby
amended
by
deleting
the
“Address
ofLandlord”
set
forth
therein
and
substituting
therefor
“c/o
Davis
Management
Company,
LLC,
125
High
Street,
21
Floor,
Boston,Massachusetts
02110”.
C.
Broker
.
Tenant
hereby
represents
and
warrants
that
it
has
not
directly
or
indirectly
dealt
with
any
broker
or
other
party
entitled
to
a
commissionor
fee
by
virtue
of
this
Amendment
other
than
Jones
Lang
LaSalle
and
The
Garibaldi
Group
(collectively,
the
“
Broker
”)
and
agrees
to
indemnify,
defend
and
holdLandlord
harmless
from
any
and
all
loss,
cost,
damage,
claim
or
expense
arising
from
any
claims
for
commissions
or
fees
by
any
third
parties,
other
than
theBroker,
based
on
dealing
with
Tenant
in
connection
with
the
Premises
or
this
Amendment.
D.
Governing
Law/Binding
Effect
.
The
Lease
and
this
Amendment
and
the
rights
and
obligations
of
both
parties
thereunder
and
hereunder
shallbe
governed
by
the
laws
of
the
Commonwealth
of
Massachusetts
and
shall
be
binding
upon
and
inure
to
the
benefit
of
the
Landlord
and
Tenant
and
their
respectivelegal
representatives,
successors
and
assigns.
E.
Entire
Understanding
.
This
Amendment
contains
the
entire
understanding
between
the
Landlord
and
Tenant
and
supersedes
any
priorunderstandings
and
agreements
between
them
respecting
the
subject
matter
of
this
Amendment.
No
modification
of
the
Lease
as
amended
by
this
Amendmentshall
be
valid
or
effective
unless
in
writing
and
signed
by
the
party
against
whom
the
modification
is
to
be
enforced.
F.
General
Provisions
.
Except
as
specifically
amended
in
this
Amendment,
the
Original
Lease
is
and
shall
remain
in
full
force
and
effect
and
hasnot
been
amended,
modified,
terminated
or
assigned.
No
portion
of
the
Premises
has
been
assigned,
sublet
or
licensed
for
use
by
any
other
occupant.
In
the
eventthere
is
a
contradiction
between
the
Original
Lease
and
this
Amendment,
this
Amendment
shall
govern.
Tenant
acknowledges
that
Landlord’s
and
Tenant’s
leasecovenants
are
independent
and
that
Tenant
has
no
claim
of
default,
setoff,
counterclaim
or
defenses
and
no
claim
of
abatement,
reduction,
adjustments,
orconcessions
with
respect
to
rent
and/or
other
charges
under
the
Original
Lease
as
of
the
date
hereof,
and
to
the
extent
any
of
the
same
exist,
they
are
hereby
waivedin
full.
[signatures
on
following
page][remainder
of
this
page
intentionally
left
blank]
9st
EXECUTED
as
a
sealed
instrument
as
of
the
date
first
set
forth
above.
LANDLORD:
DIV
NEEDHAM
115
LLC,
a
Massachusetts
limited
liability
company
By:
Fourth
Avenue
Ventures
Limited
Partnership,
its
manager
By:
Cendav
Investment
Corp.,
its
general
partner
By:/s/
Jonathan
Davis
Name:
Jonathan
Davis
Title:
President
TENANT:
CELLDEX
THERAPEUTICS,
INC.,
a
Delaware
corporation
By:/s/
Avery
W.
Catlin
Name:
Avery
W.
Catlin
Title:
SVP
&
CFO
SECRETARY’S
CERTIFICATE
I,
Anthony
S.
Marucci,
President
&
CEO
of
CELLDEX
THERAPEUTICS,
INC.,
a
Delaware
corporation
(the
“Company”),
hereby
certify
thatby
Board
Meeting
on
September
9,
2015,
approval
was
given
for
the
Company,
as
tenant,
to
enter
into
a
Second
Amendment
to
Lease
with
DIV
NEEDHAM
115LLC,
as
landlord,
with
respect
to
the
Company’s
lease
in
the
building
located
at,
known
as
and
numbered
115-119
Fourth
Avenue,
Needham,
Massachusetts,
acopy
of
which
Second
Amendment
to
Lease
is
attached
hereto
and
made
a
part
hereof.
I
further
certify
that
Avery
W.
Catlin,
as
SVP
&
CFO
of
the
Company
has
authority
to
execute
and
deliver
to
the
landlord
said
Second
Amendment
toLease
on
behalf
of
the
Corporation.
Witness
my
hand
and
seal
of
the
Corporation
this
30th
day
of
October,
2015.
/s/
Anthony
S.
MarucciName:
Anthony
S.
MarucciTitle:
President
&
CFO
EXHIBIT
A
Expansion
Premises
EXHIBIT
B
Parking
Spaces
EXHIBIT
C
Right
of
First
Refusal
Tenant
shall
have
an
ongoing
right
of
first
refusal
(the
“
Right
of
First
Refusal
”)
to
lease
certain
ROFR
Space
(hereinafter
defined),
subject
to
the
termsand
conditions
of
this
Exhibit
C
and
the
existing
rights
of
any
other
tenants
leasing
space
at
the
Building
as
of
the
date
of
this
Amendment.
1.
Notice
Of
Availability
.
Commencing
on
the
Expansion
Premises
Commencement
Date
and
continuing
until
July
31,
2018
(the
“
ROFR
Period”),
at
such
time
as
Landlord
shall
receive
a
bona
fide
written
offer
which
Landlord
is
prepared
to
accept
(a
“
Bona
Fide
Offer
”)
from
a
prospective
third-partytenant
to
lease
any
space
in
the
Building
which
is
contiguous
to
the
then
Premises
(such
space,
the
“
ROFR
Space
”),
Landlord
shall
give
Tenant
written
noticethereof
(the
“
ROFR
Notice
”).
The
ROFR
Notice
shall
set
out
the
terms
and
conditions
of
the
Bona
Fide
Offer
in
respect
of
the
ROFR
Space.
Tenant
shall
haveno
Right
of
First
Refusal
during
the
Second
Extension
Term
or
the
Third
Extension
Term,
neither
of
which
Extension
Term
shall
constitute
a
portion
of
the
ROFRPeriod.
2.
Conditions
to
Exercise
.
In
addition
to
any
other
terms
or
conditions
set
forth
herein,
Tenant’s
exercise
of
its
Right
of
First
Refusal
isconditioned
upon
Tenant’s
compliance
with
the
following
requirements:
(a)
Tenant
delivers
to
Landlord
written
notice
exercising
its
right
to
lease
the
ROFR
Space
on
the
terms
of
the
Bona
Fide
Offer
within
five(5)
days
after
Tenant’s
receipt
of
the
ROFR
Notice,
it
being
agreed
and
acknowledged
by
the
parties
hereto
that
in
the
event
of
any
failure
by
Tenant
to
timelyexercise
its
right
to
lease
the
ROFR
Space,
Landlord
shall
have
a
period
of
twelve
(12)
months
after
delivery
of
the
ROFR
Notice
within
which
to
fully
execute
anddeliver
a
lease
with
the
tenant
which
submitted
the
Bona
Fide
Offer
on
substantially
the
terms
and
conditions
set
forth
in
the
Bona
Fide
Offer,
failing
which
theRight
of
First
Refusal
shall
renew
and
Landlord
shall
again
notify
Tenant
of
any
Bona
Fide
Offer
received
during
the
ROFR
Period.
(b)
Tenant
is
not
in
default
under
the
Lease
beyond
all
applicable
notice
and
cure
periods
at
the
time
Landlord
gives
the
ROFR
Notice
andat
the
commencement
of
the
lease
of
ROFR
Space
by
Tenant;
and
(c)
Tenant
must
lease
all
of
the
ROFR
Space
on
the
terms
and
conditions
of
the
Bona
Fide
Offer
(d)
On
the
date
of
the
Bona
Fide
Offer,
Celldex
Therapeutics,
Inc.
must
be
occupying
one
hundred
percent
(100%)
of
the
then
Premisesdemised
under
the
Lease,
without
any
portion
of
the
then
Premises
subject
to
a
sublease
or
other
occupancy
agreement.
3.
Terms
.
The
following
terms
shall
apply
to
and
govern
the
lease
of
the
ROFR
Space:
(a)
For
any
Bona
Fide
Offer
received
during
the
period
of
twenty-four
(24)
months
immediately
following
the
Expansion
PremisesCommencement
Date,
Annual
Fixed
Rent,
tenant
improvement
allowance
and
tenant
inducements
shall
be
equitably
and
proportionately
adjusted
to
be
consistentwith
the
terms
of
this
Amendment
(it
being
agreed
that,
for
purposes
of
such
equable
and
proportionate
adjustment,
the
applicable
tenant
improvement
allowanceshall
be
$5.00
per
rentable
square
foot
of
the
ROFR
Space,
consistent
with
the
portion
of
the
Second
Amendment
Allowance
granted
by
Landlord
in
respect
of
theExpansion
Premises),
and
the
term
of
Tenant’s
tenancy
of
the
ROFR
Space
shall
begin
on
the
date
proposed
for
occupancy
in
the
Bona
Fide
Offer
and
shall
expirecoterminous
with
the
expiration
or
earlier
termination
of
the
Lease
Term.
(b)
For
any
Bona
Fide
Offer
received
after
the
period
of
twenty-four
(24)
months
immediately
following
the
Expansion
PremisesCommencement
Date,
Annual
Fixed
Rent,
tenant
improvement
allowance,
tenant
inducements,
and
term
commencement
and
expiration
shall
be
as
set
forth
in
theBona
Fide
Offer.
(c)
The
other
terms
and
conditions,
including,
without
limitation,
the
payment
by
Tenant
of
Additional
Rent
and
other
charges,
shall
be
thesame
as
set
forth
in
the
Lease
with
respect
to
the
balance
of
the
Premises.
4.
Documentation
.
Within
fifteen
(15)
days
after
receipt
from
Landlord,
Tenant
shall
execute
and
deliver
to
Landlord
those
instruments
Landlordreasonably
requests
to
evidence
any
lease
of
ROFR
Space
under
this
Exhibit
C
.
5.
Termination
.
Notwithstanding
anything
to
the
contrary
contained
herein,
any
assignment
or
subletting
by
Tenant
pursuant
to
the
provisions
ofthe
Lease
shall
terminate
the
Right
of
First
Refusal
and
the
same
shall
be
null
and
void
and
without
recourse
to
either
party
hereto.
In
addition,
the
Right
of
FirstRefusal
granted
hereby
shall
expire
by
its
own
terms
at
such
time
as
less
than
twenty-four
(24)
months
remain
in
the
Additional
Term
from
the
date
on
which
theterm
of
Tenant’s
tenancy
of
the
ROFR
Space
would
have
commenced
in
accordance
with
the
provisions
of
this
Exhibit
C
.
Exhibit
10.12
EIGHTH
AMENDMENT
TO
LEASE
This
EIGHTH
AMENDMENT
TO
LEASE
(this
“
Amendment
”)
is
made
as
of
the
1st
day
of
November,
2015,
(the
“
Effective
Date
”)
by
and
betweenUNIVERSITY
OF
MASSACHUSETTS
DARTMOUTH
,
an
institution
of
Higher
Education
of
the
Commonwealth
of
Massachusetts,
with
an
address
of
285Old
Westport
Rd.
North
Dartmouth
Massachusetts
02747
(“
Landlord
”)
and
CELLDEX
THERAPEUTICS,
IN
C.
(formerly
AVANTImmunotherapeutics,
Inc.),
a
Delaware
corporation,
with
an
address
of
119
Fourth
Avenue,
Needham,
Massachusetts
(“
Tenant
”).
RECITALS
WHEREAS,
Tenant
and
the
Massachusetts
Development
Finance
Agency
(“
MDFA
”)
entered
into
a
certain
Lease
dated
effective
December
22,
2003
(the
“
Lease
”)
as
amended
by
that
certain
First
Amendment
to
Lease
dated
as
of
March
17,
2005
(the
“
First
Amendment
”),
that
certain
Second
Amendment
toLease
dated
as
of
November
4,
2005
(the
“
Second
Amendment
”),
that
certain
Third
Amendment
To
Lease
dated
as
of
December
20,
2006
(the
“
ThirdAmendment
”),
that
certain
Fourth
Amendment
to
Lease
dated
as
of
July
18,
2008
(the
“
Fourth
Amendment
”),
that
certain
Fifth
Amendment
to
Lease
dated
asof
October
3,
2008
(the
“
Fifth
Amendment
”)
that
certain
Sixth
Amendment
to
Lease
dated
as
of
August
20,
2009
(the
“
Sixth
Amendment
”)
and
by
that
certainSeventh
Amendment
to
Lease
dated
June
22,
2010
(the
“
Seventh
Amendment
”)
of
certain
premises
consisting
of
approximately
23,413
rentable
square
feet
ofspace
(the
“
Premises
”)
in
the
building
(the
“
Building
”)
located
at
151
Martine
Street,
Fall
River,
Massachusetts
(the
“
Property
”)
in
the
South
CoastResearch
&
Technology
Park
(the
“
Park
”);
and
1
WHEREAS,
on
June
24,
2014,
MDFA
conveyed
all
of
its
rights,
title
and
interest
in
the
Building
and
assigned
the
Lease
to
Landlord;
and
WHEREAS,
the
Premises
is
comprised
of:
(i)
the
original
premises
demised
by
the
Lease,
as
amended
through
the
Third
Amendment,
being
11,756rentable
square
feet
on
the
second
(2nd)
floor
of
the
Building,
(ii)
the
Additional
Space
(as
defined
in
the
First
Amendment)
demised
by
the
First
Amendment,being
71
rentable
square
feet
on
the
first
(1st)
floor
of
the
Building,
(iii)
the
Expansion
Premises
(as
defined
in
the
Second
Amendment),
being
2,487
rentablesquare
feet
on
the
second
(2nd)
floor
of
the
Building;
(iv)
the
Second
Expansion
Premises
(as
defined
in
the
Third
Amendment),
being
1,853
rentable
square
feet
onthe
second
(2nd)
floor
of
the
Building;
(v)
the
Substitute
Third
Expansion
Premises
(as
defined
in
the
Fifth
Amendment),
being
4,864
rentable
square
feet
of
spaceon
the
second
floor
of
the
Building
(referred
to
therein
as
the
“Third
Expansion
Premises”);
and
(vi)
the
Fourth
Expansion
Premises
(as
defined
in
the
SixthAmendment),
being
2,382
rentable
square
feet
on
the
second
(2nd)
floor
of
the
Building,
such
that
the
“Premises
Square
Footage”
(as
stated
in
the
SeventhAmendment)
is
defined
to
be
23,413
rentable
square
feet;
and
WHEREAS,
Landlord
and
Tenant
have
agreed
to
enter
into
this
Eighth
Amendment
to
Lease
to
renew
the
term
of
the
Lease
and
to
amended
certainadditional
provisions
to
the
Lease,
NOW,
THEREFORE,
for
good
and
valuable
consideration,
the
receipt
and
sufficiency
of
which
is
hereby
mutually
acknowledged,
Landlord
and
Tenantagree
as
follows:
1.
Capitalized
Terms
.
Unless
otherwise
defined
herein,
all
capitalized
terms
used
in
this
Amendment
shall
have
the
meanings
ascribed
to
them
in
theLease,
and
all
references
in
the
Lease
to
the
“Lease”
or
“this
Lease”
or
“herein”
or
“hereunder”
or
similar
terms
or
to
any
2
Section
thereof
shall,
after
the
Effective
Date,
mean
the
Lease,
or
such
Section
thereof,
as
amended
by
this
Amendment.
2.
Demise
of
Fifth
Expansion
Premises
.
Commencing
on
the
Effective
Date
of
this
Eighth
Amendment
(the
“Fifth
Expansion
Premises
CommencementDate”),
Landlord
does
hereby
lease
to
Tenant
and
Tenant
does
lease
from
Landlord
the
approximately
5,511
rentable
square
feet
on
the
second
(2
)
floor
of
theBuilding,
as
shown
on
the
floor
plan
attached
hereto
as
Exhibit
A-8
(the
“Fifth
Expansion
Premises”)
to
have
and
to
hold
for
the
remainder
of
the
Lease
Term
asset
forth
in
the
Lease.
Space
8
Amendment
(USF)
8
Amendment
(RSF)
(RSF
=
USF
x
1.20)
Suite
217
1,567
1,880
Suite
220
1,959
2,351
Hallway
1,280
1,280
Total
4,806
5,511
Except
as
otherwise
expressly
provided
herein,
Tenant’s
lease
of
the
Fifth
Expansion
Premises
shall
be
on
all
of
the
terms
and
conditions
of
the
Lease
(including,without
limitation,
extension
rights
of
Tenant
for
Extension
Terms)
and
the
term
of
the
Lease
with
respect
to
the
Fifth
Expansion
Premises
shall
be
coterminouswith
the
Term
(and,
if
exercised,
Extension
Terms)
of
the
Lease
for
the
Existing
Premises.
As
of
the
Fifth
Expansion
Premises
Commencement
Date,
all
referencesin
the
Lease
to
(i)
the
“Premises”
and/or
premises
demised
by
the
Lease
shall
mean
the
Existing
Premises
and
the
Fifth
Expansion
Premises
collectively
as
shownon
Exhibit
A
to
the
Lease,
Exhibit
A-1
,
attached
to
the
First
Amendment,
Exhibit
A-2
,
attached
to
the
Second
3nd
th
th
Amendment,
Exhibit
A-3
,
attached
to
the
Third
Amendment,
and
on
Exhibit
A-5
,
attached
to
the
Fifth
Amendment,
Exhibit
A-6
,
attached
to
the
SixthAmendment,
Exhibit
A-7
,
attached
to
the
Seventh
Amendment,
and
Exhibit
A-8
attached
to
this
Amendment;
(ii)
the
“Tenant’s
Proportionate
Fraction”
shall
mean50.20%
which
is
calculated
by
adding
the
Premises
Square
Footage
as
set
forth
in
the
Seventh
Amendment
and
the
Fifth
Expansion
Premises
and
dividing
theBuilding’s
rentable
square
foot
into
that
sum;
and
(iii)
the
“Premises
Square
Footage”
shall
mean
28,924
rentable
square
feet.
3.
Section
2.2
.
Term
.
Section
2.2
of
the
Lease
shall
be
amended
as
of
October
1,
2015
to
read
as
follows:
“Section
2.2
.
Term
.
TO
HAVE
AND
TO
HOLD
for
a
term
(the
“Term”)
beginning
on
the
Term
Commencement
Date
which
shall
beNovember
1,
2015
and
expiring
on
July
31,
2020
(the
“Term
Expiration
Date”),
unless
earlier
terminated
as
provided
for
in
Section
2.4.”
4.
Section
2.3
.
Renewal
Term
.
Section
2.3
of
the
Lease
is
hereby
deleted
in
its
entirety
and
replaced
with
the
following
provision:
“Section
2.3
.
Option
to
Extend
Term
for
Extension
Terms
.
Tenant
shall
have
two
(2)
separate
options
to
extend
the
Lease
Term
for
anadditional
five
(5)
year
period
(i.e.,
for
a
total,
if
both
such
options
are
exercised
as
provided
herein,
of
ten
(10)
successive
years)
beyond
theTerm
or
the
first
Extension
Term,
as
the
case
may
be
(each
five
(5)
year
period
being
referred
to
herein
as
an
“Extension
Term”),
provided(i)
Tenant
shall
give
notice
to
Landlord
of
its
exercise
of
such
option
not
less
than
nine
(9)
months
prior
to
the
expiration
of
the
Term
or
the
firstExtension
Term,
as
the
case
may
be,
and
(ii)
no
default
beyond
any
applicable
grace
period
in
the
obligations
of
Tenant
under
this
Lease
shallexist
at
the
time
each
such
notice
is
given.
All
of
the
terms
and
provisions
of
this
Lease,
as
amended,
shall
be
applicable
to
each
Extension
Termexcept
that
Tenant
shall
have
no
option
to
extend
the
Lease
Term
beyond
the
second
Extension
Term.
Landlord
and
Tenant
must
determine
theAnnual
Fixed
Rental
Rate
for
each
Extension
Term
at
the
time
of
each
such
notice,
using
an
independent
fair
market
rental
value
analysis
forcomparable
buildings
used
for
research
and
development,
of
similar
age,
quality,
size,
construction
and
appearance,
with
similar
services
andamenities,
and
in
comparable
locations
within
Massachusetts,
but
outside
of
the
Greater-Boston
MSA,
4
excluding
therefrom
any
cost
to
renovate
such
space
for
a
tenant’s
occupancy
for
advertising
and
lease
negotiation
costs,
free
rent
or
otherinducements,
and
any
other
items
which
would
normally
be
offered
to
a
new
tenant
but
which
a
continuing
tenant
would
not
seek.
The
cost
of
theindependent
analysis
will
be
shared
equally
between
the
parties.
Notwithstanding
the
provisions
of
Section
10.13
of
the
Lease,
at
the
end
of
theTerm
or
either
Extension
Term,
Tenant
shall
be
entitled
to
hold
over
within
the
Premises
for
up
to
three
(3)
months,
and
the
Annual
Fixed
RentalRate
shall
be
one
hundred
and
twenty-five
(125%)
percent
of
the
Annual
Fixed
Rental
Rate
which
was
payable
during
the
last
month
of
the
Termor
either
Extension
Term,
as
the
case
may
be,
and
one
hundred
and
fifty
(150%)
percent
thereof
for
the
period
beyond
three
(3)
months
and
up
toa
total
of
six
(6)
months.”
5.
Annual
Fixed
Rental
Rate
.
Section
1.1
of
the
Lease
is
amended
by
deleting
the
provisions
regarding
the
“Annual
Fixed
Rental
Rate”
and
inserting,the
following
language:
Annual
Fixed
Rental
Rate:As
of
November
1,
2015
and
through
July
31,
2016:
$17.18
per
rentable
square
foot
per
annum
for
the
Premisesnot
including
the
Fifth
Expansion
Premises
until
such
time
as
the
Fifth
Expansion
Premises
is
suitable
forTenant’s
use,
as
evidenced
by
a
municipal
certificate
of
occupancy
and
Tenant’s
ability
to
use
same
for
theoperation
of
its
business.
As
of
August
1,
2016
and
through
July
31,
2017:
$17.52
per
rentable
square
foot.
As
of
August
1,
2017
and
through
July
31,
2018:
$17.87
per
rentable
square
foot.
As
of
August
1,
2018
and
through
July
31,
2019:
$18.23
per
rentable
square
foot.
As
of
August
1,
2019
and
through
July
31,
2020:
$18.59
per
rentable
square
foot.
6.
Tenant
Improvement
Allowance
.
Section
4
of
the
Lease
is
hereby
amended
by
adding
the
following
new
provision:
“Section
4.4
.
Tenant
Improvement
Allowance
.
If
Tenant
notifies
Landlord
in
writing
of
its
desire
to
accept
same
in
lieu
of
constructionfinancing
from
third
parties,
Landlord
shall
provide
Tenant
with
an
allowance,
subject
to
the
provisions
of
Section
10.4
below,
up
to
theaggregate
amount
of
$55,110.00
or
$10.00
per
rentable
square
foot
5
(“Tenant
Improvement
Allowance”)
which
monies
shall
be
disbursed
to
Tenant
upon
its
written
request
and
all
such
amounts
actually
advancedshall
be
repaid
to
Landlord
together
with
the
Rent
over
the
remaining
Term,
in
equal
monthly
payments,
without
interest.”
7.
Landlord
Work
.
Prior
to
the
commencement
of
work
by
Tenant
in
the
Fifth
Expansion
Premises,
Landlord
shall,
at
Landlord’s
sole
cost
and
expense,deliver
same
to
Tenant
vacant
and
broom
clean,
and
will
all
debris
and
property
removed
therefrom.
Landlord,
in
conjunction
with
its
general
contractor,
shallmake
the
Fifth
Expansion
Premises
available
to
Tenant
at
least
four
(4)
weeks
prior
to
the
anticipated
date
of
its
completion,
for
the
installation
of
Tenant’sfurniture
and
voice/data
systems.
Landlord
shall
also
be
solely
responsible
to
deliver
same
to
Tenant
in
compliance
with
all
fire,
life
safety,
environmental
and
occupational
health
andsafety
laws,
regulations
and
ordinances
(including,
but
not
limited
to,
the
Americans
with
Disabilities
Act).
Landlord
represents
that
the
Fifth
Expansion
Premises,as
well
as
the
Building,
the
Premises
and
the
public
areas
of
the
Building
also
comply
with
such
laws,
regulations
and
ordinances
and,
if
they
do
not,
that
Landlordshall,
at
its
sole
cost
and
expanse,
promptly
cause
same
to
so
comply.
8.
Broker
.
Section
1.1
of
the
Lease
is
hereby
amended
by
amending
the
definition
of
Broker
therein
by
deleting
“Jones
Lange
LaSalle”
and
replacingwith
“The
Garibaldi
Group,
Inc.”,
9.
Section
14.7
.
Brokerage
.
Section
14.7
of
the
Lease
is
hereby
amended
by
adding
the
following
second
paragraph:
“In
lieu
of
a
Landlord
contribution
to
commission
due
to
the
Broker
for
the
extension
of
the
Term,
a
rent
credit
of
Eleven
Thousand
and
TwentyTwo
Dollars
($11,022.00)
shall
be
provided
to
the
Tenant.
Landlord
agrees
to
apply
this
credit
in
two
equal
installments
of
Five
Thousand
FiveHundred
and
Eleven
Dollars
($5,511.00)
each.
The
first
credit
installment
will
be
applied
to
the
first
month’s
rent
due
after
the
full
execution
ofthis
6
Amendment.
The
second
rental
credit
installment
shall
be
applied
to
the
July,
2016
rent
due
from
Tenant.”
10.
Condensation
remediation
.
Landlord
is
presently
treating
the
Building’s
ongoing
condensation
problems
and
agrees
to
continue
to
use
reasonableefforts
in
the
event
that
the
present
work
does
not
cure
the
condensation
issue.
11.
Landlord
Representation
Regarding
Environmental
Hazards
.
To
its
knowledge,
Landlord
represents
that
there
are
no
environmental
hazards
orviolations
of
any
environmental
laws,
regulations
or
ordinances
in
or
around
the
Building
which
violations
might
pose
a
present
danger
to
health,
life
or
safety.
12.
Nondisturbance
of
Tenancy
.
Landlord
represents
that
it
has
no
financing
on
the
Building
whereby
Landlord’s
lender
would
be
entitled
to
disturb
thetenancy
of
Tenant
upon
a
default
therein
by
Landlord.
Landlord
further
represents
that
it
shall
not
enter
into
any
such
financing,
but
rather
shall
negotiate
with
anysuch
lender
so
as
to
permit
Tenant
to
remain
in
possession
of
the
Premises
on
a
direct
rental
relationship
with
such
lender
so
long
as
Tenant
is
not
in
default
of
itsobligations
under
this
Lease.
13.
Restoration
Obligation
.
Tenant’s
restoration
obligations
as
to
all
but
the
Fifth
Expansion
Premises
(regarding
mechanical
equipment
installed
by
it)are
set
forth
in
the
Lease,
and
Tenant
acknowledges
those
responsibilities.
In
the
case
of
the
Fifth
Expansion
Premises,
Tenant
intends
to
migrate
the
controls
forLandlord’s
existing
HVAC
equipment
to
Tenant’s
management
system
during
the
Term.
Upon
Tenant’s
vacation
of
the
Fifth
Expansion
Premises,
Tenant
shallreturn
the
controls
for
Landlord’s
HVAC
to
Landlord’s
management
system
at
Tenant’s
cost,
which
shall
be
Tenant’s
sole
responsibility
regarding
restoration
inthe
Fifth
Expansion
Premises.
7
14.
Ratification
.
Except
as
expressly
modified
by
this
Amendment,
the
Lease
shall
remain
in
full
force
and
effect,
and
as
further
modified
by
thisAmendment,
is
expressly
ratified
and
confirmed
by
the
parties
hereto.
This
Amendment
shall
be
binding
upon
and
inure
to
the
benefit
of
the
parties
hereto
andtheir
respective
successors
and
assigns,
subject
to
the
provisions
of
the
Lease
regarding
assignment
and
subletting.
15.
Governing
Law;
Interpretation;
and
Partial
Invalidity
.
This
Amendment
shall
be
governed
and
construed
in
accordance
with
the
laws
of
theCommonwealth
of
Massachusetts.
If
any
term
of
this
Amendment,
or
the
application
thereof
to
any
person
or
circumstances,
shall
to
any
extent
be
invalid
orunenforceable,
the
remainder
of
this
Amendment,
or
the
application
of
such
term
to
persons
or
circumstances
other
than
those
as
to
which
it
is
invalid
orunenforceable,
shall
not
be
affected
thereby,
and
each
term
of
this
Amendment
shall
be
valid
and
enforceable
to
the
fullest
extent
permitted
by
law.
The
titles
forthe
paragraphs
are
for
convenience
only
and
not
to
be
considered
in
construing
this
Amendment.
This
Amendment
contains
all
of
the
agreements
of
the
partieswith
respect
to
the
subject
matter
hereof,
and
supersedes
all
prior
dealings
between
them
with
respect
to
such
subject
matter.
No
delay
or
omission
on
the
part
ofeither
party
to
this
Amendment
in
requiring
performance
by
the
other
party
or
exercising
any
right
hereunder
shall
operate
as
a
waiver
of
any
provision
hereof
orany
rights
hereunder,
and
no
waiver,
omission
or
delay
in
requiring
performance
or
exercising
any
right
hereunder
on
any
one
occasion
shall
be
construed
as
a
barto
or
waiver
of
such
performance
or
right
on
any
future
occasion.
16.
Counterparts
and
Authority
.
This
Amendment
may
be
executed
in
multiple
counterparts,
each
of
which
shall
be
deemed
an
original
and
all
of
whichtogether
shall
constitute
one
and
the
same
document.
Landlord
and
Tenant
each
warrant
to
the
other
that
the
person
or
8
persons
executing
this
Amendment
on
its
behalf
has
or
have
authority
to
do
so
and
that
such
execution
has
fully
obligated
and
bound
such
party
to
all
terms
andprovisions
of
this
Amendment.
IN
WITNESS
WHEREOF,
the
undersigned
executed
this
Amendment
as
of
the
date
and
year
first
written
above.
LANDLORD:
University
Of
Massachusetts
Dartmouth
By:/s/
Gerald
Kavanaugh
Name:Gerald
Kavanaugh
Title:Chancellor
TENANT:
CELLDEX
THERAPEUTICS,
INC.
By:/s/
Avery
W.
Catlin
Name:Avery
W.
Catlin
Title:Senior
Vice
President
and
CFO
9
QuickLinks
--
Click
here
to
rapidly
navigate
through
this
documentExhibit
21.1
SUBSIDIARIES
OF
CELLDEX
THERAPEUTICS,
INC.
Name
Jurisdiction
of
Organization
Ownership
Percentage
Celldex
Therapeutics
Europe
GmbH
Switzerland
100% QuickLinks
Exhibit
21.1
SUBSIDIARIES
OF
CELLDEX
THERAPEUTICS,
INC.
QuickLinks
--
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here
to
rapidly
navigate
through
this
documentExhibit
23.1
CONSENT
OF
INDEPENDENT
REGISTERED
PUBLIC
ACCOUNTING
FIRM
We
hereby
consent
to
the
incorporation
by
reference
in
the
Registration
Statements
on
Forms
S-8
(Nos.
333-205694,
333-182142,
333-189336,
333-
151728and
333-117602)
and
on
Form
S-3
(No.
333-192640)
of
Celldex
Therapeutics,
Inc.
of
our
report
dated
February
25,
2016
relating
to
the
financial
statements
andthe
effectiveness
of
internal
control
over
financial
reporting,
which
appears
in
this
Form
10-K/A./s/
PricewaterhouseCoopers
LLPBoston,
Massachusetts
February
25,
2016 QuickLinks
Exhibit
23.1
CONSENT
OF
INDEPENDENT
REGISTERED
PUBLIC
ACCOUNTING
FIRM
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--
Click
here
to
rapidly
navigate
through
this
documentExhibit
31.1
CERTIFICATION
I,
Anthony
S.
Marucci,
certify
that:
1.
I
have
reviewed
this
annual
report
on
Form
10-K/A
of
Celldex
Therapeutics,
Inc.;
2.
Based
on
my
knowledge,
this
report
does
not
contain
any
untrue
statement
of
a
material
fact
or
omit
to
state
a
material
fact
necessary
to
make
thestatements
made,
in
light
of
the
circumstances
under
which
such
statements
were
made,
not
misleading
with
respect
to
the
period
covered
by
this
report;
3.
Based
on
my
knowledge,
the
financial
statements,
and
other
financial
information
included
in
this
report,
fairly
present
in
all
material
respects
thefinancial
condition,
results
of
operations
and
cash
flows
of
the
registrant
as
of,
and
for,
the
periods
presented
in
this
report;
4.
The
registrant's
other
certifying
officer
and
I
are
responsible
for
establishing
and
maintaining
disclosure
controls
and
procedures
(as
defined
in
ExchangeAct
Rules
13a-15(e)
and
15d-15(e))
and
internal
control
over
financial
reporting
(as
defined
in
the
Exchange
Act
Rules
13a-15(f)
and
15d-15(f))
for
the
registrantand
have:
(a)
Designed
such
disclosure
controls
and
procedures,
or
caused
such
disclosure
controls
and
procedures
to
be
designed
under
our
supervision,
toensure
that
material
information
relating
to
the
registrant,
including
its
consolidated
subsidiaries,
is
made
known
to
us
by
others
within
those
entities,particularly
during
the
period
in
which
this
report
is
being
prepared;
(b)
Designed
such
internal
control
over
financial
reporting,
or
caused
such
internal
control
over
financial
reporting
to
be
designed
under
oursupervision,
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
and
the
preparation
of
financial
statements
for
external
purposesin
accordance
with
generally
accepted
accounting
principles;
(c)
Evaluated
the
effectiveness
of
the
registrant's
disclosure
controls
and
procedures
and
presented
in
this
report
our
conclusions
about
theeffectiveness
of
the
disclosure
controls
and
procedures,
as
of
the
end
of
the
period
covered
by
this
report
based
on
such
evaluation;
and
(d)
Disclosed
in
this
report
any
change
in
the
registrant's
internal
control
over
financial
reporting
that
occurred
during
the
registrant's
most
recentfiscal
quarter
(the
registrant's
fourth
fiscal
quarter
in
the
case
of
an
annual
report)
that
has
materially
affected,
or
is
reasonably
likely
to
materially
affect,
theregistrant's
internal
control
over
financial
reporting;
and
5.
The
registrant's
other
certifying
officer
and
I
have
disclosed,
based
on
our
most
recent
evaluation
of
internal
control
over
financial
reporting,
to
theregistrant's
auditors
and
the
audit
committee
of
the
registrant's
board
of
directors
(or
persons
performing
the
equivalent
functions):
(a)
All
significant
deficiencies
and
material
weaknesses
in
the
design
or
operation
of
internal
control
over
financial
reporting
which
are
reasonablylikely
to
adversely
affect
the
registrant's
ability
to
record,
process,
summarize
and
report
financial
information;
and
(b)
Any
fraud,
whether
or
not
material,
that
involves
management
or
other
employees
who
have
a
significant
role
in
the
registrant's
internal
controlover
financial
reporting.Date:
February
25,
2016
By:
/s/
ANTHONY
S.
MARUCCI
Name:
Anthony
S.
Marucci
Title:
President and Chief Executive Officer QuickLinks
Exhibit
31.1
CERTIFICATION
QuickLinks
--
Click
here
to
rapidly
navigate
through
this
documentExhibit
31.2
CERTIFICATION
I,
Avery
W.
Catlin,
certify
that:
1.
I
have
reviewed
this
annual
report
on
Form
10-K/A
of
Celldex
Therapeutics,
Inc.;
2.
Based
on
my
knowledge,
this
report
does
not
contain
any
untrue
statement
of
a
material
fact
or
omit
to
state
a
material
fact
necessary
to
make
thestatements
made,
in
light
of
the
circumstances
under
which
such
statements
were
made,
not
misleading
with
respect
to
the
period
covered
by
this
report;
3.
Based
on
my
knowledge,
the
financial
statements,
and
other
financial
information
included
in
this
report,
fairly
present
in
all
material
respects
thefinancial
condition,
results
of
operations
and
cash
flows
of
the
registrant
as
of,
and
for,
the
periods
presented
in
this
report;
4.
The
registrant's
other
certifying
officer
and
I
are
responsible
for
establishing
and
maintaining
disclosure
controls
and
procedures
(as
defined
in
ExchangeAct
Rules
13a-15(e)
and
15d-15(e))
and
internal
control
over
financial
reporting
(as
defined
in
the
Exchange
Act
Rules
13a-15(f)
and
15d-15(f))
for
the
registrantand
have:
(a)
Designed
such
disclosure
controls
and
procedures,
or
caused
such
disclosure
controls
and
procedures
to
be
designed
under
our
supervision,
toensure
that
material
information
relating
to
the
registrant,
including
its
consolidated
subsidiaries,
is
made
known
to
us
by
others
within
those
entities,particularly
during
the
period
in
which
this
report
is
being
prepared;
(b)
Designed
such
internal
control
over
financial
reporting,
or
caused
such
internal
control
over
financial
reporting
to
be
designed
under
oursupervision,
to
provide
reasonable
assurance
regarding
the
reliability
of
financial
reporting
and
the
preparation
of
financial
statements
for
external
purposesin
accordance
with
generally
accepted
accounting
principles;
(c)
Evaluated
the
effectiveness
of
the
registrant's
disclosure
controls
and
procedures
and
presented
in
this
report
our
conclusions
about
theeffectiveness
of
the
disclosure
controls
and
procedures,
as
of
the
end
of
the
period
covered
by
this
report
based
on
such
evaluation;
and
(d)
Disclosed
in
this
report
any
change
in
the
registrant's
internal
control
over
financial
reporting
that
occurred
during
the
registrant's
most
recentfiscal
quarter
(the
registrant's
fourth
fiscal
quarter
in
the
case
of
an
annual
report)
that
has
materially
affected,
or
is
reasonably
likely
to
materially
affect,
theregistrant's
internal
control
over
financial
reporting;
and
5.
The
registrant's
other
certifying
officer
and
I
have
disclosed,
based
on
our
most
recent
evaluation
of
internal
control
over
financial
reporting,
to
theregistrant's
auditors
and
the
audit
committee
of
the
registrant's
board
of
directors
(or
persons
performing
the
equivalent
functions):
(a)
All
significant
deficiencies
and
material
weaknesses
in
the
design
or
operation
of
internal
control
over
financial
reporting
which
are
reasonablylikely
to
adversely
affect
the
registrant's
ability
to
record,
process,
summarize
and
report
financial
information;
and
(b)
Any
fraud,
whether
or
not
material,
that
involves
management
or
other
employees
who
have
a
significant
role
in
the
registrant's
internal
controlover
financial
reporting.Date:
February
25,
2016
By:
/s/
AVERY
W.
CATLIN
Name:
Avery
W.
Catlin
Title:
Senior Vice President and Chief Financial Officer QuickLinks
Exhibit
31.2
CERTIFICATION
QuickLinks
--
Click
here
to
rapidly
navigate
through
this
documentExhibit
32
CERTIFICATION
OF
CHIEF
EXECUTIVE
OFFICER
AND
CHIEF
FINANCIAL
OFFICER
PURSUANT
TO
18
U.S.C.
SECTION
1350,
AS
ADOPTED
PURSUANT
TO
SECTION
906
OF
THE
SARBANES-OXLEY
ACT
OF
2002
Each
of
the
undersigned
hereby
certifies,
pursuant
to
18
U.S.C.
Section
1350,
as
adopted
pursuant
to
Section
906
of
the
Sarbanes-Oxley
Act
of
2002,
in
hiscapacity
as
an
officer
of
Celldex
Therapeutics,
Inc.
(the
"Company"),
that,
to
his
knowledge,
the
Annual
Report
of
the
Company
on
Form
10-K/A
for
the
periodended
December
31,
2015
(the
"Form
10-K/A"),
fully
complies
with
the
requirements
of
Section
13(a)
or
15(d)
of
the
Securities
Exchange
Act
of
1934
(15
U.S.C.§78m
or
78o(d))
and
that
the
information
contained
in
such
report
fairly
presents,
in
all
material
respects,
the
financial
condition
and
results
of
operations
of
theCompany.
This
written
statement
is
being
furnished
to
the
Securities
and
Exchange
Commission
as
an
exhibit
to
the
Form
10-K/A.
A
signed
original
of
thisstatement
has
been
provided
to
the
Company
and
will
be
retained
by
the
Company
and
furnished
to
the
Securities
and
Exchange
Commission
or
its
staff
uponrequest.
This
certification
shall
be
not
be
deemed
"filed"
for
any
purpose,
nor
shall
it
be
deemed
to
be
incorporated
by
reference
into
any
filing
under
the
Securities
Actof
1933
or
the
Exchange
Act.Date:
February
25,
2016
By:
/s/
ANTHONY
S.
MARUCCI
Name:
Anthony
S.
Marucci
Title:
President and Chief Executive OfficerDate:
February
25,
2016
By:
/s/
AVERY
W.
CATLIN
Name:
Avery
W.
Catlin
Title:
Senior Vice President and Chief Financial Officer QuickLinks
Exhibit
32
CERTIFICATION
OF
CHIEF
EXECUTIVE
OFFICER
AND
CHIEF
FINANCIAL
OFFICER
PURSUANT
TO
18
U.S.C.
SECTION
1350,
AS
ADOPTEDPURSUANT
TO
SECTION
906
OF
THE
SARBANES-OXLEY
ACT
OF
2002