Expert Financial Analysis and Reporting

Review of Amazing and Volatile Stock Price Performance
From the closing price on December 30, 2011 through October 1, 2013 Celldex’s (CLDX) stock price increased 15 fold from $2.60 to $37.83; its shares have recently backed off to about $26.00. The number of shares outstanding nearly doubled over this 21 month timeframe from 44.2 million to 81.1 million and the market capitalization increased 27 fold from $115 million to $3.1 billion.

This is a vivid example of what is so compelling about investing in emerging biotechnology companies. While the number of investment failures may significantly exceed the number of successes, there are occasionally spectacular successes that can more than offset the failures in a balanced portfolio of emerging biotechnology stocks. It is also a graphic example of the extreme volatility on the upside and downside that can occur when the stock price gains momentum.

In the next table, I have pointed out a few key points that were important in this dramatic stock price increase. The analysts’ day presentation on January 23, 2012 may have gotten the ball rolling as the Company explained that there would be important clinical trial data in 2012 on EMERGE, a phase IIb trial of CDX-011 in refractory breast cancer and phase II data on the use of the cancer vaccine rindopepimut in glioblastoma.

Stock Price Progression for Celldex From Closing On December 30, 2011 to Present
		Stock Price	Shares Outstanding (millions)	Market Capitalization ($millions)
December 30, 2011	Closing price for 2011	$2.60	44.1	115
January 23, 2012	Analysts' Day	$3.96	50.2	199
May 23, 2012	Topline results for EMERGE breast cancer trial of CDX-011	$4.26	58.1	247
November 30, 2012	Three year survial data from rindopepimut phase II glioblastoma trials	$5.94	58.1	345
December 11, 2012	Final data from EMERGE trial	$6.88	58.1	399
January 2, 2013	First trading day of 2013	$7.00	64.4	451
August 12, 2013	ReACT trial size increased by 75 patients due to encouraging data in recurrent glioblastoma patients refractory to Avastin	$20.36	80.9	1,647
October 1, 2013	Recent closing high	$37.83	81.1	3,068
October 18, 2013	Recent price	$25.80	81.1	2,092

Topline results on the EMERGE trial were then presented on May 23, 2012 and final data on December 8, 2012. Wedged in between was three year survival data from phase II trials of rindopepimut on November 30, 2012. From November 15, 2012 until August 12, 2013, the stock price increased by 172%. There were no periods when the stock had a dramatic jump, it was pretty much a steady month after month increase indicating the stock was under heavy accumulation by big institutions. Then the expansion of patient enrollment in the ReACT trial of rindopepimut on August 12, 2013 was followed by a 65% increase in stock price in a little over one month.

Investment Overview of Key Products
Celldex has two products in advanced stage clinical trials. These are the cancer vaccine rindopepimut that is in phase III development for a targeted subset of newly diagnosed glioblastoma patients and is in a phase II trial in recurrent glioblastoma. CDX-011 is a unique antibody-toxin conjugate that is now in phase II development for a subset of metastatic breast cancer patients.

There has also been excitement about two earlier stage products. CDX-1127 is an antibody that increases T cell activity that although somewhat differentiated in mechanism of action can be compared to the checkpoint inhibitors Yervoy and the anti-PD1 antibodies that are in late stage development. These are paving the way to a new immunotherapeutic approach to treating many types of cancer. Also CDX-1135 is a complement inhibitor which can be compared to Alexion’s extremely successful drug for ultra-orphan diseases, Soliris. Celldex hopes that CDX-1135 can be the second coming of Soliris in ultra-orphan diseases.

This report focuses on these four products, but Celldex also has a technology platform in humanized antibodies that has given rise to a large number of other earlier stage candidates. It was a technology spin-off of Medarex which was acquired by Bristol-Myers Squibb (BMY), a strategic move which vaulted Bristol-Myers into the front ranks of cancer drug development.

Rindopepimut
As a cancer vaccine, rindopepimut is something of an outlier from the Celldex technology platform, but it is an important part of the investment story. It was studied in three separate phase II trials that enrolled glioblastoma patients who were positive for EGFRvIII, a mutation of the EGF receptor. This is a mutation that occurs in about 30% of glioblastoma patients according to Celldex. Rindopepimut is a cancer vaccine that generates an immune response specifically targeted at cancer cells that express this mutation. Reported results were encouraging in three phase II trials and were consistent among the three trials.

The largest of the phase II trials was ACT-III which enrolled 65 patients. Because there was no control group in any of these studies, comparisons were made to a subgroup of 29 patients from a retrospective study who most closely matched the characteristics of ACT-III patients. Against this control group, rindopepimut showed 21.8 months of median overall survival versus 16.0 months in the control, a 5.8 month improvement.

Based on this data, in December 2011 Celldex began the ACT IV phase III trial in patients with newly diagnosed EGFRvIII positive glioblastoma. This trial will enroll up to 440 patients and should report topline results in 2H, 2015. At the same time, the Company began a phase II trial in EGFRvIII positive patients with recurrent glioblastoma called ReACT.

As ReACT was originally designed, it was to have 95 patients divided into two groups. The first group was to be comprised of 70 Avastin naive patients and the second group was to have 25 patients. The 70 patients in group one were randomized one to one. Patients in one arm received rindopepimut plus Avastin plus GM-CSF. Patients in the second arm were to receive KLH plus Avastin. The second group of 25 patients was refractory to Avastin and they were given rindopepimut plus Avastin plus GM-CSF. Celldex has guided investors that there will be data from these 25 patients presented at the Society for Neuro-Oncology Annual Meeting in November of 2013.

Celldex announced on August 12, 2013 that it had completed enrollment in the initial cohort of 25 patients who were refractory to Avastin. Based on preliminary evidence of stable disease, tumor shrinkage and investigator-reported response, the Company has decided to add an expansion cohort of approximately 75 patients to better characterize the potential activity of rindopepimut in this refractory patient population. This seems to have given a major boost to the stock.

CDX-011
The data in the EMERGE trial indicated that CDX-011 appeared to have dramatic effects in extremely difficult to treat triple negative, GNMPB positive, breast cancer patients as it showed a 10.0 month median overall survival versus 5.5 months for comparator drugs. While the results were dramatic, there were only 12 patients on CDX-011 and 4 in the control group who were triple negative, GNMPB positive. This was a small number of patients, but the results were still statistically significant and encouraged Celldex to plan a phase II trial (soon to start) that is eligible for accelerated approval. Topline data on this trial will be available in late 2015 or 2016 and could be the basis for approval in the subset of triple negative GNMPB positive breast cancer patients.

CDX-1127
Celldex may be most excited about CDX-1127. The mode of action of this drug bears some similarity to the checkpoint inhibitors Yervoy and the anti-PD1 antibodies. Yervoy was introduced by Bristol-Myers in March 2011 and has current sales of nearly $1 billion. The anti-PD1 inhibitors are among the most exciting new cancer drugs in development with Street estimates of over $5 billion of sales in 2020. The mode of action of checkpoint inhibitors is to block the regulatory mechanism used to turn down the activity of T cells. The result is increased T-cell activity against cancer.

This drug is an antibody that stimulates T-cell activity. The effect of all three drugs- Yervoy, anti-PD1 s and CDX-1127- is to increase the activity of T-cells against cancer. A meaningful difference is that the checkpoint inhibitors need an immune response to be underway to be effective while CDX-1127 actually initiates the immune response. Its mechanism of action is differentiated from the checkpoint inhibitors. This may mean that the products could be used in combination or in sequence. This product is an extremely exciting concept, but it is still in phase I trials.

CDX-1135
The final drug that has gotten the attention of investors is CDX- 1135
It is a soluble complement inhibitor that targets both C3 and C5. This drug was developed by Avant (acquired by Celldex) which called this drug TP10. It is a technology that is similar to that which Alexion (ALXN) used to develop Soliris. Both companies tested their drugs against cardiac ischemia in the late 1990s and early 2000s, but both failed. However, Alexion determined that complement was very important in some ultra-orphan diseases. This has led to extraordinary success for Alexion in ultra-rare orphan diseases with its lead drug Solaris; it was approved by the FDA in 2007, had sales on $1.1 billion in 2012 and Alexion currently has a market capitalization of $21 billion.

Avant had unfortunately shelved their program, but with the acquisition of Avant in 2008, Celldex resurrected the program and has started a program in ultra-orphan disease that bears similarities to that of Alexion. Whereas Solaris has targeted diseases caused by excessive activation of C5, Celldex is going after ultra-rare orphan diseases caused by excessive C3 and dense deposit disease has been selected as the first indication. This parallel with Alexion has excited some investors who hope that Celldex could be the second coming of Alexion.

Investment Considerations
I wish that I could say that I recommended Celldex at $2.60, but that is not the case. My particular approach to analysis and investing requires a considerable amount of due diligence that takes much time. I do not have the bandwidth to cover all or even a significant percentage of publicly traded biotechnology companies. My interest in Celldex really came from the work that I had done on Northwest Biotherapeutics (NWBO), ImmunoCellular Therapeutics (IMUC) and Agenus (AGEN). Those three companies are each developing cancer vaccines targeted at glioblastoma and Celldex’s lead product rindopepimut is a cancer vaccine aimed at the same target.

While my reason for looking at Celldex was based on wanting to understand how rindopepimut potentially fits into the glioblastoma landscape, I was drawn into a deeper analysis and came to understand why investors are so excited about the company. As I will shortly explain, I am not recommending Celldex at this particular combination of time, product development and stock price. However, it is a stock that I may want to be involved with at some future point.

Rindopepimut
Rindopepimut appeared to meaningfully improve PFS and OS in phase II clinical trials for patients with EGFRvIII-expressing GBMs. Serious adverse reactions are rare as patients typically usually only experience hypersensitivity reactions at the injection site. Relative to other oncology products, it has a benign side effect profile. While rindopepimut has limitations, it could be a promising therapy for patients with EGFRvIII-expressing glioblastomas.

Management stated at the Deutsche Bank Conference on May 29, 2013 that it believes that the market opportunity for rindopepimut in newly diagnosed EGFRvIII-positive glioblastoma is about one-third of all cases. It estimates that this translates into a US addressable market of 4,000 patients and more than 8,000 patients abroad.

I think that these estimates might be aggressive, but I can’t say how much. Other estimates put the incidence of EGFRvIII-positive patients somewhat less than 30% of the glioblastoma population. Also the phase II data was created in patients with gross total resections. It is not clear what percentage of the broad universe of glioblastoma patients are totally resected but it is probably not the majority (I don’t have any data). In ACT-IV, some patients who are partially resected will be included and we should have a better answer to the importance of degree of resection when the results are published.

Rindopepimut has two major factors going for it. First, if the phase II results hold up it could provide an increase of 5.8 months in median overall survival, which in oncology terms is very significant as a 4.0 to 5.0 month increase in an aggressive disease like glioblastoma is a significant advance. Also very importantly, this is a targeted therapy. Patients who may benefit can be identified before therapy is begun. It would create a major issue if these patients could not be identified before therapy as out of every 100 patients only 20 or 30 could potentially benefit. Some of the higher priced current cancer therapies are priced at $60,000 or more per treatment. I think rindopepimut can be priced at $100,000 or more because of the severity of the disease and the cost effectiveness due to the targeting. For every 1000 patients treated, the potential revenues would be $100+ million.

CDX-011
It is harder for me to approach the commercial potential for CDX-011 in metastatic breast cancer. The results in a subset of patients in the EMERGE trial were certainly impressive as it showed that in triple negative, GPNMB positive patients the median overall survival for CDX-011 was 10.0 months versus 5.5 months in the control arm; the latter was whatever drug the investigator chose and could have been any of five to ten drugs. The patients treated in this trial on average, had failed seven prior treatment regimens. The EMERGE results are an amazing signal of activity and if they hold up in phase II, CDX-011 could emerge as a drug of choice in the triple negative GPNMB positive segment of metastatic breast cancer.

Treatment options in breast cancer are increasingly driven by testing patients for molecular sub-types such as hormone receptor positive, HER2 neu directed, BRCA 1-2, basaloid and triple negative. The type of treatment is determined by the molecular sub-type. Celldex believes that the breast cancer market is going to be a number of smaller subset markets like these. At the end of the day there will likely be a number of different subsets for breast cancer and drugs will be specifically targeted to those patients who specifically will benefit.

It is particularly the case that current treatment for triple negative patients offers poor outcomes and there is a high unmet medical need. Triple negative patients do not express HER2/neu or estrogen and progesterone receptors that are the targets of current breast cancer treatment. GPNMB expression seems to correlate with triple negatives. Celldex is hypothesizing that GPNMB positive could be added to the breast cancer treatment paradigm so that in the future all patients may be tested for GPNMB.

If the EMERGE data in triple negative, GPNMB positive metastatic breast cancer is replicated in phase III, CDX-011 has very significant sales potential. Because the market is so fragmented, it is difficult to size the opportunity, but my intuitive guess is $200 million to $500 million. If the hypothesis that GPNMB is a major risk factor to be ascertained and treated aggressively when found, the potential could be much greater. This would require a phase III trial.

CDX-1127, CDX-1135 and Other Drugs
I have a major interest in immunotherapy drugs like checkpoint inhibitors and cancer vaccines. I am intrigued by the possibility that CDX-1127 could gain as much investor and clinical investigator interest as the anti-PD1s and Yervoy. The parallel of CDX-1135 with Soliris also intrigues me. There is also a deep pipeline of other drugs in earlier stages of development that may at a future point add to the excitement with Celldex.

Investment Conclusion
After hearing all of this, you might expect me to aggressively recommend the stock, but this is not the case. Here’s why. As most experienced biotechnology investors know, cancer vaccine development has produced a long string of failures. I am persuaded that cancer vaccines have the potential to be the next great development in cancer. However, it may be the case that we need a better understanding of cancer biology before success is ultimately achieved. Rindopepimut might be a step in a long term effort to develop successful drugs as opposed to the final answer.

The phase II data used to design a phase III trial of rindopepimut was based on the ACT III trial that was a comparison of 65 patients treated with rindopepimut and compared to a matched control of 29 patients. This is not a comforting amount of data and of course, the trial was not randomized. On the positive side, the results of ACT III were consistent to those of ACT II that enrolled 22 patients and ACTIVATE that enrolled 18 patients.

The most important catalyst for the Company and rindopepimut will be the release of interim data on 25 patients treated with recurrent glioblastoma. This is the data scheduled for discussion at the Society for Neuro-Oncology Annual Meeting in November of 2013. Topline data on the use of rindopepimut in the treatment of newly diagnosed glioblastoma is probably going to be released in 2H, 2015. That is nearly two years away.

The data from the EMERGE trial that was used to design the phase II trial was based on a subset of patients in the trial that included just 12 patients in the CDX-011 arm and 4 patients in the control arm. Again, this is a very small number of patients from which to draw conclusions. The phase II trial has not yet been started and topline results are not likely to be available until late 2015 or early 2016. The data, if positive, could be the basis for accelerated approval in triple negative, GPNMB positive patients.

While I am excited about CDX-1127 and CDX-1135, they are at a very early stage of development in which drug failure is high. I need more data to turn my scientific enthusiasm for the drugs into investment enthusiasm.

The basis of my investment caution is that the phase III trial designs for rindopepimut and CDX-011 came from an uncomfortably small data base of patients. Also, the most meaningful topline results for these products are over two years away. The one data point that we will have in 2013 and perhaps through 2014 will be results from 25 recurrent glioblastoma patients. This is a very sick and difficult patient population.

If Celldex were priced at a more modest valuation, I probably would be recommending it. However, the $2.7 billion market capitalization seems to assume that nothing can go wrong. If this is the case, the stock can potentially go much higher but we won’t know this for two years. In the meantime, there is the potential for unexpected negative developments (an intrinsic part of investing in emerging biotechnology) and there could just be buyer fatigue. As I have stated previously, I am intrigued by this company and I can see myself recommending the stock at some future point, but I am on the sidelines for now.

Rindopepimut

Rindopepimut and Its Biological Target
Rindopepimut is an immunotherapy that is designed to target a mutation of the epidermal growth factor receptor (EGFR), a molecular complex that occurs in the membranes of cells. After binding to EGFR, proteins such as epidermal growth factor and TNFα create cellular signals that promote cell growth, proliferation and differentiation.

In normal cells, the EGFR receptor is sometimes turned on and sometimes off, but in some glioblastoma patients there is a mutation called , epidermal growth factor receptor variant III (EGFRvIII) that results in the receptor being permanently activated and resulting in uncontrolled cell division. It is hypothesized that this mutation through the release of IL-6 also stimulates the growth of neighboring cells that do not express EGFRvIII and that cells with this mutation may release microvesicles (cellular components that are released into the space outside the cell) containing EGFRvIII which can merge with neighboring cells.

Rindopepimut is comprised of a peptide or amino acid sequence that is specific to EGFRvIII and is not found in normal cells. This makes it an attractive target for immunotherapy. This peptide is then linked to a carrier protein called keyhole limpet hemocyanin, or KLH. Keyhole limpet hemocyanin is used extensively as a carrier protein to stimulate a response from the immune system. The peptide/ KLH linkage is administered as an injection along with the adjuvant GM-CSF. The objective is to create a powerful immune response that will kill cancer cells that express EGFRvIII. EGFRvIII is expressed in 30% of glioblastomas according to estimates provided by Celldex. I have seen other estimates that place it at 20%.

Pfizer Agreement
Celldex entered into an agreement in April 2008, which provided an exclusive worldwide license to Pfizer for rindopepimut. In November, 2010, Pfizer returned all rights to rindopepimut to Celldex which took over responsibility for development. Pfizer originated the ACT III trial of 65 patients while Celldex had earlier done the ACTIVATE trial of 18 patients and the ACT II trial of 22 patients.

Phase II Studies of Rindopepimut in Glioblastoma
Data from the three phase II trials has encouraged Celldex to proceed to a phase III study in newly diagnosed glioblastoma patients and a phase II study in recurrent glioblastoma; the latter could be the basis for approval in this patient population.

ACTIVATE, the first phase II study, was conducted at Duke Medical Center and M.D. Anderson. It enrolled 18 patients who could be evaluated. They were treated with surgical resection followed by standard of care (SOC) and rindopepimut. Standard of care was radiation and temozolomide. This was followed by ACT II, essentially an extension of ACTIVATE, that evaluated 22 new patients at the same two centers.

The third study was a phase IIb study called ACT III that was originally randomized to compare rindopepimut plus SOC to SOC alone in over 30 US clinical sites. SOC was defined as temozolomide plus radiation followed by a maintenance regiment of temozolomide. However, this trial was amended in December 2008 because the Independent Data Monitoring Committee determined that the majority of patients in the control arm who were being given SOC were dropping out of the trial because they were able to determine that they were not receiving rindopepimut. Rindopepimut caused an injection site reaction and SOC did not. The decision was made to offer SOC patients rindopepimut with the result that ACT III then became an open label study.

Results of Phase II Studies
In November 2012, Celldex announced three year survival data for ACTIVATE, ACT II and ACT III. The results were very consistent across all three trials:

	Number of patients	Median Overall Survival (months)	Patients alive at three years (%)
ACTIVATE	18	20.4	33
ACT II	22	20.5	23
ACT III	65	21.8	26

These were open label trials so there was obviously no control arm to compare against. Also, to my knowledge these were the first trials done in which the patient population was entirely made up of glioblastoma tumors that were expressing EGFRvIII. The trial that defined standard of care, the Stupp trial, enrolled all types of glioblastoma patients so that it is probably the case that only 20% to 30% of patients in Stupp were EGFRvIII positive.

In order to come up with an historical control group to compare these results to a retrospective analysis of EGFRvIII expression status and associated clinical outcome in the Phase 3 Radiation Therapy Oncology Group's, or RTOG, 0525 study was undertaken. This analysis was conducted by MD Anderson Cancer Center in cooperation with RTOG to provide an assessment of the prognosis for patients with EGFRvIII-positive disease contemporary with the ACT III data.

MD Anderson looked at 17 patients with EGFRvIII-positive disease who were enrolled at the same time as ACTIVATE was being conducted. An assumption had to be made that these patients were enrolled three months after diagnosis. This creates some statistical uncertainty. Because there was no randomization, there are also issues on how well matched these patients were for degree of resection, age and performance status. In this retrospective study the median overall survival was 12.2 months and the percentage of patients alive at three years was 6%. This compares to 21.8 months and 26% in ACT III so despite the shortcomings with defining the control group, the results looked impressive.

The Radiation Therapy Oncology Group (RTOG) undertook a retroactive study based on case records from M.D. Anderson that looked at 142 patients who were enrolled at about the same time as the ACT III patients. In these 142 patients, median overall survival was 15.1 months and 18% of patients were alive at three years. RTOG then looked more closely at a subset of 29 patients that were more specifically matched to ACT III patients. These patients had similar degrees of gross resection and were about three months post-surgery without disease progression.

I believe that this 29 patient group represents patients with characteristics most similar to ACT-III patients. In this most meaningful control group, median overall survival was 16.0 months and 13% of patients were alive at three years. Remember that the 65 patients in ACT III had median overall survival of 21.8 months and 26% of patients were alive at three years. This suggests that rindopepimut in this disease setting had an advantage of 5.8 months of overall survival.

The reader should bear in mind that patients treated with rindopepimut in ACT-III had gross total resection and because they were disease progression free three months after surgery, were a very healthy group of patients within the glioblastoma patient universe. This was a group that was most likely to have good outcomes.

ACT-IV Phase III Trial in Newly Diagnosed EGFRvIII-Positive Glioblastoma
Celldex initiated ACT-IV, a phase III study of rindopepimut, in December 2011. This is a randomized, double blind study of surgically resected EGFRvIII-positive glioblastoma patients. They are randomized to SOC or SOC plus rindopepimut. In this latter group, rindopepimut plus GM-CSF was given as a priming dose after radiation followed by temozolomide and rindopepimut plus GM-CSF given as maintenance therapy. The primary endpoint is median overall survival.

In ACT-III patients underwent image verified gross total resections. This was intended to minimize the immunosuppressive effects of the tumor mass. As a significant percentage of glioblastoma patients do not receive gross total resection, the efficacy of rindopepimut in less resected patients is unclear. To answer this question, patients with incomplete resections will also be enrolled in ACT-IV and results will be stratified for degree of resection.

ACT IV will enroll up to 440 patients at over 150 centers worldwide to recruit approximately 374 patients with GTR to be included in the primary analysis. Celldex expects to complete patient accrual by the end of 2013 and anticipated topline results in the trial in 2H, 2015. The estimated cost of the trial is $60 million.

ReACT: Original Plan for Phase II Trial in Recurrent EGFRvIII-Positive Glioblastoma
Also in December 2011, Celldex initiated ReACT, a phase II study of rindopepimut in combination with Avastin in patients with recurrent EGFRvIII-positive GB. These are patients who have recurred following SOC once or twice. As ReACT was originally designed it was to have 95 patients divided into two groups. The first group was to be comprised of 70 Avastin naive patients and the second group was to have 25 patients. The 70 patients in group one were randomized one to one. Patients in one arm received rindopepimut plus Avastin plus GM-CSF. Patients in the second arm were to receive KLS plus Avastin. The second group of 25 patients was refractory to Avastin and they were given rindopepimut plus Avastin plus GM-CSF.
In addition, researchers at Stanford University are conducting an investigator sponsored, pilot trial of rindopepimut in pediatric patients with pontine glioma. Patient enrollment is ongoing for this trial.

New Trial Plan for React
Celldex announced on August 12, 2013 that it had completed enrollment in the initial cohort of 25 patients who were refractory to Avastin. Based on preliminary evidence of stable disease, tumor shrinkage and investigator-reported response, the Company has decided to add an expansion cohort of approximately 75 patients to better characterize the potential activity of rindopepimut in this refractory patient population. The full results in the 25 patients will be reported at the Society for Neuro-Oncology Annual Meeting in November.

The ReACT study will now enroll approximately 170 patients across two groups. Group 1 will be approximately 75 Avastin naive patients randomized to receive rindopepimut plus Avastin plus SOC versus Avastin plus SOC. The other 100 Avastin refractory patients will receive rindopepimut plus Avastin in a single arm study. The primary endpoint of ReACT is 6 month progression free survival rate and secondary endpoints are objective response rate, overall survival and safety and tolerability.

CDX-011

Mechanism of Action
CDX-011 is a fully human antibody that is conjugated to a cell killing toxin called auristatin. The antibody specifically targets a glycoprotein called GPNMB that is expressed breast, melanoma and other cancers. The antibody and auristatin are joined together by a linker system licensed from Seattle Genetics (SGEN). This linker system is the same as that used in that company’s SGN 35.

The antibody drug conjugate (ADC) is designed to be stable in the bloodstream following intravenous administration. The antibody component targets and binds to GPNMB. The ADC is then internalized within the cell and releases the toxic auristatin molecule that kills the cell. In order for this toxin to be able to kill, it must be internalized by cancer cells and then released to allow activity.

The FDA has granted Fast Track designation to CDX-011 for the treatment of advanced, refractory/resistant GPNMB-expressing breast cancer.
GPNMB as a Target
CDX-011 targets the glycoprotein GPNMB; this is an antigen that has been linked to promoting angiogenesis and metastases in breast cancer. GPNMB expression is associated with increased metastatic potential leading to tumor invasion and increased numbers of metastases. Patients with high GPNMB-expressing tumors have significantly shorter metastases free periods and overall survival.

A registration trial is now underway in breast cancer, but GPNMB is also expressed in high levels in other cancers such as melanoma, non-Hodgkin's lymphoma, glioblastoma and osteosarcoma. It is particularly associated with triple negative breast cancer. There is often twice the expression of GPNMB in triple negative breast cancer as in metastatic breast cancer taken as a whole. This should make this population more sensitive to treatment.

Treatment of Stage IV Breast Cancer
The phase I and II trials of CDX-011 have been in advanced stage IV breast cancer in which there are metastases. About 90% of metastatic breast cancer patients have had a prior history of breast cancer and 10% present with an initial diagnosis of metastatic breast cancer. There is no standard treatment approach to stage IV breast. Physicians generally treat patients with one therapy until the cancer progresses and then switch to another therapy and then another and so on. In the phase II EMERGE trial of CDX-011, the median number of prior treatments for patients in the study was 7.

Monotherapy chemotherapy regimens have shown in small studies a response rate of 25% to 42%, time to progression of four to ten months and median overall survival of 13 to 22 months. These include capecitabine, gemcitabine, vinorelbine, paclitaxel, docetaxel and ixabepilone which are associated with severe side effects as efficacy increases. Quality of life issues are almost as important as response in this patient population.

Treatment options in addition to chemotherapy include hormonal therapy and biologics. Treatment is increasingly driven by testing patients for molecular sub-types such as hormone receptor positive, HER2 neu directed, BRCA 1-2, basaloid and triple negative. The type of treatment is determined by the molecular sub-type. Celldex believes that the breast cancer market is going to be a number of smaller subset markets like these. At the end of the day there will likely be a number of different subsets for breast cancer and drugs will be specifically targeted to those patients and they will benefit from it.

It is particularly the case that treatment for triple negative patients offers poor outcomes and there is a high unmet medical need. Triple negative patients do not express HER2/neu, estrogen and progesterone receptors that are the targets of current breast cancer treatment. GPNMB expression seems to correlate with triple negatives. Celldex is hypothesizing that GPNMB positive could be added to this paradigm so that in the future all patients may be tested for GPNMB. The Company is targeting a specific patient population, just as was done in the HER2 market with Herceptin and TDM-1.

Phase I/ II Studies of CDX-011
The dosing and dose level of CDX-011 was established in a phase I/II study in 2008 in patients with heavily pre-treated, progressive, locally advanced or metastatic breast cancer. They had been treated on average with seven prior regimens. Of these, there were 34 evaluable patients and 9 of these were triple negatives. In the overall group there was tumor shrinkage in 62% of all patients and 78% shrinkage in the triple negative subgroup. Stable disease of greater than 12 weeks occurred in 35% of all patients and 70% of triple negatives. The median progression free survival was 9.1 weeks in all patients and 17.9 weeks in triple negatives. CDX-011 seems to have a disproportionally positive effect in triple negative patients.

A phase I/II trial in 117 metastatic melanoma patients was completed in 2009. The study achieved its primary objective by showing a response rate of 15% and median progression free survival of 3.9 months. However, for the immediate future, the focus will be on breast cancer.

EMERGE
The phase I/II study was the basis for starting the EMERGE phase IIb study in September 2010 for which final results were announced in December 2012. EMERGE was a randomized, multi-center study of CDX-011 in 122 patients with heavily pre-treated, advanced breast cancer; these patients had seen on average six previous treatment regimens. Patients selected for the study had to be GPNMB positive. Two thirds of patients were given CDX-011 and one third was given Investigator’s Choice of therapy (IC). Patients given IC were allowed to cross over to CDX-011 if their disease progressed.

Upon final analysis, there were two groups in the study that were of particular significance. The first group was 33 patients who had overexpression of GPNMB. This was determined by their having 25% of their tumor cells express GPNMB. Of these 33 patients, 25 received CDX-011 and 8 received IC. Results comparing CDX-011 to investigators choice were as follows:

• The response rate in the CDX-011 group was 32% versus 13% in IC,
• median progression free survival was 2.7 months versus 1.5 months,
• and median overall survival was 10.0 months versus 5.7 months.

In the second group, there were 16 patients in who had overexpression of GPNMB and were also triple negative and 12 of these received CDX-011 and 4 received IC. Results were as follows:

• The response rate in the CDX-011 group was 33% versus 0% in IC,
• median progression free survival was 3.0 months versus 1.5 months,
• and median overall survival was 10.0 months versus 5.5 months.

The data showed a substantially better response rate in patients with GPNMB over expression in 25% of tumor cells and in triple negative with positive GPNMB expressing breast cancer patients although the number of patients in each group was small. Celldex has designated triple negative GPNMB positive patients to be the subjects of the soon to start phase II trial (again this could be the basis for regulatory approval) and will do a future phase III trial in GPNMB positive patients.

As the expression rate increased there was a correlation with more shrinking of tumors and improving survival. However, they saw benefit in patients with a level of 10% expression.
The most frequent treatment-related adverse events were rash, fatigue, hair loss, pruritus, diarrhea and neuropathy. Of these neuropathy is the most troubling. In the study they saw that patients with pre-existing neuropathy experienced exacerbation. Hence, this is being screened for in the phase III trial and such patients will be excluded.

Key opinion leaders were impressed by the response rate in such a heavily treated group and approximate doubling in progression free survival and median overall survival. The principal criticism was the small number of patients in the study, but even with small numbers, a statistically significant benefit was seen in median overall survival in high GPNMB expression-triple negative group.

Phase III Study
Based on the EMERGE results, Celldex had an end of phase II meeting with FDA and proposed moving forward with an accelerated registration study specifically in this triple negative breast cancer population over express GPNMB. In this study, they are looking to treat patient patients who have had fewer prior treatments, i.e. one or two as opposed to six prior treatments. They expect to enroll patients who have progressed through anthracyclines and taxane therapy.

The plan is to enroll 300 patients in 75 to 100 centers in the US who are all high GPNMB expressing, triple negative patients. High expression means that 25% or more of the tumor cells are expressing GPNMB. The study is randomized 2:1 so that 200 patients will receive CDX-011 and 100 will receive the control drug which is either Xeloda (capecitabine).

Xeloda is approved in this line of therapy, i.e. first and second line metastatic breast cancer. However, there is no data on how Xeloda does in the triple negative population. The assumption is that Xeloda will have a response rate of 15% and progression free survival of four months. The expectation for CDX-011 is for a response rate of 30% and a progression free survival of 6.25 months; this would result in a successful trial outcome.

The phase III trial should start in 4Q, 2013 and Celldex is guiding toward an enrollment timeline of 12 to 18 months, but they are hopeful that they can accrue in 14 months as was the case in EMERGE. This would result in completion of enrollment in 4Q, 2014 to 1Q, 2015. Topline results would likely be available in late 2015 or early 2016. Success in the trial should result in accelerated approval so that the drug could come to market in late 2016 or early 2017.

On August 6, 2013 the Company announced that it had completed an important step necessary for accelerated approval of CDX-011 by selecting a diagnostic partner who will conduct the tests for GPNMB expression.

CDX-1127

Mechanism of Action
CDX-1127 is a human monoclonal antibody that has a high binding affinity to CD27; this molecule is over-expressed in certain lymphomas and leukemias which make it a therapeutic target for treating those cancers. However, CD 27 is also found on T cells where it has a very different role in activating T cell response. In animal models, it has been shown that this dual mechanism of action can activate immune cells to target and eliminate cancer cells and can also inhibit the growth of lymphomas and leukemias that express CD27.

The immune system is regulated by a complex network of molecules that increase or dampen responses of immune cells. Specifically looking at T-cells, there are on switches that boost these cells into action and off switches that can turn them off to prevent auto-immunity. Antibodies can be used to turn these switches on and off. This mechanism of action is an area of intense research interest based on the success of Yervoy and promising clinical studies with anti-PD1 inhibitors.

Investors are most familiar with Yervoy, an antibody that targets CTLA-4, an off switch. By blocking this receptor, T-cells are not down regulated or turned off as easily and remain active. Yervoy was approved in 2011 in first line melanoma and has achieved sales of nearly $1 billion. Some of the most promising drugs in late stage development are the anti-PD1s. Like Yervoy, these are antibodies that prevent the T-cell from being turned down.

In understanding the CD-27 pathway it is important to understand that there are two sides of T-cells. On the one hand there are the checkpoint inhibitors like CTLA- 4 that Yervoy acts on and PD-1 that the anti-PD1s act on. They block the signal that down regulates the activity of T-cells. On the other side of the T cell there are receptors like CD 27, CD 40 and CD 28 that can be activated by antibodies. The checkpoint inhibitors need an immune response to enable them to work whereas CD 27 activation initiates an immune response. The end result of Yervoy, the anti-PD1s and CDX-1127 is the same; they increase T cell response against cancer cells.

CD 27 is an activating receptor that when stimulated increases the T-cell response. The ligand or molecule that the body normally uses to activate CD 27 is CD 70. When CD 27 is engaged by CD 70, it activates T-cells causing them to proliferate and secrete molecules that kill tumor cells. CDX-1127 replicates the signaling of CD 70 to activate T cells. CDX-1127 can essentially highjack this pathway by using an antibody that replicates the CD70 signaling and cause T cells to get activated and have anti-tumor effects.

Role in Therapy
CDX-1127 can stimulate T cell reactivity that could be effective in both solid and hematologic cancers. It can also exert a separate and distinct biologic effect by binding to CD27 on leukemias and lymphomas and inducing cell death through direct binding and ADCC mechanisms. In this way, CD27 is a target for chronic lymphocytic leukemia, mantle cell lymphoma, primary central nervous system lymphoma, Burkitt’s lymphoma and marginal zone B-cell lymphoma.

There is the potential for development of CDX-1127 as monotherapy in solid tumors such as melanoma and renal cell carcinoma that are naturally immunogenic tumors. It can be used in combination with chemotherapy or ADC that reduce tumor burden and provide source of tumor antigens. It can also be used in combination with vaccines, immune modulators such as anti-CTLA-4 (Yervoy) and anti-PD-1 antibodies, targeted therapy like Zelboraf (venurafenib) and in vitro use for cell growth effectors for adoptive transfer. Combination strategies are going to be important in the future. Some antibodies might be useful in combination, while others may be best used alone.

Phase I Study
An open label, dose-escalating phase 1 study has begun in patients with selected malignant solid tumors and also in hematologic cancers. The study is designed to test five escalating doses of CDX-1127 to determine a phase II dose for further development based on safety, tolerability, potential activity and immunogenicity. The study in ally accrued approximately 30 patients in each of the two arms, either selected refractory or relapsed solid tumors or lymphomas or leukemias known to express CD27.

Enrollment has completed in the Phase 1 portion of the solid tumor arm and CDX-1127 was determined to be well tolerated even at the highest dose level. Celldex recently initiated expansion cohorts in metastatic melanoma and renal cell carcinoma. The expansion phase of the lymphoma and leukemia arms should begin in the near future. Celldex anticipates presenting data from the solid tumor dose-escalation portion of the study and the corresponding expansion cohorts by the end of 2013. Reporting of data from the hematologic arm is anticipated in 2014.
They haven’t seen toxicity although activating antibodies have the potential to cause a lot of toxicity although and Celldex hasn’t seen this. The CD-27 antibodies can cause some autoimmunity and if they are combined with a checkpoint inhibitor, it might exacerbate the side effects.

CDX-1135

Mechanism of Action
In the human immune system there are a series of proteins involved in immune response called the complement system that initiate an acute inflammatory response to disease, infection and injury. Excessive complement activation plays a role in some persistent inflammatory conditions. CDX-1135 is a soluble form of a naturally occurring receptor called complement receptor 1 that in animal models has been shown to inhibit both the classical and alternative pathways of complement activation.

The first disease target is dense deposit disease, a rare orphan disease that is caused by uncontrolled activation of the alternative pathway of complement and leads to progressive kidney damage in children. There is currently no treatment for this disease and in about half of patients it progresses to end stage renal disease within 10 years. Kidney transplantation is not an option as the disease recurs in virtually all patients after the transplant.

Clinical Studies
There is an animal model that was created by Richard Smith, an investigator. It is a mouse model that replicates the human condition of C3 deposits developing in the kidneys. In this preclinical model, the drug did exactly what was hoped as it cleared out the kidney deposits and reversed the kidney damage. Initial experience under an investigator sponsored IND indicated that CDX-1135 limits complement abnormalities in dense deposit disease.

It plans a small pilot study in which results are expected by the end of 2013. Celldex will manufacture the product in its cGMP manufacturing facility. The Company announced on August 6, 2013 that it had enrolled the first patient in pilot study of CDX-1135 in dense deposit disease. The open-label study will enroll up to five patients (ages four and older) from clinical centers across the United States to determine the CDX-1135 dose level required to normalize alternative complement activity on an individual patient basis. Potential effects on renal function will also be assessed.

This drug was developed by Avant Therapeutics which was acquired by Celldex. It was unsuccessfully tested for use in cardiac ischemia in over 500 patients. However, it showed a favorable safety profile and that it is a potent inhibitor of the complement pathway.

Potential Indications
CDX 1135 is a soluble complement inhibitor that targets both C3 and C5. This drug was developed by Avant which called this drug TP10. It is a technology that is similar which Alexion (ALXN) used to develop Soliris. Both companies tested their drugs against cardiac ischemia in the late 1990s and early 2000s, but both failed. However, Alexion determined that complement was really important and went forward in some in ultra-orphan diseases. This has led to extraordinary success in ultra-rare orphan diseases with its lead drug Solaris; it was approved by the FDA in 2007, had sales on $1.1 billion in 2012 and Alexion currently has a market capitalization of $21 billion.

Avant unfortunately shelved their program, but with acquisition of Avant in 2008, Celldex resurrected the program and has started a program in ultra-orphan disease that bears similarities to that of Alexion. Whereas Solaris has targeted diseases caused by excessive activation of C5, Celldex is going after ultra-rare orphan diseases caused by excessive C3 and dense deposit disease has been selected as the first indication.

Dense deposit disease is an ultra-rare, progressive kidney disease. It is caused by uncontrolled activation of the alternative pathway of complement, which leads to the consumption of the circulating complement component C3, deposition of C3 and other proteins in the kidneys, and subsequent damage to kidney function. CDX-1135 has been shown to inhibit complement activation and has yielded promising results in an animal model of dense deposit disease and has thus far treated a single patient under a compassionate use protocol.

Approximately 50% of patients with dense deposit disease progress to end stage renal disease (ESRD) within 10 years of diagnosis and spend the rest of their lives on dialysis. Patients diagnosed at a younger age (≤ 12 years old) are more likely to progress to ESRD and progress more rapidly (typically within 4 years). Kidney transplantation is not a viable option because the disease recurs in virtually all patients who receive a transplant. There are no treatments at this time for dense deposit disease.

 

Tagged as cancer vaccine, CDX-011, CDX-1127, CDX-1135, Celldex Therapeutics, CLDX, glioblastoma, mestastic breast cancer, Rindopepimut + Categorized as Company Reports