Celldex May Soar in 2013

Michael is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

With so many companies claiming to have found the miracle cure for all diseases, it can be a tough challenge to find the contenders instead of the pretenders.  But there is one company that appears to be getting closer to find the illusive treatment for breast cancer.  That company is Celldex Therapeutics (NASDAQ: CLDX).

Celldex Therapeutics is a biopharmaceutical company focused on the development, manufacture, and commercialization of novel therapeutics for human healthcare.  The company has two main products.  The first is CDX-110, which is currently in Phase III clinical trials to target the tumor-specific molecule, epidermal growth factor receptor variant III.  The company's other drug, which is the focus of this article, is CDX-011.  CDX-011 is an antibody drug conjugate used to treat metastatic breast cancer and melanoma indication.

Over the past year, the stock has gained well over 200%.  The stock has rallied from a 52 week low of $2.53 to as high as $7.20.  The stock currently trades at $7.08 so at least on a technical look, the stock appears poised for higher gains.  Celldex has traded above $5.00 since the end of August and appears to have found strong support at that level as the stock has bounced off it several times since then.  So technically speaking, this may be a good entry point for investors.

The company currently has a float of approximately 62 million shares which based on the last closing price of Celldex, would give it a market capitalization of $439 million.  The company has a price to book ratio of 4.7, a price to sales ratio of 43.9, and a book value of $1.50 per share.  During the company's latest income statement filing, the company reported total revenue of just under $10 million dollars.  The company also has $1.28 per share in available cash; a very enviable position for a biotechnology company as they are typically looking to raise more cash as opposed to sitting on it.  This helps remove some of the dilution concerns that typically face most developmental biotech firms.

On December 10, 2012, Celldex announced its Phase II trial results for CDX-011.  The results were extremely positive and indicated delayed tumor growth and prolonged survival in patients with an advanced and aggressive form of breast cancer compared to single-agent chemotherapy.  The median overall survival almost doubled in the CDX-011 treated patients versus 5.5 months for patients in the control arm.

It is important to provide a little background on CDX-011 and how it works.  The drug is an antibody drug conjugate.  The antibody portion connects with cancer cells containing a protein called GPNMB.  GPNMB has been shown to correlate with some of the worst forms of breast cancer.  After the connection takes place, CDX-011 releases a toxic chemotherapy payload.  The drug conjugate was licensed from Seattle Genetics (NASDAQ: SGEN) and is the same one used in the newly approved lymphoma drug Adcetris.

Phase II was created to test the theory that CDX-011 would work most successfully in patients who's cancer form included the protein GPNMB.  Of the 120 patients enrolled in the study, all contained GPNMB in at least some cells.  Celldex is currently meeting with the Food and Drug Administration to determine the next course of action.

With the company in discussions with the FDA, anything can happen this year.  Investors should consider getting long now as news could come at any point such as FDA announcements, next step announcements such as a Phase III Trial, and potential partnerships with larger companies such as Pfizer and Merck.

Fool Blogger Michael Meyer does not own shares in Celldex Therapeutics at this time. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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