A Promising Platform for Cancer Immunotherapy

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A 2011 Nobel Prize in Physiology and Medicine is certainly impressive.  Using a novel cancer treatment on yourself is both impressive and courageous.  Dr. Ralph Steinman believed so enthusiastically in the cancer vaccines which he helped to develop that he used many of them to treat his own pancreatic cancer.  Surviving for five additional years, Steinman was able to use his position on the Scientific Advisory Board of Celldex (NASDAQ: CLDX) to guide the company into a new frontier of cancer immunotherapy.

Are cancer and the flu the same?

Clearly not - but the body's immune response is similar.  The flu vaccine works by exploiting the body's natural immune response to prime the body for action by introducing an antigen, or chemical signature, from the virus that sticks to receptors on immune cells.  The cells discovered by Steinman, called antigen presenting cells or APCs, internalize this antigen and flip it back outward to activate T-cells that destroy the invading pathogen.  Merck's (NYSE: MRK) HPV vaccine, Gardasil, works to prevent cervical cancer by preventing viral infection.  And work well it has, bringing in $1.6 billion in 2012.

Vaccines don't always have to be preventative, though.  Rather, they can be used to give the immune system a boost to fight a preexisting disease.  For example, exposing patients to mutated forms of human proteins, like those arising during cancer, can trick the body into fighting its own cancer cells.  A fellow Fool explained how Dendreon (NASDAQ: DNDN) used this approach with its prostate cancer vaccine, Provenge.  Provenge treatment involves isolating a patient's own APCs, exposing them to a prostate cancer antigen in the laboratory, and then reintroducing the 'activated' cells back into the patient.

A new technology for a new era of immunotherapy

Celldex has flipped Dendreon's biological model on its head.  With a goal of specifically and efficiently targeting a subset of immune cells in vivo, Celldex designed antibodies that bind to the internalization receptor (the DEC-205 receptor) on APCs, and are also tethered to the cancer antigen.  The APC internalizes the antibody/antigen complex, and can then signal to T-cells to begin the assault on cancerous tissue.  This method has the benefits of classical vaccines, as well as the specificity and efficiency of Dendreon's Provenge, with a fraction of the cost.

Rindopepimut is Celldex' leading drug candidate in Phase 3 trials for the treatment of front-line glioblastoma and Phase 2 trials for recurrent glioblastoma, but in theory it could treat many forms of cancer.  In Phase 2 trials, rindopepimut improved 3 year survival to 23%-33% from 6-18% in historical controls.  After 5 years, 15% of treated patients are still alive, compared to an expected 0% survival rate. 

The breast cancer treatment CDX-011 has also showed impressive results in the EMERGE Phase 2 trial.  This drug uses a slightly different mechanism licensed from Seattle Genetics, and directly targets a variant of breast cancer that is currently difficult to treat.

Steinman's Legacy

The approaches of both Celldex and Dendreon stem from Steinman's work.  FDA approval of Provenge was very exciting and the clinical data is quite impressive, yet its sky-high cost has prevented it from meeting investor expectations.  Sales growth has stalled for the last five quarters at around $80 million, and the stock hasn't fared well either.

Celldex, on the other hand, has soared 90% YTD on strong clinical trial data and a robust pipeline.  Celldex may face competition in the immunotherapy space from Bristol-Myers Squibb's (NYSE: BMY) PD-1 inhibitor Nivolumab, which Citi Group estimates will bring in a massive $7 billion annually.  It is also possible that any marketed treatment from Celldex could work synergistically with Nivolumab, as the two treatments target different biochemical pathways.

Celldex' promise isn't limited to cancer vaccines.  The proprietary APC targeting platform provides an abundance of possible treatment courses, and Celldex has only begun to scratch the surface.  Antibodies targeted to APCs can also be conjugated to immunomodulators for immunosuppression in allergic reaction, inflammation, organ transplant, or autoimmune disorders (including an HIV vaccine in Phase 1 trials).  Celldex also obtained rights from Amgen for a potent immunostimulant, now called CDX-301. 

Bottom line

With a $114 million capital raise and $16 million cash burn in the first quarter, Celldex has plenty of fuel to carry it through rindopepimut and CDX-011 trials and continue preclinical investigation of other immunotherapy applications.  I also anticipate some pretty lucrative partnerships, as Celldex is openly shopping for commercialization and R&D partners.

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Seth Robey has no position in any stocks mentioned. The Motley Fool owns shares of Dendreon. 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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