Keep Your Eyes on Celldex

Up-and-coming biopharmaceutical company Celldex Therapeutics (NASDAQ: CLDX  ) made news twice last week. Celldex announced two results -- one from its third-quarter financial performance and one from a phase 1 clinical study. Which generated more excitement from the market -- and should cause investors to keep their eyes on Celldex?

Source: Celldex Therapeutics.

Results vs. results
On the surface, Celldex's third-quarter results didn't look too hot. The company reported a net loss of $23.1 million, or $0.29 per share. That's worse than the $0.25 per share loss from the same period in 2012. It's also worse than the $0.24 per share loss expected by analysts.

Celldex reported revenue of $1 million in the third quarter, down from $3.5 million last year. Most of that drop was due to lower royalties from GlaxoSmithKline (NYSE: GSK  ) for infant rotavirus vaccine Rotarix. The licensing agreement with Glaxo ended with the last patent expiration for Rotarix. That source of revenue for Celldex is now dried up.

Even with a worse-than-expected loss and meager revenue, the fact is that financial results don't exactly make a big difference for Celldex at this point. What matters most are the company's opportunities for the future.

That's why investors were revved up by positive results from a phase 1 study of human monoclonal antibody CDX-1127. The safety profile for CDX-1127 appeared to be quite favorable. This is promising news for Celldex, particularly since other cancer drugs haven't fared so well in that regard.

For example, Adcetris from Seattle Genetics (NASDAQ: SGEN  ) carries a boxed warning about a usually fatal viral disease called progressive multifocal leukoencephalopathy, or PML. Roche's (NASDAQOTH: RHHBY  ) Avastin doesn't have a boxed warning, but the drug can cause severe side effects including gastrointestinal perforation and serious bleeding.

While the phase 1 study primarily focused on safety, Celldex stated that CDX-1127 demonstrated "clear biologic activity and promising signs of clinical activity" in the patient group. Of course, phase 1 is, by definition, early in the game. But if later-stage trials confirm the positive early findings it could eventually lead to Celldex joining the battle with Seattle Genetics and Roche.

Looking ahead
Investors are also intensely interested in results related to Celldex's lead drug, Rindopepimut. The company is scheduled to discuss preliminary data from a phase 2 study of its cancer vaccine in combination with Roche's Avastin at the World Federation of Neuro-Oncology meeting on Nov. 24. A phase 3 study of Rindopepimut is also under way in combination with Merck's Temodar in treating EGFRv3-positive glioblastoma.

Results are also expected by the end of this year for experimental drug CDX-1135. Celldex has a small pilot study in process to investigate the drug in treating Dense Deposit Disease, or DDD. This is a rare renal disease that currently has no approved treatment.

Another promising drug in Celldex's pipeline, CDX-011, should begin enrollment in an accelerated approval registrational study by the end of 2013. CDX-011 uses technology licensed from Seattle Genetics to fight metastatic breast cancer. The study that is about to begin will compare the drug directly against Roche's Xeloda. Celldex is also evaluating further clinical studies for CDX-011 in treating metastatic melanoma.

With Celldex up a whopping 266% year to date, some investors might wonder if the stock could run much higher. I suspect that it could. Shares have retreated more than 30% since Oct. 1 even with the big jump last week. Chalk much of that decline up to profit-taking. Good news on any of the drugs in its pipeline could reignite Celldex's terrific climb. Keep your eyes on this stock.

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