Down 47%: Why the Market is Wrong About Celldex Stockhttp://www.fool.com/investing/general/2014/07/22/down-47-why-the-market-is-wrong-about-celldex-stoc.aspx Brian Nichols
July 22, 2014
Celldex Therapeutics Inc (NASDAQ: CLDX) stock is down about 47% so far year-to-date. This decline was jump-started after the company's decision to close its early stage study on CDX-1135 back in March, a potential competitor to Alexion Pharmaceuticals (NASDAQ: ALXN). While this was a big blow, was it really worth what Celldex has lost?
What's the story on CDX-1135?
Treating DDD was unlikely to be a huge fundamental catalyst, but the drug's structure was exciting to investors. CDX-1135 was a complement modulator that worked by binding to certain components linked to rare diseases. Alexion Pharmaceuticals's Soliris is the same kind of drug, binding to C5; the only difference is that CDX-1135 also binds to C3.
With Soliris being the priciest drug in the U.S., having multiple uses, and being expected to generate sales over $2 billion this year, investors were excited about CDX-1135's developmental possibilities. Theoretically, if CDX-1135 was successful, many believed it could one day challenge Alexion in treating many of the same diseases. This would consequently potentially effect Soliris' pricing and Alexion's $30 billion market capitalization. It was a big blow for Celldex to close the program, but it was possibly a big win for Alexion.
A deep value-driving pipeline
In a difficult-to-treat breast cancer population who have failed three prior treatments, more than 30% of patients responded to Glembatumumab vedotin. As for Rindopepimut, it's being studied in a Phase 3 trial as well. Moreover, Celldex doubled the size of the trial last year after identifying strong anti-tumor activity.
Going deeper in the pipeline
Essentially, Varlilumab binds to cancer cells while activating certain cancer-killing proteins; it also prevents the growth of cancer-causing cells. While a maximum dose is yet to be found, Celldex found that eight of 15 patients saw their cancer stabilize with three seeing significant tumor shrinkage partway through an early-stage trial -- although it's important to