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Better Buy: Celldex Therapeutics, Inc. vs. Juno Therapeutics Inc

By Cory Renauer - Feb 28, 2017 at 7:28AM

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Celldex and Juno quickly bounced back from high-profile clinical trial failures, but which biotech stock is the better buy right now?

Celldex Therapeutics, Inc. (CLDX 6.17%) and Juno Therapeutics Inc (JUNO) are two of last year's worst-performing biotech stocks. Both companies suffered upsetting failures with their leading new drug candidates that pushed the possibility of future product sales further into the future.

Luckily, both companies had additional candidates to pivot toward after their respective frontrunners crashed and burned. To see which of these cancer-focused drugmakers is the better buy right now, let's take a look forward to see how they compare.

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Image source: Getty Images.

Celldex Therapeutics, Inc.: Strength in diversity

Celldex's stock cratered after its brain cancer vaccine Rintega failed to outperform standard chemotherapy in early 2016, and it hasn't quite recovered yet. Luckily, a return to pre-Rintega crash prices, or much higher, could be around the corner.

The company's new lead candidate, glemba, is a unique cancer therapy that attaches to a protein found on many tumor cell surfaces called gpNMB. Once inside the cell, it releases an ultra-lethal dose of chemotherapy.

Unlike Rintega, glemba had some evidence of a statistically significant benefit over standard chemo before Celldex decided to sponsor a large and expensive trial intended to support a new drug application. During a study with heavily pretreated breast cancer patients whose tumors overexpress glemba's target, a subset with an extremely difficult-to-treat form of the disease survived 166% longer without showing signs of disease progression than those receiving standard chemo. If glemba can repeat this success with similar patients in an ongoing study, the stock would soar.

While it looks like glemba has a solid chance of becoming Celldex's first commercial-stage product, the little biotech has more irons in the fire than its size suggests. Varlilumab is a novel compound that stimulates the immune system to attack cancer cells. It's currently being tested in combination with two of the most successful new cancer immunotherapies available today, Opdivo from Bristol-Myers Squibb and Tecentriq from Roche.

Another Celldex candidate, CDX-1401, is in the middle of a combination study with Incyte's epacadostat for the treatment of ovarian cancer. Last November, it acquired another pair of clinical-stage candidates along with privately held Koltan Pharmaceuticals. With a slew of differentiated drugs in human testing, there should be plenty of data for this biotech's investors to look forward to.

Juno Therapeutics Inc: Positive responses

Unlike Celldex's varied stable of targeted cancer drug candidates, Juno's placed all its chips on CAR-T therapies, which involve removing patients' immune cells and then reworking them to recognize and attack cancer.

The CAR-T process is complicated, but it's produced encouraging response rates among blood cancer patients who had run out of treatment options. The company's new lead candidate, JCAR017, drove eight of 19 patients' lymphoma into complete remission for at least three months. This would be an impressive feat with recently diagnosed patients, but this group had already relapsed after a median of four prior lines of therapy.

Juno has plans to start a larger study with JCAR017 later this year, and if all goes well, it could lead to an approval in 2018. While investors should applaud the biotech's ability to swiftly get back on its feet after a clinical meltdown, there's a slight wrinkle. Kite Pharma has a similar therapy that's much further along on the road to its first approvals, including the same lymphoma indication in which JCAR017 scored winning marks. Kite already started submitting data for its experimental CAR-T therapy, called Axi-Cel, to the Federal Drug Administration (FDA), and expects to finish filing the application by the end of March.

Running the numbers

If Juno's JCAR017 can repeat its previous success without any associated patient deaths, an approval could lead to annual sales of around $2 billion at their peak. Successful trial data could easily lift the stock far above present levels. On the other hand, at a recent enterprise value of about $1.52 billion, it also has a long way to fall if the company runs into more unexpected trouble.

Celldex Therapeutics already appears to have reached a bottom with a recent enterprise value of around $131.2 million. An eventual breast cancer approval for glemba alone would send the beaten-down biotech stock rocketing into the stratosphere from present levels.

With a stable of differentiated clinical-stage candidates to fall back on, Celldex also has an arguably larger safety net than Juno in the event of another unexpected setback. That's why Celldex looks like the better stock pick right now.

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Stocks Mentioned

Celldex Therapeutics, Inc. Stock Quote
Celldex Therapeutics, Inc.
$31.14 (6.17%) $1.81
Juno Therapeutics, Inc. Stock Quote
Juno Therapeutics, Inc.

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