Despite a widespread rally across the biotech landscape last month, the struggling clinical-stage cancer company Celldex Therapeutics (CLDX -6.89%) still managed to shed 14.8% of its value in June, according to S&P Global Market Intelligence. The primary culprits behind this sizable move lower appear to be the company's two clinical updates at the American Society of Clinical Oncology meeting early in the month.
Long story short, investors were apparently hoping for an overwhelmingly positive update for either Celldex's antibody-drug conjugate glembatumumab vedotin, or glemba, in advanced melanoma, or for the company's T-cell booster, varlilumab as part of a combo therapy with Bristol-Myers Squibb's (BMY -0.55%) Opdivo for advanced-stage colorectal and ovarian cancer.
Unfortunately, varlilumab's results were wholly unimpressive, casting serious doubt on the future of this potential combo moving forward. And while glemba's early-stage results in advanced melanoma were more upbeat with 16% of patients exhibiting reductions in the size of their tumors, this encouraging result may not be enough to break into a drug market that's arguably near its saturation point at this stage.
Celldex is roughly seven months away from unveiling glemba's potentially pivotal-stage data in triple negative breast cancer (TNBC). And with varlilumab failing to shine so far when used in conjunction with Opdivo, the company sorely needs glemba's TNBC to be a hit.
The market, unfortunately, doesn't seem to be all that optimistic about this possibility, based on how Celldex's shares have been trading so far this year. In fact, the biotech's stock is currently near its 52-week lows -- even though most biotechs have been surging higher over the past few weeks.
This trend raises the question: Is Celldex a contrarian buy? Although anything is possible with glemba's forthcoming data readout, the history of this particular class of anti-cancer therapies doesn't exactly inspire confidence, and TNBC has proven to be an extremely tough nut to crack from a pharmaceutical standpoint. In other words, Celldex appears to be fairly valued in light of its sky-high risk profile.