Up-and-coming biotech Celldex Therapeutics (NASDAQ:CLDX) reported its second-quarter financial and operational results after the market closed on Monday. Here are three key things investors need to know about those results.
1. Most of the numbers really don't matter
Celldex reported revenue of $2.2 million during the second quarter and a net loss of $32.4 million, or a loss of $0.33 per share. Both were better than expected. The consensus analysts' estimate for revenue was $450,000 with a projected net loss of $0.34 per share.
The reality is, though, that these financial results really don't matter much at this point. Celldex is a development-stage biotech. No one expects much in terms of revenue or earnings. Sure, Wall Street analysts come up with their estimates on how they expect the company to perform, but missing or beating those estimates simply won't make much of a different right now -- with one significant exception.
2. One number does matter
That leads us to the one number that actually does matter -- available cash. If Celldex spent a lot more than expected, it could negatively affect the company's cash position. That would potentially cause concern among the investor community.
As it turned out in the second quarter, though, Celldex didn't disappoint. The company's cash, cash equivalents, and marketable securities as of June 30 totaled $334.0 million. This reflected a quarterly net cash burn of $25.8 million. Celldex thinks it's in good shape to fund its activities through 2017. That's music to the ears of shareholders who don't want to see the stock diluted through another public offering.
3. What matters most is how quickly Rintega and glemba get to market
Celldex claims a market cap of over $2 billion. That's a lot of money for a company that won't see profit for quite a while. However, the anticipated potential for the biotech's two drug candidates has been significant enough to convince many investors that Celldex is worth that amount.
Many of those investors were disappointed with the latest update on regulatory approval for Rintega, which caused Celldex shares to fall nearly 20% at one point during after-hours trading. Celldex has had ongoing discussions with the U.S. Food and Drug Administration about filing for approval for the brain cancer vaccine. The company thinks it will need to wait until its phase 3 ACT IV study is completed rather than be able to rely on phase 2 ReACT study data for the regulatory filing.
This really wasn't unexpected. However, some investors probably held out hope that Rintega could just maybe make it to market more quickly. As it stands, it will probably be 2017 before the drug could gain approval.
Celldex didn't have any better-than-expected news about cancer drug glembatumumab vedotin (often referred to by its abbreviated name, glemba). Patient enrollment is picking up speed in the phase 2 of glemba as a potential treatment for patients with metastatic triple negative breast cancers that overexpress gpNMB. Enrollment also continues for another phase 2 study of glemba in treating metastatic melanoma. For now, though, regulatory approval of the drug isn't on the horizon.
Shares of the small biotech have been up as much as almost 75% this year, but they were down 4% for the year before Celldex reported its latest results. Expect more volatility in the months ahead.
As completion of the pivotal studies for Rintega and glemba draws nearer, though, Celldex could experience a surge. The potential for both drugs to be market winners seems solid. Celldex's stock price in the meantime, however, will probably be very fluid.
Keith Speights has no position in any stocks mentioned. The Motley Fool recommends Celldex Therapeutics. 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.