Please ensure Javascript is enabled for purposes of website accessibility

This One Drug Alone Makes Celldex Therapeutics, Inc. a Buy (Hint: It's not Rintega)

By Cory Renauer - Updated May 23, 2018 at 10:06AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

With over two-thirds of its market cap in cash and marketable securities, one successful candidate could make this stock a winner.

Image source: Celldex Therapeutics

Over the past year, clinical-stage biotech Celldex Therapeutics (CLDX 7.03%) has lost over 86% of its value. A phase 3 failure during a generally bearish period for your industry can do that to a company that spends over $100 million a year on R&D without a product to sell.

If you think the market went way too far in punishing the stock after Rintega failed to beat the standard-of-care in brain cancer this March, you're not alone.

Wall Street seems to have overlooked a couple important points about this promising biotech. First, its runner up drug candidate to Rintega, Glembatumumab Vedotin (formerly CDX-011, and affectionately dubbed Glembat for the rest of this article) is in several clinical trials, any one of which could support a new drug application. What you'll find even more shocking is that the company finished last year with cash and marketable securities of nearly $290 million. With a market cap of around $400 million, that puts an awfully small price on the company's existing pipeline.

In fact, I'll argue that Glembat alone makes this company a buy. Let's have a closer look.

Delivering death to cancer cells
Glembat is a harmless protein attached to a chemotherapy drug so potent, it can't be used as chemotherapy. Glembat binds specifically to gpNMB, another protein found all over the surface of several different tumor cell types. It's like a tiny Trojan horse: once Glembat binds to gpNMB, it's invited inside -- and then it releases its super-chemo drug. 

Image source: Celldex Therapeutics,

Turns out gpNMB is overexpressed on the surface of lots of different tumor cells. Celldex is taking the financially responsible route, and focusing on larger indications first such as breast, skin, and (most recently) lung cancer. 

The National Cancer Institute is so thrilled with Glembat's potential that it's sponsoring two early stage trials with patients suffering from extremely rare forms of eye and bone cancer.

A positive for triple-negative
While Celldex has gained some recent attention for beginning an early stage trial in lung cancer patients, it's an ongoing study with Glembat in triple-negative breast cancer that overexpress gpNMB that investors should stay focused on. The trial, named Metric, began in 2013 and is limited to the U.S., Canada, and Australia.

In late 2014, members of the European Medicines Agency (the EU's FDA) suggested some changes that would expand patient criteria. Those amendments boosted the number of patients to 300, and its success could support an application in the U.S. and EU.

Image source: National Cancer Institute.

In a previous trial with 122 heavily pretreated breast cancer patients with lots of gpNMB on their tumors, Glembat slowed progression of the disease and lengthened overall survival, but not enough to be considered statistically significant. When investigators sifted out patients with triple-negative breast cancer, progression free and overall survival results were significant.

Triple-negative breast cancer gets its name because the tumor cells don't express three common targets for existing therapies, leaving these women with a poor prognosis and limited options. It accounts for just 10% to 15% of all breast cancers, or about 170,000 cases annually worldwide. 

Just how many of these women's tumors overexpress gpNMB is hard to pin down. So far it seems like a high percentage, and gpNMB is frequently seen in metastatic tumor cells -- the extra-dangerous type that break free from their first location and set up shop elsewhere.

A buy? Oh yeah.
Given the lack of options available to triple-negative breast cancer patients, I think an approval in this indication alone would give the drug billion-dollar blockbuster potential. With four additional indications in exploratory trials, it could go much further.

The only upsetting part so far about Glembat is that enrollment of these patients in the trial that could lead to its approval isn't expected to complete until the second half of the year. I wouldn't expect results until well into 2017. 

At least the wait won't be dull. Glembat is just one of several clinical-stage candidates at Celldex. It's immuno-oncology candidate, varlilumab, inspires the immune system to attack tumor cells and is in combination studies with Bristol-Myers Squibb's Opdivo and Roche's atezolizumab.

While I think just one highly specific breast cancer indication for Glembat makes Celldex a buy, it's only the tip of this stock's iceberg.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Celldex Therapeutics, Inc. Stock Quote
Celldex Therapeutics, Inc.
$29.99 (7.03%) $1.97

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.