Image source: Celldex Therapeutics

Clinical-stage biotech Celldex Therapeutics (NASDAQ:CLDX) stock took a pounding recently, and the market hasn't let up since. Its first drug, Rintega, performed in line with previous results in earlier trials with brain cancer patients, but during its first controlled trial, the group receiving the standard of care shocked everyone by outperforming historical averages. 

Although Rintega treatment was pretty effective, the surprising control group results rendered the trial a failure. Without any approved products to sell, the market has turned its back on Celldex and the rest of its pipeline.

At the end of March, the company reported $254 million in cash and marketable securities on its balance sheet. With a market cap of about $398 million at recent prices, Celldex is seeing Wall Street severely undervaluing the remaining drugs in its pipeline.

That means if just one of these clinical-stage hopefuls begins to raise eyebrows, the stock could rise again. Let's have a look three potential rainmakers in Celldex's lineup.

1. 301 + 1401 might equal millions

Celldex stock recently received an upward nudge after the American Society of Clinical Oncology released a summary from a study the company plans to present in early June.

CLDX-301 Celldex Therapeutics

Image source: Celldex Therapeutics.

Investigators pretreated 30 out of 60 melanoma patients with CDX-301, an early-stage drug that binds to stem cells that give rise to other blood cells, including ones that could begin an immune-system attack.

Then they treated all 60 with CDX-1401, a two-sided agent. One side binds to proteins commonly found on the surface of a variety of tumor cells, and the other side binds to a blood cell that starts an immune-system response. The study summary hinted at increased immune-system activity in the group pretreated with CDX-301, and the treatments were well tolerated.

If the presentation confirms enough immune activity against melanoma to advance the combo into later-stage development, the stock could rise. Given the early stages of these programs, however, I think two other candidates further along the drug development path are worth more attention.

2. Varlilumab: Big pharma combos ahead?

A bit closer to the finish line is Celldex's varlilumab, a drug that stimulates T-cells to attack cancer cells. Bristol-Myers Squibb's superstar cancer therapy Opdivo makes it harder for cancer cells to hide from T-cells. Naturally, the pair began testing Opdivo and varlilumab in combination about two years ago.

After determining the combo is relatively safe and well tolerated, they began a phase 2 trial with 134 patients spread across 6 different types of cancer this April. They're mostly looking for favorable response rates, so we might hear news from this study by year's end.

Bristol isn't the only big player interested in varlilumab. Roche's recently approved cancer therapy, Tecentriq, also makes it difficult for cancer cells to hide from T-cells. Last December, the Swiss drugmaker began supplying Celldex with Tecentriq for combination testing with varlilumab in a variety of cancers .

It's early yet, but if the combination studies show promise in one or more tumor types, Bristol or Roche could be swayed to get more involved. If either announces another deal to run larger trials, Celldex stock could get a nice boost.

3. Glembatumumab vedotin

Progress with CDX-301, CDX-1401, and varlilumab could cause Celldex stock to rise, but this biotech's biggest chance to sparkle is glembatumumab vedotin, or just glembat. This antibody-drug conjugate has a cancer-recognizing protein on one side and a super-toxic chemotherapy drug on the other. The two are connected using technology from Seattle Genetics that doesn't let go of the chemo-bomb until it's invited inside a cancerous cell.

Antibody-drug conjugate

Image source: Celldex Therapeutics.

It turns out, lots of different cancer cells overexpress a glycoprotein called gpNMB on their surface. The protein side of glembat binds specifically to gpMNB, which brings it into tumor cells like a Trojan horse. The drug showed some impressive results in a small group of triple-negative breast cancer patients years ago, and the company began a randomized, controlled study in this small population.

The trial was later amended to support applications in both the U.S., and EU, and it should finish enrolling patients by the end of the year. The primary goal is progression-free survival, so we won't know if it's a winner until late next year at the earliest. If it is, however, this drug could have blockbuster potential, given that triple-negative breast cancer affects roughly 170,000 patients worldwide who have few effective treatment options.

Failed brain cancer drug Rintega chewed through a great deal of resources and raised plenty of hopes. It's easy to understand why the market was so harsh on Celldex when it failed. However, if the results seen in glembat's smaller trial are repeated in the larger ongoing study, this small biotech could be a big winner in the long run.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.