On Wednesday, Celldex Therapeutics (NASDAQ:CLDX) reported fourth-quarter financials. However, that wasn't what caused its shares to jump on Thursday. Instead, it was management's clinical-trial progress that sparked investor's optimism. Specifically, the company expects to report pivotal phase 2b trial data for glembatumumab vedotin (glemba) soon, and if that data is good, it could move this stock out of biotech's bargain bin.
Back on track?
Celldex Therapeutics investors saw the value of their shares more than cut in half after the company's Rintega flopped in a late-stage brain cancer trial in 2016. The disappointment sent shares reeling and forced management to execute a major restructuring, something that investors hope won't happen again when management reports glemba results in breast cancer patients next quarter.
Those results will show whether glemba is an effective treatment for triple-negative breast cancer patients whose tumors overexpress gpNMB, a protein that can help cancer cells invade and metastasize. Overexpression of gpNMB is correlated with a reduced time to disease progression and poor survival. Currently, these patients have limited treatment options.
It's anyone's guess how this data will read out, but midstage trial results were encouraging. In those trials, heavily pre-treated patients with advanced breast cancer were randomized 2:1 to receive glemba or "investigator's choice" (IC) chemotherapy. The overall response rate (ORR) in glemba patients with triple-negative breast cancer and gpNMB expression levels greater than 25%, was 40%. Alternatively, the ORR for the IC arm of the study was 0%. Glemba also outperformed the IC arm on progression-free survival and overall survival.
If glemba delivers similar results to those next quarter, it could be a needle-moving event because triple-negative breast cancer accounts for about 15% of breast cancer patients and roughly 40% of triple-negative breast cancer patients overexpress gpNMB. According to the National Cancer Institute, there were roughly 253,000 new cases of breast cancer diagnosed in the U.S. last year.
The primary endpoint of the study is progression-free survival and the secondary endpoints of the study include response rate, overall survival (OS), and duration of response. If glemba hits the mark on progression-free survival, management's goal is to file for Food and Drug Administration (FDA) approval next year.
A success would be welcome, especially since the company is burning through cash. It finished December 2017 with $139 million in cash and equivalents on its books, but that was down from $190 million at the end of 2016. Based on the company's current spending, management thinks it has enough financial wiggle room to get it through 2019, but that doesn't include any ramp up in spending that could be associated with preparing to commercialize glemba -- if its trial pans out. Therefore, a licensing deal or an additional issuance of shares could be in the cards, regardless of how glemba's triple-negative breast cancer trial pans out.
The glemba data isn't the only data investors could see soon, either. The company has completed enrolling patients in a study evaluating glemba alongside a checkpoint inhibitor in metastatic melanoma, and it's completed enrolling patients in a study combining another one of its drugs, varlilumab, with Bristol-Myers Squibb's (NYSE:BMY) Opdivo in various cancers, including colorectal cancer, ovarian cancer, and kidney cancer. Management expects that Bristol-Myers Squibb will report data from this combination study beginning this summer.
Overall, Celldex Therapeutics has important catalysts coming that could cause its shares to pop or drop. Admittedly, the binary nature of its upcoming results makes this a high-risk stock, but with a market cap of only $375 million, it could be worth adding some shares to aggressive portfolios.