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Actionable news in CLDX: Celldex Therapeutics, Inc.,

The Long Case For Celldex

Summary

Celldex has two promising product candidates with significant peak sales potential.

Latest data showed long-term survival benefit of Rintega.

Glembatumumab is another interesting product candidate.

Upside potential could be significant if both candidates are approved and the company also has some pipeline candidates in earlier stages of development that could drive long-term growth.

Initiating Celldex with a buy rating.

Celldex (NASDAQ:CLDX) is a clinical stage biotech company with a very promising pipeline. The company has two products that could drive significant gains for long-term shareholders in the following years and several other programs in early clinical stages. Rintega and Glembatumumab (Glemba for convenience) could generate combined peak sales around $1.5 billion which compares favorably to the company's current market cap of just around $1.55 billion. I am initiating Celldex with a buy rating. If the company manages to get both late-stage candidates into the market the upside potential could be well in the triple digits and I think that the company is also an attractive takeover target.

Celldex reveals promising data on Rintega

Celldex has revealed promising data on Rintega in recent months. The company is currently conducting two clinical trials in EGFRvIII-positive glioblastoma (GBM) - a phase 3 study in newly diagnosed GBM and a phase 2 study in recurrent GBM. The company reported survival data from its phase 2 study in patients with EGFRvIII-positive, recurrent GBM that met the primary endpoint of progression-free survival at six months. EGFRvIII-positive glioblastoma patients typically have a worse prognosis compared to the overall glioblastoma population with the median time from recurrence to death of 8.7 months. Rintega was used along with bevacizumab (Avastin) in relapsed GBM patients and nine out of 10 patients on Rintega remain alive compared to 2 out of 5 patients on the control arm and the survival rate for patients on Rintega after two years is 25% compared to 0% for control patients.

Source: Celldex investor presentation

The results also showed a significant reduction in the use of steroids on the Rintega arm. Rintega was also well tolerated without additive toxicity to bevacizumab. Rintega has an orphan drug designation in both the EU and the US and the FDA has granted Rintega breakthrough therapy designation for adult patients with EGFRvIII-positive glioblastoma. GBM has an incidence of 2 to 3 per 100,000 adults per year and accounts for 52% of all primary brain tumors and 30% of GBM patients have EGFRvIII-positive GBM. Peak sales estimates range from $400 million to more than $1 billion. Applying a 60% probability of success and a price to peak sales ratio of 5 results in Rintega's value between $1.2 billion and $3 billion (based on peak sales estimates of $400 million and $1 billion respectively). I think that Rintega is a valuable asset and if and when we get positive phase 3 results, the probability of approval will rise and so will the potential value of the drug for Celldex. I believe that Rintega alone could provide substantial upside to Celldex's share price in the following quarters, especially if we take Celldex as a takeover target (more on that later).

Glemba's potential is even higher

Glembatumumab vedotin "is an antibody-drug conjugate, or ADC, that consists of a fully-human monoclonal antibody, CR011, linked to a potent...


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