Summary
- CLDX has a volatile past, which must be scary to current investors who are holding at nearly $25.
- Despite the volatility, CLDX's impressive data and fundamental upside remains unchanged.
- With a $2.2 billion market capitalization, CLDX is one of the best buy and hold biotechnology stocks in the market, if not the best.
Celldex Therapeutics (NASDAQ:CLDX) investors have endured one of the most rewarding and yet disappointing 40 month periods that I have seen in all my years of valuing and analyzing biotechnology companies. Granted, its $25 stock price still represents upside of nearly 1,000% since the start of 2012, but that doesn't mean its move from upwards of $35 to nearly $10 at one point last year hasn't been sickening. With the stock now clearly trending higher, Celldex investors are likely becoming wary, but as someone who recently discovered this company, has analyzed the data, and realizes the valuation of innovative cancer drugs in the field of medicine, there is only one legitimate way to play Celldex Therapeutics' stock.
That way is to buy and forget. This is a stock that will remain volatile, but if not acquired soon, it is also a stock that will continue to appreciate in the coming years. Not often can investors find an investigational stage biotechnology company with one legitimate, and effectively treating cancer drug, much less two drugs, for a company that's valued at just $2.2 billion.
What really impresses me about Celldex is the success of its Phase 3 brain cancer drug Rintega. The disease that Rintega treats is glioblastoma multiforme (GBM), both recurrent and newly diagnosed. This disease is almost impossible to treat, one where the life expectancy in newly diagnosed patients is among the worst in the cancer field, and one where no drug has worked effectively.
However, Rintega has done just that. Early last year it was tested with Avastin on patients with recurrent glioblastoma, and it prolonged survival and reduced death by the tune of 50% versus the comparable group. Then, late last-year the company announced interim data on another trial in recurrent GBM where it increased survival by over three months. Further, the company is testing Rintega on newly diagnosed patients in a large Phase 3 trial where it recently completed enrollment. Data is expected in mid-2015, and will be a huge catalyst.
With that said, Rintega's efficacy earned it a Breakthrough Therapydesignation, the FDA's highest honor. This means a faster regulatory review and more involvement by the FDA to get the drug in the market faster to treat patients. While a Breakthrough designation does not guarantee an FDA approval, it does signal a very high likelihood that Rintega will soon be FDA approved.
Celldex's other drug is in Phase 2 trials, glembatumamab, and too treats a very aggressive form of cancer. Glembatumamab treats patients with triple negative, GNMPB positive, breast cancer. These patients have undergone prior treatments with no success, and no longer respond to conventional treatments. Therefore, the fact that glembatumamab nearly doubled overall survival, and slowed the disease's progression, versus standard of care is remarkable.
With all things considered, Celldex has two drugs that will likely be FDA approved at some point in the foreseeable future. Two drugs treating very aggressive forms of cancer where all else has failed, a true testament to Celldex's emphasis on research and development. That said, the market outlook for these two drugs varies. Seeking Alpha contributor Smith on Stocks foresees an addressable market of about $300 million for Rintega, but that glembatumamab could very well generate blockbuster sales. Not to mention, Celldex has a deep pipeline, and with the company having successful data in treating its two latest stage drugs, there is reason to be optimistic that Celldex has other successful drugs buried within its pipeline. As a result of this belief, along with the data of its two late stage products, Celldex looks like a stock that will create long-term stock value for quite some time, which is why the only way to play the stock is to hold on tight.
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