June 2, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Hampton, New Jersey - Celldex Therapeutics, on first glance, doesn’t look like the type of successful billionaires would invest in. Yet The Motley Fool notes that five billionaire-founded funds recently invested heavily in the company and analyzes why.
Certainly the company’s share price trend doesn’t explain it. On July 14, 2015, shares traded for $26.12, dropped to $10.38 by Sept. 29, recovered some to $18.01 on Nov. 30. Then it started a long drop to $3.17 on Mar. 17, 2016. Shares are currently trading for $4.73.
At the company’s recent first-quarter reporting, company co-founder, president and chief executive officer, said in a statement, “While the recent setback of the RINTEGA program was certainly a disappointment, the Company is focused on executing across the breadth and depth of our pipeline, including six ongoing company-led clinical trials—the pivotal METRIC study in triple negative breast cancer, two Phase II studies across a broad range of indications and multiple Phase I/II studies that are actively enrolling patients.”
But recently five funds bought up 3.3 million shares of Celldex stock.
Cory Renauer, writing for The Motley Fool, notes that although share prices are rising, they’re still cheap. The company has about $261 million in current assets as of March, and he says that, “Even after the stock’s recent climb, I think its market cap of about $449 million severely undervalues its drugs in development, one of which is in a trial that could lead to an approval.”
That drug is Glembatumumab, which is in a Phase IIb trial to treat triple-negative breast cancer. It is also being investigated in an open-label Phase I/II safety and tolerability trial in patients with unresectable stage IIIB or IV, gpNMB-expressing, advanced or metastatic squamous cell carcinoma (SCC) of the lung.
Renauer wrote, “Glembat didn’t outperform investigators’ chemo choices among the entire group strongly enough to be considered statistically significant. However, among triple-negative breast cancer patients, it improved progression-free survival and overall survival enough to be considered highly significant.”
If the drug is approved for the triple-negative breast cancer indication alone, it could hit $1 billion in annual sales. Various other rare cancers, as well as ongoing trials in melanoma, could drive those sales higher.
The company also has other pipelines assets that show promise, although it’s going to need money to advance them. The company’s varlilumab, an immuno-oncology drug, is being evaluated with Bristol-Myers Squibb’s Opdivo and with Roche’s Tecentriq. Renauer says, “Should one of these combinations or Celldex’s earlier-stage candidates score, this could become one of the best-performing stock in these billionaire money-managers’ portfolios.”
Or not.
Biotech stocks and drug development in general is pretty risky. The biggest buy was from Millennium Management, which is managed by Israel Englander. Millennium acquired 2.55 million shares in the first quarter, that still only accounts for 2.41 percent of Millennium’s total portfolio. If Celldex tanks, Millennium won’t be happy about it, but won’t be destroyed either.
“Clinical-stage biotechs are risky, no matter how sure they seem,” Renauer writes. “Performance at the commercial stage is nearly as unpredictable as clinical trials. While everything visible at this point screams ‘buy,’ I wouldn’t bet the farm on this—or any other single biotech, for that matter.”
