Why This Tiny New Jersey Biotech Looks Like Oracle in 1986
June 12, 2017
By Mark Terry, BioSpace.com Breaking News Staff
Investors and analysts are casting around for companies that might today look similar to blockbuster companies in the 1980s. For example, Intercept Pharmaceuticals (ICPT) today might be comparable to Microsoft in the 1980s. And today, George Budwell, writing for The Motley Fool, looks at a company that might compare to Oracle (ORCL) in 1986. The company? Celldex Therapeutics .
When Oracle launched its initial public offering (IPO) in 1986, it had revenue of about $55 million. Today it’s annual revenue is greater than $35 billion.
Celldex Therapeutics is headquartered in Hampton, NJ. It is focused on the immune system. It has a pipeline in immunotherapy and targeted cancer therapies with six company-led clinical trials across five product candidates, including a registration trial in triple negative breast cancer and five Phase I and II trials in difficult-to- treat indications.
This seems like a longshot. It’s never really recovered from a March 2016 failure of its Rintega cancer vaccine. At that time, an independent Data Safety and Monitoring Board (DSMB) determined the study should be stopped based on interim analysis of data from its Phase III, ACT IV study. Rintega (rindopepimut) is a cancer vaccine designed to focus the immune system on a specific tumor type, in the case of that trial, in patients with newly diagnosed EGFRviii-positive glioblastoma (GMB), a type of brain cancer.
But Budwell feels that investors are ignoring two of the company’s other value drivers—glembatumumab vedotin (glemba) for triple negative breast cancer patients who over-express the protein called gpNMB, and varlilumab, an immune-booster that is being evaluated in a variety of solid tumors with Bristol-Myers Squibb ’s checkpoint inhibitor Opdivo.
He notes, “Where could Celldex’s shares be in, say, five years from now? If glemba strikes gold in its ongoing mid-stage trial and goes on to warrant an accelerated regulatory filing, this niche cancer drug could rapidly generate upwards of $400 million in sales. So, even under a scenario where the market only assigns Celldex a price-to-sales ratio of, say, 3, the company’s shares would still be trading somewhere along the lines of 400 percent higher than where they are today. And that’s not accounting for any additional licensing or royalty payments stemming from varlilumab.”
On June 5, Celldex presented Phase I data of varlilumab and Opdivo at the 2017 ASCO Annual Meeting in Chicago. Most of the patients enrolled in the trial had PD-L1 negative tumor at baseline and had Stage IV, heavily-pretreated disease. 80 percent of the patients presented with refractory or recurrent colorectal or ovarian cancer. The combination of valilumab and Opdivo was well tolerated at all varlilumab dose levels without evidence of increased autoimmunity or inappropriate immune activation. “Notable disease control observed (stable disease or better for at least 3 months), considering the Stage IV patient population, contained mostly colorectal and ovarian cases (80%),” the company stated.
“Combining PD-1 inhibition with a potent T cell activating agent provides the opportunity to broaden the number of patients that benefit from checkpoint blockade,” said Rachel Sanborn, co-director of the Providence Thoracic Oncology Program, one of the presenters, in a statement. “While early, we have evidence that this combination does not add toxicity, can turn some ‘immuno-cold’ tumors hot, and may have clinical benefit, including in some patients who are not likely to respond to monotherapy. Further elucidating the role of intermittent versus chronic T cell activation through the comparison of alternate varlilumab dosing regimens is an essential component of the ongoing Phase II study and could be important in optimizing the potential of this combination.”
Celldex is currently trading for $2.24. Its year-high was on November 14, 2016, when it traded for $4.92.
Budwell does note, however, that even with a huge upside, investors should “make sure that your risk tolerance is high before considering purchasing stock. But then again, Oracle was also anything but a safe bet way back in 1986, when most onlookers thought the tech company was headed for the dust bin of history.”