Investment Opinion

Celldex Therapeutics, Inc.1                           Founded: 19831

53 Frontage Road, Suite 220

Hampton, NJ 0882

IPO: 2004

www.celldex.com

NASDAQ: GM: CLDX2

NAICS: In-vitro diagnostics and substance manufacturing 3254132

SIC: Develop and manufacture human therapeutics 28352

Principal Lines of Business: Developing and manufacturing of drugs used in treatment of devastating and difficult to treat illnesses such as cancer and auto immune diseases.2

 

  • Summary Financials: 2

 

Fiscal Period: Most recent quarter q1 2015

State Actual End Date: 31 st March 2015

State Reporting Unit: Thousands

 

Summary Income               Summary Balance Sheet

Total Revenues:   486               Total Current Assets: 364,129

Total Operating Expense: 31,467           Total Assets: 407,700

Net Income (after taxes): (30174)       Total Current Liabilities: 21,148

Basic/Diluted EPS: -1.32           Total Long Term Debt: 0

Quarterly Revenue Growth: N/A           Total Liabilities: 32,148

Total Equity: 375,552

Summary Cash Flow           Total Liabilities & Shareholders’ Equity: 407,700

Cash from Operating Activities   (32,589)     Total Common Shares Outstanding96.84 million

Cash from Investing Activities   (65035)       Total Cash/Share: 2.24

Cash from Financing Activities   191,759       Total Debt/Equity: N/A

Net Change in Cash   94,150

P/E (intraday): N/A

EPS: -1.39

Beta : 2.29

Market Capitalization:$2.5 billion

Most Recent Closing Price: $25.84

High: $ 25.90 low: $24.83

Principle Business1

The company works to create drugs that are aimed at stimulating the immune system to develop a fight against devastating diseases such as brain tumor, breast cancer kidney cancer among others.

  • Rindopepimut- Glioblastoma multiforme
  • Glembatumumab Vedotin-Metastatic melanoma
  • Varlilumab-Solid tumors

Principle Markets1

  • Rindopepimut is in clinical trials phase 3 tested for treatment of glioblastoma – A form of brain cancer originating from the astrocytes cells. Rindopepimut is a drug that targets the EGFRvIII oncogene which is a variant of the epidermal growth factor. This drug was approved by FDA for third phase trials with recruitment for participants (75) completing in 2014 December.
  • Rindopepimut is in two clinical EGFRvIII trials, one for newly diagnosed glioblastoma and a second trial for recurrent glioblastoma. 20,000-200,000 patients in the United States.
  • Glembatumumab Vedotin- Is in its phase 2 of clinical trials for the treatment of metastatic melanoma and also for breast cancer targeting glycoprotein GPNMB. Breast cancer 1.7 million cases in 2007.

Products Launched1

  • The company has exciting products which are undergoing clinical trials in their final stages with high expectations but are yet to be approved.

Earnings from Specific Product Sales:

None

Competing Products3

Sorted by companies, mechanism of action and oncogene EGFRviii targeting

  • Bevacizumab by Roche/Genentech /Chugai Avastin
  • Doxorubicin by Johnson and Johnson

Competing Companies3

  • Roche/Genentech/Chugai Avastin
  • Eli Lilly & Company
  • Johnson & Johnson

Earnings from Overall Product Sales2

Celldex reported overall revenue of $3.586 million in the year end 2014; this represented a decline in revenue from the previous year. The company’s revenues are expected to climb with its major product having received a go ahead for clinical trials by FDA

Principle Partners1

  • Amgen, Inc- Celldex has exclusive rights from Amgen to develop immune stimulatory molecules and to commercialize them. The two molecules are; FMS-like tyrosine kinase and CD40 ligand The other partnership originated from Celldex’s acquisition of Curagen which hence allows Celldex to develop human monoclonal antibodies
  • Duke University: Access to clinical data generated by the university in regards to rindopepimut.
  • Ludwig Institute for Cancer Research: Clinical research targeting cancer tumor antigens.
  • University of Southampton: To develop human antibodies targeted for immunotherapy for a variety of cancers.

Most Recent Significant Company News2

April 20th 2015, Celldex announced some very positive news on the progress Varlilumab, one of its cancer drugs in phase 2 trials. The drug had shown some anti-tumor activity in preclinical studies when used with PD-1inhibitors. Varlilumab is a human immunoglobulin that agonisticallybindsCD27 activating it. This activation in the presence of the drug, produces enhanced immune response and within safe profiles for the patients side effects.

This progress in Varlilumab trials puts the company’s future in development of anticancer immunotherapy at a step ahead. The drug is currently undergoing combined 1/2 trials and such reports are good news to the future prospects of the company as well as the biotechnology world as a whole. This may not have been the kind of news that would push its stocks higher, but it is a positive step towards the company’s developing one of its products that is in its development pipeline.

Analysis4,5,6

Celldex is viewed by some financial analysts as a company that had been able to tremendously grow its stock value in a short time. The stock value has quadrupled since 2013. The stock value is however still low enough and affordable with a small market capitalization. The company’s recent activities are greatly encouraging as well. The company has yet to make a breakthrough in developing its drugs which are in the pipeline. There has however been good news concerning the development of rindopepimut, with its trials entering the third phase of drug trials. This does in a way present a good multi-billion prospect for the company in the future. The company however being a low market capitalization and with poor experience in phase three trials is not yet assured of the outcomes and its ability to commercialize the drug if approved. The stock is viewed as a good pick for long-term future gains while others consider it too risky a buy. Analysts consider Celldex as a potential candidate in the bio-tech industry for a takeover by a bigger pharmaceutical firm. Envisaging such a turn of events, this would ultimately make the stock a good buy with good results.

Recommendation Trends

Current Month   Last Month   Two Months Ago   Three Months Ago

Strong Buy   7   7   7   7

Buy   3   3   3   3

Hold   0   0   0   0

Underperform   0   0   0   0

Sell   0   0   0   0

Data provided by Thomson/FirstCall6Investment Opinion

This is a company that has no approved drugs in the market, lacks third phase trial experience and as well lacks the experience in commercialization of products in case they pass the third stage of trials. The company in that light is a risky buy in terms of future considerations and stock valuations. The last quarter results from the company’s finances have not been reflective of a good performance with the company reporting losses and a very slight increase in revenue. This can be attributed to the company’s activities which are at now mainly research. With more money channeled towards third phase study for rindopepimut, the future of the company is pegged on the results of the trials. Given its inexperience, it is no guarantee for success. The company on the other hand has many products both vaccines and drugs in the pipeline which makes it a viable opportunity for future growth and an attractive stock. I would reluctantly invest in the stock for a number of reasons; The future of the company may be very bright if the drugs in the pipeline come through, Secondly for speculative purposes; since the company has such great ability with less experience, there is a possibility of a merger or takeover by a larger pharmaceutical in case of such a takeover in future I would stand to benefit. The final reason would be to speculate on the company’s performance if the trials for its drugs come good. In my opinion this overall is a risky stock to buy and therefore it presents a possible high return investment if the trials and commercialization of the products are successful.

Business Model

The company’s business model is set and focused around investment in research and technology so as to generate drugs that are not existence in the biotech industry. The company has most of its finances channeled into its research programs through which it has so far been able to produce a string of reliable results in development of drugs. Investing in research is seen as a sure way to break into the biotech market and eventually into the pharmaceutical market with original products. The company hence has a business model that leverages on research in immune mediating drugs and has established strong partnerships in research to achieve this.

Celldex has narrowed its research to specific areas in treatment so as to ensure they develop a product specialization while still ensuring diversity through development of vaccines. This model offers the company sustainability and offers it a way forward in its venture to develop new drugs.

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