Summary
- Celldex has failed too many times to inspire confidence.
- The company's current valuation is also quite high.
- However, the urticaria data is promising.
We covered Celldex ( CLDX ) way back in 2017, when the company was just in between failures. Since then, it has failed some more - Glembatumumab hasn't turned out well, and joins a long list of failed molecules from Celldex. Some of these are CDX-1135 from 8 years ago, Rintega from 7 years ago, and now this one. I am afraid to research whether there's been others in between, because I am not sure if some other failure won't turn up. So, Celldex current pipeline is here, and it will be unrecognizable by old timers:
Celldex pipeline (Celldex website)
Currently, the lead candidate is Barzolvolimab (CDX-0159), a KIT antagonist monoclonal antibody. The molecule is targeting four indications in phase 2 and 1 trials. These are - Chronic Spontaneous Urticaria ((CSU)), Chronic Inducible Urticaria (CIndU), Prurigo nodularis (PN') and Eosinophilic esophagitis (EOE').
In June and then again in December, this asset produced data that was presented by the company at two conferences. Data showed that Cold Urticaria patients achieved Complete Response with Single Dose of 1.5 mg/kg Barzolvolimab. All 9 patients in the trial achieved a CR, including the 4 patients with disease refractory to omalizumab. Duration of response was long and was dose dependent, with the median duration of response for patients treated at 1.5 mg/kg was 51+ days (7+ weeks) compared to 77+ days (11+ weeks) for the patients with cold urticaria treated at 3.0 mg/kg.
A year before this, 3.0 mg/kg of Barzolvolimab also showed 95% complete remission in urticaria patients. The company says that skin mast cells were depleted by the treatment, and Kit kinase controls the activity of mast cells. This proves that the mechanism behind the molecule is correct. There are other KIT inhibitors, mainly used to target cancers, but Celldex says Barzolvolimab is 100 to 1000 fold more potent than these competing molecules.
It looks possible that Barzolvolimab will succeed in an inflammation disease where a number of other molecules failed in cancer. Here's a list of past Celldex failures:
Celldex failed molecules (Fiercepharma)
Barzolvolimab targets urticaria, a type of allergic reaction to food and medicines that causes skin rash. Current treatment option is Novartis' xolair, which is a ~4bn franchisee but a moderately effective drug. Xolair's treatment effect is only about 40 to 50%, and that too with multiple doses. Barzolvolimab is able to achieve near 100% complete remission after just a single dose, and the drug is well tolerated, with possibility of increasing dose to enhance treatment effect duration, which is dose dependent.
About the diseases targeted, endpts says:
The diseases in question are two forms of chronic inducible urticaria. The first, called symptomatic dermographism, makes up more than half of cases. Patients can develop severe hives in response to little stimulation on the skin, such as putting on socks. The second condition, known as "cold urticaria," makes up 16% of cases and causes hives outbreaks when skin is exposed below certain temperatures.
More from endpts re the xolair comparison:
We asked Celldex SVP/CMO Diane Young about the Xolair comparison, and she spotlighted a 36% complete response for Roche's Xolair on their label for urticaria. Chris Howerton, an analyst who covers Celldex for Jefferies, has also flagged a 44% Phase III CR rate, noting that anything over 50% would be a nice win for Celldex.
According to analyst estimates, of the various indications approved for xolair, it makes some $1.5bn in those currently being targeted by Barzolvolimab.
Financials
CLDX has a market cap of $2.03bn and a cash reserve of $323mn. The valuation is excessive given that the company generates hardly any revenue, and despite its long history, its current pipeline is only in the phase 2 stage. Research and development (R&D) expenses were $21.6 million in the third quarter of 2022 while general and administrative (G&A) expenses were $6.5 million. At that rate, they have cash for more than 10 quarters.
Bottomline
CLDX has a long history of major failures so people may rightly worry. However, those failures were not exactly management failures, but failures in the clinic of some very promising molecules. Early data from the current lead asset is also very promising, and competitive. They are targeting a multi-billion dollar opportunity and early but sustained data releases have shown that their molecule is beating the current standard of care hands down. They have a few data catalysts in 2023, but regulatory steps will occur probably only in 2025. The stock is trading quite high, however if the data continues to be positive, then any significant dip is an opportunity.
For further details see:
Celldex: Long List Of Failures, High Valuation, But Good Data Recently