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Why Is Celldex (CLDX) Down 27% Since the Last Earnings Report?

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A month has gone by since the last earnings report for Celldex Therapeutics, Inc. (CLDX - Free Report) . Shares have lost about 27% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Celldex Q1 Loss In Line, Revenues Beat, Shares Up

Celldex posted first-quarter 2017 loss of $0.28 per share, which was in line with the Zacks Consensus Estimate but narrower than the year-ago loss of $0.35 per share.

Total revenue in the quarter rose 15.3% year over year to $1.5 million, beating the Zacks Consensus Estimate of $0.57 million. Revenues were generated mainly under the clinical trial collaboration with Bristol-Myers Squibb Company and the research and development agreement with Rockefeller University in the quarter.

Research and development expenses declined 5.6% from the year-ago period to $25.8 million. General and administrative spend declined 22.6% to $7.2 million.

As of Mar 31, 2017, Celldex had cash, cash equivalents and marketable securities of $167.0 million compared with $189.8 million as of Dec 31, 2016. Celldex expects that this cash plus anticipated proceeds from the future sales of its common stock under the agreement with Cantor will be enough to fund working capital requirements and planned operations through 2018. However, the guidance assumes that Celldex will pay future Kolltan contingent milestones, if any, in stock and not cash.

Pipeline Update

Celldex’s most advanced pipeline candidate is glembatumumab vedotin, currently being evaluated for the treatment of triple negative breast cancer (phase IIb - METRIC study) and metastatic melanoma (phase II). Enrolment in the METRIC study is expected to be completed in September this year, with data expected in the second quarter of 2018. In the melanoma phase II study, the company said it will present data from the single-agent cohort of glembatumumab vedotin in June at the annual meeting of the American Society of Clinical Oncology (ASCO). The study also includes two new cohorts, a glembatumumab plus varlilumab arm - data expected in fall 2017 - and a glembatumumab plus checkpoint inhibitor arm, including either Bristol-Myers’ Opdivo or Merck & Co, Inc.’s Keytruda.

Apart from glembatumumab vedotin, Celldex has several promising candidates in its pipeline, including varlilumab and CDX-014 (phase I—advanced renal cell carcinoma) among others.

Varlilumab is being evaluated in combination with Bristol-Myers Opdivo in a phase II study that includes cohorts in five indications - colorectal cancer, ovarian cancer, head and neck squamous cell carcinoma, renal cell carcinoma and glioblastoma. Celldex plans to complete enrolment across all cohorts in the phase II portion of the study in the first quarter of 2018. Meanwhile, the company expects to present data from the phase 1 potion of varlilumab/Opdivo combination study at ASCO in June.

With the Kolltan acquisition in Nov 2016, Celldex gained rights to two of Kolltan’s cancer pipeline candidates, CDX-0158 (phase I; refractory gastrointestinal stromal tumors/GIST and other KIT positive tumors) and CDX-3379 (to enter phase II in 2017 in solid tumors; being evaluated as a single agent and in combination with various other drugs like Erbitux, Tarceva, Zelboraf, and Herceptin). Celldex also acquired Kolltan’s multi-faceted TAM program.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter. In the past month, the consensus estimate has shifted by 15% due to these changes.

VGM Scores

At this time, Celldex's stock has a poor Growth Score of 'F', however its Momentum is doing a lot better with an 'A'. However, the stock was allocated a grade of 'F' on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is suitable solely for momentum based on our styles scores.

Outlook

Estimates have been trending upward for the stock. The magnitude of these revisions also looks promising. It comes with little surprise that the stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.


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