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Good Luck Chasing Celldex

NEW YORK ( TheStreet) -- Ask any seasoned investor about her or his definition of "regret" and you'll likely get a mixed bag of responses. Whether it's buying too high or selling too low -- lament, or what is coldly known in the market as "crying over spilled milk," goes with the territory.

Nevertheless, as closely as I follow the biotech sector, I'm having a hard time coming to terms with not having pulled the trigger on Celldex Therapeutics (CLDX - Get Report) earlier this year. This is despite my having proclaimed about how cheap I thought it. Since then, not only have shares of Celldex soared 235% year-to-date, but since January 2012 the biotech company has rewarded shareholders with gains of more than 700%.

Although it's certainly possible that new developments regarding the company's brain cancer treatment Rindopepimut and its orphan product CDX-1135, which is use to treat dense deposit disease can propel the shares higher, I believe this is one of those situations where those who are on the sidelines have to raise the white flag and/or say goodbye. This ship has sailed -- at least for now.

But understand, this has nothing to do with my lack of confidence in Celldex's management to continue steering this ship in the right direction. As an investor with a strong bias towards value and a low-risk threshold, Celldex's stock price just never seemed right to me -- at least not relative to Roche (RHHBY) and Bristol-Myers Squibb (BMY). Not to mention, Celldex has had a very unattractive cash-burn rate, which led to almost $70 million in negative cash flow over the past year.

Now, this is not unusual for a young biotech company, especially one that is managing various drug trials that are in all three study phases. Nor am I bringing up its cash situation to justify my lack of conviction for not having pulled the trigger on this trade. But I do have to question the Street's overzealousness towards Rindopepimut.

It's true the recent efficacy data have been encouraging, yes. I will also grant Rindopepimut does produce impressive patient results when compared to, say, Avastin, which is the Roche alternative. But Rindopepimut, while advancing well in clinical developments, has yet to be granted approval. I believe it's premature -- as evident by the stock price -- to assume that it will be.

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