@adamfeuerstein You have been a great contrarian. What's your call on CLDX? Don't see a opinion in the article.— Rupen Shah (@Rupens) September 24, 2013
@adamfeuerstein do you think $CLDX is over valued? it was a $5 stock less than a year ago.— Chris Ahlstrand (@ahlstrac) September 23, 2013Here's the one-year chart for Celldex Therapeutics. Impressive! CLDX data by YCharts
This week, I admonished Leerink analyst Howard Liang for increasing his estimate of Celldex's market value by $1 billion based solely on the prospects for an experimental cancer drug lacking human clinical data. This doesn't mean I dislike Celldex. I just like ribbing sell-side analysts for using increasingly outlandish reasons to justify higher price targets on covered companies. Analysts have two choices when a covered company blows through a price target: 1) Downgrade, or 2) raise their price target. Since very few sell-siders have the job security or cojones to downgrade stocks on valuation, the only real option is the latter. The big jump in Celldex's stock price is easily explained. Health care investors are in love with two drug development trends today: 1) Drugs to treat rare, or orphan, diseases, and 2) drugs which release the brake on a patient's immune system in order to more effectively kill cancer i.e. the PD-1s from Bristol-Myers Squibb ( BMY) and Merck ( MRK). Celldex has two drugs in its pipeline hitting on each of these trends. CDX-1135 is targeting dense deposit disease, a rare kidney disorder. As I wrote in July, investors were buying Celldex on the prospect that CDX-1135 could be like Alexion Pharmaceuticals' ( ALXN) Soliris. The second Celldex drug, CDX-1127, works by stimulating T cells to better recognize and destroy cancer cells. CDX-1127 may not be very effective on its own, but Celldex believes CDX-1127's home-run potential could be in combination with a PD-1 "checkpoint inhibitor." A similar "combination cancer immunotherapy" approach is already being tried -- Bristol is running cancer trials combining Yervoy with nivolumab -- two checkpoint inhibitors.
As Paul mentioned, Exelixis announced Thursday patient enrollment in the COMET-1 study of cabozantinib in advanced, post-chemo, prostate cancer patients has completed. Importantly, Exelixis will have results from an interim analysis of the study this year, and perhaps the final analysis, too, if necessary. This means Exelixis CEO Michael Morrissey now gets to stand up in front of investors and tell them the release of pivotal cabozantinib data is a near-term event. He'll find investors receptive to this message this fall and especially in January at the big J.P. Morgan healthcare conference. With Exelixis shares stuck in the $5 range, the risk-reward for the COMET-1 study looks favorable. This is not to say there is no risk in the COMET-1 study (or the COMET-2) study. I just see the bull-bear battle over whether cabozantinib works or not in prostate cancer being waged in 2014 at a higher Exelixis stock price than where it sits today. Remember, too, the drug is already approved in medullary thyroid cancer and phase II studies in prostate cancer have yielded plenty of positive data. If you've forgotten about Exelixis in 2013 -- and who can blame you -- it's time to take another look.
@adamfeuerstein Hi Adam, what's going on with Geron? Back from the dead and going gangbusters?— Biobottom (@Biobottom) September 24, 2013It's helpful to start with the big-picture view of Geron ( GERN). Since going public in 1990, the company has racked up an accumulated deficit of more than $875 million. No drugs approved, no drugs even close to being approved. Geron's stem cell program -- gone. Cancer vaccines -- gone. Imetelstat, Geron's telomerase inhibitor, is hanging on by a thread despite multiple clinical trial failures.
Geron's fully diluted market cap today is approaching $500 million, which is what Gilead Sciences ( GILD) paid to acquire YM BioSciences and its myelofibrosis drug CYT387 (since renamed momelotinib.) The difference is that momelotinib was ready to enter phase III studies when Gilead picked it up. Geron's imetelstat isn't there yet and we have no real clue if the drug's efficacy and safety are comparable to competing myelofibrosis drugs. If momelotinib isn't more effective or safer than Incyte's ( INCY) Jakafi, for example, Geron will have a tough time justifying the expense of moving the drug forward.
$NPSP~ Hey @adamfeuerstein great call on this one. Because of your insight, i sold 10k shares @ $11/shr. Thks!!!— Jeff Jorgenson (@jjjorgen) September 25, 2013You're right, the concerns I raised about insurers pushing back on NPS Pharmaceuticals ( NPSP) due to the high cost of Gattex were wrong. NPS has done very well with the Gattex launch and the stock has reacted accordingly: NPSP data by YCharts
I still believe the risk of insurers putting more reimbursement restrictions on high-priced orphan drugs exists, but I admit evidence of a clampdown to date is scant and I was clearly wrong about NPS Pharma. To their credit, my colleagues at TheStreet Jim Cramer and David Peltier have both been enthusiastic supporters of NPS this year. -- Reported by Adam Feuerstein in Boston. Follow Adam Feuerstein on Twitter.