Analyst's Celldex Call Another Sign Of Biotech Stock Bubble

NEW YORK (TheStreet) -- Biotech stock bubble alert: On Wednesday, Oppenheimer analyst Boris Peaker jacks his Celldex Therapeutics (CLDX) price target to $40 from $25. Why? Because Peaker predicts an experimental Celldex cancer drug with no human clinical data today will deliver $8 billion (!!!) in sales in 2025. 

Peaker:

Our valuation revision is based on the addition of CDX-1127 to our model. We did not make any changes to our valuation of rindo ($5/share), CDX-011 ($18/share), CDX-1135 ($2/share), and added CDX-1127 ($15/share). We believe that CDX-1127 holds the largest commercial potential compared to CDLX's other assets. However, given the early stage of development, we assume only a 15% probability of success for CDX-1127 at this time and look toward the anticipated data in November to further refine our CDX-1127 NPV. 

A 15% probability of success for CDX-1127 yet it's still worth $15 per share to Celldex today. Why peak out at only $8 billion in sales? Why not $10 billion? $20 billion? You're just throwing darts blindfolded, Boris, so why not go really big? 

We've seen sell-side analysts gin up a lot of crazy excuses to justify higher valuations for development-stage biotech companies these days, but Peaker's rationalization for Celldex is preposterous. 

David Sobek believes the only bubble in biotech today is people warning/complaining about biotech stock bubbles. But the housing bubble began when real estate brokers start selling split-level ranches in Kissimmee, Fla, for $2 million each without anyone raising an eyebrow. Peering 12 years into the future to predict $8 billion in sales for a drug with no clinical data today is no different. 

-- Reported by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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