AstraZeneca plc (ADR) (AZN), Pfizer Inc. (PFE): Celldex Therapeutics, Inc. (CLDX) Is Still a Buy

The survival data from three Phase II studies showed benefit as compared to independent control datasets. According to company disclosures,

‘In the multi-center Phase 2 ACT III study, the median overall survival is 24.6 months from diagnosis (21.8 months from study entry) and overall survival is 26% at three years. In the Phase 2 ACT II study, the median overall survival is 24.4 months from diagnosis (20.5 months from study entry) and overall survival is 23% at three years. In the Phase 2 ACTIVATE study, the median overall survival is 24.6 months from diagnosis (20.4 months from study entry) and overall survival is 33% at three years.’

The company has also announced positive data in the Phase II Emerge study for its breast cancer candidate CDX-011. The drug attacks the GPNMB protein, which is primarily responsible for the migration, invasion and metastasis of the cancer. The results, according to company disclosures,

‘confirm preliminary findings reported in May and establish proof of principle with evidence of higher activity in patient subgroups with high GPNMB expression (expression in e25% of tumor cells), including those with triple negative disease.’

Bottom Line

The mean sell side target price for Celldex is $15.6, an upside of approximately 30% based on the current price. At a market capitalization of approximately $900 million, the company is also a good acquisition target. There is a big patent gap in the market because a number of big pharmaceutical players are facing sales declines due to expiring patents. Discovery of a drug is a pretty long and expensive process. This makes small companies with promising candidates, such as Celldex, an attractive acquisition target.

Pfizer Inc. (NYSE:PFE) and AstraZeneca plc (NYSE:AZN) could be interested in a small cap company like Celldex. Pfizer is facing patent expiry on Lipitor and AstraZeneca is facing generic competition to its star drug Seroquel IR. The new CEO of AstraZeneca, Pascal Soriot is trying to turn around the falling sales of AstraZeneca plc (NYSE:AZN) by focusing on new drug candidates.

The weak pipeline of the company increases the likelihood that the company might be interested in acquiring a small company like Celldex Therapeutics, Inc. (NASDAQ:CLDX) with a market cap under $1 billion. In a recent strategic shift the company has also decided to focus on three key areas: cardiovascular, cancer and metabolism disorders. Pfizer Inc. (NYSE:PFE) already has a pretty strong oncology pipeline with leading candidate PD-0332991 in Phase II trials for the treatment of breast cancer. According to sell side estimates, the drug can have a peak sales potential of approximately $5 billion.

The article Celldex Is Still a Buy originally appeared on Fool.com and is written by Mohsin Saeed.

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