Celldex Therapeutics, Inc. (CLDX): 4 Reasons This Biotech Went up by 400 Percent

That investors love companies making drugs for orphan disease is evident from the example of Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), a stock that gained more than 150% in the run up to and after approval of Soliris in September 2011. Soliris is a first-in-class drug approved for treatment of PNH, an ultra-rare, life-threatening blood disorder. It is also approved for aHUS, another ultra-rare, life-threatening genetic disease that can progressively damage vital organs, leading to stroke, heart attack, kidney failure and death. Launch of Soliris resulted in net income of the company jumping from $97 million in FY 2010 to $175 million in FY 2011 to $255 million in 2012. That story can be repeated for Celldex Therapeutics, Inc. (NASDAQ:CLDX).

Celldex Therapeutics, Inc. (NASDAQ:CLDX) also has candidate drugs for lymphoma and multiple solid tumors, and a clinical program for stem cell transplantation, all of which are in early stage trials. However, the company should be able to come up with Phase I data and move these to Phase II within a short period of time.

Conclusion

With development stage biotech companies, growth potential matters more than revenues. However, it is difficult to estimate the value of a biotech company, particularly when bulls and bears are playing the market aggressively. All signs point to an overbought situation for Celldex.

On growth, while there are a lot of catalysts down the road, the current market price of Celldex stock assumes extremely high revenue from the three pipeline products discussed above. At the same time, the company presents promising assets in oncology which could be of interest to a large pharmaceutical company wanting to boost its oncology portfolio.

Dr. Kanak Kanti De has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article 4 Reasons This Biotech Went up by 400 Percent originally appeared on Fool.com and is written by Dr. Kanak Kanti De.

Kanak is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.