With more than 230,000 women diagnosed with breast cancer in the U.S. annually – and Roche’s Herceptin producing annual sales of more than $5 billion – the potential for breast cancer drugs is enormous. While there are many companies developing drugs to treat the disease, there are two specifically with late-phase drugs that have been favorites in the market.
A breakthrough drug
Since the start of 2012, Celldex Therapeutics, Inc. (NASDAQ:CLDX) has seen its market capitalization increase from under $200 million to $1.15 billion. While the company does have a product in clinical development for brain cancer (rindopepimut), almost all of its upside has been tied to the Phase II trials (and results) from CDX-011.
CDX-011 is a vaccine used to treat patients with advanced/metastatic breast cancer who express the protein GPNMB. The FDA has granted Fast Track designation to CDX-011 for the treatment of advanced, refractory/resistant GPNMB-expressing breast cancer.
What’s impressive about CDX-011 is that it was proven effective on patients who had no longer responded to a median of five-six prior therapies; meaning most difficult to treat. Yet, of the 120 patients treated with CDX-011, 33% had a response rate compared to no response in patients using chemotherapy. Moreover, CDX-011 slowed the growth of tumors by 100% compared to its control arm.
Due to the stage of the disease, such progress is considered incredible. The technology used is equally impressive, as the success from the trial proves that targeting GPNMB is highly effective in treating such violent diseases. Thus, investors are excited that this protein is also expressed in multiple tumors such as melanoma and glioma.
Moving forward, the question is not whether the drug will be approved, but rather when it will be approved. The FDA is already showing favoritism towards the drug, and has a history of rapidly approving drugs for life-threatening cancers. As a result, there’s a lot to like when it comes to Celldex Therapeutics, Inc. (NASDAQ:CLDX).
Excitement without a clinical benefit
While Celldex Therapeutics, Inc. (NASDAQ:CLDX) has seen its valuation increase with data, Galena Biopharma Inc (NASDAQ:GALE) has seen its value increase with the idea of a successful study and the “upside” of its breast cancer drug. Galena’s drug NeuVax activates specific cytotoxic T lymphocytes (CTLs) to recognize and destroy HER-2 expressing cancer cells.
Celldex Therapeutics, Inc. (NASDAQ:CLDX)’s drug fights cancer at its most advanced stages, while Galena Biopharma Inc (NASDAQ:GALE) is using its vaccine to prevent breast cancer recurrence for those who express this “HER-2” antigen. Much like CDX-011’s GPNMB, HER-2 is expressed in a number of other cancers. However, the upside for NeuVax is nowhere near as clear as with CDX-011.
NeuVax was tested in a previous Phase I/II study before beginning its current Phase III 700 patient trial. The study itself was a disaster as patients were not dosed correctly and the balance of those who were “healthier” was clearly one-sided in the favor of NeuVax. Regardless, the Phase 2 trial was not statistically significant – but Galena Biopharma Inc (NASDAQ:GALE) did find a select group of patients who did not redevelop breast cancer as quickly – those who are node-positive and express HER-2 +1/+2.
Galena Biopharma Inc (NASDAQ:GALE) seems to have built this study by twisting and bending all of the results associated with the original study. With NeuVax being tested on node-positive HER-2 +1/+2 patients from a small 50 patient subgroup, I am not sure how investors could be encouraged heading into a large Phase III trial.
The big picture
The company (and investors) have chosen to ignore the big picture. NeuVax is a product that was purchased for about $7 million from a near bankrupt private company Apthera. Galena Biopharma Inc (NASDAQ:GALE) purchased this product when its clinical products as RXi Pharmaceuticals all failed; and no more money could be squeezed from investors.
Right now, with what we know, you should wonder how investors could be happy with what they see from Galena. The company has seen its valuation increase from $40 million to $200 million since January 2012 and has given no reason to believe that NeuVax will be successful in a Phase 3 trial – but rather, management touts the drug’s “potential”.
For the sake of argument, if NeuVax was successful, it would be entering a large market treating an unmet medical need. Galena Biopharma Inc (NASDAQ:GALE) consistently touts Roche’s Herceptin by ensuring to disclose the $5 billion per year that it returns annually in several press releases.
