Celldex: Can Anything Halt Its Slide?

| About: Celldex Therapeutics, (CLDX)
Three Phase II trials and still waiting. It's been a lot of bad news lately for this little biotech. Trial data has been scrutinized, a Phase II/III was downgraded to a Phase II, and big Pharma partner, Pfizer (NYSE:PFE), has left it at the alter. Not surprisingly, the stock has been spiraling downwards since the middle of 2010. In fact, it is down 16.6% in the last 52 weeks.
Not long ago, Celldex (NASDAQ:CLDX) was heralded as the next big thing in cancer immunotherapy; its results in glioblastoma were unprecedented, and its off-the-shelf vaccine components had the appeal of higher profit margins compared to custom vaccines such as Provenge from Dendreon (NASDAQ:DNDN). On the management side, its founders hailed from well regarded Medarex, while other team members have considerable experience in late stage clinical trial management.
In May 2007, hopes were high for lead candidate CDX-110. Two small Phase II trials, ACTIVATE, and ACTII showed consistent and dramatic extensions of progression free survival and overall survival. A Phase II/III trial, ACT III, was initiated, if things went well after six months, the study was expected to accrue additional patients and convert into a pivotal Phase III trial. But because nearly all patients (14 of 16) in the control arm declined further participation, the trial was modified to a single-arm Phase 2b – adding years to the approval timeline. In September 2010, Pfizer pulled out of their partnership.
The company presented data a couple months later at the Society for Neuro-Oncology showing that all three Phase II trials behaved similarly: Median progression free survival (PFS) for CDX-110 treated patients ranged from 12.3 to 15.3 months, median overall survival (OS) ranged from 24.3 to 24.6 months, and overall survival at 24 months was 50%. This compared to 6.4 months, 15.2 months, and 6% for standard of care in historically matched controls of EGFRvIII positive patients. Impressively, the four year survival rate in the longest running Phase II trial, ACTIVATE, is 22%. It is no wonder patients in the control arm decided to opt out.
Celldex is now planning a pivotal Phase III trial set to begin the second half of this year and is in discussions with the FDA to finalize study endpoints. Celldex hopes to use PFS as the primary endpoint for initial approval. Overall survival data would then be supplied following a Phase IV study for “full approval.” A demand by the FDA for OS as the primary endpoint would lengthen the trial significantly although it does not appear this is expected by the company.
Celldex has regained full rights to its cancer vaccine and intends to keep those rights in North American while looking for a partner elsewhere. In this case, there are only 10,000 new glioblastoma patients diagnosed each year in the U.S., making it feasible for a small company to go it alone.
In the next few months, the company will decide on additional indications to pursue with CDX-110. Heading up the list are head-and-neck cancer and non-small-cell lung cancer. A significant percent of both tumors express EGFRvIII, the target of the vaccine. EGFRvIII is a variant of the normal epidermal growth factor receptor (EGFR) and is constitutively active, leading to uncontrolled cell division.
Interestingly, the variant is also found on cancer stem cells (CSC) and has been used as a marker along with CD133 to identify brain tumor CSCs. Cancer stem cells are thought to be important in cancer recurrence and are often not killed by conventional therapies. There is a considerable amount of interest in treatments targeting CSCs.
It has been hypothesized that the efficacy seen in CDX-110 is due to its dual action both toward regular cancer cells and cancer stem cells. CDX-110 vaccination primes the immune system to attack cells with the EGFRvIII antigen. Normal cells are spared because they do not express this aberrant protein.
Celldex has more than enough cash for a year of operation, but it will be several years before the CDX-110 Phase III trials comes to fruition. One worry is dilution as development costs increase. Funding from a large partner would certainly ease some of those concerns.
In the meantime, more encouraging news may come from some earlier stage projects. Two candidates are enrolling patients in Phase II studies. CDX-1307, a second-generation cancer vaccine, delivers a specific tumor antigen to dendritic cells with antibodies. It is now being tested in early stage bladder cancer. A Phase 2b study for CDX-011, an antibody drug conjugate for advanced breast cancer is expected to complete enrollment by the end of this year.
Active cancer immunotherapy is now a proven technology and is a fundamental change in the current approach to cancer treatment. Celldex is one of the companies heading this charge.
All eyes are on CDX-110. For this stock to regain its mojo, management will need to provide clarification on its trial endpoints and expected time for patient accrual and completion. An SPA (special protocol acessment) for the trial would be nice. As previously mentioned, a partnership announcement would be very well received. Celldex has a rich pipeline for such a small company; monetization of these assets could also boost shares.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.