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The Promise Behind Celldex

|Includes:Celldex Therapeutics, Inc (CLDX)
The Promise Behind Celldex
Celldex shares climbed steadily in the months leading up to the release of its ASCO abstracts, rising from $4.71 at the start of the year and hitting a high of $9.43 on May 18. Shares 9% the day the abstracts were released on May 21, closing at $6.97. Share prices have not recovered.

The run-up in Celldex shares was due to the extraordinary results the company had achieved in two previous Phase II trials of its cancer vaccine CDX-110 for Glioblastoma Multiforme (GBM). CDX-110 targets EGFRvIII, an activating and transforming EGFR mutation found in about 40% of GBM. The vaccine itself consists of consists of a 13 amino-acid long peptide from the mutated portion of EGFRvIII, along with a vaccine adjuvant and GM-CSF to boost its efficacy. EGFRvIII is found only on cancer cells. Because of CDX-110s targeted nature, clinicians have noted its low toxicity profile, with injection-site reactions the major side effect.

The two completed Phase II trials are called ACTIVATE and ACTII. Both trials were uncontrolled single arm and recruited newly diagnosed EGFRvIII positive GBM patients with optimally resected tumors.

Data from both these Phase II trials were presented at last year’s ASCO. Though they were small trials, both ACTIVATE and ACTII showed nearly identical results, and were far better than historical controls: Time to Progression of 14-15 months vs. 6 months matched historical control; Progression-free survival at 6 months- 95% vs. 59%; Median Overall Survival- 23-26 months vs. 15 months. It all looked very good. 

In 2008, Pfizer signed on as a global partner. The deal called for a $40M upfront payment and all development costs to be covered by Pfizer, along with $390 in milestones. Celldex would receive double digit royalties from sales.

With data in hand, a pivotal multi-center, open-label, randomized Phase II/III called ACTIII was initiated. However, patients, when learning of their placement in the placebo group, dropped out of the trial at a very high rate (14 of 16 patients, leading the company to change the trial to a Phase II single arm.

The data presented in the ASCO abstract for ACTIII is very early stage. No Time to Progression or Survival data were included. The trial calls for 65 patients to receive treatment. Of 40 patients treated so far, 28 (70%) were alive and progression free at 5.5 months.

These results are excellent! Then why the sell off? In ACTIVATE and ACTII, ~95% of patients were shown to be alive and progression free at 6 months. That’s a huge disparity. The reason for this is the method in which Time to Progression is calculated in these three trials. In the first two trials, analysis started from the time of surgery. In ACTIII, analysis did not begin until the patients received their first dose of vaccine. There is a 3 month lag from time of surgery to vaccination because after surgery, patients need to get their first radiotherapy and chemo and show they are free of disease before they can even enter the clinical trial.

Accounting for this difference, Celldex reps have stated that a median Time to Progression of about 14 months can be extrapolated. This is identical to both ACTIVATE and ACTII.

Although it is unfortunate that a new Phase III will need to be run, these three Phase II trials have not been complete wastes. Through these small trials, Celldex has been able to clearly show the profound activity of CDX-110 in GBM, making it an easy decision to start a large pivotal Phase III. After all, attempts at cancer immunotherapies have been littered with failures. These trials also allowed Celldex to show temozolomide can actually work to enhance the effect of CDX-110, aiding in future clinical trial design.

Pfizer is now working with Celldex to finalize the Phase III design.

Celldex is in good shape financially with $75M in the bank, burning about $9M a quarter.

Disclosure: Long CLDX
Stocks: CLDX