Immuno-oncology (I-O) development is a sizzling-hot area of focus for drug development these days. While many major pharmaceutical companies have either launched or are testing I-O drugs, several clinical-stage biotechs also are developing promising candidates. Celldex Therapeutics (NASDAQ:CLDX) and Agenus (NASDAQ:AGEN) are key players in that group.
So far in 2017, however, neither stock has performed very well. Both have fallen around 13% year to date. Over the long run, however, Celldex and Agenus could emerge as big winners. But which is the better pick for investors? Here's how Celldex and Agenus compare in the three most important categories for clinical-stage biotechs -- pipelines, partnerships, and cash positions.
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Pipelines
The story for Celldex was much different early last year than it is now. In March 2016, the biotech announced that its lead candidate, Rintega, had failed in a late-stage clinical study targeting treatment of glioblastoma, an aggressive form of brain cancer. Celldex's stock plunged on the news, but investors still had hope: Celldex wasn't solely dependent on one drug.
Although Celldex didn't have another experimental drug as far along in development as Rintega, the biotech did (and still does) have a couple of phase 2 candidates. Glembatumumab vedotin (glemba for short) is being evaluated in two phase 2 studies, one focusing on treatment of triple-negative breast cancer and the other on treatment of metastatic melanoma. Varlilumab (varli) is also being evaluated in phase 2 studies for treatment of colorectal cancer, metastatic melanoma, ovarian cancer, renal cell carcinoma, head and neck squamous cell carcinoma, and glioblastoma.
Glemba is Celldex's best hope for a relatively near-term win. If the results from the breast cancer study are positive, the company plans to submit the drug for regulatory approval and potentially launch the drug in 2019.
In addition to glemba and varli, Celldex also has three other early-stage pipeline candidates. CDX-0158 is a KIT inhibitor that is being studied as a potential treatment for gastrointestinal stromal tumors and other KIT-positive tumors. CDX-3379 blocks the activity of the ErbB3 receptor and is being evaluated in treating several solid tumors. CDX-014 targets T-cell immunoglobulin mucin-1 (TIM-1) in potentially treating kidney cancer.
Agenus has one product that already awaits regulatory approval. The biotech's QS-21 Stimulon adjuvant is used in GlaxoSmithKline's (NYSE:GSK) shingles and malaria vaccines. GlaxoSmithKline will find out later this year if its Shingrix shingles vaccine wins U.S. approval.
The second most advanced candidate in Agenus' pipeline is Prophage, which is being evaluated in a phase 2 study as a vaccine for glioblastoma. Prophage has a long history. It's been in development for 16 years and has failed in clinical studies targeting other types of cancer, including metastatic melanoma and adjuvant renal cell carcinoma.
Perhaps the most promising prospects for Agenus, however, are with its checkpoint antibodies. The company has four candidates in early-stage clinical studies using different mechanisms to target various types of cancer: CTLA-4 antagonist AGEN1884, PD-1 antagonist AGEN2034, GITR antagonist INCAGN1876, and OX40 agonist INCAGN1949. In addition, Agenus is evaluating experimental cancer vaccine AutoSynVax in an early-stage study for which results are expected later this year.
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Partnerships
Both of these small biotechs have partnerships with big drugmakers. Celldex is collaborating with Bristol-Myers Squibb to study varli in combination with Opdivo. The relationship with Bristol-Myers Squibb has been a big financial boost for Celldex in recent quarters.
Agenus, meanwhile, partnered with GlaxoSmithKline on the shingles and malaria vaccines mentioned earlier. The company also inked a deal with Incyte to develop several checkpoint antibodies. Incyte is fully funding the GITR and OX40 clinical programs and gave Agenus a cash infusion of $80 million in the first quarter.
Merck also has taken an interest in Agenus. In 2014, the big drugmaker entered into a collaboration and license agreement with Agenus to develop fully human antibodies for two undisclosed target indications. Merck selected a lead candidate for one of those undisclosed indications last year.
Cash positions
At the end of the first quarter of 2017, Celldex reported cash, cash equivalents, and marketable securities of $167.0 million. Celldex thinks this amount should carry it through 2018. However, there are two things to note. First, the company also anticipates generating more cash by selling its stock under an existing agreement. Second, Celldex's guidance assumes it will be able to pay future contingent milestones relating to its acquisition of Kolltan in stock rather than cash.
As for Agenus, the biotech reported a cash position of $124 million at the end of the first quarter (including cash, cash equivalents, and short-term investments). Like Celldex, Agenus should be able to fund operations through 2018 with its current reserves but might need to raise money through another stock offering at some point in the future.
Better buy
So which of these two biotechs is the better pick for investors? It's a tough decision.
The primary importance of the two companies' partnerships with big drugmakers is that it helps provide investors some reassurance that there's real potential. I wouldn't say that either Celldex or Agenus really has the advantage in this area, since they both have attracted attention (and money) from solid companies.
Although Celldex has a larger cash position, it's also spending more money than Agenus. The two biotechs are roughly in the same shape when it comes to cash.
That means the choice comes down to which biotech has the best pipeline. Agenus has already monetized part of the future royalties it might get from GlaxoSmithKline's vaccine sales. Prophage's history of failures makes its success as a glioblastoma vaccine questionable. I do like the potential for Agenus' checkpoint antibodies, but they're all either in early-stage or pre-clinical testing.
Celldex's glemba and varli, on the other hand, are more advanced than Agenus' promising checkpoint antibodies. Glemba could actually be on the market within the next couple of years if all goes well. Because of these reasons, I'd give the edge ever so slightly to Celldex as the better pick for now.
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