Celldex Therapeutics (CLDX) Q1 Earnings: What's In Store?

Celldex Therapeutics, Inc. (NASDAQ:CLDX) is expected to report first-quarter 2017 results on May 4. Celldex’s performance has been encouraging with a three-quarter average positive surprise of 8.06%.

In the last reported quarter, the company recorded a positive surprise of 11.76%.

Celldex Therapeutics’ shares are down 7.7% so far this year. This compares unfavorably with a 4.9% increase registered by the Zacks classified Biomed/Genetics industry during this period.

Let’s see how things are shaping up for this announcement.

Factors at Play

Celldex, a development-stage biopharmaceutical company, is focused on the development and commercialization of immunotherapies for the treatment of cancer and other difficult-to-treat diseases.

The company earns revenues entirely from product development and licensing agreements, and contracts and grants. The company recognizes revenues under its clinical trial collaboration with Bristol-Myers Squibb Company (NYSE:BMY) for varlilumab. We believe the company will continue to record revenues from these sources in the first quarter of 2017 as well.

With no approved product in its portfolio, investor focus will remain on pipeline development at the company.

The company’s most advanced pipeline candidate is glembatumumab vedotin, currently being evaluated for the treatment of triple negative breast cancer (phase IIb) and metastatic melanoma (phase II). It is also being evaluated for the treatment of other cancers (squamous cell lung cancer, uveal melanoma and pediatric osteosarcoma) in which glycoprotein NMB is expressed.

At the previous earnings conference call, the company had mentioned that it may bring in a partner for glembatumumab. We expect the company to update on this issue at the first quarter conference call.

Apart from glembatumumab vedotin, Celldex has several promising candidates in its pipeline, including varlilumab, CDX-1401/CDX-301 (phase II—multiple solid tumors; in collaboration with CITN) and CDX-014 (phase I—advanced renal cell carcinoma) among others.

With the Kolltan acquisition (Nov 2016), Celldex gained rights to two of Kolltan’s cancer pipeline candidates—CDX-0158 (phase I; refractory gastrointestinal stromal tumors/GIST and other KIT positive tumors) and CDX-3379 (to enter phase II in 2017 in solid tumors; being evaluated as a single agent and in combination with various other drugs like Erbitux, Tarceva, Zelboraf, and Herceptin). Celldex also acquired Kolltan’s multi-faceted TAM program.

Operating expenses vary on a quarterly basis.

What Our Model Indicates

Our proven model does not conclusively show that Celldex is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat estimates. But that is not the case here, as you will see below.

Zacks ESP: Its Earnings ESP is 0.00% as both the Most Accurate estimate as well as the Zacks Consensus Estimate stand at a loss of 28 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Celldex’s Zacks Rank #3 increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings beat.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Stocks in the pharma sector that have both a positive ESP and a favorable Zacks Rank are:

Proteostasis Therapeutics, Inc. (NASDAQ:PTI) , which is expected to release results on May 12, has an Earnings ESP of +5.17% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ultragenyx Pharmaceutical Inc. (NASDAQ:RARE) with an Earnings ESP of +0.59% and a Zacks Rank #3. The company is expected to release results on May 4.

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