August 3, 2011 From Alex To -- CLDX: The Value Proposition
• The common pushback against CLDX's investment case is that the company has no
near-term data flow. The bull case for the stock is that, net of $71 million cash on the
balance sheet, at a $70 million enterprise value, CLDX is a steal considering the large
portfolio of clinical-stage products and the technology platform in immunotherapy and
antibody engineering.
• Both arguments are correct, at least considering rindo, CLDX's lead drug candidate
for brain tumors. Now that rindo's Phase 3 trial is starting, it will be at least 2 years
before we will see the results. But, we could see a major clinical read-out in the next
12 months from the breast cancer trial of CDX-011. CDX-011 is an antibody conjugate
targeting GPNMB. The study is on track to fully accrue by year-end 2011. We would expect
some sort of interim data in 1H 2012. Not exactly near term, but within the next 12
months. The stock impact, however, could be significant should the CDX-011 trial be
positive. The percentage of breast cancers with GPNMB expression exceeds those with HER2
expression. So, conceivably, CDX-011 could garner commercial sales similar to Herceptin
(ROG.VX), which exceeds $4 billion. One can imagine the market getting excited should the
Phase 2 trial yields robust results. The wild card is partnering. It is conceivable in
the next 12 months CLDX will find partner(s) for one or more of its many drug candidates.
Who is to say, during partnership discussions, that one of the larger companies will not
find CLDX's whole portfolio and technology platforms attractive and end up buying the
company?
Alex To, MD
Managing Member
Cross Current Research, LLC
2 Research Way, 2nd Floor
Princeton, NJ 08540
