Celldex (CLDX) to Report Q3 Earnings: What’s in the Cards?

Celldex Therapeutics, Inc. CLDX is expected to report third-quarter 2017 results next week. Its performance has been encouraging as it beat estimates in three of the trailing four quarters and met estimates in one, delivering an average positive surprise of 7.29%.

In the last reported quarter, the company delivered a positive earnings surprise of 8%.

Celldex Therapeutics’ shares are down 31.1% so far this year against a 3.3% increase registered by the industry during this period.

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

Factors at Play

Celldex 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 BMY for varlilumab. The company will continue to record revenues from these sources in the third quarter of 2017.

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

Celldex’s most advanced pipeline candidate is glembatumumab vedotin, which is currently being evaluated for the treatment of triple negative breast cancer (phase IIb—METRIC study) and metastatic melanoma (phase II). Enrolment in the METRIC study closed this September, with data expected in the second quarter of 2018. In the melanoma study, Celldex added two new cohorts, a glembatumumab plus varlilumab arm (data expected in fall 2017) and a glembatumumab plus checkpoint inhibitor arm, including either Bristol Myers’ Opdivo or Merck’s Keytruda. In the melanoma study, glemba performed well in the single agent setting.

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

Varlilumab is being evaluated in combination with Opdivo in a phase II study that includes cohorts in five indications—colorectal cancer, ovarian cancer, head and neck squamous cell carcinoma, renal cell carcinoma and glioblastoma. Celldex plans to complete enrolment across all cohorts in the phase II portion of the study in the first quarter of 2018. Meanwhile, data from the phase I study of varlilumab/Opdivo combination study was presented in June. The study met its primary endpoint as the combination was well tolerated at all tested dose levels.

Though R&D and SG&A costs declined in the second quarter, operating expenses may vary on a quarterly basis.

Earnings Whispers

Our proven model does not conclusively show that Celldex is likely to beat on earnings 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: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at a loss of 24 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Although Celldex’s Zacks Rank #3 increases the predictive power of ESP, its 0.00% ESP makes surprise prediction difficult.

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

Here are some health care stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Clovis Oncology, Inc. CLVS is scheduled to release results on Nov 1 after market close. The company has an Earnings ESP of +2.01% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Syndax Pharmaceuticals, Inc. SNDX has an Earnings ESP of +2.9% and a Zacks Rank #3. The company is scheduled to release results on Nov 7.

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