Is A Beat In The Cards For Celldex (CLDX) In Q4 Earnings?

We expect Celldex Therapeutics, Inc. (NASDAQ:CLDX) to beat expectations when it reports fourth-quarter 2017 results next month. Its performance has been encouraging as it beat estimates in three of the trailing four quarters and met the same in one, delivering an average positive surprise of 15.36%.

In the last reported quarter, the company delivered a positive earnings surprise of 41.67%.

However, Celldex Therapeutics’ shares have lost 32.7% in the past year compared with a 2.5% decline for 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 (NYSE:BMY) for varlilumab. The company will continue to record revenues from these sources in the fourth quarter of 2017.

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

In December 2017, the company started patient enrollment in a phase I study, evaluating its new candidate, CDX-1140, for the treatment of patients with advanced solid tumors. Notably, CDX-1140 is a fully human antibody that targets CD40, an immune response activator.

In November 2017, Celldex announced data from a phase II study, evaluating a combination of its most advanced pipeline candidate, glembatumumab vedotin, and varlilumab in melanoma. The median progression free survival was 2.6 months, with 52% of patients having stable disease for six weeks or more.

The study is also evaluating glembatumumab plus checkpoint inhibitors, including either Bristol Myers’ Opdivo or Merck’s Keytruda.

It also initiated a phase II study on its human monoclonal antibody, CDX-3379 in patients with advanced head and neck squamous cell carcinoma ("HNSCC"). The phase II study will evaluate CDX-3379 in combination with Eli Lilly’s Erbitux in patients with advanced HNSCC who are Erbitux resistant and previously treated with an anti-PD1 checkpoint inhibitor.

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

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

Earnings Whispers

Our proven model shows that Celldex is likely to beat estimates this quarter as it has the right combination of two key ingredients – a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) – which have a significantly higher chance of beating earnings.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is +18.28%. This is because the Most Accurate estimate is pegged at a loss of 19 cents per share while the Zacks Consensus Estimate is pegged at a loss of 23 cents per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Celldex currently carries a Zacks Rank #3, which when combined with a positive ESP makes us reasonably confident of an earnings beat.

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

Other Stocks That Warrant a Look

Here are a couple of 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.

Atara Biotherapeutics (NASDAQ:ATRA) is expected to release results on Mar 8. The company has an Earnings ESP of +7.42% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Gemphire Therapeutics (NASDAQ:GEMP) is expected to release results on Mar 21. The company has an Earnings ESP of +8.01% and a Zacks Rank #2.

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