Why Celldex Shares Dropped


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Celldex Therapeutics were getting rejected by investors today, falling as much as 17% after reporting earnings this morning.

So what: Celldex reported a $0.27 per share loss on revenue of $3.6 million. Earnings missed estimates, while sales beat them, but that is mostly irrelevant since Celldex is a development-stage biopharmaceutical company. Overall, the report looks strong with the company showing positive data from a phase 2b study of CDX-011 in metastatic breast cancer, as well as encouraging survival data from phase 2 studies of rindopepimut. The company's cash position also improved over 2012, adding $30 million through additional financing, which management said will "support operations and clinical development through 2015."

Now what:Today's drop could simply be a secular pullback as Celldex shares have gained 300% since October 2011 -- and nearly 50% this year alone. With no major immediate breakthroughs on the way, shares seemed due to cool off a bit. Investors may also be reacting to recent share dilution, which was needed to fund R&D. In the first two months of the year, Celldex sold 16 million more shares, diluting investors by 25%. After a volatile opening today, shares have climbed and the stock was down just 5% by midday.

While you can certainly make huge gains in biotech companies like Celldex, the best investing approach is to choose great companies and stick with them for the long term. The Motley Fool's free report "3 Stocks That Will Help You Retire Rich" names stocks that could help you build long-term wealth and retire well, along with some winning wealth-building strategies that every investor should be aware of. Click here now to keep reading.

The article Why Celldex Shares Dropped originally appeared on Fool.com.

Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.