Better Buy: Ziopharm Oncology, Inc. vs. Celldex Therapeutics

If you like putting money into the beaten-down stocks of clinical-stage biotechs, Ziopharm Oncology (NASDAQ:ZIOP) and Celldex Therapeutics (NASDAQ:CLDX) might warrant a look. Ziopharm's share price has dropped more than 25% so far in 2018, while Celldex stock has plunged more than 80%.�

Are either of these two biotech stocks likely to rebound? And, if so, which is the better pick for investors? Here's how Ziopharm and Celldex compare.

Image source: Getty Images.

The case for Ziopharm�

A couple of delays have weighed on Ziopharm stock in 2018. The company has been working on completing Chemistry Manufacturing and Control technical requirements for a planned pivotal phase 3 clinical study evaluating gene therapy�Ad-RTS-hIL-12 plus veledimex�in treating�recurrent glioblastoma (rGBM), an aggressive form of brain cancer. The FDA also recently put a clinical hold on a planned phase 1 clinical study of Ziopharm's CD19-targeted chimeric antigen receptor T cell (CAR-T) therapy.�

Are either of these setbacks death knells for Ziopharm? Not really. It's taking a while for the biotech to finalize all of the information needed to move forward with the pivotal phase 3 study of its controlled IL-12 gene therapy, but Ziopharm will finish this task sooner or later. The company should also be able to answer questions for the FDA regarding the CAR-T phase 1 study.

The main reason investors might want to consider buying Ziopharm is the potential for both of its clinical programs. Ad-RTS-hIL-12 has shown the potential to achieve something very important in fighting cancer: making cold tumors become hot. The body's immune system attacks hot tumors, but not cold ones.�

Ziopharm's gene therapy works by promoting the expression of�human interleukin-12 (hIL-12). Interleukins are proteins produced by white blood cells that regulate immune responses. The hIL-12 interleukin activates the immune system's killer T cells and guides them to tumors.

A phase 1 study evaluating the biotech's CAR-T therapy in treating patients with acute myeloid leukemia (AML) that expresses the CD33 antigen is already enrolling patients, while Ziopharm answers the FDA's questions on the planned phase 1 study for its CD19-targeted CAR-T therapy. Both therapies use point-of-care manufacturing that hold the potential to be faster and less expensive than current CAR-T therapies.

After its latest drop, Ziopharm's market cap stands below $430 million. If the company is able to succeed in clinical trials with either of its programs, the biotech stock should skyrocket.

The case for Celldex

Celldex has experienced two crushing failures over the last couple of years. In 2016, Rintega flopped in a phase 3 clinical study targeting treatment of�glioblastoma. Celldex's next best hope,�glembatumumab vedotin (glemba), failed to meet the primary endpoint in a pivotal study targeting treatment of�triple-negative breast cancer (TNBC).

After swinging and missing twice, does Celldex have anything left in the pipeline that could succeed? Most clinical-stage biotechs would be out after two strikes. Celldex, however, still has four candidates in clinical testing.

Varlilumab (varli) is being evaluated in a phase 2 study in combination with Bristol-Myers Squibb's Opdivo in treating several types of cancer. Celldex reported data at the American Society of Clinical Oncology (ASCO) meeting in early June that showed promise for the combination of the two drugs in turning cold tumors hot.��

Celldex's�CDX-3379 is also in a phase 2 study in combination with Eli Lilly's chemotherapy Erbitux in treating�advanced head and neck squamous cell cancer. This study is still in its early stages.

The biotech also has a couple of candidates in phase 1 clinical testing. CDX-1140 is being evaluated in treating several types of solid tumors. The company's other early-stage program, CDX-301, is in an investigator-initiated study with radiation therapy targeting treatment of advanced non-small cell lung cancer (NSCLC).�Celldex thinks both CDX-1140 and CDX-301 could have potential in combination with varli.�

The huge setbacks for Rintega and glemba devastated Celldex's market cap. Any positive news for its pipeline candidates would likely cause the biotech stock to soar.

Better buy

There's a four-letter word associated with both of these biotech stocks: R-I-S-K. Celldex has already proven just how risky a clinical-stage biotech can be. However, Ziopharm also faces a significant risk of failure with its pipeline candidates. Because of these risks, I don't think either of these stocks is a good pick for most investors.

If I had to choose one of them, though, I'd go with Ziopharm since it's farther along in clinical development. Still, the biotech only had $51 million in cash and cash equivalents at the end of the first quarter. That should be enough to fund operations into the first half of 2019. However, Ziopharm will almost certainly need to issue more shares -- and therefore dilute the value of existing shares -- prior to then.

With a great deal of risk remaining for its pipeline, and this prospect of dilution on the way, I would recommend watching Ziopharm from the sidelines even though it's arguably the better buy between these two beaten-down biotech stocks.�

Britain's royal family made even more money in 2017

It appears to have been a bumper year for Britain's royal family, especially Prince William, his wife Kate and his brother Prince Harry.

Two sets of documents published Thursday provide new insights into how the royal family earned, distributed and spent its money in the financial year ended March 31.

The reports divide income and spending into broad categories that make analysis difficult, but the biggest change from years past involves William, Kate and Harry, who are known formally as the Duke and Duchess of Cambridge and the Duke of Sussex.

One of the official reports, which covers the finances of Prince Charles, shows the budget category that includes funding for William, Kate and Harry increased roughly 40% to 拢5 million ($6.6 million). One major caveat: The category also includes "capital expenditure" and Charles' savings.

In recent years, Prince Charles and his wife Camilla, the Duchess of Cornwall, have increased spending in the category at more modest rates of up to 10%.

Harry's wedding to Meghan Markle on May 19 has sparked huge public interest in their finances, but the royal family and British government have declined to give details about their wedding spending.

There's another potential explanation for the funding increase: William has taken on more royal responsibilities, and Charles may have provided more financing for his activities.

The Duke and Duchess of Cambridge, and the Duke of Sussex.

Prince Charles

Charles and Camilla rely on a mix of public and private money to finance their work and lives.

Over 90% of their income comes from a private estate, the Duchy of Cornwall, which was established in 1337 to provide an income to the heir to the throne. The Duchy of Cornwall owns and operates land in rural and urban areas, a collection of islands and rental cottages in places like Wales and Cornwall.

The new documents show the couple made 拢21.7 million ($28.6 million) from the estate in the year ended March, up about 5% from the previous year. They also receive some money from Queen Elizabeth II, which is predominantly used for official travel.

Prince Charles and his wife Camilla, the Duchess of Cornwall.

Queen Elizabeth II

The second new report covers the Sovereign Grant, which is the Queen's main source of income.

The Sovereign Grant is generated from the Crown Estate, a collection of UK properties and farms that bring in hundreds of millions of pounds each year. The vast majority of earnings go into government coffers, but 25% of the profits are given back to the Queen in the form of the Sovereign Grant.

The grant essentially acts as an expense account, covering the costs of travel, security, staff and the upkeep of royal palaces. The family took part in roughly 3,000 official engagements in the past year alone, with the Queen present at just over 150 of those.

The Queen received 拢76.1 million ($100.2 million) free of tax from the Sovereign Grant in the year ended March, a 78% increase from the previous year that will help finance an extensive 10-year renovation of Buckingham Palace. She'll get another 8% boost in the current financial year.

The report said the Queen's household also made additional income of 拢17.3 million ($22.8 million) last year from services like property rentals and facilities management.

Another important source of income for the Queen -- the Duchy of Lancaster -- is a private estate of commercial, agricultural and residential properties that dates back to 1265.

It generated 拢19.2 million ($25.3 million) in income during the 2016-2017 fiscal year. The estate will release updated financial information in July.

Tandem Diabetes Takes Aim at Medtronic's Artificial Pancreas

Insulin pump maker Tandem Diabetes Care (NASDAQ:TNDM) has secured an FDA OK that puts it on track to challenge�Medtronic (NYSE:MDT) for the lead in the emerging market for closed-loop insulin systems. Is Tandem Diabetes stock a buy?

A little background

Produced by beta cells in the pancreas, insulin is necessary for removing glucose from the bloodstream so it can be stored in the liver and muscles for energy.

Image source: Getty Images.

With diabetes, patients either don't produce insulin (type 1) or they develop a resistance to the insulin they do produce (type 2).

Type 1 diabetes is normally diagnosed in childhood and is thought to be caused by genetics or environmental factors that result in the immune system attacking beta cells. Occurring later in life, diet and smoking is thought to contribute to the onset of type 2 diabetes.

Although type 1 diabetes is less common than type 2 diabetes, it still represents a 1.5 million addressable patient population in the United States. Currently, there are about 30 million Americans with type 2 diabetes and by 2030, the number of Americans with diabetes is expected to reach 55 million.

Because type 1 diabetics don't produce insulin, they require more intensive insulin treatment. Historically, managing type 1 diabetes has involved multiple finger sticks per day to measure blood sugar levels, followed by insulin injections when necessary. Although type 2 diabetics don't always require insulin at first, most patients will need insulin injections eventually.

A new approach to managing diabetes

Increasingly, type 1 patients are turning away from traditional finger sticks and insulin injections. Instead, they're embracing continuous glucose monitors (CGMs), such as those made by DexCom (NASDAQ:DXCM), and insulin pumps, such as those made by Tandem Diabetes Care.

CGMs track blood sugar over time, providing diabetics with greater insight into changing trends in their blood glucose levels. Insulin pumps can be affixed to the body to provide insulin at regular intervals based upon glucose readings.

The two devices have been used by patients separately to manage their disease for years, but technology is advancing that's allowing these devices to work together in a system that automates glucose measurement and insulin dosing.

In 2016, Medtronic's MiniMed 670G became the first of these coordinated, closed-loop systems to secure an FDA go ahead. The MiniMed 670G, which includes a Medtronic CGM, insulin pump, and software, can suspend insulin if predicted blood sugar levels appear too low.

The MiniMed 670G was officially launched in the summer of 2017 and demand for it is accelerating. Exiting the most recent quarter, there were over 70,000 people using the MiniMed 670G, up from 20,000 people in the prior quarter.

Let the competition begin

Medtronic's monopoly of the closed-loop system market is quickly coming to an end.

In August, Tandem Diabetes plans to make a new feature called Basal-IQ available to users of its t:slim X2 insulin pump that will stop the pump from delivering insulin when CGM readings predict insulin levels in the future will be too low. Once this feature is available,�users will be able to create a system like the MiniMed 670G that combines DexCom's latest CGM, the G6, with the t:slim X2 to eliminate finger sticks and automate monitoring and insulin dosing.

It remains to be seen if Tandem Diabetes can outsell Medtronic, but Tandem's system does have some advantages. Tandem Diabetes t:slim X2 pump is 38% smaller than the MiniMed 670G and the sensors for DexCom's G6 can be worn for 10 days, rather than seven days for Medtronic's CGM. Also, Tandem Diabetes solution essentially does away with fingers sticks, while finger sticks are still necessary to calibrate the MiniMed 670G.

What it means to investors

Medtronic doesn't reveal exactly how much money it's making on the MiniMed 670G, but the system costs thousands of dollars and growing demand for it is one reason why Medtronic's expects double-digit diabetes revenue growth this fiscal year. For perspective, that division contributed $2.1 billion to Medtronic's top-line last fiscal year.

Tandem Diabetes Care is a much smaller company. In Q1 2018, it shipped 4,444 insulin pumps, up 58% year over year, and its sales totaled $27.3 million, up 44% year over year. Over the past 12 months, Tandem Diabetes sales were $116 million.

TNDM Revenue (TTM). Data source:�YCharts.

Since Medtronic exited last quarter with 70,000 MiniMed 670G users, winning away even a little market share could be financially significant to Tandem Diabetes; especially because it's still losing money.�Despite its sales growth, Tandem Diabetes reported a net loss of $32.7 million in the first quarter of 2018.

Tandem Diabetes is guiding for sales of between $132 million to $140 million, up 23% to 30% from 2017, but I suspect that forecast will increase now that the FDA's given its automated insulin system the OK.

In the past, management has said it can break even on a cash flow basis once it reaches 80,000 installed pumps, which is something it hopes to achieve in the second half of next year. A good launch of its new system this summer could allow it to pull that timeline forward and if so, investors could be rewarded with profits sooner than previously expected.

Overall,�Tandem Diabetes' opportunity is big enough to have me thinking it's a stock worth buying, however, it and Medtronic won't have this market all to themselves forever. New closed-loop systems from Insulet and Bigfoot Biomedical could be available in a year or two, so investors will want to pay close attention to their progress.

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Cross Country Healthcare (CCRN) Upgraded by ValuEngine to “Hold”

Cross Country Healthcare (NASDAQ:CCRN) was upgraded by stock analysts at ValuEngine from a “sell” rating to a “hold” rating in a research note issued on Wednesday.

A number of other brokerages also recently issued reports on CCRN. BidaskClub downgraded Cross Country Healthcare from a “strong-buy” rating to a “buy” rating in a research report on Friday, June 8th. TheStreet raised Cross Country Healthcare from a “c+” rating to a “b” rating in a research report on Thursday, March 1st. Lake Street Capital downgraded Cross Country Healthcare from a “buy” rating to a “hold” rating and reduced their price target for the stock from $16.00 to $11.00 in a research report on Thursday, May 3rd. Cantor Fitzgerald downgraded Cross Country Healthcare from an “overweight” rating to a “neutral” rating in a research report on Friday, March 2nd. Finally, Benchmark downgraded Cross Country Healthcare from a “buy” rating to a “hold” rating and set a $19.00 price target on the stock. in a research report on Thursday, March 1st. Seven analysts have rated the stock with a hold rating and four have issued a buy rating to the company. The company has an average rating of “Hold” and a consensus price target of $13.75.

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Cross Country Healthcare opened at $12.52 on Wednesday, Marketbeat reports. The company has a quick ratio of 2.32, a current ratio of 2.32 and a debt-to-equity ratio of 0.39. The firm has a market cap of $452.81 million, a price-to-earnings ratio of 20.52, a P/E/G ratio of 2.22 and a beta of 0.89. Cross Country Healthcare has a twelve month low of $9.07 and a twelve month high of $14.65.

Cross Country Healthcare (NASDAQ:CCRN) last posted its earnings results on Wednesday, May 2nd. The business services provider reported $0.06 earnings per share for the quarter, topping analysts’ consensus estimates of $0.02 by $0.04. The company had revenue of $210.30 million during the quarter, compared to analyst estimates of $206.75 million. Cross Country Healthcare had a return on equity of 9.99% and a net margin of 4.74%. Cross Country Healthcare’s revenue was up 1.3% on a year-over-year basis. During the same quarter in the prior year, the business earned $0.05 earnings per share. analysts anticipate that Cross Country Healthcare will post 0.45 earnings per share for the current fiscal year.

In other news, Director W Larry Cash bought 5,000 shares of the business’s stock in a transaction that occurred on Monday, May 7th. The shares were purchased at an average cost of $11.14 per share, with a total value of $55,700.00. Following the transaction, the director now directly owns 118,580 shares in the company, valued at $1,320,981.20. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is accessible through this link. Also, COO William J. Burns bought 2,500 shares of the business’s stock in a transaction that occurred on Thursday, May 10th. The stock was purchased at an average cost of $11.92 per share, for a total transaction of $29,800.00. Following the completion of the transaction, the chief operating officer now owns 144,378 shares in the company, valued at $1,720,985.76. The disclosure for this purchase can be found here. Corporate insiders own 3.40% of the company’s stock.

Hedge funds and other institutional investors have recently added to or reduced their stakes in the stock. Koch Industries Inc. acquired a new position in shares of Cross Country Healthcare in the 1st quarter valued at $117,000. Aperio Group LLC acquired a new position in shares of Cross Country Healthcare in the 1st quarter valued at $133,000. Renaissance Technologies LLC acquired a new position in shares of Cross Country Healthcare in the 4th quarter valued at $156,000. Barclays PLC increased its position in shares of Cross Country Healthcare by 118.6% in the 1st quarter. Barclays PLC now owns 12,283 shares of the business services provider’s stock valued at $136,000 after acquiring an additional 6,665 shares during the period. Finally, Teacher Retirement System of Texas acquired a new position in shares of Cross Country Healthcare in the 4th quarter valued at $162,000. 95.66% of the stock is currently owned by hedge funds and other institutional investors.

About Cross Country Healthcare

Cross Country Healthcare, Inc provides healthcare staffing, recruiting, and workforce solutions in the United States. The company operates in three segments: Nurse and Allied Staffing, Physician Staffing, and Other Human Capital Management Services. The Nurse and Allied Staffing segment offers traditional staffing, including temporary and permanent placement of travel nurses and allied professionals, branch-based local nurses, and allied staffing; short-term staffing of registered nurses, licensed practical nurses, certified nurse assistants, practitioners, pharmacists, and other allied professionals on per diem and short-term assignments; and travel allied professionals on long-term contract assignments.

To view ValuEngine’s full report, visit ValuEngine’s official website.