Medarex (MEDX)



Medarex (NASDAQ:MEDX) is a young biotech company that makes human monoclonal antibodies (mAb), which mimic the action of the immune system and can be more effective and less toxic than traditional drugs. Medarex has always operated at a loss, but its leading compound, a mAb cancer drug called ipilimumab, has the potential to be a major driver of revenue for the company if successful. Jointly being developed with Bristol-Myers Squibb, ipilimumab is currently in Phase III clinical trials for metastatic melanoma and the FDA has expedited its clinical testing and approval, but may also be effective for other types of cancers.[1]

Medarex owns the UltiMAb process that uses transgenic mice to produce fully human antibodies for medical purposes, and licenses this technology to other pharmaceutical and biotech companies.[2] The company has more than 35 partnerships with external companies including Johnson & Johnson and Pfizer.[3]


Medarex (MEDX) is a biopharmaceutical company focused on the development of antibodies in oncology and immunologic diseases. It was founded in 1987 and its IPO on the New York Stock Exchange took place in 1991. [4]

Antibodies are an increasingly important tool in the arsenal of advanced "targeted therapies" that pharmaceutical companies are rolling out to combat diseases such as cancer. Traditional cancer drugs kill cancer cells, but also healthy cells as well, making them extremely toxic and limits the doses that can be given to patients. Targeted therapies only impact cancerous cells and can be given in higher doses, and are often more effective than traditional chemotherapy regimens. Examples include Genentech's Avastin, Herceptin, and Lucentis and Medimmune's Synagis.

It is relatively easy for a biotech company to make a mouse or chicken antibody.[5] However, these animal antibodies can cause severe immune system reactions when used in humans. As a result, human or human-like antibodies are preferred, but are also harder to produce.

Over 40 antibodies derived from MEDX's technology are currently in human clinical testing, with 7 of the most advanced product candidates presently in Phase 3 clinical trials.[6] Several of these products were developed in-house while others were developed by MEDX's partners.

Currently, revenues are only derived from licensing agreements and royalties, but if MEDX successfully launch a drug, its sales will increase very quickly.


2007 revenues were $56 million, a 16% increase from 2006.[7] Medarex has been operating at a loss as it has yet to see the launch of a major drug. In 2007, the net loss was $27 million, down from $181 million in 2006 due to a one-time gain from the sale of its interest in Genmab of $152 million.[8]


MEDX research and development expenditures has been rising steadily over the years. Its R&D costs rose 40% from 2005 to 2006, due to the expensive clinical trials that the company has to conduct as it seeks FDA approval for its drugs. [9]

MEDX makes the UltiMAb Human Antibody Development System used to create human antibodies which are better than its competitors. By producing fully human antibodies, there is no need for time-consuming and expensive humanization, which means changing a non-human antibody to be more human-like. These fully-human antibodies also exhibit a much greater binding affinity for their molecular targets than their non-human counterparts, resulting in increased drug efficacy.[10]

Trends & Forces

Uncertainty over lead compound Ipilimumab

Ipilimumab is MEDX's lead compund and is currently in Phase III clinical trials for metastatic melanoma (a type of skin cancer). Ipilimumab is likely to be the biggest contributor to revenue growth and is forecast to reach sales of $112 million in 2010.[11] Ipilimumab is jointly developed with Bristol-Myers Squibb Company (BMY).

In Phase II clinical trials, 11.4%, or 4 of 35 patients, were still alive after 4 years, and the median overall survival for patients treated with ipilimumab in combination with dacarbazine was 15 months in this study. These results compare favorably to median overall survival ranges of 6 to 9 months for patients with treated or previously untreated advanced melanoma treated with standard chemotherapy. [12]

Growth in the Oncology Market Boosts MEDX's Revenues

According to reports by MarketResearch, the oncology market forecasts show an increase from $33billion in 2004 to over $89.5billion in 2012.[13] Factors like an aging population and an increased understanding of the genetics of cancer are fueling this growth. Medarex’s lead compound is targeted for melanoma and possibly other types of cancer and sales will benefit from this trend. [14]


In the metastatic melanoma market, the following drugs are currently being used to treat metastatic melanoma:

  • Dacarbazine: This is a generic drug and is widely used in first-line therapy. As an alkylating agent, it hinders DNA replication in both cancerous and healthy cells. [15]
  • Fotemustine: It is sold as Muphoran and is marketed by Servier, a French pharmaceutical company. Fotemustine is in the same drug class as Dacarbazine and has similar effects.

There are limited treatment options for metastatic melanoma and the prognosis for patients is poor. Ipilimumab would be more effective and less toxic than currently available treatments.[16]

More than 24 companies claim ownership of technology for generating human or humanized antibodies. These include:

  • Genmab: It is a publicly listed company listed on the OMX Nordic Exchange in Coopenhagen. Genmab has developed UniBody, a proprietary technology which is used to create a smaller antibody format which may offer several advantages over traditional full size monoclonal antibodies. MEDX has an approximately 5.1% interest in Genmab.
  • Regeneron Pharmaceuticals (REGN) : REGN currently has 1 marketed product and 3 drugs in its pipeline. It also has a genetically engineered mouse model (VelocImmune) which is used to produced humanized antibodies.[17]
  • Dyax (DYAX): Dyax’s makes test products that rapidly identify compounds that bind with very high affinity and specificity to therapeutic targets. [19] The company also has three drugs under development in its pipeline.
  • XOMA (XOMA): XOMA's Human Engineering(HE) technology is a clinically-tested humanization method for reducing the negative immune reactions that non-human antibodies cause, while retaining the efficacy of the antibody. [20] It also has 7 drugs under development in its pipeline.
  • PDL BioPharma (PDLI): PDLI has a proprietary antibody humanization technology that has been used to develop successful antibodies such as Herceptin and Avastin. However, companies have generally switched to technologies that produce fully human antibodies instead of merely humanized ones.
In millions of USD Medarex Regeneron Alexion Dyax Xoma PDLI
Total Revenue56.26125.0272.0426.184.25258.93
Gross Profit35.91-76.5965.3426.184.25258.93
Net Income-27.07-105.6-92.29-56.31-12.33-21.06
Return on Average Assets-3.16%-13.88%-27.64%-65.56%-14.10%-1.66%
Return on Average Equity-4.99%-31.20%-81.59%-212.66%NA-3.98%


  1. Medarex Announces FDA Fast Track Designations For Ipilimumab For The Treatment Of Metastatic Melanoma
  2. MEDX 2007 10-K
  3. MEDX 2007 10-K
  4. MEDX 2007 10-K
  5. Monoclonal antibodies
  6. MEDX 2007 10-K
  7. MEDX 2007 10-K
  8. MEDX 2007 10-K
  9. MEDX 2007 10-K
  10. MEDX 2007 10-K
  11. [ Datamonitor report. MEDX 2007.]
  12. Ipilimumab Plus Chemotherapy is Associated with Prolonged Survival and Increased Disease Control Rates in Patients with Advanced Melanoma
  13. Cancer Therapeutics: The Worldwide Market. Kalorama Information
  14. MEDX 2007 10-K
  15. Wikipedia Decarbazine
  16. Melanoma
  17. Regeneron Pharmaceuticals 10-K
  18. Alexion Pharmaceuticals 10-K
  19. Dyax10-K
  20. Xoma10-K
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