UPDATE 3-Celldex says Pfizer ends cancer vaccine deal; shrs sink

Fri Sep 3, 2010 3:05pm EDT

* Says cancer vaccine not strategic priority for Pfizer

* Says will conduct late-stage studies on its own

* Worldwide rights to vaccine revert to Celldex on Nov. 1

* Celldex shares tank 39 pct to lifetime low (Adds analyst comments; updates stock movement)

By Shravya Jain

BANGALORE, Sept 3 (Reuters) - Celldex Therapeutics Inc (CLDX.O) said it would go it alone on the development of its lead cancer vaccine, after partner Pfizer (PFE.N) pulled out saying the program was no longer a strategic priority for the drug giant.

Though Pfizer's pull out sent Celldex's stock crashing to a life low, analysts said they were confident the company could advance the vaccine into late-stage trials without a partner.

"As much as people are saying that Pfizer didn't believe in the drug, (Pfizer) didn't really say that. It just has different priorities," WBB Securities analyst Steve Brozak said.

Needham & Co analyst Mark Monane said despite a higher financial risk, the execution risk for the drug's development has not increased as Celldex has the experience and the resources to take it forward.

"Celldex can bring the drug into Phase 3 in the first half of 2011," Monane said.

In May, the company said data from a mid-stage trial of the vaccine, called CDX-110, showed progression-free survival for 70 percent of the patients afflicted with a type of brain tumor, and claimed the results were 40 percent better than the current standard of care. [ID:nN20241460]

Celldex's CDX-110 is an immunotherapy vaccine -- the drug targets a molecule that is present only in tumor cells. The vaccine is similar to Dendreon's DNDN.O Provenge -- the only FDA approved cancer vaccine, which treats advanced prostate cancer.

"We don't need a partner going forward. We plan on pushing (the vaccine rindopepimut) into Phase 3 ourselves," Celldex Chief Executive Anthony Marucci said, adding that the company would need to raise money at "some point" to complete the study.

Brean Murray, Carret & Co analyst Jonathan Aschoff expects the trial to cost less than $50 million.

Celldex, with a market value of about $146.7 million, had cash, cash equivalents and marketable securities of $65.8 million as of June 30.

On a conference call with analysts, CEO Marucci said the company will now need to hire more people on the clinical side.

Needham, Massachusetts-based Celldex said it would also focus on the four other product candidates that are in ongoing early to mid-stage studies.

It has two other cancer vaccines in early and mid stage development, an antibody therapy for breast cancer and melanoma in mid stage trials, and a renal disease therapy in early development.

DOOMED DEAL

In April 2008, Celldex and Pfizer Vaccines LLC had entered into the deal for the cancer vaccine as a treatment for patients with Glioblastoma Multiforme, a kind of brain tumor.

Pfizer had made an upfront payment of $40 million in 2008 and had also made an equity investment of $10 million in the biopharmaceutical firm.

Celldex was also eligible to receive milestone payments of over $390 million for the successful development and commercialization of the drug.

Celldex Chief Financial Officer Avery Catlin said there was no termination fee defined in the license agreement and the companies would decide on a future course of action within the next 60 days.

Worldwide rights to develop and market the vaccine return to Celldex effective Nov. 1.

Celldex shares, which have fallen 27 percent over the past three months, dropped 39 percent to a lifetime low of $2.91 before recouping some of their early losses. They were trading down at $3.53 late afternoon.

About 5 million shares changed hands Friday, more than 14-times their 10-day average daily volume. (Additional reporting by Esha Dey in Bangalore; Editing by Anne Pallivathuckal, Anthony Kurian)

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