Updated with more information, stock price

NEEDHAM, Mass. ( TheStreet) -- Pfizer ( PFE) walked away from a partnership with Celldex Therapeutics ( CLDX) to develop the small drugmaker's brain tumor vaccine CDX-110, Celldex announced Friday.

Celldex has regained full rights to CDX-110 and says it intends to continue the drug's development. Pfizer decided to terminate the partnership over CDX-110 because the drug is "no longer a strategic priority" for the company, Celldex said.

Celldex shares were down $1.54, or 32%, to $3.24 in recent Friday trading.

Celldex licensed CDX-110 to Pfizer in April 2008. The drug is designed to treat glioblastoma multiformae, or GBM, a form of brain cancer.

A hint of acrimony between Celldex and Pfizer emerged earlier this summer over the speed and direction of CDX-110's development.

At the June annual meeting of the American Society of Clinical Oncology, Celldex CEO Anthony Marucci expressed frustration that the company couldn't move faster to start a pivotal, phase III study of CDX-110 because Pfizer was in charge of the drug's clinical development.

One prickly issue was how to design a randomized, controlled phase III study of CDX-110 in GBM patients -- a necessary requirement to get the drug approved. A previous attempt to conduct a randomized phase II study -- in which some patients receive CDX-110 and others receive a placebo or control treatment -- failed because patients were reluctant to enter a study in which there was a chance they wouldn't receive the experimental drug.

Previous phase II studies of CDX-110 have produced some promising benefits for brain cancer patients, but the number of patients treated were relatively small and the studies lacked a control arm by which treatment with CDX-110 could be compared.

A source close to Celldex says that Pfizer also likely reached the conclusion that CDX-110's commercial potential wasn't significant enough financially, especially after the merger with Wyeth. CDX-110 is designed to work only in a subset of patients who have GBM brain tumors with a variation of a more common protein receptor.

Celldex said additional data from a phase II study of CDX-110 will be presented at a medical meeting in November.

As of June 30, Celldex had $65.8 million in cash. Now that Pfizer has walked away from CDX-110, Celldex will need to use it own cash to fund the drug's future clinical trials.

--Written by Adam Feuerstein in Boston.

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