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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Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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