Pfizer Terminates Deal – Analyst Blog

Recently, Pfizer (PFE) announced its decision to pull out of an agreement with Celldex Therapeutics (CLDX) to develop the brain tumor vaccine rindopepimut (PF-04948568 / CDX-110) as the development of the vaccine no longer constituted a strategic priority for the pharmaceutical giant. CDX-110, in mid-stage studies, is an immunotherapy vaccine targeting a molecule that is present only in tumor cells.

 

With Pfizer pulling out of the agreement, all global rights for the development and commercialization of rindopepimut will revert to Celldex from November 1, 2010. The intervening period will see both companies working together for the successful transition of rindopepimut and related data, intellectual property and materials from the pharma giant to Celldex. Celldex remains confident to develop the vaccine further in spite of the separation from its illustrious partner.

 

Earlier in the year, Celldex presented respectable results regarding the brain cancer vaccine. Data from a mid-stage study revealed that treatment with the candidate resulted in progression-free survival for 70 % of the patients suffering from glioblastoma multiforme (GBM) – a type of brain tumor that is treated using rindopepimut – and claimed the results were 40 % better than the current standard of care.

 

As a reminder, the deal, inked in 2008, included a $50 million upfront payment by Pfizer in addition to $390 million to be paid by Pfizer on the achievement of certain milestones plus royalty payments.

 

 

We currently have a Neutral recommendation on Pfizer, which is supported by a Zacks #3 Rank (short-term Hold rating). We expect near-term earnings growth at Pfizer to come in the form of cost-cutting and share repurchases.

 

While the merger with Wyeth provides Pfizer with an attractive biologics platform and some complementary products and businesses, we do not believe they are enough to sustain long-term top line growth. Longer-term growth will be dependent on the success of drug development. The patent expiration of cholesterol therapy Lipitor in 2011 remains a big concern.

 

We also have a Zacks #3 Rank on Celldex with a long-term Neutral stance.