Shares of Coley Pharmaceutical Group Inc. sank nearly 60 percent Wednesday on news that partner Pfizer Inc. has walked away from the investigation lung cancer drug PF-3512676, shelving two Phase III and two Phase II trials.

A scheduled interim analysis of the Phase III trials by an independent data safety monitoring committee showed there was no evidence that PF-3512676 produced additional clinical efficacy over that achieved with the standard cytotoxic chemotherapy regimen alone. The committee concluded that the risk-benefit profile did not justify continuation of the trials, the company said.

"We're dumbfounded," commented Robert L. Bratzler, Coley president and CEO, in a late afternoon conference call, especially given the results Coley achieved in a Phase II randomized clinic trial.

Bratzler declined to discuss any specifics of the results because, he said, "there's still a lot we don't know." He did confirm that the interim data that spawned the Pfizer pullout came from both Phase III clinical trials in advanced non-small-cell lung cancer. He also said there were no indications the patients receiving PF-3512676 fared any worse than those receiving just cytotoxic chemotherapy.

A thorough analysis of the data will take place with New York-based Pfizer in coming weeks, after Pfizer has shut down the clinical trials, he added.

Coley shares (NASDAQ:COLY) fell 59.25 percent, a $5.03 plunge, closing at $3.46.

The partnership between Coley and Pfizer dates to March 2005 when they entered into a series of agreements in which Pfizer obtained development and worldwide marketing rights to PF-3512676, also known as Promune. Coley received a $50 million up-front license fee, and became eligible for up to $455 million plus potential royalties. In addition, Pfizer purchased $10 million in Coley stock in a private placement concurrent with Coley's subsequent IPO.

Pfizer's decision is the second major blow to Coley's pipeline this year. In January, it suspended development of its candidate Actilon due to limited efficacy seen in Phase I and II trials in hepatitis C. Actilon, like PF-3512676, targeted Toll-like receptor 9. The belief has been that stimulation of TLR9 would trigger both short-term and sustained immune responses. That dual activation, along with its potential for reduced side effects, differentiates the drug class from many other immune therapy approaches, the company said.

Initial Actilon data, from a Phase Ib trial in relapsed hepatitis C virus patients who got the drug in addition to pegylated interferon and ribavirin, showed seven of 14 patients in the Actilon group remained negative for the virus after 24 weeks. But after those patients completed the full 48 weeks of treatment and were measured months afterward, only two showed continued viral clearance. In a Phase II trial in null and partial responders, no meaningful differences in viral load in the treatment arms were seen in the null population. It suspended further enrollment of partial responders.

After the Actilon announcement, Wellesley, Mass.-based Coley stock dropped by more than 11 percent, and it reduced its work force by about 22 percent, or 33 employees, mostly in drug development. (See BioWorld Today, Jan. 24, 2007.)

Still in the Coley pipeline are product candidates AVE7279 and AVE0675, which are in a Phase I clinical trial for the treatment of respiratory diseases, such as asthma and allergic disorders, and is partnered with Sanofi-Aventis. The company also has Vaximmune, a TLR9 agonist in a Phase II trial as an adjuvant in infectious disease and cancer vaccines to boost the body's immune response to antigens contained in the vaccines. Vaximmune was the target in an April 2007 deal in which Coley got $4 million up front and stands to receive up to $33 million in potential milestones as part of a licensing deal that gave Merck & Co. Inc. rights to the adjuvant technology for use in developing vaccines for infectious diseases and Alzheimer's. (See BioWorld Today, April 13, 2007.)

Under the terms, Coley also would receive royalties on any product sales from the collaboration. In exchange, Merck holds nonexclusive rights to the technology for certain infectious disease fields and Alzheimer's disease, and retains an option to add additional disease areas in the future. The deal is similar to earlier agreements Coley signed with companies such as GlaxoSmithKline plc and Novartis AG.

On June 11, Coley announced it has acquired the therapeutic Toll-like receptor cancer programs from 3M for cash payments totaling $20 million over three years, plus milestones and royalties. That deal added to Coley's pipeline clinical and preclinical small-molecule candidates targeting TLR7 and TLR8.

At the end of March, Coley reported cash on hand totaling $96 million, and the company said it expects a 2007 burn of about $35 million.