The Associated Press May 18, 2011, 1:54PM ET

Celldex shares fall after offering price announced

Shares of cancer drug developer Celldex Therapeutics Inc. tumbled Wednesday after it said it would price a stock offering at $3.15 per share and it expects to collect $29.4 million in proceeds after expenses.

THE SPARK: The Needham, Mass., company said it will use proceeds from the offering to fund clinical trials and for working capital. It is preparing to start a late-stage study of the drug candidate rindopepimut as a treatment for glioblastoma, the most aggressive type of brain cancer.

Celldex had been working with Pfizer Inc., the world's largest drugmaker, to develop the drug, but Pfizer pulled out last year.

The offering of 10 million shares is expected to close Monday. Celldex gave underwriters a 30-day option to buy up to 1.5 million additional shares to cover excess demand.

Jefferies & Co. Inc. is acting as the offering's sole book-running manager. Wedbush Securities Inc., Brean Murray, Carret and Co. and Roth Capital Partners LLC are acting as co-managers.

THE BIG PICTURE: Celldex said earlier this month it lost $10.1 million, or 31 cents per share, in the first quarter. Revenue slipped to $2.5 million, as product development and licensing agreements revenue fell.

THE ANALYSIS: WBB Securities President Steve Brozak said investors don't understand the offering price, which represents a discount of nearly 19 percent to Tuesday's closing price. He said Celldex had to offer a relatively low price to attract institutional investors because the company no longer has a big development partner on the drug.

Brozak said Pfizer pulled out due to financial considerations, not because of the drug's potential.

"This is the best of times to be an investor in Celldex," said Brozak, whose company has no holdings in Celldex or a banking relationship with the company. "This highlights that real innovation is really being spurred by small biotech."

SHARE ACTION: Down 13 percent, or 51 cents, to $3.37 in afternoon trading while broader trading indexes were up slightly. Celldex traded as high as $9.49 a year ago but has declined since then.


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