Celltech Group plc said partner Pfizer Inc. has decided to delay development of the rheumatoid arthritis drug CDP 870, thereby stalling the potential launch for at least one year, and wants to renegotiate the terms of the companies' profit-sharing agreement.

The news sent Slough, UK-based Celltech's stock (NYSE:CLL) down $2.78 Thursday, or 18.2 percent, to close at $12.52.

New York-based Pfizer is waiting for data from Phase III studies already under way in RA before going ahead with more.

"They don't like the commercial terms, more than anything else," said Goran Ando, Celltech's CEO. "They just want a larger slice."

Celltech entered the deal with Peapack, N.J.-based Pharmacia Corp. (later merged with Pfizer) in March 2001, when the agreement was hailed as the largest ever by a European biotechnology firm, promising up to $280 million for Celltech, with $50 million up front.

Analyst Erica Whittaker at Merrill Lynch Global Securities in London said in a research report that the profit allowance to Celltech in the RA indication is probably about 37 percent and in Crohn's disease about 85 percent.

Ando acknowledged the analysts' estimates but declined to comment. What's clear is that Pfizer wants more than it originally bargained for, and the companies will be trying to hammer out a new deal during the next two months, Ando said.

If they can't, "we'll look for an amicable divorce," he said. "Regardless of which way it goes, it will take a couple more months [after a decision is made]. We're both committed to doing this, rather than drag it on to eternity."

In RA, Pfizer already has two Phase III studies under way and said it is postponing the start of any more until current trials yield data, which are due in the first and second quarters of 2004. The remaining studies, the longest of which had been scheduled to start in the second half of 2003, will determine the filing date in RA.

Celltech said it still hopes to launch CDP 870, a pegylated anti-tumor necrosis factor-alpha antibody fragment, in 2006 for Crohn's disease - a market in which Whittaker estimated $250 million in peak sales.

"We are comfortable with the current guidance of 2006 [for that launch], and that is unchanged," Ando said, adding that "we'll do everything we can, now that we're uncoupling it [from the RA indication] in terms of filing dates" to move the Crohn's filing date earlier, which might be possible, but "it's not going to be a huge amount" earlier than projected.

The first of two pivotal Celltech-run registration studies in Crohn's will be started in the U.S. in the next two weeks, with the second due to begin in early 2004.

Ando said the Crohn's indication looks much more promising than Celltech first believed, as shown partly by Malvern, Pa.-based Centocor Inc.'s Remicade (infliximab), the anti-TNF drug approved for Crohn's and RA.

"The overall market penetration has surprised everyone," Ando said. "It's been very quick." Remicade is the only anti-TNF approved for Crohn's so far, Ando noted, so another likely factor for success with CDP 870 in Crohn's is order of entry to the market.

"Being the second approved biologic for Crohn's is very different from being the fourth to market in RA," he said. "A couple of years ago, we saw [the Crohn's indication] as a nice little add-on."

The drug ran into trouble earlier against Crohn's. In March 2002, Celltech reported that a Phase II study proved CDP 870 effective and safe, but did not reach statistical significance because of a very high placebo response rate. Still, Celltech said results were good enough to provide confidence going into Phase III work, and CDP 870 has an advantage over Remicade since it's injected monthly rather than infused intravenously.