Developing game-changing cancer drugs is no easy task, and investors in Celldex Therapeutics (NASDAQ:CLDX) were harshly reminded of that reality when management recently announced that the company is discontinuing the development of Rintega, its lead product candidate.

Rintega's late-stage trial failure in glioblastoma -- a type of brain cancer -- stunned investors and led to a halving of Celldex's share price. What can investors learn from this clinical trial failure, and what does it mean for Celldex's future? Find out in this healthcare segment of The Motley Fool's Industry Focus: Healthcare podcast.

A transcript follows the video.

This podcast was recorded on March 9, 2016. 

Kristine Harjes: So, risk of trial failure. How big of a risk is that? How should investors be thinking about it?

Todd Campbell: Well, we've got, unfortunately, a really good example in Celldex, a company that was working on therapy for brain cancer, glioblastoma. It, at one point, was very promising, but unfortunately, just recently, the company announced that it's going to have to discontinue its study because, sure enough, a late-stage trial will not out-perform placebo.

Harjes: Yeah, that was a huge disappointment when we saw it in the news. And the stock tanked, what, 50% or so just on that one news item?

Campbell: Right. This stock is down below $4 now, and this is probably a touchy, painful subject for investors who own the stock, given that it was trading around $30 last summer. As recently as the fourth-quarter conference call, management seemed encouraged; they were offering up encouraging words. The CEO said that he believes that fundamentally, they have a drug that's approvable in this drug, Rintega. The chief medical officer said that there was a chance that maybe the trial could get stopped early for success, and it could get to the market sooner rather than later.

So I think what this does is it reminds investors that you can take a drug that looks really, really good at mid-stage trials, for a very important indication, like brain cancer, where so many people, thousands of people get it, unfortunately, thousands of people are still dying from it. And that can make you think, "Wow, they're going to revolutionize this indication! And this is going to be a fantastic investment for me to get involved in." Until the drug clears the phase 3 trials, which is the third stage, you just can't assume anything.

Harjes: Yeah, especially with cancer medicines. We know that 90% of medicines fail at some point during clinical trials. That number goes up to 93% when we're talking about cancer.

Campbell: Cancer is very, very hard to treat and to attack, and medicines they're developing now are incredibly complex, so we don't fully understand them, especially when they get rolled out into much larger patient populations in phase 3. This trial had 745 participants in it. Anything can and sometimes does happen. In this case, it wasn't necessarily a failure for Rintega, it was a better-than-expected outcome for the people who were taking the control, the placebo group. In past trials, the placebo group didn't perform nearly as well as they did in this phase 3 trail. So, it's hard to say that Rintega is a complete failure. But, that being said, the company has halted development of the drug, and that basically leaves investors saying, "OK, what could happen next for the company?"

Harjes: So it seems like there might still be a little bit of promise in this company. Do you think that falls into Rintega? Or do they have any other assets to fall back on?

Campbell: I think you have to consider Rintega as basically gone for now. Unless they can do some retroactive analysis that allows them to figure out how to run another trial, I don't see any more development of that drug. They do have two other drugs, though, that are interesting. I'll shorten the names, because as we all know, the names are hard to pronounce in biotech, the generic names. But one is Glemba and the other is Varli, and these are both monoclonal antibodies that are under development, mid- and late-stage trials, for cancer. Results from both trials could start rolling out to investors either later this year or 2017. So there are some catalysts that could re-energize the stock price. However, as we saw with Rintega, there's still a lot of risk here. If neither of these trials pan out, then you have to look at other trials in development. That being said, the market cap is far lower today than it was a month ago. They do have a pretty good amount of cash on hand that should get them through 2017.

Kristine Harjes has no position in any stocks mentioned. Todd Campbell owns shares of Celldex Therapeutics. The Motley Fool recommends Celldex Therapeutics. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.