West Coast Editor
About two weeks after Aventis SA - discouraged by mixed news from a Phase III trial with Genasense for chronic lymphocytic leukemia - bailed out of a deal with Genta Inc., the antisense chemotherapy booster failed against advanced multiple myeloma.
"My opinion is, it's game over," said Kate Winkler, vice president of equity research for Merriman Curhan Ford & Co. in San Francisco. "I think the company is in extreme danger of declaring bankruptcy."
The news disclosed Friday sent Genta's stock (NASDAQ:GNTA) into a tailspin, losing 38 cents, or about 23 percent of its value, to close at $1.27. Shares recovered somewhat Monday and ended at $1.32, up 5 cents.
Genta said the Phase III study with injected Genasense (oblimersen sodium) with high-dose dexamethasone missed the primary endpoint of time to progression in patients who'd been given extensive therapy previously. Details of the results will be provided over the coming weekend at the American Society of Hematology meeting in San Diego, Genta said. Meanwhile, the company is evaluating the data further to decide what will be the next steps with Genasense against multiple myeloma.
Earlier this month, Genta's shares took a 50 percent hit on news from the CLL trial. Though relapsed or refractory patients getting Genasense plus chemo proved significantly more likely to achieve complete or nodular partial remission than those given chemo alone (which was the primary endpoint), those who got the combination therapy showed no significant difference from the chemo group alone in the secondary endpoints: time to progression and overall survival. (See BioWorld Today, Nov. 10, 2004.)
The secondary-endpoint findings caused Strasbourg, France-based Aventis (now part of Sanofi-Aventis Group) to back away from the potential $476.9 million deal signed in the spring of 2002 for Genasense, which targets the Bcl-2 protein and entered the clinic in 1995. The companies had a co-promotion arrangement in the U.S., and Aventis owned the rights in other parts of the world. (See BioWorld Today, April 30, 2002.)
Benjamin Weintraub, analyst with Hibernia Southcoast Capital in New Orleans, believes Genta could pull through.
"If they do continue, they'll look significantly different," he said, noting that a merger with a larger group or sell-off of assets might save the day. Others in Genta's situation have made it, he said, citing a 10-for-1 reverse stock split as one of the possibilities.
Intellectual property related to Bcl-2 is strong "despite Genasense not working," Weintraub added, and the acquisition in 2003 of privately held Salus Therapeutics Inc., of Salt Lake City, helped by giving Genta some oomph in antisense and small interfering RNA. (See BioWorld Today, Aug. 18, 2003.)
Winkler, though, pointed out that the company "has virtually no pipeline other than Genasense and they have a ton of debt, including $19 million they owe back to Aventis in May," when the deal is officially concluded, Winkler told BioWorld Today.
"They had received $35 million as an advance on the approval milestone, which they're obviously not going to get, and they've paid off $16 million with inventory of drug, which is kind of bizarre" but probably was allowed under the contract signed when the Genasense picture seemed brighter, she said.
Genta noted in its most recent quarterly report that Aventis has been a "significant" source of funding. For the three months ending Sept. 30, Genta recorded gross total costs and expenses of about $25.4 million, with Aventis reimbursing $20.5 million.
In 2003, license fees and development funding revenues received from Aventis totaled about $5.2 million, or 78 percent, of consolidated revenues. Sales of Ganite (gallium nitrate), the injectable drug for cancer-related hypercalcemia, brought in $1.4 million, or 21 percent.
"Ganite was really a placeholder for getting their marketing up and running," Winkler said, and marketing of that product has stopped since the bad news about Genasense began rolling in.
The drug's trail of tears extends to May, when Genta withdrew its new drug application after an FDA advisory panel gave the drug a thumbs-down for advanced melanoma. Also that month, the company reduced its work force by half to conserve cash, and got word of a class-action lawsuit by shareholders. (See BioWorld Today, May 4, 2004.)
There has been more than one lawsuit, Winkler said.
"All these are still outstanding," she said. "Some will go away but some of them have teeth."