Genta Inc. said Wednesday it will run out of cash next month unlessit can secure funding from investors or corporate partners.
The San Diego company has cut costs over the last 18 months bydownsizing and narrowing its focus to concentrate on its Anticodeprogram and its Genta-Jago Technologies B.V. joint venture, whichis developing controlled-release and reformulated drugs.
Genta said in its earnings report released Wednesday that it had $2.3million in cash on June 30, 1996, and would use that up inSeptember. If funding doesn't come in Genta may have to sell orlicense certain assets and technology, scale back its programs andfurther reduce its workforce and spending. Genta also said it failed tomeet net asset criteria required for listing on NASDAQ and facespossible delisting of its stock.
Genta stock (NASDAQ:GNTA) lost as much as two-thirds of itsvalue Wednesday before recovering some and closing down 56 centsat 75 cents per share, a drop of 43 percent.
Since raising money in March 1996 "we told the market we hadenough cash to get into September," said Genta Chairman and CEOThomas Adams, "and we're still in that position." He said Genta istrying to secure financing and also is actively seeking partners for theAnticode and Geomatrix programs.
Adams said Genta is in discussions to restructure an agreement madewith holders of Series A preferred stock purchased in September1993. A delisting of Genta stock would require the company torepurchase all the preferred shares at a cost of $31 million, whichcould force the company to stop operations.
"They have the ability to stay in their preferred position for anotheryear," Adams said.
Genta's Anticode cancer program involves technology usingantisense and triple-stranded therapeutics to inhibit production ofdisease-related DNA. The lead product in that program, G3139, is ina Phase I/II trial in the U.K.
Genta recently reported a non-Hodgkin's lymphoma patient treatedwith G3139 achieved a complete response and four of eight patientstreated demonstrated clinical and/or biological activity. The companyalso said the National Cancer Institute agreed to fund and conductU.S. studies of the drug in various tumors.
The Genta-Jago venture is being conducted with Jagotec AG, ofSwitzerland. Adams said three products are in late-stagedevelopment, with the filing of abbreviated new drug applicationsanticipated in 1997. Overall the venture is developing about a dozenproducts.
Genta has the right in the joint venture to apply the Geomatrixtechnology to 60 products, giving Genta a number of partneringopportunities.
"We've got $60 million invested in the antisense business, with 80patents and applications," Adams said, underscoring another sourceof partnership potential.
Genta also has a wholly owned subsidiary, JBL Scientific, whichmanufactures Anticode drugs and intermediates for others. Adamssaid that company is profitable and expects sales of $5 million thisyear, up from $3.8 million in 1995.
In the second quarter Genta had a net loss of $2.9 million andrevenues of $1.4 million. The company has 26.5 million sharesoutstanding. n
-- Jim Shrine
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