Gensia Inc. suffered its third significant setback in the past sixmonths Monday with the news that the FDA said its new drugapplication for the GenESA system is not approvable.

The San Diego company's stock (NASDAQ:GNSA) fell $1.13, or 32percent, to close at $2.38 in trading of nearly 1.6 million shares.Gensia's stock fell 51 percent, from $10.37 to $5.06 on Oct. 17 aftera Phase III trial of its lead product, Protara, failed to show statisticalsignificance.

Another setback occurred in January when Gensia had to delay thefiling of an abbreviated new drug application (ANDA) for Geomatrixnifedipine because it failed to meet bioequivalency standards. Thatresulted in postponements of payments from collaborator BoehringerMannheim Pharmaceuticals Inc., of Gaithersburg, Md.

The GenESA system combines the drug arbutamine and a computer-controlled closed-loop administration system, which is designed tohelp in the detection of coronary artery disease for those who can'texercise. It is approved in five European countries.

Martha Hough, Gensia's senior director of finance, told BioWorldthe company will have to wait until it meets with the FDA to betterunderstand what concerns the agency had with the submission. Thecompany had no other comment about the FDA's action letter.

Analysts Richard Stover, of Stover, Haley, Burns Inc., of Stamford,Conn., and Matthew Geller of Oppenheimer & Co. in New York, haddifferent opinions about the FDA's action. Neither, however, wassure of the specific reasons for the rejection.

"There just wasn't that much there to begin with," Geller toldBioWorld. "I think it was more a creation in people's minds. Thescience was never that exciting."

Geller was one of the analysts who correctly surmised that there wastrouble with Protara when the trial was stopped in August on therecommendation of an independent committee. He said the adenosineregulating agent (ARA) technology on which Protara is based haslittle value.

Stover, who earlier said the GenESA data "looked verystraightforward," said Monday that it showed another example ofwhat some have called the "arrogance of power" wielded by theFDA. "This just highlights even more the need for changes at theFDA," he said.

Geller didn't agree. He said there may have been some toxicitiesassociated with arbutamine.

Gensia reported a net loss of $50 million in 1994 with revenues ofabout $50 million, mostly from its generics business. It also reportedcash and equivalents of $53.6 million on Dec. 31. The company has31.6 million shares outstanding.

Hough said the company plans to license out Protara "to a companythat has the financial wherewithal to take it forward." It is clear, shesaid, that another trial will be needed. And, she said, Gensia hopes toidentify a compound that's bioequivalent to Pfizer Inc.'s ProcardiaXL, and file an ANDA in 1996.

"You have to say with the setback and the current valuation, this is aphenomenal takeover candidate," Stover said. "The current valuationof the stock is a lot less than the generic business is worth. BuyingGensia at [$2.50] would be like buying Synergen at [$2.50]."(Synergen Inc., of Boulder, Colo., was bought by Amgen Inc. for$262 million, or $9.25 per share.)

Stover still is confident valuable drugs can be developed with theARA technology, but Geller said the generics business is about allGensia has left. Geller said a takeover would be made more difficultbecause of Gensia's large debt, which includes a preferredshareholder obligation of $80 million. n

-- Jim Shrine

(c) 1997 American Health Consultants. All rights reserved.