Genta Will Add to Its Trials and Lose Its CFO
By Adam Feuerstein
Staff Reporter
06/03/2002 11:24 AM EDT
Genta (GNTA:Nasdaq - news - commentary - research - analysis) said Monday that it's pushing back the development timeline of its experimental cancer drug Genasense in order to add more patients to its ongoing clinical trials.
The biotech firm also said it raised $72 million in gross proceeds from its development partner, the Franco-German pharmaceutical firm Aventis (AVE:NYSE ADR - news - commentary - research - analysis). Genta's chief financial officer, Al Fernandez, has also resigned to "pursue personal objectives," according to CEO Ray Warrell. A replacement is being sought.
Genta shares fell $1.38, or 15%, to $7.87 in recent Monday trading.
In May, TheStreet.com reported that Genta was still enrolling patients in all three of its Phase III clinical trials for Genasense, which would likely delay the reporting of results and push back efforts to get the drug reviewed by the Food and Drug Administration.
Monday, Warrell said the company, after consulting with Aventis, has decided to increase the number of patients in its Phase III malignant melanoma study to 750 from 450. As a result, Genasense won't be submitted to the FDA before the middle of 2003, instead of the end of 2002, as previously expected.
Warrell, speaking on a conference call, added that patient counts in two ongoing Phase III studies testing Genasense in two blood cancers -- multiple myeloma and chronic lymphocytic leukemia -- will also likely be increased, but no final decision has been made. Data from these trials was expected at a medical meeting in December, but will now be delayed to a future, albeit undetermined, date.
Warrell insisted that the trial resizing was done at the request of partner Aventis, which is asking Genta to take a more conservative, go-slow approach with Genasense's development to avoid the costly missteps made by other biotech firms recently. The addition of more patients, and the drug's delayed timeline, in no way hints at anticipated poor results from the three late-stage trials, he added.
Critics, of course, will take issue with this assertion. This is the second time Genta has added patients to the melanoma trial, which like all the studies, is not blinded. That means doctors know which patients are receiving a combination of Genasense and chemotherapy, and which are just receiving chemotherapy. Adding patients to an ongoing clinical trial -- not once, but twice -- raises a major red flag about Genasense's efficacy.
The increased uncertainty over Genasense is clearly spooking investors. Genta has now lost almost 60% of its market value since hitting a 52-week high of $18.49 per share in late August. The selloff has been accelerated, of course, by the moribund biotech sector as a whole.
But investors' concerns with Genasense are overshadowing good news on Genta's improved cash position. Monday, the company said it sold approximately 6.7 million shares of its stock to Aventis, raising $72 million in gross proceeds. Aventis now owns just under 10% of Genta's outstanding voting shares. Aventis' equity investment in Genta was part of the agreement signed between the two companies in April.
Genta now has $166 million in cash on hand, the best cash position in the company's history, according to Warrell.
But the sharp drop in Genta's share price has forced Aventis to take a larger ownership stake in the biotech company -- just over 1 million shares more than previously planned. Genta was trading at around $13 per share when Aventis inked its deal on April 29. |
