Genta job cuts include entire sales force
Friday, May 14, 2004
BY SUSAN TODD
Star-Ledger Staff
Genta, which ranked among New Jersey's most promising biotechnology companies, yesterday slashed nearly half its employees in an effort to recover from a setback last week with its lead cancer drug.
The company will immediately stop marketing its first drug, which was intended to help establish its sales force before the launch of Genasense, the experimental cancer drug that formed the heart of its business.
Executives held one-on-one meetings yesterday morning with 85 employees whose jobs were eliminated. Nearly half of those, roughly 35 people, formed the company's entire sales force, Genta spokeswoman Joy Schmitt said.
The remainder of the employees were cut from "all levels, all departments," she said.
The drastic moves, a reflection of Genta's precarious business position, will allow the company to put its remaining money -- an estimated $67 million -- toward a single endeavor: getting Genasense on the market.
But Genta's stumble also highlights the high stakes of drug development, particularly for cash-strapped biotechnology companies. After nine years and hundreds of millions of dollars, Genta's business prospects crumbled in a matter of days.
"It had to be painful, but it's a smart decision," said David Miller, president of Biotech Monthly, an independent stock research company in Seattle. "It doesn't make sense to have salespeople out there selling something that doesn't pay for their salaries."
Last week, an advisory panel to the Food and Drug Administration said data generated by large, lengthy clinical trials did not prove unequivocally that Genasense effectively stopped the progression of skin cancer or extended the lives of patients with the disease.
Genta's shares have lost roughly $833 million in two weeks. Yesterday, the shares rose 17 cents, or 3.6 percent, to $4.85.
The panel's findings were not a death knell for Genasense. Experts said the data showed patients responded to the drug, but because of flaws in the structure of the studies, there was doubt about whether it work effectively enough to be approved. For now, a partnership with Aventis to co-develop the drug remains intact.
The FDA was scheduled to make a final decision on Genasense by June 8. But late yesterday, Genta's executives said they were withdrawing their application for the drug's approval as a treatment for advanced melanoma.
The strategic move essentially erases the FDA's June 8 deadline, giving the company time to meet with regulators and discuss what it will have to do -- the possibilities include another clinical trial -- to get approval for the drug.
Meanwhile, Genta is banking on the possibility of promising data from two other clinical trials. Those are studying Genasense as a treatment for multiple myeloma and leukemia.
"We anticipate that the steps we are taking will conserve cash, thereby allowing time to collect and analyze data from ongoing and recently completed trials," Chief Executive Ray Warrell said in a news release.
Ganite, Genta's first drug, had generated $1.4 million in sales.
"The decision to cease active marketing of Ganite is especially difficult," he said. "However, given our funding priorities for Genasense, we no longer believe we can sustain the additional marketing and selling expenses that are required for Ganite to reach profitability."
Susan Todd can be reached at stodd@starledger.com or (973) 392-4125. |
