Despite setbacks, Genta tries to prove it's one biotech company that can rebound
SUSAN TODD
Associated Press
BERKELEY HEIGHTS, N.J. - When Genta failed to get approval for its cancer drug last month, Raymond Warrell, chief executive of the battered biotechnology company, began a ritual of lunchtime meetings with his employees.
No question or rumor was off limits.
Warrell, a former oncologist with a calm, serious manner, took them all. He explained everything from the data scrutinized by the Food and Drug Administration's panel of experts to a flurry of lawsuits filed by angry shareholders.
At the fourth meeting, he tried a new tactic: optimism.
Using slides projected on a big screen, he presented stock charts for six biotech companies that ran into snags in developing drugs. In each case, share prices slid and then rebounded as the business recovered.
It was proof, Warrell said, that biotech companies do rebound.
"This is a very dynamic, highly volatile business," Warrell said in an interview this week. "As rapidly as things can collapse, things can snap back."
Now, he is hoping to prove it with Genta, once one of New Jersey's most promising biotechnology companies. But by all accounts, it won't be easy.
For starters, the company must prove its key drug, Genasense, treats chronic lymphocytic leukemia. And Genta has to be more convincing than it was last month when an FDA panel recommended against approving Genasense as a treatment for skin cancer.
(Companies that make cancer medicines often seek approval of the same drug for different forms of the disease.)
Warrell, meanwhile, has a variety of other challenges, including limited cash, shareholder lawsuits and skeptical investors.
"If the data on (leukemia) is bad, you have to doubt the future of the company," said David Miller, president of Biotech Monthly, an independent stock research publication in Seattle. "It's all about the data.
"I don't think their credibility can get any worse than it is. What they have is a financial risk. They have to worry about keeping the lights on."
In his first interview since Genta's stumble last month, Warrell, 54, described the company's sudden, wrenching shift into recovery mode.
It began on May 3. Nearly every Genta employee was either attending the FDA advisory panel meeting in Maryland or watching it via teleconference at the company's offices in Berkeley Heights.
The panel said Genta's studies did not sufficiently prove Genasense, combined with the chemotherapy drug dacarbazine, helped patients with malignant melanoma.
FDA observers said the agency's reviewers were unusually scathing. The vote represented a departure, they said, from the agency's recent leniency on new cancer medicines, such as AstraZeneca's Iressa for lung cancer.
"We were optimistic this application had a good shot at approval," Warrell said. "We're certainly hopeful that other indications or the melanoma indication will prove to be successful. It wasn't on that morning."
The disappointment was immense. Genta has spent nine years and $323 million developing Genasense. And it has cost Genta dearly.
The company's stock price has plummeted 77 percent since the start of the year, and 85 employees were fired, including a newly assembled 35-member sales force. With its sales force eliminated, Genta's management also stopped marketing its only product, Ganite, a treatment for elevated levels of calcium in cancer patients.
Those steps will help Genta's financial situation. In the last quarter, Genta had at least $67 million - enough to take the company into next year.
"The worst time was probably the first 48 hours (after the advisory panel's meeting)," Warrell said, "realizing the full implication of this decision with respect to the company our team had built."
The company's fate still rests with Genasense. The drug is being studied in late-stage clinical trials as a treatment for two forms of blood cancer, leukemia and multiple myeloma.
Aventis, Genta's partner in developing Genasense, is standing behind its $477 million agreement. However, when the company's merger with Sanofi-Synthelabo is completed, analysts expect the terms of the 2-year-old pact could change.
Even if the two late-stage clinical studies produce positive data later this year, the company must still return to the FDA for approval.
Genta is hoping to seek its next approval by the end of 2004.
"You hope they're not going to happen, but every company has its bumps," said Douglas Watson, a director on the company's board since 2002. "We're very much believers in Genasense. We're hopeful these other indications will breathe life into it."
Analysts said Genta's best bet at resurrection rests with the drug's ability to treat chronic lymphocytic leukemia. "Genasense works," Miller said. "It's a matter of determining which markets it works in."
It is also a matter of money. The tough decisions Warrell and his senior management made within days of the panel's vote will give it more cash to use as it pursues regulatory approval for Genasense.
If it succeeds in getting an approval, Genta could receive an additional $95 million from Aventis. An approval will be a "springboard," Warrell said, "to bring other products into the company."
During the company's annual meeting Wednesday, Warrell put aside concern over whether his credibility is an issue as the company moves ahead.
"The issue is really how well this drug performs, management's ability to maneuver through the regulatory process and to manage our resources," he said.
"We have been clear from the outset about the risks of investing in projects for difficult diseases."
Genta deliberately diversified its program, he said, so if Genasense failed in one area, there would be multiple chances of getting approval in another. Now, the company is relying on its fallback strategy.
"With luck," Warrell said, "the other two clinical trials will be part of the turnaround process." |
