BOSTON ( TheStreet) -- On August 2, Genta (GNTAQ) filed for Chapter 7 bankruptcy liquidation, thereby ending 24 years of repeated clinical failures, multiple FDA rejections, countless toxic financings and epically piggish executive behavior.
Before the Genta corpse rots into distant memory, I thought it might be helpful to document the company's colorful and painful history. The Genta story is a warning to biotech investors showing how chronic clinical failure can lead to soul-crushing shareholder dilution.
Old-timers may recall that Genta was founded with the mission to develop generic versions of hard-to-manufacture drugs. The company's first target in the late 1990s was the calcium channel blocker Procardia XL, which at the time was among the world's biggest selling branded drugs. Generic drug makers were keen to develop their own versions of Procardia. Genta was in the hunt too, and thought it had an advantage because of a proprietary drug delivery technology licensed from a European company called Jagotec. Unfortunately, Genta's efforts flopped and other generic drug makers copied Procardia first. None of Genta's generic drug projects ever made it to market and the entire program was eventually scrapped.Enter Genasense, an "antisense" drug designed to block a key protein involved in various cancers, including certain leukemias and skin cancers. In the early 2000s, antisense was big news, the "flavor of the day" biotech technology, much the way RNA interference rose to prominence more recently. Genta promoted Genasense relentlessly despite murky evidence of efficacy. All that hype paid off in 2002 when Aventis (now Sanofi (SNY)) agreed to partner with Genta on Genasense's development. It's hard to believe now, but Genta traded on the Nasdaq back then and was considered a real biotech company -- albeit one steeped in controversy. The Aventis deal -- $480 million in up-front cash payments and development milestones -- was a high water mark for Genta and Genasense. It went downhill from there for the company and its shareholders. This where the Genta story becomes more familiar. Genasense's phase III study in melanoma failed, although Genta claimed the data were positive. The company sought FDA approval but the drug was rejected. Genta tried for FDA approval again, this time with lackluster data from a leukemia clinical trial. Again, FDA kicked Genasense to the curb. Genta decided to give melanoma another shot but a do-over clinical trial failed. Finally, in 2011, Genasense was scrapped.
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