sank Friday after the company said it was withdrawing its application for an experimental skin cancer drug from consideration by the Food and Drug Administration.
The Berkeley Heights, N.J.-based company said Thursday afternoon, after markets had closed, that it had told the FDA it was pulling its application for Genasense, a drug that it wants to use in conjunction with a standard chemotherapy drug to treat advanced cases of malignant melanoma, the most lethal form of skin cancer.
Earlier Thursday, the company said it was firing 45% of its staff and taking other steps to conserve money, in an effort to focus its attention on getting Genasense to the market.
The stock fell 40 cents, or 8.3%, to $4.45 in midmorning trading Friday.
Genta's decision was basically an anticlimax. A federal advisory committee on May 3 voted against recommending Genasense be approved. Although the FDA doesn't always abide by advisory committees' suggestions, the agency usually follows their recommendations. In Genta's case, the 13-3 vote by the advisory committee and an FDA staff analysis contained harsh comments about the drug's efficacy and the company's research.
Genta's stock took a big hit on April 30, falling to $8.60 from $14.43, or 40%, after critical comments from the FDA's staff were made public. After the advisory committee voted, the stock plunged another 41% to $5.11 from $8.60.
Genta isn't giving up, and its withdrawal of Genasense was a strategic move. Under federal drug approval guidelines, the FDA had until June 8 to decide whether to approve or reject Genasense. Genta said late Thursday that it wants to meet with the FDA "to review key issues and to identify the next steps related to further development of Genasense in melanoma."
Not surprisingly, Genta's woes have caused analysts to downgrade the company's stock. Schwab Soundview Capital Market cut its rating to neutral from outperform on Friday, less than three weeks after initiating coverage. Four other investment banking and/or research firms cut their ratings on May 3 and May 4.
Genta's money-saving strategy includes not only dismissing 85 employees, but also halting sales of its only product, Ganite, for cancer patients who develop a potentially deadly increase of calcium in their blood. The FDA approved the drug in September.
But Raymond P. Warrell Jr., Genta's chairman and CEO, said Thursday that given the company's desire to resurrect Genasense, "we no longer believe we can sustain the additional marketing and selling expenses that are required for Ganite to reach profitability." Warrell said Genta had $67 million in cash and cash equivalents at the end of the first quarter.
"We anticipate that the steps we are taking today will conserve cash, thereby allowing time to collect and analyze data from ongoing and recently completed trials," he added.
Genta's marketing partner for Genasense is
. But that relationship may change because Aventis is being acquired by
In addition to malignant melanoma, Genta has been conducting clinical trials for Genasense on patients with blood-related cancers - chronic lymphocytic leukemia and multiple myeloma. But Genta has frustrated the investment community by declining to reveal the test results, saying that the information would be released later this year.
Both of the blood cancer tests are phase III tests, the final clinical trial tests before a drug application is submitted to the FDA. Genta submitted its malignant melanoma application to the FDA in December, telling investors that it wanted to focus on one use for the drug before evaluating test results for other possible uses. Those blood cancer trials were completed in January 2003 and March 2003.