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(Updated with Tuesday's closing GenVec stock price.)



) --



experimental pancreatic cancer drug TNFerade is no better than a placebo, forcing the shut down a pivotal late-stage study, the company said Monday night.

The failure of the GenVec drug TNFerade after a second interim analysis of the phase III study is a huge setback for the company. GenVec shares closed 71.5% at 80 cents Tuesday.

By my quick calculations, GenVec has roughly 26 cents a share in cash. Throw in a few pennies for the rest of the company's drug pipeline, minus TNFerade, and fair value Tuesday morning should be around 30 cents a share.

TNFerade's blowup is not altogether surprising given the

less-than-comforting data

from the first look at the same study in November 2008.

GenVec's stock price dipped below 40 cents a share at that time, with an assist from the global financial crisis. Yet the stock fully recovered and even breached $3 a share this month, which tells you investors were betting on a

come-from-behind victory

a la

Human Genome Sciences

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TheStreet Recommends

( HGSI). Sadly, what investors are getting is a



-style schmeissing.

Pancreatic cancer patients treated with TNFerade combined with radiation and chemotherapy had an 8% reduction in the risk of death compared to treatment with radiation and chemotherapy alone, according to the second interim analysis of the 330-patient phase III study released Monday night.

That corresponds to a hazard of 0.92, just slightly in favor of TNFerade. Simply defined, the hazard ratio is an estimate of the treatment effect of TNFerade plus the standard of care compared to the treatment effect of the standard of care alone.

For perspective, two treatments are equally effective when the hazard ratio of a study hits 1. Unfortunately, TNFerade was getting much closer to placebo over time -- which explains why GenVec was forced to halt the study.

TNFerade efficacy dwindled over time. When

GenVec performed the first interim analysis of the phase III study

in November 2008, the hazard ratio in favor of TNFerade was 0.75, which meant TNFerade patients had a 25 percent reduction in the risk of death.

GenVec called that first interim encouraging, but other efficacy data presented at that time was troublesome, raising doubts about the drug and causing the stock to sink.

The median survival in the study, measured in November 2008, was 9.9 months for both TNFerade and the control arms. No difference.

Survival as a function of time was also running against TNFerade. At 12 months, 39.9% of TNFerade-treated patients were alive compared with 22.5% of patients in the study's control arm. However, at 24 months, only 10.6% of patients treated with TNFerade were still alive compared with 11.3% of patients in the control arm.

In other words, the benefit of TNFerade had vanished.

In its press release Monday, GenVec didn't disclose median survival data for the TNFerade study at the second interim analysis, nor did the company say what percentage of patients were still alive in each arm of the study.

The TNFerade failure leaves GenVec with a pipeline consisting of a very early-stage hearing loss drug partnered with Novartis and a handful of early-stage vaccine programs.

-- Reported by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;

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