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Back in July, after polling a group of trusted health care fund managers, I called Genta ( GNTA) one of the riskiest stocks in the biotech sector. Why? Because of the widely held belief that the trials of its experimental antisense cancer drug Genasense would fail, but Genta would nonetheless find something positive to say. That may throttle short-sellers, who now control 28% of the company's freely traded shares.

It seems like that prediction has come true.

Genta said Wednesday that Genasense failed to significantly extend overall survival in patients with advanced skin cancer, according to results from a large, phase III clinical trial.

But despite the negative results shown in the study's primary endpoint, Genta is claiming victory and says it is filing the drug for approval with the Food and Drug Administration.

The question left unanswered is what happens to Genta's stock today. Will investors believe the company's spin? Or will they look at the Genasense data and note that the melanoma study's primary endpoint -- the most important, clinically relevant goal of the study -- came up way short?

Genta has always been a battleground stock between longs and shorts. Wednesday's announcement is only going to intensify the fighting, which I reckon will go on for a long time.

A Look at the Results

Let's get right to the data, starting with the most important goal of the melanoma study: the primary endpoint of overall survival.

By the generally accepted statistical measures of efficacy, the Genasense study, enrolling 771 patients on an intent-to-treat basis, was a failure. Melanoma patients who received a combination of Genasense and chemotherapy survived an average of 9.1 months. Patients receiving just chemotherapy survived 7.9 months. That's an increase in survival of just over one month in favor of Genasense.

This isn't even close to being statistically significant: The study's "p value" came in at 0.184. In layman's terms, that means there was a greater than 18% chance that the results in the study occurred randomly. The accepted threshold for a random occurrence outcome in clinical trials is less than or equal to 5%.

Here's some perspective. The much-heralded colon cancer study involving Genentech's ( DNA) Avastin this past spring came in with a p value of .00003 for its primary endpoint. (That means there was a microscopically small .003% chance that the results were random.)

Yet nowhere in today's press release does Genta acknowledge that the melanoma study's primary endpoint failed.

Instead, the company says that a variety of secondary endpoints (read: less clinically important) did achieve statistical significance, including progression-free survival and tumor response rate. This is the basis upon which Genta says Genasense is an effective, clinically meaningful treatment for melanoma?

Trials and Tribulations

For months now, Genta's CEO Ray Warrell has insisted he was putting Genasense through the most stringent, thoroughly designed clinical trials in order to validate its efficacy. For melanoma, that meant running a clinical trial using the FDA's "gold standard" endpoint -- overall median survival. As I pointed out above, Genasense failed this test, and badly.

Genta was also running two other concurrent clinical trials, testing Genasense against chronic lymphocytic leukemia and multiple myeloma -- both forms of blood cancer. The company has long said it would only release results initially from the most encouraging study -- the one that gave it the best shot at filing an approval application with the FDA.

Could we assume now that the data from the chronic lymphocytic leukemia and multiple myeloma studies were even worse than the melanoma study? Is dubious melanoma data the best Genta can offer?

Genta shares closed Tuesday at $16.01 and were halted in the after-hours session. The company is holding an 8 a.m. EDT conference call to discuss the Genasense results. An analyst meeting will also be held at 4:30 p.m. today.
Adam Feuerstein writes regularly for RealMoney.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He invites you to send your feedback.