SAN DIEGO ( TheStreet) -- The market value of Adventrx Pharmaceuticals ( ANX) will plunge Wednesday (and deservedly so) after U.S. regulators rejected the company's lung cancer drug Exelbine.

The setback raises serious and legitimate questions about Adventrx's qualifications as a drug developer and should pop the speculative trading bubble that's over-inflated the company's valuation all summer.

Adventrx shares closed Tuesday at $2.54 ahead the announcement of the Exelbine rejection. The company isn't worth more than the cash on its books -- $40 million, or about $1.11 a share. For its sheer stupidity and the fact that Adventrx still intends to spend (waste) its cash, the stock should trade below cash value.

That's because Adventrx appears to lack any ability to get even the simplest of drugs approved by the U.S. Food and Drug Administration. Exelbine is a proprietary reformulation of the chemotherapy drug vinorelbine -- nothing fancy or complicated about it. The only requirement to get Exelbine approved was to show in a very straightforward and small study that Exelbine was biologically equivalent to vinorelbine.

Yet somehow, Adventrx managed to screw up this simple task. Unbelievable.

Based on inspections of clinical trial sites, FDA reviewers were unable to verify the "authenticity" of the drugs used in the bioequivalence study, which put the results of the study in question, according to Adventrx's explanation of the FDA rejection letter.

Step back a moment and think about what that means: FDA is accusing Adventrx of running a clinical study so mismanaged that determining which lung cancer patients received either Exelbine or vinorelbine could not be determined.


If that's not enough, FDA still has unanswered questions about the quality and manufacturing of Exelbine, according to Adventrx. Yet these were concerns that Adventrx was supposed to have assuaged after FDA issued refuse-to-file letter for Exelbine in March 2010.

In July, I argued that Adventrx -- trading near $4 a share at the time -- was wildly over-valued based on the tiny commercial opportunity for Exelbine. I assumed Adventrx would manage to get Exelbine approved, even though the drug would barely generate any revenue. I was right about the stock for the wrong reasons. I gave Adventrx too much credit. I didn't believe the company could be as incompetent as it's now proven to be.

In its Tuesday night announcement, Adventrx suggested the Exelbine rejection may force the company to put the drug on the shelf so it can focus on two other drugs in its pipeline. Those are ANX-514, another reformulation project, this one of the generic cancer drug taxotere; and ANX-188, an old (and previously failed) drug for sickle cell anemia.

To move ANX-514 and ANX-188 forward, Adventrx must design and executive clinical trials, a skill the company lacks. If a "drug company" can't run clinical trials, it can't develop drugs. And if a "drug company" can't develop drugs, it doesn't deserve to be called a "drug company."

Adventrx is not a drug company. It's a cash-burning, shareholder value-losing exercise in futility.

--Written by Adam Feuerstein in Boston.

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Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.