GenVec, Novartis ink deal for hearing-loss remedy
Wednesday, January 20, 2010
GenVec of Gaithersburg, which last year was in danger of having its stock delisted, announced Tuesday that it has inked a deal with Swiss drugmaking giant Novartis to license its early-stage work aimed at reversing hearing loss.
Under the agreement, Novartis will acquire $2 million of GenVec's stock and will pay the biotech company an initial $5 million to take over research and development of a potential hearing-loss remedy. GenVec stands to receive another $213.6 million if it meets research and sales milestones.
GenVec has been working on ways to help the human body replace cells in the ear that are destroyed sometimes as a result of old age or exposure to loud noises. Before GenVec's research, the general belief was that such cells could not be regenerated and that this type of hearing loss could not be restored.
The local firm stands to earn royalties if a hearing-loss product derived from its research reaches the market, although such an event would be years away typically.
Though such a drug eventually could be lucrative, GenVec currently is focused on a cancer-treatment product, which is further along and near the end of its testing stage.
"For a small company like GenVec, it's important not to do too many things at the same time," said Paul H. Fischer, GenVec president and chief executive.
The company, which went public in 2001 and now employs about 100 people, hopes it may soon have a flagship product in TNFerade, a drug in late-stage testing for use in the treatment of advanced pancreatic cancer.
The Food and Drug Administration in November granted TNFerade the status of "orphan drug," giving GenVec certain financial perquisites for developing a drug that would serve a relatively small market. About 35,000 people in the United States die of pancreatic cancer each year. The drug also is being looked at as a possible treatment for other types of cancer.
Fischer said GenVec expects results on the drug's latest tests in the coming months. The process has not been speedy. One research firm said it ceased coverage of the company after TNFerade's tests took longer than expected.
For its most recent financial quarter, ended in September, GenVec reported a net loss of $3.6 million, compared with $6.8 million the previous year. Revenue declined to $2.9 million, compared with $4.2 million in the year-earlier period.
The Nasdaq Stock Market warned in September that GenVec was in danger of being delisted after its stock traded at less than $1 for more than 30 days. In recent weeks, however, the firm's stock price has been rising; it closed at $1.94 on Tuesday.
GenVec's chief financial officer, Douglas Swirsky, said the stock exchange informed the company earlier this month that it is now in compliance with listing requirements.
"The issue is now behind us," he said.