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GenVec discontinues trials of experimental cancer drug; stock plunges

By Mike Musgrove
Washington Post Staff Writer
Wednesday, March 31, 2010

Gaithersburg-based GenVec said it will discontinue clinical trials of a drug that was being developed with the aim of fighting pancreatic cancer, a surprise announcement that sent the company's share price reeling.

During a call with analysts Tuesday morning, GenVec's president and chief executive, Paul H. Fischer, said that Phase 3 testing of the company's experimental drug, TNFerade, would be discontinued because early results showed it was not likely to meet the target for regulatory approval. Early data showed that patients in the drug trial had an 8 percent lower risk of death compared with patients outside the trial.

The news had a devastating effect on GenVec's share prices. After closing at $2.81 on Monday, the stock opened at 73 cents on Tuesday morning and closed at 80 cents.

The drug joins a list of experimental treatments in recent years that have failed to defeat the difficult-to-treat disease, a fact that Fischer referred to in his comments during the analyst call.

"We were hopeful that we were going to buck that trend," Fischer said, "but pancreatic cancer seems to have gotten another victim here." TNFerade has also been considered as a treatment for other types of cancer, but the company said that it has not yet determined the drug's future.

Joseph Pantginis, senior research analyst with Roth Capital Partners, said that the test failure is a major setback for the company but that GenVec still has options.

"A lot of key business decisions need to be made at this point," he said. "Luckily, they do have a decent amount of cash right now -- about $30 million -- to hopefully weather this storm."

GenVec has other technology under active development, though Wall Street's hopes were that TNFerade would prove to be a flagship product for the company. In January, for example, GenVec announced that it had landed a deal with Novartis to license its early-stage work aimed at reversing hearing loss.

"The technology itself is very promising, but it's still in the relatively early stage," Pantginis said. "It's difficult to put a value on such programs."

Pancreatic cancer has been a particularly difficult cancer to develop treatments for, said Jack Welch, a senior investigator with the National Cancer Institute. According to the organization, 42,470 cases of pancreatic cancer were diagnosed in 2009 and the disease was responsible for 35,240 deaths. One reason for the high fatality rate is that the cancer is often diagnosed late, he said, a result of the organ's location in the body.

Welch said that while many companies have developed experimental drugs to treat the disease, "the ones that make it through Phase 2 and prove to be valuable are few and far between."

"Other cancers have yielded their biological secrets more easily," he said.

Late last year, the Nasdaq Stock Market warned GenVec that it was in danger of being delisted after its stock traded at less than $1 for more than 30 days.

With the stock again under $1, the firm's chief financial officer, Douglas J. Swirsky, faced analyst questions about whether it was again at risk of a delisting. The company hopes to bring the price up and avoid that, he said, "but there's no guarantee."

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