Issues for Genta's Lead Candidate
Genta, Incorporated (GNTA) is a biopharmaceutical company focused on developing and commercializing drugs for the treatment of cancer. The company's leading candidate, Genasense, for the treatment of CLL [chronic lymphocytic leukemia], got a non-approvable notice from the FDA on December 15, 2006; the company filed an appeal with the FDA in April 2007 and a response from the FDA is expected during the first quarter of 2008.
With the non-approval of Genasense for CLL, the future of Genasense remains uncertain. Following the FDA decision to reject Genasense in 2004 for advanced melanoma and added toxicity by addition of Genasense to chemotherapy, the company decided to appeal the non-approvable notice of Genasense. However, we believe that Genasense's chances of U.S. approval remain slim.
In July 2007, the EMEA [European Medicines Agency] indicated that approval of Genasense in melanoma will require another clinical study. Genta believes that the AGENDA trial will be able to address the EMEA's requirement adequately. However, data from this trial is not expected until end-2008, significantly delaying Genasense's approval.
The sale of Genasense and Ganite outside the U.S. on a named patient/compassionate basis should provide the company with much-needed revenue and help reduce its cash burn. However, we do not see the company attaining profitability in the near future. We believe that Genta shares are fairly valued at the current level. We maintain a Hold rating on Genta shares with a target price of $1 per share which corresponds to a market cap of $36.2 million.
Varun Parwal contributed to this report.
Wait on Positive XenoPort Data
XenoPort, Inc. (XNPT) is a biopharmaceutical company focused on developing a portfolio of internally discovered product candidates for the potential treatment of central nervous system (CNS) disorders and gastroesophageal reflux disease (GERD). The lead candidate is XP-13512, a Transported Prodrug of gabapentin.
XenoPort is partnered with GlaxoSmithKline (GSK) for development and commercialization in the U.S. and select countries outside the U.S. The drug is in late-stage trials for the treatment of Restless Legs Syndrome (RLS). So far the data has been highly encouraging. XP-13512 could launch in 2009.
XenoPort currently trades with a market capitalization of around $1.5 billion. The shares have performed extremely well over the past several months, up five-fold since the summer of 2005. We think the market is coming to grips with the power of XenoPort's Transported Prodrug technology. We believe there are potentially hundreds of currently approved molecules that have failed to achieve peak penetration because of deficiencies in the oral absorption or metabolism.
