OT- Sputtering Cell Genesys firing most employees- CEGE
Bernadette Tansey, Chronicle Staff Writer
Friday, October 17, 2008
(10-16) 18:34 PDT -- Cell Genesys Inc., a 20-year-old Bay Area biotechnology company that has yet to win its first drug approval, said Thursday that it is firing most of its employees and considering a sale or merger after canceling work on its lead product.
The South San Francisco company said it is halting a second late-stage clinical trial of its experimental therapy GVAX in prostate cancer because an independent committee of experts concluded it was unlikely to deliver positive results.
Shares in the company plunged 72 percent to close at 17 cents. But a tougher blow had already fallen on investors in late August, when the same expert committee called for an early end to a related trial due to safety concerns. The committee found that GVAX-treated prostate cancer patients in that trial were dying at a higher rate than those given a different treatment. On Aug. 27, Cell Genesys shares lost $2 to close at 78 cents.
CEO Stephen Sherwin said the company has since found no evidence that the GVAX regimen carried toxic effects that could explain the additional deaths.
"We don't have all the answers," Sherwin said during a conference call with analysts Thursday.
Cell Genesys is among a long line of companies that have tried in vain to produce successful cancer immunotherapies, which are also called cancer vaccines. The drugs are designed to activate the immune system to recognize cancer cells and destroy them. Among the other recent casualties in the field is Genitope Corp. of Fremont, which said last month it might file for bankruptcy protection.
Cell Genesys, founded in 1988, was trading above $50 in 2000 as biotech companies benefited from excitement over the Human Genome Project. But the luster of cancer vaccine companies dimmed as success eluded them. The field shared a collective flutter in April 2007, when Dendreon Corp. of Seattle came close to winning Food and Drug Administration approval of its experimental prostate cancer treatment Provenge. But the FDA decided to wait for further trial data on Provenge. Dendreon reported favorable interim data this month on the new trial, and expects full results by mid-2009.
Cell Genesys had been Dendreon's closest rival. The company is now mulling plans with its research partner on the GVAX program, Takeda Pharmacetical Co. Ltd. of Japan. Sherwin said researchers at Johns Hopkins may still proceed with their own trials of GVAX for leukemia and pancreatic cancer.
"Personally, I have not lost my conviction about the potential of the GVAX platform or active immunotherapy in general," Sherwin said on the conference call. He said the disappointing results in the two large GVAX trials may have stemmed from factors other than the treatment itself.
In the meantime, however, Cell Genesys is letting go 75 percent of its 290 employees, with more cuts to come next year. It still has an early stage research collaboration with Novartis. But among the employees leaving this month is the company's chief medical officer, Robert Dow. "Cell Genesys may face developmental stagnancy with the failure of GVAX prostate," said Needham & Co. analyst Mark Monane in a research note.
Cell Genesys expects to end the year with $128 million in cash. Biotech companies whose own products fail can often merge with a cash-strapped firm whose experimental drugs hold more promise. In a filing with the Securities and Exchange Commission on Thursday, Cell Genesys said it is considering new research directions, mergers, acquisition by another company, sale of company assets and liquidation.
E-mail Bernadette Tansey at btansey@sfchronicle.com.
This article appeared on page C - 1 of the San Francisco Chronicle
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