We maintain a Hold rating on Genta Incorporated (GNTA), a biopharmaceutical company focused on developing and commercializing drugs for the treatment of cancer.
Unfortunately, the company has entered into a survival mode due to the shortage of cash. With the non-approval of Genasense for chronic lymphocytic leukemia by FDA, the future of Genasense remains uncertain. In July 2007, the EMEA indicated that approval of Genasense in melanoma will require the conduct of another clinical study. Genta believes that the AGENDA trial will be able to address the EMEA's requirement adequately.
Positive data from this trial will enable the company for the worldwide filing of Genasense as a treatment for melanoma. However, we do not expect to see data from the trial before end-2008. The company had cash and marketable securities of only $16.3 million at June 30, 2008. It raised $3.1 million through the issuance of 6 million shares to institutional investors in February 2008 and issued $20 million senior notes with 15% interest rate in June 2008.
The sales of Genasense and Ganite outside the U.S. on a named patient/compassionate basis only provide the company with limited revenue which cannot offset high R&D costs due to the current phase III trial of AGNDA. In April 2008, the Company reduced its workforce by approximately 30% in order to conserve cash. Genta also announced that it would seek a buyer for its sole marketed product, Ganite.
We do not see the company attaining profitability in the near future. We believe that Genta shares are fairly valued at the current level. Our target price is $0.70 which corresponds to a market cap of $26 million.
Read the full analyst report on GNTA
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