Washington Editor

In a disappointing case of déj vu, investors drove down shares in Genitope Corp. by 48.6 percent after learning that a Phase III study of its lead cancer treatment would last longer than expected.

The news starkly mirrors that of a year ago, and on Friday, the stock (NASDAQ:GTOP) lost $2.71, to close at $2.87, an all-time low, on heavier-than-usual volume. Like last year, the company disclosed that its pivotal trial of MyVax would have to continue, this time until December 2007.

That was the recommendation of an independent data safety monitoring board following its second interim analysis of efficacy data in follicular non-Hodgkin's lymphoma patients.

"I think the reaction today is certainly rational," Jason Kantor, an analyst with RBC Capital Markets, said of the stock drop. Noting that there will be no more news drivers until the trial ends, "it's not a very attractive opportunity from that perspective."

Genitope Chairman and CEO Dan Denney admitted his "disappointment" during a conference call, acknowledging a hope "that we would cross the goal line" at this point. But the study has yet to reach a statistically significant difference to prove the personalized immunotherapy's merit relative to treatment with a nonspecific immunotherapy control.

"We don't know what's wrong with the trial at this point," Kantor told BioWorld Today. "There are no known facts here, except that they didn't hit the statistical hurdle - 0.0026."

The Redwood City, Calif.-based company will release some of the study's early findings this week as part of a government filing. Denney, who said there are "no red flags" in the data, added he remains "optimistic about the ultimate outcome" of the study.

Kantor also expects success in the end, noting the trial "will probably show a statistically significant benefit at the final analysis," but he questioned whether it would be as robust a response as was expected because the statistical assumptions going into the study have yet to be realized.

Also, he indicated he expects little clarity from this week's unveiling of data, predicting that while the findings might demonstrate a significant prolongation of progression-free survival in the entire patient population, there would be no clear insight as to MyVax's impact. That could lead to confusion, Kantor said, but he thinks the therapy "probably does work.'

Nevertheless, New York-based RBC downgraded Genitope's stock.

The company's disclosure a year ago that an initial interim analysis indicated that the study would have to continue was met with a similar reaction, causing a 27.9 percent plunge in the company's shares to $8.80. (See BioWorld Today, July 27, 2005.)

Between 270 and 300 patients are participating in the trial, which began in November 2000. Its continued duration has been of concern relative to Genitope's ability to cover costs. The company had $119.7 million in reserve cash, cash equivalents and marketable securities as of March 31.

Denney, who said "we've been very careful with our pennies until now," added it was too early to determine whether Genitope would need to raise additional funds next year. Looking back a bit, money has been brought in ahead of both interim analyses: A financing earlier this year netted about $58.7 million, and one before that raised $53.7 million. (See BioWorld Today, Dec. 15, 2004, and Feb. 8, 2006.)

Denney noted plans to start further MyVax studies could be delayed by as long as three months to further conserve cash, though he offered little transparency on the company's burn rate going forward. In addition to the Phase III work in follicular non-Hodgkin's lymphoma, for which the product has fast-track status from the FDA, there is an ongoing Phase I/II trial in chronic lymphocytic leukemia patients.