GenVec seeks liquidation after gene therapy setbacks

GenVec ($GNVC) has opted to drop out of the race to develop new gene therapies. The struggling biotech's board of directors has approved a plan to liquidate the company's assets, dissolve the business, and delist its publicly traded shares. Shareholders get to vote on the plan, which could be nixed if the company's prospects brighten, according to an SEC filing.

The closure of GenVec would cool what has been a hot streak for development of gene therapies. The treatments, which use viral vectors to deliver healthy genes into cells to elicit desired disease-fighting effects, have enjoyed a resurgence in recent years after serious side effects were reported in earlier clinical studies of the treatments. Last year UniQure garnered European approval for the rare disease treatment Glybera, which became the first approved gene therapy in the West. And the biotech outfit bluebird bio has won a partnership with Celgene ($CELG) this year for gene therapies against cancer.

Gaithersburg, MD-based GenVec, however, was unable to find a buyer after launching a search for strategic alternatives in 2010. The search followed the failure of the company's lead gene therapy candidate TNFerade in Phase III development for pancreatic cancer and the decision to halt further trialing of the experimental treatment in March 2010. In September the company's CEO Cynthia Collins, who took the helm after the retirement of ex-chief Paul Fischer, cut 23 workers or a third of the company's staff to conserve its limited resources. Nine more jobs were chopped in February.

Collins was careful in September to preserve staff working on an early-stage program focused on hearing loss and balance disorders in collaboration with Novartis ($NVS), which had inked a heavily milestone-driven deal with GenVec in January 2010 to partner on the research. GenVec told regulators this month that its revenues from the marquee program fell from $1.5 million in the first quarter of 2012 to $438,000 in the first three months of this year. Its overall revenue dropped to $1.2 million from $3.2 million.

GenVec ended the first quarter with $11.8 million in cash and equivalents. As of the end of March, the company had burned through nearly $269 million of investors' money on its research and operations. Its only approved product from this large investment is a conditionally sanctioned gene therapy against foot-and-mouth disease in cattle.

"Small companies like GenVec need continuous capital as this technology is so early-stage," Steve Brozak, managing partner of WBB Securities, said, as quoted by Reuters. "The perception of this technology makes it difficult to raise capital."

- here's the SEC filing
- see Reuters' article
- and an item from the Washington Business Journal

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