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GNVC Trial Fails And Investors Head for the Exits

|Includes: Abbott Laboratories (ABT), ARIA, ENZ, NVS

With the announcement from GNVC yesterday that the TNFerade Phase III clinical trial with pancreatic cancer was ended, the potential near term positive catalyst for GNVC has not materialized. The inevitable selloff is occurring in the pre-market as investors sell and speculators willing to consider a buy point watch for a possible entry. There may be a trade here, depending upon how severe the selloff.  This negative development is not the end of the company--but it is an undeniable major negative.

The GNVC conference call this morning discussed the reasons for the TNFerade results. In layman's terms,the longer patients were on the trial, the less effective TNFerade appeared--basically approaching placebo effect.

The company will be continuing its other cancer trials.

There was alot of interest on the Conference Call on GNVC's financials and what is next for GNVC.  Management noted that the company had $11 Million in cash as of the end of 2009 and $26 Million net was received from a financing in February. They have received $7 Million from Novartis (NYSE:NVS) for vaccine development. And "a few million dollars" from warrants exercised also came into the company's coffers.

Management said that if all milestones were met in the company;s partnerships in vaccine development, the company could receive up to $211 Million. Obviously, to meet ALL milestones would be remarkable, but there are obviously other revenue streams for GNVC going forward. It was highlighted that these "funded programs have been validated by external review". As a bit of "lemons to lemonade" for today, the burn rate will decline substantially as the clinical trial is wound down, providing more time for the milestone payments to come in.

Just a quick overview here before the market opens. Those willing to risk a trade, there may be an opportunity. But any action at this juncture should be labeled as "trading" and not "investing". Some traders did well with the  disappointment at CTIC last week. The next few hours will be volatile--and with volatility may be opportunity.

Disclosure: Long GNVC