I thought things were looking bad for Genta (NASDAQ:GNTA) back in May when the Food and Drug Administration's oncologic drugs advisory committee said it could not recommend Genasense for treating melanoma, given that the drug's benefits did not outweigh its toxicity. On that news, Genta's stock took a 70% hit.

Last night, the other shoe dropped. Aventis (NYSE:AVE) was Genta's partner for Genasense, but now that agreement has dissipated, with Aventis packing up and going home. It is never, ever a good sign when a pharmaceutical partner leaves. As a result, Genta's stock opened down 40% this morning and is now down 85% for the year. Ouch!

Genta tried to take the edge off of this blow by announcing top-line results from the phase 3 trial in chronic lymphocytic leukemia (CLL). While there was a benefit in adding Genasense to chemotherapy in complete or partial remissions, there was no improvement in patient survival or time-to-disease progression. Full data will be released at the American Society of Hematology meeting next month. An important piece of info revealed during the conference call this morning was that Aventis saw this data prior to ending the partnership. That leads to the question: Would Aventis have bailed out if it thought Genasense was going to be a successful drug in the treatment of CLL? Probably not.

There are financial ramifications to Aventis' exit. At the end of its third quarter, Genta had $36.7 million cash on hand. Genta had a line of credit with Aventis and now owes Aventis $19 million by May 2005. So the company really has only $17.7 million to work with. That's a dicey situation. It's not easy to raise funds on good terms with a stock under $2. Especially when the only drug under development is of dubious value because of toxicity and efficacy concerns.

Genta is not yet out of options, but the proverbial fat lady is in back warming up.

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Fool contributor Charly Travers does not own shares of any company mentioned in this article. Charly is an analyst on the new Motley Fool Rule Breakers growth newsletter. Take a free trial, and check it out today.