CancerVax Dumps Drug, Plans Job Cut

NEW YORK — CancerVax Corp. stock plunged Tuesday after the biotechnology company announced that it would toss aside its most advanced drug candidate and slash its workforce by more than half.

Shares of CancerVax fell $1.26, or 40%, to $1.66. The company said it would cut its workforce to 80 people from 183.

The setback effectively takes “a late-stage development company and [turns] it into an early-stage development company,” said Joseph Pantginis, an analyst with Adams Harkness.

The decision by CancerVax and its Swiss partner Serono to pull the plug on Canvaxin, designed as a treatment for melanoma, leaves CancerVax with few drug candidates.

CancerVax, of Carlsbad, Calif., expects to file an investigational new drug application early next year for one drug candidate and to push another drug, now its de facto lead candidate, into a Phase II trial sometime in 2006.

Pantginis expects that the company won’t see any data from the studies until 2007. He cut his rating on the stock to “reduce” -- one level above “sell” -- from “market perform.”

CancerVax said during a conference call Tuesday that it would consider looking to acquisitions to help shore up its pipeline, a development that Pantginis said would be welcome. He also raised the “shot-in-the-dark” chance that the company, with its stock price flagging, would be scooped up by a rival.

CancerVax said Monday that the decision to abandon Canvaxin came after an independent body, the Data and Safety Monitoring Board, found that the drug wasn’t likely to show effectiveness in a Phase III trial.