NEW YORK (CNN/Money) - When looking at an investment in a smaller pharmaceutical firm, one drug can make or break the company's stock, and Genta Inc. is developing a potential blockbuster, according to Richard Suttmeier, chief market strategist with Joseph Stevens & Co.

Berkeley Heights, N.J.-based Genta is developing an antisense cancer treatment called Genasense, which is designed to attack the BCL-2 protein in cancer cells, which stops the death process initiated by anti-cancer treatments.

While the company pushes Genasense through the U.S. Food and Drug Administration approval process, it's struggling to turn a profit.

Genta (GNTA: up $0.30 to $16.15, Research, Estimates) posted a loss of 28 cents per share in the fourth quarter of 2001, compared with a loss of 7 cents a share in the same quarter a year earlier. The company cited additional purchases for the Genasense drug substance and increased research and development costs for the wider loss.

Suttmeier elaborates on what makes Genta his favorite stock.

The stocks of some smaller biotech firms, such as Inspire Pharmaceuticals or Corixa, have taken a beating when a lead drug does not get FDA approval. Any chance of that with Genta?

Genta's Genasense cancer treatment makes it the favorite stock of Richard Suttmeier.

Unlike many other biotech companies that bank on the success of one clinical trial [for one drug], which leaves you with that boom-or-bust experience, Genta has three ongoing randomized and controlled pivotal studies in Phase III that will all wrap up shortly.

In doing this, Genta has leveraged the overwhelming data they have compiled over the last seven years in human studies to render the results necessary for an FDA approval in at least one, if not two or three, of the first cancer indications for Genasense.

Furthermore, they recently began a controlled, randomized, Phase III pivotal trial in lung cancer and they expect to do the same in cancer of the breast, prostate and colon before the end of this year. Lastly, they recently expanded their CRADA (creative research and development agreement) with the NCI (National Cancer Institute) which will soon lead to dozens of additional trials. This drug has been extensively studied in hundreds of patients and will continue to be studied.

Is Genta overly dependent on the success of Genasense?

Genta has a diversified oncology pipeline that includes an FDA-approved drug, Ganite, which will be launched later this year for the treatment of cancer-related hypercalcemia ( an increase in calcium levels in the blood due to cancerous bone deterioration).

They also have two other programs graduating to the clinic, which are their Androgenics program, for the treatment of prostate cancer, as well as the Decoy Aptamer program, which will potentially be useful in a variety of cancers. All of these programs address billion-dollar-plus market opportunities.

The company's fourth-quarter loss more than doubled compared with the prior year and it cited increased purchases of Genasense substances. Where does it purchase the substance, and do you expect its losses to continue to widen before Genasense is approved?

Genta's drug is manufactured mostly by Avecia, which was a spinoff of AstraZeneca (AZN: Research, Estimates). Genta expects to burn approximately $14 [million] to $18 million for the next two quarters and approximately $54 million for 2002.

The company said it raised $32.7 million in the fourth quarter, giving it about $54 million in cash and marketable securities. How long can it last without another cash infusion?

Genta's cash position will maintain their development pace for this year. However, we expect the company to sign a global partnership with a major pharmaceutical company within the next few months.

Because Genasense is in late Phase III trials and has legitimate blockbuster potential, we expect that any deal with a major pharmaceutical company to include up-front money of at least $200 million, plus a 50-50 split of revenues upon launch. Such an alliance will increase sales of Genasense through the distribution channels already available through the Big Pharma company.

Also, they will launch their first drug this year, which will bring in money. Moreover, the partnership will also include some cost sharing so their burn will be reduced. Lastly, the Genasense drug could be on the market in the first half of next year, which will also greatly improve the cash position.

ImClone had some difficulty with its agreement with Bristol-Myers and had to restructure the deal. Any concern when a larger pharmaceutical company takes a stake in a smaller firm?

ImClone's stock dropped because the FDA rejected their application for approval [of Erbitux]. When ImClone cut their deal with Bristol-Myers the stock soared to an all-time high of $75.

Do you have a price target on the stock?

GNTA has rising momentum and is technically positive given weekly closes above its five-week modified moving average, now at $13.91. If GNTA penetrates and holds its recent high at $18.11, there is a measured move objective into the $31-$32 range in six months or so.

Do you own a stake in Genta?

Genta is the largest position of our retail client base and many of our employees own the stock personally. Joseph Stevens does not have any investment banking relationship with Genta.