logo
  Join        Login             Stock Quote

Research Note on Synta Pharma (SNTA)

 March 13, 2009 07:58 PM
 



Synta Pharma (SNTA): Price: $1.97; Market Cap (MM): $66.8
Market Perform; Simos Simeonidis, Ph.D.
Senior Biotechnology Analyst
http://biomedreports.com/research.html

Synta cuts 42% of workforce; waiting for strategic alternatives guidance

The News: Synta announced today a 42% reduction in its workforce, laying off 90 employees, in an effort to preserve its cash balance, following the failure of the Phase III melanoma trial with Elescomol, the company's only late stage program.

Our view: This was an anticipated and absolutely necessary first step, given that the company's most valuable and tangible asset is their cash position, and it would make no sense to continue spending like a Phase III company with a big Pharma partner, given the Elescomol failure in melanoma and the uncertainty around the future of the GlaxoSmithKline partnership (GSK, Not Rated).

What's next for Synta? 1) An analysis of the data on what may have caused the imbalance of deaths will occur in the upcoming weeks, 2) GSK's decision on whether to give the compound back to Synta and end the partnership or continue its development and 3) the company's guidance on what its plans are going forward in terms of strategic alternatives.
We would also expect management to act promptly to further preserve the current cash position, and in addition to today's restructuring effort (that still leaves the company with a significant workforce for a company of its stage), to explore strategic alternatives that may eventually return some value to current SNTA holders, including A) bringing in a later stage asset through a potential merger (or reverse merger), and/or B) the sale of the company's remaining assets, and the return of cash to existing shareholders. We believe that given the current market environment, it would be unwise for the company to continue spending in unproven and highly risky, early stage programs.

Our view on what's coming up: It would be mere conjecture to attempt to speculate on what may have caused the excess deaths in the patients treated with Elescomol. We believe however that it is highly unlikely that we will see further development on Elescomol in melanoma, or in other solid tumors, given the excess deaths observed in the Phase III trial.

Next Page >>12
iOnTheMarket Premium
Advertisement

Advertisement


Comments Closed


rss feed

Latest Stories

article imageRussell 2000 Showing Relative Weakness at the New Highs

A quick “Quad Index” Grid shows us that the small-cap Russell 2000 is showing relative strength to the read on...

article imageThe Poster Boy For Liberal Economics Discovers The Tax Factor

Paul Krugman seems to be having a supply-side-economics moment… sort of. Raising taxes, the NY Times read on...

article imageMacroprudential Policy And Distribution Of Risk

There is very little doubt that housing prices and leverage played a strong role in the global financial read on...

article imageIs the World Turning Japanese?

Many really think so, but reality suggests read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center

Related Articles:

Bristol-Myers (BMY): Blockbusters Ahead?
More Articles on: Medical



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.