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Synta Pharma: Price: $1.94; Market Cap (MM): $65.8Market Perform; Simos Simeonidis, Ph.D. - Senior Biotech Analyst, Rodman & Renshaw

Synta moves forward with investment in Phase I/II trial before GSK decision

The News:Synta announced this morning that they have dosed the first patient in an open-label, dose-finding, safety and efficacy Phase I/II study with twice-weekly, IV STA-9090, their Hsp90 inhibitor, in patients with hematologic malignancies. The company also guided they are planning on initiating additional trials with STA-9090 in other indications later this year.

Two interpretations of today’s news: We are somewhat perplexed the company has decided to go ahead with investing in an additional trial of an early stage compound this soon after the recent Elesclomol news, despite the lack of clarity on the future of the compound, and given the lack of visibility on additional funding from GlaxoSmithKline (GSK, Not Rated).

1) One way to interpret this move could be as the company believing very strongly in the potential of STA-9090 and has decided to place a significant bet behind its development, given that this is the third trial with STA-9090, with more to come this year, and the fact that we do not see any additional source of funding for Synta in the foreseeable future.