Glaxo’s decision leaves Synta with few options
The decision by GlaxoSmithKline to terminate its partnership with Synta Pharmaceuticals over melanoma drug, elesclomol, will come as little surprise given that the health of the alliance looked very shaky after a decision in February to halt dosing following an unexplained increased death rate in the treatment arm compared with the control group (Synta hurt by elesclomol safety scare, February 27, 2009).
That event caused shares in the group to fall by 75% to just $1.36, they fell again in May when the results of the trial were present at this year’s Asco (ASCO EventAnalyzer - 2009's winners and losers, June 4, 2009). As such, the news that Glaxo was waving goodbye to its partner did little to deflate the already battered stock, which closed 4% lower yesterday at $2.16.
Synta is now left sitting on a drug whose prospects look very limited. But the death notice has not quite been served on elesclomol, which had been forecast to contribute $7m in royalties to Synta by 2014. Rather than calling it quits now, Synta is waiting for the data to mature, with particular reference to overall survival data for the patients who were involved in the trial. These data are expected either late this year or early next year.
Make or break decision
Speaking on a conference call Safi Bahcall, chief executive, said these data would inform the group’s decision on elesclomol and whether or not it would be talking to the FDA at the end of the year to resume clinical trials.
There is a very, very slender chance that elesclomol could be saved. So far the results have shown that there is no organ specific toxicity associated with the drug that could account for the imbalance in deaths between the two groups. Also the patients enrolled in the treatment arm tended to be sicker. It is hoped that as the patients are monitored the differences between the trial arms might diminish.
But if the results of elesclomol in metastatic melanoma do not result in a resumption of trials, the company will essentially be a high risk, early stage company with one phase I/II product, a phase I drug and three pre-clinical candidates on its books and no prospects for revenue generation for several years.
Cash in the cupboard
However, what Synta does have on its side is its relative high levels of cash, running at $84.8m in the first quarter. The group also took a very big axe to costs in March, cutting 41% of its workforce, in a move designed to give it more than two year’s money without resorting to fundraising in the market and sparing its already weak share price.
The next best hope in the pipeline is the group’s hsp90 drug, STA-9090, which is currently in phase I/II. Although the drug does not have any sales forecasts, yesterday Mr Bahcall said that there was external interest in the drug and partnering would be the fastest way to accelerate its development. “We will be looking at a range of partnering options for STA-9090 over the rest of this year. This is a change from our earlier thinking that we would wait until next year to begin partnership discussions,” he said.
But the group said that while discussions may start this year, there was no guarantee that a deal would be inked this year. If this is the case then investors should expect little from the group, whose next significant event will be the final data from elescolmol.
As such the company could consider using its cash pile to buy in a later stage asset that could bring in value faster than its current pipeline, or in a more radical move the acquisition of a small company.