Synta reports $10.3M net loss for third quarter 2010 vs. $118.1M net income for third quarter 2009

Nov 4 2010

Synta Pharmaceuticals Corp. (NASDAQ: SNTA), a biopharmaceutical company focused on discovering, developing, and commercializing small molecule drugs to treat severe medical conditions, today reported financial results and operational highlights for the quarter ended September 30, 2010.

“Elesclomol in combination with paclitaxel-based chemotherapy has shown potential for clinical benefit in patients with low to normal LDH levels in three randomized clinical trials: Phase 2b and Phase 3 trials in metastatic melanoma and a Phase 2b trial in non-small cell lung cancer”

Financial Results

The Company reported a net loss of $10.3 million, or $0.25 per basic and diluted share, for the third quarter 2010, compared to net income of $118.1 million, or $3.49 per basic share and $3.48 per diluted share, for the same period in 2009. Total collaboration revenue was $3.4 million for the third quarter in 2010 compared to total collaboration revenue of $130.4 million for the same period in 2009, which included $114.6 million related to the acceleration of unrecognized deferred license and milestone revenue in connection with the termination of the agreement with GlaxoSmithKline for the development of elesclomol. Research and development expenses were $11.0 million for the third quarter in 2010 compared to $9.1 million for the same period in 2009. General and administrative expenses were $2.6 million for the third quarter in 2010 compared to $3.1 million for the same period in 2009. As of September 30, 2010, the Company had $54.1 million in cash, cash equivalents and marketable securities compared to $44.2 million as of December 31, 2009.

Synta has also recently announced two financial transactions. On September 30, 2010, the Company entered into an agreement with General Electric Capital Corporation under which GECC provided Synta with a $15 million loan. On October 4, 2010, Synta established an equity line of credit of up to $35 million with Azimuth Opportunity Ltd.

In addition, on November 1, 2010, Synta was informed that all four Therapeutic Discovery Tax Credit applications submitted under the Patient Protection and Affordable Care Act of 2010 were approved and the company has been awarded approximately $1 million in grants.

More detailed financial information and analysis may be found in the Company's Quarterly Report on Form 10-Q, which was filed with the Securities and Exchange Commission on November 4, 2010.

Operational Highlights

STA-9090

"We continue to make excellent progress in demonstrating safety and clinical activity with STA-9090, as well as advancing our clinical trial program," said Safi R. Bahcall, Ph.D., President and Chief Executive Officer, Synta. "The safety database of over 270 patients treated to date shows that STA-9090 does not have the serious liver toxicities of first-generation Hsp90 inhibitors or the commonly occurring ocular toxicities of other second-generation Hsp90 inhibitors. The multiple instances of durable tumor shrinkage seen in highly refractory patients following single-agent treatment with STA-9090 are encouraging evidence of clinical activity. These results have established STA-9090 as the leading compound in the Hsp90 field. They have also enabled our strategy of working closely with leading investigators to initiate a broad range of Phase 2 trials: nine Phase 2 trials are ongoing and several more are planned for later this year and early 2011. Initial results from the Phase 2 trials have been promising and our goal is to begin a registration-enabling trial by mid 2011."

"We have been encouraged especially by the results seen to date in our Phase 2 trial in non-small cell lung cancer," said Vojo Vukovic, M.D., Ph.D., Senior Vice President and Chief Medical Officer, Synta. "We recently expanded this trial to focus on the patient population that has shown the most promising results with STA-9090; results from this expansion will inform the design of larger studies being planned for next year. Also important for our plans is the ongoing combination therapy program, which includes a Phase 1 solid tumor study of STA-9090 and docetaxel; the evaluation of the docetaxel combination in our NSCLC trial; and several additional combination therapy trials we expect to initiate in the first half of 2011. The strong scientific and clinical rationale supporting a combination approach, together with the favorable safety profile for STA-9090 - in particular, the non-overlapping toxicities with certain widely used anti-cancer agents - suggest that combination therapy is a promising strategy."

In addition to the ongoing studies, two investigator-sponsored Phase 2 trials were recently initiated for STA-9090, in pancreatic cancer and ocular melanoma, and two additional investigator-sponsored trials, in prostate and breast cancer, are expected to initiate by year-end.

"At the start of the year, as we began our Phase 2 program, we announced two key year-end goals: have interim results from the Stage 1 portion of our three company-sponsored trials, and have initiated a total of 15 trials for STA-9090," said Dr. Bahcall. "We achieved the first goal, and are on track to meet the second goal. Our two solid-tumor trials met the pre-specified Stage 1 efficacy criteria, and interim results from the hematologic trial will be presented at ASH in December. A total of 13 trials have been initiated to date, with two more expected by year-end, meeting our year-end goal. We are encouraged by the progress and potential for this program and look forward to continuing to advance the development of STA-9090 next year."

Elesclomol

In the quarter, the FDA and Health Canada provided clearance to initiate a Phase 2 trial of elesclomol in acute myeloid leukemia (AML) patients. Patient enrollment is expected to begin by early 2011.

On November 1, 2010, Synta announced that the Gynecologic Oncology Group (GOG) will initiate a Phase 2 clinical trial of elesclomol in combination with paclitaxel for the treatment of persistent or recurrent ovarian, fallopian tube, or primary peritoneal cancer. The National Cancer Institute will provide funding of up to $300,000 for the trial.

"We are pleased by the progress in initiating the AML and ovarian trials, for which there is encouraging preclinical and clinical support," said Dr. Bahcall. "We are in discussions with investigators for studying elesclomol in additional indications next year, including non-small cell lung cancer and prostate cancer, which would most likely be in the context of other cost- or risk-sharing agreements."

"Elesclomol in combination with paclitaxel-based chemotherapy has shown potential for clinical benefit in patients with low to normal LDH levels in three randomized clinical trials: Phase 2b and Phase 3 trials in metastatic melanoma and a Phase 2b trial in non-small cell lung cancer," said Dr. Vukovic. "By directly targeting cancer cell energy metabolism - which represents a novel mechanism, distinct from chemotherapy or kinase inhibition - and with the benefit of a predictive biomarker to help select the patients most likely to respond, elesclomol has the potential to be an exciting, new approach to treating a broad range of solid tumor and hematologic malignancies."

CRACM

Synta has been developing novel small-molecule, orally bioavailable, inhibitors of the CRAC ion channel, which plays a key role in immune cell production of pro-inflammation factors including TNFα and IL-2. Synta CRACM inhibitors offer the potential of potent, targeted immune modulators, comparable to TNFα inhibitors but orally administered. In December 2008, Synta entered into a license and collaboration agreement with Roche, under which Roche would fund two years of CRAC ion channel discovery research at Synta, and has an exclusive license to certain resulting compounds. The research collaboration will conclude as scheduled on December 31, 2010. Roche retains an exclusive license to certain compounds produced during this collaboration; Synta is entitled to future milestone payments and royalties based on development and commercial progress with these compounds. All future development and commercialization costs for licensed compounds will be paid by Roche. Synta retains all rights to all compounds not licensed by Roche.

"This has been a productive research collaboration and we are optimistic about the potential for CRAC ion channel inhibitors to provide a new treatment option for patients suffering from inflammatory and auto-immune disorders," said Dr. Bahcall.

Guidance

The Company expects to end 2010 with $43-45 million in cash, cash equivalents and marketable securities. Based on the current operating plan, it expects cash resources, together with remaining research and development reimbursements under its collaboration with Roche, will be sufficient to fund operations into 2012. This estimate assumes no additional funds from new partnership agreements, cost- or risk-sharing agreements, equity financing events, or use of the $35 million equity line of credit available to Synta. Certain new clinical programs contemplated for 2011 would be conducted subject to the availability of additional financial resources.