Glaxo inks deal for Synta cancer drug
Last Updated: 2007-10-10 15:55:29 -0400 (Reuters Health)
By Bill Berkrot
NEW YORK (Reuters) - GlaxoSmithKline Plc has licensed Synta Pharmaceuticals Corp's experimental drug for advanced melanoma, paying $80 million up front in a deal that could eventually earn the U.S. biotechnology company more than $1 billion, the two companies said on Wednesday.
Shares of Synta, which had more than doubled since late August in the run-up to the deal, fell more than 7 percent. The company had previously said it expected to announce a deal on the cancer drug before the end of the year.
"It's a transformative event for the company," Synta Chief Executive Safi Bahcall said of the Glaxo deal in an interview.
Bahcall said there had been a very competitive bidding process for the drug, known as STA-4783.
He said Glaxo's "commitment and sense of urgency" to develop the medicine tipped the scales in its favor.
The deal for the drug, which is beginning a global phase 3 trial for melanoma involving 600 patients, marks a further step by Glaxo to boost its pipeline through outside alliances.
Europe's biggest drugmaker has made cancer medicine a priority area for development.
"It further strengthens our late stage oncology pipeline, which currently includes 10 phase 3 programs," Glaxo's research head, Moncef Slaoui, said in a statement.
Phase 3 is usually the final stage of human testing before a drug is submitted to regulators for an approval decision.
"We believe this is excellent news for Synta as it validates STA-4783, provides a significant amount of cash to the company to continue operations, and provides a world class partner with which to continue development of the drug," Rodman & Renshaw analyst Michael King said in a research note.
He estimated approval for the drug in the first half of 2009 if the phase 3 data are positive in late 2008.
In a phase 2 study, patients with advanced melanoma taking the Synta drug plus a common chemotherapy agent had a median survival of 12 months compared with 5.6 months for the chemotherapy drug alone. Progression-free survival more than doubled -- 35 percent vs 15 percent -- at six months.
"From every melanoma physician or patient group we've talked to, there seems to be a tremendous sense of desperation for new treatment options," Bahcall said.
"There hasn't been a drug that acts in a new mechanism that's been approved in 30 years for metastatic melanoma," he added. "If it gets approved, we think it has a chance to help a very broad percentage of patients in the melanoma population."
STA-4783 has a new mechanism action, which kills cancer cells by raising oxidative stress levels beyond the breaking point, triggering programmed cell death without harming normal cells. Synta anticipates it will also work across a variety of tumor types.
Under the deal, Glaxo and Synta will share responsibility for development and commercialization of STA-4783 in the United States and Glaxo will have exclusive rights elsewhere.
Synta will be eligible for potential milestone payments of up to $135 million if the drug is approved for melanoma, plus up to $450 million for other indications and up to $300 million based on certain sales targets.
Glaxo may also buy up to $45 million of Synta's common stock upon achievement of specified milestones.
Synta still owns full rights to four other drugs it has in development, including ones for cancer and rheumatoid arthritis, and the company is entertaining offers.
"We're in discussions with several other companies as well as GSK for some of our other programs," Bahcall revealed.
"This deal gives us the financial strength and flexibility to keep those programs a little longer," he said.
Typically, the further along a drug is in development the higher the price tag.
Synta shares were off 77 cents, or 7.5 percent, at $9.48 at mid-afternoon on Nasdaq.
(Additional reporting by Ben Hirschler in London)
