AdamFeuerstein My Blog
Synta Pharma CEO Sudden Resignation Might Trigger Overhaul
By: Adam Feuerstein | 03/04/14
The directors sitting on Synta Pharmaceuticals' (SNTA) board finally looked at the stock chart above or spoke with a real-life oncologist. Either might explain why the company announced the sudden resignation of CEO Safi Bahcall Monday night. Bahcall is being replaced by a committee of directors until a new CEO can be found.
No specific reason was provided for Bahcall's resignation and a company spokesperson wouldn't elaborate. The subpar performance of Synta's stock price during a raging biotech bull market couldn't have helped his case for continued employment. No one but Bahcall really believed in the future of Synta's lead lung cancer drug ganetespib, either.
AF is more frequently correct than not in his assessment of small cap biotechs. He frequently receives the wrath of retailers who buy stock in such shaky companies as Galena, because he points out the dubious nature of these enterprises and criticizes their inferior drug pipelines or commercialized drugs. Anybody who read his short article on Synta today and who has adequately researched the company and its lead drug ganetespib would reasonably conclude that AF rightfully has doubts about this drug in the Galaxy trial for lung cancer. At the same time, Synta is pursuing its Enchant trials with ganetespib and there is a bit more reason for optimism here. Read the AF article closely and you'll see AF is referring only to the lung cancer clinical trials.
I would not say that Adam's spin is negative or positive, mostly just facts. For example, I think it is clear that Safi got fired and the reasons may be as simple as he didn't get his job done as CEO in returning value for this company. IN which case, this is great news. Adam F attempts a hint that the lung cancer trial might be halted but everyone knows that there is no basis for that. In fact, the last readout for this wasn't really that bad, it simply did not meet the STREET expectations. There was still improved survival rate, and the longer trial will parse hopefully any short term noise (as you all know that is why trials need to run years). Also, our drug here might not be best for lung anyway, and SNTA's value is not based upon any one application but a combination of them. There are plenty of examples of drugs that work better in one particular tissue/cancer application versus another. SNTA swung for the fences and has us in every application possible. Some might work better than other. So if we get breast and ovarian let's say, but not lung, and then calculate the actual value of these applications based upon projected peak sales--I'd say this company is worth at least 1.5 billion dollars, which is a much higher price than today. My message is relax and hold.
Sentiment: Strong Buy