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Synta Pharma slumps on data from cancer drug study

NEW YORK (AP) -- Shares of Synta Pharmaceuticals tumbled Monday after the company reported more data from a study of its experimental cancer drug ganetespib.

THE SPARK: The trial compares ganetespib to the chemotherapy drug docetaxel in the treatment of advanced non-small cell lung adenocarcinoma, a type of lung cancer. The study is designed to identify the patients who might benefit the most from ganetespib. Synta said Monday that patients who were treated with ganetespib and docetaxel had median survival of 10.7 months, and patients treated with docetaxel alone had median survival of 7.4 months.

A final analysis of the study is expected in early 2014.

THE BIG PICTURE: Synta Pharmaceuticals Corp. does not have any approved drugs, and ganetespib is its most advanced experimental product. A year ago the Lexington, Mass., company said patients treated with ganetespib had longer overall survival and time-to-disease-progression than patients treated with docetaxel. However in June the company reported additional data that disappointed investors.

THE ANALYSIS: Stifel Nicolaus analyst Brian Klein said he is having doubts about ganetespib based on the latest trial because the new data show a smaller benefit for ganetespib-chemotherapy combination compared to chemotherapy alone versus the prior trial, which showed a greater benefit. He said the company has received inconsistent results from some of the sites where the trial is being conducted, and even though those sites aren't involved in the current late-stage trial, that study may not succeed.

"Prior survival results were already muddled by significant (and previously dismissed) regional differences," he said. Klein said he thinks Synta "moved too quickly into Phase 3, with a poor trial design and a potentially inappropriate statistical plan."

Klein rates the shares "Hold."

Jefferies & Co. analyst Thomas Wei said the benefits of ganetespib now look smaller because the trial included a group of patients in Russia and Ukraine who were healthier than most of the other patients. He maintained a "Buy" rating but trimmed his price target to $20 per share from $22, saying the update creates more risk in Synta shares.

SHARE ACTION: Synta Pharmaceuticals shares sank $1.32, or 21 percent, to $5.08 in afternoon trading. The stock fell 34 percent on June 3 to close at $4.87, but had recovered since then and closed at $6.40 on Friday.