Synta and GSK Part Ways Over Cancer Drug

In with the old, out with the new. At least, that's what GlaxoSmithKline(GSK Quote) may be thinking today in the dissolution of one relationship and the creation of another.

Synta Pharmaceuticals(SNTA Quote) and GSK severed ties today over the experimental drug elesclomol. The two companies were in a partnership to test and market the drug as a treatment for late-stage melanoma.

But the collaboration is ending by September 10th after results of a disappointing trial were announced earlier. The study showed no statistical significance for the survival of patients treated with elesclomol and the chemotherapy agent paclitaxel, as compared to those treated with only the chemotherapy agent.

The study did show that a small subgroup improved. But the Phase III study was halted in February following concerns about deaths and safety.

"We appreciate GSK's contributions to this program and understand their decision," Synta President and CEO Dr. Safi R. Bahcall said in a release. "We will be meeting with medical and scientific advisors to review the data from the SYMMETRY trial and additional results later this year, and will use this guidance to inform our choices for a path forward for the program. We expect to report more on additional data and plans for the program later this year."

Synta also said worldwide rights to elesclomol would stay with Synta, while GSK may receive a royalty fee -- worth a single-digit percentage -- on any future sales of the drug.

"While we are continuing to evaluate the potential of elesclomol, we are focusing our resources on the other programs in our portfolio, particularly our Hsp90 program for which we expect to initiate a number of new clinical trials in the near term," Dr. Bahcall continued.

But in a bid to gain access to more emerging markets, GSK followed up with news that its entered into an agreement with Dr. Reddy's Laboratories(RDY Quote) to develop and market products. "This is another significant step forward in our strategy to grow and diversify GSK's business in emerging markets," GSK Emerging Markets President Abbas Hussain said in a release. "This new alliance will combine Dr. Reddy's portfolio of quality branded pharmaceuticals together with GSK's extensive sales and marketing capabilities."

Dr. Reddy's spiked prior to the close of trading Monday to finish up 13 cents to $14.89. Meanwhile, GSK ADRs closed down 2.5% and Synta Pharmaceuticals shares slipped 10 cents to $2.61.