Synta Suffers From Premature Stock Promotion Syndrome

LEXINGTON, Mass. ( TheStreet) -- One day, Synta Pharmaceuticals ( SNTA) will actually complete a drug study before issuing a press release touting fantastic results. Monday was not that day.

On Monday, Synta said four of 15 breast cancer patients reported significant tumor shrinkage following treatment with the company's experimental HSP90 inhibitor ganetespib. Two of the responding patients are diagnosed with triple-negative breast cancer, which is aggressive and particularly difficult to treat.

The problem is that this phase II study of ganetespib was designed to enroll 70 breast cancer patients. Synta started the study one year ago and was supposed to have complete results ready in October, according to the study's protocol listed on ClinicalTrials.gov.

Instead, it's almost August and Synta announces "preliminary" results from just 15 patients.

Ganetespib may hold promise as a breast cancer treatment, but a signal of activity derived from 70 patients would be a lot more convincing than from 15 patients, particularly in a study where the company has the ability to monitor every patient's results in real time.

Synta pulled the same stunt with a mid-stage study of ganetespib in lung cancer patients. In fact, the company pushed ahead with the start of a phase III lung cancer study before the phase II study was finished.

Wall Street has not been happy with this rash decision, which explains why Synta's stock price is down 48% year to date.

But on Monday, Synta shares are up 44 percent to $7.28, so today's press release accomplished its primary goal.

Two more things:

A prior study of ganetespib in breast cancer patients wasn't as successful, failing to meet the pre-specified criteria for response rate.

As I said above, a big advantage of open-label studies is that companies can monitor results in real time. Synta directors Bill Reardon, Keith Gollust, Bruce Kovner, Donald Kufe and Bob Wilson all received thousands of shares of Synta stock for free on July 1.

-- Reported by Adam Feuerstein in Boston.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

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