Synta Pharmaceuticals Corp. SNTA reported a first-quarter 2016 loss of 5 cents per share, much narrower than the year-ago loss of 19 cents.
With no approved product in its portfolio, the company does not generate revenues yet.
In the first quarter of 2016, research and development (R&D) expenses were $3.4 million, down almost 79% from the year-ago quarter. General and administrative (G&A) expenses were down 26.7% year over year to $3 million.
The decline in both R&D and G&A expenses was due to restructuring initiatives undertaken in the fourth quarter of 2015 and the first quarter of 2016, respectively.
Merger in Focus
Last month, Synta announced that it will be merging with a privately held company, Madrigal Pharmaceuticals, Inc., in an all-stock transaction. This combined company will focus on the development of novel small-molecule drugs targeting cardiovascular-metabolic diseases and non-alcoholic steatohepatitis (NASH).
MGL-3196, which is Madrigal’s lead candidate, is a phase II-ready candidate that is being evaluated for the treatment of NASH and heterozygous as well as homozygous familial hypercholesterolemia.
Once the proposed merger closes, Madrigal shareholders will own 64% of the combined company while Synta shareholders will own 36%. The merger is slated to close in the third quarter of 2016.
We note that Synta had earlier focused on cancer treatments but the company suffered a setback last year when it decided to terminate a phase III study (GALAXY-2) on its lead pipeline candidate ganetespib (advanced non-small cell lung adenocarcinoma) due to futility. Thereafter, the company discontinued a substantial portion of its R&D activities relating to ganetespib and its oncology pipeline.
However, the company continues to conduct limited activities with respect to ganetespib including providing support for a couple of ongoing investigator-sponsored studies in ovarian cancer and sarcoma and drug candidates from its Hsp90 inhibitor drug conjugate (HDC) program, including its lead HDC candidate STA-12-8666.
Going ahead, we believe investor focus will remain on updates from the Madrigal transaction.
Investors looking for well-ranked stocks in the health care sector can consider ANI Pharmaceuticals, Inc. ANIP, Retrophin, Inc. RTRX and Bristol-Myers Squibb Company BMY. All three stocks sport a Zacks Rank #1 (Strong Buy).
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