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GEN News Highlights : Mar 13, 2009

Synta Reduces Workforce by 40%

Decision will allow the company to operate for two years.

Synta Pharmaceuticals is nixing 90 positions, bringing the total number of employees down to 130. The decision comes after last month’s announcement that development of anticancer agent elesclomol had been suspended.

Synta says that the restructuring will allow it to operate for approximately two more years without the need for additional equity financing. Synta has two other programs in clinical development and two at the preclinical stage. STA 9090 is a synthetic Hsp90 inhibitor that is currently enrolling patients in two Phase I trials in solid tumors. Apilimod is an oral IL-12/IL-23 inhibitor currently enrolling patients in a Phase IIA study in rheumatoid arthritis.

Preclinical programs comprise a vascular disrupting agent and small molecules targeting calcium release-activated calcium modulator (CRACM) channels for the treatment of inflammatory diseases.

The CRACM channel inhibitors are being developed with Roche, which paid $25 million up front including two years worth of research funding. Total value of the deal is just over $1 billion with roughly equal amounts payable through development and sales milestones for three products in multiple indications.

The news in February sent the company’s stock plunging around 77%, and its partnership with GlaxoSmithKline for elesclomol hangs in the balance. GSK has paid $130 million in fees and milestones as well as a majority of program costs. If the companies decide to continue investigations, Synta could earn another $85 million related to melanoma and $750 million linked to other types of cancer.

Considering the halt was due to initial analysis of Phase III data in melanoma that showed more deaths in the study arm compared to the control group, continuation seems unlikely. No decision has yet been reported.