Negative Phase III results spelled the end of the development and commercialization deal.

GlaxoSmithKline (GSK) decided to terminate its collaboration with Synta Pharmaceuticals since clinical trials with the compound being jointly developed were previously stopped due to safety concerns.

The deal, which had a $1 billion potential, earned Synta $130 million. Worldwide rights to elesclomol will revert to Synta, which may pay GSK a low single-digit royalty on any potential future sales of elesclomol.

At this point, however, Synta seems unlikely to continue developing the candidate, because initial Phase III data from a melanoma study showed more deaths in the treatment arm compared to controls. The news hit the company hard, and its stock spiraled down 77%, and Synta was forced to cut 40% of its staff.

Synta could’ve made $85 million in milestones linked to progress in melanoma and $750 million related to other cancers. As of March 31, 2009, the company reported having $84.8 million in cash.

While the firm will evaluate the potential of elesclomol, resources are being focused on other candidates, particularly the Hsp90 program, according to Safi R. Bahcall, Ph.D., president and CEO. STA-9090 is the lead candidate and is in Phase II studies in hematologic cancer. Dr. Bahcall expects clinical trials in other settings to begin in the near future.

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