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Synta Pharmaceuticals Inc. Reports Operating Results (10-Q)

November 04, 2009 | About:

Synta Pharmaceuticals Inc. (SNTA) filed Quarterly Report for the period ended 2009-09-30.

SYNTA PHARMACEUTICALS CORP. is a biopharmaceutical company focused on discovering developing and commercializing small molecule drugs to extend and enhance the lives of patients with severe medical conditions including cancer and chronic inflammatory diseases. Synta has a unique chemical compound library an integrated discovery engine and a diverse pipeline of clinical- and preclinical-stage drug candidates with distinct mechanisms of action and novel chemical structures. All Synta drug candidates were invented by Synta scientists using our compound library and drug discovery capabilities. Synta has a partnership with GlaxoSmithKline for the joint development and commercialization of its lead investigational drug candidate elesclomol which is in a global pivotal Phase 3 clinical trial for the treatment of metastatic melanoma. Synta Pharmaceuticals Inc. has a market cap of $92.6 million; its shares were traded at around $2.73 with and P/S ratio of 35.5.

Highlight of Business Operations:

Elesclomol was well-tolerated in the SYMMETRY trial and most observed adverse events were NCI CTC (National Cancer Institute Common Toxicity Criteria) Grade 1 or 2. The most common Grade 3 or higher adverse events in the treatment arm (elesclomol plus paclitaxel) compared to the control arm (paclitaxel alone) were neutropenia (6.8% vs. 2.5%), fatigue (4% vs. 1.2%), anemia (2.2% vs. 1.8%), dyspnea (2.2% vs. 1.8%), alopecia (1.9% vs. 2.8%), peripheral neuropathy (1.9% vs. 1.2%), vomiting (1.9% vs. 1.5%), and infusion related reaction (1.9% vs. 2.2%).

We continue to use the Black-Scholes option pricing model as it is the most appropriate valuation method for our option grants. The Black-Scholes model requires inputs for risk-free interest rate, dividend yield, volatility and expected lives of the options. Since we have a limited history of stock activity, expected volatility for the period from April 1, 2009 through September 30, 2009 was based upon the weighted-average historical volatility data of our common stock and the historical volatility data from several guideline public biotechnology companies similar in size and value to us that also have stock compensation plans with similar terms. Prior to April 1, 2009, expected volatility was based solely on historical data from several similar guideline public biotechnology companies with similar stock compensation plans and terms. We will continue using our historical volatility and other similar public entity volatility information until our historical volatility alone is relevant to measure expected volatility for future option grants. We estimate the forfeiture rate based on historical data. Our options generally vest 25% after one year of service and quarterly over three years thereafter. Based on an analysis of historical forfeitures, we applied a forfeiture rate of 10% to all options that vest upon completion of the first year of service following the date of grant. The analysis will be re-evaluated at least annually and the forfeiture rate will be adjusted as necessary. The risk-free interest rate for periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. The expected lives for options granted represent the period of time that options granted are expected to be outstanding. Since January 1, 2006, we have used the simplifie

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