Insiders Are Buying Synta Pharmaceuticals

Nov.18.13 | About: Synta Pharmaceuticals (SNTA)

In this article, I will feature one biotech stock that has seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.
  2. The stock is sold by no insiders in the month of intensive purchasing.
  3. At least two purchasers increased their holdings by more than 10%.

Synta Pharmaceuticals (NASDAQ:SNTA) focuses on the discovery, development, and commercialization of small molecule drugs for treating severe medical conditions, including cancer and chronic inflammatory diseases.

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Insider buying during the last 30 days

Here is a table of Synta's insider-trading activity during the last 30 days by insider.

Name Title Trade Date Shares Purchased Public Offering Current Ownership Increase In Shares
Safi Bahcall CEO Nov 13 20,000 Yes 2,053,135 shares +1.0%
William Reardon Director Nov 13 13,333 Yes 36,561 shares +57.4%
Keith Gollust Director Nov 13 150,000 Yes 3,330,638 shares +4.7%
Bruce Kovner Director Nov 13 5,000,000 Yes 28,641,849 shares +21.1%
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There have been 5,183,333 shares purchased by insiders during the last 30 days.

Insider buying by calendar month

Here is a table of Synta's insider-trading activity by calendar month.

Month Insider buying / shares Insider selling / shares
November 2013 5,183,333 0
October 2013 0 0
September 2013 0 0
August 2013 0 0
July 2013 0 0
June 2013 3,170,000 0
May 2013 0 0
April 2013 0 0
March 2013 0 0
February 2013 0 0
January 2013 0 0
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There have been 8,353,333 shares purchased and there have been zero shares sold by insiders this year. The month of November has seen the most insider buying.

Financials

Synta reported the third-quarter financial results on November 4 with the following highlights:

Revenue $0
Net loss $22.5 million
Cash $53.4 million
Debt $23.5 million
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On November 13, 2013, Synta priced a public offering of 14,000,000 shares of its common stock at a price to the public of $3.75 per share. Gross proceeds to Synta are expected to be approximately $52.5 million.

Pipeline and upcoming catalysts

Synta has the following upcoming catalysts:

Trial Catalyst
GALAXY-1 Overall survival results by early 2014.
GALAXY-2 Interim analyses in H2/2014, final analysis in H1/2015.
ENCHANT-1 Initial results in December 2013.
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(Source: Synta)

Competition

Synta's competitors include Infinity Pharmaceuticals (NASDAQ:INFI), Curis (NASDAQ:CRIS), and Exelixis (NASDAQ:EXEL). Here is a table comparing these companies.

Company SNTA INFI CRIS EXEL
Market Cap: 292.06M 689.98M 237.16M 974.44M
Employees: 124 154 33 174
Revenue: N/A N/A 15.16M 34.81M
EBITDA: -74.05M -138.80M -8.18M -170.83M
Net Income: -76.63M -140.84M -20.50M -226.21M
P/S: N/A N/A 15.92 28.26
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Synta doesn't have any revenues yet.

Here is a table of these competitors' insider-trading activities this year.

Company Insider buying / shares Insider selling / shares
INFI 0 5,781,169
CRIS 90,000 481,852
EXEL 10,000 0
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Only Synta has seen intensive insider buying during the last 30 days.

Conclusion

There have been four different insiders buying Synta and there have not been any insiders selling Synta during the last 30 days. Two of these four insiders increased their holdings by more than 10%.

On October 26, 2013, Synta announced one-year follow-up results from the GALAXY-1 Phase 2b/3 trial. The stock plunged after the results due to improved performance by the control arm.

The insiders purchased their shares after the GALAXY-1 trial results at $3.75 share price pursuant to the public offering. The next catalyst for the stock will be the initial results from the ENCHANT-1 trial, which will be presented at the San Antonio Breast Cancer Symposium in December of this year.

There are five analyst buy ratings, three neutral ratings, and zero sell ratings with an average price target of $15.83. I believe the stock could be a good speculative pick from the current price level based on the intensive insider buying.

Disclosure: I am long EXEL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.