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Cancer is a disease that has impacted the lives of each and every one of us. Cancer is a disease that involves unregulated cell growth, where cells divide and grow uncontrollably, forming malignant tumors, and can potentially invade nearby parts of the body. The cancer may also spread to more distant parts of the body through the lymphatic system or bloodstream, eventually overtaking healthy cells and leading to death. There are over 100 different known cancers that afflict humans. Determining what causes cancer is complex and many things are known to increase the risk of cancer, including tobacco use, certain infections, radiation, lack of physical activity, obesity and environmental contaminants. These can directly damage genes or combine with existing genetic faults within cells to cause the disease. In 2010, cancer was the second leading cause of all mortality in the United States. Rates are rising as more people live to an old age and as mass lifestyle changes occur in the developing world. Some of the most common cancers are lung, breast and colorectal cancer. In 2009, 205,974 people were diagnosed with lung cancer, and 158,081 people died from it. That same year 211,731 women were diagnosed with breast cancer, and 40,676 women died from the disease. Further, 136,717 people were diagnosed with colorectal cancer, and 51,848 people died from it.

While there is not a cure for cancer at this time, many pharmaceutical companies are working diligently toward this goal. Much of the research centers on blocking the growth of cancer cells while trying to preserve healthy cells. Historically, chemotherapy and radiation have been utilized to shrink and kill cancer cells, but this destroys normal tissue leading to severe side effects and reduced quality of life during treatment. One of the goals of cancer treatments, beyond curing it entirely, is to at minimum, slow the progression of disease and prolong life. Given the reach of cancer in all of our lives and the annual incidence of the disease, a company that can develop a successful treatment which prolongs and improves quality of life may be sitting on a proverbial gold mine. That said, Synta Pharmaceuticals (SNTA) may indeed be sitting on such a drug which could generate billions in revenue and result in the stock moving magnitudes of order higher from current levels. The purpose if this article is to compare the status of SNTA's leading anti-cancer drug candidate, ganetespib, to other competitors' drugs of similar class and discuss the trials and tribulations of the company in 2013 and where it heads for 2014. I also discuss the science of the drug and why it is one of the most promising therapies under study to date. Ganetespib belongs to a new class of drugs known as heat shock protein 90 (Hsp 90) inhibitors. Hsp90 plays a role in the maturation of client proteins, which help cells growth, divide, and survive. Compared to healthy cells, cancer cells are more dependent on elevated levels of Hsp90 to proliferate. As such, inhibiting the production of Hsp90 could stop certain types of cancer.

Unlike other targeted therapies which seek out specific mutations, such as Roches' (OTCQX:RHHBY) Herceptin or Pfizer's (PFE) Xalkori which are specifically tailored to seek out and attack specific mutated cells (with mixed success), Hsp90 inhibitors are believed to be able to disrupt several signaling pathways simultaneously to stop tumor cell proliferation. Ganetespib has now been studied in over 700 patients in more than 20 clinical trials. In preclinical models at the molecular level, ganetespib inhibits a molecular chaperone called Heat Shock Protein 90 (Hsp90), essential to the function of many of the most fundamental drivers of cancer cell growth and proliferation. Treatment with ganetespib has been shown in preclinical models to reduce some aggressive features of tumors, such as the ability to induce the growth of new blood vessels, the ability to spread to other organs in the body, and to resist attack by traditional therapies, such as chemo. SNTA is primarily focusing on developing ganetespib as a treatment for non-small-cell lung cancer, or NSCLC, breast cancer and colorectal cancer. If approved, the drug is expected to hit annual peak sales of $425 million to $600 million.

The Science of Heat Shock Protein 90 Inhibitor Therapy is Tricky

As Hsp90 is a molecular chaperone required for the proper maturation and activation of numerous client proteins, it was studied as a target for drug activity. Hsp90 client proteins play critical roles in cancer cell growth, differentiation, and survival. Furthermore, relative to normal cells, cancer cells are more reliant on elevated levels of the active form of Hsp90 and, as such, appear to be selectively sensitive to Hsp90 inhibitors. What is unique about ganetespib relative to other major cancer drugs which only target a single biological pathway, inhibition of Hsp90 results in the simultaneous disruption of numerous signaling pathways that are critical for tumor cell proliferation and survival. Ganetespib successfully works on the following three anti-cancer applications, as stated in their scientific descriptions:

Oncogene-addiction: Certain genetically-defined cancers, such as ALK-positive lung cancer or HER2-positive breast cancer, show a strong dependence on a single mutated or overexpressed Hsp90 client protein. Hsp90 inhibition, by leading to the destabilization of these client proteins, offers a potential approach to treating these cancers that is distinct from kinase inhibitors or antibodies, which bind to the oncogene driver directly. Strong Hsp90 clients that drive oncogene-addicted cancers include ALK, HER2, mutant BRAF and EGFR, androgen receptor (AR), estrogen receptor (ER), and JAK2.

Resistance: Cancer cells often develop resistance to commonly used anti-cancer treatments such as chemotherapy and radiation therapy. Many of these resistance mechanisms involve cell-cycle checkpoint, DNA repair, and anti-apoptosis pathways, which rely on Hsp90 client proteins including ATR, BCL2, BRCA1/2, CDK1/4, CHK1, and WEE1. Inhibition of these client proteins supports combining ganetespib with chemotherapy or radiation therapy in order to investigate whether the combination reduces resistance and improves potential clinical activity. In preclinical models of cancer, ganetespib has shown synergistic activity with chemotherapies including docetaxel, paclitaxel, pemetrexed, gemcitabine, cytarabine, irinotecan, etoposide, doxorubicin, carboplatin, cisplatin, and vincristine as well as with radiation therapy.

Aggressive tumor biology properties, including angiogenesis and metastasis: In advanced stage disease, tumors develop properties that allow them to spread throughout the body. These include the activation of pathways that regulate new blood vessel formation (angiogenesis) and those that enable cancer cell separation from primary tumors and establishment of new tumor lesions (metastasis). Many Hsp90 client proteins play key roles in these processes. These include HIF-1alpha, VEGFR, PDFGR, and VEGF in angiogenesis; and MET, RAF, AKT, MMPs, HIF-1alpha, and IGF-1R in metastasis. In preclinical models, ganetespib has shown an ability to inhibit these proteins and suppress these aggressive properties.

While its anticancer properties are not in question, successful formulation of a drug that can actively treat cancer in patients is indeed in question. Table 1 shows the status of competitors' HsP 90 trials:

Table 1. Status of Heat Shock Protein 90 Inhibitor Trials.

Pharmaceutical Company

Anti-Cancer Therapy

Last Known Therapy Status

Astex Pharmaceuticals (ASTX)

AT13387

Phase 2

Biogen (BIIB)

BIIB021, BIIB028

Suspended

Debiopharm/Curis (CRIS)

Debio 0932

Phase 1/2

Esanex

SNX-5422

Restarted

Exelixis (EXEL)

XL888

Suspended

Infinity Pharmaceuticals (INFI)

Retaspimycin HCI

Terminated after failed trial studying NSCLC. No

Kyowa Hakko Kirin (OTC:KYKOF)

KW2478

Phase 1/2

Myrexis (OTCPK:MYRX)

MPC-3100, MPC-0767

Suspended

Novartis/Vernalis (NVS)

AUY922

Phase 2

Samus Therapeutics

PU-H71

Phase 1

Synta Pharmaceuticals

Ganetespib

Phase 2/2b/3

As we can see, in addition to SNTA, only ASTX and NVS's therapies are also in the phase two trials. INFI had a promising HsP90 inhibitor in retaspimycin HCL, but its trial failed after an NSCLC study found no significant difference between the trial therapy and the standard therapy and thus did not meet significance requirements that would justify continuing with the trials. In September 2013, Retaspimycin HCI was terminated, casting doubts on the future of Hsp90 inhibitors as a viable treatment for NSCLC. Retaspimycin was intended to treat squamous cell carcinoma, a type of NSCLC commonly caused by smoking. This hurt SNTA's stock as well. Considering the rate of suspensions and failures we see that SNTA is in dangerous territory with HsP90, and it has everything riding on ganetespib, but has also had the most progress.

2013 Trading: Volatile And Two Major Trial Results

Trading Galaxy-1

Over the past year investor sentiment has worsened due to several factors. In June, SNTA reported that during the GALAXY-1 study, patients given ganetespib showed a median survival rate of 9.8 months, compared to 7.4 months for the group only given chemotherapy. However, the drug only reduced the risk of death by 18%, far lower than the company's original projection of 31% in October 2012. As a result, the stock plunged over 50% in few trading sessions its steepest decline in four years. But the data was GOOD. The Kaplan Meier survival curves of the two groups over the course of the study disappointed the Street. Given the small numbers of participants, the statistical power, that is the ability to detect group differences, was low. The Hazard Ratio of 0.68 means that the combination drug group was 32% as likely to survive compared to the standard care group. The Street was expecting about 34% difference. This number was a bit lower than initially reported in earlier updates in October 2012, but is still highly epidemiologically attractive. Those given ganetespib had survival of 9.8 months compared with 7.4 months in the docetaxel-only group, which is over 30% longer life. Overall, the group reported an 18 percent reduction in the risk of death, which wasn't statistically significant and lower than the 31% initially hypothesized.

Despite the less-than-expected performance, these numbers are meaningful and I believe the Street overreacted after their release, sending shares down 35% in one day and 50% in a week. A sub-analysis examining those patients who were diagnosed more than 6 months prior to study entry (which would be the most sick patients), and the combination group had a statistically significant (p=0.01) hazard ratio of 0.36, or a 64% difference in survival compared to the standard care only group. Finally the ganetespib group versus a standard care group had a statistically significant (p=0.0053) reduction in risk of 50% (hazard ratio=0.5) for the formation of lesions. This is highly important. Lesions are what actually lead to folks succumbing to cancer and ultimately passing away. By preventing lesion formation, life is extended allowing patients to have a chance to fight the cancer and possibly survive.

SNTA's one-year follow-up for GALAXY-1 the following month was positive, however -- it reported that patients had an overall survival rate of 65%, with a survival rate of 10.7 months compared to 7.4 months on chemotherapy alone. However, there were concerns about vast differences in enrollment and treatment patterns across testing centers, which SNTA admitted could have affected the study.

Trading ENCHANT-1

In this trial investigators are evaluating the efficacy and safety of ganetespib monotherapy for treatment of HER2+ or triple-negative breast cancer patients previously untreated for locally advanced or metastatic disease. In the overall trial they are seeking to enroll 35 patients in each cohort and to then perform an interim analysis once 15 patients are enrolled. Earlier this year, five patients were enrolled into the HER2+ cohort and 15 patients were enrolled into the triple-negative breast cancer cohort and an interim report was given. Of these, four patients in the HER2+ cohort and 11 patients in the triple-negative cohort were evaluated by an independent panel. Of the four patients in the HER2+ group evaluated, three patients (75%) achieved an objective response, including one complete radiological response and two partial responses. One patient (25%) in this cohort achieved stable disease. How about the triple-negative breast cancer cohort? Of the 11 patients in the triple-negative breast cancer cohort that could be evaluated, two patients achieved partial response (18%) and five patients achieved stable disease (45%), for a total disease control rate of 64%. At the week 3 PET assessment for metabolic response, three of the four patients (75%) able to be evaluated by independent review in the HER2+ cohort achieved a metabolic response.

Trading The Share Offering

An additional offering of 16.1 million shares in November, aimed at boosting the company's light cash position of $53.4 million, has caused the stock to drop by over 30% since late October. However, the offering was successful for the company's coffers as it reported proceeds of over $60 million from the sale, prior to the deduction of underwriting discounts, commissions, and other expenses. Shortly after this offering we learned that insiders were huge buyers on the open market after shares tanked. In fact, insiders purchased over five million shares in the month of November.

Trading Analysts

The analyst coverage on this stock should catch your attention immediately. The six analysts that cover the stock are extremely bullish. In fact, the midpoint of the price targets for all six analysts is over $16.00 a share. My 2014 price target is $12.00.

Trading HsP90 Cancer Treatments

As an epidemiologist I am extremely thrilled with the HsP 90 inhibitor approach to cancer treatment. It has proved difficult to move from the biochemistry to the in vivo therapy. If you are looking for the one company with a real shot to get FDA approval for an HsP90 inhibitor, then SNTA is the only game in town. Of course, everything is riding on this. The stock is clearly not without risks (later trials could be failures, data quality could diminish, eventual approval for the drug down the road could be denied, the company could burn through cash in the next year and may have to do another offering), but shares are a strong buy in my opinion, especially if you can get them under $5.00. I have been trading around my core position, buying when it gets under $5.00 and selling above $6.00 and $7.00 when it reaches there. For 2014, it will all be about the data. However, GALAXY and ENCHANT have been extremely promising and I think a few more positive pieces of news is all it will take for a larger pharmaceutical company to step in and offer a buyout or partnership. With cancer impacting all of our lives, I am pleased to invest in this company for 2014 despite the risks. It earns the distinction of most likely to double in 2014 of all my picks.

Source: Investing In The Future Of Cancer Therapy: Synta A Top 2014 Pick