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Synta Pharmaceuticals Corp. (NASDAQ:SNTA)

Q1 2010 Earnings Conference Call

May 4, 2010 10:00 AM ET

Executives

Rob Kloppenburg – VP, IR and Corporate Communications

Safi Bahcall – CEO

Keith Ehrlich – CFO

Analysts

Jason Kantor – RBC Capital Markets

Ryan Martin – Barclays Capital

Andrew Vaino – Roth Capital Partners

Operator

Good day and welcome to the Synta Pharmaceuticals first quarter 2010 financial results conference call. Today’s conference is being recorded and webcast. At this time for opening remarks I would like to turn the call over to Rob Kloppenburg, Vice President of Investor Relations and Corporate Communications at Synta Pharmaceuticals. Please go ahead sir.

Rob Kloppenburg

Good morning and thank you all for taking the time to join us today. With me are Dr. Safi Bahcall our Chief Executive Officer, Keith Ehrlich, our Chief Financial Officer and Dr. Vojo Vukovic, Synta’s Chief Medical Officer. This morning we issued a press release that reported results for the first quarter of 2010. This release can be found on our website at www.syntapharma.com. Before we begin I would like to point out that we will be making forward-looking statements based on our current intent, belief and expectations. They are subject to certain risks and uncertainties and I encourage everyone to look at the SEC filings for additional detail.

I will now turn the call over to Dr. Bahcall, after which we’ll open the floor to questions. Safi?

Safi Bahcall

Thanks Rob and thank you for joining us this morning. Today I’ll give a brief update on our program and Keith Ehrlich will summarize our first quarter financials. I would like to start by saying this is an exciting time at Synta because we’re in a period with many new trials being initiated and results from earlier trials maturing. As a result, we expect to have considerable data flow for the rest of this year and into next year.

STA-9090 our Hsp90 inhibitor is now in five phase II trials including the new colon and gastric cancer trials announced today. The three previously initiated phase II trial in lung cancer, GIST and AML are enrolling well.

We are pleased that the tolerability of the drug continues to be positive and appears to show certain distinct advantages over other Hsp90 inhibitors. Results to-date from our two solid tumor phase I trials will be presented at ASCO, which will describe the safety and tolerability in greater detail. Preliminary results from the first stage of each of our phase II lung, GIST and AML trials will be available in the second half of the year.

We’ll be discussing with the lead investigators on these trials, the most appropriate meetings to present these results and we’ll let you know when we have the meeting presentation scheduled.

We are excited about the opportunity for 9090 in the new phase II indications announced today, colon cancer and gastric cancer.

There is a good scientific rationale on these tumor types based on the underlying pathways targeted by 9090. In addition, in our phase I trial we did see a response, which qualified as the confirmed partial response by RECIST criteria in a colorectal cancer patient with progress in numerous prior therapies.

The phase I activity profile as well as safety profile will be discussed in greater detail at ASCO next month.

We are very pleased to be working with leading investigators with such high profile institutions as Memorial Sloan Kettering in New York and Mass General Hospital in Boston.

This reflects our approach to building a strong support network in a scientific and medical community for 9090 driven by the data from the drug and the broad therapeutic potential.

To this end we’re confirming our prior guidance and very much look forward to announcing an additional four to eight week trial for 9090 for a total of 6 to 10 new trials this year.

The breadth and quality of this program position 9090 to be the leading Hsp90 inhibitor in the industry. That is our goal and we are fully committed to leading this field.

I’d like to give a brief update on Elesclomol today as well. At ASCO last month we presented results showing that anticancer activity of Elesclomol correlates with level of HIF-1a and LDH.

Essentially Elesclomol needs oxygen to work. Low levels of oxygen in cells reduce Elesclomol activity. These results are consistent with the results from both our phase II B and phase III melanoma trial in which only the normal LDH population showed benefit from Elesclomol. As a reminder, that it’s not a small population but rather the majority across both trials.

Based on the positive results seen for Elesclomol in an ex-vivo analysis in patients with acute myeloid leukemia, which were presented at ASH in December as well as our prior supporting data for Elesclomol in hematologic cancers, we’re in discussions to initiate a trial for Elesclomol in AML. We expect this trial to start before the end of this year.

Finally, with regard to partnerships, our guidance has not changed from our last call. We continue to be in active discussions for each of unpartnered programs and are targeting concluding at least one partnership this year. I will now turn the call over to Keith Ehrlich.

Keith Ehrlich

Thank you Safi and good morning everyone. Together with a $26.7 million of net proceeds raised in our follow-on offering of common stock in January 2010, we entered 2010 with approximately $71 million of cash resources. As of March 31, 2010 our cash balance was approximately $58 million.

Total collaboration revenues in the first quarter of 2010 were $4 million as compared to $4.5 million in the same period of 2009. In the first quarter of 2010, our research and development expenses were $10.2 million as compared to $22.6 million for the same period of 2009 during which were conducting the phase III symmetry trial for Elesclomol.

In the first quarter of 2010, our general and administrative expenses were $3.1 million as compared to $4.1 million for the comparable period in 2009.

In the first quarter of 2010, our net loss was $9.3 million or $0.24 per basic and diluted share as compared to $23.5 million or $0.69 per basic and diluted share.

Based on our current operating levels, we continue to estimate that our cash resources together with the expected research and development reimbursements and milestone payments anticipated under the Roche agreement will be sufficient to fund the company’s operations into 2012. I will now turn the call back to Safi.

Safi Bahcall

Thanks Keith, we’ll open the call now to questions, operator.

Question-and-Answer Session

Operator

Thank you Dr. Bahcall. (Operator Instructions) Our first question comes from the line of Jason Kantor of RBC Capital Markets. Please proceed with your question.

Jason Kantor – RBC Capital Markets

Hey guys. I was able to find the colorectal cancer study on clinicaltrials.gov but not the gastric. So maybe you could give us a little bit more detail on what that trial is going to look like, how many lines of therapy of those patients failed with the dose etc.

Rob Kloppenburg

Sure. Vojo you want to take that one.

Vojo Vukovic

Sure. Hi Jason; the gastric trial is conducted in advance in gastric cancer patients. So these are patients who have failed (inaudible) care, which is frontline (inaudible) be second line and beyond. It’s a single agent study like our other phase II programs.

Jason Kantor- RBC Capital Markets

And that’s a weekly 200 mcg per meter square.

Vojo Vukovic

Yes we’re using the same dosage schedule that we’re taking also forward in our other phase II trials.

Jason Kantor – RBC Capital Markets

Okay and then in terms, Safi, in terms of partnering, can you give us some idea of what were some of the flavors of deals that your considering?

Vojo Vukovic

Yes we’re looking across each of our programs and we’re in discussions with a number of partners on both global types of deals as well as regional types of deals and right now it’s kind of too early to say exactly which one we’ll converge on.

Jason Kantor- RBC Capital Markets

Then in terms of your phase I hematologic study, is that going to be at ASH or at EHA or when are we going to see (inaudible) there.

Vojo Vukovic

ASH is a reasonable place to present heme data from a study like that but we haven’t made any final decisions, we’ll talk with the investigators over the next few months.

Jason Kantor- RBC Capital Markets

Thank you.

Operator

Our next question comes from the line of Ryan Martin of Barclays Capital. Please proceed with your question.

Ryan Martin – Barclays Capital

Hi, thanks for taking the questions. I believe on the GIST trial, do you say it was a randomized trial. I was asking because I was looking through the ASCO titles online and it looks like Novartis has a data presentation for their Hsp90 in a way, which I believe is a randomized study.

Vojo Vukovic

Yes there was a Novartis phase III study for a different agent, which was largely randomized but the Hsp90 studies have been, like ours have been nonrandomized.

Ryan Martin – Barclays Capital

Okay thanks and in terms of your studies with STA-9090, can you maybe provide more color on the biomarker study that you’ve been doing?

Vojo Vukovic

Sure. We were looking at the variety of biomarkers and the specifics, that clearly depends on the tumor type that you’re investigating. Some of the common ones that may be shared across several studies includes phospho-Akt and include Her2/neu, may include EGFR but there’s also lots of disease specific biomarkers. In some our studies, we’ll be doing tumor sample analysis. So, we’ll be able to learn a lot about biomarkers in our phase II studies.

Ryan Martin – Barclays Capital

Thanks and finally maybe Safi, you mentioned having one partnership probably by the end of this year, does this still include the Hsp90 inhibitor as a potential partnership.

Safi Bahcall

Yes that’s in discussions and that is one of the types of partnerships that we’re looking at.

Ryan Martin – Barclays Capital

Okay thanks for taking the questions.

Operator

(Operator Instructions) Our next question comes from Andrew Vaino of Roth Capital Partners. Please proceed with your question.

Andrew Vaino – Roth Capital Partners

Just a quick question on how best to think about the revenue from royalties and reimbursement going forward. Do you reckon same levels as in Q1?

Safi Bahcall

Are you referring to our partnership with Roche?

Andrew Vaino – Roth Capital Partners

Yes.

Safi Bahcall

I think if you look at the prior quarters, it’s been a fairly consistent revenue which is related to essentially reimbursing R&D cost and that’s a fairly reasonable assumption to continue to project that.

Andrew Vaino – Roth Capital Partners

Okay and any incliners as to when we might see some phase II data from the 9090?

Safi Bahcall

Yes, second half of this year, we will have preliminary data from our phase II trial.

Andrew Vaino – Roth Capital Partners

Okay thank you.

Operator

This concludes this question-and-answer session. I will now turn the conference back over to Dr. Bahcall for closing remarks.

Safi Bahcall

Thank you everyone for your time and this ends the call.

Operator

Ladies and gentlemen, this concludes today’s call you may now disconnect.

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Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

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