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In the pharmaceutical industry, it is very common to see multiple drugs in development that go after the same target. Usually, there is a direct correlation between the recognition a target has and the number of competing agents. This is the case with “hot targets” such as PI3K,RAF and mTOR, which are pursued by many pharma and biotech companies.

In most cases (especially with targeted therapies), the different compounds are being developed in parallel, and there is no way of identifying a clear winner. This can persist even after approval. For instance, both Pfizer (NYSE:PFE) and Novartis (NYSE:NVS) have an mTOR inhibitor on the market for the treatment of renal cancer. It is clear both drugs are active but each compound was approved based on a different trial in a different patient population, so neither can claim superiority.

Synta’s (NASDAQ:SNTA) lead agent, STA-9090, is a rare example where a leader emerges very early on, even prior to commencing phase III trials. STA-9090 inhibits Hsp90, a well recognized target in cancer that has been pursued by the industry for over a decade. The first generation of compounds were naturally derived products with mild efficacy and a problematic safety profile. Companies then turned to the development of 2nd generation Hsp90 inhibitors that were hoped to be safer and more potent.

Several 2nd generation compounds entred clinical testing in 2007-2008, including Synta’ STA-9090. Two years ago, when STA-9090 was still in phase I, Synta was yet another company with an Hsp90 inhibitor program. The list included Pfizer (PFE) , Novartis , BMS, Infinity (NASDAQ:INFI) and Biogen Idec (NASDAQ:BIIB), all of whom had Hsp90 inhibitors in active development. Today, Synta’s drug does not only appear to have the best safety and efficacy profiles, it became the only active Hsp90 program with clinical results, leaving the rest of the industry behind. In other words, the competition simply evaporated.

Some of the other drugs did show some level of activity in cancer patients, but the safety issues were too grave. In particular, compounds from Pfizer and Novartis led to severe ocular toxicities, which have not been observed with STA-9090 so far. The fate of Biogen Idec’s compound is uncertain following Biogen’s intentions to deemphasize its oncology pipeline. There are additional Hsp90 inhibitors that got into the clinic only recently, for which there is still no clinical data. It is important to note that taking the lead does not guarantee eventual approval for STA-9090, but it certainly makes it an interesting compound based on company’s remarks and anticipated results from a lung cancer trial.

The safety issues with other Hsp90 inhibitors automatically raise concerns about STA-9090’s safety profile. As I discussed in a previous post, published results from two phase I studies at ASCO did not show disturbing safety issues with STA-9090, even though there were cases of liver toxicity.

According to the company, the safety profile from ongoing trials including almost 300 patients shows that the drug does not have the serious liver toxicities of first-generation Hsp90 inhibitors or the commonly occurring ocular toxicities seen with 2nd generation compounds (although actual results are yet to be published). Luckily for Synta, STA-9090 does not lead to severe ocular toxicities simply because the drug does not reach the retina, in contrast to the other 2nd generation compounds.

Early signs in lung cancer

Synta is putting all its chips on STA-9090, which is in 9 phase II trials in multiple indications. Five of the trials are investigator sponsored studies, for which the company does not carry the costs ($2-3M per study). The most important of these trials is a large phase II in non-small cell lung cancer (NSCLC) study. Although results will be officially presented only in February, the company already confirmed it is seeing encouraging results, with multiple cases of tumor shrinkage, including objective responses in heavily pretreated patients.

Synta identified a subset of lung cancer patients who seem to derive more benefit from the drug. This subset (patients without KRAS or EGFR mutations) represents approximately two thirds of the overall patient population, a huge commercial opportunity. In these patients, Synta claims to have multiple cases of durable tumor shrinkage as well as an unexpectedly high rate (over 70%) of disease control for patients with advanced disease.

The disease control rate, which includes both partial responses and disease stabilization, is comparable to approved agents in lung cancer such as Taxotere and Tarceva. In addition, having multiple objective responses in lung cancer with a single agent is very intriguing. Still, it is somewhat hard to interpret the data based on this general information. As with any single arm trials, the study is not comparing STA-9090 to a control arm, so the disease control findings should be treated with caution.

Moreover, the definition of disease control includes a variety of outcomes, ranging from limited tumor shrinkage to limited tumor growth. It remains to be seen what is the portion of patients who actually saw their disease regress or stop progressing vs. patients with slow growth of tumors. Another important piece of data that is missing is duration of disease control in the form of progression free survival (PFS). Results in February will shed more light on these issues. In the meantime, investors can draw some optimism from the company’s intention to start a pivotal trial in lung cancer in first half of next year.

Registration trials on the horizon

Synta is now talking openly about starting one or more pivotal trials in the first half of next year. The primary indication will probably be NSCLC, given the efficacy signal from the phase II study. Again, this is a good indication for the nature of the data but it needs to be corroborated by actual results. The company is evaluating two approaches for STA-9090: Either as a single agent in a narrow biomarker-defined patient population or in combination with chemotherapy in a broader population.

For the broader indication, Synta will probably do a randomized phase III trial with Taxotere in 2nd/3rd line KRAS/EGFR wild type NSCLC, based on strong scientific rationale and unpublished clinical results. This trial, which will probably be preceded by a phase IIb stage, will take several years to complete and therefore represents more of a long term opportunity. In contrast, a single agent study in a niche indication that is highly responsive to STA-9090 could generate data in less than 2 years.

Looking for a niche indication

The company still did not elaborate about biomarker-defined target populations, but a clinical trial with another Hsp90 inhibitor may have identified one. Two months ago, investigators published results from a phase II study with one of the first generation Hsp90 inhibitors, Infinity’s IPI-504, in NSCLC.

The drug had modest activity overall but intriguingly high activity in 3 patients with ALK mutations. This rare type of mutation has only been recently identified and is gaining traction thanks to Pfizer’s crizotinib, which inhibits the ALK protein directly.

The IPI-504 study included only 3 patients with ALK mutations, all of whom experienced prolonged tumor shrinkage. From a biology standpoint, there is a strong rationale that is supported by recently published preclinical data for why ALK mutated tumors would be sensitive to Hsp90 inhibitors, but this will have to be validated in additional patients. This led investigators from Massachusetts General Hospital and Dana Farber cancer institute to open a trial with IPI-504 specifically for patients with ALK mutations. The two medical centers are also part of STA-9090’s lung cancer trial.

There is no data regarding the activity of STA-9090’s in ALK “positive” patients, however, as a more potent and safer Hsp90 inhibitor, it has a good chance to be highly effective in this indication as well. Obviously, Synta will have to see that STA-9090 really works in that population before pursuing a registration trial. Another open question is STA-9090’s activity in patients who progressed on crizotinib. A combination trial with crizotinib, which is still not approved, is a reasonable but more complicated option.

Although ALK mutations are rare (~4% of NSCLC patients), they still represent an attractive commercial opportunity of over $200M in the US alone. Pfizer is pursuing this indication aggressively with crizotinib, which is in two phase III studies. One of the advantages in targeting this population is that someone else is doing the work of identifying the patients, developing screening tests and educating the medical community. This will turn patient selection from a logistic nightmare (theoretically, 25 patients should be screened for every ALK mutated patient) into a relatively easy task for a small company such as Synta.

Upcoming milestones

The most important catalyst for Synta will be results from the lung cancer study. In addition, two trials in patients with blood cancers will be presented at the ASH meeting next week. Based on the abstracts, the safety profile of STA-9090 is acceptable, even though anti tumor activity was limited. For some reason, the company did not accrue patients with multiple myeloma which is believed to be a highly suitable indication for Hsp90 inhibitors.

Synta also expects to strike a licensing deal for STA-9090 in the coming months. The company will probably keep North American rights to the drug, but it is still unclear whether it intends to monetize rights for the rest of the world or just in Japan. Geographic deals with local Japanese companies are becoming a mainstream strategy for biotech companies as they provide large amounts of non-dilutive funds and development activity in Japan, which is otherwise inaccessible to smaller companies. Two examples are Arqule’s (NASDAQ:ARQL) deal with Kyowa Hakko and more recently, Onyx’s (NASDAQ:ONXX) deal with Ono.

Portfolio updates

We are holding our position in Synta (up 62% in since added 4 months ago) and would be buyers on weakness in anticipation of four events:

  • (i) ASH data presentation that should corroborate STA-9090’s safety profile this week.
  • (ii) Lung cancer data that will demonstrate the drug’s efficacy in February.
  • (iii) Initiation of a pivotal trial in the first half of 2011.
  • (iv) A geographic licensing deal in the first half of 2011.

We are selling Aveo Pharmaceutical (NASDAQ:AVEO) which is up 69% since added in April. Long term, the company has tremendous potential but current valuation of over $500M seems reasonable. We would consider getting back in next year before the pivotal data in renal cancer.

Portfolio holdings as of December 5th, 2010 (click to enlarge)

Source: Synta's Lead Program Gains Momentum

Additional disclosure: See portfolio