Recent IPO Synta Pharma Sees Strong Insider Buying

Lexington, MA-based biotech company Synta Pharmaceuticals (SNTA) has seen some strong insider buying recently by some very strong hands. Insider buying right after an IPO on a deal that had to be heavily discounted is an interesting situation.

Three Directors, including Bruce Kovner, bought one million shares at $10 a share, just days after the discounted IPO. Synta is today trading at $8.80. Who is Bruce Kovner? Besides being listed on the Forbes 400, Kovner runs one of the biggest hedge funds on Wall Street, Caxton Associates. Like almost all of the heavy hedgies, Kovner is ultra-secretive about his work.

The board of directors and management teams are composed of dream-team of medical, scientific research and business leaders. An early-stage drug development company, Synta has a rich library of chemical compounds, small molecules and plant extracts that it mines for drugs that may some day battle scourges like skin cancer or inflammation-related ailments like rheumatoid arthritis.

Synta came public on February 6. The firm priced 5 million shares at $10 each, well below the $14 to $16 range set earlier. The number of shares offered was also reduced from 6 million. Bear Stearns & Co. and Lehman Brothers Inc. were the joint book-running.

Synta said it expects to begin a phase three clinical trial of the product and announce plans for initiating clinical trials in other types of cancer by the middle of this year. The company is also developing STA-9090 and STA-9584 to treat cancer, with the first inhibiting heat shock and the second disrupting blood vessels to kill tumors.

Other programs include Apilimod to treat autoimmune and chronic inflammatory diseases and CRAC for inflammatory immune response. To date Synta has maintained all rights to all of its products in all markets and indications. Going forward, partnerships with other pharmaceutical companies may play an important role in the growth of the company. Synta collaborates with researchers at top-tier academic institutions. Synta has formed over two dozen such alliances, and seeks outstanding collaborators for advancing the scientific understanding of our products and disease targets.

Disclosure: Author holds a position in Synta

SNTA since IPO:

snta chart