Glaxo Grabs Synta Melanoma Drug in Deal Worth up to $1.1 Billion

10/10/07

Yes, that’s $1.1 billion.

GlaxoSmithKline (NYSE: GSK) leapt at STA-4783 just a couple of weeks after Lexington, MA-based Synta Pharmaceuticals (NASDAQ: SNTA) presented some promising news about the experimental drug at a European cancer meeting. Adding STA-4783 to standard chemotherapy more than doubled the survival time in a Phase 2b trial in patients with metastatic melanoma—a deadly disease with limited treatment options.

The terms are sweet. The drug will be jointly developed and commercialized in the U.S., but GSK will have exclusive rights to it elsewhere. Synta, which was founded in 2002, gets a nice $80 million upfront cash payment, but has to earn the next $135 million as milestone payments dished out as the drugs works its way towards approval for metastatic melanoma. The next $450 million is pinned to various other indications. To earn the last $350 and push over the billion dollar mark, the drug needs to meet certain net sales goals. Synta also gets royalties based on net sales.

Glaxo, like every big pharma, sorely needs more good stuff in the pipeline. The safety concerns surrounding Avandia, which was one of the company’s bright hopes, has made that need even more acute. The deal with Synta “confirms GSK’s growing status as a world leader in the development of new oncology medicines,” Glaxo R&D head Moncef Slaoui said in a press release.

And if its early promise plays out, the Synta drug could represent a real milestone; the FDA hasn’t approved a new small-molecule drug for metastatic melanoma in about 30 years. What’s more, the company says, Synta’s drug would be the first of a class of drugs that work by inducing what’s called oxidative stress in cancer cells.

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