Biotech Buzz Post No. 8 - SNTA

“If I have seen farther it is by standing on the shoulders of giants” – Sir Isaac Newton (1642-1727), writing to his rival Robert Hooke on 5 February 1676.

Synta Pharmaceuticals (Nasdaq SNTA) – A potential blockbuster on the shoulders of giants

One of the things I love about biotechnology investing is how one frequently gets to live out that oft-quoted maxim from Newton about standing on the shoulders of giants. Some talented researcher labours in obscurity for decades with National Cancer Institute (NCI) and other grant funding in order to elucidate a basic mechanism of cancer cell growth and development. Eventually he comes across one particular protein that seems to represent an important target and other researchers get interested, including some who develop the first generation of drugs to hit that target, generally with variable results. After a couple of decades there’s a sizeable body of literature in the public domain, built largely at taxpayer expense, on the target and the drugs that can hit it and why they may or may not work. Then along comes the biotech company, develops the Next Generation drug and enjoys clinical success with it that leads to a new blockbuster. The backers of that company were able to speculate successfully (the word speculate coming from the Latin verb speculare, meaning to spy out, which in turn came from specula, a watchtower) because they were standing on the shoulders of giants.

Such, I believe, could be the story of Synta Pharmaceuticals (Nasdaq: SNTA), a cancer drug developer from Lexington, Ma. (that’s right - the same place from whence came the shot heard round the world – today it’s a hotbed of drug and medical device development rather than rebellion). Synta’s lead candidate, now in Phase III, is Ganetespib, a small molecule inhibitor of a well-known target called HSP90. Synta isn’t the only company working on HSP90 - Astex Pharmaceuticals (Nasdaq: ASTX), Curis (Nasdaq: CRIS) and Infinity Pharmaceuticals (Nasdaq: INFI) are also in the HSP90 game - but Synta is the biotech with arguably the best data to date, having shown in Phase II that it can extend survival in non-small cell lung cancer (NSCLC) with Ganetespib in combination with docetaxel.

HSP90 is a really interesting cancer target because it sits upstream of so many other proteins we know to be good targets. The HSP part stands for ‘Heat Shock Protein’, that is, a protein present in cells under normal conditions but expressed at high levels when exposed to a sudden temperature jump or other stress, something that can be highly tumourigenic. HSP90 is a so-called ‘chaperone’ protein whose job is to help other proteins fold correctly. Among the ‘client proteins’ that it works with are ALK (the target of Pfizer’s Xalkori drug), HER2 (the target of Roche’s Herceptin), BRAF (GSK’s Tafinlar) and EGFR (Roche’s Tarceva) all known to be aberrant proteins in cellular signalling pathways. In other words, hit HSP90 with a decent drug, and you may shut down a number of pathways at once.

People have been working on HSP90 as a cancer target for a long time, ever since it was realised by NCI researchers in the mid-1990s that Geldanamycin, a 1970s-era anti-tumour antiobiotic like doxorubin, worked by inhibiting this particular Heat Shock Protein (click here for the relevant paper). The trouble with the original drug is that there’s a quinine moiety in there which makes it virtually insoluble, not to mention highly reactive. Enter the biotech companies with rationally designed drugs that stood on the giant shoulders of the taxpayer funded work related to Geldanamycin and HSP90 and were able to attract the lucrative attention of Big Pharma. HSP90 hit the biopharma big time in 2006 when Biogen Idec agreed to pay US$150m plus US$100m in milestones to buy the San Diego biotech Conforma Therapeutics, then in Phase I with an HSP90 programme. Two years later another California biotech, called Kosan Biosciences, having made it to Phase III in multiple myeloma with a Geldanamycin analogue called Tanespimycin, was acquired by Bristol-Myers Squibb for US$190m, in a bid that was triple what the stock had been trading at immediately before its announcement. Biogen and BMS have since dropped out of the HSP90 race, but Novartis is still in it, with a drug sourced from the British drug developer Vernalis (LSE: VER) called AUY922 on which the two companies have been working for about ten years. Novartis reckons AUY922, now in Phase II, is a potential blockbuster. Which points to good things potentially emerging from Synta’s Ganetespib, that drug having moved last year into Phase III. Synta calculates that its HSP90 inhibitor is 10 to 100 times more potent that Tanespimycin, depending on what cancer cell or animal model you’re testing it in.

At Phase II the numbers are looking good for Ganetespib. In 2011 Synta started GALAXY-1, a 300-patient randomised IIb/III study of Ganetespib plus docetaxel versus docetaxel alone in advanced NSCLC, where the treatment was second line. Interim results from GALAXY-1 released in September 2012 showed that for NSCLC patients with adenocarcinoma histology the objective response rate jumped from 8% to 16% over the controls while the Progression-Free Survival rose from 2.8 months to 4.2 months. Evidence from GALAXY-1 as to the type of patients which best responded was used to design the 500-patient confirmatory Phase III GALAXY-2 trial, which treated its first patient in April of this year. GALAXY-2 is recruiting adenocarcinoma NSCLC patients with a diagnosis of advanced disease more than six months prior to study entry, since these patients did best  in GALAXY-1. In June 2013 at ASCO, the annual meeting of the American Society of Clinical Oncology in Chicago, Synta was able to show overall survival for those patients of 10.7 months versus 6.4 months for docetaxel only. The hazard ratio from this comparison, at only 0.61, had a miniscule p value of p=0.009. That was highly encouraging because the hazard ratio represented the odds that patients in the the experimental treatment arm would die as against the control arm. The lower Ganetespib went below 1, the better.

The critics will argue that Synta doth protest too much and has sliced its patient population too thinly in order to get a marketable drug. After the ASCO data came out Synta stock was marked down heavily because for all the adenocarcinoma patients in the trial (not just those diagnosed more than six months prior to recruitment into GALAXY-1) the overall survival advantage was only 2.4 months. The hazard ratio here was 0.82 which wasn’t statistically significant (p=0.082). So what? Thin-slicing of patient populations works in this instance because there’s an awful lot of lung cancer patients out there - ~230,000 new diagnoses in the US alone in 2012 – and this is, after all, an era of increasingly personalised medicine. Throw in the apparent utility of HSP90 inhibitors across a range of cancers – Ganetespib is in multiple Phase I and II trials – and Synta may just have a highly commercial drug on its hands, for which interim and final analyses of the GALAXY-2 trial will read out next year. At this stage the market is giving the company the benefit of the doubt with a current market capitalisation of US$407m. So it’s fair to say that holders of Synta still think that they are standing on the shoulders of giants.

Who benefits Down Under when Synta potentially moves forward? It's interesting to note that Synta is in preclinical development with STA-9584, a vascular disrupting agent for prostate cancer. Bionomics (ASX: BNO) expects to read out Phase II data soon with its vascular disrupting agent, BNC-105. Could be worth climbing up on the gigantic shoulders where Bionomics is perched and doing some homework.

Stuart Roberts, Australian Life Sciences consultant, with global focus
Nisi Dominus Frustra

+61 (0)447 247 909

sroberts2164@gmail.com

Twitter @Biotech_buzz

About Stuart Roberts. I started as an analyst at the Sydney-based stockbroking firm Southern Cross Equities in April 2001, focused on the Life Sciences sector from February 2002. Southern Cross Equities was acquired by Bell Financial Group in 2008 and I continued at Bell Potter Securities until June 2013. Over the twelve years to 2013 I built a reputation as one of Australia's leading biotech analysts. I am currently consulting to the Australian biotech industry. Before joining Southern Cross Equities I wrote for The Intelligent Investor, probably the most readable investment publication in Australia. I have a Masters Degree in Finance from Finsia. My hobbies are jazz, cinema, US politics and reading patent applications filed by biotechnology and medical device companies.

Previous Australian Biotechnology Buzz posts:
ImmunoCellular Therapeutics (NYSE MKT: IMUC), 27 August 013
Immunomedics (Nasdaq: IMMU), 21 August 2013
Inovio Pharmaceuticals (NYSE MKT: INO), 24 August 2013
Merrimack Pharmcaceuticals (Nasdaq: MACK), 26 August 2013
Oncolytics Biotech (Nasdaq: ONCY),  22 August 2013
Regulus Therapeutics (Nasdaq: RGLS), 23 August 2013
Sunshine Heart (Nasdaq: SSH), 28 August 2013
Synta Pharmaceuticals (Nasdaq: SNTA), 1 September 2013.

Disclaimer. This is commentary, not investment research. If you buy the stock of any biotech company in Australia, the US or wherever you need to do your own homework, and I mean, do your own homework. I'm not responsible if you lose money.