Shares of Synta Pharmaceuticals Corp fell 21 percent on Monday after updated data from a mid-stage lung cancer trial showed that its drug had less clinical benefit than previously reported.
The drug, ganetespib, reduced the chance of death in patients by 25 percent, lower than the 39 percent the company announced in June from an earlier analysis. The company presented the latest data over the weekend.
"The magnitude of the survival benefit is getting smaller," Stifel Nicolaus analyst Brian Klein told Reuters. "The risk for the drug's success has gone up."
The mid-stage study, Galaxy-1, was intended to identify patients most likely to benefit from the use of the drug.
These patients have been enrolled in a late-stage study, testing ganetespib plus a chemotherapy drug, docetaxel, in those with advanced non-small cell lung cancer who had failed prior treatment.
Synta Chief Executive Safi Bahcall said on a conference call on Monday that the company would limit recruitment from two Eastern European countries for the late-stage study.
Analysts said data from those patients may have skewed the trial results as they were healthier than the target population.
The company is also considering increasing enrollment in the trial to 700 or 800 patients, from the 500 patients it planned, the CEO said on the call.
"The company has about $70 million in cash, and based on my estimates, they don't have sufficient resources to conclude the study. This is even before having to enroll additional patients," Stifel's Klein said.
Ganetespib is designed to inhibit a protein, which activates other proteins that play a role in the growth of cancer cells.
The drug is also being tested in three studies as a treatment for breast cancer.
Synta's shares were down 19 percent at $5.17 in afternoon trade on the Nasdaq.
(Reporting By Vrinda Manocha in Bangalore; Editing by Sriraj Kalluvila)