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Ebb & Flow

Profit-taking by investors after its IPO lock-up expired may have been behind last week's share price dip for cancer and autoimmune company Synta (SNTA), which shed $2.24 (20%) to $8.76 despite announcing a potentially blockbuster deal with GlaxoSmithKline (LSE:GSK; GSK).

The deal is to develop STA-4783, a small molecule heat shock protein 70 (Hsp70) agonist expected to begin a Phase III trial this quarter to treat metastatic melanoma. GSK will pay $80 million up front and up to $585 million in development and regulatory milestones.

SNTA could receive another $300 million in commercial milestones, and the pharma has retained an option to take a $45 million equity stake in SNTA.

The companies will co-develop and co-commercialize STA-4783 in the U.S., while GSK will be responsible elsewhere. SNTA will fund U.S. development for the melanoma indication, while the partners will share development costs for other cancer indications.

SNTA will receive a tiered profit share of 40-50% based on annual net sales in the U.S and is eligible for double-digit royalties elsewhere. The company said it expects to file an NDA for STA-4783 to treat metastatic melanoma in 1H09.

SNTA had a strong run prior to the announcement: its share price more than doubled to $11 by early October from a low of about $5 in late August.

Second batter up

Targanta (TARG) became the second U.S. biotech to price an IPO this month, helping to end a lull that began in early August.

The infectious disease company's offering came on the heels of an IPO by inhaled drug delivery company Map (MAPP) in the first week of October.

TARG sold 5.8 million shares at $10, rather than the hoped-for $12-$14, raising $57.5 million and valuing the company at $210 million. MAPP also priced below its range - going out at $12, rather than $14-$16.

TARG finished its first week of trading off $1.50 (15%) to $8.50, while MAPP gained 11% the Friday it started trading.

Next quarter, TARG expects to submit an NDA for oritavancin to treat complicated skin and skin structure infections (cSSSIs). The company acquired worldwide rights to the semi-synthetic glycopeptide antibiotic from InterMune (ITMN) in 2005. Oritavancin has completed two Phase III trials in cSSSIs.

On the road show, President and CEO Mark Leuchtenberger said he hoped for a YE08 PDUFA date, with a launch in 2009.

CFO George Eldridge said TARG had $50 million in cash at Sept. 30,

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