What: Amid an industrywide sell-off, shares in the biotech company Synta Pharmaceuticals (NASDAQ:SNTA) toppled by 9.67% today after the company announced a new CEO.
So What: Synta Pharmaceuticals is working on oncology drugs, and its most advanced candidate is ganetespib, a heat shock protein 90 inhibitor being studied in phase 3 trials as a treatment for non-small cell lung cancer.
Today, Synta Pharmaceuticals announced that the company is appointing current Executive Vice President and Chief Operating Officer Chen Schor to the position of President & CEO, replacing Anne Whitaker, who is leaving to take a position at another company.
Now What: After holding the position of President of North American operations for Sanofi, Whitaker took on the CEO role at Synta last fall. Under her tenure, a new strategy to transform Synta into a company more focused on oncology programs was announced in February. Whitaker's leadership experience and the company's transformation was a big reason behind Synta's successful secondary offering, which was completed in April.
While money raised from that secondary will help pay for pricey cancer trials, such as those that are evaluating ganetespib, investors are right to be a bit cautious.
Interim results from ganetespib's phase 3 trials are expected in the second half of this year, and final results are expected next year. If those trial results are positive, then the company estimates it will file for FDA approval in 2016. If they're negative, then it would be a big blow for the company.
Overall, the short tenure of Whitaker and Chen, who just joined Synta in December, and the fact that ganetespib trial results could prove to be a binary event that leads to a massive share price pop or drop, makes this one too risky for me to consider buying it on this dip.
Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned.The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.