Synta Pharmaceuticals Corp. (NASDAQ: SNTA)
Synta Pharmaceuticals is having an incredible day in the market today, and for good reason. The company announced that it has entered into a mergers and acquisitions agreement. Today, we’ll talk about the merger, how the market reacted to the news, and what we can expect to see from SNTA moving forward. So, let’s get right to it…
SNTA Announces A Merger
As mentioned above Synta Pharmaceuticals is having a strong day in the market today after announcing a merger. It was announced today that SNTA and a privately-held pharmaceutical company known as Madrigal Pharmaceuticals will be merging. Under the agreement, Madrigal will merge with a wholly-owned subsidiary of Synta in an all-stock transaction. According to the announcement, the merger is designed to focus on the development of novel small-molecule treatments that address major unmet needs in cardiovascular-metabolic disease and non-alcoholic steatohepatitis.
According to the terms of the merger agreement Synta will be acquiring all outstanding shares of Madrigal. In exchange for the outstanding shares in the company, SNTA will be issuing about 253.9 million new shares of common stock. At the end of the day, when the acquisition is over, SNTA shareholders will own 36% of the combined company while Madrigal shareholders will own 64% of the combined company. In a statement, Keith R. Gollust, Chairman of SNTA had the following to say…
“Following an extensive review of strategic alternatives, Synta’s Board of Directors believes that a merger with Madrigal Pharmaceuticals offers shareholders the most compelling opportunity for enhancing long-term value… Madrigal’s lead compound, MGL-3196, is a selective THR-ß agonist with a unique lipid lowering profile that has been validated through early clinical and preclinical studies. The combined company will be well capitalized with a lead program that offers both a potentially substantial commercial opportunity in NASH, and an efficient clinical development plan with commercial potential in genetic lipid disorders.”
Following up on the statement above, Dr. Taub, Founder and CEO at Madrigal had the following to say…
“MGL-3196 is designed to specifically target thyroid hormone beta receptors in the liver involved in metabolism and cholesterol regulation, and avoid side effects associated with thyroid hormone receptor activation outside the liver… As a result, and because of MGL-3196’s observed high liver uptake and high ß-selectivity, it has a favorable safety profile and did not show adverse findings observed in chronic animal toxicology studies with a prior thyroid agonist. Madrigal has designed Phase 2 clinical programs to establish proof of concepts in both NASH and FH with data readouts for each program anticipated throughout 2017.”
How The Market Reacted To The News
As investors, one of the first things that we learn is that the news moves the market. Any time news is released that surrounds a publicly traded company, we can expect to see movement in the market as a result. Positive news leads to positive moves while negative news will lead to negative moves. We also know that nothing seems to cause excitement quite like mergers and acquisitions. So naturally, we’re seeing incredibly strong gains on SNTA today. Currently (12:17), the stock is trading at $0.38 per share after a gain of $0.14 per share or 55.85% thus far today.
What We Can Expect To See Moving Forward
Moving forward, I have an overwhelmingly bullish expectation of what we can expect to see from SNTA. The planned merger is overwhelmingly positive news as it will give SNTA much of the information and resources that it needs to continue ongoing work on its current candidates. Overall, this is an incredibly positive move for both sides of the agreement.
What Do You Think?
Where do you think SNTA is headed moving forward and why? Let us know your opinion in the comments below!