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The Associated Press January 5, 2012, 4:13PM ET

Synta rises as analyst weighs cancer drug

Shares of Synta Pharmaceuticals Corp. rose Thursday after a Rodman & Renshaw analyst praised the company's experimental cancer drug ganetespib.

THE SPARK: Analyst Michael King started coverage of Synta shares with rating of "Market Outperform" and a price target of $8 per share. He said ganetespib is one of the few remaining drugs in its class, and Synta stock should trade significantly higher if it succeeds in mid- and late-stage clinical trials.

"If successfully developed, ganetespib could be an anticancer agent with broad applicability and Synta would be deeply undervalued today," King wrote.

THE BIG PICTURE: Ganetespib is designed to inhibit a protein called heat shock protein 90. Heat shock proteins usually protect healthy cells from environmental stress. However in some cases the proteins instead help to protect cancer cells, allowing them to grow and divide very rapidly. King said many heat shock protein drugs have been abandoned because of negative trial results. But he said ganetespib is an exception.

Synta is a development-stage company with no products on the market. It is studying ganetespib as a treatment for a variety of cancers, including tumors of the lung, colon, pancreas, breast, prostate, and eyes. The most advanced trial, called Galaxy, will study the drug in combination with the cancer drug docetaxel as a treatment for advanced non-small cell lung cancer.

SHARE ACTION: Shares of the Lexington, Mass., company gained 31 cents, or 6.4 percent, to close at $5.14. The stock has risen 19.3 percent since Dec. 8, when the company reported positive data from a study of ganetespib as a treatment for breast cancer.

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