LONDON - Drug maker GlaxoSmithKline PLC and Synta Pharmaceuticals Corp. said Wednesday they are collaborating on the development of a new skin cancer drug in a deal that could be worth around $1 billion for the U.S.-based biotechnology company.
Synta will fund all development of STA-4783, which is aimed at treating metastatic melanoma, the most deadly form of skin cancer. The companies will share costs for the development of the drug and will jointly sell it in the United States, with Synta receiving a share of the profits.
The makers of the drug say it works by overloading cancerous cells with oxygen, pushing them to self-destruct. Non-cancerous cells have a much higher tolerance for oxygen, and so are unaffected.
There are very few drugs available for people with advanced skin cancer, which kills 70 per cent of patients within one year.
Synta will receive an initial payment of $80 million and will be eligible for staged payments of up to $135 million for the metastatic melanoma treatment and up to $450 million for the drug's other applications.
The company is also eligible for $300 million in staged payments, depending on sales. Glaxo could also buy up to $45 million in Synta's common stock.
Glaxo, which announced earlier this week that its head of European pharmaceuticals Andrew Witty would succeed Chief Executive Jean-Pierre Garnier next year, has a healthy pipeline of promising new products, but its share price remains deflated after a tough year that saw a challenge to a key drug and as a number of U.S. patents near expiration.
Shares of Lexington, Massachusetts-based Synta fell 75 cents to $9.50 in midday trading, while Glaxo edged down 0.4 per cent to 1,310 pence ($26.64) on the London Stock Exchange.
