Synta Pharmaceuticals (SNTA) Stock: Gains Big On Merger Completion


Synta Pharmaceuticals Corp. (NASDAQ: SNTA)

Synta Pharmaceuticals closed out the week last week on an incredibly strong note, and for good reason. The company announced that it has completed the merger with Madrigal Pharmaceuticals. Today, we’ll talk about the details of the merger. On top of the merger, earnings data was offered. Today, we’ll talk about the earnings data, the completion of the merger, and what we can expect to see from SNTA moving forward. So, let’s get right to it…

SNTA Produces Strong Quarterly Results

As mentioned above, Synta Pharmaceuticals announced earnings for the second quarter late last week, helping to prop the value of the stock up. First and foremost, SNTA is in the research and development phase, with no approved products. As a result, the company doesn’t produce any revenue. Nonetheless, the loss reported for the second quarter proved to be overwhelmingly positive. During the quarter, the company announced that it lost $0.02 per share. This is a massive improvement from the $0.15 lost per share in the same quarter one year ago.

The key driver for SNTA for the second quarter was research and development expenses. In the quarter, these expenses decreased by $16.5 million. However, administrative costs are up. Losses in this area are up 14.9% at $3.6 million for the quarter. Nonetheless, the report was overwhelmingly positive.

Madrigal Merger Is Now Complete

Another story that helped to push the value of Synta Pharmaceuticals upward late last week was the fact that it was announced that a key merger was completed. Madrigal Pharmaceuticals and Synta Pharmaceuticals are now the same company. Due to the merger, the combined compnay has $40 million in cash that is available for research and development efforts.

Under the terms of the agreement, investors in Madrigal common stock were given 0.1593 shares of Synta common stock in exchange for each share they owned in Madrigal. Following the merger, there are currently about 11.3 million shares of the combined company on the market today.

Also, Synta will no longer go by this name. Instead, under the terms of the merger agreement, the company name will be changed to Madrigal Pharmaceuticals, Inc. As a result, the stock will begin trading under the symbol MDGL on the NASDAQ Global Market tomorrow, July 25th, 2016. In a statement, Paul Friedman, M.D., President and CEO at MDGL had the following to offer…

The completion of this merger with Synta, and the emergence of the new Madrigal as a public company, are significant milestones for the combined company and its shareholders. We believe MGL-3196 provides a compelling opportunitiy for value creation from our product development programs in NASH and genetic lipid disorders, including familial hypercholesterolemia. The company is well capitalized and plans to initiate Phase 2 clincial trials in these indications in the next few months.

What We Can Expect To See Moving Forward

Moving forward, I have a relatively bullish opinion of what we can expect to see from SNTA, or as of tomorrow MDGL. Following the completion of the recently announced merger, the company has plenty of cash on hand to move further in the development process, and with promising treatments currently being studied, things are looking up for the long run.

What Do You Think?

Where do you think the new MDGL is headed moving forward? Join the discussion at TalkTRENDZ from CNA Finance!

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