The USA’s Synta Pharmaceuticals Corp says it has to cut 42% of its workforce following the suspension earlier this month of a Phase III trial of elesclomol, the skin cancer drug that is partnered with GlaxoSmithKline.

About a fortnight ago, Synta announced it has stopped the Phase III Symmetry trial comparing elesclomol in combination with paclitaxel to paclitaxel alone in chemo-naive patients with stage IV metastatic melanoma. The decision was taken after an independent data monitoring committee identified safety concerns, notably a greater number of deaths in patients on the elesclomol/paclitaxel arm.

This news has prompted Synta to reduce its workforce by 90 posts to 130, allowing the company to operate with current cash reserves for two more years without the need for additional equity financing. The cuts have been made across the organisation “while maintaining strength in core capabilities of discovery and development”, Synta said.

Chief executive Safi Bahcall said that “these decisions are never easy” but “we needed to act now to ensure that Synta has the resources, independent of external financial conditions, to continue to advance our most promising pipeline compounds”. He added that these programmes “have generated substantial interest” among “potential pharmaceutical industry partners”.

These promising research programmes include STA 9090: a novel, synthetic Hsp90 inhibitor that is currently enrolling patients in two Phase 1 trials in solid tumours, and apilimod, an oral IL-12/IL-23 inhibitor which is in Phase IIa for rheumatoid arthritis.

However it is the status of elesclomol that is causing most concern. Synta has already received $130 million from GSK and an additional $880 million in potential future milestones are achievable “should the programme continue”. Dr Bahcall said the firm and GSK are “awaiting the results of additional analysis to determine the future direction for this compound”.

Simos Simeonidis, an analyst at Rodman & Renshaw, fears the worst. He said “we believe it is highly unlikely that we will see further development on elescomol in melanoma, or in other solid tumours, given the excess deaths observed in the Phase III trial”.

Dr Simeonidis added that “we do not believe that another pharma or biotech company will invest in this program any further”, given that “we are dealing with a new and unproven mechanism of action”, plus the fact that elesclomol also failed in lung cancer and sarcoma trials in 2005. He concluded that Synta’s job reductions are “an anticipated and absolutely necessary first step, given that the company’s most valuable and tangible asset is their cash position, and it would make no sense to continue spending like a Phase III company”.