Synta Pharmaceuticals Corp. (NASDAQ:SNTA) has been rising on the news of a merger agreement, with Madrigal. As per the agreement, Madrigal would be taking over the affairs of the company and would also own 64% of SNTA shares outstanding. The effects of the news were immediately visible of the stock, but the most notable change came from Billionaire Bruce Kovner, who bought a total of 60,000 shares of SNTA. He disclosed the purchase in a 13-D filed with the SEC.
It is ironic, however, that the CEO of Synta Pharmaceuticals, Paul Friedman, decided to put his money on Madrigal. The CEO infused a total of $9 million in Madrigal, along with a consortium of investors. Regardless of where the better returns would lie, the merged company is expected to have a value of $150 million. It should be noted here that SNTA has just drugs in its portfolio, both of which are in their early stages of clinical trials.
It is being stated that the merger of the two companies was actually fueled by an actual marriage of Paul, with Rebecca Taub, the founder and CEO of Madrigal Pharmaceuticals. Even though the rumors could have been dismissed as irrelevant, but the fact that the two companies operate in completely different areas of the pharmaceuticals industry adds weight to these rumors. Synta is involved in the development of drugs, for the treatment of cancer and has suffered several setbacks, with potential cancer drugs. On the other hand, Madrigal Pharmaceuticals works on the development of drugs for liver disease.
The hopes of SNTA ever generating revenue, recently fell to a new law, after one of its cancer drugs suffered failure in a late-stage clinical trial. Friedman had earlier stated in an interview that the board of directors was looking at options for generating revenue. Moreover, the name of Madrigal had been advised by the company’s advisory bank as well as the CEO himself.
Synta Pharmaceuticals Corp. (NASDAQ:SNTA) lost 9.23% of its share value, during the April 18 trading session, to reach a close at $0.347.