Synta Pharmaceuticals Corp.'s second attempt at an initial public offering fell short of expectations, though the company was able to pull in proceeds of $50 million to support ongoing clinical development of its lead compounds in cancer and inflammatory disease.

The Lexington, Mass.-based firm priced 5 million shares at $10 each, well below the $14 to $16 range set last month. Net proceeds are expected to total about $44.7 million, or $51.7 million if underwriters exercise their 750,000-share overallotment option in full.

Synta had hoped to raise $115 million when it first filed for an IPO in early 2005. Citing unfavorable market conditions, the firm yanked the filing a few months later, only to try again in November 2006. (See BioWorld Today, Jan., 20, 2005, and Nov. 27, 2006.)

The company's shares received a cool reception from Wall Street on the first day of trading Tuesday. Synta's stock (NASDAQ:SNTA) slipped 91 cents to close at $9.09.

According to its prospectus, nearly half the money raised in the offering is earmarked for continued development of STA-4783, Synta's lead cancer drug that's set to start Phase III trials this year in metastatic melanoma. An injectable small molecule, STA-4783 is designed to work by inducing an oxidative stress response in cancer cells, making them more susceptible to apoptosis.

Synta previously completed an 81-patient Phase IIb trial, which showed that patients treated with STA-4783 plus paclitaxel increased their median progression-free survival by 3.68 months compared to 1.84 months for patients given paclitaxel alone. And 35 percent of patients in the STA-4783 plus paclitaxel group were free of tumor progression at six months vs. 15 percent in the paclitaxel only arm. The upcoming Phase III trial also is expected to evaluate the fast-track drug in combination with paclitaxel.

The company allotted between $10 million and $12 million for its research work and preclinical pipeline, leading with STA-9090, a small-molecule heat-shock protein 90 (Hsp90) inhibitor for cancer. Synta anticipates filing an investigational new drug application for that compound in the first half of this year.

Beyond that, the company has STA-9584, a preclinical-stage small molecule that has shown antitumor activity, and an inflammatory disease program involving small-molecule inhibitors of calcium release-activated calcium (CRAC) ion channels. In early research, CRAC ion channel inhibitors demonstrated an ability to selectively inhibit immune cells' production of pro-inflammatory cytokines in arthritis models.

About $2 million to $3 million is expected to support ongoing work with its anti-inflammatory drug, apilimod, an oral small-molecule inhibitor of IL-12, and IL-23. That product is in Phase IIa trials in rheumatoid arthritis and common variable immunodeficiency, and Synta expects results from both those studies later this year.

Remaining funds from the offering will be put toward general corporate purposes.

The company, which reported a net loss of $44.8 million for the first nine months of 2006, had a total net loss of $224 million since its March 2000 inception. As of Sept. 30, Synta had cash, cash equivalents and marketable securities totaling $58.7 million.

Prior to the offering, Synta's officers and directors owned more than 50 percent of the company's outstanding shares. Company directors Keith Gollust, Bruce Kovner and Robert Wilson, along with affiliated entities, offered to purchase up to 1 million shares of Synta's offering, which would give the officers and directors 49.3 percent ownership based on 33.8 million shares estimated to be outstanding after the offering.

Bear, Stearns & Co. Inc., Lazard Capital Markets and Lehman Brothers, all of New York, and Montgomery & Co. LLC, of Santa Monica, Calif., acted as underwriters for the offering.