Ahead of the Bell: Synta Pharma shares sink

Shares of Synta Pharmaceuticals plunged 26 percent in premarket trading a day after the drug developer announced initial results of a study comparing its cancer treatment ganetespib with the standard of care for treating an advanced form of lung cancer.

The Lexington, Mass., company paired ganetespib and the standard of care, docetaxel, and compared results from patients taking that with those who just took docetaxel as a second treatment for advanced, non-small cell lung cancer in a mid-to-late-stage study.

Two key subgroups of patients taking that combination showed an improvement in progression-free survival over those taking only docetaxel, Jefferies & Co. analyst Thomas Wei said. Progression-free survival measures the time from the start of treatment until a patient's cancer begins advancing again or the patient dies.

He said the trial also did not show serious safety side effects.

The price of Synta shares dropped Thursday morning, and Wei attributed that largely to a lack of reported statistics from the company and small sample sizes in the subgroups. He wrote that more analysis is needed to validate the initial findings, but the analyst also said the results were encouraging and the market reaction appeared "overdone."

"We are highly encouraged by this new data and would buy on weakness," Wei wrote.

Shares of Synta Pharmaceuticals Corp. dropped $1.88 to $5.37 before markets opened.