The drug, ganetespib, was shown in a mid-stage trial to improve survival in patients with advanced lung cancer that worsened after initial treatment, but the results led some investors to reassess the outlook.
BMO analyst Jim Birchenough said that while the risk of death and disease progression appears positive for ganetespib, the difference in patient deaths is relatively small. "We would advise careful attention to detail on statistical design and powering of the phase 3 trial before considering incremental investment," he said in a research note.
Ganetespib is part of an experimental class known as heat shock protein 90 inhibitors, which are designed to block a pathway used by many different cancer-fueling proteins.
The Phase 2 study compared treatment with a combination of ganetespib and chemotherapy to chemotherapy alone. Patients on the drug lived for a median of 9.8 months, compared with 7.4 months for patients given just chemotherapy.
But the most significant results were seen only in patients whose cancer was diagnosed six months or more before the start of the study. For that group, overall survival improved to 10.7 months compared with 6.4 months - a gain of 67 percent.
That six-month cutoff is "a surrogate for rapidity of disease course," said Dr Suresh Ramalingam, professor of medical oncology at the Winship Cancer Institute at Emory University in Atlanta, and the study's lead author.
A larger, pivotal trial of ganetespib will exclude patients who did not respond well to initial therapy.
Side effects associated with the drug included low white blood cell levels, fatigue and diarrhea.
The trial, presented at a meeting of the American Society of Clinical Oncology in Chicago, involved 252 patients with late-stage lung adenocarcinoma, the most common type of lung cancer. It accounts for about 45 percent of the 170,000 non-small cell lung cancer cases diagnosed in the United States each year.
Synta shares were down 31.6 percent at $5.05 on the Nasdaq on Monday morning.
(Reporting by Deena Beasley; editing by Mohammad Zargham and Matthew Lewis)