Synta Pharmaceuticals Corp. (SNTA): A Promising Biotech Stock for 2013

To truly understand the potential of Synta’s drug, let’s take a look at the current revenues that Alimta and Taxotere are generating.

Alimta, developed by Eli Lilly & Co. (NYSE:LLY), is expected to generate revenue of $3.5 billion by 2016.  However, once 2016 comes along, the drug’s basic patent will lapse.  And typically, branded drugs lose more than 80% of their sales within a year after patent lapse.  So while that patent lapse will create an opportunity for Synta shareholders, Eli Lilly & Co. (NYSE:LLY) will be hurting on the bottom line as there should be a roughly $2.5 billion+ drop in revenue.

Taxotere, developed by Sanofi SA (ADR) (NYSE:SNY)-Aventis, generated $3.1 billion in revenue in 2010.  That was the final year before the company’s patent expired.  In 2012, Taxotere generated sales of 563 million Euros, or $737 million.  Investors can clearly see the potential of a new drug that has patent protection (like Synta could have) compared to a drug that has a patent lapse.

Despite the risks, I maintain that Synta Pharmaceuticals Corp. (NASDAQ:SNTA) is setting up its investors for a promising future.  If the company can continue to show positive GALAXY trial results, Synta’s market capitalization could see a tremendous increase given the market size for lung cancer.

The article Synta Pharmaceuticals: A Promising Biotech Stock for 2013 originally appeared on Fool.com and is written by Ted Mayer.

Ted Mayer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Ted is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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