SNDX - Sizing Up Syndax Pharmaceuticals

2023-12-26 11:15:43 ET

Summary

• Syndax Pharmaceuticals, Inc. has experienced a roller coaster ride in the stock market, but is currently up 80% from its lows in October.
• The company has two candidates in development that are poised to garner FDA approval in 2024 and also just filled its coffers with a capital raise.
• Will the share price gains continue?  An analysis follows in the paragraphs below.

Truth is born into this world only with pangs and tribulations, and every fresh truth is received unwillingly .”? Alfred Russel Wallace.

Today, we put Syndax Pharmaceuticals, Inc. ( SNDX ) in the spotlight. The stock has given shareholders a bit of a roller coaster ride over the last year and is up some 80% from its lows in late October. Can the rally in this oncology focused biopharma firm continue? An analysis follows below.

Company Overview:

This clinical stage biopharmaceutical concern is focused on developing therapies for the treatment of cancer. Syndax is headquartered just outside of Boston in Waltham, MA. The stock trades around $21.00 a share and sports an approximate market capitalization of $1.7 billion.

Historically, Syndax's developmental approach has been to in-license technology, keeping front-end development costs down at the expense of revenue sharing on successful collaborations.

Recent Developments:

Earlier this month, the company posted encouraging Phase 1 trial data evaluating revumenib in the treatment of acute leukemias. Revumenib is a potent, selective, small molecule inhibitor of the menin-KMT2A binding interaction. In early October, the firm disclosed Phase 1/2 data from a study called AUGMENT - 101 met the primary endpoint in patients with acute myeloid leukemia ((AML)) and acute lymphoid leukemia ((ALL)). The overall response rate was 63%, and the CR/CRh rate reached 24.5% in patients with KMT2Ar AML. Syndax is in the process of submitting an NDA around revumenib to be approved to treat KMT2Ar acute leukemia and that submission should be completed soon. This type of ALL is caused by the rearrangement of the KMT2A gene and affects approximately 10% of ALL patients. Revumenib has Fast Track status for this indication, it should be noted. The candidate also has Breakthrough Therapy Designation treat relapsed or refractory acute leukemia.

The company has three primary compounds within its pipeline: Revumenib, axatilimab and entinostat. The first two have reached late-stage development and Syndax is aiming to garner their first approvals for each compound sometime in 2024. Two months ago, Bank of America initiated SNDX as a new buy with a $29 price target on the belief that " Revumenib as having 'first mover advantage' in the treatment of certain leukemias ." and that it saw " compelling upside for shares at current levels ." The stock has moved some 75% higher since that analyst call, it should be noted.

The company's other late-stage candidate is axatilimab, which is partnering in developing with Incyte ( INCY ). This candidate is an investigational monoclonal antibody that targets colony stimulating factor-1 receptor, or CSF-1R. It is delivered via IV infusion.

In July, the companies announced positive results from an approximate 240 patient study call AGAVE - 201 evaluating axatilimab to treat chronic graft-versus-host disease or GVHD for patients that already had received two or more lines of therapy for this indication. The study met it primary endpoint and a marketing application should be filed with the FDA shortly. If all goes according to schedule, axatilimab should be approved late in 2024. GVHD develops in approximately half of transplant patients and affects just under 15,000 individuals in the U.S. on an annual basis.

Finally, Entinostat is a selective, oral, once-weekly, class I HDAC inhibitor which has seen early work done as potential treatment of solid tumors. Currently, Syndax is deprioritizing development of this compound until it can find a suitable developmental partner.

Analyst Commentary & Balance Sheet:

Since the company posted third quarter results on November 2nd, 11 analyst firms including JP Morgan, Goldman Sachs and BTIG have reissued/assigned Buy/Outperform ratings on the stock. Price targets proffered range from $28 to $45 a share.

Approximately 12% of the outstanding float in the shares are currently held short. One insider has sold approximately $3.7 million worth of equity so far in the second half of 2023. Syndax Pharmaceuticals ended the third quarter with just under $380 million worth of cash and marketable securities on the balance sheet after posting a net loss for the third quarter of $51.1 million. The company subsequentially raised approximately $200 million via a secondary offering in mid-December.

Verdict:

There is a lot to like about the longer-term prospects of Syndax Pharmaceuticals. The company has several compounds in development and has the potential of two FDA approvals in 2024. It is partnered with Incyte on these compounds and enjoys solid analyst support. Syndax also addressed near and medium-term funding needs with a $200 million capital raise.

That said, the stock has soared some 75% since the market bottom in late October which coincided with the bullish call on the stock from Bank of America. I think both Syndax Pharmaceuticals, Inc. stock and the overall market are overdue for some profit taking in the weeks ahead. Therefore, I plan to wait to see if the shares pull back in the mid-teens before taking a small position in SNDX in anticipation of FDA approvals in the coming year.

Truth is ever feeble against passionate falsehood .”? Bernard Cornwell.

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