On Wednesday, Scotiabank (TSX:BNS) adjusted its outlook on shares of Syndax Pharmaceuticals (NASDAQ:SNDX), reducing the price target to $18 from the previous $23, while maintaining a Sector Perform rating on the stock.
The revision follows concerns about the potential for Syndax's drug, revumenib, to secure final approval from the U.S. Food and Drug Administration (FDA) for the treatment of relapsed/refractory acute myeloid leukemia (AML) with NPM-1 mutations.
The analyst at Scotiabank expressed that the decision to lower the price target is based on the perceived increased risk associated with FDA approval. This is partly due to what is believed to be a less than satisfactory durability of response in clinical trials, which has seemingly not met the six-month benchmark considered clinically meaningful by clinicians and the regulatory agency.
Further complicating the drug's approval prospects, safety concerns have been raised. Notably, high grade QT interval prolongation, a type of cardiac rhythm abnormality, was observed at a higher rate than in previous studies. This safety issue could negatively influence the competitive landscape for revumenib, especially when compared to other menin inhibitors in development for AML.
Scotiabank's report also highlighted the potential competitive pressure from similar drugs being developed by other companies. Two such competitors mentioned were KURA's ziftomenib, which has received a Sector Perform rating, and BMEA's icovamenib, rated as Sector Outperform.
The adjustment in Syndax Pharmaceuticals' price target by Scotiabank reflects a cautious approach by the analyst due to the combination of efficacy concerns and heightened safety risks observed in the clinical development of revumenib. The company's journey toward FDA approval remains under close scrutiny as it navigates these challenges.
In other recent news, Syndax Pharmaceuticals has seen significant developments. H.C. Wainwright raised the price target for Syndax to $49.00, maintaining a Buy rating, following positive results from the company's AUGMENT-101 trial for revumenib, an acute myeloid leukemia (AML) treatment.
Conversely, Goldman Sachs (NYSE:GS) lowered its price target for Syndax from $33 to $31, also maintaining a Buy rating, due to concerns raised about QTc prolongations and differentiation syndrome in the same trial.
The company announced positive Phase 2 trial results for revumenib in treating relapsed or refractory mutant NPM1 AML. The trial met its primary endpoint with a 23% complete response rate among evaluable adults. Syndax plans to file a supplemental New Drug Application for revumenib in the first half of 2025, contingent on potential FDA approval for a different indication in acute leukemia patients with KMT2Ar mutations expected in the fourth quarter of 2024.
In financial developments, Syndax announced a substantial $350 million royalty agreement with Royalty Pharma for Niktimvo during its Q3 2024 earnings call. This agreement is expected to strengthen the company's financial position and aid in the commercialization of Niktimvo and revumenib.
Syndax reported $399.6 million in cash as of September 30, with Q3 operating expenses at $102.1 million. These are the latest developments in Syndax's aggressive clinical development and commercialization strategies.
InvestingPro Insights
Recent InvestingPro data adds context to Scotiabank's cautious stance on Syndax Pharmaceuticals. The company's market cap stands at $1.38 billion, but its financial metrics paint a challenging picture. With a negative gross profit of $48.19 million and an operating income of -$321.21 million in the last twelve months, Syndax is currently unprofitable, aligning with the InvestingPro Tip that analysts do not anticipate profitability this year.
The stock has taken a significant hit recently, with a 24.07% decline in the past week and a 15.26% drop over the last month. This performance reflects the market's reaction to the concerns raised about revumenib's approval prospects. Despite these short-term setbacks, InvestingPro Tips highlight that Syndax holds more cash than debt on its balance sheet, potentially providing some financial flexibility as it navigates the regulatory challenges ahead.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Syndax Pharmaceuticals, providing a deeper understanding of the company's financial health and market position.
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