HCW starts Syndax Pharma at buy; PT $30

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H.C. Wainwright initiated coverage of Syndax Pharmaceuticals (NASDAQ:SNDX) with a “buy” rating and a $30 price target. The stock closed at $7.10 on July 11.

Analyst Edward White writes that Syndax’s lead candidate, entinostat, is an oral, small molecule Class 1 selective histone deacetylase inhibitor that has direct effects on both cancer cells and immuno-suppressive cells, potentially enhancing the body’s immune response to tumors. 

Following positive Phase 2 data, Syndax received breakthrough designation from the FDA for entinostat in the treatment of hormone receptor positive, human epidermal growth factor receptor two-negative breast cancer used in combination with exemestane. 

Mr. White said Syndax’s stock price was hit in May when ASCO abstracts were released and Syndax reported updated data from a Phase 1b/2 trial of entinostat and Keytruda in melanoma, non-small cell lung cancer (NSCLC) and microsatellite stable colorectal cancer (MSS CRC). Data in the NSCLC and melanoma cohorts were below expectations. Data in the MSS CRC cohort were from 16 patients and only one patient responded. 

However, he said the NSCLC data in a subset of patients allowed the company to identify a potential registration pathway for entinostat plus Keytruda in NSCLC patients that progressed on a PD-1 or PD-L1 inhibitor and the company plans to start the next trial of the combination in the second half of 2018. 

“We believe investors have overreacted to the data, and we think the stock represents a compelling investment,” Mr White said. In addition, “we do not believe the company is being given enough credit for its Phase 3 trial in breast cancer that could have progression free survival data in the third quarter of 2018.”

Stephen Kilmer