Syndax Shares Fall 8% in Classic 'Sell the News' FDA Approval
Investors take profits on the biotech's landmark leukemia drug approval, overshadowing the major regulatory win as focus shifts to commercial launch.
Syndax Pharmaceuticals Inc. (NASDAQ: SNDX) shares fell sharply on Friday in a classic “sell the news” reaction after the company secured its first-ever regulatory approval from the U.S. Food and Drug Administration. The stock dropped more than 8% in midday trading, despite the landmark accelerated approval for its targeted leukemia therapy, Revuforj (revumenib).
The drug was approved for adult and pediatric patients with relapsed or refractory acute myeloid leukemia (AML) who have a specific NPM1 mutation, a group with limited treatment options. While the approval marks a critical transition for Syndax from a clinical to a commercial-stage company, investors appeared to use the confirmation of the long-awaited news as an opportunity to take profits.
Shares of Syndax closed down 7.83% at $13.53 on Friday. The sell-off occurred after a significant run-up in the months leading to the decision, as expectations for a positive outcome grew.
The FDA’s decision, announced on its website, was based on the AUGMENT-101 trial, which showed a complete remission or complete remission with partial hematologic recovery rate of 23%. For patients achieving this, the median duration of response was 4.5 months. Revuforj is the first and only therapy approved by the FDA for this specific genetic subset of AML.
“This is a significant moment for patients with relapsed/refractory NPM1-mutated AML, who have been waiting for a targeted treatment for this aggressive disease,” said Michael A. Metzger, Chief Executive Officer of Syndax, in a company statement.
Despite the clinical milestone, the market's focus quickly shifted. The FDA's prescribing information includes a boxed warning for differentiation syndrome, a potentially life-threatening side effect associated with this class of drugs. Investor caution around the drug's safety profile and the challenges of a commercial launch may have contributed to the sell-off, as reported by Benzinga.
Wall Street analysts, however, remain broadly positive on the company's long-term prospects. Syndax holds a consensus “Moderate Buy” rating, with an average analyst price target of $37.69, suggesting a significant upside from its current trading level. The disparity highlights the difference between short-term market dynamics and the fundamental value analysts see in the company's new commercial asset.
The company is financially prepared for the launch, reporting over $518 million in cash and equivalents in its second-quarter results, which it expects will be sufficient to fund operations to profitability. This strong cash position will be crucial as Syndax builds out its sales and marketing infrastructure to support Revuforj's rollout.
Now, with approval secured, Syndax faces its next major test: executing a successful commercial launch. Investors will be closely watching early sales figures and physician uptake to gauge Revuforj's market potential and justify the high expectations that were built into the stock price ahead of the FDA's decision.