What happened

Shares of Syndax Pharmaceuticals (NASDAQ:SNDX), a clinical-stage biotech focused on cancer, rose 27% as of 3:10 p.m. EDT Wednesday. While the exact cause of the jump isn't clear, at least part of today's bullish move is attributable to comments from analysts at Morgan Stanley.

So what

A group of analysts at Morgan Stanley published a research note on Syndax Pharmaceuticals today. Interestingly enough, the analysts reduced their price target on the company's stock from $25 to $24. However, the firm maintained its overweight rating on the stock.

A man in a suit giving a thumbs-up

Image source: Getty Images.

Normally, you'd reasonably expect that a price-target reduction on a small-cap stock like Syndax would result in a big stock market plunge. However, that's not happening today, because the $24 price target is still significantly higher than yesterday's closing price of $10.58. 

Now what

2018 should be an exciting year for shareholders of Syndax. The company is gearing up to report data from its all-important phase 3 E2112 trial within the next six months. The clinical study is testing the company's lead compound, entinostat, in combination with Pfizer's Aromasin as a possible treatment for breast cancer. If all goes well, entinostat could be submitted for evaluation by the Food and Drug Administration before the end of the year.

If that weren't exciting enough, the company also expects to report data from its Encore 601 study -- a phase 1 trial studying entinostat and Merck's blockbuster drug Keytruda in non-small-cell lung cancer -- in the second quarter. If the data looks good, the company will kick off a phase 2 study soon after.

While it's hard to gauge whether or not entinostat is the real deal at this point, it's worth noting that the drug has already received breakthrough therapy designation by the FDA. That's certainly an encouraging sign. What's more, the market for cancer drugs is enormous, so if entinostat ultimately wins the green light, there could be a lot of upside for investors who get in at today's market cap of just $334 million.

However, since I've seen many promising drugs flame out once they reach phase 3 trials, my personal plan is to watch this story unfold from the sidelines.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.