Going Back to the Well in a Sector That’s Working
After years of underperformance, biotech is finally catching a nice bid. Here’s my strategy on a name showing promise.
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Large tech stocks just had one of their worst weeks since the tariff tantrum back in early April 2025. And that was with Micron Technology (MU) posting blowout quarterly results and raising guidance. Late this past week, rumors grew that OpenAI may push back its much anticipated IPO to 2027.
There was a lot of sector rotation in equities last week with large healthcare names such as AbbVie (ABBV) being one beneficiary of that trend. Biotech also benefited from this rotation with the State Street SPDR S&P Biotech ETF (XBI) rising more than 7% over the five trading days. After years of vastly underperforming the market, biotech is finally catching a nice bid here as the first half of 2026 comes to a close.
I am going back to the well for my latest covered call trade idea. Syndax Pharmaceuticals (SNDX) has been on a nice upward trend over the past couple of weeks and feels like it has more upside ahead of it. Syndax sports an approximate market capitalization of $1.9 billion, with the stock currently trading around $21. The liquidity with the options is a bit less than I usually target, but the option premiums are more than lucrative enough to make up for that factor.
New York City-headquartered Syndax has two FDA approved products on the market. Those are a leukemia medicine known by its brand name Revuforj, and a treatment for chronic graft-versus-host disease (cGvHD) called Niktimvo. The company is pursuing label-expansion opportunities with both therapies within their pipeline. Revuforj was out-licensed from AbbVie.
Revuforj is the bigger contributor to overall sales of these two products. It is an oral, first-in-class menin inhibitor that was green lit by the FDA late in 2024 for the treatment of relapsed/refractory (R/R) acute leukemia with a lysine methyltransferase 2A gene (KMT2A) translocation. In late 2025, the FDA approved an additional indication. Revuforj saw 2025 revenues of just under $125 million.
Syndax is evaluating Revuforj as part of a combination therapy in both intensive chemotherapy eligible and ineligible populations, which would greatly expand its potential market. Two of these efforts are currently in pivotal trials.
Niktimvo is an IV-infused colony stimulating factor-1 receptor (CSR-1R) antibody that was approved by the FDA late in 2024 for the treatment of cGvHD in patients who have failed at least two prior lines of systemic therapy. Syndax has partnered with Incyte Corp. (INCY) to develop and commercialize Niktimvo.
Incyte is pursuing development of Niktimvo as part of a combination therapy to treat other indications of cGVHD that could boost Niktimvo’s total addressable domestic market to $5 billion. Potential commercialization for these indications is years away and Niktimvo competes against other offerings from the likes of Sanofi (SNY). Top-line results from a mid-stage combination therapy study are scheduled to be disclosed in the second half of this year. Niktimvo contributed nearly $16 million to overall sales for Syndax in Q1.
The company has funding in place to reach profitability, which is projected in 2028 when the Wall Street analyst consensus has Syndax making $0.84 per share. The analyst community sees EPS of over $4 in 2031. Syndax is well covered by Wall Street, which is unanimously bullish on the company’s prospects. The median analyst firm’s price target on SNDX is currently in the mid-$30s.
Option Strategy
Here is how one can establish a position in SNDX using a covered call strategy. As a reminder, covered call orders involve buying an equity and simultaneously selling just out of the money call strikes against the new position.
Selecting the January $20 call strikes, fashion a covered call order with a net debit in the $16 to $17.00 a share range (net stock price – option premium).
This strategy delivers downside protection of roughly 22% across the trade expiration. The strategy also provides upside potential of 21% over the option duration even if the stock trades down 6% over the option duration.
At the time of publication, Jensen was long ABBV, SNDX and XBI.
