Syndax Pharmaceuticals, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Syndax is a clinical-stage biopharmaceutical company with no approved products and no product sales. Revenue consisted of license fees under its entinostat agreement with Kyowa Kirin (KKC).
Financial results and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $0.4 million | $0.4 million | $0.8 million | $0.8 million |
| Research and development expense | $16.9 million | $10.9 million | $38.7 million | $20.5 million |
| General and administrative expense | $5.8 million | $6.0 million | $11.5 million | $12.0 million |
| Net loss | $22.9 million | $17.1 million | $50.6 million | $32.3 million |
| Net loss per share, basic and diluted | $0.44 | $0.42 | $0.98 | $0.97 |
| Cash used in operating activities | Not presented quarterly | Not presented quarterly | $46.6 million | $37.3 million |
- Q2 R&D rose 54%; the company attributed the increase primarily to clinical and manufacturing activity, including menin and axatilimab programs. First-half R&D rose 89%, including a $2.0 million menin milestone expense.
- At June 30, cash and cash equivalents were $68.0 million and short-term investments were $185.1 million, totaling $253.1 million. This compares with $293.1 million at December 31, 2020. The company said existing resources were expected to fund its current operating plan for at least 12 months.
- Cash, cash equivalents and restricted cash declined $47.2 million in the first half. Financing provided $7.0 million, including $5.1 million net proceeds from the at-the-market (ATM) offering; investing used $7.5 million, largely reflecting purchases and maturities of short-term securities.
- Term-loan principal outstanding was $20.0 million, bearing interest at a minimum 9.85%. Interest-only payments run through October 1, 2021, followed by monthly principal and interest payments; maturity is September 1, 2023. The loan is secured by substantially all assets other than intellectual property.
- Accumulated deficit was $619.3 million. No product gross margin or product-level profitability is reported because there are no product sales.
Material changes and business developments
- Revenue was unchanged year over year; losses widened as development spending increased. First-half net loss rose 57% from 2020.
- For SNDX-5613, updated Phase 1 dose-escalation data reported in May showed 7 of 31 patients (23%) achieved CR/CRh. Syndax selected Phase 2 doses of 276 mg every 12 hours without a strong CYP3A4 inhibitor and 163 mg every 12 hours with one; Phase 2 dosing remained subject to FDA endorsement. Enrollment continued.
- Syndax announced plans for a frontline SNDX-5613 combination trial in AML and a Phase 1b combination trial, AUGMENT-102, expected to enroll up to 27 patients. The FDA granted SNDX-5613 Fast Track Designation in June for adult and pediatric patients with relapsed or refractory acute leukemias with MLL rearrangement or NPM1 mutation.
- Axatilimab Phase 1/2 expansion enrollment in chronic graft-versus-host disease (cGVHD) was complete. Updated results for 40 patients were expected in Q4 2021. Enrollment continued in pivotal Phase 2 AGAVE-201, with topline data expected in 2023. The FDA granted axatilimab Orphan Drug Designation for cGVHD and idiopathic pulmonary fibrosis.
- Entinostat development was deprioritized after the Phase 3 E2112 trial failed to meet its primary overall-survival endpoint. Remaining ECOG agreement payment obligations were approximately $3.2 million, estimated over about one year; $2.5 million was accrued at June 30.
Outlook, risks and contingencies
- No formal financial forecast was provided. Management anticipated continued significant R&D spending and losses, with expenses varying according to trial, manufacturing and development activity. Syndax may need additional capital sooner than expected and may seek equity, debt, collaborations or licensing arrangements; future financing could dilute shareholders or restrict operations.
- COVID-19 had not changed financial guidance or 2021 clinical data timelines to date, and Syndax reported adequate expected supplies of SNDX-5613 and axatilimab. However, it warned that the pandemic could affect trial enrollment, site activity, supply chains, timelines and access to capital.
- Clinical programs remain early-stage and subject to uncertain safety, efficacy, enrollment, regulatory approval and manufacturing outcomes. Interim trial results may change as more data are collected and verified.
- License agreements may trigger substantial future milestone and royalty obligations. Potential maximum development/regulatory milestones include $99.0 million to AbbVie for menin assets and $119.5 million to UCB for axatilimab; these are contingent, not current debt.
- The company reported no material legal proceedings, no off-balance-sheet arrangements, and effective disclosure controls as of June 30, 2021.
Most important facts for investors to verify
- Whether subsequent SNDX-5613 and axatilimab data support the preliminary results and stated development timelines.
- Cash burn, trial and manufacturing spending, and whether the stated at-least-12-month runway remains adequate as programs advance.
- Loan repayment schedule, interest costs and covenant status, including the October 2021 end of the interest-only period.
- Potential dilution from the remaining $75 million ATM authorization, outstanding pre-funded warrants and equity compensation.
- COVID-19 effects on patient enrollment, clinical sites and third-party manufacturing, as well as milestone and royalty obligations under license agreements.