Syndax Pharmaceuticals, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Amounts are in U.S. dollars; financial statement amounts are in millions unless stated otherwise. Syndax is a clinical-stage biopharmaceutical company with no approved products and no product-sales revenue.
Financial results and liquidity
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue, all license fees | $12.4 | $0.4 | $13.1 | $1.1 |
| Research and development expense | $25.6 | $14.4 | $64.3 | $34.9 |
| General and administrative expense | $6.8 | $5.8 | $18.3 | $17.8 |
| Operating loss | $(20.0) | $(19.9) | $(69.5) | $(51.6) |
| Net loss | $(20.6) | $(20.4) | $(71.3) | $(52.7) |
| Net loss per share, basic and diluted | $(0.40) | $(0.46) | $(1.38) | $(1.43) |
| Operating cash flow | Not presented separately for the quarter | Not presented separately for the quarter | $(71.6) | $(55.6) |
- Q3 revenue was recognized under the Kyowa Kirin (KKC) entinostat license. KKC discontinued development and terminated the agreement in September; Syndax recognized the remaining $12.4 million of deferred revenue. This was a one-time accounting recognition, not product-sales revenue.
- At September 30, cash and cash equivalents were $71.4 million and short-term investments were $158.3 million, totaling $229.7 million; restricted cash was $0.1 million. Total current assets were $238.3 million and current liabilities $28.7 million.
- Term-loan principal outstanding was $20.0 million. The interest rate was 9.85%; monthly principal-and-interest payments began after the interest-only period ended October 1, 2021, with maturity on September 1, 2023.
- Cash, cash equivalents and restricted cash decreased $43.8 million during the first nine months. Financing provided $8.7 million, including $5.1 million net proceeds from the ATM program. Stock-based compensation was $9.4 million for the nine-month period.
Changes versus the prior comparable periods
- Nine-month net loss increased $18.5 million, or 35%, year over year, while operating expenses rose $30.0 million, or 57%. Higher clinical and manufacturing activity drove most of the R&D increase, including work on SNDX-5613 and axatilimab.
- Q3 R&D increased 78% year over year, primarily due to clinical and manufacturing spending, including menin-related manufacturing, drug production, and a $2.0 million axatilimab milestone expense. Q3 G&A rose 17%.
- Reported revenue increased sharply because the KKC agreement’s remaining deferred revenue was recognized upon termination. Revenue should not be interpreted as recurring or commercial product revenue.
- Cash and short-term investments declined from $293.1 million at December 31, 2020 to $229.7 million at September 30, 2021.
Outlook, developments and risks
- Management said existing cash, cash equivalents and investments were expected to fund current operating plans for at least 12 months. Syndax nevertheless expects continued losses and may need additional financing; future equity issuance could dilute shareholders.
- In September 2021, Syndax signed an axatilimab collaboration and license agreement with Incyte. The announced terms include a $117 million non-refundable cash payment and a $35 million equity investment, plus up to $450 million in development, regulatory and commercial milestones and royalties. The agreement was subject to HSR waiting-period clearance; as of September 30, Syndax had received no consideration and had not transferred licenses or other deliverables. Do not treat the announced upfront payment or equity investment as quarter-end cash.
- Under the proposed collaboration, the parties would share global and U.S.-specific development costs, with Incyte funding 55% and Syndax 45%; Incyte would fund 100% of ex-U.S.-specific trials. U.S. commercialization would include shared profits and losses.
- Clinical priorities were SNDX-5613 for relapsed/refractory acute leukemia and axatilimab for chronic graft-versus-host disease (cGVHD). The pivotal AGAVE-201 axatilimab trial was enrolling, with topline data expected in 2023. The filing also described planned SNDX-5613 combination and other trials, expected to begin in 2022. November 2021 clinical announcements in the filing are subsequent developments, not Q3 financial results.
- Management cited possible COVID-19-related delays to trial enrollment, site initiation, manufacturing, supply and regulatory work, despite no material financial impact or changed 2021 clinical-data timelines reported to date. Other key risks include uncertain clinical efficacy and safety, regulatory approval, third-party manufacturing and collaboration execution, competition, intellectual-property protection, and access to capital.
- The company reported no material legal proceedings, no off-balance-sheet arrangements, and effective disclosure controls as of September 30, 2021.
Investor facts to verify
- Whether and when the Incyte agreement cleared its effectiveness condition, and whether the upfront payment and equity investment were subsequently received or completed.
- How KKC termination affects future entinostat development and confirms that Q3’s license revenue is nonrecurring.
- Actual cash burn, trial spending and runway against management’s at-least-12-month estimate, including the impact of post-October 2021 loan amortization.
- Enrollment, safety and efficacy updates for AUGMENT-101 and AGAVE-201, and whether planned 2022 trials and the stated 2023 AGAVE-201 data target remain on schedule.
- Potential dilution from the ATM program, outstanding pre-funded warrants and equity compensation.