Syndax Pharmaceuticals, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Syndax is a clinical-stage biopharmaceutical company with no approved products and no product-sales revenue. Its lead programs are revumenib (SNDX-5613) for acute leukemias and axatilimab for chronic graft-versus-host disease (cGVHD) and other conditions. The company has deprioritized entinostat.
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Revenue | $0 | $0.379 million, entirely license fees |
| Research and development expense | $30.0 million | $21.9 million; up 37% |
| General and administrative expense | $6.8 million | $5.7 million; up 21% |
| Operating loss | $36.9 million | $27.2 million |
| Net loss | $37.2 million | $27.7 million |
| Net loss per share, basic and diluted | $0.63 | $0.54 |
| Net cash used in operating activities | $41.9 million | $22.6 million |
Margins are not meaningful given the absence of product revenue and the company’s continuing development-stage losses. R&D costs rose mainly with clinical and manufacturing activity, partly offset by $6.3 million of Incyte cost reimbursements; the company also recorded a $2.0 million development milestone expense for its menin-MLL license.
At March 31, cash and cash equivalents were $188.8 million and short-term investments were $209.2 million, totaling $397.9 million. Cash, cash equivalents and restricted cash declined $33.2 million during the quarter. Total assets were $422.2 million, total liabilities $47.7 million, and stockholders’ equity $374.5 million. The company reported $20.0 million of term-loan principal outstanding. The loan carries a variable rate subject to a 9.25% minimum; $3.6 million was classified as current.
Changes, outlook and material items
- Compared with Q1 2021, the net loss increased by $9.4 million, primarily reflecting higher clinical, manufacturing and personnel costs. Operating cash use also increased, including because prepaid expenses and deposits rose by $14.7 million.
- Management said existing cash, cash equivalents and short-term investments were expected to fund projected operating expenses and capital requirements for at least the next 12 months. It expects significant losses and increased R&D and G&A expenses to continue, and says further capital may be needed.
- For revumenib, enrollment in the pivotal Phase 2 AUGMENT-101 cohorts was ongoing; the company expected completion of enrollment in at least one cohort later in 2022, initial topline data beginning in the first half of 2023, and potential first NDA filing in 2023. Topline data from combination studies were also expected beginning in 2023. A colorectal cancer proof-of-concept trial was planned for Q4 2022.
- For axatilimab, enrollment in the pivotal Phase 2 AGAVE-201 trial was ongoing, with topline data expected in the first half of 2023 and a potential BLA filing in 2023. The company also expected to start a Phase 2 idiopathic pulmonary fibrosis trial in Q4 2022. The FDA had granted axatilimab Fast Track designation for cGVHD after failure of at least two systemic therapies.
- The Incyte collaboration shares global and U.S.-specific development costs, with Incyte responsible for 55% and Syndax 45%; Incyte funds ex-U.S.-specific trial costs. Syndax may receive contingent milestones and tiered royalties, but these are uncertain and no additional collaboration revenue was recognized in Q1. The related termination right expired March 23, 2022 without a challenge; Syndax released the remaining $187,000 derivative liability.
- After quarter-end, Syndax sold 1,111,111 shares under its ATM program in April for approximately $19.4 million net proceeds. As of May 6, $49.7 million remained available under the program. The filing also notes potential dilution from equity issuance and outstanding warrants, options and other awards.
- Principal risks include clinical-trial efficacy, safety, enrollment and timing; regulatory approval; reliance on third-party manufacturing and Incyte; financing needs; intellectual-property and licensing protections; and possible COVID-19 or geopolitical disruption. Management described COVID-19’s impact as minimal to date but warned that trial, supply-chain and operational delays remained possible.
Important facts for investors to verify
- Whether trial enrollment and the stated 2022–2023 data and filing timelines remain on track, and what complete, verified efficacy and safety data show.
- Cash burn and runway against management’s at-least-12-month estimate, including the impact of clinical spending, reimbursements, debt service and subsequent ATM proceeds.
- Whether Incyte continues to fund and execute its collaboration obligations, and whether milestone or royalty payments become achievable.
- Current debt terms, maturity and any conditions or approvals governing access to additional loan tranches.
- Potential dilution from the ATM, pre-funded warrants, stock options and other equity awards.