Syndax Pharmaceuticals, Inc. — Q3 2020 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2020. Syndax is a clinical-stage biopharmaceutical company with no approved products and no product-sales revenue. Its reported revenue is license-fee revenue under the Kyowa Kirin entinostat agreement.
Key financial metrics
| Metric | Q3 2020 | Nine months 2020 | Comparable 2019 period |
|---|---|---|---|
| Revenue | $0.4 million | $1.1 million | $0.4 million; $1.1 million |
| Research and development expense | $14.4 million | $34.9 million | $9.9 million; $33.5 million |
| General and administrative expense | $5.8 million | $17.8 million | $3.6 million; $11.0 million |
| Operating loss | $19.9 million | $51.6 million | $13.1 million; $43.3 million |
| Net loss | $20.4 million | $52.7 million | $12.8 million; $42.0 million |
| Net loss per share, basic and diluted | $0.46 | $1.43 | $0.41; $1.40 |
Amounts are shown in the order 2020; comparable 2019. Nine-month net loss attributable to common stockholders was $56.6 million, including a $3.9 million deemed dividend from repricing warrants; reported net loss was $52.7 million. With only license revenue and no product sales, conventional product gross-margin performance is not meaningful.
- At September 30, cash and cash equivalents were $56.4 million and short-term investments were $113.8 million, totaling $170.2 million. Current assets were $177.4 million; total assets were $179.3 million.
- Operating cash use for the nine months was $55.6 million; investing cash use was $78.4 million, principally reflecting purchases of short-term investments; financing provided $165.8 million. Cash, cash equivalents and restricted cash increased $31.7 million.
- Long-term loan carrying value was $20.0 million. The Hercules loan bears interest at 9.85% as of September 30, has interest-only payments through October 2021, and matures in September 2023. Up to $10 million of additional borrowing was available subject to lender approval. The loan is secured by substantially all assets other than intellectual property and includes a $12.5 million minimum-cash covenant effective October 1, 2020.
Changes versus prior periods
- Q3 operating expenses increased 50% year over year, and net loss increased 59%. R&D rose 45%, primarily reflecting clinical-program activity and a $2.0 million axatilimab milestone; G&A rose 62%, including higher employee-related costs and a $1.0 million stock-option modification charge.
- For the first nine months, operating expenses increased 19% and net loss increased 25%. R&D increased 4%, while G&A increased 62%, including pre-commercialization activity, compensation and stock-based compensation.
- Financing included approximately $142.7 million net proceeds from 2020 equity offerings and $19.7 million net proceeds from the loan. Shares issued and outstanding were 38.8 million at quarter-end, up from 27.1 million at December 31, 2019; 40.9 million were outstanding as of November 4, 2020.
Outlook, developments and risks
- Management said cash, cash equivalents and marketable securities as of November 5, 2020 were expected to fund current operating plans for at least 12 months. It expects continued significant losses and may need additional financing; future capital needs depend on clinical progress, costs, regulatory requirements and other factors.
- For SNDX-5613, the company amended the Phase 1 AUGMENT-101 trial to focus enrollment on MLL-rearranged and NPM1-mutant acute leukemias, add pediatric patients over 30 days old, and expand selected dose cohorts. Enrollment was ongoing; data were expected in early 2021, with Phase 2 anticipated to start in early 2021.
- For axatilimab in chronic graft-versus-host disease, enrollment continued in the Phase 1/2 study. Syndax planned to start the pivotal Phase 2 AGAVE-201 trial by year-end 2020 and anticipated topline data in 2023. Updated Phase 1 data were expected at the December 2020 ASH meeting.
- In May 2020, the Phase 3 E2112 entinostat trial did not meet its primary endpoint of statistically significant overall-survival benefit. Syndax deprioritized entinostat to focus resources on its other programs. Estimated remaining ECOG trial obligations were approximately $3.8 million over about two years.
- COVID-19 had not materially affected operations or changed stated 2020 clinical-data timelines as of the filing, but could delay enrollment, trial conduct, manufacturing, supply and regulatory work, or restrict access to capital. The company reported adequate expected supplies of SNDX-5613 and axatilimab at that time.
- Other significant risks include clinical-trial failure or delay, regulatory and manufacturing uncertainty, dependence on third-party suppliers and license partners, future financing and dilution, and intellectual-property risks. Potential milestone and royalty obligations under product licenses are contingent on development or commercial achievements.
Important facts for investors to verify
- Whether SNDX-5613 and axatilimab enrollment, data, and pivotal-trial milestones remain on schedule, particularly given pandemic-related risks.
- Cash runway relative to actual operating burn, the minimum-cash loan covenant, and whether the optional loan tranche was drawn or additional financing was required.
- Clinical and regulatory implications of the E2112 result, the deprioritization of entinostat, and remaining trial and license-related obligations.
- Potential dilution from outstanding pre-funded warrants, warrants, stock options, and future equity offerings; the filing reported approximately $50 million still available under the ATM program.
- Changes in clinical-trial costs, license-related milestone obligations, and the company’s ability to preserve adequate cash while advancing its pipeline.