Syndax Pharmaceuticals, Inc. — Q1 2019 Form 10-Q
Reporting period: Three months ended March 31, 2019. Syndax is a clinical-stage biopharmaceutical company with no approved products and no product-sales revenue. The unaudited interim results are not necessarily indicative of full-year results.
Financial results and liquidity
| Metric | Q1 2019 | Q1 2018 / comparison |
|---|---|---|
| Revenue | $0.379 million | $0.379 million; unchanged, entirely license fees |
| Research and development expense | $11.279 million | $15.339 million; down 26% |
| General and administrative expense | $3.911 million | $4.791 million; down 18% |
| Total operating expenses | $15.190 million | $20.130 million; down 25% |
| Operating loss | $14.811 million | $19.751 million |
| Net loss | $14.302 million | $19.398 million; loss narrowed 26% |
| Basic and diluted net loss per share | $0.53 | $0.79 |
| Net cash used in operating activities | $16.831 million | $19.870 million |
At March 31, cash and cash equivalents were $58.1 million and short-term investments were $34.6 million, totaling $92.7 million. Management said these resources were expected to fund projected operating expenses and capital requirements for at least 12 months. Current assets were $97.6 million and current liabilities were $15.7 million. Total liabilities were $30.8 million, including deferred revenue and operating lease liabilities; the filing does not disclose borrowings or debt. With no product-sales revenue, product margins are not meaningful.
Financing provided $28.4 million of net cash in Q1, primarily from a March registered direct offering and the ATM program. The direct offering generated $27.6 million gross proceeds and included common shares, pre-funded warrants, and two series of warrants. The Company also sold 140,819 shares through its ATM for approximately $0.8 million net. Common shares outstanding increased to 27.1 million from 24.8 million at year-end 2018. Accumulated deficit was $453.7 million.
Material changes and operating commentary
- R&D expense fell $4.1 million year over year, mainly because of lower external development spending, including reduced SNDX-6352 manufacturing and lower professional and clinical-program costs. Menin manufacturing activity increased.
- G&A expense declined $0.9 million, primarily due to lower pre-commercialization activity and professional fees.
- Revenue remained level at $0.379 million, recognized ratably under the Kyowa Hakko Kirin (KHK) entinostat license. Deferred revenue under that agreement was $15.8 million at quarter-end.
- Adoption of the new lease accounting standard added approximately $1.3 million of lease assets and liabilities at January 1, 2019, with no material impact on reported operations or cash flows.
Pipeline, outlook, and key risks
- Entinostat: The Phase 3 E2112 trial continued after its fourth planned interim overall-survival analysis. The trial had not met the progression-free-survival statistical hurdle, as previously reported in October 2018; overall survival remained the key potential basis for an NDA. Management said the next interim OS analysis was scheduled for Q4 2019 and a final assessment, if needed, for Q2 2020. Elsewhere, the filing says final OS results are expected no later than the end of 2020.
- Entinostat combinations: Management reported encouraging data from NSCLC and melanoma cohorts of ENCORE 601 presented at AACR. Initiation of planned registration combination trials was on hold pending final E2112 OS results.
- SNDX-5613: Management expected to file an IND in Q2 2019 and begin a Phase 1 trial in relapsed or refractory MLL-rearranged or NPM1-mutated acute leukemia patients shortly thereafter.
- SNDX-6352: Initial results from the Phase 1 cGVHD dose-escalation trial were anticipated in the second half of 2019. A separate Phase 1/1b program included monotherapy and a durvalumab combination.
- The Company expects continued significant losses and rising R&D and G&A expenses, and states that further capital will be needed to fund operations beyond its projected near-term runway. Future financing could dilute shareholders or require unfavorable collaboration terms.
- Key risks include clinical-trial failure or delay, reliance on ECOG-ACRIN/NCI and other collaborators, regulatory uncertainty, competition, manufacturing and patient-enrollment challenges, and dependence on licensed intellectual property. The filing notes the entinostat Phase 3 PFS result and that the existing trial may be insufficient for European approval.
- No material legal proceedings, material changes in contractual obligations, or off-balance-sheet arrangements were reported. Management judged disclosure controls effective at the reasonable-assurance level.
Important facts for investors to verify
- Timing and outcome of the next and final E2112 overall-survival analyses, including the different timing descriptions in the filing.
- Whether the stated cash runway remains adequate as trial activity, manufacturing spending, and other expenses change.
- Terms, potential dilution, and exercise or adjustment provisions of the March 2019 pre-funded and Series warrants, and remaining ATM capacity.
- Progress of the SNDX-5613 IND and Phase 1 start, and timing and results of SNDX-6352 cGVHD data.
- Clinical and regulatory milestones, as well as contingent license obligations; milestone payments and royalties are dependent on uncertain future events.