Syndax Pharmaceuticals, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. The unaudited filing was signed November 2, 2023. Syndax is a clinical-stage biopharmaceutical company; it had no products approved for commercial sale and generated no product revenue.
Financial performance and liquidity
Amounts below are in millions of dollars, except per-share data.
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | 0 | 0 | 0 | 0 |
| Research and development expense | 39.1 | 26.9 | 107.9 | 86.7 |
| General and administrative expense | 17.3 | 8.2 | 44.1 | 23.1 |
| Total operating expenses | 56.4 | 35.1 | 152.0 | 109.7 |
| Net loss | 51.1 | 35.4 | 136.9 | 110.1 |
| Basic and diluted loss per share | $0.73 | $0.58 | $1.97 | $1.84 |
| Interest income | 5.3 | 1.8 | 15.6 | 2.9 |
Margins: Gross and operating margins are not meaningful because the company reported no revenue; operating losses equaled operating expenses. Higher interest income partly offset operating losses.
- Cash, cash equivalents and short- and long-term investments: $379.3 at September 30, 2023, versus $481.3 at December 31, 2022. This included $94.6 cash and equivalents and $284.7 investments. Current assets were $381.0 and current liabilities $39.2; total liabilities were $40.0.
- Cash flow, nine months: $119.3 used in operations, $133.9 provided by investing activities, and $5.6 provided by financing activities. Cash, cash equivalents and restricted cash increased $20.3 to $94.8. Investing cash flow primarily reflected maturities of marketable securities, net of purchases.
- Debt and obligations: The Hercules term loan had been terminated in September 2022; no term-loan balance was reported. Remaining liabilities primarily included operating lease obligations; approximately $1.2 was payable within 12 months. Capital leases were immaterial.
- Management stated existing cash, cash equivalents and investments were expected to fund projected operating and capital requirements for at least 12 months. The company also had $200.0 available under its 2023 at-the-market equity program as of October 27, 2023; no shares were sold under it through September 30.
Material changes versus the prior comparable period
- Q3 operating expenses rose 60% year over year; nine-month operating expenses rose 39%. R&D increased 45% in Q3 and 25% for nine months, reflecting higher employee costs, development activity and, in Q3, clinical and manufacturing costs.
- G&A increased 110% in Q3 and 91% for nine months, driven by employee-related costs, professional fees and other expenses.
- Net loss increased $15.7 in Q3 and $26.7 for nine months. Increased interest income and lower interest expense partially offset higher operating costs. Interest expense fell mainly because the Hercules loan was terminated in 2022.
- Nine-month operating cash use increased to $119.3 from $110.8. Stock-based compensation was $22.6, versus $11.8 in the prior-year period.
Outlook, programs and risks
- Revumenib: The company reported positive topline results from the pivotal AUGMENT-101 KMT2A-rearranged acute leukemia cohort: CR/CRh rate 23% (13/57); the trial stopped further accrual in those cohorts following an independent monitoring committee recommendation. The company reported initiating an NDA under FDA Real-Time Oncology Review and expected to complete submission by year-end 2023. It expected to complete enrollment in the mNPM1 AML cohort in late Q1 or early Q2 2024 and report topline data in Q4 2024. Other combination, maintenance and solid-tumor studies were ongoing or planned.
- Axatilimab: The company and Incyte reported positive topline AGAVE-201 results in cGVHD; all three dose cohorts met the primary endpoint. At the 0.3 mg/kg dose, the reported response rate within six months was 74%, with 60% of those patients still responding at one year. The companies expected to submit a BLA by year-end 2023. Syndax also expected to start a Phase 2 idiopathic pulmonary fibrosis trial by year-end and a cGVHD combination trial with ruxolitinib in mid-2024.
- Under the Incyte collaboration, the parties share U.S. development costs (Incyte 55%, Syndax 45% for specified trials) and U.S. commercialization profits and losses equally; Incyte leads U.S. commercialization and has exclusive commercialization rights outside the U.S. Milestone and royalty payments remain contingent.
- Management expected R&D and G&A spending to continue increasing and anticipated significant losses for at least several years. The company may need additional capital beyond its stated 12-month funding horizon; financing could dilute shareholders or require unfavorable collaboration terms.
- Key risks include clinical and regulatory uncertainty, trial enrollment and data maturity, reliance on Incyte and third-party manufacturers, intellectual-property and licensing risks, competition, reimbursement and pricing, and inflation, supply-chain disruption and geopolitical events. The company warned preliminary clinical results may change with further follow-up and verification.
- No material legal or arbitration proceedings and no contingent liabilities were recorded as of September 30, 2023. Management reported effective disclosure controls and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- FDA review, acceptance and outcome of the revumenib NDA, and the final pivotal-trial dataset and safety profile.
- Axatilimab BLA submission and review timeline, final AGAVE-201 data, and Incyte’s continuing development and commercialization commitment.
- Actual cash burn and whether the $379.3 investment and cash balance supports the planned trial and pre-commercialization schedule; management’s stated runway is at least 12 months, not a profitability forecast.
- Use of the $200.0 ATM capacity, potential share dilution, and future financing needs.
- Changes in trial timelines, manufacturing supply, licensing obligations, and the contingent milestone and royalty economics of the company’s collaborations and licenses.