Syndax Pharmaceuticals, Inc. — Q1 2020 Form 10-Q
Reporting period: Three months ended March 31, 2020. Syndax is a clinical-stage biopharmaceutical company with no approved products and no product sales. Its reported revenue came from a legacy entinostat license agreement.
Financial performance and position
| Metric | Q1 2020 | Q1 2019 / comparison |
|---|---|---|
| Revenue | $0.379 million | $0.379 million |
| Research and development expense | $9.562 million | $11.279 million; down 15% |
| General and administrative expense | $5.917 million | $3.911 million; up 51% |
| Total operating expenses | $15.479 million | $15.190 million; up 2% |
| Net loss | $15.236 million | $14.302 million |
| Net loss per share attributable to common stockholders | $0.56 | $0.53 |
| Cash used in operating activities | $15.925 million | $16.831 million |
At March 31, cash and cash equivalents were $44.629 million and short-term investments were $54.376 million, totaling $99.005 million. Total assets were $105.155 million; total liabilities were $51.646 million, including a $19.792 million net carrying value of loan debt. Accumulated deficit was $510.706 million. Profit margins are not meaningful given the company’s pre-commercial stage and minimal license revenue.
In May 2020, after quarter-end, Syndax completed an offering of 5,555,556 shares at $18 per share, receiving approximately $93.7 million net proceeds. The underwriters also had an option to purchase up to 833,333 additional shares.
Material changes and unusual items
- January’s registered direct offering generated approximately $34.9 million net proceeds from common stock and pre-funded warrants. It also triggered a reset of outstanding Series 1 and Series 2 warrant exercise prices to $10 and $13, respectively, and a $3.906 million deemed dividend that increased the loss attributable to common stockholders.
- In February, Syndax borrowed $20 million under a Hercules loan facility. The interest rate was 9.85% at quarter-end. The agreement provides for a possible additional $10 million advance subject to lender approval, collateralizes substantially all assets other than intellectual property, and includes a $12.5 million minimum-cash covenant beginning October 1, 2020, subject to specified conditions.
- R&D expense fell mainly because of lower ENCORE program clinical activity and reduced employee-related costs, partly offset by increased professional fees. G&A rose with pre-commercialization work, staffing and insurance costs.
Outlook, programs and risks
- Entinostat: Management expected the Phase 3 E2112 trial to reach 410 death events during Q2 2020, triggering final overall-survival analysis. A positive result could support a U.S. regulatory filing. The trial had previously failed its progression-free-survival primary endpoint. Management was preparing for a potential 2021 U.S. launch if results and FDA approval supported it.
- SNDX-5613: The Phase 1/2 AUGMENT-101 trial was enrolling patients with relapsed/refractory acute leukemias. Management expected to establish recommended Phase 2 doses by Q4 2020 and present additional results in Q4. FDA orphan drug designation had been granted for adult and pediatric AML. Announced initial clinical data were preliminary.
- Axatilimab: Phase 1/2 cGVHD enrollment continued; additional results were expected in Q4 2020. The company also reported Phase 1 solid-tumor data and determination of a recommended Phase 2 dose.
- COVID-19: Syndax said the pandemic had not affected financial guidance or changed 2020 clinical data timelines to date. It had moved employees to remote work and was using remote trial approaches, but warned of possible enrollment, site, manufacturing, supply-chain, regulatory and operating delays. Adequate 2020 supplies were expected, but prolonged disruption could adversely affect development and future commercialization.
- Liquidity: Management said quarter-end liquidity was expected to fund projected expenses and capital requirements for at least 12 months. It also stated that cash, cash equivalents and marketable securities as of May 7, including recent financing, were expected to fund current plans for at least 12 months. The company remains loss-making and may need further financing; access to capital could be constrained by market disruption, including COVID-19.
- Other key risks include clinical and regulatory failure, dependence on collaborators and third-party manufacturers, competition, intellectual-property and licensing exposure, future dilution, and loan covenants. No material legal proceedings were reported. Management concluded disclosure controls were effective as of March 31, 2020.
Important facts for investors to verify
- Final E2112 overall-survival results, their timing and whether they support an NDA; the filing notes the earlier failure on the progression-free-survival endpoint.
- Whether COVID-19 or other factors subsequently affected trial enrollment, data timelines, manufacturing or supply availability.
- Cash runway assumptions, including the impact of the May offering, operating burn and any additional financing needs.
- Hercules facility terms, minimum-cash covenant compliance, potential additional borrowing and repayment obligations.
- Potential dilution from the January offering, pre-funded warrants, repriced Series warrants, stock options and the May offering.
- Progress and final data for SNDX-5613 and axatilimab; preliminary or early-stage results may change as more data accrue.