Syndax Pharmaceuticals, Inc. — FY 2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. The filing also provides unaudited quarterly results, including Q4 2020. Amounts below are in U.S. dollars; financial statement figures are generally in millions unless noted.
Business context
Syndax is a clinical-stage biopharmaceutical company with no approved products and no product sales. Its lead programs are SNDX-5613, being developed for MLL-rearranged and NPM1-mutant acute leukemias, and axatilimab for chronic graft-versus-host disease (cGVHD). The company deprioritized entinostat after its Phase 3 E2112 trial failed to show a statistically significant overall-survival benefit.
Financial performance and liquidity
| Metric | FY 2020 | FY 2019 | Change |
|---|---|---|---|
| Revenue, entirely license fees | $1.517 | $1.517 | Unchanged |
| Research and development expense | $50.435 | $42.994 | Up 17% |
| General and administrative expense | $22.505 | $16.062 | Up 40% |
| Total operating expenses | $72.940 | $59.056 | Up 24% |
| Loss from operations | $(71.423) | $(57.539) | Loss increased |
| Net loss | $(73.158) | $(56.047) | Loss increased 31% |
| Net loss attributable to common stockholders | $(77.064) | $(56.047) | Includes $3.906 deemed dividend from warrant repricing |
| Basic and diluted loss per share | $(1.87) | $(1.84) | Loss per share increased |
| Cash used in operating activities | $(71.260) | $(50.612) | Use increased |
Revenue was recognized over time under the Kyowa Kirin license for entinostat in Japan and Korea; it is not product-sale revenue. Gross margin is not separately reported and is not meaningful for assessing commercial product economics at this stage.
At year-end, cash, cash equivalents and short-term investments totaled $293.065 million, versus $59.775 million a year earlier. Working capital was $279.992 million; total assets were $300.613 million, total liabilities $48.425 million and stockholders’ equity $252.188 million. Cash and short-term investments rose primarily following equity financings.
Operating cash use was $71.260 million. Investing cash use was $142.530 million, mainly reflecting purchases of marketable securities net of maturities; financing provided $304.424 million. Cash, cash equivalents and restricted cash increased $90.634 million.
At December 31, 2020, the Hercules loan had $20.0 million principal outstanding (about $20.119 million carrying value, including fees and issuance costs), at a 9.85% rate. Interest-only payments run through October 2021, with maturity in September 2023. The company did not draw the additional $10 million tranche; the $12.5 million minimum-cash covenant was waived after specified conditions were met.
Q4 2020 and material changes
Unaudited Q4 2020 revenue was $0.380 million, operating expenses were $20.240 million, loss from operations was $19.860 million and net loss was $20.423 million, or $0.44 per share. Q4 2019 net loss was $14.000 million, or $0.44 per share. Quarterly results are not necessarily indicative of future periods.
- FY 2020 research and development spending rose with increased SNDX-5613 and axatilimab study activity; it also included a $2.0 million axatilimab milestone expense. Reduced entinostat activity and the absence of the prior-year $4.0 million menin-program milestone partly offset the increase.
- General and administrative expense increased, principally from higher employee-related costs, stock compensation and professional fees.
- The company raised approximately $242.8 million net through follow-on public offerings and $34.9 million net through a direct placement in 2020; it also received approximately $19.7 million net from the term loan.
- Common shares outstanding increased from 27.1 million at year-end 2019 to 47.9 million at year-end 2020. The company also had 3.56 million pre-funded warrants outstanding.
Outlook, commentary and key risks
- SNDX-5613: Management expected to complete Phase 1 enrollment in the first half of 2021, begin the Phase 2 portion of AUGMENT-101 in Q2 2021 and enroll up to 132 patients across the Phase 1/2 trial. The company anticipated presenting Phase 1 data in late Q1 or early Q2 2021 and planned a chemotherapy-combination trial in the second half of 2021.
- Axatilimab: The pivotal Phase 2 AGAVE-201 trial began enrolling in January 2021, with up to 210 cGVHD patients across three dose schedules. Management expected topline results in 2023. Preliminary Phase 1 findings were described as showing responses and multiorgan benefit, but the filing cautions that interim data may change and remain subject to verification.
- Entinostat: The E2112 Phase 3 trial did not meet its primary overall-survival endpoint. Syndax deprioritized the program; the KKC license remained in force. Approximately $3.2 million of remaining ECOG-ACRIN payment obligations were estimated to be payable over about one year, with $1.6 million accrued at year-end.
- Funding: Management believed year-end liquidity would fund projected operating expenses and capital requirements for at least 12 months. The filing warns that additional capital may be required and may not be available on acceptable terms; continued losses are expected and profitability is uncertain.
- COVID-19: No material financial impact was reported at the time, and management expected adequate clinical supplies. However, the pandemic could disrupt enrollment, trial operations, supply chains, regulatory interactions and access to capital.
- Other risks and contingencies: Clinical efficacy and safety remain unproven; trials may be delayed or fail, and regulatory approval is uncertain. Syndax relies on third-party manufacturers and service providers, and its licensed programs carry potential milestone and royalty obligations. The company reported no material legal proceedings.
The independent auditor issued an unqualified opinion on the financial statements. Management concluded disclosure controls and internal control over financial reporting were effective as of year-end; the auditor did not attest to internal control effectiveness because of the company’s emerging-growth-company exemption.
Important facts for investors to verify
- Progress, enrollment, safety and final efficacy data for AUGMENT-101 and AGAVE-201, against the timelines stated in this filing.
- Actual cash burn and runway as development spending changes; the filing’s runway estimate is management’s assessment, not a guarantee.
- Future equity dilution, including the effect of 2020 offerings, outstanding pre-funded warrants, options and any further financing.
- Loan repayment terms, interest exposure and covenant status, as well as contingent milestone, royalty and collaboration commitments.
- The implications of E2112’s failed endpoint for entinostat and the status of the KKC license and related revenue.
- Whether COVID-19 or third-party manufacturing and trial-site issues materially affect development schedules or supply availability.