Syndax Pharmaceuticals, Inc. — FY 2017 Form 10-K
Reporting period: Fiscal year ended December 31, 2017; filed March 8, 2018. The filing is an annual report, not a standalone Q4 filing. Syndax is a clinical-stage oncology company with no approved products or product sales. Its lead candidate, entinostat, is in a Phase 3 breast cancer trial and multiple combination trials; SNDX-6352 is in Phase 1; Menin inhibitors remain preclinical.
Financial performance and liquidity
| Metric | FY 2017 | FY 2016 |
|---|---|---|
| Revenue, all license fees | $2.1 million | $1.2 million |
| Research and development expense | $48.2 million | $31.7 million |
| General and administrative expense | $15.9 million | $13.3 million |
| Operating loss | $62.0 million | $43.8 million |
| Net loss | $60.8 million | $44.5 million |
| Net loss per share | $2.90 | $3.22 |
| Cash, cash equivalents and investments at year-end | $133.2 million | $105.3 million |
| Working capital at year-end | $117.6 million | $98.1 million |
FY 2017 operating cash use was $47.4 million; investing cash use was $17.0 million; financing provided $75.7 million. Financing included net proceeds of $48.7 million from a follow-on offering, $24.9 million from a registered direct offering, and $1.7 million from the ATM program. Management said available cash and investments were expected to fund projected expenses and capital needs for at least 12 months from the financial statements’ issuance date. No interest-bearing debt was outstanding at year-end; the company had repaid its term loans in 2015. No product margins are meaningful because there are no product sales.
Q4 2017 snapshot: License-fee revenue was $1.193 million, operating expenses $20.682 million, and net loss $19.104 million, versus $0.305 million, $11.446 million, and $10.815 million, respectively, in Q4 2016. Q4 2017 R&D expense included a $5.0 million upfront payment for the Menin Assets.
Material changes versus prior periods
- Annual revenue increased 73%, but remained limited to license fees, principally under the Kyowa Hakko Kirin (KHK) entinostat agreement; no product revenue was generated.
- R&D expense increased 52%, reflecting broader and later-stage clinical activity, increased enrollment and trial costs, and the $5.0 million Menin license payment. G&A expense rose 19%.
- Net loss widened to $60.8 million from $44.5 million. Cash and investments rose to $133.2 million, supported by equity financings.
- KHK’s $5.0 million development milestone was received in 2017; $0.9 million was recognized as revenue in Q4 and the remaining $4.1 million was deferred.
- The company licensed preclinical Menin assets in 2017. Entinostat’s base chemical-composition patent expired in September 2017; the company cited a licensed patent covering the clinical crystalline form that runs to 2029.
Outlook, commentary and key risks
- Management expected E2112, the entinostat-plus-exemestane Phase 3 trial in HR+, HER2-negative breast cancer, to complete enrollment in Q3 2018. The PFS analysis and first interim OS analysis were completed in November 2017, but results remained confidential. The primary OS analysis was expected no sooner than 2019.
- Management expected 2018 data from the PD-(L)1-refractory melanoma and NSCLC cohorts of ENCORE 601, and from the TNBC trial ENCORE 602. The company expected ovarian-cancer trial results in the first half of 2019. These are expectations, not guaranteed dates or outcomes.
- SNDX-6352 Phase 1 enrollment was expected to complete by Q3 2018; the company anticipated reporting data and a Phase 2 strategy in the second half of 2018. Menin development was preclinical, with an IND filing planned for 2019.
- Management stated that losses and R&D spending were expected to continue increasing and that additional capital would be needed to advance development and commercialization. Future funding may dilute shareholders or be unavailable on acceptable terms.
- Key uncertainties include clinical-trial efficacy and safety, enrollment and third-party execution (including ECOG-ACRIN/NCI), regulatory approval, competitive changes in cancer treatment, reliance on collaborators and contract manufacturers, and intellectual-property protection. The filing notes that the current Phase 3 plan may be insufficient for European approval.
- The Phase 2b entinostat breast-cancer trial reported median PFS of 4.3 versus 2.3 months and median OS of 28.1 versus 19.8 months; the ongoing Phase 3 trial must confirm benefit. The filing also reports higher adverse-event rates and more dose modifications and discontinuations with the combination.
Important facts for investors to verify
- Check subsequent E2112 enrollment, unblinded efficacy results, safety findings, and any changes to the anticipated analysis or regulatory strategy.
- Review later clinical data for ENCORE 601, ENCORE 602, ENCORE 603, and SNDX-6352 against the timelines and development plans stated here.
- Assess cash runway using current operating cash use, trial commitments, and future financing; the stated 12-month runway is management’s estimate as of the filing date.
- Confirm the terms and remaining obligations under KHK and other licenses, including deferred revenue, milestone payments, royalties, and patent coverage—especially following the 2017 entinostat composition-patent expiry.
- Reconcile reported quarterly results to the audited annual statements and distinguish license/milestone revenue from recurring product revenue, which was zero.