Syndax Pharmaceuticals, Inc. — FY2019 Form 10-K
Reporting period: Fiscal year ended December 31, 2019. This is an annual report, not a quarterly filing; the company also provides unaudited fourth-quarter results. Syndax was a clinical-stage biopharmaceutical company with no approved products and no product-sale revenue.
Financial and operating performance
| Metric | FY2019 | FY2018 | Change |
|---|---|---|---|
| Revenue, all license fees | $1.5 million | $1.5 million | Flat |
| Research and development expense | $43.0 million | $60.1 million | Down 28% |
| General and administrative expense | $16.1 million | $17.3 million | Down 7% |
| Operating loss | $57.5 million | $75.9 million | Loss narrowed 24% |
| Net loss | $56.0 million | $74.0 million | Loss narrowed 24% |
| Net loss per share, basic and diluted | $1.84 | $2.92 | Loss per share narrowed |
| Cash, cash equivalents and short-term investments at year-end | $59.8 million | $80.9 million | Down $21.1 million |
| Working capital at year-end | $44.0 million | $67.2 million | Down $23.3 million |
Revenue was recognized from the Kyowa Kirin license agreement for entinostat; it was not product revenue. The company reported no gross margin because it had no product sales. Net cash used in operating activities was $50.6 million, compared with $68.5 million in 2018. Cash and cash equivalents alone were $24.6 million at year-end, alongside $35.2 million of short-term investments. Total liabilities were $31.9 million; the balance sheet showed no funded loan debt at December 31, 2019.
Fourth-quarter 2019 revenue was $0.38 million, operating expenses were $14.6 million, and net loss was $14.0 million, or $0.44 per share. The filing does not provide a clear fourth-quarter year-over-year comparison in its quarterly table.
Material changes and developments
- R&D expense declined by $17.1 million, mainly reflecting lower clinical-trial, manufacturing and NDA-preparation spending. The reduction was partly offset by a $4.0 million menin-program milestone expense and higher SNDX-5613 clinical spending.
- Operating cash use decreased by $17.9 million year over year. Financing activities provided $28.6 million in 2019, principally from a direct offering; cash and cash equivalents decreased by $9.3 million during the year.
- The Phase 3 E2112 trial of entinostat plus exemestane did not meet its progression-free-survival primary endpoint. The final overall-survival analysis remained pending.
- Two entinostat immuno-oncology combination trials, in triple-negative breast cancer and ovarian cancer, failed to meet their respective progression-free-survival primary endpoints. Registration-trial plans in NSCLC and melanoma were put on hold pending E2112 results.
Outlook, risks and contingencies
- Entinostat: Management expected E2112 to reach 410 death events and trigger final overall-survival analysis in Q2 2020. A positive survival result could support a U.S. regulatory filing; approval was not assured. The company was preparing for a potential U.S. launch in 2021.
- SNDX-5613: The Phase 1/2 AUGMENT-101 trial was enrolling patients with relapsed or refractory acute leukemias. Initial clinical data were expected in Q4 2020; the Phase 2 expansion was intended to assess three genetically defined leukemia cohorts.
- SNDX-6352: Following preliminary clinical proof of concept in chronic graft-versus-host disease, the company was advancing an expansion cohort. Further Phase 1/2 results were expected in 2020. The candidate was also being developed in combination with durvalumab for solid tumors.
- Liquidity and financing: Management said year-end liquidity, together with subsequent financing, was expected to fund projected expenses and capital requirements for at least 12 months. In January 2020, the company raised approximately $35 million gross through common shares and pre-funded warrants. In February 2020, it borrowed $20 million under a Hercules facility, with up to $10 million additional borrowing subject to lender approval. The facility bears interest at the greater of 9.85% or 5.10% plus prime, is secured by substantially all assets other than intellectual property, and includes a $12.5 million minimum-cash covenant beginning in 2020.
- Key risks: The business remained dependent on clinical-trial outcomes, regulatory approval, additional capital and third-party manufacturing and collaboration partners. Syndax had accumulated losses of $495.5 million and expected continuing losses. The filing also cited competition, reimbursement and pricing pressures, intellectual-property and license risks, and possible disruption from the emerging coronavirus outbreak.
- Other contingencies: Future milestone and royalty obligations under license agreements could be substantial if development or commercial milestones are achieved. The company reported no material legal proceedings and no off-balance-sheet arrangements.
Important facts for investors to verify
- Whether E2112’s final overall-survival results supported an NDA filing and what regulatory authorities required next.
- Actual cash runway after the January equity financing, Hercules borrowing, continuing cash burn and any further financing or dilution.
- Progress, safety and efficacy results for SNDX-5613 and SNDX-6352, including whether expected 2020 data and trial timelines were achieved.
- Current status and terms of the Hercules facility, including covenant compliance, additional borrowing availability and repayment obligations.
- Whether license-related milestones, royalties, manufacturing capacity or intellectual-property developments materially changed the company’s obligations or commercial prospects.