Syndax Pharmaceuticals, Inc. — 2018 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2018; the filing also reports fourth-quarter results. Syndax is a clinical-stage biopharmaceutical company with no approved products and no product sales.
Financial performance and liquidity
| Metric | FY 2018 | FY 2017 |
|---|---|---|
| Revenue, all license fees | $1.5 million | $2.1 million |
| Research and development expense | $60.1 million | $48.2 million |
| General and administrative expense | $17.3 million | $15.9 million |
| Net loss | $74.0 million | $60.8 million |
| Net loss per share, basic and diluted | $2.92 | $2.90 |
| Cash used in operating activities | $68.5 million | $47.4 million |
FY 2018 revenue was recognized under the Kyowa Hakko Kirin (KHK) license agreement; Syndax reported no product revenue. The year-over-year revenue decline primarily reflects the prior-year KHK milestone payment and its recognition over the agreement term. Product gross margin is not applicable because there were no product sales.
In Q4 2018, revenue was $380,000 and net loss was $18.8 million, versus $1.2 million and $19.1 million, respectively, in Q4 2017. Q4 2018 net loss per share was $0.70, compared with $0.80.
At year-end, cash, cash equivalents and short-term investments totaled $80.9 million, down from $133.2 million a year earlier; working capital was $67.2 million. Management expected available funds to cover projected operating expenses and capital requirements for at least 12 months from the filing’s issuance. Total liabilities were $30.9 million, including deferred revenue; the filing does not indicate material borrowings. Lease commitments totaled approximately $1.6 million. No product-sales margins were reported.
FY 2018 financing provided $15.7 million, mainly from $15.5 million net proceeds under the at-the-market (ATM) offering. The company sold 2.1 million shares through the ATM during 2018. Net operating cash use rose from the prior year, while investment maturities drove positive investing cash flow.
Material changes and business developments
- R&D expense increased 25% to $60.1 million, reflecting higher clinical and manufacturing-development activity, including SNDX-6352 and the Menin program. Management expected full-year 2019 R&D expense to decrease.
- Net loss widened by $13.2 million, while operating cash use increased by $21.2 million versus 2017.
- The Phase 3 E2112 trial of entinostat plus exemestane in advanced HR+, HER2-negative breast cancer did not meet the statistical threshold for its progression-free survival endpoint. The overall-survival endpoint remained under evaluation; the next interim analysis was expected in Q2 2019, with final analysis expected no later than the end of 2020.
- Entinostat combination trials in triple-negative breast cancer and ovarian cancer did not meet their primary progression-free-survival endpoints. Syndax also decided not to advance the microsatellite-stable colorectal cancer cohort.
- The company selected SNDX-5613 as its lead Menin inhibitor and expected to file an IND in Q2 2019. SNDX-6352 trials continued, with dose selection expected in Q2 2019 and initial cGVHD results expected in Q4 2019.
Outlook, risks and unusual items
- Near-term prospects depend substantially on E2112 overall-survival results. Failure to show an OS benefit could undermine entinostat’s regulatory and commercial prospects; breakthrough therapy designation and the trial’s Special Protocol Assessment do not assure approval.
- The company anticipated continued losses and cash needs. It may seek additional equity, debt or collaboration funding; future financing could dilute shareholders or require rights concessions. At March 6, 2019, $31.2 million remained available under the ATM program.
- Development, regulatory, manufacturing and commercialization risks remain significant. Syndax relies on third-party manufacturers and collaborators, has no commercial manufacturing infrastructure, and has not established its own sales organization.
- Potential payments under licenses—including development, regulatory and sales milestones and royalties—could be substantial if milestones are achieved; these contingent amounts are not included in the reported contractual-obligations table.
- In June 2018, BVF exchanged 2.0 million common shares for warrants to acquire 2.0 million shares at $0.0001 per share, subject to an ownership cap. This unusual capital transaction and its potential dilution merit review.
Important facts for investors to verify
- Latest E2112 overall-survival analysis, timing of the final readout, and implications for regulatory strategy.
- Updated cash burn, remaining liquidity, and financing needs relative to the stated 12-month runway.
- ATM share sales, outstanding warrants and options, and the resulting fully diluted share count.
- Progress and actual timing of the SNDX-5613 IND and clinical-trial initiation, and SNDX-6352 dose and cGVHD data.
- Current development priorities and spending plans following the failed PFS endpoints in the other entinostat combination trials.
- Terms and potential future obligations under the KHK, Bayer, UCB and Allergan/Vitae agreements, including milestone and royalty triggers.