Syndax(SNDX) - 2020 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This part provides the unaudited condensed consolidated financial statements and related notes for Syndax Pharmaceuticals, Inc. as of March 31, 2020, and for the three months ended March 31, 2020 and 2019 Item 1. Unaudited Financial Statements This section details the unaudited condensed consolidated financial statements and accompanying notes for the specified periods Condensed Consolidated Balance Sheets This section presents the company's financial position, including assets, liabilities, and equity, as of March 31, 2020, and December 31, 2019 | Metric | March 31, 2020 (in thousands) | December 31, 2019 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------ | | Cash and cash equivalents | $44,629 | $24,609 | | Short-term investments | $54,376 | $35,166 | | Total current assets | $104,206 | $62,331 | | Total assets | $105,155 | $63,525 | | Total current liabilities | $18,790 | $18,368 | | Total long-term liabilities | $32,856 | $13,557 | | Total liabilities | $51,646 | $31,925 | | Total stockholders' equity | $53,509 | $31,600 | Condensed Consolidated Statements of Comprehensive Loss This section outlines the company's revenues, expenses, and net loss for the three months ended March 31, 2020 and 2019 | Metric | Three Months Ended March 31, 2020 (in thousands) | Three Months Ended March 31, 2019 (in thousands) | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total revenues | $379 | $379 | | Research and development | $9,562 | $11,279 | | General and administrative | $5,917 | $3,911 | | Total operating expenses | $15,479 | $15,190 | | Loss from operations | $(15,100) | $(14,811) | | Net loss | $(15,236) | $(14,302) | | Net loss per share (basic and diluted) | $(0.56) | $(0.53) | Condensed Consolidated Statements of Cash Flows This section details the cash inflows and outflows from operating, investing, and financing activities for the specified periods | Cash Flow Activity | Three Months Ended March 31, 2020 (in thousands) | Three Months Ended March 31, 2019 (in thousands) | | :----------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash used in operating activities | $(15,925) | $(16,831) | | Net cash (used in) provided by investing activities | $(19,053) | $12,752 | | Net cash provided by financing activities | $54,998 | $28,426 | | Net increase in cash, cash equivalents and restricted cash | $20,020 | $24,347 | | Cash, cash equivalents and restricted cash — end of period | $44,744 | $58,332 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations of the company's business, accounting policies, revenue, net loss per share, and significant agreements - Syndax Pharmaceuticals, Inc. is a clinical stage biopharmaceutical company incorporated in Delaware in 2005, operating in one segment from Waltham, Massachusetts[18] - The company has implemented business continuity plans to mitigate the impact of the COVID-19 pandemic, which could affect clinical development timelines, manufacturing, regulatory efforts, and overall business, financial condition, and growth prospects[22][23] - Revenue for the three months ended March 31, 2020 and 2019 was $379 thousand, derived solely from the KKC License Agreement, recognized ratably over the expected performance period through 2029[12][28][32] - Net loss per share attributable to common stockholders was $(0.56) for the three months ended March 31, 2020, compared to $(0.53) for the same period in 2019[12][34] - The company entered into a loan and security agreement with Hercules Capital, Inc. in February 2020, providing up to $30,000 thousand, with an initial advance of $20,000 thousand funded. The loan bears interest at an annual rate of 9.85% as of March 31, 2020, and is collateralized by substantially all company assets except intellectual property[60][61][62] - As of March 31, 2020, total stockholders' equity was $53,509 thousand, an increase from $31,600 thousand at December 31, 2019, primarily due to proceeds from a direct offering and stock-based compensation[11][67] - In May 2020, the company closed an underwritten public offering, selling 5,555,556 shares of common stock at $18.00 per share, generating net proceeds of $93,700 thousand[78] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operational results, clinical development progress, and the impact of COVID-19 for the three months ended March 31, 2020 - Syndax Pharmaceuticals is a clinical-stage biopharmaceutical company focused on developing cancer therapies, including entinostat, axatilimab, and SNDX-5613[80] - The company reported a net loss of $(15,236) thousand for the three months ended March 31, 2020, and an accumulated deficit of $510.7 million as of March 31, 2020[81] - The E2112 Phase 3 trial for entinostat in HR+, HER2- breast cancer is anticipated to reach 410 death events in Q2 2020, triggering the final overall survival (OS) analysis, which could lead to U.S. regulatory approval[83] - SNDX-5613, a menin inhibitor, received Orphan Drug Designation for adult and pediatric AML and is in a Phase 1/2 trial (AUGMENT-101) with additional results expected in Q4 2020[85][86][87] - Axatilimab, an anti-CSF-1R monoclonal antibody, continues enrollment in its Phase 1/2 trial for chronic graft versus host disease (cGVHD), with further results expected in Q4 2020[88] - The COVID-19 pandemic has not yet impacted financial guidance or clinical data timelines for 2020, but poses risks to supply chain, clinical development, and access to capital if disruptions persist[82][90][91][92][93] Results of Operations Comparison (Three Months Ended March 31) | Metric | 2020 (in thousands) | 2019 (in thousands) | Increase (Decrease) ($) | Increase (Decrease) (%) | | :-------------------------- | :------------------ | :------------------ | :---------------------- | :---------------------- | | License fees | $379 | $379 | $0 | 0% | | Research and development | $9,562 | $11,279 | $(1,717) | -15% | | General and administrative | $5,917 | $3,911 | $2,006 | 51% | | Total operating expenses | $15,479 | $15,190 | $289 | 2% | | Loss from operations | $(15,100) | $(14,811) | $289 | 2% | | Interest expense | $(449) | $0 | $(449) | — | | Interest income | $333 | $452 | $(119) | -26% | | Net loss | $(15,236) | $(14,302) | $934 | 7% | - Research and development expenses decreased by $1,717 thousand (15%) to $9,562 thousand, primarily due to reduced clinical activities in ENCORE programs, partially offset by increased activities for SNDX-5613[108] - General and administrative expenses increased by $2,006 thousand (51%) to $5,917 thousand, driven by increased pre-commercialization activities and employee-related expenses[110] - As of March 31, 2020, the company had $99,005 thousand in cash, cash equivalents, and short-term investments, which are expected to fund operations for at least the next 12 months[113] - Net cash used in operating activities was $(15,925) thousand for the three months ended March 31, 2020, primarily due to net loss and changes in operating assets and liabilities[127] - Net cash provided by financing activities was $54,998 thousand, mainly from a direct stock offering ($34,900 thousand) and proceeds from the Hercules term loan ($19,700 thousand)[131] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses the company's exposure to market risk, primarily interest rate sensitivity, given its financial instruments - As of March 31, 2020, the company held $44,629 thousand in cash and cash equivalents and $54,376 thousand in short-term investments, primarily exposed to interest rate sensitivity[138] - The Hercules Loan Agreement has a variable interest rate (9.85% as of March 31, 2020), with $20,000 thousand outstanding. A 100 basis point adverse change in interest rates would increase interest expense by approximately $500 thousand[139] Item 4. Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures and reports no material changes in internal control over financial reporting - Management concluded that disclosure controls and procedures were effective at a reasonable assurance level as of March 31, 2020[142][143] - No material changes in internal control over financial reporting occurred during the quarter, and the company has not experienced a material impact on internal controls despite employees working remotely due to COVID-19[144] PART II. OTHER INFORMATION This part includes information on legal proceedings, risk factors, equity sales, defaults, and a list of exhibits Item 1. Legal Proceedings This section states that as of March 31, 2020, the company was not a party to any material legal or arbitration proceedings - As of March 31, 2020, Syndax Pharmaceuticals was not involved in any material legal or arbitration proceedings[147] Item 1A. Risk Factors This section outlines significant risks that could materially and adversely affect the company's business, financial condition, results of operations, and future growth prospects - The COVID-19 pandemic poses significant risks, including potential delays in clinical trials, disruptions to the supply chain, and reduced access to capital, which could negatively impact business operations and financial results[150][151][152][153][154] - Failure of the Phase 3 clinical trial for entinostat (E2112) to demonstrate safety and efficacy, or delays in its completion, could significantly harm the business and delay commercialization[156][162][163] - The company has no sales, marketing, or distribution experience and relies on third parties for manufacturing, which could lead to challenges in commercializing approved products[167][168][191] - The company has incurred net losses since inception and anticipates continued losses, requiring additional capital that may not be available on acceptable terms, potentially forcing delays or termination of product development[236][237][241][242] - Inability to obtain or protect intellectual property rights, or breaches/terminations of license agreements (Bayer, UCB, Allergan), could lead to loss of development and commercialization rights for product candidates[249][262][265][266][269][270][273] - The market price of the company's common stock is highly volatile and could be negatively affected by various factors, including clinical trial results, regulatory actions, competition, and general economic conditions[287][288] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds were reported[306] Item 3. Defaults upon Senior Securities This section indicates that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities were reported[307] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q, including organizational documents, agreements, and certifications - The exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, Securities Purchase Agreement, Loan and Security Agreement with Hercules Capital, Inc., Non-employee Director Compensation Policy, Amended and Restated Executive Employment Agreements, and certifications by the Principal Executive and Financial Officers[309]