Syndax(SNDX) - 2023 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements Syndax Pharmaceuticals reported a $41.1 million net loss for Q1 2023, with total assets at $459.8 million Condensed Consolidated Balance Sheets Total assets decreased to $459.8 million as of March 31, 2023, primarily due to reduced cash and investments Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $57,517 | $74,356 | | Short-term investments | $374,876 | $401,446 | | Total current assets | $441,511 | $489,786 | | Total assets | $459,826 | $497,236 | | Total current liabilities | $23,721 | $29,065 | | Total liabilities | $24,321 | $29,787 | | Total stockholders' equity | $435,505 | $467,449 | Condensed Consolidated Statements of Comprehensive Loss Q1 2023 net loss increased to $41.1 million due to higher operating expenses, partially offset by increased interest income Q1 Financial Performance (in thousands, except per share data) | Metric | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Research and development | $34,054 | $30,022 | | General and administrative | $11,961 | $6,836 | | Total operating expenses | $46,015 | $36,858 | | Loss from operations | ($46,015) | ($36,858) | | Interest income | $5,076 | $224 | | Net loss | ($41,126) | ($37,169) | | Net loss per share | ($0.59) | ($0.63) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $39.2 million in Q1 2023, with overall cash decreasing by $16.8 million Cash Flow Summary (in thousands) | Activity | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($39,228) | ($41,931) | | Net cash provided by investing activities | $19,915 | $8,182 | | Net cash provided by financing activities | $2,474 | $557 | | Net decrease in cash | ($16,839) | ($33,192) | Notes to Condensed Consolidated Financial Statements Notes detail significant accounting policies, key collaborations like Incyte for axatilimab, and license agreements with milestone obligations - The company is a clinical-stage biopharmaceutical firm focused on developing cancer therapies, operating in a single segment[18] - Entered a collaboration with Incyte for the worldwide development and commercialization of axatilimab. Syndax and Incyte share U.S. profits and losses equally, and global development costs at a 45% (Syndax) / 55% (Incyte) split. Syndax is eligible for up to $450 million in milestones plus tiered royalties on ex-U.S. sales[28][29] - The company has significant license agreements with milestone payment obligations: up to $99.0 million to Allergan (for revumenib), up to $119.5 million to UCB (for axatilimab), and up to $150.0 million to Bayer (for entinostat)[33][36][38] Stock-Based Compensation Expense (in thousands) | Category | Q1 2023 | Q1 2022 | | :--- | :--- | :--- | | Research and development | $2,778 | $1,353 | | General and administrative | $3,460 | $2,125 | | Total | $6,238 | $3,478 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses increased operating expenses for Q1 2023 and asserts $449.0 million in cash is sufficient for 12 months Company and Clinical Overview Syndax focuses on revumenib and axatilimab, with key clinical milestones expected in 2023, including NDA and BLA submissions - The company's two lead product candidates are revumenib (for KMT2Ar acute leukemias and NPM1 mutant AML) and axatilimab (for cGVHD and IPF)[61] - Key upcoming milestones for revumenib include sharing topline data from the KMT2Ar pooled analysis in Q3 2023 and submitting an NDA by the end of 2023[64] - Key upcoming milestones for axatilimab include reporting topline data from the pivotal AGAVE-201 trial in mid-2023 and filing a BLA by year-end 2023[64][65] Results of Operations Total operating expenses increased 25% to $46.0 million in Q1 2023, driven by higher R&D and G&A costs Comparison of Operations (in thousands) | Item | Q1 2023 | Q1 2022 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $34,054 | $30,022 | $4,032 | 13% | | General and administrative | $11,961 | $6,836 | $5,125 | 75% | | Total operating expenses | $46,015 | $36,858 | $9,157 | 25% | | Net loss | ($41,126) | ($37,169) | ($3,957) | 11% | - The increase in R&D expenses was mainly due to a $4.9 million rise in employee-related costs and increased manufacturing activities for revumenib, offset by lower license fees[84][85] - The increase in G&A expenses was primarily driven by a $3.4 million rise in employee-related expenses and a $1.2 million increase in professional fees[87] Liquidity and Capital Resources The company held $449.0 million in cash and investments as of March 31, 2023, deemed sufficient for at least 12 months - The company possessed $449.0 million in cash, cash equivalents, and short and long-term investments as of March 31, 2023[91] - Management asserts that current cash reserves are sufficient to fund operations for at least the next 12 months[91][93] - The company has an active At-the-Market (ATM) program with $49.7 million available for future sales as of May 3, 2023[92] Quantitative and Qualitative Disclosures About Market Risk Primary market risk is interest rate sensitivity on its $432.4 million cash and investment portfolio, with no material impact expected - The primary market risk is interest rate sensitivity on cash and investments[105] - Due to the short-term maturities of investments, an immediate 100 basis point change in interest rates is not expected to have a material effect on the fair market value of the portfolio[105] Controls and Procedures Management concluded disclosure controls and procedures were effective as of March 31, 2023, with no material changes to internal controls - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2023[107] - No material changes to the internal control over financial reporting occurred during the quarter ended March 31, 2023[108] PART II. OTHER INFORMATION Legal Proceedings As of March 31, 2023, the company was not party to any material legal or governmental proceedings - As of March 31, 2023, the company was not party to any material legal proceedings[110] Risk Factors The company faces significant risks including clinical development failures, reliance on third parties, financial needs, and intellectual property challenges Risks Related to Our Business and Industry Success depends on clinical development and approval of product candidates, with risks including trial failures, reliance on third parties, and market acceptance - The company may be unable to complete the development and commercialization of its product candidates, which would significantly harm business prospects[113][115] - The company is dependent on its collaboration with Incyte to develop and commercialize axatilimab; failure by Incyte to perform could terminate or delay the program[122][123] - Reliance on third-party suppliers for manufacturing and distribution poses risks related to capacity, quality control, and regulatory compliance (cGMP)[137][139][140] - Product candidates may cause undesirable side effects that could delay or prevent regulatory approval or limit their commercial use[147] Risks Related to Our Financial Position and Capital Needs The company has a history of net losses, an accumulated deficit of $734.2 million, and will require substantial additional dilutive capital - The company has incurred net losses since inception (except 2021) and anticipates continued losses. The accumulated deficit was $734.2 million as of March 31, 2023[189][190] - The company will require additional capital to finance its operations, and such financing may not be available on acceptable terms, or at all[194][195] - The ability to use net operating loss (NOL) carryforwards may be limited by Section 382 of the Code due to past ownership changes in 2007, 2015, and 2020, and potential future changes[200] Risks Related to Intellectual Property Success depends on protecting intellectual property, with risks including patent prosecution challenges, license agreement breaches, and changes in patent law - The company's success is highly dependent on its ability to establish, maintain, and protect patents and other intellectual property rights[203] - A breach or termination of the UCB license agreement could lead to the loss of development and commercialization rights for axatilimab[216][219] - A breach or termination of the AbbVie (formerly Vitae) license agreement could lead to the loss of rights for revumenib[220][223] - Changes in U.S. patent law, such as the America Invents Act and recent Supreme Court rulings, could increase uncertainties and costs, potentially weakening the company's ability to protect its products[228][229] Risks Related to Ownership of Our Common Stock and Other General Matters Risks include common stock price volatility, potential dilution from future financing, significant control by principal stockholders, and anti-takeover provisions - The market price of the company's common stock is highly volatile and subject to wide fluctuations[241] - Future sales of equity or debt securities to fund operations may result in dilution to existing stockholders[244] - As of March 31, 2023, principal stockholders and management owned approximately 41.4% of the company's stock, allowing them to exert significant influence over stockholder-approved matters[248] - Anti-takeover provisions in the company's charter and Delaware law could make an acquisition more difficult, potentially limiting stockholder opportunities for a premium[252] Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents and required SEC certifications - Lists exhibits filed with the report, including corporate governance documents, employment agreements, and required SEC certifications[254]