Syndax(SNDX) - 2023 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements for Syndax Pharmaceuticals, Inc. as of September 30, 2023, and for the three and nine-month periods then ended, including Balance Sheets, Statements of Comprehensive Loss, Statements of Cash Flows, and accompanying Notes to the Financial Statements, prepared in accordance with U.S. GAAP Condensed Consolidated Balance Sheets The balance sheet shows a decrease in total assets to $399.2 million as of September 30, 2023, from $497.2 million at year-end 2022, primarily due to a reduction in short-term investments, while total liabilities increased to $40.0 million from $29.8 million, and total stockholders' equity decreased from $467.4 million to $359.2 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $94,550 | $74,356 | | Short-term investments | $269,006 | $401,446 | | Total Assets | $399,224 | $497,236 | | Liabilities & Equity | | | | Total current liabilities | $39,174 | $29,065 | | Total liabilities | $40,038 | $29,787 | | Total stockholders' equity | $359,186 | $467,449 | | Total Liabilities & Equity | $399,224 | $497,236 | Condensed Consolidated Statements of Comprehensive Loss The company reported a net loss of $51.1 million for the third quarter of 2023, an increase from the $35.4 million loss in the same period of 2022, with the net loss for the nine months ended September 30, 2023, reaching $136.9 million, compared to $110.1 million in the prior year period, driven by higher research and development and general and administrative expenses Operating Results (in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | Nine Months 2023 | Nine Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $39,087 | $26,901 | $107,906 | $86,658 | | General and administrative | $17,268 | $8,240 | $44,143 | $23,066 | | Loss from operations | $(56,355) | $(35,141) | $(152,049) | $(109,724) | | Net loss | $(51,146) | $(35,403) | $(136,887) | $(110,144) | | Net loss per share | $(0.73) | $(0.58) | $(1.97) | $(1.84) | Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2023, net cash used in operating activities was $119.3 million, net cash provided by investing activities was $133.9 million mainly from maturities of investments exceeding purchases, and net cash provided by financing activities was $5.6 million primarily from stock option exercises Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(119,252) | $(110,781) | | Net cash provided by (used in) investing activities | $133,899 | $(48,559) | | Net cash provided by financing activities | $5,649 | $8,752 | | Net increase (decrease) in cash | $20,296 | $(150,588) | Notes to Condensed Consolidated Financial Statements The notes provide details on significant accounting policies, collaborative and license agreements, stock-based compensation, and stockholders' equity, highlighting the Incyte collaboration for axatilimab where development costs are shared 45% by Syndax and 55% by Incyte, significant license agreements with potential milestone payments, and a nearly doubled year-over-year stock-based compensation expense for the nine-month period - Under the Incyte collaboration, Syndax is responsible for 45% of shared global and U.S. development costs for axatilimab, while Incyte is responsible for 55%[26] - The company has potential future milestone payment obligations of up to $99.0 million to Allergan (AbbVie) for Menin Assets, $119.5 million to UCB for axatilimab, and $150.0 million to Bayer for entinostat[32][34][36] Stock-Based Compensation Expense (in thousands) | Period | 2023 | 2022 | | :--- | :--- | :--- | | Three Months Ended Sep 30 | $8,321 | $4,362 | | Nine Months Ended Sep 30 | $22,624 | $11,778 | - In May 2023, the company established a new At-the-Market (ATM) equity offering program for up to $200.0 million, with no shares sold under this program as of September 30, 2023[55] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, clinical progress, and strategic outlook, highlighting positive pivotal data for its lead candidates, revumenib and axatilimab, with plans for regulatory submissions by year-end 2023, detailing a significant year-over-year increase in operating expenses driven by advancing clinical programs and pre-commercialization activities, and confirming sufficient capital to fund operations for at least the next 12 months Company Overview and Clinical Developments Syndax is a clinical-stage biopharmaceutical company focused on cancer therapies with two lead candidates, revumenib and axatilimab, for which the company announced positive pivotal trial data, initiating an NDA submission for revumenib in R/R KMT2Ar acute leukemia under the FDA's RTOR program and planning a BLA submission for axatilimab in cGVHD by year-end 2023 following positive AGAVE-201 trial results - The company's two lead product candidates are revumenib (for acute leukemias) and axatilimab (for cGVHD and IPF)[62] - Positive topline data from the pivotal AUGMENT-101 trial of revumenib led to the initiation of an NDA submission, expected to be complete by year-end 2023[65] - Following positive topline data from the pivotal AGAVE-201 trial, Syndax and its partner Incyte expect to submit a BLA for axatilimab by year-end 2023[66] Results of Operations Operating expenses increased significantly for both the three and nine-month periods ended September 30, 2023, compared to 2022, with R&D expenses rising 45% to $39.1 million and G&A expenses rising 110% to $17.3 million for the third quarter, and R&D expenses increasing 25% to $107.9 million and G&A expenses increasing 91% to $44.1 million for the nine-month period, primarily due to higher employee-related costs, professional fees, and clinical and manufacturing activities for the lead programs Comparison of Operating Expenses (in thousands) | Expense Category | Q3 2023 | Q3 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Research and development | $39,087 | $26,901 | 45% | | General and administrative | $17,268 | $8,240 | 110% | | Total operating expenses | $56,355 | $35,141 | 60% | Comparison of Operating Expenses (in thousands) | Expense Category | Nine Months 2023 | Nine Months 2022 | Change (%) | | :--- | :--- | :--- | :--- | | Research and development | $107,906 | $86,658 | 25% | | General and administrative | $44,143 | $23,066 | 91% | | Total operating expenses | $152,049 | $109,724 | 39% | Liquidity and Capital Resources As of September 30, 2023, the company had $379.3 million in cash, cash equivalents, and investments, which management believes is sufficient to cover operating expenses and capital requirements for at least the next 12 months, with a $200.0 million ATM program in place for future capital needs, though no shares were sold under it during the quarter, and future capital requirements will depend on clinical trial progress, regulatory outcomes, and commercialization costs - The company had cash, cash equivalents, and short- and long-term investments totaling $379.3 million as of September 30, 2023[98] - Management believes current cash is sufficient to fund operations for at least the next 12 months[98][101] - A new $200.0 million At-the-Market (ATM) program was established in May 2023, with the full amount available as of October 27, 2023[100] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity related to its cash and investment portfolio, but due to the short-term nature and low-risk profile of its investments, management does not expect a 100 basis point change in interest rates to have a material effect on its financial position, and inflation is not believed to have had a significant impact on results - The company's primary market risk exposure is to interest rate changes on its $94.6 million in cash and cash equivalents and $284.7 million in investments[114] - Due to the short-term maturities of its investments, management believes an immediate 100 basis point change in interest rates would not have a material effect on the fair market value of its portfolio[114] Controls and Procedures Based on an evaluation conducted by management, including the CEO and CFO, the company's disclosure controls and procedures were concluded to be effective as of September 30, 2023, with no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[116] - There were no material changes to the company's internal control over financial reporting during the third quarter of 2023[117] PART II. OTHER INFORMATION Legal Proceedings This section states that as of September 30, 2023, Syndax Pharmaceuticals was not a party to any material legal or arbitration proceedings, and no governmental proceedings were pending or known to be contemplated against the company - As of September 30, 2023, the company was not party to any material legal proceedings[120] Risk Factors This section provides a comprehensive overview of the significant risks and uncertainties that could adversely affect the company's business, financial condition, and results of operations, categorized into business and industry, financial position and capital needs, intellectual property, and stock ownership, highlighting dependence on the clinical and commercial success of its two lead product candidates, inherent uncertainties of the regulatory approval process, the need for future financing, and the ability to protect its intellectual property Risks Related to Our Business and Industry The company's success is highly dependent on the successful clinical development, regulatory approval, and commercialization of its lead candidates, revumenib and axatilimab, facing risks including potential failure to demonstrate safety and efficacy, delays in clinical trials, reliance on the Incyte collaboration for axatilimab, manufacturing dependence on third parties, intense competition, and challenges in achieving market acceptance and reimbursement - The company's prospects are significantly harmed if it is unable to successfully complete clinical development, obtain regulatory approval for, and commercialize its product candidates[123][125] - The company is dependent on its collaboration with Incyte to develop and commercialize axatilimab; failure by Incyte to perform its obligations could substantially delay or terminate the program[133][134] - The company relies on third-party suppliers and Incyte for manufacturing and distribution, and has no direct control over their capacity, quality, or compliance with cGMP regulations[145][147] Risks Related to Our Financial Position and Capital Needs Syndax has a history of net losses and expects them to continue as it advances its programs, with no product revenue and a requirement for substantial additional capital to fund operations, clinical development, and potential commercialization, and future financing may not be available on acceptable terms, if at all, which could force the company to delay or scale back its plans - The company has incurred net losses since inception (except in 2021) and anticipates continued significant losses for the foreseeable future[196][197] - The company will require additional capital to finance its operations, and if unable to raise funds, may have to delay, scale back, or discontinue development or commercialization of its product candidates[201][203] - The company's ability to use its net operating loss (NOL) carryforwards may be limited due to past and potential future ownership changes under Section 382 of the Code[207] Risks Related to Intellectual Property The company's success depends on its ability to obtain, maintain, and protect its intellectual property, including risks related to the uncertainty of patent prosecution, potential infringement lawsuits, and the difficulty of enforcing IP rights globally, and is also dependent on its license agreements with UCB for axatilimab and AbbVie (formerly Vitae) for revumenib, where a breach or termination could result in the loss of rights to these candidates - The company's success depends on its ability to establish, maintain, and protect patents and other intellectual property rights for its product candidates[209] - A breach or termination of the license agreement with UCB could lead to the loss of development and commercialization rights for axatilimab[219][222] - A breach or termination of the license agreement with AbbVie (Vitae) could lead to the loss of development and commercialization rights for revumenib[224][227] Risks Related to Ownership of Our Common Stock and Other General Matters Ownership of the company's common stock involves risks including high price volatility, potential dilution from future equity or debt offerings, and significant influence exerted by principal stockholders and management, alongside risks from unstable market conditions, potential securities litigation, and the need to maintain effective internal controls over financial reporting - The trading 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 will result in dilution to existing stockholders[244] - As of September 30, 2023, executive officers, directors, and 5%+ stockholders beneficially owned approximately 40.4% of the company's voting stock, allowing them to exert significant influence[248] Other Information This section discloses that during the last fiscal quarter, none of the company's directors or officers adopted or terminated any pre-arranged trading plans for the purchase or sale of the company's securities - No directors or officers adopted or terminated contracts, instructions, or written plans for the purchase or sale of company securities during the last fiscal quarter[253] Exhibits This section provides a list of the exhibits filed with the Form 10-Q, including the company's Amended and Restated Certificate of Incorporation and Bylaws, as well as certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act - The report includes a list of filed exhibits, such as charter documents and required officer certifications (Exhibits 31.1, 31.2, 32.1)[255]