Syndax(SNDX) - 2020 Q4 - Annual Report

Part I Business Syndax Pharmaceuticals is a clinical-stage biopharmaceutical company focused on developing cancer therapies, with lead candidates SNDX-5613 and axatilimab, and a strategy reliant on pipeline advancement and third-party manufacturing - The company's two lead product candidates are SNDX-5613 for acute leukemias and axatilimab for chronic Graft Versus Host Disease (cGVHD)[23] - Development of entinostat, a Class I HDAC inhibitor, has been deprioritized to focus resources on the SNDX-5613 and axatilimab programs[23][44] - The company relies entirely on third-party contract manufacturers for all raw materials, active pharmaceutical ingredients, and finished products for both clinical trials and future commercial supply[74][178] Product Pipeline Overview | Product Candidate | Target | Phase | Indication(s) | | :--- | :--- | :--- | :--- | | SNDX-5613 | Menin inhibitor | Phase 1/2 (AUGMENT-101) | MLLr leukemias, NPM1c AML | | Axatilimab | CSF-1R mAB | Phase 2 (AGAVE-201) | Chronic GVHD | | Entinostat | Class I HDAC inhibitor | Under review | Deprioritized | Pipeline and Strategy The company's strategy centers on advancing SNDX-5613 and axatilimab through clinical trials, while deprioritizing the entinostat program due to failed Phase 3 results - The Phase 1/2 AUGMENT-101 trial for SNDX-5613 is ongoing, with the Phase 2 portion expected to begin in Q2 2021 and potentially serve as the basis for registration[25][31] - The pivotal Phase 2 AGAVE-201 trial for axatilimab in cGVHD began in January 2021, with topline data anticipated in 2023[29][38] - The company deprioritized the entinostat program after the Phase 3 E2112 trial did not meet its primary endpoint of a statistically significant overall survival benefit[44] Collaborations and Licensing Syndax maintains key collaborations and in-licensing agreements for its pipeline assets, including entinostat, axatilimab, and SNDX-5613, involving potential milestone and royalty payments - The company has an exclusive license agreement with Kyowa Kirin (KKC) for the development and commercialization of entinostat in Japan and Korea, which includes potential development, regulatory, and sales milestone payments up to $75 million, plus royalties[69][70][71] - Axatilimab is licensed from UCB, with potential future payments up to $119.5 million in development/regulatory milestones and $250.0 million in sales-based milestones, plus low double-digit royalties[96][97] - SNDX-5613 is licensed from Vitae (AbbVie), with potential future payments up to $99 million in development/regulatory milestones and $70.0 million in sales-based milestones, plus royalties[99][100] Intellectual Property The company's intellectual property is primarily in-licensed, with key patents for axatilimab, SNDX-5613, and entinostat expiring between 2029 and 2037 - The in-licensed composition-of-matter patents for axatilimab will expire in August 2034 or later[78] - The in-licensed patents for the menin inhibitor asset (SNDX-5613) are expected to expire between June 2037 and September 2037[83] - A key patent for entinostat, covering its crystalline polymorph B (RE45,499), is licensed from Bayer and expires in August 2029. The original composition of matter patent for entinostat expired in September 2017[87][250] Risk Factors The company faces substantial risks from COVID-19, high drug development costs, a history of net losses, reliance on third-party manufacturing, and the need for significant additional capital - The COVID-19 pandemic could adversely impact business operations, including delaying clinical trials due to site initiation issues, patient enrollment challenges, and supply chain disruptions[150][151][152] - The company has incurred net losses since inception and expects to continue incurring them for the foreseeable future, with no product revenue to date[228][229] - The company is entirely dependent on third-party suppliers for manufacturing and distribution of its clinical drug supplies and will be for any commercial products, posing risks related to quality, capacity, and regulatory compliance[178][180] - The company's success is highly dependent on its ability to protect its intellectual property, which is largely in-licensed, and it faces risks of patent expiration, litigation, and challenges in foreign jurisdictions[245][255] - The company will require substantial additional capital to fund operations, and future financing may not be available on acceptable terms, potentially leading to dilution for existing stockholders[234][235] Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - None[304] Properties The company leases its headquarters in Waltham, Massachusetts, and an additional office in New York, New York, which are deemed sufficient for future operations - The company's headquarters is a leased office space of 12,207 square feet in Waltham, Massachusetts, with the lease expiring March 1, 2022[305] - An additional 4,039 square feet of office space is leased in New York, New York, with that lease expiring August 31, 2022[305] Legal Proceedings The company is not currently a party to any material legal proceedings - Not currently a party to any material legal proceedings[307] Mine Safety Disclosures This item is not applicable to the company - Not applicable[308] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock trades on Nasdaq under "SNDX", with no history or future expectation of cash dividends, as earnings are retained for development - Common stock trades on the Nasdaq Global Select Market under the symbol "SNDX"[311] - The company has never declared or paid cash dividends and does not intend to in the foreseeable future[313] Selected Financial Data Selected financial data shows consistent license revenue, persistent net losses reaching $77.1 million in 2020, and a significant increase in cash and investments to $293.1 million by year-end 2020 Selected Consolidated Statement of Operations Data (in thousands) | | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,517 | $1,517 | $1,517 | $2,108 | $1,220 | | Research and development | $50,435 | $42,994 | $60,106 | $48,201 | $31,665 | | General and administrative | $22,505 | $16,062 | $17,287 | $15,861 | $13,321 | | Loss from operations | $(71,423) | $(57,539) | $(75,876) | $(61,954) | $(43,766) | | Net loss | $(73,158) | $(56,047) | $(73,961) | $(60,802) | $(44,472) | | Net loss per share | $(1.87) | $(1.84) | $(2.92) | $(2.90) | $(3.22) | Selected Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Cash, cash equivalents, short-term and long term investments | $293,065 | $59,775 | $80,911 | $133,220 | $105,330 | | Total assets | $300,613 | $63,525 | $83,938 | $137,186 | $109,013 | | Accumulated deficit | $(568,628) | $(495,470) | $(439,423) | $(366,111) | $(305,293) | | Total stockholders' equity | $252,188 | $31,600 | $53,047 | $104,319 | $84,139 | Management's Discussion and Analysis of Financial Condition and Results of Operations In 2020, net loss increased to $73.2 million due to higher R&D and G&A expenses, while cash and investments significantly increased to $293.1 million from equity offerings, expected to fund operations for at least 12 months Comparison of Results of Operations (in thousands) | | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $1,517 | $1,517 | $0 | 0% | | Research and development | $50,435 | $42,994 | $7,441 | 17% | | General and administrative | $22,505 | $16,062 | $6,443 | 40% | | Loss from operations | $(71,423) | $(57,539) | $(13,884) | 24% | | Net loss | $(73,158) | $(56,047) | $(17,111) | 31% | - The $7.4 million increase in R&D expense in 2020 was primarily due to increased clinical trial activities for SNDX-5613 ($5.3 million) and axatilimab ($3.7 million), and a $2.0 million milestone expense for the axatilimab program[350][352] - The company believes its cash, cash equivalents, and short-term investments of $293.1 million as of December 31, 2020, will be sufficient to fund operations for at least the next 12 months[358] Cash Flow Summary (in thousands) | | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(71,260) | $(50,612) | | Net cash provided by (used in) investing activities | $(142,530) | $12,781 | | Net cash provided by financing activities | $304,424 | $28,570 | Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate sensitivity on investments and its variable-rate term loan, though a 100 basis point change is not expected to materially affect financial position - The primary market risk is interest rate sensitivity on cash equivalents, short-term investments, and the variable-rate Loan Agreement with Hercules[391][392] - An immediate 100 basis point change in interest rates is not expected to have a material effect on the fair market value of the company's cash and investments[391] Financial Statements and Supplementary Data This section presents the company's audited consolidated financial statements for 2020, reflecting increased net losses and a strengthened cash position, with an unqualified opinion from Deloitte & Touche LLP - The financial statements were audited by Deloitte & Touche LLP, which issued an unqualified opinion[431][435] Consolidated Balance Sheet Highlights (in thousands) | | Dec 31, 2020 | Dec 31, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $115,243 | $24,609 | | Short-term investments | $177,822 | $35,166 | | Total Assets | $300,613 | $63,525 | | Total Liabilities | $48,425 | $31,925 | | Accumulated Deficit | $(568,628) | $(495,470) | | Total Stockholders' Equity | $252,188 | $31,600 | Consolidated Statement of Operations (in thousands) | | Year Ended Dec 31, 2020 | Year Ended Dec 31, 2019 | | :--- | :--- | :--- | | Total revenues | $1,517 | $1,517 | | Research and development | $50,435 | $42,994 | | General and administrative | $22,505 | $16,062 | | Net loss | $(73,158) | $(56,047) | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[396] Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2020, with an auditor attestation report omitted due to emerging growth company status - Management concluded that disclosure controls and procedures were effective as of December 31, 2020[397] - Management concluded that internal control over financial reporting was effective as of December 31, 2020[398] - The company is exempt from providing an auditor's attestation report on internal controls because it is an "emerging growth company"[399] Other Information There is no other information to report in this item - None[400] Part III Directors, Executive Officers and Corporate Governance The information required for this item, regarding directors, executive officers, and corporate governance, is incorporated by reference from the company's 2021 Proxy Statement - Information is incorporated by reference from the company's 2021 Proxy Statement[403] Executive Compensation The information required for this item, regarding executive compensation, is incorporated by reference from the company's 2021 Proxy Statement - Information is incorporated by reference from the company's 2021 Proxy Statement[404] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required for this item, regarding security ownership, is incorporated by reference from the company's 2021 Proxy Statement - Information is incorporated by reference from the company's 2021 Proxy Statement[405] Certain Relationships and Related Transactions, and Director Independence The information required for this item, regarding related party transactions and director independence, is incorporated by reference from the company's 2021 Proxy Statement - Information is incorporated by reference from the company's 2021 Proxy Statement[406] Principal Accountant Fees and Services The information required for this item, regarding principal accountant fees and services, is incorporated by reference from the company's 2021 Proxy Statement - Information is incorporated by reference from the company's 2021 Proxy Statement[407] Part IV Exhibits and Financial Statement Schedules This section lists exhibits filed with the Form 10-K, including corporate governance and material contracts, with financial statements referenced under Item 8 and schedules omitted - The financial statements required by this item are located under Item 8 of the report[409] - All financial statement schedules have been omitted because they are not required or the necessary information is provided in the Consolidated Financial Statements or Notes[410] Form 10-K Summary This item is not applicable - Not applicable[419]