Syndax(SNDX) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Unaudited Financial Statements The company presents its unaudited condensed consolidated balance sheets, statements of comprehensive loss, cash flows, and related notes Condensed Consolidated Balance Sheets | ASSETS (In thousands) | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Cash and cash equivalents | $64,386 | $115,243 | | Short-term investments | $206,949 | $177,822 | | Total current assets | $278,947 | $298,864 | | Total assets | $279,672 | $300,613 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | Total current liabilities | $24,568 | $18,872 | | Total long-term liabilities | $26,899 | $29,553 | | Total liabilities | $51,467 | $48,425 | | Total stockholders' equity | $228,205 | $252,188 | Condensed Consolidated Statements of Comprehensive Loss | (In thousands, except share and per share data) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Revenue: License fees | $379 | $379 | | Total revenues | $379 | $379 | | Operating expenses: Research and development | $21,870 | $9,562 | | Operating expenses: General and administrative | $5,672 | $5,917 | | Total operating expenses | $27,542 | $15,479 | | Loss from operations | $(27,163) | $(15,100) | | Net loss | $(27,723) | $(15,236) | | Comprehensive loss | $(27,710) | $(15,188) | | Net loss per share attributable to common stockholders—basic and diluted | $(0.54) | $(0.56) | Condensed Consolidated Statements of Cash Flows | (In thousands) | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(22,589) | $(15,925) | | Net cash used in investing activities | $(29,228) | $(19,053) | | Net cash provided by financing activities | $960 | $54,998 | | Net (decrease) increase in cash, cash equivalents and restricted cash | $(50,857) | $20,020 | | Cash, cash equivalents and restricted cash—end of period | $64,501 | $44,744 | Notes to Condensed Consolidated Financial Statements - Syndax Pharmaceuticals, Inc is a clinical-stage biopharmaceutical company incorporated in Delaware in 2005, focusing on developing cancer therapies[22] - The company's financial statements are prepared in conformity with U.S GAAP, and the interim results are not necessarily indicative of future periods[23] - The COVID-19 pandemic could impact clinical development timelines, manufacturing, and regulatory efforts, posing a material adverse effect on business, financial condition, results of operations, and growth prospects[26][27] - Revenue from contracts with customers is solely derived from a license agreement with Kyowa Kirin, Co, Ltd (KKC) for entinostat in Japan and Korea, with $0.4 million recognized for the three months ended March 31, 2021 and 2020[30][34] Net Loss per Share Attributable to Common Stockholders (In thousands, except share and per share data): | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net loss attributable to common stockholders | $(27,723) | $(19,142) | | Net loss per share—basic and diluted | $(0.54) | $(0.56) | | Weighted-average common shares | 51,499,831 | 34,328,640 | - The company has significant license agreements for its product candidates: AbbVie License Agreement for Menin Assets (SNDX-5613), UCB License Agreement for axatilimab, and Bayer Agreement for entinostat[38][39][45] - The E2112 trial for entinostat did not achieve its primary endpoint, leading the company to deprioritize the entinostat program[43] Fair Value Measurements (In thousands): | Asset Category | March 31, 2021 (Total Carrying Value) | December 31, 2020 (Total Carrying Value) | | :--- | :--- | :--- | | Cash and cash equivalents | $64,386 | $115,243 | | Short-term investments | $206,949 | $177,822 | | Total assets at fair value | $271,335 | $293,065 | Accrued Expenses and Other Current Liabilities (In thousands): | Category | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Accrued clinical costs | $8,997 | $7,132 | | Accrued compensation and related costs | $1,579 | $3,213 | | Total accrued expenses and other current liabilities | $11,414 | $11,246 | Stock-Based Compensation Expense (In thousands): | Category | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Research and development | $903 | $532 | | General and administrative | $1,864 | $1,297 | | Total | $2,767 | $1,829 | - The company entered into a loan and security agreement with Hercules Capital, Inc in February 2020 for up to $30.0 million, with $20.0 million funded[61][63] Changes in Stockholders' Equity (In thousands, except share data): | Metric | Balance as of Dec 31, 2020 | Stock-based compensation expense | Net loss | Balance as of Mar 31, 2021 | | :--- | :--- | :--- | :--- | :--- | | Additional Paid-In Capital | $820,815 | $2,767 | — | $824,542 | | Accumulated Deficit | $(568,628) | — | $(27,723) | $(596,351) | | Total Stockholders' Equity | $252,188 | $2,767 | $(27,723) | $228,205 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's business overview, clinical progress, financial results, liquidity, and capital resources Company Overview - Syndax Pharmaceuticals is a clinical-stage biopharmaceutical company focused on cancer therapies, with lead product candidates SNDX-5613 and axatilimab[77] - The company has no approved products, incurring significant net losses since inception, with a net loss of $27.7 million and an accumulated deficit of $596.4 million as of March 31, 2021[78] Key Financials (In millions): | Metric | March 31, 2021 | | :--- | :--- | | Net Loss | $(27.7) | | Accumulated Deficit | $(596.4) | | Cash, Cash Equivalents and Short-term Investments | $271.3 | Clinical Developments - SNDX-5613 showed positive data in R/R acute leukemias, with an overall response rate (ORR) of 48% and 67% of responders achieving MRD- status[80][81][82] - Enrollment is complete for the Phase 2 expansion of axatilimab in cGVHD, with topline data from the pivotal AGAVE-201 trial anticipated in 2023[83][84][85] COVID-19 Business Update - The company has implemented business continuity plans to mitigate COVID-19 impacts, though the pandemic could still materially adversely affect business operations[86][90] - Supply chain for key product candidates is currently adequate, but the pandemic could cause disruptions and delays in trial activities[87][88] - Persistent disruption of global financial markets due to COVID-19 could hinder access to additional capital, negatively affecting operations[89] Financial Overview - The company has not generated product revenues to date, with all revenue derived from the KKC license agreement for entinostat[91][92] - Research and development expenses are central to the business model and are expected to increase, totaling $327.1 million from inception through March 31, 2021[95] - General and administrative expenses are expected to increase with headcount and preparation for potential commercialization[99][100][101] Results of Operations Comparison of Three Months Ended March 31, 2021 vs. 2020 (In thousands): | Metric | 2021 | 2020 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | License fees | $379 | $379 | $0 | 0% | | Research and development | $21,870 | $9,562 | $12,308 | 129% | | General and administrative | $5,672 | $5,917 | $(245) | -4% | | Loss from operations | $(27,163) | $(15,100) | $12,063 | 80% | | Interest expense | $(623) | $(449) | $(174) | 39% | | Interest income | $120 | $333 | $(213) | -64% | | Net loss | $(27,723) | $(15,236) | $12,487 | 82% | - The significant increase in R&D expenses (129% YoY) was driven by increased clinical activities for SNDX-6352 and SNDX-5613, and a $2.0 million milestone expense[107] - General and administrative expenses decreased slightly due to reduced pre-commercialization activities, partially offset by higher employee expenses[109] Liquidity and Capital Resources - As of March 31, 2021, the company had $271.3 million in cash, cash equivalents, and short-term investments, expected to fund operations for at least the next 12 months[112] - Recent financing activities include public offerings in December 2020 ($135.0 million net proceeds) and May 2020 ($107.9 million net proceeds)[113][114] - A new At-the-Market (ATM) equity offering program was established in March 2021, allowing the sale of up to $75.0 million in common stock[119] - Future funding requirements are substantial and the company anticipates needing additional capital through equity, debt, or collaborations[121][122][124] Summary of Cash Flows (In thousands): | Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(22,589) | $(15,925) | | Net cash used in investing activities | $(29,228) | $(19,053) | | Net cash provided by financing activities | $960 | $54,998 | - Net cash used in operating activities increased to $22.6 million in Q1 2021 from $15.9 million in Q1 2020, primarily due to higher net loss[126][127] - Net cash used in investing activities increased to $29.2 million in Q1 2021, mainly due to purchases of short-term investments[128] - Net cash provided by financing activities significantly decreased to $1.0 million in Q1 2021 from $55.0 million in Q1 2020, which included proceeds from stock offerings[131][132] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk exposure is interest rate sensitivity affecting its investments and variable-rate debt - The company's primary market risk exposure is interest rate sensitivity, affecting its $64.4 million in cash/cash equivalents and $206.9 million in short-term investments[136] - An immediate 100 basis point change in interest rates would not materially affect the fair market value of cash equivalents and short-term investments[136] - The $20.0 million outstanding term loan bears a variable interest rate; a 100 basis point adverse change could increase interest expense by approximately $0.5 million[137] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - As of March 31, 2021, management concluded that disclosure controls and procedures were effective at the reasonable assurance level[140] - There were no material changes in internal control over financial reporting during the most recent fiscal quarter[141] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reports no involvement in any material legal or arbitration proceedings as of the reporting date - As of March 31, 2021, the company was not involved in any material legal or arbitration proceedings, and no governmental proceedings were pending or contemplated[143] Item 1A. Risk Factors The company outlines significant risks related to its business, financial position, intellectual property, and stock ownership Risks Related to Our Business and Industry - The COVID-19 pandemic could adversely impact business operations, clinical trials, supply chain, and access to capital[146][147][148][149] - Failure to successfully complete clinical development, obtain regulatory approval, and commercialize product candidates would significantly harm business prospects[152][153] - Interim clinical trial data may change, and preliminary results are not predictive of final outcomes, as shown by the entinostat E2112 trial's failure[157][158] - The company relies on third-party suppliers for manufacturing, and any failure to comply with cGMPs could delay or prevent product development[169][170] - Product candidates may cause undesirable side effects, leading to trial delays, regulatory denial, or market withdrawal[176][177] - The company faces significant competition from other biotechnology and pharmaceutical companies with greater resources and experience[181][183][185] - Dependence on sublicensees and licensors for product development means their actions could adversely affect the company's business[186][187] - Relationships with healthcare providers are subject to anti-kickback and fraud laws, with potential for significant penalties for non-compliance[208][211] - Significant disruptions to IT systems or data security incidents could result in financial, legal, and reputational harm[212][213][215] Risks Related to Our Financial Position and Capital Needs - The company has incurred net losses since inception and anticipates continued losses, with an accumulated deficit of $596.4 million as of March 31, 2021[217][218] - Without product revenue, profitability depends on successful commercialization, which is uncertain and requires significant future capital[219][221][222] - Additional capital will be required to fund planned operations, and if not available, the company may have to delay or discontinue product development[223][224] - The loan agreement with Hercules Capital places restrictions on operating and financial flexibility, and a default could accelerate repayment[228][229] - Changes in tax laws or their interpretation could adversely affect the company's financial condition[230] - The company's ability to use net operating loss carryforwards (NOLs) may be limited due to ownership changes, potentially increasing future tax liability[231][232] Risks Related to Intellectual Property - Failure to obtain or protect intellectual property rights could impair the company's ability to compete effectively[234][235][236] - Patent protection for product candidates might expire before commercialization, limiting market exclusivity; entinostat's composition of matter patent expired in 2017[237][239] - Protecting intellectual property rights globally is expensive and challenging, as foreign laws may offer less protection[243][244][245] - Breaching license agreements for key products could result in losing development and commercialization rights[246][249][250][254][255][258] - Changes in patent law could diminish patent value and increase prosecution and enforcement costs[259][260][261] - Failure to comply with procedural requirements for patent maintenance can lead to loss of patent rights[262][263][264] - Claims of misappropriation of intellectual property or inability to protect trade secrets could harm the business[269][272] Risks Related to Ownership of Our Common Stock and Other General Matters - The market price of the common stock is highly volatile due to various factors, potentially leading to loss of investment[273][274] - Future equity or debt offerings may dilute existing stockholders and impose restrictions on the business[275][276][277] - Lack of research coverage by analysts or adverse opinions could negatively impact stock price and trading volume[279] - Principal stockholders and management own a significant percentage (29.2% as of March 31, 2021) of voting stock, allowing them to exert significant influence[280] - As an 'emerging growth company,' the company may use reduced disclosure requirements, which could make its stock less attractive[281][283][284] - Failure to maintain effective internal control over financial reporting could adversely affect investor confidence and stock value[288][289] - Provisions in charter documents and Delaware law may have anti-takeover effects, discouraging acquisitions[290] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities or use of proceeds during the period - No unregistered sales of equity securities or use of proceeds were reported for the period[291] Item 3. Defaults upon Senior Securities The company reports no defaults upon senior securities during the period - No defaults upon senior securities were reported for the period[292] Item 6. Exhibits This section lists all exhibits filed with the report, including corporate documents and officer certifications - Exhibits include Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Certifications of Principal Executive and Financial Officers, and financial statements in iXBRL format[294]