Syndax Pharmaceuticals, Inc. (SNDX) Q3 2017 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Syndax Third Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will begin at that time. [Operator Instructions]. As a reminder, this conference call maybe recorded. I would now like to introduce your host for today conference, Miss. Melissa Forst of Argot Partners. You may proceed.

Thank you, operator. Welcome, and thank you to those of you joining us on the line and the webcast this afternoon for a review of Syndax's third quarter financial and operating results. I'm Melissa Forst with Argot Partners and with me this afternoon to discuss the results and provide an update are Dr. Briggs Morrison, Chief Executive Officer and Rick Shea, Chief Financial Officer. Also joining on the call today for the question-and-answer session will be Michael Metzger, President and Chief Operating Officer and Michael Meyers, Chief Medical Officer. The call is being accompanied by a slide deck that has been posted on the Company's website. So, I would ask you to please turn to our forward-looking statements on Slide 2. Before we get begin, I would like to remind you that any statements made during this call that are not historical are considered to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the Risk Factors section in the Company's most recent Quarterly Report on the Form 10-Q and other reports filed with the SEC. Any forward-looking statements represent our views as of today November 7, 2017 only. A replay of the call will be available on the Company's website and [technical difficulty] please turn to Slide 3. And I'm pleased to turn the call over to Dr. Briggs Morrison, Chief Executive Officer.

Great, thank you very much, Melissa. And thank you to everyone who's joining us on today's call and on the webcast. This afternoon I'll share the progress we've made during the third quarter as we continue to execute on our corporate strategy and support of our primary mission which is develop innovative therapies that will enable patients with cancer to live longer and better than ever before. Slide 3 briefly summarizes our corporate pipeline which includes two potential best-in-class molecules; Entinostat and SNDX-6352 which are being tested in five ongoing clinical trials across six different indications. This quarter we expanded our pipeline with third set of assets through a license agreement with Vitae Pharmaceuticals, a subsidiary of Allergan for a portfolio of small molecule inhibitors of the Menin MLL-r interaction. I'll share more about these assets later in this call. I'd also like to highlight that Kyowa Hakko Kirin recently dosed the first patient in a pivotal trial of entinostat which triggered $5 million milestone payment to Syndax from Kirin. Similar to our ongoing Phase 3 study E2112 KHK is running a randomized double-blind, placebo-controlled, pivotal Phase 2 trial testing the combination of entinostat and exemestane versus exemestane monotherapy in Japanese patients with advanced or recurrent hormone receptor positive HER2 negative breast cancer. Slide 4 provides an update on the milestones that we've previously communicated to all of you. I'm pleased to see the steady progress again these milestone. Slide 5 is an in-depth update to Phase 2 ENCORE 601 trial. As you saw in since the abstract that were released this morning we've seen some interesting responses in the PD-1 refractory non-small cell lung cancer patients treated with entinostat and KEYTRUDA in combination. These findings reinforce the results from our PD-1 refractory melanoma cohort that we presented at ASCO earlier this year adding additional data to support the concept that entinostat can reserve resistance to PD-1 therapies. This data is well been received by our non-small cell lung cancer investigators as it's led to rapid accrual of the second stage of the cohort which has now reached its target of enrolling a total 56 patients. As we also noted in the abstracts release this morning. We've met the pre-specified objective response threshold to advance into the second stage of the Phase 2 trial for the non-small cell lung cancer cohort which is enrolling patients who we've not previously received PD-L1 inhibitors. The goal there was to have at least four responses in 17 patients. However, despite this extremely promising data we've chosen not to progress to the second stage of this cohort at this time. As you know there are many pivotal trials reading out over the near term in first line non-small cell lung cancer. We like to see the data from some of those trials before we undertake further trials in this population of patients. This Saturday at SITC at Leena Gandhi from NYU who've delivered oral presentation covering the safety and efficacy data from the Stage 1 of the both the Encore 601 non-small cell lung cancer cohort. The 17 patients in the naïve cohort and the 31 patients in the refractory non-small cell lung cancer. Slide 6 provides the summary of the target enrolment and current enrolment status for each cohort of the Encore 601 trial which as five and two stages designed. I'm pleased to report that enrolment in all cohorts made remarkable progress this quarter with both the first stage of colorectal cohort and the second stage of PD-L1 refractory non-small cell lung cancer cohort achieving full enrolment. You'll again note that for the cohort of non-small cell lung cancer patients who've not previously been treated with PD-1 antagonist with we've met the threshold to advance to Stage 2 with at least four responses. As previously communicated, you can expect update on the clinical data from the refractory non-small cell lung cancer cohort, full 56 patients. The refractory melanoma cohort the full 34 patients and the colorectal cohort the first 13 patients all in the first half of 2018. Let me now make a few comments about refractory melanoma program. Slide 7 highlights the unmet need for new treatment options for patients who fail of PD-1 antagonist either alone or in combination with CTLA-4 inhibitor. It's clearly an area of high unmet medical need and based upon the promising data from our Encore 601 trial that we presented at ASCO this year and this population of patients with refractory melanoma we undertook a series of regulatory consultations both with the FDA and with European agency. We anticipate providing an update on our clinical development and registration plans for this indication in the first half of 2018 along with the updated clinical data on the full 34 patients from the refractory melanoma cohort of Encore 601. Turning to Slide 8, I'll just briefly review the status of the remainder of the Encore program, enrolment in 602 which is our Phase 1b/2 trial exploring the combination of entinostat with Roche Genentech's anti PD-L1 antibody TECENTRIQ in women with metastatic triple negative breast cancer who have received one or two prior lines of systemic therapy. This remains ongoing for the randomized Phase 2 portion of the trial. We now expect to complete enrolment in the first half of 2018 and remain on track to have results in the second half of 2018. For Encore 603 which is our Phase 1b/2 trial testing entinostat in combination with BAVENCIO, the anti-PD-L1 antibody developed by the Pfizer-Merck KGaA alliance in women with advanced ovarian cancer who've previously received three to five lines therapy enrolment similarly remains ongoing for the Phase 2 portion of the trial as previously shared, we expect to complete enrolment in the first half of 2018 and present results in the first half of 2019. Both of these studies the primary endpoint is progression-free survival and a secondary endpoint include overall response rate and overall survival. Let me now provide an update on E2112 our Phase 3 breast cancer trial. Slide 9 summarizes the trial design and the endpoints. We've recently learned from the trial sponsor the ECOG-ACRIN cancer research group that the data safety monitor committee has completed a final PFS analysis and the first interim OS analysis. The result of this analysis are held confidentially the ECOG-ACRIN study statistician and the Data Safety Monitoring Committee. No communication regarding this analysis will be release until completion of enrolment which ECOG-ACRIN expects will occur in the first half of 2018. As you may recall E2112 represents one of the first Phase 3 trials involving a novel mechanism of action in this setting since the approval of agents targets CKD4/6. The trial is 83% enrolled and we continue to work with ECOG to bring important trial to completion. We anticipate potential NDA filing next year, if the PFS analysis is positive. It's our belief that entinostat has blockbuster potential to severe as second or third line therapy for hormone receptor positive HER2 negative metastatic breast cancer as you'll see on Slide 10 we estimate that there are approximately 34,000 patients who belong to receive hormone therapy after failing first line therapy and who could therefore potentially be eligible to receive entinostat. Based on feedback from ECOG-ACRIN we also anticipate that at least 30% of the patients enrolled in E2112 will have previously received a CDK4/6 inhibitor. Let me now turn to SNDX-6352 our potential best in class monoclonal antibody targeting CSF-1 receptor as we've previously noted SNDX-6352 has demonstrated a unique profile that includes high binding affinity and ability to prevent binding of both IL-34 and CSF-1 to CSF-1 receptor and potential synergistic activity with other therapeutic classes. As shown on Slide 11, it functions by blocking the Ligand binding domains of the cell surface protein receptor CSF-1R. This plays a critical role regulating proliferation, survival and differentiation of tumor- immunosuppressant cells found in the tumor microenvironment that can inhibit the ability of tumor infiltrating lymphocytes to attack and kill tumor cell. We believe that more effective treatment of a variety of cancers will necessitate novel drug combinations to overcome the intense immunosuppression in the tumor microenvironment. And based on evidence to-date, we also think that SNDX-6352 has the potential for complementary or synergistic activity when used either with checkpoint inhibitors, cell therapies, chemotherapy or radiation therapy. May also be synergistic with entinostat which has been shown to inhibit two other critically immunosuppressive cells in the tumor microenvironment the myeloid-derived suppressor cells and the regulatory T cells. We've completed the Phase 1 single ascending dose trial in this agent with healthy volunteers during which we noted changes in CSF-1, IL-34 and circulating monocyte levels all consistent with the mechanism of CSF-1R inhibitor. We'll present the detailed results from this study at SITC later this week, additionally this past quarter we initiated multiple ascending dose trial in patients with various solid tumors and we've completed enrolment in the first cohort of that trial. Turning to Slide 12, as I mentioned earlier we recently entered into an exclusive worldwide license agreement with Allergan for our portfolio of pre-clinical oral small molecule inhibitors of the interaction of Menin with the MLL protein. These compounds have potential application and the treatment of genetically defined subset of acute leukemia with chromosomal rearrangements in the MLL-rg. Let me first introduce you to the disease and the biology, MLL-r leukemia generally represents as either ALL or AML as a particular bad prognosis that represents a well-defined area of high unmet need. Might also meet the guidelines for orphan designation. Importantly this patient population is routinely identified in clinical practice today. The leukemia is driven by the fusion protein depicted in the diagram on the right. The fusion proteins all retain the immunoterminal of MLL-1 including the rate, the region that binds to Menin. But the carboxyl terminal consists of a portion of a different gene, this fusion protein thus abnormally links a family of protein to Menin thereby causing transformation. There's a diagram more fully on Slide 13, you'll see on the top panel that MLL fusion protein binds to Menin and also thereby abnormally brings a large family of proteins to a specific region of DNA causing abnormal transcriptional activation of family of genes. You can see in the bottom panel that the inhibitors block the binding of the MLL fusion protein to Menin and hence the entire family of abnormally recruited proteins are displaced. This leads decreases in self-proliferation and induction of both differentiation in apoptosis. We believe that targeting of a specific genetic fusion protein is an attractive improvement strategy as summarized in Slide 14 as it could potentially allow us to run very focused clinical trials involving a prospectively defined patient sub-population harboring this genetic marker. This in turn potentially afford us an opportunity for a more rapid regulatory path forward as we've seen with other companies who have developed therapies targeting specific fusion protein. On the right, we summarize a number of examples of this approach. This transaction represents another example of how Syndax creates value through in-licensing high potential assets. As summarized in Slide 15, the transaction involved a modest upfront payment of $5 million with downstream contingent development, regulatory and sales milestones and tiered royalties on future sales. Under the terms of the agreement we're responsible for the development, manufacturing and global commercialization of this portfolio and we believe we're well positioned to develop this unique product portfolio which may have therapeutic potential and diseases beyond MLL-r leukemia. Before I turn the call over to Rick Shea, our Chief Financial Officer to discuss our financial results and update you on our balance sheet. Let me just remind of our data presentations at SITC later this week shown on Slide 16. This includes results from Stage 1 of both the non-small cell lung cancer cohorts of Encore 601 as well as initial biomarker analysis from the refractory melanoma cohort and results of the Phase 1 single ascending dose monotherapy study of SNDX-6352 in healthy volunteers. And with that, I'll turn it over to Rick for the financial update.

Thank you Briggs. Turning to Slide 17 for the three months ended September 30, 2017 Syndax reported a net loss of $15.1 million or $0.68 per share compared to $15.0 million or $0.84 per share for Q3, 2016. Our research and development expenses in the third quarter of 2017 decreased to $12.2 million from $12.3 million for Q3, 2016 primarily due to an increase in clinical trial activities of $3.9 million and increased employee compensation expense of $0.9 million offset by a $5 million upfront payment in Q3, 2016 related to the in-license of SNDX-6352 from UCB. Our general and administrative expenses were$3.6 million during the third quarter of 2017 compared to $3.3 million for the prior year period. G&A we had an increase in non-cash stock compensation of $0.4 million and an increase in salary expense of $0.2 million due to increase headcount offset by this decrease legal fees of $0.3 million. As of September 30, 2017, there were 22.3 million common shares issued in outstanding and only a fully diluted basis using the treasury stock method we had 23.1 million shares outstanding. Additional financial details will be available in our 10-Q which we expect to file this week. Syndax ended the third quarter with cash balance of $120.6 million which we believe is sufficient to fund development into 2019 enabling us to reach key development milestones. In addition, in the fourth quarter, we completed $25 million registered direct offering of common stock which further strengthened our shareholder base and extended our financial runway through significant value and inflection point further into 2019. Also in the fourth quarter we earned $5 million from KHK for the achievement of a development milestone which on a cash basis will offset the $5 million upfront payment we made to Allergan for the Menin license. Looking ahead, we expect R&D expenses for the fourth quarter to be in the range of $15 million to $18 million and total operating expenses to fall between $19 million and $22 million. For the year, we expect R&D expenses to be between $47 million to $50 million and total operating expenses to come in between $63 million and $66 million. I'd like to now turn the call back over to Briggs.

Thank you very much Rick. Looking ahead we anticipate several key upcoming milestones all these summarized in Slide 18. As you can see the first half of 2018 is very data rich and we look forward to sharing this data at appropriate scientific congresses. As always I'd like to thank the team here at Syndax, our collaborators and most importantly the patients, trial sites and investigators involved with our clinical program. With that, I'd like to open the call for questions.

[Operator Instructions] and our first question comes from Christopher Marai with Nomura Instinet. You may proceed.

I'm wondering if you could perhaps provide a little more granularity on some of the data that we might see coming from your sites entinostat, plus pembro and non-small cell lung cancer at SITC. Obviously 10% response rate hit your threshold but clearly some patient characteristics particular prior lines therapy what they had received in time since the last therapy could the important - wondering if we're seeing that or you'll provide an update around SITC on that. And then secondarily, just with respect of the regulatory path forward for entinostat in combination with pembro or anti- PD-L1 therapeutic. Could you maybe elaborate on where you see those going? Thank you.

Thanks, Chris. So first in terms of the non-small cell lung cancer data at SITC. As I said as Leena Gandhi will do the presentation Saturday afternoon and there's also a poster that will outline additional data that she's not able to cover in her - I think it's a 10-minute presentation. So all the things that you're interested in terms of prior lines of therapy, PD-L1 status, probably interval from when they were treated with progressed on PD-1 on when they went onto to our study, the many kinds of questions I think people have about that trial, that data will be available either in Leena's presentation or in the accompanying poster. Your second question was about melanoma.

Well, yes the regulatory path forward for entinostat plus pembro across abroad actually when do we get some more details on that path forward from you guys.

Right, so as I said in my prepared comments, we've had now regulatory consultations both with the FDA and with some European regulatory agencies we have at least one more regulatory consultation, so our guidance would be that in the first half of next year we'll have consolidated all of that feedback on approaches to the development of melanoma both in terms of accelerated approval approach here in the US and full approval in the US and full approval globally and so our intent would be to share potentially our - exactly what we're going to do around the time that we - we'll some update on the full 34 patients in that cohort. We have not yet had any regulatory consultations regarding other indications.

Okay, great and then just one quick one, while we're on the topic. I mean any additional data we may see on the specific molecular mechanism behind re-sensitization of these patients that could be interesting and finally I'll just throw one last one in for the Menin. When do expect enter [ph] the clinic? I'll jump back in queue. Thank you.

Sure, as I indicated there is a poster that looks at the biopsies pre-and post-therapy from the melanoma cohort and again you'll get a chance to see if we have a fairly broad biomarker search effort there and aspects of that will be presented at SITC. I think your last question was when do you think the Menin inhibitor will enter the clinic? We've guided to the beginning of 2019, we have some additional pre-clinical work to do to pick amongst the portfolio and some IND enabling studies.

And our next question comes from Bert Hazlett with BTIG. You may proceed.

Briggs, as we move towards material events with E2112 as ECOG moves forward more rapidly with the enrolment. If you could please just remind us of the let's call it the potential decision outcomes with PFS and OS as the data emerges in the beginning of next year?

Sure. Thanks Bert. So as people may remember there are two endpoint for the trial. PFS and OS. They're not hierarchically tested they're separately tested, so you can win on either PFS or OS. As I indicated final PFS analysis and the first interim OS analysis has been completed that's held confidentially by the Data Safety Monitoring Committee it will be released when enrolment is completed. Will also note that the additional interim analysis of OS are done every six months. The final OS is done once we have 410 overall survival events and we estimate that would occur somewhere between 18 to 24 months after the completion of enrolment. Hope that answers your question.

That does. Thank you. And just one quick one on, enrolment is preceded rapidly in a number of not incremental but another series of indications beyond non-small cell and Melanoma. Any particular read into the rapid enrolment in those studies?

Yes, so I think in the refractory lung cancer population as I said, I think you know the fact we're seeing responses in refractory patients has encouraged our investigators and they've enrolled quite rapidly. The colorectal cohort it appears [ph] investigators actually came to us with that suggestion and they have followed through and enrolled very rapidly. So and again the Melanoma cohort based upon the positive data we had at ASCO I think people were encouraged. So I think it's a combination of actual data that they're seeing from the early stages and excitement around the mechanism.

Okay, thank you.

And our next question comes from Hartaj Singh with Oppenheimer. You may proceed.

Just a quick question on the melanoma, the potential of melanoma design. Briggs you kind of hinted at potentially accelerated approval in the US and then global. How would you sort of structure the patients are going after? Because you've shown data in both monotherapy PD-1 usage and then combined with CTLA 4 I mean, how are you thinking about, those two patient types and then what would sort of endpoint for an accelerated approval here in the United States and kind of lead through for the European or global filing in that regards. And just got a quick question after that.

Right. So thanks Hartaj. I mean as you saw in our ASCO data about two-thirds of patients have received both the PD-1 and CTLA-4, about a third had received PD-1 monotherapy. I think from a usage point of view there is probably more sequential usage now of PD-1 and then using CTLA-4 in some patients because of sort of read out of the Phase 3 trials. I think from our point of view, as long as they've progress on PD-1 or PD-1, CTLA-4 those patients will both be eligible for programs that we're thinking about. As you can imagine for accelerated approval in the US, most commonly people use objective response with some level with an expectation around durability of those responses for randomized pivotal trials both in the US and Europe. I think regulatory agencies are generally favor overall survival as their primary endpoint in those trials or at least an assessment of overall survival, but PFS can also be used.

Got it. Thanks Briggs. And just on your lung cancer. I know you've just paused the naïve patient cohort. Is there a possibility that when you look in the first half of 2018 and you look at moving your at least the second line of the experienced lung cancer patient [indiscernible] in the next phase of clinical trials, if you could run a clinical trial that has both naïve and PD-1 experience patients, so that's not possible? You'll have to do two separate trials.

Hartaj, I think it really depends on the question that you're asking in the trial. I think the main reason that we wanted to focus our resources on the refractory population at this point. Is that, that's I think an area of clear unmet need. And maybe going out a little on limb here but I think by the time entinostat gets approved in non-small cell lung cancer probably reasonably likely that most - it will be diagnosed lung patients will receive PD-1 as part of their primary therapy. Either in monotherapy as we see with KEYTRUDA today for that PD-L1 highs [ph] in combination with chemotherapy as we see combinations getting today with KEYTRUDA or in combination with CTLA-4. So the common thread there, is there's going to be refractory patients and we think that scenario of unmet need that really there haven't been a lot of advances yet, so that's where we would like to focus, but for the patients who've not yet received PD-1, they're certainly potentially biomarker subpopulation where there is still significant unmet need and we're open to seeing how that field plays out.

Great. Thank you Briggs. Appreciated.

[Operator Instructions] and our next question comes from David Lebowitz with Morgan Stanley

This is Vikram on for David. Just one question from our side. Could you run us through the design of the 6352 study? And then also, if you could comment on how this molecule compares with Five Prime's CSF1R, that's going to have data presented this weekend. That would be helpful. Thank you.

Yes, so the 6352 that's being presented at SITC was a single ascending dose trial in normal healthy volunteers, the primary intent was to understand PK and PD. So, because it's done in normal volunteers there is really only, safety, PK and PD there is no efficacy data. The multiple ascending dose trial that we have just opened is again primarily safety PK, PD study in all comers' oncology population, where they could be treated with multiple doses of the agent. In terms of how it compares to the five prime one, there are many similarities both antibodies are IgG4, both antibodies block the binding of both CSFI and IL-34 and both antibodies are relatively high affinity. So, there is significant similarities between our drug and Five Prime drug.

And our next question comes from Chris Shibutani with Cowen and Company. You may proceed.

Thanks very much. I apologize I had some technical issues earlier in case this question was asked. But you had incremental news about new molecule that you acquired this MLL-r leukemia [indiscernible] patient, can you talk about sort of how you're thinking about the overall portfolio. I think a lot of your assets can seem disparate but certainly there is a potential for them to kind of create this mosaic possibly combined where does this fit in, is there a relationship that would make sense rather than perhaps was it just opportunistic, maybe some context for this well as well would be helpful. Thank you.

Sure. Chris I think you know as I sort of joke to my team the only requirement we have for molecule we licensing in is that they actually work, that was a joke. So, I think our approach has been to be opportunistic, it's little hard when your licensing in molecules to say only do this or only do that. So, we look for first off things where think the science is particularly strong and then where the molecules that have been invented look like they're going to great molecule. So, I think when we did the CSF1R deals, we thought there's a biology behind tumor-associated macrophages was quite strong and the antibody from UCB was sort of exactly what we thought we would want in that class. I think the biology around the Menin MLL-r program is really quite remarkable it's been evolving now for some time and we were extremely fortunate that group of Vitae has some really, really very potent what looked like really good molecules. So again, we like the science, we like the chemistry that's been applied to it and as I said in my prepared remarks we think it has a sort of higher than average chance of success given that it's targeting these defined re-arrangements that tumor has essentially [ph] told you what the ideology is. So, we are open to both solid tumors and liquid tumors and where there is unmet need and good science and good molecules, we'll go after them.

It's helpful sometimes obviously that this target has some validation as you describe in your depth. I believe there is some other players amongst competitors Kura has Menin-MLL inhibitor I think KO-539. Could you compare in contrast what you've just brought into your portfolio versus the Kura or any other compounds that you think might be kind of similar stage. Thank you.

Yes, it's little hard to compare. Obviously we're well aware of the Kura compound without I don't think either company has public structures and so it's kind of hard to comparative analysis, from what they've presented in the public domain it does look like it is a potent molecule that inhibits the interaction and, so we take it as significant competition and we like to make sure that we get ahead of them.

Congrats on the compound. Thanks for the update.

Thank you ladies and gentlemen, this now concludes our Q&A portion of the conference. I would now like to turn the call over to Briggs Morrison, Chief Executive Officer for any closing remarks.

Great. Thanks very much everybody for joining the call. Again, I'll remind you we have three different presentations at SITC for those of you who are attending we'll be delighted to meet and chat with you. Obviously there's been some questions about the data and we'll have - we'll be available to meet and chat with people after all the presentations are completed at the end of day, on Saturday. Thanks again for attending the meeting.

Ladies and gentlemen, thank you for attending today's conference. This does conclude the program and you may all disconnect. Everyone have a great day.