Syndax Pharmaceuticals, Inc. (SNDX) Q2 2019 Earnings Report, Transcript and Summary

Good afternoon, ladies and gentlemen, and welcome to the Syndax Second Quarter 2019 Financial Results 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 follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded.I would now like to turn the conference over to your host Ms. Melissa Forst of Argot Partners. Ma'am, please go ahead.

Welcome and thank you to those of you joining us on the line and the webcast this afternoon for a review of Syndax's second quarter 2019 financial and operating results. I am Melissa Forst with Argot Partners. And with me this afternoon to discuss the results and provide an update on the company's progress are Dr. Briggs Morrison, Chief Executive Officer; and Rick Shea, Chief Financial Officer. Also joining us on the call today for the question-and-answer session is Michael Metzger, President and COO; and Dr. Michael Meyers, Chief Medical Officer.This 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 the company's forward-looking statements on slide two.Before we 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. This includes those discussed in the Risk Factors section in the company's most recent quarterly report on Form 10-Q, as well as other reports filed with the SEC.Any forward-looking statements represent the company's views as of today, August 7, 2019 only. A replay of this call will be available on the company's website at www.syndax.com following the call.And with that, I am pleased to turn the call over to Dr. Briggs Morrison, Chief Executive Officer of Syndax.

Thank you, Melissa. And thank you to everyone joining us on today's call and webcast. I'd like to start my comments by congratulating Michael Metzger, our President and Chief Operating Officer on his appointment to the Board of Directors of Syndax. I have been fortunate to work with Michael over the past four years here at Syndax and his appointment to the Board is an important recognition of his many accomplishments and of his importance to the future of our company.Slide three provides a high-level summary of our current corporate priorities, as we strive to realize the future in which people with cancer live longer and better than ever before. The exciting news from our second quarter was that the FDA has cleared the IND for our highly selective rationally designed Menin inhibitor SNDX-5613.As a result of this accomplishment, we are now entering a new and exciting chapter in the evolution of Syndax. We've spoken at length about our Class I specific HDAC inhibitor entinostat and our ongoing Phase 3 trial of entinostat in hormone receptor-positive HER2 negative breast cancer.The new SNDX-5613 program takes us into the treatment of genetically defined acute leukemias and importantly broadens our portfolio. Both programs have the potential to become important new medicine. We expect to know much more about the future prospects of both entinostat and SNDX-5613 over the next 12 to 18 months.Let's review these opportunities in greater detail. Slide four summarizes the design of the Phase 3 trial of entinostat in hormone receptor-positive HER2 negative breast cancer. The trial has randomized 608 patients to exemestane plus placebo versus exemestane plus entinostat and the focus of this trial is now clearly on overall survival.As we've noted on previous calls OS interim analyses are conducted by the ECOG Data Safety Monitoring board approximately every six months. A positive outcome at any of these OS interim analyses or upon achieving the final number of events needed to conclude the study, would allow us to file for regulatory approval in United States based upon the terms of our breakthrough therapy designation in hormone receptor-positive metastatic breast cancer and the special protocol assessment with the FDA. Our team is prepared to submit a regulatory filing, should the trial be positive, within about six months of receiving the data from ECOG.I'd like to remind everyone that each interim analysis evaluates both the possibility that the trial is futile through a formal futility analysis at each interim, as well as the possibility that the trial is positive, based on a statistically significant improvement in overall survival. A final analysis of this trial will be conducted once there are 410 events, the timing of which is uncertain. We currently believe that the trial will fully readout in either November of this year or the first half of 2020.Slide five emphasizes the potential for the entinostat/exemestane regimen to be the preferred agent after a first-line aromatase inhibitor which is typically given either as a single agent or in combination with a CDK4/6 inhibitor. Our current estimate is that between 30% and 50% of the patients in E2112 will have received a CDK4/6 inhibitor prior to entering the trial. Thus, we should have a highly relevant dataset in the post CDK4/6 population.In our opinion, the rapid adoption of CDK4/6 inhibitor such as Ibrance in the first-line setting underscores the desire of physicians and patients to improve the outcomes associated with anti-estrogen therapies. In the setting of a positive E2112 result, we would expect entinostat to enjoy similar widespread use. This population of patients is substantial with an estimated 34,000 patients each year who go on to receive hormone therapy after failing first-line therapy and who could therefore be eligible to receive the entinostat regimen.Let me now provide more detail about the news of the second quarter, the recent clearance of the IND for our genetically-targeted agent SNDX-5613. Slide six shows the similarity between our Menin program and other medicines that attack the fusion proteins as a result of chromosomal rearrangement. We make this comparison because chromosomal rearrangements are a type of genomic alteration in cancer that has been highly predictive of clinical success and targeted therapies are used against them.The first example of recurring chromosomal rearrangement in oncology was the so-called Philadelphia chromosome, which results in the BCR-ABL fusion protein. Gleevec and other BCR-ABL inhibitors have transformed the treatment of CML leukemias that harbor this fusion protein.Since then, there have been many examples of medicines that specifically attack fusion proteins that result from a chromosomal translocation including medicines like ALK fusions, NTRK fusions and RET fusion. In these chromosomal translocations, there is strong evidence that the resulting fusion protein is driving the cancer cell. Being able to precisely define these patients led to the development of medicines that demonstrate large treatment effects in specific patient populations and enabled a rapid clinical developments and regulatory path.It should be noted that the examples I just mentioned resulting in fusion protein was an activated kinase and the drugs that were developed were kinase inhibitors. Signaling biology of the MLL rearrangement may in fact be distinct and SNDX-5613 is not a kinase inhibitor. So, we of course need to see how 5613 behaves in the clinic. Nonetheless, our 5613 program is an example of a targeted therapy that was designed upon -- based upon our understanding of a specific chromosomal rearrangement that leads to a specific fusion protein known to drive the leukemic process.On slide 7, we summarize the first in-human trial in the accelerated understanding of Menin inhibition, our AUGMENT program. The first in-human clinical trial has combined Phase I and Phase II trial. The Phase I portion is a dose escalation trial designed to identify the maximum tolerated dose and a recommended Phase II dose for SNDX-5613. Patients with relapse or refractory acute leukemia will be enrolled and will take SNDX-5613 daily by mouth until they experience either progressive disease or unacceptable toxicity.The first 28 days of dosing will serve as the period in which safety is evaluated for determining dose escalation. Patients are not required to have specific genetic abnormalities in order to enroll in the Phase I study. The first cohorts follow an accelerated dose titration with only one patient required per cohort. Upon entering a pre-specified level of toxicity the trial will convert to a standard 3+3 design. We will carefully assess pharmacokinetics, safety and efficacy.It is anticipated that upwards of 30 patients may be enrolled in the Phase I portion with the precise number dependent on the number of cohorts that need to be explored and the toxicities that are encountered. I want to emphasize that the PK analysis is a key component of the Phase I trial.Our preclinical data indicates that the Menin-MLLr interaction needs to be continuously inhibited in order to achieve optimal efficacy. And so, we will be carefully examining the drug exposures in patients to assess whether we are indeed achieving adequate target coverage. We look forward to seeing this initial PK data in the first dose cohorts as those data will significantly inform the likelihood and timing of single-agent efficacy in the MLL-rearranged and NPM1 mutant leukemia population.Given that patients are not required to have a specific genetic abnormality in order to enroll in the Phase 1 portion of the trial, we believe that PK data from the Phase 1 portion could be more informative than the efficacy assessments with efficacy being an exploratory objective.Furthermore, we believe that safely achieving adequate target coverage in the Phase 1 trial could bode well for establishing efficacy in the Phase 2 portion. Once the recommended Phase 2 dose is established the Phase 2 trial will proceed to enroll three distinct expansion cohorts each of which consists of a specific genetically-defined relapse or refractory acute leukemia. The three cohorts are adults with MLLr acute myeloid leukemia or AML; adults with MLLr acute lymphoid leukemia or ALL; and adults with NPM1 mutant AML. The Phase 2 portion will further characterize the safety of SNDX-5613 and will provide an initial estimate of the complete response rate as the primary measure of the therapeutic benefit.We know that a lot of people, including patients, physicians and investors are eager to see the initial data from this first AUGMENT trial. Given that we are just getting the trial up and running it is not possible to provide specific guidance as to when we will present data. As of now, we expect to report initial clinical data from the trial in 2020 and do not anticipate presenting data this year. We should be able to give you a better sense of data timing, once the trial is underway.In addition, we are eager to advance this molecule into the pediatric population. It is a key component of our overall strategy. We will have more to say about the details of the pediatric timing and approach on a future call. Based upon preclinical data and the underlying biology of the pathway, we are expecting evidence of single-agent activity.As a result, there could be a rapid and straightforward clinical development path for 5613 perhaps similar to the path taken for agents addressing patients with FLT3 or IDH1 mutations. As we continue to learn more about the potential of SNDX-5613 in acute leukemia we see this molecule becoming an additional and important value driver for Syndax.Let me now turn to slide 8 and SNDX-6352 our potential best-in-class monoclonal antibody therapy targeting the CSF-1 receptor. We're conducting a trial testing 6352 as monotherapy in chronic GvHD. Chronic GvHD is a frequent complication of hematopoietic stem cell transplantation wherein donor-derived immune cells contribute to the initiation and development of fibrosis and manifestation of many of the advanced disease symptoms.In pre-clinical models blockage of the CSF-1/CSF-1R interaction with an anti-CSF-1R antibody can result in the depletion of donor macrophages thereby preventing and reducing chronic graft versus host disease. We believe that chronic graft versus host disease represents an attractive clinical opportunity for 6352.When our IND was cleared for this study, FDA required that we limit enrollment to patients whose disease had progressed after both steroids and ibrutinib therapy. However, as ibrutinib is not currently frequently used to treat this population enrollment has been slower than anticipated. We hope to provide an update on this program in the second half of next year despite our earlier guidance for later this year.Finally, slide 9 summarizes transactions that led to the acquisition of the Menin-MLLr and SNDX-6352 programs. We believe that we will be able to continue to expand our pipeline through the acquisition or in-licensing of quality differentiated assets. We believe that we have the necessary clinical development expertise to bring these compounds to valuable inflection points and expect to remain among preferred partners of such transaction.I will now turn the call over to Rick to review our financial results.

Thank you, Briggs. Results of our operations for Q2 2019 and the comparison to the prior year period are included in our press release, so I won't repeat them in these remarks. Additional financial details are available on our quarterly report on Form 10-Q, which we filed this afternoon.Turning to slide 10. We ended the second quarter of 2019 with $80.5 million in cash and 31.6 million shares and share equivalents outstanding.Looking ahead, I'd like to provide updated financial guidance for both Q3 and for the full year 2019. For the third quarter of 2019, we expect R&D expenses to be $11 million to $12 million and total operating expenses to be $15 million to $16 million and that includes approximately $1.5 million of non-cash stock compensation expense.For the full year 2019, our guidance is substantially unchanged. We expect R&D expenses of $45 million to $47 million and total operating expenses of $60 million to $63 million. Operating expenses for 2019 are expected to include non-cash stock compensation expense of $6 million and our interest income is approximately $2 million so our net cash burn for 2019 is expected to be $52 million to $54 million.Our current cash along with reduced spending will allow us to operate the company to achieve key milestones for prioritized programs specifically OS results for E2112 and early proof-of-concept for our targeted menin inhibitor. We anticipate our year-end cash balance to be about $55 million.I would now turn the call back over to Briggs.

Thanks very much, Rick. I'd like to close our call with a clear summary of our company priorities. We believe that a positive OS result in E2112 would be transformative for Syndax and create significant shareholder value. We expect a final readout either in November of this year or the first half of 2020.We also believe that SNDX-5613 our Menin-MLLr inhibitor is well-poised for near-term proof-of-concept data. We believe that safely achieving adequate target coverage in the Phase 1 trial could derisk this program with single-agent activity in patients with leukemia providing clinical proof-of-concept and enabling early regulatory clarity and planning for next step. For SNDX-6352, we are expecting initial efficacy data in chronic GvHD in the second half of next year.Finally, we are optimistic that we'll continue to identify and bring in novel molecules to deepen our portfolio. We have a proven track record of delivering on this pillar of our strategy and I believe this is a core strength of our company.As always I 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] We have your first question sir from Chris Shibutani of Cowen. Your line is open.

Hi, guys. This is Pam Barendt on for Chris Shibutani. We have a couple of questions. First on E2112. Have you guys done any new recent modeling to project whether a positive result is more likely to occur in November versus May?And secondly on the Menin program, how would the potential target population size compare with that of FLT3 or IDH targeted drugs? Thank you.

Great. Maybe I'll let Michael Meyers talk about our recent modeling of November versus May.

Yes. So we actually are very optimistic that either the November or May analyses would yield a positive result. And for all intensive purposes the probability of success at either one of those two analyses is approximately equal.

And your second question in terms of population size, the MLLr is roughly the same size as IDH2. I don't have the FLT3 numbers in front of me right now. The other point I guess I would just emphasize is NPM1 is of course larger represents probably about one-third of AML.

Got it. Very helpful. Thank you.

Your next question presenter comes from the line of Madhu Kumar for R.W. Baird. Your line is open.

Yeah, thanks for taking my question. So first one about the Menin-MLL program. How do you think about PK? And potential differences in PK between MLL rearranged and non-rearranged patients? Like you could imagine, for example, that the non-rearranged patients if they don't have the target in significant abundance they're going to have a different PK profile than patients who have in abundance of that interaction ramping up? And then I have a follow-up question after that.

Right. So I think Madhu, the preclinical data we have so far would suggest that the exposures needed to give efficacy whether it's MLLr or NPM1 are roughly the same. So because they are driven by the Menin-MLLr -- the MLL1-Menin interaction that's the interaction that has to be disrupted and it appears that the target exposure that are needed to disrupt that are the same whether it's NPM1 or MLLr.In tumors that are neither one of those two genetically defined tumors – leukemias, our current evidence would suggest that the drug actually doesn't have activity in things where you don't have either NPM1 mutations or MLLr mutation.

Okay. So -- but then following from that point if it doesn't have activity, would you expect it to have the same exposure dynamics as it would in a MLLr or NPM1 mutant blood cancer?

Right. I'm not entirely sure I get your question. I mean I think in terms of plasma exposures whether your normal healthy volunteers or your in cancer patients depending on what the cancer patient have shouldn't matter that's just a PK characteristic of the drug. The question is whether they can disrupt the Menin-MLL interaction in our view really only is relevant in the MLLr population or the NPM1 mutant population.

Okay. So to that point, what is a good PD biomarker to show disruption of the Menin-MLL interaction? And is that the one you plan on employing in kind of the expansion cohorts?

Yeah. I think it's -- we haven't said much about -- I don't think we said anything at all about the pharmacodynamic marker that we're using and we can talk about that on future calls as that comes together.

Okay, great. Thanks.

Your next question is from David Lebowitz from Morgan Stanley. Your line is open.

Thank you very much for taking my question. Just to piggyback on an earlier question regarding E2112. I guess should we assume that the powering between the November and May interim analyses are essentially interim and then final analyses are essentially the same?

I'll give that question to Michael Meyers our Chief Medical Officer.

Obviously the greatest power is with the final analysis because it includes more events. However, I think that at this point, the number of events does -- is not so great in terms of the difference between the two analyses that the power increases materially.

Okay. Makes sense. And I guess just jumping over to the Menin program. As far as the tumors that were selected in the study, I guess a little bit about the rationale behind these specific tumors. Were there other tumors that you considered adding into the trial as well?

Right. So I think MLLr population, the basic biology that led to the invention of this molecule is all driven by the MLLr chromosomal translocations. And so there the science is very well worked out that the amino terminus of MLL1 needs to bind to Menin that's really required for transformation. And if you disrupt that with a small molecule you get anti-leukemic effect. So that's where the MLLr population is the core scientific hypothesis of how the drug was developed.The NPM1 mutant population was identified by an academic group who noted that the transcript profile for NPM1 mutant leukemias looked very, very similar to the MLLr's and so they tested NPM1 PDXs and we see really quite dramatic efficacy in those PDX models so that's how we got those two.That same group has tested molecule in other forms of leukemia and has not seen activity. And so for now, we're not exploring those. There have been reports in the literature about the drug being used in some solid tumors. In our hands, we've not been able to repeat or confirm that efficacy in solid tumors. So, at this point, based upon the experiments we've done with our molecule, we believe that the MLLr and NPM1 are the ones that seem to have very, very strong preclinical data and that's why we're pursuing them.

Thanks for taking my questions.

Your next question is from Bert Hazlett from BTIG. Your line is open.

Just a couple on MLL, the menin inhibitor program. Just Briggs, a little bit more if you could as to why you're enrolling patients -- in terms of study design, why you're having patients that are not required to have a genetic abnormality in the first trial -- first part of the trial?

Yeah. I'll let Michael Meyers answer that question.

Yeah. I would share that. It was at the urging of the FDA that we include patients who did not necessarily have the genetic abnormality in order to better understand PK and safety.

Okay.

We fully expect though that the population may be enriched for the patients who are most likely to benefit i.e. those who have the genetic abnormalities.

Okay. Thank you. And then are you starting at doses where you would expect to see activity in the initial cohorts?

Right. So I think Bert that's what I was trying to get at in terms of the PK exposures in the Phase I portion. We do this modeling of what we think human exposures are going to be. And based upon that modeling, we think we're not far off from exposures. But you never really know until you actually start dosing patients. And so that's why, I made the comment in my prepared remarks that seeing that exposure data from the first couple of cohorts will give us a much better much sense of where we are.

Okay. And then just to be clear, is there an ability to expand into every cohort and to all cohorts if you see activity in each one of the three?

So the Phase 1 portion really is just to define that recommended dose and then we will expand into all three cohorts. Obviously as Michael has pointed out, if the Phase I portion is a bit enriched we get some of the patients with the genetically-defined lesions that might give us an earlier view of efficacy. But the sort of if you will definitive assessment is really in the Phase 2 portion and all three cohorts will be opened in parallel.

Great. Can’t wait to see the data. Thank you.

Your next question is from Christopher Marai from Nomura Instinet. Your line is open.

Hello. This is Jackson Harvey on for Christopher Marai. Thanks for taking my question. I am curious about the PK of the drug. It looked like in some of the early preclinical experiments in animals it may have needed a twice daily dosing. Can you speak a little bit about what you've seen in animal models for 5613? And also, if you could give some insight into what dose-limiting toxicities may look like based on those experiments? Thank you.

Right. So Jackson just to be clear the protocol does -- the Phase 1 protocol does start with b.i.d. dosing. It has built into it the opportunity to look at other dosing regimens as well. So goes to my earlier comment that we try to predict what the PK exposure will be and what the half life will be but we won't know that really until we start dosing patients. So we are starting with b.i.d. dosing, and then we'll explore other regimens depending on the PK.In terms of dose-limiting toxicities in the preclinical work, that data has not been presented yet. It should be presented at an upcoming scientific congress. So that's about all I can say about the preclinical tox data.

Your next question is from Harshita Polishetty of B. Riley FBR. Your line is open.

Hello. This is Jeffrey Tan on for Harshita. And thanks for taking our questions. With regard to the Menin inhibitor, I was curious if you started to investigate possible resistance mechanisms that could emerge with the drug?

Right, thanks for the question. We have tried to start to explore this. And actually the problem is we don't seem to be able to generate, resistant mutants. So, the team has tried some of the standard approaches, where you treat, you stop treating let the tumor go back treat again.The tumor seemed to be continually sensitive. So until we can actually identify resistant cell lines, we can't identify the mechanism. Of course in patients should we be fortunate enough to see patients respond, if those responses progress at a later time, we'll be able to look at that in samples from patients. But in preclinical models, we have not yet been able to generate resistant mutants.

And second, I know you've previously guided to possible regulatory pathways, seen with the NTRK and Alk fusions for the Menin molecule. Can you give us any additional color on the regulatory pathway?

Well. So again, I think if you look at both, the IDH programs, FLT3 programs, NTRK fusions, if you're seeing a reasonable level of complete response -- in the case of leukemia, complete -- durable complete responses, then the number of patients that you need is a bit more limited.And again I'd encourage you, just to take a look at some of the precedents from IDH programs. And FLT3 programs about, sort of how many patients you need. And what level of activity was sufficient for them to get approved.

Great, thank you. And good luck for the rest of the year.

Great, thank you.

I am showing no further questions, at this time. I would now like to turn the conference back to, Dr. Morrison.

Great. Thank you very much everybody for participating in the call today and for your questions. And we look forward to seeing you all, after you hopefully get a little bit of relaxation in August. We'll see you in September.

Ladies and gentlemen, this concludes today's conference. Thank you for your participation. And have a wonderful day. You may all disconnect.