Syndax Pharmaceuticals, Inc. (SNDX) Q2 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Syndax Second Quarter 2020 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] I would now like to turn the conference over to your host, Ms. Melissa Forst. Please go ahead.

Thank you, Grace. Welcome, and thank you to those of you joining us on the line and the webcast this afternoon for a review of Syndax' second quarter 2020 financial and operating results. I'm Melissa Forst of 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 Daphne Karydas, Chief Financial Officer. Also joining us on the call today for the question-and-answer session is Michael Metzger, President and COO; Dr. Michael Meyers, Chief Medical Officer; and Dr. Peter Ordentlich, Chief Scientific Officer. This call is being accompanied by a slide deck that has been posted to the company's website, so I would ask you to please turn to the forward-looking statements on Slide 2. 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, including 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 6, 2020, only. A replay of the call will be available on the company's website, syndax.com, following the call. And with that, I'm pleased to turn the call over to Dr. Briggs Morrison, Chief Executive Officer of Syndax.

Great. Thank you very much, Melissa, and thank you to everyone for joining us on today's call and webcast. Let me start my comments by welcoming Daphne Karydas to Syndax as our new Chief Financial Officer. Daphne completed her formal education at MIT and Harvard and has a distinguished professional career at North America's most prestigious financial and pharmaceutical firms. We are truly honored to have her joining our team. You'll hear more from her later in the call. I'd also like to take this opportunity to thank Rick Shea for his exceptional contributions to Syndax and wish him every success in his well-earned retirement. Let me now turn to Slide 3, which provides a high-level summary of our current corporate priorities as we strive to realize a future in which people with cancer live longer and better than ever before. The second quarter of this year was quite eventful for Syndax. We were extremely disappointed when ECOG informed us that E2112, the Phase III trial of entinostat in hormone receptor positive HER2-negative breast cancer, did not achieve the primary endpoint of demonstrating a critically significant overall survival benefit. Entinostat has been deprioritized in our portfolio. And as Daphne will discuss, our go-forward budget forecast includes only closeout costs for entinostat. We continue to collect encouraging data that will further clarify the potential of our anti-CSF-1R antibody, axatilamab, to treat chronic graft versus host disease. And at AACR, we presented the first clinical evidence that inhibition of the menin-MLL1 interaction by SNDX-5613, our menin inhibitor, can induce response in patients with MLL-r acute leukemia. In the second quarter, we were granted orphan designation by FDA for 5613 for the treatment of adult and pediatric AML. We also announced the successful addition of over $100 million to our balance sheet under attractive terms. Let's now turn to Slide 4 and 5613, our genetically targeted agent for the treatment of leukemia. As we noted previously, there's extensive validation of both MLL-r and NPM1 mutations has molecular targets in leukemia, and well-established diagnostic tests routinely identify patients with these genetic mutations. Premier publications provide the scientific rationale and preclinical validation of our ongoing clinical trial, and there are historic precedents that support a rapid regulatory path for such targeted agents in acute leukemias. At AACR this year, we presented preclinical and early clinical data for 5613, showing that our molecule is a potent and specific inhibitor of the menin-MLL interaction. The only off-target activity of note is its relatively weak binding to the HER channel, and of clinical relevance, it's primarily metabolized by CYP3A4. On Slide 5, we summarize the detailed experiments that were conducted to drive a model of the plasma exposures, we think, will be needed in patients to drive efficacy. We were, of course, pleased that, as shown on Slide 6, the second patient in the trial and the first patient in the trial with an MLL-r rearrangement had plasma exposures that exceeded the levels we anticipated would be required for efficacy and achieved a complete response. Importantly, this patient safely experienced a deep and rapid response. She was in CR by day 28 of therapy while experiencing nothing more than grade 2 adverse events. Of note, this patient was on a concomitant medication that inhibits the activity of CYP3A4, which may account for the disproportional PK exposure relative to what we had anticipated. Full details on additional patients are included in the AACR presentation that's available on our website. The schema for the updated ongoing AUGMENT-101 trial, the first-in-human trial in the accelerated understanding of menin or AUGMENT program, is shown on Slide 7. The Phase I portion is a dose escalation trial designed to identify the maximum tolerated dose and recommended Phase II dose of 5613 in 2 independent cohorts of patients with relapsed or refractory leukemia. Arm A enrolls patients who are not on a strong CYP3A4 inhibitor and Arm B enrolls patients who are on CYP3A4 inhibitor at the time of enrollment. The first 28 days of dosing serve as the period when safety is evaluated for determining dose escalations. And our intent is to define a recommended Phase II dose for each cohort. In June of this year, we participated in an FDA Pediatric Oncology Drug Advisory Committee meeting regarding our development strategy for SNDX-5613. We were quite pleased with the uniform enthusiasm of the committee and FDA and the support of comments made by several physicians during the public comment session. It's clear to us that the pediatric oncology community and the physicians participating in our trials are excited about the progress we are making. In addition to the ODAC meeting, we have been working closely with FDA to continue to modify AUGMENT-101 as our data accumulates. The split into arm A and arm B is one such example. More recently, based upon the totality of our accumulating data both in AUGMENT-101 and in our pediatric compassionate use experience, we have worked with FDA to further modify the Phase I portion of AUGMENT-101 in 3 important ways. First, FDA has agreed that we can now focus enrollment exclusively to patients with MLL-r or NPM1 mutations. You may recall that the trial initially was open to all adults with relapsed or refractory leukemia. Second, they have agreed to allow us to backfill any dose level up to a total of 12 patients in either arm A or arm B if efficacy has been observed in that dose level. These backfill slots will open up enrollment. It will provide more PK and safety data in an expanded Phase I trial and will give us greater certainty as we enter Phase II and could potentially accelerate our path to eventual approval. And third, FDA has strongly encouraged us to enroll pediatric patients, including any patient over 30 days of age. We believe their encouragement to include pediatric patients so early in the drug development process is based on the results to date in AUGMENT-101 as well as what we are seeing in the compassionate use treatment setting. We continue to receive request to provide drug to children currently ineligible to enroll in AUGMENT-101. And so we've continued to support these compassionate use treatments aligned with the dose levels that have been studied in AUGMENT-101. As we've gotten to doses which can achieve our prespecified PK thresholds, physicians are starting to see activity in these pediatric patients as well. Indeed, we recently received results from an adolescent who was treated on compassionate use, and his clinical course is strikingly similar to patient number two, illustrated on Slide 6. The child had refractory MLL-r AML, received SNDX-5613 at the equivalent of dose level 2 on arm B, that's 226 milligrams by mouth twice a day, in combination with a strong CYP3A4 inhibitor. The patient had plasma exposures that exceeded the levels we anticipated would be required for efficacy, achieved a complete response on day 28 and experienced only grade 1 adverse events. One can only imagine how ecstatic the parents of this child are to have renewed hope for their youngster. We're eager to share publicly the observations that have allowed us to modify AUGMENT-101. Our goal has been to present the completed Phase I portion of AUGMENT-101 in its entirety. And we had hoped to do so by the end of this year. We continue to anticipate identifying a recommended Phase II dose and completing Phase I by the end of this year, and yet these exciting trial enhancements that I've described will now move our presentation of the completed Phase I data into early 2021. As a reminder, the Phase II trial will proceed to enroll 3 distinct expansion cohorts, each of which consists of a specific genetically defined relapsed or refractory acute leukemia. The 3 cohorts are shown on Slide 8 and will include patients with MLL-r ALL, patients with MLL-r AML and patients with NPM1 mutant AML. The Phase II portion will further characterize the safety of 5613 and will provide an initial estimate of the complete response rate as the primary measure of therapeutic benefit. Like the changes to the Phase I, Phase II will enroll both pediatric and adult patients, thereby providing us a potential path to regulatory approval with a broad label, including both adults and pediatrics. We look forward to continuing to update you on the progress of AUGMENT-101 as the year progresses. Let me now turn to Slide 9 in axatilamab, which is formerly known as SNDX-6352, our potential best-in-class monoclonal antibody therapy targeting the CSF-1 receptor. Results from the multiple ascending dose trials exploring axatilamab alone and in combination with durvalumab in patients with solid tumors was presented during this year's AACR meeting, and these results demonstrated the tolerability and robust PD biomarker modulation of axatilamab. It underscored its ability to promote rapid and sustained depletion of circulating pro-inflammatory monocytes at all dose levels tested. As you know, we initiated a trial testing axatilamab as monotherapy in chronic graft versus host disease, and the rationale for that is shown on Slide 10. Chronic graft versus host disease is a frequent complication of hematopoietic stem cell transplantation, wherein the donor-derived immune cells contribute to the initiation and development of fibrosis in the myriad manifestations of this disease. In preclinical models, blocking the CSF-1/CSF-1R with anti-CSF-1R antibodies can result in depletion of donor macrophages and thereby both prevent and reduce chronic graft versus host disease. Last year, we released initial data from our Phase I trial, which is diagrammed on Slide 11. The Phase I portion is a dose escalation trial designed to identify the maximum tolerated dose and a recommended Phase II dose of axatilamab for the treatment of chronic GVHD. We've released data from the first 5 patients enrolled in the first 3 cohorts and have now modified the trial to include a Phase II cohort at the 1 mg per kg dose. We will continue the Phase I trial to more formally define the recommended Phase II dose and may open one or more additional Phase II cohorts as well. We anticipate presenting the Phase I data for approximately 10 to 15 patients at the end of this year at a medical conference. In addition, we are in discussions with regulators concerning the design of a registrational program for chronic graft versus host disease. We anticipate providing full details of the registrational program at our next quarterly call and hope to initiate our registration trial as early as the end of this year. We believe that chronic GVHD represents a high unmet medical need and an important commercial opportunity with approximately 14,000 patients suffering from GVHD in the U.S. today. With the recent positive pivotal results from both Incyte's Jakafi and Kadmon's KD025, we may soon see commercial launches that will begin to delineate the commercial opportunity in chronic graft versus host disease. Despite recent advances in this area, we believe the data generated to date with axatilamab suggests it has the potential to play an important role in the treatment for GVHD. Finally, Slide 12 summarizes the transactions that led to the acquisition of the menin-MLL-r and axatilamab 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 scale to evaluate and identify high-quality assets and the clinical development experience to bring these compounds through valuable inflection points. We expect to remain among preferred partners of such transactions. I will now turn the call over to Daphne to review our financial results.

Thank you, Briggs. First, let me start by thanking you for the great introduction. I am extremely fortunate to join Syndax at a very exciting and pivotal time for the company, and I'm looking forward to helping Syndax achieve its goals of bringing new life-altering treatments to cancer patients. I also want to thank Rick for a great transition, and I wish him all the best in his retirement. Now, let me turn to the quarter. The results of our operations for the second quarter of 2020 and the comparison to the prior year quarter are included in our press release, so I won't repeat them in these remarks. Additional financial details will be available in our second quarter report on Form 10-Q, which will be filed today. I would like to point out that our operating loss for the quarter was $17.1 million or $0.42 per share compared to the $14.9 million or $0.47 per share for the same period last year. Turning to Slide 13; we ended the second quarter with $186.8 million in cash and cash equivalents and 44.1 million shares and prefunded warrants outstanding. This included the proceeds from our May equity offering of 6.4 million shares at $18 per share with net proceeds of $107.9 million. Looking ahead, I'd like to provide financial guidance for the second half of 2020. You will recall that we had withheld second half guidance until such time that the E2112 Phase III trial was completed. For the second half of 2020, R&D expenses will increase over the first half primarily due to increased development activities for both 5613 and axatilamab. As Briggs discussed in his remarks, we are enhancing the Phase I portion of the menin AUGMENT-101 trial while simultaneously preparing for Phase II trials for both 5613 and axatilamab. A significant portion of the increased R&D expenses will be going towards CMC activities for both programs as we want to be prepared for potential accelerated filing. Additionally, entinostat has been deprioritized and second half R&D expenses will include only wind-down costs for this program. Second half G&A expenses are expected to be lower than the first half primarily due to lower pre-commercialization activities. For the third quarter and second half of 2020, we expect R&D expenses to be $14 million to $16 million and $30 million to $35 million, respectively; and total operating expenses for the third quarter and second half of 2020 to be $19 million to $21 million and $40 million to $45 million, respectively, including approximately $2 million of noncash stock compensation expense per quarter. This guidance includes $4 million in milestone payments to UCB that we anticipate in the second half based on achievement of positive development milestones associated with axatilamab. Given our cash operating expense guidance for the second half of 2020, we expect to end the year with approximately $145 million of cash, which gives us cash runway into 2022. I would now like to turn the call back over to Briggs.

Thank you, Daphne, and welcome again to Syndax. As I hope you've appreciated from my prepared remarks, the first half of this year has brought significant change to Syndax. We are incredibly disappointed about the results of E2112. We are most disappointed for women with hormone receptor positive breast cancer. We really hoped that we had a novel medicine for them. We're working with ECOG to understand the E2112 results, and we anticipate that ECOG will present results at San Antonio Breast Cancer Symposium. On the other hand, we're incredibly excited about SNDX-5613, our menin-MLL-r inhibitor. In addition to the CR we described at AACR, we've now described a similar rapid and deep CR in our compassionate use experience. The Phase I trial is now focused on MLL-r and NPM1 patients only. It's been expanded, and the inclusion of pediatric patients provides a potential path to initial broad label. We have many questions to addressing this program, but we believe we have the skill and resources needed to advance the program and potentially enable early regulatory clarity. We're also excited about the early results we're seeing with axatilamab in chronic GVHD. We look forward to presenting updated data from this program at the end of this year and updating you on the design and timing of our registration trial. With our recent highly successful financing, we are comfortable that we have the financial resources to aggressively advance our programs and achieve key upcoming milestones. We remain optimistic that we will 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 the core strength of our company. As always, I would like to thank the wonderfully talented team here at Syndax, our collaborators and most importantly, the patients, trial sites and investigators involved with our clinical programs. In addition, I'd like to thank our committed long-term investors for helping us to build this great company and to welcome the new investors who joined that effort with our recent financing. With that, I'd like to open the call to questions.

[Operator Instructions] Your first question comes from the line of Peter Lawson from Barclays.

This is Walhid [ph] on for Peter. Just had a question on the ARGUMENT-101 study. Where are you for current enrollment? And how many patients that you recruited have the MLL-r versus NPM1 mutation?

Yes. Thanks so much for the question. We'll update the full Phase I trial for AUGMENT-101 when we present the data in early 2021.

Got it. And I know that you mentioned that you'll be looking to get to a recommended Phase II dose by year-end. Will we potentially get an update on the patients that you've already presented on AACR as well?

Again, I think our intent was to present the entire completed Phase I trial. So that will include the update on the AACR patients when we present the completed Phase I trial.

Your next question comes from the line of Chris Shibutani from Cowen.

Great. A question for you about the discussions that you've had with the FDA and the planning adjustments you've made for the trial. Can you talk to us about what you're expecting the pediatric inclusion could do in terms of time lines and label? And also, maybe comment about how you're thinking about things from the standpoint of, for instance, compendia listing. Historically, some of the paths towards actual use have been fairly brisk in this type of setting based upon fairly modest clinical trial data sets. I'll start there. And then, I have a follow-up for Daphne.

Sure. Thanks so much, Chris. The peds inclusion, I don't think changes the time line to finish the Phase I trial. Obviously, it gets patients into that trial and will help with the setup for Phase II. And as I indicated in my prepared remarks, I think the inclusion - the indication we've gotten in our conversations with FDA is that the inclusion of both pediatrics and adult in both Phase I and Phase II could potentially enable a broad label that includes both peds and adult. In terms of compendia listing, I think the compendia listings, as you say, are another way to present information to the community. I think the trial we have ongoing would be a labeled indication, but we are in discussions with many investigators about investigator-sponsored trials that could add compendia data as well.

Great. And then, a follow-up for Daphne. Daphne, congratulations on your role, and we welcome you, certainly with the paths that you've already trespassed, similar to many of us in the past here. It's much appreciated. As you put your fresh eyes on the portfolio and the track record that the company has had in terms of entinostat previously in I/O and then with the breast cancer effort, and now based upon some comments that continue to be scripted about thinking to continue to look for assets, what will be some of your initial thoughts? Perhaps unfair, you haven't had 100 days in the seat, but I'll ask it anyway.

Thank you, Chris, and thank you for the welcoming remarks. So what I would say is that one of the very attractive elements of this organization and this management team for me to join Syndax was exactly those capabilities, the very enormous amount of talent not only in being able to develop the assets in hand but also to look for and identify interesting assets that I think will fit in very nicely with the - again, the capabilities and the focus of this organization, and I'm very excited to be a part of that organization and those opportunities.

Would you be keener for R&D-type projects that might have a couple of years? Are you thinking more commercial? Where is your leaning?

So, I think that the overall leaning would be in the development stage. But I think we're looking at all opportunities. And as you know and I know that with every opportunity, there's always a risk-reward and risk-benefit equation, and I think we're open to looking across the board, but I think our preference is in the development stage.

[Operator Instructions] Your next question comes from the line of Joel Beatty from Citi.

This is Shawn Egan calling in for Joel. It was great to hear about the complete response in the pediatric patients. Was that one of the 5 patients that was announced at the AACR presentation that were dosed previously? And then I have a follow-up question as well.

Shawn, thanks for your question. No. So the first 5 patients that were presented at AACR, I think we made - and they were also discussed at the pediatric ODAC. None of those patients really had plasma exposures that were - we thought would be associated with efficacy. None of them were taking a CYP3A4 inhibitor. So as I indicated in my prepared remarks, we've continued to essentially dose escalate the compassionate use patients in parallel with how we have dose escalated AUGMENT-101. So the patient that we described in my prepared remarks is not one of those 5. It's a recently communicated result from a patient that was on 226 with a CYP3A4 inhibitor.

Okay. Maybe can you comment just kind of on the broader strategy for 5613 and how you're looking at - obviously, you're enrolling relapsed/refractory now. But then again, how do you plan to kind of pivot and do induction and maintenance and try to capitalize on the whole market?

Yes. So clearly, our focus right now is to get the drug approved. When you see this kind of activity this early in a Phase I program, it gives us a good sense that we may be on to something that could easily be - make it across the goal line. So our focus right now is to do the things we need to do to get the drug approved. We are in discussions with a number of groups and a number of experts in the area about a variety of other uses for the drug, as you point out, in combination in induction, in maintenance after induction, in maintenance after bone marrow transplant. There are many different clinical avenues where this drug might be useful, and we're exploring many of those.

Next, we have Mr. Madhu Kumar from Baird.

This is Rob [ph] calling in for Madhu. My question was for axatilamab. Can you walk through selecting the 1 mg per kg dose for Phase II given that the Phase I dose escalation is ongoing?

Yes, sure. So in the Phase I portion that - with the data we had released at the end of last year, we had studied 0.15, 0.5 and 1. Based upon PK/PD modeling, we had thought that 1 was probably going to be the appropriate dose, and we saw good tolerability and efficacy at that dose. So what we decided to do was to expand that dose level while we finished the Phase I. It doesn't preclude us from going back and studying other dose levels either in an expanded Phase I or in Phase II. But the PK/PD looked pretty good, the tolerability looked good, and so we thought we'd expand that to start to get a better sense of the broader applicability of the drug.

Okay. And just a follow-up; to what extent are you considering that drug's utility in non-cancer settings? Would you explore cancer - non-cancer indications internally or externally?

Right. So I mean, again, we chose chronic graft versus host disease because it is sort of a - in a way, a prototype for a variety of different autoimmune diseases. And so we are looking at a number of different indications, some of which we would feel perfectly comfortable running ourselves, some of which we might want to look for a partner who's got deeper expertise in that particular disease. So that's work that we're doing right now, both to prioritize what indications and then how we go about pursuing them.

Thank you. And I'm showing no further questions at this time. I would now like to turn the conference back to our CEO, Dr. Morrison, for any closing remarks.

I just want to thank everybody again for joining the webcast. Again, I want to welcome Daphne to Syndax, and we hope everybody is well, and have a good summer. Thanks so much.

Thank you, everyone. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now all disconnect.