Syndax Pharmaceuticals Inc (SNDX) 2016 Q3 法說會逐字稿

Good day ladies and gentlemen, and welcome to the Syndax third-quarter earnings conference call.

(Operator Instructions)

I would now like to introduce your host for today's conference, Melissa Forest, Assistant Vice President of Investor Relations. You may begin.

Thank you, operator.

Welcome, and thank you to those of you joining us on the line and the webcast this afternoon for a view of Syndax's third-quarter 2016 financial and operating results. I am Melissa Forest, Assistant Vice President of Investor Relations. 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 Allan Shaw, Chief Financial Officer.

Also joining us on the call today for the question-and-answer session is Michael Metzger, President and Chief Operating Officer of Syndax. This call will be accompanied by a slide deck that has been posted on the Company's website. I would ask you to turn to our forward-looking statements on slide 2.

Before we began, I'd 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 most recent quarterly report on Form 10-Q and other reports filed with the SEC.

Any forward-looking statements represent our views as of today, November 10, 2016 only. A replay of this call will be available on the Company's website www.syndax.com following this call. You can find the dial-in information for the replay in today's press release, as well as on the Company's website. With that, I'll ask you to turn to slide 3.

And I'm pleased to turn the call over to Dr. Briggs Morrison, Chief Executive Officer of Syndax.

Thank you very much, Melissa.

Good afternoon, and thank you to everyone is joined us on our conference call and webcast. The third quarter was a productive one for Syndax, as we continued executing our corporate strategy towards the realization of our primary mission, which is too develop innovative therapies to enable patients with cancer to live longer and better than ever before. With the recent clinical and business development progress, we believe we are well on our way to achieving our goal of having five innovative clinical programs ongoing, including four combination studies by year end.

Our corporate strategy to develop innovative cancer therapies is summarized briefly on slide 3. Today this strategy involves two potential best-in-class assets. The first, Entinostat, is our small-molecule class-one-specific histone deacetylase inhibitor being develop in a number of clinical trials evaluating combination therapies across six different cancer indications ranging from a late-stage Phase 3 study in breast cancer to Phase I clinical studies in immuno-oncology. Our second asset, Syndax 6352, is an antibody against the CSF1 receptor which we end-licensed early in the third quarter.

Our lead product candidate, Entinostat, is being tested in hormone receptor positive HER2-negative breast cancer in combination with an aromatase inhibitor in a Phase 3 registration program in collaboration with the Eastern Cooperative Oncology Group, American College of Radiology Imaging Network, otherwise referred to as ECOG, and the National Cancer Institute.

I'd like to first remind you that Entinostat in combination with Exemestane was granted breakthrough therapy designation by the US Food and Drug Administration for this hormone receptor-positive HER2-negtive breast cancer indication based upon positive results from our randomized Phase 2b clinical trial, ENCORE 301, which demonstrated approximately an eight-month improvement in overall survival. Entinostat is also being tested in combinations with key checkpoint inhibitors in the immuno-oncology space in collaboration with leading pharmaceutical companies.

I will shortly being reviewing the progress we've made during the quarter across these programs, but before doing so I'd like to note that, as shown on bottom of slide 3, the foundation underlying our corporate strategy is our people and our finances. We've been very fortunate to have hired an incredibly talented group of people to Syndax. And I'd like to thank our entire team for their hard work and commitment to our mission. Our CFO, Allan Shaw, will review our strong financial position later in the call.

As shown in slide four, the lead program for Entinostat is a Phase 3 registration trial referred to as E2112 in hormone receptor positive HER2-negative breast cancer, which is being conducted by ECOG and the NCI under special protocol assessment. The study has two primary endpoints, progression-free survival and overall survival.

It's important to note that the terms of the special protocol assessment allow for a potential registration file based on either positive PFS or positive OS data. I'm pleased to report that ECOG has informed us that enrollment has proceeded at a robust pace. After the end of October the trial had accrued more than 60% of the target enrollment.

In our previous communications, we have indicated that enrollment will complete no sooner than the second half of 2017. I'm pleased to report that ECOG has now indicated that they believe enrollment will indeed complete by the end of the second half of 2017. Further, they've also indicated that it is likely that the final analysis of the progression-free survival endpoint will also be available by the end of the second half of 2017. Everyone at Syndax and at ECOG is really excited about the progress of this study.

Entinostat has several properties that we believe position it as a best-in-class HDAC inhibitor, including selectivity for class-one HDAC enzymes, synergistic activity with several classes of therapeutic agents including immune checkpoint inhibitors, and an ability to re-sensitize cancer cells. As shown on slide 5, Entinostat has a differentiated mechanism of action that targets the tumor microenvironment specifically by blocking the proliferation and function of immunosuppressive myeloid route suppressor cells and by blocking the development and function of regulatory T cells.

Slide 6 show the other clinical development programs underway with Entinostat, which cover our existing efforts to combine Entinostat with key checkpoint inhibitors under partnerships with Merck, Genentech, and Merck KGA and Pfizer. As noted in the slide, we anticipating generating multiple milestones from these studies next year. I want to emphasize that this program really consists of five different experiments in five different clinical settings with three different antibodies.

Slide 7 summarizes the Phase 1b portion of ENCORE 601, which is testing Entinostat in combination with pembrolizumab. The safety assessment for the dose escalation an dose confirmation part of this Phase 1b portion has been completed, as shown on the side.

Syndax will present safety, biomarker, and initial efficacy data from this completed Phase 1b portion of the study in patients with non-small cell lung cancer as the poster presentation tomorrow at the Society for Immunotherapy of Cancer 2016 annual meeting in National Harbour, Maryland.

At this time the data are relatively immature, and include only a small number of patients. And yet we are pleased that the initial safety data suggests that the combination is well tolerated. Having defined this well tolerated combination regimen, we've now progressed to the Phase 2 portion of the trial. I'll also note that the pharmaco-dynamic data from this Phase 1b portion of ENCORE 601 is consistent with previous data that's been presented, indicating that Entinostat can reduce number of circulating myeloid-derived suppressor cells.

Slide 8 provide details on the ENCORE 601 Phase 2 design, and shows the two stages of the Phase 2 portion, including response thresholds necessary to progress the study. I'm pleased to report that during the third quarter we initiated enrollment of patients with non-small cell lung cancer and melanoma in all three of the Phase 2 cohorts at the 5-milligram dose. And anticipate making a go/no-go decision to progress each arm to the second stage of the Phase 2 portion by the end of the first quarter of 2017.

Slide 9 summarizes our second ENCORE study called 602, which is a Phase 1b/2 trial of Entinostat in combination with atezolizumab from Genentech in patients with triple negative breast cancer. As shown on this slide, the primary endpoint of the Phase 1b portion is to select a recommended Phase 2 dose. And the primary endpoint of the Phase 2 portion is progression-free survival.

We began dosing patients in June, and have continued dosing patients and assessing the safety of the 5-milligram dose in the trial's open label Phase 1b portion. An abstract describing the trial has been accepted for presentation in the trial's in progress track at San Antonio. And we anticipate reporting the safety data from the Phase 1b dose determination portion in the first half of 2017.

On slide 10, our third ENCORE study, ENCORE 603, is a Phase 1b/2 trial of Entinostat in combination with avelumab from Merck KGA and Pfizer for patients with ovarian cancer. Enrollment in this trial is on track to begin by the end of the year. And we expect to present safety data from the Phase 1b portion in 2017. The primary endpoint of the Phase 1b portion is safety, while the primary endpoint for the Phase 2 portion is progression-free survival.

I would like to now turn our second clinical asset, Syndax 6352, a potential best-in-class IND-ready anti-CFS-1R monoclonal antibody that we licensed from UCB in July of this year. As shown on slide 11, Syndax-6352 is a high affinity antibody directed against a cell surface protein called colony stimulating factor receptor one, which plays a critical role in regulating and proliferation, survival and differentiation of macrophages. As you can see on slide 11, CSF-1R regulates a variety of critical cellular processes for macrophages, and blocking this receptor has been shown to the depletion of cells known as tumor-associated macrophages.

These tumor-associated macrophages are immunosuppressive, and can suppress the ability of tumor-infiltrating lymphocytes to attack and kill tumor cells. As I noted earlier, preclinical data indicates that Entinostat can suppress the function of both myeloid-derived suppressor cells and regulatory T cells, which are the other two critical cell types in the tumor microenvironment that mediate immune suppression. Given the data showing that anti-CSF-1R antibodies can deplete tumor-associated macrophages, we believe the combination of Entinostat plus Syndax 6352 may have some unique synergistic effects by suppressing these three critical immuno-suppressant cell types in the tumor microenvironment.

Slide 12 summarizes some of the properties of Syndax 6352 that we believe help position it as a potential best-in-class molecule, including its high affinity, its ability to block the two key ligands for the receptor, and synergistic activity with other therapeutic classes in preclincal models including checkpoint inhibitors. We believe that Syndax 6352 can be used to treat a wide variety of cancers in combination with other agents, including immuno-checkpoint inhibitors, cell therapy, radiotherapy, and chemotherapy. Also as shown on slide 12 you can see in the callout box on the slide that we have commenced the enrollment of our Phase I single ascending dose trial of Syndax 6352 in healthy volunteers.

In summary, both Entinostat and Syndax 6350 have potential uses in combination with other classes of agents, and together they target three of the most important cells mediating immunosuppressant in the tumor microenvironment. We believe that the combination of blocking key immunosuppressantive components, as well as blocking the PD-1/PD-L1 pathway, could give us greater responses and perhaps more prolonged and deeper responses in patients with a wide variety of cancers.

Quickly, before we turn to our financial results, I want to remind you that the SITC meeting is ongoing. And the details of relevant poster presentations for both Entinostat and Syndax 6352 are outlined on slide 13.

With that, I'd like to now turn the call over to Allan Shaw, our Chief Financial Officer, to discuss our financial results and update you on our balance sheet. Allan?

Thank you, Briggs, and good afternoon.

Turning to slide 14, for the three months ended September 30, 2016 Syndax reported a net loss attributable too common stockholders of $15 million, or $0.84 a share. The net loss for the three months ended September 30, 2016 included a non-cash stock-based compensation expense of $800,000 related to the issuance of stock option awards to employees.

Our research and development expenses in the third quarter of 2016 increased by $9.3 million to $12.3 million from the comparable prior period, primarily due to increased clinical activities attributable to increased patient accrual costs in E2112, higher expenses associated with the Phase 2 expansion of ENCORE 601, and the commencement of ENCORE 602, as well as the upfront payment related to expanding the pipeline with SNDX 6352. Our general administrative expenses were $3.3 million during the third quarter, similar to the comparable prior-year period of $3.2 million.

Total common shares issued and outstanding as of September 30, 2016 was 18,189,880. We also had 2,865,923 common stock equivalents outstanding, for a total of 21,055,803 shares of common stock and common stock equivalents outstanding as of September 30, 2016. Additional financial details will be available in our quarterly report on Form 10-Q for the third quarter 2016, which is expected to be filed no later than November 14, 2016.

Furthermore, Syndax ended the third quarter with cash and cash equivalents, including short-term investments of $115.6 million, which we believe is sufficient to fund development efforts into the middle of 2018, which will enable us to reach key corporate milestones. We believe that we are in a strong financial position, and will continue to make appropriate and measured investments in building our Company.

I would like now to turn the call back over to Briggs.

Thanks very much, Allan.

In closing, we believe Syndax is developing a portfolio of potential best-in-class therapies in a variety of studies, including novel combination strategies involving immuno-checkpoint inhibitors. The Phase III registration trial and breast cancer for our lead asset is a well underway, with potential results expected in the second half of 2017.

Three of these clinical programs involve collaborations with leading pharmaceutical companies with their checkpoint inhibitors to explore the synergistic effects of Entinostat as immunotherapy. And the most recent addition to our portfolio, Syndax 6352, attests to our ability to execute value-added strategic transactions that complement our existing portfolio and expand our pipeline.

As summarized on slide 15, we believe we made significant progress during the quarter across all of our programs. And anticipate generating important milestones through the end of this year and through 2017.

With that, I'd like to open the call for questions.

Thank you.

(Operator Instructions)

Our first question comes from Matthew Harrison with Morgan Stanley. Your question, please.

This is Cyrus on for Matt. Thanks for taking my question. So for the go/no-go decision in ENCORE, what is bar for progression? And how does durability of response play into this decision?

Right. Thanks very much for your question. Slide 8 of the presentation gives you the go/no-go thresholds for each of the three cohorts. I'll emphasize again that these are essentially three independent experiments. We could progress one cohort, two cohorts or all three cohorts. And just to remind you, so for patients who have non-small cell lung cancer who have not previously received a PD-L1 inhibitor, the way the trial is designed, we enroll 13 patients. If 3 out of those 13 have a response, we progressed to Stage 2 where we enroll an additional 33.

For non-small cell lung cancer patients who have progressed on a previous PD-1 or a PD-L1 therapy, we enroll 20 patients. If 2 out of 20 respond, we progress to trial and enroll another 36. And for the melanoma patients, these are melanoma patients who have progressed on either PD-1 or PD-L1 therapy, we enroll 13 patients. If at least 2 of them have a response, we progress and enroll another 21.

Your question about durability of response is not factored into the formal go/no-go criteria. The formal go/no-go criteria are based on objective response rate. We will, of course, evaluate the durability of those responses. But it's not a formal criteria for the go/no-go.

Got it. Got it. And question about E-2112.

Yes?

Has the composition of available patients changed? What allowed for the faster enrollment? And are you guys confident that the screening criteria are being complied with?

Yes. So there's a couple of things that contributed to the uptick in enrollment. I would say during this calendar year, inparticularly, enrollment's been going quite well. One of them is just sort of operational execution. I think our team at Syndax has done quite a bit of work in collaboration with ECOG, publicizing the trial, making sure physicians know the type of patients to enroll. And that's helped with enrollment. There were some changes to the enrollment criteria in an amendment that was made last summer, the summer of 2015.

And the major one I think that has helped with the pace of enrollment was to allow patients who had previously received Faslodex into the trial. When the trial was first designed, it was only patients who had progressed on an aromatase inhibitor. We allowed patients, because of the wide use of Fasodex, to enter as well. Those are things I think that have contributed primarily to the nice pace of enrollment.

In terms of the population of patients that are being enrolled, we do keep track of what we refer to as protocol violators to make sure that the intended population is being enrolled, and we think the trial is being conducted at a high level of quality. We do know that there are patients coming into the trial who have previously received palbociclib, either in combination with letrozole or in combination with Faslodex. I don't have the most current percent of that population, but we know that that's represented in the enrolled population.

Great. Thank you.

Thank you. Our next question comes from Tony Butler with Guggenheim Partners. Your question, please.

Thanks very much. Briggs, in the commentary around MDSCs that our systemic, is there a direct correlation between the reduction in systemic MDSCs and that which are at the site of the tumor? That's question one.

Question two then is, if you are able to effectively, let's just assume, remove all the barriers in the tumor microenvironment, at least that we know about, is there actually any evidence that you then can derive a clonal T-cell against the tumor that may be initiated by an anti-PD-1 response? My third question, apologies for three, in the ovarian cancer trial, are these all-comers? Or are they defined by BRCA status? Thanks very much.

Thanks a lot, Tony. First to your question about MDSCs and whether changes in peripheral MDSCs accurately reflect what's going on in the tumor. To be honest, I think that's a little bit of an open question.

We've seen in some of the preclinical experiments where you don't see a lot of change in either the proliferation or function of MDSCs in the spleen or in the circulating blood. But you do see profound changes in the tumor. So it's I think a little bit of an open question that we're trying to evaluate, of whether these changes in the periphery will correlate with changes in the tumor.

Your second question is if you remove all of the immunosuppressive barriers, do you end up with a clonal T-cell population? I don't think we know the answer to that. I think that what people have described, in fact, is as you start to decrease some of these immunosuppressive factors, you get clonal expansion and a broader repertoire of T-cells that are attacking the tumor, which is all for the good so that it makes it harder for the tumor to escape. And your question about the ovarian cancer population. Yes, it is an all-comers, including patients with mutant BRCA status.

Thank you, Briggs.

(Operator Instructions)

Our next question comes from Mike King with JMP Securities. Your question, please.

Mike, are you there?

Sorry. Can you hear me now?

We can hear you now.

All right. First of all, thanks for the question and congrats on the progress in the quarter. Briggs, I just wanted to be clear on the terminology, because -- so I guess the dose ranging in the first part of ENCORE 601, you're calling a 1b/2 and now you're calling this next phase of the trial a Phase 2 with a basically two-compartment design?

So just to be clear, Mike, the ENCORE 601 in total is a Phase 1b/2 trial. The Phase 1b portion was the dose escalation and dose confirmation. That's the data that we will present at SITC tomorrow. There'll be a poster. If you are there, we'd be delighted to review it with you. We've now moved into the Phase 2 portion. The Phase 2 portion is designed as what is referred to as the Simon two-stage design.

Phase 2 actually has two stages to it. That's where the nomenclature gets confusing, I think. The first stage is you enroll, as I said, somewhere between 13 and 20 patients in each cohort. If you see a level of activity that seems -- that's sort of pre-specified, that will allow you to progress to larger numbers of patients in the second stage. But all of that is considered the Phase 2 portion of ENCORE 601.

Right, okay. I'm clear on that now. So, all right. And then so you've begun enrollment of patients in the Stage 1 portion of Phase 2?

Yes.

Okay, got it.

And what we're indicating is that that go/no-go of whether you enroll more patients, we anticipate at the enrollment stage at the pace it's going, we'd be able to make that decision by the end of the first quarter of 2017.

2017. Okay. Perfect. Picking up where Tony Butler left off on the ovarian cancer combo with avelumab, in the sense of an all-comers trial, might it be difficult to enroll, just given all of the interest in PARP inhibitors? Or do you think you might be looking at patients who may be in the post-PARP inhibitor setting in that study?

Yes. I think that obviously the, if my memory serves me correctly, the only approved PARP inhibitor is olaparib, which is approved for patients in third-line or later monotherapy treatment. Obviously, some exciting data has come out from Tesaro and their maintenance trial. I don't think they're approved yet. And obviously Clovis also has an exciting PARP inhibitor, which I don't think they're approved yet either but will be soon, or they say they will be soon.

I don't -- so I do anticipate that over time as this trial enrolls we'll be seeing patients who have previously received a PARP inhibitor. I don't think -- that wouldn't surprise us. I think starting right now, again, the AZ indication is only for patients with known germ-line BRCA status in third-line or greater. I don't think that'll be that big of a challenge for enrollment. But as the other ones get approved and come onto the market, it will be -- I think we will see people who have previously received a PARP inhibitor. That's perfectly fine.

Right, okay. And then finally, just from a development strategy standpoint, is it conceivable that you guys might undertake sort of a broad exploratory combination studies with Entinostat in breast cancer? Sort of what you've been doing with the checkpoints? There's obviously a lot of agents that are used throughout the treatment paradigm to date for metastatic breast cancer, including CDK-46s. Could we anticipate at some point in the near-term that you might start to open combination protocols, sort of ENCORE whatever 604, 5 and 6, with Entinostat in metastatic breast cancer?

Yes. Thanks for the question, Mike. I think our view at this stage is, we'd like to see E-2112 read out. And I think if we get a positive result on progression-free survival the second half of next year, part of the lifecycle management, obviously, would be to do additional studies. That trial's in combination with Exemestane.

We can do vision studies in combination with a CDK-46, in combination with Faslodex. So there would be more of those trials as part of the lifecycle management of the medicine. But we don't anticipate starting any of those in terms of Syndax-sponsored trials until we read out 2112.

Right. Okay. Thanks for taking the questions. I'll jump back in the queue.

Thanks.

Our next question comes from Joel Beatty with Citigroup. Your question, please.

Thanks for taking the questions. For the ENCORE 601 trial, when you're looking at the Phase 1b trial design, how much read-through is there between the responses in that phase of the study compared to what you might expect in Phase 2?

Yes. Thanks for the question, Joel. Again, the Phase 1b portion, it is a 1b, which means they all had non-small cell lung cancer, but it was a somewhat heterogeneous population of patients. Some were naive to having received a PD-L1, some who previously had progressed on a PD-1, essentially all full-spectrum of PD-L1 status.

So I think it's a relatively, as I said in my comments, a small and immature dataset. So it's -- and of course, as we all know having done drug development for many years, you can always get fooled one way or the other, either positively or negatively by small datasets. So I think that's why we're doing the Phase 2 portion, to get a better understanding of the activity.

And of course we didn't study any patients with melanoma in the Phase 1b portion. So the melanoma cohort is completely unexplored. I will say that our investigators conducting the trial, to your question, did not believe that anything either in the Phase 1b or the Phase 2 portion of non-small cell lung cancer would necessarily read through to melanoma. There are obviously different immunobiology in melanoma than lung cancer. That's why we're excited about getting the Phase 2 portion enrolled and getting that data, because we think it is complementary to the Phase 1b portion.

Okay, got it. And one more question related to the CSF-1R program. For the first trials in healthy volunteers, what can be learned from those studies? Is it just looking at safety, or are there other, say, biomarkers that might be able to be looked at?

The primary purpose, of course, is to assess PK and PD, as well as safety. The thing that, I think, we think we can accelerate is, in fact, the selection of a dose that you can take into multiple ascending dose trials. It's primarily PK. There's actually quite a bit of PD you can get from the molecule. It's not what I would call PD at the tumor, because obviously, they don't have tumor.

But you can get some, looking at peripheral monocytes and other markers, some read on pharmaco-dynamics which will help us pick the dose. But it's really just to sort of accelerate that dose escalation to get to a therapeutic dose and then move into cancer patients in the multiple ascending dose trial.

Thank you.

Thank you. I'm showing no further questions at this time. I would like to turn the call back over to Dr. Morrison for closing remarks.

Great. Thank you very much, everybody, again for joining us on the call and webcast. We look forward to seeing many of you at upcoming conferences. Have a good evening.

Ladies and gentlemen, that does conclude today's conference. Thank you for your participation. You may now disconnect.