SNDX - Syndax Pharmaceuticals: Positive Axatilimab Phase 2 Results

2023-09-08 10:42:03 ET

Summary

• Syndax is making strides in the adoption of entinostat, a cancer therapeutic used in combination with immune checkpoint therapies.
• Syndax reported an increase in operating expenses in Q2 2023, but remains financially stable with cash reserves of $418.3 million.
• Syndax has two leading candidates in its drug pipeline, revumenib and axatilimab, which show promise in treating acute leukemia and chronic graft-versus-host disease (cGVHD) respectively.

Known for its work in cancer therapeutics, Syndax ( SNDX ) is making strides in the adoption of entinostat, a Class I Histone deacetylase inhibitors (HDAC) inhibitor that is utilized in combination with immune checkpoint therapies. The inherent nature of its specialty drug pipeline, its strategic collaborations, and overall market positioning make Syndax a company worth serious consideration. Its potential influence in reshaping the oncology landscape denotes a compelling opportunity for investment.

Financials

Looking into Syndax's financials, revenues and expenditures are key to understanding the company's position and trajectory. In Q2 2023, the company reported an increase in both R&D expenses and G&A expenses compared to the prior year, pushing up the total amount of operating expenses. R&D expenses, for instance, rose to $34.8 million, a significant uptick from the $29.7 million reported in Q2 2022. Meanwhile, G&A expenses witnessed an even steeper increase, almost doubling from $8.0 million to $14.9 million in the same period.

Syndax also reported a net loss of $44.6 million, slightly higher than the previous year's Q2 net loss of $37.6 million. Examined closely, this uptick in net loss was attributable to the rise in operating expenses, outpacing any potential growth in revenues.

Despite these losses, Syndax remains financially stable, with cash and cash equivalents, as well as short- and long-term investments, totaling $418.3 million. These reserves could serve as an important buffer against future expenses or unforeseen challenges.

The financial guidance for the rest of the year suggests a strategic commitment to enhancing R&D. Syndax anticipates R&D expenses to be between $39 and $43 million in Q3 2023, and total operating expenses to be anywhere from $57 to $62 million. By year's end, the company expects operating expenses to reach a total between $225 and $240 million. These projections convey a continuous intention to invest heavily in R&D, a move that fits within the pharmaceutical industry norms and Syndax's own commitment to advancing its pipeline.

Even with these heavy expenses, given its current cash position and the calculated burn rate, Syndax appears to have sufficient capital to sustain its operations for an extended period. At the current total loss rate, Syndax’s cash reserves will last a little under 2 years (or roughly 7 quarters). This affords them ample time to strive toward bringing their pipeline projects to fruition.

Pipeline

Syndax has two leading candidates in its drug pipeline— revumenib and CSF-1R Inhibitor Clinical Trial | SNDX-6352 for cGVHD . Revumenib is a selective oral inhibitor of the Traf2- and Nck interacting kinase (TNIK) pathway, a critical pathway that regulates Wnt signaling, which is implicated in various forms of cancer. This drug is currently under extensive clinical evaluation, particularly for its efficacy in treating acute leukemia , a blood cancer known for its rapid disease progression and high mortality rates.

Revumenib is especially focused on targeting two subtypes of acute leukemia—KMT2A-rearranged ( KMT2Ar ) and nucleophosmin mutant (mNPM1) —each characterized by unique genetic alterations that lead to poor or intermediate prognoses. The drug's mechanism inhibits the TNIK pathway, restoring the normal functions of KMT2A and nucleophosmin (NPM1) proteins, thereby arresting the growth of leukemic cells. Additionally, revumenib has the added benefit of increasing the sensitivity of these cancerous cells to other anti-cancer treatments such as venetoclax and azacitidine.

Syndax is actively enrolling patients for the Phase 2 AUGMENT-101 trial , focusing on specific patient populations with KMT2Ar and mNPM1 acute myeloid leukemia (AML). In a strategic move, the company plans to pool data for adult and pediatric KMT2Ar acute leukemia cases to file a single New Drug Application (NDA). Topline data for the pooled analysis is anticipated in the third quarter of 2023, with NDA filing expected by year-end. Several other Phase 1 trials of revumenib are also underway, aiming to cover various treatment aspects in acute leukemia, including combination trials with venetoclax , azacitidine , and low-dose cytarabine . Initial safety data from these studies are expected by the end of the year.

In contrast, axatilimab, another promising candidate from Syndax, is a monoclonal antibody targeting the colony-stimulating factor-1 receptor (CSF-1R). This drug has applications in inflammatory and fibrotic diseases, especially in chronic graft-versus-host disease ( cGVHD ). This condition is a serious complication often seen after allogeneic hematopoietic stem cell transplantation, affecting a significant percentage of recipients. By inhibiting CSF-1R, axatilimab effectively reduces macrophage activity, which plays a significant role in the pathogenesis of cGVHD. In a pivotal Phase 2 trial, the drug demonstrated a favorable safety profile and an overall response rate of 49% at 24 weeks across key subgroups. Syndax, in collaboration with its partner Incyte, plans to submit a Biologics License Application (BLA) by the end of 2023. Additional trials for axatilimab are also in the pipeline, targeting different aspects and stages of cGVHD, as well as other related conditions like idiopathic pulmonary fibrosis.

Beyond these two leading candidates, Syndax has other promising drugs like Entinostat - Syndax and SNDX-5613 in its portfolio. Entinostat is a class I HDAC inhibitor being developed with Genentech for treating hormone receptor-positive breast cancer, while SNDX-5613 aims to treat acute leukemias with mixed-lineage leukemia translocations or NPM1 mutations. Collectively, these advancements position Syndax as a company that demands keen observation within the realms of both cancer and inflammatory diseases.

Axatilimab Shows Promise in cGVHD Treatment

Syndax, in partnership with Incyte ( INCY ), recently released topline data from their pivotal trial of Axatilimab for both adult and pediatric patients suffering from Chronic Graft versus Host Disease cGVHD who have already undergone two or more prior lines of therapy. Achieving its primary endpoint across all doses and cohorts, Axatilimab propelled overall response rates (ORR) within the first half a year of treatment to impressive levels: 74%, 67%, and 50% respectively, for doses of 0.3 mg/kg every two weeks, 1.0 mg/kg every two weeks, and 3.0 mg/kg every month. Furthermore, this reaction surfaced across key patient groups, especially those who have been subject to treatments of ruxolitinib, belumosudil and/or ibrutinib in the past.

Bolstered by this finding and hoping to gain the go-ahead from the FDA, Syndax and Incyte are planning to submit a BLA by the end of the coming year. It is posited that Axatilimab could serve as a ground-breaking treatment for cGVHD by mitigating inflammation and fibrosis via interference with disease-associated macrophages. The AGAVE-201 study has evidenced the substantial impact this tool could provide, whether administered alone or used in conjunction with standard therapies. Therapeutically, this could be revolutionary for sufferers of cGVHD, reinforcing Axatilimab's potential as a clinically meaningful tool to combat this debilitating disease.

In addition to shedding light on the face of the AGAVE-201 study, we also learned about the mitigating impact of Axatilimab on symptoms. A significant 55% of patients who were treated with one of the doses, 0.3mg/kg, experienced a crucial improvement in symptoms, mirrored by at least a seven-point reduction in the modified Lee cGVHD Symptom Scale score. Data reveals that among patients treated with this dosage, considerably more than half have managed to maintain a response till their 12-month mark.

The AGAVE-201 study itself enrolled a lengthy roster of 241 patients in 121 sites spread across 16 countries. Patients involved were recipients of a median of four systemic therapies of the past, with almost three-quarters having already been treated with ruxolitinib, almost a quarter with FDA Approves Belumosudil for Chronic GVHD , and nearly a third with ibrutinib . Well above half of the patients had at least four organs involved at their entry point into the trial, including an alarming 45% with lung involvement. The scale of this trial and the diversity of the patient base bodes well for the potential pervasiveness of Axatilimab's adoption by the larger GVHD suffering population.

Despite the results garnered from this study, the journey was not without its challenges. Fatigue surfaced as one of the more common adverse events experienced by patients, along with an increase in certain biochemical parameters. Undoubtedly, these adverse events have the capacity to introduce complexities into the treatment process. However, the benefits offered by Axatilimab seem to outweigh these concerns, creating a persuasive rationale for its potential inclusion in GVHD treatment protocols.

Technical and Operational Risks

Anti-Colony stimulating factor 1 receptor (CSF-1R) antibodies such as Axatilimab target CSF-1R proteins, which are overexpressed in many cancer cells and are associated with various pathological conditions. However, these proteins also have crucial roles in normal cellular functions, particularly supporting the development and survival of mononuclear phagocyte cells, such as macrophages and dendritic cells. Unintended interference with these functions could potentially result in adverse immune responses or the impairment of normal cellular processes.

In addition, the intrinsic nature of monotherapy applications places Syndax's Axatilimab at a risk, given the complex, heterogeneous nature of most cancer conditions. While Axatilimab has proven effective as a monotherapy in certain patient populations, it may not be universally effective due to the diversity in tumor biology. There exists the potential risk of resistance development, where cancer cells may respond initially, but later adapt and become impervious to the treatment.

The applicability of Axatilimab extends beyond just its efficacy. Market approval for cancer therapeutics often requires an extensive duration of successful clinical trials, rigorous compliance to regulatory standards, and the demonstration of a favorable risk-benefit profile. The road to marketing authorization is often long and fraught with unexpected challenges.

Furthermore, there are inherent risks persisting within the operational facets of Syndax's business model that cannot be disregarded. For instance, Syndax’s strong dependency on the success of its investigational assets like Axatilimab underscores a potential vulnerability. A setback in the development of its flagship products or inconsistency in clinical trial data could have significant implications on the company’s market value.

On a broader scale, the volatile nature of the biotech sector, as well as the persistent uncertainties presented by the ongoing global health crisis, pose potential risks to Syndax. The effect of clinical disruptions or delays may impact Syndax's operational momentum and subsequently, its bottom-line.

Competitors

Despite their current collaboration, Incyte's Jakafi (ruxolitinib ) has been making waves in the cGVHD market, emerging as a strong contender. This JAK 1/2 inhibitor is currently approved in the United States for the treatment of patients with steroid-refractory acute GVHD. However, despite its regulatory foothold, Jakafi's efficacy rate falls short when compared to Axatilimab's Phase 2 trial results. Specifically, Jakafi's ORR hovered around 55% mark whereas Axatilimab achieved a staggering 74% at its highest dose in recent trials. This suggests that Syndax's Axatilimab might provide a more potent solution, albeit pending regulatory approval, compared to the current market offerings.

Sanofi ( SNY ) also lays claim to a slice of the cGVHD market with belumosudil, an oral tyrosine kinase inhibitor. Yet, belumosudil has shown limited efficacy in its recent trials, further boosting Axatilimab's relative advantage on the efficacy front.

In the sphere of acute leukemia, a multitude of companies hold their ground. Companies such as Novartis ( NVS ) and Jazz Pharmaceuticals ( JAZZ ) have developed potent therapies including Rydapt (midostaurin) and Vyxeos respectively. However, Syndax's decision to pave a path through a Phase 2 trial of Revumenib in acute leukemia potentially hints at a novel mode of action yet to be capitalized on by these competitors.

Beyond the mere mechanics of Syndax's products, it is also worthwhile to appreciate the implications of Syndax's robust pipeline, strategic collaborations, and the resilience demonstrated in navigating this challenging environment. The differentiation in strategies and product-target relationships could provide Syndax a unique positioning tool in its competitive landscape.

Valuation Concerns

Syndax's valuation through the conventional lens of price-to-sales ratio presents a mixed picture. The company trades at a market capitalization of $1.3 billion, corresponding to a P/S ratio of 8.61, significantly higher than the sector average of 3.76. The company is still largely in the clinical stage, so the sales are limited while R&D expenses mount high. For this reason, it is not entirely accurate to assess the company from a pure-value standpoint. Rather, a growth-oriented approach should be considered.

Despite being a rare disease and niche market, AML is expected to surpass a $1 billion market size by 2030. Similarly, GVHD already has a market size of over $2.5 billion and rapidly expanding. Provided revumenib and axatilimab continue to meet clinical endpoints for their trials, they are poised to capture a large share of this market. If Syndax can conservatively capture an average of 20% of each of these markets, that would put their market cap at roughly $2.6 billion assuming the industry average P/S ratio of 3.76 on $700 million of sales ($200 for AML and $500 million for GVHD, respectively). This represents an increase in value of roughly 90-110% of current prices should both drugs achieve success at the market stage. This is, of course, just an assumption based on the information currently available, and only time will tell if the drugs are a success or not.

That said, Syndax's portfolio is definitely positioned to address both cancer and inflammatory diseases, two areas with unmet clinical needs and lucrative market potential. The company has a robust pipeline spearheaded by revumenib and axatilimab, both of which are nearing significant clinical milestones. As stated earlier, top-line data for revumenib is expected by Q3 2023.

While Syndax has incurred rising R&D and G&A expenses, the increase aligns with the advancement of its drug candidates through critical phases of clinical trials. Given the data so far, the market appears to be pricing in this transformative potential, which could manifest as substantial top-line growth upon successful commercialization.

For further details see: