Syndax Pharmaceuticals, Inc. (SNDX) Earnings Call Transcript & Summary

Good day, everyone, and welcome to Syndax conference call. Today's call is being recorded. At this time, I would like to turn the call over to Maghan Meyers of Argot Partners. Please begin.

Thank you, operator. Welcome, and thank you to those of you joining us on the line and the webcast this morning for a review of Syndax's announced collaboration with Incyte for the development of axatilimab. I'm Maghan Meyers with Argot Partners, and with me this morning to discuss this collaboration are Dr. Briggs Morrison, Chief Executive Officer; Michael Metzger, President and COO; and Daphne Karydas, Chief Financial Officer. Also joining us on the call today for the question-and-answer session is Dr. Peter Ordentlich, Chief Scientific Officer. 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 our views as of today, September 27, 2021, only. A replay of this call will be available on the company's website, www.syndax.com, following this call. With that, I'm pleased to turn the call over to Dr. Briggs Morrison, Chief Executive Officer of Syndax.

Thank you very much, Maghan, and thank you to everyone who is joining us on today's call. We are delighted to be announcing today that Syndax and Incyte have entered into a broad, long-term global collaboration that brings together 2 companies with a solid track record of innovation to accelerate and maximize the development of axatilimab, our potentially best-in-class monoclonal antibody therapy targeting the CSF-1 receptor. As you know, we presented our Phase I chronic graft versus host disease data at ASH in December of last year. The reaction to our data was extremely positive, and given our belief in the broad clinical potential of axatilimab, we initiated a process to look for a global partner to collaborate with us on the further development of this exciting molecule. We are thrilled to announce today that we have entered into a collaborative agreement with Incyte. To briefly summarize, axatilimab is an IgG4 monoclonal antibody that binds to the CSF-1 receptor and blocks the interaction with its ligands, CSF-1 and IL-34, thereby decreasing the proliferation and function of CSF-1R-dependent monocytes and macrophages. Based on impressive preclinical data demonstrating the effectiveness of CSF-1R inhibition in a model of chronic graft versus host disease, we ran a Phase I clinical trial to ask whether axatilimab would be useful in the treatment of this disease. The Phase I data we presented at ASH last year showed a [ 57% ] overall response rate in very heavily pretreated patients across the various doses tested and show that axatilimab was generally safe and well tolerated. Based upon the data being generated in the Phase I dose escalation phase, we chose to open a Phase II expansion cohort to further explore the 1 milligram per kilogram dose administered every 2 weeks. As announced earlier this year, we completed enrollment of 23 patients in that single-arm Phase II trial and have guided that we will be presenting a full update of the 40 patients who have been enrolled in our combined Phase I and II trials later this year. We've also announced the design and initiation of our global pivotal trial in chronic graft versus host disease called the AGAVE-201. This trial is enrolling patients with chronic graft versus host disease, whose disease has progressed after 2 prior therapies. Patients must be at least 6 years of age and have met overall entry criteria. This is a pivotal dose-ranging trial in which patients will be randomized to 1 of 3 treatment groups, each investigating 3 distinct doses of axatilimab, 2 given every 2 weeks and 1 dose regimen administered every 4 weeks. The primary endpoint is overall response rate using the 2014 NIH consensus criteria for chronic graft versus host disease. Secondary endpoints will include duration of response and validated quality of life assessments using the Lee Symptom scale. Enrollment to the study is underway, and we are on track to deliver top line data in 2023. As we have noted previously, we have also been working extensively with experts in the field of fibrotic diseases and found a strong consensus that the scientific basis for the efficacy of axatilimab in chronic graft versus host disease is likely to extend to a wide variety of fibrotic diseases such as IPF and scleroderma. As we have previously communicated, we obtained orphan drug designation from the FDA for the use of axatilimab in IPF, and we are working with experts and regulators to develop a trial to appropriately test axatilimab in that setting. It is against this backdrop that we today are announcing our collaboration with Incyte to accelerate and maximize the development of axatilimab. In addition to the potential for sequencing axatilimab and Incyte's JAK inhibitors as monotherapy in chronic graft versus host disease, we also have the ability to evaluate combination therapy with these 2 complementary mechanisms of action. The 2 different mechanisms of action could allow for the potential for a combination in both the steroid-refractory and steroid-naive chronic graft versus host disease setting with the potential to arrive at a safe and effective combination that could potentially lead to a steroid-free regimen. Before Michael walks you through the details, I just want to note that this collaboration will allow us both to maximize the value of axatilimab in chronic graft versus host disease, and will allow us to initiate a Phase II POC trial in idiopathic pulmonary fibrosis. We'll have more to say about the details of the IPF POC trial in the future, but for now, I'd like to turn things over to Michael to summarize the details of the collaboration. Michael?

Thanks, Briggs. I'm personally very excited to be announcing this important collaboration as it marks a critical value-enhancing milestone for the program and for the company. As Briggs mentioned, based on the emerging data in chronic graft versus host disease, we realized several months ago that this mechanism, CSF-1R and in particular, our antibody had significant potential beyond cGVHD and that extensive clinical development in a number of high-value fibrotic indications with high unmet medical need was indeed warranted. To maximize the potential of the drug, we conducted a thorough process in search of the ideal global partner for axatilimab, and ultimately concluded that Incyte with its significant expertise in GVHD with ruxolitinib and a track record of success -- successful co-development and co-commercialization partnerships, they would be the best suited to help Syndax build a broad and valuable antifibrotic franchise. Critical to Syndax's long-term strategy is to identify and unlock potential value within our pipeline and then find a way to exploit this value globally while retaining major economic value in the U.S. And we are confident that this global partnership will help us fulfill all of these ambitions. The deal provides $152 million upfront, $117 million in cash and notably $35 million in equity at a 30% premium which we believe is a strong endorsement of our company and its overall value proposition. The cash infusion and investment will help to strengthen the company's balance sheet while enabling us to accelerate and expand on the development of axatilimab and our Menin program, both of which will be in registration trials this year. The overall collaboration structure we designed is fit for purpose. In the U.S., Syndax and Incyte will split profits 50-50. This enables us to retain significant upside while we actively participate both strategically and in the ongoing development of the molecule. There is also cost sharing for development. Syndax is responsible for 45% of costs, limiting our downside and extending our cash. Finally, we have an opportunity for co-commercialization in the U.S. with the option to provide up to 30% of the sales force. This opt-in right allows us to participate in the launch of an important product alongside a strong commercial partner that has extensive experience across indications, including oncology and immunology. Outside the U.S., we'll rely on Incyte to develop and launch the product in all major markets to maximize its full potential as a global brand. The economics to Syndax over the course of the collaboration are enhanced with key regulatory and sales milestones covering multiple indications throughout the world. The payments totaled an additional $450 million and Syndax receives double-digit royalties on ex U.S. sales. Also important to highlight is the development plan, which calls for the partners to design novel combinations with axatilimab and Incyte's JAK inhibitors with the goal of establishing axatilimab in earlier settings within chronic graft versus host disease and expanding its market opportunity. As we previously mentioned, was our intention, Syndax will initiate a Phase II proof-of-concept trial in IPF, the first expansion outside of establishing chronic graft versus host disease as a beachhead and into other fibrotic diseases where we believe axatilimab could have a significant impact. Successful development in IPF could lead to an additional approval in a very important indication of considerable value and would provide support for axatilimab in other fibrotic-driven diseases that the parties could explore over the course of the collaboration. Now let me turn it back over to Briggs.

Thanks so much, Michael. So let me close the call by again emphasizing our excitement about the broad franchise opportunity for axatilimab and our excitement about maximizing this opportunity through our collaboration with Incyte. We've been very impressed by the thoroughness and thoughtfulness of our Incyte colleagues and look forward to working with them as this collaboration unfolds. As always, I'd like to thank the wonderfully talented team here at Syndax, and our committed long-term investors who are helping us to build this great company. With that, I'd like to open the call for questions.

[Operator Instructions] Our first question comes from Phil Nadeau with Cowen and Company.

Congratulations on the deal. A few questions from us. First, on the milestones, could you give us some sense of what it will take to trigger those milestones or maybe just a broad breakdown of development versus regulatory versus commercial?

Michael, do you want to take that one?

Yes, sure. Phil, thank you. Yes, we haven't disclosed the breakdown of the milestones, but I would kind of say that they break down pretty significant approval milestones, late regulatory milestones as well as commercial, they sort of are evenly split. So -- it's significant milestones around development as well as commercial.

Got it. Okay. And then second, on the combinations with JAK inhibitors, it does seem like that could be differentiating in the marketplace. Can you talk a bit more about when those trials could start? And maybe what the development path is?

Yes, this is Briggs, happy to take that. So we're working -- obviously, we've just announced the deal. So we're working diligently to work through those details with our colleagues at Incyte. Things, of course, could start as early as next year. And as is our practice, once we have a trial design that is agreed to by both parties and agreed to by the regulators, then we'll share it with people, the design, the number of patients and the time lines.

Our next question comes from Yigal Nochomovitz with Citigroup.

Great. I just had two. One clinical, one commercial. On the clinical question, just could you remind us of any preclinical data and/or any early clinical data that support the use of axatilimab to treat IPF? And then secondly, regarding the development costs, where Incyte is responsible for 100% of the cost, could you quickly clarify what you mean by indications that are specific to ex U.S. countries as I wasn't aware of any diseases that have no prevalence in the U.S. but occur ex U.S. So if you could specify which diseases you're referring to, that would be super helpful.

So Michael, do you want to take the second question first, just to clarify that?

Yes, sure. Thanks, Yigal. So I think the way to think about it is when we were referring to 100% of the cost ex U.S., we were talking about trials that are specifically needed to further regulatory -- get through regulatory hurdles ex U.S. They're not specific to any particular indication, but there may be trials for GVHD or IPF or others that are required for ex U.S. geographies, and that's -- and those are -- those will be covered by Incyte. But in terms of overall cost structure, which I think I outlined in my remarks, we'll be covering 45%, they'll be covering 55%. So that's generally how you should think about the breakdown between U.S. and ex U.S.

And Yigal, let me take your question about the scientific rationale for IPF. As you will recall, we licensed the CSF-1R antibody from UCB and UCB has an extensive preclinical package not yet published, but an extensive preclinical package supporting scientific rationale for IPF. That's what we've been using as we've been speaking with experts, and some of that data was included as we got our orphan designation from the FDA. And I guess we've also commented some of the responses that we've seen in the chronic GVHD setting, the biology there is very similar to what you see in IPF, and we've seen some very nice pulmonary, not just stabilization of FVC, which is the endpoint people use in IPF trials, but actually improvements in FVC. And then there's additional clinical information from natural history studies of patients with IPF showing that the nonclassical monocytes predict a poor outcome for patients. So we think there's quite a bit of both preclinical observations from our GVHD trials and longitudinal data to support the rationale for testing the drug in IPF.

Our next question comes from Joel Beatty with Baird.

Congrats on the deal. The first question is, could you characterize the level of proof-of-concept data that you'd want to show in the next IPF trial to prompt Incyte on their decision on whether to opt in or not? And then the second question is for the royalties, it looks like Europe and Japan are mid-teens while other countries, ex U.S. are low double digits. Can you just clarify if that low double digits means kind of lower than the mid-teens or is it going to be higher?

So Michael, why don't we have you take the second question again first?

Yes, sure, Joel. So thanks. We didn't break out specifically ex U.S. milestones where they fell. We said double-digit royalties. So I'm not sure where that comes from. But yes, they're double-digit royalties throughout various geographies. And so I think that's the specificity we've provided so far when you think about it.

And Joel, just in terms of the design of the IPF trial, again, as I mentioned earlier, we'll say more about the details of the design, the sample size and the timing. I guess the one thing I would say, as we've been discussing with experts in the field about how to do what people call proof-of-concept trials, we've come to the conclusion that you really only can get proof of concept if you're using a clinical endpoint. So you can think of the IPF proof-of-concept trial as sort of a smaller version of what would be considered a pivotal trial using pivotal trial endpoints, where we haven't yet been convinced or I should say the experts we've been consulting have advised us that some of the biomarker-driven trials or intermediate kind of end points that people use can have both false positive and false negative rates. And so our current thinking, and again, we'll say more once the trial design is finalized, is that we would use pivotal endpoints like FVC to establish proof of concept.

Our next question comes from Peter Lawson with Barclays.

Just -- any I guess a question for Daphne, just thoughts around how far this could extend your cash runway?

Sure. Thanks, Peter. So with the addition of the $152 million, again, in $117 million upfront and $35 million in equity investment on the balance sheet, this would take our cash runway to early 2024.

Perfect. And then just as we think about fibrotic diseases, are there other drugs in the space that we should be thinking about that you kind of require access to for combination trials or other things that could change the landscape there?

Yes. I think Peter, so the short answer is yes, of course. I think in GVHD, with Incyte's recent approval in chronic graft versus host disease, it's -- and the complementary mechanisms of action, we think that's a very clear and important combination to the study. In IPF there -- as you know, there are only 2 approved drugs. And so our -- back to the question about the IPF trial, we would, of course, be studying our drug in combination with those 2 approved drugs. And then as you go into other diseases, scleroderma, liver fibrotic diseases, et cetera, there would be additional agents that might be of interest to combine.

Got you. And then just a final question, just regards to other indications and I guess, prior indications, is the door closed for oncology for CSF-1R for your molecule?

Well, I wouldn't say the door is closed, but I would say that the data that both we and others have generated, testing a CSF-1R antibody in combination with a PD-1 pathway antagonist have not been particularly promising. Again, we're -- we continue to monitor that science. And there are academic scientists who have suggested to us that there may be a specific patient selection approach there. But at this point, that is not a priority for the program.

Our next question comes from Justin Walsh with B. Riley Securities.

Congrats on the deal. So my first question is, the press release notes that Syndax retains the option to co-promote. Can you provide some color on what you expect would dictate your decision to go forward with a co-promote or not?

Michael, do you want to take that one?

Sure. Well, I think, as you know, it's a -- we have a portfolio of molecules will be, hopefully, at a similar stage of launch -- development and launch with our Menin program when we get our first approval and have the opportunity to sell the drug in chronic graft versus host disease. I think there are some portfolio questions about how do we want to build a field force and all of that. So I think there's that. There's also where are we with regard to resources and so forth. So I think there's a number of considerations around how we view our portfolio and what else we may have on tap within our pipeline. But I think that it provides us great flexibility to really learn and work with a great -- a great partner on the commercial side, especially in Incyte. And so we have excellent flexibility to leverage that as we move our portfolio forward.

Got it. My next question is on the development cost share. Do you expect that, that will include AGAVE-201? Or is it more like the combination trials or new trials that are initiated from here?

Yes. So I'll just make a follow-up comment there. All development is shared in the way that we have presented it, so 45%, 55% in terms of AGAVE, that's included as well.

All right. Perfect then. And one more question for me. Are there any specific overlapping toxicities between ruxolitinib and axatilimab that we should be thinking about or keeping an eye on heading into the combination trial?

Yes, Justin, thanks for that question. The short answer is no, which is, in fact, what makes it just an attractive combination. Axatilimab, the data we presented at ASH last year, the drug was quite well tolerated with really just some transient LFT abnormalities, no cytopenias or the kinds of things that occasionally you can run into with a JAK inhibitor. So at this stage of the game, it is that nonoverlapping toxicity, nonoverlapping mechanisms of action that make the combination so attractive.

Our next question comes from Avatar Jones with Morgan Stanley.

This is Avatar on for David this morning. Just another question regarding the JAK combination. Could you really provide a little color on that scientific rationale? And any commentary that you have in regards to the recent discussions of JAK safety and how this approach plays out in the context of that?

Sure. So Peter, do you want to make a couple of comments about the scientific rationale for the combination, then I can comment on the safety?

Yes, sure. So obviously, the 2 mechanisms target sort of different components of particularly GVHD in terms of the T cell component and more of the inflammatory reaction where the JAK inhibitors are more effective. And so we think the combination overlaps very nicely and targeting both the monocytes and macrophages that contribute to the fibrosis and more of the T cells, which contribute to the inflammatory side.

And I guess I would say in terms of -- we always think in terms of benefit-risk. And so I think the risks that are -- have been identified with the JAK inhibitor class are potentially of less impact in this patient population where the benefit is sorely needed. These are patients who have life-threatening diseases. So obviously, we'll continue to monitor all of the known JAK safety issues. But I think in this case, the benefit-risk is really a different calculation than it is in some of autoimmune diseases.

We have no further questions. I'd like to turn the call back over to Dr. Briggs Morrison for any closing remarks.

Great. Thanks very much, operator. And again, thank you, everybody, for joining us on the call. As you can tell, we're really quite excited. We think this unlocks tremendous value for axatilimab, and importantly, allows us to maximize the value of that molecule and of our Menin program. So thanks so much for your questions, and we look forward to following up with you in the future.

This does conclude the program. You may now disconnect. Everyone, have a great day.