Introduction
Syndax Pharmaceuticals Inc. (SNDX, Financial) is a clinical-stage biopharmaceutical company focused on developing a pipeline of combination therapies in multiple cancer indications. The company has several compounds in development, but the lead candidate is entinostat, which is a Class 1, selective histone deacetylase inhibitor which has been shown to block myeloid-derived suppressor cells and regulatory T-cells.
Once weekly oral administration is a convenient dosing and is a positive differentiator. The company has several collaborations with big pharmaceutical companies, where it combines entinostat with already approved drugs. Thus, it is has several shots at the goal, making it an attractive investment. So far, the clinical results indicate etinostat has been well tolerated in combination with other treatments. Results from the ongoing studies will be the main potential catalysts for the stock in the second and third quarters.Ă‚
The main study
The very promising results of the phase two trial of entinostat and Aromasin in treating advanced hormone receptor-positive breast cancer resulted in the coveted breakthrough therapy designation.
Syndax has one ongoing phase three trial under special protocol assessment, which assures us the Food and Drug Administration is on board with the study's design. This study looks into the combination of entinostat plus Aromasin in treating hormone receptor-positive and human epidermal growht factor receptor-negative breast cancer, with the cooperation of the National Cancer Institute. If the study is positive, a huge market opportunity awaits it and the drug could potentially replace Afinitor as the standard of care. The company believes the use of this combination in the second and third line of therapy for treating metastatic breast cancer has blockbuster potential.
ECOG-ACRIN Cancer Research Group, the sponsor of the phase three trial, said results will not be disclosed until completion of enrollment (aimed for the third quarter). Final progression-free survival analysis and the first interim analysis for overall survival have already been completed by the Data Safety Monitoring Committee. If all goes well, Syndax could submit a New Drug Application for this indication by the end of 2018.
The phase two trial of entinostat and Aromasin (the same combination used in the phase three study) had decent progression-free survival results, but very good overall survival results. Since overall survival is the gold standard for oncology studies, I think the chances of success for this study is around 75% to 80%.
Additional studies
In addition to the phase three study, the company has initiated several phase one and two studies under the “ENCORE” clinical trial program, where it evaluates if entinostat can potentially enhance the efficacy of already approved anti-programmed death-lighand 1 drugs. The ENCORE program has several collaborations with big pharma.
Under the ENCORE program, Merck's (MRK, Financial) Keytruda is combined with entinostat to treat recurrent non-small cell lung cancer, melanoma and colorectal cancer (three phase one and two studies). Readouts from these studies are expected in the second quarter of 2018.
Syndax is also studying entinostat in additional cancer types. It has combined the drug with Roche's (RHBBY) Tecentriq to test its effectiveness in treating triple negative breast cancer. The drug has also been combined with Pfizer’s (PFE, Financial) Bavencio to study ovarian cancer. They hope to have these studies fully enrolled in the first half of the year.
The ENCORE program provides “multiple shots at the goal," increasing the chances of success, and provides a cushion for downside since failure of one of the studies is not a binary event for the company.
Evaluation
Syndax ended 2017 with $130 million in cash. The quarterly burn rate is around $20 million. Management has guided total operating expenses, including research and development, will be around $85 million to $95 million, so the company is funded at least until the first quarter of 2019. If the phase three studies' results are positive and the stock goes up, however, there is a good chance for a secondary offering to prepare for the New Drug Application compilation, submission and product commercialization.
Analyst commentary is very favorable. The median analyst price target is close to $22 a share. The current share price of around $10.5 translates to a $225 million market cap. If the results of the studies are positive, a $1 billion market cap is not impossible in the near term. The success of the ENCORE program alone can increase the market cap to $600 million.
It should be noted the stock may have a bumpy ride in 2018 as several readouts from the ongoing clinical studies are due, the main one being the results from the phase three study.
